Exhibit 4.1
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
Depositor
WILSHIRE CREDIT CORPORATION,
Servicer
and
LASALLE BANK NATIONAL ASSOCIATION,
Trustee
----------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2006
----------
XXXXXXX XXXXX MORTGAGE INVESTORS TRUST,
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-RM1
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS.................................................... 1
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES.. 38
SECTION 2.01. Conveyance of Mortgage Loans........................... 38
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans........ 41
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.............................................. 42
SECTION 2.04. Representations and Warranties of the Servicer......... 46
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans that
are not "Qualified Mortgages".......................... 48
SECTION 2.06. Authentication and Delivery of Certificates............ 48
SECTION 2.07. REMIC Elections........................................ 48
SECTION 2.08. [RESERVED]............................................. 51
SECTION 2.09. Covenants of the Servicer.............................. 51
SECTION 2.10. [RESERVED]............................................. 52
SECTION 2.11. Permitted Activities of the Trust...................... 52
SECTION 2.12. Qualifying Special Purpose Entity...................... 52
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS............... 52
SECTION 3.01. Servicer to Service Mortgage Loans..................... 52
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer................................ 54
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
the Servicer........................................... 54
SECTION 3.04. Trustee to Act as Servicer............................. 54
SECTION 3.05. Collection of Mortgage Loan Payments; Collection
Account; Certificate Account........................... 55
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts........................................ 59
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans........................... 59
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.................................... 60
SECTION 3.09. [RESERVED]............................................. 62
SECTION 3.10. Maintenance of Hazard Insurance........................ 62
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements............................................. 62
SECTION 3.12. Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds; Special Loss
Mitigation............................................. 63
-i-
TABLE OF CONTENTS
(continued)
PAGE
----
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files........ 66
SECTION 3.14. Documents, Records and Funds in Possession of Servicer
to be Held for the Trustee............................ 67
SECTION 3.15. Servicing Compensation................................. 67
SECTION 3.16. Access to Certain Documentation........................ 68
SECTION 3.17. Annual Statement as to Compliance...................... 68
SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements........................ 68
SECTION 3.19. Rights of the NIMs Insurer............................. 71
SECTION 3.20. Periodic Filings....................................... 71
SECTION 3.21. Annual Certificate by Trustee.......................... 74
SECTION 3.22. Annual Certificate by Servicer......................... 75
SECTION 3.23. Prepayment Charge Reporting Requirements............... 75
SECTION 3.24. Information to the Trustee............................. 75
SECTION 3.25. Indemnification........................................ 76
SECTION 3.26. Nonsolicitation........................................ 76
SECTION 3.27. High Cost Mortgage Loans............................... 76
ARTICLE IV DISTRIBUTIONS................................................. 77
SECTION 4.01. Advances............................................... 77
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls......................... 78
SECTION 4.03. Distributions on the REMIC Interests................... 78
SECTION 4.04. Distributions.......................................... 78
SECTION 4.05. Monthly Statements to Certificateholders............... 82
ARTICLE V THE CERTIFICATES............................................... 86
SECTION 5.01. The Certificates....................................... 86
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates............................... 87
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...... 94
SECTION 5.04. Persons Deemed Owners.................................. 95
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses.............................................. 95
SECTION 5.06. Book-Entry Certificates................................ 95
SECTION 5.07. Notices to Depository.................................. 96
SECTION 5.08. Definitive Certificates................................ 96
-ii-
TABLE OF CONTENTS
(continued)
PAGE
----
SECTION 5.09. Maintenance of Office or Agency........................ 97
SECTION 5.10. Authenticating Agents.................................. 97
ARTICLE VI THE DEPOSITOR AND THE SERVICER................................ 98
SECTION 6.01. Respective Liabilities of the Depositor and the
Servicer............................................... 98
SECTION 6.02. Merger or Consolidation of the Depositor or the
Servicer............................................... 98
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer
and Others............................................. 99
SECTION 6.04. Limitation on Resignation of Servicer.................. 99
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds......... 99
SECTION 6.06. Special Servicing Agreements........................... 100
ARTICLE VII DEFAULT; TERMINATION OF SERVICER............................. 100
SECTION 7.01. Events of Default...................................... 100
SECTION 7.02. Trustee to Act; Appointment of Successor............... 102
SECTION 7.03. Notification to Certificateholders..................... 103
ARTICLE VIII CONCERNING THE TRUSTEE...................................... 103
SECTION 8.01. Duties of the Trustee.................................. 103
SECTION 8.02. Certain Matters Affecting the Trustee.................. 104
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.. 106
SECTION 8.04. Trustee May Own Certificates........................... 106
SECTION 8.05. Trustee's Fees and Expenses............................ 106
SECTION 8.06. Indemnification and Expenses of Trustee................ 106
SECTION 8.07. Eligibility Requirements for Trustee................... 107
SECTION 8.08. Resignation and Removal of Trustee..................... 107
SECTION 8.09. Successor Trustee...................................... 108
SECTION 8.10. Merger or Consolidation of Trustee..................... 108
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.......... 109
SECTION 8.12. Tax Matters............................................ 110
ARTICLE IX TERMINATION................................................... 112
SECTION 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans......................................... 112
SECTION 9.02. Final Distribution on the Certificates................. 113
SECTION 9.03. Additional Termination Requirements.................... 114
ARTICLE X MISCELLANEOUS PROVISIONS....................................... 115
SECTION 10.01. Amendment.............................................. 115
-iii-
TABLE OF CONTENTS
(continued)
PAGE
----
SECTION 10.02. Counterparts........................................... 117
SECTION 10.03. Governing Law.......................................... 117
SECTION 10.04. Intention of Parties................................... 117
SECTION 10.05. Notices................................................ 118
SECTION 10.06. Severability of Provisions............................. 119
SECTION 10.07. Assignment............................................. 119
SECTION 10.08. Inspection and Audit Rights............................ 121
SECTION 10.09. Certificates Nonassessable and Fully Paid.............. 121
SECTION 10.10. Compliance with Regulation AB.......................... 121
-iv-
EXHIBIT A FORMS OF CERTIFICATES
EXHIBIT B MORTGAGE LOAN SCHEDULE
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1 FORM OF CLASS R TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM OF CLASS R TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G FORM OF INVESTMENT LETTER (ACCREDITED INVESTOR)
EXHIBIT H FORM OF RULE 144A LETTER (QUALIFIED INSTITUTIONAL BUYER)
EXHIBIT I FORM OF REQUEST FOR RELEASE
EXHIBIT J [RESERVED]
EXHIBIT K FORM OF BACK-UP CERTIFICATION OF TRUSTEE
EXHIBIT L FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M-1 FORM OF CLASS A-1 CAP CONTRACT
EXHIBIT M-2 FORM OF CLASS A-2A CAP CONTRACT
EXHIBIT M-3 FORM OF FLOATING RATE SUBORDINATE CERTIFICATES CAP CONTRACT
EXHIBIT N-1 ONE-MONTH LIBOR CAP TABLE -- CLASS A-1 CAP CONTRACT
EXHIBIT N-2 ONE-MONTH LIBOR CAP TABLE -- CLASS A-2A CAP CONTRACT
EXHIBIT N-3 ONE-MONTH LIBOR CAP TABLE -- FLOATING RATE SUBORDINATE CERTIFICATES
CAP CONTRACT
EXHIBIT O FORM OF TRANSFEROR REPRESENTATION LETTER FOR TRANSFER TO REGULATION
S BOOK-ENTRY CERTIFICATE FROM A HOLDER OF A RULE 144A BOOK-ENTRY
CERTIFICATE OR DEFINITIVE CERTIFICATE
EXHIBIT P FORM OF TRANSFEROR REPRESENTATION LETTER FOR TRANSFER PURSUANT TO
RULE 144A FROM A HOLDER OF A REGULATION S BOOK-ENTRY CERTIFICATE OR
DEFINITIVE CERTIFICATE
EXHIBIT Q FORM OF SWAP AGREEMENT
EXHIBIT R FORM OF ASSESSMENT OF COMPLIANCE
EXHIBIT S SERVICING CRITERIA TO BE ADDRESSED
EXHIBIT T FORM OF XXXXXXXX-XXXXX CERTIFICATION
EXHIBIT U FORM OF ITEM 1123 CERTIFICATION OF SERVICER
SCHEDULE X
SCHEDULE Y
SCHEDULE Z
-i-
POOLING AND SERVICING AGREEMENT, dated as of March 1, 2006, among XXXXXXX
XXXXX MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor (the
"Depositor"), WILSHIRE CREDIT CORPORATION, a Nevada corporation, as servicer
(the "Servicer"), and LASALLE BANK NATIONAL ASSOCIATION, a national banking
association, as trustee (the "Trustee").
The Depositor is the owner of the Trust Fund that is hereby conveyed to the
Trustee in return for the Certificates. The Trust Fund for federal income tax
purposes will consist of (i) three real estate mortgage investment conduits,
(ii) the right to receive payments distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof, (iii) each Cap Contract and the Cap
Contract Account, (iv) the grantor trusts described in Section 2.07 hereof and
(v) the Supplemental Interest Trust, which in turn will hold the Swap Agreement.
The SWAP REMIC will consist of all of the assets constituting the Trust Fund
(other than the assets described in clauses (ii), (iii), (iv) and (v) above,
other than the SWAP REMIC Regular Interests and other than the Lower Tier REMIC
Regular Interests) and will be evidenced by the SWAP REMIC Regular Interests
(which will be uncertificated and will represent the "regular interests" in the
SWAP REMIC) and the Class SWR Interest as the single "residual interest" in the
SWAP REMIC. The Lower Tier REMIC will consist of SWAP REMIC Regular Interests
and will be evidenced by the Lower Tier REMIC Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Lower Tier
REMIC) and the Class LTR Interest as the single "residual interest" in the Lower
Tier REMIC. The Trustee will hold the Lower Tier REMIC Regular Interests. The
Upper Tier REMIC will consist of the Lower Tier REMIC Regular Interests and will
be evidenced by the REMIC Regular Interests (which will represent the "regular
interests" in the Upper Tier REMIC) and the Residual Interest as the single
"residual interest" in the Upper Tier REMIC. The Class R Certificate will
represent beneficial ownership of the Class SWR Interest, the Class LTR Interest
and the Residual Interest. The "latest possible maturity date" for federal
income tax purposes of all interests created hereby will be the Latest Possible
Maturity Date.
All covenants and agreements made by the Sponsor in the Sale Agreement and
by the Depositor and the Trustee herein with respect to the Mortgage Loans and
the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates and, to the extent provided
herein, the NIMs Insurer.
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
----- ------------------------- -------------
1-SW1 $94,217,971.554 (1)
1-SW1A $ 4,380,725.218 (2)
1-SW1B $ 4,380,725.218 (3)
1-SW2A $ 4,768,659.805 (2)
1-SW2B $ 4,768,659.805 (3)
1-SW3A $ 5,114,297.613 (2)
1-SW3B $ 5,114,297.613 (3)
1-SW4A $ 5,376,218.651 (2)
1-SW4B $ 5,376,218.651 (3)
1-SW5A $ 5,481,223.588 (2)
1-SW5B $ 5,481,223.588 (3)
1-SW6A $ 3,936,268.703 (2)
1-SW6B $ 3,936,268.703 (3)
1-SW7A $ 2,320,690.422 (2)
1-SW7B $ 2,320,690.422 (3)
1-SW8A $ 2,167,462.125 (2)
1-SW8B $ 2,167,462.125 (3)
1-SW9A $ 1,989,065.979 (2)
1-SW9B $ 1,989,065.979 (3)
1-SW10A $ 1,833,553.162 (2)
1-SW10B $ 1,833,553.162 (3)
1-SW11A $ 1,630,583.010 (2)
1-SW11B $ 1,630,583.010 (3)
1-SW12A $ 1,452,239.175 (2)
1-SW12B $ 1,452,239.175 (3)
1-SW13A $ 1,304,275.844 (2)
1-SW13B $ 1,304,275.844 (3)
1-SW14A $ 1,190,238.082 (2)
1-SW14B $ 1,190,238.082 (3)
1-SW15A $ 1,163,443.726 (2)
1-SW15B $ 1,163,443.726 (3)
1-SW16A $ 1,344,951.624 (2)
1-SW16B $ 1,344,951.624 (3)
1-SW17A $ 1,996,163.729 (2)
1-SW17B $ 1,996,163.729 (3)
1-SW18A $ 1,639,477.117 (2)
1-SW18B $ 1,639,477.117 (3)
1-SW19A $ 2,425,942.299 (2)
1-SW19B $ 2,425,942.299 (3)
1-SW20A $ 1,943,315.629 (2)
1-SW20B $ 1,943,315.629 (3)
1-SW21A $ 1,551,414.316 (2)
1-SW21B $ 1,551,414.316 (3)
1-SW22A $ 1,009,990.091 (2)
1-SW22B $ 1,009,990.091 (3)
1-SW23A $ 776,925.343 (2)
1-SW23B $ 776,925.343 (3)
1-SW24A $ 658,735.755 (2)
1-SW24B $ 658,735.755 (3)
1-SW25A $ 5,096,328.958 (2)
1-SW25B $ 5,096,328.958 (3)
2-SW2 $128,220,201.526 (4)
2-SW1A $ 5,961,680.782 (5)
2-SW1B $ 5,961,680.782 (6)
2-SW2A $ 6,489,616.695 (5)
-2-
2-SW2B $ 6,489,616.695 (6)
2-SW3A $ 6,959,991.387 (5)
2-SW3B $ 6,959,991.387 (6)
2-SW4A $ 7,316,436.849 (5)
2-SW4B $ 7,316,436.849 (6)
2-SW5A $ 7,459,336.912 (5)
2-SW5B $ 7,459,336.912 (6)
2-SW6A $ 5,356,824.797 (5)
2-SW6B $ 5,356,824.797 (6)
2-SW7A $ 3,158,202.078 (5)
2-SW7B $ 3,158,202.078 (6)
2-SW8A $ 2,949,675.375 (5)
2-SW8B $ 2,949,675.375 (6)
2-SW9A $ 2,706,898.021 (5)
2-SW9B $ 2,706,898.021 (6)
2-SW10A $ 2,495,262.338 (5)
2-SW10B $ 2,495,262.338 (6)
2-SW11A $ 2,219,042.490 (5)
2-SW11B $ 2,219,042.490 (6)
2-SW12A $ 1,976,336.325 (5)
2-SW12B $ 1,976,336.325 (6)
2-SW13A $ 1,774,974.656 (5)
2-SW13B $ 1,774,974.656 (6)
2-SW14A $ 1,619,781.918 (5)
2-SW14B $ 1,619,781.918 (6)
2-SW15A $ 1,583,317.774 (5)
2-SW15B $ 1,583,317.774 (6)
2-SW16A $ 1,830,329.876 (5)
2-SW16B $ 1,830,329.876 (6)
2-SW17A $ 2,716,557.271 (5)
2-SW17B $ 2,716,557.271 (6)
2-SW18A $ 2,231,146.383 (5)
2-SW18B $ 2,231,146.383 (6)
2-SW19A $ 3,301,438.201 (5)
2-SW19B $ 3,301,438.201 (6)
2-SW20A $ 2,644,636.871 (5)
2-SW20B $ 2,644,636.871 (6)
2-SW21A $ 2,111,302.684 (5)
2-SW21B $ 2,111,302.684 (6)
2-SW22A $ 1,374,484.409 (5)
2-SW22B $ 1,374,484.409 (6)
2-SW23A $ 1,057,309.157 (5)
2-SW23B $ 1,057,309.157 (6)
2-SW24A $ 896,466.245 (5)
2-SW24B $ 896,466.245 (6)
2-SW25A $ 6,935,538.042 (5)
2-SW25B $ 6,935,538.042 (6)
SWR (7) (7)
-3-
(1) The interest rate on the Class 1-SW1 Interest shall be a per annum rate
equal to the Group One Net WAC.
(2) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the designation
"A" shall be a per annum rate equal to 2 times the Group One Net WAC,
subject to a maximum rate of 2 times the REMIC Swap Rate for such
Distribution Date.
(3) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the designation
"B" shall be a per annum rate equal to the greater of (x) the excess, if
any, of (i) 2 times the Group One Net WAC over (ii) 2 times the REMIC Swap
Rate for such Distribution Date and (y) 0.00%.
(4) The interest rate on the Class 2-SW2 Interest shall be a per annum rate
equal to the Group Two Net WAC.
(5) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "2" and ending with the designation
"A" shall be a per annum rate equal to 2 times the Group Two Net WAC,
subject to a maximum rate of 2 times the REMIC Swap Rate for such
Distribution Date.
(6) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "2" and ending with the designation
"B" shall be a per annum rate equal to the greater of (x) the excess, if
any, of (i) 2 times the Group Two Net WAC over (ii) 2 times the REMIC Swap
Rate for such Distribution Date and (y) 0.00%.
(7) The Class SWR Interest shall have no principal amount and shall bear no
interest.
THE LOWER TIER REMIC
The following table sets forth the designations, initial principal balances,
interest rates, Corresponding Classes of Certificates and related Mortgage Group
for each interest in the Lower Tier REMIC:
Class(es) of
Corresponding
Initial Certificates
Principal Interest or Related
Class Balance Rate Mortgage Group
----- --------- -------- --------------
LTA-1 (1) (8) A-1, R
LTA-2A (1) (8) A-2A
LTA-2B (1) (8) A-2B
LTA-2C (1) (8) A-2C
LTA-2D (1) (8) A-2D
LTM-1 (1) (8) M-1
LTM-2 (1) (8) M-2
LTM-3 (1) (8) M-3
LTM-4 (1) (8) M-4
LTM-5 (1) (8) M-5
-0-
XXX-0 (1) (8) M-6
LTB-1 (1) (8) B-1
LTB-2 (1) (8) B-2
LTB-3 (1) (8) B-3
LTIX (2) (8) N/A
LTII1A (3) (8) Group One
LTII1B (4) (9) Group One
LTII2A (5) (8) Group Two
LTII2B (6) (10) Group Two
LTIIX (7) (8) N/A
LT-IO (11) (11) N/A
LTR (12) (12) N/A
(1) The initial principal balance of each of these Lower Tier REMIC Regular
Interests shall equal 1/4 of the initial Certificate Principal Balance of
its Corresponding Certificates.
(2) The initial principal balance of the Class LTIX Interest shall equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance of the
Mortgage Loans over (ii) the initial principal balance of the Lower Tier
REMIC I Marker Interests.
(3) The initial principal balance of the Class LTII1A Interest shall equal
0.05% of the excess of (i) the aggregate Cut-off Date Principal Balance of
the Group One Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal Balances of Certificate Group One.
(4) The initial principal balance of the Class LTII1B Interest shall equal
0.05% of the aggregate Cut-off Date Principal Balance of the Group One
Mortgage Loans.
(5) The initial principal balance of the Class LTII2A Interest shall equal
0.05% of the excess of (i) the aggregate Cut-off Date Principal Balance of
the Group Two Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal Balances of Certificate Group Two.
(6) The initial principal balance of the Class LTII2B Interest shall equal
0.05% of the aggregate Cut-off Date Principal Balance of the Group Two
Mortgage Loans.
(7) The initial principal balance of the Class LTIIX Interest shall equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance of the
Mortgage Loans over (ii) the initial principal balance of the Lower Tier
REMIC II Marker Interests.
(8) For each Distribution Date, the interest rate for each of the Lower Tier
REMIC Regular Interests (other than the Class LTII1B, the Class LTII2B and
the Class LT-IO Interests) shall be a per annum rate (but not less than
zero) equal to the product of (i) the weighted average of the interest
rates on the SWAP REMIC Regular Interests for such Distribution Date and
(ii) a fraction the numerator of which is 30 and the denominator of which
is the actual number of days in the Accrual Period for the LIBOR
Certificates, provided however, that for any Distribution Date on which the
Class LT-IO Interest is entitled to a portion of interest accruals on a
SWAP REMIC Regular Interest ending with a designation "A" as described in
footnote 11 below, such weighted average shall be computed by first
subjecting the rate on such SWAP REMIC Regular Interest to a cap equal to
Swap LIBOR for such Distribution Date.
(9) For each Distribution Date, the interest rate for the Class LTII1B Interest
shall be a per annum rate equal to the product of (i) the weighted average
of the interest rates on the SWAP REMIC Regular Interests beginning with
the designation "1" for such Distribution Date and (ii) a fraction the
numerator of which is 30 and the denominator
-5-
of which is the actual number of days in the Accrual Period for the LIBOR
Certificates, provided, however, that for any Distribution Date on which
the Class LT-IO Interest is entitled to a portion of interest accruals on a
SWAP REMIC Regular Interest ending with a designation "A" as described in
footnote 11 below, such weighted average shall be computed by first
subjecting the rate on such SWAP REMIC Regular Interest to a cap equal to
Swap LIBOR for such Distribution Date.
(10) For each Distribution Date, the interest rate for the Class LTII2B Interest
shall be a per annum rate equal to the product of (i) the weighted average
of the interest rates on the SWAP REMIC Regular Interests beginning with
the designation "2" for such Distribution Date and (ii) a fraction the
numerator of which is 30 and the denominator of which is the actual number
of days in the Accrual Period for the LIBOR Certificates, provided,
however, that for any Distribution Date on which the Class LT-IO Interest
is entitled to a portion of interest accruals on a SWAP REMIC Regular
Interest ending with a designation "A" as described in footnote 11 below,
such weighted average shall be computed by first subjecting the rate on
such SWAP REMIC Regular Interest to a cap equal to Swap LIBOR for such
Distribution Date.
(11) The Class LT-IO Interest is an interest-only class that does not have a
principal balance. For only those Distribution Dates listed in the first
column of the table below, the Class LT1-IO shall be entitled to interest
accrued on the SWAP REMIC Regular Interest listed in the second column
below at a per annum rate equal to the excess, if any, of (i) the interest
rate for such SWAP REMIC Regular Interest for such Distribution Date over
(ii) Swap LIBOR for such Distribution Date.
Distribution SWAP REMIC
Date Regular Interest
------------ ----------------
7 Class 1-SW1A
Class 2-SW1A
7-8 Class 1-SW2A
Class 2-SW2A
7-9 Class 1-SW3A
Class 2-SW3A
7-10 Class 1-SW4A
Class 2-SW4A
7-11 Class 1-SW5A
Class 2-SW5A
7-12 Class 1-SW6A
Class 2-SW6A
7-13 Class 1-SW7A
Class 2-SW7A
7-14 Class 1-SW8A
Class 2-SW8A
7-15 Class 1-SW9A
Class 2-SW9A
7-16 Class 1-SW10A
Class 2-SW10A
7-17 Class 1-SW11A
Class 2-SW11A
7-18 Class 1-SW12A
Class 2-SW12A
7-19 Class 1-SW13A
Class 2-SW13A
7-20 Class 1-SW14A
Class 2-SW14A
7-21 Class 1-SW15A
-6-
Class 2-SW15A
7-22 Class 1-SW16A
Class 2-SW16A
7-23 Class 1-SW17A
Class 2-SW17A
7-25 Class 1-SW18A
Class 2-SW18A
7-26 Class 1-SW19A
Class 2-SW19A
7-27 Class 1-SW20A
Class 2-SW20A
7-28 Class 1-SW21A
Class 2-SW21A
7-29 Class 1-SW22A
Class 2-SW22A
7-30 Class 1-SW23A
Class 2-SW23A
7-31 Class 1-SW24A
Class 2-SW24A
7-32 Class 1-SW25A
Class 2-SW25A
(12) The Class LTR Interest shall have no principal amount and shall bear no
interest.
UPPER TIER REMIC
The following table sets forth the designation, the initial principal balances,
the interest rates and Classes of Related Certificates for each of the interests
in the Upper Tier REMIC.
Initial Class of
Principal Related
Class Balance Rate Certificates
----- --------- ---- ------------
UTA-1 (1) (2) A-1
UTA-2A (1) (2) A-2A
UTA-2B (1) (2) A-2B
UTA-2C (1) (2) A-2C
UTA-2D (1) (2) A-2D
UTM-1 (1) (2) M-1
UTM-2 (1) (2) M-2
UTM-3 (1) (2) M-3
UTM-4 (1) (2) M-4
UTM-5 (1) (2) M-5
UTM-6 (1) (2) M-6
UTB-1 (1) (2) B-1
UTB-2 (1) (2) B-2
UTB-3 (1) (2) B-3
Uncertificated Class C Interest (3) (3) N/A
UT-IO (4) (4) N/A
Residual Interest (1) (2) R
-7-
(1) The initial principal balance of each of these REMIC Regular Interests shall
equal the initial principal balance of its Class of Related Certificates.
(2) The interest rates on each of these REMIC Regular Interests shall be an
annual rate equal to the Pass-Through Rate for the Class of Related
Certificates, provided that in lieu of the applicable Available Funds Caps set
forth in the definition of an applicable Pass-Through Rate, the applicable Upper
Tier REMIC Net WAC Cap shall be used.
(3) The Uncertificated Class C Interest shall have an initial principal balance
equal to the initial Overcollateralization Amount. The Uncertificated Class C
Interest shall accrue interest on a notional balance set forth in the definition
of Class C Current Interest at a rate equal to the Class C Distributable
Interest Rate. The Uncertificated Class C Interest shall be represented by the
Class C Certificates.
(4) The Class UT-IO Interest shall have no principal amount and will not have an
interest rate, but will be entitled to 100% of the interest accrued with respect
to the Class LT-IO Interest. The Class UT-IO Interest shall be represented by
the Class C Certificates.
THE CERTIFICATES
The following table sets forth the Class designation, interest rate and initial
Class principal amount for each Class of Certificates comprising interests in
the Trust Fund.
Class Initial Class Principal Amount Interest Rate
----- ------------------------------ -------------
A-1 (1) (2)
A-2A (1) (2)
A-2B (1) (2)
A-2C (1) (2)
A-2D (1) (2)
M-1 (1) (2)
M-2 (1) (2)
M-3 (1) (2)
M-4 (1) (2)
M-5 (1) (2)
M-6 (1) (2)
B-1 (1) (2)
B-2 (1) (2)
B-3 (1) (2)
C (3) (3)
P (4) (4)
R (1) (2)(5)
(1) Each of these Classes of Certificates shall have initial principal
balances as set forth in Section 5.01 hereof.
(2) Each of these Classes of Certificates shall bear interest at a per annum
rate equal to the Pass-Through Rate for such Certificates set forth in the
definitions herein.
-8-
(3) For federal income tax purposes, the Class C Certificate shall represent
(i) the right to receive all distributions with respect to the REMIC
Regular Interests represented by the Uncertificated Class C Interest and
the Class UT-IO Interest and (ii) certain rights and obligations with
respect to notional principal contracts as described in Section 2.07.
(4) The Class P Certificates shall be entitled to the amounts distributable
pursuant to Section 4.04(b) hereof and shall not represent a REMIC regular
interest.
(5) The Class R Interest represents ownership of the Class SWR Interest, the
Class LTR Interest and the Residual Interest.
In consideration of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions that service for their own account mortgage loans of the
same type as the Mortgages Loans in the jurisdictions in which the related
Mortgaged Properties are located.
Accountant's Attestation: As defined in Section 3.18.
Accrual Period: With respect to each Class of Class A-1, Class R, Class A-2A,
Class M and Class B Certificates (other than the Class B-2 Certificates), their
Corresponding REMIC Regular Interests and the Lower Tier REMIC Interests and any
Distribution Date, the period commencing on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) and ending on the day immediately preceding such Distribution Date and
with respect to the Class A-2B, Class A-2C, Class A-2D and Class B-2
Certificates, their Corresponding REMIC Regular Interests and the SWAP REMIC
Regular Interests and any Distribution Date, the calendar month immediately
preceding the month in which such Distribution Date occurs. All calculations of
interest on each Class of Class A-1, Class R, Class A-2A, Class M and Class B
Certificates (other than the Class B-2 Certificates), their Corresponding REMIC
Regular Interests and the Lower Tier REMIC Interests will be made on the basis
of the actual number of days elapsed in the related Accrual Period and a 360 day
year and all calculations of interest on the Class A-2B, Class A-2C, Class A-2D
and Class B-2 Certificates, their Corresponding REMIC Regular Interests and the
SWAP REMIC Regular Interests will be made on a the basis of a 360 day year
consisting of twelve 30-day months.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate that is adjustable.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
-9-
Advance: The aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date pursuant to Section 4.01, the amount of
any such advances being equal to the sum of the aggregate of payments of
principal and interest (or, with respect to the Interest-Only Mortgage Loans,
payments of scheduled interest) (net of the related Servicing Fees) on the
related Mortgage Loans that were due during the applicable Due Period and not
received as of the close of business on the related Determination Date, less the
aggregate amount of any such Delinquent payments that the Servicer has
determined would constitute a Non-Recoverable Advance were an advance to be made
with respect thereto; provided, however, that with respect to any Mortgage Loan
that is 150 days delinquent or more (whether or not the Mortgage Loan has been
converted to an REO Property), any shortfalls in interest due to bankruptcy
proceedings or any shortfalls on the Mortgage Loans due to the application of
the Servicemembers Civil Relief Act or similar state legislation or regulations,
there will be no obligation to make advances and, provided further, however,
that with respect to any Mortgage Loan that has been converted to an REO
Property which is less than 150 days delinquent, the obligation to make Advances
shall only be to payments of interest (net of the related Servicing Fees), to be
calculated after taking into account rental income.
Advance Facility: A financing or other facility as described in Section
10.07.
Advancing Person: A Person to whom the Servicer's rights under this
Agreement to be reimbursed for any Advances or Servicing Advances have been
assigned pursuant to Section 10.07.
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A Certificate
Principal Balance, the Class A-2B Certificate Principal Balance, the Class A-2C
Certificate Principal Balance, the Class A-2D Certificate Principal Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate Principal
Balance, the Class M-2 Certificate Principal Balance, the Class M-3 Certificate
Principal Balance, the Class M-4 Certificate Principal Balance, the Class M-5
Certificate Principal Balance, the Class M-6 Certificate Principal Balance, the
Class B-1 Certificate Principal Balance, the Class B-2 Certificate Principal
Balance, and the Class B-3 Certificate Principal Balance, in each case as of
such date of determination.
Agreement: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.
Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which the sum of (i) the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of which were
used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Sponsor by an independent fee appraiser at the time of
the origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such
-10-
time of origination. With respect to a Mortgage Loan the proceeds of which were
used to refinance an existing mortgage loan, the "Appraised Value" is the
appraised value of the Mortgaged Property based upon the appraisal obtained at
the time of refinancing.
Assessment of Compliance: As defined in Section 3.18.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located to reflect of
record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.
Auction: The one-time auction conducted by the Trustee, as described in
Section 9.01(b) hereof.
Auction Date: The date on which the Auction occurs.
Authenticating Agent: As defined in Section 5.10.
Available Funds Cap: Any of the Class A-1 Available Funds Cap, the Class
A-2 Available Funds Cap or the Weighted Average Available Funds Cap.
Balloon Loan: A Mortgage Loan having an original term to stated maturity of
approximately 15 or 30 years which provides for level monthly payments of
principal and interest based on a 30- or 40-year amortization schedule, with a
balloon payment of the remaining outstanding principal balance due on such
Mortgage Loan at its stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.06). As of the Closing Date, each of
the Class A, Class M and Class B Certificates constitutes a Class of Book-Entry
Certificates.
Bring Down Letter: That certain letter agreement, dated as of March 21,
2006 between ResMAE and the Sponsor, with respect to the Mortgage Loans.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of California, State of Oregon, State
of Illinois and in the City of New York, New York are authorized or obligated by
law or executive order to be closed.
Cap Contract: Any of the Class A-1 Cap Contract, the Class A-2A Cap
Contract or the Floating Rate Subordinate Certificates Cap Contract.
Cap Contract Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(k)(i) in the name of the Trustee for the
benefit of the Trust Fund and designated "LaSalle Bank National Association, as
trustee, in trust for registered holders of Xxxxxxx Xxxxx Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-RM1." Funds in the
Cap
-11-
Contract Account shall be held in trust for the Trust Fund for the uses and
purposes set forth in this Agreement.
Cap Contract Counterparty: Bear Xxxxxxx Financial Products Inc.
Cap Contract Notional Balance: Any of the Class A-1 Cap Contract Notional
Balance, the Class A-2A Cap Contract Notional Balance or the Floating Rate
Subordinate Certificates Cap Contract Notional Balance.
Cap Contract Termination Date: Any of the Class A-1 Cap Contract
Termination Date, the Class A-2A Cap Contract Termination Date or the Floating
Rate Subordinate Certificates Cap Contract Termination Date.
Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Authenticating Agent in substantially the forms
attached hereto as Exhibits A.
Certificate Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(e) in the name of the Trustee for the
benefit of the Certificateholders and designated "LaSalle Bank National
Association, as trustee, in trust for registered holders of Xxxxxxx Xxxxx
Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series
2006-RM1." Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Certificate Group: Either of Certificate Group One or Certificate Group
Two.
Certificate Group One: The Class A-1 and Class R Certificates. For purposes
of Section 2.07 hereof, Certificate Group One shall be related to Group One.
Certificate Group Two: The Class A-2A, Class A-2B Certificates, Class A-2C
Certificates and Class A-2D Certificates. For purposes of Section 2.07 hereof,
Certificate Group Two shall be related to Group Two.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(i). On each Distribution Date, after all distributions of principal on such
Distribution Date, a portion of the Class C Interest Carry Forward Amount in an
amount equal to the excess of the Overcollateralization Amount on such
Distribution Date over the Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the first Distribution Date, the initial
Overcollateralization Amount) will be added to the aggregate Certificate
Principal Balance of the Class C Certificates (on a pro rata basis).
Notwithstanding the foregoing on any Distribution Date relating to a Due Period
in which a Subsequent Recovery has been received by the Servicer, the
Certificate Principal Balance of any Class of Certificates then outstanding for
which any Applied Realized Loss Amount has been allocated will be increased, in
order of seniority, by an amount
-12-
equal to the lesser of (i) the Unpaid Realized Loss Amount for such Class of
Certificates and (ii) the total of any Subsequent Recovery distributed on such
date to the Certificateholders (reduced by the amount of the increase in the
Certificate Principal Balance of any more senior Class of Certificates pursuant
to this sentence on such Distribution Date).
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee is entitled to rely conclusively on a certification of
the Depositor or any Affiliate of the Depositor in determining which
Certificates are registered in the name of an Affiliate of the Depositor.
Class: All Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.
Class A Certificate Principal Balance: As of any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A Certificate
Principal Balance, the Class A-2B Certificate Principal Balance, the Class A-2C
Certificate Principal Balance, the Class A-2D Certificate Principal Balance and
the Class R Certificate Principal Balance.
Class A Certificates: Any of the Class A-1 Certificates, the Class A-2
Certificates and the Class R Certificates.
Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the related Stepdown Date or any Distribution Date on which a
Stepdown Trigger Event exists, 100% of the Principal Distribution Amount for
such Distribution Date and (2) on or after the Stepdown Date where a Stepdown
Trigger Event does not exist, the excess of (A) the Class A Certificate
Principal Balance immediately prior to such Distribution Date over (B) the
lesser of (i) 56.10% of the aggregate Stated Principal Balance of the Mortgage
Loans as of such Distribution Date and (ii) the excess of the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount; provided, however, that in no
event will the Class A Principal Distribution Amount with respect to any
Distribution Date exceed the aggregate Certificate Principal Balance of the
Class A Certificates.
Class A-1 Available Funds Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest on the Mortgage Loans in Group One based on the Net Mortgage
Rates, less the pro rata portion (calculated based on the ratio of the Group One
Mortgage Loans to the total pool of Mortgage Loans) allocable to the Group One
Mortgage Loans of any Net Swap Payments or Swap Termination Payments (other than
Defaulted Swap Termination Payments) owed to the Swap Counterparty for such
Distribution Date in effect on the related Due Date divided by (y) the aggregate
Stated Principal Balance of the Mortgage Loans in Group One as
-13-
of the first day of the related Accrual Period (or, in the case of the first
Distribution Date, as of the Cut-off Date) and (iii) a fraction, the numerator
of which is 30, and the denominator of which is the actual number of days in the
related Accrual Period.
Class A-1 Cap Contract: The confirmation and agreement between the Trustee
on behalf of the Trust Fund and the Cap Contract Counterparty (in the form of
Exhibit M-1 hereto).
Class A-1 Cap Contract Notional Balance: With respect to any Distribution
Date, the Class A-1 Cap Contract Notional Balance set forth for such
Distribution Date in the Class A-1 One-Month LIBOR Cap Table attached hereto as
Exhibit N-1.
Class A-1 Cap Contract Termination Date: The Distribution Date in September
2006.
Class A-1 Certificates: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1 Certificates.
Class A-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1 Pass-Through Rate on
the Class A-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-1 Certificates.
Class A-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-1 Pass-Through Rate for the related Accrual Period.
Class A-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.180% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.360% per annum.
Class A-1 Maximum Rate Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest that would have been due on the Group One Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans provided for
interest at their Net Mortgage Rates less the pro rata portion (calculated based
on the ratio of the Group One Mortgage Loans to the total pool of Mortgage
Loans) allocable to the Group One Mortgage Loans of any Net Swap Payments or
Swap Termination Payments owed to the Swap Counterparty for such Distribution
Date (other than Defaulted Swap Termination Payments), divided by (y) the
aggregate Stated Principal Balance of the Group One Mortgage Loans as of the
first day of the related Accrual Period and (iii) a fraction, the numerator of
which is 30 and the denominator of which is the actual number of days in the
related Accrual Period.
-14-
Class A-1 Pass-Through Rate: For the first Distribution Date, 4.960% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1 Margin, (2) the Class A-1 Available Funds Cap for such
Distribution Date and (3) the Class A-1 Maximum Rate Cap for such Distribution
Date.
Class A-1 Upper Collar: With respect to each Distribution Date with respect
to which payments are received on the Class A-1 Cap Contract, a rate equal to
the lesser of One-Month LIBOR and 10.3200% per annum.
Class A-2 Available Funds Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12 and (ii) the quotient of (x) the total
scheduled interest on the Group Two Mortgage Loans based on the Net Mortgage
Rates in effect on the related Due Date, less the pro rata portion (calculated
based on the ratio of the Group Two Mortgage Loans to the total pool of Mortgage
Loans) allocable to the Group Two Mortgage Loans of any Net Swap Payments or
Swap Termination Payments (other than Defaulted Swap Termination Payments) owed
to the Swap Counterparty for such Distribution Date, divided by (y) the
aggregate Stated Principal Balance of the Group Two Mortgage Loans as of the
first day of the related Accrual Period and, only with respect to the Class A-2A
Certificates, multiplied by a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days in the related Accrual Period.
Class A-2 Certificates: Any of the Class A-2A, Class A-2B, Class A-2C and
Class A-2D Certificates.
Class A-2 Maximum Rate Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12 and (ii) the quotient of (x) the total
scheduled interest that would have been due on the Group Two Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans provided for
interest at their Net Mortgage Rates less the pro rata portion (calculated based
on the ratio of the Group Two Mortgage Loans to the total pool of Mortgage
Loans) allocable to the Group Two Mortgage Loans of any Net Swap Payments or
Swap Termination Payments owed to the Swap Counterparty for such Distribution
Date (other than Defaulted Swap Termination Payments), divided by (y) the
aggregate Stated Principal Balance of the Group Two Mortgage Loans as of the
first day of the related Accrual Period and, only with respect to the Class A-2A
Certificates, multiplied by a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days in the related Accrual Period.
Class A-2A Cap Contract: The confirmation and agreement between the Trustee
on behalf of the Trust Fund and the Cap Contract Counterparty (in the form of
Exhibit M-2 hereto).
Class A-2A Cap Contract Notional Balance: With respect to any Distribution
Date, the Class A-2A Cap Contract Notional Balance set forth for such
Distribution Date in the Class A-2A One-Month LIBOR Cap Table attached hereto as
Exhibit N-2.
Class A-2A Cap Contract Termination Date: The Distribution Date in
September 2006.
Class A-2A Certificate: Any Certificate designated as a "Class A-2A
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
-15-
Class A-2A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2A Certificates.
Class A-2A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2A Pass-Through Rate on
the Class A-2A Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-2A Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2A Certificates.
For purposes of calculating interest, principal distributions on a Distribution
Date will be deemed to have been made on the first day of the Accrual Period in
which such Distribution Date occurs.
Class A-2A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2A Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2A Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-2A Pass-Through Rate for the related Accrual Period.
Class A-2A Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.070% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.140% per annum.
Class A-2A Pass-Through Rate: For the first Distribution Date, 4.850% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2A Margin, (2) the Class A-2 Available Funds Cap for such
Distribution Date and (3) the Class A-2 Maximum Rate Cap for such Distribution
Date.
Class A-2A Upper Collar: With respect to each Distribution Date with
respect to which payments are received on the Class A-2A Cap Contract, a rate
equal to the lesser of One-Month LIBOR and 9.4200% per annum.
Class A-2B Certificate: Any Certificate designated as a "Class A-2B
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-2B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2B Certificates.
Class A-2B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2B Pass-Through Rate on
the Class A-2B Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-2B Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2B Certificates.
For purposes of calculating interest, principal distributions on a Distribution
Date will be deemed to have been made on the first day of the Accrual Period in
which such Distribution Date occurs.
Class X-0X Xxxxxxxx Xxxxx Xxxxxxx Xxxxxx: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2B Current Interest with respect to
prior Distribution Dates over (B) the amount
-16-
actually distributed to the Class A-2B Certificates with respect to interest on
such prior Distribution Dates and (2) interest on such excess (to the extent
permitted by applicable law) at the Class A-2B Pass-Through Rate for the related
Accrual Period.
Class A-2B Pass-Through Rate: For any Distribution Date on or before the
Initial Optional Termination Date, the least of (1) 5.450%, (2) the Class A-2
Available Funds Cap for such Distribution Date and (3) the Class A-2 Maximum
Rate Cap for such Distribution Date; and for any Distribution Date after the
Initial Optional Termination Date, the least of (1) 5.950%, (2) the Class A-2
Available Funds Cap for such Distribution Date and (3) the Class A-2 Maximum
Rate Cap for such Distribution Date.
Class A-2C Certificate: Any Certificate designated as a "Class A-2C
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-2C Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2C Certificates.
Class A-2C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2C Pass-Through Rate on
the Class A-2C Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-2C Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2C Certificates.
For purposes of calculating interest, principal distributions on a Distribution
Date will be deemed to have been made on the first day of the Accrual Period in
which such Distribution Date occurs.
Class A-2C Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2C Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2C Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-2C Pass-Through Rate for the related Accrual Period.
Class A-2C Pass-Through Rate: For any Distribution Date on or before the
Initial Optional Termination Date, the least of (1) 5.800%, (2) the Class A-2
Available Funds Cap for such Distribution Date and (3) the Class A-2 Maximum
Rate Cap for such Distribution Date; and for any Distribution Date after the
Initial Optional Termination Date, the least of (1) 6.300%, (2) the Class A-2
Available Funds Cap for such Distribution Date and (3) the Class A-2 Maximum
Rate Cap for such Distribution Date.
Class A-2D Certificate: Any Certificate designated as a "Class A-2D
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class A-2D Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2D Certificates.
Class A-2D Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2D Pass-Through Rate on
the Class A-2D Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-2D Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such
-17-
Distribution Date to the Class A-2D Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class A-2D Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2D Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2D Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-2D Pass-Through Rate for the related Accrual Period.
Class A-2D Lockout Distribution Amount: As of any Distribution Date, the
product of (x) the Class A-2D Lockout Distribution Percentage (as set forth in
the underlying table) for that Distribution Date and (y) the Class A-2D Pro Rata
Distribution Amount for that Distribution Date. In no event shall the Class A-2D
Lockout Distribution Amount for a Distribution Date exceed the Group Two
Principal Distribution Amount for such Distribution Date or the Certificate
Principal Balance of the Class A-2D Certificates immediately prior to such
Distribution Date.
Class A-2D Lockout Distribution Percentage: As of any Distribution Date,
the applicable percentage for such Distribution Date set forth in the following
table:
DISTRIBUTION DATE OCCURRING IN LOCKOUT PERCENTAGE
------------------------------ ------------------
April 2006 - March 2009 0%
April 2009 - March 2011 45%
April 2011 - March 2012 80%
April 2012 - March 2013 100%
April 2013 and thereafter 300%
Class A-2D Pass-Through Rate: For any Distribution Date on or before the
Initial Optional Termination Date, the least of (1) 5.595%, (2) the Class A-2
Available Funds Cap for such Distribution Date and (3) the Class A-2 Maximum
Rate Cap for such Distribution Date; and for any Distribution Date after the
Initial Optional Termination Date, the least of (1) 6.095%, (2) the Class A-2
Available Funds Cap for such Distribution Date and (3) the Class A-2 Maximum
Rate Cap for such Distribution Date.
Class A-2D Pro Rata Distribution Amount: As of any Distribution Date, an
amount equal to the product of (x) a fraction, the numerator of which is the
Certificate Principal Balance of the Class A-2D Certificates immediately prior
to such Distribution Date and the denominator of which is the aggregate
Certificate Principal Balance of the Class A-2 Certificates immediately prior to
such Distribution Date and (y) the Group Two Principal Distribution Amount for
such Distribution Date.
Class B Certificates: Any of the Class B-1, Class B-2 and Class B-3
Certificates.
Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.
Class B-1 Certificate: Any Certificate designated as "Class B-1 Certificate
"on the face thereof in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.
-18-
Class B-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1 Certificates.
Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class B-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-1 Certificates.
Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-1 Pass-Through Rate for the related Accrual Period.
Class B-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 1.220% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 1.830% per annum.
Class B-1 Pass-Through Rate: For the first Distribution Date, 6.000% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the related Weighted Average Available Funds Cap
for such Distribution Date and (3) the related Weighted Average Maximum Rate Cap
for such Distribution Date.
Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance and the
Class M Certificate Principal Balance, have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal Balance (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class M-2 Certificate Principal
Balance (after taking into account distributions of the Class M-2 Principal
Distribution Amount on such Distribution Date), (D) the Class M-3 Certificate
Principal Balance (after taking into account distributions of the Class M-3
Principal Distribution Amount on such Distribution Date), (E) the Class M-4
Certificate Principal Balance (after taking into account distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date, (F) the Class
M-5 Certificate Principal Balance (after taking into account distributions of
the Class M-5 Principal Distribution Amount on such Distribution Date, (G) the
Class M-6 Certificate Principal Balance (after taking into account distributions
of the Class M-6 Principal Distribution Amount on such Distribution Date and (H)
the Class B-1 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 86.80% of the Stated Principal
Balance of the Mortgage Loans as of such Distribution Date and (B) the excess of
the Stated Principal Balance of the Mortgage Loans as of such Distribution Date
over the Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date on which the
Certificate Principal Balance of each Class of Class A Certificates and Class M
Certificates has been reduced to zero, the Class B-1 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class B-1 Certificates and (y) 100% of the Principal Distribution
Amount remaining after
-19-
any distributions on such Class A and Class M Certificates and (II) in no event
will the Class B-1 Principal Distribution Amount with respect to any
Distribution Date exceed the Class B-1 Certificate Principal Balance.
Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of the Class B-1 Certificates pursuant to the last sentence of
the definition of "Certificate Principal Balance."
Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.
Class B-2 Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2 Certificates.
Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class B-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-2 Certificates.
Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-2 Pass-Through Rate for the related Accrual Period.
Class B-2 Pass-Through Rate: For any Distribution Date on or before the
Initial Optional Termination Date, the least of (1) 6.700%, (2) the related
Weighted Average Available Funds Cap for such Distribution Date and (3) the
related Weighted Average Maximum Rate Cap for such Distribution Date; and for
any Distribution Date after the Initial Optional Termination Date, the least of
(1) 7.200%, (2) the related Weighted Average Available Funds Cap for such
Distribution Date and (3) the related Weighted Average Maximum Rate Cap for such
Distribution Date.
Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M Certificate Principal Balance and the Class B-1 Certificate Principal
Balance have been reduced to zero and a Stepdown Trigger Event exists, or as
long as a Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the Class A Certificate Principal Balance (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate
-20-
Principal Balance (after taking into account distributions of the Class M-2
Principal Distribution Amount on such Distribution Date), (D) the Class M-3
Certificate Principal Balance (after taking into account distributions of the
Class M-3 Principal Distribution Amount on such Distribution Date), (E) the
Class M-4 Certificate Principal Balance (after taking into account distributions
of the Class M-4 Principal Distribution Amount on such Distribution Date), (F)
the Class M-5 Certificate Principal Balance (after taking into account
distributions of the Class M-5 Principal Distribution Amount on such
Distribution Date), (G) the Class M-6 Certificate Principal Balance (after
taking into account distributions of the Class M-6 Principal Distribution Amount
on such Distribution Date), (H) the Class B-1 Certificate Principal Balance
(after taking into account distributions of the Class B-1 Principal Distribution
Amount on such Distribution Date) and (I) the Class B-2 Certificate Principal
Balance immediately prior to such Distribution Date over (2) the lesser of (A)
90.10% of the Stated Principal Balance of the Mortgage Loans as of such
Distribution Date and (B) the excess of the Stated Principal Balance of the
Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A, Class M and Class B-1 Certificates has been
reduced to zero, the Class B-2 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class B-2
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A, Class M and Class B-1 Certificates and (II)
in no event will the Class B-2 Principal Distribution Amount with respect to any
Distribution Date exceed the Class B-2 Certificate Principal Balance.
Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of the Class B-2 Certificates pursuant to the last sentence of
the definition of "Certificate Principal Balance."
Class B-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-3 Certificates.
Class B-3 Certificate: Any Certificate designated as a "Class B-3
Certificate" on the face thereof in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class B-3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-3 Certificates.
Class B-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3 Pass-Through Rate on
the Class B-3 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class B-3 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-3 Certificates.
Class B-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3 Certificates with respect to interest on such prior Distribution Dates and
-21-
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-3 Pass-Through Rate for the related Accrual Period.
Class B-3 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 2.400% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 3.600% per annum.
Class B-3 Pass-Through Rate: For any Distribution Date, the least of (1)
One-Month LIBOR plus the Class B-3 Margin, (2) the related Weighted Average
Available Funds Cap for such Distribution Date and (3) the related Weighted
Average Maximum Rate Cap for such Distribution Date.
Class B-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, the
Class M Certificate Principal Balance, the Class B-1 Certificate Principal
Balance and the Class B-2 Certificate Principal Balance have been reduced to
zero and a Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event
does not exist, the excess of (1) the sum of (A) the Class A Certificate
Principal Balance (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date), (B) the Class M-1
Certificate Principal Balance (after taking into account distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account distributions
of the Class M-2 Principal Distribution Amount on such Distribution Date), (D)
the Class M-3 Certificate Principal Balance (after taking into account
distributions of the Class M-3 Principal Distribution Amount on such
Distribution Date), (E) the Class M-4 Certificate Principal Balance (after
taking into account distributions of the Class M-4 Principal Distribution Amount
on such Distribution Date), (F) the Class M-5 Certificate Principal Balance
(after taking into account distributions of the Class M-5 Principal Distribution
Amount on such Distribution Date), (G) the Class M-6 Certificate Principal
Balance (after taking into account distributions of the Class M-6 Principal
Distribution Amount on such Distribution Date), (H) the Class B-1 Certificate
Principal Balance (after taking into account distributions of the Class B-1
Principal Distribution Amount on such Distribution Date), (I) the Class B-2
Certificate Principal Balance (after taking into account distributions of the
Class B-2 Principal Distribution Amount on such Distribution Date) and (J) the
Class B-3 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 92.10% of the Stated Principal Balance of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balance of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of Class A, Class M, Class B-1 and Class B-2
Certificates has been reduced to zero, the Class B-3 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class B-3 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class M, Class B-1 and
Class B-2 Certificates and (II) in no event will the Class B-3 Principal
Distribution Amount with respect to any Distribution Date exceed the Class B-3
Certificate Principal Balance.
Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of the Class B-3 Certificates pursuant to the last sentence of
the definition of "Certificate Principal Balance".
-22-
Class C Applied Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with respect to the Mortgage Loans which
have been applied to the reduction of the Certificate Principal Balance of the
Class C Certificates.
Class C Certificate: Any Certificate designated as a "Class C Certificate"
on the face thereof, in the form of Exhibit A hereto, representing the right to
distributions as set forth herein.
Class C Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class C Certificates.
Class C Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class C Distributable Interest Rate on
a notional amount equal to the aggregate principal balance of the Lower Tier
REMIC Regular Interests immediately prior to such Distribution Date, plus the
interest portion of any previous distributions on such Class that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class C
Certificates.
Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
(other than the Class LT-IO Interest) over (b) two times the weighted average of
the interest rates on the Lower Tier REMIC I Marker Interests and the Class LTIX
Interest (treating for purposes of this clause (b) the interest rate on each of
the Lower Tier REMIC I Marker Interests as being subject to a cap and a floor
equal to the interest rate of the Corresponding REMIC Regular Interest of the
Corresponding Certificates (as adjusted to reflect the length of the Accrual
Period for the LIBOR Certificates) and treating the Class LTIX Interest as being
capped at zero). The averages described in the preceding sentence shall be
weighted on the basis of the respective principal balances of the Lower Tier
REMIC Regular Interests immediately prior to any date of determination.
Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class C Certificates.
Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class C Certificates pursuant to the last sentence of
the definition of "Certificate Principal Balance."
Class LTA-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificates and an interest rate equal to the Net
Rate.
Class LTA-2A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
-23-
Class LTA-2B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTA-2C Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTA-2D Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LT-IO Interest: An uncertificated regular interest in the Lower Tier
REMIC with the characteristics set forth in the description of the Lower Tier
REMIC in the Preliminary Statement.
Class LTIX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) 50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over (ii) the
initial principal balance of the Lower Tier REMIC I Marker Interests, and with
an interest rate equal to the Net Rate.
Class LTIIX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) 50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over (ii) the
initial principal balance of the Lower Tier REMIC II Marker Interests, and with
an interest rate equal to the Net Rate.
Class LTII1A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the excess of (i) the
aggregate Cut-off Date Principal Balance of the Group One Mortgage Loans over
(ii) the aggregate of the initial Certificate Principal Balances of Certificate
Group One, and with an interest rate equal to the Net Rate.
Class LTII1B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% the aggregate Cut-off
Date Principal Balance of the Group One Mortgage Loans, and with an interest
rate equal to the rate set forth in footnote 9 to the description of the Lower
Tier REMIC in the Preliminary Statement.
-24-
Class LTII2A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the excess of (i) the
aggregate Cut-off Date Principal Balance of the Group Two Mortgage Loans over
(ii) the aggregate of the initial Certificate Principal Balances of Certificate
Group Two, and with an interest rate equal to the Net Rate.
Class LTII2B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the aggregate Cut-off
Date Principal Balance of the Group Two Mortgage Loans and with an interest rate
equal to the rate set forth in footnote 10 to the description of the Lower Tier
REMIC in the Preliminary Statement.
Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-4 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-5 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-6 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTR Interest: The sole class of "residual interest" in the Lower Tier
REMIC.
Class M Certificates: Any of the Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5 and Class M-6 Certificates.
Class M Certificate Principal Balance: For any date of determination, the
sum of the Class M-1 Certificate Principal Balance, Class M-2 Certificate
Principal Balance, Class M-3 Certificate Principal Balance, Class M-4
Certificate Principal Balance, Class M-5 Certificate Principal Balance and Class
M-6 Certificate Principal Balance.
Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.
-25-
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1 Certificates.
Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-1 Certificates.
Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-1 Pass-Through Rate for the related Accrual Period.
Class M-1 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.360% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.540% per annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 5.140% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin, (2) the related Weighted Average Available Funds Cap
for such Distribution Date and (3) the related Weighted Average Maximum Rate Cap
for such Distribution Date.
Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance has been
reduced to zero and a Stepdown Trigger Event exists, or as long as a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the Class A
Certificate Principal Balance (after taking into account distributions of the
Class A Principal Distribution Amount on such Distribution Date) and (B) the
Class M-1 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 63.00% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balances for the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of Class A Certificates has been reduced to
zero, the Class M-1 Principal Distribution Amount will equal the lesser of (x)
the outstanding Certificate Principal Balance of the Class M-1 Certificates and
(y) 100% of the Principal Distribution Amount remaining after any distributions
on such Class A Certificates and (II) in no event will the Class M-1 Principal
Distribution Amount with respect to any Distribution Date exceed the Class M-1
Certificate Principal Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the
-26-
Certificate Principal Balance of such Class M-1 Certificates pursuant to the
last sentence of the definition of "Certificate Principal Balance."
Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-2 Certificates.
Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-2 Certificates.
Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-2 Pass-Through Rate for the related Accrual Period.
Class M-2 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.380% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.570% per annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 5.160% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the related Weighted Average Available Funds Cap
for such Distribution Date and (3) the related Weighted Average Maximum Rate Cap
for such Distribution Date.
Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance and the
Class M-1 Certificate Principal Balance have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal Balance (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date) and (C) the Class M-2 Certificate Principal
Balance immediately prior to such Distribution Date over (2) the lesser of (A)
69.50% of the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date and (B) the excess of the Stated Principal Balances of the
Mortgage Loans as of the end of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates and the Class M-1 Certificates has
-27-
been reduced to zero, the Class M-2 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class M-2
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A and Class M-1 Certificates and (II) in no
event will the Class M-2 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-2 Certificate Principal Balance.
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-3 Certificates.
Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-3 Certificates.
Class M-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-3 Pass-Through Rate on
the Class M-3 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-3 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-3 Certificates.
Class M-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-3 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-3 Pass-Through Rate for the related Accrual Period.
Class M-3 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.400% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.600% per annum.
Class M-3 Pass-Through Rate: For the first Distribution Date, 5.180% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-3 Margin, (2) the related Weighted Average Available Funds Cap
for such Distribution Date and (3) the related Weighted Average Maximum Rate Cap
for such Distribution Date.
Class M-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate Principal Balance
have been reduced to zero and a Stepdown Trigger Event exists, or as long as a
Stepdown
-28-
Trigger Event does not exist, the excess of (1) the sum of (A) the Class A
Certificate Principal Balance (after taking into account distributions of the
Class A Principal Distribution Amount on such Distribution Date), (B) the Class
M-1 Certificate Principal Balance (after taking into account distributions of
the Class M-1 Principal Distribution Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account distributions
of the Class M-2 Principal Distribution Amount on such Distribution Date) and
(D) the Class M-3 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 73.40% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of such Distribution
Date over the Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date on which the
Certificate Principal Balance of each Class of Class A Certificates, the Class
M-1 Certificates and the Class M-2 Certificates has been reduced to zero, the
Class M-3 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class M-3 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A, Class M-1 and Class M-2 Certificates and (II) in no event will the
Class M-3 Principal Distribution Amount with respect to any Distribution Date
exceed the Class M-3 Certificate Principal Balance.
Class M-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-4 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-4 Certificates.
Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-4 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-4 Certificates.
Class M-4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-4 Pass-Through Rate on
the Class M-4 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-4 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-4 Certificates.
Class M-4 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-4 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-4 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-4 Pass-Through Rate for the related Accrual Period.
-29-
Class M-4 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.500% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.750% per annum.
Class M-4 Pass-Through Rate: For the first Distribution Date, 5.280% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-4 Margin, (2) the related Weighted Average Available Funds Cap
for such Distribution Date and (3) the related Weighted Average Maximum Rate Cap
for such Distribution Date.
Class M-4 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, Class
M-1 Certificate Principal Balance, Class M-2 Certificate Principal Balance and
Class M-3 Certificate Principal Balance have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal Balance (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class M-2 Certificate Principal
Balance (after taking into account distributions of the Class M-2 Principal
Distribution Amount on such Distribution Date), (C) the Class M-3 Certificate
Principal Balance (after taking into account distributions of the Class M-3
Principal Distribution Amount on such Distribution Date) and (D) the Class M-4
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 76.90% of the Stated Principal Balances of the Mortgage
Loans as of such Distribution Date and (B) the excess of the Stated Principal
Balances for the Mortgage Loans as of such Distribution Date over the Minimum
Required Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates, the Class M-1 Certificates, the
Class M-2 Certificates and the Class M-3 Certificates has been reduced to zero,
the Class M-4 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class M-4 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A, Class M-1, Class M-2 and Class M-3 Certificates and (II) in no
event will the Class M-4 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-4 Certificate Principal Balance.
Class M-4 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-4 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-4 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-4 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-5 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-5 Certificates.
Class M-5 Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-5 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-5 Certificates.
-30-
Class M-5 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-5 Pass-Through Rate on
the Class M-5 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-5 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-5 Certificates.
Class M-5 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-5 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-5 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-5 Pass-Through Rate for the related Accrual Period.
Class M-5 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.520% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.780% per annum.
Class M-5 Pass-Through Rate: For the first Distribution Date, 5.300% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-5 Margin, (2) the related Weighted Average Available Funds Cap
for such Distribution Date and (3) the related Weighted Average Maximum Rate Cap
for such Distribution Date.
Class M-5 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, Class
M-1 Certificate Principal Balance, Class M-2 Certificate Principal Balance,
Class M-3 Certificate Principal Balance and Class M-4 Certificate Principal
Balance have been reduced to zero and a Stepdown Trigger Event exists, or as
long as a Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the Class A Certificate Principal Balance (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after
taking into account distributions of the Class M-2 Principal Distribution Amount
on such Distribution Date), (D) the Class M-3 Certificate Principal Balance
(after taking into account distributions of the Class M-3 Principal Distribution
Amount on such Distribution Date), (E) the Class M-4 Certificate Principal
Balance (after taking into account distributions of the Class M-4 Principal
Distribution Amount on such Distribution Date) and (F) the Class M-5 Certificate
Principal Balance immediately prior to such Distribution Date over (2) the
lesser of (A) 80.40% of the Stated Principal Balances of the Mortgage Loans as
of such Distribution Date and (B) the excess of the Stated Principal Balances
for the Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates, the Class M-1 Certificates, the
Class M-2 Certificates, the Class M-3 Certificates an the Class M-4 Certificates
has been reduced to zero, the Class M-5 Principal Distribution Amount will equal
the lesser of (x) the outstanding Certificate Principal Balance of the Class M-5
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A, Class M-1, Class M-2, Class M-3 and Class M-4
Certificates and (II) in no event will the Class M-5 Principal Distribution
Amount with respect to any Distribution Date exceed the Class M-5 Certificate
Principal Balance.
-31-
Class M-5 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-5 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-5 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-5 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-6 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-6 Certificates.
Class M-6 Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class M-6 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-6 Certificates.
Class M-6 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-6 Pass-Through Rate on
the Class M-6 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or Class M-6 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-6 Certificates.
Class M-6 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-6 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-6 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-6 Pass-Through Rate for the related Accrual Period.
Class M-6 Margin: As of any Distribution Date up to and including the
Initial Optional Termination Date, 0.620% per annum and, as of any Distribution
Date after the Initial Optional Termination Date, 0.930% per annum.
Class M-6 Pass-Through Rate: For the first Distribution Date, 5.400% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-6 Margin, (2) the related Weighted Average Available Funds Cap
for such Distribution Date and (3) the related Weighted Average Maximum Rate Cap
for such Distribution Date.
Class M-6 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Class A Certificate Principal Balance, Class
M-1 Certificate Principal Balance, Class M-2 Certificate Principal Balance,
Class M-3 Certificate Principal Balance, Class M-4 Certificate Principal Balance
and Class M-5 Certificate Principal Balance have been reduced to zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the Class A Certificate Principal
Balance (after taking into account distributions of the Class A Principal
Distribution Amount on such Distribution Date), (B) the Class M-1 Certificate
Principal Balance (after taking into account distributions of the Class M-1
Principal Distribution Amount on such Distribution Date), (C) the Class M-2
Certificate Principal Balance (after taking into account distributions of the
Class M-2 Principal
-32-
Distribution Amount on such Distribution Date), (D) the Class M-3 Certificate
Principal Balance (after taking into account distributions of the Class M-3
Principal Distribution Amount on such Distribution Date), (E) the Class M-4
Certificate Principal Balance (after taking into account distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date), (F) the
Class M-5 Certificate Principal Balance (after taking into account distributions
of the Class M-5 Principal Distribution Amount on such Distribution Date), and
(G) the Class M-6 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 83.60% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of such Distribution
Date over the Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date on which the
Certificate Principal Balance of each Class of Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, the Class M-3 Certificates, the
Class M-4 Certificates and the Class M-5 Certificates has been reduced to zero,
the Class M-6 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class M-6 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5
Certificates and (II) in no event will the Class M-6 Principal Distribution
Amount with respect to any Distribution Date exceed the Class M-6 Certificate
Principal Balance.
Class M-6 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-6 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-6 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-6 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class P Certificate: Any Certificate designated as a Class P Certificate on
the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.
Class R Certificate: The Class R Certificate executed by the Trustee and
authenticated by the Trustee in substantially the form set forth in Exhibit A.
Class R Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class R Certificate.
Class R Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class R Pass-Through Rate on the Class
R Certificate Principal Balance as of such Distribution Date plus the portion of
any previous distributions on such Class in respect of Current Interest or a
Class R Interest Carry Forward Amount that is recovered as a voidable preference
by a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class R Certificate. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class R Interest Carry Forward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class R
Certificate with respect to interest on such prior Distribution Dates and (2)
interest on such excess (to the extent permitted by applicable law) at the Class
R Pass-Through Rate for the related Accrual Period.
-33-
Class R Margin: As of any Distribution Date up to and including the Initial
Optional Termination Date for the Certificates, 0.180% per annum and, as of any
Distribution Date after the Initial Optional Termination Date, 0.360% per annum.
Class R Pass-Through Rate: For the first Distribution Date, 4.960% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Class A-1 Available Funds Cap for such
Distribution Date and (3) the Class A-1 Maximum Rate Cap for such Distribution
Date.
Class SWR Interest: The sole class of "residual interest" in the SWAP
REMIC.
Closing Date: March 21, 2006.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: The separate Eligible Accounts created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated, "Wilshire
Credit Corporation, as servicer for LaSalle Bank National Association, as
trustee, in trust for registered holders of Xxxxxxx Xxxxx Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-RM1". Funds in the
Collection Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement.
Combined Loan-to-Value Ratio: The fraction, expressed as a percentage, the
numerator of which is the sum of (1) the original principal balance of the
related Mortgage Loan and (2) any outstanding principal balances of Mortgage
Loans the liens on which are senior to the lien on such related Mortgage Loan
(such sum calculated at the date of origination of such related Mortgage Loan)
and the denominator of which is the lesser of (A) the Appraised Value of the
related Mortgaged Property and (B) the sales price of the related Mortgaged
Property at time of origination.
Commission: The Securities and Exchange Commission.
Compensating Interest: For any Distribution Date and all Principal
Prepayments in full in respect of a Mortgage Loan that are received during the
period from the first day of the related Prepayment Period through the last day
of the calendar month preceding such Distribution Date, a payment made by the
Servicer in an amount not to exceed the product of (a) one-twelfth of 0.25% and
(b) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date, equal to the amount of interest at the Net Mortgage Rate for
that Mortgage Loan from the date of prepayment through the 30th day of such
preceding calendar month; provided that any month consisting of less than 30
days shall be deemed to consist of 30 days.
Corresponding Certificates: With respect to the Class LTA-1 Interest, the
Class A-1 and Class R Certificates. With respect to the Class LTA-2A Interest,
the Class A-2A Certificates. With respect to the Class LTA-2B Interest, the
Class A-2B Certificates. With respect to the Class LTA-2C Interest, the Class
A-2C Certificates. With respect to the Class LTA-2D Interest, the Class A-2D
Certificates. With respect to the Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class LTM-2 Interest, the Class M-2
Certificates. With respect to the Class LTM-3 Interest, the Class M-3
Certificates. With respect to the Class LTM-4 Interest, the Class M-4
Certificates. With respect to the Class LTM-5 Interest, the Class M-5
Certificates. With respect to the Class LTM-6 Interest, the Class M-6
Certificates.
-34-
With respect to the Class LTB-1 Interest, the Class B-1 Certificates. With
respect to the Class LTB-2 Interest, the Class B-2 Certificates. With respect to
the Class LTB-3 Interest, the Class B-3 Certificates.
Corresponding REMIC Regular Interest: For each Class of Certificates, the
interest in the Upper Tier REMIC listed on the same row in the table entitled
"Upper Tier REMIC" in the Preliminary Statement.
Current Interest: Any of the Class A-1 Current Interest, the Class A-2A
Current Interest, the Class A-2B Current Interest, the Class A-2C Current
Interest, the Class A-2D Current Interest, the Class R Current Interest, the
Class M-1 Current Interest, the Class M-2 Current Interest, the Class M-3
Current Interest, the Class M-4 Current Interest, the Class M-5 Current
Interest, the Class M-6 Current Interest, the Class B-1 Current Interest, the
Class B-2 Current Interest, the Class B-3 Current Interest and the Class C
Current Interest.
Custodial Agreement: The Custodial Agreement, dated as of March 21, 2006,
by and between the Custodian and the Trustee.
Custodian: Xxxxx Fargo Bank, N.A.
Cut-off Date: March 1, 2006.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates after
the Cut-off Date.
Defaulted Swap Termination Payment: Any payment required to be made by the
Supplemental Interest Trust to the Swap Counterparty pursuant to the Swap
Agreement as a result of an event of default under the Swap Agreement with
respect to which the Swap Counterparty is the defaulting party or a termination
event (including a Downgrade Termination Event) under that agreement (other than
illegality or a tax event) with respect to which the Swap Counterparty is the
sole Affected Party (as defined in the Swap Agreement).
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month. With
respect to any Mortgage Loan due on any day other than the first day of the
month, such Mortgage Loan shall be deemed to be due on the first day of the
immediately succeeding month. Similarly for "60 days delinquent," "90 days
delinquent" and so on.
-35-
Denomination: With respect to each Certificate, the amount set forth on the
face thereof as the "Initial Principal Balance of this Certificate."
Depositor: Xxxxxxx Xxxxx Mortgage Investors, Inc., a Delaware corporation,
or any successor in interest.
Depository: The initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
Depository Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Transaction: A transaction in which the assets underlying the
Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial mortgage obligations that
are secured by single-family residential, multi-family residential, commercial
real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th day of
the month of such Distribution Date or, if such 15th day is not a Business Day,
the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (2) any organization
(other than a cooperative described in Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such organization is
subject to the tax imposed by Section 511 of the Code and (3) any organization
described in Section 1381(a)(2)(C) of the Code.
Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such 25th day is not a Business Day, the
next succeeding Business Day, commencing in April 2006.
Downgrade Termination Event: An event whereby (x) the Swap Counterparty (or
its guarantor) ceases to have short term unsecured and/or long term debt ratings
at least equal to the levels specified in the Swap Agreement, and (y) at least
one of the following events has not occurred (except to the extent otherwise
approved by the Rating Agencies): (i) 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 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
-36-
made a credit support document for the Swap Counterparty pursuant to an
amendment to the Swap Agreement.
Due Date: With respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which a Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period beginning on
the second day of the calendar month preceding the calendar month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
Eligible Account: An account that is (1) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (2) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee
and each Rating Agency, the Certificateholders have a claim with respect to the
funds in such account and a perfected first security interest against any
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, or (v) maintained
at an eligible institution whose commercial paper, short-term debt or other
short-term deposits are rated at least A-1+ by S&P and F-1+ by Fitch, or (vi)
maintained with a federal or state chartered depository institution the deposits
in which are insured by the FDIC to the applicable limits and the short-term
unsecured debt obligations of which (or, in the case of a depository institution
that is a subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated A-1 by S&P, F-1 by Fitch or
Prime-1 by Moody's at the time any deposits are held on deposit therein, (vii) a
trust account or accounts maintained with the corporate trust department of a
federal or state chartered depository institution or trust company having
capital and surplus of not less than $50,000,000 or (viii) otherwise acceptable
to each Rating Agency, as evidenced by a letter from each Rating Agency to the
Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements would
satisfy the requirements of Prohibited Transaction Exemption 90-29, Exemption
Application No. D-8012, 55 Fed. Reg. 21459 (1990), as amended, granted 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
S&P, Moody's or Fitch.
ERISA Restricted Certificates: The Class C Certificates and Class P
Certificates and any other Certificate, as long as the acquisition and holding
of such Certificate is not covered by and exempt under an underwriter's
exemption.
-37-
Event of Default: As defined in Section 7.01 hereof.
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 Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Extra Principal Distribution Amount: With respect to any Distribution Date,
(1) prior to the Stepdown Date, the excess of (A) the sum of (i) the Aggregate
Certificate Principal Balance immediately preceding such Distribution Date
reduced by the Principal Funds with respect to such Distribution Date and (ii)
$20,452,931 and over (B) the aggregate Stated Principal Balance of the Mortgage
Loans as of such Distribution Date and (2) on and after the Stepdown Date, (A)
the sum of (x) the Aggregate Certificate Principal Balance immediately preceding
such Distribution Date, reduced by the Principal Funds with respect to such
Distribution Date and (y) the greater of (a) 1.00% of the aggregate Stated
Principal Balance of the Mortgage Loans and (b) the Minimum Required
Overcollateralization Amount less (B) the aggregate Stated Principal Balance of
the Mortgage Loans as of such Distribution Date; provided, however, that if on
any Distribution Date a Stepdown Trigger Event is in effect, the Extra Principal
Distribution Amount will not be reduced to the applicable percentage of the
then-current aggregate Stated Principal Balance of the Mortgage Loans (and will
remain fixed at the applicable percentage of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Due Date immediately prior to the
Stepdown Trigger Event) until the next Distribution Date on which the Stepdown
Trigger Event is not in effect.
Xxxxxx Xxx: A federally chartered and privately owned corporation organized
and existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Fitch: Fitch, Inc., or any successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate that is fixed.
Floating Rate Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for a class of Class A, Class M or Class
B Certificates is based upon the related Available Funds Cap, the excess of (1)
the amount of interest that such Class would have been entitled to receive on
such Distribution Date had the Pass-Through Rate for that Class not been
calculated based on the related Available Funds Cap, up to but not exceeding
greater of (x) the related Maximum Rate Cap or (y) the sum of (i) the related
Available Funds Cap and (ii) the product of (A) a fraction, the numerator of
-38-
which is 360 and the denominator of which is the actual number of days in the
related Accrual Period and (B) the quotient obtained by dividing (I) an amount
equal to the proceeds, if any, payable under the related Cap Contract with
respect to such Distribution Date by (II) the aggregate Certificate Principal
Balance of each of the Classes of Certificates to which such Cap Contract
relates for such Distribution Date over (2) the amount of interest such class
was entitled to receive on such Distribution Date based on the related Available
Funds Cap, together with (i) the unpaid portion of any such excess from prior
Distribution Dates (and interest accrued thereon at the then applicable
Pass-Through Rate, without giving effect to the applicable Available Funds Cap)
and (ii) any amount previously distributed with respect to Floating Rate
Certificate Carryover for such class that is recovered as a voidable preference
by a trustee in bankruptcy.
Floating Rate Subordinate Certificates: The Class M-1, Class M-2, Class
M-3, Class M-4, Class M-5, Class M-6, Class B-1 and Class B-3 Certificates.
Floating Rate Subordinate Certificates Cap Contract: The confirmation and
agreement between the Trust Fund or the Trustee and the Cap Contract
Counterparty (in the form of Exhibit M-3 hereto).
Floating Rate Subordinate Certificates Cap Contract Notional Balance: With
respect to any Distribution Date, the Floating Rate Subordinate Certificates Cap
Contract Notional Balance set forth for such Distribution Date in the Floating
Rate Subordinate Certificates One-Month LIBOR Cap Table attached hereto as
Exhibit N-3.
Floating Rate Subordinate Certificates Cap Contract Termination Date: The
Distribution Date in September 2006.
Xxxxxxx Mac: A corporate instrumentality of the United States created and
existing under Title III of the Emergency Home Finance Act of 1970, as amended,
or any successor thereto.
Grantor Trusts: The grantor trusts described in Section 2.07 hereof.
Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Group One: The portion of the Mortgage Pool identified as "Group One" in
the Prospectus Supplement.
Group One Mortgage Loan: Any Mortgage Loan at any time identified in the
Group One Mortgage Loan Schedule attached hereto as Exhibit B-2.
Group One Net WAC: The Net WAC of Group One.
Group One Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-1 and Class R Certificates and (ii) the product of (x) the Group One
Principal Distribution Percentage and (y) the Class A Principal Distribution
Amount; provided, however, that with respect to any Distribution Date on which
the Class A-1 and Class R Certificates are outstanding and the Certificate
Principal Balance of the Class X-0
-00-
Xxxxxxxxxxxx has been reduced to zero, the Group One Principal Distribution
Amount will equal the Class A Principal Distribution Amount.
Group One Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group One and the denominator of which is the amount of Principal Funds received
from all of the Mortgage Loans in the mortgage pool.
Group Two: The portion of the Mortgage Pool identified as "Group Two" in
the Prospectus Supplement.
Group Two Mortgage Loan: Any Mortgage Loan at any time identified in the
Group Two Mortgage Loan Schedule attached hereto as Exhibit B-3.
Group Two Net WAC: The Net WAC of Group Two.
Group Two Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-2 Certificates and (ii) the product of (x) the Group Two Principal
Distribution Percentage and (y) the Class A Principal Distribution Amount;
provided, however, that with respect to any Distribution Date on which the Class
A-2 Certificates are outstanding and the Certificate Principal Balances of the
Class A-1 and Class R Certificates have been reduced to zero, the Group Two
Principal Distribution Amount will equal the Class A Principal Distribution
Amount.
Group Two Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group Two and the denominator of which is the amount of Principal Funds received
from all of the Mortgage Loans in the mortgage pool.
Indenture: An indenture relating to the issuance of notes guaranteed by the
NIMs Insurer.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the first
Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Principal Balance: With respect to any Certificate, the
Certificate Principal Balance of such Certificate or any predecessor Certificate
on the Closing Date as set forth in Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
Initial Optional Termination Date: The first Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans (or if such Mortgage
Loan is an REO Property, the fair market value of such REO Property) is equal to
or less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.
Insurance Policy: With respect to any Mortgage Loan or the related
Mortgaged Property included in the Trust Fund, any insurance policy, including
all riders and endorsements thereto in effect
-40-
with respect to such Mortgage Loan or Mortgaged Property, including any
replacement policy or policies for any insurance policies.
Insurance Proceeds: Proceeds paid in respect of a Mortgage Loan or the
related Mortgaged Property pursuant to any Insurance Policy or any other
insurance policy covering such Mortgage Loan or Mortgaged Property, to the
extent such proceeds are payable to the mortgagee under the Mortgage, the
Servicer or the Trustee under the deed of trust and are not applied to the
restoration of the related Mortgaged Property or released either to the
Mortgagor or to the holder of a senior lien on the related Mortgaged Property in
accordance with the procedures that the Servicer would follow in servicing
mortgage loans held for its own account, in each case other than any amount
included in such Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to a Mortgage Loan or the related Mortgaged
Property.
Interest Carry Forward Amount: Any of the Class A-1 Interest Carry Forward
Amount, the Class A-2A Interest Carry Forward Amount, the Class A-2B Interest
Carry Forward Amount, the Class A-2C Interest Carry Forward Amount, the Class
A-2D Interest Carry Forward Amount, the Class R Interest Carry Forward Amount,
the Class M-1 Interest Carry Forward Amount, the Class M-2 Interest Carry
Forward Amount, the Class M-3 Interest Carry Forward Amount, the Class M-4
Interest Carry Forward Amount, the Class M-5 Interest Carry Forward Amount, the
Class M-6 Interest Carry Forward Amount, the Class B-1 Interest Carry Forward
Amount, the Class B-2 Interest Carry Forward Amount, the Class B-3 Interest
Carry Forward Amount or the Class C Interest Carry Forward Amount, as the case
may be.
Interest Determination Date: With respect to the Offered Certificates
(other than the Class A-2B, Class A-2C, Class A-2D and Class B-2 Certificates),
(i) for any Accrual Period other than the first Accrual Period, the second LIBOR
Business Day preceding the commencement of such Accrual Period and (ii) for the
first Accrual Period, March 17, 2006.
Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee, (2) all Advances
relating to interest with respect to the Mortgage Loans, (3) all Compensating
Interest with respect to the Mortgage Loans, (4) Liquidation Proceeds with
respect to the Mortgage Loans (to the extent such Liquidation Proceeds relate to
interest) collected during the related Prepayment Period, (5) all proceeds of
any purchase pursuant to Section 2.02 or 2.03 during the related Prepayment
Period or pursuant to Section 9.01 not later than the related Determination Date
(to the extent that such proceeds relate to interest) less the Servicing Fee and
(6) all Prepayment Charges received with respect to the Mortgage Loans during
the related Prepayment Period, less (A) all Non-Recoverable Advances relating to
interest and (B) other amounts reimbursable (including without limitation
indemnity payments) to the Servicer and the Trustee pursuant to this Agreement
allocable to interest.
Issuing Entity: Xxxxxxx Xxxxx Mortgage Investors Trust, Series 2006-RM1.
Latest Possible Maturity Date: The latest maturity date for any Mortgage
Loan in the Trust Fund plus one year.
-00-
XXXXX Xxxxxxxx Day: Any day on which banks in the City of London, England,
Chicago, Illinois and New York City, U.S.A. are open and conducting transactions
in foreign currency and exchange.
LIBOR Certificates: The Class A-1, Class A-2A, Class M, Class B (other than
Class B-2) and Class R Certificates.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as provided
by applicable law governing the real property subject to the related Mortgage
and any security agreements and as to which the Servicer has certified (in
accordance with Section 3.12) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such liquidation
or (b) as to which is not a first lien Mortgage Loan and is delinquent 180 days
or longer, Servicer has certified in a certificate of an officer of the Servicer
delivered to the Trustee that it does not believe that there is a reasonable
likelihood that any further net proceeds will be received or recovered with
respect to such Mortgage Loan.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of Mortgage Loans, whether
through trustee's sale, foreclosure sale, sale by the Servicer pursuant to this
Agreement or otherwise or amounts received in connection with any condemnation
or partial release of a Mortgaged Property and any other proceeds received in
connection with an REO Property, less the sum of related unreimbursed Advances,
Servicing Fees, Servicing Advances and any other expenses related to such
Mortgage Loan.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (X) the Appraised Value of the related Mortgaged Property and (Y) the sales
price of the related Mortgaged Property at the time of origination.
Losses: Any losses, claims, damages, liabilities or expenses collectively.
Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.
Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the Class
LTA-2A Interest, the Class LTA-2B Interest, the Class LTA-2C Interest, the Class
LTA-2D Interest, the Class LTM-1 Interest, the Class LTM-2 Interest, the Class
LTM-3 Interest, the Class LTM-4 Interest, the Class LTM-5 Interest, the Class
LTM-6 Interest, the Class LTB-1 Interest, the Class LTB-2 Interest, the Class
LTB-3 Interest, the Class LTIX Interest, the Class LTIIX Interest, the Class
LTII1A Interest, the Class LTII1B Interest, the Class LTII2A Interest, the Class
LTII2B Interest, the Class LT-IO Interest and the Class LTR Interest.
Lower Tier REMIC I Marker Interests: Each of the classes of Lower Tier
REMIC Regular Interests other than the Class LTIX Interest, the Class LTIIX
Interest, the Class LTII1A Interest, the Class LTII1B Interest, the Class LTII2A
Interest, the Class LTII2B Interest and the Class LT-IO Interest.
Lower Tier REMIC II Marker Interests: Each of the Class LTII1A Interest,
the Class LTII1B Interest, the Class LTII2A Interest and the Class LTII2B
Interest.
-00-
Xxxxx Xxxx REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.
Lower Tier REMIC Subordinated Balance Ratio: The ratio of (i) the principal
balance of the Class LTII1A Interest to (ii) the principal balance of the Class
LTII2A Interest that is equal to the ratio of (i) the excess of (A) the
aggregate Stated Principal Balance of Group One over (B) the current Certificate
Principal Balance of the Class A-1 and Class R Certificates to (ii) the excess
of (A) the aggregate Stated Principal Balance of Group Two over (B) the current
Certificate Principal Balance of the Class A-2 Certificates.
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the maximum rate of interest set forth as such in the related Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest set forth in
the related Mortgage Note.
Maximum Rate Cap: Any of the Class A-1 Maximum Rate Cap, the Class A-2
Maximum Rate Cap or the Weighted Average Maximum Rate Cap.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgage electronically
maintained by MERS.
MIN: The loan number for any MERS Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the minimum rate of interest set forth as such in the related Mortgage Note.
Minimum Required Overcollateralization Amount: An amount equal to the
product of (x) 0.50% and (y) the Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.
MLML: Xxxxxxx Xxxxx Mortgage Lending, Inc., a Delaware corporation, or its
successors in interest.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee, solely
as nominee for the originator of such Mortgage Loan and its successors and
assigns.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: Xxxxx'x Investors Service, Inc. or any successor in interest.
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust or
other instrument with all riders thereto creating a first or second lien or a
first or second priority ownership interest in an estate in fee simple in real
property securing a Mortgage Note.
-43-
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Group: Either of Group One or Group Two.
Mortgage Loans: Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to time
amended by the Trustee to reflect the deletion of Deleted Mortgage Loans and the
addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement transferred to the Trustee as part of the Trust Fund and from time to
time subject to this Agreement, attached hereto as Exhibits X-0, X-0 and B-3,
setting forth the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) borrower name and address;
(iii) the unpaid principal balance of the Mortgage Loans;
(iv) the Initial Mortgage Rate;
(v) the original maturity date and the months remaining before
maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment due date of the Mortgage Loan;
(ix) the Loan-to-Value Ratio at origination with respect to a Mortgage
Loan;
(x) a code indicating whether the residential dwelling at the time of
origination was represented to be owner-occupied;
(xi) a code indicating the property type;
(xii) with respect to each Adjustable Rate Mortgage Loan;
(A) the frequency of each Adjustment Date;
(B) the next Adjustment Date;
-44-
(C) the Maximum Mortgage Rate;
(D) the Minimum Mortgage Rate;
(E) the Mortgage Rate as of the Cut-off Date;
(F) the related Periodic Rate Cap;
(G) the Gross Margin;
(H) the lifetime rate cap;
(xiii) location of the related Mortgaged Property;
(xiv) a code indicating whether a Prepayment Charge is applicable;
(A) the period during which such Prepayment Charge is in effect;
(B) the amount of such Prepayment Charge;
(C) any limitations or other conditions on the enforceability of
such Prepayment Charge; and
(D) any other information pertaining to the Prepayment Charge
specified in the related Mortgage Note;
(xv) the Credit Score and date obtained; and
(xvi) the MIN.
Mortgage Note: The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan and all
amendments, modifications and attachments thereto with all riders attached
thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum
rate equal to the then current Mortgage Rate less the Servicing Fee Rate.
Net Rate: The per annum rate set forth in footnote 8 to the description of
the Lower Tier REMIC in the Preliminary Statement hereto (such rate being based
on the weighted average of the interest rates on the SWAP REMIC Regular
Interests as adjusted and as set forth in such footnote).
-45-
Net Swap Payment: With respect to any Distribution Date, any net payment
(other than a Swap Termination Payment or Defaulted Swap Termination Payment)
made by the Supplemental Interest Trust to the Swap Counterparty on the related
Fixed Rate Payer Payment Date (as defined in the Swap Agreement) or made by the
Swap Counterparty to the Supplemental Interest Trust on the related Floating
Rate Payer Payment Date (as defined in the Swap Agreement). In each case, the
Net Swap Payment shall not be less than zero.
Net WAC: With respect to any Distribution Date and for any Mortgage Group,
the weighted average Net Mortgage Rate for the Mortgage Loans in such Mortgage
Group calculated based on the respective Net Mortgage Rates and the Stated
Principal Balances of such Mortgage Loans as of the preceding Distribution Date
(or, in the case of the first Distribution Date, as of the Cut-off Date).
NIM Notes: The notes to be issued pursuant to the Indenture.
NIMs Insurer: Any of the one or more insurers, if any, that is guaranteeing
certain payments under any NIM Notes; provided, that upon the payment in full of
the NIM Notes, all rights of the NIMs Insurer hereunder shall terminate.
NIMs Insurer Default: As defined in Section 10.13.
Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise related to the Mortgage Loans.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise related to the Mortgage
Loans.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A, Class M and Class B Certificates.
Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, or
Trustee, the Servicer (or any other officer customarily performing functions
similar to those performed by any of the above designated officers and to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with a particular subject) or (2), if
provided for in this Agreement, signed by a Servicing Officer, as the case may
be, and delivered to the Depositor, the Servicer or the Trustee, as the case may
be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate determined by
the Trustee on the related Interest Determination Date on the basis of (a) the
offered rates for one-month United States dollar deposits, as such rates appear
on Telerate page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date or (b) if such rate does not appear on Telerate Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference Banks for
one-month United States dollar deposits, as
-46-
such rates appear on the Reuters Screen LIBO Page, as of 11:00 a.m. (London
time) on such Interest Determination Date. If One-Month LIBOR is determined
pursuant to clause (b) above, on each Interest Determination Date, One-Month
LIBOR for the related Accrual Period will be established by the Trustee as
follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the nearest
whole multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the higher of (i) One-Month LIBOR
as determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer reasonably acceptable to each addressee of such
opinion; provided, however, that with respect to Section 6.04 or 10.01, or the
interpretation or application of the REMIC Provisions, such counsel must (1) in
fact be independent of the Depositor or the Servicer, (2) not have any direct
financial interest in the Depositor or the Servicer or in any Affiliate of
either such party, and (3) not be connected with the Depositor or the Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
Optional Termination: The termination of the trust hereunder pursuant to
clause (a) of Section 9.01 hereof.
Optional Termination Amount: The repurchase price received by the Trustee
in connection with any repurchase of all of the Mortgage Loans pursuant to
Section 9.01.
Optional Termination Price: On any date after the Initial Optional
Termination Date an amount equal to the sum of (i) the then aggregate
outstanding Stated Principal Balance of the Mortgage Loans (or, if such Mortgage
Loan is an REO Property, the fair market value of such REO Property) plus
accrued interest thereon at the applicable Mortgage Rate through the Due Date in
the month in which the Optional Termination Price is to be distributed to the
Certificateholders; (ii) any unreimbursed out-of-pocket costs and expenses owed
to the Trustee or the Servicer, any unpaid or unreimbursed Servicing Fees,
Trustee Fees and all unreimbursed Advances and Servicing Advances, in each case
incurred by such party in the performance of its obligations; (iii) any
unreimbursed costs, penalties and/or damages incurred by the Trust Fund in
connection with any violation relating to any of the Mortgage Loans of any
predatory or abusive lending law; and (iv) any Swap Termination Payment, other
than a Defaulted Swap Termination Payment, owed to the Swap Counterparty.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.
-47-
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).
Ownership Interest: As to any Certificate, any ownership interest in such
Certificate including any interest in such Certificate as the Holder thereof and
any other interest therein, whether direct or indirect, legal or beneficial.
Pass-Through Rate: With respect to any Class of Certificates, the
corresponding Pass-Through Rate for such Class of Certificates.
Percentage Interest: With respect to:
(i) any Class, the percentage interest in the undivided beneficial
ownership interest evidenced by such Class which shall be equal
to the Certificate Principal Balance of such Class divided by the
aggregate Certificate Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced thereby of the
related Class shall equal the percentage obtained by dividing the
Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of such Class; except that in
the case of any Class P Certificates, the Percentage Interest
with respect to such Certificate shown on the face of such
Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the related
Mortgage Note, the provision therein that limits permissible increases and
decreases in the Mortgage Rate on any Adjustment Date.
Permitted Activities: The primary activities of the trust created pursuant
to this Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor and other
assets of the Trust Fund, including the Cap Contracts and the
Supplemental Interest Trust subtrust, which in turn holds the
Swap Agreement, and any credit enhancement and passive derivative
financial instruments that pertain to beneficial interests issued
or sold to parties other than the Depositor, its Affiliates, or
its agents;
(ii) issuing Certificates and other interests in the assets of the
Trust Fund;
(iii) through the appropriate subtrust, as applicable, receiving
collections on the Mortgage Loans and the Swap Agreement and
making payments on such Certificates and interests in accordance
with the terms of this Agreement; and
-48-
(iv) engaging in other activities that are necessary or incidental to
accomplish these limited purposes, which activities cannot be
contrary to the status of the Trust Fund as a qualified special
purpose entity under existing accounting literature.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof, provided
the timely payment of such obligations is backed by the full
faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by any state of
the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates;
(iii) commercial or finance company paper, other than commercial or
finance company paper issued by the Depositor, the Trustee or any
of their Affiliates, which is then receiving the highest
commercial or finance company paper rating of each such Rating
Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances (other than banker's acceptances issued by the
Trustee or any of its Affiliates) issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to supervision
and examination by federal and/or state banking authorities,
provided that the commercial paper and/or long term unsecured
debt obligations of such depository institution or trust company
are then rated one of the two highest long-term and the highest
short-term ratings of each such Rating Agency for such
securities;
(v) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation rated in the two highest long-term
or the highest short-term ratings of each Rating Agency
containing, at the time of the issuance of such agreements, such
terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by any
such Rating Agency as evidenced by a letter from each Rating
Agency;
(vii) repurchase obligations with respect to any security described in
clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (v) above;
(viii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the
face amount thereof) bearing interest or sold at a discount
issued by any corporation, other than the Trustee or any of its
Affiliates, incorporated under the laws of the United States or
any state thereof
-49-
which, at the time of such investment, have one of the two
highest long term ratings of each Rating Agency;
(ix) interests in any money market fund (including those managed or
advised by the Trustee or its Affiliates), which at the date of
acquisition of the interests in such fund and throughout the time
such interests are held in such fund has the highest applicable
long term rating by each Rating Agency rating such fund; and
(x) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the
United States or any state thereof, other than the Trustee or any
of its Affiliates, which on the date of acquisition has been
rated by each such Rating Agency in their respective highest
applicable rating category;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer shall receive an Opinion of Counsel, at the
expense of the party requesting that such investment be made, to the effect that
such investment will not adversely affect the status of the any REMIC provided
for herein as a REMIC under the Code or result in imposition of a tax on the
Trust Fund or any REMIC provided for herein and (II) each such investment must
be a "permitted investment" within the meaning of Section 860G(a)(5) of the
Code. Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with respect to the
Class R Certificate, (iv) rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or
resident of the United States, a corporation or partnership (or other entity
treated as a corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United States or any
State thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor and the Trustee with a duly completed
Internal Revenue Service Form
-50-
W-8ECI or applicable successor form. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in Section 7701
of the Code. A corporation will not be treated as an instrumentality of the
United States or of any State thereof for these purposes if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such government unit.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances, as of such Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.
Preference Claim: The meaning set forth in Section 4.04(j) hereof.
Prepayment Assumption: A rate of prepayment, as described in the Prospectus
Supplement in the definition of "Modeling Assumptions," relating to the Offered
Certificates.
Prepayment Charges: Any prepayment premium or charge payable by a Mortgagor
in connection with any Principal Prepayment on a Mortgage Loan pursuant to the
terms of the related Mortgage Note or Mortgage, as applicable.
Prepayment Interest Excess: With respect to any Servicer Remittance Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the first
day of the calendar month in which such Servicer Remittance Date occurs and the
last day of the related Prepayment Period, an amount equal to interest (to the
extent received) at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the first day of the
calendar month in which such Servicer Remittance Date occurs and ending on the
date on which such Principal Prepayment is so applied.
Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full (other
than a Principal Prepayment in full resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof and other than a Principal
Prepayment in full on a Mortgage Loan received during the period from and
including the first day to and including the 14th day of the month of such
Distribution Date), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the preceding Distribution Date exceeds (ii) the amount of interest
paid or collected in connection with such Principal Prepayment.
Prepayment Period: With respect to any Distribution Date, the period
beginning with the opening of business on the 15th day of the calendar month
preceding the month in which such Distribution Date occurs (or in the case of
the first Distribution Date, beginning with the opening of business on the
Cut-off Date) and ending on the close of business on the 14th day of the month
in which such Distribution Date occurs.
-00-
Xxxxxxxxx Xxxxxxxxxxxx Xxxxxx: With respect to each Distribution Date, the
sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1) the scheduled principal due during
the related Due Period and received before the related Servicer Remittance Date
or advanced on or before the related Servicer Remittance Date, (2) prepayments
in full collected in the related Prepayment Period, (3) the Stated Principal
Balance of each Mortgage Loan that was purchased by the Depositor during the
related Prepayment Period or, in the case of a purchase pursuant to Section
9.01, on the Business Day prior to such Distribution Date, (4) the amount, if
any, by which the aggregate unpaid principal balance of any Replacement Mortgage
Loan is less than the aggregate unpaid principal of the related Deleted Mortgage
Loans delivered by the Sponsor in connection with a substitution of a Mortgage
Loan pursuant to Section 2.03(c), (5) all Liquidation Proceeds collected during
the related Prepayment Period (to the extent such Liquidation Proceeds relate to
principal and represent payment in full), (6) all Subsequent Recoveries received
during the related Due Period and (7) all other collections and recoveries in
respect of principal during the related Due Period, less (A) all Non-Recoverable
Advances relating to principal with respect to the Mortgage Loans and (B) other
amounts reimbursable (including without limitation indemnity payments) to the
Servicer and the Trustee pursuant to this Agreement allocable to principal.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03 and 9.01 hereof) that is
received or recovered in advance of its scheduled Due Date and is not
accompanied by an amount as to interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of prepayment.
Partial Principal Prepayments shall be applied by the Servicer in accordance
with the terms of the related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated March 17, 2006,
relating to the public offering of the Offered Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Sponsor or the Transferor pursuant to Section 2.02 or 2.03
hereof, an amount equal to the sum of (i) 100% of the unpaid principal balance
of the Mortgage Loan as of the date of such purchase together with any
unreimbursed Servicing Advances, (ii) accrued interest thereon at the applicable
Mortgage Rate from (a) the date through which interest was last paid by the
Mortgagor to (b) the Due Date in the month in which the Purchase Price is to be
distributed to Certificateholders and (iii) any unreimbursed costs, penalties
and/or damages incurred by the Trust Fund in connection with any violation
relating to such Mortgage Loan of any predatory or abusive lending law.
QIB: A "qualified institutional buyer" within the meaning of Rule 144A.
Rating Agency: Either of S&P or Xxxxx'x. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
-52-
Rating Agency Condition: As defined in the Swap Agreement.
Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer with respect
thereto (net of reimbursement of Advances and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to a Mortgage
Loan which is not a Liquidated Loan, any amount of principal that the Mortgagor
is no longer legally required to pay (except for the extinguishment of debt that
results from the exercise of remedies due to default by the Mortgagor).
Record Date: With respect to the first Distribution Date, the Closing Date.
With respect to any other Distribution Date, the close of business on the last
Business Day of the month preceding the month in which the applicable
Distribution Date occurs.
Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank,
N.A., Xxxxx Fargo Bank, N.A. and NatWest, N.A.; provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, England, (ii) whose quotations appear on the Reuters
Screen LIBO Page on the relevant Interest Determination Date and (iii) which
have been designated as such by the Servicer.
Regular Certificate: Any one of the Class A, Class M and Class B
Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005)) or by the staff of
the Commission, or as may be provided by the Commission or its staff from time
to time.
Regulation S: Regulation S promulgated under the Securities Act or any
successor provision thereto, in each case as the same may be amended from time
to time; and all references to any rule, section or subsection of, or definition
or term contained in, Regulation S means such rule, section, subsection,
definition or term, as the case may be, or any successor thereto, in each case
as the same may be amended from time to time.
Regulation S Book-Entry Certificates: Certificates sold in offshore
transactions in reliance on Regulation S in the form of one or more permanent
global Certificates in definitive, fully registered form without interest
coupons, which shall be deposited on behalf of the subscribers for such
Certificates represented thereby with the Trustee, as custodian for DTC and
registered in the name of a nominee of DTC.
Related Certificates: For each interest in the Upper Tier REMIC, the Class
of Certificates listed on the same row in the table entitled "Upper Tier REMIC"
in the Preliminary Statement.
Relief Act: The Servicemembers Civil Relief Act or any similar state or
local law.
-53-
Relief Act Shortfall: With respect to any Distribution Date and any
Mortgage Loan, any reduction in the amount of interest or principal collectible
on such Mortgage Loan for the most recently ended calendar month as a result of
the application of the Relief Act.
REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein to "the REMICs" or "a REMIC" shall
mean any of (or, as the context requires, all of) the SWAP REMIC, the Lower Tier
REMIC and the Upper Tier REMIC.
REMIC Pass-Through Rate: In the case of a Class of the Class A, Class M and
Class B Certificates, the Upper Tier REMIC Net WAC Cap for the Corresponding
REMIC Regular Interest.
REMIC Provisions: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and proposed,
temporary and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time as
well as provisions of applicable state laws.
REMIC Regular Interests: Each of the interests in the Upper Tier REMIC as
set forth in the Preliminary Statement other than the Residual Interest.
REMIC SWAP Rate: For each Distribution Date (and the related Accrual
Period), a per annum rate equal to the Fixed Rate under the Swap Agreement for
such Distribution Date, as set forth in the Prospectus Supplement.
Remittance Report: As defined in Section 4.04(j) hereof.
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor for
a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio no higher
than that of the Deleted Mortgage Loan; (5) have a remaining term to maturity no
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan; (6) provide for a Prepayment Charge on terms substantially similar to
those of the Prepayment Charge, if any, of the Deleted Mortgage Loan; (7) have
the same lien priority as the Deleted Mortgage Loan; (8) constitute the
-54-
same occupancy type as the Deleted Mortgage Loan; and (9) comply with each
representation and warranty set forth in Section 2.03 hereof.
Request for Release: The Request for Release of Documents submitted by the
Servicer to the Trustee or the Custodian, substantially in the form of Exhibit I
hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any insurance
policy that is required to be maintained from time to time under this Agreement.
Required Percentage: As of any Distribution Date following the Stepdown
Date, the quotient of (1) the excess of (A) the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date, over (B) the Certificate Principal
Balance of the most senior Class of Certificates outstanding as of such
Distribution Date, prior to giving effect to distributions to be made on such
Distribution Date and (2) the Stated Principal Balance of the Mortgage Loans as
of such Distribution Date.
Requirements: Any rules or regulations promulgated pursuant to the
Xxxxxxxx-Xxxxx Act of 2002 (as such may be amended from time to time).
Reserve Interest Rate: With respect to any Interest Determination Date, the
rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.
Residual Interest: An interest in the Upper Tier REMIC that is entitled to
all distributions of principal and interest on the Class R Certificate other
than distributions in respect of the Class SWR Interest and Class LTR Interest
and distributions on the Class R Certificate in respect of Excess Interest.
ResMAE: ResMAE Mortgage Corporation.
Responsible Officer: When used with respect to the Trustee or the Servicer,
any officer of the Trustee or the Servicer with direct responsibility for the
administration of this Agreement and any other officer to whom, with respect to
a particular matter, such matter is referred because of such officer's knowledge
of and familiarity with the particular subject.
Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc., or
any successor in interest.
Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated as of
February 1, 2006 between the Depositor and the Sponsor.
-55-
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
Servicer: Wilshire Credit Corporation, a Nevada corporation, or its
successor in interest.
Servicer Advance Date: As to any Distribution Date, the related Servicer
Remittance Date.
Servicer Remittance Date: With respect to any Distribution Date, the later
of two Business Days after the 15th day of the month in which such Distribution
Date occurs and the 18th day (or if such day is not a Business Day, the next
preceding Business Day) of the month in which such Distribution Date occurs.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations hereunder, including, but not limited to, the cost of (1) the
preservation, inspection, restoration and protection of a Mortgaged Property,
including without limitation advances in respect of real estate taxes and
assessments, (2) any collection, enforcement or judicial proceedings, including
without limitation foreclosures, collections and liquidations, (3) the
conservation, management, sale and liquidation of any REO Property, (4)
executing and recording instruments of satisfaction, deeds of reconveyance,
substitutions of trustees on deeds of trust or Assignments of Mortgage to the
extent not otherwise recovered from the related Mortgages or payable under this
Agreement, (5) correcting errors of prior servicers; costs and expenses charged
to the Servicer by the Trustee; tax tracking; title research; flood
certifications; lender paid mortgage insurance, (6) obtaining or correcting any
legal documentation required to be included in the Mortgage Files and reasonably
necessary for the Servicer to perform its obligations under this Agreement and
(7) compliance with the obligations under Sections 3.01 and 3.10.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of (x) the Servicing Fee Rate and (y) the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
facsimile signature appear on a list of servicing officers furnished to the
Trustee by the Servicer on the Closing Date pursuant to this Agreement, as such
lists may from time to time be amended.
Servicing Transfer Costs: In the event that the Servicer does not reimburse
the Trustee under this Agreement, all costs associated with the transfer of
servicing from the predecessor Servicer, including, without limitation, any
costs or expenses associated with the termination of the predecessor Servicer,
the
-56-
appointment of a successor servicer, the complete transfer of all servicing data
and the completion, correction or manipulation of such servicing data as may be
required by the Trustee or any successor servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans properly and effectively.
SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.
Significance Estimate: With respect to any Distribution Date, and in
accordance with Item 1115 of Regulation AB, shall be an amount determined based
on the reasonable good-faith estimate by the Depositor or its affiliate (and
reported to the Trustee) 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.
Sponsor: Xxxxxxx Xxxxx Mortgage Lending, Inc., a Delaware corporation, or
its successor in interest.
Startup Day: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x) due with
respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date and (y) that were received by the Servicer as of the close of
business on the Determination Date related to such Distribution Date or with
respect to which Advances were made on the Servicer Advance Date prior to such
Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.
Stepdown Date: The earlier of: (A) the first Distribution Date on which the
aggregate Certificate Principal Balance of the Class A-1 Certificates and Class
A-2 Certificates has been reduced to zero; and (B) the later to occur of (1) the
Distribution Date in April 2009 or (2) the first Distribution Date on which (A)
the Class A Certificate Principal Balance (reduced by the Principal Funds with
respect to such Distribution Date) is less than or equal to (B) 56.10% of the
aggregate Stated Principal Balances of the Mortgage Loans as of such
Distribution Date.
Stepdown Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution Date set forth in the following
table:
-57-
DISTRIBUTION DATE OCCURRING IN STEPDOWN REQUIRED LOSS PERCENTAGE
------------------------------ --------------------------------------
April 2008 -- March 2009 1.60% with respect to April 2008, plus
an additional 1/12th of 2.00% for each
month thereafter
April 2009 -- March 2010 3.60% with respect to April 2009, plus
an additional 1/12th of 2.05% for each
month thereafter
April 2010 -- March 2011 5.65% with respect to April 2010, plus
an additional 1/12th of 1.60% for each
month thereafter
April 2011 -- March 2012 7.25% with respect to April 2011, plus
an additional 1/12th of 0.80% for each
month thereafter
April 2012 and thereafter 8.05%
Stepdown Trigger Event: With respect to the Certificates on or after the
Stepdown Date, a Distribution Date on which (1) the quotient of (A) the
aggregate Stated Principal Balance of all Mortgage Loans that are 60 or more
days Delinquent measured on a rolling three month basis (including, for the
purposes of this calculation, Mortgage Loans in foreclosure and REO Properties
and Mortgage Loans with respect to which the applicable Mortgagor is in
bankruptcy) and (B) the Stated Principal Balance of the Mortgage Loans as of the
preceding Servicer Remittance Date, equals or exceeds the product of (i) 36.25%
and (ii) the Required Percentage or (2) the quotient (expressed as a percentage)
of (A) the aggregate Realized Losses incurred from the Cut-off Date through the
last day of the calendar month preceding such Distribution Date and (B) the
aggregate principal balance of the Mortgage Loans as of the Cut-off Date exceeds
the Stepdown Required Loss Percentage.
Subcontractor: Any outsourcer that performs one or more discrete functions
identified in Item 1122(d) of Regulation AB with respect to 5% or more of the
Mortgage Loans under the direction or authority of a Servicer (measured by
aggregate Stated Principal Balance of the Mortgage Loans, annually at the
commencement of the calendar year prior to the year in which an Assessment of
Compliance is required to be delivered, multiplied by a fraction, the numerator
of which is the number of months during which such Subcontractor performs such
discrete functions and the denominator of which is 12, or, in the case of the
year in which the Closing Date occurs, the number of months elapsed in such
calendar year).
Subordinate Certificates: Each of the Class M and Class B Certificates.
Subsequent Recovery: Any amount received on a Mortgage Loan (net of amounts
reimbursed to the Servicer related to Liquidated Mortgage Loans) subsequent to
such Mortgage Loan being determined to be a Liquidated Mortgage Loan.
Sub-Servicer: Any Person that services Mortgage Loans on behalf of the
Servicer pursuant to a subservicing agreement and is responsible for the
performance of the material servicing functions required to be performed by the
Servicer under this Agreement that are identified in Item 1122(d) of Regulation
AB with respect to 10% or more of the Mortgage Loans under the direction or
authority of the Servicer (measured by aggregate Stated Principal Balance of the
Mortgage Loans, annually at the commencement of the calendar year prior to the
year in which an Assessment of Compliance is required to be delivered,
multiplied by a fraction, the numerator of which is the number of months during
which
-58-
such Subservicer services the related Mortgage Loans and the denominator of
which is 12, or, in the case of the year in which the Closing Date occurs, the
number of months elapsed in such calendar year). Any subservicer shall meet the
qualifications set forth in Section 3.02.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(c).
Supplemental Interest Trust: The separate trust, established pursuant to
Section 4.04(l) of this Agreement and held by the Trustee for the benefit of the
holders of the Certificates as a segregated subtrust of the Trust Fund, in which
the Swap Agreement will be held, out of which any Swap Termination Payments or
Net Swap Payments owed to the Swap Counterparty will be paid, certain
distributions to Certificateholders will be made, and into which any Swap
Termination Payments or Net Swap Payments received from the Swap Counterparty
will be deposited as set forth in Section 4.04 hereof.
Swap Agreement: The confirmation to the master agreement, dated as of March
9, 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 4.04(l) hereof.
Swap Counterparty: Bear Xxxxxxx Financial Products 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 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 Accrual Period for the Lower Tier REMIC
Interests divided by (b) 30.
Swap Payment Date: For so long as the Swap Agreement is in effect or
amounts remain unpaid thereunder, the Business Day immediately preceding each
Distribution Date.
SWAP REMIC: As described in the Preliminary Statement and Section 2.07.
SWAP REMIC Interests: Each of the interests in the SWAP REMIC as set forth
in the Preliminary Statement.
SWAP REMIC Regular Interests: Each of the SWAP REMIC Interests other than
the Class SWR Interest.
Swap Termination Payment: Any payment payable by the Supplemental Interest
Trust or the Swap Counterparty upon termination of the Swap Agreement as a
result of termination of the Swap Agreement.
Tax Matters Person: The Person designated as "tax matters person" in the
manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any direct or indirect transfer or sale of any Ownership Interest
in a Certificate.
-59-
Transfer Agreement: The Master Mortgage Loan Purchase and Interim Servicing
Agreement, dated as of January 1, 2006, between Xxxxxxx Xxxxx Mortgage Lending,
Inc., as purchaser, and ResMAE, as seller and interim servicer, as supplemented
by the Bring Down Letter.
Transferor: ResMAE.
Trust Fund: The corpus of the trust (the "Xxxxxxx Xxxxx Mortgage Investors
Trust, Series 2006-RM1") created hereunder consisting of (i) the Mortgage Loans
and all interest and principal received on or with respect thereto on and after
the Cut-off Date to the extent not applied in computing the Cut-off Date
Principal Balance thereof, exclusive of interest not required to be deposited in
the Collection Account; (ii) the Collection Account and the Certificate Account
and all amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loans; (v) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid property; (vi) the Cap Contracts and Cap Contract
Account and (vii) the Supplemental Interest Trust, which in turn holds the Swap
Agreement.
Trustee: LaSalle Bank National Association, a national banking association,
not in its individual capacity, but solely in its capacity as trustee for the
benefit of the Certificateholders under this Agreement, and any successor
thereto, and any corporation or national banking association resulting from or
surviving any consolidation or merger to which it or its successors may be a
party and any successor trustee as may from time to time be serving as successor
trustee hereunder; it being understood that certain duties of the Trustee under
Sections 2.01, 2.02 and 3.13 with respect to the possession and administration
of the Mortgage Files generally may be carried out by a custodian engaged by the
Trustee. On the Closing Date, the Trustee shall appoint the Custodian as
custodian for that portion of the Mortgage Files that it holds pursuant to the
terms of the Custodial Agreement.
Uncertificated Class C Interest: An uncertificated REMIC Regular Interest
having the characteristics described in the Preliminary Statement.
United States Person: (i) A citizen or resident of the United States, (ii)
a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes organized in or under the laws of
the United States or any state thereof or the District of Columbia (unless, in
the case of a partnership, Treasury regulations provide otherwise), (iii) an
estate the income of which is includible in gross income for United States tax
purposes regardless of its source or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons prior to such date, that
elect to continue to be treated as United States persons will also be United
States Persons.
Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount, Class M-3 Unpaid Realized Loss Amount,
Class M-4 Unpaid Realized Loss Amount, Class M-5 Unpaid Realized Loss Amount,
Class M-6 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount, Class B-3 Unpaid Realized Loss Amount and
Class C Unpaid Realized Loss Amount, collectively.
-60-
Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.
Upper Tier REMIC Net WAC Cap: In the case of the Class UTA-1 Interest and
the Residual Interest, a per annum rate equal to the weighted average of the
interest rate of the Class LTII1B Interest for such Distribution Date. In the
case of the Class UTA-2A, Class UTA-2B, Class UTA-2C and Class UTA-2D Interests,
a per annum rate equal to the weighted average of the interest rate for the
Class LTII2B for such Distribution Date (adjusted, in the case of the Class
UTA-2B, Class UTA-2C and Class UTA-2D Interests, to reflect accruals on the
basis of a 360 day year consisting of twelve 30 day months). In the case of the
Class UTM-1, Class UTM-2, Class UTM-3, Class UTM-4, Class UTM-5, Class UTM-6,
Class UTB-1, Class UTB-2 and Class UTB-3 Interests, a per annum rate equal to
the weighted average (adjusted, in the case of the Class UTB-2 Interest, to
reflect accruals on the basis of a 360 day year consisting of twelve 30 day
months) of the interest rates of Class LTII1B and Class LTII2B Interests for
such Distribution weighted, respectively, on the basis of the uncertificated
principal balances of the Class LTII1A and the Class LTII2A Interests.
USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated as follows: (1) 98% to the Class A, Class M and Class B
Certificates, with the allocation among such Certificates to be in proportion to
the Certificate Principal Balance of each Class relative to the Certificate
Principal Balance of all other Classes and (2) each Class of the Class C and
Class P will be allocated 1% of the Voting Rights. Voting Rights will be
allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
Weighted Average Available Funds Cap: With respect to a Distribution Date,
the per annum rate equal to the weighted average of the Class A-1 Available
Funds Cap and the Class A-2 Available Funds Cap, as calculated with respect to
the Class A-2A Certificates, (weighted in proportion to the results of
subtracting from the aggregate Stated Principal Balance of each Mortgage Group,
the current Certificate Principal Balance of the Class A-1 and Class R
Certificates, in the case of Group One, or the Class A-2A, Class A-2B, Class
A-2C and Class A-2D Certificates, in the case of Group Two) and, only with
respect to the Class B-2 Certificates, multiplied by the actual number of days
in the Accrual Period divided by 30.
Weighted Average Maximum Rate Cap: With respect to a Distribution Date, the
per annum rate equal to the weighted average (weighted in proportion to the
results of subtracting from the aggregate Stated Principal Balance of each
Mortgage Group, the current Certificate Principal Balance of the Class A-1 and
Class R Certificates, in the case of Group One, or the Class A-2A, Class A-2B,
Class A-2C and Class A-2D Certificates, in the case of Group Two) of the Class
A-1 Maximum Rate Cap and the Class A-2 Maximum Rate Cap, as calculated with
respect to the Class A-2A Certificates, and, only with respect to the Class B-2
Certificates, multiplied by the actual number of days in the Accrual Period
divided by 30.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
-61-
The Depositor, concurrently with the execution and delivery hereof, does
hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).
It is agreed and understood by the Depositor, the Servicer and the Trustee
that it is not intended that any Mortgage Loan be included in the Trust that is,
without limitation, either (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 Mortgage 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 assignment, the Depositor does hereby deliver to,
and deposit with, the Trustee or the Custodian, the following documents or
instruments with respect to each Mortgage Loan:
(A) The original Mortgage Note endorsed in blank or, "Pay to the order
of LaSalle Bank National Association, as trustee, without recourse"
together with all riders thereto. The Mortgage Note shall include all
intervening endorsements showing a complete chain of the title from the
Transferor to [____________________].
(B) Except as provided below and for each Mortgage Loan that is not a
MERS Loan, the original recorded Mortgage together with all riders thereto,
with evidence of recording thereon, or, if the original Mortgage has not
yet been returned from the recording office, a copy of the original
Mortgage together with all riders thereto certified to be a true copy of
the original of the Mortgage that has been delivered for recording in the
appropriate recording office of the jurisdiction in which the Mortgaged
Property is located and in the case of each MERS Loan, the original
Mortgage together with all riders thereto, noting the presence of the MIN
of the Loan and either language indicating that the Mortgage Loan is a MOM
Loan or if the Mortgage Loan was not a MOM Loan at origination, the
original Mortgage and the assignment thereof to MERS, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded.
(C) In the case of each Mortgage Loan that is not a MERS Loan, the
original Assignment of each Mortgage in blank or, to "LaSalle Bank National
Association, as trustee."
(D) The original policy of title insurance (or a preliminary title
report, commitment or binder if the original title insurance policy has not
been received from the title insurance company).
(E) Originals of any intervening assignments of the Mortgage, with
evidence of recording thereon or, if the original intervening assignment
has not yet been returned from the recording office, a copy of such
assignment certified to be a true copy of the original of the assignment
which has been sent for recording in the appropriate jurisdiction in which
the Mortgaged Property is located.
-62-
(F) Originals of all assumption and modification agreements, if any.
(G) If in connection with any Mortgage Loan, the Depositor cannot
deliver the Mortgage, Assignments of Mortgage or assumption, consolidation
or modification, as the case may be, with evidence of recording thereon, if
applicable, concurrently with the execution and delivery of this Agreement
solely because of a delay caused by the public recording office where such
Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered for recordation, the
Depositor shall deliver or cause to be delivered to the Trustee or the
Custodian written notice stating that such Mortgage or assumption,
consolidation or modification, as the case may be, has been delivered to
the appropriate public recording office for recordation. Thereafter, the
Depositor shall deliver or cause to be delivered to the Trustee or the
Custodian such Mortgage, Assignments of Mortgage or assumption,
consolidation or modification, as the case may be, with evidence of
recording indicated thereon, if applicable, upon receipt thereof from the
public recording office. To the extent any required endorsement is not
contained on a Mortgage Note or an Assignment of Mortgage, the Depositor
shall make or cause to be made such endorsement.
(H) With respect to any Mortgage Loan, none of the Depositor, the
Servicer or the Trustee shall be obligated to cause to be recorded the
Assignment of Mortgage referred to in this Section 2.01. In the event an
Assignment of Mortgage is not recorded, the Servicer shall have no
liability for its failure to receive and act on notices related to such
Assignment of Mortgage.
The ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the Trustee on behalf of the
Certificateholders. Neither the Depositor nor the Servicer shall take any action
inconsistent with such ownership and shall not claim any ownership interest
therein. The Depositor and the Servicer shall respond to any third party
inquiries with respect to ownership of the Mortgage Loans by stating that such
ownership is held by the Trustee on behalf of the Certificateholders. Mortgage
documents relating to the Mortgage Loans not delivered to the Trustee or the
Custodian are and shall be held in trust by the Servicer, for the benefit of the
Trustee as the owner thereof, and the Servicer's possession of the contents of
each Mortgage File so retained is for the sole purpose of servicing the related
Mortgage Loan, and such retention and possession by the Servicer, is in a
custodial capacity only. The Depositor agrees to take no action inconsistent
with the Trustee's ownership of the Mortgage Loans, to promptly indicate to all
inquiring parties that the Mortgage Loans have been sold and to claim no
ownership interest in the Mortgage Loans.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Sponsor to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Sponsor deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Sponsor to the Depositor deemed to be secured by said pledge and that the
Trustee shall be deemed to be an independent custodian for purposes of
perfection of the security interest granted to the Depositor. If the conveyance
of the Mortgage Loans from the Depositor to the Trustee is characterized as a
pledge, it is the intention of this Agreement that this Agreement shall
constitute a security agreement under applicable law, and that the Depositor
shall be deemed to have granted to the Trustee a first priority security
interest in all of the Depositor's right, title and interest in, to and under
the Mortgage Loans, all
-63-
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
In addition to the conveyance made in the first paragraph of this Section
2.01, the Depositor does hereby convey, assign and set over to the Trustee for
the benefit of the Certificateholders its rights and interests under the Sale
Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement, the rights in
the Transfer Agreements described therein, and the benefit of the repurchase
obligations and the obligation of the Sponsor contained in the Sale Agreement to
take, at the request of the Depositor or the Trustee, all action on its part
which is reasonably necessary to ensure the enforceability of a Mortgage Loan.
The Trustee hereby accepts such assignment, and shall be entitled to exercise
all rights of the Depositor under the Sale Agreement as if, for such purpose, it
were the Depositor. The foregoing sale, transfer, assignment, set-over, deposit
and conveyance does not and is not intended to result in creation or assumption
by the Trustee of any obligation of the Depositor, the Sponsor, or any other
Person in connection with the Mortgage Loans or any other agreement or
instrument relating thereto.
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.
Except as set forth in the exception report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it (or the
Custodian) holds and will hold such documents and any other documents
constituting a part of the Mortgage Files delivered to it in trust for the use
and benefit of all present and future Certificateholders. The Depositor will
cause the Sponsor to repurchase any Mortgage Loan to which a material exception
was taken in the Exception Report unless such exception is cured to the
satisfaction of the Trustee within 45 Business Days of the Closing Date.
The Trustee acknowledges receipt of the three Cap Contracts (forms of which
are attached hereto as Exhibits N-1, N-2 and N-3), the Transfer Agreement, the
Bring Down Letter and the Sale Agreement.
The Trustee acknowledges receipt of the Swap Agreement that will be held in
the Supplemental Interest Trust and is hereby instructed to enter into the Swap
Agreement, not in its individual capacity, but solely as Trustee for the Issuing
Entity and for the Supplemental Interest Trust.
The Trustee agrees, for the benefit of Certificateholders, and the NIMs
insurer, to review or cause the Custodian to review each Mortgage File delivered
to it within 60 days after the Closing Date to ascertain and to certify, within
70 days of the Closing Date, to the NIMs Insurer, the Depositor and the Servicer
that all documents required by Section 2.01 (A)-(B), (C) (if applicable), and
(D)-(E), and the documents if actually received by it, under Section 2.01(F),
have been executed and received, and that such documents relate to the Mortgage
Loans identified in Exhibit B-1 that have been conveyed to it. It is herein
acknowledged that, in conducting such review, the Trustee shall not be under any
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, that they have actually
been recorded or that they are other than what they purport to be on their face.
If the Trustee or
-64-
the Custodian finds any document or documents constituting a part of a Mortgage
File to be missing or defective (that is, mutilated, damaged, defaced or
unexecuted) in any material respect, the Trustee or the Custodian shall promptly
(and in any event within no more than five Business Days) after such finding so
notify the NIMs Insurer, the Servicer, the Sponsor and the Depositor. In
addition, the Trustee or the Custodian shall also notify the NIMs Insurer, the
Servicer, the Sponsor and the Depositor if the original Mortgage with evidence
of recording thereon with respect to a Mortgage Loan is not received within 70
days of the Closing Date; if it has not been received because of a delay caused
by the public recording office where such Mortgage has been delivered for
recordation, the Depositor shall deliver or cause to be delivered to the Trustee
written notice stating that such Mortgage has been delivered to the appropriate
public recording office for recordation and thereafter the Depositor shall
deliver or cause to be delivered such Mortgage with evidence of recording
thereon upon receipt thereof from the public recording office. The Trustee shall
request that the Sponsor correct or cure such omission, defect or other
irregularity, or substitute a Mortgage Loan pursuant to the provisions of
Section 2.03(c), within 90 days from the date the Sponsor was notified of such
omission or defect and, if the Sponsor does not correct or cure such omission or
defect within such period, that the Sponsor purchase such Mortgage Loan from the
Trust Fund within 90 days from the date the Trustee notified the Sponsor of such
omission, defect or other irregularity at the Purchase Price of such Mortgage
Loan. The Purchase Price for any Mortgage Loan purchased pursuant to this
Section 2.02 shall be paid to the Servicer and deposited by the Servicer in the
Certificate Account or Collection Account, as appropriate, promptly upon
receipt, and the Trustee, upon receipt of a Request for Release and
certification of the Servicer of such required deposit, shall promptly release
to the Sponsor the related Mortgage File and the Trustee shall execute and
deliver such instruments of transfer or assignment, without recourse, as shall
be requested by the Sponsor and necessary to vest in the Sponsor or its
designee, as the case may be, any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility with regard to such Mortgage
Loan. It is understood and agreed that the obligation of the Sponsor to
purchase, cure or substitute any Mortgage Loan as to which a material defect in
or omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders and the NIMs Insurer. The preceding sentence shall not,
however, limit any remedies available to the Certificateholders, the NIMs
Insurer, the Depositor or the Trustee pursuant to the Sale Agreement, the
Transfer Agreement or any Bring Down Letter. The Trustee shall be under no duty
or obligation to inspect, review and examine such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable,
recordable, duly authorized, sufficient, legal, valid or appropriate to the
represented purpose, or that they have actually been recorded, or that they are
other than what they purport to be on their face. The Servicer and the Trustee
shall keep confidential the name of each Mortgagor except as required for
performance of this Agreement and the Servicer and the Trustee shall not solicit
any such Mortgagor for the purpose of refinancing the related Mortgage Loan;
notwithstanding anything herein to the contrary, the foregoing shall not be
construed to prohibit (i) disclosure of any and all information that is or
becomes publicly known, or information obtained by the Trustee or the Servicer
from sources other than the other parties hereto, (ii) disclosure of any and all
information (A) if required to do so by any applicable law, rule or regulation,
(B) to any government agency or regulatory body having or claiming authority to
regulate or oversee any aspects of the business of the Trustee or the Servicer
or that of any Affiliate, (C) pursuant to any subpoena, civil investigation
demand or similar demand or request of any court, regulatory authority,
arbitrator or arbitration to which the Trustee or the Servicer or any Affiliate
or an officer, director, employer or shareholder thereof is a party or (D) to
any Affiliate, independent or internal auditor, agent, employee or attorney of
the Trustee or the Servicer having a need to know the same, provided that the
Trustee or the Servicer, as applicable, advises such recipient of the
confidential nature of the information being disclosed, or (iii) any other
disclosure authorized by the Depositor.
-65-
Within 70 days of the Closing Date, the Trustee or the Custodian shall
deliver to the NIMs Insurer, the Depositor and the Servicer the Trustee's
Certification, substantially in the form of Exhibit D attached hereto,
evidencing the completeness of the Mortgage Files, with any exceptions noted
thereto.
SECTION 2.03. Representations, Warranties and Covenants of the Depositor.
(a) The Depositor hereby represents and warrants to the NIMs Insurer,
the Servicer and the Trustee as follows, as of the date hereof:
(i) The Depositor is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has full power and authority (corporate and other) necessary to own or hold
its properties and to conduct its business as now conducted by it and to
enter into and perform its obligations under this Agreement and the Sale
Agreement.
(ii) The Depositor has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and the Sale Agreement and has
duly authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement and the Sale
Agreement; and this Agreement and the Sale Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, subject, as
to enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
(ii) general principles of equity, regardless of whether enforcement is
sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement and the Sale
Agreement by the Depositor, the consummation of the transactions
contemplated by this Agreement and the Sale Agreement, and the fulfillment
of or compliance with the terms hereof are in the ordinary course of
business of the Depositor and will not (A) result in a material breach of
any term or provision of the charter or by-laws of the Depositor or (B)
materially conflict with, result in a violation or acceleration of, or
result in a material default under, the terms of any other material
agreement or instrument to which the Depositor is a party or by which it
may be bound or (C) constitute a material violation of any statute, order
or regulation applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Depositor's ability to perform or meet
any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement and the Sale Agreement or the ability of the Depositor to perform
its obligations under this Agreement and the Sale Agreement in accordance
with the terms hereof.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or
-66-
compliance by the Depositor with, this Agreement and the Sale Agreement or
the consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, the Depositor has
obtained the same. The Depositor hereby represents and warrants to the
Trustee with respect to each Mortgage Loan as of the Closing Date, and
following the transfer of the Mortgage Loans to it by the Sponsor, the
Depositor had good title to the Mortgage Loans and the Mortgage Notes were
subject to no offsets, claims, liens, mortgage, pledge, charge, security
interest, defenses or counterclaims.
(b) The representations and warranties of the Transferor with respect
to the related Mortgage Loans in the Transfer Agreement, which have been
assigned to the Trustee hereunder, were made as of the date specified in the
Transfer Agreement and brought forward to the Closing Date pursuant to the Bring
Down Letter. The representations and warranties of the Transferor with respect
to the Mortgage Loans contained in the Bring Down Letter were made as of the
Closing Date. The representations and warranties of the Sponsor with respect to
the Mortgage Loans contained in the Sale Agreement were made as of the Closing
Date. To the extent that any fact, condition or event with respect to a Mortgage
Loan constitutes a breach of a representation or warranty of the Sponsor under
the Sale Agreement, the obligations of the Sponsor under the Sale Agreement
shall be enforced against the Sponsor, as set forth in the Sale Agreement. The
Trustee acknowledges that the Depositor shall have no obligation or liability
with respect to any breach of any representation or warranty with respect to the
Mortgage Loans (except as set forth in Section 2.03(a)(v)) under any
circumstances.
In addition to the representations and warranties of the Transferor in the
Transfer Agreement that were brought forward to the Closing Date pursuant to the
Bring Down Letter, with respect to each Mortgage Loan, the Transferor made
certain additional covenants regarding such Mortgage Loan, as set forth in the
Transfer Agreement. With respect to any breach of such additional covenants that
materially and adversely affects the interests of the Certificateholders in such
Mortgage Loan, the Sponsor shall repurchase such Mortgage Loan in accordance
with this Section 2.03.
(c) Upon discovery by any of NIMs Insurer, the Depositor, the Servicer
or the Trustee of a breach of any of such representations and warranties that
adversely and materially affects the value of the related Mortgage Loan,
Prepayment Charges or the interests of the Certificateholders, the party
discovering such breach shall give prompt written notice to the other parties.
Within 90 days of the discovery of such breach of any representation or
warranty, the Sponsor shall either (a) cure such breach in all material
respects, (b) repurchase such Mortgage Loan or any property acquired in respect
thereof from the Trustee at the Purchase Price or (c) within the two year period
following the Closing Date, substitute a Replacement Mortgage Loan for the
affected Mortgage Loan. In the event of discovery of a breach of any
representation and warranty of the Sponsor, the Trustee's rights shall be
enforced under the Sale Agreement for the benefit of Certificateholders and the
NIMs Insurer. If a breach of the representations and warranties set forth in the
Transfer Agreement hereof exists solely due to the unenforceability of a
Prepayment Charge, the Trustee or the other party having notice thereof shall
notify the Servicer thereof and not seek to enforce the repurchase remedy
provided for herein unless such Mortgage Loan is not current. In the event of a
breach of the representations and warranties with respect to the Mortgage Loans
set forth in the Transfer Agreement, the Trustee shall enforce the right of the
Trust Fund to be indemnified for such breach of representation and warranty. In
the event that such breach relates solely to the unenforceability of a
Prepayment Charge, amounts received in respect of such indemnity up to the
amount of such Prepayment Charge shall be distributed pursuant to Section
4.04(b)(i). As provided in the Sale Agreement, if the Sponsor substitutes for a
Mortgage Loan for which there is a breach of any representations and warranties
in the Transfer Agreement which adversely and
-67-
materially affects the value of such Mortgage Loan and such substitute mortgage
loan is not a Replacement Mortgage Loan, under the terms of the Sale Agreement,
the Sponsor will, in exchange for such substitute Mortgage Loan, (i) provide the
applicable Purchase Price for the affected Mortgage Loan or (ii) within two
years of the Closing Date, substitute such affected Mortgage Loan with a
Replacement Mortgage Loan. Any such substitution shall not be effected prior to
the additional delivery to the Trustee of a Request for Release substantially in
the form of Exhibit I and shall not be effected unless it is within two years of
the Startup Day. The Sponsor indemnifies and holds the Trust Fund, the Trustee,
the Depositor, the Servicer, the Custodian, the NIMs Insurer and each
Certificateholder harmless against any and all taxes, claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trust Fund, the Trustee, the Depositor,
the Servicer, the Custodian, the NIMs Insurer and any Certificateholder may
sustain in connection with any actions of the Sponsor relating to a repurchase
of a Mortgage Loan other than in compliance with the terms of this Section 2.03
and the Sale Agreement, to the extent that any such action causes (i) any
federal or state tax to be imposed on the Trust Fund or any REMIC provided for
herein, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup day" under Section 860G(d)(1) of the Code, or (ii) any REMIC created
hereunder to fail to qualify as a REMIC at any time that any Certificate is
outstanding. In furtherance of the foregoing, if the Sponsor is not a member of
MERS and repurchases a Mortgage Loan which is registered on the MERS System, the
Sponsor, at its own expense and without any right of reimbursement, shall cause
MERS to execute and deliver an assignment of the Mortgage in recordable form to
transfer the Mortgage from MERS to the Sponsor and shall cause such Mortgage to
be removed from registration on the MERS System in accordance with MERS' rules
and regulations.
With respect to any Mortgage Loan repurchased by the Sponsor pursuant to
the Sale Agreement, the principal portion of the funds received by the Servicer
in respect of such repurchase of a Mortgage Loan will be considered a Principal
Prepayment and shall be deposited in the Certificate Account pursuant to Section
3.05. Upon receipt by the Trustee of notice from the Servicer of receipt by the
Servicer of the full amount of the Purchase Price for a Deleted Mortgage Loan,
and upon receipt by the Trustee or the Custodian of the Mortgage File for a
Replacement Mortgage Loan substituted for a Deleted Mortgage Loan and a Request
for Release, the Trustee or the Custodian shall release and reassign to the
Sponsor the related Mortgage File for the Deleted Mortgage Loan and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as shall be necessary to vest in
such party or its designee or assignee title to any Deleted Mortgage Loan
released pursuant hereto, free and clear of all security interests, liens and
other encumbrances created by this Agreement, which instruments shall be
prepared by the Depositor or the Sponsor, and the Trustee shall have no further
responsibility with respect to the Mortgage File relating to such Deleted
Mortgage Loan.
With respect to each Replacement Mortgage Loan to be delivered to the
Trustee or the Custodian pursuant to the terms of this Article II in exchange
for a Deleted Mortgage Loan: (i) the Sponsor must deliver to the Trustee or the
Custodian the Mortgage File for the Replacement Mortgage Loan containing the
documents set forth in Section 2.01 along with a written certification
certifying as to the Mortgage Loan satisfying all requirements under the
definition of Replacement Mortgage Loan and the delivery of such Mortgage File
and containing the granting language set forth in Section 2.01; and (ii) the
Depositor will be deemed to have made, with respect to such Replacement Mortgage
Loan, each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. The Trustee or the Custodian shall review the
Mortgage File with respect to each Replacement Mortgage Loan and certify to the
Depositor that all documents required by Section 2.01(A)-(B), (C) (if
applicable), and (D)-(E) have been executed and received.
-68-
For any month in which the Sponsor substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Sponsor will
determine the amount (if any) by which the aggregate principal balance of all
such Replacement Mortgage Loans as of the date of substitution and the aggregate
Prepayment Charges with respect to such Replacement Mortgage Loans is less than
the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
Prepayment Charges of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") plus an amount equal to any unreimbursed
costs, penalties and/or damages incurred by the Trust Fund in connection with
any violation relating to such Deleted Mortgage Loan of any predatory or abusive
lending law shall be remitted by the Sponsor to the Trustee for deposit into the
Certificate Account by the Sponsor on the Determination Date for the
Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.
Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee and the NIMs Insurer
shall each have received an Opinion of Counsel (at the expense of the party
seeking to make the substitution) that, under current law, such substitution
will not (A) affect adversely the status of any REMIC established hereunder as a
REMIC, or of the related "regular interests" as "regular interests" in any such
REMIC, or (B) cause any such REMIC to engage in a "prohibited transaction" or
prohibited contribution pursuant to the REMIC Provisions.
The Depositor shall amend the Mortgage Loan Schedule to reflect the removal
of such Deleted Mortgage Loan from the terms of this Agreement and the
substitution of the Replacement Mortgage Loan or Replacement Mortgage Loans.
Upon such substitution by the Sponsor, such Replacement Mortgage Loan or
Replacement Mortgage Loans shall constitute part of the Mortgage Pool and shall
be subject in all respects to the terms of this Agreement and the applicable
Sale Agreement, including all applicable representations and warranties thereof
included in the applicable Sale Agreement as of the date of substitution.
(d) It is understood and agreed that the representations, warranties
and indemnification (i) set forth in this Section 2.03, (ii) of the Sponsor and
the Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder and (iii) of each Transferor, assigned by the Sponsor to the
Depositor pursuant to the Sale Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.
(e) The Depositor shall deliver a copy of the Mortgage Loan Schedule
to the Servicer on the Closing Date.
(f) The Depositor shall notify the Servicer and the Trustee when any
NIM Notes are issued and when such NIM Notes are no longer outstanding.
SECTION 2.04. Representations and Warranties of the Servicer.
(a) The Servicer hereby represents and warrants to the Depositor and
the Trustee as follows, as of the date hereof:
-69-
(i) The Servicer is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Nevada and is
duly authorized and qualified to transact any and all business contemplated
by this Agreement to be conducted by the Servicer in any state in which a
Mortgaged Property is located or is otherwise not required under applicable
law to effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Mortgage Loan, to service the Mortgage
Loans in accordance with the terms of this Agreement and to perform any of
its other obligations under this Agreement in accordance with the terms
hereof.
(ii) The Servicer has the corporate power and authority and to service
each Mortgage Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on the part of the Servicer
the execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and delivery hereof by
the other parties hereto, constitutes a legal, valid and binding obligation
of the Servicer, enforceable against the Servicer in accordance with its
terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the Servicer,
the servicing of the Mortgage Loans under this Agreement, the consummation
of any other of the transactions contemplated by this Agreement, and the
fulfillment of or compliance with the terms hereof are in the ordinary
course of business of the Servicer and will not (A) result in a material
breach of any term or provision of the charter or by-laws of the Servicer
or (B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Servicer is a party or
by which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to the Servicer of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Servicer; and the Servicer is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair the
Servicer's ability to perform or meet any of its obligations under this
Agreement.
(iv) The Servicer is an approved servicer of mortgage loans for Xxxxxx
Xxx and is an approved servicer of mortgage loans for Xxxxxxx Mac.
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened, against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Servicer to service the Mortgage Loans or
to perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation of the transactions
-70-
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Servicer has obtained the same.
(vii) The Servicer has fully furnished and will fully furnish (for the
period it serviced the Mortgage Loans), in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files
to Equifax, Experian and Trans Union Credit Information Company on a
monthly basis.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans that are not
"Qualified Mortgages".
Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within five Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee, upon the written direction of the Depositor, shall reconvey to the
Depositor the Mortgage Loan to be released pursuant hereto in the same manner,
and on the same terms and conditions, as it would a Mortgage Loan repurchased
for breach of a representation or warranty contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the
Authenticating Agent in authorized denominations evidencing ownership of the
entire Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform its duties set forth in this Agreement in
accordance with the provisions hereof.
SECTION 2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to make
an appropriate election to treat each of the Upper Tier REMIC, the Lower Tier
REMIC and the SWAP REMIC as a REMIC. The Trustee shall sign the returns
providing for such elections and such other tax or information returns that are
required to be signed by the Trustee under applicable law. This Agreement shall
be construed so as to carry out the intention of the parties that each of the
Upper Tier REMIC, the Lower Tier REMIC and the SWAP REMIC be treated as a REMIC
at all times prior to the date on which the Trust Fund is terminated.
(b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day" for purposes of the REMIC Provisions shall be the
Closing Date. Each REMIC's fiscal year shall be the calendar year.
-71-
The SWAP REMIC shall consist of all of the assets of the Trust Fund, other
than (i) amounts distributable to the Class P Certificates pursuant to Section
4.04(b)(i) hereof, (ii) the interests issued by the SWAP REMIC and the interests
issued by the Lower Tier REMIC, (iii) the grantor trusts described in Section
2.07 hereof, (iv) each Cap Contract and the Cap Contract Account and (v) the
Swap Agreement and the Supplemental Interest Trust. The SWAP REMIC shall issue
the SWAP REMIC Regular Interests, which shall be designated as regular interests
of such REMIC, and shall issue the Class SWR Interest, which shall be designated
as the sole class of residual interest in the SWAP REMIC. Each of the SWAP REMIC
Regular Interests shall have the characteristics set forth in the Preliminary
Statement and this Section 2.07.
The Lower Tier REMIC shall consist of the SWAP REMIC Regular Interests. The
Lower Tier REMIC shall issue the Lower Tier REMIC Regular Interests, which shall
be designated as regular interests of such REMIC and shall issue the Class LTR
Interest, which shall be designated as the sole class of residual interest in
the Lower Tier REMIC. Each of the Lower Tier REMIC Regular Interests shall have
the characteristics set forth in its definition and the Preliminary Statement.
The assets of the Upper Tier REMIC shall be the Lower Tier REMIC Regular
Interests. The REMIC Regular Interests shall be designated as the regular
interests in the Upper Tier REMIC and the Residual Interest shall be designated
as the sole class of residual interest in the Upper Tier REMIC. For federal
income tax purposes, the pass-through rate on each REMIC Regular Interest (other
than the Uncertificated Class C Interest and the Class UT-IO Interest) and on
the sole class of residual interest in the Upper Tier REMIC shall be subject to
a cap equal to the Upper Tier REMIC Net WAC Cap.
The beneficial ownership of the Class SWR Interest, Class LTR Interest and
the Residual Interest shall be represented by the Class R Certificate. The Class
SWR Interest and Class LTR Interest shall not have a principal balance or bear
interest.
(c) The "tax matters person" with respect to each REMIC for purposes
of the REMIC Provisions shall be the beneficial owner of the Class R
Certificate; provided, however, that the Holder of the Class R Certificate, by
its acceptance thereof, irrevocably appoints the Trustee as its agent and
attorney-in-fact to act as "tax matters person" with respect to each such REMIC
for purposes of the REMIC Provisions. If there is more than one beneficial owner
of the Class R Certificate, the "tax matters person" shall be the Person with
the greatest percentage interest in the Class R Certificate and, if there is
more than one such Person, shall be determined under Treasury regulation Section
1.860F-4(d) and Treasury regulation Section 301.6231(a)(7)-1.
(d) (i) It is intended that the rights of each Class of the Class A,
Class M and Class B Certificates to receive payments in respect of Excess
Interest shall be treated as a right in interest rate cap contracts written by
the Class C Certificateholders in favor of the holders of each Class of the
Class A, Class M and Class B Certificates and such shall be accounted for as
property held separate and apart from the regular interests in the Upper Tier
REMIC held by the holders of the Class A Certificates (other than the Class R
Certificate), Class M Certificates, Class B Certificates and the residual
interest in the Upper Tier REMIC held by the holder of the Class R Certificate.
For information reporting requirements, the rights of the Class A, Class M and
Class B Certificates to receive payments in respect of Excess Interest shall be
assumed to have zero or a de minimis value. This provision is intended to
satisfy the requirements of Treasury Regulations Section 1.860G-2(i) for the
treatment of property rights coupled with REMIC interests to be separately
respected and shall be interpreted consistently with such regulation. On each
Distribution Date, to the extent that any of the Class A, Class M and Class B
-72-
Certificates receive payments in respect of Excess Interest, such amounts, to
the extent not derived from payments on the Cap Contracts or the Swap Agreement,
will be treated as distributed by the Upper Tier REMIC to the Class C
Certificates pro rata in payment of the amounts specified in Section 4.04(g) and
then paid to the relevant Class of Certificates pursuant to the related interest
rate cap agreement.
(ii) It is intended that the beneficial owners of the Certificates
(other than the Class P and Class C Certificates) shall be treated as having
entered into a notional principal contract with respect to the beneficial owners
of the Class C Certificates. Pursuant to each such notional principal contract,
all beneficial owners of each Class of Certificates (other than the Class P and
Class C Certificates) shall be treated as having agreed to pay, on each
Distribution Date, to the beneficial owners of the Class C Certificates an
aggregate amount equal to the excess, if any, of (i) the amount payable on such
Distribution Date on the Corresponding REMIC Regular Interest of such Class of
Certificates over (ii) the amount payable on such Class of Certificates on such
Distribution Date (such excess, a "Class Payment Shortfall"). A Class Payment
Shortfall shall be allocated to each Class of Certificates to the extent that
interest accrued on such Class for the related Accrual Period at the
Pass-Through Rate for a Class, computed by substituting "Upper Tier REMIC Net
WAC Cap" for the Available Funds Cap set forth in the definition thereof,
exceeds the amount of interest accrued on such Certificate at the Pass-Through
Rate (without such substitution) for the related Accrual Period, and a Class
Payment Shortfall payable from principal collections shall be allocated to the
most subordinate Class of Certificates with an outstanding principal balance to
the extent of such balance.
(e) The parties intend that the portion of the Trust Fund consisting
of the Uncertificated Class C Interest, the uncertificated Class UT-IO Interest,
the rights to receive payments deemed made by the Class A, Class M and Class B
Certificates in respect of notional principal contracts described in Section
2.07(d)(ii), the Supplemental Interest Trust which holds the Swap Agreement, the
Cap Contracts, the Cap Contract Account and the obligation of the holders of the
Class C Certificates to pay amounts in respect of Excess Interest to the holders
of the Class A, Class M and Class B Certificates shall be treated as a "grantor
trust" under the Code, for the benefit of the holders of the Class C
Certificates, and the provisions hereof shall be interpreted consistently with
this intention. In furtherance of such intention, the Trustee shall (i) furnish
or cause to be furnished to the holders of the Class C Certificates information
regarding their allocable share, if any, of the income with respect to such
grantor trust, (ii) file or cause to be filed with the Internal Revenue Service
Form 1041 (together with any necessary attachments) and such other forms as may
be applicable and (iii) comply with such information reporting obligations with
respect to payments from such grantor trust to the holders of Class A, Class M,
Class B and Class C Certificates as may be applicable under the Code.
(f) The parties intend that the portion of the Trust Fund consisting
of the right to receive amounts distributable to the Class P Certificates
pursuant to Section 4.04(b)(i) hereof shall be treated as a "grantor trust"
under the Code, for the benefit of the holders of the Class P Certificates, and
the provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class P Certificates information regarding their
allocable share of the income with respect to such grantor trust and (ii) file
or cause to be filed with the Internal Revenue Service Form 1041 (together with
any necessary attachments) and such other forms as may be applicable.
(g) The parties intend that amounts paid to the Swap Counterparty
under the Swap Agreement shall be deemed for federal income tax purposes to be
paid by the Class C Certificates first, out of funds deemed received in respect
of the Class UT-IO Interest, second, out of funds deemed
-73-
received in respect of the Uncertificated Class C Interest and third, out of
funds deemed received in respect of notional principal contracts described in
Section 2.07(d)(ii), and the provisions hereof shall be interpreted consistently
with this intention. On each Distribution Date, to the extent that amounts paid
to the Swap Counterparty are deemed paid out of funds received in respect of the
Uncertificated Class C Interest, such amounts will be treated as distributed by
the Upper Tier REMIC to the Class C Certificates pro rata in payment of the
amounts specified in Section 4.04(g) and then paid to the Swap Counterparty
pursuant to the Swap Agreement.
The Supplemental Interest Trust shall be an "outside reserve fund" for
federal income tax purposes and not an asset of any REMIC. Furthermore, the
Holders of the Class C Certificates shall be the beneficial owners of the
Supplemental Interest Trust for all federal income tax purposes, and shall be
taxable on all income earned thereon.
(h) All payments of principal and interest at the Net Mortgage Rate on
each of the Mortgage Loans (other than amounts distributable to the Class P
Certificates pursuant to Section 4.04(b)(i) hereof) received by the SWAP REMIC
with respect to the Mortgage Loans shall be paid to the SWAP REMIC Regular
Interests until the principal balance of all such interests have been reduced to
zero and any losses allocated to such interests have been reimbursed. Any
available funds remaining in the SWAP REMIC on a Distribution Date after
distributions to the SWAP REMIC Regular Interests shall be distributed to the
Class R Certificates on account of the Class SWR Interest. On each Distribution
Date, the Trustee shall distribute the aggregate Interest Funds (net of
expenses) with respect to each of the SWAP REMIC Regular Interests based on the
interest rates for each such SWAP REMIC Regular Interest. On each Distribution
Date, the Trustee shall distribute the aggregate Principal Funds with respect to
the Group One Mortgage Loans first to the Class 1-SW1 Interest until its
principal balance is reduced to zero and then sequentially to each of the other
SWAP REMIC Regular Interests beginning with designation "1" in ascending order
of their numerical class designation, in equal amounts to each such class in
such numerical designation, until the principal balance of each such class is
reduced to zero. All losses with respect to the Group One Mortgage Loans shall
be allocated among the SWAP REMIC Regular Interests beginning with the
designation "1" in the same manner that principal distributions are allocated.
On each Distribution Date, the Trustee shall distribute the aggregate Principal
Funds with respect to the Group Two Mortgage Loans first to the Class 2-SW2
Interest until its principal balance is reduced to zero and then sequentially to
each of the other SWAP REMIC Regular Interests beginning with designation "2" in
ascending order of their numerical class designation, in equal amounts to each
such class in such numerical designation, until the principal balance of each
such class is reduced to zero. All losses with respect to the Group Two Mortgage
Loans shall be allocated among the SWAP REMIC Regular Interests beginning with
the designation "2" in the same manner that principal distributions are
allocated. Subsequent Recoveries with respect to the Group One and Group Two
Mortgage Loans shall be allocated in the reverse fashion from the manner in
which losses are allocated.
All payments received by the Lower Tier REMIC with respect to the SWAP
REMIC Regular Interests shall be paid to the Lower Tier REMIC Regular Interests
until the principal balance of all such interests have been reduced to zero and
any losses allocated to such interests have been reimbursed. Any excess amounts
shall be distributed to the Class LTR Interest. On each Distribution Date,
payments and losses shall be allocated among the Lower Tier REMIC Regular
Interests so that (i) each of the Lower Tier REMIC I Marker Interests shall have
a principal balance equal to 25% of the principal balance of the Corresponding
Certificates, (ii) the Class LTIX Interest has a principal balance equal to the
excess of (x) 50% of the remaining principal balance of the Mortgage Loans over
(y) the aggregate principal balance of the Lower Tier REMIC I Marker Interests
(if necessary to reflect an increase in overcollateralization,
-74-
accrued and unpaid interest on the Class LTIX interest may be added to its
principal amount to achieve this result) and (iii) the aggregate principal
amount of the Class LTII1A Interest, Class LTII1B Interest, Class LTII2A
Interest, Class LTII2B Interest and the Class LTIIX Interest shall equal 50% of
the remaining principal balance of the Mortgage Loans. Distributions and losses
allocated to the Lower Tier REMIC Regular Interests described in clause (iii) of
the preceding sentence will be allocated among such Lower Tier REMIC Regular
Interests in the following manner: (x) such distributions shall be deemed made
to such Lower Tier REMIC Regular Interests first, so as to keep the principal
balance of the each such Lower Tier REMIC Regular Interest with "B" at the end
of its designation equal to 0.05% of the aggregate scheduled principal balance
of the Mortgage Loans in the related Mortgage Group and second, to such Lower
Tier REMIC Regular Interests with "A" at the end of its designation so that the
uncertificated principal balance of each such Lower Tier REMIC Regular Interest
is equal to 0.05% of the excess of (I) the aggregate scheduled principal balance
of the Mortgage Loans in the related Mortgage Group over (II) the aggregate
principal balance of Certificate Group One, in the case of the Class LTII1A
Interest, or Certificate Group Two, in the case of the Class LTII2A Interest
(except that if 0.05% of any such excess is greater than the principal amount of
the related Lower Tier REMIC II Marker Interest with "A" at the end of its
designation, the least amount of principal shall be distributed to each Lower
Tier REMIC II Marker Interest with "A" at the end of its designation such that
the Lower Tier REMIC Subordinated Balance Ratio is maintained) and finally, any
remaining distributions of principal to the Class LTIIX Interest and (y) such
losses shall be allocated among the Lower Tier REMIC Regular Interests described
in clause (iii) of the preceding sentence first, so as to keep the principal
balance of the each such Lower Tier REMIC Regular Interest with "B" at the end
of its designation equal to 0.05% of the aggregate scheduled principal balance
of the Mortgage Loans in the related Mortgage Group; second, to such Lower Tier
REMIC Regular Interests with "A" at the end of its designation so that the
uncertificated principal balance of each such Lower Tier REMIC Regular Interest
is equal to 0.05% of the excess of (I) the aggregate scheduled principal balance
of the Mortgage Loans in the related Mortgage Group over (II) the aggregate
principal balance of Certificate Group One, in the case of the Class LTII1A
Interest, or Certificate Group Two, in the case of the Class LTII2A Interest
(except that if 0.05% of any such excess is greater than the principal amount of
the related Lower Tier REMIC II Marker Interest with "A" at the end of its
designation, the least amount of losses shall be allocated to each Lower REMIC
II Marker Interest with "A" at the end of its designation such that the Lower
Tier REMIC Subordinated Balance Ratio is maintained) and finally, any remaining
losses to the Class LTIIX Interest. Notwithstanding the preceding two sentences,
however, losses not allocated to any Class of Certificates will not be allocated
to any Lower Tier REMIC Regular Interests. All computations with respect to the
Lower Tier REMIC Regular Interests shall be taken out to ten decimal places.
Any available funds remaining in the Lower Tier REMIC on a Distribution
Date after distributions to the Lower Tier REMIC Regular Interests shall be
distributed to the Class R Certificates in respect of the Class LTR Interest.
If on any Distribution Date the Certificate Principal Balance of any Class
of Certificates is increased pursuant to the last sentence of the definition of
"Certificate Principal Balance", then there shall be an equivalent increase in
the principal amounts of the Lower Tier REMIC Regular Interests, with such
increase allocated (before the making of distributions and the allocation of
losses on the Lower Tier REMIC Regular Interests on such Distribution Date)
among the Lower Tier REMIC Regular Interests so that, to the greatest extent
possible, (i) each of the Lower Tier REMIC I Marker Interests has a principal
balance equal to 25% of the principal balance of the Corresponding Certificates,
(ii) the Class LTIX Interest has a principal balance equal to the excess of (x)
50% of the remaining principal balance of the Mortgage Loans over (y) the
aggregate principal balance of the Lower Tier REMIC I Marker Interests
-75-
and (iii) the aggregate principal amount of the Lower Tier REMIC II Marker
Interests and the Class LTIIX Interest shall equal 50% of the remaining
principal balance of the Mortgage Loans. Allocations in connection with clause
(iii) shall be made so that, to the greatest extent possible, (a) the principal
balance of each Lower Tier REMIC II Marker Interest with "B" at the end of its
designation equals 0.05% of the aggregate scheduled principal balance of the
Mortgage Loans in related Mortgage Group, (b) the principal balance of each
Lower Tier REMIC II Marker Interest with "A" at the end of its designation
equals 0.05% of the excess of (x) the aggregate scheduled principal balance of
the Mortgage Loans in related Mortgage Group over (y) the aggregate principal
balance of Certificate Group One in the case of the Class LTII1A Interest, or
Certificate Group Two in the case of the Class LTII2A Interest and (c) any
remaining allocations are made to the Class LTIIX Interest.
(i) In the event that any REMIC provided for herein fails to qualify
as a REMIC, loses its status as a REMIC or incurs federal, state or local taxes
as a result of a prohibited transaction or prohibited contribution under the
REMIC Provisions due to the negligent performance by the Servicer of its duties
and obligations set forth herein, the Servicer shall indemnify the NIMs Insurer,
the Trustee and the Trust Fund against any and all Losses resulting from such
negligence; provided, however, that the Servicer shall not be liable for any
such Losses attributable to the action or inaction of the Trustee, the Depositor
or the Holder of the residual interest in such REMIC, as applicable, nor for any
such Losses resulting from misinformation provided by the Holder of the residual
interest in such REMIC on which the Servicer has relied. The foregoing shall not
be deemed to limit or restrict the rights and remedies of the Holder of the
residual interest in such REMIC now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Servicer have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement, (2) for any Losses other than those arising out of a
negligent performance by the Servicer of its duties and obligations set forth
herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).
(j) In the event that any REMIC provided for herein fails to qualify
as a REMIC, loses its status as a REMIC, or incurs federal, state or local taxes
as a result of a prohibited transaction or prohibited contribution under the
REMIC Provisions due to the negligent performance by the Trustee of its duties
and obligations set forth herein, the Trustee shall indemnify the NIMs Insurer
and the Trust Fund against any and all Losses resulting from such negligence;
provided, however, that the Trustee shall not be liable for any such Losses
attributable to the action or inaction of the Servicer, the Depositor or the
Holder of the residual interest in such REMIC, as applicable, nor for any such
Losses resulting from misinformation provided by the Holder of the residual
interest in such REMIC on which the Trustee has relied. The foregoing shall not
be deemed to limit or restrict the rights and remedies of the Holder of the
residual interest in such REMIC now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Trustee have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement, (2) for any Losses other than those arising out of a
negligent performance by the Trustee of its duties and obligations set forth
herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).
SECTION 2.08. [RESERVED]
SECTION 2.09. Covenants of the Servicer.
-76-
The Servicer hereby covenants to each of the other parties to this
Agreement that the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy.
SECTION 2.10. [RESERVED]
SECTION 2.11. Permitted Activities of the Trust. The Trust is created for
the object and purpose of engaging in the Permitted Activities. In furtherance
of the foregoing, the Trustee is hereby authorized and directed to execute and
deliver on behalf of the Trust, and to perform the duties and obligations of the
Trust under, the Cap Contracts, an insurance and indemnity agreement with a NIMs
Insurer and any other agreement or instrument related thereto, in each case in
such form as the Depositor shall direct or shall approve, the execution and
delivery of any such agreement by the Depositor to be conclusive evidence of its
approval thereof.
SECTION 2.12. Qualifying Special Purpose Entity. For purposes of SFAS 140,
the parties hereto intend that the Trust Fund shall be treated as a "qualifying
special purpose entity" as such term is used in SFAS 140 and any successor rule
thereto and its power and authority as stated in Section 2.11 of this Agreement
shall be limited in accordance with paragraph 35 or SFAS 140.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall service and
administer the Mortgage Loans in accordance with the Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that, subject to Section 6.03, the
Servicer shall not take any action that is inconsistent with or prejudices the
interests of the Trust Fund or the Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the rights and interests of the other
parties to this Agreement except as otherwise required
-77-
by this Agreement or by law. Notwithstanding anything in this Agreement to the
contrary, the Servicer shall not make or permit any modification, waiver or
amendment of any term of any Mortgage Loan which would cause any of the REMICs
provided for herein to fail to qualify as a REMIC or result in the imposition of
any tax under Section 860G(a) or 860G(d) of the Code. The Servicer shall
represent and protect the interest of the Trust Fund in the same manner as it
currently protects its own interest in mortgage loans in its own portfolio in
any claim, proceeding or litigation regarding a Mortgage Loan, but in any case
not in any manner that is a lesser standard than that provided in the first
sentence of this Section 3.01. Without limiting the generality of the foregoing,
the Servicer, in its own name or in the name of the Depositor and the Trustee,
is hereby authorized and empowered by the Depositor and the Trustee, when the
Servicer believes it appropriate in its reasonable judgment, to execute and
deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any
of them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, subordinations and all other comparable
instruments, with respect to the Mortgage Loans, and with respect to the
Mortgaged Properties held for the benefit of the Certificateholders. The
Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by any or all of them as are
necessary or appropriate to enable the Servicer to service and administer the
Mortgage Loans, to the extent that the Servicer is not permitted to execute and
deliver such documents pursuant to the preceding sentence. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Servicer. For purposes of this Section 3.01, the Trustee
hereby grants to the Servicer a limited power of attorney to execute and file
any and all documents necessary to fulfill the obligations of the Servicer under
this Section 3.01.
Upon request of the Servicer, the Trustee shall furnish the Servicer with
any powers of attorney and other documents in form as provided to it necessary
or appropriate to enable the Servicer to service and administer the Mortgage
Loans. The Trustee shall not be responsible for and the Servicer shall indemnify
the Trustee for any action taken by the Servicer pursuant to the application of
any power of attorney. Notwithstanding anything contained herein to the
contrary, the Servicer shall not without the Trustee's written consent, hire or
procure counsel to represent the Trustee without indicating its representative
capacity.
The Servicer shall not be required to make any Servicing Advance with
respect to a Mortgage Loan that is 150 days or more delinquent.
The Servicer shall have at least 30 days' notice of the appointment of a
NIMs Insurer prior to being required to deliver any notices pursuant to this
Agreement to such NIMs Insurer.
The Servicer shall deliver a list of Servicing Officers to the Trustee by
the Closing Date.
The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Xxxxxx Xxx Guide Announcement 97-02 and for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
The Servicer further is authorized and empowered by the Trustee, on behalf
of the Certificateholders and the Trustee, in its own name or in the name of the
Sub-Servicer, when the Servicer or the Sub-Servicer, as the case may be,
believes it is appropriate in its best judgment to register any Mortgage Loan on
the MERS System, or cause the removal from the registration of any Mortgage Loan
on the MERS System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of
-78-
them, any and all instruments of assignment and other comparable instruments
with respect to such assignment or re-recording of a Mortgage in the name of
MERS, solely as nominee for the Trustee and its successors and assigns. Any
reasonable expenses incurred in connection with the actions described in the
preceding sentence or as a result of MERS discontinuing or becoming unable to
continue operations in connection with the MERS System, shall be subject to
withdrawal by the Servicer from the Collection Account (provided that such
expenses constitute "unanticipated expenses" within the meaning of Treasury
Regulation Section 1.860G-1(b)(3)(ii)).
With respect to any Mortgage Loan, the Servicer may consent to the
refinancing of the prior senior lien relating to such Mortgage Loan, provided
that the following requirements are met:
(a) the resulting Combined Loan-to-Value Ratio of such Mortgage Loan
is no higher than the Combined Loan-to-Value Ratio prior to such refinancing;
(b) the interest rate for the loan evidencing the refinanced senior
lien is no more than 2.0% higher than the interest rate on the loan evidencing
the existing senior lien immediately prior to the date of such refinancing; and
(c) the loan evidencing the refinanced senior lien is not subject to
negative amortization.
SECTION 3.02. Servicing and Subservicing; Enforcement of the Obligations of
Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage Loan
by a subservicer, which may be an affiliate, pursuant to a subservicing
agreement (each, a "Subservicing Agreement"); provided, however, that (i) such
subservicing arrangement and the terms of the related Subservicing Agreement
must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder, (ii) that such agreement
would not result in a withdrawal or downgrading by any Rating Agency of the
ratings of any Certificates or any of the NIM Notes evidenced by a letter to
that effect delivered by each Rating Agency to the Depositor and the NIMs
Insurer and (iii) the NIMs Insurer shall have consented to such Subservicing
Agreement, which consent shall not be unreasonably withheld. Notwithstanding the
provisions of any Subservicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Servicer and a
subservicer or reference to actions taken through a subservicer or otherwise,
the Servicer shall remain obligated and liable to the Depositor, the Trustee and
the Certificateholders for the servicing and administration of the Mortgage
Loans in accordance with the provisions of this Agreement without diminution of
such obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Mortgage Loans. Every Subservicing
Agreement entered into by the Servicer shall contain a provision giving any
successor servicer the option to terminate such agreement, with the consent of
the NIMs Insurer (which consent shall not be unreasonably withheld), in the
event a successor servicer is appointed. All actions of the each subservicer
performed pursuant to the related Subservicing Agreement shall be performed as
an agent of the Servicer with the same force and effect as if performed directly
by the Servicer. The Servicer shall deliver to the NIMs Insurer and the Trustee
copies of all Subservicing Agreements. The Trustee shall have no obligations,
duties or liabilities with respect to a subservicer, including, without
limitation, any obligation, duty or liability to monitor such subservicer or to
pay a Subservicer's fees and expenses.
-79-
(b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
related Mortgage Loans that are received by a subservicer regardless of whether
such payments are remitted by the subservicer to the Servicer.
(c) The Servicer shall not permit a Subservicer to perform any
servicing responsibilities hereunder with respect to the Mortgage Loans unless
that Subservicer first agrees in writing with the Servicer to deliver an
Assessment of Compliance and an Accountant's Attestation in such manner and at
such times that permits that Servicer to comply with Section 3.17 of this
Agreement.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.
Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.
SECTION 3.04. Trustee to Act as Servicer.
Subject to Sections 6.04 and 7.02, in the event that the Servicer shall for
any reason no longer be the servicer hereunder (including by reason of an Event
of Default), the Trustee or its designee shall, within a period of time not to
exceed ninety (90) days from the date of notice of termination or resignation,
thereupon assume all of the rights and obligations of the Servicer hereunder
arising thereafter (except that the Trustee shall not be (i) liable for losses
arising out of any acts or omissions of the predecessor servicer hereunder, (ii)
obligated to make Advances or Servicing Advances if it is prohibited from doing
so by applicable law, (iii) obligated to effectuate repurchases or substitutions
of Mortgage Loans hereunder, including pursuant to Section 2.02 or 2.03 hereof,
(iv) responsible for any expenses of the Servicer pursuant to Section 2.03 or
(v) deemed to have made any representations and warranties hereunder, including
pursuant to Section 2.04 or the first paragraph of Section 6.02 hereof;
provided, however that the Trustee (subject to clause (ii) above) or its
designee, in its capacity as the successor servicer, shall immediately assume
the terminated or resigning Servicer's obligation to make Advances and Servicing
Advances). No such termination or resignation shall affect any obligation of the
Servicer to pay amounts owed under this Agreement and to perform its duties
under this Agreement until its successor assumes all of its rights and
obligations hereunder. If the Servicer shall for any reason no longer be a
servicer (including by reason of any Event of Default), the Trustee (or any
other successor servicer) may, at its option, succeed to any rights and
obligations of the Servicer under any subservicing agreement in accordance with
the terms thereof; provided, however, that the Trustee (or any other successor
servicer) shall not incur any liability or have any obligations in its capacity
as servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Servicer thereunder; and the Servicer shall not thereby be relieved of
any liability or obligations under the subservicing agreement arising prior to
the date of such succession. To the extent any costs or expenses, including
without limitation, Servicing Transfer Costs incurred by the Trustee in
connection with this Section 3.04 or Section 7.02, are not paid by the Servicer
pursuant to this Agreement within 30 days of the date of the Trustee's invoice
thereof, such amounts shall be payable out of the Certificate Account; provided
that if the Servicer has been terminated by reason of an Event of Default, the
terminated servicer shall reimburse the Trust Fund for any such expense incurred
by the Trust Fund upon receipt of a reasonably detailed invoice evidencing such
expenses. If the Trustee is unwilling or unable to act as servicer, the Trustee
shall seek to appoint a successor servicer that is eligible in accordance with
the criteria specified in this Agreement and reasonably acceptable to the NIMs
Insurer.
-80-
The Servicer shall, upon request of the Trustee, but at the expense of the
Servicer if the Servicer has been terminated by reason of an Event of Default,
deliver to the assuming party all documents and records relating to each
subservicing agreement and the Mortgage Loans then being serviced and otherwise
use its best efforts to effect the orderly and efficient transfer of the
subservicing agreement to the assuming party.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.
(a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Servicer may in
its discretion (i) waive any late payment charge or, if applicable, any default
interest charge, or (ii) subject to Section 3.01, extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below; provided, further, that the
NIMs Insurer's prior written consent shall be required for any modification,
waiver or amendment after the Cut-off Date if the aggregate number of
outstanding Mortgage Loans which have been modified, waived or amended exceeds
5% of the number of Mortgage Loans as of the Cut-Off Date. In the event of any
such arrangement pursuant to clause (ii) above, subject to Section 4.01, the
Servicer shall make any Advances on the related Mortgage Loan during the
scheduled period in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangements.
Notwithstanding the foregoing, in the event that any Mortgage Loan is in default
or, in the judgment of the Servicer, such default is reasonably foreseeable, the
Servicer, consistent with the standards set forth in Section 3.01, may also
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor (any and all such waivers, modifications, variances,
forgiveness of principal or interest, postponements, or indulgences collectively
referred to herein as "forbearance"), provided, however, that in determining
which course of action permitted by this sentence it shall pursue, the Servicer
shall adhere to the standards of Section 3.01. The Servicer's analysis
supporting any forbearance and the conclusion that any forbearance meets the
standards of Section 3.01 shall be reflected in writing in the Mortgage File.
(b) The Servicer will not waive any Prepayment Charge or portion
thereof unless, (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership or other similar laws relating
to creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the Servicer has not
been provided with information sufficient to enable it to collect the Prepayment
Charge, or (iv) in the Servicer's reasonable judgment as described in Section
3.01 hereof, (x) such waiver relates to a default or a reasonably foreseeable
default, (y) such waiver would maximize recovery of total proceeds taking into
account the value of such Prepayment Charge and related Mortgage Loan and (z)
doing so is standard and customary in servicing similar Mortgage Loans
(including any waiver of a Prepayment Charge in connection with a refinancing of
a Mortgage Loan that is related to a default or a reasonably foreseeable
default), or (v) the collection of the Prepayment Charge
-81-
or of a similar type of prepayment premium would be considered "predatory" or
"illegal" pursuant to written guidance published by any applicable federal,
state or local regulatory authority having jurisdiction over such matters or has
been challenged by any such authority, or (vi) only to the extent that the
Depositor has notified the Servicer that there are no NIM Notes outstanding,
there is a certified class action in which a similar type of prepayment premium
is being challenged. Except as provided in the preceding sentence, in no event
will the Servicer waive a Prepayment Charge in connection with a refinancing of
a Mortgage Loan that is not related to a default or a reasonably foreseeable
default. If the Servicer waives or does not collect all or a portion of a
Prepayment Charge relating to a Principal Prepayment in full or in part due to
any action or omission of the Servicer, other than as provided above, the
Servicer shall deposit the amount of such Prepayment Charge (or such portion
thereof as had been waived for deposit) into the Collection Account for
distribution in accordance with the terms of this Agreement.
(c) The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.
(d) The Servicer shall establish and initially maintain, on behalf of
the Certificateholders, a Collection Account. The Servicer shall deposit into
such Collection Account daily, within two Business Days of receipt thereof, in
immediately available funds, the following payments and collections received or
made by it on and after the Cut-off Date with respect to the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the
Mortgage Loans on or prior to the Cut-off Date;
(ii) all payments on account of interest on the Mortgage Loans net of
the Servicing Fee permitted under Section 3.15, other than (x) interest due
on the Mortgage Loans on or prior to the Cut-off Date and (y) Prepayment
Interest Excess;
(iii) all Liquidation Proceeds, other than proceeds to be applied to
the restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with the Servicer's normal servicing procedures;
(iv) all Subsequent Recoveries;
(v) all Compensating Interest;
(vi) any amount required to be deposited by the Servicer pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments;
(vii) any amounts required to be deposited by the Servicer pursuant to
Section 3.10 hereof;
(viii) all Advances made by the Servicer pursuant to Section 4.01;
(ix) all Prepayment Charges; and
-82-
(x) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property and other similar ancillary fees (other than
Prepayment Charges) if collected, and any Prepayment Interest Excess need not be
remitted by the Servicer. Rather, such fees and charges may be retained by the
Servicer as additional servicing compensation. In the event that the Servicer
shall remit any amount not required to be remitted and not otherwise subject to
withdrawal pursuant to Section 3.08 hereof, it may at any time withdraw or
direct the Trustee, or such other institution maintaining the Collection
Account, to withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding. The Servicer shall maintain adequate
records with respect to all withdrawals made pursuant to this Section. All funds
deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.
The Servicer shall give notice to the NIMs Insurer and the Trustee of the
location of the Collection Account maintained by it when established and prior
to any change thereof. Not later than twenty days after each Distribution Date,
the Servicer shall forward to the NIMs Insurer, the Trustee and the Depositor
the most current available bank statement for the Collection Account. Copies of
such statement shall be provided by the Trustee to any Certificateholder and to
any Person identified to the Trustee as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided such
statement is delivered by the Servicer to the Trustee.
(e) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:
(i) the aggregate amount withdrawn by the Servicer from the Collection
Account for deposit in the Certificate Account;
(ii) the Purchase Price and any Substitution Adjustment Amount;
(iii) any amount required to be deposited by the Trustee pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments; and
(iv) the Optional Termination Amount paid by the winning bidder at the
Auction or by the Servicer pursuant to Section 9.01.
Any amounts received by the Trustee prior to 1:00 p.m. New York City
time (or such earlier deadline for investment in the Permitted Investments
designated by the Trustee) which are required to be deposited in the Certificate
Account by the Servicer may be invested in Permitted Investments on the Business
Day on which they were received. The foregoing requirements for remittance by
the Servicer and deposit by the Servicer into the Certificate Account shall be
exclusive. If the Servicer fails to remit any funds due by the time designated
herein, the Servicer shall pay to the Trustee, for its own account, interest
accrued on such funds at the prime rate as set forth in The Wall Street Journal
from and including the applicable due date, to but excluding the day such funds
are paid to the Trustee. In the event that the
-83-
Servicer shall remit any amount not required to be remitted and not otherwise
subject to withdrawal pursuant to Section 3.08 hereof, it may at any time
withdraw such amount from the Certificate Account, any provision herein to the
contrary notwithstanding. All funds deposited in the Certificate Account shall
be held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08. In
no event shall the Trustee incur liability for withdrawals from the Certificate
Account at the direction of the Servicer. The Trustee shall give notice to the
NIMs Insurer and the Servicer of the location of the Certificate Account
maintained by it when established and prior to any change thereof.
(f) Each institution that maintains the Collection Account shall, and
each institution that maintains the Certificate Account may but shall not be
required to, invest the funds in each such account, as directed by the Servicer
or the Trustee, as applicable, in writing, in Permitted Investments, which shall
mature not later than (i) in the case of the Collection Account the Business Day
preceding the Servicer Remittance Date (except that if such Permitted Investment
is an obligation of the institution that maintains such Collection Account or is
otherwise immediately available, then such Permitted Investment shall mature not
later than the Servicer Remittance Date) and (ii) in the case of the Certificate
Account, the Business Day immediately preceding the first Distribution Date that
follows the date of such investment (except that if such Permitted Investment is
an obligation of the institution that maintains such Certificate Account or is
otherwise immediately available, then such Permitted Investment shall mature not
later than such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be made
in the name of the Trustee for the benefit of the Certificateholders. All income
and gain net of any losses realized from amounts on deposit in the Collection
Account shall be for the benefit of the Servicer as servicing compensation and
shall be remitted to it monthly as provided herein. The amount of any losses
incurred in the Collection Account in respect of any such investments shall be
deposited by the Servicer in the Collection Account out of the Servicer's own
funds immediately as realized. All income and gain net of any losses realized
from amounts on deposit in the Certificate Account shall be for the benefit of
the Trustee and shall be remitted to or withdrawn by it monthly as provided
herein. The amount of any losses incurred in the Certificate Account in respect
of any such investments shall be deposited by the Trustee in the Certificate
Account out of the Trustee's own funds immediately as realized.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.
To the extent required by the related Mortgage Note, the Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Servicer to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the
Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes and assessments and insurance premiums) and
3.10 hereof (with respect to hazard insurance), to refund to any Mortgagors any
sums as may be determined to be overages, to pay interest, if required by law or
the terms of the related Mortgage or Mortgage Note, to Mortgagors on balances in
the Escrow Account or to clear and terminate the Escrow Account at the
termination of this Agreement in accordance with Section 9.01 hereof. The Escrow
Accounts shall not be a part of the Trust Fund.
-84-
SECTION 3.07. Access to Certain Documentation and Information Regarding the
Mortgage Loans.
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.
The Servicer may from time to time provide the Depositor, and any Person
designated by the Depositor, with reports and information regarding the Mortgage
Loans, including without limitation, information requested by the Depositor or
an originator of the Mortgage Loans for required institutional risk control.
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.
(a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously paid to or
withheld by the Servicer), as servicing compensation in accordance with
Section 3.15, that portion of any payment of interest that equals the
Servicing Fee for the period with respect to which such interest payment
was made, and, as additional servicing compensation, those other amounts
set forth in Section 3.15;
(ii) to reimburse the Servicer (or the Trustee as successor servicer)
for Advances made by it (or to reimburse the Advance Financing Person for
Advances made by it) with respect to the Mortgage Loans, such right of
reimbursement pursuant to this subclause (ii) being limited to amounts
received on particular Mortgage Loan(s) (including, for this purpose,
Liquidation Proceeds) that represent late recoveries of payments of
principal and/or interest on such particular Mortgage Loan(s) in respect of
which any such Advance was made;
(iii) to reimburse the Servicer for any Non-Recoverable Advance
previously made and any Non-Recoverable Servicing Advances previously made
to the extent that, in the case of Non-Recoverable Servicing Advances,
reimbursement therefor constitutes "unanticipated expenses" within the
meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii);
(iv) to pay to the Servicer earnings on or investment income with
respect to funds in or credited to the Collection Account;
(v) to reimburse the Servicer from Insurance Proceeds for Insured
Expenses covered by the related Insurance Policy;
(vi) [reserved];
-85-
(vii) to pay the Servicer (or the Trustee as successor servicer) any
unpaid Servicing Fees and to reimburse it for any unreimbursed Servicing
Advances (to the extent that reimbursement for Servicing Advances would
constitute an "unanticipated expense" within the meaning of Treasury
Regulation Section 1.860G-1(b)(3)(ii)), the Servicer's right to
reimbursement of Servicing Advances pursuant to this subclause (vi) with
respect to any Mortgage Loan being limited to amounts received on
particular Mortgage Loan(s)(including, for this purpose, Liquidation
Proceeds and purchase and repurchase proceeds) that represent late
recoveries of the payments for which such advances were made pursuant to
Section 3.01 or Section 3.06;
(viii) to pay to the Depositor or the Servicer, as applicable, with
respect to each Mortgage Loan or property acquired in respect thereof that
has been purchased pursuant to Section 2.02, 2.03 or 3.12, all amounts
received thereon and not taken into account in determining the related
Stated Principal Balance of such repurchased Mortgage Loan;
(ix) to reimburse the Servicer, the Trustee or the Depositor for
expenses incurred by any of them in connection with the Mortgage Loans or
Certificates and reimbursable pursuant to Section 3.04, Section 3.25 or
Section 6.03 hereof provided that reimbursement therefor would constitute
"unanticipated" expenses within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii);
(x) to reimburse the Trustee for enforcement expenses reasonably
incurred in respect of a breach or defect giving rise to the purchase
obligation in Section 2.03 that were incurred in the Purchase Price of the
Mortgage Loans including any expenses arising out of the enforcement of the
purchase obligation; provided that any such expenses will be reimbursable
under this subclause (x) only to the extent that such expenses would
constitute "unanticipated expenses" within the meaning of Treasury
Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the REMICs provided
for herein;
(xi) to pay the Servicer any unpaid Servicing Fees for any Mortgage
Loan upon such Mortgage Loan being charged off and upon termination of the
obligations of the Servicer;
(xii) to withdraw pursuant to Section 3.05 any amount deposited in the
Collection Account and not required to be deposited therein; and
(xiii) to clear and terminate the Collection Account upon termination
of this Agreement pursuant to Section 9.01 hereof.
In addition, the Servicer will use commercially reasonable efforts to cause
to be withdrawn from the Collection Account no later than 2:30 p.m. Eastern
Time, but in any case no later than 4:00 p.m. Eastern Time on the Servicer
Remittance Date, the Interest Funds and the Principal Funds (other than amounts
payable to the Trustee), to the extent on deposit, and such amount shall be
deposited in the Certificate Account; provided, however, if the Trustee does not
receive such Interest Funds and Principal Funds on the Servicer Remittance Date,
the Servicer shall pay, out of its own funds, interest on such amount at a rate
equal to the "prime rate" as published by The Wall Street Journal at such time
for each date or part thereof.
-86-
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account.
The Servicer shall provide written notification to the Trustee on or prior
to the next succeeding Servicer Remittance Date upon making any withdrawals from
the Collection Account pursuant to subclauses (iii) and (vii) above.
Unless otherwise specified, any amounts reimbursable to the Servicer or the
Trustee from amounts on deposit in the Collection Account or the Certificate
Accounts shall be deemed to come from first, Interest Funds, and thereafter,
Principal Funds for the related Distribution Date.
(b) The Trustee shall withdraw funds from the Certificate Account for
distribution to the Certificateholders in the manner specified in this Agreement
(and shall withhold from the amounts so withdrawn, the amount of any taxes that
it is authorized to retain pursuant to this Agreement). In addition, the Trustee
may from time to time make withdrawals from the Certificate Account for the
following purposes:
(i) to withdraw pursuant to Section 3.05 any amount deposited in the
Certificate Account and not required to be deposited therein;
(ii) to clear and terminate the Certificate Account upon termination
of the Agreement pursuant to Section 9.01 hereof (after paying all amounts
necessary to the Trustee or the Servicer in connection with any such
termination);
(iii) to pay to the Trustee (or any custodian) for any fees, expenses
and indemnification reimbursable pursuant to this Agreement, including
without limitation Sections 3.04, 6.03, 8.05 and 8.06 hereof; and
(iv) to pay to the Trustee earnings on or investment income with
respect to funds in or credited to the Certificate Account.
SECTION 3.09. [RESERVED]
SECTION 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each first lien Mortgage
Loan, hazard insurance with extended coverage in an amount, to the extent
permitted by applicable law, that is at least equal to the lesser of (i) the
estimated replacement value of the improvements that are part of such Mortgaged
Property which may be the last known coverage, and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds of such policy shall be sufficient to prevent the related Mortgagor
and/or mortgagee from becoming a co-insurer. Each such policy of standard hazard
insurance shall contain, or have an accompanying endorsement that contains, a
standard mortgagee clause. The Servicer shall also cause flood insurance to be
maintained on property acquired upon foreclosure or deed in lieu of foreclosure
of any Mortgage Loan, to the extent required under the standards described
below. Pursuant to Section 3.05 hereof, any amounts collected by the Servicer
under any such policies (other than the amounts to be applied to the restoration
or repair of the related Mortgaged Property or property thus acquired or amounts
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures) shall be deposited in the Collection Account. Any cost
-87-
incurred by the Servicer in maintaining any such insurance shall not, for the
purpose of calculating monthly distributions to the Certificateholders or
remittances to the Trustee for their benefit, be added to the principal balance
of the Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so
permit. Such costs shall be recoverable by the Servicer out of late payments by
the related Mortgagor or out of Liquidation Proceeds to the extent and as
otherwise permitted by Section 3.08 hereof. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor or
maintained on property acquired in respect of a Mortgage other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If a first lien Mortgaged Property is
located at the time of origination of the Mortgage Loan in a federally
designated special flood hazard area and such area is participating in the
national flood insurance program, the Servicer shall cause flood insurance to be
maintained with respect to such Mortgage Loan. Such flood insurance shall be in
an amount equal to the lesser of (i) the original principal balance of the
related Mortgage Loan, (ii) the estimated replacement value of the improvements
that are part of such Mortgaged Property which may be the last known coverage,
or (iii) the maximum amount of such insurance available for the related
Mortgaged Property under the Flood Disaster Protection Act of 1973, as amended.
In the event that the Servicer shall obtain and maintain a blanket policy
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, except as set forth below, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale" clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law; provided, further, that the Servicer shall not take any action in relation
to the enforcement of any "due-on-sale" clause that would adversely affect or
jeopardize coverage under any Required Insurance Policy. An Opinion of Counsel
at the expense of the Servicer (which expense shall constitute a Servicing
Advance) delivered to the Trustee and the Depositor shall conclusively establish
the reasonableness of the Servicer's belief that any "due-on-sale" clause is not
enforceable under applicable law. 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
-88-
shall not be required to enforce any "due-on-sale" clause if in the reasonable
judgment of the Servicer, entering into an assumption and modification agreement
with a Person to whom such property shall be conveyed and releasing the original
Mortgagor from liability would be in the best interests of the
Certificateholders. The Mortgage Loan, as assumed, shall conform in all respects
to the requirements, representations and warranties of this Agreement. The
Servicer shall notify the Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Trustee the original copy of
such assumption or substitution agreement (indicating the Mortgage File to which
it relates), which copy shall be added by the Trustee to the related Mortgage
File and which shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. The Servicer shall be responsible for recording any such
assumption or substitution agreements. In connection with any such assumption or
substitution agreement, the Monthly Payment on the related Mortgage Loan shall
not be changed but shall remain as in effect immediately prior to the assumption
or substitution, the stated maturity or outstanding principal amount of such
Mortgage Loan shall not be changed nor shall any required monthly payments of
principal or interest be deferred or forgiven. Any fee collected by the Servicer
for consenting to any such 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 3.12. Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds; Special Loss Mitigation.
(a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account pursuant to
Section 3.08 hereof). The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the proceeds of liquidation of
the related Mortgaged Property, as contemplated in Section 3.08 hereof. If the
Servicer has knowledge that a Mortgaged Property that it is contemplating
acquiring in foreclosure or by deed-in-lieu of foreclosure is located within a
one-mile radius of any site with environmental or hazardous waste risks known to
the Servicer, the Servicer will, prior to acquiring the Mortgaged Property,
consider such risks and only take action in accordance with Accepted Servicing
Practices.
With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee or its nominee. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or
-89-
through an agent selected by the Servicer protect and conserve such REO Property
in the same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and protection of
the interests of the Certificateholders, rent the same, or any part thereof, as
the Servicer deems to be in the best interest of itself and the
Certificateholders for the period prior to the sale of such REO Property. The
Servicer or an Affiliate thereof may receive usual and customary real estate
referral fees for real estate brokers in connection with the listing and
disposition of REO Property. The Servicer shall prepare a statement with respect
to each REO Property that has been rented showing the aggregate rental income
received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Servicer to comply with the reporting requirements of the REMIC Provisions. The
net monthly rental income, if any, from such REO Property shall be deposited in
the Collection Account no later than the close of business on each Determination
Date. The Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Trust Fund or, at the expense of the Trust Fund, obtain, in accordance with
applicable procedures for obtaining an automatic extension of the grace period,
more than 60 days prior to the day on which such three-year period would
otherwise expire, an extension of the three-year grace period, in which case
such property must be disposed of prior to the end of such extension, unless the
Trustee and the NIMs Insurer shall have been supplied with an Opinion of Counsel
(such Opinion of Counsel not to be an expense of the Trustee or the NIMs
Insurer), to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to such three-year period or extension will not result in
the imposition of taxes on "prohibited transactions" of the Trust Fund or any of
the REMICs provided for herein as defined in section 860F of the Code or cause
any of the REMICs provided for herein to fail to qualify as a REMIC at any time
that any Certificates are outstanding, in which case the Trust Fund may continue
to hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement, no
Mortgaged Property acquired by the Trust Fund shall be held, rented (or allowed
to continue to be rented) or otherwise used for the production of income by or
on behalf of the Trust Fund in such a manner or pursuant to any terms that would
(i) cause such Mortgaged Property to fail to qualify as "foreclosure property"
within the meaning of section 860G(a)(8) of the Code or (ii) subject the Trust
Fund or any REMIC provided for herein to the imposition of any federal, state or
local income taxes on the income earned from such Mortgaged Property under
section 860G(c) of the Code or otherwise, unless the Servicer or the Depositor
has agreed to indemnify and hold harmless the Trustee and the Trust Fund with
respect to the imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current) and
all such income shall be deemed, for all purposes in this Agreement, to be
-90-
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Collection Account. To the extent the income
received during a Prepayment Period is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting from
a partial collection of Liquidation Proceeds or any income from an REO Property,
will be applied in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and Servicing Fees,
pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse the
Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or this
Section 3.12; third, to any Prepayment Charges and then to accrued and unpaid
interest (to the extent no Advance has been made for such amount) on the
Mortgage Loan or related REO Property, at the Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed; and
fourth, as a recovery of principal of the Mortgage Loan.
(b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.
(c) [RESERVED]
(d) With respect to such of the Mortgage Loans as come into and
continue in default, the Servicer will decide, in its reasonable business
judgment, whether to (i) foreclose upon the Mortgaged Properties securing those
Mortgage Loans pursuant to Section 3.12(a), (ii) write off the unpaid principal
balance of the Mortgage Loans as bad debt (provided that the Servicer has
determined that no net recovery is possible through foreclosure proceedings or
other liquidation of the related Mortgaged Property), (iii) take a deed in lieu
of foreclosure, (iv) accept a short sale or short refinance; (v) arrange for a
repayment plan, or (vi) agree to a modification of such Mortgage Loan. As to any
Mortgage Loan that becomes 120 days delinquent, the Servicer shall have obtained
or shall obtain a broker's price opinion, the cost of which will be reimbursable
as a Servicing Advance. After obtaining the broker's price opinion, the Servicer
will determine, in its reasonable business judgment, whether a net recovery is
possible through foreclosure proceedings or other liquidation of the related
Mortgage Property. If the Servicer determines that no such recovery is possible,
it must charge off the related Mortgage Loan at the time it becomes 180 days
delinquent. Once a Mortgage Loan has been charged off, the Servicer will
discontinue making Advances, the Servicer will not be entitled to Servicing Fees
(except as provided below) with respect to such Mortgage Loan, and the Mortgage
Loan will be treated as a Liquidated Mortgage Loan. If the Servicer determines
that such net recovery is possible through foreclosure proceedings or other
liquidation of the related Mortgaged Property on a Mortgage Loan that becomes
180 days delinquent, the Servicer may continue making Advances, and the Servicer
will be required to notify the Trustee of such decision.
(e) Any Mortgage Loan that is charged off, pursuant to (d) above, may
continue to be serviced by the Servicer for the Certificateholders using
specialized collection procedures (including foreclosure, if appropriate). The
Servicer will be entitled to Servicing Fees and reimbursement of
-91-
expenses in connection with such Mortgage Loans after the date of charge off,
only to the extent of funds available from any recoveries on any such Mortgage
Loans. Any such Mortgage Loans serviced in accordance with the specialized
collection procedures shall be serviced for approximately six months. Any net
recoveries received on such Mortgage Loans during such six month period will be
treated as Subsequent Recoveries. On the date which is six months after the date
on which the Servicer begins servicing such Mortgage Loans using the specialized
collection procedures, unless specific net recoveries are anticipated by the
Servicer on a particular Mortgage Loan, such charged off loan will be released
to the majority holder of the Class C Certificates and thereafter, (i) the
majority holder of the Class C Certificates, as identified with contact
information in writing to the Servicer by the Depositor, will be entitled to any
amounts subsequently received in respect of any such released loans, subject to
the Servicer's fees described below, (ii) the majority holder of the Class C
Certificates may designate any servicer to service any such released loan, (iii)
the majority holder of the Class C Certificates may sell any such released loan
to a third party and (iv) to the extent the servicing of such charged off loan
is not transferred from the Servicer, the servicing of such charged off loan and
the fees therefore shall be governed by the most current servicing agreement
between the Servicer and the Sponsor.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its custodian by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of a copy of such request, the Trustee or its custodian
shall promptly release the related Mortgage File to the Servicer, the cost of
which may be charged to the Servicer by the Trustee, and the Servicer is
authorized to cause the removal from the registration on the MERS System of any
such Mortgage if applicable, and the Servicer, on behalf of the Trustee shall
execute and deliver the request for reconveyance, deed of reconveyance or
release or satisfaction of mortgage or such instrument releasing the lien of the
Mortgage together with the Mortgage Note with written evidence of cancellation
thereon. Expenses incurred in connection with any instrument of satisfaction or
deed of reconveyance shall be chargeable to the Mortgagor to the extent
permitted by law, and otherwise to the Trust Fund to the extent such expenses
constitute "unanticipated expenses" within the meaning of Treasury Regulations
Section 1.860G-(1)(b)(3)(ii). From time to time and as shall be appropriate for
the servicing or foreclosure of any Mortgage Loan, including for collection
under any policy of flood insurance, any fidelity bond or errors or omissions
policy, or for the purposes of effecting a partial release of any Mortgaged
Property from the lien of the Mortgage or the making of any corrections to the
Mortgage Note or the Mortgage or any of the other documents included in the
Mortgage File, the Trustee or its custodian shall, upon delivery to the Trustee
or its custodian of a Request for Release in the form of Exhibit I signed by a
Servicing Officer, release the Mortgage File to the Servicer, and the cost of
delivery of the Mortgage File may be charged to the Servicer by the Trustee.
Subject to the further limitations set forth below, the Servicer shall cause the
Mortgage File or documents so released to be returned to the Trustee or its
custodian when the need therefor by the Servicer no longer exists, unless the
Mortgage Loan is liquidated and the proceeds thereof are deposited in the
Collection Account.
Each Request for Release may be delivered to the Trustee or its custodian
(i) via mail or courier, (ii) via facsimile or (iii) by such other means,
including, without limitation, electronic or computer readable medium, as the
Servicer and the Trustee or its custodian shall mutually agree. The Trustee or
its custodian shall release the related Mortgage File(s) within four Business
Days of receipt of a properly completed Request for Release pursuant to clauses
(i), (ii) or (iii) above. Receipt of a properly completed Request for Release
shall be authorization to the Trustee or its custodian to release such Mortgage
Files,
-92-
provided the Trustee or its custodian has determined that such Request for
Release has been executed, with respect to clauses (i) or (ii) above, or
approved, with respect to clause (iii) above, by an authorized Servicing Officer
of the Servicer, and so long as the Trustee or its custodian complies with its
duties and obligations under this Agreement. If the Trustee or its custodian is
unable to release the Mortgage Files within the period previously specified, the
Trustee or its custodian shall immediately notify the Servicer indicating the
reason for such delay. The Servicer shall not pay penalties or damages due to
the Trustee's or its designee's negligent failure to release the related
Mortgage File or the Trustee's or its designee's negligent failure to execute
and release documents in a timely manner, and such amounts shall be Servicer
Advances.
On each day that the Servicer remits to the Trustee or its custodian
Requests for Releases pursuant to clauses (ii) or (iii) above, the Servicer
shall also submit to the Trustee or its custodian a summary of the total number
of such Requests for Releases requested on such day by the same method as
described in such clauses (ii) and (iii) above.
If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Servicer
may deliver or cause to be delivered to the Trustee or its custodian, for
signature, as appropriate or on behalf of the Trustee, execute any court
pleadings, requests for trustee's sale or other documents necessary to
effectuate such foreclosure or any legal action brought to obtain judgment
against the Mortgagor on the Mortgage Note or the Mortgage or to obtain a
deficiency judgment or to enforce any other remedies or rights provided by the
Mortgage Note or the Mortgage or otherwise available at law or in equity.
Notwithstanding the foregoing, the Servicer shall cause possession of any
Mortgage File or of the documents therein that shall have been released by the
Trustee or its custodian to be returned to the Trustee or its custodian promptly
after possession thereof shall have been released by the Trustee or its
custodian unless (i) the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account, and the Servicer shall have delivered to the Trustee or its custodian a
Request for Release in the form of Exhibit I or (ii) the Mortgage File or
document shall have been delivered to an attorney or to a public trustee or
other public official as required by law for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged Property
and the Servicer shall have delivered to the Trustee or its custodian an
Officer's Certificate of a Servicing Officer certifying as to the name and
address of the Person to which the Mortgage File or the documents therein were
delivered and the purpose or purposes of such delivery.
SECTION 3.14. Documents, Records and Funds in Possession of Servicer to be
Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the control of,
the Servicer in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds, including but not
limited to, any funds on deposit in the Collection Account, shall be held by the
Servicer for and on behalf of the Trustee and shall be and remain the sole and
exclusive property of the Trust Fund, subject to the applicable provisions of
this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Collection
Account or in any Escrow Account, or any funds that otherwise are or may become
due or payable to the Trustee for the benefit of the Certificateholders, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of set
off against any Mortgage File or any funds collected on, or in connection with,
a Mortgage
-93-
Loan, except, however, that the Servicer shall be entitled to set off against
and deduct from any such funds any amounts that are properly due and payable to
the Servicer under this Agreement.
SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.
Additional servicing compensation in the form of any Excess Proceeds, late
payment fees, assumption fees (i.e. fees related to the assumption of a Mortgage
Loan upon the purchase of the related Mortgaged Property) and similar fees
payable by the Mortgagor, Prepayment Interest Excess, all income and gain net of
any losses realized from Permitted Investments in the Collection Account, and
any other benefits arising from the Collection Account and the Escrow Account
shall be retained by the Servicer to the extent not required to be deposited in
the Collection Account and the Escrow Account pursuant to Sections 3.05, 3.06 or
3.12(a) hereof. The Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement therefor except as specifically provided in this
Agreement. In no event shall the Trustee be liable for any Servicing Fee or for
any differential between the Servicing Fee and the amount necessary to induce a
successor servicer to act as successor servicer under this Agreement.
SECTION 3.16. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, as
applicable, access to the documentation regarding the Mortgage Loans required by
applicable regulations of the OTS and the FDIC. Such access shall be afforded
without charge, but only upon reasonable and prior written request and during
normal business hours at the offices of the Servicer designated by it provided,
that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Servicer in providing such
reports and access. Nothing in this Section shall limit the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
SECTION 3.17. Annual Statement as to Compliance.
Not later than (a) March 12 of each calendar year (other than the calendar
year during which the Closing Date occurs) or (b) with respect to any calendar
year during which an annual report on Form 10-K is not required to be filed
pursuant to Section 3.20 on behalf of the Trust, by April 15 of each calendar
year (or if such day is not a Business Day, the immediately succeeding Business
Day), the Servicer shall deliver to the Trustee and the Depositor, an Officers'
Certificate in the form attached hereto as Exhibit U stating, as to each
signatory thereof, that (i) a review of the activities of such Servicer during
the preceding calendar year and of the performance of such Servicer under this
Agreement has been made under such officer's supervision, and (ii) to the best
of such officer's knowledge, based on such review, such Servicer has fulfilled
all its obligations under this Agreement in all material respects throughout
such year or a portion thereof, or, if there has been a failure to fulfill any
such obligation in any material respect, specifying each such failure known to
such officer and the nature and status thereof. With
-94-
respect to any Subservicer that meets the criteria of Item 1108(a)(2)(i) through
(iii) of Regulation AB, the related Servicer shall deliver, on behalf of that
Subservicer, the Officer's Certificate set forth in this Section 3.17 as and
when required with respect to such Subservicer.
SECTION 3.18. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
(a) Not later than (i) March 12 of each calendar year (other than the
calendar year during which the Closing Date occurs) or (ii) with respect to any
calendar year during which an annual report on Form 10-K is not required to be
filed pursuant to Section 3.20 on behalf of the Trust, by April 15 of each
calendar year (or if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer, at its own expense, shall deliver to the Trustee
and the Depositor an officer's assessment of its compliance with the Servicing
Criteria during the preceding calendar year as required by Rules 13a-18 and
15d-18 of the Exchange Act and Item 1122 of Regulation AB (the "Assessment of
Compliance"), which assessment shall be substantially in the form of Exhibit R
hereto.
(b) Not later than (i) March 12 of each calendar year (other than the
calendar year during which the Closing Date occurs) or (ii) with respect to any
calendar year during which an annual report on Form 10-K is not required to be
filed pursuant to Section 3.20 on behalf of the Trust, April 15 of each calendar
year (or if such day is not a Business Day, the immediately succeeding Business
Day), the Servicer, at its own expense, shall cause a nationally or regionally
recognized firm of independent registered public accountants (who may also
render other services to any Servicer, the Sponsor or any affiliate thereof)
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Trustee and the Depositor that attests to and reports
on the assessment of compliance provided by such Servicer pursuant to Section
3.18(a) (the "Accountant's Attestation"). Such Accountant's Attestation shall be
in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act.
(c) The Servicer shall deliver on behalf of any Subservicer and each
Subcontractor (unless, in the case of any Subcontractor, the Depositor has
notified the Servicer and the Trustee in writing that such compliance statement
is not required by Regulation AB) not later than March 12 of each calendar year
(other than the calendar year during which the Closing Date occurs) with respect
to any calendar year during which the Trust's annual report on Form 10-K is
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, to the Trustee and the Depositor an Assessment of
Compliance, which assessment shall be substantially in the form of Exhibit R
hereto. The Servicer shall deliver on behalf of any Subservicer (other than the
calendar year during which the Closing Date occurs) with respect to any calendar
year during which the Trust's annual report on Form 10-K is not required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission, by April 15 of each calendar year (or, in each case, if such day is
not a Business Day, the immediately succeeding Business Day) to the Trustee and
the Depositor an Assessment of Compliance, which assessment shall be
substantially in the form of Exhibit R hereto.
(d) Not later than March 12 of each calendar year (other than the
calendar year during which the Closing Date occurs) with respect to any calendar
year during which the Trust's annual report on Form 10-K is required to be filed
in accordance with the Exchange Act and the rules and regulations of the
Commission, the Servicer shall cause each Subservicer and each Subcontractor
(unless, in the case of any Subcontractor, the Depositor has notified the
Trustee and Servicer in writing that such compliance statement is not required
by Regulation AB) to deliver to the Trustee and the Depositor an
-95-
Accountant's Attestation by a registered public accounting firm that attests to,
and reports on, the Assessment of Compliance pursuant to Section 3.18(c) above.
Other than the calendar year during which the Closing Date occurs, with respect
to any calendar year during which the Trust's annual report on Form 10-K is not
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, not later than April 15 of each calendar year
(or, in each case, if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer shall cause each Subservicer to deliver to the
Trustee and the Depositor an Accountant's Attestation by a registered public
accounting firm that attests to, and reports on, the Assessment of Compliance
pursuant to Section 3.18(c) above.
(e) Not later than, with respect to any calendar year during which the
Trust's annual report on Form 10K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission, 15 calendar days
before the date on which the Trust's annual report on Form 10-K with respect to
the transactions contemplated by this Agreement is required to be filed in
accordance with the Exchange Act and the rules and regulations of the Commission
(or, in each case, if such day is not a Business Day, the immediately preceding
Business Day), the Trustee shall deliver to the Depositor and the Servicer an
Assessment of Compliance with regard to the Servicing Criteria applicable to the
Trustee during the preceding calendar year, which assessment shall be
substantially in the form of Exhibit R hereto.
(f) Not later than, with respect to any calendar year during which the
Trust's annual report on Form 10K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission, 15 calendar days
before the date on which the Trust's annual report on Form 10-K with respect to
the transactions contemplated by this Agreement is required to be filed in
accordance with the Exchange Act and the rules and regulations of the Commission
(or, in each case, if such day is not a Business Day, the immediately preceding
Business Day), the Trustee shall deliver to the Depositor and the Servicer an
Accountant's Attestation by a registered public accounting firm that attests to,
and reports on, the Assessment of Compliance pursuant to Section 3.18(e) above.
(g) Not later than, with respect to any calendar year during which the
Trust's annual report on Form 10-K is required to be filed in accordance with
the Exchange Act and the rules and regulations of the Commission, 15 calendar
days before the date on which the Trust's annual report on Form 10-K is required
to be filed in accordance with the Exchange Act and the rules and regulations of
the Commission (or, in each case, if such day is not a Business Day, the
immediately preceding Business Day), the Depositor shall cause each custodian,
including the Custodian, to deliver to the Depositor, the Servicer and the
Trustee an Assessment of Compliance with regard to the Servicing Criteria
applicable to such custodian during the preceding calendar year, which
assessment shall be substantially in the form of Exhibit R hereto.
(h) Not later than March 12 (or, in each case, if such day is not a
Business Day, the immediately succeeding Business Day), of any calendar year
(other than the calendar year during which the Closing Date occurs) during which
the Trust's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, the
Depositor shall cause each Custodian to deliver to the Depositor, the Servicer
and the Trustee an Accountant's Attestation by a registered public accounting
firm that attests to, and reports on, the Assessment of Compliance pursuant to
Section 3.18(g) above.
(i) [Reserved].
-96-
(j) [Reserved].
(k) The Depositor agrees to cause the Custodian to indemnify and hold
harmless the Trustee and the Servicer and each Person, if any, who "controls"
the Trustee or the Servicer within the meaning of the Securities Act and its
officers, directors and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses that such Person may sustain
arising out of third party claims based on (i) the failure of the Custodian to
deliver when required any information required of it pursuant to Section 3.18 or
3.20 or (ii) any material misstatement or omission contained in any information
provided on its behalf pursuant to Section 3.18 or 3.20.
(l) Copies of such Assessments of Compliance and Accountant's
Attestations shall be available on the Trustee's website xxx.xxxxxxxx.xxx to any
Certificateholder, provided such statement is delivered to the Trustee. The
initial Assessments of Compliance and Accountant's Attestations required
pursuant to this Section 3.18 shall be delivered to the Trustee, and the
Depositor, as applicable, by each party no later than March 12, 2007.
(m) Each of the parties hereto acknowledges and agrees that the
purpose of this Section 3.18 is to facilitate compliance by the Sponsor and the
Depositor with the provisions of Regulation AB, as such may be amended or
clarified from time to time. Therefore, each of the parties agrees that the
parties' obligations hereunder will be supplemented and modified as necessary to
be consistent with any such amendments, interpretive advice or guidance,
convention or consensus among active participants in the asset-backed securities
markets, advice of counsel, or otherwise in respect of the requirements of
Regulation AB and the parties shall comply with requests made by the Sponsor or
the Depositor for delivery of additional or different information as the Sponsor
or the Depositor may determine in good faith is necessary to comply with the
provisions of Regulation AB, provided that such information is available to such
party without unreasonable effort or expense and within such timeframe as may be
reasonably requested. Any such supplementation or modification shall be made in
accordance with Section 10.01 without the consent of the Certificateholders, and
may result in a change in the reports filed by the Trustee on behalf of the
Trust under the Exchange Act.
SECTION 3.19. Rights of the NIMs Insurer.
Each of the rights of the NIMs Insurer set forth in this agreement shall
exist so long as the NIM Notes issued pursuant to the Indenture remain
outstanding or the NIMs Insurer is owed amounts in respect of its guarantee of
payment on such NIM notes.
SECTION 3.20. Periodic Filings.
As set forth on Schedule X hereto, for so long as the Trust is subject to
the Exchange Act reporting requirements, no later than the end of business on
the 2nd Business Day after the occurrence of an event requiring disclosure on
Form 8K (a "reportable event") (i) the Depositor, the Sponsor or the Servicer
shall have timely notified the Trustee of an item reportable on a Form 8-K
(unless such item is specific to the Trustee, in which case the Trustee will be
deemed to have notice) and (ii) shall have delivered to the Trustee no later
than two 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 a word format agreed upon by the Trustee and Depositor, Seller or
Servicer. 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
-97-
contemplated by this Agreement (unless such information is specific to the
Trustee, in which case the Trustee will be responsible for consulting with the
Depositor or Servicer in making such a determination) or what events shall cause
a Form 8-K to be required to be filed (unless such event is specific to the
Trustee, in which case the Trustee will be responsible for consulting with the
Depositor or Servicer before causing such Form 8-K to be filed) and shall not be
liable for any late filing of a Form 8-K in the event that it does not receive
all information, data and exhibits required to be provided or filed on or prior
to the second Business Day prior to the applicable filing deadline and with
respect to signatures, by noon, New York City time, on the fourth Business Day
after the reportable event. After preparing the Form 8-K on behalf of the
Depositor, the Trustee shall, if required, forward electronically a draft copy
of the Form 8-K to the Depositor and the Servicer for review. No later than one
and one-half Business Days after receiving a final copy of the Form 8-K from the
Trustee, a duly authorized representative of the Servicer shall sign the Form
8-K and return an electronic or fax copy of such signed Form 8-K (with an
original executed hard copy to follow by overnight mail) to the Trustee and the
Trustee shall file such Form 8-K; provided that the Depositor has notified the
Trustee that it approves of the form and substance of such Form 8-K. If a Form
8-K cannot be filed on time or if a previously filed Form 8-K needs to be
amended, the Trustee will follow the procedures set forth in this Agreement.
After filing with the Commission, the Trustee will, pursuant to this Agreement,
make available on its internet website a final executed copy of each Form 8-K.
The Trustee will have no obligation to prepare, execute or file such Form 8-K or
any liability with respect to any failure to properly prepare, execute or file
such Form 8-K resulting from the Trustee's inability or failure to obtain or
receive any information needed to prepare, arrange for execution or file such
Form 8-K within the time frames required by this paragraph, not resulting from
its own negligence, bad faith or willful misconduct.
Within 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 (the "Commission") via the Electronic Data Gathering and
Retrieval System (XXXXX), a Form 10-D with (1) a copy of the report to the
Certificateholders for such Distribution Date as an exhibit thereto. Any other
information provided to the Trustee by the Servicer or Depositor to be included
in Form 10-D shall be determined and prepared by and at the direction of the
Depositor pursuant to the following paragraph and the Trustee will have no duty
or liability for any failure hereunder to determine or prepare any additional
information on Form 10-D ("Additional Form 10-D Disclosure") as set forth in the
next paragraph.
As set forth in Schedule Y hereto, within 5 calendar days after the related
Distribution Date (i) the parties hereto, as applicable, will be required to
provide to the Depositor and the Servicer, to the extent known to such party,
any Additional Form 10-D Disclosure (including any breaches of pool asset
representations and warranties or transaction covenants of which the party has
written notice and which has not been included on the monthly distribution
report for the period), if applicable, and (ii) the Depositor, to the extent it
deems necessary, forward to the Trustee in XXXXX-compatible form (with a copy to
the Servicer), or in such other form as otherwise agreed upon by the Trustee and
the Depositor, the form and substance of the Additional Form 10-D Disclosure by
the 8th calendar day after the distribution date. The Depositor will be
responsible for any reasonable fees and expenses incurred by the Trustee in
connection with including any Additional Form 10-D Disclosure on Form 10-D
pursuant to this paragraph.
After preparing the Form 10-D at the direction of the Depositor, the
Trustee will forward electronically a draft copy of the Form 10-D to the
Depositor and the Servicer for review by the 9th calendar day after the
Distribution Date. No later than 2 business days after receipt of a final copy
after the related Distribution Date, unless the Servicer receives a notice from
the Trustee as described below or a notice from the Depositor that it has
discovered a material deficiency or irregularity with respect to such
-98-
Form 10-D, a duly authorized representative of the Servicer shall sign the Form
10-D and return an electronic or fax copy of such Form 10-D (with an original
executed hard copy to follow by overnight mail) to the Trustee and the Trustee
shall file such Form 10-D within two business days. Unless the Servicer shall
have received notice from the Trustee to the contrary, the Trustee will be
deemed to have represented to the Servicer that the monthly statement has been
properly prepared by the Trustee and the Servicer may rely upon the accuracy
thereof in it execution of the Form 10-D. If a Form 10-D cannot be filed on time
(because of notice from the Trustee per the previous sentence or otherwise) or
if a previously filed Form 10-D needs to be amended, the Trustee will follow the
procedures set forth in this Agreement. After filing with the Commission, the
Trustee will make available on its internet website a final executed copy of
each Form 10-D. the Trustee will have no liability with respect to any failure
to properly prepare, execute or file such Form 10-D resulting from the Trustee's
inability or failure to obtain or receive any information needed to prepare,
arrange for execution or file such Form 10-D on a timely basis.
Prior to Xxxxx 00, 0000 (xxx, if applicable, prior to the 90th calendar day
after the end of the fiscal year for the trust), the Trustee shall, on behalf of
the Trust and in accordance with industry standards, prepare and file with the
Commission via XXXXX a Form 10 -K with respect to the Trust Fund. Such Form 10-K
shall include the following items, in each case to the extent they have been
delivered to the Trustee within the applicable time frames set forth in this
Agreement, (i) an annual compliance statement for the Servicer and each
Subservicer, as described in Section 3.17 of the Agreement, (ii)(A) the annual
reports on assessment of compliance with servicing criteria for each Servicer,
Subservicer and Subcontractor (unless the Depositor has determined that such
compliance statement is not required by Regulation AB), as described in Section
3.18 of the Agreement, and (B) if any Reporting Servicer's report on assessment
of compliance with servicing criteria described in Section 3.18 identifies any
material instance of noncompliance, disclosure identifying such instance of
noncompliance, or if any report on assessment of compliance with servicing
criteria described in Section 3.18 of the Agreement is not included as an
exhibit to such Form 10-K, disclosure that such report is not included and an
explanation why such report is not included, (iii)(A) the registered public
accounting firm attestation report for the Servicer and each Subservicer, as
described in Section 3.18 of the Agreement, and (B) if any registered public
accounting firm attestation report described in the Section 3.18 of the
Agreement identifies any material instance of noncompliance, disclosure
identifying such instance of noncompliance, or if any such registered public
accounting firm attestation report is not included as an exhibit to such Form
10-K, disclosure that such report is not included and an explanation why such
report is not included, and (iv) a Xxxxxxxx-Xxxxx Certification in the form
attached hereto as Exhibit T, executed by the senior officer in charge of
securitizations of the Servicer. Any disclosure or information in addition to
(i) through (iv) above that is required to be included on Form 10-K ("Additional
Form 10-K Disclosure") shall be determined and prepared by and at the direction
of the Depositor pursuant to the following paragraph and the Trustee will have
no duty or liability for any failure hereunder to determine or prepare any
Additional Form 10-K Disclosure, except as set forth in the next paragraph.
As set forth in Schedule Z hereto, no later than March 12 of each year that
the Trust is subject to the Exchange Act reporting requirements, commencing in
2007, (i) certain parties to the transaction shall be required to provide to the
Depositor and the Servicer, to the extent known, any Additional Form 10-K
Disclosure, if applicable, and (ii) the Depositor shall, to the extent it deems
necessary, forward to the Trustee in XXXXX-compatible form, or in such other
form as otherwise agreed upon by the Trustee and the Depositor, the form and
substance of the Additional Form 10-K Disclosure by March 15. The Depositor will
be responsible for any reasonable fees and expenses incurred by the Trustee in
connection with including any Additional Form 10-K Disclosure on Form 10-K
pursuant to this paragraph.
-99-
After preparing the Form 10-K, the Trustee shall forward electronically a
draft copy of the Form 10-K to the Depositor and the Servicer for review. Upon
the request of the Servicer, the Depositor shall confirm that it has reviewed
the Form 10-K, that it has been properly prepared and that the Servicer may rely
on the accuracy thereof (other than with respect to any portion of the Form 10-K
or any exhibit thereto provided by the Servicer (other than any portion thereof
with respect to which the Servicer has relied on the Trustee)). No later than
5:00pm EST on the 3rd Business Day following receipt of a final copy of the Form
10-K and if requested, the above-described confirmation from the Depositor, a
senior officer of the Servicer shall sign the Form 10-K and return an electronic
or fax copy of such signed Form 10-K (with an original executed hard copy to
follow by overnight mail) to the Trustee and the Trustee shall file such Form
10-K by March 30th. If a Form 10-K cannot be filed on time or if a previously
filed Form 10-K needs to be amended, the Trustee will follow the procedures set
forth in the Agreement. After filing with the Commission, the Trustee will,
pursuant to the Agreement, make available on its internet website a final
executed copy of each Form 10-K. the Trustee shall have no liability with
respect to any failure to properly prepare, execute or file such Form 10-K
resulting from the Trustee's inability or failure to obtain or receive any
information needed to prepare, arrange for execution or file such Form 10-K on a
timely basis.
Each Form 10-K shall include a certification (the "Xxxxxxxx-Xxxxx
Certification") which shall be in the form attached hereto as Exhibit T. The
Servicer will cause its senior officer in charge of securitization to execute
the Xxxxxxxx-Xxxxx Certification required pursuant to Rule 13a -14 under the
Securities Exchange Act of 1934, as amended, and to deliver the original
executed Certification to the Trustee by March 12 of each year in which the
Trust is subject to the reporting requirements of the Exchange Act. In
connection therewith, each of the Trustee and the Servicer shall sign a
certification (in the form attached hereto as Exhibit K and Exhibit L,
respectively) for the benefit of the Servicer and its officers, directors and
affiliates regarding certain aspects of the Form 10-K Certification. 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 a Form 12B-25 and one or more amended Form 10-Ks, to
the extent such amendments are accepted by the Exchange Act, to include such
missing information or exhibits promptly after receipt thereof by the Trustee.
Promptly following the first date legally permissible under applicable
regulations and interpretations of the Commission, the Trustee shall, on behalf
of the Trust and in accordance with industry standards, file with the 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 is reasonably
necessary to prepare and file all necessary reports with the Commission. The
Trustee shall have no responsibility to file any items with the Commission other
than those specified in this section and the Servicer shall execute any and all
form 8-Ks and 10-Ks required hereunder.
If the Commission issues additional interpretative guidance or promulgates
additional rules or regulations with respect to Regulation AB or otherwise, or
if other changes in applicable law occur, that would require the reporting
arrangements, or the allocation of responsibilities with respect thereto,
described in this Section 3.20, to be conducted differently than as described,
the Depositor, the Servicer, and the Trustee will reasonably cooperate to amend
the provisions of this Section 3.20 in order to comply with such amended
reporting requirements and such amendment of this Section 3.20. Any such
amendment shall be made in accordance with Section 10.01 without the consent of
the Certificateholders,
-100-
and may result in a change in the reports filed by the Trustee on behalf of the
Trust under the Exchange Act. Notwithstanding the foregoing, the Depositor, the
Servicer, and the Trustee shall not be obligated to enter into any amendment
pursuant to this Section 3.20 that adversely affects its obligations and
immunities under this Agreement.
The Depositor, the Servicer and the Trustee agree to use their good faith
efforts to cooperate in complying with the requirements of this Section 3.20.
SECTION 3.21. Indemnification by Trustee.
The Trustee shall indemnify and hold harmless the Depositor, the Servicer
and their respective officers, directors, agents and Affiliates from and against
any losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by the Trustee or any of its officers, directors, agents or
Affiliates of its obligations under Sections 3.18 and 3.20, any material
misstatement or omission in any documents prepared thereunder (to the extent the
Trustee is responsible for providing information or calculating amounts included
in such information), the failure of the Trustee to deliver when required any
Assessment of Compliance or Accountant's Attestation required of it pursuant to
Section 3.18, or any material misstatement or omission contained in any
Assessment of Compliance or Accountant's Attestation provided on its behalf
pursuant to Section 3.18, or the negligence, bad faith or willful misconduct of
the Trustee in connection therewith. If the indemnification provided for herein
is unavailable or insufficient to hold harmless the indemnified parties, then
the Trustee agrees that it shall contribute to the amount paid or payable by the
indemnified parties as a result of the losses, claims, damages or liabilities of
the indemnified parties in such proportion as is appropriate to reflect the
relative fault of the Trustee on the one hand and of the indemnified parties on
the other.
SECTION 3.22. Indemnification by Servicer.
The Servicer shall indemnify and hold harmless the Trustee and the
Depositor and their respective officers, directors, agents and Affiliates from
and against any losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Servicer or any of its officers, directors, agents or
Affiliates of its obligations under Sections 3.17, 3.18 and 3.20, any material
misstatement or omission in any documents prepared thereunder (to the extent the
Servicer is responsible for providing information or calculating amounts
included in such information), the failure of such Servicer or any related
Sub-Servicer or Subcontractor to deliver or cause to be delivered when required
any Assessment of Compliance or Accountant's Attestation required of it pursuant
to Section 3.18 or Annual Statement of Compliance required pursuant to Section
3.17, as applicable, or any material misstatement or omission contained in any
Assessment of Compliance, Accountant's Attestation or Annual Statement as to
Compliance provided on its behalf pursuant to Section 3.18 or 3.17, as
applicable, or the negligence, bad faith or willful misconduct of the Servicer
in connection therewith. If the indemnification provided for herein is
unavailable or insufficient to hold harmless the indemnified parties, then the
Servicer agrees that it shall contribute to the amount paid or payable by the
indemnified parties as a result of the losses, claims, damages or liabilities of
the indemnified parties in such proportion as is appropriate to reflect the
relative fault of the Servicer on the one hand and the indemnified parties on
the other.
SECTION 3.23. Prepayment Charge Reporting Requirements.
-101-
Promptly after each Distribution Date, the Servicer shall provide to the
Depositor and the Trustee the following information with regard to each Mortgage
Loan that has prepaid during the related Prepayment Period:
(i) loan number;
(ii) current Mortgage Rate;
(iii) current principal balance;
(iv) original principal balance;
(v) Prepayment Charge amount due; and
(vi) Prepayment Charge amount collected.
SECTION 3.24. Information to the Trustee.
Two Business Days after the 15th day of each month, but not later than the
18th day of each month, the Servicer shall furnish to the Trustee in electronic
format (1) the Remittance Report pursuant to Section 4.03 and (ii) a delinquency
report in such form or forms as the Trustee and the Servicer may from time to
time agree for the period ending on the last Business Day of the preceding month
(and with respect to prepayments in full, for the period ending on the 14th day
of the month in which such report is to be furnished); provided, however, that
in the event the 18th day is not a Business Day, the aforementioned reports
shall be furnished by the Servicer to the Trustee on the next Business Day; and
provided, further, that in the event there are three non-Business Days preceding
the 18th day, the Servicer will (a) furnish to the Trustee, on or before the
18th day of the month, the aforementioned reports, which will not include
information arising from the related Prepayment Period, and (b) furnish to the
Trustee, by 3:00 P.M., EST on the next succeeding Business Day after the 18th
day, a cumulative version of the aforementioned reports which includes such
information arising from the related Prepayment Period.
SECTION 3.25. Indemnification.
The Servicer shall indemnify the Sponsor, the Trust Fund, the Trustee (in
its individual capacity and in its capacity as trustee), the Depositor and their
officers, directors, employees and agents and hold each of them harmless against
any and all claims, losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and any other costs, fees
and expenses that any of such parties may sustain in any way related to the
failure of the Servicer to perform its duties and service the related Mortgage
Loans in compliance with the terms of this agreement by reason of negligence,
willful misfeasance or bad faith in the performance of its duties or by reason
of reckless disregard of obligations and duties hereunder. The Servicer
immediately shall notify the Sponsor, the Trustee and the Depositor or any other
relevant party if a claim is made by a third party with respect to such party
and this Agreement or the related Mortgage Loans and, if subject to this
indemnification obligation, assume (with the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any of such parties in respect of such
claim. The Servicer shall follow any reasonable written instructions received
from the Trustee in connection with such claim, it being understood that the
Trustee shall have
-102-
no duty to monitor or give instructions with respect to such claims, and the
Servicer will not have any liability for following such instructions. The
Servicer shall provide the Depositor and the Trustee with a written report of
all expenses and advances incurred by the Servicer pursuant to this Section
3.25(a), and the Servicer shall promptly reimburse itself from the assets of the
Trust Fund in the Collection Account for all amounts advanced by it pursuant to
the preceding sentence except when the claim in any way relates to the gross
negligence, bad faith or willful misconduct of the Servicer. The provisions of
this paragraph shall survive the termination of this Agreement and the payment
of the outstanding Certificates.
SECTION 3.26. Nonsolicitation.
For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its Affiliates and
agents will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer or its Affiliates or agents which are directed to the general public at
large, or certain segments thereof, shall not constitute solicitation as that
term is used in this Section 3.26.
SECTION 3.27. High Cost Mortgage Loans.
In the event that the Servicer reasonably determines that a Mortgage Loan
may be a "high cost mortgage loan", "high cost home", "covered", "high cost",
"high risk home", "predatory" or similarly classified loan under any applicable
state, federal or local law, the Servicer may notify the Depositor, the Sponsor
and the Trustee thereof; the Servicer may terminate its servicing thereof; and
such determination shall be deemed to materially and adversely affect the
interests of the Certificateholders in such Mortgage Loan and the Transferor, or
the Sponsor, in event the Transferor does not do so, will repurchase the
Mortgage Loan within a 30 day period from the date of the notice in the manner
described in Section 2.05.
ARTICLE IV
DISTRIBUTIONS
SECTION 4.01. Advances.
(a) Subject to the conditions of this Article IV, the Servicer, as
required below, shall make an Advance and deposit such Advance in the Collection
Account. The Servicer shall use commercially reasonable efforts to remit each
such Advance no later than 2:30 p.m. Eastern time, but in any case no later than
4:00 p.m. Eastern time, on the Servicer Advance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders, funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, each Rating Agency, the
NIMs Insurer and the Trustee an Officer's Certificate setting forth the basis
for such determination. The Servicer may, in its sole discretion, make an
Advance with respect to the principal portion of the final Scheduled Payment on
a Balloon Loan, but the Servicer is under no obligation to do so; provided,
however, that nothing in this sentence shall affect the Servicer's obligation
-103-
under this Section 4.01 to Advance the interest portion of the final Scheduled
Payment with respect to a Balloon Loan as if such Balloon Loan were a fully
amortizing Mortgage Loan. If a Mortgagor does not pay its final Scheduled
Payment on a Balloon Loan when due, the Servicer shall Advance (unless it
determines in its good faith judgment that such amounts would constitute a
Non-Recoverable Advance) a full month of interest (net of the Servicing Fee) on
the Stated Principal Balance thereof each month until its Stated Principal
Balance is reduced to zero.
In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any amount held for future distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Certificate Account.
In addition, the Servicer shall have the right to reimburse itself for any such
Advance from amounts held from time to time in the Collection Account to the
extent such amounts are not then required to be distributed. Any funds so
applied and transferred pursuant to the previous two sentences shall be replaced
by the Servicer by deposit in the Collection Account no later than the close of
business on the Servicer Advance Date on which such funds are required to be
distributed pursuant to this Agreement. The Servicer shall be entitled to be
reimbursed from the Collection Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.08. The obligation to make
Advances with respect to any Mortgage Loan shall continue until the earlier of
(i) such Mortgage Loan is paid in full, (ii) the related Mortgaged Property or
related REO Property has been liquidated or until the purchase or repurchase
thereof (or substitution therefor) from the Trust Fund pursuant to any
applicable provision of this Agreement, except as otherwise provided in this
Section 4.01, (iii) the Servicer determines in its good faith judgment that such
amounts would constitute a Non-Recoverable Advance as provided in the preceding
paragraph or (iv) the date on which such Mortgage Loan becomes 150 days
delinquent as set forth below.
(b) Notwithstanding anything in this Agreement to the contrary
(including, but not limited to, Sections 3.01 and 4.01(a) hereof), no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer
(including for the avoidance of doubt, the Trustee as successor servicer) if
such Advance or Servicing Advance would, if made, constitute a Non-Recoverable
Advance or a Non-Recoverable Servicing Advance. The determination by the
Servicer that it has made a Non-Recoverable Advance or a Non-Recoverable
Servicing Advance or that any proposed Advance or Servicing Advance, if made,
would constitute a Non-Recoverable Advance or a Non-Recoverable Servicing
Advance, respectively, shall be evidenced by an Officer's Certificate of the
Servicer delivered to the Depositor and the Trustee. In addition, the Servicer
shall not be required to advance any Relief Act Shortfalls.
(c) Notwithstanding the foregoing, the Servicer shall not be required
to make any Advances for any Mortgage Loan after such Mortgage Loan becomes 150
days delinquent. The Servicer shall identify such delinquent Mortgage Loans in
the Servicer Statement referenced in Section 3.24. In addition, the Servicer
shall provide the Trustee with an Officer's Certificate listing such delinquent
Mortgage Loans and certifying that such loans are 150 days or more delinquent.
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment Interest
Shortfall, the Servicer shall, from amounts in respect of the Servicing Fee for
such Distribution Date, deposit into the Collection Account, as a reduction of
the Servicing Fee for such Distribution Date, no later than the Servicer Advance
Date immediately preceding such Distribution Date, an amount up to the
Prepayment Interest
-104-
Shortfall. In case of such deposit, the Servicer shall not be entitled to any
recovery or reimbursement from the Depositor, the Trustee, the Trust Fund or the
Certificateholders. With respect to any Distribution Date, to the extent that
the Prepayment Interest Shortfall exceeds Compensating Interest (such excess, a
"Non-Supported Interest Shortfall"), such Non-Supported Interest Shortfall shall
reduce the Current Interest with respect to each Class of Certificates, pro rata
based upon the amount of interest each such Class would otherwise be entitled to
receive on such Distribution Date.
SECTION 4.03. Distributions on the REMIC Interests.
On each Distribution Date, amounts on deposit in the Certificate Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in each of the SWAP REMIC and the Lower Tier REMIC in an amount
sufficient to make the distributions on the respective Certificates on such
Distribution Date in accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
(a) [Reserved].
(b) On each Distribution Date, the Trustee shall, to the extent of
funds then available, make the following distributions from funds then available
in the Certificate Account, of an amount equal to the Interest Funds, in the
following order of priority:
(i) to the Class P Certificates, an amount equal to any Prepayment
Charges received with respect to the Mortgage Loans and all amounts paid by
the Servicer, the Sponsor or the Transferor in respect of Prepayment
Charges pursuant to this Agreement or the Transfer Agreement, as
applicable, and all amounts received in respect of any indemnification paid
as a result of a Prepayment Charge being unenforceable in breach of the
representations and warranties set forth in the Sale Agreement or the
Transfer Agreement for the related Prepayment Period;
(ii) to the Supplemental Interest Trust, any Net Swap Payments owed to
the Swap Counterparty;
(iii) to the Supplemental Interest Trust, any Swap Termination Payment
owed by the Issuing Entity to the Swap Counterparty (other than any
Defaulted Swap Termination Payment);
(iv) to each class of the Class A Certificates, the Current Interest
and any Interest Carry Forward Amount with respect to each such class;
provided, however, that if Interest Funds are insufficient to make a full
distribution of the aggregate Current Interest and the aggregate Interest
Carry Forward Amount to the Class A Certificates, Interest Funds will be
distributed pro rata among each class of the Class A Certificates based
upon the ratio of (x) the Current Interest and Interest Carry Forward
Amount for each class of the Class A Certificates to (y) the total amount
of Current Interest and any Interest Carry Forward Amount for the Class
A-1, Class A-2 and Class R Certificates in the aggregate;
(v) to the Class M-1 Certificates, the Current Interest for such class
and any Interest Carry Forward Amount with respect to such class;
-105-
(vi) to the Class M-2 Certificates, the Current Interest for such
class and any Interest Carry Forward Amount with respect to such class;
(vii) to the Class M-3 Certificates, the Current Interest for such
class and any Interest Carry Forward Amount with respect to such class;
(viii) to the Class M-4 Certificates, the Current Interest for such
class and any Interest Carry Forward Amount with respect to such class;
(ix) to the Class M-5 Certificates, the Current Interest for such
class and any Interest Carry Forward Amount with respect to such class;
(x) to the Class M-6 Certificates, the Current Interest for such class
and any Interest Carry Forward Amount with respect to such class;
(xi) to the Class B-1 Certificates, the Current Interest for each such
class and any Interest Carry Forward Amount with respect to each such
class;
(xii) to the Class B-2 Certificates, the Current Interest for each
such class and any Interest Carry Forward Amount with respect to each such
class;
(xiii) to the Class B-3 Certificates, the Current Interest for each
such class and any Interest Carry Forward Amount with respect to each such
class; and
(xiv) any remainder pursuant to Section 4.04(f) hereof.
On each Distribution Date, subject to the proviso in (iv) above, Interest
Funds received on the Group One Mortgage Loans will be deemed to be distributed
to the Class R and Class A-1 Certificates and Interest Funds received on the
Group Two Mortgage Loans will be deemed to be distributed to the Class A-2
Certificates, in each case, until the related Current Interest and Interest
Carry Forward Amount of each such class of Certificates for such Distribution
Date has been paid in full. Thereafter, Interest Funds not required for such
distributions are available to be applied to if necessary, to the class or
classes of Certificates that are not related to such group of Mortgage Loans.
(c) [RESERVED]
(d) On each Distribution Date, the Trustee shall, to the extent of
funds then available, make the following distributions from the Certificate
Account of an amount equal to the Principal Distribution Amount in the following
order of priority, and each such distribution shall be made only after all
distributions pursuant to Section 4.04(b) above shall have been made until such
amount shall have been fully distributed for such Distribution Date:
(i) to the Class A Certificates, the Class A Principal
Distribution Amount shall be distributed as follows:
(a) the Group One Principal Distribution Amount will be
distributed as follows: sequentially to the Class R and Class A-1
Certificates, until the Certificate Principal Balance of each such class
has been reduced to zero;
-106-
(b) the Group Two Principal Distribution Amount will be
distributed as follows: (1) to the Class A-2D Certificates in an amount
equal to the Class A-2D Lockout Distribution Amount and then (2)
sequentially, to the Class A-2A Certificates until the Certificate
Principal Balance thereof has been reduced to zero, then to the Class A-2B
Certificates until the Certificate Principal Balance thereof has been
reduced to zero, then to the Class A-2C Certificates until the Certificate
Principal Balance thereof has been reduced to zero and then to the Class
A-2D Certificates until the Certificate Principal Balance thereof has been
reduced to zero; provided, however, that on and after the Distribution Date
on which the aggregate Certificate Principal Balance of the Class M, Class
B and Class C Certificates has been reduced to zero, any principal
distributions allocated to the Class A-2A, Class A-2B, Class A-2C and Class
A-2D Certificates are required to be allocated pro rata, among such
classes, based on their respective Certificate Principal Balances, until
their Certificate Principal Balances have been reduced to zero;
(ii) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount;
(iii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount;
(iv) to the Class M-3 Certificates, the Class M-3 Principal
Distribution Amount;
(v) to the Class M-4 Certificates, the Class M-4 Principal
Distribution Amount;
(vi) to the Class M-5 Certificates, the Class M-5 Principal
Distribution Amount;
(vii) to the Class M-6 Certificates, the Class M-6 Principal
Distribution Amount;
(viii) to the Class B-1 Certificates, the Class B-1 Principal
Distribution Amount;
(ix) to the Class B-2 Certificates, the Class B-2 Principal
Distribution Amount;
(x) to the Class B-3 Certificates, the Class B-3 Principal
Distribution Amount; and
(xi) any remainder pursuant to Section 4.04(e) hereof.
(e) [RESERVED]
(f) On each Distribution Date, the Trustee shall, to the extent of
funds then available, make the following distributions up to the following
amounts from the Certificate Account of the remainders pursuant to Section
4.04(b)(xiv) and (d)(xi) hereof and each such distribution shall be made
-107-
only after all distributions pursuant to Sections 4.04(b) and (d) above shall
have been made until such remainders shall have been fully distributed for such
Distribution Date:
(i) for distribution as part of the Principal Distribution
Amount, the Extra Principal Distribution Amount;
(ii) to the Class M-1 Certificates, any Unpaid Realized Loss
Amount for such class;
(iii) to the Class M-2 Certificates, any Unpaid Realized Loss
Amount for such class;
(iv) to the Class M-3 Certificates, any Unpaid Realized Loss
Amount for such class;
(v) to the Class M-4 Certificates, any Unpaid Realized Loss
Amount for such class;
(vi) to the Class M-5 Certificates, any Unpaid Realized Loss
Amount for such class;
(vii) to the Class M-6 Certificates, any Unpaid Realized Loss
Amount for such class;
(viii) to the Class B-1 Certificates, any Unpaid Realized Loss
Amount for such class;
(ix) to the Class B-2 Certificates, any Unpaid Realized Loss
Amount for such class;
(x) to the Class B-3 Certificates, any Unpaid Realized Loss
Amount for such class;
(xi) to the Class A, Class M and Class B Certificates, on a pro
rata basis, based upon outstanding Floating Rate Certificate Carryover for
each such Class, the Floating Rate Certificate Carryover for each such
Class; and
(xii) the remainder pursuant to Section 4.04(g) hereof.
(g) on each Distribution Date, the Trustee shall allocate the
remainders pursuant to Section 4.04(f)(xii) as follows:
(i) to the Supplemental Interest Trust, any Defaulted Swap
Termination Payment;
(ii) to the Class C Certificates in the following order of
priority, (I) the Class C Current Interest, (II) the Class C Interest Carry
Forward Amount, (III) as principal on the Class C Certificate until the
Certificate Principal Balance of the Class C Certificates has been reduced
to zero and (IV) the Class C Unpaid Realized Loss Amount; and
-108-
(iii) the remainder pursuant to Section 4.04(h) hereof.
(h) On each Distribution Date, the Trustee shall allocate the
remainder pursuant to Section 4.04(g)(iii) hereof (i) to the Trustee to
reimburse amounts or pay indemnification amounts owing to the Trustee from the
Issuing Entity pursuant to Section 6.03 and (ii) to the Class R Certificate and
such distributions shall be made only after all preceding distributions shall
have been made until such remainder shall have been fully distributed.
(i) On each Distribution Date, after giving effect to distributions on
such Distribution Date, the Trustee shall allocate the Applied Realized Loss
Amount for the Certificates to reduce the Certificate Principal Balances of the
Class C Certificates and the Subordinate Certificates in the following order of
priority:
(i) to the Class C Certificates, until the Class C Certificate
Principal Balance is reduced to zero;
(ii) to the Class B-3 Certificates until the Class B-3
Certificate Principal Balance is reduced to zero;
(iii) to the Class B-2 Certificates until the Class B-2
Certificate Principal Balance is reduced to zero;
(iv) to the Class B-1 Certificates until the Class B-1
Certificate Principal Balance is reduced to zero;
(v) to the Class M-6 Certificates until the Class M-6 Certificate
Principal Balance is reduced to zero;
(vi) to the Class M-5 Certificates until the Class M-5
Certificate Principal Balance is reduced to zero;
(vii) to the Class M-4 Certificates until the Class M-4
Certificate Principal Balance is reduced to zero;
(viii) to the Class M-3 Certificates until the Class M-3
Certificate Principal Balance is reduced to zero;
(ix) to the Class M-2 Certificates until the Class M-2
Certificate Principal Balance is reduced to zero; and
(x) to the Class M-1 Certificates until the Class M-1 Certificate
Principal Balance is reduced to zero.
(j) Subject to Section 9.02 hereof respecting the final distribution,
on each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the
-109-
foregoing, but subject to Section 9.02 hereof respecting the final distribution,
distributions with respect to Certificates registered in the name of a
Depository shall be made to such Depository in immediately available funds.
In accordance with this Agreement, the Servicer shall prepare and deliver
an electronic report (the "Remittance Report") to the Trustee (or by such other
means as the Servicer and the Trustee may agree from time to time) containing
such data and information as to permit the Trustee to prepare the Monthly
Statement to Certificateholders and make the required distributions for the
related Distribution Date. The Trustee will prepare the Monthly Report based
solely upon the information received from the Servicer.
The Trustee shall promptly notify the NIMs Insurer of any proceeding or the
institution of any action, of which a Responsible Officer of the Trustee has
actual knowledge, seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class C Certificates or the
Class P Certificates. Each Holder of the Class C Certificates or the Class P
Certificates, by its purchase of such Certificates and the Trustee hereby agree
that the NIMs Insurer may at any time during the continuation of any proceeding
relating to a Preference Claim direct all matters relating to such Preference
Claim, including, without limitation, (i) the direction of any appeal of any
order relating to such Preference Claim and (ii) the posting of any surety,
supersedes or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the NIMs Insurer shall be subrogated to the rights
of the Trustee and each Holder of the Class C Certificates and the Class P
Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim;
provided, however, that the NIMs Insurer will not have any rights with respect
to any Preference Claim set forth in this paragraph unless the indenture trustee
with respect to the NIM Notes or the holder of any NIMs Notes has been required
to relinquish a distribution made on the Class C Certificates, the Class P
Certificates or the NIM Notes, as applicable, and the NIMs Insurer made a
payment in respect of such relinquished amount.
(k) The Trustee is hereby directed by the Depositor to execute the Cap
Contracts on behalf of the Issuing Entity in the form presented to it by the
Depositor and shall have no responsibility for the contents of such Cap
Contract, including, without limitation, the representations and warranties
contained therein. Any funds payable by the Trustee under the Cap Contracts at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in any Cap Contract, except as set forth in Section 11 of
each Cap Contract, the Trust shall not be required to make any payments to the
counterparty under any Cap Contract. Any payments received under the terms of
the related Cap Contract will be available to pay the holders of the related
Class A-1, Class A-2A, Class M and Class B Certificates (other than the Class
B-2 Certificates) up to the amount of any Floating Rate Certificate Carryovers
remaining after all other distributions required under this Section 4.04 are
made on such Distribution Date, other than Floating Rate Certificate Carryovers
attributable to the fact that Applied Realized Loss Amounts are not allocated to
the Class A Certificates. Any amounts received under the terms of any Cap
Contract on a Distribution Date that are not used to pay such Floating Rate
Certificate Carryovers will be distributed to the holders of the Class C
Certificates. Payments in respect of such Floating Rate Certificate Carryovers
from proceeds of a Cap Contract shall be paid to the related Classes of Class
A-1, Class A-2A, Class M and Class B Certificates (other than the Class B-2
Certificates), pro rata based upon such Floating Rate Certificate Carryovers for
each such class of Class A-1, Class A-2A, Class M and Class B Certificates
(other than the Class B-2 Certificates). Amounts received on the Class A-1 Cap
Contract will only be available to make payments on the Class A-1 Certificates,
amounts received on the Class A-2A Cap Contract will only be available to make
payments on the Class A-2A
-110-
Certificates, amounts received on the Floating Rate Subordinate Certificates Cap
Contract will only be available to make payments on the Floating Rate
Subordinate Certificates.
(i) The Trustee shall establish and maintain, for the benefit of
the Issuing Entity and the Certificateholders, the Cap Contract Account. On
or prior to the related Cap Contract Termination Date, amounts, if any,
received by the Trustee for the benefit of the Trust Fund in respect of the
related Cap Contract shall be deposited by the Trustee into the Cap
Contract Account and will be used to pay Floating Rate Certificate
Carryovers on the related Class A-1, Class A-2A, Class M and Class B
Certificates (other than the Class B-2 Certificates) to the extent provided
in the immediately preceding paragraph. With respect to any Distribution
Date on or prior to the related Cap Contract Termination Date, the amount,
if any, payable by the Cap Contract Counterparty under the related Cap
Contract will equal the product of (i) the excess of (x) One-Month LIBOR
(as determined by the Cap Contract Counterparty and subject to a cap equal
to the rate with respect to such Distribution Date as shown under the
heading "1ML Upper Collar" in the schedule to the related Cap Contract),
over (y) the rate with respect to such Distribution Date as shown under the
heading "1ML Strike Lower Collar" in the schedule to the related Cap
Contract, (ii) an amount equal to the lesser of (x) the related Cap
Contract Notional Balance for such Distribution Date and (y) the
outstanding Certificate Principal Balance of the related classes of
Certificates and (iii) the number of days in such Accrual Period, divided
by 360. If a payment is made to the Issuing Entity under a Cap Contract and
the Trustee is required to distribute excess amounts to the holders of the
Class C Certificates as described above, information regarding such
distribution will be included in the monthly statement made available on
the Trustee's website pursuant to Section 4.05 hereof.
(ii) Amounts on deposit in the Cap Contract Account will remain
uninvested pending distribution to Certificateholders.
(iii) Each Cap Contract is scheduled to remain in effect until
the related Cap Contract Termination Date and will be subject to early
termination only in limited circumstances. Such circumstances include
certain insolvency or bankruptcy events in relation to the Cap Contract
Counterparty (after a grace period of three Local Business Days, as defined
in the related Cap Contract, after notice of such failure is received by
the Cap Contract Counterparty) to make a payment due under the related Cap
Contract, the failure by the Cap Contract Counterparty (after a cure period
of 20 days after notice of such failure is received) to perform any other
agreement made by it under the related Cap Contract, the termination of the
Trust Fund and the related Cap Contract becoming illegal or subject to
certain kinds of taxation.
(l) On the Closing Date, the Supplemental Interest Trust shall be
established and maintained pursuant to this Agreement, as a separate trust, the
corpus of which shall be held by the Trustee for the benefit of the holders of
the Certificates as a segregated subtrust of the Trust Fund. The Supplemental
Interest Trust shall be an Eligible Account, and funds deposited therein shall
be held separate and apart from, and shall not be commingled with, any other
moneys, including, without limitation, other moneys of the Trustee held pursuant
to this Agreement. In no event shall any funds deposited in the Supplemental
Interest Trust 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.
-111-
The Trustee shall enforce all of the rights of the Supplemental Interest
Trust and exercise any remedies under the Swap Agreement and, in the event the
Swap Agreement is terminated as a result of the designation by either party
thereto of an Early Termination Date (as defined in the Swap Agreement), find a
replacement counterparty to enter into a replacement swap agreement utilizing
the amounts of the net Swap Termination Payments received.
For each Distribution Date, through and including the Distribution Date in
November 2008, 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 November 2008, 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 Supplemental Interest Trust and shall be used to make any upfront payment
required under a replacement swap agreement and any upfront payment received
from the counterparty to a replacement swap agreement shall be used to pay any
Swap Termination Payment owed to the Swap Counterparty.
Notwithstanding anything contained herein, in the event that a replacement
swap agreement cannot be obtained within 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 Trust Fund by the original Swap Counterparty
(computed in accordance with the original Swap Agreement) and distribute such
amount in accordance with Section 4.04(l)(i)-(viii) of this Agreement. Any such
subtrust shall not be an asset of any REMIC. Any amounts remaining in such
subtrust shall be distributed to the holders of the Class C Certificates on the
Distribution Date following the earlier of (i) the termination of the Trust Fund
pursuant to Section 9.01 and (ii) November 25, 2008.
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 Supplemental Interest Trust. The Supplemental Interest
Trust will not be an asset of any REMIC. Funds in the Supplemental Interest
Trust shall be distributed in the following order of priority by the Trustee:
(i) to the Swap Counterparty, all Net Swap Payments, if any, owed
to the Swap Counterparty for such Distribution Date;
(ii) to the Swap Counterparty, any Swap Termination Payment,
other than a Defaulted Swap Termination Payment, if any, owed to the Swap
Counterparty;
-112-
(iii) to each class of the Class A Certificates, on a pro rata
basis, any Current Interest and any Interest Carry Forward Amount with
respect to such class to the extent unpaid;
(iv) sequentially, to the Class M-1 Certificates on a pro rata
basis, the Class M-2 Certificates on a pro rata basis, the Class M-3
Certificates on a pro rata basis, the Class M-4 Certificates on a pro rata
basis, the Class M-5 Certificates on a pro rata basis, the Class M-6
Certificates on a pro rata basis, the Class B-1 Certificates on a pro rata
basis, the Class B-2 Certificates on a pro rata basis and the Class B-3
Certificates on a pro rata basis, in that order, any Current Interest for
such class to the extent unpaid;
(v) to the Class A, Class R, Class M and Class B Certificates, to
pay principal as described and in the same manner and order of priority as
set forth in Sections 4.04(d)(i) through 4.04(d)(x) in order to restore
levels of the Overcollateralization Amount, and after giving effect to
distributions from Principal Distribution Amount for each such Class;
(vi) sequentially, to the Class M-1 Certificates on a pro rata
basis, the Class M-2 Certificates on a pro rata basis, the Class M-3
Certificates on a pro rata basis, the Class M-4 Certificates on a pro rata
basis, the Class M-5 Certificates on a pro rata basis, the Class M-6
Certificates on a pro rata basis, the Class B-1 Certificates on a pro rata
basis, the Class B-2 Certificates on a pro rata basis and the Class B-3
Certificates on a pro rata basis, in that order, any Interest Carry Forward
with respect to such class to the extent unpaid;
(vii) sequentially, to the Class M-1 Certificates on a pro rata
basis, the Class M-2 Certificates on a pro rata basis, the Class M-3
Certificates on a pro rata basis, the Class M-4 Certificates on a pro rata
basis, the Class M-5 Certificates on a pro rata basis, the Class M-6
Certificates on a pro rata basis, the Class B-1 Certificates on a pro rata
basis, the Class B-2 Certificates on a pro rata basis and the Class B-3
Certificates on a pro rata basis, in that order, any Unpaid Realized Loss
Amount for such class to the extent unpaid;
(viii) to the Class A, Class R, Class M and Class B Certificates,
on a pro rata basis, any Floating Rate Certificate Carryover to the extent
not paid based on the amount of such unpaid Floating Rate Certificate
Carryover;
(ix) to the Swap Counterparty, any Defaulted Swap Termination
Payment owed to the Swap Counterparty to the extent not already paid; and
(x) to the Class C Certificates any remaining amount.
Notwithstanding the foregoing, however, after giving effect to proposed
distributions on any Distribution Date, the sum of the cumulative amounts
distributed pursuant to clause (v) above and the cumulative amounts distributed
pursuant to clause (vii) above shall be limited to the aggregate amount of
cumulative Realized Losses incurred from the Cut-off Date through the last day
of the related Prepayment Period.
Upon termination of the Trust Fund, any amounts remaining in the
Supplemental Interest Trust shall be distributed pursuant to the priorities set
forth in this Section 4.04(l).
-113-
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 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall prepare
and make available on its website located at xxx.xxxxxxxx.xxx to each Holder of
a Class of Certificates of the Trust Fund, the Servicer, the Trustee, the Rating
Agencies and the Depositor a statement setting forth for the Certificates the
following information; provided, however, that with respect to any calendar
year during which an annual report on Form 10-K is not required to be filed
with the Commission on behalf of the Trust, information set forth in Items
(xxiv) through (xxxi) below are not required to be included in such statement
during any calendar year:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate
amount of any Principal Prepayments included therein, (B) the aggregate of
all scheduled payments of principal included therein, (C) the Extra
Principal Distribution Amount, if any, and (D) the aggregate amount of
Prepayment Charges, if any;
(ii) the amount of such distribution to Holders of each Class
allocable to interest, together with any Non-Supported Interest Shortfalls
allocated to each Class;
(iii) the Certificate Principal Balance of each Class after
giving effect (i) to all distributions allocable to principal on such
Distribution Date and (ii) the allocation of any Applied Realized Loss
Amounts for such Distribution Date;
(iv) the Pool Stated Principal Balance for such Distribution
Date;
(v) the amount of the Servicing Fee paid to or retained by the
Servicer and any amounts constituting reimbursement or indemnification of
the Servicer or Trustee;
(vi) the Pass-Through Rate for each Class of Certificates for
such Distribution Date;
(vii) the amount of Advances included in the distribution on such
Distribution Date;
(viii) the cumulative amount of (A) Realized Losses and (B)
Applied Realized Loss Amounts to date, in the aggregate and with respect to
the Group One Mortgage Loans and Group Two Mortgage Loans;
(ix) the amount of (A) Realized Losses and (B) Applied Realized
Loss Amounts with respect to such Distribution Date, in the aggregate and
with respect to the Group One Mortgage Loans and Group Two Mortgage Loans;
(x) the number and aggregate principal amounts of Mortgage Loans
(A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 31 to 60
days, (2) 61 to 90 days and (3) 91 or more days, and (B) in foreclosure and
Delinquent (1) 31 to 60 days, (2) 61 to 90 days
-114-
and (3) 91 or more days, in each case as of the close of business on the
last day of the calendar month preceding such Distribution Date, in the
aggregate and with respect to the Group One Mortgage Loans and Group Two
Mortgage Loans;
(xi) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number and Stated
Principal Balance of such Mortgage Loan as of the close of business on the
last day of the calendar month preceding such Distribution Date and the
date of acquisition thereof, in the aggregate and with respect to the Group
One Mortgage Loans and Group Two Mortgage Loans;
(xii) the total number and principal balance of any REO
Properties as of the close of business on the last day of the calendar
month preceding such Distribution Date, in the aggregate and with respect
to the Group One Mortgage Loans and Group Two Mortgage Loans;
(xiii) the aggregate Stated Principal Balance of all Liquidated
Loans as of the preceding Distribution Date, in the aggregate and with
respect to the Group One Mortgage Loans and Group Two Mortgage Loans;
(xiv) whether a Stepdown Trigger Event has occurred and is in
effect;
(xv) with respect to each Class of Certificates, any Interest
Carry Forward Amount with respect to such Distribution Date for each such
Class, any Interest Carry Forward Amount paid for each such Class and any
remaining Interest Carry Forward Amount for each such Class;
(xvi) the number and Stated Principal Balance (as of the
preceding Distribution Date) of any Mortgage Loans which were purchased or
repurchased during the preceding Due Period and since the Cut-off Date;
(xvii) the number of Mortgage Loans for which Prepayment Charges
were received during the related Prepayment Period and, for each such
Mortgage Loan, the amount of Prepayment Charges received during the related
Prepayment Period and in the aggregate of such amounts for all such
Mortgage Loans since the Cut-off Date;
(xviii) the amount and purpose of any withdrawal from the
Collection Account pursuant to Section 3.08(a)(viii);
(xix) the amount of any payments to each Class of Certificates
that are treated as payments received in respect of a REMIC "regular
interest" or REMIC "residual interest" and the amount of any payments to
each Class of Certificates that are not treated as payments received in
respect of a REMIC "regular interest" or REMIC "residual interest";
(xx) as of each Distribution Date, the amount, if any, to be
deposited in the Cap Contract Account pursuant to the related Cap Contract
as described in Section 4.04(k) and the amount thereof to be paid to the
Class A-1 Certificates, the Class A-2A Certificates, the Floating Rate
Subordinate Certificates and the Class C Certificates described in Section
4.04(k) hereof;
-115-
(xxi) as of each Distribution Date, the amount, if any, to be
deposited in the Supplemental Interest Trust pursuant to the Swap Agreement
as described in Section 4.04(l) and the amount thereof to be paid to the
Certificates;
(xxii) any Floating Rate Certificate Carryover paid and all
Floating Rate Certificate Carryover remaining on each class of the Class A,
Class M and Class B Certificates on such Distribution Date;
(xxiii) the number of Mortgage Loans with respect to which (i) a
reduction in the Mortgage Rate has occurred or (ii) the related borrower's
obligation to repay interest on a monthly basis has been suspended or
reduced pursuant to the Servicemembers Civil Relief Act or the California
Military and Veterans Code, as amended; and the amount of interest not
required to be paid with respect to any such Mortgage Loans during the
related Due Period as a result of such reductions in the aggregate and with
respect to the Group One Mortgage Loans and the Group Two Mortgage Loans.
(xxiv) with respect to each Class of Certificates, the amount of
any Non-Supported Interest Shortfalls on such Distribution Date;
(xxv) the number and amount of pool assets at the beginning and
ending of each period, and updated pool composition information;
(xxvi) any material changes to methodology regarding calculations
of delinquencies and charge-offs;
(xxvii) information on the amount, terms and general purpose of
any advances made or reimbursed during the period, including the general
use of funds advanced and the general source of funds for reimbursements;
(xxviii) any material modifications, extensions or waivers to
pool asset terms, fees, penalties or payments during the distribution
period or that have cumulatively become material over time;
(xxix) material breaches of pool asset representations or
warranties or transaction covenants;
(xxx) information on ratio, coverage or other tests used for
determining any early amortization, liquidation or other performance
trigger and whether the trigger was met; and
(xxxi) information regarding any pool asset changes (other than
in connection with a pool asset converting into cash in accordance with its
terms), such as pool asset substitutions and repurchases (and purchase
rates, if applicable), and cash flows available for future purchases, such
as the balances of any prefunding or revolving accounts, if applicable.
(b) The Trustee will make the Monthly Statement (and, at its option,
any additional files containing the same information in an alternative format)
available each month to Certificateholders, other parties to this Agreement and
any other interested parties via the Trustee's Internet website. The Trustee's
Internet website shall initially be located at "xxx.xxxxxxxx.xxx". Assistance in
using the website can be obtained by calling the Trustee's customer service desk
at (000) 000-0000. Parties that are unable to use the website are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change the
way the monthly statements to Certificateholders are distributed in order to
make such distribution more convenient and/or more accessible to the above
parties and the Trustee shall provide timely and adequate notification to all
above parties regarding any such changes.
The foregoing information and reports shall be prepared and determined by
the Trustee based on Mortgage Loan data provided to the Trustee by the Servicer
and information received by the Trustee from the Swap Counterparty. In preparing
or furnishing the foregoing information, the Trustee shall be entitled to rely
conclusively on the accuracy of the information or data (i) regarding the
Mortgage Loans and the related REO Property that has been provided to the
Trustee by the Servicer and (ii) regarding the Swap Agreement, that has been
provided to the Trustee by the Swap Counterparty, and the Trustee shall be
entitled to rely conclusively on the Mortgage Loan data provided by the Servicer
and shall have no liability for any errors in such Mortgage Loan data.
As a condition to access the Trustee's internet website, the Trustee may
require registration and the acceptance of a disclaimer. The Trustee will not be
liable for the dissemination of information in accordance with this Agreement.
(c) If so requested in writing within a reasonable period of time
after the end of each calendar year, the Trustee shall make available on its
website or cause to be furnished to each Person who at any time during the
calendar year was a Certificateholder of record, a statement containing the
information set forth in clauses (a)(i) and (a)(ii) of this Section 4.05
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as are from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificate and the NIMs Insurer each Form
1066 and each Form 1066Q and shall
-116-
respond promptly to written requests made not more frequently than quarterly by
any Holder of Class R Certificate with respect to the following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate assumptions used
in determining the projected principal and interest cash flows described
above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of the REMICs with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the REMICs;
and
(vii) Any taxes (including penalties and interest) imposed on the
REMICs, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or local
income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above shall
be provided by the Depositor pursuant to Section 8.12.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:
Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ --------------------- --------------------
A-1 $25,000.00 $1.00 $171,181,000
-117-
Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ --------------------- --------------------
A-2A $25,000.00 $1.00 $111,712,000
A-2B $25,000.00 $1.00 $ 72,476,000
A-2C $25,000.00 $1.00 $ 25,474,000
A-2D $25,000.00 $1.00 $ 23,296,000
M-1 $25,000.00 $1.00 $ 17,863,000
M-2 $25,000.00 $1.00 $ 16,828,000
M-3 $25,000.00 $1.00 $ 10,097,000
M-4 $25,000.00 $1.00 $ 9,061,000
M-5 $25,000.00 $1.00 $ 9,061,000
M-6 $25,000.00 $1.00 $ 8,284,000
B-1 $25,000.00 $1.00 $ 8,284,000
B-2 $25,000.00 $1.00 $ 8,543,000
B-3 $25,000.00 $1.00 $ 5,177,000
R $ 100.00 N/A $ 100.00
C (1) (1) 100%
P (2) (2) (2)
----------
(1) The Class C Certificates shall not have minimum dollar denominations or
certificate notional amount and shall be issued in a minimum percentage
interest of 25%.
(2) The Class P Certificates shall not have minimum dollar denominations or
Certificate Principal Balances and shall be issued in a minimum percentage
interest of 100%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth as attached
hereto executed by the Authenticating Agent by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication. On the Closing Date, the Authenticating Agent shall authenticate
the Certificates to be issued at the written direction of the Depositor, or any
Affiliate thereof.
The 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 Exhibit A hereto added to the form of each
such Certificate (each, a "Regulation S Book-Entry Certificate"), which shall be
deposited on behalf of the Holders of such Certificates represented thereby with
the Trustee, as custodian for DTC and registered in the name of a nominee of
DTC, duly executed and authenticated by the Trustee and the Authenticating Agent
as hereinafter provided. The aggregate principal amounts of the Regulation S
Book-Entry Certificates may from time to time be increased or decreased by
adjustments made on the records of the Trustee or DTC or its nominee, as the
case may be, as hereinafter provided.
-118-
The Certificates sold in reliance on Rule 144A 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 Exhibit A hereto added to the form of each such Certificate (each, a "Rule
144A Book-Entry Certificate"), which shall be deposited on behalf of the Holders
of such Certificates represented thereby with the Trustee, as custodian for DTC
and registered in the name of a nominee of DTC, duly executed and authenticated
by the Trustee and the Authenticating Agent as hereinafter provided. The
aggregate principal amounts of the Rule 144A Book-Entry Certificates may from
time to time be increased or decreased by adjustments made on the records of the
Trustee or DTC or its nominee, as the case may be, as hereinafter provided.
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Authenticating Agent shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute and the Authenticating
Agent shall authenticate and deliver the Certificates that the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of Transfer or exchange shall be accompanied by a
written instrument of Transfer in form satisfactory to the Trustee duly executed
by the holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.
No Transfer of a Class C or Class P Certificate shall be made unless such
Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall (except with
respect to the initial transfer of a Class C or Class P Certificate by Xxxxxxx
Xxxxx & Co. or, in connection with a transfer of a Class C or Class P
Certificate to the indenture trustee under an Indenture pursuant to which NIM
Notes are issued, whether or not such notes are guaranteed by the NIMs Insurer)
each certify to the Trustee in writing the facts surrounding the Transfer in
substantially the form set forth in Exhibit F (the "Transferor Certificate") and
(i) deliver a letter in substantially the form of either Exhibit G (the
"Investment Letter") or Exhibit H (the "Rule 144A Letter") or (ii) there shall
be delivered to the Trustee an Opinion of Counsel that such Transfer may be made
pursuant to an exemption from the Securities Act,
-119-
which Opinion of Counsel shall not be an expense of the Depositor or the
Trustee. The Depositor shall provide to any Holder of a Class C or Class P
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and such
other information as shall be necessary to satisfy the condition to eligibility
set forth in Rule 144A(d)(4) for Transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A. The Trustee shall cooperate with the Depositor
in providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information in the possession of the
Trustee regarding the Certificates, the Mortgage Loans and other matters
regarding the Trust Fund as the Depositor shall reasonably request to meet its
obligation under the preceding sentence. Each Holder of a Class C or Class P
Certificate desiring to effect such Transfer shall, and does hereby agree to,
indemnify the Depositor and the Trustee against any liability that may result if
the Transfer is not so exempt or is not made in accordance with such federal and
state laws.
By acceptance of a Regulation S Global Security, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will only transfer such a Certificate as provided herein. In
addition, each Holder of a Regulation S Global Security shall be deemed to have
represented and warranted to the Depositor, the Trustee and any of their
respective successors that: (i) such Person is not a "U.S. person" within the
meaning of Regulation S and was, at the time the buy order was originated,
outside the United States and (ii) such Person understands that such
Certificates have not been registered under the Securities Act and that (x)
until the expiration of the 40-day distribution compliance period (within the
meaning of Regulation S), no offer, sale, pledge or other transfer of such
Certificates or any interest therein shall be made in the United States or to or
for the account or benefit of a U.S. person (each as defined in 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" as defined in Rule 144A under the
Securities Act, that is purchasing such Certificates for its own account or for
the account of a qualified institutional buyer to which notice is given that the
transfer is being made in reliance on Rule 144A or (B) in an offshore
transaction (as defined in Regulation S) in compliance with the provisions of
Regulation S, in each case in compliance with the requirements of this
Agreement; and it will notify such transferee of the transfer restrictions
specified in this Section.
No transfer of a Certificate that is neither an ERISA Restricted
Certificate nor a Class R Certificate shall be registered unless the transferee
provides the Trustee with a representation that either (i) such transferee is
not, and is not acting for, on behalf of or with any assets of, an employee
benefit plan or other arrangement subject to Title I of ERISA or plan subject to
Section 4975 of the Code, or (ii) until the termination of the Swap Agreement,
the acquisition and holding of the Certificate are eligible for exemptive relief
under Prohibited Transaction Class Exemption ("PTCE") 00-00, XXXX 00-0, XXXX
91-38, PTCE 95-60 or PTCE 96-23.
No transfer of an ERISA Restricted Certificate or a Class R Certificate
shall be registered unless the Trustee has received (A) a representation to the
effect that such transferee is not an employee benefit plan subject to Title I
of ERISA, a plan subject to Section 4975 of the Code or a plan subject to any
state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law"), and is not directly
or indirectly acquiring the ERISA Restricted Certificate or the Class R
Certificate by, on behalf of, or with any assets of any such plan (collectively,
"Plan"), or (B) solely in the case of ERISA Restricted Certificates, (I) if the
Certificate has been the subject of an
-120-
ERISA-Qualifying Underwriting, a representation to the effect that such
transferee is an insurance company that is acquiring the Certificate with assets
of an "insurance company general account," as defined in Section V(e) of
Prohibited Transaction Class Exemption ("PTCE") 95-60, and the acquisition and
holding of the Certificate are covered and exempt under Sections I and III of
PTCE 95-60, or (II) solely in the case of an ERISA Restricted Certificate that
is a Definitive Certificate, an Opinion of Counsel satisfactory to the Trustee,
and upon which the Trustee and the NIMs Insurer shall be entitled to rely, to
the effect that the acquisition and holding of such Certificate will not
constitute or result in a nonexempt prohibited transaction under Title I of
ERISA or Section 4975 of the Code, or a violation of Similar Law, and will not
subject the Trustee, the Servicer, the NIMs Insurer or the Depositor to any
obligation in addition to those expressly undertaken in this Agreement, which
Opinion of Counsel shall not be an expense of the Trustee, the Servicer, the
NIMs Insurer or the Depositor.
Except in the case of a Definitive Certificate, the representations set
forth in the two immediately preceding paragraphs of this Subsection 5.02(a),
other than clause (II)(B) in the immediately preceding paragraph, shall be
deemed to have been made to the Trustee by the transferee's acceptance of a
Certificate (or the acceptance by a Certificate Owner of the beneficial interest
in any Certificate).
Notwithstanding any other provision herein to the contrary, any purported
transfer of a Certificate to or on behalf of a Plan without the delivery to the
Trustee of a representation or an Opinion of Counsel satisfactory to the Trustee
as described above shall be void and of no effect. The Trustee shall not be
under any liability to any Person for any registration or transfer of any
Certificate that is in fact not permitted by this Section 5.02(a), nor shall the
Trustee be under any liability for making any payments due on such Certificate
to the Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the transfer was registered by
the Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any Certificate that
was in fact a Plan and that held such Certificate in violation of this Section
5.02(a) all payments made on such Certificate at and after the time it commenced
such holding. Any such payments so recovered shall be paid and delivered to the
last preceding Holder of such Certificate that is not a Plan.
(b) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Ownership Interest in a Class R Certificate may be purchased,
transferred or sold, directly or indirectly, except in accordance with the
provisions hereof. No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Class R Certificate unless, in
addition to the certificates required to be delivered to the Trustee under
subparagraph (a) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit E-1 and an affidavit of
the proposed transferor in the form attached hereto as Exhibit E-2. In the
absence of a contrary instruction from the transferor of a Class R
Certificate, declaration (11) in Appendix A of the Transfer Affidavit may
-121-
be left blank. If the transferor requests by written notice to the Trustee
prior to the date of the proposed transfer that one of the two other forms
of declaration (11) in Appendix A of the Transfer Affidavit be used, then
the requirements of this Section 5.02(b)(ii) shall not have been satisfied
unless the Transfer Affidavit includes such other form of declaration.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from any
other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Class R Certificate and (C) not to
Transfer its Ownership Interest in a Class R Certificate or to cause the
Transfer of an Ownership Interest in a Class R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee. Further, no transfer, sale or other disposition of any
Ownership Interest in a Class R Certificate may be made to a person who is
not a U.S. Person (within the meaning of section 7701 of the Code) unless
such person furnishes the transferor and the Trustee with a duly completed
and effective Internal Revenue Service Form W-8ECI (or any successor
thereto) and the Trustee consents to such transfer, sale or other
disposition in writing.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section
5.02(b) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Class R Certificate in violation of the provisions of this Section
5.02(b), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class R
Certificate that is in fact not permitted by Section 5.02(a) and this
Section 5.02(b) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under
the provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit. The Trustee shall be
entitled but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at and
after either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Permitted
Transferee of such Certificate.
(v) At the option of the Holder of the Class R Certificate, the Class
SWR Interest, the Class LTR Interest and the residual interest in the Upper
Tier REMIC may be severed and represented by separate certificates (with
the separate certificate that represents the Residual Interest also
representing all rights of the Class R Certificate to distributions
attributable to an interest rate on the Class R Certificate in excess of
the REMIC Pass-Through Rate); provided, however, that such separate
certification may not occur until the Trustee receives an Opinion of
Counsel to the effect that separate certification in the form and manner
proposed would not result in the imposition of federal tax upon the Trust
Fund or any of the REMICs provided for herein or cause any of the REMICs
provided for herein to fail to qualify as a REMIC; and provided further,
that the provisions of Sections 5.02(a) and (b) will apply to each such
separate certificate as if the separate certificate were a Class R
Certificate. If, as evidenced by an Opinion of Counsel, it is necessary to
preserve the REMIC status of any of the REMICs provided for herein, the
Class SWR Interest, the Class LTR Interest and the residual interest in the
Upper Tier REMIC shall be
-122-
severed and represented by separate certificates (with the separate
certificate that represents the Residual Interest also representing all
rights of the Class R Certificate to distributions attributable to an
interest rate on the Class R Certificate in excess of the REMIC
Pass-Through Rate).
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(b) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel
shall not be an expense of the Trustee or the Depositor, to the effect that the
elimination of such restrictions will not cause any of the REMICs provided for
herein to fail to qualify as a REMIC at any time that the Certificates are
outstanding or result in the imposition of any tax on the Trust Fund, any REMIC
provided for herein, a Certificateholder or another Person. Each Person holding
or acquiring any Ownership Interest in a Class R Certificate hereby consents to
any amendment of this Agreement that, based on an Opinion of Counsel furnished
to the Trustee, is reasonably necessary (a) to ensure that the record ownership
of, or any beneficial interest in, a Class R Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and (b)
to provide for a means to compel the Transfer of a Class R Certificate that is
held by a Person that is not a Permitted Transferee to a Holder that is a
Permitted Transferee.
(c) The transferor of the Class R Certificate shall notify the Trustee
in writing upon the transfer of the Class R Certificate.
(d) [Reserved].
(e) The preparation and delivery of all certificates, opinions and
other writings referred to above in this Section 5.02 shall not be an expense of
the Trust Fund, the Depositor or the Trustee.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee and its counsel) connected therewith. Any replacement Certificate
issued pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.
SECTION 5.04. Persons Deemed Owners.
The NIMs Insurer, the Trustee and any agent of the NIMs Insurer or the
Trustee may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of
-123-
receiving distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the NIMs Insurer nor the Trustee, nor any agent of the
NIMs Insurer or the Trustee, shall be affected by any notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in writing
from the Trustee, (b) state that such Certificateholders desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates, and (c) provide a copy of the communication that such
Certificateholders propose to transmit or if the NIMs Insurer or the Depositor
shall request such information in writing from the Trustee, then the Trustee
shall, within ten Business Days after the receipt of such request, provide the
NIMs Insurer or the Depositor or such Certificateholders at such recipients'
expense the most recent list of the Certificateholders of the Trust Fund held by
the Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Class C, Class P and Class R Certificates shall be definitive
certificates. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08(a):
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the NIMs Insurer and the Trustee may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;
(c) registration of the Book-Entry Certificates may not be transferred
by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
-124-
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.
In the event that Definitive Certificates are issued pursuant to Section
5.08(b), clauses (a) through (g) of this Section 5.06 shall continue to be
applicable with respect to all remaining Book-Entry Certificates.
SECTION 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Trustee shall give all such
notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
(a) If, after Book-Entry Certificates have been issued with respect to
any Certificates, (a) the Depository or the Depositor advises the Trustee that
the Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor notifies the Trustee and the Depository of its
intent to terminate the book-entry system through the Depository and, upon
receipt of notice of such intent from the Depository, the Certificate Owners of
the Book-Entry Certificates agree to initiate such termination or (c) after the
occurrence and continuation of an Event of Default, Certificate Owners of such
Book-Entry Certificates having not less than 51% of the Voting Rights evidenced
by any Class of Book-Entry Certificates advise the Trustee and the Depository in
writing through the Depository Participants that the continuation of a
book-entry system with respect to Certificates of such Class through the
Depository (or its successor) is no longer in the best interests of the
Certificate Owners of such Class, then the Trustee shall notify all Certificate
Owners of such Book-Entry Certificates and the NIMs Insurer, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners of such Class requesting the same.
The Depositor shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon surrender to the Trustee of any such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Authenticating Agent shall authenticate and the Trustee shall deliver such
Definitive Certificates. Neither the Depositor nor the Trustee shall be liable
for any delay in delivery of such instructions and each may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of such Definitive Certificates, all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the
-125-
extent applicable with respect to such Definitive Certificates and the Trustee
shall recognize the Holders of such Definitive Certificates as
Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
offices at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: MLMI
2006-RM1 as offices for such purposes. The Trustee will give prompt written
notice to the Certificateholders of any change in such location of any such
office or agency.
SECTION 5.10. Authenticating Agents.
(a) One or more Authenticating Agents (each, an "Authenticating
Agent") may be appointed hereunder each of which shall be authorized to act on
behalf of the Trustee in authenticating the Certificates. Wherever reference is
made in this Agreement to the authentication of Certificates by the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be an entity organized and
doing business under the laws of the United States of America or any state
thereof, having a combined capital and surplus of at least $15,000,000,
authorized under such laws to operate a trust business and subject to
supervision or examination by federal or state authorities. If the
Authenticating Agent is a party other than the Trustee, the Trustee shall have
no liability in connection with the performance or failure of performance of the
Authenticating Agent. LaSalle Bank National Association is hereby appointed as
the initial Authenticating Agent. The Trustee shall be the Authenticating Agent
during any such time as no other Authenticating Agent has been appointed and has
not resigned.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee and the Depositor.
Except with respect to the initial Authenticating Agent, LaSalle Bank National
Association, which shall be the Authenticating Agent for so long as it is the
Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance within the provisions of this Section 5.10, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 5.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee.
-126-
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.
The Depositor and the Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.
Except as provided in the next paragraph, the Depositor and the Servicer
will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any Person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding (except for the
execution of an assumption agreement where such succession is not effected by
operation of law); provided, however, that the successor or surviving Person to
the Servicer shall be qualified to sell mortgage loans to, and to service
mortgage loans on behalf of, Xxxxxx Xxx or Xxxxxxx Mac.
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.
None of the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the 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 Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor or the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor or the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense, incurred in connection with the performance of their duties under this
Agreement or incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense (i) incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or (ii) which does not constitute
an "unanticipated expense" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii). Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal
-127-
action that is not incidental to its respective duties hereunder and that in its
opinion may involve it in any expense or liability; provided, however, that any
either of the Depositor or the Servicer in its discretion may undertake any such
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties hereto and the interests of the Trustee and
the Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be, expenses, costs and
liabilities of the Trust Fund, and the Depositor and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account as provided by
Section 3.08 hereof.
Notwithstanding anything herein to the contrary, in preparing or
furnishing any reports or certifications pursuant to this Agreement, the
Servicer shall be entitled to rely conclusively on the accuracy of the
information or data provided to it by any other party to the Agreement and
shall have no liability for any errors therein.
SECTION 6.04. Limitation on Resignation of Servicer.
Subject to the provisions of Section 7.01, the second paragraph of Section
7.02, the second paragraph of Section 6.02 and the following paragraph of this
Section 6.04, the Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the NIMs Insurer. No such resignation shall
become effective until the Trustee or a successor servicer reasonably acceptable
to the NIMs Insurer and the Trustee is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Section 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer.
Notwithstanding anything to the contrary in the previous paragraph of this
Section 6.04, the Trustee, the Depositor and the NIMs Insurer 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, if any, for the benefit of certain lenders, and (ii)
agree that upon delivery to the Trustee by the Servicing Rights Pledgee of a
letter signed by the Servicer whereby the Servicer shall resign as Servicer
under this Agreement, notwithstanding anything to the contrary which may be set
forth in Section 3.04 above, the Trustee shall appoint the Servicing Rights
Pledgee or its designee as successor servicer, provided that the Servicer's
resignation will not be effective unless, at the time of such appointment, the
Servicing Rights Pledgee or its designee (i) meets the requirements of a
successor servicer under Section 7.03 of this Agreement (including being
acceptable to the Rating Agencies), provided, that the consent and approval of
the Trustee, the Depositor and the NIMS Insurer shall be deemed to have been
given to the Servicing Rights Pledgee or its designee, and the Servicing Rights
Pledgee and its designee are hereby agreed to be acceptable to the Trustee, the
Depositor and the NIMS Insurer and (ii) agrees to be subject to the terms of
this Agreement. If, pursuant to any provision hereof, the duties of the Servicer
are transferred to a successor servicer, the entire amount of the Servicing Fee
and other compensation payable to the Servicer pursuant hereto shall thereafter
be payable to such successor servicer.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of Xxxxxx Xxx or Xxxxxxx Mac for Persons
performing servicing for mortgage loans purchased by Xxxxxx Mae or Xxxxxxx Mac.
The Servicer shall provide the Trustee and the NIMs Insurer, upon request and
reasonable notice, with copies of such policies and fidelity bond or a
certification from the insurance
-128-
provider evidencing such policies and fidelity bond. The Servicer may be deemed
to have complied with this provision if an Affiliate of the Servicer has such
errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends to
the Servicer. In the event that any such policy or bond ceases to be in effect,
the Servicer shall use its reasonable best efforts to obtain a comparable
replacement policy or bond from an insurer or issuer meeting the requirements
set forth above as of the date of such replacement. Any such policy or fidelity
bond shall by its terms not be cancelable without thirty days' prior written
notice to the Trustee.
SECTION 6.06. Special Servicing Agreements.
The Servicer may enter into a special servicing advisory agreement with an
unaffiliated holder of the Class R Certificate and/or one or more other class of
subordinated certificates and/or an advisor designated by the holder of the
Class R Certificate. Pursuant to such agreement, the Servicer may provide such
holder or advisor, in its capacity as special servicing advisor, with loan-level
information with respect to the Mortgage Loans, and the holder of the Class R
Certificate or the special servicing advisor designated by the holder of the
Class R Certificate may advise the Servicer with respect to the commencement of
foreclosure proceedings or other actions to liquidate such Mortgage Loans and/or
any other efforts to maximize recoveries with respect to such Mortgage Loans.
ARTICLE VII
DEFAULT; TERMINATION OF SERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
(i) any failure by the Servicer to make any Advance, to deposit in the
Collection Account or the Certificate Account or remit to the Trustee any
payment (excluding a payment required to be made under Section 4.01 hereof)
required to be made under the terms of this Agreement, which failure shall
continue unremedied for three Business Days and, with respect to a payment
required to be made under Section 4.01 hereof, for one Business Day, after
the date on which written notice of such failure shall have been given to
the Servicer by the Trustee or the Depositor, or to the Trustee, the
Depositor and the Servicer by the NIMs Insurer or the Holders of
Certificates evidencing greater than 50% of the Voting Rights evidenced by
the Certificates; or
(ii) any failure by the Servicer to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Servicer contained in this Agreement or any representation or warranty
shall prove to be untrue, which failure or breach shall continue unremedied
for a period of 60 days after the date on which written notice of such
failure shall have been given to the Servicer, the Trustee and the
Depositor by the Trustee or the Depositor, or to the Servicer, the Trustee
and the Depositor by the Holders of Certificates evidencing greater than
50% of the Voting Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
-129-
its affairs, shall have been entered against the Servicer and such decree
or order shall have remained in force undischarged or unstayed for a period
of 60 consecutive days; or
(iv) consent by the Servicer to the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings of or relating to the Servicer or
all or substantially all of the property of the Servicer; or
(v) admission by the Servicer in writing of its inability to pay its
debts generally as they become due, file a petition to take advantage of,
or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) any failure by the Servicer to duly perform, within the required
time period, its obligations under Sections 3.17, 3.18 and 3.22 of this
Agreement, which failure continues unremedied for a period of ten (10) days
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Trustee or any
other party to this Agreement.
If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, the Trustee may, or at the
direction of the NIMs Insurer or the Holders of Certificates evidencing greater
than 50% of the Voting Rights evidenced by the Certificates (with the written
consent of the NIMs Insurer, except after a NIMs Insurer Default), shall, by
notice in writing to the Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Servicer under this Agreement and in
and to the related Mortgage Loans and the proceeds thereof, other than its
rights as a Certificateholder hereunder. On or after the receipt by the Servicer
of such written notice, all authority and power of the Servicer hereunder,
whether with respect to the related Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee. To the extent the Event of Default resulted from
the failure of the Servicer to make a required Advance, the Trustee shall
thereupon make any Advance described in Section 4.01 hereof subject to Section
3.04 hereof. The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Servicer to pay amounts owed pursuant to Article VIII. The Servicer
agrees to cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee of all cash amounts which shall at the time be
credited to the Collection Account, or thereafter be received with respect to
the Mortgage Loans. The Servicer and the Trustee shall promptly notify the
Rating Agencies of the occurrence of an Event of Default, such notice to be
provided in any event within two Business Days of such occurrence.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a), and any other amounts payable
to the Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder. Notwithstanding anything herein to the
contrary, upon
-130-
termination of the Servicer hereunder, any liabilities of the Servicer which
accrued prior to such termination shall survive such termination.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, the
Trustee shall be entitled to all fees, compensation and reimbursement for costs
and expenses that the Servicer would have been entitled to hereunder if the
Servicer had continued to act hereunder. Notwithstanding the foregoing, if the
Trustee has become the successor to the Servicer in accordance with Section 7.01
hereof, the Trustee may, if it shall be unwilling to so act, or shall, if it is
prohibited by applicable law from making Advances pursuant to Section 4.01
hereof or if it is otherwise unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution provided the appointment of such successor shall be approved by the
NIMs Insurer and does not adversely affect the then current rating of the
Certificates by each Rating Agency as the successor to the Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder. Any successor Servicer shall be an institution that
is acceptable to the NIMs Insurer and is a Xxxxxx Xxx and Xxxxxxx Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000,
and that is willing to service the Mortgage Loans and executes and delivers to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer (other
than liabilities of the Servicer under Section 6.03 hereof incurred prior to
termination of the Servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; and provided further that each
Rating Agency acknowledges that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation. No appointment of a
successor to the Servicer hereunder shall be effective until the Trustee shall
have consented thereto, prior written consent of the NIMs Insurer is obtained
(provided, that such prior written consent shall not be required in the event
that the Servicing Rights Pledgee or its designee is so appointed as successor
servicer) and written notice of such proposed appointment shall have been
provided by the Trustee to each Certificateholder. The Trustee shall not resign
as servicer until a successor servicer has been appointed and has accepted such
appointment. Pending appointment of a successor to the Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3.04 hereof, act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer hereunder. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither the
Trustee nor any other successor servicer shall be deemed to be in default
hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or any
delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of the Servicer to deliver or provide, or any delay in
delivering or providing, any cash, information, documents or records to it.
-131-
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the Depositor and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the Rating Agencies
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of the Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in its exercise as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee
shall, at the written direction of the majority of the Certificateholders or the
NIMs Insurer, or may, proceed to protect and enforce its rights and the rights
of the Certificateholders or the NIMs Insurer 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, the NIMs Insurer and the
Certificateholders.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement. If any such
instrument is found not to conform on its face to the requirements of this
Agreement in a material manner, the Trustee shall notify the person providing
such Agreement of such non-conformance, and if the instrument is not corrected
to the its satisfaction, the Trustee will provide notice thereof to the
Certificateholders and the NIMs Insurer and take such further action as directed
by the Certificateholders and the NIMs Insurer.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability that would be imposed by
reason of its willful misfeasance or bad faith; provided, however, that:
-132-
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable, individually
or as Trustee, except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement that it reasonably believed in good faith to be genuine and
to have been duly executed by the proper authorities respecting any matters
arising hereunder;
(ii) the Trustee shall not, individually or as Trustee, be liable for
an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee unless the Trustee was negligent or
acted in bad faith or with willful misfeasance; and
(iii) the Trustee shall not be liable, individually or as Trustee,
with respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the NIMs Insurer or the
Holders in accordance with this Agreement relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee under this
Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and conclusively rely upon and shall be
fully protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel of its choice and any advice
or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel;
(iii) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Agreement;
(iv) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing so to do by the NIMs Insurer
or the Holders of each Class of Certificates evidencing not less than 25%
of the Voting Rights of such Class;
-133-
(v) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
custodians, accountants or attorneys or independent contractors and the
Trustee will not be responsible for any misconduct or negligence on the
part of any agent, custodian, accountant, attorney or independent
contractor appointed with due care by it hereunder;
(vi) the Trustee shall not be required to expend its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such liability is not
assured to it;
(vii) the Trustee shall not be liable, individually or as Trustee, for
any loss on any investment of funds pursuant to this Agreement (other than
as issuer of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an Event
of Default until a Responsible Officer of the Trustee shall have received
written notice thereof;
(ix) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the NIMs Insurer or the Certificateholders, pursuant
to the provisions of this Agreement, unless the NIMs Insurer or such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity satisfactory to it against the costs, expenses and liabilities
that may be incurred therein or thereby;
(x) if requested by the Servicer, the Trustee may appoint the Servicer
as the Trustee's attorney-in-fact in order to carry out and perform certain
activities that are necessary or appropriate for the servicing and
administration of the Mortgage Loans pursuant to this Agreement. Such
appointment shall be evidenced by a power of attorney in such form as may
be agreed to by the Trustee and the Servicer. The Trustee shall have no
liability for any action or inaction of the Servicer in connection with
such power of attorney and the Trustee shall be indemnified by the Servicer
for all liabilities, costs and expenses incurred by the Trustee in
connection with the Servicer's use or misuse of such powers of attorney;
and
(xi) in order to comply with its duties under the U.S.A. Patriot Act,
the Trustee shall obtain and verify certain information and documentation
from the other parties hereto, including but not limited to, such party's
name, address and other identifying information.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement. The Trustee shall have no duty (A) to 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 rerecording, refiling or
redepositing, as applicable, thereof, (B) to see to any insurance or (C) to see
to the payment or discharge of any tax, assessment, or other governmental charge
-134-
or any lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Fund.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representation as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, or any
related document other than with respect to the execution and authentication of
the Certificates, if it so executed or authorized the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor or the
Servicer of any funds paid to the Depositor or the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account or the
Certificate Account by the Depositor or the Servicer.
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 was not the
Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
The Trustee and any custodian shall be entitled to, such compensation as
shall be agreed to in writing by the Trustee and the Depositor (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.
SECTION 8.06. Indemnification and Expenses of Trustee.
(a) LaSalle Bank National Association (as Trustee and in its
individual corporate capacity) and its directors, officers, employees and agents
shall be entitled to indemnification from the Trust Fund for any loss, liability
or expense incurred in connection with (i) any audit, controversy or judicial
proceeding relating to a governmental authority or any legal proceeding incurred
without negligence or willful misconduct on their part, arising out of, or in
connection with the acceptance or administration of the trusts created hereunder
and (ii) the performance of their duties hereunder, including any applicable
fees and expenses payable hereunder, and the costs and expenses of defending
themselves against any claim in connection with the exercise or performance of
any of their powers or duties hereunder, provided that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor written notice thereof promptly after the Trustee shall have
knowledge thereof; provided that failure to so notify shall not relieve the
Trust Fund of the obligation to indemnify the Trustee; however, any
reasonable delay by the Trustee to provide written notice to the Depositor
and the Holders promptly after the Trustee shall have obtained knowledge of
a claim shall not relieve the Trust Fund of the obligation to indemnify the
Trustee under this Section 8.06;
(ii) while maintaining control over its own defense, the Trustee shall
reasonably cooperate and consult with the Depositor in preparing such
defense;
-135-
(iii) notwithstanding anything to the contrary in this Section 8.06,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld or delayed; and
(iv) indemnification therefor would constitute "unanticipated
expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii).
Any indemnification payments to the Trustee (or a custodian) pursuant to
this Section 8.06(a) shall be allocated first to principal and then, to the
extent remaining, to interest.
The provisions of this Section 8.06 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
(b) The Trustee shall be entitled to reimbursement by the Trust Fund
of all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with this Agreement (including fees and expenses of its
counsel and all persons not regularly in its employment), except any such
expenses, disbursements and advances that either (i) arise from its negligence,
bad faith or willful misconduct or (ii) do not constitute "unanticipated
expenses" within the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii).
(c) The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $400,000 in the aggregate in any calendar year, excluding
(i) any Servicing Transfer Costs and (ii) any costs, damages or expenses
incurred by the Trustee in connection with any "high cost" home loans or any
predatory or abusive lending laws, which amounts shall in no case be subject to
any such limitation; provided, however, that such cap shall apply only if NIM
Notes have been issued and there is a NIMs Insurer and shall cease to apply
after the date on which any NIM Notes are paid in full or if there is no NIMs
Insurer; provided further, however, that amounts incurred by the Trustee in
excess of such annual limit in any calendar year shall be payable to the Trustee
in succeeding calendar years, subject to such annual limit for each applicable
calendar year. Any amounts reimbursable hereunder and all amounts which the NIMs
Insurer is entitled to be paid or reimbursed shall have been paid or reimbursed.
Any amounts not in excess of this cap may be withdrawn by the Trustee from the
Certificate Account at any time.
(d) The Custodian shall be entitled to indemnification and
reimbursement of expenses to the same extent as the Trustee is entitled to such
amounts pursuant to subsection (a) and (b) of this Section 8.06, without regard
to subsection (c) of this Section 8.06.
SECTION 8.07. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers having a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and with a long-term deposit rating of
at least "A2" by Xxxxx'x and "A" by S&P. If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.07 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
-136-
provisions of this Section 8.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.08 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor, the NIMs Insurer and their respective
Affiliates; provided, however, that such corporation cannot be an Affiliate of
the Servicer.
SECTION 8.08. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by (1) giving written notice of resignation to the Depositor by mailing
notice of resignation by first class mail, postage prepaid, to the
Certificateholders at their addresses appearing on the Certificate Register and
each Rating Agency, not less than 60 days before the date specified in such
notice when, subject to Section 8.09, such resignation is to take effect, and
(2) acceptance of appointment by a successor trustee acceptable to the NIMs
Insurer in accordance with Section 8.09 and meeting the qualifications set forth
in Section 8.07. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice or
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or the NIMs Insurer or (ii) the Trustee
shall become incapable of acting, or shall be adjudged as bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and shall promptly appoint a successor trustee
by written instrument, in triplicate, one copy of which instrument shall be
delivered to the Trustee and one copy of which shall be delivered to the
successor trustee.
The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates, with the consent of the NIMs Insurer, or the NIMs Insurer upon
failure of the Trustee to perform its obligations hereunder, may at any time
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized (or by the NIMs Insurer), one complete
set of which instruments shall be delivered by the successor trustee to the
Servicer, one complete set to the Trustee so removed and one complete set to the
successor so appointed. Notice of any removal of the Trustee shall be given to
the NIMs Insurer and each Rating Agency by the successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.
SECTION 8.09. Successor Trustee.
Any successor trustee appointed as provided in Section 8.08 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, the NIMs Insurer and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as trustee herein.
-137-
No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.09, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If the Depositor fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION 8.10. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee and the NIMs Insurer to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the Trust
Fund or any part thereof, whichever is applicable, and, subject to the other
provisions of this Section 8.11, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable. Any
such co-trustee or separate trustee shall be compensated by the Trust Fund and
subject to the written approval of the Servicer and the NIMs Insurer. The
Trustee shall not be liable for the actions of any co-trustee appointed with due
care; provided that the appointment of a co-trustee shall not relieve the
Trustee of its obligations hereunder. If the Servicer and the NIMs Insurer shall
not have joined in such appointment within 15 days after the receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.07 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.09.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(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
-138-
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 Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction
of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) The Trustee, with the consent of the NIMs Insurer, may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
the NIMs Insurer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the Trustee
its agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.12. Tax Matters.
(a) It is intended that each of the REMICs provided for herein shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such REMIC to qualify as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. It is also intended
that each of the grantor trusts provided for in Section 2.07 hereof shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such grantor trust to qualify as, a grantor trust under the
provisions of Subpart E, Part I of Subchapter J of the Code. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is hereby appointed to act as agent) on behalf of each of the REMICs
provided for herein and that in such capacity it shall: (a) prepare and file, or
cause to be prepared and filed, in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066 or any successor form adopted by
the Internal Revenue Service) and prepare and file or cause to be prepared and
filed with the Internal Revenue Service and applicable state or local tax
authorities income tax or information returns for each taxable year with respect
to each of the REMICs and grantor trusts provided for herein, containing such
information and at the times and in the manner as may be required by the Code or
state or local tax laws, regulations, or rules, and furnish or cause to be
furnished to Certificateholders the schedules, statements or information at such
times and in such manner as may be required thereby; (b) within thirty days of
the Closing Date,
-139-
furnish or cause to be furnished to the Internal Revenue Service, on Forms 8811
or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code for each of the REMICs provided for
herein; (c) make or cause to be made elections, on behalf of each of the REMICs
provided for herein to be treated as a REMIC on the federal tax return of such
REMICs for their first taxable years (and, if necessary, under applicable state
law); (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions or other applicable
law, including without limitation, the calculation of any original issue
discount using the Prepayment Assumption; (e) provide information necessary for
the computation of tax imposed on the transfer of a Class R Certificate to a
Person that is not a Permitted Transferee, or an agent (including a broker,
nominee or other middleman) of a Person that is not a Permitted Transferee, or a
pass through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct the affairs of each of the REMICs
and grantor trusts provided for herein at all times that any Certificates are
outstanding so as to maintain the status of each of the REMICs provided for
herein as a REMIC under the REMIC Provisions and the status of each of the
grantor trusts provided for herein as a grantor trust under Subpart E, Part I of
Subchapter J of the Code; (g) not knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC status of
any of the REMICs provided for herein or result in the imposition of tax upon
any such REMIC; (h) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the grantor trust status
under Subpart E, Part I of Subchapter J of the Code of any of the grantor trusts
provided for herein or result in the imposition of tax upon any such grantor
trust; (i) pay, from the sources specified in the last paragraph of this Section
8.12, the amount of any federal, state and local taxes, including prohibited
transaction taxes as described below, imposed on each of the REMICs provided for
herein prior to the termination of the Trust Fund when and as the same shall be
due and payable (but such obligation shall not prevent the Trustee or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Trustee from withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings); (j) sign or cause to be signed
federal, state or local income tax or information returns; (k) maintain records
relating to each of the REMICs provided for herein, including but not limited to
the income, expenses, assets and liabilities of each of the REMICs and grantor
trusts provided for herein; and (l) as and when necessary and appropriate,
represent each of the REMICs provided for herein in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any of the REMICs provided for herein, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of any of the REMICs provided for herein, and otherwise act on behalf
of each of the REMICs provided for herein in relation to any tax matter
involving any of such REMICs or any controversy involving the Trust Fund.
In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within 10
days after the Closing Date all information or data that the Trustee requests in
writing and determines to be relevant for tax purposes to the valuations and
offering prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans. Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor, any such additional information or data
that the Trustee may, from time to time, request in order to enable the Trustee
to perform its duties as set
-140-
forth herein. The Depositor hereby agrees to indemnify the Trustee for any
losses, liabilities, damages, claims or expenses of the Trustee arising from any
errors or miscalculations of the Trustee that result from any failure of the
Depositor to provide, or to cause to be provided, accurate information or data
to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of any of
the REMICs provided for herein as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of any of such REMICs as defined in
Section 860G(c) of the Code, on any contribution to the Trust Fund after the
Startup Day pursuant to Section 860G(d) of the Code, or any other tax is
imposed, if not paid as otherwise provided for herein, such tax shall be paid by
(i) the Trustee, if any such other tax arises out of or results from a breach by
the Trustee of any of its obligations under this Agreement or as a result of the
location of the Trustee, (ii) any party hereto (other than the Trustee) to the
extent any such other tax arises out of or results from a breach by such other
party of any of its obligations under this Agreement or as a result of the
location of such other party or (iii) in all other cases, or in the event that
any liable party here fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts (other than amounts
derived by the Trust Fund from a payment on the Cap Contracts or amounts
received by the Supplemental Interest Trust as payments on the Swap Agreement)
otherwise to be distributed to the Class R Certificateholders (pro rata)
pursuant to Section 4.04, and second with amounts (other than amounts derived by
the Trust Fund from a payment on the Cap Contracts or amounts received by the
Supplemental Interest Trust as payments on the Swap Agreement) otherwise to be
distributed to all other Certificateholders in the following order of priority:
first, to the Class C Certificates (pro rata), second to the Class B-3
Certificates (pro rata), third to the Class B-2 Certificates (pro rata), fourth
to the Class B-1 Certificates (pro rata), fifth to the Class M-6 Certificates
(pro rata), sixth to the Class M-5 Certificates (pro rata), seventh to the Class
M-4 Certificates (pro rata), eighth to the Class M-3 Certificates (pro rata),
ninth to the Class M-2 Certificates (pro rata), tenth to the Class M-1
Certificates (pro rata) and eleventh to the Class A Certificates (pro rata).
Notwithstanding anything to the contrary contained herein, to the extent that
such tax is payable by the Class R Certificate, the Trustee is hereby authorized
pursuant to such instruction to retain on any Distribution Date, from the
Holders of the Class R Certificate (and, if necessary, from the Holders of all
other Certificates in the priority specified in the preceding sentence), funds
otherwise distributable to such Holders in an amount sufficient to pay such tax.
The Trustee agrees to promptly notify in writing the party liable for any such
tax of the amount thereof and the due date for the payment thereof.
(b) Each of the Depositor, the Servicer and the Trustee agrees not to
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of any of the REMICs provided for
herein or result in the imposition of a tax upon any of the REMICs provided for
herein.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.
(a) Subject to Section 9.03, the obligations and responsibilities of
the Depositor, the Servicer and the Trustee created hereby with respect to the
Trust Fund shall terminate upon the earlier of (a) an Optional Termination and
(b) the later of (i) the maturity or other liquidation (or any Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO
-141-
Property and (ii) the distribution to Certificateholders of all amounts required
to be distributed to them pursuant to this Agreement, as applicable. In no event
shall the trusts created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to the Court of St.
James's, living on the date hereof and (ii) the Latest Possible Maturity Date.
(b) On or before the Determination Date following the Initial Optional
Termination Date, the Trustee shall attempt to terminate the Trust Fund by
conducting an auction of all of the Mortgage Loans and REO Properties via a
solicitation of bids from at least three (3) bidders, each of which shall be a
nationally recognized participant in mortgage finance (the "Auction"). In
addition, the Trustee will also solicit a bid from each Holder of a Class C
Certificate. The Depositor and the Trustee agree to work in good faith to
develop bid procedures in advance of the Initial Optional Termination Date to
govern the operation of the Auction. The Trustee shall be entitled to retain an
investment banking firm and/or other agents in connection with the Auction, the
cost of which shall be included in the Optional Termination Price (unless an
Optional Termination does not occur in which case such costs shall be an expense
of the Trust Fund). The Trustee shall accept the highest bid received at the
Auction; provided that the amount of such bid equals or exceeds the Optional
Termination Price. The Trustee shall determine the Optional Termination Price
based upon information provided by (i) the Servicer with respect to the amounts
described in clauses (A) and (B) of the definition of "Optional Termination
Price", (ii) the Depositor with respect to the information described in clause
(C) of the definition of "Optional Termination Price." The Trustee may
conclusively rely upon the information provided to it in accordance with the
immediately preceding sentence and shall not have any liability for the failure
of any party to provide such information.
If an Optional Termination does not occur as a result of the Auction's
failure to achieve the Optional Termination Price, the Servicer may, on any
Distribution Date following such Auction, at its option, terminate the Trust
Fund by purchasing all of the Mortgage Loans and REO Properties at a price equal
to the Optional Termination Price. In connection with such termination, the
Optional Termination Price shall be delivered to the Trustee no later than two
Business Days immediately preceding the related Distribution Date.
Notwithstanding anything to the contrary herein, the Optional Termination Amount
paid to the Trustee by the winning bidder at the Auction or by the Servicer
shall be deposited by the Trustee directly into the Certificate Account
immediately upon receipt. Upon any termination as a result of an Auction, the
Trustee shall, out of the Optional Termination Amount deposited into the
Certificate Account, (x) reimburse the Trustee for its costs and expenses
necessary to conduct the Auction and any other unreimbursed amounts owing to it
and (y) pay to the Servicer, the aggregate amount of any unreimbursed
out-of-pocket costs and expenses owed to the Servicer and any unpaid or
unreimbursed Servicing Fees, Advances and Servicing Advances.
(c) Notwithstanding anything to the contrary in clause (b) above, in
the event that the Trustee receives the written opinion of a nationally
recognized participant in mortgage finance acceptable to the Sponsor that the
Mortgage Loans and REO Properties to be included in the Auction will not be
saleable at a price sufficient to achieve the Optional Termination Price, the
Trustee need not conduct the Auction. In such event, the Servicer shall have the
option to purchase the Mortgage Loans and REO Properties at the Optional
Termination Price as of the Initial Optional Termination Date.
SECTION 9.02. Final Distribution on the Certificates.
-142-
If on any Determination Date, (i) the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder and the NIMs Insurer or
(ii) the Trustee determines that a Class of Certificates shall be retired after
a final distribution on such Class, the Trustee shall notify the
Certificateholders as soon as practicable after such Determination Date that the
final distribution in retirement of such Class of Certificates is scheduled to
be made on the immediately following Distribution Date. Any final distribution
made pursuant to the immediately preceding sentence will be made only upon
presentation and surrender of the Certificates at the office of the Trustee
specified in such notice.
Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed no later than the last calendar day of
the month immediately preceding the month of such final distribution (or with
respect to an Auction, mailed no later than one Business Day following
completion of such Auction). Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (b)
the location of the office or agency at which such presentation and surrender
must be made, and (c) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.
The Trustee will give such notice the NIMs Insurer and to each Rating Agency at
the time such notice is given to Certificateholders.
In the event such notice is given, the Servicer shall remit all funds in
the Collection Account to the Trustee for deposit in the Certificate Account on
the Servicer Remittance Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit and the receipt by the
Trustee of a Request for Release therefor, the Trustee shall promptly release to
the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholders of such
funds and assets, the Trustee shall not have any further duties or obligations
with respect thereto.
SECTION 9.03. Additional Termination Requirements.
-143-
(a) In the event the Trustee or the Servicer completes an Optional
Termination as provided in Section 9.01, the Trust Fund shall be terminated in
accordance with the following additional requirements, unless the Trustee has
been supplied with an Opinion of Counsel, at the expense of the NIMs Insurer or
Servicer, as applicable, to the effect that the failure of the Trust Fund to
comply with the requirements of this Section 9.03 will not (i) result in the
imposition of taxes on "prohibited transactions" of any of the REMICs provided
for herein as defined in Section 860F of the Code, or (ii) cause any of the
REMICs provided for herein to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(i) The Depositor shall establish a 90-day liquidation period and
notify the Trustee thereof, and the Trustee shall in turn specify the first
day of such period in a statement attached to the final tax returns of each
of the REMICs provided for herein pursuant to Treasury Regulation Section
1.860F-1. The Depositor shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations thereunder,
as evidenced by an Opinion of Counsel obtained at the expense of the
Servicer;
(ii) During such 90-day liquidation period, and at or prior to the
time of making the final payment on the Certificates, the Depositor as
agent of the Trustee shall sell all of the assets of the Trust Fund for
cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholders all cash on hand
(other than cash retained to meet outstanding claims), and the Trust Fund
shall terminate at that time, whereupon the Trustee shall have no further
duties or obligations with respect to sums distributed or credited to the
Class R Certificateholders.
(b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Depositor to specify the 90-day liquidation period for the
Trust Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt and
sign such a plan of complete liquidation prepared and delivered to it by
Depositor upon the written request of the Depositor, and the receipt of the
Opinion of Counsel referred to in Section 9.03(a) and to take such other action
in connection therewith as may be reasonably requested by the Depositor.
(d) Notwithstanding any other terms of this Agreement, prior to any
termination of the Trust Fund, the Servicer may prepare a reconciliation of all
Advances and Servicing Advances made by it for which it has not been reimbursed
and a reasonable estimate of all additional Servicing Advances and other costs
for which it would be entitled to be reimbursed if the Trust Fund were not being
terminated, including without limitation, any Servicing Advances and other costs
arising under Section 6.03 (Limitation on Liability of the Depositor, the
Servicer and Others), and the Servicer may recover these Advances, Servicing
Advances and estimated Servicing Advances and other costs from the Collection
Account (to the extent that such recovery of Servicing Advances, estimated
Servicing Advances and other costs constitutes "unanticipated expenses" within
the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).
(e) (e) Notwithstanding any other terms of this Agreement, unless the
Servicer previously has notified the Trustee that it has entered into a
servicing agreement for the servicing after the
-144-
termination date of the Trust Fund assets, at least 20 days prior to any
termination of the Trust Fund, the Trustee or the Depositor shall notify the
Servicer in writing to transfer the assets of the Trust Fund as of the
termination date to the person specified in the notice, or if such person is not
then known, to continue servicing the assets until the date that is 20 days
after the termination date and on the termination date, the Trustee or the
Depositor shall notify the Servicer of the person to whom the assets should be
transferred on that date. In the latter event the Servicer shall be entitled to
recover its servicing fee and any advances made for the interim servicing period
from the collections on the assets which have been purchased from the Trust and
the new owner of the assets, and the agreements for the new owner to obtain
ownership of the assets of the Trust Fund shall so provide.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, with the consent of the NIMs Insurer and without the
consent of any of the Certificateholders to,
(i) to cure any ambiguity or correct any mistake,
(ii) to correct, modify or supplement any provision herein which may
be inconsistent with the Prospectus Supplement or any other provision
herein,
(iii) to add any other provisions with respect to matters or questions
arising under this Agreement, or
(iv) to modify, alter, amend, add to or rescind any of the terms or
provisions contained in this Agreement, provided, however, that, in the
case of clauses (iii) and (iv), such amendment will not, as evidenced by an
Opinion of Counsel to such effect, adversely affect in any material respect
the interests of any Holder; provided, further, however, that such
amendment will be deemed to not adversely affect in any material respect
the interest of any Holder if the Person requesting such amendment obtains
a letter from each Rating Agency stating that such amendment will not
result in a reduction or withdrawal of its rating of any Class of the
Certificates, it being understood and agreed that any such letter in and of
itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating. In addition, this Agreement may be amended from
time to time by the Depositor, the Servicer and the Trustee without the
consent of any of the Certificateholders and without delivery of an opinion
of counsel to comply with the provisions of Regulation AB.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee and the NIMs Insurer shall have been
provided
-145-
an Opinion of Counsel, which opinion shall be an expense of the party requesting
such amendment but in any case shall not be an expense of the Trustee or the
NIMs Insurer, to the effect that such action is necessary or appropriate to
maintain such qualification or to avoid or minimize the risk of the imposition
of such a tax.
This Agreement may also be amended from time to time by the Depositor, the
Trustee, the Servicer, the Trustee and the Holders of the Certificates affected
thereby evidencing not less than 66 2/3% of the Voting Rights, with the consent
of the NIMs Insurer, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) adversely affect in
any material respect the interests of the Holders of any Class of Certificates
in a manner other than as described in (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) reduce the aforesaid percentages of Certificates the Holders
of which are required to consent to any such amendment without the consent of
the Holders of all such Certificates then outstanding. A copy of such Opinion of
Counsel shall be provided to the NIMs Insurer.
Notwithstanding any contrary provision of this Agreement, the Trustee shall
not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of any
tax on the Trust Fund, any of the REMICs provided for herein or the
Certificateholders or cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.
The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.
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.
-146-
Notwithstanding anything to the contrary in this Section 10.01, the Trustee
and the Servicer shall reasonably cooperate with the Depositor and its counsel
to enter into such amendments or modifications to this Agreement as may be
necessary to comply with Regulation AB and any interpretation thereof by the
Securities and Exchange Commission.
SECTION 10.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice
to the NIMs Insurer and each Rating Agency with respect to each of the following
of which it has actual knowledge:
-147-
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Trustee or the Servicer
and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02 and 2.03;
(v) The final payment to Certificateholders; and
(vi) Any change in the location of the Certificate Account.
(b) The Trustee shall promptly furnish or make available to each
Rating Agency copies of the following:
(i) Each report to Certificateholders described in Section 4.05;
(ii) Each annual statement as to compliance described in Section 3.17;
and
(iii) Each annual independent public accountants' servicing report
described in Section 3.18.
All directions, demands and notices hereunder shall be in writing and shall be
deemed to have been duly given when delivered to (a) in the case of the
Depositor, Xxxxxxx Xxxxx Mortgage Investors, Inc. 000 Xxxxx Xxxxxx, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Rating Agencies, (i) Standard & Poor's Ratings
Services, a division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000xxx (ii) Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; (c) in the case of the Servicer, Wilshire
Credit Corporation, 00000 X.X. Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx, Xxxxxx 00000,
Attention: Xxxxx Xxxxxxxx; (d) in the case of the Trustee, LaSalle Bank National
Association, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, and
in the case of any of the foregoing persons, such other addresses as may
hereafter be furnished by any such persons to the other parties to this
Agreement. Notices to Certificateholders shall be deemed given when mailed,
first class postage prepaid, to their respective addresses appearing in the
Certificate Register.
SECTION 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the
-148-
Trustee and Depositor; provided, however, the Servicer is hereby authorized to
enter into an Advance Facility under which (l) the Servicer sells, assigns or
pledges to an Advancing Person the Servicer's rights under this Agreement to be
reimbursed for any Advances or Servicing Advances and/or (2) an Advancing Person
agrees to fund some or all Advances or Servicing Advances required to be made by
the Servicer pursuant to this Agreement. No consent of the Trustee,
Certificateholders or any other party is required before the Servicer may enter
into an Advance Facility. Notwithstanding the existence of any Advance Facility
under which an Advancing Person agrees to fund Advances and/or Servicing
Advances on the Servicer's behalf, the Servicer shall remain obligated pursuant
to this Agreement to make Advances and Servicing Advances pursuant to and as
required by this Agreement, and shall not be relieved of such obligations by
virtue of such Advance Facility.
Reimbursement amounts shall consist solely of amounts in respect of
Advances and/or Servicing Advances made with respect to the Mortgage Loans for
which the Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming the Servicer had made the related Advance(s) and/or
Servicing Advance(s).
The Servicer shall maintain and provide to any successor Servicer a
detailed accounting on a loan by loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advancing Person. The successor Servicer
shall be entitled to rely on any such information provided by the predecessor
Servicer, and the successor Servicer shall not be liable for any errors in such
information.
An Advancing Person who purchases or receives an assignment or pledge of
the rights to be reimbursed for Advances and/or Servicing Advances, and/or whose
obligations hereunder are limited to the funding of Advances and/or Servicing
Advances shall not be required to meet the criteria for qualification of a
Subservicer set forth in this Agreement.
The documentation establishing any Advance Facility shall require that such
reimbursement amounts distributed with respect to each Mortgage Loan be
allocated to outstanding unreimbursed Advances or Servicing Advances (as the
case may be) made with respect to that Mortgage Loan on a "first in, first out"
(FIFO) basis. Such documentation shall also require the Servicer to provide to
the related Advancing Person or its designee loan by loan information with
respect to each such reimbursement amount distributed to such Advancing Person
or Advance Facility trustee on each Distribution Date, to enable the Advancing
Person or Advance Facility trustee to make the FIFO allocation of each such
reimbursement amount with respect to each Mortgage Loan. The Servicer shall
remain entitled to be reimbursed by the Advancing Person or Advance Facility
trustee for all Advances and Servicing Advances funded by the Servicer to the
extent the related rights to be reimbursed therefor have not been sold, assigned
or pledged to an Advancing Person.
Any amendment to this Section 10.07 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.07, including amendments to
add provisions relating to a successor Servicer, may be entered into by the
Trustee and the Servicer, without the consent of any Certificateholder
notwithstanding anything to the contrary in this Agreement, upon receipt by the
Trustee of an Opinion of Counsel that such amendment has no material adverse
effect on the Certificateholders or written confirmation from the Rating
Agencies that such amendment will not adversely affect the ratings on the
Certificates. Prior to entering into an Advance Facility, the Servicer shall
notify the lender under such facility in writing that: (a) the Advances financed
by and/or pledged to the lender are obligations owed to the Servicer on a non
recourse basis payable only from the cash flows and proceeds received under this
Agreement for reimbursement of
-149-
Advances only to the extent provided herein, and the Trustee and the Trust Fund
are not otherwise obligated or liable to repay any Advances financed by the
lender; (b) the Servicer will be responsible for remitting to the lender the
applicable amounts collected by it as reimbursement for Advances funded by the
lender, subject to the restrictions and priorities created in this Agreement;
and (c) the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and the lender.
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such indemnity satisfactory to it as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates and/or the NIMs
Insurer, or to obtain or seek to obtain priority over or preference to any other
such Holder and/or the NIMs Insurer or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 10.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the Depositor or the Trustee during the Servicer's normal
business hours, to examine all the books of account, records, reports and other
papers of the Servicer relating to the Mortgage Loans to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants selected by the Depositor or the Trustee and to discuss its
affairs, finances and accounts relating to the Mortgage Loans with its officers,
employees, agents, counsel and independent public accountants (and by this
-150-
provision the Servicer hereby authorizes such accountants to discuss with such
representative such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any out-of-pocket expense
incident to the exercise by the Depositor or the Trustee of any right under this
Section 10.09 shall be borne by the party requesting such inspection (except in
the case of the Trustee in which case such expenses shall be borne by the
requesting Certificateholder(s)); all other such expenses shall be borne by the
Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Authenticating Agent pursuant to this Agreement, are and shall be deemed fully
paid.
SECTION 10.11. Compliance with Regulation AB.
Each of the parties hereto acknowledges and agrees that the purpose of
Sections 3.17, 3.18 and 3.20 of this Agreement is to facilitate compliance by
the Depositor with the provisions of Regulation AB, as such may be amended or
clarified from time to time. Therefore, each of the parties agrees that (a) the
obligations of the parties hereunder shall be interpreted in such a manner as to
accomplish compliance with Regulation AB, (b) the parties' obligations hereunder
will be supplemented and modified as necessary to be consistent with any such
amendments, interpretive advice or guidance, or convention or consensus among
active participants in the asset-backed securities markets in respect of the
requirements of Regulation AB and (c) the parties shall comply with reasonable
requests made by the Depositor for delivery of that or different information as
is necessary to comply with the provisions of Regulation AB.
SECTION 10.12. Third Party Rights.
The NIMs Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement.
SECTION 10.13. Additional Rights of the NIMs Insurer.
Each party to this Agreement, any agent thereof and any successor thereto
shall furnish to the NIMs Insurer a copy of any notice, direction, demand,
opinion, schedule, list, certificate, report, statement, filing, information,
data or other communication provided by it or on its behalf to any other Person
pursuant to this Agreement at the same time, in the same form and in the same
manner as such communication is so provided and shall address or cause such
communication to be addressed to the NIMs Insurer in addition to any other
addressee thereof. The Servicer shall cause the NIMs Insurer to be an addressee
of any report furnished pursuant to this Agreement. With respect to the Trustee,
such obligation shall be satisfied with the provision of access to the NIMs
Insurer to the Trustee's website.
Wherever in this Agreement there shall be a requirement that there be no
downgrade, reduction, withdrawal or qualification of or other effect on the
rating of any Class of Certificates by any Rating Agency as of any date, there
also shall be deemed to be a requirement that there be no such effect on any
class of notes issued pursuant to the Indenture and guaranteed by the NIMs
Insurer as of such date. In addition, unless there exists a continuance of any
failure by the NIMs Insurer to make a required payment under the policy insuring
the NIM Notes (such event, a "NIMs Insurer Default"), wherever in this
-151-
Agreement there shall be a requirement that any Person or any communication,
object or other matter be acceptable or satisfactory to or otherwise receive the
consent or other approval of any other Person (whether as a condition to the
eligibility of such Person to act in any capacity, as a condition to any
circumstance or state of affairs related to such matter, or otherwise), there
also shall be deemed to be a requirement that such Person or matter be approved
in writing by the NIMs Insurer, which approval shall not be unreasonably
withheld or delayed
-152-
IN WITNESS WHEREOF, the Depositor, the Trustee and the Servicer have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
as Depositor
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
LASALLE BANK NATIONAL ASSOCIATION
as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
WILSHIRE CREDIT CORPORATION,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT A
FORMS OF CERTIFICATES
[INTENTIONALLY OMITTED]
A-1
EXHIBIT B-1
MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
[INTENTIONALLY OMITTED]
B-1-1
EXHIBIT B-2
MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
[INTENTIONALLY OMITTED]
B-2-1
EXHIBIT B-3
MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
[INTENTIONALLY OMITTED]
B-1
EXHIBIT C
[RESERVED]
C-1
EXHIBIT D
FORM OF TRUSTEE CERTIFICATION
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Wilshire Credit Corporation
00000 X.X. Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement
dated as of March 1, 2006 among Xxxxxxx Xxxxx Mortgage Investors, Inc., as
depositor, LaSalle Bank National Association, as trustee, Wilshire Credit
Corporation, as servicer (the "Pooling and Servicing Agreement"), the
undersigned, as [Trustee][Custodian], hereby certifies that [, except as set
forth in Schedule A hereto,] as to each Mortgage Loan listed in the Mortgage
Loan Schedule attached hereto (other than any Mortgage Loan paid in full or
listed on the attachment hereto) it has reviewed the Mortgage File and the
Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
[Trustee][Custodian] pursuant to Section 2.01 of the Pooling and Servicing
Agreement are in its possession;
(ii) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing
Date, it has received evidence of such recording; and
(iii) Such documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan.
The [Trustee][Custodian] has made no independent examination of any
documents contained in each Mortgage File beyond confirming (i) that the
Mortgage Loan number, the name of the Mortgagor, the street address (excluding
zip code), the mortgage interest rate at origination, the gross margin (if
applicable), the lifetime rate cap (if applicable), the periodic rate cap (if
applicable), the original principal balance, the first payment due date and the
original maturity date in each Mortgage File conform to the respective Mortgage
Loan number and name listed on the Mortgage Loan Schedule and (ii) the existence
in each Mortgage File of each of the documents listed in subparagraphs (i)(A)
through (E), as applicable, inclusive, of Section 2.01 in the Agreement. The
[Trustee][Custodian] makes no representations or warranties as to the validity,
legality, recordability, sufficiency, enforceability, due authorization or
genuineness of any of the
D-1
documents contained in each Mortgage Loan or the collectability, insurability,
effectiveness, priority, perfection or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-referenced Pooling and Servicing
Agreement.
[LASALLE BANK NATIONAL ASSOCIATION,
as Trustee]
[XXXXX FARGO BANK, N.A., as Custodian]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
D-2
EXHIBIT E-1
FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
[DATE]
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-RM1
Ladies and Gentlemen:
We propose to purchase Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2006-RM1, Class R, described in the
Prospectus Supplement, dated March 17, 2006, and the Prospectus, dated January
18, 2006.
A. We certify that (a) we are not a disqualified organization and (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
B. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class R Certificate, we may incur tax liabilities in excess of any
cash flows generated by the Class R Certificate, and (d) we intend to pay any
taxes associated with holding the Class R Certificate as they become due and (e)
we will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.
E-1
C. We acknowledge that we will be the beneficial owner of the Class R
Certificate and: 1
___________ The Class R Certificate will be registered in our name.
___________ The Class R Certificate will be held in the name of our
nominee, _________________, which is not a disqualified organization.
D. We certify that we are not an employee benefit plan subject to Title I
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a
plan subject to Section 4975 of the Code or a plan subject to federal, state,
local, non-U.S. or other law substantively similar to the foregoing provisions
of ERISA or the Code (each, a "Plan"), and are not directly or indirectly
acquiring the Class R Certificate on behalf of or with any assets of a Plan.
E. We certify that (i) we are a U.S. person or (ii) we will hold the Class
R Certificate in connection with the conduct of a trade or business within the
United States and have furnished the transferor and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code; for this purpose the term
"U.S. person" means a citizen or resident of the United States, a corporation,
or partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any State thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to United States federal income tax regardless
of the source of its income, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more such U.S. persons have the authority to control all substantial
decisions of the trust (or, to the extent provided in applicable Treasury
regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons. We agree that any breach by us of this
certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.
F. We agree that in the event that at some future time we wish to transfer
any interest in the Class R Certificate, we will transfer such interest in the
Class R Certificate only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in the Class R Certificate on
behalf of a disqualified organization, (ii) is a U.S. person or will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and will furnish us and the Trustee with a duly completed and
effective Internal Revenue Service Form W-8ECI or successor form at the time and
in the manner required by the Code and (iii) has delivered to the Trustee a
letter in the form of this letter (including the affidavit appended hereto) and,
we will provide the Trustee a written statement substantially in the form of
Exhibit E-2 to the Pooling and Servicing Agreement.
G. We hereby designate _______________________ as our fiduciary to act as
the tax matters person for each of the REMICs provided for in the Pooling and
Servicing Agreement.
Very truly yours,
[PURCHASER]
----------
1 Check appropriate box and if necessary fill in the name of the Transferee's
nominee.
E-2
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted as of __________ __, 200__
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
E-3
APPENDIX A
Affidavit pursuant to (i) Section
860E(e)(4) of the Internal Revenue Code
of 1986, as amended, and (ii) certain
provisions of the Pooling and Servicing
Agreement
Under penalties of perjury, the undersigned declares that the following is true:
1. He or she is an officer of _________________________ (the "Transferee"),
2. the Transferee's Employer Identification number is __________,
3. the Transferee is not a "disqualified organization" (as defined below),
has no plan or intention of becoming a disqualified organization, and is not
acquiring any of its interest in the Xxxxxxx Xxxxx Mortgage Investors Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-RM1, Class R Certificate on
behalf of a disqualified organization or any other entity,
4. unless Xxxxxxx Xxxxx Mortgage Investors, Inc.("MLMI") has consented to
the transfer to the Transferee by executing the form of Consent affixed as
Appendix B to the Transferee's Letter to which this Certificate is affixed as
Appendix A, the Transferee is a "U.S. person" (as defined below),
5. that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,
6. the Transferee has historically paid its debts as they became due,
7. the Transferee intends, and believes that it will be able, to continue
to pay its debts as they become due in the future,
8. the Transferee understands that, as beneficial owner of the Class R
Certificate, it may incur tax liabilities in excess of any cash flows generated
by the Class R Certificate,
9. the Transferee intends to pay any taxes associated with holding the
Class R Certificate as they become due,
10. the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by MLMI (upon advice of counsel) to
constitute a reasonable arrangement to ensure that the Class R Certificate will
not be owned directly or indirectly by a disqualified organization, and
11. IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the
transfer is not a direct or indirect transfer of the Class R Certificate to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of the Transferee, and as to each of the residual
interests represented by the Class R Certificate, the present value of the
anticipated tax liabilities associated with holding such residual interest does
not exceed the sum of:
A. the present value of any consideration given to the Transferee to
acquire such residual interest;
E-4
B. the present value of the expected future distributions on such residual
interest; and
C. the present value of the anticipated tax savings associated with holding
such residual interest as the related REMIC generates losses.
For purposes of this declaration, (i) the Transferee is assumed to pay tax at a
rate equal to the highest rate of tax specified in Section 11(b)(1) of the Code,
but the tax rate specified in Section 55(b)(1)(B) of the Code may be used in
lieu of the highest rate specified in Section 11(b)(1) of the Code if the
Transferee has been subject to the alternative minimum tax under Section 55 of
the Code in the preceding two years and will compute its taxable income in the
current taxable year using the alternative minimum tax rate, and (ii) present
values are computed using a discount rate equal to the Federal short-term rate
prescribed by Section 1274(d) of the Code for the month of the transfer and the
compounding period used by the Transferee;]
[(11) (A) at the time of the transfer, and at the close of each of the
Transferee's two fiscal years preceding the Transferee's fiscal year of
transfer, the Transferee's gross assets for financial reporting purposes
exceed $100 million and its net assets for financial reporting purposes
exceed $10 million; and
(B) the Transferee is an eligible corporation as defined in Treasury
regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that any
subsequent transfer of the Class R Certificate will be to another eligible
corporation in a transaction that satisfies Treasury regulation Sections
1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii), 1.860E-1(c)(4)(iii) and
1.860E-1(c)(5) and such transfer will not be a direct or indirect transfer
to a foreign permanent establishment (within the meaning of an applicable
income tax treaty) of a domestic corporation.
For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]
(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another U.S.
taxpayer.
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary
E-5
supervision over the administration of such trust, and one or more such U.S.
Persons have the authority to control all substantial decisions of such trust,
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons).
-------------------------------------
By:
---------------------------------
---------------------------------
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
-------------------------------------
, Secretary
-------------------------------------
E-6
Personally appeared before me the above-named ______________, known or proved to
me to be the same person who executed the foregoing instrument and to be the
_______ of the Investor, and acknowledged to me that he executed the same as his
free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this day of ___, 200_ .
_____________________________________
Notary Public
County of ___________________________
State of ____________________________
My commission expires the ________ day of ______________
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Dated: ___________
E-7
EXHIBIT E-2
FORM OF TRANSFEROR'S AFFIDAVIT
[DATE]
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-RM1
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true, and has no reason to believe that the
Transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to the
Class R Certificate referred to in the attached affidavit. In addition, the
Transferor has conducted a reasonable investigation at the time of the transfer
and found that the Transferee had historically paid its debts as they came due
and found no significant evidence to indicate that the Transferee will not
continue to pay its debts as they become due.
Very truly yours,
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
E-2-1
EXHIBIT F
FORM OF TRANSFEROR CERTIFICATE
[DATE]
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-RM1
RE: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
Ladies and Gentlemen:
In connection with our disposition of the Class [____] Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act and (b) we have not offered or sold any Certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of March 1,
2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, LaSalle Bank
National Association, as trustee, and Wilshire Credit Corporation, as servicer.
Very truly yours,
----------------------------------------
Name of Transferor
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER
(ACCREDITED INVESTOR)
[DATE]
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-RM1
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-RM1, Class [____] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement, dated as of March 1, 2006
(the "Pooling and Servicing Agreement"), among Xxxxxxx Xxxxx Mortgage Investors,
Inc., as depositor (the "Depositor"), LaSalle Bank National Association, as
trustee (the "Trustee"), Wilshire Credit Corporation, as servicer (the
"Servicer"). [The Purchaser intends to register the Transferred Certificate in
the name of ____________________, as nominee for _________________.] All terms
used and not otherwise defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. All Certificates other than ERISA Restricted Certificates and Class R
Certificates will be a legend to the following effect:
UNTIL THE TERMINATION OF THE SWAP AGREEMENT, EACH TRANSFEREE OF THIS
CERTIFICATE SHALL BE DEEMED TO REPRESENT (OR IN THE CASE OF A DEFINITIVE
CERTIFICATE, SHALL REPRESENT) TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT,
AND IS NOT ACTING FOR, ON BEHALF OF OR WITH ANY ASSETS OF, ANY EMPLOYEE
G-1
BENEFIT PLAN OR OTHER ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR ANY PLAN SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR
(B) THE TRANSFEREE'S ACQUISITION AND HOLDING OF THIS CERTIFICATE IS COVERED BY
AND EXEMPT UNDER ANY OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 00-00,
XXXX 00-0, XXXX 00-00, XXXX 00-00, XXXX 96-23, EACH AS AMENDED.
3. The Certificates (other than the Class R Certificate) will bear a legend
to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
"1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT,
DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR
SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT,
THE 1940 ACT AND ANY APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER
ALSO COMPLIES WITH THE OTHER PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT. IF THE CERTIFICATE IS A DEFINITIVE CERTIFICATE, NO
TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE (A) AN
INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS
FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.
4. The ERISA Restricted Certificates will bear a legend to the following
effect:
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE HAS RECEIVED
(A) A REPRESENTATION THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), A PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE") OR A PLAN SUBJECT TO STATE, LOCAL, FEDERAL,
NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA
OR THE CODE ("SIMILAR LAW") (COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR
INDIRECTLY ACQUIRING THIS CERTIFICATE BY, ON BEHALF OF, OR WITH ANY ASSETS OF
ANY SUCH PLAN, (B) IF THE CERTIFICATE HAS BEEN THE SUBJECT OF AN
ERISA-QUALIFYING UNDERWRITING, A REPRESENTATION THAT SUCH TRANSFEREE IS AN
INSURANCE COMPANY THAT IS ACQUIRING THE CERTIFICATE WITH ASSETS OF AN "INSURANCE
COMPANY GENERAL ACCOUNT" AS DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 95-60 AND THE ACQUISITION AND HOLDING OF THE
CERTIFICATE ARE COVERED AND EXEMPT UNDER SECTIONS I AND III OF PTCE 95-60 (IN
THE CASE OF ANY ERISA RESTRICTED CERTIFICATE OTHER THAN CLASS C CERTIFICATES OR
CLASS P CERTIFICATES, AFTER THE TERMINATION OF THE SWAP AGREEMENT), OR (C)
SOLELY IN THE CASE OF A DEFINITIVE CERTIFICATE, AN OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE, AND UPON WHICH THE TRUSTEE SHALL BE ENTITLED TO
RELY, TO THE EFFECT THAT THE ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY THE
PROSPECTIVE TRANSFEREE WILL NOT CONSTITUTE OR RESULT IN A NONEXEMPT
G-2
PROHIBITED TRANSACTION UNDER TITLE I OF ERISA OR SECTION 4975 OF THE CODE OR A
VIOLATION OF SIMILAR LAW AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER OR THE
DEPOSITOR TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN
THE POOLING AND SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN
EXPENSE OF THE TRUSTEE, THE SERVICER OR THE DEPOSITOR. IF THE CERTIFICATE IS NOT
A DEFINITIVE CERTIFICATE, THE TRANSFEREE IS DEEMED TO HAVE MADE THE
REPRESENTATION IN (A) OR (B) ABOVE.
5. The Class R Certificate will bear a legend to the following effect:
THIS CLASS R CERTIFICATE MAY NOT BE TRANSFERRED, EXCEPT IN ACCORDANCE WITH
SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT AND THE HOLDER OF THIS
CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH CERTIFICATE ONLY IN ACCORDANCE WITH SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CERTIFICATE SHALL BE
MADE UNLESS THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRUSTEE (A) A TRANSFER AFFIDAVIT FROM THE PROSPECTIVE
INVESTOR; AND (B) AN AFFIDAVIT FROM THE TRANSFEROR REGARDING THE OFFERING
AND SALE OF THE CERTIFICATE.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE WITH A REPRESENTATION THAT SUCH TRANSFEREE
IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN
SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO STATE, LOCAL,
FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW"), AND IS NOT DIRECTLY OR
INDIRECTLY ACQUIRING THIS CERTIFICATE BY, ON BEHALF OF, OR WITH ANY ASSETS
OF ANY SUCH PLAN.
6. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY] * and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
7. The Purchaser (a) is a substantial, sophisticated institutional investor
having such knowledge and experience in financial and business matters, and in
particular in such matters related to securities similar to the Certificates,
such that it is capable of evaluating the merits and risks of investment in the
Certificates, (b) is able to bear the economic risks of such an investment and
(c) is an "accredited investor" within the meaning of Rule 501(a) promulgated
pursuant to the Securities Act.
8. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other
----------
* No required of a broker/dealer purchaser.
G-3
similar security to any person in any manner, (b) solicit any offer to buy or to
accept a pledge, disposition or other transfer of any Certificate, any interest
in any Certificate or any other similar security from any person in any manner,
(c) otherwise approach or negotiate with respect to any Certificate, any
interest in any Certificate or any other similar security with any person in any
manner, (d) make any general solicitation by means of general advertising or in
any other manner, or (e) take any other action, that would constitute a
distribution of any Certificate under the Securities Act or the Investment
Company Act of 1940, as amended (the "1940 Act"), that would render the
disposition of any Certificate a violation of Section 5 of the Securities Act or
any state securities law, or that would require registration or qualification
pursuant thereto. Neither the Purchaser nor anyone acting on its behalf has
offered the Certificates for sale or made any general solicitation by means of
general advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
9. Either (i) the Purchaser of a Certificate that is neither an ERISA
Restricted Certificate nor a Class R Certificate is not, and is not acting for,
on behalf of or with any assets of, an employee benefit plan or other
arrangement subject to Title I of ERISA or plan subject to Section 4975 of the
Code, or (ii) until the termination of the Swap Agreement, such Purchaser's
acquisition and holding of such Certificates are eligible for exemptive relief
under Prohibited Transaction Class Exemption ("PTCE") 00-00, XXXX 00-0, XXXX
91-38, PTCE 95-60 or PTCE 96-23.
10. The Purchaser of an ERISA Restricted Certificate (A) is not an employee
benefit plan subject to Title I of ERISA, a plan subject to Section 4975 of the
Code, a plan subject to any state, local, federal, non-U.S. or other law
substantively similar to the foregoing provisions of ERISA or the Code ("Similar
Law") and is not directly or indirectly acquiring such Certificates by, on
behalf of, or with any assets of any such plan, or (B) if the Certificate has
been the subject of an ERISA-Qualifying Underwriting, is an insurance company
that is acquiring the Certificate with assets of an "insurance company general
account," as defined in Section V(e) of Prohibited Transaction Class Exemption
("PTCE") 95-60, and the acquisition and holding of the Certificate are covered
and exempt under Sections I and III of PTCE 95-60 (in the case of any ERISA
Restricted Certificate other than Class C Certificates or Class P Certificates,
after the termination of the Swap Agreement), or (C) solely in the event the
Certificate is a Definitive Certificate, herewith delivers an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the acquisition and holding of the Certificate will not
constitute or result in a nonexempt prohibited transaction under Title I of
ERISA or Section 4975 of the Code, or a violation of Similar Law, and will not
subject the Trustee, the Servicer or the Depositor to any obligation in addition
to those expressly undertaken in the Pooling and Servicing Agreement, which
Opinion of Counsel shall not be an expense of the Trustee, the Servicer or the
Depositor.
11. The Purchaser of a Class R Certificate is not an employee benefit plan
subject to Title I of ERISA, a plan subject to Section 4975 of the Code, a plan
subject to any state, local, federal, non-U.S. or other law substantively
similar to the foregoing provisions of ERISA or the Code ("Similar Law"), or a
Person directly or indirectly acquiring such Certificate by, on behalf of, or
with any assets of any such plan.
12. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit H to the Pooling and Servicing Agreement.
G-4
13. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
G-5
EXHIBIT H
FORM OF RULE 144A INVESTMENT LETTER
(QUALIFIED INSTITUTIONAL BUYER)
[DATE]
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-RM1
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-RM1, Class [____] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement, dated as of March 1, 2006
(the "Pooling and Servicing Agreement"), among Xxxxxxx Xxxxx Mortgage Investors,
Inc., as depositor (the "Depositor"), LaSalle Bank National Association, as
trustee (the "Trustee"), Wilshire Credit Corporation, as servicer (the
"Servicer"). [THE PURCHASER INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN
THE NAME OF ____________________, AS NOMINEE FOR _________________.] All terms
used and not otherwise defined herein shall have the meanings set forth in the
Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d) solely in the case of a
Certificate other than an ERISA Restricted Certificate or Class R Certificate,
either (i) we are not, and are not acquiring the Certificate for, on behalf of
or with any assets of, any employee benefit plan or other arrangement subject to
Title I of ERISA or any plan subject to Section 4975 of the Code, or (ii) until
the termination of the Swap Agreement, our acquisition and holding of the
Certificate is covered by and exempt under any of Prohibited Transaction Class
Exemption ("PTCE") 00-00, XXXX 00-0, XXXX 91-38, PTCE 95-60, or PTCE 96-23,
(e)solely with respect to ERISA Restricted Certificates, (A) we are
H-1
not an employee benefit plan subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), a plan subject to Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"), a plan
subject to any state, local, federal, non-U.S. or other law substantively
similar to the foregoing provisions of ERISA or the Code ("Similar Law"), or
Persons directly or indirectly acting on behalf of or using any assets of any
such plan, or (B), if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, we are an insurance company that is acquiring the
Certificate with assets of an "insurance company general account," as defined in
Section V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the
acquisition and holding of the Certificate are covered and exempt under Sections
I and III of PTCE 95-60 (in the case of any ERISA Restricted Certificate other
than Class C Certificates or Class P Certificates, after the termination of the
Swap Agreement), or (C) solely in the event the Certificate is a Definitive
Certificate, we will herewith deliver an Opinion of Counsel satisfactory to the
Trustee, and upon which the Trustee shall be entitled to rely, to the effect
that the acquisition and holding of the Certificate will not constitute or
result in a nonexempt prohibited transaction under Title I of ERISA or Section
4975 of the Code, or a violation of Similar Law, and will not subject the
Trustee, the Servicer or the Depositor to any obligation in addition to those
expressly undertaken in the Pooling and Servicing Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Servicer or the Depositor,
(f) we have not, nor has anyone acting on our behalf offered, transferred,
pledged, sold or otherwise disposed of the Certificates, any interest in the
Certificates or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Certificates, any interest
in the Certificates or any other similar security from, or otherwise approached
or negotiated with respect to the Certificates, any interest in the Certificates
or any other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Certificates
under the Securities Act or that would render the disposition of the
Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
and (g) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act and have completed one of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale of the Transferred Certificates to us is being made in reliance on
Rule 144A. We are acquiring the Transferred Certificates for our own account or
for resale pursuant to Rule 144A and further understand that such Certificates
may be resold, pledged or transferred only (i) to a person reasonably believed
by us, based upon certifications of such purchaser or information we have in our
possession, to be a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer to whom notice is
given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the
Securities Act.
H-2
We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0
XXXXX 0
XXXXXXXXX XXXXXXXXXXXXX BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $____________ * in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
_______ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended.
_______ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by
Federal, State or territorial banking commission or similar
official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a
copy of which is attached hereto.
_______ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which is
supervised and examined by a State or Federal authority
having supervision over such institution or is a foreign
savings and loan association or equivalent institution and
(b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a
copy of which is attached hereto.
_______ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of
----------
* Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
H-4
the Securities Exchange Act of 1934, as amended.
_______ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by
the insurance commissioner or a similar official or agency
of the State, territory or the District of Columbia.
_______ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
_______ ERISA Plan. The Buyer is an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of
1974, as amended.
_______ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940, as
amended.
_______ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958, as amended.
_______ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
H-5
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
X-0
XXXXX 0
XXXXXXXXX XXXXXXXXXXXXX BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
_______ The Buyer owned $___________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
_______ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
H-7
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 in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
IF AN ADVISER:
----------------------------------------
Print Name of Buyer
Date:
----------------------------------
H-8
EXHIBIT I
FORM OF REQUEST FOR RELEASE
[DATE]
To: LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Account Manager--MLMI 2006-RM1
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
In connection with the administration of the Mortgage Loans held by you, as
Trustee, pursuant to the Pooling and Servicing Agreement dated as of March 1,
2006 among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, LaSalle Bank
National Association, as Trustee, Wilshire Credit Corporation, as servicer (the
"Pooling and Servicing Agreement"), we request the release, and hereby
acknowledge receipt, of the Mortgage File for the Mortgage Loan described below,
for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_________ 1. Mortgage Paid in Full
_________ 2. Foreclosure
_________ 3. Substitution
_________ 4. Other Liquidation (Repurchases, etc.)
_________ 5. Nonliquidation
Address to which the Trustee should deliver the Mortgage File:
By:
------------------------------------
(authorized signer)
Address:
-------------------------------
Date:
----------------------------------
I-1
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
Please acknowledge the execution of the above request by your signature and date
below:
LASALLE BANK NATIONAL ASSOCIATION
as Trustee
By:
--------------------------------- ----------------------------------------
Signature Date
Documents returned to Trustee:
By:
--------------------------------- ----------------------------------------
Signature Date
I-2
EXHIBIT J
[RESERVED]
J-1
EXHIBIT K
FORM OF BACK-UP CERTIFICATION OF TRUSTEE
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Wilshire Credit Corporation
00000 XX Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of March 1,
2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire
Credit Corporation, as servicer, and LaSalle Bank National Assocition, as
trustee, relating to Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-RM1
The Trustee hereby certifies to the Depositor, the Servicer and their
officers, directors and affiliates, and with the knowledge and intent that they
will rely upon this certification, that:
(1) I have reviewed the annual report on Form 10-K for the fiscal year
[2006] (the "Annual Report"), and all reports on Form 8-K (if any) and on Form
10-D required to be filed in respect of the period covered by the Annual Report
(collectively with the Annual Report, the "Reports"), of the Trust;
(2) To the best of my knowledge, and assuming the accuracy of the
statements required to be made or data required to be delivered by the Servicer
and Depositor (to the extent that such statements or data were received by the
Trustee and are relevant to the statements made by the Trustee in this Back-Up
Certification), the information in the Reports relating to the trustee, taken as
a whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by the Annual Report;
(3) To the best of my knowledge, and assuming the accuracy of the
statements required to be made or data required to be delivered by the Servicer
and Depositor (to the extent that such statements or data were received by the
Trustee and are relevant to the statements made by the Trustee in this Back-Up
Certification), the distribution and any other information required to be
provided by the Trustee (other than information provided by or on behalf of the
Servicer or the Depositor) to the Depositor and each Servicer under the Pooling
and Servicing Agreement for inclusion in the Reports is included in the Reports;
and
K-1
(4) The report on assessment of compliance with servicing criteria for
asset-backed securities of the Trustee and its related attestation report on
assessment of compliance with servicing criteria required to be included in the
Annual Report in accordance with Item 1122 of Regulation AB and Exchange Act
Rules 13a-18 and 15d-18 has been included as an exhibit to the Annual Report.
Any material instances of non-compliance are described in such report and have
been disclosed in the Annual Report.
LaSalle Bank National Association,
as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
K-2
EXHIBIT L
FORM OF OFFICER'S CERTIFICATE OF SERVICER
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
Wilshire Credit Corporation (the "Servicer") certifies to the Depositor and
the Trustee, and their officers, directors and affiliates, and with the
knowledge and intent that they will rely upon this certification, that:
(1) I am responsible for reviewing the activities performed by the Servicer
under the Pooling and Servicing Agreement and I have reviewed, or persons under
my supervision have reviewed, the servicer compliance statement of the Servicer
and the compliance statements of each Sub-Servicer, if any, engaged by the
Servicer provided to the Depositor and the Trustee for the Trust's fiscal year
[___] in accordance with Item 1123 of Regulation AB (each a "Compliance
Statement"), the report on assessment of the Servicer's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the "Servicing
Criteria") and reports on assessment of compliance with servicing criteria for
asset-backed securities of the Servicer and of each Sub-Servicer [or
Subcontractor], if any, engaged or utilized by the Servicer provided to the
Depositor and the Trustee for the Trust's fiscal year [___] in accordance with
Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Item 1122 of Regulation AB (each a "Servicing Assessment"),
the registered public accounting firm's attestation report provided in
accordance with Rules 13a-18 and 15d-18 under the Exchange Act and Section
1122(b) of Regulation AB related to each Servicing Assessment (each a
"Attestation Report"), and all servicing reports, officer's certificates and
other information relating to the servicing of the Mortgage Loans by the
Servicer during 200[ ] that were delivered or caused to be delivered by the
Servicer pursuant to the Agreement (collectively, the "Servicing Information");
(2) Based on my knowledge, and assuming the accuracy of the information
provided to the Servicer in connection with the transfer of servicing of the
Mortgage Loans to the Servicer, the Servicing Information, taken as a whole,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Servicing Information;
(3) Based on my knowledge, the servicing information required to be
provided to the Trustee by the Servicer pursuant to the Pooling and Servicing
Agreement has been provided to the Trustee;
(4) Based on my knowledge and the compliance review conducted in preparing
each Compliance Statement of the Servicer and, if applicable, reviewing each
Compliance Statement of each Sub-Servicer, if any, engaged by the Servicer, and
except as disclosed in such Compliance Statement[(s)], the Servicer [(directly
and through its Sub-Servicers, if any)] has fulfilled its obligations under the
Pooling and Servicing Agreement in all material respects.
L-1
(5) Each Servicing Assessment of the Servicer and of each Sub-Servicer [or
Subcontractor], if any, engaged or utilized by the Servicer and its related
Attestation Report required to be included in the Annual Report in accordance
with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 has
been provided to the Depositor and the Trustee. Any material instances of
non-compliance are described in any such Servicing Assessment or Attestation
Report.
Date:
-------------------------------
Wilshire Credit Corporation,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0
XXXXXXX X-0
FORM OF CLASS A-1 CAP CONTRACT
BEAR XXXXXXX
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: March 21, 2006
TO: LaSalle Bank, National Association, not in its individual capacity,
but solely as Trustee for Xxxxxxx Xxxxx Mortgage Investors, Inc.,
Series 2006-RM1
ATTENTION: Xxxxxxxxxxx Xxxxx
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Fixed Income Derivatives Confirmation and Agreement
REFERENCE NUMBER:
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
LaSalle Bank, National Association, not in its individual capacity, but solely
as Trustee for Xxxxxxx Xxxxx Mortgage Investors Trust, Inc., Series 2006-RM1
("Counterparty") under the Pooling and Servicing Agreement, dated as of March 1,
2006 among Xxxxxxx Xxxxx Mortgage Investors, Inc. as depositor, Wilshire Credit
Corporation, as servicer and LaSalle Bank, National Association, as trustee
("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"). 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. In the event of any inconsistency between the
M-1
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 2 of 14
provisions of this Agreement and the Definitions or the ISDA Form Master
Agreement, this Agreement shall prevail for purposes of the Transaction. Terms
capitalized but not defined herein shall have the meanings attributed to them in
the Pooling and Servicing Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Transaction: Rate Cap
------------ --------
Notional Amount: With respect to the Calculation Period, the lesser
of (i) the amount set forth for such period as
detailed in Schedule I attached hereto and (ii) the
aggregate Certificate Balance of the Subordinate
Certificates (except for the Class B-2
Certificates) immediately prior to the related
Floating Rate Payer Payment Date.
Trade Date: March 13, 2006
Effective Date: Xxxxx 00, 0000
Xxxxxxxxxxx Date: September 25, 2006, subject to adjustment in
accordance with the Business Day Convention.
FIXED AMOUNT (PREMIUM):
Fixed Rate Payer: Counterparty
Fixed Rate Payer March 15, 2006
Payment Date:
Fixed Amount:
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Cap Rate: With respect to any Calculation Period, the rate
set forth for such period as detailed in Schedule I
attached hereto.
Floating Rate Payer The 25th calendar day of each month during the Term
Period End Dates: of this Transaction, commencing April 25, 2006 and
ending on the Termination Date, subject to
adjustment in accordance with the Business Day
Convention.
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 3 of 14
Floating Rate Payer Early Payment shall be applicable. The Floating
Payment Dates: Rate Payer Payment Date shall be two Business Days
preceding each Floating Rate Payer Period End Date.
Floating Rate Option:
Designated Maturity: One month
Floating Rate Day Actual/360
Count Fraction:
Reset Dates: The first day of each Calculation Period
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Modified Following
3. Additional Provisions: 1) Each party hereto is hereby advised and
acknowledges that the other party has engaged in
(or refrained from engaging in) substantial
financial transactions and has taken (or refrained
from taking) other material actions in reliance
upon the entry by the parties into the Transaction
being entered into on the terms and conditions set
forth herein and in the Confirmation relating to
such Transaction, as applicable and, in the case of
the Counterparty, it has been directed under the
Pooling and Servicing Agreement to enter into this
Transaction. This paragraph (1) shall be deemed
repeated on the trade date of each Transaction.
2) No later than each Floating Rate Payer Period
End Date the Counterparty will make available on
its website located at xxxx://xxx.xxxxxxxx.xxx the
current principal balance of the Certificates,
Series 2006-RM1. No later than each Reset Date,
BSFP shall deliver to LaSalle Bank, National
Association, a written confirmation containing the
results of the calculations performed on each Reset
Date and the amount which is to be paid to the
Counterparty on the next Floating Rate Payer
Payment Date.
4. Provisions Deemed Incorporated in a Schedule to the Master Agreement:
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 4 of 14
1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form
Master Agreement will apply to any Transaction.
2) Termination Provisions. For purposes of the ISDA Form Master Agreement:
(a) "Specified Entity" is not applicable to BSFP or Counterparty for any
purpose.
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will not apply to BSFP or
to Counterparty.
(d) The provisions of Section 5 (a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) The "Bankruptcy" provision of Section 5(a)(vii)(2) will not apply to
Counterparty.
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply
to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Maste Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
3) Tax Representations. Not applicable
4) [Reserved]
5) Documents to be Delivered. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO DELIVER DOCUMENT FORM/DOCUMENT/ DOCUMENT CERTIFICATE DATE BY WHICH TO BE DELIVERED
---------------------------------- ------------------------------------ -----------------------------
BSFP and the Counterparty Any document required or Promptly after the earlier of
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 5 of 14
reasonably requested to allow the (i) reasonable demand by
other party to make payments under either party or (ii) learning
this Agreement without any deduction that such form or document is
or withholding for or on the account required
of any Tax or with such deduction or
withholding at a reduced rate
(2) Other documents to be delivered are:
PARTY REQUIRED TO DELIVER DATE BY WHICH TO BE COVERED BY SECTION 3(D)
DOCUMENT FORM/DOCUMENT/CERTIFICATE DELIVERED REPRESENTATION
------------------------- ---------------------------------- ---------------------- -----------------------
BSFP and the Counterparty Any documents required by the Upon the execution and Yes
receiving party to evidence the delivery of this
authority of the delivering party Agreement and such
or its Credit Support Provider, if Confirmation
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 REQUIRED TO DELIVER DATE BY WHICH TO BE COVERED BY SECTION 3(D)
DOCUMENT FORM/DOCUMENT/CERTIFICATE DELIVERED REPRESENTATION
------------------------- ---------------------------------- ---------------------- -----------------------
BSFP and the Counterparty A certificate of an authorized Upon the execution and Yes
officer of the party, as to the delivery of this
incumbency and authority of the Agreement and such
respective officers of Confirmation
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 6 of 14
the party signing this Agreement,
any relevant Credit Support
Document, or any Confirmation, as
the case may be
BSFP Monthly rate set letter to On or prior to each No
Counterparty Floating Rate Payer
Payment Date
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of
the ISDA Form Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
(For all purposes)
Address for notices or communications to the Counterparty:
Address: LaSalle Bank, National Association
000 Xxxxx XxXxxxx Xxxxxx
Address: Xxxxx 0000
Xxxxxxx, XX 00000
Attention: MLMI 2006-RM1
Facsimile: 000-000-0000
Phone: 000-000-0000
BSFP appoints as its
Process Agent: Not Applicable
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 7 of 14
The Counterparty appoints as its
Process Agent: Not Applicable
(b) Process Agent. For the purpose of Section 13(c):
(c) Offices. The provisions of Section 10(a) will not apply to this Agreement;
neither BSFP nor the Counterparty have any Offices other than as set forth
in the Notices Section and BSFP agrees that, for purposes of Section 6(b)
of the ISDA Form Master Agreement, it shall not in future have any Office
other than one in the United States.
(d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement: BSFP is not a Multibranch Party. The Counterparty is not a
Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP.
(f) Credit Support Document. Not applicable for either BSFP or the
Counterparty.
(g) Credit Support Provider.
BSFP: Not Applicable
The Counterparty: Not Applicable
(h) Governing Law. The parties to this Agreement hereby agree that the law of
the State of New York shall govern their rights and duties in whole,
without regard to conflict of law provisions thereof, other than New York
General Obligation Law Section 5-1401.
(i) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall
be held to be invalid or unenforceable (in whole or in part) for any
reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion eliminated, so long as
this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter of
this Agreement and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or expectations of the
parties.
The parties shall endeavor to engage in good faith negotiations to replace
any invalid or unenforceable term, provision, covenant or condition with a
valid or enforceable term, provision, covenant or condition, the economic
effect of which comes as close as possible to that of the invalid or
unenforceable term, provision, covenant or condition.
(j) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and
all communications between
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 8 of 14
officers or employees of the parties, waives any further notice of such
monitoring or recording, and agrees to notify its officers and employees of
such monitoring or recording.
(k) Waiver of Jury Trial. Each party waives any right it may have to a trial by
jury in respect of any Proceedings relating to this Agreement or any Credit
Support Document.
(l) Trustee Capacity and Liability Limitations It is expressly understood and
agreed by the parties hereto that insofar as this Confirmation is executed
by the Trustee (i) this Confirmation is executed and delivered by LaSalle
Bank, National Association not in its individual capacity but solely as
Trustee under the Pooling and Servicing Agreement referred to in this
Confirmation in the exercise of the powers and authority conferred and
invested in it thereunder; (ii) any representations, undertakings and
agreements of the Trust are made and intended not as personal
representations, undertakings and agreements by LaSalle Bank, National
Association but are made and intended for the purpose of binding only the
Trust; (iii) nothing herein contained shall be construed as creating any
liability on LaSalle Bank, National Association individually, or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties
who are signatories to this Agreement and by any person claiming by,
through or under such parties and (iv) under no circumstances shall LaSalle
Bank, National Association in its individual capacity be personally liable
for the payment of any indebtedness or expenses (including the Fixed
Amount) or be personally liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken under
this Confirmation.
(m) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of S&P and Xxxxx'x has been provided
notice of the same and confirms in writing (including by facsimile
transmission) after such notice is given that it will not downgrade,
withdraw or otherwise modify its then-current rating of the Notes.
(n) Proceedings. BSFP shall not institute against or cause any other person to
institute against, or join any other person in instituting against,
Counterparty or any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law for a period of one year and one day following
payment in full of the Notes.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP shall not be deemed to have any
Affiliates for purposes of this Agreement, including for purposes of
Section 6(b)(ii).
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 9 of 14
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it enters
into a Transaction that:--
(1) Nonreliance. It is not relying on any statement or representation
of the other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this Agreement
or the Confirmation in respect of that Transaction.
(2) Evaluation and Understanding.
(i) BSFP is acting for its own account and LaSalle Bank, National
Association is acting in its capacity as Trustee under the
Pooling and Servicing Agreement and not for its own account. Each
Party has made its own independent decisions to enter into this
Transaction and as to whether this Transaction is appropriate or
proper for it based upon its own judgment and upon advice from
such advisors as it has deemed necessary and, in the case of the
Counterparty, it has been directed to enter into this Transaction
under the Pooling and Servicing Agreement. It is not relying on
any communication (written or oral) of the other party as
investment advice or as a recommendation to enter into this
Transaction; it being understood that information and
explanations related to the terms and conditions of this
Transaction shall not be considered investment advice or a
recommendation to enter into this Transaction. It has not
received from the other party any assurance or guarantee as to
the expected results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own
behalf or through independent professional advice), and
understands and accepts, the terms, conditions and risks of this
Transaction. It is also capable of assuming, and assumes, the
financial and other risks of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor
for it in respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such term is
defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35)
promulgated under, and an "eligible contract participant" as defined
in Section 1(a)(12) of, the Commodity Exchange Act, as amended, and it
is entering into the Transaction for the purposes of managing its
borrowings or investments, hedging its underlying assets or
liabilities or in connection with a line of business."
9) Additional Provisions. Notwithstanding the terms of Sections 5 and 6 of the
ISDA Form
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 10 of 14
Master Agreement, if Counterparty has satisfied its payment obligations
under Section 2(a)(i) of the ISDA form Master Agreement, then unless BSFP
is required pursuant to appropriate proceedings to return to Counterparty
or otherwise returns to Counterparty upon demand of Counterparty any
portion of such payment, (a) the occurrence of an event described in
Section 5(a) of the ISDA form Master Agreement with respect to Counterparty
shall not constitute an Event of Default or Potential Event of Default with
respect to Counterparty as the Defaulting Party and (b) BSFP shall be
entitled to designate an Early Termination Event pursuant to Section 6 of
the ISDA form Master Agreement only as a result of a Termination Event set
forth in either Section 5(b)(i) or Section 5(b)(ii) of the ISDA form Master
Agreement with respect to BSFP as the Affected Party or Section 5(b)(iii)
of the ISDA form Master Agreement with respect to BSFP as the Burdened
Party. For purposes of the Transaction to which this Agreement relates,
Counterparty's only obligation under Section 2(a)(i) of the ISDA form
Master Agreement is to pay the Fixed Amount on the Fixed Rate Payer Payment
Date.
10) Set-off. The provisions for Set-off set forth in Section 6(e) of the ISDA
Form Master Agreement shall not apply for purposes of this Transaction.
11) Third party Beneficiary. Each of the Note Insurer and the Backup Note
Issuer is a third party beneficiary of this Agreement and is entitled to
the rights and benefits hereunder and may enforce the provisions hereof as
if it were a party hereto.
12) Additional Termination Events. Additional Termination Events will apply.
(a) If a Ratings Event has occurred and BSFP has not, within 30 days,
complied with Section 13 below, then an Additional Termination Event shall
have occurred with respect to BSFP and BSFP shall be the sole Affected
Party with respect to such an Additional Termination Event. (b) If, upon
the occurrence of a Swap Disclosure Event (as defined in Section 14 of this
Agreement), BSFP has not, within 10 days after such Swap Disclosure Event
complied with any of the provisions set forth in Section 14(iii) of this
Agreement, then an Additional Termination Event shall have occurred with
respect to BSFP and BSFP shall be the sole Affected Party with respect to
such Additional Termination Event.
13) Ratings Event. If a Ratings Event (as defined below) occurs with respect to
BSFP, then BSFP shall, at is own expense, (i) assign this Transaction
hereunder to a third party within thirty (30) days of such Ratings Event
that meets or exceeds, or as to which any applicable credit support
provider meets or exceeds, the Approved Ratings Thresholds (as defined
below) or (ii) deliver collateral, and an executed ISDA Credit Support
Annex, within thirty (30) days of such Ratings Event and subject to each of
S&P's and Xxxxx'x written confirmation that delivery of such collateral in
the context of such downgrade will not result in a withdrawal,
qualification or downgrade of the then current ratings assigned to the
Notes. For the avoidance of doubt, a downgrade of the rating on the Notes
could occur in the event that BSFP does not post sufficient collateral. For
purposes of this Transaction, a "Ratings Event" shall occur with respect to
BSFP, if its counterparty credit rating ceases to be rated at least "AA-"
by S&P, and at least "Aa3" by Xxxxx'x
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 11 of 14
(including in connection with a merger, consolidation or other similar
transaction by BSFP) such ratings being referred to herein as the "Approved
Ratings Thresholds", (unless, within 30 days after such withdrawal or
downgrade, each of Xxxxx'x and S&P has reconfirmed the rating of the Notes,
as applicable, which was in effect immediately prior to such withdrawal or
downgrade.
14) Compliance with Regulation AB.
BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors, Inc., Series
2006-RM1 ("MLMI") is required under Regulation AB under the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") ("Regulation AB"), to disclose certain financial information
regarding BSFP or its group of affiliated entities, if applicable, depending on
the aggregate "significance percentage" of this Agreement and any other
derivative contracts between BSFP or its group of affiliated entities, if
applicable, and Counterparty, as calculated from time to time in accordance with
Item 1115 of Regulation AB.
It shall be a swap disclosure event ("Swap Disclosure Event") if, on any
Business Day after the date hereof, MLMI requests from BSFP the applicable
financial information described in Item 1115 of Regulation AB (such request to
be based on a reasonable determination by MLMI, in good faith, that such
information is required under Regulation AB) (the "Swap Financial Disclosure").
Upon the occurrence of a Swap Disclosure Event, BSFP, at its own expense, shall
(a) provide to MLMI the Swap Financial Disclosure, (b) secure another entity to
replace BSFP as party to this Agreement on terms substantially similar to this
Agreement and subject to prior notification to the Swap Rating Agencies, which
entity (or a guarantor therefor) meets or exceeds the Approved Rating Thresholds
(or which satisfies the Rating Agency Condition) and which entity is able to
comply with the requirements of Item 1115 of Regulation AB or (c) obtain a
guaranty of the BSFP's obligations under this Agreement from an affiliate of the
BSFP that is able to comply with the financial information disclosure
requirements of Item 1115 of Regulation AB, such that disclosure provided in
respect of the affiliate will satisfy any disclosure requirements applicable to
the Swap Provider, and cause such affiliate to provide Swap Financial
Disclosure. If permitted by Regulation AB, any required Swap Financial
Disclosure may be provided by incorporation by reference from reports filed
pursuant to the Exchange Act.
BSFP agrees that, in the event that BSFP provides Swap Financial Disclosure to
MLMI in accordance with Section 14(iii)(a) or causes its affiliate to provide
Swap Financial Disclosure to MLMI in accordance with Section 14(iii)(a), it will
indemnify and hold harmless MLMI, its respective directors or officers and any
person controlling MLMI, from and against any and all losses, claims, damages
and liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in such Swap Financial Disclosure or caused by any
omission or alleged omission to state in such Swap Financial Disclosure a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 12 of 14
15) Third Party Beneficiary. MLMI shall be a third party beneficiary of this
Agreement.
Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the applicable Trustee, whereupon such Trustee will promptly remit such
amounts to BSFP. MLML further agrees to provide notice to BSFP upon any
remittance to the Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
THE BEAR XXXXXXX COMPANIES INC. OTHER THAN
BSFP IS AN OBLIGOR OR A CREDIT SUPPORT PROVIDER ON THIS AGREEMENT.
5. Account Details and
Settlement Information: PAYMENTS TO BSFP:
Citibank, N.A., New York
ABA Number: 000-0000-00, for the account of
Bear, Xxxxxxx Securities Corp.
Account Number: 0925-3186, for further credit to
Bear Xxxxxxx Financial Products Inc.
Sub-account Number: 102-04654-1-3
Attention: Derivatives Department
PAYMENTS TO COUNTERPARTY:
LaSalle Bank, National Association
ABA Number: 000000000
Account Number: 0000000
OBI Attn: LaSalle CHGO/CTR/BNF:Lasalle Trust
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 13 of 14
Ref.: MLMI 2006-RM1
This Agreement may be executed in several counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact XXXXX XXXXXX by telephone at 000-000-0000. For all other inquiries
please contact DERIVATIVES DOCUMENTATION by telephone at 000-0-000-0000.
Originals will be provided for your execution upon your request.
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
BEAR XXXXXXX FINANCIAL PRODUCTS INC. BY:
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
LASALLE BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
TRUSTEE FOR XXXXXXX XXXXX MORTGAGE INVESTORS, INC., SERIES 2006-RM1 UNDER THE
POOLING AND SERVICING AGREEMENT, DATED AS OF MARCH 1, 2006
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
am
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 14 of 14
SCHEDULE OF NOTIONAL AMOUNTS
(all such dates subject to adjustment in accordance with the Business Day
Convention)
EXHIBIT M-2
FORM OF CLASS A-2A CAP CONTRACT
BEAR XXXXXXX
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: March 21, 2006
TO: LaSalle Bank, National Association, not in its individual capacity,
but solely as Trustee for Xxxxxxx Xxxxx Mortgage Investors, Inc.,
Series 2006-RM1
ATTENTION: Xxxxxxxxxxx Xxxxx
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Fixed Income Derivatives Confirmation and Agreement - DRAFT
REFERENCE NUMBER:
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
LaSalle Bank, National Association, not in its individual capacity, but solely
as Trustee for Xxxxxxx Xxxxx Mortgage Investors Trust, Inc., Series 2006-RM1
("Counterparty") under the Pooling and Servicing Agreement, dated as of March 1,
2006 among Xxxxxxx Xxxxx Mortgage Investors, Inc. as depositor, Wilshire Credit
Corporation, as servicer and LaSalle Bank, National Association, as trustee
("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"). 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. 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. Terms
capitalized but not defined herein shall have the
M-2
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 2 of 14
meanings attributed to them in the Pooling and Servicing Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Type of Transaction: Rate Cap
-------------------- --------------------------------------------
Notional Amount: With respect to the Calculation Period, the
lesser of (i) the amount set forth for such
period as detailed in Schedule I attached
hereto and (ii) the aggregate Certificate
Balance of the Class A-2A Certificates
immediately prior to the related Floating
Rate Payer Payment Date.
Trade Date: March 13, 2006
Effective Date: Xxxxx 00, 0000
Xxxxxxxxxxx Date: September 25, 2006, subject to adjustment in
accordance with the Business Day Convention
FIXED AMOUNT (PREMIUM):
Fixed Rate Payer: Counterparty
Fixed Rate Payer March 15, 2006
Payment Date
Fixed Amount: The Fixed Amount will be netted with the
Additional Amount, as specified in the
Confirmation identified by BSFP's Reference
Number XXXXX0000.
FLOATING AMOUNTS:
FLOATING RATE PAYER: BSFP
Cap Rate: With respect to any Calculation Period, the
rate set forth for such period as detailed
in Schedule I attached hereto.
Floating Rate Payer The 25th calendar day of each month during
Period End Dates: the Term of this Transaction, commencing
April 25, 2006 and ending on the Termination
Date, subject to adjustment in accordance
with the Business Day Convention.
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 3 of 14
Floating Rate Payer Early Payment shall be applicable. The
Payment Dates: Floating Rate Payer Payment Date shall be
two Business Days preceding each Floating
Rate Payer Period End Date.
Floating Rate Option:
Designated Maturity: One month
Floating Rate Day Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Modified Following
3. Additional Provisions: 1) Each party hereto is hereby advised and
acknowledges that the other party has
engaged in (or refrained from engaging in)
substantial financial transactions and has
taken (or refrained from taking) other
material actions in reliance upon the entry
by the parties into the Transaction being
entered into on the terms and conditions set
forth herein and in the Confirmation
relating to such Transaction, as applicable
and, in the case of the Counterparty, it has
been directed under the Pooling and
Servicing Agreement to enter into this
Transaction. This paragraph (1) shall be
deemed repeated on the trade date of each
Transaction.
2) No later than each Floating Rate Payer
Period End Date the Counterparty will make
available on its website located at
[xxxx://xxx.____] the current principal
balance of the Certificates, Series
2006-RM1. No later than each Reset Date,
BSFP shall deliver to LaSalle Bank, National
Association, a written confirmation
containing the results of the calculations
performed on each Reset Date and the amount
which is to be paid to the Counterparty on
the
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 4 of 14
next Floating Rate Payer Payment Date.
1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form
Master Agreement will apply to any Transaction.
2) Termination Provisions. For purposes of the ISDA Form Master Agreement:
(a) "Specified Entity" is not applicable to BSFP or Counterparty for any
purpose.
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will not apply to BSFP or
to Counterparty.
(d) The provisions of Section 5 (a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) The "Bankruptcy" provision of Section 5(a)(vii)(2) will not apply to
Counterparty.
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply
to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to l Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
3) Tax Representations. Not applicable
4) [Reserved]
5) Documents to be Delivered. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 5 of 14
PARTY REQUIRED TO DELIVER DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED
---------------------------------- ---------------------------------- -------------------------------------
BSFP and the Counterparty Any document required or Promptly after the earlier of (i)
reasonably requested to allow the reasonable demand by either party or
other party to make payments under (ii) learning that such form or
this Agreement without any document is required
deduction or withholding for or on
the account of any Tax or with
such deduction or withholding at a
reduced rate
(2) Other documents to be delivered are:
PARTY REQUIRED TO DELIVER FORM/DOCUMENT/ DATE BY WHICH TO BE COVERED BY SECTION 3(D)
DOCUMENT CERTIFICATE DELIVERED REPRESENTATION
------------------------- ------------------------- ---------------------- -----------------------
BSFP and the Counterparty Any documents required by Upon the execution and Yes
the receiving party to delivery of this
evidence the authority of Agreement and such
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
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 6 of 14
PARTY REQUIRED TO DELIVER DATE BY WHICH TO BE COVERED BY SECTION 3(D)
DOCUMENT FORM/DOCUMENT/ CERTIFICATE DELIVERED REPRESENTATION
------------------------- -------------------------- -------------------- -----------------------
BSFP and the Counterparty A certificate of an Upon the execution Yes
authorized officer of the and delivery of this
party, as to the Agreement and such
incumbency and authority Confirmation
of the respective officers
of the party signing this
Agreement, any relevant
Credit Support Document,
or any Confirmation, as
the case may be
BSFP Monthly rate set letter to On or prior to each No
Counterparty Floating Rate Payer
Payment Date
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
(For all purposes)
Address for notices or communications to the Counterparty:
Address: LaSalle Bank, National Association
000 Xxxxx XxXxxxx Xxxxxx
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 0 xx 00
Xxxxx 0000
Xxxxxxx, XXX 00000
Attention: MLMI 2006-RM1
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c):
BSFP appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) will not apply to this Agreement;
neither BSFP nor the Counterparty have any Offices other than as set forth
in the Notices Section and BSFP agrees that, for purposes of Section 6(b)
of the ISDA Form Master Agreement, it shall not in future have any Office
other than one in the United States.
(d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement: BSFP is not a Multibranch Party. The Counterparty is not a
Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP.
(f) Credit Support Document. Not applicable for either BSFP or the
Counterparty.
(g) Credit Support Provider. BSFP: Not Applicable The Counterparty: Not
Applicable
(h) Governing Law. The parties to this Agreement hereby agree that the law of
the State of New York shall govern their rights and duties in whole,
without regard to conflict of law provisions thereof, other than New York
General Obligation Law Section 5-1401.
(i) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall
be held to be invalid or unenforceable (in whole or in part) for any
reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion eliminated, so long as
this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter of
this Agreement and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 8 of 14
expectations of the parties.
The parties shall endeavor to engage in good faith negotiations to replace
any invalid or unenforceable term, provision, covenant or condition with a
valid or enforceable term, provision, covenant or condition, the economic
effect of which comes as close as possible to that of the invalid or
unenforceable term, provision, covenant or condition.
(j) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and
all communications between officers or employees of the parties, waives any
further notice of such monitoring or recording, and agrees to notify its
officers and employees of such monitoring or recording.
(k) Waiver of Jury Trial. Each party waives any right it may have to a trial by
jury in respect of any Proceedings relating to this Agreement or any Credit
Support Document.
(l) Trustee Capacity and Liability Limitations It is expressly understood and
agreed by the parties hereto that insofar as this Confirmation is executed
by the Trustee (i) this Confirmation is executed and delivered by LaSalle
Bank, National Association not in its individual capacity but solely as
Trustee under the Pooling and Servicing Agreement referred to in this
Confirmation in the exercise of the powers and authority conferred and
invested in it thereunder; (ii) any representations, undertakings and
agreements of the Trust are made and intended not as personal
representations, undertakings and agreements by LaSalle Bank, National
Association but are made and intended for the purpose of binding only the
Trust; (iii) nothing herein contained shall be construed as creating any
liability on LaSalle Bank, National Association individually, or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties
who are signatories to this Agreement and by any person claiming by,
through or under such parties and (iv) under no circumstances shall LaSalle
Bank, National Association in its individual capacity be personally liable
for the payment of any indebtedness or expenses (including the Fixed
Amount) or be personally liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken under
this Confirmation.
(m) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of S&P and Xxxxx'x has been provided
notice of the same and confirms in writing (including by facsimile
transmission) after such notice is given that it will not downgrade,
withdraw or otherwise modify its then-current rating of the Notes.
(n) Proceedings. BSFP shall not institute against or cause any other person to
institute against, or join any other person in instituting against,
Counterparty or any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law for a period of one year and one day
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 9 of 14
following payment in full of the Notes.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP shall not be deemed to have any
Affiliates for purposes of this Agreement, including for purposes of
Section 6(b)(ii).
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it enters
into a Transaction that:--
(1) Nonreliance. It is not relying on any statement or representation
of the other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this Agreement
or the Confirmation in respect of that Transaction.
(2) Evaluation and Understanding.
(i) BSFP is acting for its own account and LaSalle Bank, National
Association is acting in its capacity as Trustee under the Pooling and
Servicing Agreement and not for its own account. Each Party has made
its own independent decisions to enter into this Transaction and as to
whether this Transaction is appropriate or proper for it based upon
its own judgment and upon advice from such advisors as it has deemed
necessary and, in the case of the Counterparty, it has been directed
to enter into this Transaction under the Pooling and Servicing
Agreement. It is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation to enter
into this Transaction; it being understood that information and
explanations related to the terms and conditions of this Transaction
shall not be considered investment advice or a recommendation to enter
into this Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own
behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of this Transaction. It
is also capable of assuming, and assumes, the financial and other
risks of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor
for it in respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such term is
defined in Section
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 10 of 14
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, and it is entering into the
Transaction for the purposes of managing its borrowings or
investments, hedging its underlying assets or liabilities or in
connection with a line of business."
9) Additional Provisions. Notwithstanding the terms of Sections 5 and 6 of the
ISDA Form Master Agreement, if Counterparty has satisfied its payment
obligations under Section 2(a)(i) of the ISDA form Master Agreement, then unless
BSFP is required pursuant to appropriate proceedings to return to Counterparty
or otherwise returns to Counterparty upon demand of Counterparty any portion of
such payment, (a) the occurrence of an event described in Section 5(a) of the
ISDA form Master Agreement with respect to Counterparty shall not constitute an
Event of Default or Potential Event of Default with respect to Counterparty as
the Defaulting Party and (b) BSFP shall be entitled to designate an Early
Termination Event pursuant to Section 6 of the ISDA form Master Agreement only
as a result of a Termination Event set forth in either Section 5(b)(i) or
Section 5(b)(ii) of the ISDA form Master Agreement with respect to BSFP as the
Affected Party or Section 5(b)(iii) of the ISDA form Master Agreement with
respect to BSFP as the Burdened Party. For purposes of the Transaction to which
this Agreement relates, Counterparty's only obligation under Section 2(a)(i) of
the ISDA form Master Agreement is to pay the Fixed Amount on the Fixed Rate
Payer Payment Date.
10) Set-off. The provisions for Set-off set forth in Section 6(e) of the ISDA
Form Master Agreement shall not apply for purposes of this Transaction.
11) Third party Beneficiary. Each of the Note Insurer and the Backup Note Issuer
is a third party beneficiary of this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
12) Additional Termination Events. Additional Termination Events will apply. (a)
If a Ratings Event has occurred and BSFP has not, within 30 days, complied with
Section 13 below, then an Additional Termination Event shall have occurred with
respect to BSFP and BSFP shall be the sole Affected Party with respect to such
an Additional Termination Event. (b) If, upon the occurrence of a Swap
Disclosure Event (as defined in Section 14 of this Agreement), BSFP has not,
within 10 days after such Swap Disclosure Event complied with any of the
provisions set forth in Section 14(iii) of this Agreement, then an Additional
Termination Event shall have occurred with respect to BSFP and BSFP shall be the
sole Affected Party with respect to such Additional Termination Event.
13) Ratings Event. If a Ratings Event (as defined below) occurs with respect to
BSFP, then BSFP shall, at is own expense, (i) assign this Transaction hereunder
to a third party within thirty (30) days of such Ratings Event that meets or
exceeds, or as to which any applicable credit support provider meets or exceeds,
the Approved Ratings Thresholds (as defined below) or (ii) deliver collateral,
and an executed ISDA Credit Support Annex, within thirty (30) days of such
Ratings Event and subject to each of S&P's and Xxxxx'x written confirmation that
delivery of
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 11 of 14
such collateral in the context of such downgrade will not result in a
withdrawal, qualification or downgrade of the then current ratings assigned to
the Notes. For the avoidance of doubt, a downgrade of the rating on the Notes
could occur in the event that BSFP does not post sufficient collateral. For
purposes of this Transaction, a "RATINGS EVENT" shall occur with respect to
BSFP, if its counterparty credit rating ceases to be rated at least "AA-" by
S&P, and at least "Aa3" by Xxxxx'x (including in connection with a merger,
consolidation or other similar transaction by BSFP) such ratings being referred
to herein as the "Approved Ratings Thresholds", (unless, within 30 days after
such withdrawal or downgrade, each of Xxxxx'x and S&P has reconfirmed the rating
of the Notes, as applicable, which was in effect immediately prior to such
withdrawal or downgrade.
14) Compliance with Regulation AB.
BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors, Inc., Series
2006-RM1 ("MLMI") is required under Regulation AB under the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") ("Regulation AB"), to disclose certain financial information
regarding BSFP or its group of affiliated entities, if applicable, depending on
the aggregate "significance percentage" of this Agreement and any other
derivative contracts between BSFP or its group of affiliated entities, if
applicable, and Counterparty, as calculated from time to time in accordance with
Item 1115 of Regulation AB.
It shall be a swap disclosure event ("Swap Disclosure Event") if, on any
Business Day after the date hereof, MLMI requests from BSFP the applicable
financial information described in Item 1115 of Regulation AB (such request to
be based on a reasonable determination by MLMI, in good faith, that such
information is required under Regulation AB) (the "Swap Financial Disclosure").
Upon the occurrence of a Swap Disclosure Event, BSFP, at its own expense, shall
(a) provide to MLMI the Swap Financial Disclosure, (b) secure another entity to
replace BSFP as party to this Agreement on terms substantially similar to this
Agreement and subject to prior notification to the Swap Rating Agencies, which
entity (or a guarantor therefor) meets or exceeds the Approved Rating Thresholds
(or which satisfies the Rating Agency Condition) and which entity is able to
comply with the requirements of Item 1115 of Regulation AB or (c) obtain a
guaranty of the BSFP's obligations under this Agreement from an affiliate of the
BSFP that is able to comply with the financial information disclosure
requirements of Item 1115 of Regulation AB, such that disclosure provided in
respect of the affiliate will satisfy any disclosure requirements applicable to
the Swap Provider, and cause such affiliate to provide Swap Financial
Disclosure. If permitted by Regulation AB, any required Swap Financial
Disclosure may be provided by incorporation by reference from reports filed
pursuant to the Exchange Act.
BSFP agrees that, in the event that BSFP provides Swap Financial Disclosure to
MLMI in accordance with Section 14(iii)(a) or causes its affiliate to provide
Swap Financial Disclosure to MLMI in accordance with Section 14(iii)(a), it will
indemnify and hold harmless MLMI, its respective directors or officers and any
person controlling MLMI, from and against any and all
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 12 of 14
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in such Swap Financial
Disclosure or caused by any omission or alleged omission to state in such Swap
Financial Disclosure a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
15) Third Party Beneficiary.
Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the applicable Trustee, whereupon such Trustee will promptly remit such
amounts to BSFP. MLML further agrees to provide notice to BSFP upon any
remittance to the Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
5. Account Details and
Settlement Information: PAYMENTS TO BSFP:
Citibank, N.A., New York
ABA Number: 000-0000-00, for the account of Bear,
Xxxxxxx Securities Corp.
Account Number: 0925-3186, for further credit to
Bear Xxxxxxx Financial Products Inc.
Sub-account Number: 102-04654-1-3
Attention: Derivatives Department
PAYMENTS TO COUNTERPARTY:
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 13 of 14
LaSalle Bank, National Association
ABA Number: 000000000
Account Number: 0000000
OBI Attn: LaSalle CHGO/CTR/BNF:Lasalle ABA
Ref.: MLMI 2006-RM1
This Agreement may be executed in several counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact XXXXX XXXXXX by telephone at 000-000-0000. For all other inquiries
please contact DERIVATIVES DOCUMENTATION by telephone at 000-0-000-0000.
Originals will be provided for your execution upon your request.
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
BEAR XXXXXXX FINANCIAL PRODUCTS INC. BY:
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
EXHIBIT M-3
FORM OF FLOATING RATE SUBORDINATE CERTIFICATES CAP CONTRACT
BEAR XXXXXXX
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: March 21, 2006
TO: LaSalle Bank, National Association, not in its individual capacity,
but solely as Trustee for Xxxxxxx Xxxxx Mortgage Investors, Inc.,
Series 2006-RM1
ATTENTION: Xxxxxxxxxxx Xxxxx
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Fixed Income Derivatives Confirmation and Agreement - DRAFT
REFERENCE NUMBER:
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
LaSalle Bank, National Association, not in its individual capacity, but solely
as Trustee for Xxxxxxx Xxxxx Mortgage Investors Trust, Inc., Series 2006-RM1
("Counterparty") under the Pooling and Servicing Agreement, dated as of March 1,
2006 among Xxxxxxx Xxxxx Mortgage Investors, Inc. as depositor, Wilshire Credit
Corporation, as servicer and LaSalle Bank, National Association, as trustee
("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"). 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. 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. Terms
capitalized but not defined herein shall have the
M-3
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 2 of 14
meanings attributed to them in the Pooling and Servicing Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Type of Transaction: Rate Cap
Notional Amount: With respect to the Calculation Period, the
lesser of (i) the amount set forth for such
period as detailed in Schedule I attached
hereto and (ii) the aggregate Certificate
Balance of the Class A-2A Certificates
immediately prior to the related Floating
Rate Payer Payment Date.
Trade Date: March 13, 2006
Effective Date: Xxxxx 00, 0000
Xxxxxxxxxxx Date: September 25, 2006, subject to adjustment in
accordance with the Business Day Convention
FIXED AMOUNT (PREMIUM):
Fixed Rate Payer: Counterparty
Fixed Rate Payer March 15, 2006
Payment Date
Fixed Amount:
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Cap Rate: With respect to any Calculation Period, the
rate set forth for such period as detailed
in Schedule I attached hereto.
Floating Rate Payer Period End The 25th calendar day of each month during
Dates: the Term of this Transaction, commencing
April 25, 2006 and ending on the Termination
Date, subject to adjustment in accordance
with the Business Day Convention.
Floating Rate Payer Early Payment shall be applicable. The
Floating Rate Payer Payment Date shall be
two Business Days
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 3 of 14
Payment Dates: preceding each Floating Rate Payer Period
End Date.
Floating Rate Option:
Designated Maturity: One month
Floating Rate Day Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Modified Following
3. Additional Provisions: 1) Each party hereto is hereby advised and
acknowledges that the other party has
engaged in (or refrained from engaging in)
substantial financial transactions and has
taken (or refrained from taking) other
material actions in reliance upon the entry
by the parties into the Transaction being
entered into on the terms and conditions set
forth herein and in the Confirmation
relating to such Transaction, as applicable
and, in the case of the Counterparty, it has
been directed under the Pooling and
Servicing Agreement to enter into this
Transaction. This paragraph (1) shall be
deemed repeated on the trade date of each
Transaction.
2) No later than each Floating Rate Payer
Period End Date the Counterparty will make
available on its website located at
[xxxx://xxx.____] the current principal
balance of the Certificates, Series
2006-RM1. No later than each Reset Date,
BSFP shall deliver to LaSalle Bank, National
Association, a written confirmation
containing the results of the calculations
performed on each Reset Date and the amount
which is to be paid to the Counterparty on
the next Floating Rate Payer Payment Date.
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 4 of 14
1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form
Master Agreement will apply to any Transaction.
2) Termination Provisions. For purposes of the ISDA Form Master Agreement:
(a) "Specified Entity" is not applicable to BSFP or Counterparty for any
purpose.
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will not apply to BSFP or
to Counterparty.
(d) The provisions of Section 5 (a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) The "Bankruptcy" provision of Section 5(a)(vii)(2) will not apply to
Counterparty.
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply
to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to l Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
3) Tax Representations. Not applicable
4) [Reserved]
5) Documents to be Delivered. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 5 of 14
PARTY REQUIRED TO DELIVER
DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED
------------------------- -------------------------- -----------------------------
BSFP and the Counterparty Any document required or Promptly after the earlier of (i)
reasonably requested to allow the reasonable demand by either party or
other party to make payments under (ii) learning that such form or
this Agreement without any document is required
deduction or withholding for or on
the account of any Tax or with
such deduction or withholding at a
reduced rate
(2) Other documents to be delivered are:
PARTY REQUIRED TO DELIVER DATE BY WHICH TO BE COVERED BY SECTION 3(D)
DOCUMENT FORM/DOCUMENT/ CERTIFICATE DELIVERED REPRESENTATION
------------------------- -------------------------- ------------------- -----------------------
BSFP and the Counterparty Any documents required by Upon the execution and Yes
the receiving party to delivery of this
evidence the authority of Agreement and such
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
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 6 of 14
PARTY REQUIRED TO DELIVER DATE BY WHICH TO BE COVERED BY SECTION 3(D)
DOCUMENT FORM/DOCUMENT/ CERTIFICATE DELIVERED REPRESENTATION
------------------------- -------------------------- ------------------- -----------------------
BSFP and the Counterparty A certificate of an Upon the execution and Yes
authorized officer of the delivery of this Agreement
party, as to the and such 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
BSFP Monthly rate set letter to On or prior to each No
Counterparty Floating Rate Payer
Payment Date
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
(For all purposes)
Address for notices or communications to the Counterparty:
Address: LaSalle Bank, National Association
000 Xxxxx XxXxxxx Xxxxxx
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 0 xx 00
Xxxxx 0000
Xxxxxxx, XXX 00000
Attention: MLMI 2006-RM1
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c):
BSFP appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) will not apply to this Agreement;
neither BSFP nor the Counterparty have any Offices other than as set forth
in the Notices Section and BSFP agrees that, for purposes of Section 6(b)
of the ISDA Form Master Agreement, it shall not in future have any Office
other than one in the United States.
(d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement: BSFP is not a Multibranch Party. The Counterparty is not a
Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP.
(f) Credit Support Document. Not applicable for either BSFP or the
Counterparty.
(g) Credit Support Provider. BSFP: Not Applicable The Counterparty: Not
Applicable
(h) Governing Law. The parties to this Agreement hereby agree that the law of
the State of New York shall govern their rights and duties in whole,
without regard to conflict of law provisions thereof, other than New York
General Obligation Law Section 5-1401.
(i) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall
be held to be invalid or unenforceable (in whole or in part) for any
reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion eliminated, so long as
this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter of
this Agreement and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 8 of 14
expectations of the parties.
The parties shall endeavor to engage in good faith negotiations to replace
any invalid or unenforceable term, provision, covenant or condition with a
valid or enforceable term, provision, covenant or condition, the economic
effect of which comes as close as possible to that of the invalid or
unenforceable term, provision, covenant or condition.
(j) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and
all communications between officers or employees of the parties, waives any
further notice of such monitoring or recording, and agrees to notify its
officers and employees of such monitoring or recording.
(k) Waiver of Jury Trial. Each party waives any right it may have to a trial by
jury in respect of any Proceedings relating to this Agreement or any Credit
Support Document.
(l) Trustee Capacity and Liability Limitations It is expressly understood and
agreed by the parties hereto that insofar as this Confirmation is executed
by the Trustee (i) this Confirmation is executed and delivered by LaSalle
Bank, National Association not in its individual capacity but solely as
Trustee under the Pooling and Servicing Agreement referred to in this
Confirmation in the exercise of the powers and authority conferred and
invested in it thereunder; (ii) any representations, undertakings and
agreements of the Trust are made and intended not as personal
representations, undertakings and agreements by LaSalle Bank, National
Association but are made and intended for the purpose of binding only the
Trust; (iii) nothing herein contained shall be construed as creating any
liability on LaSalle Bank, National Association individually, or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties
who are signatories to this Agreement and by any person claiming by,
through or under such parties and (iv) under no circumstances shall LaSalle
Bank, National Association in its individual capacity be personally liable
for the payment of any indebtedness or expenses (including the Fixed
Amount) or be personally liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken under
this Confirmation.
(m) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of S&P and Xxxxx'x has been provided
notice of the same and confirms in writing (including by facsimile
transmission) after such notice is given that it will not downgrade,
withdraw or otherwise modify its then-current rating of the Notes.
(n) Proceedings. BSFP shall not institute against or cause any other person to
institute against, or join any other person in instituting against,
Counterparty or any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law for a period of one year and one day
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 9 of 14
following payment in full of the Notes.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP shall not be deemed to have any Affiliates
for purposes of this Agreement, including for purposes of Section 6(b)(ii).
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it enters
into a Transaction that:--
(1) Nonreliance. It is not relying on any statement or representation
of the other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this Agreement
or the Confirmation in respect of that Transaction.
(2) Evaluation and Understanding.
(i) BSFP is acting for its own account and LaSalle Bank, National
Association is acting in its capacity as Trustee under the Pooling and
Servicing Agreement and not for its own account. Each Party has made
its own independent decisions to enter into this Transaction and as to
whether this Transaction is appropriate or proper for it based upon
its own judgment and upon advice from such advisors as it has deemed
necessary and, in the case of the Counterparty, it has been directed
to enter into this Transaction under the Pooling and Servicing
Agreement. It is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation to enter
into this Transaction; it being understood that information and
explanations related to the terms and conditions of this Transaction
shall not be considered investment advice or a recommendation to enter
into this Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own
behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of this Transaction. It
is also capable of assuming, and assumes, the financial and other
risks of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor
for it in respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such term is
defined in Section
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 10 of 14
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, and it is entering into the
Transaction for the purposes of managing its borrowings or
investments, hedging its underlying assets or liabilities or in
connection with a line of business."
9) Additional Provisions. Notwithstanding the terms of Sections 5 and 6 of the
ISDA Form Master Agreement, if Counterparty has satisfied its payment
obligations under Section 2(a)(i) of the ISDA form Master Agreement, then unless
BSFP is required pursuant to appropriate proceedings to return to Counterparty
or otherwise returns to Counterparty upon demand of Counterparty any portion of
such payment, (a) the occurrence of an event described in Section 5(a) of the
ISDA form Master Agreement with respect to Counterparty shall not constitute an
Event of Default or Potential Event of Default with respect to Counterparty as
the Defaulting Party and (b) BSFP shall be entitled to designate an Early
Termination Event pursuant to Section 6 of the ISDA form Master Agreement only
as a result of a Termination Event set forth in either Section 5(b)(i) or
Section 5(b)(ii) of the ISDA form Master Agreement with respect to BSFP as the
Affected Party or Section 5(b)(iii) of the ISDA form Master Agreement with
respect to BSFP as the Burdened Party. For purposes of the Transaction to which
this Agreement relates, Counterparty's only obligation under Section 2(a)(i) of
the ISDA form Master Agreement is to pay the Fixed Amount on the Fixed Rate
Payer Payment Date.
10) Set-off. The provisions for Set-off set forth in Section 6(e) of the ISDA
Form Master Agreement shall not apply for purposes of this Transaction.
11) Third party Beneficiary. Each of the Note Insurer and the Backup Note Issuer
is a third party beneficiary of this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
12) Additional Termination Events. Additional Termination Events will apply. (a)
If a Ratings Event has occurred and BSFP has not, within 30 days, complied with
Section 13 below, then an Additional Termination Event shall have occurred with
respect to BSFP and BSFP shall be the sole Affected Party with respect to such
an Additional Termination Event. (b) If, upon the occurrence of a Swap
Disclosure Event (as defined in Section 14 of this Agreement), BSFP has not,
within 10 days after such Swap Disclosure Event complied with any of the
provisions set forth in Section 14(iii) of this Agreement, then an Additional
Termination Event shall have occurred with respect to BSFP and BSFP shall be the
sole Affected Party with respect to such Additional Termination Event.
13) Ratings Event. If a Ratings Event (as defined below) occurs with respect to
BSFP, then BSFP shall, at is own expense, (i) assign this Transaction hereunder
to a third party within thirty (30) days of such Ratings Event that meets or
exceeds, or as to which any applicable credit support provider meets or exceeds,
the Approved Ratings Thresholds (as defined below) or (ii) deliver collateral,
and an executed ISDA Credit Support Annex, within thirty (30) days of such
Ratings Event and subject to each of S&P's and Xxxxx'x written confirmation that
delivery of
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 11 of 14
such collateral in the context of such downgrade will not result in a
withdrawal, qualification or downgrade of the then current ratings assigned to
the Notes. For the avoidance of doubt, a downgrade of the rating on the Notes
could occur in the event that BSFP does not post sufficient collateral. For
purposes of this Transaction, a "RATINGS EVENT" shall occur with respect to
BSFP, if its counterparty credit rating ceases to be rated at least "AA-" by
S&P, and at least "Aa3" by Xxxxx'x (including in connection with a merger,
consolidation or other similar transaction by BSFP) such ratings being referred
to herein as the "Approved Ratings Thresholds", (unless, within 30 days after
such withdrawal or downgrade, each of Xxxxx'x and S&P has reconfirmed the rating
of the Notes, as applicable, which was in effect immediately prior to such
withdrawal or downgrade.
14) Compliance with Regulation AB.
BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors, Inc., Series
2006-RM1 ("MLMI") is required under Regulation AB under the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") ("Regulation AB"), to disclose certain financial information
regarding BSFP or its group of affiliated entities, if applicable, depending on
the aggregate "significance percentage" of this Agreement and any other
derivative contracts between BSFP or its group of affiliated entities, if
applicable, and Counterparty, as calculated from time to time in accordance with
Item 1115 of Regulation AB.
It shall be a swap disclosure event ("Swap Disclosure Event") if, on any
Business Day after the date hereof, MLMI requests from BSFP the applicable
financial information described in Item 1115 of Regulation AB (such request to
be based on a reasonable determination by MLMI, in good faith, that such
information is required under Regulation AB) (the "Swap Financial Disclosure").
Upon the occurrence of a Swap Disclosure Event, BSFP, at its own expense, shall
(a) provide to MLMI the Swap Financial Disclosure, (b) secure another entity to
replace BSFP as party to this Agreement on terms substantially similar to this
Agreement and subject to prior notification to the Swap Rating Agencies, which
entity (or a guarantor therefor) meets or exceeds the Approved Rating Thresholds
(or which satisfies the Rating Agency Condition) and which entity is able to
comply with the requirements of Item 1115 of Regulation AB or (c) obtain a
guaranty of the BSFP's obligations under this Agreement from an affiliate of the
BSFP that is able to comply with the financial information disclosure
requirements of Item 1115 of Regulation AB, such that disclosure provided in
respect of the affiliate will satisfy any disclosure requirements applicable to
the Swap Provider, and cause such affiliate to provide Swap Financial
Disclosure. If permitted by Regulation AB, any required Swap Financial
Disclosure may be provided by incorporation by reference from reports filed
pursuant to the Exchange Act.
BSFP agrees that, in the event that BSFP provides Swap Financial Disclosure to
MLMI in accordance with Section 14(iii)(a) or causes its affiliate to provide
Swap Financial Disclosure to MLMI in accordance with Section 14(iii)(a), it will
indemnify and hold harmless MLMI, its respective directors or officers and any
person controlling MLMI, from and against any and all
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 12 of 14
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in such Swap Financial
Disclosure or caused by any omission or alleged omission to state in such Swap
Financial Disclosure a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
15) Third Party Beneficiary.
Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the applicable Trustee, whereupon such Trustee will promptly remit such
amounts to BSFP. MLML further agrees to provide notice to BSFP upon any
remittance to the Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
5. Account Details and PAYMENTS TO BSFP:
Settlement Information: Citibank, N.A., New York
ABA Number: [_________], for the account of Bear,
Xxxxxxx Securities Corp.
Account Number: [________], for further credit to
Bear Xxxxxxx Financial Products Inc. Sub-account
Number:
Attention: Derivatives Department
PAYMENTS TO COUNTERPARTY:
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 13 of 14
LaSalle Bank, National Association
ABA Number: ______________________
Account Number: ______________________
OBI Attn: LaSalle CHGO/CTR/BNF:Lasalle ABA
Ref.: MLMI 2006-RM1
This Agreement may be executed in several counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact XXXXX XXXXXX by telephone at 000-000-0000. For all other inquiries
please contact DERIVATIVES DOCUMENTATION by telephone at 000-0-000-0000.
Originals will be provided for your execution upon your request.
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
BEAR XXXXXXX FINANCIAL PRODUCTS INC. BY:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 14 of 14
LASALLE BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
TRUSTEE FOR XXXXXXX XXXXX MORTGAGE INVESTORS, INC., SERIES 2006-RM1 UNDER THE
POOLING AND SERVICING AGREEMENT, DATED AS OF MARCH 1, 2006
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
SCHEDULE OF NOTIONAL AMOUNTS
(all such dates subject to adjustment in accordance with the Business Day
Convention)
EXHIBIT N-1
ONE-MONTH LIBOR CAP TABLE - CLASS A-1
NOTIONAL
FROM AND INCLUDING TO BUT EXCLUDING AMOUNT (USD) CAP RATE
------------------ ---------------- ------------ --------
Effective Date 25-Apr-06 171,181,000 6.502%
25-Apr-06 25-May-06 169,759,103 7.616%
25-May-06 25-Jun-06 167,849,678 7.364%
25-Jun-06 25-Jul-06 165,456,274 7.616%
25-Jul-06 25-Aug-06 169,579,246 7.369%
25-Aug-06 Termination Date 159,225,997 7.369%
N-1-1
EXHIBIT N-2
ONE-MONTH LIBOR CAP TABLE - CLASS A-2A
NOTIONAL
FROM AND INCLUDING TO BUT EXCLUDING AMOUNT (USD) CAP RATE
------------------ ---------------- ------------ --------
Effective Date 25-Apr-06 111,712,000 6.770%
25-Apr-06 25-May-06 109,848,286 7.912%
25-May-06 25-Jun-06 107,340,320 7.655%
25-Jun-06 25-Jul-06 104,192,425 7.914%
25-Jul-06 25-Aug-06 100,405,159 7.664%
25-Aug-06 Termination Date 95,987,867 7.665%
N-2-1
EXHIBIT N-3
ONE-MONTH LIBOR CAP TABLE - FLOATING RATE SUBORDINATE CERTIFICATES
NOTIONAL AMOUNT
FROM AND INCLUDING TO BUT EXCLUDING (USD) CAP RATE
------------------ ---------------- --------------- --------
Effective Date 25-Apr-06 84,655,000 6.139%
25-Apr-06 25-May-06 84,655,000 7.269%
25-May-06 25-Jun-06 84,655,000 7.014%
25-Jun-06 25-Jul-06 84,655,000 7.270%
25-Jul-06 25-Aug-06 84,655,000 7.021%
25-Aug-06 Termination Date 84,655,000 7.022%
N-3-1
EXHIBIT O
FORM OF TRANSFEROR REPRESENTATION LETTER
FOR TRANSFER TO REGULATION S BOOK-ENTRY CERTIFICATE
FROM A HOLDER OF A RULE 144A BOOK-ENTRY CERTIFICATE OR DEFINITIVE
CERTIFICATE
[DATE]
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-RM1
RE: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
Ladies and Gentlemen:
In connection with our disposition of the Class ___ Certificates which
are held in the form of Definitive Certificates or in the form of a beneficial
interest in a Rule 144A Book-Entry Certificate and to effect the transfer
pursuant to Regulation S under the Securities Act of 1933, as amended
("Regulation S") of the above Certificates in exchange for an equivalent
beneficial interest in a Regulation S Book-Entry Certificate, we hereby certify
that such transfer has been effected in accordance with (i) the transfer
restrictions set forth in the Pooling and Servicing Agreement, dated as of March
1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as Depositor, LaSalle
Bank National Association, as Trustee, Wilshire Credit Corporation, as Servicer
and in the Certificates and (ii) in accordance with Regulation S, and that:
a. the offer of the Certificates was not made to a person in the
United States;
b. at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
c. no directed selling efforts have been made in contravention of the
requirements of Rule 903 or 904 of Regulation S, as applicable;
d. the transaction is not part of a plan or scheme to evade the
registration requirements of the United States Securities Act of 1933, as
amended; and
e. the transferee is not a U.S. Person (as defined by Regulation S).
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal Proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.
O-1
Very truly yours,
----------------------------------------
Print Name of Transferor
By
-------------------------------------
Authorized Officer
O-2
EXHIBIT P
FORM OF TRANSFEROR REPRESENTATION LETTER
FOR TRANSFER PURSUANT TO RULE 144A FROM A HOLDER OF
A REGULATION S BOOK-ENTRY CERTIFICATE OR DEFINITIVE CERTIFICATE
[DATE]
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-RM1
RE: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
Ladies and Gentlemen:
In connection with our disposition of the Class __ Certificates which
are held in the form of Definitive Certificates or in the form of a beneficial
interest in a Regulation S Book-Entry Certificate and to effect the transfer
pursuant to Rule 144A under the Securities Act of 1933, as amended ("Rule 144A")
of the above Certificates in exchange for an equivalent beneficial interest in a
Rule 144A Book-Entry Certificate or a Definitive Note, we hereby certify that
such Certificates are being transferred in accordance with (i) the transfer
restrictions set forth in the Pooling and Servicing Agreement, dated as of March
1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as Depositor, La Salle
Bank National Association, as Trustee, Wilshire Credit Corporation, as Servicer
and in the Certificates and (ii) Rule 144A under the Securities Act of 1933, as
amended, to a transferee that we reasonably believe is purchasing the
Certificates for its own account or an account with respect to which the
transferee exercises sole investment discretion, the transferee and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
a transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any other
jurisdiction.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal Proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
----------------------------------------
Print Name of Transferor
By:
------------------------------------
Authorized Officer
P-1
EXHIBIT Q
FORM OF SWAP AGREEMENT
BEAR XXXXXXX
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: March 21, 2006
TO: LaSalle Bank, National Association, not in its individual capacity,
but solely as Trustee for Xxxxxxx Xxxxx Mortgage Investors, Inc.,
Series 2006-RM1
ATTENTION: Xxxxxxxxxxx Xxxxx
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Fixed Income Derivatives Confirmation and Agreement - DRAFT
REFERENCE NUMBER:
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
LaSalle Bank, National Association, not in its individual capacity, but solely
as Trustee for Xxxxxxx Xxxxx Mortgage Investors Trust, Inc., Series 2006-RM1
("Counterparty") under the Pooling and Servicing Agreement, dated as of March 1,
2006 among Xxxxxxx Xxxxx Mortgage Investors, Inc. as depositor, Wilshire Credit
Corporation, as servicer and LaSalle Bank, National Association, as trustee
("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"). 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. 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. Terms
capitalized but not defined herein shall have
Q-1
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 2 of 14
the meanings attributed to them in the Pooling and Servicing Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Type of Transaction: Rate Cap
-------------------- -----------------------------------------------
Notional Amount: With respect to the Calculation Period, the
amount set forth for such period as detailed in
Schedule I attached hereto.
Trade Date: March 13, 2006
Effective Date: September 25, 2006
Termination Date: November 25, 2008 subject to adjustment in
accordance with the Business Day Convention.
FIXED AMOUNT
Fixed Rate Payer: Counterparty
Fixed Rate Payer The 25th calendar day of each month during the
Payment Date Term of this Transaction, commencing October
25, 2006 and ending on the Termination Date,
subject to adjustment in accordance with the
Business Day Convention.
Fixed Rate:
Fixed Rate Day Count Fraction: 30/360
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Floating Rate Payer The 25th calendar day of each month during the
Payment Dates: Term of this Transaction, commencing October
25, 2006 and ending on the Termination Date,
subject to adjustment in accordance with the
Business Day Convention.
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: One month
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 3 of 14
Floating Rate Day Count Actual/360
Fraction:
Reset Dates: The first day of each Calculation Period
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Modified Following
3. Additional Provisions: 1) Each party hereto is hereby advised and
acknowledges that the other party has engaged
in (or refrained from engaging in) substantial
financial transactions and has taken (or
refrained from taking) other material actions
in reliance upon the entry by the parties into
the Transaction being entered into on the terms
and conditions set forth herein and in the
Confirmation relating to such Transaction, as
applicable and, in the case of the
Counterparty, it has been directed under the
Pooling and Servicing Agreement to enter into
this Transaction. This paragraph (1) shall be
deemed repeated on the trade date of each
Transaction.
2) No later than each Floating Rate Payer
Period End Date the Counterparty will make
available on its website located at
[xxxx://xxx.____] the current principal balance
of the Certificates, Series 2006-RM1. No later
than each Reset Date, BSFP shall deliver to
LaSalle Bank, National Association, a written
confirmation containing the results of the
calculations performed on each Reset Date and
the amount which is to be paid to the
Counterparty on the next Floating Rate Payer
Payment Date.
1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form
Master Agreement will apply to any Transaction.
2) Termination Provisions. For purposes of the ISDA Form Master Agreement:
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 4 of 14
(a) "Specified Entity" is not applicable to BSFP or Counterparty for any
purpose.
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will not apply to BSFP or
to Counterparty.
(d) The provisions of Section 5 (a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) The "Bankruptcy" provision of Section 5(a)(vii)(2) will not apply to
Counterparty.
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply
to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to l Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
3) Tax Representations. Not applicable
4) [Reserved]
5) Documents to be Delivered. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO DELIVER
DOCUMENT FORM/DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED
------------------------- -------------------------- -----------------------------
BSFP and the Counterparty Any document required or Promptly after the earlier of (i)
reasonably requested to allow the reasonable demand by either party or
other party to make payments under (ii) learning that such form or
this Agreement without any document is required
deduction or withholding for or on
the account of any Tax or with
such deduction or withholding at a
reduced rate
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 5 of 14
(2) Other documents to be delivered are:
PARTY REQUIRED TO DELIVER FORM/DOCUMENT/ DATE BY WHICH TO BE COVERED BY SECTION 3(D)
DOCUMENT CERTIFICATE DELIVERED REPRESENTATION
------------------------- -------------------------- -------------------------- -----------------------
BSFP and the Counterparty Any documents required by Upon the execution and Yes
the receiving party to delivery of this
evidence the authority of Agreement and such
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 REQUIRED TO DELIVER FORM/DOCUMENT/ DATE BY WHICH TO BE COVERED BY SECTION 3(D)
DOCUMENT CERTIFICATE DELIVERED REPRESENTATION
------------------------- -------------------------- -------------------------- -----------------------
BSFP and the Counterparty A certificate of an Upon the execution and Yes
authorized officer of the delivery of this Agreement
party, as to the and such Confirmation
incumbency and authority
of the respective officers
of the party signing this
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 6 of 14
Agreement, any relevant
Credit Support Document,
or any Confirmation, as
the case may be
BSFP Monthly rate set letter to On or prior to each No
Counterparty Floating Rate Payer
Payment Date
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
(For all purposes)
Address for notices or communications to the Counterparty:
Address: LaSalle Bank, National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XXX 00000
Attention: MLMI 2006-RM1
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c):
BSFP appoints as its
Process Agent: Not Applicable
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 7 of 14
The Counterparty appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) will not apply to this Agreement;
neither BSFP nor the Counterparty have any Offices other than as set forth
in the Notices Section and BSFP agrees that, for purposes of Section 6(b)
of the ISDA Form Master Agreement, it shall not in future have any Office
other than one in the United States.
(d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement: BSFP is not a Multibranch Party. The Counterparty is not a
Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP.
(f) Credit Support Document. Not applicable for either BSFP or the
Counterparty.
(g) Credit Support Provider. BSFP: Not Applicable The Counterparty: Not
Applicable
(h) Governing Law. The parties to this Agreement hereby agree that the law of
the State of New York shall govern their rights and duties in whole,
without regard to conflict of law provisions thereof, other than New York
General Obligation Law Section 5-1401.
(i) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall
be held to be invalid or unenforceable (in whole or in part) for any
reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion eliminated, so long as
this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter of
this Agreement and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or expectations of the
parties.
The parties shall endeavor to engage in good faith negotiations to replace
any invalid or unenforceable term, provision, covenant or condition with a
valid or enforceable term, provision, covenant or condition, the economic
effect of which comes as close as possible to that of the invalid or
unenforceable term, provision, covenant or condition.
(j) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and
all communications between officers or 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.
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc., Series 2006-RM1
March 21, 2006
Page 8 of 14
(k) Waiver of Jury Trial. Each party waives any right it may have to a trial by
jury in respect of any Proceedings relating to this Agreement or any Credit
Support Document.
(l) Trustee Capacity and Liability Limitations It is expressly understood and
agreed by the parties hereto that insofar as this Confirmation is executed
by the Trustee (i) this Confirmation is executed and delivered by LaSalle
Bank, National Association not in its individual capacity but solely as
Trustee under the Pooling and Servicing Agreement referred to in this
Confirmation in the exercise of the powers and authority conferred and
invested in it thereunder; (ii) any representations, undertakings and
agreements of the Trust are made and intended not as personal
representations, undertakings and agreements by LaSalle Bank, National
Association but are made and intended for the purpose of binding only the
Trust; (iii) nothing herein contained shall be construed as creating any
liability on LaSalle Bank, National Association individually, or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties
who are signatories to this Agreement and by any person claiming by,
through or under such parties and (iv) under no circumstances shall LaSalle
Bank, National Association in its individual capacity be personally liable
for the payment of any indebtedness or expenses (including the Fixed
Amount) or be personally liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken under
this Confirmation.
(m) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of S&P and Xxxxx'x has been provided
notice of the same and confirms in writing (including by facsimile
transmission) after such notice is given that it will not downgrade,
withdraw or otherwise modify its then-current rating of the Notes.
(n) Proceedings. BSFP shall not institute against or cause any other person to
institute against, or join any other person in instituting against,
Counterparty or any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law for a period of one year and one day following
payment in full of the Notes.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP shall not be deemed to have any Affiliates
for purposes of this Agreement, including for purposes of Section 6(b)(ii).
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it enters
into a Transaction that:--
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 9 of 14
(1) Nonreliance. It is not relying on any statement or representation
of the other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this Agreement
or the Confirmation in respect of that Transaction.
(2) Evaluation and Understanding.
(i) BSFP is acting for its own account and LaSalle Bank, National
Association is acting in its capacity as Trustee under the Pooling and
Servicing Agreement and not for its own account. Each Party has made
its own independent decisions to enter into this Transaction and as to
whether this Transaction is appropriate or proper for it based upon
its own judgment and upon advice from such advisors as it has deemed
necessary and, in the case of the Counterparty, it has been directed
to enter into this Transaction under the Pooling and Servicing
Agreement. It is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation to enter
into this Transaction; it being understood that information and
explanations related to the terms and conditions of this Transaction
shall not be considered investment advice or a recommendation to enter
into this Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own
behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of this Transaction. It
is also capable of assuming, and assumes, the financial and other
risks of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor
for it in respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such term is
defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35)
promulgated under, and an "eligible contract participant" as defined
in Section 1(a)(12) of, the Commodity Exchange Act, as amended, and it
is entering into the Transaction for the purposes of managing its
borrowings or investments, hedging its underlying assets or
liabilities or in connection with a line of business."
9) Additional Provisions. Notwithstanding the terms of Sections 5 and 6 of the
ISDA Form Master Agreement, if Counterparty has satisfied its payment
obligations under Section 2(a)(i) of the ISDA form Master Agreement, then unless
BSFP is required pursuant to appropriate proceedings to return to Counterparty
or otherwise returns to Counterparty upon demand of Counterparty any portion of
such payment, (a) the occurrence of an event described in Section 5(a) of the
ISDA form Master Agreement with respect to Counterparty shall not constitute an
Event of Default or Potential Event of Default with respect to Counterparty as
the Defaulting Party and (b) BSFP shall be entitled to designate an Early
Termination Event pursuant to Section
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 10 of 14
6 of the ISDA form Master Agreement only as a result of a Termination Event set
forth in either Section 5(b)(i) or Section 5(b)(ii) of the ISDA form Master
Agreement with respect to BSFP as the Affected Party or Section 5(b)(iii) of the
ISDA form Master Agreement with respect to BSFP as the Burdened Party. For
purposes of the Transaction to which this Agreement relates, Counterparty's only
obligation under Section 2(a)(i) of the ISDA form Master Agreement is to pay the
Fixed Amount on the Fixed Rate Payer Payment Date.
10) Set-off. The provisions for Set-off set forth in Section 6(e) of the ISDA
Form Master Agreement shall not apply for purposes of this Transaction.
11) Third party Beneficiary. Each of the Note Insurer and the Backup Note Issuer
is a third party beneficiary of this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
12) Additional Termination Events. Additional Termination Events will apply. (a)
If a Ratings Event has occurred and BSFP has not, within 30 days, complied with
Section 13 below, then an Additional Termination Event shall have occurred with
respect to BSFP and BSFP shall be the sole Affected Party with respect to such
an Additional Termination Event. (b) If, upon the occurrence of a Swap
Disclosure Event (as defined in Section 14 of this Agreement), BSFP has not,
within 10 days after such Swap Disclosure Event complied with any of the
provisions set forth in Section 14(iii) of this Agreement, then an Additional
Termination Event shall have occurred with respect to BSFP and BSFP shall be the
sole Affected Party with respect to such Additional Termination Event.
13) Ratings Event. If a Ratings Event (as defined below) occurs with respect to
BSFP, then BSFP shall, at is own expense, (i) assign this Transaction hereunder
to a third party within thirty (30) days of such Ratings Event that meets or
exceeds, or as to which any applicable credit support provider meets or exceeds,
the Approved Ratings Thresholds (as defined below) or (ii) deliver collateral,
and an executed ISDA Credit Support Annex, within thirty (30) days of such
Ratings Event and subject to each of S&P's and Moody's written confirmation that
delivery of such collateral in the context of such downgrade will not result in
a withdrawal, qualification or downgrade of the then current ratings assigned to
the Notes. For the avoidance of doubt, a downgrade of the rating on the Notes
could occur in the event that BSFP does not post sufficient collateral. For
purposes of this Transaction, a "RATINGS EVENT" shall occur with respect to
BSFP, if its counterparty credit rating ceases to be rated at least "AA-" by
S&P, and at least "Aa3" by Moody's (including in connection with a merger,
consolidation or other similar transaction by BSFP) such ratings being referred
to herein as the "Approved Ratings Thresholds", (unless, within 30 days after
such withdrawal or downgrade, each of Moody's and S&P has reconfirmed the rating
of the Notes, as applicable, which was in effect immediately prior to such
withdrawal or downgrade.
14) Compliance with Regulation AB.
BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors, Inc., Series
2006-RM1
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 11 of 14
("MLMI") is required under Regulation AB under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act") ("Regulation AB"), to disclose certain financial information regarding
BSFP or its group of affiliated entities, if applicable, depending on the
aggregate "significance percentage" of this Agreement and any other derivative
contracts between BSFP or its group of affiliated entities, if applicable, and
Counterparty, as calculated from time to time in accordance with Item 1115 of
Regulation AB.
It shall be a swap disclosure event ("Swap Disclosure Event") if, on any
Business Day after the date hereof, MLMI requests from BSFP the applicable
financial information described in Item 1115 of Regulation AB (such request to
be based on a reasonable determination by MLMI, in good faith, that such
information is required under Regulation AB) (the "Swap Financial Disclosure").
Upon the occurrence of a Swap Disclosure Event, BSFP, at its own expense, shall
(a) provide to MLMI the Swap Financial Disclosure, (b) secure another entity to
replace BSFP as party to this Agreement on terms substantially similar to this
Agreement and subject to prior notification to the Swap Rating Agencies, which
entity (or a guarantor therefor) meets or exceeds the Approved Rating Thresholds
(or which satisfies the Rating Agency Condition) and which entity is able to
comply with the requirements of Item 1115 of Regulation AB or (c) obtain a
guaranty of the BSFP's obligations under this Agreement from an affiliate of the
BSFP that is able to comply with the financial information disclosure
requirements of Item 1115 of Regulation AB, such that disclosure provided in
respect of the affiliate will satisfy any disclosure requirements applicable to
the Swap Provider, and cause such affiliate to provide Swap Financial
Disclosure. If permitted by Regulation AB, any required Swap Financial
Disclosure may be provided by incorporation by reference from reports filed
pursuant to the Exchange Act.
BSFP agrees that, in the event that BSFP provides Swap Financial Disclosure to
MLMI in accordance with Section 14(iii)(a) or causes its affiliate to provide
Swap Financial Disclosure to MLMI in accordance with Section 14(iii)(a), it will
indemnify and hold harmless MLMI, its respective directors or officers and any
person controlling MLMI, from and against any and all losses, claims, damages
and liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in such Swap Financial Disclosure or caused by any
omission or alleged omission to state in such Swap Financial Disclosure a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
15) Third Party Beneficiary.
Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the applicable Trustee, whereupon such Trustee will promptly remit such
amounts to BSFP.
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 12 of 14
MLML further agrees to provide notice to BSFP upon any remittance to the
Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: (000) 000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx
00000
Attention: Derivative Operations - 7th Floor
Facsimile: (000) 000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
5. Account Details and
Settlement Information: PAYMENTS TO BSFP:
Citibank, N.A., New York
ABA Number: [__________], for
the account of Bear, Xxxxxxx Securities Corp.
Account Number: [_________], for further
credit to Bear Xxxxxxx Financial Products Inc.
Sub-account Number:
Attention: Derivatives Department
PAYMENTS TO COUNTERPARTY:
LaSalle Bank, National Association
ABA Number:
Account Number:
OBI Attn: LaSalle CHGO/CTR/BNF:Lasalle ABA
Ref.: MLMI 2006-RM1
This Agreement may be executed in several counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact XXXXX XXXXXX by telephone at 000-000-0000. For all other inquiries
please contact DERIVATIVES DOCUMENTATION by telephone at 000-0-000-0000.
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 13 of 14
Originals will be provided for your execution upon your request.
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
BEAR XXXXXXX FINANCIAL PRODUCTS INC. BY:
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
LASALLE BANK, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
TRUSTEE FOR XXXXXXX XXXXX MORTGAGE INVESTORS, INC., SERIES 2006-RM1 UNDER THE
POOLING AND SERVICING AGREEMENT, DATED AS OF MARCH 1, 2006
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Reference Number:
LaSalle Bank, National Association, as Trustee for Xxxxxxx Xxxxx Mortgage
Investors, Inc.,
Series 2006-RM1
March 21, 2006
Page 14 of 14
SCHEDULE OF NOTIONAL AMOUNTS
(all such dates subject to adjustment in accordance with the Business Day
Convention)
NOTIONAL AMOUNT
FROM AND INCLUDING TO BUT EXCLUDING (USD)
------------------ ---------------- ---------------
Effective Date 25-Oct-06 295,357,555.00
25-Oct-06 27-Nov-06 274,672,743.00
27-Nov-06 26-Dec-06 252,156,190.00
26-Dec-066 25-Jun-07 228,007,612.00
25-Jan-076 26-Feb-07 202,622,301.00
26-Feb-07 26-Mar-07 176,741,180.00
26-Mar-07 25-Apr-07 158,154,993.00
25-Apr-07 25-May-07 147,197,208.00
25-May-07 25-Jun-07 136,962,933.00
25-Jun-07 25-Jul-07 127,571,005.00
25-Jul-07 27-Aug-07 118,913,374.00
27-Aug-07 25-Sep-07 111,214,123.00
25-Sep-07 25-Oct-07 104,356,972.00
25-Oct-07 26-Nov-07 98,198,471.00
26-Nov-07 26-Dec-07 92,578,431.00
26-Dec-07 25-Jan-08 87,084,908.00
25-Jun-08 25-Feb-08 80,734,345.00
25-Feb-08 25-Mar-08 71,308,903.00
25-Mar-08 25-Apr-08 71,308,903.00
25-Apr-08 27-May-08 63,567,656.00
27-May-08 25-Jun-08 52,112,895.00
25-Jun-08 25-Jul-08 42,936,990.00
25-Jul-08 25-Aug-08 35,611,556.00
25-Aug-08 25-Sep-08 30,842,607.00
25-Sep-08 27-Oct-08 27,174,138.00
27-Oct-08 Termination Date 24,063,734.00
EXHIBIT R
FORM OF ASSESSMENT OF COMPLIANCE
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-RM1
Wilshire Credit Corporation
00000 XX Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Standard & Poor's, a division of
The XxXxxx-Xxxx Companies, Inc.
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Pooling and Servicing Agreement (the "Agreement") dated as of March 1,
2006 among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor,
Wilshire Credit Corporation, as servicer and LaSalle Bank National
Association, as trustee, relating to Xxxxxxx Xxxxx Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-RM1 (the
"Trust")
For the calendar year ending December 31, [2006] or portion thereof,
[LaSalle Bank National Association, as Trustee] [Wilshire Credit Corporation, as
Servicer] [Xxxxx Fargo Bank, N.A., as Custodian] for the Trust has complied in
all material respects with the relevant Servicing Criteria in Exhibit S of the
Agreement.
R-1
All capitalized terms used herein but not defined herein shall have the
meanings assigned to them in the Agreement.
Date:
-------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
R-2
EXHIBIT S
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
(RMBS unless otherwise noted)
DEFINITIONS KEY:
PRIMARY SERVICER - transaction party having borrower contact X - obligation
CUSTODIAN - safe keeper of certain pool assets
TRUSTEE - fiduciary of the transaction and safe keeper of certain pool assets
WHERE THERE ARE MULTIPLE CHECKS FOR CRITERIA THE ATTESTING PARTY WILL IDENTIFY
IN THEIR MANAGEMENT ASSERTION THAT THEY ARE ATTESTING ONLY TO THE PORTION OF THE
DISTRIBUTION CHAIN THEY ARE RESPONSIBLE FOR IN THE RELATED TRANSACTION
AGREEMENTS.
WILSHIRE
CREDIT LASALLE
CORPORATION XXXXX FARGO BANK ADDITIONAL
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (CUSTODIAN) (TRUSTEE) INFORMATION
---------------- ---------------------------------- ------------- ----------- ----------- -------------------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are X
instituted to monitor any
performance or other triggers and
events of default in accordance
with the transaction agreements.
1122(d)(1)(ii) If any material servicing IF APPLICABLE IF IF
activities are outsourced to third FOR A APPLICABLE APPLICABLE
parties, policies and procedures TRANSACTION FOR A FOR A
are instituted to monitor the PARTICIPANT TRANSACTION TRANSACTION
third party's performance and PARTICIPANT PARTICIPANT
compliance with such servicing
activities.
1122(d)(1)(iii) Any requirements in the N/A N/A N/A
transaction agreements to maintain
a back-up servicer for the Pool
Assets are maintained.
1122(d)(1)(iv) A fidelity bond and errors and X
omissions policy is in effect on
the party participating in the
servicing function throughout the
reporting period in the amount of
coverage required by and otherwise
in accordance with the terms of
the transaction agreements.
CASH COLLECTION AND ADMINISTRATION
1122(d)(2)(i) Payments on pool assets are X X
deposited into the appropriate
custodial bank
S-1
WILSHIRE
CREDIT LASALLE
CORPORATION XXXXX FARGO BANK ADDITIONAL
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (CUSTODIAN) (TRUSTEE) INFORMATION
---------------- ---------------------------------- ------------- ----------- ----------- -------------------
accounts and related bank clearing
accounts no more than two business
days following receipt, or such
other number of days specified in
the transaction agreements.
1122(d)(2)(ii) Disbursements made via wire X X Servicer disburses
transfer on behalf of an obligor funds to trustee.
or to an investor are made only by Trustee disburses
authorized personnel. funds to
certificateholders.
1122(d)(2)(iii) Advances of funds or guarantees X
regarding collections, cash flows
or distributions, and any interest
or other fees charged for such
advances, are made, reviewed and
approved as specified in the
transaction agreements.
1122(d)(2)(iv) The related accounts for the X X
transaction, such as cash reserve
accounts or accounts established
as a form of over
collateralization, are separately
maintained (e.g., with respect to
commingling of cash) as set forth
in the transaction agreements.
1122(d)(2)(v) Each custodial account is X X
maintained at a federally insured
depository institution as set
forth in the transaction
agreements. For purposes of this
criterion, "federally insured
depository institution" with
respect to a foreign financial
institution means a foreign
financial institution that meets
the requirements of Rule
13k-1(b)(1) of the Securities
Exchange Act.
1122(d)(2)(vi) Unissued checks are safeguarded so X X
as to prevent unauthorized access.
1122(d)(2)(vii) Reconciliations are prepared on a X X
monthly basis for all asset-backed
securities related bank accounts,
including custodial accounts and
related bank clearing accounts.
These reconciliations are (A)
mathematically accurate; (B)
prepared within 30 calendar days
after the bank statement cutoff
date, or such other number of days
specified in the transaction
agreements; (C) reviewed and
approved by someone other than the
person who prepared the
reconciliation; and (D) contain
explanations for reconciling
items. These reconciling items are
resolved within 90 calendar days
of their original identification,
or such other number of days
specified in the
S-2
WILSHIRE
CREDIT LASALLE
CORPORATION XXXXX FARGO BANK ADDITIONAL
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (CUSTODIAN) (TRUSTEE) INFORMATION
---------------- ---------------------------------- ------------- ----------- ----------- -------------------
transaction agreements.
INVESTOR REMITTANCES AND REPORTING
1122(d)(3)(i) Reports to investors, including X X
those to be filed with the
Commission, are maintained in
accordance with the transaction
agreements and applicable
Commission requirements.
Specifically, such reports (A) are
prepared in accordance with
timeframes and other terms set
forth in the transaction
agreements; (B) provide
information calculated in
accordance with the terms
specified in the transaction
agreements; (C) are filed with the
Commission as required by its
rules and regulations; and (D)
agree with investors' or the
trustee's records as to the total
unpaid principal balance and
number of Pool Assets serviced by
the Servicer.
1122(d)(3)(ii) Amounts due to investors are X X Wilshire remits
allocated and remitted in cash and loan level
accordance with timeframes, data to trustees
distribution priority and other based on timelines
terms set forth in the transaction established in the
agreements. PSA. The trustee
is responsible for
the allocation of
funds to
certificateholders
using the
appropriate
distribution
priority as
established by the
PSA.
1122(d)(3)(iii) Disbursements made to an investor X Trustee disburses
are posted within two business funds to
days to the Servicer's investor certificateholders.
records, or such other number of
days specified in the transaction
agreements.
1122(d)(3)(iv) Amounts remitted to investors per X X Servicer remits
the investor reports agree with funds and provides
cancelled checks, or other form of certain investor
payment, or custodial bank reports to trustees
statements. within guidelines
and timeframes
established in
PSA. Trustee
disburses funds to
certificateholders.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on pool X X X
assets is maintained as required
by the transaction agreements or
related pool asset documents.
1122(d)(4)(ii) Pool assets and related documents X X X
are
S-3
WILSHIRE
CREDIT LASALLE
CORPORATION XXXXX FARGO BANK ADDITIONAL
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (CUSTODIAN) (TRUSTEE) INFORMATION
---------------- ---------------------------------- ------------- ----------- ----------- -------------------
safeguarded as required by the
transaction agreements
1122(d)(4)(iii) Any additions, removals or X X
substitutions to the asset pool
are made, reviewed and approved in
accordance with any conditions or
requirements in the transaction
agreements.
1122(d)(4)(iv) Payments on pool assets, including X
any payoffs, made in accordance
with the related pool asset
documents are posted to the
Servicer's obligor records
maintained no more than two
business days after receipt, or
such other number of days
specified in the transaction
agreements, and allocated to
principal, interest or other items
(e.g., escrow) in accordance with
the related pool asset documents.
1122(d)(4)(v) The Servicer's records regarding X
the pool assets agree with the
Servicer's records with respect to
an obligor's unpaid principal
balance.
1122(d)(4)(vi) Changes with respect to the terms X
or status 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 X
actions (e.g., 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 X
efforts are maintained during the
period a pool asset is delinquent
in accordance with the transaction
agreements. Such records are
maintained on at least a monthly
basis, or such other period
specified in the transaction
agreements, and describe the
entity's activities in monitoring
delinquent pool assets including,
for example, phone calls, letters
and payment rescheduling plans in
cases where delinquency is deemed
temporary (e.g., illness or
unemployment).
S-4
WILSHIRE
CREDIT LASALLE
CORPORATION XXXXX FARGO BANK ADDITIONAL
REG AB REFERENCE SERVICING CRITERIA (SERVICER) (CUSTODIAN) (TRUSTEE) INFORMATION
---------------- ---------------------------------- ------------- ----------- ----------- -------------------
1122(d)(4)(ix) Adjustments to interest rates or X
rates of return for pool assets
with variable rates are computed
based on the related pool asset
documents.
1122(d)(4)(x) Regarding any funds held in trust X
for an obligor (such as escrow
accounts): (A) such funds are
analyzed, in accordance with the
obligor's pool asset documents, on
at least an annual basis, or such
other period specified in the
transaction agreements; (B)
interest on such funds is paid, or
credited, to obligors in
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 X
obligor (such as tax or insurance
payments) are made on or before
the related penalty or expiration
dates, as indicated on the
appropriate bills or notices for
such payments, provided that such
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 X
connection 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 X
obligor 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 X
uncollectible accounts are
recognized and recorded in
accordance with the transaction
agreements.
1122(d)(4)(xv) Any external enhancement or other X
support, identified in Item
1114(a)(1) through (3) or Item
1115 of Regulation AB, is
maintained as set forth in the
transaction agreements.
S-5
EXHIBIT T
XXXXXXXX-XXXXX CERTIFICATIONS
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Wilshire Credit Corporation
00000 XX Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Re: Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-RM1
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.
T-1
[In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties [name of
servicer, sub-servicer, co-servicer, depositor or trustee].]
Date:
------------------------
----------------------------------------
[Signature]
----------------------------------------
[Title]
T-2
EXHIBIT U
FORM OF ITEM 1123 CERTIFICATION OF SERVICER
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - Xxxxxxx Xxxxx Mortgage Investors Trust,
Series 2006-RM1
Re: Pooling and Servicing Agreement (the "Agreement") dated as of March 1, 2006
among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire Credit
Corporation, as servicer and LaSalle Bank National Association, as trustee,
relating to Xxxxxxx Xxxxx Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-RM1
I, [identify name of certifying individual], [title of certifying individual] of
Wilshire Credit Corporation (the "Servicer"), hereby certify that:
(1) A review of the activities of the Servicer during the preceding
calendar year and of the performance of the Servicer under the Agreement has
been made under my supervision; and
(2) To the best of my knowledge, based on such review, the Servicer has
fulfilled all its obligations under the Agreement in all material respects
throughout such year or a portion thereof[, or, if there has been a failure to
fulfill any such obligation in any material respect, I have specified below each
such failure known to me and the nature and status thereof].
Date:
-------------------------------
Wilshire Credit Corporation,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
U-1
SCHEDULE X
Item on Form 8-K Party Responsible
---------------- -----------------
*Item 1.01- Entry into a Material Definitive Agreement All parties
*Item 1.02- Termination of a Material Definitive Agreement All parties
Item 1.03- Bankruptcy or Receivership Depositor
Item 2.04- Triggering Events that Accelerate or Increase a Depositor
Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement
*Item 3.03- Material Modification to Rights of Security Trustee
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, Trustee
*Item 6.03- Change in Credit Enhancement or External Depositor/Trustee
Support
*Item 6.04- Failure to Make a Required Distribution Trustee
Item 6.05- Securities Act Updating Disclosure Depositor
Item 7.01- Reg FD Disclosure Depositor
Item 8.01 Depositor
Item 9.01 Depositor
SCHEDULE Y
Item on Form 10-D Party Responsible
----------------- -----------------
Item 1: Distribution and Pool Performance Information Trustee and Servicer (with respect to underlying
Mortgage Loan data)
Plus any information required by 1121 which is NOT Servicer and Trustee (to the extent required by
included on the monthly statement to Regulation AB)
Certificateholders
Item 2: Legal Proceedings per Item 1117 of Reg AB All parties to the PSA (as to themselves), the
depositor/trustee/servicer (to the extent known) as
to the issuing entity, the sponsor, 1106(b)
originator, any 1100(d)(1) party
Item 3: Sale of Securities and Use of Proceeds Depositor
Item 4: Defaults Upon Senior Securities Trustee
Item 5: Submission of Matters to a Vote of Security Trustee
Holders
Item 6: Significant Obligors of Pool Assets Depositor/Sponsor/Mortgage Loan Seller/ Servicer
Item 7: Significant Enhancement Provider Information Depositor/Sponsor
Item 8: Other Information All parties to the Pooling and Servicing Agreement
(as to themselves) responsible for disclosure items on Form 8-K
Item 9: Exhibits Trustee
SCHEDULE Z
Item on Form 10-K Party Responsible
----------------- -----------------
Item 1B: Unresolved Staff Comments Depositor
*Item 9B: Other Information Trustee and any other party responsible for disclosure
items on Form 8-K
*Item 15: Exhibits, Financial Statement Schedules Trustee/servicer/subservicers. Depositor
*Additional Item: All parties to the PSA (as to themselves), the
depositor/trustee/servicer (to the extent known) as to
Disclosure per Item 1117 of Reg AB the issuing entity, the sponsor, 1106(b) originator,
any 1100(d)(1) party
*Additional Item: All parties to the PSA, the sponsor, originator,
Disclosure per Item 1119 of Reg AB significant obligor, enhancement or support provider
Additional Item: Depositor/Sponsor/Mortgage Loan Seller/Servicer
Disclosure per Item 1112(b) of Reg AB
Additional Item: Depositor/Sponsor
Disclosure per Items 1114(b) and 1115(b) of Reg AB
