Exhibit 4
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SECURITIZED ASSET BACKED RECEIVABLES LLC,
Depositor,
HOMEQ SERVICING CORPORATION,
Servicer,
OFFICETIGER GLOBAL REAL ESTATE SERVICES INC.,
Loan Performance Advisor,
FREMONT INVESTMENT & LOAN,
Responsible Party,
and
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2006
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SECURITIZED ASSET BACKED RECEIVABLES LLC TRUST 2006-FR3
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2006-FR3
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans.................................
Section 2.02 Acceptance by the Trustee of the Mortgage Loans..............
Section 2.03 Representations, Warranties and Covenants of the
Responsible Party and the Servicer; Remedies for
Breaches of Representations and Warranties with Respect
to the Mortgage Loans.......................................
Section 2.04 [Reserved]...................................................
Section 2.05 Execution and Delivery of Certificates.......................
Section 2.06 REMIC Matters................................................
Section 2.07 Representations and Warranties of the Depositor..............
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicer to Service Mortgage Loans...........................
Section 3.02 Subservicing Agreements between the Servicer and
Subservicers................................................
Section 3.03 Successor Subservicers.......................................
Section 3.04 Liability of the Servicer....................................
Section 3.05 No Contractual Relationship between Subservicers and the
Trustee.....................................................
Section 3.06 Assumption or Termination of Subservicing Agreements by
Trustee.....................................................
Section 3.07 Collection of Certain Mortgage Loan Payments.................
Section 3.08 Subservicing Accounts........................................
Section 3.09 Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.............................................
Section 3.10 Collection Account...........................................
Section 3.11 Withdrawals from the Collection Account......................
Section 3.12 Investment of Funds in the Collection Account, Escrow
Accounts and the Distribution Account.......................
Section 3.13 Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage.......................................
Section 3.14 Enforcement of Due-On-Sale Clauses; Assumption Agreements....
Section 3.15 Realization upon Defaulted Mortgage Loans....................
Section 3.16 Release of Mortgage Files....................................
Section 3.17 Title, Conservation and Disposition of REO Property..........
Section 3.18 Notification of Adjustments..................................
Section 3.19 Access to Certain Documentation and Information Regarding
the Mortgage Loans..........................................
Section 3.20 Documents, Records and Funds in Possession of the
Servicer to Be Held for the Trustee.........................
Section 3.21 Servicing Compensation.......................................
Section 3.22 Annual Statement as to Compliance............................
Section 3.23 Annual Reports on Assessment of Compliance with Servicing
Criteria; Annual Independent Public Accountants'
Attestation Report..........................................
Section 3.24 Trustee to Act as Servicer...................................
Section 3.25 Compensating Interest........................................
Section 3.26 Credit Reporting; Xxxxx-Xxxxx-Xxxxxx Act.....................
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
Section 4.01 Advances.....................................................
Section 4.02 Priorities of Distribution...................................
Section 4.03 Monthly Statements to Certificateholders.....................
Section 4.04 Certain Matters Relating to the Determination of LIBOR.......
Section 4.05 Allocation of Applied Realized Loss Amounts..................
Section 4.06 Supplemental Interest Account................................
Section 4.07 Supplemental Float Account...................................
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.............................................
Section 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates....................................
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates............
Section 5.04 Persons Deemed Owners........................................
Section 5.05 Access to List of Certificateholders' Names and Addresses....
Section 5.06 Maintenance of Office or Agency..............................
ARTICLE VI
THE DEPOSITOR, THE SERVICER
AND THE LOAN PERFORMANCE ADVISOR
Section 6.01 Respective Liabilities of the Depositor and the Servicer.....
Section 6.02 Merger or Consolidation of the Depositor or the Servicer.....
Section 6.03 Limitation on Liability of the Depositor, the Servicer
and Others..................................................
Section 6.04 Limitation on Resignation of the Servicer....................
Section 6.05 Additional Indemnification by the Servicer; Third Party
Claims......................................................
Section 6.06 Duties of the Loan Performance Advisor.......................
Section 6.07 Loan Performance Advisor's Fees..............................
ARTICLE VII
DEFAULT
Section 7.01 Events of Default............................................
Section 7.02 Trustee to Act; Appointment of Successor.....................
Section 7.03 Notification to Certificateholders...........................
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 Duties of the Trustee........................................
Section 8.02 Certain Matters Affecting the Trustee........................
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans........
Section 8.04 Trustee May Own Certificates.................................
Section 8.05 Trustee's Fees and Expenses..................................
Section 8.06 Eligibility Requirements for the Trustee.....................
Section 8.07 Resignation and Removal of the Trustee.......................
Section 8.08 Successor Trustee............................................
Section 8.09 Merger or Consolidation of the Trustee.......................
Section 8.10 Appointment of Co-Trustee or Separate Trustee................
Section 8.11 Tax Matters..................................................
Section 8.12 Periodic Filings.............................................
Section 8.13 Tax Classification of the Excess Reserve Fund Account,
the Supplemental Interest Account, the Interest Rate
Swap Agreement and the Cap Agreement........................
ARTICLE IX
TERMINATION
Section 9.01 Termination upon Liquidation or Purchase of the Mortgage
Loans.......................................................
Section 9.02 Final Distribution on the Certificates.......................
Section 9.03 Additional Termination Requirements..........................
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment....................................................
Section 10.02 Recordation of Agreement; Counterparts.......................
Section 10.03 Governing Law................................................
Section 10.04 Intention of Parties.........................................
Section 10.05 Notices......................................................
Section 10.06 Severability of Provisions...................................
Section 10.07 Limitation on Rights of Certificateholders...................
Section 10.08 Inspection and Audit Rights..................................
Section 10.09 Certificates Nonassessable and Fully Paid....................
Section 10.10 Assignment; Sales; Advance Facilities........................
Section 10.11 Rule of Construction.........................................
Section 10.12 Waiver of Jury Trial.........................................
Section 10.13 Third Party Rights...........................................
Section 10.14 Regulation AB Compliance; Intent of the Parties;
Reasonableness..............................................
SCHEDULES
Schedule I Mortgage Loan Schedule
Schedule II Representations and Warranties of the Servicer
Schedule III Representations and Warranties of the Responsible Party as to
the Mortgage Loans
Schedule IV Representations and Warranties as to the Responsible Party
Schedule V Representations and Warranties of the Depositor as to the
Mortgage Loans
EXHIBITS
Exhibit A Form of Class A, Class M and Class B Certificates
Exhibit B Form of Class P Certificate
Exhibit C-1 Form of Class R-I Certificate
Exhibit C-2 Form of Class R-II Certificate
Exhibit D Form of Class X Certificate
Exhibit E Form of Initial Certification of Trustee
Exhibit F Form of Document Certification and Exception Report of Trustee
Exhibit G Form of Residual Transfer Affidavit
Exhibit H Form of Transferor Certificate
Exhibit I Form of Rule 144A Letter
Exhibit J Form of Request for Release
Exhibit K Form of Contents for Each Mortgage File
Exhibit L Form of Certification to be provided with Form 10-K
Exhibit M Form of Trustee's Certification to be provided to Depositor
Exhibit N Form of Servicer's Certification to be provided to Depositor
Exhibit O Sponsor Representation Letter
Exhibit P Servicing Criteria
Exhibit Q Additional Form 10-D Disclosure
Exhibit R Additional Form 10-K Disclosure
Exhibit S Form 8-K Disclosure Information
Exhibit T Interest Rate Swap Agreement
Exhibit U Cap Agreement
Exhibit V Additional Disclosure Notification
THIS POOLING AND SERVICING AGREEMENT, dated as of July 1, 2006,
among SECURITIZED ASSET BACKED RECEIVABLES LLC, a Delaware limited liability
company, as depositor (the "Depositor"), HOMEQ SERVICING CORPORATION, a New
Jersey corporation, as servicer (the "Servicer"), OFFICETIGER GLOBAL REAL ESTATE
SERVICES INC., as loan performance advisor (the "Loan Performance Advisor"),
FREMONT INVESTMENT & LOAN, California industrial bank, as responsible party (the
"Responsible Party"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION, a national
banking association, as trustee (the "Trustee").
W I T N E S S E T H:
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Trustee shall elect that four segregated asset pools within the
Trust Fund (exclusive of (i) the Prepayment Charges, (ii) the Interest Rate Swap
Agreement and the Cap Agreement, (iii) the Supplemental Interest Account, (iv)
the Excess Reserve Fund Account, and (v) the right of the LIBOR Certificates to
receive Basis Risk Carry Forward Amounts and, without duplication, Upper Tier
Carry Forward Amounts and the obligation to pay Class IO Shortfalls) be treated
for federal income tax purposes as comprising four REMICs (each, a "Trust REMIC"
or, in the alternative, Pooling Tier REMIC-1, Pooling Tier REMIC-2, the Lower
Tier REMIC and the Upper Tier REMIC, respectively). Each Class of Certificates
(other than the Class P Certificates and the Residual Certificates), other than
the right of each Class of LIBOR Certificates to receive Basis Risk Carry
Forward Amounts and, without duplication, Upper Tier Carry Forward Amounts and
the obligation to pay Class IO Shortfalls and the right of the Class X
Certificates to receive payments from the Interest Rate Swap Agreement, the Cap
Agreement and the Class IO Shortfalls, represents ownership of a regular
interest in the Upper Tier REMIC for purposes of the REMIC Provisions. The Class
R-I Certificates represent ownership of the sole class of residual interest in
Pooling Tier REMIC-1 for purposes of the REMIC Provisions. The Class R-II
Certificates represent ownership of the sole class of residual interest in each
of Pooling Tier REMIC-2, the Lower Tier REMIC and the Upper Tier REMIC for
purposes of the REMIC Provisions. The Startup Day for each Trust REMIC is the
Closing Date. The latest possible maturity date for each regular interest is the
latest date referenced in Section 2.06.
The Upper Tier REMIC shall hold as assets the several classes of
uncertificated Lower Tier REMIC Regular Interests, set out below. The Lower Tier
REMIC shall hold as assets the several classes of uncertificated Pooling Tier
REMIC-2 Regular Interests. Pooling Tier REMIC-2 shall hold as assets the several
classes of uncertificated Pooling Tier REMIC-1 Regular Interests. Pooling Tier
REMIC-1 shall hold as assets the assets of the Trust Fund (exclusive of (i) the
Prepayment Premiums, (ii) the Interest Rate Swap Agreement and the Cap
Agreement, (iii) the Supplemental Interest Account, (iv) the Excess Reserve Fund
Account, (v) the Cap Agreement and (vi) the right of the LIBOR Certificates to
receive Basis Risk Carry Forward Amounts and, without duplication, Upper Tier
Carry Forward Amounts and the obligation to pay Class IO Shortfalls).
For federal income tax purposes, the Class P Certificates represent
beneficial ownership of the Prepayment Charges, each Class of LIBOR Certificates
represents beneficial ownership of a regular interest in the Upper Tier REMIC
and the right to receive Basis Risk Carry Forward Amounts and, without
duplication, Upper Tier Carry Forward Amounts, and the Class X Certificates
represent beneficial ownership of two regular interests in the Upper Tier REMIC
and the right to receive Class IO Shortfalls, the Excess Reserve Fund Account,
the Supplemental Interest Account, the Interest Rate Swap Agreement and the Cap
Agreement, which portions of the Trust Fund shall be treated as a grantor trust.
Pooling Tier REMIC-1
Pooling Tier REMIC-1 shall issue the following interests in Pooling
Tier REMIC-1, and each such interest, other than the Class PT1-R Interest, is
hereby designated as a regular interest in the Pooling Tier REMIC-1. Pooling
Tier REMIC-1 shall also issue the Class R-I Certificates. The Class PT1-R
Interest is hereby designated as the sole class of residual interest in Pooling
Tier REMIC-1.
Initial Pooling
Pooling Tier Tier
Pooling Tier REMIC-1 REMIC-1 Interest REMIC-1
Interest Rate Principal Amount
-------------------- ---------------- ----------------
Class PT1-1 (1) $20,078,845.18
Class PT1-2A (2) $14,570,934.87
Class PT1-2B (3) $14,570,934.87
Class PT1-3A (2) $14,952,745.70
Class PT1-3B (3) $14,952,745.70
Class PT1-4A (2) $15,286,484.94
Class PT1-4B (3) $15,286,484.94
Class PT1-5A (2) $15,570,878.20
Class PT1-5B (3) $15,570,878.20
Class PT1-6A (2) $15,804,923.68
Class PT1-6B (3) $15,804,923.68
Class PT1-7A (2) $15,987,902.76
Class PT1-7B (3) $15,987,902.76
Class PT1-8A (2) $16,269,696.06
Class PT1-8B (3) $16,269,696.06
Class PT1-9A (2) $16,343,028.70
Class PT1-9B (3) $16,343,028.70
Class PT1-10A (2) $16,364,591.99
Class PT1-10B (3) $16,364,591.99
Class PT1-11A (2) $16,334,829.37
Class PT1-11B (3) $16,334,829.37
Class PT1-12A (2) $16,029,414.06
Class PT1-12B (3) $16,029,414.06
Class PT1-13A (2) $15,237,733.72
Class PT1-13B (3) $15,237,733.72
Class PT1-14A (2) $14,485,032.19
Class PT1-14B (3) $14,485,032.19
Class PT1-15A (2) $13,769,809.48
Class PT1-15B (3) $13,769,809.48
Class PT1-16A (2) $13,090,172.98
Class PT1-16B (3) $13,090,172.98
Class PT1-17A (2) $12,444,343.61
Class PT1-17B (3) $12,444,343.61
Class PT1-18A (2) $11,830,617.66
Class PT1-18B (3) $11,830,617.66
Class PT1-19A (2) $11,249,138.59
Class PT1-19B (3) $11,249,138.59
Class PT1-20A (2) $16,385,894.04
Class PT1-20B (3) $16,385,894.04
Class PT1-21A (2) $25,363,907.53
Class PT1-21B (3) $25,363,907.53
Class PT1-22A (2) $22,016,676.95
Class PT1-22B (3) $22,016,676.95
Class PT1-23A (2) $19,123,133.22
Class PT1-23B (3) $19,123,133.22
Class PT1-24A (2) $16,617,079.65
Class PT1-24B (3) $16,617,079.65
Class PT1-25A (2) $14,154,754.99
Class PT1-25B (3) $14,154,754.99
Class PT1-26A (2) $11,563,711.20
Class PT1-26B (3) $11,563,711.20
Class PT1-27A (2) $ 9,583,656.49
Class PT1-27B (3) $ 9,583,656.49
Class PT1-28A (2) $ 8,042,385.07
Class PT1-28B (3) $ 8,042,385.07
Class PT1-29A (2) $ 6,825,736.61
Class PT1-29B (3) $ 6,825,736.61
Class PT1-30A (2) $ 5,849,862.56
Class PT1-30B (3) $ 5,849,862.56
Class PT1-31A (2) $ 5,057,290.37
Class PT1-31B (3) $ 5,057,290.37
Class PT1-32A (2) $ 4,406,422.71
Class PT1-32B (3) $ 4,406,422.71
Class PT1-33A (2) $ 3,866,900.52
Class PT1-33B (3) $ 3,866,900.52
Class PT1-34A (2) $ 3,417,136.74
Class PT1-34B (3) $ 3,417,136.74
Class PT1-35A (2) $ 3,037,794.00
Class PT1-35B (3) $ 3,037,794.00
Class PT1-36A (2) $ 2,715,239.52
Class PT1-36B (3) $ 2,715,239.52
Class PT1-37A (2) $ 2,474,849.08
Class PT1-37B (3) $ 2,474,849.08
Class PT1-38A (2) $ 2,332,964.30
Class PT1-38B (3) $ 2,332,964.30
Class PT1-39A (2) $ 2,199,286.15
Class PT1-39B (3) $ 2,199,286.15
Class PT1-40A (2) $ 2,073,488.70
Class PT1-40B (3) $ 2,073,488.70
Class PT1-41A (2) $ 1,954,919.65
Class PT1-41B (3) $ 1,954,919.65
Class PT1-42A (2) $ 1,843,205.36
Class PT1-42B (3) $ 1,843,205.36
Class PT1-43A (2) $ 1,737,945.36
Class PT1-43B (3) $ 1,737,945.36
Class PT1-44A (2) $ 1,518,506.50
Class PT1-44B (3) $ 1,518,506.50
Class PT1-45A (2) $ 1,432,139.97
Class PT1-45B (3) $ 1,432,139.97
Class PT1-46A (2) $ 1,350,660.98
Class PT1-46B (3) $ 1,350,660.98
Class PT1-47A (2) $ 1,273,934.01
Class PT1-47B (3) $ 1,273,934.01
Class PT1-48A (2) $ 1,201,617.96
Class PT1-48B (3) $ 1,201,617.96
Class PT1-49A (2) $ 1,133,456.61
Class PT1-49B (3) $ 1,133,456.61
Class PT1-50A (2) $ 1,069,208.79
Class PT1-50B (3) $ 1,069,208.79
Class PT1-51A (2) $ 1,008,619.36
Class PT1-51B (3) $ 1,008,619.36
Class PT1-52A (2) $ 951,554.10
Class PT1-52B (3) $ 951,554.10
Class PT1-53A (2) $ 897,737.71
Class PT1-53B (3) $ 897,737.71
Class PT1-54A (2) $ 847,003.15
Class PT1-54B (3) $ 847,003.15
Class PT1-55A (2) $ 799,172.01
Class PT1-55B (3) $ 799,172.01
Class PT1-56A (2) $ 663,887.53
Class PT1-56B (3) $ 663,887.53
Class PT1-57A (2) $ 626,719.34
Class PT1-57B (3) $ 626,719.34
Class PT1-58A (2) $ 8,168,655.12
Class PT1-58B (3) $ 8,168,655.12
Class PT1-R (4) $ 0
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(1) For any Distribution Date (and the related Interest Accrual Period), this
Pooling Tier REMIC-1 Regular Interest shall bear interest at a per annum
rate (its "Pooling Tier REMIC-1 Interest Rate") equal to the Pooling Tier
REMIC-1 Net WAC Rate.
(2) For any Distribution Date (and the related Interest Accrual Period), this
Pooling Tier REMIC-1 Regular Interest shall bear interest at a per annum
rate (its "Pooling Tier REMIC-1 Interest Rate") equal to the product of
(i) 2 and (ii) the Pooling Tier REMIC-1 Net WAC Rate, subject to a maximum
rate of 11.096%.
(3) For any Distribution Date (and the related Interest Accrual Period), this
Pooling Tier REMIC-1 Regular Interest shall bear interest at a per annum
rate (its "Pooling Tier REMIC-1 Interest Rate") equal to the excess, if
any, of (A) the product of (i) 2 and (ii) the Pooling Tier REMIC-1 Net WAC
Rate over (B) 11.096%.
(4) The Class PT1-R Interest shall not have a principal balance and shall not
bear interest.
On each Distribution Date, the Trustee shall first pay from the
Trust Fund and charge as an expense of Pooling Tier REMIC-1 all expenses of the
Trust for such Distribution Date. Such expense, other than Servicing Fees, Loan
Performance Advisor Fees and Trustee Fees, shall be allocated in the same manner
as Realized Losses.
On each Distribution Date, the interest distributable in respect of
the Mortgage Loans for such Distribution Date shall be deemed to be distributed
to the Pooling Tier REMIC-1 Regular Interests at the rates shown above.
On each Distribution Date, Realized Losses, Subsequent Recoveries
and payments of principal in respect of the Mortgage Loans (including, for the
first Distribution Date only, the Closing Date Deposit Amount) shall be
allocated to the outstanding Pooling Tier REMIC-1 Regular Interest with the
lowest numerical denomination until the Pooling Tier REMIC-1 Principal Amount of
such interest or interests, as the case may be, is reduced to zero, provided
that, with respect to Pooling Tier REMIC-1 Regular Interests with the same
numerical denomination, such Realized Losses and payments of principal shall be
allocated pro rata between such Pooling Tier REMIC-1 Regular Interests.
Pooling Tier REMIC-2
Pooling Tier REMIC-2 shall issue the following interests in Pooling
Tier REMIC-2, and each such interest, other than the Class PT2-R Interest, is
hereby designated as a regular interest in Pooling Tier REMIC-2. The Class PT2-R
Interest is hereby designated as the sole class of residual interest in Pooling
Tier REMIC-2 and shall be represented by the Class R-II Certificates.
Corresponding Corresponding
Pooling Tier Pooling Tier Corresponding Pooling Tier Scheduled
Pooling Tier REMIC-2 REMIC-2 Initial Pooling Tier REMIC-1 Crossover
REMIC-2 Interest Interest Rate Principal Amount REMIC-2 IO Interest Regular Interest Distribution Date
---------------- -------------- ---------------- ------------------- ---------------- -----------------
Class PT2-1 (1) $20,078,845.18 N/A N/A N/A
Class PT2-2A (2) $14,570,934.87 Class PT2-IO-2 N/A N/A
Class PT2-2B (3) $14,570,934.87 N/A N/A N/A
Class PT2-3A (2) $14,952,745.70 Class PT2-IO-3 N/A N/A
Class PT2-3B (3) $14,952,745.70 N/A N/A N/A
Class PT2-4A (2) $15,286,484.94 Class PT2-IO-4 N/A N/A
Class PT2-4B (3) $15,286,484.94 N/A N/A N/A
Class PT2-5A (2) $15,570,878.20 Class PT2-IO-5 N/A N/A
Class PT2-5B (3) $15,570,878.20 N/A N/A N/A
Class PT2-6A (2) $15,804,923.68 Class PT2-IO-6 N/A N/A
Class PT2-6B (3) $15,804,923.68 N/A N/A N/A
Class PT2-7A (2) $15,987,902.76 Class PT2-IO-7 N/A N/A
Class PT2-7B (3) $15,987,902.76 N/A N/A N/A
Class PT2-8A (2) $16,269,696.06 Class PT2-IO-8 N/A N/A
Class PT2-8B (3) $16,269,696.06 N/A N/A N/A
Class PT2-9A (2) $16,343,028.70 Class PT2-IO-9 N/A N/A
Class PT2-9B (3) $16,343,028.70 N/A N/A N/A
Class PT2-10A (2) $16,364,591.99 Class PT2-IO-10 N/A N/A
Class PT2-10B (3) $16,364,591.99 N/A N/A N/A
Class PT2-11A (2) $16,334,829.37 Class PT2-IO-11 N/A N/A
Class PT2-11B (3) $16,334,829.37 N/A N/A N/A
Class PT2-12A (2) $16,029,414.06 Class PT2-IO-12 N/A N/A
Class PT2-12B (3) $16,029,414.06 N/A N/A N/A
Class PT2-13A (2) $15,237,733.72 Class PT2-IO-13 N/A N/A
Class PT2-13B (3) $15,237,733.72 N/A N/A N/A
Class PT2-14A (2) $14,485,032.19 Class PT2-IO-14 N/A N/A
Class PT2-14B (3) $14,485,032.19 N/A N/A N/A
Class PT2-15A (2) $13,769,809.48 Class PT2-IO-15 N/A N/A
Class PT2-15B (3) $13,769,809.48 N/A N/A N/A
Class PT2-16A (2) $13,090,172.98 Class PT2-IO-16 N/A N/A
Class PT2-16B (3) $13,090,172.98 N/A N/A N/A
Class PT2-17A (2) $12,444,343.61 Class PT2-IO-17 N/A N/A
Class PT2-17B (3) $12,444,343.61 N/A N/A N/A
Class PT2-18A (2) $11,830,617.66 Class PT2-IO-18 N/A N/A
Class PT2-18B (3) $11,830,617.66 N/A N/A N/A
Class PT2-19A (2) $11,249,138.59 Class PT2-IO-19 N/A N/A
Class PT2-19B (3) $11,249,138.59 N/A N/A N/A
Class PT2-20A (2) $16,385,894.04 Class PT2-IO-20 N/A N/A
Class PT2-20B (3) $16,385,894.04 N/A N/A N/A
Class PT2-21A (2) $25,363,907.53 Class PT2-IO-21 N/A N/A
Class PT2-21B (3) $25,363,907.53 N/A N/A N/A
Class PT2-22A (2) $22,016,676.95 Class PT2-IO-22 N/A N/A
Class PT2-22B (3) $22,016,676.95 N/A N/A N/A
Class PT2-23A (2) $19,123,133.22 Class PT2-IO-23 N/A N/A
Class PT2-23B (3) $19,123,133.22 N/A N/A N/A
Class PT2-24A (2) $16,617,079.65 Class PT2-IO-24 N/A N/A
Class PT2-24B (3) $16,617,079.65 N/A N/A N/A
Class PT2-25A (2) $14,154,754.99 Class PT2-IO-25 N/A N/A
Class PT2-25B (3) $14,154,754.99 N/A N/A N/A
Class PT2-26A (2) $11,563,711.20 Class PT2-IO-26 N/A N/A
Class PT2-26B (3) $11,563,711.20 N/A N/A N/A
Class PT2-27A (2) $9,583,656.49 Class PT2-IO-27 N/A N/A
Class PT2-27B (3) $9,583,656.49 N/A N/A N/A
Class PT2-28A (2) $8,042,385.07 Class PT2-IO-28 N/A N/A
Class PT2-28B (3) $8,042,385.07 N/A N/A N/A
Class PT2-29A (2) $6,825,736.61 Class PT2-IO-29 N/A N/A
Class PT2-29B (3) $6,825,736.61 N/A N/A N/A
Class PT2-30A (2) $5,849,862.56 Class PT2-IO-30 N/A N/A
Class PT2-30B (3) $5,849,862.56 N/A N/A N/A
Class PT2-31A (2) $5,057,290.37 Class PT2-IO-31 N/A N/A
Class PT2-31B (3) $5,057,290.37 N/A N/A N/A
Class PT2-32A (2) $4,406,422.71 Class PT2-IO-32 N/A N/A
Class PT2-32B (3) $4,406,422.71 N/A N/A N/A
Class PT2-33A (2) $3,866,900.52 Class PT2-IO-33 N/A N/A
Class PT2-33B (3) $3,866,900.52 N/A N/A N/A
Class PT2-34A (2) $3,417,136.74 Class PT2-IO-34 N/A N/A
Class PT2-34B (3) $3,417,136.74 N/A N/A N/A
Class PT2-35A (2) $3,037,794.00 Class PT2-IO-35 N/A N/A
Class PT2-35B (3) $3,037,794.00 N/A N/A N/A
Class PT2-36A (2) $2,715,239.52 Class PT2-IO-36 N/A N/A
Class PT2-36B (3) $2,715,239.52 N/A N/A N/A
Class PT2-37A (2) $2,474,849.08 Class PT2-IO-37 N/A N/A
Class PT2-37B (3) $2,474,849.08 N/A N/A N/A
Class PT2-38A (2) $2,332,964.30 Class PT2-IO-38 N/A N/A
Class PT2-38B (3) $2,332,964.30 N/A N/A N/A
Class PT2-39A (2) $2,199,286.15 Class PT2-IO-39 N/A N/A
Class PT2-39B (3) $2,199,286.15 N/A N/A N/A
Class PT2-40A (2) $2,073,488.70 Class PT2-IO-40 N/A N/A
Class PT2-40B (3) $2,073,488.70 N/A N/A N/A
Class PT2-41A (2) $1,954,919.65 Class PT2-IO-41 N/A N/A
Class PT2-41B (3) $1,954,919.65 N/A N/A N/A
Class PT2-42A (2) $1,843,205.36 Class PT2-IO-42 N/A N/A
Class PT2-42B (3) $1,843,205.36 N/A N/A N/A
Class PT2-43A (2) $1,737,945.36 Class PT2-IO-43 N/A N/A
Class PT2-43B (3) $1,737,945.36 N/A N/A N/A
Class PT2-44A (2) $1,518,506.50 Class PT2-IO-44 N/A N/A
Class PT2-44B (3) $1,518,506.50 N/A N/A N/A
Class PT2-45A (2) $1,432,139.97 Class PT2-IO-45 N/A N/A
Class PT2-45B (3) $1,432,139.97 N/A N/A N/A
Class PT2-46A (2) $1,350,660.98 Class PT2-IO-46 N/A N/A
Class PT2-46B (3) $1,350,660.98 N/A N/A N/A
Class PT2-47A (2) $1,273,934.01 Class PT2-IO-47 N/A N/A
Class PT2-47B (3) $1,273,934.01 N/A N/A N/A
Class PT2-48A (2) $1,201,617.96 Class PT2-IO-48 N/A N/A
Class PT2-48B (3) $1,201,617.96 N/A N/A N/A
Class PT2-49A (2) $1,133,456.61 Class PT2-IO-49 N/A N/A
Class PT2-49B (3) $1,133,456.61 N/A N/A N/A
Class PT2-50A (2) $1,069,208.79 Class PT2-IO-50 N/A N/A
Class PT2-50B (3) $1,069,208.79 N/A N/A N/A
Class PT2-51A (2) $1,008,619.36 Class PT2-IO-51 N/A N/A
Class PT2-51B (3) $1,008,619.36 N/A N/A N/A
Class PT2-52A (2) $951,554.10 Class PT2-IO-52 N/A N/A
Class PT2-52B (3) $951,554.10 N/A N/A N/A
Class PT2-53A (2) $897,737.71 Class PT2-IO-53 N/A N/A
Class PT2-53B (3) $897,737.71 N/A N/A N/A
Class PT2-54A (2) $847,003.15 Class PT2-IO-54 N/A N/A
Class PT2-54B (3) $847,003.15 N/A N/A N/A
Class PT2-55A (2) $799,172.01 Class PT2-IO-55 N/A N/A
Class PT2-55B (3) $799,172.01 N/A N/A N/A
Class PT2-56A (2) $663,887.53 Class PT2-IO-56 N/A N/A
Class PT2-56B (3) $663,887.53 N/A N/A N/A
Class PT2-57A (2) $626,719.34 Class PT2-IO-57 N/A N/A
Class PT2-57B (3) $626,719.34 N/A N/A N/A
Class PT2-58A (2) $8,168,655.12 Class PT2-IO-58 N/A N/A
Class PT2-58B (3) $8,168,655.12 N/A N/A N/A
Class PT2-IO-2 (4) (4) N/A Class PT1-2A August 2006
Class PT2-IO-3 (4) (4) N/A Class PT1-3A September 2006
Class PT2-IO-4 (4) (4) N/A Class PT1-4A October 2006
Class PT2-IO-5 (4) (4) N/A Class PT1-5A November 2006
Class PT2-IO-6 (4) (4) N/A Class PT1-6A December 2006
Class PT2-IO-7 (4) (4) N/A Class PT1-7A January 2007
Class PT2-IO-8 (4) (4) N/A Class PT1-8A February 2007
Class PT2-IO-9 (4) (4) N/A Class PT1-9A March 2007
Class PT2-IO-10 (4) (4) N/A Class PT1-10A April 2007
Class PT2-IO-11 (4) (4) N/A Class PT1-11A May 2007
Class PT2-IO-12 (4) (4) N/A Class PT1-12A June 2007
Class PT2-IO-13 (4) (4) N/A Class PT1-13A July 2007
Class PT2-IO-14 (4) (4) N/A Class PT1-14A August 2007
Class PT2-IO-15 (4) (4) N/A Class PT1-15A September 2007
Class PT2-IO-16 (4) (4) N/A Class PT1-16A October 2007
Class PT2-IO-17 (4) (4) N/A Class PT1-17A November 2007
Class PT2-IO-18 (4) (4) N/A Class PT1-18A December 2007
Class PT2-IO-19 (4) (4) N/A Class PT1-19A January 2008
Class PT2-IO-20 (4) (4) N/A Class PT1-20A February 2008
Class PT2-IO-21 (4) (4) N/A Class PT1-21A March 2008
Class PT2-IO-22 (4) (4) N/A Class PT1-22A April 2008
Class PT2-IO-23 (4) (4) N/A Class PT1-23A May 2008
Class PT2-IO-24 (4) (4) N/A Class PT1-24A June 2008
Class PT2-IO-25 (4) (4) N/A Class PT1-25A July 2008
Class PT2-IO-26 (4) (4) N/A Class PT1-26A August 2008
Class PT2-IO-27 (4) (4) N/A Class PT1-27A September 2008
Class PT2-IO-28 (4) (4) N/A Class PT1-28A October 2008
Class PT2-IO-29 (4) (4) N/A Class PT1-29A November 2008
Class PT2-IO-30 (4) (4) N/A Class PT1-30A December 2008
Class PT2-IO-31 (4) (4) N/A Class PT1-31A January 2009
Class PT2-IO-32 (4) (4) N/A Class PT1-32A February 2009
Class PT2-IO-33 (4) (4) N/A Class PT1-33A March 2009
Class PT2-IO-34 (4) (4) N/A Class PT1-34A April 2009
Class PT2-IO-35 (4) (4) N/A Class PT1-35A May 2009
Class PT2-IO-36 (4) (4) N/A Class PT1-36A June 2009
Class PT2-IO-37 (4) (4) N/A Class PT1-37A July 2009
Class PT2-IO-38 (4) (4) N/A Class PT1-38A August 2009
Class PT2-IO-39 (4) (4) N/A Class PT1-39A September 2009
Class PT2-IO-40 (4) (4) N/A Class PT1-40A October 2009
Class PT2-IO-41 (4) (4) N/A Class PT1-41A November 2009
Class PT2-IO-42 (4) (4) N/A Class PT1-42A December 2009
Class PT2-IO-43 (4) (4) N/A Class PT1-43A January 2010
Class PT2-IO-44 (4) (4) N/A Class PT1-44A February 2010
Class PT2-IO-45 (4) (4) N/A Class PT1-45A March 2010
Class PT2-IO-46 (4) (4) N/A Class PT1-46A April 2010
Class PT2-IO-47 (4) (4) N/A Class PT1-47A May 2010
Class PT2-IO-48 (4) (4) N/A Class PT1-48A June 2010
Class PT2-IO-49 (4) (4) N/A Class PT1-49A July 2010
Class PT2-IO-50 (4) (4) N/A Class PT1-50A August 2010
Class PT2-IO-51 (4) (4) N/A Class PT1-51A September 2010
Class PT2-IO-52 (4) (4) N/A Class PT1-52A October 2010
Class PT2-IO-53 (4) (4) N/A Class PT1-53A November 2010
Class PT2-IO-54 (4) (4) N/A Class PT1-54A December 2010
Class PT2-IO-55 (4) (4) N/A Class PT1-55A January 2011
Class PT2-IO-56 (4) (4) N/A Class PT1-56A February 2011
Class PT2-IO-57 (4) (4) N/A Class PT1-57A March 2011
Class PT2-IO-58 (4) (4) N/A Class PT1-58A April 2011
Class PT2-R (5) (5) N/A N/A N/A
----------
(1) For any Distribution Date (and the related Interest Accrual Period), this
Pooling Tier REMIC-2 Regular Interest shall bear interest at a per annum
rate (its "Pooling Tier REMIC-2 Interest Rate") equal to the Pooling Tier
REMIC-1 Net WAC Rate.
(2) For any Distribution Date (and the related Interest Accrual Period), this
Pooling Tier REMIC-2 Regular Interest shall bear interest at a per annum
rate (its "Pooling Tier REMIC-2 Interest Rate") equal to the weighted
average of the Pooling Tier REMIC-1 Interest Rates on the Pooling Tier
REMIC-1 Regular Interests and having an "A" in their class designation,
provided that, on each Distribution Date on which interest is
distributable on the Corresponding Pooling Tier REMIC-2 IO Interest, this
Pooling Tier REMIC-2 Regular Interest shall bear interest at a per annum
rate equal to Swap LIBOR subject to a maximum rate equal to the weighted
average of the Pooling Tier REMIC-1 Interest Rates on the Pooling Tier
REMIC-1 Regular Interests and having an "A" in their class designation.
(3) For any Distribution Date (and the related Interest Accrual Period), this
Pooling Tier REMIC-2 Regular Interest shall bear interest at a per annum
rate (its "Pooling Tier REMIC-2 Interest Rate") equal to the weighted
average of the Pooling Tier REMIC-1 Interest Rates on the Pooling Tier
REMIC-1 Regular Interests and having a "B" in their class designation.
(4) Each Pooling Tier REMIC-2 IO Interest is an interest-only interest and
does not have a principal balance but has a notional balance ("Pooling
Tier REMIC-2 IO Notional Balance") equal to the Pooling Tier REMIC-1
Principal Amount of the Corresponding Pooling Tier REMIC-1 Regular
Interest. From the Closing Date through and including the Corresponding
Scheduled Crossover Distribution Date, each Pooling Tier REMIC-2 IO
Interest shall be entitled to receive interest that accrues on the
Corresponding Pooling Tier REMIC-1 Regular Interest at a rate equal to the
excess, if any, of (i) the Pooling Tier REMIC-1 Interest Rate for the
Corresponding Pooling Tier REMIC-1 Regular Interest over (ii) Swap LIBOR.
After the related Corresponding Scheduled Crossover Distribution Date, the
Pooling Tier REMIC-2 IO Interest shall not accrue interest.
(5) The Class PT2-R Interest shall not have a principal balance and shall not
bear interest.
On each Distribution Date, the interest distributable in respect of
the Mortgage Loans for such Distribution Date shall be distributed to the
Pooling Tier REMIC-2 Regular Interests at the Pooling Tier REMIC-2 Interest
Rates shown above.
On each Distribution Date, Realized Losses, Subsequent Recoveries
and payments of principal in respect of the Mortgage Loans (including, for the
first Distribution Date only, the Closing Date Deposit Amount) shall be
allocated to the then outstanding Pooling Tier REMIC-2 Regular Interests (other
than the Pooling Tier REMIC-2 IO Interests) with the lowest numerical
denomination until the Pooling Tier REMIC-2 Principal Amount of such interest or
interests, as the case may be, is reduced to zero, provided that, for Pooling
Tier REMIC-2 Regular Interests Mortgage Loans with the same numerical
denomination, such Realized Losses, Subsequent Recoveries and payments of
principal shall be allocated pro rata between such Pooling Tier REMIC-2 Regular
Interests.
Lower Tier REMIC
The Lower Tier REMIC shall issue the following interests, and each
such interest, other than the Class LT-R Interest, is hereby designated as a
regular interest in the Lower Tier REMIC. The Class LT-R Interest is hereby
designated as the sole class of residual interest in the Lower Tier REMIC and
shall be represented by the Class R-II Certificates.
Corresponding
Lower Tier Upper Tier
Lower Tier REMIC REMIC Initial Lower Tier REMIC Regular
Class Designation Interest Rate REMIC Principal Amount Interest
----------------- ------------- ---------------------------- -------------
Class LT-A-1 (1) 1/2 Corresponding Upper Tier A-1
REMIC Regular Interest
initial Class Principal
Balance
Class LT-A-2 (1) 1/2 Corresponding Upper Tier A-2
REMIC Regular Interest
initial Class Principal
Balance
Class LT-A-3 (1) 1/2 Corresponding Upper Tier A-3
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-1 (1) 1/2 Corresponding Upper Tier M-1
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-2 (1) 1/2 Corresponding Upper Tier M-2
REMIC Regular Interest
initial Class Principal
Balance
Class LT-M-3 (1) 1/2 Corresponding Upper Tier M-3
REMIC Regular Interest
initial Class Principal
Balance
Class LT-B-1 (1) 1/2 Corresponding Upper Tier B-1
REMIC Regular Interest
initial Class Principal
Balance
Class LT-B-2 (1) 1/2 Corresponding Upper Tier B-2
REMIC Regular Interest
initial Class Principal
Balance
Class LT-B-3 (1) 1/2 Corresponding Upper Tier B-3
REMIC Regular Interest
initial Class Principal
Balance
Class LT-B-4 (1) 1/2 Corresponding Upper Tier B-4
REMIC Regular Interest
initial Class Principal
Balance
Class LT-B-5 (1) 1/2 Corresponding Upper Tier B-5
REMIC Regular Interest
initial Class Principal
Balance
Class LT-Accrual (1) 1/2 Pool Stated Principal N/A
Balance plus 1/2 Subordinated
Amount
Class LT-IO (2) (2) N/A
Class LT-R (3) (3) N/A
----------
(1) The interest rate with respect to any Distribution Date for these interest
is a per annum variable rate equal to the Lower Tier REMIC Net WAC Rate.
(2) This Lower Tier Regular Interest is an interest-only interest and does not
have a Lower Tier REMIC Principal Amount. On each Distribution Date, this
Lower Tier Regular Interest shall be entitled to receive all interest
distributable on the Pooling Tier REMIC-2 IO Interests.
(3) The Class LT-R Interest is the sole class of residual interest in the
Lower Tier REMIC and it does not have a principal amount or an interest
rate.
Each Lower Tier REMIC Regular Interest is hereby designated as a
regular interest in the Lower Tier REMIC. The Class LT-A-1, Class LT-A-2, Class
LT-A-3, Class LT-M-1, Class LT-M-2, Class LT-M-3, Class LT-B-1, Class LT-B-2,
Class LT-B-3, Class LT-B-4 and Class LT-B-5 Interests are hereby designated the
LT Accretion Directed Classes (the "LT Accretion Directed Classes").
On each Distribution Date, 50% of the increase in the Subordinated
Amount shall be payable as a reduction of the Lower Tier REMIC Principal Amount
of the LT Accretion Directed Classes (each such Class will be reduced by an
amount equal to 50% of any increase in the Subordinated Amount that is
attributable to a reduction in the Class Certificate Balance of its
Corresponding Class) and shall be accrued and added to the Lower Tier REMIC
Principal Amount of the Class LT-Accrual Interest. On each Distribution Date,
the increase in the Lower Tier REMIC Principal Amount of the Class LT-Accrual
Interest may not exceed interest accruals for such Distribution Date for the
Class LT-Accrual Interest. All payments of scheduled principal and prepayments
of principal generated by the Mortgage Loans (including, for the first
Distribution Date only, the Closing Date Deposit Amount) and all Subsequent
Recoveries allocable to principal shall be allocated (i) 50% to the Class
LT-Accrual Interest and (ii) 50% to the LT Accretion Directed Classes (such
principal payments and Subsequent Recoveries shall be allocated among such LT
Accretion Directed Classes in an amount equal to 50% of the principal amounts
and Subsequent Recoveries allocated to their respective Corresponding Classes),
until paid in full. Notwithstanding the above, principal payments allocated to
the Class X Interest that result in the reduction in the Subordinated Amount
shall be allocated to the Class LT-Accrual Interest (until paid in full).
Reductions to Lower Tier REMIC Principal Amounts as a result of
Realized Losses and increases in Lower Tier REMIC Principal Amounts as a result
of Subsequent Recoveries shall be applied so that after all distributions have
been made on each Distribution Date (i) the Lower Tier REMIC Principal Amount of
each LT Accretion Directed Class is equal to 50% of the Class Certificate
Balance of its Corresponding Class and (ii) the Class LT-Accrual Interest is
equal to 50% of the aggregate Stated Principal Balance of the Mortgage Loans
plus 50% of the Subordinated Amount.
Upper Tier REMIC
The Upper Tier REMIC shall issue the following classes of Upper Tier
REMIC Regular Interests and each such interest, other than the Class UT-R
Interest, is hereby designated as a regular interest in the Upper Tier REMIC.
The Class UT-R Interest is hereby designated as the sole class of residual
interests in the Upper Tier REMIC and shall be represented by the Class R-II
Certificates.
Initial Upper Corresponding
Upper Tier REMIC Upper Tier REMIC Tier REMIC Class of
Class Designation Interest Rate Principal Amount Certificates
----------------- ---------------- ---------------- -------------
Class A-1 (1) $454,270,000 Class A-1
Class A-2 (1) $160,383,000 Class A-2
Class A-3 (1) $142,838,000 Class A-3
Class M-1 (1) $79,996,000 Class M-1
Class M-2 (1) $55,305,000 Class M-2
Class M-3 (1) $15,308,000 Class M-3
Class B-1 (1) $15,308,000 Class B-1
Class B-2 (1) $12,839,000 Class B-2
Class B-3 (1) $10,370,000 Class B-3
Class B-4 (1) $10,369,000 Class B-4
Class B-5 (1) $8,889,000 Class B-5
Class IO (2) (2)
Class X (3) (3) Class X (3)
Class UT-R (4) (4) Class R-II
----------
(1) For any Distribution Date (and the related Interest Accrual Period), this
interest shall bear interest at the lesser of (i) the Pass-Through Rate
(determined without regard to the Net WAC Rate Cap) for the Corresponding
Class of Certificates and (ii) the Upper Tier REMIC Net WAC Rate.
(2) This interest is an interest-only interest and does not have a principal
balance. On each Distribution Date, the Class IO Interest shall be
entitled to receive all interest distributable on the Class LT-IO
Interest. This interest shall be beneficially owned by the holders of the
Class X Certificates and shall be held as an asset of the Supplemental
Interest Account.
(3) The Class X Interest has an initial principal balance of $16,622,630 but
it will not accrue interest on such balance but will accrue interest on a
notional principal balance. As of any Distribution Date, the Class X
Interest shall have a notional principal balance equal to the aggregate of
the Lower Tier Principal Amounts of the Lower Tier REMIC Regular Interests
(other than the Class LT-IO Interest) as of the first day of the related
Interest Accrual Period. With respect to any Interest Accrual Period, the
Class X Interest shall bear interest at a rate equal to the excess, if
any, of the Lower Tier REMIC Net WAC Rate over the product of (i) 2 and
(ii) the weighted average Lower Tier REMIC Interest Rate of the Lower Tier
REMIC Regular Interests (other than Class LT-IO Interest), where the Lower
Tier REMIC Interest Rate on the Class LT-Accrual Interest is subject to a
cap equal to zero and each LT-Accretion Directed Class is subject to a cap
equal to the Upper Tier Interest Rate on its Corresponding Class of Upper
Tier Regular Interest. With respect to any Distribution Date, interest
that so accrues on the notional principal balance of the Class X Interest
shall be deferred in an amount equal to any increase in the Subordinated
Amount on such Distribution Date. Such deferred interest shall not itself
bear interest.
(4) The Class UT-R Interest does not have an interest rate or a principal
balance.
On each Distribution Date, interest distributable in respect of the
Lower Tier Interests for such Distribution Date shall be deemed to be
distributed on the interests in the Upper Tier REMIC at the rates shown above,
provided that the Class IO Interest shall be entitled to receive interest before
any other interest in the Upper Tier REMIC.
On each Distribution Date, all Realized Losses, Subsequent
Recoveries and all payments of principal shall be allocated to the Upper Tier
Interests until the outstanding principal balance of each such interest equals
the outstanding Class Certificate Balance of the Corresponding Class of
Certificates as of such Distribution Date.
Certificates
Class Pass-Through Class Certificate
Class Designation Rate Balance
----------------- ---- ------------
Class A-1 (6) (1) $454,270,000
Class A-2 (6) (1) $160,383,000
Class A-3 (6) (1) $142,838,000
Class M-1 (6) (2) $ 79,996,000
Class M-2 (6) (2) $ 55,305,000
Class M-3 (6) (2) $ 15,308,000
Class B-1 (6) (2) $ 15,308,000
Class B-2 (6) (2) $ 12,839,000
Class B-3 (6) (2) $ 10,370,000
Class B-4 (6) (2) $ 10,369,000
Class B-5 (6) (2) $ 8,889,000
Class X (3) (3)
Class R-I (4) (4)
Class R-II (5) (5)
----------
(1) The Class A-1, Class A-2 and Class A-3 Certificates will bear interest
during each Interest Accrual Period at a per annum rate equal to the
lesser of (i) LIBOR plus the applicable Pass-Through Margin and (ii) the
Net WAC Rate Cap.
(2) The Class M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3,
Class B-4 and Class B-5 Certificates will bear interest during each
Interest Accrual Period at a per annum rate equal to the lesser of (i)
LIBOR plus the applicable Pass-Through Margin and (ii) the Net WAC Rate
Cap.
(3) The Class X Certificates will represent beneficial ownership of the Class
X Interest, the Class IO Interest, the right to receive Class IO
Shortfalls, the Cap Agreement, amounts in the Supplemental Interest
Account, subject to the obligation to pay Net Swap Payments to the Swap
Provider and Upper Tier Carry Forward Amounts to the LIBOR Certificates
and, without duplication, Basis Risk Carry Forward Amounts to the LIBOR
Certificates and amounts in the Excess Reserve Fund Account, subject to
the obligation to make payments from the Excess Reserve Fund Account in
respect of Basis Risk Carry Forward Amounts to the LIBOR Certificates. For
federal income tax purposes, the Trustee will treat a Class X
Certificateholder's obligation to make payments to the LIBOR Certificates
of Basis Risk Carry Forward Amounts from the Excess Reserve Fund Account
and the Supplemental Interest Account and, without duplication, Upper Tier
Carry Forward Amounts from the Supplemental Interest Account as payments
made pursuant to an interest rate cap contract written by the Class X
Certificateholders in favor of each Class of LIBOR Certificates. Such
rights of the Class X Certificateholders and LIBOR Certificateholders
shall be treated as held in a portion of the Trust Fund that is treated as
a grantor trust under subpart E, Part I of subchapter J of the Code. The
Class X Certificates do not have a Class Certificate Balance.
(4) The Class R-I Certificates do not have a principal balance or an interest
rate. The Class R-I Certificates represent the residual interest in
Pooling Tier REMIC-1.
(5) The Class R-II Certificates do not have a principal balance or an interest
rate. The Class R-II Certificates represent ownership of the Class PT2-R
Interest, the Class LT-R Interest and the Class UT-R Interest.
(6) Each of these Certificates will represent not only the ownership of the
Corresponding Class of Upper Tier REMIC Regular Interest but also the
right to receive payments from the Excess Reserve Fund Account and
Supplemental Interest Account in respect of any Basis Risk Carry Forward
Amounts and, without duplication, from the Supplemental Interest Account
in respect of Upper Tier Carry Forward Amounts. Each of these Certificates
will also be subject to the obligation to pay Class IO Shortfalls as
described in Section 8.13. For federal income tax purposes, any amount
distributed on the LIBOR Certificates on any such Distribution Date in
excess of the amount distributable on their Corresponding Class of Upper
Tier Regular Interest on such Distribution Date shall be treated as having
been paid from the Excess Reserve Fund Account or the Supplemental
Interest Account, as applicable, and any amount distributable on such
Corresponding Class of Upper Tier Regular Interest on such Distribution
Date in excess of the amount distributable on the Corresponding Class of
Certificates on such Distribution Date shall be treated as having been
paid to the Supplemental Interest Account, all pursuant to, and as further
provided in Section 8.13. For federal income tax purposes, the Trustee
will treat a LIBOR Certificateholder's right to receive payments from the
Excess Reserve Fund Account and Supplemental Interest Account as payments
made pursuant to an interest rate cap contract written by the Class X
Certificateholders.
The minimum denomination for each Class of Certificates, other than
the Class P and Class X Certificates and the Residual Certificates, will be
$25,000 with integral multiples of $1 in excess thereof except that one
Certificate in each Class may be issued in a different amount. The minimum
denomination for each of the Class P and Class X Certificates will be a 1%
Percentage Interest in such Class, and the minimum denomination for the Residual
Certificates shall be 100% Percentage Interest in such Class.
Set forth below are designations of Classes of Certificates to the
categories used herein:
Book-Entry Certificates...... All Classes of Certificates other than the
Physical Certificates.
Class A Certificates......... Class A-1, Class A-2 and Class A-3
Certificates.
Class B Certificates......... Class B-1, Class B-2, Class B-3, Class B-4
and Class B-5 Certificates.
Class M Certificates......... Class M-1, Class M-2 and Class M-3
Certificates.
Delay Certificates........... None.
ERISA-Restricted
Certificates............... Subordinated Certificates, Class P and Class
X Certificates and the Residual
Certificates; any certificate with a rating
below the lowest applicable permitted rating
under the Underwriters' Exemption.
LIBOR Certificates........... Class A and Subordinated Certificates.
Non-Delay Certificates....... Class A, Class X and Subordinated
Certificates.
Offered Certificates......... All Classes of Certificates other than the
Private Certificates.
Physical Certificates........ Class P and Class X Certificates and the
Residual Certificates.
Private Certificates......... Class B-4, Class B-5, Class P and Class X
Certificates and the Residual Certificates.
Rating Agencies.............. Moody's, Fitch, Standard & Poor's and DBRS.
Regular Certificates......... All Classes of Certificates other than the
Class P Certificates and the Residual
Certificates.
Residual Certificates........ Class R-I and Class R-II Certificates.
Subordinated Certificates.... Class M and Class B Certificates.
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: With respect to any Mortgage Loan,
those mortgage servicing practices set forth in Section 3.01(a) of this
Agreement.
Account: Any of the Collection Account, the Distribution Account,
any Escrow Account, the Supplemental Interest Account, the Supplemental Float
Account or the Excess Reserve Fund Account. Each Account shall be an Eligible
Account.
Accrued Certificate Interest Distribution Amount: With respect to
any Distribution Date for each Class of LIBOR Certificates, the amount of
interest accrued during the related Interest Accrual Period at the applicable
Pass-Through Rate on the related Class Certificate Balance immediately prior to
such Distribution Date, as reduced by such Class' share of Net Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls for such Distribution
Date allocated to such Class pursuant to Section 4.02.
Additional Disclosure Notification: As defined in Section 8.12(c).
Additional Form 10-D Disclosure: As defined in Section 8.12(b).
Additional Form 10-K Disclosure: As defined in Section 8.12(c).
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan.
Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any
time, the per annum rate equal to the Mortgage Rate less the Expense Fee Rate.
Adjustment Date: As to any Adjustable Rate Mortgage Loan, the first
Due Date on which the related Mortgage Rate adjusts as set forth in the related
Mortgage Note and each Due Date thereafter on which the Mortgage Rate adjusts as
set forth in the related Mortgage Note.
Advance: Any P&I Advance or Servicing Advance.
Advance Facility: A financing or other facility as described in
Section 10.10.
Advancing Person: The Person to whom the Servicer's rights under
this Agreement to be reimbursed for any P&I Advances or Servicing Advances have
been assigned pursuant to Section 10.10.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
or supplements hereto.
Amount Held for Future Distribution: As to the Certificates on any
Distribution Date, the aggregate amount held in the Collection Account at the
close of business on the related Determination Date on account of (i) Principal
Prepayments, Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and
Subsequent Recoveries on the Mortgage Loans received after the end of the
related Prepayment Period and (ii) all Scheduled Payments on the Mortgage Loans
due after the end of the related Due Period.
Analytics Company: Intex Solutions, Inc., or any other bond
analytics service provider identified to the Trustee by the Depositor.
Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which the aggregate Class Certificate Balance of the
LIBOR Certificates after distributions of principal on such Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form (other than the assignee's
name and recording information not yet returned from the recording office),
reflecting the sale of the Mortgage to the Trustee.
Available Funds: With respect to any Distribution Date and the
Mortgage Loans, to the extent received by the Trustee (x) the sum of (i) all
scheduled installments of interest (net of the related Expense Fees) and
principal due on the Due Date on such Mortgage Loans in the related Due Period
and received by the Servicer on or prior to the related Determination Date,
together with any P&I Advances in respect thereof; (ii) all Condemnation
Proceeds, Insurance Proceeds, Liquidation Proceeds and Subsequent Recoveries
received by the Servicer during the related Prepayment Period (in each case, net
of unreimbursed expenses incurred in connection with a liquidation or
foreclosure and unreimbursed Advances, if any); (iii) all partial or full
prepayments on the Mortgage Loans received by the Servicer during the related
Prepayment Period together with all Compensating Interest paid by the Servicer
in connection therewith (excluding any Prepayment Charges); (iv) all
Substitution Adjustment Amounts with respect to substitutions of Mortgage Loans
that occur on or prior to the related Determination Date; (v) all amounts
received with respect to such Distribution Date as the Repurchase Price in
respect of a Mortgage Loan repurchased on or prior to the related Determination
Date; and (vi) the proceeds with respect to the termination of the Trust Fund
pursuant to clause (a) of Section 9.01; reduced by (y) amounts in reimbursement
for Advances previously made with respect to the Mortgage Loans and other
amounts as to which the Servicer, the Depositor or the Trustee are entitled to
be paid or reimbursed pursuant to this Agreement.
Balloon Loan: Any Mortgage Loan that requires only payments of
interest until the stated maturity date of the Mortgage Loan or Scheduled
Payments of principal (not including the payment due on its stated maturity
date) that are based on an amortization schedule that would be insufficient to
fully amortize the principal thereof by the stated maturity date of the Mortgage
Loan.
Basic Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the Principal Remittance Amount for such
Distribution Date over (ii) the Excess Subordinated Amount, if any, for such
Distribution Date.
Basis Risk Carry Forward Amount: With respect to each Class of LIBOR
Certificates, as of any Distribution Date, the sum of (A) if on such
Distribution Date the Pass-Through Rate for any Class of LIBOR Certificates is
based upon the Net WAC Rate Cap, the excess of (i) the Accrued Certificate
Interest Distribution Amount such Class of Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated as
the sum of LIBOR and the applicable Pass-Through Margin on such Class of
Certificates for such Distribution Date, over (ii) the Accrued Certificate
Interest Distribution Amount payable on such Class of Certificates at the Net
WAC Rate Cap for such Distribution Date and (B) the portion of any such excess
described in clause (A) for such Class of Certificates from all previous
Distribution Dates not previously paid, together with interest thereon at a rate
equal to the sum of LIBOR and the applicable Pass-Through Margin for such Class
of Certificates for such Distribution Date.
Basis Risk Payment: For any Distribution Date, an amount equal to
the lesser of (i) the aggregate of the Basis Risk Carry Forward Amounts for such
Distribution Date and (ii) the Class X Distributable Amount (prior to any
reduction for (x) amounts paid from the Excess Reserve Fund Account to pay any
Basis Risk Carry Forward Amount or (y) any Defaulted Swap Termination Payment).
Best's: Best's Key Rating Guide, as the same shall be amended from
time to time.
Book-Entry Certificates: As specified in the Preliminary Statement.
Business Day: Any day other than (i) Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions, in (a) the State of New
York, California, New Jersey or Delaware, (b) the State in which the Servicer's
servicing operations are located, or (c) any State in which the Trustee's
Corporate Trust Office is located, are authorized or obligated by law or
executive order to be closed.
Cap Agreement: The interest rate cap agreement, dated August 3,
2006, between the Cap Provider and the Trustee, a copy of which is attached
hereto as Exhibit U.
Cap Provider: Barclays Bank PLC, a bank authorized and regulated by
the United Kingdom's Financial Services Authority and a member of the London
Stock Exchange, and its successors in interest.
Certificate: Any one of the Certificates executed by the Trustee in
substantially the forms attached hereto as exhibits.
Certificate Balance: With respect to any Class of Certificates,
other than the Class X or Class P Certificates or the Residual Certificates, at
any date, the maximum dollar amount of principal to which the Holder thereof is
then entitled hereunder, such amount being equal to the Denomination thereof
minus all distributions of principal previously made with respect thereto and in
the case of any Certificates, reduced by any Applied Realized Loss Amounts
allocated to such Class of Certificates pursuant to Section 4.05; provided,
however, that immediately following the Distribution Date on which a Subsequent
Recovery is distributed, the Class Certificate Balances of any Class or Classes
of Certificates that have been previously reduced by Applied Realized Loss
Amounts will be increased, in order of seniority, by the amount of the
Subsequent Recovery distributed on such Distribution Date (up to the amount of
Unpaid Realized Loss Amount for such Class or Classes for such Distribution
Date). The Class P and Class X Certificates and the Residual Certificates have
no Certificate Balance.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section
5.02.
Certificateholder or Holder: The Person in whose name a Certificate
is registered in the Certificate Register, except that, solely for the purpose
of giving any consent pursuant to this Agreement, any Certificate registered in
the name of the Depositor or 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 the Preliminary Statement.
Class A Certificates: As specified in the Preliminary Statement.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the aggregate Class Certificate Balances of
the Class A Certificates immediately prior to such Distribution Date over (ii)
the lesser of (A) 53.40% of the aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution Date and (B) the excess, if any, of the
aggregate Stated Principal Balance of the Mortgage Loans for such Distribution
Date over $4,938,013.
Class A-1 Certificates: All Certificates bearing the class
designation of "Class A-1".
Class A-2 Certificates: All Certificates bearing the class
designation of "Class A-2".
Class A-3 Certificates: All Certificates bearing the class
designation of "Class A-3".
Class B Certificates: As specified in the Preliminary Statement.
Class B-1 Certificates: All Certificates bearing the class
designation of "Class B-1".
Class B-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date) and (E) the Class Certificate Balance of the Class B-1
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 87.00% of the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date over
$4,938,013.
Class B-2 Certificates: All Certificates bearing the class
designation of "Class B-2".
Class B-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (E) the Class Certificate Balance of the Class B-1
Certificates (after taking into account the distribution of the Class B-1
Principal Distribution Amount for such Distribution Date), and (F) the Class
Certificate Balance of the Class B-2 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (A) 89.60% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and (B) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date over $4,938,013.
Class B-3 Certificates: All Certificates bearing the class
designation of "Class B-3".
Class B-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (E) the Class Certificate Balance of the Class B-1
Certificates (after taking into account the distribution of the Class B-1
Principal Distribution Amount for such Distribution Date), (F) the Class
Certificate Balance of the Class B-2 Certificates (after taking into account the
distribution of the Class B-2 Principal Distribution Amount for such
Distribution Date) and (G) the Class Certificate Balance of the Class B-3
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 91.70% of the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date over
$4,938,013.
Class B-4 Principal Distribution Amount: With respect to any
Distribution Date is the excess of (i) the sum of (a) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (b) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (c) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (d) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (e) the Class Certificate Balance of the Class B-1
Certificates (after taking into account the distribution of the Class B-1
Principal Distribution Amount for such Distribution Date), (f) the Class
Certificate Balance of the Class B-2 Certificates (after taking into account the
distribution of the Class B-2 Principal Distribution Amount for such
Distribution Date), (g) the Class Certificate Balance of the Class B-3
Certificates (after taking into account the distribution of the Class B-3
Principal Distribution Amount for such Distribution Date) and (h) Class
Certificate Balance of the Class B-4 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (a) 93.80% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and (b) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date over $4,938,013.
Class B-5 Principal Distribution Amount: With respect to any
Distribution Date is the excess of (i) the sum of (a) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (b) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (c) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (d) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (e) the Class Certificate Balance of the Class B-1
Certificates (after taking into account the distribution of the Class B-1
Principal Distribution Amount for such Distribution Date), (f) the Class
Certificate Balance of the Class B-2 Certificates (after taking into account the
distribution of the Class B-2 Principal Distribution Amount for such
Distribution Date), (g) the Class Certificate Balance of the Class B-3
Certificates (after taking into account the distribution of the Class B-3
Principal Distribution Amount for such Distribution Date), (h) the Class
Certificate Balance of the Class B-4 Certificates (after taking into account the
distribution of the Class B-4 Principal Distribution Amount for such
Distribution Date) and (i) Class Certificate Balance of the Class B-5
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(a) 95.60% of the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date and (b) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date over
$4,938,013.
Class Certificate Balance: With respect to any Class and as to any
date of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
Class IO Interest: As specified in the Preliminary Statement.
Class IO Shortfalls: As defined in Section 8.13. For the avoidance
of doubt, the Class IO Shortfall for any Distribution Date shall equal the
amount payable to the Class X Certificates in respect of amounts due to the Swap
Provider on such Distribution Date (other than Defaulted Swap Termination
Payments) in excess of the amount payable on the Class X Interest (prior to
reduction for any Basis Risk Payments or Defaulted Swap Termination Payments) or
Class IO Interest on such Distribution Date, all as further provided in Section
8.13.
Class LT-R Interest: The sole class of "residual interest" in the
Lower Tier REMIC evidenced by the Class R-II Certificates.
Class M Certificates: As specified in the Preliminary Statement.
Class M-1 Certificates: All Certificates bearing the class
designation of "Class M-1".
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), and (B) the Class Certificate Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (ii) the lesser of (A) 69.60%
of the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date and (B) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date over $4,938,013.
Class M-2 Certificates: All Certificates bearing the class
designation of "Class M-2".
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date) and (C) the Class Certificate Balance of the
Class M-2 Certificates immediately prior to such Distribution Date over (ii) the
lesser of (A) 80.80% of the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date and (B) the excess, if any, of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date over
$4,938,013.
Class M-3 Certificates: All Certificates bearing the class
designation of "Class M-3".
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date) and (D) the Class
Certificate Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (A) 83.90% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and (B) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date over $4,938,013.
Class P Certificates: All Certificates bearing the class designation
of "Class P".
Class PT1-R Interest: The residual interest in Pooling Tier REMIC-1
as described in the Preliminary Statement and the related footnote thereto.
Class PT2-R Interest: The residual interest in Pooling Tier REMIC-2
as described in the Preliminary Statement and the related footnote thereto.
Class R-I Certificates: All Certificates bearing the class
designation of "Class R-I".
Class R-II Certificates: All Certificates bearing the class
designation of "Class R-II".
Class UT-R Interest: The sole class of "residual interest" in the
Upper Tier REMIC evidenced by the Class R-II Certificate.
Class X Certificates: All Certificates bearing the class designation
of "Class X".
Class X Distributable Amount: On any Distribution Date, the sum of
(i) as a distribution in respect of interest, the amount of interest that has
accrued on the Class X Interest (as set forth in the Preliminary Statement) and
not applied as an Extra Principal Distribution Amount on such Distribution Date,
plus any such accrued interest remaining undistributed from prior Distribution
Dates, plus (without duplication) (ii) as a distribution in respect of
principal, any portion of the principal balance of the Class X Interest which is
distributable as a Subordination Reduction Amount, minus (iii) any Defaulted
Swap Termination Payment payable to the Swap Provider and any amounts paid from
the Excess Reserve Fund Account to pay Basis Risk Carry Forward Amounts.
Class X Interest: The Upper Tier REMIC Regular Interest represented
by the Class X Certificates as specified and described in the Preliminary
Statement and the related footnote thereto.
Closing Date: August 3, 2006.
Closing Date Deposit Amount: $5,105,022 (all of which is allocable
to principal) deposited by the Depositor into the Distribution Account on the
Closing Date.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: As defined in Section 3.10(a).
Combined Loan-to-Value Ratio or CLTV: As of any date and as to any
Second-Lien Mortgage Loan, the ratio (expressed as a percentage) of the (a) sum
of (i) the outstanding principal balance of the Second-Lien Mortgage Loan and
(ii) the outstanding principal balance as of such date of any mortgage loan or
mortgage loans that are senior or equal in priority to the Second-Lien Mortgage
Loan and which are secured by the same Mortgaged Property to (b) (i) in the case
of a purchase, the lesser of (A) the sale price of the Mortgaged Property and
(B) its appraised value at the time of sale, or (ii) in the case of a
refinancing or modification, the appraised value of the Mortgaged Property at
the time of the refinancing or modification.
Commission: The United States Securities and Exchange Commission.
Compensating Interest: For any Distribution Date, the lesser of (a)
the amount, if any, by which the Prepayment Interest Shortfall, if any, for such
Distribution Date, with respect to voluntary Principal Prepayments in Full
(excluding any payments made upon liquidation of any Mortgage Loan) exceeds all
Prepayment Interest Excesses for such Distribution Date on the Mortgage Loans,
and (b) the amount of the Servicing Fee payable to the Servicer for such
Distribution Date.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation.
Convertible Mortgage Loan: Any individual Adjustable Rate Mortgage
Loan which contains a provision whereby the Mortgagor is permitted to convert
the Adjustable Rate Mortgage Loan to a Fixed Rate Mortgage Loan in accordance
with the terms of the related Mortgage Note.
Corporate Trust Office: The designated office of the Trustee at
which at any particular time its corporate trust business with respect to this
Agreement is administered, which office at the date of the execution of this
Agreement is located (i) for purposes of Certificate transfers, at Xxxxx Fargo
Center, Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
Attention: Corporate Trust Services - SABR 2006-FR3 and (ii) for all other
purposes, at 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention:
Client Manager-SABR 2006-FR3, facsimile no. (000) 000-0000, and which is the
address to which notices to and correspondence with the Trustee should be
directed.
Corresponding Class: The class of interests in the Lower Tier REMIC
or Upper Tier REMIC created under this Agreement that corresponds to the Class
of interests in the other such REMIC, as applicable, or to a Class of
Certificates in the manner set out below:
Corresponding Corresponding Corresponding
Lower Tier REMIC Upper Tier REMIC Class of
Class Designation Regular Interest Certificates
----------------- ---------------- ------------
Class LT-A-1 Class A-1 Class A-1
Class LT-A-2 Class A-2 Class A-2
Class LT-A-3 Class A-3 Class A-3
Class LT-M-1 Class M-1 Class M-1
Class LT-M-2 Class M-2 Class M-2
Class LT-M-3 Class M-3 Class M-3
Class LT-B-1 Class B-1 Class B-1
Class LT-B-2 Class B-2 Class B-2
Class LT-B-3 Class B-3 Class B-3
Class LT-B-4 Class B-4 Class B-4
Class LT-B-5 Class B-5 Class B-5
Corresponding Pooling Tier REMIC-1 Regular Interest: As described in
the Preliminary Statement.
Corresponding Pooling Tier REMIC-2 IO Interest: As described in the
Preliminary Statement.
Corresponding Scheduled Crossover Distribution Date: The
Distribution Date in the month and year specified in the Preliminary Statement
corresponding to a Pooling Tier REMIC-2 IO Interest.
Corresponding Upper Tier REMIC Regular Interest: As defined in the
Preliminary Statement.
Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
Cumulative Loss Percentage: With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred from the Cut-off Date to the last day of the
calendar month preceding the month in which such Distribution Date occurs and
the denominator of which is the Cut-off Date Pool Principal Balance of the
Mortgage Loans.
Cumulative Loss Trigger Event: If, with respect to any Distribution
Date, the quotient (expressed as a percentage) of (x) the aggregate amount of
Realized Losses incurred since the Cut-off Date through the last day of the
related Due Period, divided by (y) the Cut-off Date Pool Principal Balance,
exceeds the applicable Cumulative Loss Percentages set forth below with respect
to such Distribution Date:
Distribution Date
Occurring In Cumulative Loss Percentage
------------------------ -------------------------------------------------
August 2008 through July 1.500% for the first month, plus an additional
2009 1/12th of 1.850% for each month thereafter
(e.g., 2.425% in February 2009)
August 2009 through July 3.350% for the first month, plus an additional
2010 1/12th of 1.900% for each month thereafter
(e.g., 4.300% in February 2010)
August 2010 through July 5.250% for the first month, plus an additional
2011 1/12th of 1.500% for each month thereafter
(e.g., 6.000% in February 2011)
August 2011 through July 6.750% for the first month, plus an additional
2012 1/12th of 0.750% for each month thereafter
(e.g., 7.125% in February 2012)
August 2012 and thereafter 7.500%
Custodial File: With respect to each Mortgage Loan, the file
retained by the Trustee consisting of items (a) - (h) as listed on Exhibit K
hereto.
Cut-off Date: July 1, 2006.
Cut-off Date Pool Principal Balance: The aggregate Stated Principal
Balances of all Mortgage Loans as of the Cut-off Date.
Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the Cut-off Date.
Data Tape Information: With respect to each Mortgage Loan, the
following information as of the Cut-off Date provided by the applicable
Originator to the Sponsor pursuant to the Purchase Agreement and the Interim
Servicing Agreement: (1) the Responsible Party's Mortgage Loan identifying
number; (2) the Mortgagor's name; (3) the street address of the Mortgaged
Property including the city, state and zip code; (4) a code indicating whether
the Mortgagor is self-employed; (5) as to each Mortgage Loan, the Stated
Principal Balance as of the Cut-off Date; (6) the Index; (7) a code indicating
whether the Mortgaged Property is owner-occupied; (8) the number and type of
residential units constituting the Mortgaged Property; (9) the original stated
months to maturity; (10) the original amortization months to maturity; (11) the
stated maturity date; (12) the amount of the Scheduled Payment as of the Cut-off
Date; (13) the first date on which the Scheduled Payment was due on the Mortgage
Loan and, if such date is not consistent with the Due Date currently in effect,
such Due Date; (14) the "paid through date" based on payments received from the
related Mortgagor; (15) the original principal amount of the Mortgage Loan; (16)
with respect to each Adjustable Rate Mortgage Loan, the Minimum Mortgage Rate;
(17) with respect to each Adjustable Rate Mortgage Loan, the Maximum Mortgage
Rate; (18) with respect to each Adjustable Rate Mortgage Loan, the initial
Periodic Mortgage Rate Cap; (19) with respect to each Adjustable Rate Mortgage
Loan, the subsequent Periodic Mortgage Rate Cap; (20) with respect to each
Adjustable Rate Mortgage Loan, the first payment Adjustment Date immediately
following the Cut-off Date; (21) with respect to each Adjustable Rate Mortgage
Loan, the first Interest Rate Adjustment Date immediately following the Cut-off
Date; (22) with respect to each Adjustable Rate Mortgage Loan, the Gross Margin;
(23) with respect to each Adjustable Rate Mortgage Loan, the Mortgage Rate
adjustment period; (24) the type of Mortgage Loan (i.e., Fixed Rate or
Adjustable Rate Mortgage Loan); (25) lien position (i.e., First-Lien or
Second-Lien Mortgage Loan); (26) a code indicating the purpose of the loan
(i.e., purchase, rate and term refinance, equity take-out refinance); (27) the
credit risk score (FICO score); (28) the loan credit grade classification (as
described in the underwriting guidelines); (29) the Mortgage Rate at
origination; (30) the Mortgage Rate as of the Cut-off Date; (31) the value of
the Mortgaged Property; (32) a code indicating the term and amount of Prepayment
Charges applicable to such Mortgage Loan (including any prepayment penalty
term), if any; (33) with respect to each First-Lien Mortgage Loan, the
Loan-to-Value Ratio at origination, and with respect to each Second-Lien
Mortgage Loan, the Combined Loan-to-Value Ratio at origination; (34) the
documentation level; (35) the date of origination; (36) a code indicating
whether the Mortgage Loan is a Balloon Loan; (37) the Due Date for the first
Scheduled Payment; (38) the original Scheduled Payment due; (39) the
debt-to-income ratio with respect to the Mortgage Loan; (40) the Mortgage Rate
calculation method (i.e., 30/360, simple interest, other); (41) a code
indicating whether the Mortgage Loan is Home Loan; (42) appraisal verification
(Y/N); (43) type of appraisal verification, if any; and (44) with respect to
Second-Lien Mortgage Loans, the outstanding principal balance of the superior
lien at origination. With respect to the Mortgage Loans in the aggregate, the
Data Tape Information shall set forth the following information, as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current aggregate
outstanding principal balance of the Mortgage Loans; (3) the weighted average
Mortgage Rate of the Mortgage Loans; and (4) the weighted average maturity of
the Mortgage Loans.
DBRS: Dominion Bond Rating Service. If DBRS is designated as a
Rating Agency in the Preliminary Statement, for purposes of Section 10.05(c) the
address for notices to DBRS shall be Dominion Bond Rating Service, 00 Xxxxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxx, or such other
address as DBRS may hereafter furnish to the Depositor, the Trustee and the
Servicer.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the United
States Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which
became final and non-appealable, except such a reduction resulting from a
Deficient Valuation or any reduction that results in a permanent forgiveness of
principal.
Deemed Material and Adverse Representation: Each representation and
warranty identified as such on Schedule III to this Agreement.
Defaulted Swap Termination Payment: Any Swap Termination Payment
required to be paid by the Trust to the Swap Provider pursuant to the Interest
Rate Swap Agreement as a result of an Event of Default (as defined in the
Interest Rate Swap Agreement) with respect to which the Swap Provider is the
defaulting party or a Termination Event (as defined in the Interest Rate Swap
Agreement) (other than Illegality or a Tax Event that is not a Tax Event Upon
Merger (each as defined in the Interest Rate Swap Agreement )) with respect to
which the Swap Provider is the sole Affected Party (as defined in the Interest
Rate Swap Agreement).
Deficient Valuation: With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the United States
Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).
Delay Certificates: As specified in the Preliminary Statement.
Deleted Mortgage Loan: As defined in Section 2.03.
Delinquency Trigger Event: With respect to any Distribution Date,
the circumstances in which the quotient (expressed as a percentage) of (x) the
rolling three month average of the aggregate unpaid principal balance of 60+ Day
Delinquent Mortgage Loans, divided by (y) the aggregate unpaid principal balance
of the Mortgage Loans, as of the last day of the related Due Period, equals or
exceeds 34.30% of the prior period's Senior Enhancement Percentage.
Denomination: With respect to each Certificate, the amount set forth
on the face thereof as the "Initial Certificate Balance of this Certificate" or
the Percentage Interest appearing on the face thereof.
Depositor: Securitized Asset Backed Receivables LLC, a Delaware
limited liability company, and its successors in interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code of
the State of New York.
Depository Institution: Any depository institution or trust company,
including the Trustee, that (a) is incorporated under the laws of the United
States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations that
are rated "P-1" by Moody's, "F1+" by Fitch, "A-1" by Standard & Poor's and, if
rated by DBRS, "R-1" by DBRS (in each case, to the extent they are designated as
Rating Agencies in the Preliminary Statement).
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to each Remittance Date, the 15th
day (or if such day is not a Business Day, the immediately preceding Business
Day) in the calendar month in which such Remittance Date occurs.
Disqualified Non-U.S. Person: With respect to a Residual
Certificate, (i) any Non-U.S. Person or agent thereof other than a Non-U.S.
Person that holds the Residual Certificate in connection with the conduct of a
trade or business within the United States and has furnished the transferor and
the Trustee with an effective IRS Form W-8ECI, or (ii) any domestic entity
classified as a partnership under the Code if any of its direct or indirect
partners (other than through a U.S. corporation) are Disqualified Non-U.S.
Persons, unless such Person described in (i) or (ii) above has delivered to both
the transferor and the Trustee an opinion of a nationally recognized tax counsel
to the effect that the transfer of the Residual Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of the Residual Certificate will not be
disregarded for federal income tax purposes.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(d) in the name of the Trustee
for the benefit of the Certificateholders and designated "Xxxxx Fargo Bank,
National Association in trust for registered holders of Securitized Asset Backed
Receivables LLC Trust 2006-FR3 Mortgage Pass-Through Certificates, Series
2006-FR3". Funds in the Distribution Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:00 noon New York City time on the third Business Day immediately preceding
such Distribution Date.
Distribution Date: The 25th day of each calendar month, or if such
day is not a Business Day, the next succeeding Business Day, commencing in
August 2006.
Document Certification and Exception Report: The report attached to
Exhibit F hereto.
Due Date: The day of the month on which the Scheduled Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the calendar month preceding the month in which
such Distribution Date occurs and ending on the first day of the calendar month
in which such Distribution Date occurs.
Eligible Account: Either (i) an account maintained with a federal or
state-chartered depository institution or trust company that complies with the
definition of Eligible Institution, (ii) an account maintained with the
corporate trust department of a federal depository institution or
state-chartered depository institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the U.S. Code of Federal
Regulation Section 9.10(b), which, in either case, has corporate trust powers
and is acting in its fiduciary capacity or (iii) any other account acceptable to
each Rating Agency. Eligible Accounts may bear interest, and may include, if
otherwise qualified under this definition, accounts maintained with the Trustee.
Each Eligible Account shall be a separate account.
Eligible Institution: A federal or state-chartered depository
institution or trust company the commercial paper, short-term debt obligations,
or other short-term deposits of which are rated "A-1+" by Standard & Poor's if
the amounts on deposit are to be held in the account for no more than 365 days
(or at least "A-2" by Standard & Poor's if the amounts on deposit are to be held
in the account for no more than 30 days), or the long-term unsecured debt
obligations of which are rated at least "AA-" by Standard & Poor's if the
amounts on deposit are to be held in the account for no more than 365 days, and
the commercial paper, short-term debt obligations or other short-term deposits
of which are rated at least "P-1" by Moody's and "F1+" by Fitch (or a comparable
rating if another Rating Agency is specified by the Depositor by written notice
to the Servicer and the Trustee) (in each case, to the extent they are
designated as Rating Agencies in the Preliminary Statement).
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of Prohibited
Transaction Exemption ("PTE") 2002-41, 67 Fed. Reg. 54487 (2002) (or any
successor thereto), or any substantially similar administrative exemption
granted by the U.S. Department of Labor.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.09(b).
Escrow Payments: As defined in Section 3.09(b).
Event of Default: As defined in Section 7.01.
Excess Reserve Fund Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Sections 3.07(b) and 3.07(c) in the
name of the Trustee for the benefit of the Regular Certificateholders and
designated "Xxxxx Fargo Bank, National Association in trust for registered
holders of Securitized Asset Backed Receivables LLC Trust 2006-FR3, Mortgage
Pass-Through Certificates, Series 2006-FR3". Funds in the Excess Reserve Fund
Account shall be held in trust for the Regular Certificateholders for the uses
and purposes set forth in this Agreement. Amounts on deposit in the Excess
Reserve Fund Account shall not be invested.
Excess Subordinated Amount: With respect to any Distribution Date,
the excess, if any, of (a) the Subordinated Amount on such Distribution Date
over (b) the Specified Subordinated Amount for such Distribution Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expense Fee Rate: As to each Mortgage Loan, a per annum rate equal
to the sum of the Servicing Fee Rate, the Trustee Fee Rate and the Loan
Performance Advisor Fee Rate.
Expense Fees: As to each Mortgage Loan, the sum of the Servicing
Fee, the Trustee Fee and the Loan Performance Advisor Fee.
Extra Principal Distribution Amount: As of any Distribution Date,
the lesser of (x) the related Total Monthly Excess Spread for such Distribution
Date and (y) the related Subordination Deficiency for such Distribution Date.
Xxxxxx Mae: The Federal National Mortgage Association, or any
successor thereto.
Xxxxxx Xxx Guides: The Xxxxxx Xxx Xxxxxxx' Guide and the Xxxxxx Xxx
Servicers' Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Responsible Party as contemplated by this Agreement), a determination
made by the Servicer that all Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared by
a Servicing Officer, of each Final Recovery Determination made thereby.
Final Scheduled Distribution Date: The Final Scheduled Distribution
Date for each Class of Certificates is the Distribution Date occurring in May
2036.
First-Lien Mortgage Loan: A Mortgage Loan secured by a first-lien
Mortgage on the related Mortgaged Property.
Fitch: Fitch, Inc., or any successor thereto. If Fitch is designated
as a Rating Agency in the Preliminary Statement, for purposes of Section
10.05(c) the address for notices to Fitch shall be Fitch, Inc., Xxx Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: MBS Monitoring - Securitized Asset
Backed Receivables LLC Trust 2006-FR3, or such other address as Fitch may
hereafter furnish to the Depositor, the Trustee and the Servicer.
Fixed Rate Mortgage Loan: A fixed rate Mortgage Loan.
Form 8-K Disclosure Information: As defined in Section 8.12(g).
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note to be added
to the applicable Index to determine the Mortgage Rate.
High Cost Loan: A Mortgage Loan (a) covered by the Home Ownership
and Equity Protection Act of 1994 ("HOEPA"), (b) with an "annual percentage
rate" or total "points and fees" payable by the related Mortgagor (as each such
term is calculated under HOEPA) that exceed the thresholds set forth by HOEPA
and its implementing regulations, including 12 C.F.R. ss. 226.32(a)(1)(i) and
(ii), (c) classified as a "high cost home," "threshold," "covered," (excluding
New Jersey "Covered Home Loans" as that term was defined in clause (1) of the
definition of that term in the New Jersey Home Ownership Security Act of 2002
that were originated between November 26, 2003 and July 7, 2004), "high risk
home," "predatory" or similar loan under any other applicable state, federal or
local law (or a similarly classified loan using different terminology under a
law imposing heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points and/or fees) or
(d) a Mortgage Loan categorized as High Cost pursuant to Appendix E of Standard
& Poor's Glossary.
Home Loan: A Mortgage Loan categorized as Home Loan pursuant to
Appendix E of Standard & Poor's Glossary.
HomEq: HomEq Servicing Corporation, a New Jersey corporation, and
its successors in interest.
Indenture Trustee: The trustee for the NIM Securities.
Index: As to each Adjustable Rate Mortgage Loan, the index from time
to time in effect for the adjustment of the Mortgage Rate set forth as such on
the related Mortgage Note.
Initial Certification: As defined in Section 2.02.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect, including any replacement policy or policies for any Insurance
Policies.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Accrual Period: With respect to each Class of Non-Delay
Certificates and the Corresponding Class of Lower Tier REMIC Regular Interests
and any Distribution Date, the period commencing on the Distribution Date
occurring in the month preceding the month in which the current Distribution
Date occurs and ending on the day immediately preceding the current Distribution
Date (or, in the case of the first Distribution Date, the period from and
including the Closing Date to but excluding such first Distribution Date). With
respect to the Class LT-Accrual, Class LT-IO and each Pooling Tier REMIC-1
Regular Interest and Pooling Tier REMIC-2 Regular Interest and any Distribution
Date, the calendar month preceding such Distribution Date. For purposes of
computing interest accruals on each Class of Non-Delay Certificates, each
Interest Accrual Period has the actual number of days in such month and each
year is assumed to have 360 days.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the Mortgage
Loan Schedule, on which the Mortgage Rate is adjusted.
Interest Rate Cap Payment: With respect to the Cap Agreement and for
any Distribution Date, the amount, if any, required to be paid by the Cap
Provider on such Distribution Date under the Cap Agreement.
Interest Rate Swap Agreement: The interest rate swap agreement,
dated as of August 3, 2006 between the Swap Provider and the Trustee, a copy of
which is attached hereto as Exhibit T.
Interest Remittance Amount: With respect to any Distribution Date
and the Mortgage Loans, that portion of Available Funds attributable to interest
received or advanced with respect to Mortgage Loans, net of the fees payable to
the Servicer, the Trustee, and the Loan Performance Advisor, and net of any Net
Swap Payments and Swap Termination Payments, other than Defaulted Swap
Termination Payments, payable to the Swap Provider with respect to such
Distribution Date.
Interim Servicing Agreement: The Interim Servicing Agreement, dated
as of February 1, 2006, by and between the Responsible Party and the Sponsor.
Investment Account: As defined in Section 3.12(a).
Investor: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the investor pursuant to the MERS Procedures
Manual.
IRS: The Internal Revenue Service.
Late Collections: With respect to any Mortgage Loan and any Due
Period, all amounts received after the Determination Date immediately following
such Due Period, whether as late payments of Scheduled Payments or as Insurance
Proceeds, Condemnation Proceeds, Liquidation Proceeds, Subsequent Recoveries or
otherwise, which represent late payments or collections of principal and/or
interest due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) but delinquent for such Due Period and not
previously recovered.
LIBOR: With respect to any Interest Accrual Period for the LIBOR
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided, that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee shall request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Trustee (after
consultation with the Depositor), at approximately 11:00 a.m. (New York City
time) on such date for one-month U.S. dollar loans to leading European banks.
LIBOR Certificates: As specified in the Preliminary Statement.
LIBOR Determination Date: With respect to any Interest Accrual
Period for the LIBOR Certificates, the second London Business Day preceding the
commencement of such Interest Accrual Period.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified to the Trustee that it has received all amounts it
expects to receive in connection with the liquidation of such Mortgage Loan
including the final disposition of an REO Property.
Liquidation Proceeds: Cash received in connection with the
liquidation of a Liquidated Mortgage Loan, whether through a trustee's sale,
foreclosure sale or otherwise.
Loan Performance Advisor: OfficeTiger Global Real Estate
Services Inc., a Delaware corporation, and its successors in interest, and if
a successor loan performance advisor is appointed hereunder, such successor.
Loan Performance Advisor Agreement: The Loan Performance Advisor
Agreement, dated as of February 1, 2005, by and between the Sponsor and the Loan
Performance Advisor.
Loan Performance Advisor Fee: As to any Distribution Date, an amount
equal to the product of (a) one-twelfth of the Loan Performance Advisor Fee Rate
and (b) the aggregate Stated Principal Balance of the Mortgage Loans as of the
preceding Distribution Date or, in the case of the first Distribution Date, the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date;
provided, however that the Loan Performance Advisor Fee for any Distribution
Date shall not be lower than $1,500.
Loan Performance Advisor Fee Rate: With respect to each Mortgage
Loan, either (a) 0.015% per annum or (b) if the Loan Performance Advisor Fee is
the amount calculated pursuant to the proviso in the definition of "Loan
Performance Advisor Fee", a per annum rate determined by dividing such fee by
the average of the aggregate Stated Principal Balance of the Mortgage Loans as
of the preceding Distribution Date.
Loan-to-Value Ratio or LTV: As of any date and as to any First-Lien
Mortgage Loan, the ratio (expressed as a percentage) of the outstanding
principal balance of the First-Lien Mortgage Loan to (a) in the case of a
purchase, the lesser of (i) the sale price of the Mortgaged Property and (ii)
the lesser of (y) its appraised value at the time of sale or (z) the appraised
value determined by a review appraisal conducted by the applicable Originator,
or (b) in the case of a refinancing or modification, the lesser of (i) the
appraised value of the Mortgaged Property at the time of the refinancing or
modification or (ii) the appraised value determined by a review appraisal
conducted by the applicable Originator.
London Business Day: Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
Lower Tier REMIC: As described in the Preliminary Statement.
Lower Tier REMIC Interest Rate: As described in the Preliminary
Statement.
Lower Tier REMIC Regular Interest: Each of the Class LT-A-1, Class
A-2, Class LT-A-3, Class LT-M-1, Class LT-M-2, Class LT-M-3, Class LT-B-1, Class
LT-B-2, Class LT-B-3, Class LT-B-4, Class LT-B-5, Class LT-IO and Class
LT-Accrual Interests as described in the Preliminary Statement.
Lower Tier REMIC Principal Amount: The principal balance of each
Lower Tier REMIC Regular Interest, determined as set forth in the Preliminary
Statement. The Lower Tier REMIC Principal Amount shall be computed to at least
eight (8) decimal places.
Lower Tier REMIC Net WAC Rate: A per annum variable rate equal to
the weighted average of the Pooling Tier REMIC-2 Interest Rates of the Pooling
Tier REMIC-2 Regular Interests (other than the Pooling Tier REMIC-2 IO
Interests).
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the maximum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be increased during the
lifetime of such Adjustable Rate Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, and its successors in interest.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Responsible Party has designated or will designate MERS as, and has taken or
will take such action as is necessary to cause MERS to be, the mortgagee of
record, as nominee for the Responsible Party, in accordance with the MERS
Procedure Manual and (b) the Responsible Party has designated or will designate
the Purchaser as the Investor on the MERS System.
MERS Procedure Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified from time to time.
MERS(R) System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the minimum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be decreased during the
lifetime of such Adjustable Rate Mortgage Loan.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.03.
Moody's: Xxxxx'x Investors Service, Inc. If Xxxxx'x is designated as
a Rating Agency in the Preliminary Statement, for purposes of Section 10.05(c)
the address for notices to Moody's shall be Xxxxx'x Investors Service, Inc., 00
Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage
Pass-Through Group, or such other address as Moody's may hereafter furnish to
the Depositor, the Trustee and the Servicer.
Mortgage: The mortgage, deed of trust or other instrument identified
on the Mortgage Loan Schedule as securing a Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
contained in either the Servicing File or Custodial File.
Mortgage Loan: An individual Mortgage Loan that is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes,
without limitation, the Mortgage File, the Scheduled Payments, Principal
Prepayments, Liquidation Proceeds, Subsequent Recoveries, Condemnation Proceeds,
Insurance Proceeds, REO Disposition proceeds, Prepayment Charges, and all other
rights, benefits, proceeds and obligations arising from or in connection with
such Mortgage Loan, excluding replaced or repurchased Mortgage Loans.
Mortgage Loan Schedule: A schedule of Mortgage Loans delivered to
the Trustee and referred to as Schedule I, such schedule setting forth the Data
Tape Information with respect to each Mortgage Loan. In addition, the Mortgage
Loan Schedule shall include the Original Sale Date for each Mortgage Loan.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne on a Mortgage Note,
which shall be adjusted from time to time in the case of an Adjustable Rate
Mortgage Loan.
Mortgage Rate Caps: With respect to an Adjustable Rate Mortgage
Loan, the Periodic Mortgage Rate Cap, the Maximum Mortgage Rate, and the Minimum
Mortgage Rate for such Mortgage Loan.
Mortgaged Property: With respect to each Mortgage Loan, the real
property (or leasehold estate, if applicable) identified on the Mortgage Loan
Schedule as securing repayment of the debt evidenced by the related Mortgage
Note.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Monthly Excess Cash Flow: For any Distribution Date, the amount
remaining for distribution pursuant to Section 4.02(a)(iii) (before giving
effect to distributions pursuant to such subsection).
Net Prepayment Interest Shortfall: For any Distribution Date, the
amount by which the sum of the Prepayment Interest Shortfalls for such
Distribution Date exceeds the sum of (i) all Prepayment Interest Excesses for
such Distribution Date and (ii) Compensating Interest payments made with respect
to such Distribution Date.
Net Swap Payment: With respect to any Distribution Date, any net
payment (other than a Swap Termination Payment) payable by the Trust to the Swap
Provider on the related Fixed Rate Payer Payment Date (as defined in the
Interest Rate Swap Agreement).
Net Swap Receipt: With respect to any Distribution Date, any net
payment (other than a Swap Termination Payment) made by the Swap Provider to the
Trust on the related Floating Rate Payer Payment Date (as defined in the
Interest Rate Swap Agreement), or any amount withdrawn from the reserve account
referred to in the third full paragraph of Section 4.06 that is required under
that paragraph be treated as a Net Swap Receipt for purposes of determining the
distributions from the Supplemental Interest Account.
Net WAC Rate Cap: With respect to the Mortgage Loans as of any
Distribution Date, the product of a per annum rate equal to (i) the weighted
average of the Adjusted Net Mortgage Rates for the Mortgage Loans then in effect
on the beginning of the related Due Period, minus the product of (A) the Net
Swap Payment plus any Swap Termination Payment (other than a Defaulted Swap
Termination Payment) made to the Swap Provider, if any, expressed as a
percentage equal to a fraction, the numerator of which is equal to the Net Swap
Payment plus any Swap Termination Payment (other than a Defaulted Swap
Termination Payment) made to the Swap Provider and the denominator of which is
equal to the aggregate Stated Principal Balance of the Mortgage Loans at the
beginning of such Due Period and (B) 12 and (ii) a fraction, the numerator of
which is 30 and the denominator of which is the actual number of days in the
related Interest Accrual Period. With respect to the first Due Period and first
Distribution Date only, the Net WAC Rate Cap shall be reduced by a fraction, the
numerator of which is the Closing Date Deposit Amount and the denominator if
which is the Cut-Off Date Pool Principal Balance.
NIM Issuer: The entity established as the issuer of the NIM
Securities.
NIM Securities: Any debt securities secured or otherwise backed by
some or all of the Class X and Class P Certificates that are rated by any Rating
Agency.
NIM Trustee: The trustee for the NIM Securities.
Non-Delay Certificates: As specified in the Preliminary Statement.
Non-Permitted Transferee: A Person other than a Permitted
Transferee.
Nonrecoverable P&I Advance: Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Servicer, will not or, in the case of a
proposed P&I Advance, would not be ultimately recoverable from related Late
Collections on such Mortgage Loan or REO Property as provided herein.
Nonrecoverable Servicing Advance: Any Servicing Advances previously
made or proposed to be made in respect of a Mortgage Loan or REO Property,
which, in accordance with Accepted Servicing Practices, will not or, in the case
of a proposed Servicing Advance, would not be ultimately recoverable from
related Late Collections.
Non-U.S. Person: A person that is not a U.S. Person.
Notice of Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the Certificates
shall be made only upon presentation and surrender thereof.
Offered Certificates: As specified in the Preliminary Statement.
Officer's Certificate: A certificate signed by an officer of the
Servicer with responsibility for the servicing of the Mortgage Loans and listed
on a list delivered to the Trustee pursuant to this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
in-house counsel for the Servicer or any Subservicer, reasonably acceptable to
the Trustee (and/or such other Persons as may be set forth herein), provided,
that any Opinion of Counsel relating to (a) qualification of any Trust REMIC or
(b) compliance with the REMIC Provisions, must be (unless otherwise stated in
such Opinion of Counsel) an opinion of counsel who (i) is in fact independent of
the Servicer of the Mortgage Loans, (ii) does not have any material direct or
indirect financial interest in the Servicer of the Mortgage Loans or in an
Affiliate of the Servicer and (iii) is not connected with the Servicer of the
Mortgage Loans as an officer, employee, director or person performing similar
functions.
Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans, as of the last day of
the related Due Period, is equal to 10% or less of the Cut-off Date Pool
Principal Balance.
Original Sale Date: April 28, 2006.
Originator: The Responsible Party.
OTS: Office of Thrift Supervision, and any successor thereto.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee
pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with
a Stated Principal Balance greater than zero which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.
Ownership Interest: As to any Residual Certificate, any ownership
interest in such Certificate including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial.
P&I Advance: As to any Mortgage Loan or REO Property, any advance
made by the Servicer in respect of any Remittance Date representing the
aggregate of all payments of principal and interest, net of the Servicing Fee,
that were due during the related Due Period on the Mortgage Loans and that were
delinquent on the related Determination Date, plus certain amounts representing
assumed payments not covered by any current net income on the Mortgaged
Properties acquired by foreclosure or deed in lieu of foreclosure as determined
pursuant to Section 4.01.
Pass-Through Margin: With respect to each Class of Regular
Certificates, the following percentages: Class A-1 Certificates, 0.050%; Class
A-2 Certificates, 0.140%; Class A-3 Certificates, 0.250%; Class M-1
Certificates, 0.300%; Class M-2 Certificates, 0.410%; Class M-3 Certificates,
0.460%; Class B-1 Certificates, 0.950%; Class B-2 Certificates, 1.100%; Class
B-3 Certificates, 1.900%; Class B-4 Certificates, 2.250%; and Class B-5
Certificates, 2.250%. On the first Distribution Date after the Optional
Termination Date, the Pass-Through Margins shall increase to: Class A-1
Certificates, 0.100%; Class A-2 Certificates, 0.280%; Class A-3 Certificates,
0.500%; Class M-1 Certificates, 0.450%; Class M-2 Certificates, 0.615%; Class
M-3 Certificates, 0.690%; Class B-1 Certificates, 1.425%; Class B-2
Certificates, 1.650%; Class B-3 Certificates, 2.850%; Class B-4 Certificates,
3.375%; and Class B-5 Certificates, 3.375%.
Pass-Through Rate: For each Class of Certificates and each Class of
Upper Tier REMIC Regular Interest, the per annum rate set forth or calculated in
the manner described in the Preliminary Statement.
PCAOB: The Public Company Accounting Oversight Board.
Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Periodic Mortgage Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the periodic limit on each Mortgage Rate adjustment as set forth
in the related Mortgage Note.
Permitted Investments: Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued by the Servicer, the Trustee or any of their respective
Affiliates:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of,
or bankers' acceptances (which shall each have an original maturity
of not more than 90 days and, in the case of bankers' acceptances,
shall in no event have an original maturity of more than 365 days or
a remaining maturity of more than 30 days) denominated in United
States dollars and issued by, any Depository Institution and rated
"F1+" by Fitch, "A-1+" by Standard & Poor's, "P-1" by Moody's and
"R-1 by DBRS (in each case, to the extent they are designated as
Rating Agencies in the Preliminary Statement);
(iii) repurchase obligations with respect to any security
described in clause (i) above entered into with a Depository
Institution (acting as principal);
(iv) securities (which shall in no event have an original
maturity of more than 365 days) bearing interest or sold at a
discount that are issued by any corporation incorporated under the
laws of the United States of America or any state thereof and that
are rated by Standard & Poor's and Moody's (in each case, to the
extent they are designated as Rating Agencies in the Preliminary
Statement), and by each other Rating Agency that rates such
securities in its highest long-term unsecured rating categories at
the time of such investment or contractual commitment providing for
such investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on
demand or on a specified date not more than 30 days after the date
of acquisition thereof) that is rated by Standard & Poor's and
Moody's (in each case, to the extent they are designated as Rating
Agencies in the Preliminary Statement), and by each other Agency
that rates such securities in its highest short-term unsecured debt
rating available at the time of such investment;
(vi) units of money market funds, including money market funds
managed or advised by the Depositor, the Trustee or an Affiliate
thereof, that have been rated "Aaa" by Moody's, "AAAm" or "AAAm-G"
by Standard & Poor's and, if rated by Fitch, at least "AAA" by Fitch
and "R-1" by DBRS (in each case, to the extent they are designated
as Rating Agencies in the Preliminary Statement); and
(vii) if previously confirmed in writing to the Trustee, any
other demand, money market or time deposit, or any other obligation,
security or investment, as may be acceptable to each of the Rating
Agencies as a permitted investment of funds backing "Aaa" or "AAA"
rated securities;
provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.
Permitted Transferee: Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in Section 860E(c)(1) of the Code) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in Section 1381(a)(2)(C) of the Code, (v) a Person that is a
Disqualified Non-U.S. Person or a U.S. Person with respect to whom income from a
Residual Certificate is attributable to a foreign permanent establishment or
fixed base, within the meaning of an applicable income tax treaty, of such
Person or any other U.S. Person, (vi) an "electing large partnership" within the
meaning of Section 775 of the Code and (vii) any other Person so designated by
the Depositor based upon an Opinion of Counsel that the Transfer of an Ownership
Interest in a Residual Certificate to such Person may cause any Trust REMIC to
fail to qualify as a REMIC at any time that the Certificates are outstanding.
The terms "United States", "State" and "international organization" shall have
the meanings set forth in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of Xxxxxxx Mac, a majority
of its board of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Physical Certificates: As specified in the Preliminary Statement.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans for such
Distribution Date that were Outstanding Mortgage Loans on the Due Date in the
related Due Period.
Pooling Tier REMIC-1: As described in the Preliminary Statement.
Pooling Tier REMIC-1 Interest Rate: As described in the Preliminary
Statement.
Pooling Tier REMIC-1 Net WAC Rate: With respect to the Mortgage
Loans as of any Distribution Date, a per annum rate equal to (a) the weighted
average of the Adjusted Net Mortgage Rates then in effect on the beginning of
the related Due Period on the Mortgage Loans multiplied by (b) 30 divided by the
actual number of days in the related Interest Accrual Period. With respect to
the first Due Period and first Distribution Date only, the Pooling Tier REMIC-1
Net WAC Rate shall be reduced by a fraction, the numerator of which is the
Closing Date Deposit Amount and the denominator of which is the Cut-off Date
Pool Principal Balance.
Pooling Tier REMIC-1 Principal Amount: As described in the
Preliminary Statement.
Pooling Tier REMIC-1 Regular Interest: As described in the
Preliminary Statement.
Pooling Tier REMIC-2: As described in the Preliminary Statement.
Pooling Tier REMIC-2 Interest Rate: As described in the Preliminary
Statement.
Pooling Tier REMIC-2 IO Interest: Any of the Pooling Tier REMIC-2
Regular Interests with the designation "IO" in its name.
Pooling Tier REMIC-2 IO Notional Balance: As described in the
Preliminary Statement.
Pooling Tier REMIC-2 Principal Amount: As described in the
Preliminary Statement.
Pooling Tier REMIC-2 Regular Interest: As described in the
Preliminary Statement.
Prepayment Charge: Any prepayment premium, penalty or charge
collected by the Servicer with respect to a Mortgage Loan from a Mortgagor in
connection with any Principal Prepayment pursuant to the terms of the related
Mortgage Note.
Prepayment Interest Excess: With respect to any Distribution Date,
any interest collected by the Servicer with respect to any Mortgage Loan
serviced by the Servicer as to which a Principal Prepayment in Full occurs from
the 1st day of the month through the 15th day of the month in which such
Distribution Date occurs and that represents interest that accrues from the 1st
day of such month to the date of such Principal Prepayment in Full.
Prepayment Interest Shortfall: With respect to any Distribution
Date, the sum of, for each Mortgage Loan that was, during the portion of the
Prepayment Period from the first day of such Prepayment Period through the last
day of the month preceding the month in which such Distribution Date occurs, the
subject of a Principal Prepayment which is not accompanied by an amount equal to
one month of interest that would have been due on such Mortgage Loan on the Due
Date that occurs during such Prepayment Period and which was applied by the
Servicer to reduce the outstanding principal balance of such Mortgage Loan on a
date preceding such Due Date, an amount equal to the product of (a) the Mortgage
Rate net of the Servicing Fee Rate for such Mortgage Loan, (b) the amount of the
Principal Prepayment for such Mortgage Loan, (c) 1/360 and (d) the number of
days commencing on the date on which such Principal Prepayment was applied and
ending on the last day of the calendar month in which the related Prepayment
Period begins.
Prepayment Period: With respect to any Distribution Date, either (i)
with respect to any Principal Prepayments in Full, the period from and including
the 16th day of the month preceding the month in which such Distribution Date
occurs (or, in the case of the first Distribution Date, from the Cut-off Date)
to and including the 15th day of the month in which such Distribution Date
occurs, or (ii) with respect to any partial Principal Prepayments, the calendar
month preceding the month in which such Distribution Date occurs.
Principal Distribution Amount: For any Distribution Date, the sum of
(i) the Basic Principal Distribution Amount for such Distribution Date and (ii)
the Extra Principal Distribution Amount for such Distribution Date.
Principal Prepayment: Any full or partial payment or other recovery
of principal on a Mortgage Loan (including upon liquidation of a Mortgage Loan)
which is received in advance of its scheduled Due Date, excluding any Prepayment
Charge thereon and which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution Date,
the amount equal to the sum of the following amounts (without duplication) with
respect to the related Due Period: (i) each Scheduled Payment of principal on a
Mortgage Loan due during such Due Period and received by the Servicer on or
prior to the related Determination Date or advanced by the Servicer for the
related Remittance Date, (ii) all Principal Prepayments received during the
related Prepayment Period; (iii) all net Liquidation Proceeds, Condemnation
Proceeds and Insurance Proceeds on the Mortgage Loans allocable to principal,
and all Subsequent Recoveries, actually collected by the Servicer during the
related Prepayment Period; (iv) the portion of the Repurchase Price allocable to
principal with respect to each Mortgage Loan repurchased on or prior to the
related Determination Date; (v) all Substitution Adjustment Amounts allocable to
principal with respect to the substitutions of Mortgage Loans that occur on or
prior to the related Determination Date; (vi) the allocable portion of the
proceeds received with respect to the termination of the Trust Fund pursuant to
clause (a) of Section 9.01 (to the extent such proceeds relate to principal) and
(vii) with respect to the Distribution Date in August 2006 only, the Closing
Date Deposit Amount.
Private Certificates: As specified in the Preliminary Statement.
Prospectus Supplement: The Prospectus Supplement, dated July 28,
2006, relating to the Offered Certificates.
PTCE 95-60: As defined in Section 5.02(b).
PUD: A planned unit development.
Purchase Agreement: The Amended and Restated Mortgage Loan Purchase
Agreement, dated as of May 1, 2006, by and between the Responsible Party and the
Sponsor.
Rating Agency: Each of the Rating Agencies specified in the
Preliminary Statement. If such organization or a successor is no longer in
existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, as is designated by the
Depositor, notice of which designation shall be given to the Trustee. References
herein to a given rating or rating category of a Rating Agency shall mean such
rating category without giving effect to any modifiers. For purposes of Section
10.05(c), the addresses for notices to each Rating Agency shall be the address
specified therefor in the definition corresponding to the name of such Rating
Agency, or such other address as such Rating Agency may hereafter furnish to the
Depositor, the Trustee and the Servicer.
Realized Losses: With respect to any date of determination and any
Liquidated Mortgage Loan, the amount, if any, by which (a) the unpaid principal
balance of such Liquidated Mortgage Loan together with accrued and unpaid
interest thereon exceeds (b) the Liquidation Proceeds with respect thereto net
of the expenses incurred by the Servicer in connection with the liquidation of
such Liquidated Mortgage Loan and net of the amount of unreimbursed Servicing
Advances with respect to such Liquidated Mortgage Loan.
Record Date: With respect to any Distribution Date, the close of
business on the Business Day immediately preceding such Distribution Date;
provided, however, that, for any Definitive Certificate, the Record Date shall
be the close of business on the last Business Day of the month preceding the
month in which such applicable Distribution Date occurs.
Reference Bank: As defined in Section 4.04.
Regular Certificates: As specified in the Preliminary Statement.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.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 (January 7, 2005))
or by the staff of the Commission, or as may be provided by the Commission or
its staff from time to time.
Relief Act Interest Shortfall: With respect to any Distribution Date
and any Mortgage Loan, any reduction in the amount of interest collectible on
such Mortgage Loan for the most recently ended Due Period as a result of the
application of the Servicemembers Civil Relief Act or any similar state
statutes.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
Remittance Date: With respect to any Distribution Date, the third
Business Day immediately preceding such Distribution Date.
REO Disposition: The final sale by the Servicer of any REO Property.
REO Imputed Interest: As to any REO Property, for any period, an
amount equivalent to interest (at the Mortgage Rate net of the Servicing Fee
Rate that would have been applicable to the related Mortgage Loan had it been
outstanding) on the unpaid principal balance of the Mortgage Loan as of the date
of acquisition thereof (as such balance is reduced pursuant to Section 3.17 by
any income from the REO Property treated as a recovery of principal).
REO Mortgage Loan: A Mortgage Loan where title to the related
Mortgaged Property has been obtained by the Servicer in the name of the Trustee
on behalf of the Certificateholders.
REO Property: A Mortgaged Property acquired by the Trust Fund
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Reportable Event: As defined in Section 8.12(g).
Repurchase Price: With respect to any Mortgage Loan, an amount equal
to the sum of (i) the unpaid principal balance of such Mortgage Loan as of the
date of repurchase, (ii) interest on such unpaid principal balance of such
Mortgage Loan at the Mortgage Rate from the last date through which interest has
been paid to the date of repurchase, (iii) all unreimbursed Servicing Advances
and (iv) all expenses incurred by the Trustee arising out of the Trustee's
enforcement of the applicable Person's repurchase obligation hereunder or under
the Sponsor Representation Letter.
Request for Release: The Request for Release submitted by the
Servicer to the Trustee, substantially in the form of Exhibit J.
Residual Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any vice
president, any assistant vice president, any assistant secretary, any assistant
treasurer, any associate, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers who at such time shall be officers 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 and who shall have direct
responsibility for the administration of this Agreement.
Responsible Party: Fremont Investment & Loan, a California
industrial bank, and its successors in interest.
Rule 144A Letter: As defined in Section 5.02(b).
Sarbanes Certification: As defined in Section 8.12(c).
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan
due on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified herein, shall give effect to any related Debt
Service Reduction and any Deficient Valuation that affects the amount of the
monthly payment due on such Mortgage Loan.
Second-Lien Mortgage Loan: A Mortgage Loan secured by a second-lien
Mortgage on the related Mortgaged Property.
Securities Act: The Securities Act of 1933, as amended.
Senior Enhancement Percentage: With respect to any Distribution
Date, the percentage obtained by dividing (x) the sum of (i) the aggregate Class
Certificate Balance of the Subordinated Certificates and (ii) the Subordinated
Amount (in each case after taking into account the distribution of the Principal
Distribution Amount, including any principal payments on such Classes from the
Supplemental Interest Account and the Supplemental Float Account, for such
Distribution Date) by (y) the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date.
Senior Specified Enhancement Percentage: As of any date of
determination, 46.60%.
Servicer: HomEq Servicing Corporation, a New Jersey corporation, and
its successors in interest, and if a successor servicer is appointed hereunder,
such successor.
Servicer Remittance Report: As defined in Section 4.03(d).
Servicing Advances: The reasonable "out-of-pocket" costs and
expenses (including legal fees) incurred by the Servicer in the performance of
its servicing obligations in connection with a default, delinquency or other
unanticipated event, including, but not limited to, the cost of (i) the
preservation, restoration, inspection and protection of a Mortgaged Property,
(ii) any enforcement, administrative or judicial proceedings, including
foreclosures and litigation, in respect of a particular Mortgage Loan, (iii) the
management (including reasonable fees in connection therewith) and liquidation
of any REO Property and (iv) the performance of its obligations under Sections
3.01, 3.09, 3.13 and 3.15. The Servicing Advances shall also include any
reasonable "out-of-pocket" costs and expenses (including legal fees) incurred by
the Servicer in connection with executing and recording instruments of
satisfaction, deeds of reconveyance or Assignments of Mortgage in connection
with any satisfaction or foreclosure in respect of any Mortgage Loan to the
extent not recovered from the Mortgagor or otherwise payable under this
Agreement. The Servicer shall not be required to make any Nonrecoverable
Servicing Advances.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of Regulation AB, which as of the Closing Date are listed on Exhibit P
hereto.
Servicing Fee: With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in Full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the applicable Stated
Principal Balance of such Mortgage Loan as of the first day of such calendar
month. Such fee shall be payable monthly, and shall be prorated for any portion
of a month during which the Mortgage Loan is serviced by the Servicer under this
Agreement. The Servicing Fee is payable solely from the interest portion
(including recoveries with respect to interest from Liquidation Proceeds,
Subsequent Recoveries, Insurance Proceeds, Condemnation Proceeds and proceeds
received with respect to REO Properties) of such Scheduled Payment collected by
the Servicer, or as otherwise provided under Section 3.11.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per
annum with respect to each remaining Distribution Date.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Servicer consisting of originals or copies of all documents in
the Mortgage File which are not delivered to the Trustee in the Custodial File
and copies of the Mortgage Loan Documents set forth in Exhibit K hereto.
Servicing Function Participant: As defined in Section 3.23(a).
Servicing Officer: Any employee or 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 list may from time to time be amended.
Servicing Transfer Date: With respect to each Mortgage Loan, July
31, 2006.
Similar Law: As defined in Section 5.02(b).
60+ Day Delinquent Mortgage Loan: Each Mortgage Loan with respect to
which any portion of a Scheduled Payment is, as of the last day of the prior Due
Period (not including a Mortgage Loan that became a Liquidated Mortgage Loan
after such last day of the prior Due Period and on or prior to the end of the
Prepayment Period in which such Due Period ends), 60 days or more Delinquent
(without giving effect to any grace period), each Mortgage Loan in foreclosure,
each Mortgage Loan related to REO Property and each Mortgage Loan where the
related Mortgagor has filed for bankruptcy.
Specified Subordinated Amount: Prior to the Stepdown Date, an amount
equal to 2.20% of the Cut-off Date Pool Principal Balance. On and after the
Stepdown Date, an amount equal to 4.40% of the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date, subject, until the
Class Certificate Balance of each Class of LIBOR Certificates has been reduced
to zero, to a minimum amount equal to 0.50% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date; provided, however, that
if, on any Distribution Date, a Trigger Event exists, the Specified Subordinated
Amount shall not be reduced to the applicable percentage of the then current
aggregate Stated Principal Balance of the Mortgage Loans but instead remain the
same as the prior period's Specified Subordinated Amount until the Distribution
Date on which a Trigger Event no longer exists. When the Class Certificate
Balance of each Class of LIBOR Certificates has been reduced to zero, the
Specified Subordinated Amount will thereafter equal zero.
Sponsor: Xxxxxx Funding LLC, a Delaware limited liability company,
and its successors in interest.
Sponsor Representation Letter: The Side Letter, dated as of August
3, 2006, by and between the Sponsor and the Depositor, a copy of which is
attached hereto as Exhibit O.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc. If Standard & Poor's is designated as a Rating
Agency in the Preliminary Statement, for purposes of Section 10.05(c) the
address for notices to Standard & Poor's shall be Standard & Poor's, 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage Surveillance
Group - Securitized Asset Backed Receivables LLC Trust 2006-FR3, or such other
address as Standard & Poor's may hereafter furnish to the Depositor, the Trustee
and the Servicer.
Standard & Poor's Glossary: The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
Startup Day: The Closing Date.
Stated Principal Balance: As to each Mortgage Loan and as of any
date of determination, (i) the principal balance of the Mortgage Loan at the
Cut-off Date after giving effect to payments of principal due on or before such
date (whether or not received), minus (ii) all amounts previously remitted to
the Trustee with respect to the related Mortgage Loan representing payments or
recoveries of principal including advances in respect of scheduled payments of
principal. For purposes of any Distribution Date, the Stated Principal Balance
of any Mortgage Loan will give effect to any scheduled payments of principal
received by the Servicer on or prior to the related Determination Date or
advanced by the Servicer for the related Remittance Date and any unscheduled
principal payments and other unscheduled principal collections received during
the related Prepayment Period, and the Stated Principal Balance of any Mortgage
Loan that has prepaid in full or has become a Liquidated Mortgage Loan during
the related Prepayment Period shall be zero.
Stepdown Date: The later to occur of (i) the earlier to occur of (a)
the Distribution Date in August 2009 and (b) the Distribution Date following the
Distribution Date on which the aggregate Class Certificate Balances of the Class
A Certificates have been reduced to zero and (ii) the first Distribution Date on
which the Senior Enhancement Percentage (calculated for this purpose only after
taking into account payments of principal on the Mortgage Loans applied to
reduce the Stated Principal Balance of the Mortgage Loans for the applicable
Distribution Date but prior to any applications of Principal Distribution Amount
to the Certificates on such Distribution Date) is greater than or equal to the
Senior Specified Enhancement Percentage.
Subcontractor: Any third-party or Affiliated vendor, subcontractor
or other Person utilized by the Servicer, a Subservicer or the Trustee, as
applicable, that is not responsible for the overall servicing (as "servicing" is
commonly understood by participants in the mortgage-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to any of the Mortgage Loans.
Subordinated Amount: As of any Distribution Date, the excess, if
any, of (a) the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date over (b) the aggregate of the Class Certificate Balances
of the LIBOR Certificates as of such Distribution Date (after giving effect to
the payment of the Principal Remittance Amount on such Certificates on such
Distribution Date).
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordination Deficiency: With respect to any Distribution Date, the
excess, if any, of (a) the Specified Subordinated Amount applicable to such
Distribution Date over (b) the Subordinated Amount applicable to such
Distribution Date.
Subordination Reduction Amount: With respect to any Distribution
Date, an amount equal to the lesser of (a) the Excess Subordinated Amount and
(b) the Net Monthly Excess Cash Flow.
Subsequent Recovery: With respect to any Mortgage Loan or related
Mortgaged Property that became a Liquidated Mortgage Loan or was otherwise
disposed of, all amounts received in respect of such Liquidated Mortgage Loan
after an Applied Realized Loss Amount related to such Mortgage Loan or Mortgaged
Property is allocated to reduce the Class Certificate Balance of any Class of
Subordinated Certificates. Any Subsequent Recovery that is received during a
Prepayment Period will be included as part of the Principal Remittance Amount
for the related Distribution Date.
Subservicer: Any Person that services Mortgage Loans on behalf of
the Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Servicer under
this Agreement, with respect to some or all of the Mortgage Loans, that are
identified in Item 1122(d) of Regulation AB.
Subservicing Account: As defined in Section 3.08.
Subservicing Agreements: As defined in Section 3.02(a).
Substitute Mortgage Loan: A Mortgage Loan substituted by the
Responsible Party 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 J, (i) have a Stated Principal Balance, after deduction of all
Scheduled Payments due in the month of substitution, not in excess of the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) be accruing interest at a
rate not lower than and not more than 1% higher than that of the Deleted
Mortgage Loan; (iii) have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Mortgage Loan; (iv) be of the
same type as the Deleted Mortgage Loan; and (v) comply with each representation
and warranty set forth in Section 2.03.
Substitution Adjustment Amount: As defined in Section 2.03.
Supplemental Float Account: The trust account created pursuant to
Section 4.07 of this Agreement consisting of any interest or investment income
earned on funds deposited in the Collection Account, subject to Section 3.21(c).
The Supplemental Float Account shall be an asset of Pooling Tier REMIC-1.
Supplemental Interest Account: The trust account created pursuant to
Section 4.06 of this Agreement consisting of the Cap Agreement, the Interest
Rate Swap Agreement, the Class IO Interest and the right to receive Class IO
Shortfalls, subject to the obligation to pay amounts specified in Section 4.06.
Swap LIBOR: With respect to any Distribution Date (and the related
Interest Accrual Period), the product of (i) USD-LIBOR-BBA (as used in the
Interest Rate Swap Agreement), (ii) two, and (iii) the quotient of (a) the
actual number of days in the Interest Accrual Period for the LIBOR Certificates
divided by (b) 30.
Swap Provider: Barclays Bank PLC, a bank authorized and regulated by
the United Kingdom's Financial Services Authority and a member of the London
Stock Exchange, and its successors in interest.
Swap Termination Payment: Any payment payable by the Trust or the
Swap Provider upon termination of the Interest Rate Swap Agreement as a result
of an Event of Default (as defined in the Interest Rate Swap Agreement) or a
Termination Event (as defined in the Interest Rate Swap Agreement).
Tax Matters Person: The Holder of the (i) Class R-I Certificates and
(ii) Class R-II Certificates designated as "tax matters person" of (i) Pooling
Tier REMIC-1 and (ii) Pooling Tier REMIC-2, the Lower Tier REMIC and the Upper
Tier REMIC, respectively, in the manner provided under Treasury Regulations
Section 1.860F-4(d) and Treasury Regulations Section 301.6231(a)(7)-1.
Tax Service Contract: As defined in Section 3.09(a).
Telerate Page 3750: The display page currently so designated on the
Bridge Telerate Service (or such other page as may replace that page on that
service for displaying comparable rates or prices).
10-K Filing Deadline: As defined in Section 8.12(c).
Termination Price: As defined in Section 9.01.
Total Monthly Excess Spread: As to any Distribution Date, an amount
equal to the excess, if any, of (i) the interest on the Mortgage Loans (other
than Prepayment Interest Excesses) received by the Servicer on or prior to the
related Determination Date or advanced by the Servicer for the related
Remittance Date (net of Expense Fees) over (ii) the sum of (A) the amounts
payable to the Certificates pursuant to Section 4.02(a)(i) on such Distribution
Date, (B) any Net Swap Payments to the Swap Provider and (C) any Swap
Termination Payment (other than a Defaulted Swap Termination Payment) to the
Swap Provider.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: Either a Cumulative Loss Trigger Event or a
Delinquency Trigger Event.
Trust: The express trust created hereunder in Section 2.01(c).
Trust Fund: The corpus of the trust created hereunder consisting of
(i) the Mortgage Loans and all interest and principal with respect thereto
received on or after the related Cut-off Date, other than such amounts which
were due on the Mortgage Loans on or prior to the related Cut-off Date; (ii) the
Collection Account, Excess Reserve Fund Account, the Distribution Account, the
Supplemental Float 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 Cap Agreement; (v) the Interest Rate Swap Agreement; (vi)
the Supplemental Interest Account; (vii) the Closing Date Deposit Amount; (viii)
the Sponsor Representation Letter; and (ix) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing.
Trust REMIC: Any of Pooling Tier REMIC-1, Pooling Tier REMIC-2, the
Lower Tier REMIC or the Upper Tier REMIC, as applicable.
Trustee: Xxxxx Fargo Bank, National Association, a national banking
association, and its successors in interest and, if a successor trustee is
appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to the
product of (a) one-twelfth of the Trustee Fee Rate and (b) the aggregate Stated
Principal Balance of the Mortgage Loans as of the preceding Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.002% per
annum.
Underwriters' Exemption: Any exemption listed under footnote 1 of,
and amended by, Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487
(2002), or any successor exemption.
Underwriting Guidelines: The underwriting guidelines attached to the
Purchase Agreement.
Unpaid Interest Amount: As of any Distribution Date and any Class of
Certificates, the sum of (a) the portion of the Accrued Certificate Interest
Distribution Amount from Distribution Dates prior to the current Distribution
Date remaining unpaid immediately prior to the current Distribution Date and (b)
interest on the amount in clause (a) above at the applicable Pass-Through Rate
(to the extent permitted by applicable law).
Unpaid Realized Loss Amount: With respect to any Class of
Subordinated Certificates and as to any Distribution Date, is the excess of (i)
the Applied Realized Loss Amounts with respect to such Class over (ii) the sum
of (a) all distributions in reduction of such Applied Realized Loss Amounts on
all previous Distribution Dates, and (b) the amount by which the Class
Certificate Balance of such Class has been increased due to the distribution of
any Subsequent Recoveries on all previous Distribution Dates. Any amounts
distributed to a Class of Subordinated Certificates in respect of any Unpaid
Realized Loss Amount will not be applied to reduce the Class Certificate Balance
of such Class.
Upper Tier Carry Forward Amount: With respect to each Class of LIBOR
Certificates, as of any Distribution Date, the sum of (A) if on such
Distribution Date the Upper Tier REMIC Interest Rate for the Corresponding Class
of Upper Tier REMIC Regular Interest is based upon the Upper Tier REMIC Net WAC
Rate, the excess, if any, of (i) the Accrued Certificate Interest Distribution
Amount such Class of LIBOR Certificates would otherwise be entitled to receive
on such Distribution Date taking into account the Net WAC Rate Cap, over (ii)
the Accrued Certificate Interest Distribution Amount such Class of Upper Tier
REMIC Regular Interest would otherwise be entitled to receive on such
Distribution Date taking into account the Upper Tier REMIC Net WAC Rate and (B)
the Upper Tier Carry Forward Amount for such Class of Certificates for all
previous Distribution Dates not previously paid, together with interest thereon
at a rate equal to the applicable Upper Tier REMIC Interest Rate for such Class
of Certificates for such Distribution Date, without giving effect to the Upper
Tier REMIC Net WAC Rate.
Upper Tier REMIC: As described in the Preliminary Statement.
Upper Tier REMIC Net WAC Rate: For any Distribution Date, the
weighted average of the Lower Tier REMIC Interest Rate of the Lower Tier REMIC
Regular Interests (other than the Class LT-IO Interest), weighted on the basis
of the Lower Tier REMIC Principal Amounts.
Upper Tier REMIC Regular Interest: As described in the Preliminary
Statement.
U.S. Person: (i) A citizen or resident of the United States; (ii) a
corporation (or entity treated as a corporation for tax purposes) created or
organized in the United States or under the laws of the United States or of any
State thereof, including, for this purpose, the District of Columbia; (iii) a
partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any State
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations); (iv) an estate whose income is
includible in gross income for United States income tax purposes regardless of
its source; or (v) 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 U.S. Persons have authority to control substantial decisions of the trust.
Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as U.S. Persons prior to such date, may elect to continue to
be U.S. Persons.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X
Certificates, if any (such Voting Rights to be allocated among the Holders of
Certificates of each such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class P
Certificates, if any, and (c) the remaining Voting Rights shall be allocated
among Holders of the remaining Classes of Certificates in proportion to the
Certificate Balances of their respective Certificates on such date.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans. (a) The Depositor,
concurrently with the execution and delivery hereof, hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for the benefit of the
Certificateholders, without recourse, all the right, title and interest of the
Depositor in and to the Trust Fund, and the Trustee, on behalf of the Trust,
hereby accepts the Trust Fund. On the Closing Date, the Depositor shall pay,
without any right of reimbursement from the Trust, to the Cap Provider the
"Fixed Amount" (as defined in the related Cap Agreement) due and payable to the
Cap Provider pursuant to the terms of each Cap Agreement.
(b) In connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered or caused to be delivered to the Trustee for
the benefit of the Certificateholders the following documents or instruments
with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note bearing all intervening endorsements
showing a complete chain of endorsement from the originator to the last
endorsee, endorsed "Pay to the order of _____________, without recourse"
and signed (which may be by facsimile signature) in the name of the last
endorsee by an authorized officer. To the extent that there is no room on
the face of the Mortgage Notes for endorsements, the endorsement may be
contained on an allonge, if state law so allows and the Trustee is so
advised in writing by the Responsible Party that state law so allows;
(ii) the original of any guarantee executed in connection with the
Mortgage Note;
(iii) the original Mortgage with evidence of recording thereon. If,
in connection with any Mortgage Loan, the original Mortgage cannot be
delivered with evidence of recording thereon on or prior to the Closing
Date because of a delay caused by the public recording office where such
Mortgage has been delivered for recordation or because such Mortgage has
been lost or because such public recording office retains the original
recorded Mortgage, the Responsible Party shall deliver or cause to be
delivered to the Trustee a photocopy of such Mortgage, together with (A)
in the case of a delay caused by the public recording office, an Officer's
Certificate of the Responsible Party (or certified by the title company,
escrow agent, or closing attorney) stating that such Mortgage has been
dispatched to the appropriate public recording office for recordation and
that the original recorded Mortgage or a copy of such Mortgage certified
by such public recording office to be a true and complete copy of the
original recorded Mortgage will be promptly delivered to the Trustee upon
receipt thereof by the Responsible Party; or (B) in the case of a Mortgage
where a public recording office retains the original recorded Mortgage or
in the case where a Mortgage is lost after recordation in a public
recording office, a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage;
(iv) the originals of all assumption, modification, consolidation
and extension agreements, if any, with evidence of recording thereon;
(v) the original Assignment of Mortgage for each Mortgage Loan
endorsed in blank (except with respect to MERS Designated Loans);
(vi) the originals of all intervening assignments of Mortgage (if
any) evidencing a complete chain of assignment from the applicable
originator to the last endorsee (or, in the case of a MERS Designated
Loan, MERS) with evidence of recording thereon, or if any such intervening
assignment has not been returned from the applicable recording office or
has been lost or if such public recording office retains the original
recorded assignments of Mortgage, the Responsible Party shall deliver or
cause to be delivered a photocopy of such intervening assignment, together
with (A) in the case of a delay caused by the public recording office, an
Officer's Certificate of the Responsible Party or a certificate from an
escrow company, a title company or a closing attorney stating that such
intervening assignment of Mortgage has been dispatched to the appropriate
public recording office for recordation and that such original recorded
intervening assignment of Mortgage or a copy of such intervening
assignment of Mortgage certified by the appropriate public recording
office to be a true and complete copy of the original recorded intervening
assignment of Mortgage will be promptly delivered to the Trustee upon
receipt thereof by the Responsible Party; or (B) in the case of an
intervening assignment where a public recording office retains the
original recorded intervening assignment or in the case where an
intervening assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original recorded
intervening assignment;
(vii) the original mortgagee title insurance policy or, in the event
such original title policy is unavailable, a copy of the title policy,
certified by the Responsible Party, or certified true copy of the related
policy binder or commitment for title certified to be true and complete by
the title insurance company;
(viii) the original or, if unavailable, a copy of any security
agreement, chattel mortgage or equivalent document executed in connection
with the Mortgage (if provided); and
(ix) if any of the above documents has been executed by a person
holding a power of attorney, an original or photocopy of such power
certified by the Responsible Party to be a true and correct copy of the
original.
To the extent not previously delivered to the Sponsor pursuant to
the Purchase Agreement, the Responsible Party shall promptly upon receipt from
the respective recording office cause to be delivered to the Trustee the
original recorded document described in (iii), (iv) and (vi) above.
From time to time, the Responsible Party, the Depositor or the
Servicer, as applicable, shall forward to the Trustee, additional original
documents, additional documents evidencing an assumption, modification,
consolidation or extension of a Mortgage Loan, in accordance with the terms of
this Agreement upon receipt of such documents. All such mortgage documents held
by the Trustee as to each Mortgage Loan shall constitute the "Custodial File".
To the extent not previously delivered to the Sponsor pursuant to
this Agreement, on or prior to the Closing Date, the Responsible Party shall
deliver to the Trustee, Assignments of Mortgages, in blank, for each Mortgage
Loan that is not a MERS Designated Loan. No later than thirty (30) Business Days
following the later of the Closing Date and the date of receipt by the Servicer
of the complete recording information for a Mortgage, the Servicer shall
promptly submit or cause to be submitted for recording, at the expense of the
Responsible Party and at no expense to the Trust Fund, the Trustee, the Servicer
or the Depositor, in the appropriate public office for real property records,
each Assignment of Mortgage referred to in Section 2.01(b)(v). Notwithstanding
the foregoing, however, for administrative convenience and facilitation of
servicing and to reduce closing costs, the Assignments of Mortgage shall not be
required to be completed and submitted for recording with respect to any
Mortgage Loan (i) if the Trustee and each Rating Agency have received an Opinion
of Counsel, satisfactory in form and substance to the Trustee and each Rating
Agency to the effect that the recordation of such Assignments of Mortgage in any
specific jurisdiction is not necessary to protect the Trustee's interest in the
related Mortgage Note, (ii) if such Mortgage Loan is a MERS Designated Mortgage
Loan or (iii) if the Rating Agencies have each notified the Depositor and the
Servicer in writing that not recording any such Assignments of Mortgage would
not cause the initial ratings on any LIBOR Certificates to be downgraded or
withdrawn; provided, however, that the Servicer shall not be held responsible or
liable for any loss that occurs because an Assignment of Mortgage was not
recorded, but only to the extent the Servicer does not have prior knowledge of
the act or omission that causes such loss. Unless the Depositor gives the
Servicer notice to the contrary, the Depositor is deemed to have given the
Servicer notice that the condition set forth in clause (iii) above is
applicable. In addition to the foregoing, the Servicer shall cause each
Assignment of Mortgage to be recorded in accordance with Accepted Servicing
Practices in order to convey, upon foreclosure, the title of any Mortgaged
Property to the Trust as set forth in Section 3.17 hereof. If the Assignment of
Mortgage is to be recorded, the applicable Mortgage shall be assigned by the
Responsible Party, at the expense of the Responsible Party to "Xxxxx Fargo Bank,
National Association, as trustee under the Pooling and Servicing Agreement dated
as of July 1, 2006, Securitized Asset Backed Receivables LLC Trust 2006-FR3". In
the event that any such Assignment of Mortgage is lost or returned unrecorded
because of a defect therein, the Responsible Party shall promptly cause to be
delivered a substitute Assignment of Mortgage to cure such defect and thereafter
cause each such assignment to be duly recorded at no expense to the Trust Fund.
In the event that such original or copy of any document submitted
for recordation to the appropriate public recording office is not so delivered
to the Trustee within 180 days (or such other time period as may be required by
any Rating Agency) following the Closing Date, and in the event that the
Responsible Party does not cure such failure within 30 days of discovery or
receipt of written notification of such failure from the Depositor, the related
Mortgage Loan shall, upon the request of the Depositor, be repurchased by the
Responsible Party at the price and in the manner specified in Section 2.03. The
foregoing repurchase obligation shall not apply in the event that the
Responsible Party cannot deliver such original or copy of any document submitted
for recordation to the appropriate public recording office within the specified
period due to a delay caused by the recording office in the applicable
jurisdiction; provided, that the Responsible Party shall instead deliver a
recording receipt of such recording office or, if such recording receipt is not
available, an officer's certificate of an officer of the Responsible Party,
confirming that such document has been accepted for recording.
Notwithstanding anything to the contrary contained in this Section
2.01, in those instances where the public recording office retains or loses the
original Mortgage or assignment after it has been recorded, the obligations of
the Responsible Party shall be deemed to have been satisfied upon delivery by
the Responsible Party to the Trustee, prior to the Closing Date of a copy of
such Mortgage or assignment, as the case may be, certified (such certification
to be an original thereof) by the public recording office to be a true and
complete copy of the recorded original thereof.
(c) The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust (the "Trust") to be known, for convenience, as "Securitized Asset Backed
Receivables LLC Trust 2006-FR3" and Xxxxx Fargo Bank, National Association is
hereby appointed as Trustee in accordance with the provisions of this Agreement.
The parties hereto acknowledge and agree that it is the policy and intention of
the Trust to acquire only Mortgage Loans meeting the requirements set forth in
this Agreement, including without limitation, the representation and warranty
set forth in paragraph (aaa) of Schedule III. The Trust's fiscal year is the
calendar year.
(d) The Trust shall have the capacity, power and authority, and the
Trustee on behalf of the Trust is hereby authorized, to accept the sale,
transfer, assignment, set over and conveyance by the Depositor to the Trust of
all the right, title and interest of the Depositor in and to the Trust Fund
(including, without limitation, the Mortgage Loans, the Cap Agreement and the
Interest Rate Swap Agreement) pursuant to Section 2.01(a). The Trustee on behalf
of the Trust is hereby authorized to enter into the Cap Agreement and the
Interest Rate Swap Agreement.
Section 2.02 Acceptance by the Trustee of the Mortgage Loans. The
Trustee shall acknowledge, on the Closing Date, receipt by the Trustee, of the
documents identified in the Initial Certification in the form annexed hereto as
Exhibit E ("Initial Certification"), and declares that it holds and will hold
such documents and the other documents delivered to it pursuant to Section 2.01,
and that it holds or will hold such other assets as are included in the Trust
Fund, in trust for the exclusive use and benefit of all present and future
Certificateholders. The Trustee shall maintain possession of the related
Mortgage Notes in the States of Minnesota, California or Utah, unless otherwise
permitted by the Rating Agencies.
In connection with the Closing Date, the Trustee shall be required
to deliver via facsimile (with original to follow the next Business Day) to the
Depositor an Initial Certification prior to the Closing Date, or, as the
Depositor agrees on the Closing Date, certifying receipt of a Mortgage Note and
Assignment of Mortgage for each Mortgage Loan. The Trustee shall not be
responsible to verify the validity, sufficiency or genuineness of any document
in any Custodial File.
Within 90 days after the Closing Date, the Trustee shall ascertain
that all documents identified in the Document Certification and Exception Report
in the form attached hereto as Exhibit F are in its possession, and shall
deliver to the Depositor and the Servicer a Document Certification and Exception
Report, in the form annexed hereto as Exhibit F, to the effect that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such certification
as an exception and not covered by such certification): (i) all documents
identified in the Document Certification and Exception Report and required to be
reviewed by it are in its possession; (ii) such documents have been reviewed by
it and appear regular on their face and relate to such Mortgage Loan; (iii)
based on its examination and only as to the foregoing documents, the information
set forth in items (1), (2), (3), (15), (22) and (29) of the Data Tape
Information respecting such Mortgage Loan is correct; and (iv) each Mortgage
Note has been endorsed as provided in Section 2.01 of this Agreement. The
Trustee shall not be responsible to verify the validity, sufficiency or
genuineness of any document in any Custodial File.
The Trustee shall retain possession and custody of each Custodial
File in accordance with and subject to the terms and conditions set forth
herein. The Servicer shall promptly deliver to the Trustee, upon the execution
or receipt thereof, the originals of such other documents or instruments
constituting the Custodial File as come into the possession of the Servicer from
time to time.
The Responsible Party shall deliver to the Servicer copies of all
trailing documents required to be included in the Custodial File at the same
time the original or certified copies thereof are delivered to the Trustee,
including but not limited to such documents as the title insurance policy and
any other Mortgage Loan documents upon return from the public recording office.
The documents shall be delivered to the Responsible Party at the Responsible
Party's expense to the Servicer.
Section 2.03 Representations, Warranties and Covenants of the
Responsible Party and the Servicer; Remedies for Breaches of Representations and
Warranties with Respect to the Mortgage Loans. (a) The Servicer hereby makes the
representations and warranties set forth in Schedule II hereto to the Depositor
and the Trustee, as of the Closing Date.
(b) The Responsible Party hereby makes the representations and
warranties set forth in Schedule III and Schedule IV hereto to the Depositor and
the Trustee, as of the Closing Date. The Depositor hereby makes the
representations and warranties set forth in Schedule V hereto to the Trustee, as
of the dates set forth in such Schedule.
(c) It is understood and agreed by the Servicer and the Responsible
Party that the representations and warranties set forth in this Section 2.03
shall survive the transfer of the Mortgage Loans by the Depositor to the Trustee
on the Closing Date, and shall inure to the benefit of the Depositor and the
Trustee notwithstanding any restrictive or qualified endorsement on any Mortgage
Note or Assignment of Mortgage or the examination or failure to examine any
Mortgage File. Upon discovery by any of the Responsible Party, the Depositor,
the Trustee or the Servicer of a breach of any of the foregoing representations
and warranties, the party discovering such breach shall give prompt written
notice to the others. The Trustee shall enforce the rights of the Trust under
the Sponsor Representation Letter.
(d) Within 30 days of the earlier of either discovery by or notice
to the Responsible Party that any Mortgage Loan does not conform to the
requirements as determined in the Trustee's review of the related Custodial File
or within 60 days of the earlier of either discovery by or notice to the
Responsible Party of any breach of a representation or warranty, set forth in
Section 2.03(b), that materially and adversely affects the value of any Mortgage
Loan or the interest of the Trustee or the Certificateholders therein, the
Responsible Party shall use its best efforts to cause to be remedied a material
defect in a document constituting part of a Mortgage File or promptly to cure
such breach in all material respects and, if such defect or breach cannot be
remedied, the Responsible Party shall, at the Depositor's option as specified in
writing and provided to the Responsible Party and the Trustee, (i) if such 30-
or 60-day period, as applicable, expires prior to the second anniversary of the
Closing Date, remove such Mortgage Loan (a "Deleted Mortgage Loan") from the
Trust Fund and substitute in its place a Substitute Mortgage Loan, in the manner
and subject to the conditions set forth in this Section 2.03; or (ii) repurchase
such Mortgage Loan at the Repurchase Price; provided, however, that any such
substitution pursuant to clause (i) above shall not be effected prior to the
delivery to the Trustee of a Request for Release substantially in the form of
Exhibit J, and the delivery of the Mortgage File to the Trustee for any such
Substitute Mortgage Loan. Notwithstanding the foregoing, a breach (i) which
causes a Mortgage Loan not to constitute a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code or (ii) by the Responsible Party of
any of the representations and warranties identified as a Deemed Material and
Adverse Representation on Schedule III will be deemed automatically to
materially and adversely affect the value of such Mortgage Loan and the
interests of the Trustee and Certificateholders in such Mortgage Loan. In the
event that the Trustee receives notice from any party discovering a breach of
such breach by the Responsible Party of any of the representations and
warranties identified as a Deemed Material and Adverse Representation on
Schedule III, the Trustee shall give notice of such breach to the Responsible
Party and request the Responsible Party to repurchase the Mortgage Loan at the
Repurchase Price within sixty (60) days of receipt by the Responsible Party of
such notice. The Responsible Party shall repurchase each such Mortgage Loan
within 60 days of the earlier of discovery or receipt of notice with respect to
each such Mortgage Loan. Within 90 days of the earlier of either discovery by or
notice to the Depositor of any breach of a representation or warranty set forth
in clause (a) or (b) of Schedule V hereto with respect to any Mortgage Loan that
is also a breach of the representation and warranty set forth in clause (g) or
(aaa), as applicable, of Schedule III and the Responsible Party has not
repurchased such Mortgage Loan within the applicable time period for repurchase
set forth above, the Depositor shall repurchase such Mortgage Loan at the
Repurchase Price or substitute a Substitute Mortgage Loan for such Mortgage
Loan.
(e) With respect to any Substitute Mortgage Loan or Loans, the
Responsible Party shall deliver to the Trustee for the benefit of the
Certificateholders the Mortgage Note, the Mortgage, the related assignment of
the Mortgage, and such other documents and agreements as are required by Section
2.01, with the Mortgage Note endorsed and the Mortgage assigned as required by
Section 2.01. No substitution is permitted to be made with respect to any
Distribution Date after the end of the related Prepayment Period. Scheduled
Payments due with respect to Substitute Mortgage Loans in the Due Period of
substitution shall not be part of the Trust Fund and will be retained by the
Responsible Party on the next succeeding Distribution Date. For the Due Period
of substitution, distributions to Certificateholders will include the Scheduled
Payment due on any Deleted Mortgage Loan for such Due Period and thereafter the
Responsible Party shall be entitled to retain all amounts received in respect of
such Deleted Mortgage Loan.
(f) The Servicer, based upon information provided by the Depositor
or the Responsible Party, shall amend the Mortgage Loan Schedule for the benefit
of the Certificateholders to reflect the removal of such Deleted Mortgage Loan
and the substitution of the Substitute Mortgage Loan or Loans and the Servicer
shall deliver the amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, the Substitute Mortgage Loan or Loans shall be subject to the
terms of this Agreement in all respects, and the Responsible Party shall be
deemed to have made with respect to such Substitute Mortgage Loan or Loans, as
of the date of substitution, the representations and warranties made pursuant to
Section 2.03(b) with respect to such Mortgage Loan. Upon any such substitution
and the deposit to the Collection Account of the amount required to be deposited
therein in connection with such substitution as described in the following
paragraph, the Trustee shall release the Mortgage File held for the benefit of
the Certificateholders relating to such Deleted Mortgage Loan to the Responsible
Party and shall execute and deliver at the Responsible Party's direction such
instruments of transfer or assignment prepared by the Responsible Party, in each
case without recourse, as shall be necessary to vest title in the Responsible
Party, of the Trustee's interest in any Deleted Mortgage Loan substituted for
pursuant to this Section 2.03.
(g) For any month in which the Responsible Party substitutes one or
more Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Servicer will determine the amount (if any) by which the aggregate unpaid
principal balance of all such Substitute Mortgage Loans as of the date of
substitution is less than the aggregate unpaid principal balance of all such
Deleted Mortgage Loans. The amount of such shortage plus an amount equal to the
aggregate of any unreimbursed Advances with respect to such Deleted Mortgage
Loans (collectively, the "Substitution Adjustment Amount") shall be remitted by
the Responsible Party to the Servicer for deposit into the Collection Account on
or before the Distribution Account Deposit Date for the Distribution Date in the
month succeeding the calendar month during which the related Mortgage Loan
became required to be purchased or replaced hereunder.
(h) In addition to such repurchase or substitution obligation
referred to in Section 2.03(d), the Responsible Party shall indemnify the
Depositor, any of its Affiliates, the Servicer, the Trustee and the Trust and
hold such parties harmless against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments
and other costs and expenses (including, without limitation, any taxes payable
by the Trust) resulting from any third party claim, demand, defense or assertion
based on or grounded upon, or resulting from, a breach by the Responsible Party
of any of its representations and warranties or obligations contained in this
Agreement. This indemnity shall survive the termination of this Agreement.
(i) In addition to such repurchase or substitution obligation
referred to in Section 2.03(d), the Depositor shall indemnify the Trust and hold
the Trust harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses (including, without limitation, any taxes payable by the Trust)
resulting from any third party claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach by the Depositor of any of its
representations and warranties or obligations contained in this Agreement. This
indemnity shall survive the termination of this Agreement.
(j) The Servicer shall amend the Mortgage Loan Schedule for the
benefit of the Certificateholders to reflect the removal of such Deleted
Mortgage Loan and the Servicer shall deliver the amended Mortgage Loan Schedule
to the Trustee.
(k) In the event that a Mortgage Loan shall have been repurchased
pursuant to this Agreement or the Sponsor Representation Letter, the proceeds
from such repurchase shall be deposited by the Servicer in the Collection
Account pursuant to Section 3.10 on or before the Distribution Account Deposit
Date for the Distribution Date in the month following the month during which the
applicable Person became obligated to repurchase or replace such Mortgage Loan
and upon such deposit of the Repurchase Price, and receipt of a Request for
Release in the form of Exhibit J hereto, the Trustee shall release the related
Custodial File held for the benefit of the Certificateholders to such Person as
directed by the Servicer, and the Trustee shall execute and deliver at such
Person's direction such instruments of transfer or assignment prepared by such
Person, in each case without recourse, as shall be necessary to transfer title
from the Trustee. In accordance with Section 10.05(b), the Trustee shall
promptly notify each Rating Agency of a purchase of a Mortgage Loan pursuant to
this Section 2.03.
It is understood and agreed that the obligation of the Responsible
Party under this Agreement to cure, repurchase or substitute any Mortgage Loan
as to which a breach of a representation and warranty has occurred and is
continuing, together with any related indemnification obligations of the
Responsible Party set forth in Section 2.03(h), shall constitute the sole
remedies against such Person respecting such breach available to
Certificateholders, the Depositor and any of its Affiliates, or the Trustee on
their behalf.
It is understood and agreed that the obligation of the Depositor
under this Agreement to cure, repurchase or substitute any Mortgage Loan as to
which a breach of a representation and warranty has occurred and is continuing,
together with any related indemnification obligations of the Depositor set forth
in Section 2.03(i), shall constitute the sole remedies against such Person
respecting such breach available to Certificateholders, the Trust, or the
Trustee on their behalf.
The provisions of this Section 2.03 shall survive delivery of the
respective Custodial Files to the Trustee for the benefit of the
Certificateholders.
Section 2.04 [Reserved].
Section 2.05 Execution and Delivery of Certificates. The Trustee
acknowledges the transfer and assignment to it of the Trust Fund and,
concurrently with such transfer and assignment, has executed and delivered to or
upon the order of the Depositor, the Certificates in authorized Denominations
evidencing directly or indirectly the entire ownership of the Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates.
Section 2.06 REMIC Matters. The Preliminary Statement sets forth the
designations for federal income tax purposes of all interests created hereby.
The "Startup Day" of each Trust REMIC for purposes of the REMIC Provisions shall
be the Closing Date. The "latest possible maturity date" of the regular
interests in each Trust REMIC is the Distribution Date occurring in May 2036,
which is the Distribution Date in the month following the latest Mortgage Loan
maturity date.
Amounts distributable to the Class X Certificates (prior to any
reduction for any Basis Risk Payment, Net Swap Payment or Swap Termination
Payment), exclusive of any amounts received from the Swap Provider, shall be
deemed paid from the Upper Tier REMIC in respect of the Class X Interest and the
Class IO Interest to the Holders of the Class X Certificates prior to
distribution of any Basis Risk Payments to the LIBOR Certificates or Swap
Termination Payment to the Swap Provider.
For federal income tax purposes, any amount distributed on the LIBOR
Certificates on any Distribution Date in excess of the amount distributable on
their Corresponding Class of Upper Tier Regular Interest on such Distribution
Date shall be treated as having been paid from the Excess Reserve Fund Account
or the Supplemental Interest Account, as applicable, and any amount
distributable on such Corresponding Class of Upper Tier Regular Interest on such
Distribution Date in excess of the amount distributable on the Corresponding
Class of LIBOR Certificates on such Distribution Date shall be treated as having
been paid to the Supplemental Interest Account, all pursuant to and as further
provided in Section 8.13.
Section 2.07 Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Trustee and the
Servicer that as of the date of this Agreement or as of such date specifically
provided herein:
(a) The Depositor is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(b) The Depositor has the power and authority to convey the Mortgage
Loans and to execute, deliver and perform, and to enter into and consummate
transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed
and delivered by the Depositor, all requisite company action having been taken,
and, assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes or will constitute the legal, valid and binding
agreement of the Depositor, enforceable against the Depositor in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of, or registration
or filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Depositor
with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been received or obtained on or
prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the certificate of formation or limited liability company
agreement of the Depositor, or (B) of any term, condition or provision of any
material indenture, deed of trust, contract or other agreement or instrument to
which the Depositor or any of its subsidiaries is a party or by which it or any
of its subsidiaries is bound; (ii) results or will result in a violation of any
law, rule, regulation, order, judgment or decree applicable to the Depositor of
any court or governmental authority having jurisdiction over the Depositor or
its subsidiaries; or (iii) results in the creation or imposition of any lien,
charge or encumbrance which would have a material adverse effect upon the
Mortgage Loans or any documents or instruments evidencing or securing the
Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement;
(g) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that would materially and adversely affect its
performance hereunder; and
(h) Immediately prior to the transfer and assignment by the
Depositor to the Trustee on the Closing Date, the Depositor had good title to,
and was the sole owner of each Mortgage Loan, free of any interest of any other
Person, and the Depositor has transferred all right, title and interest in each
Mortgage Loan to the Trustee. The transfer of the Mortgage Note and the Mortgage
as and in the manner contemplated by this Agreement is sufficient either (i)
fully to transfer to the Trustee, for the benefit of the Certificateholders, all
right, title, and interest of the Depositor thereto as note holder and mortgagee
or (ii) to grant to the Trustee, for the benefit of the Certificateholders, the
security interest referred to in Section 10.04.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.07 shall survive delivery of the
respective Custodial Files to the Trustee and shall inure to the benefit of the
Trustee.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicer to Service Mortgage Loans. (a) For and on
behalf of the Certificateholders, the Servicer shall service and administer the
Mortgage Loans in accordance with the terms of this Agreement and the respective
Mortgage Loans and, to the extent consistent with such terms, in the same manner
in which it services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:
(i) any relationship that the Servicer, any Subservicer or any
Affiliate of the Servicer or any Subservicer may have with the related
Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the
Servicer or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or Servicing
Advances; or
(iv) the Servicer's or any Subservicer's right to receive
compensation for its services hereunder or with respect to any particular
transaction.
To the extent consistent with the foregoing, if the Servicer shall
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes. Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, the Servicer
shall have full power and authority, acting alone or through Subservicers as
provided in Section 3.02, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer in its
own name or in the name of a Subservicer is hereby authorized and empowered by
the Trustee when the Servicer believes it appropriate in its best judgment in
accordance with Accepted Servicing Practices, to execute and deliver any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the Mortgage
Loans and the Mortgaged Properties and to institute foreclosure proceedings or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such
properties, and to hold or cause to be held title to such properties, on behalf
of the Trustee. The Servicer shall be responsible for preparing and recording
all lien releases and mortgage satisfactions in accordance with state and local
regulations, and shall be responsible for all expenses in connection therewith
if not paid by the Mortgagor if permitted by applicable law and the related
Mortgage Loan Documents (except if such expense would constitute a Servicing
Advance) and all other consequences resulting from its failure to fully
discharge such obligation. The Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.16, the Trustee shall execute, at the
written request of the Servicer, and furnish to the Servicer and any Subservicer
such documents provided to the Trustee as are necessary or appropriate to enable
the Servicer or any Subservicer to carry out their servicing and administrative
duties hereunder, and the Trustee hereby grants to the Servicer, and this
Agreement shall constitute, a power of attorney to carry out such duties
including a power of attorney to take title to Mortgaged Properties after
foreclosure on behalf of the Trustee. The Trustee shall execute a separate power
of attorney, furnished to it by the Servicer, in favor of the Servicer for the
purposes described herein to the extent necessary or desirable to enable the
Servicer to perform its duties hereunder. The Trustee shall not be liable for
the actions of the Servicer or any Subservicers under such powers of attorney.
(b) Subject to Section 3.09(b), in accordance with the standards of
the preceding paragraph, the Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3.09(b), and further as provided in Section 3.11.
Any cost incurred by the Servicer or by Subservicers in effecting the timely
payment of taxes and assessments on a Mortgaged Property shall not be added to
the unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.
(c) Notwithstanding anything in this Agreement to the contrary, the
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.01) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions resulting
from actual payments of principal) or change the final maturity date on such
Mortgage Loan (except for a reduction of interest payments resulting from the
application of the Servicemembers Civil Relief Act or any similar state
statutes) or (ii) permit any modification, waiver or amendment of any term of
any Mortgage Loan that would both (A) effect an exchange or reissuance of such
Mortgage Loan under Section 1001 of the Code (or final, temporary or proposed
Treasury regulations promulgated thereunder) and (B) cause any Trust REMIC to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions after the startup day" under the
REMIC Provisions, or (iii) except as provided in Section 3.07(a), waive any
Prepayment Charges.
(d) The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Servicer
from the responsibilities or liabilities arising under this Agreement.
Section 3.02 Subservicing Agreements between the Servicer and
Subservicers. (a) The Servicer may enter into subservicing agreements with
Subservicers for the servicing and administration of the Mortgage Loans
("Subservicing Agreements"). The Servicer represents and warrants to the other
parties hereto that no Subservicing Agreement is in effect as of the Closing
Date with respect to any Mortgage Loans required to be serviced by it hereunder.
The Servicer shall give notice to the Depositor and the Trustee of any such
Subservicer and Subservicing Agreement, which notice shall contain all
information (including without limitation a copy of the Subservicing Agreement)
reasonably necessary to enable the Trustee, pursuant to Section 8.12(g), to
accurately and timely report the event under Item 6.02 of Form 8-K pursuant to
the Exchange Act (if such reports under the Exchange Act are required to be
filed under the Exchange Act). No Subservicing Agreement shall be effective
until 30 days after such written notice is received by both the Depositor and
the Trustee. The Trustee shall not be required to review or consent to such
Subservicing Agreements and shall have no liability in connection therewith.
(b) Each Subservicer shall be (i) authorized to transact business in
the state or states in which the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution that has deposit accounts
insured by the FDIC and (iii) a Xxxxxxx Mac or Xxxxxx Mae approved mortgage
servicer. Each Subservicing Agreement must impose on the Subservicer
requirements conforming to the provisions set forth in Section 3.08 and provide
for servicing of the Mortgage Loans consistent with the terms of this Agreement.
The Servicer will examine each Subservicing Agreement and will be familiar with
the terms thereof. The terms of any Subservicing Agreement will not be
inconsistent with any of the provisions of this Agreement. The Servicer and the
Subservicers may enter into and make amendments to the Subservicing Agreements
or enter into different forms of Subservicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Trustee, without the consent of
the Trustee. Any variation without the consent of the Trustee from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Subservicing Accounts, or credits and charges to the
Subservicing Accounts or the timing and amount of remittances by the
Subservicers to the Servicer, are conclusively deemed to be inconsistent with
this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee and the Depositor copies of all Subservicing Agreements, and any
amendments or modifications thereof, promptly upon the Servicer's execution and
delivery of such instruments.
(c) As part of its servicing activities hereunder, the Servicer
(except as otherwise provided in the last sentence of this paragraph), for the
benefit of the Trustee, shall enforce the obligations of each Subservicer under
the related Subservicing Agreement, including, without limitation, any
obligation to make advances in respect of delinquent payments as required by a
Subservicing Agreement. Such enforcement, including, without limitation, the
legal prosecution of claims, termination of Subservicing Agreements, and the
pursuit of other appropriate remedies, shall be in such form and carried out to
such an extent and at such time as the Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.
(d) The Servicer shall cause any Subservicer engaged by the Servicer
(or by any Subservicer) for the benefit of the Depositor and the Trustee to
comply with the provisions of this Section 3.02 and with Sections 3.22, 3.23,
6.02 and 6.05 of this Agreement to the same extent as if such Subservicer were
the Servicer, and to provide the information required with respect to such
Subservicer under Section 8.12 of this Agreement. The Servicer shall be
responsible for obtaining from each such Subservicer and delivering to
applicable Persons any servicer compliance statement required to be delivered by
such Subservicer under Section 3.22 and any assessment of compliance report and
related accountant's attestation required to be delivered by such Subservicer
under Section 3.23, in each case as and when required to be delivered.
(e) Subject to the conditions set forth in this Section 3.02(e), the
Servicer and any Subservicer engaged by the Servicer is permitted to utilize one
or more Subcontractors to perform certain of its obligations hereunder. The
Servicer shall promptly upon request provide to the Depositor and the Trustee a
written description (in form and substance satisfactory to the Depositor and the
Trustee) of the role and function of each Subcontractor utilized by the Servicer
or any such Subservicer, specifying, not later than the date specified for
delivery of the annual report on assessment of compliance set forth in Section
3.23(a) (i) the identity of each such Subcontractor, if any, that is
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, and (ii) which elements of the Servicing Criteria will be
addressed in assessments of compliance provided by each Subcontractor identified
pursuant to clause (i) of this paragraph. As a condition to the utilization by
the Servicer or any such Subservicer of any Subcontractor determined to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer (or by any such Subservicer) for the benefit of the Depositor and the
Trustee to comply with the provisions of Section 3.23 of this Agreement to the
same extent as if such Subcontractor were the Servicer. The Servicer shall be
responsible for obtaining from each such Subcontractor and delivering to the
applicable Persons any assessment of compliance report and related accountant's
attestation required to be delivered by such Subcontractor under Section 3.23,
in each case as and when required to be delivered.
Notwithstanding the foregoing, the Servicer engages a Subcontractor
in connection with the performance of any of its duties under this Agreement,
the Servicer shall be responsible for determining whether such Subcontractor is
a "servicer" within the meaning of Item 1101 of Regulation AB and whether any
such affiliate or third-party vendor meets the criteria in Item 1108(a)(2)(i)
through (iii) of Regulation AB. If the Servicer determines, pursuant to the
preceding sentence, that such Subcontractor is a "servicer" within the meaning
of Item 1101 of Regulation AB and meets the criteria in Item 1108(a)(2)(i)
through (iii) of Regulation AB, then such Subcontractor shall be deemed to be a
Subservicer for purposes of this Agreement, the engagement of such Subservicer
shall not be effective unless and until notice is given pursuant to Section
3.02(a) and the Servicer shall comply with Section 3.02(d) with respect thereto.
Section 3.03 Successor Subservicers. The Servicer shall be entitled
to terminate any Subservicing Agreement and the rights and obligations of any
Subservicer pursuant to any Subservicing Agreement in accordance with the terms
and conditions of such Subservicing Agreement; provided, however, that the
termination, resignation or removal of a Subservicer shall be not be effective
until 30 days after written notice is received by both the Depositor and the
Trustee that contains all information reasonably necessary to enable the
Trustee, pursuant to Section 8.12(g), to accurately and timely report the event
under Item 6.02 of Form 8-K pursuant to the Exchange Act (if such reports under
the Exchange Act are required to be filed under the Exchange Act). In the event
of termination of any Subservicer, all servicing obligations of such Subservicer
shall be assumed simultaneously by the Servicer without any act or deed on the
part of such Subservicer or the Servicer, and the Servicer either shall service
directly the related Mortgage Loans or shall enter into a Subservicing Agreement
with a successor Subservicer which qualifies under Section 3.02.
Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Depositor or the Trustee without
fee, in accordance with the terms of this Agreement, in the event that the
Servicer shall, for any reason, no longer be the Servicer (including termination
due to an Event of Default).
Section 3.04 Liability of the Servicer. Notwithstanding 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 primarily liable to the Trustee for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 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. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Section 3.05 No Contractual Relationship between Subservicers and
the Trustee. Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
Servicer alone, and the Trustee (or any successor Servicer) shall not be deemed
a party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer except as set forth in Section 3.06.
The Servicer shall be solely liable for all fees owed by it to any Subservicer,
irrespective of whether the Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees.
Section 3.06 Assumption or Termination of Subservicing Agreements by
Trustee. In the event the Servicer at any time shall for any reason no longer be
the Servicer (including by reason of the occurrence of an Event of Default), the
Trustee, or its designee or the successor Servicer if the successor is not the
Trustee, shall thereupon assume all of the rights and obligations of the
Servicer under each Subservicing Agreement that the Servicer may have entered
into, with copies thereof provided to the Trustee or the successor Servicer if
the successor is not the Trustee, prior to the Trustee or the successor Servicer
if the successor is not the Trustee, assuming such rights and obligations,
unless the Trustee elects to terminate any Subservicing Agreement in accordance
with its terms as provided in Section 3.03.
Upon such assumption, the Trustee, its designee or the successor
servicer shall be deemed, subject to Section 3.03, to have assumed all of the
Servicer's interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if each Subservicing Agreement had
been assigned to the assuming party, except that (i) the Servicer shall not
thereby be relieved of any liability or obligations under any Subservicing
Agreement that arose before it ceased to be the Servicer and (ii) none of the
Depositor, the Trustee, their designees or any successor Servicer shall be
deemed to have assumed any liability or obligation of the Servicer that arose
before it ceased to be the Servicer.
The Servicer at its expense shall, upon request of the Trustee, its
designee or the successor Servicer deliver to the assuming party all documents
and records relating to each Subservicing Agreement and the Mortgage Loans then
being serviced and an accounting of amounts collected and held by or on behalf
of it, and otherwise use its best efforts to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party.
Section 3.07 Collection of Certain Mortgage Loan Payments. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions
of any applicable Insurance Policies, follow such collection procedures as it
would follow with respect to mortgage loans comparable to the Mortgage Loans and
held for its own account. Consistent with the foregoing and Accepted Servicing
Practices, the Servicer may (i) waive any late payment charge or, if applicable,
any penalty interest, or (ii) extend the Due Dates for the Scheduled Payments
due on a Mortgage Note for a period of not greater than 180 days; provided, that
any extension pursuant to clause (ii) above shall not affect the amortization
schedule of any Mortgage Loan for purposes of any computation hereunder, except
as provided below. In the event of any such arrangement pursuant to clause (ii)
above, the Servicer shall make timely advances on such Mortgage Loan during such
extension pursuant to Section 4.01 and in accordance with the amortization
schedule of such Mortgage Loan without modification thereof by reason of such
arrangements, subject to Section 4.01(d) pursuant to which the Servicer shall
not be required to make any such advances that are Nonrecoverable P&I Advances.
Notwithstanding the foregoing, the Servicer may waive, in whole or in part, a
Prepayment Charge only under the following circumstances: (i) such waiver
relates to a default or a reasonably foreseeable default and would, in the
reasonable judgment of the Servicer, maximize recovery of total proceeds taking
into account the value of such Prepayment Charge and the related Mortgage Loan
or (ii) such Prepayment Charge is not permitted to be collected by applicable
law. If a Prepayment Charge is waived other than as permitted by the prior
sentence, then the Servicer is required to pay the amount of such waived
Prepayment Charge, for the benefit of the Holders of the Class P Certificates,
by depositing such amount into the Collection Account from its own funds,
without any right of reimbursement therefor, together with and at the time that
the amount prepaid on the related Mortgage Loan is required to be deposited into
the Collection Account; provided, however, that the Servicer shall not have an
obligation to pay the amount of any uncollected Prepayment Charge if the failure
to collect such amount is the direct result of inaccurate or incomplete
information on the Mortgage Loan Schedule in effect at such time.
(b) (i) The Trustee shall establish and maintain the Excess Reserve
Fund Account, on behalf of the Class X Certificateholders, to receive any Basis
Risk Payment and to secure their limited recourse obligation to pay to the LIBOR
Certificateholders Basis Risk Carry Forward Amounts (prior to using any Interest
Rate Cap Payments or Net Swap Receipts). For the avoidance of doubt, any Basis
Risk Carry Forward Amounts shall be paid to the LIBOR Certificates first from
the Excess Reserve Fund Account and then from the Supplemental Interest Account.
(ii) On each Distribution Date, the Trustee shall deposit the amount
of any Basis Risk Payment for such date into the Excess Reserve Fund
Account.
(c) (i) On each Distribution Date on which there exists a Basis Risk
Carry Forward Amount on any Class of Certificates, the Trustee shall (1)
withdraw from the Distribution Account and deposit in the Excess Reserve Fund
Account, as set forth in Section 4.02(a)(iii)(Q), the lesser of (x) the Class X
Distributable Amount (without regard to the reduction in the definition thereof
for any Basis Risk Carry Forward Amount or any Defaulted Swap Termination
Payment (to the extent remaining after the distributions specified in Sections
4.02(a)(iii)(A)-(P)) and (y) the aggregate Basis Risk Carry Forward Amounts for
such Distribution Date and (2) withdraw from the Excess Reserve Fund Account
amounts necessary to pay to such Class or Classes of Certificates the Basis Risk
Carry Forward Amount. Such payments shall be allocated to those Classes and paid
in the priority set forth in Sections 4.02(a)(iii)(R).
(ii) The Trustee shall account for the Excess Reserve Fund Account
as an asset of a grantor trust under subpart E, Part I of subchapter J of
the Code and not as an asset of any REMIC created pursuant to this
Agreement. The beneficial owners of the Excess Reserve Fund Account are
the Class X Certificateholders. For all federal tax purposes, amounts
transferred by the Upper Tier REMIC to the Excess Reserve Fund Account
shall be treated as distributions by the Trustee to the Class X
Certificateholders.
(iii) Any Basis Risk Carry Forward Amounts paid by the Trustee to
the LIBOR Certificateholders from the Excess Reserve Fund Account or the
Supplemental Interest Account shall be accounted for by the Trustee as
amounts paid first to the Holders of the Class X Certificates (in respect
of the Class X Interest or the Class IO Interest, respectively) and then
to the respective Class or Classes of LIBOR Certificates. In addition, the
Trustee shall account for the LIBOR Certificateholders' rights to receive
payments of Basis Risk Carry Forward Amounts from the Excess Reserve Fund
Account (along with payments of Basis Risk Carry Forward Amounts and,
without duplication, Upper Tier Carry Forward Amounts from the
Supplemental Interest Account) as rights in a limited recourse interest
rate cap contract written by the Class X Certificateholders in favor of
the LIBOR Certificateholders.
(iv) Notwithstanding any provision contained in this Agreement, the
Trustee shall not be required to make any payments from the Excess Reserve
Fund Account except as expressly set forth in this Section 3.07(c) and
Sections 4.02(a)(iii)(R).
(d) The Trustee shall establish and maintain the Distribution
Account on behalf of the Certificateholders. The Depositor shall cause to be
deposited into the Distribution Account on the Closing Date the Closing Date
Deposit Amount. The Trustee shall, promptly upon receipt, deposit in the
Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Servicer to the Trustee
pursuant to Section 3.11;
(ii) any amount deposited by the Servicer pursuant to Section
3.12(b) in connection with any losses on Permitted Investments; and
(iii) any other amounts deposited hereunder which are required to be
deposited in the Distribution Account.
In the event that the Servicer shall remit any amount not required
to be remitted, it may at any time direct the Trustee in writing to withdraw
such amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering notice to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds deposited in the Distribution Account shall be held by the
Trustee in trust for the Certificateholders until disbursed in accordance with
this Agreement or withdrawn in accordance with Section 4.02. In no event shall
the Trustee incur liability for withdrawals from the Distribution Account at the
direction of the Servicer.
(e) The Trustee may invest the funds in the Distribution Account in
one or more Permitted Investments in accordance with Section 3.12. The Trustee
may withdraw from the Distribution Account any income or gain earned from the
investment of funds deposited therein for its own benefit.
(f) The Servicer shall give notice to the Trustee, each Rating
Agency and the Depositor of any proposed change of the location of the
Collection Account within a reasonable period of time prior to any change
thereof.
(g) In order to comply with its duties under the USA Patriot Act of
2001, the Trustee shall comply with any Xxxxx Fargo anti-money laundering
policies, including, without limitation, any customer identification procedures.
Section 3.08 Subservicing Accounts. In those cases where a
Subservicer is servicing a Mortgage Loan pursuant to a Subservicing Agreement,
the Subservicer will be required to establish and maintain one or more
segregated accounts (collectively, the "Subservicing Account"). The Subservicing
Account shall be an Eligible Account and shall otherwise be acceptable to the
Servicer. The Subservicer shall deposit in the clearing account (which account
must be an Eligible Account) in which it customarily deposits payments and
collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Subservicer's receipt thereof, all proceeds of Mortgage Loans received by
the Subservicer less its servicing compensation to the extent permitted by the
Subservicing Agreement, and shall thereafter deposit such amounts in the
Subservicing Account, in no event more than two Business Days after the deposit
of such funds into the clearing account. The Subservicer shall thereafter
deposit such proceeds in the Collection Account or remit such proceeds to the
Servicer for deposit in the Collection Account not later than two Business Days
after the deposit of such amounts in the Subservicing Account. For purposes of
this Agreement, the Servicer shall be deemed to have received payments on the
Mortgage Loans when the Subservicer receives such payments.
Section 3.09 Collection of Taxes, Assessments and Similar Items;
Escrow Accounts. (a) The Servicer shall ensure that each of the Mortgage Loans
shall be covered by a paid-in-full, life-of-the-loan tax service contract in
effect with respect to each First Lien Mortgage Loan (each, a "Tax Service
Contract"). Each Tax Service Contract shall be assigned to the Trustee, or its
designee, at the Servicer's expense in the event that the Servicer is terminated
as Servicer of the related Mortgage Loan.
(b) To the extent that the services described in this paragraph (b)
are not otherwise provided pursuant to the Tax Service Contracts described in
paragraph (a) above, the Servicer undertakes to perform such functions. To the
extent the related Mortgage provides for Escrow Payments, the Servicer shall
establish and maintain, or cause to be established and maintained, one or more
segregated accounts (the "Escrow Accounts"), which shall be Eligible Accounts.
The Servicer shall deposit in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Servicer's
receipt thereof, all (i) collections from the Mortgagors (or related advances
from Subservicers) for the payment of taxes, assessments, hazard insurance
premiums and comparable items for the account of the Mortgagors ("Escrow
Payments") collected on account of the Mortgage Loans and (ii) all Condemnation
Proceeds and Insurance Proceeds to be applied to the restoration of the related
Mortgaged Property or released to the related Mortgagor in accordance with
applicable law and Accepted Servicing Practices, and the Servicer shall
thereafter deposit such Escrow Payments in the Escrow Accounts, in no event more
than two Business Days after the deposit of such funds in the clearing account,
for the purpose of effecting the payment of any such items as required under the
terms of this Agreement. Withdrawals of amounts from an Escrow Account may be
made only to (i) effect payment of taxes, assessments, hazard insurance
premiums, and comparable items; (ii) reimburse the Servicer (or a Subservicer to
the extent provided in the related Subservicing Agreement) out of related
collections for any advances made pursuant to Section 3.01 (with respect to
taxes and assessments) and Section 3.13 (with respect to hazard insurance);
(iii) refund to Mortgagors any sums as may be determined to be overages; (iv)
pay itself any interest earned on the Escrow Account or, if required and as
described below, to Mortgagors on balances in the Escrow Account; (v) clear and
terminate the Escrow Account at the termination of the Servicer's obligations
and responsibilities in respect of the Mortgage Loans under this Agreement; (vi)
transfer such funds to a replacement Escrow Account that meets the requirements
hereof; (vii) recover amounts deposited in error or (viii) to release
Condemnation Proceeds or Insurance Proceeds to be applied to the restoration of
the related Mortgaged Property or to the related Mortgagor in accordance with
the applicable law and Accepted Servicing Practices. As part of its servicing
duties, the Servicer or Subservicers shall pay to the Mortgagors interest on
funds in Escrow Accounts, to the extent required by law and, to the extent that
interest earned on funds in the Escrow Accounts is insufficient, to pay such
interest from its or their own funds, without any reimbursement therefor. To the
extent that a Mortgage does not provide for Escrow Payments, the Servicer shall
use its reasonable best efforts to determine whether any such payments are made
by the Mortgagor in a manner and at a time that avoids the loss of the Mortgaged
Property due to a tax sale or the foreclosure of a tax lien. The Servicer
assumes full responsibility for the payment of all such bills within such time
and shall effect payments of all such bills irrespective of the Mortgagor's
faithful performance in the payment of same or the making of the Escrow Payments
and shall make advances from its own funds to effect such payments, including
any payment required to be made in connection with a Mortgage Loan that does
provide for Escrow Payments and is insufficient to make such payments; provided,
however, that such advances are deemed to be Servicing Advances.
Section 3.10 Collection Account. (a) On behalf of the Trustee and
the Certificateholders, the Servicer shall establish and maintain, or cause to
be established and maintained, one or more segregated Eligible Accounts (such
account or accounts, the "Collection Account"), held in trust for the benefit of
the Trustee on behalf of the Certificateholders. On behalf of the Trustee, the
Servicer shall deposit or cause to be deposited in the clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Servicer's receipt thereof, and shall thereafter deposit into the Collection
Account, in no event more than two Business Days after the deposit of such funds
into the clearing account, as and when received or as otherwise required
hereunder, the following payments and collections received or made by it
subsequent to the Cut-off Date (other than in respect of principal or interest
on the related Mortgage Loans due on or before the Cut-off Date), or payments
(other than Principal Prepayments) received by it on or prior to the Cut-off
Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Condemnation Proceeds to the extent
such Insurance Proceeds and Condemnation Proceeds are not to be applied to
the restoration of the related Mortgaged Property or released to the
related Mortgagor in accordance with the express requirements of law or in
accordance with Accepted Servicing Practices, Liquidation Proceeds and
Subsequent Recoveries;
(iv) any amounts required to be deposited pursuant to Section 3.12
in connection with any losses realized on Permitted Investments with
respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Servicer pursuant to
the second paragraph of Section 3.13(a) in respect of any blanket policy
deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with this Agreement or the Sponsor Representation Letter; and
(vii) all Prepayment Charges collected by the Servicer or required
to be paid by the Servicer pursuant to Section 3.07.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees and other similar fees and charges need
not be deposited by the Servicer in the Collection Account and shall, upon
collection, belong to the Servicer as additional compensation for its servicing
activities. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding. The Servicer shall at its own expense be responsible for
reviewing and reconciling the Collection Account in accordance with industry
standards and shall act promptly to resolve any discrepancies related thereto.
(b) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12, subject
to Section 3.21(c). The Servicer shall give notice to the Trustee and the
Depositor of the location of the Collection Account maintained by it when
established and prior to any change thereof.
Section 3.11 Withdrawals from the Collection Account. (a) The
Servicer shall, from time to time, make withdrawals from the Collection Account
for any of the following purposes or as described in Section 4.01:
(i) on or prior to each Remittance Date, to remit to the Trustee (A)
the Trustee Fee with respect to such Distribution Date, (B) all Available
Funds in respect of the related Distribution Date together with all
amounts representing Prepayment Charges (payable to the Class P
Certificateholders) from the Mortgage Loans received by the Servicer
during the related Prepayment Period and (C) subject to Section 3.21(c),
all income and gain realized from the investment of funds deposited in the
Collection Account, for deposit in the Supplemental Float Account;
(ii) to reimburse the Servicer for P&I Advances, but only to the
extent of amounts received which represent Late Collections (net of the
related Servicing Fees) of Scheduled Payments on Mortgage Loans with
respect to which such P&I Advances were made in accordance with the
provisions of Section 4.01;
(iii) to pay the Servicer or any Subservicer (A) any unpaid
Servicing Fees or (B) any unreimbursed Servicing Advances with respect to
each Mortgage Loan, but only to the extent of any Late Collections or
other amounts as may be collected by the Servicer from a Mortgagor, or
otherwise received with respect to such Mortgage Loan (or the related REO
Property);
(iv) to pay to the Servicer as servicing compensation (in addition
to the Servicing Fee) on each Remittance Date (A) subject to Section
3.21(c), any interest or investment income earned on funds deposited in
the Collection Account or (B) any Prepayment Interest Excesses to the
extent permitted under Section 3.21(b);
(v) to pay to the applicable Person, with respect to each Mortgage
Loan that has previously been repurchased or replaced by such Person
pursuant to this Agreement or the Sponsor Representation Letter, all
amounts received thereon subsequent to the date of purchase or
substitution, as the case may be;
(vi) to reimburse the Servicer for (A) any P&I Advance or Servicing
Advance previously made which the Servicer has determined to be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance in
accordance with the provisions of Section 4.01 and (B) any unpaid
Servicing Fees related to any Second Lien Mortgage Loan to the extent not
recoverable from Liquidation Proceeds, Insurance Proceeds or other amounts
received with respect to the related Second Lien Mortgage Loan under
Section 3.11(a)(iii);
(vii) to pay, or to reimburse the Servicer for Servicing Advances in
respect of, expenses incurred in connection with any Mortgage Loan
pursuant to Section 3.15;
(viii) to reimburse the Servicer, the Depositor or the Trustee for
expenses incurred by or reimbursable to the Servicer, the Depositor or the
Trustee, as the case may be, pursuant to Section 6.03, Section 7.02 or
Section 8.05;
(ix) to reimburse the Servicer or the Trustee, as the case may be,
for expenses reasonably incurred in respect of the breach or defect giving
rise to the repurchase obligation under this Agreement or the Sponsor
Representation Letter that were included in the Repurchase Price of the
Mortgage Loan, including any expenses arising out of the enforcement of
the repurchase obligation, to the extent not otherwise paid pursuant to
the terms hereof;
(x) to withdraw any amounts deposited in the Collection Account in
error; and
(xi) to clear and terminate the Collection Account upon termination
of this Agreement;
(xii) to withdraw any amounts held in the related Collection Account
and not required to be remitted to the Trustee on the Remittance Date
occurring in the month in which such amounts are deposited into such
Collection Account, to reimburse such Servicer for xxxxxxxxxxxx X&X
Advances; and
(xiii) to invest funds in Permitted Investments in accordance with
Section 3.12.
(b) 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, to the extent held by or on behalf of
it, pursuant to subclauses (a)(ii), (iii), (v), (vi), (vii), (viii), (ix) and
(x) above. The Servicer shall provide written notification (as set forth in
Section 4.01(d)) to the Trustee, on or prior to the next succeeding Remittance
Date, upon making any withdrawals from the Collection Account pursuant to
subclause (a)(vi) above.
Section 3.12 Investment of Funds in the Collection Account, Escrow
Accounts and the Distribution Account. (a) (i) The Servicer shall invest the
funds in the Collection Account pursuant to Section 3.21(c) and (ii) the
Servicer may invest the funds in the Collection Account pursuant to Section
3.21(c), the Servicer may invest the funds in the Escrow Accounts (to the extent
permitted by law and the related Mortgage Loan documents) and the Trustee may
invest funds in the Distribution Account and shall invest such funds in the
Distribution Account (for purposes of this Section 3.12, each such Account is
referred to as an "Investment Account"), in one or more Permitted Investments
bearing interest or sold at a discount, and maturing, unless payable on demand,
no later than the Business Day immediately preceding the date on which such
funds are required to be withdrawn from such account pursuant to this Agreement;
provided, however, that any such Permitted Investment may mature, unless payable
on demand or held at the institution of the Trustee, no later than one Business
Day prior to the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement. If no investment instruction is given in a
timely manner, the Trustee shall hold the funds in the Distribution Account
uninvested. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds in an Investment Account shall be
made in the name of the Servicer or the Trustee, as applicable. The Servicer or
the Trustee, as applicable, shall be entitled to sole possession over each such
investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Servicer or the Trustee or its
agent, as applicable, together with any document of transfer necessary to
transfer title to such investment to the Servicer or the Trustee or its agent,
as applicable. In the event amounts on deposit in an Investment Account are at
any time invested in a Permitted Investment payable on demand, the Servicer or
the Trustee, as applicable, may:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on such
date; and
(y) demand payment of all amounts due thereunder that such
Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit in an
Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the Collection Account (subject to Section 3.21(c)) or Escrow
Account, as applicable, held by or on behalf of the Servicer, shall be for the
benefit of the Servicer and shall be subject to its withdrawal in the manner set
forth in Section 3.11. The Servicer shall, from its own funds, deposit in the
Collection Account or Escrow Account, as applicable, the amount of any loss of
principal incurred in respect of any such Permitted Investment made with funds
in such accounts immediately upon realization of such loss.
(c) All income and gain realized from the investment of funds
deposited in the Distribution Account held by the Trustee, shall be for the
benefit of the Trustee, and shall be subject to the Trustee's withdrawal in the
manner set forth in Section 3.07(e). The Trustee shall, from its own funds,
deposit in the Distribution Account the amount of any loss of principal incurred
in respect of any such Permitted Investment made with funds in such account
immediately upon realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment of
funds held in the Escrow Account or the Collection Account, or if a default
occurs in any other performance required under any Permitted Investment of funds
held in the Escrow Account or the Collection Account, the Servicer shall take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate proceedings.
Section 3.13 Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage. (a) The Servicer shall cause to be maintained
for each Mortgage Loan fire insurance with extended coverage on the related
Mortgaged Property in an amount which is at least equal to the least of (i) the
outstanding principal balance of such Mortgage Loan, (ii) the amount necessary
to fully compensate for any damage or loss to the improvements that are a part
of such property on a replacement cost basis and (iii) the maximum insurable
value of the improvements which are a part of such Mortgaged Property, in each
case in an amount not less than such amount as is necessary to avoid the
application of any coinsurance clause contained in the related hazard insurance
policy. The Servicer shall also cause to be maintained fire insurance with
extended coverage on each REO Property in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements which are a
part of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property, plus accrued interest at
the Mortgage Rate and related Servicing Advances. The Servicer will comply in
the performance of this Agreement with all reasonable rules and requirements of
each insurer under any such hazard policies. Any amounts to be collected by the
Servicer under any such policies (other than amounts required to be deposited in
the Escrow Account and applied to the restoration or repair of the property
subject to the related Mortgage or amounts to be released to the Mortgagor in
accordance with the procedures that the Servicer would follow in servicing loans
held for its own account, subject to the terms and conditions of the related
Mortgage and Mortgage Note) shall be deposited in the Collection Account,
subject to withdrawal pursuant to Section 3.11. Any cost incurred by the
Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to the Trustee, be added to the unpaid principal
balance of the related Mortgage Loan, notwithstanding that the terms of such
Mortgage Loan so permit. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the Mortgaged Property or REO
Property is at any time in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards and flood
insurance has been made available, the Servicer will cause to be maintained a
flood insurance policy in respect thereof. Such flood insurance shall be in an
amount equal to the lesser of (i) the unpaid principal balance of the related
Mortgage Loan and (ii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance program (assuming
that the area in which such Mortgaged Property is located is participating in
such program).
In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer either (i) acceptable to Xxxxxx Xxx or Xxxxxxx Mac or
(ii) having a general policy rating of A:VI or better in Best's (or such other
rating that is comparable to such rating) 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 two sentences of this Section 3.13, it
being understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy complying
with the first two sentences of this Section 3.13, and there shall have been one
or more losses which would have been covered by such policy, deposit to the
Collection Account from its own funds the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of itself and the Trustee, claims under
any such blanket policy in a timely fashion in accordance with the terms of such
policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Xxxxxx Mae or Xxxxxxx Mac if it were the purchaser of the
Mortgage Loans. The Servicer shall also maintain a fidelity bond in the form and
amount that would meet the requirements of Xxxxxx Mae or Xxxxxxx Mac, unless the
Servicer has obtained a waiver of such requirements from Xxxxxx Mae or Xxxxxxx
Mac. The Servicer shall provide the Trustee with copies of any such insurance
policies and fidelity bond. The Servicer shall 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. Any such errors
and omissions policy and fidelity bond shall by its terms not be cancelable
without thirty days' prior written notice to the Trustee. The Servicer shall
also cause each Subservicer to maintain a policy of insurance covering errors
and omissions and a fidelity bond which would meet such requirements.
Section 3.14 Enforcement of Due-On-Sale Clauses; Assumption
Agreements. The Servicer will, to the extent it has knowledge of any conveyance
or prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Servicer shall not be required to take such action if, in its sole business
judgment, the Servicer believes it is not in the best interests of the Trust
Fund and shall not exercise any such rights if prohibited by law from doing so.
If the Servicer reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into either (i)
an assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon or (ii) a
substitution agreement as provided in the succeeding sentence. The Servicer is
also 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 the Mortgagor and becomes liable under the
Mortgage Note, provided, that no such substitution shall be effective unless
such person satisfies the underwriting criteria of the Servicer and has a credit
risk rating at least equal to that of the original Mortgagor. In connection with
any assumption, modification or substitution, the Servicer shall apply such
underwriting standards and follow such practices and procedures as shall be
normal and usual in its general mortgage servicing activities and as it applies
to other mortgage loans owned solely by it. The Servicer shall not take or enter
into any assumption and modification agreement, however, unless (to the extent
practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy, or a new policy meeting the requirements of this Section is obtained.
Any fee collected by the Servicer in respect of an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Rate and the
amount of the Scheduled Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Servicer shall notify the Trustee
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee the executed original of such
substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
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 by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatsoever. For purposes of this Section 3.14, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
Section 3.15 Realization upon Defaulted Mortgage Loans. The Servicer
shall use its best efforts, consistent with Accepted Servicing Practices, to
foreclose upon or otherwise comparably convert (which may include an acquisition
of REO Property) 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 pursuant to
Section 3.07, and which are not released from this Agreement pursuant to any
other provision hereof. The Servicer shall use reasonable efforts to realize
upon such defaulted Mortgage Loans in such manner as will maximize the receipt
of principal and interest by the Trustee, taking into account, among other
things, the timing of foreclosure proceedings; provided, however, with respect
to any Second Lien Mortgage Loan for which the related first lien mortgage loan
is not included in the Trust Fund, if, after such Mortgage Loan becomes 180 days
or more delinquent, the Servicer determines that a significant net recovery is
not possible through foreclosure, such Mortgage Loan may be charged off and the
Mortgage Loan will be treated as a Liquidated Mortgage Loan giving rise to a
Realized Loss. The foregoing is subject to the provisions that, in any case in
which Mortgaged Property shall have suffered damage from an uninsured cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such property unless it shall determine in its sole discretion (i) that such
restoration will increase the net Liquidation Proceeds of the related Mortgage
Loan to the Trustee, after reimbursement to itself for such expenses, and (ii)
that such expenses will be recoverable by the Servicer through Insurance
Proceeds, Condemnation Proceeds, Liquidation Proceeds or Subsequent Recoveries
from the related Mortgaged Property, as contemplated in Section 3.11. 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 as contemplated in Section 3.11.
The proceeds of any liquidation or REO Disposition, as well as any
recovery resulting from a partial collection of Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds or Subsequent Recoveries or any income from an
REO Property, will be applied in the following order of priority: first, to
reimburse the Servicer or any Subservicer for any related unreimbursed Servicing
Advances, pursuant to Section 3.11 or 3.17; second, to reimburse the Servicer
for any related xxxxxxxxxxxx X&X Advances, pursuant to Section 3.11; third, to
accrued and unpaid interest on the Mortgage Loan or REO Imputed Interest, at the
Mortgage Rate, to the date of the liquidation or REO Disposition, or to the Due
Date prior to the Remittance Date on which such amounts are to be distributed if
not in connection with a liquidation or REO Disposition; and fourth, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than a full recovery thereof, that amount will be
allocated as follows: first, to unpaid Servicing Fees; and second, as interest
at the Mortgage Rate (net of the Servicing Fee Rate). The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Servicer or any Subservicer pursuant to Section 3.11 or 3.17. The portions of
the recovery so allocated to interest at the Mortgage Rate (net of the Servicing
Fee Rate) and to principal of the Mortgage Loan shall be applied as follows:
first, to reimburse the Servicer or any Subservicer for any related unreimbursed
Servicing Advances in accordance with Section 3.11 or 3.17, and second, to the
Trustee in accordance with the provisions of Section 4.02, subject to paragraph
(g) of Section 3.17 with respect to certain excess recoveries from an REO
Disposition.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Servicer has received actual notice of, or has actual knowledge of
the presence of, hazardous or toxic substances or wastes on the related
Mortgaged Property, or if the Trustee otherwise requests, the Servicer shall
cause an environmental inspection or review of such Mortgaged Property to be
conducted by a qualified inspector. Upon completion of the inspection, the
Servicer shall promptly provide the Trustee and the Depositor with a written
report of the environmental inspection.
After reviewing the environmental inspection report, the Servicer
shall determine consistent with Accepted Servicing Practices how the Servicer
shall proceed with respect to the Mortgaged Property. In the event (a) the
environmental inspection report indicates that the Mortgaged Property is
contaminated by hazardous or toxic substances or wastes and (b) the Servicer
proceeds with foreclosure or acceptance of a deed in lieu of foreclosure, the
Servicer shall be reimbursed for all reasonable costs associated with such
foreclosure or acceptance of a deed in lieu of foreclosure and any related
environmental clean-up costs, as applicable, from the related Liquidation
Proceeds, or if the Liquidation Proceeds are insufficient to fully reimburse the
Servicer, the Servicer shall be entitled to be reimbursed from amounts in the
Collection Account pursuant to Section 3.11. In the event the Servicer does not
proceed with foreclosure or acceptance of a deed in lieu of foreclosure, the
Servicer shall be reimbursed from general collections for all Servicing Advances
made with respect to the related Mortgaged Property from the Collection Account
pursuant to Section 3.11.
Section 3.16 Release of Mortgage Files. (a) Upon the payment in full
of any Mortgage Loan, or the receipt by the Servicer of a notification that
payment in full shall be escrowed in a manner customary for such purposes, the
Servicer will, within five (5) Business Days of the payment in full, notify the
Trustee by a certification (which certification shall include a statement to the
effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 3.10 have been or will be so deposited) of a Servicing Officer and shall
request delivery to it of the Custodial File by submitting a Request for
Release, which Request for Release may be in an electronic format in a form
acceptable to the Trustee, to the Trustee. Upon receipt of such certification
and Request for Release, the Trustee shall promptly release the related
Custodial File to the Servicer within two (2) Business Days. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account unless such expenses
constitute Servicing Advances.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Insurance Policy relating to the Mortgage Loans, the Trustee shall, upon
request of the Servicer and delivery to the Trustee of a Request for Release,
which Request for Release may be in an electronic format in a form acceptable to
the Trustee, release the related Custodial File to the Servicer within three (3)
Business Days, and the Trustee shall, at the direction of the Servicer, execute
such documents as shall be necessary to the prosecution of any such proceedings
and the Servicer shall retain the Mortgage File in trust for the benefit of the
Trustee. Such Request for Release shall obligate the Servicer to return each and
every document previously requested from the Custodial File to the Trustee when
the need therefor by the Servicer no longer exists, unless the Mortgage Loan has
been liquidated and the Liquidation Proceeds relating to the Mortgage Loan have
been deposited in the Collection Account or the Mortgage File or such document
has 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 either
judicially or non-judicially, and the Servicer has delivered to the Trustee a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation that are
required to be deposited into the Collection Account have been so deposited, or
that such Mortgage Loan has become an REO Property, a copy of the Request for
Release shall be released by the Trustee to the Servicer or its designee.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer copies of any court pleadings, requests for
trustee's sale or other documents reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity, or shall exercise and deliver to the Servicer a power of attorney
sufficient to authorize the Servicer to execute such documents on its behalf.
Each such certification shall include a request that such pleadings or documents
be executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.17 Title, Conservation and Disposition of REO Property.
(a) This Section shall apply only to REO Properties acquired for the account of
the Trustee and shall not apply to any REO Property relating to a Mortgage Loan
which was purchased or repurchased from the Trustee pursuant to any provision
hereof. In the event that title to any such REO Property is acquired, the deed
or certificate of sale shall be issued to Xxxxx Fargo Bank, National Association
(or, if applicable, the name of the successor Trustee) as Trustee for
Securitized Asset Backed Receivables LLC 2006-FR3 Mortgage Pass-Through
Certificates, Series 2006-FR3, or to its nominee, for the benefit of the
Certificateholders.
(b) The Servicer shall manage, conserve, protect and operate each
REO Property for the Trustee solely for the purpose of its prompt disposition
and sale. The Servicer, either itself or through an agent selected by the
Servicer, shall manage, conserve, protect and operate the REO Property in the
same manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. The Servicer shall attempt to
sell the same (and may temporarily rent the same for a period not greater than
one year, except as otherwise provided below) on such terms and conditions as
the Servicer deems to be in the best interest of the Trustee on behalf of the
Certificateholders. The Servicer shall notify the Trustee from time to time as
to the status of each REO Property.
(c) The Servicer shall use its best efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within three years after title has been taken to such REO Property, unless the
Servicer determines, and gives an appropriate notice to the Trustee to such
effect, that a longer period is necessary for the orderly liquidation of such
REO Property. Subject to Section 3.17(h), if a period longer than three years is
permitted under the foregoing sentence and is necessary to sell any REO
Property, the Servicer shall report monthly to the Trustee as to the progress
being made in selling such REO Property.
(d) The Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets and shall deposit such funds in the
Collection Account.
(e) The Servicer shall deposit net of reimbursement to the Servicer
for any related outstanding Servicing Advances and unpaid Servicing Fees
provided in Section 3.11, or cause to be deposited, in no event more than two
(2) Business Days after the Servicer's receipt thereof, in the Collection
Account all revenues received with respect to the related REO Property and shall
withdraw therefrom funds necessary for the proper operation, management and
maintenance of the REO Property.
(f) The Servicer, upon an REO Disposition, shall be entitled to
reimbursement for any related unreimbursed Servicing Advances as well as any
unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.11.
(g) Any net proceeds from an REO Disposition which are in excess of
the unpaid principal balance of the related Mortgage Loan plus all unpaid REO
Imputed Interest thereon through the date of the REO Disposition shall be
retained by the Servicer as additional servicing compensation.
(h) The Servicer shall use its reasonable best efforts to sell, or
cause the Subservicer to sell, in accordance with Accepted Servicing Practices,
any REO Property as soon as possible, but in no event later than the conclusion
of the third calendar year beginning after the year of its acquisition by
Pooling Tier REMIC-1 unless (i) the Servicer applies for an extension of such
period from the Internal Revenue Service pursuant to the REMIC Provisions and
Code Section 856(e)(3), in which event such REO Property shall be sold within
the applicable extension period, or (ii) the Servicer obtains for the Trustee an
Opinion of Counsel, addressed to the Depositor, the Trustee and the Servicer, to
the effect that the holding by Pooling Tier REMIC-1 of such REO Property
subsequent to such period will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code or cause any
Trust REMIC to fail to qualify as a REMIC under the REMIC Provisions or
comparable provisions of relevant state laws at any time. The Servicer shall
manage, conserve, protect and operate each REO Property for the Trustee, the
Certificateholders and the Trust Fund solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) or
result in the receipt by the Pooling Tier REMIC-1 of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or
any "net income from foreclosure property" which is subject to taxation under
Section 860G(a)(1) of the Code. Pursuant to its efforts to sell such REO
Property, the Servicer shall either itself or through an agent selected by the
Servicer protect and conserve such REO Property in the same manner and to such
extent as is customary in the locality where such REO Property is located and
may, incident to its conservation and protection of the interests of the Trustee
on behalf of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Trustee on behalf of the
Certificateholders for the period prior to the sale of such REO Property;
provided, however, that any rent received or accrued with respect to such REO
Property qualifies as "rents from real property" as defined in Section 856(d) of
the Code.
Section 3.18 Notification of Adjustments. With respect to each
Adjustable Rate Mortgage Loan, the Servicer shall adjust the Mortgage Rate on
the related Adjustment Date and shall adjust the Scheduled Payment on the
related mortgage payment adjustment date, if applicable, in compliance with the
requirements of applicable law and the related Mortgage and Mortgage Note. In
the event that an Index becomes unavailable or otherwise unpublished, the
Servicer shall select a comparable alternative index over which it has no direct
control and which is readily verifiable. The Servicer shall execute and deliver
any and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Rate and Scheduled
Payment adjustments. The Servicer shall promptly, upon written request therefor,
deliver to the Trustee such notifications and any additional applicable data
regarding such adjustments and the methods used to calculate and implement such
adjustments. Upon the discovery by the Servicer or the receipt of notice from
the Trustee that the Servicer has failed to adjust a Mortgage Rate or Scheduled
Payment in accordance with the terms of the related Mortgage Note, the Servicer
shall deposit in the Collection Account from its own funds the amount of any
interest loss caused as such interest loss occurs.
Section 3.19 Access to Certain Documentation and Information
Regarding the Mortgage Loans. In the event the Servicer reasonably believes that
compliance with this Section will make the Mortgage Loans legal for investment
by federally insured savings and loan associations, the Servicer shall provide,
or cause the Subservicer to provide, to the Depositor, the Trustee, the OTS or
the FDIC and the examiners and supervisory agents thereof, access to the
documentation regarding the Mortgage Loans in its possession required by
applicable regulations of the OTS. 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 or, if applicable, any Subservicer. Nothing
in this Section shall derogate from the obligation of any such party to observe
any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of any such party to provide access as provided in
this Section as a result of such obligation shall not constitute a breach of
this Section.
Section 3.20 Documents, Records and Funds in Possession of the
Servicer to Be Held for the Trustee. The Servicer shall account fully to the
Trustee for any funds received by the Servicer or which otherwise are collected
by the Servicer as Liquidation Proceeds, Condemnation Proceeds or Insurance
Proceeds in respect of any Mortgage Loan serviced by the Servicer. 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 its Collection Account, shall be held by the Servicer
for and on behalf of the Trustee and shall be and remain the sole and exclusive
property of the Trustee, subject to the applicable provisions of this Agreement.
The Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in any Collection Account, the Distribution
Account or any Escrow Account, or any funds that otherwise are or may become due
or payable to the Trustee for the benefit of the Certificateholders, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of setoff
against any Mortgage File or any funds collected on, or in connection with, a
Mortgage Loan, except, however, that the 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 3.21 Servicing Compensation. (a) As compensation for its
activities hereunder, the Servicer shall, with respect to each Mortgage Loan, be
entitled to retain from deposits to the Collection Account and from Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds, Subsequent Recoveries and
REO Proceeds related to such Mortgage Loan, the Servicing Fee with respect to
each Mortgage Loan (less any portion of such amounts retained by any
Subservicer). In addition, the Servicer shall be entitled to recover unpaid
Servicing Fees out of related Late Collections and as otherwise permitted under
Section 3.11. The right to receive the Servicing Fee may not be transferred in
whole or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement; provided, however, that
the Servicer may pay from the Servicing Fee any amounts due to a Subservicer
pursuant to a Subservicing Agreement entered into under Section 3.02.
(b) Additional servicing compensation in the form of assumption or
modification fees, late payment charges, net Prepayment Interest Excesses (to
the extent not required to offset Prepayment Interest Shortfalls), NSF fees,
reconveyance fees and other similar fees and charges (other than Prepayment
Charges) shall be retained by the Servicer only to the extent such fees or
charges are received by the Servicer. The Servicer shall also be entitled as
additional servicing compensation, to interest or other income earned on
deposits in the Escrow Account (to the extent permitted by law and the related
Mortgage Loan documents) in accordance with Section 3.12.
(c) The Servicer shall also be entitled pursuant to Section
3.11(a)(iv) to withdraw from the Collection Account as additional servicing
compensation, interest or other income earned on deposits therein; provided,
however, that in the event that the purchase by Barclays of HomEq's servicing
division is consummated by December 31, 2006, and so long as HomEq is the
Servicer, the Servicer shall remit to the Trustee for deposit in the
Supplemental Float Account all income and gain realized from the investment of
funds deposited in the Collection Account.
(d) The Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder (including payment of
premiums for any blanket policy insuring against hazard losses pursuant to
Section 3.13, servicing compensation of the Subservicer to the extent not
retained by it and the fees and expenses of independent accountants and any
agents appointed by the Servicer), and shall not be entitled to reimbursement
therefor from the Trust Fund except as specifically provided in Section 3.11.
Section 3.22 Annual Statement as to Compliance. The Servicer shall
deliver, and shall cause each Subservicer engaged by the Servicer to deliver or
cause to be delivered, and the Trustee shall deliver, to the Depositor, the
Rating Agencies and the Trustee on or before March 5th of each calendar year,
commencing in 2007, an Officer's Certificate stating, as to each signatory
thereof, that (i) a review of the activities of the Trustee, Servicer or
Subservicer, as applicable, during the preceding calendar year and of its
performance under this Agreement or the applicable Subservicing Agreement, as
the case may be, has been made under such officer's supervision, and (ii) to the
best of such officer's knowledge, based on such review, the Trustee, Servicer or
Subservicer, as applicable, has fulfilled all of its obligations under this
Agreement or the applicable Subservicing Agreement, as the case may be, in all
material respects, throughout such year, or, if there has been a failure to
fulfill any such obligation in any material respect, specifying each such
failure known to such officers and the nature and status thereof. Promptly after
receipt of each such Officer's Certificate, the Depositor shall review such
Officer's Certificate and, if applicable, consult with the Trustee, Servicer or
Subservicer as to the nature of any failure by the Trustee, Servicer or
Subservicer in the fulfillment of any of the Trustee's, Servicer's or
Subservicer's obligations. The obligations of the Trustee, Servicer and
Subservicer under this Section apply to each Trustee, Servicer and Subservicer
that acted as Trustee or serviced a Mortgage Loan, as applicable, during the
applicable period, whether or not the Trustee, the Servicer or such Subservicer
is acting as the Trustee, Servicer or Subservicer, as applicable, at the time
such Officer's Certificate is required to be delivered. None of the Trustee,
Servicer or Subservicer shall be required to cause the delivery of any Officer's
Certificate required by this Section until March 15th in any given year so long
as it has received written confirmation from the Depositor that a Form 10-K is
not required to be filed in respect of the Trust for the preceding calendar
year.
In the event the Servicer, the Trustee or any Subservicer engaged by
the Servicer is terminated or resigns pursuant to the terms of this Agreement,
or any applicable agreement in the case of a Subservicer, as the case may be,
such party shall provide with respect to the year of termination an Officer's
Certificate pursuant to this Section 3.22 or to such applicable agreement, as
the case may be, notwithstanding any such termination, assignment or
resignation, but only covering the period prior to such termination.
Section 3.23 Annual Reports on Assessment of Compliance with
Servicing Criteria; Annual Independent Public Accountants' Attestation Report.
(a) Not later than March 5th of each calendar year commencing in
2007, the Servicer and the Trustee shall deliver, and the Servicer shall cause
each Subservicer engaged by the Servicer and the Servicer and the Trustee shall
cause each Subcontractor utilized by the Servicer (or by any such Subservicer)
or the Trustee, as applicable, and determined by the Servicer or the Trustee, as
applicable, pursuant to Section 3.02(e) to be "participating in the servicing
function" within the meaning of Item 1122 of Regulation AB (in each case, a
"Servicing Function Participant"), to deliver, each at its own expense, to the
Depositor and the Trustee, a report on an assessment of compliance with the
Servicing Criteria applicable to it that contains (A) a statement by such party
of its responsibility for assessing compliance with the Servicing Criteria
applicable to it, (B) a statement that such party used the Servicing Criteria to
assess compliance with the applicable Servicing Criteria, (C) such party's
assessment of compliance with the applicable Servicing Criteria as of and for
the period ending the end of the fiscal year covered by the Form 10-K required
to be filed pursuant to Section 8.12, including, if there has been any material
instance of noncompliance with the applicable Servicing Criteria, a discussion
of each such failure and the nature and status thereof, and (D) a statement that
a registered public accounting firm has issued an attestation report on such
Person's assessment of compliance with the applicable Servicing Criteria as of
and for such period. Each such assessment of compliance report shall be
addressed to the Depositor and signed by an authorized officer of the applicable
company, and shall address each of the applicable Servicing Criteria set forth
on Exhibit P hereto, or as set forth in the notification furnished to the
Depositor and the Trustee pursuant to Section 3.23(c). The Servicer and the
Trustee hereby acknowledge and agree that their respective assessments of
compliance will cover the items identified on Exhibit P hereto as being covered
by such party. The parties to this Agreement acknowledge that where a particular
Servicing Criteria has multiple components, each party's assessment of
compliance and related attestation of compliance will relate only to those
components that are applicable to such party. Promptly after receipt of each
such report on assessment of compliance, the Depositor shall review each such
report and, if applicable, consult with the Servicer or the Trustee as to the
nature of any material instance of noncompliance with the Servicing Criteria
applicable to it (and each Subservicer or Servicing Function Participant engaged
or utilized by the Servicer, such Subservicer or the Trustee, as applicable), as
the case may be. None of the Servicer or the Trustee or any Subservicer or
Servicing Function Participant shall be required to cause the delivery of any
such assessments until March 15th in any given year so long as it has received
written confirmation from the Depositor that a Form 10-K is not required to be
filed in respect of the Trust for the preceding calendar year.
In the event the Servicer, the Trustee, any Subservicer or any
Servicing Function Participant engaged by any such party is terminated, assigns
its rights and obligations under, or resigns pursuant to, the terms of this
Agreement, or any other applicable agreement, as the case may be, such party
shall provide with respect to the year of termination a report on assessment of
compliance pursuant to this Section 3.23, or to such other applicable agreement,
notwithstanding any such termination, assignment or resignation.
(b) Not later than March 5th of each calendar year commencing in
2007, the Servicer and the Trustee shall cause, and the Servicer shall cause
each Subservicer engaged by the Servicer and the Servicer and the Trustee shall
cause each Servicing Function Participant utilized by the Trustee or the
Servicer, as applicable (or by any Subservicer engaged by the Servicer), to
cause, each at its own expense, a registered public accounting firm (which may
also render other services to such party) that is a member of the American
Institute of Certified Public Accountants to furnish a report to the Trustee and
the Depositor that attests to and reports on such Person's assessment of
compliance with the Servicing Criteria applicable to it , with a copy to the
Rating Agencies, to the effect that (i) it has obtained a representation
regarding certain matters from the management of such Person, which includes an
assertion that such Person has complied with the Servicing Criteria applicable
to it pursuant to Section 3.23(a) and (ii) on the basis of an examination
conducted by such firm in accordance with standards for attestation engagements
issued or adopted by the PCAOB, that attests to and reports on such Person's
assessment of compliance with the Servicing Criteria applicable to it. In the
event that an overall opinion cannot be expressed, such registered public
accounting firm shall state in such report why it was unable to express such an
opinion. Each such related accountant's attestation report shall be made in
accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act. Promptly after receipt of each such
accountants' attestation report, the Depositor shall review the report and, if
applicable, consult with the Servicer or the Trustee as to the nature of any
defaults by the Servicer or the Trustee (and each Subservicer or Servicing
Function Participant engaged or utilized by the Servicer or the Trustee, as
applicable, or by any Subservicer engaged by the Servicer), as the case may be,
in the fulfillment of any of the Servicer's, the Trustee's or the applicable
Subservicer's or Servicing Function Participant's obligations hereunder or under
any applicable sub-servicing agreement. None of the Servicer, the Trustee or any
Servicer or Servicing Function Participant shall be required to cause the
delivery of any such attestation required by this paragraph until March 15th in
any given year so long as it has received written confirmation from the
Depositor that a Form 10-K is not required to be filed in respect of the Trust
for the preceding calendar year.
(c) No later than February 1 of each fiscal year, commencing in
2007, the Servicer shall notify the Trustee and the Depositor as to the name of
each Subservicer engaged by it for the prior fiscal year and each Servicing
Function Participant utilized by it and by each Subservicer engaged by it, but
only to the extent there has been a change in the information in such
notification from notices previously delivered, and the Trustee shall notify the
Depositor as to the name of each Servicing Function Participant utilized by it,
and each such notice will specify what specific Servicing Criteria will be
addressed in the report on assessment of compliance prepared by such Subservicer
and Servicing Function Participant in each case, to the extent of any change
from the prior year's notice, if any. When the Servicer or the Trustee submits
its assessment pursuant to Section 3.23(a), the Servicer and the Trustee, as
applicable, will also at such time include the assessment (and related
attestation pursuant to Section 3.23(b)) of each Servicing Function Participant
utilized by it and by each Subservicer engaged by it.
Promptly after receipt of each such assessment of compliance with
servicing criteria and attestation report, the Trustee shall confirm to the
Depositor that each assessment of compliance with servicing criteria submitted
pursuant to Section 3.23 is accompanied by an attestation report meeting the
requirements of this Section 3.23 and shall notify the Depositor of any
exceptions.
In the event the Servicer, the Trustee, any Subservicer or any
Servicing Function Participant engaged by any such party, is terminated, assigns
its rights and duties under, or resigns pursuant to the terms of, this
Agreement, or any applicable agreement, as the case may be, such party shall
cause a registered public accounting firm to provide with respect to the year of
termination, at the cost and expense of such party, an attestation report
pursuant to this Section 3.23, or such other applicable agreement,
notwithstanding any such termination, assignment or resignation.
Section 3.24 Trustee to Act as Servicer. (a) Subject to Section
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 successor shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter, except that the Trustee shall not be (i)
liable for losses of the predecessor Servicer pursuant to Section 3.10 or any
acts or omissions of the predecessor Servicer hereunder, (ii) obligated to
effectuate repurchases or substitutions of Mortgage Loans hereunder, including
but not limited to repurchases or substitutions pursuant to Section 2.03, (iii)
responsible for expenses of the predecessor Servicer pursuant to Section 2.03 or
(iv) deemed to have made any representations and warranties of the Servicer
hereunder. Any such assumption shall be subject to Section 7.02.
(b) Every Subservicing Agreement entered into by the Servicer shall
contain a provision giving the successor Servicer the option to terminate such
agreement in the event a successor Servicer is appointed.
(c) If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee (or any other
successor Servicer) may, at its option, succeed to any rights and obligations of
the Servicer under any Subservicing Agreement in accordance with the terms
thereof; provided, that the Trustee (or any other successor Servicer) shall not
incur any liability or have any obligations in its capacity as successor
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.
(d) The Servicer shall, upon request of the Trustee, but at the
expense of the Servicer, deliver to the assuming party all documents and records
relating to each Subservicing Agreement (if any) and the Mortgage Loans then
being serviced thereunder and an accounting of amounts collected and held by it,
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Subservicing Agreement to the assuming party.
Section 3.25 Compensating Interest. The Servicer shall remit to the
Trustee on each Remittance Date for deposit in the Distribution Account an
amount from its own funds equal to the Compensating Interest payable by the
Servicer for the related Distribution Date.
Section 3.26 Credit Reporting; Xxxxx-Xxxxx-Xxxxxx Act. (a) With
respect to each Mortgage Loan, the Servicer agrees to fully furnish, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on the
primary borrower of such Mortgage Loan to Equifax, Experian and TransUnion
Credit Information Company (three of the credit repositories) on a monthly
basis.
(b) The Servicer shall comply with Title V of the Xxxxx-Xxxxx-Xxxxxx
Act of 1999 and all applicable regulations promulgated thereunder, relating to
the Mortgage Loans and the related borrowers and shall provide all required
notices thereunder.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
Section 4.01 Advances. (a) The amount of P&I Advances to be made by
the Servicer for any Remittance Date shall equal, subject to Section 4.01(c),
the sum of (i) the aggregate amount of Scheduled Payments (with each interest
portion thereof net of the related Servicing Fee), due during the Due Period
immediately preceding such Remittance Date in respect of the Mortgage Loans,
which Scheduled Payments were not received as of the close of business on the
related Determination Date, plus (ii) with respect to each REO Property, which
REO Property was acquired during or prior to the related Prepayment Period and
as to which such REO Property an REO Disposition did not occur during the
related Prepayment Period, an amount equal to the excess, if any, of the
Scheduled Payments (with each interest portion thereof net of the related
Servicing Fee) that would have been due on the related Due Date in respect of
the related Mortgage Loans, over the net income from such REO Property
transferred to the Collection Account for distribution on such Remittance Date.
With respect to any balloon payment on a Balloon Mortgage Loan, the Servicer
shall only be obligated to advance the assumed monthly payment that would have
been due on the related Due Date based on the original principal amortization
schedule for such Balloon Mortgage Loan with interest at the Mortgage Rate net
of the Servicing Fee Rate.
(b) On each Remittance Date, the Servicer shall remit in immediately
available funds to the Trustee an amount equal to the aggregate amount of P&I
Advances, if any, to be made in respect of the Mortgage Loans and REO Properties
for the related Remittance Date either (i) from its own funds or (ii) from the
Collection Account, to the extent of funds held therein for future distribution
(in which case, it will cause to be made an appropriate entry in the records of
Collection Account that Amounts Held for Future Distribution have been, as
permitted by this Section 4.01, used by the Servicer in discharge of any such
P&I Advance) or (iii) in the form of any combination of (i) and (ii) aggregating
the total amount of P&I Advances to be made by the Servicer with respect to the
Mortgage Loans and REO Properties. Any Amounts Held for Future Distribution and
so used shall be appropriately reflected in the Servicer's records and replaced
by the Servicer by deposit in the Collection Account on or before any future
Remittance Date to the extent required.
(c) The obligation of the Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from coverage under this Agreement, except as otherwise provided
in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I Advance
or Servicing Advance shall be required to be made hereunder by the Servicer if
such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance. The
determination by the Servicer that it has made a Nonrecoverable P&I Advance or a
Nonrecoverable Servicing Advance or that any proposed P&I Advance or Servicing
Advance, if made, would constitute a Nonrecoverable P&I Advance or a
Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officer's Certificate of the Servicer delivered to the Trustee. In addition, the
Servicer shall not be required to advance any Relief Act Interest Shortfalls or
any Prepayment Interest Shortfalls in excess of its obligations to pay
Compensating Interest pursuant to Section 3.25.
(e) Except as otherwise provided herein, the Servicer shall be
entitled to reimbursement pursuant to Section 3.11 for Servicing Advances from
recoveries from the related Mortgagor or from all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds, Condemnation Proceeds and
Subsequent Recoveries) with respect to the related Mortgage Loan.
Section 4.02 Priorities of Distribution. (a) On each Distribution
Date, the Trustee will make the disbursements and transfers from amounts then on
deposit in the Distribution Account in the following order of priority and to
the extent of the Available Funds remaining and, on such Distribution Date,
shall make distributions on the Certificates in accordance with such allocation:
(i) to the holders of each Class of LIBOR Certificates and to the
Supplemental Interest Account in the following order of priority:
(A) to the Supplemental Interest Account, the sum of (x) all
Net Swap Payments and (y) any Swap Termination Payment owed to the
Swap Provider other than a Defaulted Swap Termination Payment;
(B) from the Interest Remittance Amounts, to the Class A-1,
Class A-2 and Class A-3 Certificates, the related Accrued
Certificate Interest Distribution Amounts and Unpaid Interest
Amounts for such Distribution Date, allocated pro rata based on
their respective entitlements to those amounts;
(C) from any remaining Interest Remittance Amounts, to the
Class M-1 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(D) from any remaining Interest Remittance Amounts, to the
Class M-2 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(E) from any remaining Interest Remittance Amounts, to the
Class M-3 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(F) from any remaining Interest Remittance Amounts, to the
Class B-1 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(G) from any remaining Interest Remittance Amounts, to the
Class B-2 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(H) from any remaining Interest Remittance Amounts, to the
Class B-3 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(I) from any remaining Interest Remittance Amounts, to the
Class B-4 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date; and
(J) from any remaining Interest Remittance Amounts, to the
Class B-5 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(ii) (A) on each Distribution Date (1) before the Stepdown Date or
(2) with respect to which a Trigger Event is in effect, to the holders of
the related Class or Classes of LIBOR Certificates then entitled to
distributions of principal as set forth below, from amounts remaining on
deposit in the Distribution Account after making distributions pursuant to
clause (i) above, an amount equal to the Principal Distribution Amount in
the following order of priority:
(a) to the Class A Certificates, allocated as described in
Section 4.02(c), until the respective Class Certificate Balances
thereof are reduced to zero; and
(b) sequentially to the Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates, in
that order, until the respective Class Certificate Balances are
reduced to zero;
(B) on each Distribution Date (1) on and after the Stepdown
Date and (2) as long as a Trigger Event is not in effect, to the
holders of the related Class or Classes of LIBOR Certificates then
entitled to distribution of principal, from amounts remaining on
deposit in the Distribution Account after making distributions
pursuant to clause (i) above, an amount equal to, in the aggregate,
the Principal Distribution Amount in the following amounts and order
of priority:
(a) to the Class A Certificates, the lesser of (x) the
Principal Distribution Amount and (y) the Class A Principal
Distribution Amount, allocated as described in Section 4.02(c),
until the respective Class Certificate Balances thereof are reduced
to zero;
(b) to the Class M-1 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the amount
distributed to the Class A Certificateholders in clause (ii)(B)(a)
above and (y) the Class M-1 Principal Distribution Amount, until the
Class Certificate Balance thereof has been reduced to zero;
(c) to the Class M-2 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the amount
distributed to the Class A Certificateholders in clause (ii)(B)(a)
above and to the Class M-1 Certificates in clause (ii)(B)(b) above
and (y) the Class M-2 Principal Distribution Amount, until the Class
Certificate Balance thereof has been reduced to zero;
(d) to the Class M-3 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the amount
distributed to the Class A Certificateholders in clause (ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above and
to the Class M-2 Certificates in clause (ii)(B)(c) above and (y) the
Class M-3 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(e) to the Class B-1 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the amount
distributed to the Class A Certificateholders in clause (ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above, to
the Class M-2 Certificates in clause (ii)(B)(c) above and to the
Class M-3 Certificates in clause (ii)(B)(d) above and (y) the Class
B-1 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(f) to the Class B-2 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the amount
distributed to the Class A Certificateholders in clause (ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above, to
the Class M-2 Certificates in clause (ii)(B)(c) above, to the Class
M-3 Certificates in clause (ii)(B)(d) above and to the Class B-1
Certificates in clause (ii)(B)(e) above and (y) the Class B-2
Principal Distribution Amount, until the Class Certificate Balance
thereof has been reduced to zero;
(g) to the Class B-3 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the amount
distributed to the Class A Certificateholders in clause (ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above, to
the Class M-2 Certificates in clause (ii)(B)(c) above, to the Class
M-3 Certificates in clause (ii)(B)(d) above, to the Class B-1
Certificates in clause (ii)(B)(e) above and to the Class B-2
Certificates in clause (ii)(B)(f) above and (y) the Class B-3
Principal Distribution Amount, until the Class Certificate Balance
thereof has been reduced to zero;
(h) to the Class B-4 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the amount
distributed to the Class A Certificateholders in clause (ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above, to
the Class M-2 Certificates in clause (ii)(B)(c) above, to the Class
M-3 Certificates in clause (ii)(B)(d) above, to the Class B-1
Certificates in clause (ii)(B)(e) above, to the Class B-2
Certificates in clause (ii)(B)(f) above and to the Class B-3
Certificates in clause (ii)(B)(g) above and (y) the Class B-4
Principal Distribution Amount, until the Class Certificate Balance
thereof has been reduced to zero; and
(i) to the Class B-5 Certificates, the lesser of (x) the
excess of (i) the Principal Distribution Amount over (ii) the amount
distributed to the Class A Certificateholders in clause (ii)(B)(a)
above, to the Class M-1 Certificates in clause (ii)(B)(b) above, to
the Class M-2 Certificates in clause (ii)(B)(c) above, to the Class
M-3 Certificates in clause (ii)(B)(d) above, to the Class B-1
Certificates in clause (ii)(B)(e) above, to the Class B-2
Certificates in clause (ii)(B)(f) above, to the Class B-3
Certificates in clause (ii)(B)(g) above and to the Class B-4
Certificates in clause (ii)(B)(h) above and (y) the Class B-5
Principal Distribution Amount, until the Class Certificate Balance
thereof has been reduced to zero;
(iii) any amount remaining after the distributions in clauses (i)
and (ii) above, plus as specifically indicated below, from amounts on
deposit in the Excess Reserve Fund Account, shall be distributed in the
following order of priority:
(A) to the Class M-1 Certificates, any Unpaid Interest Amount
for such Class;
(B) to the Class M-1 Certificates, any Unpaid Realized Loss
Amount for such Class;
(C) to the Class M-2 Certificates, any Unpaid Interest Amount
for such Class;
(D) to the Class M-2 Certificates, any Unpaid Realized Loss
Amount for such Class;
(E) to the Class M-3 Certificates, any Unpaid Interest Amount
for such Class;
(F) to the Class M-3 Certificates, any Unpaid Realized Loss
Amount for such Class;
(G) to the Class B-1 Certificates, any Unpaid Interest Amount
for such Class;
(H) to the Class B-1 Certificates, any Unpaid Realized Loss
Amount for such Class;
(I) to the Class B-2 Certificates, any Unpaid Interest Amount
for such Class;
(J) to the Class B-2 Certificates, any Unpaid Realized Loss
Amount for such Class;
(K) to the Class B-3 Certificates, any Unpaid Interest Amount
for such Class;
(L) to the Class B-3 Certificates, any Unpaid Realized Loss
Amount for such Class;
(M) to the Class B-4 Certificates, any Unpaid Interest Amount
for such Class;
(N) to the Class B-4 Certificates, any Unpaid Realized Loss
Amount for such Class;
(O) to the Class B-5 Certificates, any Unpaid Interest Amount
for such Class;
(P) to the Class B-5 Certificates, any Unpaid Realized Loss
Amount for such Class;
(Q) to the Excess Reserve Fund Account, the amount of any
Basis Risk Payment (without regard to Interest Rate Cap Payments or
Net Swap Receipts) for such Distribution Date;
(R) from funds on deposit in the Excess Reserve Fund Account
with respect to such Distribution Date, an amount equal to any
remaining unpaid Basis Risk Carry Forward Amount with respect to any
LIBOR Certificate for such Distribution Date to the LIBOR
Certificates in the same order and priority in which the Accrued
Certificate Interest Distribution Amount is allocated among such
Classes of Certificates, except that the Class A Certificates shall
be paid (a) first, among the Class A-1 Certificates, Class A-2
Certificates and Class A-3 Certificates, pro rata, based upon their
respective Class Certificate Balances (only with respect to those
Class A Certificates with an outstanding Basis Risk Carry Forward
Amount) and (b) second, any remaining amounts to the Class A-1
Certificates, Class A-2 Certificates and Class A-3 Certificates, pro
rata, based on any such Basis Risk Carry Forward Amounts remaining
unpaid;
(S) to the Supplemental Interest Account, the amount of any
Defaulted Swap Termination Payment owed to the Swap Provider;
(T) to the Class X Certificates, the remainder of the Class X
Distributable Amount not distributed pursuant to Sections
4.02(a)(iii)(A)-(S);
(U) to the Class R-I Certificates, any remaining amount, in
respect of Pooling Tier REMIC-1 (including, for the avoidance of
doubt, amounts paid from the Collection Account to the Supplemental
Float Account and remaining after application pursuant to Section
4.07(i)-(iv)); and
(V) to the Class R-II Certificates, any remaining amount, in
respect of Pooling Tier REMIC-2, the Lower Tier REMIC and the Upper
Tier REMIC.
If on any Distribution Date, as a result of the foregoing allocation
rules, any Class of Class A Certificates does not receive in full the related
Accrued Certificate Interest Distribution Amount or the related Unpaid Interest
Amount, if any, then such shortfall will be allocated to the Holders of such
Class, with interest thereon, on future Distribution Dates, as any Unpaid
Interest Amount, subject to the priorities described above.
(b) On each Distribution Date, prior to any distributions on any
other Class of Certificates, all amounts representing Prepayment Charges from
the Mortgage Loans received during the related Prepayment Period (including
amounts payable by the Servicer pursuant to Section 3.07) shall be distributed
by the Trustee to the holders of the Class P Certificates.
(c) Any principal distributions allocated to the Class A
Certificates shall be allocated sequentially, first to the Class A-1
Certificates, until their Class Certificate Balance has been reduced to zero,
then to the Class A-2 Certificates, until their Class Certificate Balance has
been reduced to zero and then to the Class A-3 Certificates, until their Class
Certificate Balance has been reduced to zero. Notwithstanding the foregoing, on
and after the Distribution Date on which the aggregate Class Certificate
Balances of the Subordinated Certificates and the principal balance of the Class
X Certificates have been reduced to zero, any principal distributions allocated
to the Class A Certificates shall be allocated, pro rata among the Class A
Certificates, based on their respective Class Certificate Balances, until their
respective Class Certificate Balances have been reduced to zero.
(d) On any Distribution Date, any Relief Act Shortfalls and Net
Prepayment Interest Shortfalls for such Distribution Date shall be allocated by
the Trustee as a reduction in the following order:
(i) First, to the portion of the Class X Distributable Amount
allocable to interest; and
(ii) Second, pro rata, as a reduction of the Accrued Certificate
Interest Distribution Amount for the Class A, Class M and Class B
Certificates, based on the amount of interest to which such Classes would
otherwise be entitled.
Section 4.03 Monthly Statements to Certificateholders. (a) Not later
than each Distribution Date, the Trustee shall make available to each
Certificateholder, the Servicer, the Depositor and each Rating Agency a
statement based in part on information provided by the Servicer setting forth
with respect to the related distribution:
(i) the actual Distribution Date, the related Record Date, the
Interest Accrual Period(s) for each Class for such Distribution Date and
the LIBOR Determination Date for such Interest Accrual Period;
(ii) the amount of Available Funds;
(iii) the amount of Available Funds allocable to principal, the
Principal Remittance Amount (separately identifying the components
thereof) and the Principal Distribution Amount (and the calculation
thereof);
(iv) the amount of Available Funds allocable to interest and each
Interest Remittance Amount;
(v) the amount of any Unpaid Interest Amount for each Class included
in such distribution and any remaining Unpaid Interest Amounts after
giving effect to such distribution, any Basis Risk Carry Forward Amount
for each Class and the amount of such Basis Risk Carry Forward Amount
covered by withdrawals from the Excess Reserve Fund Account on such
Distribution Date;
(vi) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable to
such Holders if there were sufficient funds available therefor, the amount
of the shortfall and the allocation of the shortfall as between principal
and interest, including any Basis Risk Carry Forward Amount not covered by
amounts in the Excess Reserve Fund Account;
(vii) the Class Certificate Balance of each Class of Certificates
before and after giving effect to the distribution of principal on such
Distribution Date;
(viii) the Pool Stated Principal Balance for the related
Distribution Date;
(ix) the amount of the Expense Fees paid to or retained by the
Servicer and paid to or retained by the Trustee (stated separately and in
the aggregate) with respect to such Distribution Date;
(x) the Pass-Through Rate for each such Class of Certificates with
respect to such Distribution Date;
(xi) the amount of Advances included in the distribution on such
Distribution Date reported by the Servicer (and the Trustee as successor
servicer and any other successor servicer, if applicable) as of the close
of business on the Determination Date immediately preceding such
Distribution Date;
(xii) the number and aggregate outstanding principal balances of
Mortgage Loans (1) as to which the Scheduled Payment is delinquent 31 to
60 days, 61 to 90 days, 91 or more days, and in such other periods and for
such times as required by Regulation AB, (2) that have become REO
Property, (3) that are in foreclosure and (4) that are in bankruptcy, in
each case as of the close of business on the last Business Day of the
immediately preceding month;
(xiii) for each of the preceding 12 calendar months, or all calendar
months since the related Cut-off Date, whichever is less, the aggregate
dollar amount of the Scheduled Payments (A) due on all outstanding
Mortgage Loans on each of the Due Dates in each such month and (B)
delinquent 60 days or more on each of the Due Dates in each such month;
(xiv) with respect to any Mortgage Loans that became REO Properties
during the preceding calendar month, the aggregate number of such Mortgage
Loans and the aggregate outstanding principal balance of such Mortgage
Loans as of the close of business on the last Business Day of the
immediately preceding month and the month and year of acquisition of such
REO Properties;
(xv) the total number and outstanding principal balance of any REO
Properties (and market value, if available) as of the close of business on
the last Business Day of the immediately preceding month;
(xvi) whether a Trigger Event has occurred and is continuing
(including the calculation demonstrating the existence of the Trigger
Event);
(xvii) the amount on deposit in the Excess Reserve Fund Account
(after giving effect to distributions on such Distribution Date);
(xviii) in the aggregate and for each Class of Certificates, the
aggregate amount of Applied Realized Loss Amounts incurred during the
preceding calendar month and aggregate Applied Realized Loss Amounts
through such Distribution Date;
(xix) the amount of any Net Monthly Excess Cash Flow on such
Distribution Date and the allocation of it to the Certificateholders with
respect to Unpaid Interest Amounts, Applied Realized Loss Amounts and
Basis Risk Carry Forward Amounts;
(xx) the amount of any Net Swap Payments, Net Swap Receipts, Swap
Termination Payments or Defaulted Swap Termination Payments;
(xxi) the calculations of LIBOR and Swap LIBOR;
(xxii) the Subordinated Amount and Specified Subordinated Amount;
(xxiii) Prepayment Charges collected or paid (pursuant to Section
3.07(a)) by the Servicer;
(xxiv) the Cumulative Loss Percentage and the aggregate amount of
Realized Losses used to calculate the Cumulative Loss Percentage;
(xxv) the amount distributed on the Class X Certificates;
(xxvi) the amount of any Subsequent Recoveries for such Distribution
Date; and
(xxvii) the number of Mortgage Loans at the beginning and end of the
applicable reporting period, the pool factor, and the weighted average
interest rate, and weighted average remaining term.
In addition, each Form 10-D prepared and filed by the Trustee
pursuant to Section 8.12 shall include the following information with respect to
the related distribution:
(A) material breaches of Mortgage Loan representations and
warranties of which the Trustee has knowledge or has received
written notice; and
(B) material breaches of any covenants under this Agreement of
which the Trustee has knowledge or has received written notice.
(b) The Trustee's responsibility for providing the above statement
to the Certificateholders, each Rating Agency and the Depositor is limited, if
applicable, to the availability, timeliness and accuracy of the information
derived from the Servicer. The Trustee shall make available the above statement
via the Trustee's internet website. The Trustee's website will initially be
located at xxxx://xxx.xxxxxxx.xxx and 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 may 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. 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.
The Trustee shall make available to each Analytics Company via the
Trustee's internet website each statement to Certificateholders prepared
pursuant to this Section 4.03(a). The Trustee and the Servicer shall cooperate
in good faith with the Depositor to reconcile any discrepancies in such
statements, and the Trustee shall provide any corrections to such statements to
each Analytics Company within ten Business Days of the related Distribution
Date.
The Trustee will also be entitled to rely on but shall not be
responsible for the content or accuracy of any information provided by third
parties for purposes of preparing the monthly statement to Certificateholders
and may affix thereto any disclaimer it deems appropriate in its reasonable
discretion (without suggesting liability on the part of any other party hereto).
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at any
time during the calendar year was a Certificateholder, a statement containing
the information set forth in clauses (a)(i) and (a)(ii) of this Section 4.03
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time in effect.
(d) Not later than three Business Days following the Determination
Date and in no event later than the 20th calendar day of each month, the
Servicer shall furnish to the Depositor with respect to clause (i) below and the
Trustee with respect to clause (ii) below, a monthly remittance advice statement
(the "Servicer Remittance Report") (in a format mutually agreed upon by the
Servicer, the Trustee and the Depositor) containing such information as shall be
reasonably requested (i) by the Depositor to enable the Depositor to disclose
"static pool information", as required by Item 1105 of Regulation AB, with
respect to the Mortgage Loans, and (ii) by the Trustee to enable the Trustee to
provide the reports required by Section 4.03(a) as to the accompanying
remittance. The Servicer shall concurrently deliver to the Depositor a data
tape, in form and substance reasonably satisfactory to the Depositor and the
Servicer, containing the information required pursuant to this Section 4.03(d)
on a loan-by-loan basis for all of the Mortgage Loans.
The Servicer Remittance Report shall, at a minimum, document, on
such Determination Date, Mortgage Loan payment activity on an individual
Mortgage Loan basis, as follows:
(i) with respect to each Scheduled Payment, the amount of such
remittance allocable to principal (including a separate breakdown of any
Principal Prepayment, including the date of such prepayment, and any
Prepayment Charges, received during the related Prepayment Period along
with a detailed report of interest on principal prepayment amounts
remitted in accordance with Section 3.25);
(ii) with respect to each Scheduled Payment, the amount of such
remittance allocable to interest;
(iii) the amount of Servicing Fees received by the Servicer during
the prior distribution period;
(iv) the individual and aggregate Stated Principal Balance of the
Mortgage Loans;
(v) the aggregate expenses reimbursed to the Servicer during the
prior distribution period pursuant to Section 3.11; and
(vi) the number and aggregate outstanding principal balances of
Mortgage Loans (a) delinquent 31 to 60 days, 61 to 90 days, 91 or more
days, and in such other periods and for such times as required by
Regulation AB; (b) as to which foreclosure or bankruptcy proceedings of
the related mortgagor have commenced; and (c) as to which REO Property has
been acquired.
(e) For all purposes of this Agreement, with respect to any Mortgage
Loan, delinquencies shall be determined and reported based on the so-called
"OTS" methodology for determining delinquencies on mortgage loans similar to the
Mortgage Loans. By way of example, a Mortgage Loan would be delinquent with
respect to a Scheduled Payment due on a Due Date if such Scheduled Payment is
not made by the close of business on the Mortgage Loan's next succeeding Due
Date, and a Mortgage Loan would be more than 30-days Delinquent with respect to
such Scheduled Payment if such Scheduled Payment were not made by the close of
business on the Mortgage Loan's second succeeding Due Date. The Servicer hereby
represents and warrants to the Depositor that this delinquency recognition
policy is not less restrictive than any delinquency recognition policy
established by the primary safety and soundness regulator, if any, of the
Servicer with respect to mortgage loans similar to the Mortgage Loans.
Section 4.04 Certain Matters Relating to the Determination of LIBOR.
LIBOR shall be calculated by the Trustee in accordance with the definition of
LIBOR. Until all of the LIBOR Certificates are paid in full, the Trustee shall
at all times retain at least four Reference Banks for the purpose of determining
LIBOR with respect to each LIBOR Determination Date. The Trustee initially shall
designate the Reference Banks (after consultation with the Depositor). Each
"Reference Bank" shall be a leading bank engaged in transactions in Eurodollar
deposits in the international Eurocurrency market, shall not control, be
controlled by, or be under common control with, the Trustee and shall have an
established place of business in London. If any such Reference Bank should be
unwilling or unable to act as such or if the Trustee should terminate its
appointment as Reference Bank, the Trustee shall promptly appoint or cause to be
appointed another Reference Bank (after consultation with the Depositor). The
Trustee shall have no liability or responsibility to any Person for (i) the
selection of any Reference Bank for purposes of determining LIBOR or (ii) any
inability to retain at least four Reference Banks which is caused by
circumstances beyond its reasonable control.
(i) The Pass-Through Rate for each Class of LIBOR Certificates for
each Interest Accrual Period shall be determined by the Trustee on each
LIBOR Determination Date so long as the LIBOR Certificates are Outstanding
on the basis of LIBOR and the respective formulae appearing in footnotes
corresponding to the LIBOR Certificates in the table relating to the
Certificates in the Preliminary Statement. The Trustee shall not have any
liability or responsibility to any Person for its inability, following a
good-faith reasonable effort, to obtain quotations from the Reference
Banks or to determine the arithmetic mean referred to in the definition of
LIBOR, all as provided for in this Section 4.04 and the definition of
LIBOR. The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be
final, conclusive and binding upon each Holder of a Certificate and the
Trustee.
Section 4.05 Allocation of Applied Realized Loss Amounts. Any
Applied Realized Loss Amounts shall be allocated by the Trustee to the most
junior Class of Subordinated Certificates then Outstanding in reduction of the
Class Certificate Balance thereof.
Section 4.06 Supplemental Interest Account. On the Closing Date, the
Trustee shall establish and maintain in its name, a separate non-interest
bearing trust account for the benefit of the holders of the LIBOR Certificates
(the "Supplemental Interest Account") as a part of the Trust Fund. The
Supplemental Interest Account shall be an Eligible Account, and funds on deposit
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.
On any Distribution Date, Interest Rate Cap Payments, Swap
Termination Payments, Net Swap Payments owed to the Swap Provider and Net Swap
Receipts for that Distribution Date will be deposited into the Supplemental
Interest Account. Funds in the Supplemental Interest Account will be distributed
in the following order of priority:
(i) to the Swap Provider, the sum of (x) all Net Swap Payments and
(y) any Swap Termination Payment, other than a Defaulted Swap Termination
Payment, to the Swap Provider, if any, owed for that Distribution Date;
(ii) to the Class A Certificates, to pay Accrued Certificate
Interest Distribution Amounts and, if applicable, any Unpaid Interest
Amounts as described in Section 4.02(a)(i), to the extent unpaid from
Available Funds;
(iii) sequentially, to the Class X-0, Xxxxx X-0, Class M-3, Class
B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates, in that
order, to pay Accrued Certificate Interest Distribution Amounts and, if
applicable, any Unpaid Interest Amounts as described in Section 4.02(a)(i)
and (iii), to the extent unpaid from Available Funds;
(iv) to the LIBOR Certificates, to pay Basis Risk Carry Forward
Amounts as described in Section 4.02(a)(iii)(R), to the extent unpaid from
Available Funds (including Basis Risk Payments on deposit in the Excess
Reserve Fund Account);
(v) sequentially, to the Class A, Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates, in
that order, to pay principal as described in Section 4.02(a)(ii)(A) or
Section 4.02(a)(ii)(B), as applicable, but only to the extent necessary to
restore the Subordinated Amount to the Specified Subordinated Amount as a
result of current or prior Realized Losses not previously reimbursed,
after giving effect to payments and distributions from Available Funds;
(vi) sequentially, to the Class X-0, Xxxxx X-0, Class M-3, Class
B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates, in that
order, to pay any Unpaid Interest Amounts as described in Section
4.02(a)(iii), to the extent unpaid from Available Funds;
(vii) to the Swap Provider, any Defaulted Swap Termination Payment
owed to the Swap Provider for that Distribution Date; and
(viii) to the holders of the Class X Certificates, any remaining
amounts.
Notwithstanding the foregoing, in the event that the Trust receives
a Swap Termination Payment and a successor Swap Provider cannot be obtained,
then the Trustee shall deposit the Swap Termination Payment into the reserve
account that is a sub-account of the Supplemental Interest Account. On each
subsequent Distribution Date (so long as funds are available in the reserve
account), the Trustee shall withdraw from the reserve account and deposit into
the Supplemental Interest Account an amount equal to the amount of any Net Swap
Receipt due the Trust (calculated in accordance with the terms of the original
Interest Rate Swap Agreement) and treat such amount as a Net Swap Receipt for
purposes of determining the distributions from the Supplemental Interest
Account.
Upon termination of the Trust, any amounts remaining in the
Supplemental Interest Account shall be distributed pursuant to the priorities
set forth in this Section 4.06.
The Trustee shall account for the Supplemental Interest Account as
an asset of a grantor trust under subpart E, Part I of subchapter J of the Code
and not as an asset of any Trust REMIC created pursuant to this Agreement. The
beneficial owners of the Supplemental Interest Account are the Class X
Certificateholders. For federal income tax purposes, Net Swap Payments and Swap
Termination Payments payable to the Swap Provider shall be deemed to be paid to
the Supplemental Interest Account from the Upper Tier REMIC, first, by the
Holder of the Class X Certificates (in respect of the Class IO Interest and, if
applicable, Class X Interest) and second, other than any Defaulted Swap
Termination Payment, by the Holders of the applicable Class or Classes of LIBOR
Certificates (in respect of Class IO Shortfalls) as and to the extent provided
in Section 8.13.
Any Basis Risk Carry Forward Amounts and, without duplication, Upper
Tier Carry Forward Amounts distributed by the Trustee to the LIBOR
Certificateholders from the Excess Reserve Fund Account or the Supplemental
Interest Account shall be accounted for by the Trustee, for federal income tax
purposes, as amounts paid first to the Holders of the Class X Certificates (in
respect of the Class X Interest or the Class IO Interest, respectively) and then
to the respective Class or Classes of LIBOR Certificates. In addition, the
Trustee shall account for the rights of Holders of each Class of LIBOR
Certificates to receive payments of Basis Risk Carry Forward Amounts and,
without duplication, Upper Tier Carry Forward Amounts from the Supplemental
Interest Account (along with Basis Risk Carry Forward Amounts payable from the
Excess Reserve Fund Account) as rights in a separate limited recourse interest
rate cap contract written by the Class X Certificateholders in favor of Holders
of each such Class.
The Supplemental Interest Account shall be an "outside reserve fund"
for federal income tax purposes and not an asset of any Trust REMIC.
Furthermore, the Holders of the Class X Certificates shall be the beneficial
owners of the Supplemental Interest Account for all federal income tax purposes,
and shall be taxable on all income earned thereon, and any amounts reimbursed
from the Upper Tier REMIC to the Supplemental Interest Account shall be treated
as having been distributed to the Holders of the Class X Certificates.
In the event the Swap Provider does not deliver the Delivery Amount
(as defined in the Interest Rate Swap Agreement) to the Trustee, the Trustee
shall provide notice of such failure to the Swap Provider within one Business
Day of such failure.
Section 4.07 Supplemental Float Account. On the Closing Date, the
Trustee shall establish and maintain in its name, a separate trust account for
the benefit of the holders of the LIBOR Certificates (the "Supplemental Float
Account") as a part of the Trust Fund. The Supplemental Float Account shall be
an Eligible Account, and funds on deposit 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.
Funds in the Supplement Float Account shall remain uninvested.
On the Remittance Date, to the extent required pursuant to Section
3.21(c), the Servicer shall remit and report any interest or investment income
earned on funds deposited in the Collection Account and the Trustee shall
deposit such interest or investment income into the Supplemental Float Account.
Funds in the Supplemental Float Account will be distributed in the following
order of priority:
(i) to the Class A Certificates, to pay Accrued Certificate Interest
Distribution Amounts and, if applicable, any Unpaid Interest Amounts as
described in Section 4.02(a)(i), to the extent unpaid from Available Funds
and the Supplemental Interest Account;
(ii) sequentially, to the Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates, in that
order, to pay Accrued Certificate Interest Distribution Amounts and, if
applicable, any Unpaid Interest Amounts as described in Section 4.02(a)(i)
and (iii), to the extent unpaid from Available Funds and the Supplemental
Interest Account;
(iii) sequentially, to the Class A, Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates, in
that order, to pay principal as described in Section 4.02(a)(ii)(A) or
Section 4.02(a)(ii)(B), as applicable, but only to the extent necessary to
restore the Subordinated Amount to the Specified Subordinated Amount as a
result of current or prior Realized Losses not previously reimbursed,
after giving effect to payments and distributions from Available Funds and
the Supplemental Interest Account;
(iv) sequentially, to the Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates, in that
order, to pay any Unpaid Interest Amounts as described in Section
4.02(a)(iii), to the extent unpaid from Available Funds and the
Supplemental Interest Account; and
(v) to the holders of the Class R-I Certificates, any remaining
amounts.
Upon termination of the Trust, any amounts remaining in the
Supplemental Float Account shall be distributed pursuant to the priorities set
forth in this Section 4.07.
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 denominations, integral multiples
in excess thereof (except that one Certificate in each Class may be issued in a
different amount) and aggregate denominations per Class set forth in the
Preliminary Statement.
The Depositor hereby directs the Trustee to register the Class X and
Class P Certificates in the name of the Depositor or its designee. On a date as
to which the Depositor notifies the Trustee, the Trustee shall transfer the
Class X and Class P Certificates in the name of the NIM Trustee, or such other
name or names as the Depositor shall request, and to deliver the Class X and
Class P Certificates to the NIM Trustee or to such other Person or Persons as
the Depositor shall request.
Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (x) by wire
transfer in immediately available funds to the account of such Holder at a bank
or other entity having appropriate facilities therefor, if such Holder has so
notified the Trustee at least five Business Days prior to the related Record
Date or (y) by check mailed by first class mail to such Certificateholder at the
address of such Holder appearing in the Certificate Register.
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of any such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless authenticated by the Trustee by manual signature, and
such authentication upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly executed and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the direction of the Depositor, or any Affiliate thereof.
Section 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates. (a) The Trustee shall maintain, or cause to be
maintained in accordance with the provisions of Section 5.06, a Certificate
Register for the Trust Fund in which, subject to the provisions of subsections
(b) and (c) below and to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
transfer of any Certificate, the Trustee shall execute and deliver, in the name
of the designated transferee or transferees, one or more new Certificates of the
same Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No transfer of a Private Certificate shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In determining whether a transfer is being made pursuant to an effective
registration statement, the Trustee shall be entitled to rely solely upon a
written notice to such effect from the Depositor. Except with respect to (i) the
transfer of the Class X or Class P Certificates or the Residual Certificates to
the Depositor or an Affiliate of the Depositor, (ii) the transfer of the Class X
or Class P Certificates to the NIM Issuer or the NIM Trustee, or (iii) a
transfer of the Class X or Class P Certificates from the NIM Issuer or the NIM
Trustee to the Depositor or an Affiliate of the Depositor, in the event that a
transfer of a Private Certificate which is a Physical Certificate 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 shall certify to the Trustee in writing the
facts surrounding the transfer in substantially the form set forth in Exhibit H
(the "Transferor Certificate") and either (i) there shall be delivered to the
Trustee a letter in substantially the form of Exhibit I (the "Rule 144A Letter")
or (ii) there shall be delivered to the Trustee at the expense of the transferor
an Opinion of Counsel that such transfer may be made without registration under
the Securities Act. In the event that a transfer of a Private Certificate which
is a Book-Entry Certificate 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 will
be deemed to have made as of the transfer date each of the certifications set
forth in the Transferor Certificate in respect of such Certificate and the
transferee will be deemed to have made as of the transfer date each of the
certifications set forth in the Rule 144A Letter in respect of such Certificate,
in each case as if such Certificate were evidenced by a Physical Certificate. As
directed by the Depositor, the Trustee shall provide to any Holder of a Private
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and such
other information as shall be necessary to satisfy the condition to eligibility
set forth in Rule 144A(d)(4) for transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A. The Depositor and the Servicer shall cooperate
with the Trustee in providing the Rule 144A information referenced in the
preceding sentence, including providing to the Trustee such information
regarding the Certificates, the Mortgage Loans and other matters regarding the
Trust Fund as the Depositor shall reasonably determine to meet its obligation
under the preceding sentence. Each Holder of a Private Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Servicer and the Depositor against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
Except with respect to (i) the transfer of the Class X or Class P
Certificates or the Residual Certificates to the Depositor or an Affiliate of
the Depositor, (ii) the transfer of the Class X or Class P Certificates to the
NIM Issuer or the NIM Trustee, or (iii) a transfer of the Class X or Class P
Certificates from the NIM Issuer or the NIM Trustee to the Depositor or an
Affiliate of the Depositor, no transfer of an ERISA-Restricted Certificate shall
be made unless the Trustee shall have received either (i) a representation from
the transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee (in the event such Certificate is a Private
Certificate or a Residual Certificate, such requirement is satisfied only by the
Trustee's receipt of a representation letter from the transferee substantially
in the form of Exhibit I), to the effect that such transferee is not an employee
benefit plan or arrangement subject to Section 406 of ERISA, a plan subject to
Section 4975 of the Code or a plan subject to any Federal, state or local law
("Similar Law") materially similar to the foregoing provisions of ERISA or the
Code, nor a Person acting on behalf of any such plan or arrangement nor using
the assets of any such plan or arrangement to effect such transfer, or (ii) in
the case of an ERISA-Restricted Certificate other than a Residual Certificate or
a Class P Certificate that has been the subject of an ERISA-Qualifying
Underwriting, and the purchaser is an insurance company, a representation that
the purchaser is an insurance company that is purchasing such Certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under Sections I and III of PTCE 95-60 or (iii) in the case of any such
ERISA-Restricted Certificate other than a Residual Certificate or Class P
Certificate presented for registration in the name of an employee benefit plan
subject to Title I of ERISA, a plan or arrangement subject to Section 4975 of
the Code (or comparable provisions of any subsequent enactments), or a plan
subject to Similar Law, or a trustee of any such plan or any other Person acting
on behalf of any such plan or arrangement or using such plan's or arrangement's
assets, an Opinion of Counsel satisfactory to the Trustee and the Servicer,
which Opinion of Counsel shall not be an expense of the Depositor, the Trustee,
the Servicer or the Trust Fund, addressed to the Trustee, to the effect that the
purchase or holding of such ERISA-Restricted Certificate will not constitute or
result in a non-exempt prohibited transaction within the meaning of ERISA,
Section 4975 of the Code or any Similar Law and will not subject the Depositor,
the Trustee or the Servicer to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. For purposes of the preceding
sentence, with respect to an ERISA-Restricted Certificate that is not a Private
Certificate or a Residual Certificate, in the event the representation letter
referred to in the preceding sentence is not furnished, such representation
shall be deemed to have been made to the Trustee by the transferee's (including
an initial acquirer's) acceptance of the ERISA-Restricted Certificates.
Notwithstanding anything else to the contrary herein, (a) any purported transfer
of an ERISA-Restricted Certificate, other than a Class P Certificate or Residual
Certificate, to or on behalf of an employee benefit plan subject to ERISA, the
Code or Similar Law without the delivery to the Trustee of an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect
and (b) any purported transfer of a Class P Certificate or Residual Certificate
to a transferee that does not make the representation in clause (i) above shall
be void and of no effect.
None of the Residual Certificates or Class P Certificates may be
sold to any employee benefit plan subject to Title I of ERISA, any plan subject
to Section 4975 of the Code, or any plan subject to any Similar Law or any
Person investing on behalf or with plan assets of such plan.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 5.02(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 by the Trustee in accordance with the foregoing requirements.
As long as the Interest Rate Swap Agreement is in effect, each
beneficial owner of a Certificate other than an ERISA Restricted Certificate, or
any interest therein, shall be deemed to have represented that either (i) it is
not a Plan or (ii) the acquisition and holding of the Certificate are eligible
for the exemptive relief available under at least one of (i) Department of Labor
Prohibited Transaction Class Exemption ("PTCE") 84-14 (for transactions by
independent "qualified professional asset managers"), (ii) PTCE 91-38 (for
transactions by bank collective investment funds), (iii) XXXX 00-0 (for
transactions by insurance company pooled separate accounts), PTCE 95-60 (for
transactions by insurance company general accounts) or (iv) PTCE 96-23 (for
transactions effected by "in-house asset managers") or similar exemption under
similar law.
(c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee;
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Residual Certificate unless, in
addition to the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit G;
(iii) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Residual Certificate and (C)
not to Transfer its Ownership Interest in a Residual Certificate or to
cause the Transfer of an Ownership Interest in a Residual Certificate to
any other Person if it has actual knowledge that such Person is a
Non-Permitted Transferee;
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Residual Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Residual Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Residual
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit, Transferor
Certificate and the Rule 144A Letter. The Trustee shall be entitled but
not obligated to recover from any Holder of a Residual Certificate that
was in fact a Non-Permitted Transferee at the time it became a Holder or,
at such subsequent time as it became a Non-Permitted Transferee, all
payments made on such Residual Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and delivered
by the Trustee to the last preceding Permitted Transferee of such
Certificate; and
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Residual Certificate to any Holder
who is a Non-Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the Trustee or the
Servicer, to the effect that the elimination of such restrictions will not cause
any Trust REMIC to fail to qualify as a REMIC at any time that the Certificates
are Outstanding or result in the imposition of any tax on the Trust Fund, a
Certificateholder or another Person. Each Person holding or acquiring any
Ownership Interest in a Residual Certificate hereby consents to any amendment of
this Agreement which, based on an Opinion of Counsel furnished to the Trustee,
is reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Residual Certificate is not transferred, directly or
indirectly, to a Person that is a Non-Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Residual Certificate which is held by a
Person that is a Non-Permitted Transferee to a Holder that is a Permitted
Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at
all times remain registered in the name of the Depository or its nominee and at
all times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Trustee or the Depositor is
unable to locate a qualified successor, or (y) the Depositor notifies 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
Depository Participants holding beneficial interests in the Book-Entry
Certificates agree to initiate such termination, the Trustee shall notify all
Certificate Owners, through the Depository, of the occurrence of any such event
and of the availability of definitive, fully registered Certificates (the
"Definitive Certificates") to Certificate Owners requesting the same. Upon
surrender to the Trustee of the related Class of Certificates by the Depository,
accompanied by the instructions from the Depository for registration, the
Trustee shall issue the Definitive Certificates. None of the Servicer, the
Depositor or the Trustee shall be liable for any delay in delivery of such
instruction and each may conclusively rely on, and shall be protected in relying
on, such instructions. The Depositor shall provide the Trustee with an adequate
inventory of Certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder;
provided, that the Trustee shall not by virtue of its assumption of such
obligations become liable to any party for any act or failure to act of the
Depository.
(f) Each Private Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer and accompanied by IRS Form W-8ECI, W-8BEN, W-8IMY (and
all appropriate attachments) or W-9 in form satisfactory to the Trustee, duly
executed by the Certificateholder or his attorney duly authorized in writing.
Each Certificate presented or surrendered for registration of transfer or
exchange shall be canceled and subsequently disposed of by the Trustee in
accordance with its customary practice. No service charge shall be made for any
registration of transfer or exchange of Private Certificates, but the Trustee
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Private
Certificates.
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 (b) there is delivered to the Depositor, the Servicer and the
Trustee such security or indemnity as may be required by them to hold 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) connected therewith. Any replacement Certificate issued pursuant to
this Section 5.03 shall constitute complete and indefeasible evidence of
ownership, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 5.04 Persons Deemed Owners. The Servicer, the Trustee, the
Depositor and any agent of the Servicer, the Depositor or the Trustee may treat
the Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and neither the Servicer, the
Trustee, the Depositor, nor any agent of the Servicer, the Depositor 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 which such Certificateholders propose to transmit, or if the
Depositor or Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the Depositor, the Servicer or such Certificateholders at
such recipients' expense the most recent list of the Certificateholders of such
Trust Fund held by the Trustee, if any. The Depositor and every
Certificateholder, by receiving and holding a Certificate, agree that the
Trustee shall not be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.
Section 5.06 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 located at Xxxxx
Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000. The Trustee shall
give prompt written notice to the Certificateholders of any change in such
location of any such office or agency.
ARTICLE VI
THE DEPOSITOR, THE SERVICER
AND THE LOAN PERFORMANCE ADVISOR
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. (a) The Depositor and the Servicer will each keep in full effect its
existence, rights and franchises as a corporation or federally chartered savings
bank, as the case may be, 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.
(b) The Servicer is and shall continue to be an institution which is
a Xxxxxx Xxx-approved and Xxxxxxx Mac-approved seller/servicer in good standing,
shall maintain a net worth of at least $30,000,000 (as determined in accordance
with generally accepted accounting principles) and shall maintain its license to
do business or service residential mortgage loans in any jurisdictions in which
the Mortgaged Properties are located.
(c) 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 (including a sale of substantially all of the assets
of the Servicer) 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; provided, however, that
the successor or surviving Person to the Servicer shall make the covenant set
forth in Section 6.02(b). As a condition to the succession to the Servicer under
this Agreement by any Person (i) into which the Servicer may be merged or
consolidated, or (ii) which may be appointed as a successor to a Servicer, the
Servicer shall provide to the Depositor, at least 15 calendar days prior to the
effective date of such succession or appointment, (x) written notice to the
Depositor of such succession or appointment and (y) in writing and in form and
substance reasonably satisfactory to the Depositor, all information reasonably
necessary to enable the Trustee, pursuant to Section 8.12(g), to accurately and
timely report the event under Item 6.02 of Form 8-K pursuant to the Exchange Act
(if such reports under the Exchange Act are required to be filed under the
Exchange Act).
Section 6.03 Limitation on Liability of the Depositor, the Servicer
and Others. None of the Depositor, the Servicer or any of their respective
directors, officers, employees or agents shall be under any liability to the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
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 which would otherwise be imposed by reasons of willful
misfeasance, bad faith or negligence (or gross negligence in the case of the
Depositor) in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, its Affiliates, the Servicer
and any of their respective directors, officers, employees or agents 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,
its Affiliates, the Servicer and any of their respective directors, officers,
employees or agents shall be indemnified by the Trust Fund and held harmless
against any loss, liability or expense incurred in connection with any audit,
controversy or judicial proceeding relating to a governmental taxing authority
or any legal action relating to this Agreement, the Certificates or the Loan
Performance Advisor Agreement other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence (or gross negligence
in the case of the Depositor) in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties hereunder. The Depositor
shall not be under any obligation to appear in, prosecute or defend any legal
action that is not incidental to its respective duties hereunder and which in
its opinion may involve it in any expense or liability; provided, however, that
the Depositor may in its discretion undertake any such action (or direct the
Trustee to undertake such actions pursuant to Section 2.03 for the benefit of
the Certificateholders) that it may deem necessary or desirable in respect of
this Agreement and the rights and duties of the parties hereto and interests of
the Trustee and the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor shall be
entitled to be reimbursed therefor out of the Collection Account.
Neither the Servicer nor any of the officers, employees or agents of
the Servicer shall be under any liability to the Trustee or the Depositor for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement; provided, however, that this provision shall not
protect the Servicer or any such person against any breach of warranties or
representations made herein, or failure to perform its obligations in compliance
with the terms of this Agreement, or any liability which would otherwise be
imposed by reason of any breach of the terms and conditions of this Agreement.
The Servicer and any officer, employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that is
not incidental to its duties to service the Mortgage Loans in accordance with
this Agreement and which in its opinion may involve it in any expenses or
liability; provided, however, that the Servicer may undertake any such action
which it may deem necessary or desirable in respect to this Agreement and the
rights and duties of the parties hereto. In such event, the legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities for which the Trust Fund will be liable, and the Servicer
shall be entitled to be reimbursed therefor out of the Collection Account.
Section 6.04 Limitation on Resignation of the Servicer. Subject to
Section 6.02 and 7.01, the Servicer shall not assign this Agreement or resign
from the obligations and duties hereby imposed on it except by mutual consent of
the Servicer, the Depositor and the Trustee or (i) upon the determination that
the performance of its obligations or duties hereunder are no longer permissible
under applicable law or are in material conflict by reason of applicable law
with any other activities carried on by it or its subsidiaries or Affiliates,
the other activities of the Servicer so causing such a conflict being of a type
and nature carried on by the Servicer or its subsidiaries or Affiliates at the
date of this Agreement or (ii) upon satisfaction of the following conditions:
(a) the Servicer has proposed a successor servicer to the Trustee and (b) each
Rating Agency shall have delivered a letter to the Trustee prior to the
appointing of the successor servicer stating that the proposed appointment of
such successor servicer as Servicer hereunder will not result in the reduction
or withdrawal of the then current rating of the Certificates; provided, however,
that no such resignation by the Servicer shall become effective until such
successor servicer or, in the case of (i) above, the Trustee shall have assumed
the Servicer's responsibilities and obligations hereunder or the Trustee shall
have designated a successor servicer in accordance with Section 7.02. Any such
resignation shall not relieve the Servicer of responsibility for any of the
obligations specified in Sections 7.01 and 7.02 as obligations that survive the
resignation or termination of the Servicer. Any such determination permitting
the resignation of the Servicer pursuant to (i) above shall be evidenced by an
Opinion of Counsel to such effect delivered to the Depositor and the Trustee
which Opinion of Counsel shall be in form and substance acceptable to the
Depositor and the Trustee. No such resignation shall become effective until a
successor shall have assumed in writing the Servicer's responsibilities and
obligations hereunder.
Section 6.05 Additional Indemnification by the Servicer; Third Party
Claims.
(a) The Servicer shall indemnify the Responsible Party, the Sponsor,
the Depositor, the Trustee and any Affiliate, director, officer, employee or
agent of the Depositor and hold them harmless against any and all third party
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 them may sustain in any way related to (i) any breach by the
Servicer, of any of its representations and warranties referred to in Section
2.03(a), (ii) any error in any tax or information return prepared by the
Servicer, or (iii) the failure of the Servicer to perform its duties and service
the Mortgage Loans in compliance with the terms of this Agreement (including,
without limitation, the failure to deliver accurate and complete information on
a timely basis pursuant to Section 4.03(d)). The Servicer immediately shall
notify the Depositor, the Responsible Party and the Trustee if a claim is made
by a third party with respect to this Agreement or the Mortgage Loans, assume
(with the prior written consent of the Depositor and the Trustee) 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 the Responsible Party, the Depositor or the Trustee in
respect of such claim.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the Servicer shall indemnify the Depositor, the Sponsor, the Trustee
and any director, officer, employee or agent of the Depositor, the Sponsor or
the Trustee and hold them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that any of them may
sustain in any way related to any failure by the Servicer or any Subservicer
engaged by the Servicer or any Subcontractor utilized by the Servicer to deliver
any information, report, certification or accountants' letter when and as
required under Sections 3.22, 3.23, 6.02 or 8.12, including without limitation
any failure by the Servicer to identify pursuant to Section 3.02(e) any
Subcontractor "participating in the servicing function" within the meaning of
Item 1122 of Regulation AB.
(c) If the indemnification provided for in this Section 6.05 is
unavailable or insufficient to hold harmless any Person entitled to
indemnification thereunder, then the Servicer shall contribute to the amount
paid or payable by the Person entitled to indemnification as a result of the
losses, claims, damages or liabilities of such Person in such proportion as is
appropriate to reflect the relative fault of such Person on the one hand and the
Servicer, on the other, in connection with the Servicer's obligations pursuant
to this Section 6.05. This Section 6.05 shall survive the termination of this
Agreement or the earlier resignation or removal of the Servicer.
Section 6.06 Duties of the Loan Performance Advisor. The Loan
Performance Advisor shall perform its obligations under the Loan Performance
Advisor Agreement.
Section 6.07 Loan Performance Advisor's Fees. On each Distribution
Date the Trustee shall withdraw from the Distribution Account the Loan
Performance Advisor Fee and pay such fee to the Loan Performance Advisor as
compensation for its activities under this Agreement.
ARTICLE VII
DEFAULT
Section 7.01 Events of Default. "Event of Default", wherever used
herein, means any one of the following events:
(a) any failure by the Servicer to remit to the Trustee any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of one Business Day after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Depositor or by the Trustee, or to the Servicer, the Depositor
and the Trustee by Certificateholders entitled to at least 25% of the Voting
Rights in the Certificates; or
(b) the failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of the Servicer set forth in this Agreement which continues unremedied for
a period of forty-five days (except that (x) such number of days shall be
fifteen in the case of a failure to pay any premium for any insurance policy
required to be maintained under this Agreement and (y) such number of days shall
be ten in the case of a failure to observe or perform any of the obligations set
forth in Sections 3.02, 3.22, 3.23, 6.02 or 8.12) after the earlier of (i) the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Depositor or by the Trustee, or to
the Servicer, the Depositor and the Trustee by Certificateholders entitled to at
least 25% of the Voting Rights in the Certificates and (ii) actual knowledge of
such failure by a Servicing Officer of the Servicer; or
(c) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty consecutive days; or
(d) the Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(e) the Servicer shall admit in writing its inability generally to
pay its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(f) a breach of any representation and warranty of the Servicer
referred to in Section 2.03(a), which materially and adversely affects the
interests of the Certificateholders and which continues unremedied for a period
of thirty days after the date upon which written notice of such breach is given
to the Servicer by the Trustee or by the Depositor, or to the Servicer, the
Trustee and the Depositor by Certificateholders entitled to at least 25% of the
Voting Rights in the Certificates; or
(g) Fitch reduces its servicer rating of the Servicer to "RPS2-" or
lower, Xxxxx'x reduces its servicer rating of the Servicer to "SQ3" or lower, or
Standard & Poor's reduces its servicer rating of the Servicer to "Average" or
lower.
If an Event of Default described in clauses (a) through (g) of this
Section 7.01 shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, the Trustee may, and at the
written direction of a majority of the Voting Rights, the Trustee shall, by
notice in writing to the Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Servicer under this Agreement and in
and to the Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder; provided, however, that the Trustee shall not be
required to give written notice to the Servicer of the occurrence of an Event of
Default described in clauses (b) through (g) of this Section 7.01 unless and
until a Responsible Officer of the Trustee has actual knowledge of the
occurrence of such an event; provided further, that the Depositor shall give
written notice to the Servicer of the occurrence of an Event of Default
described in clause (g) of this Section 7.01 upon obtaining actual knowledge of
the occurrence of such an event. In the event that a Responsible Officer of the
Trustee has actual knowledge of the occurrence of an event of default described
in clause (a) of this Section 7.01, the Trustee shall give written notice to the
Servicer of the occurrence of such an event within one Business Day of the first
day on which such Responsible Officer obtains actual knowledge of such
occurrence; provided, that if such failure is the failure to make a P&I Advance,
the Trustee shall send such notice and, if the Event of Default of the Servicer
was the failure to make a P&I Advance, the Trustee, as successor servicer, shall
make such P&I Advance for distribution on the related Distribution Date. On and
after the receipt by the Servicer of such written notice, all authority and
power of the Servicer hereunder, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee. Subject to Section 7.02,
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.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive from the Trust Fund payment
of all accrued and unpaid Servicing Fees due to the Servicer prior to such
termination, and reimbursement for all outstanding Advances made by the Servicer
on or prior to the termination of the Servicer. Except to the extent provided by
the following sentence, any successor Servicer shall not be permitted to pay
itself the Servicing Fee due to it or to reimburse itself directly for Advances
made by it as otherwise permitted by Sections 3.11(a)(ii), (iii), (vi) or (vii)
if the terminated Servicer has not been paid Servicing Fees due to the
terminated Servicer and been fully reimbursed for Advances made by the
terminated Servicer. The successor Servicer is hereby authorized to pay to the
terminated Servicer (or the related Advancing Person in accordance with Section
11.11) and itself, as applicable, all Servicing Fees due to the terminated
Servicer and the successor Servicer, and to reimburse the terminated Servicer
and itself for all Advances made by them from the Collection Account to the same
extent the terminated Servicer or successor Servicer would have been permitted
to pay itself the Servicing Fees due to it or to reimburse itself for such
Advances in accordance with Sections 3.11(a)(ii), (iii), (vi) or (vii). All
Advances made pursuant to the terms of this Agreement shall be deemed made and
shall be reimbursed on a "first in-first out" (FIFO) basis. At such time as the
terminated Servicer has been paid all Servicing Fees due to it and been
reimbursed for all Advances made by it, the successor Servicer shall be
permitted to pay itself the Servicing Fee due to such successor servicer and to
reimburse itself directly for Advances made by such successor servicer in
accordance with Sections 3.11(a)(ii), (iii), (vi) or (vii).
Section 7.02 Trustee to Act; Appointment of Successor. On and after
the time the Servicer receives a notice of termination pursuant to Section 3.24
or Section 7.01, the Trustee shall, subject to and to the extent provided in
Section 3.05, 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 P&I Advances and Servicing Advances, pursuant
to Section 3.24 or Section 7.01. It is understood and acknowledged by the
parties hereto that there will be a period of transition before the transfer of
servicing obligations is fully effective. Notwithstanding the foregoing, the
Trustee will have a period (not to exceed 90 days) to complete the transfer of
all servicing data and correct or manipulate such servicing data as may be
required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise enable the Trustee to service the Mortgage Loans in
accordance with Accepted Servicing Practices. As compensation therefor, the
Trustee shall be entitled to all funds relating to the Mortgage Loans that the
Servicer would have been entitled to charge to the Collection Account if the
Servicer had continued to act hereunder including, if the Servicer was receiving
the Servicing Fee, the Servicing Fee and, subject to Section 3.21(c), the income
on investments or gain related to the Collection Account which the Servicer
would be entitled to receive. Notwithstanding the foregoing, if the Trustee has
become the successor to the Servicer in accordance with Section 7.01, the
Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
by applicable law from making P&I Advances and Servicing Advances pursuant to
Section 4.01, if it is otherwise unable to so act or at the written request of
Certificateholders entitled to at least a majority of the Voting Rights,
appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution the appointment of which does
not adversely affect the then current rating of the Certificates by each Rating
Agency, as the successor to the Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Any successor to the Servicer shall make the covenant set forth in
Section 6.02(b). Any successor to the Servicer shall be an institution which is
willing to service the Mortgage Loans and which executes and delivers to the
Depositor and the Trustee an agreement accepting such delegation and assignment,
containing 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 incurred prior to termination of
the Servicer under Section 7.01), with like effect as if originally named as a
party to this Agreement; provided, that each Rating Agency acknowledges that its
rating of the Certificates in effect immediately prior to such assignment and
delegation will not be qualified or reduced, as a result of such assignment and
delegation. Pending appointment of a successor to the Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3.05, 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 the Servicing Fee Rate and amounts paid to the Servicer from
investments (subject to Section 3.21(c)). The Trustee and such successor
Servicer shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Neither the Trustee nor any other
successor to the Servicer shall be deemed to be in default hereunder by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof or any failure to perform, or any delay in performing, any
duties or responsibilities hereunder, in either case caused by the failure of
the Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.
In the event that the Servicer is terminated pursuant to Section
7.01, the terminated Servicer shall be responsible for the servicing transfer,
provide notices to the Mortgagors, arrange for and transfer the Servicing Files
to a successor Servicer and pay all of its own out-of-pocket costs and expenses
at its own expense. In addition, in the event that the Servicer is terminated
pursuant to Section 7.01, the terminated Servicer shall pay all reasonable
out-of-pocket costs and expenses of a servicing transfer incurred by parties
other than the terminated Servicer promptly upon presentation of reasonable
documentation of such costs. If the Trustee is the terminated Servicer (except
in the case where the Trustee in its role as successor Servicer is being
terminated pursuant to Section 7.01 by reason of an Event of Default caused
solely by the Trustee as the successor Servicer and not by the predecessor
Servicer's actions or omissions), such costs shall be paid by the prior
terminated Servicer promptly upon presentation of reasonable documentation of
such costs. If the terminated Servicer defaults in its obligation to pay such
costs and expenses, the same shall be paid by the successor Servicer or the
Trustee, in which case the successor Servicer or the Trustee, as applicable,
shall be entitled to reimbursement therefor from the Trust Fund.
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 3.13.
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 and 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 each Rating Agency
notice of each such Event of Default hereunder known to the Trustee, unless such
event shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 Duties of the Trustee. The Trustee, before the
occurrence of an Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform such duties and only such
duties as are specifically set forth in this Agreement. In case an Event of
Default has occurred and remains uncured, the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form required by this Agreement. The Trustee shall not be responsible for
the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order, or other instrument.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct.
Unless an Event of Default known to the Trustee has occurred and is
continuing:
(a) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of the duties and obligations specifically set
forth in this Agreement, no implied covenants or obligations shall be read into
this Agreement against the Trustee, and the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement which it believes in good faith
to be genuine and to have been duly executed by the proper authorities
respecting any matters arising hereunder;
(b) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it is finally proven that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken, suffered, or omitted to be taken by it in good faith in accordance with
the direction of the Holders of Certificates evidencing not less than 25% of the
Voting Rights of Certificates relating to the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Agreement.
The Trustee shall be permitted to utilize one or more Subcontractors
for the performance of certain of its obligations under this Agreement, provided
that the Trustee complies with Section 3.02(e) as if the Trustee were a
"Servicer" pursuant to that Section. The Trustee shall indemnify the Depositor,
the Sponsor and any director, officer, employee or agent of the Depositor or the
Sponsor and hold them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that any of them may
sustain in any way related to the failure of the Trustee to perform any of its
obligations under Section 3.22 or Section 3.23, including without limitation any
failure by the Trustee to identify pursuant to Section 3.02(e) any Subcontractor
that is a Servicing Function Participant. This indemnity shall survive the
termination of this Agreement or the earlier resignation or removal of the
Trustee.
Section 8.02 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 8.01:
(a) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties and the Trustee shall have no responsibility to
ascertain or confirm the genuineness of any signature of any such party or
parties;
(b) the Trustee may consult with counsel, financial advisers or
accountants and the advice of any such counsel, financial advisers or
accountants and any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(c) 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;
(d) 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 to do so by the Holders of
Certificates evidencing not less than 25% of the Voting Rights allocated to each
Class of Certificates;
(e) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agents, accountants or attorneys
appointed with due care by it hereunder;
(f) the Trustee shall not be required to risk or expend its own
funds or otherwise incur any financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers hereunder if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not assured to it;
(g) the Trustee shall not be liable for any loss on any investment
of funds pursuant to this Agreement (other than in its corporate capacity as
obligor of the investment security and with respect to the investment of funds
in the Distribution Account);
(h) unless a Responsible Officer of the Trustee has actual knowledge
of the occurrence of an Event of Default, the Trustee shall not be deemed to
have knowledge of an Event of Default, until a Responsible Officer of the
Trustee shall have received written notice thereof; and
(i) the Trustee shall be under no obligation to exercise any of the
trusts, rights or powers vested in it by this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs, expenses
and liabilities which may be incurred therein or thereby.
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates shall be taken as the
statements of the Depositor and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document other than with respect to the Trustee's execution and
authentication of the Certificates. The Trustee shall not be accountable for the
use or application by the Depositor or the Servicer of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Depositor or the Servicer.
The Trustee shall have no responsibility for filing or recording any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder (unless the Trustee shall have become the successor
Servicer).
The Trustee executes the Certificates not in its individual capacity
but solely as Trustee of the Trust Fund created by this Agreement, in the
exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee on behalf of the Trust Fund in the Certificates is made and intended not
as a personal undertaking or agreement by the Trustee but is made and intended
for the purpose of binding only the Trust Fund.
Section 8.04 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not the Trustee.
Section 8.05 Trustee's Fees and Expenses. As compensation for its
activities under this Agreement, the Trustee may withdraw from the Distribution
Account on each Distribution Date the Trustee Fee for the Distribution Date and
any interest or investment income earned on funds deposited in the Distribution
Account. The Trustee and any director, officer, employee, or agent of the
Trustee shall be indemnified by the Trust Fund and held harmless against any
loss, liability, or expense (including reasonable attorney's fees) resulting
from any error in any tax or information return prepared by the Servicer or
incurred in connection with:
(a) this Agreement,
(b) the Insurance Policy,
(c) the Certificates, or
(d) the performance of any of the Trustee's duties under this
Agreement,
other than any loss, liability, or expense (i) resulting from any breach of the
Servicer's obligations in connection with this Agreement for which the Servicer
has performed its obligation to indemnify the Trustee pursuant to Section 6.05,
(ii) resulting from any breach of the Responsible Party's obligations in
connection with this Agreement for which the Responsible Party has performed its
obligation to indemnify the Trustee pursuant to Section 2.03(h) or (iii)
incurred because of willful misconduct, bad faith, or negligence in the
performance of any of the Trustee's duties under this Agreement. This indemnity
shall survive the termination of this Agreement or the resignation or removal of
the Trustee under this Agreement. Without limiting the foregoing, except as
otherwise agreed upon in writing by the Depositor and the Trustee, and except
for any expense, disbursement, or advance arising from the Trustee's negligence,
bad faith, or willful misconduct, the Trust Fund shall pay or reimburse the
Trustee for all reasonable expenses, disbursements, and advances incurred or
made by the Trustee in accordance with this Agreement with respect to:
(A) the reasonable compensation, expenses, and disbursements
of its counsel not associated with the closing of the issuance of
the Certificates, and
(B) the reasonable compensation, expenses, and disbursements
of any accountant, engineer, or appraiser that is not regularly
employed by the Trustee, to the extent that the Trustee must engage
them to perform services under this Agreement.
Except as otherwise provided in this Agreement or a separate letter
agreement between the Trustee and the Depositor, the Trustee shall not be
entitled to payment or reimbursement for any routine ongoing expenses incurred
by the Trustee in the ordinary course of its duties as Trustee, Registrar, or
paying agent under this Agreement or for any other routine expenses incurred by
the Trustee; provided, however, no expense shall be reimbursed hereunder if it
would not constitute an "unanticipated expense incurred by the REMIC" within the
meaning of the REMIC Provisions.
Section 8.06 Eligibility Requirements for the Trustee. The Trustee
hereunder shall at all times be a corporation or association organized and doing
business under the laws of a state or the United States of America, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, subject to supervision or examination by
federal or state authority and with a credit rating which would not cause any of
the Rating Agencies to reduce their respective then current ratings of the
Certificates (or having provided such security from time to time as is
sufficient to avoid such reduction) as evidenced in writing by each Rating
Agency. 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 8.06
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 this Section 8.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.07. The
entity serving as Trustee may have normal banking and trust relationships with
the Depositor and its Affiliates or the Servicer and its Affiliates; provided,
however, that such entity cannot be an Affiliate of the Depositor or the
Servicer other than the Trustee in its role as successor to the Servicer.
Section 8.07 Resignation and Removal of the Trustee. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
written notice of resignation to the Depositor, the Servicer and each Rating
Agency not less than 60 days before the date specified in such notice, when,
subject to Section 8.08, such resignation is to take effect, and acceptance by a
successor trustee in accordance with Section 8.08 meeting the qualifications set
forth in Section 8.06. If no successor trustee meeting such qualifications shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice or resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with Section 8.06 and shall fail to resign after written request thereto by the
Depositor, or if at any time the Trustee shall become incapable of acting, or
shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or a tax is imposed with respect to
the Trust Fund by any state in which the Trustee or the Trust Fund is located
and the imposition of such tax would be avoided by the appointment of a
different trustee, then the Depositor may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, one copy of which shall
be delivered to the Trustee, one copy to the Servicer and one copy to the
successor trustee.
The Holders of Certificates entitled to at least a majority of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which 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. The
successor trustee shall notify each Rating Agency of any removal of the Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to this Section 8.07 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 8.08.
Section 8.08 Successor Trustee. Any successor trustee appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the Depositor
and to its predecessor trustee and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as trustee herein. The Depositor, the Servicer and
the predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties, and
obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of its acceptance, the successor trustee is
eligible under Section 8.06 and its appointment does not adversely affect the
then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.
Section 8.09 Merger or Consolidation of the Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder; provided, that such corporation shall be eligible under Section 8.06
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. In
connection with the succession to the Trustee under this Agreement by any Person
(i) into which the Trustee may be merged or consolidated, or (ii) which may be
appointed as a successor to the Trustee, the Trustee shall notify the Depositor
of such succession or appointment and shall furnish to the Depositor in writing
and in form and substance reasonably satisfactory to the Depositor, all
information reasonably necessary for the Trustee to accurately and timely
report, pursuant to Section 8.12(g), the event under Item 6.02 of Form 8-K
pursuant to the Exchange Act (if such reports under the Exchange Act are
required to be filed under the Exchange Act).
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider appropriate. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(a) To the extent necessary to effectuate the purposes of this
Section 8.10, all rights, powers, duties and obligations conferred or imposed
upon the Trustee, except for the obligation of the Trustee under this Agreement
to advance funds on behalf of the Servicer, shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or as
successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the applicable Trust
Fund or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(b) No trustee hereunder shall be held personally liable because of
any act or omission of any other trustee hereunder and such appointment shall
not, and shall not be deemed to, constitute any such separate trustee or
co-trustee as agent of the Trustee;
(c) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee; and
(d) The Trust Fund, and not the Trustee, shall be liable for the
payment of reasonable compensation, reimbursement and indemnification to any
such separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the separate trustees and co-trustees, when
and as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection and indemnity to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11 Tax Matters. It is intended that the assets with
respect to which any REMIC election pertaining to the Trust Fund is to be made,
as set forth in the Preliminary Statement, shall constitute, and that the
conduct of matters relating to such assets shall be such as to qualify such
assets as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Trustee covenants and agrees that it shall act as agent (and the Trustee is
hereby appointed to act as agent) on behalf of each Trust REMIC and that in such
capacity it shall:
(a) prepare and file in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit (REMIC) Income Tax Return (Form 1066 or any successor form
adopted by the Internal Revenue Service) and prepare and file 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 Trust REMIC
containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
furnish 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, the Trustee will apply
for an employer identification number from the Internal Revenue Service via Form
SS-4 or any other acceptable method for all tax entities and shall also furnish
to the Internal Revenue Service, on Form 8811 or as otherwise may be required by
the Code, the name, title, address, and telephone number of the person that the
Holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code;
(c) make an election that each of Pooling Tier REMIC-1, Pooling Tier
REMIC-2, the Lower Tier REMIC and the Upper Tier REMIC be treated as a REMIC on
the federal tax return for its first taxable year (and, if necessary, under
applicable state law);
(d) prepare and forward to the Certificateholders and to the
Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them in
accordance with the REMIC Provisions, including the calculation of any original
issue discount using the prepayment assumption (as described in the Prospectus
Supplement);
(e) provide information necessary for the computation of tax imposed
on the Transfer of a Residual Certificate to a Person that is a Non-Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax);
(f) to the extent that they are under its control, conduct matters
relating to such assets at all times that any Certificates are Outstanding so as
to maintain the status of each Trust REMIC as a REMIC under the REMIC
Provisions;
(g) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of any Trust
REMIC created hereunder;
(h) pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal or state tax, including prohibited
transaction taxes as described below, imposed on each Trust REMIC before its
termination when and as the same shall be due and payable (but such obligation
shall not prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings);
(i) cause federal, state or local income tax or information returns
to be signed by the Trustee or such other Person as may be required to sign such
returns by the Code or state or local laws, regulations or rules; and
(j) maintain records relating to each of the Trust REMICs, including
the income, expenses, assets, and liabilities thereof on a calendar year basis
and on the accrual method of accounting and the adjusted basis of the assets
determined at such intervals as may be required by the Code, as may be necessary
to prepare the foregoing returns, schedules, statements or information.
The Holder of the largest Percentage Interest of the Class R-I
Certificates shall act as Tax Matters Person for Pooling Tier REMIC-1 and the
holder of the largest Percentage Interest of the Class R-II Certificates shall
act as the Tax Matters Person for Pooling Tier REMIC-2, the Lower Tier REMIC and
the Upper Tier REMIC, in each case, within the meaning of Treasury Regulations
Section 1.860F-4(d), and the Trustee is hereby designated as agent of such
Certificateholder for such purpose (or if the Trustee is not so permitted, such
Holder shall be the Tax Matters Person in accordance with the REMIC Provisions).
In such capacity, the Trustee shall, as and when necessary and appropriate,
represent any Trust REMIC in any administrative or judicial proceedings relating
to an examination or audit by any governmental taxing authority, request an
administrative adjustment as to any taxable year of any Trust REMIC, enter into
settlement agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any Trust REMIC, and otherwise act on
behalf of each REMIC in relation to any tax matter or controversy involving it.
The Trustee shall treat the rights of the Class P Certificateholders
to receive Prepayment Charges (including amounts payable by the Servicer with
respect thereto), the rights of the Class X Certificateholders to receive
amounts in the Excess Reserve Fund Account and the Supplemental Interest Account
(subject, other than in the case of the Class X Certificates, to the obligation
to pay Basis Risk Carry Forward Amounts and, without duplication, Upper Tier
Carry Forward Amounts) and the rights of the LIBOR Certificateholders to receive
Basis Risk Carry Forward Amounts and, without duplication, Upper Tier Carry
Forward Amounts as the beneficial ownership of interests in a grantor trust, and
not as an obligation of any Trust REMIC created hereunder, for federal income
tax purposes. The Trustee shall file or cause to be filed with the IRS together
with Form 1041 or such other form as may be applicable and shall furnish or
cause to be furnished, to the Class P Certificateholders, the Class X
Certificateholders and the LIBOR Certificateholders, the respective amounts
described above that are received, in the time or times and in the manner
required by the Code.
To enable the Trustee to perform its duties under this Agreement,
the Depositor shall provide to the Trustee within ten 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 the price, yield, prepayment assumption, and projected
cash flows of the Certificates and the Mortgage Loans. Moreover, the Depositor
shall provide information to the Trustee concerning the value to each Class of
Certificates of the right to receive Basis Risk Carry Forward Amounts from the
Excess Reserve Fund Account and Basis Risk Carry Forward Amounts or, without
duplication, Upper Tier Carry Forward Amounts from the Supplemental Interest
Account. Unless otherwise advised by the Depositor, for federal income tax
purposes, the Trustee is hereby directed to assign a value of zero to the right
of each Holder allocating the purchase price of an initial Offered
Certificateholder between such right and the related Upper Tier Regular
Interest. Thereafter, the Depositor shall provide to the Trustee promptly upon
written request therefor any additional information or data that the Trustee
may, from time to time, reasonably request to enable the Trustee to perform its
duties under this Agreement; provided, however, that the Depositor shall not be
required to provide any information regarding the Mortgage Loans that the
Servicer is required to provide to the Trustee pursuant to this Agreement. The
Depositor hereby indemnifies the Trustee for any losses, liabilities, damages,
claims, or expenses of the Trustee arising from any errors or miscalculations of
the Trustee that result from any failure of the Depositor to provide, pursuant
to this paragraph, accurate information or data to the Trustee on a timely
basis.
Neither the Servicer nor Trustee shall (i) permit the creation of
any interests in any Trust REMIC other than the regular and residual interests
set forth in the Preliminary Statement, (ii) receive any amount representing a
fee or other compensation for services (except as otherwise permitted by this
Agreement) or (iii) otherwise knowingly or intentionally take any action, cause
the Trust Fund to take any action or fail to take (or fail to cause to be taken)
any action reasonably within its control and the scope of duties more
specifically set forth herein, that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (A) endanger the status of any Trust REMIC as a
REMIC or (B) result in the imposition of a tax upon any Trust REMIC or the Trust
Fund (including but not limited to the tax on "prohibited transactions" as
defined in Section 860F(a)(2) of the Code and the tax on contributions to a
Trust REMIC set forth in Section 860G(d) of the Code, or the tax on "net income
from foreclosure property") unless the Trustee receives an Opinion of Counsel
(at the expense of the party seeking to take such action or, if such party fails
to pay such expense, and the Trustee determines that taking such action is in
the best interest of the Trust Fund and the Certificateholders, at the expense
of the Trust Fund, but in no event at the expense of the Trustee) to the effect
that the contemplated action will not, with respect to the Trust Fund or any
Trust REMIC created hereunder, endanger such status or, unless the Trustee
determines in its sole discretion to indemnify the Trust Fund against such tax,
result in the imposition of such a tax).
If any tax is imposed on "prohibited transactions" of any Trust
REMIC as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of the Pooling Tier REMIC-1 as defined in Section 860G(c)
of the Code, on any contribution to any Trust REMIC after the Startup Day
pursuant to Section 860G(d) of the Code, or any other tax is imposed, including
any minimum tax imposed on any Trust REMIC pursuant to Sections 23153 and 24874
of the California Revenue and Taxation Code, if not paid as otherwise provided
for herein, the tax shall be paid by (i) the Trustee if such tax arises out of
or results from negligence of the Trustee in the performance of any of its
obligations under this Agreement, (ii) the Servicer, in the case of any such
minimum tax, and otherwise if such tax arises out of or results from a breach by
the Servicer of any of its obligations under this Agreement, or (iii) in all
other cases, or if the Trustee or the Servicer fails to honor its obligations
under the preceding clause (i) or (ii), any such tax will be paid with amounts
otherwise to be distributed to the Certificateholders, as provided in Section
4.02(a).
Section 8.12 Periodic Filings. (a) The Trustee and the Servicer
shall reasonably cooperate with the Depositor in connection with the reporting
requirements of the Trust under the Exchange Act. The Trustee shall prepare for
execution by the Depositor any Forms 10-D and 10-K and certain Form 8-K's (not
to include any Form 8-K related to the filing of this Agreement and any
amendments thereto), required by the Exchange Act and the rules and regulations
of the Commission thereunder, in order to permit the timely filing thereof, and
the Trustee shall file (via the Commission's Electronic Data Gathering and
Retrieval System, or XXXXX) such Forms executed by the Depositor.
(b) Within 15 days after each Distribution Date (subject to
permitted extensions under the Exchange Act), the Trustee shall prepare and file
on behalf of the Trust any Form 10-D required by the Exchange Act, in form and
substance as required by the Exchange Act. The Trustee shall file each Form 10-D
with a copy of the related Monthly Statement attached thereto. Any disclosure in
addition to the Monthly Statement that is required to be included on Form 10-D
("Additional Form 10-D Disclosure") shall be reported to the Depositor and the
Trustee by the parties set forth on Exhibit Q and directed and approved by the
Depositor pursuant to the following paragraph. The Trustee will have no duty or
liability for any failure hereunder to determine or prepare any Additional Form
10-D Disclosure, except as set forth in the next paragraph.
As set forth on Exhibit Q hereto, within 5 calendar days after the
related Distribution Date, the parties, to the extent described on Exhibit Q,
shall be required to provide to the Trustee and the Depositor, to the extent
known by such applicable parties, any Additional Form 10-D Disclosure, the form
and substance of the Additional Form 10-D Disclosure described on Exhibit Q
applicable to such party (and shall include with such Additional Form 10-D
Disclosure an Additional Disclosure Notification in the form attached hereto as
Exhibit V), and the Depositor will approve, as to form and substance, or
disapprove, as the case may be, the inclusion of the Additional Form 10-D
Disclosure on Form 10-D. The Trustee has no duty under this Agreement to monitor
or enforce the performance by the parties listed on Exhibit Q (other than with
respect to the Trustee) of their duties under this paragraph or proactively
solicit or procure from such parties any Additional Form 10-D Disclosure
information; provided, however, the Trustee shall cooperate with the Depositor
in a reasonable manner in order for the Depositor to comply with its reporting
obligations under the Exchange Act as set forth in Section 8.12(a). The
Depositor will be responsible for any reasonable fees and expenses assessed or
incurred by the Trustee in connection with including any Additional Form 10-D
Disclosure on Form 10-D pursuant to this paragraph. The Trustee shall compile
all such information provided to it in a Form 10-D prepared by it.
After preparing the Form 10-D, the Trustee shall forward
electronically a copy of the Form 10-D to the Depositor for approval and
execution. No later than 2 Business Days prior to the 15th calendar day after
the related Distribution Date, an officer of the Depositor shall sign the Form
10-D and return an electronic or fax copy of such signed Form 10-D (with an
original executed hard copy to follow by overnight mail) to the Trustee. If a
Form 10-D cannot be filed on time or if a previously filed Form 10-D needs to be
amended, the Trustee will follow the procedures set forth in Section
8.12(f)(ii). Promptly (but not later than one Business Day) after filing with
the Commission, the Trustee will make available on its internet website a final
executed copy of each Form 10-D prepared and filed by the Trustee. Form 10-D
requires the Depositor to indicate (by checking "yes" or "no") that it "(1) has
filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the preceding 12 months (or for such shorter period that the
Depositor was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days." The Depositor hereby instructs the
Trustee, with respect to each Form 10-D, to check "yes" for each item unless the
Trustee has received timely prior written notice from the Depositor that the
answer should be "no" for an item. The Depositor shall notify the Trustee in
writing, as soon as reasonably practicable but no later than 5 Business Days
prior to the 15th calendar day after the related Distribution Date with respect
to the filing of a report on Form 10-D, if the answer to the questions should be
"no." The Trustee shall be entitled to rely on such instructions in preparing
and/or filing any such Form 10-D. The Depositor acknowledges that the
performance by the Trustee of its duties under this Section 8.12(b) related to
the timely preparation and filing of Form 10-D is contingent upon the Servicer
and the Depositor observing all applicable deadlines in the performance of their
duties under this Section 8.12(b). The Trustee shall have no liability for any
loss, expense, damage, claim arising out of or with respect to any failure to
properly prepare and/or timely file such Form 10-D, where such failure results
from the Trustee's inability or failure to receive, on a timely basis, any
information from any party hereto (other than the Trustee or any Subcontractor
utilized by the Trustee) needed to prepare, arrange for execution or file such
Form 10-D, not resulting from its own negligence, bad faith or willful
misconduct.
(c) On or before 90 days after the end of each fiscal year of the
Trust or such earlier date as may be required by the Exchange Act (the "10-K
Filing Deadline"), commencing in March 2007, the Trustee shall prepare and file
on behalf of the Trust a Form 10-K, in form and substance as required by the
Exchange Act. Each 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 Trustee, the Servicer and each Subservicer engaged by the Servicer and the
Trustee, as described under Section 3.22, (ii)(A) the annual reports on
assessment of compliance with servicing criteria for the Trustee, the Servicer,
each Subservicer engaged by the Servicer and each Servicing Function Participant
utilized by the Servicer or the Trustee, as described under Section 3.23, and
(B) if any such report on assessment of compliance with servicing criteria
described under Section 3.23 identifies any material instance of noncompliance,
disclosure identifying such instance of noncompliance, or such report on
assessment of compliance with servicing criteria described under Section 3.23 is
not included as an exhibit to such Form 10-K, disclosure that such report is not
included and an explanation why such report is not included, (iii)(A) the
registered public accounting firm attestation report for the Trustee, the
Servicer, each Subservicer engaged by the Servicer and each Servicing Function
Participant utilized by the Servicer or the Trustee, as described under Section
3.23, and (B) if any registered public accounting firm attestation report
described under Section 3.23 identifies any material instance of noncompliance,
disclosure identifying such instance of noncompliance, or if any such registered
public accounting firm attestation report is not included as an exhibit to such
Form 10-K, disclosure that such report is not included and an explanation why
such report is not included, and (iv) a certification in the form attached
hereto as Exhibit L, with such changes as may be necessary or appropriate as a
result of changes promulgated by the Commission (the "Sarbanes Certification"),
which shall be signed by the senior officer of the Depositor in charge of
securitization. Any disclosure or information in addition to (i) through (iv)
above that is required to be included on Form 10-K ("Additional Form 10-K
Disclosure") shall be reported to the Depositor and the Trustee by the parties
set forth on Exhibit R and directed and approved by the Depositor pursuant to
the following paragraph. 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 on Exhibit R hereto, no later than March 1 of each year
(or, in the case of the Servicer, March 5th of each year) that the Trust is
subject to the Exchange Act reporting requirements, commencing in 2007, the
parties, to the extent described on Exhibit R, shall be required to provide to
the Trustee and the Depositor, to the extent known by such applicable parties,
any Additional Form 10-K Disclosure, the form and substance of the Additional
Form 10-K Disclosure described on Exhibit R applicable to such party (and shall
include with such Additional Form 10-K Disclosure an Additional Disclosure
Notification in the form attached hereto as Exhibit V), and the Depositor will
approve, as to form and substance, or disapprove, as the case may be, the
inclusion of the Additional Form 10-K Disclosure on Form 10-K. The Trustee has
no duty under this Agreement to monitor or enforce the performance by the
parties listed on Exhibit R (other than with respect to the Trustee) of their
duties under this paragraph or proactively solicit from such parties any
Additional Form 10-K Disclosure information; provided, however, the Trustee
shall cooperate with the Depositor in a reasonable manner in order for the
Depositor to comply with its reporting obligations under the Exchange Act as set
forth in Section 8.12(a). The Depositor will be responsible for any reasonable
fees and expenses assessed or incurred by the Trustee in connection with
including any Additional Form 10-K Disclosure on Form 10-K pursuant to this
paragraph. The Trustee shall compile all such information provided to it in a
Form 10-K prepared by it.
After preparing the Form 10-K, the Trustee shall forward
electronically a copy of the Form 10-K to the Depositor for approval and
execution. Form 10-K requires the registrant to indicate (by checking "yes" or
"no") that it "(1) has filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days." The Depositor hereby
instructs the Trustee, with respect to each Form 10-K, to check "yes" for each
item unless the Trustee has received timely prior written notice from the
Depositor that the answer should be "no" for an item. The Depositor shall notify
the Trustee in writing by March 1st if the answer to the questions should be
"no." The Trustee shall be entitled to rely on such instructions in preparing
and/or filing any such Form 10-K. No later than 5:00 p.m. EST on the 4th
Business Day prior to the 10-K Filing Deadline, a senior officer of the
Depositor 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. 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 Section 8.12(f)(ii). Promptly (but no later than one Business Day)
after filing with the Commission, the Trustee will make available on its
internet website a final executed copy of each Form 10-K prepared and filed by
the Trustee. The Depositor acknowledges that the performance by the Trustee of
its duties under this Section 8.12(c) related to the timely preparation and
filing of Form 10-K is contingent upon the Servicer (and any Subservicer or
Servicing Function Participant engaged by the Servicer) and the Depositor
observing all applicable deadlines in the performance of their duties under this
Section 8.12(c), Section 8.12(d), Section 3.22 and Section 3.23. The Trustee
shall have no liability for any loss, expense, damage, claim arising out of or
with respect to any failure to properly prepare and/or timely file such Form
10-K, where such failure results from the Trustee's inability or failure to
receive, on a timely basis, any information from any party hereto or any
Subservicer or Servicing Function Participant engaged by any such party hereto
(other than the Trustee or any Servicing Function Participant utilized by the
Trustee) needed to prepare, arrange for execution or file such Form 10-K, not
resulting from its own negligence, bad faith or willful misconduct.
(d) In connection with the execution of a Sarbanes Certification,
the Trustee shall sign a certification (in the form attached hereto as Exhibit
M, with such changes as may be necessary or appropriate as a result of changes
promulgated by the Commission) for the benefit of the Depositor and its
officers, directors and Affiliates, and the Servicer shall sign a certification
solely with respect to the Servicer (in the form attached hereto as Exhibit N,
with such changes as may be necessary or appropriate as a result of changes
promulgated by the Commission) for the benefit of the Depositor, the Trustee and
their respective officers, directors and Affiliates. Each such certification
shall be delivered to the Depositor no later than March 10th of each year (or if
such day is not a Business Day, the immediately preceding Business Day) and the
Depositor shall deliver the Sarbanes Certification no later than the time set
forth for the delivery to the Trustee of the signed Form 10-K pursuant to
Section 8.12(c) for such year. In the event that prior to the filing date of the
Form 10-K in March of each year, the Trustee or the Servicer has actual
knowledge of information material to the Sarbanes Certification, that party
shall promptly notify the Depositor and each of the other parties signing the
certifications. In addition, (i) the Trustee shall indemnify and hold harmless
the Depositor and the Sponsor and their officers, directors, employees, agents
and Affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments
and other costs and expenses arising out of or based upon any breach of the
Trustee's obligations under this Section 8.12(d) or the Trustee's material
misstatement, omission, negligence, bad faith or willful misconduct in
connection therewith, and (ii) the Servicer shall indemnify and hold harmless
the Depositor, the Trustee and their respective officers, directors, employees,
agents and Affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments
and other costs and expenses arising out of or based upon any breach of the
Servicer's obligations under this Section 8.12(d) or any material misstatement
or omission, 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 any indemnified party, then (i) the Trustee
agrees in connection with a breach of the Trustee's obligations under this
Section 8.12(d) or the Trustee's material misstatement, omission, negligence,
bad faith or willful misconduct in connection therewith that it shall contribute
to the amount paid or payable by the Depositor and the Sponsor as a result of
the losses, claims, damages or liabilities of the Depositor and the Sponsor in
such proportion as is appropriate to reflect the relative fault of the Depositor
and the Sponsor on the one hand and the Trustee on the other and (ii) the
Servicer agrees that it shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities of
such indemnified party in such proportion as is appropriate to reflect the
relative fault of such indemnified party, on the one hand, and the Servicer, on
the other hand, in connection with a breach of the Servicer's obligations under
this Section 8.12(d) or any material misstatement, omission, negligence, bad
faith or willful misconduct of the Servicer in connection therewith. The
obligations of the Trustee and the Servicer under this Section 8.12(d) shall
apply to the Trustee and the Servicer whether or not such Trustee or Servicer is
acting as Trustee or Servicer, as applicable, at the time such certification is
required to be delivered. The indemnification and contribution obligations set
forth in this Section 8.12(d) shall survive the termination of this Agreement or
the earlier resignation or removal of the Trustee or the Servicer, as
applicable.
(e) Upon any filing of Form 10-D, Form 10-K or Form 8-K with the
Commission, the Trustee shall promptly (but no later than one (1) Business Day)
make available via the Trustee's internet website to the Depositor a copy of
each such executed report, statement or information.
(f) (i) The obligations set forth in paragraphs (a) through (d) of
this Section shall only apply with respect to periods for which reports are
required to be filed with respect to the Trust under the Exchange Act. On or
prior to January 30 of the first year in which the Trustee is able to do so
under applicable law, the Trustee shall prepare and file a Form 15 Suspension
Notification with respect to the Trust, with a copy to the Depositor. At the
start of any fiscal year, including any fiscal year after the filing of a Form
15 Suspension Notification, if the number of Holders of the Offered Certificates
of record exceeds the number set forth in Section 15(d) of the Exchange Act or
the regulations promulgated pursuant thereto which would cause the Trust to
again become subject to the reporting requirements of the Exchange Act, the
Trustee shall recommence preparing and filing reports on Form 10-K, 10-D and 8-K
as required pursuant to this Section 8.12 and the parties hereto shall again
have the obligations set forth in this Section 8.12.
(ii) In the event that the Trustee is unable to timely file with the
Commission all or any required portion of any Form 8-K, 10-D or 10-K
required to be filed pursuant to this Agreement because required
disclosure information was either not delivered to it or delivered to it
after the delivery deadlines set forth in this Agreement, the Trustee will
promptly notify the Depositor. In the case of Form 10-D and 10-K, the
Depositor and Trustee will thereupon prepare and file, and the other
parties shall cooperate in connection with such preparation and filing, a
Form 12b-25 and a 10-D/A and 10-K/A as applicable, pursuant to Rule 12b-25
of the Exchange Act. In the case of Form 8-K, the Trustee will, upon
receipt of all required Form 8-K Disclosure Information and, upon the
approval and direction of the Depositor, include such disclosure
information on the next succeeding Form 10-D. In the event that any
previously filed Form 8-K, 10-D or 10-K needs to be amended, in connection
with any Additional Form 10-D Disclosure (other than, in the case of Form
10-D, for the purpose of restating any Monthly Statement), Additional Form
10-K Disclosure or Form 8-K Disclosure Information, the Trustee will
notify the Depositor and such other parties to the transaction as are
affected by such amendment, and the Depositor and the Trustee shall
prepare and file, and such other parties will cooperate in connection with
such preparation and filing, any necessary Form 8-K/A, 10-D/A or 10-K/A.
Any Form 15, Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K shall
be signed by an officer or a senior officer of the Depositor. The
Depositor acknowledges that the performance by the Trustee of its duties
under this Section 8.12(f) related to the timely preparation and filing of
Form 15, a Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K is
contingent upon the Servicer and the Depositor observing all applicable
deadlines in the performance of their duties under this Section 8.12 and
Sections 3.22 and 3.23. The Trustee shall have no liability for any loss,
expense, damage, claim arising out of or with respect to any failure to
properly prepare and/or timely file any such Form 15, Form 12b-25 or any
amendments to Forms 8-K, 10-D or 10-K, where such failure results from the
Trustee's inability or failure to obtain or receive, on a timely basis,
any information from any party hereto or any Subservicer or any Servicing
Function Participant engaged by any such party hereto (other than the
Trustee or any Servicing Function Participant utilized by the Trustee)
needed to prepare, arrange for execution or file such Form 15, Form 12b-25
or any amendments to Forms 8-K, 10-D or 10-K, not resulting from its own
negligence, bad faith or willful misconduct.
(g) Within four (4) Business Days after the occurrence of an event
requiring disclosure on Form 8-K (each such event, a "Reportable Event"), and
also if requested by the Depositor, the Trustee shall prepare and file on behalf
of the Trust any Form 8-K, as required by the Exchange Act, provided that the
Depositor shall file the initial Form 8-K in connection with the issuance of the
Certificates. Any disclosure or information related to a Reportable Event or
that is otherwise required to be included on Form 8-K (other than the initial
Form 8-K) ("Form 8-K Disclosure Information") shall be reported to the Depositor
and the Trustee by the parties set forth on Exhibit R and directed and approved
by the Depositor pursuant to the following paragraph. The Trustee will have no
duty or liability for any failure hereunder to determine or prepare any Form 8-K
Disclosure Information or any Form 8-K, except as set forth in the next
paragraph.
As set forth on Exhibit S hereto, for so long as the Trust is
subject to the Exchange Act reporting requirements, no later than the end of
business (New York City time) on the 2nd Business Day after the occurrence of a
Reportable Event the parties, to the extent described on Exhibit S, shall be
required to provide to the Trustee and the Depositor, to the extent known by
such applicable parties, any Form 8-K Disclosure Information, the form and
substance of the Form 8-K Disclosure Information described on Exhibit S
applicable to such party (and shall include with such Form 8-K Disclosure
Information, an Additional Disclosure Notification in the form attached hereto
as Exhibit V, and the Depositor will approve, as to form and substance, or
disapprove, as the case may be, the inclusion of the Form 8-K Disclosure
Information on Form 8-K. The Trustee has no duty under this Agreement to monitor
or enforce the performance by the parties listed on Exhibit S (other than with
respect to the Trustee) of their duties under this paragraph or proactively
solicit or procure from such parties any Form 8-K Disclosure Information;
provided, however, the Trustee shall cooperate with the Depositor in a
reasonable manner in order for the Depositor to comply with its reporting
obligations under the Exchange Act as set forth in Section 8.12(a). The
Depositor will be responsible for any reasonable fees and expenses assessed or
incurred by the Trustee in connection with including any Form 8-K Disclosure
Information on Form 8-K pursuant to this paragraph. The Trustee shall compile
all such information provided to it in a Form 8-K prepared by it.
After preparing the Form 8-K, the Trustee shall no later than 12:00
noon (New York City time) on the 3rd Business Day after the Reportable Event but
in no case without having had notice for 24 hours forward electronically a draft
copy of the Form 8-K to the Depositor for review. No later than 12:00 noon (New
York City time) on the 4th Business Day after the Reportable Event, an officer
of the Depositor 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. 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 Section 8.12(f)(ii). Promptly (but no later than one Business Day)
after filing with the Commission, the Trustee will, make available on its
internet website a final executed copy of each Form 8-K prepared and filed by
the Trustee. The Depositor and Servicer acknowledge that the performance by the
Trustee of its duties under this Section 8.12(g) related to the timely
preparation, arrangement for execution and filing of Form 8-K is contingent upon
the Servicer and the Depositor observing all applicable deadlines in the
performance of their duties under this Section 8.12(g). The Trustee shall have
no liability for any loss, expense, damage, claim arising out of or with respect
to any failure to properly prepare and/or timely file such Form 8-K, where such
failure results from the Trustee's inability or failure to obtain or receive, on
a timely basis, any information from any party hereto (other than the Trustee or
any Subcontractor utilized by the Trustee) needed to prepare, arrange for
execution or file such Form 8-K, not resulting from its own negligence, bad
faith or willful misconduct.
(h) The Trustee shall have no liability for any loss, expense,
damage or claim arising out of or resulting from (i) the accuracy or inaccuracy
of any Additional Form 10-D Disclosure, Additional Form 10-K Disclosure or Form
8-K Disclosure Information (excluding any information therein provided by the
Trustee or any Subcontractor utilized by the Trustee) provided to the Trustee in
connection with the preparation of Forms 10-D, 10-K and 8-K pursuant to this
Section 8.12, or (ii) the failure of the Depositor to approve for filing any
Forms 10-D, 10-K and 8-K required to be prepared by the Trustee pursuant to this
Section 8.12, in either case, not resulting from the Trustee's own negligence,
bad faith or misconduct.
(i) Any Additional Form 10-D Disclosure, Additional Form 10-K
Disclosure or Form 8-K Disclosure Information required to be provided to the
Trustee shall be sent (by email at xxx.xxx.xxxxxxxxxxxxx@xxxxxxxxxx.xxx and
facsimile at 410-715-2380) in XXXXX-compatible format, or in such other format
as otherwise agreed upon by the Trustee, the Depositor and the party providing
such information. With respect to any notice required to be delivered by the
Trustee to the Depositor pursuant to Section 8.12 of this Agreement, the Trustee
may deliver such notice, notwithstanding any contrary provision in Section
11.05, via facsimile to 000-000-0000 or telephonically by calling the General
Counsel at 212-412-4000. The signing party at the Depositor can be contacted at
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General Counsel,
Facsimile: (000) 000-0000, or such other address as to which the Depositor has
provided prior written notice to the Trustee.
Section 8.13 Tax Classification of the Excess Reserve Fund Account,
the Supplemental Interest Account, the Interest Rate Swap Agreement and the Cap
Agreement. For federal income tax purposes, the Trustee shall treat the Excess
Reserve Fund Account, the Supplemental Interest Account, the Cap Agreement and
the Interest Rate Swap Agreement as beneficially owned by the holders of the
Class X Certificates and shall treat such portion of the Trust Fund as a grantor
trust, within the meaning of subpart E, Part I of subchapter J of the Code. The
Trustee shall treat the rights that each Class of LIBOR Certificates has to
receive payments of Basis Risk Carry Forward Amounts from the Excess Reserve
Fund Account and, to the extent not paid from the Excess Reserve Fund Account
from the Supplemental Interest Account (including, without duplication, Upper
Tier Carry Forward Amounts), as rights to receive payments under an interest
rate cap contract written by the Class X Certificateholders in favor of each
such Class and beneficially owned by each such Class through the grantor trust.
Accordingly, each Class of Certificates (excluding the Class X and Class P
Certificates and the Residual Certificates) will be comprised of two components
- an Upper Tier REMIC Regular Interest and an interest in an interest rate cap
contract, and the Class X Certificates will be comprised of six components - two
Upper Tier REMIC Regular Interests (the Class X Interest and the Class IO
Interest), an interest in the Excess Reserve Fund Account, subject to the
obligation to pay Basis Risk Carry Forward Amounts and ownership of the
Supplemental Interest Account, the Cap Agreement and the Interest Rate Swap
Agreement, subject to the obligation to pay Basis Risk Carry Forward Amounts
(including, without duplication, Upper Tier Carry Forward Amounts), Net Swap
Payments and Swap Termination Payments. The Trustee shall allocate the issue
price for a Class of Certificates among the respective components for purposes
of determining the issue price of each Upper Tier REMIC Regular Interest
component based on information received from the Depositor.
Holders of LIBOR Certificates shall also be treated as having agreed
to pay, on each Distribution Date, to the Holders of the Class X Certificates an
aggregate amount equal to the excess, if any, of (i) Net Swap Payments and Swap
Termination Payments (other than Defaulted Swap Termination Payments) over (ii)
the sum of amounts payable on the Class X Interest available for such payments
and amounts payable on the Class IO Interest (such excess, a "Class IO
Shortfall"), first from interest and then from principal distributable on the
LIBOR Certificates. A Class IO Shortfall payable from interest collections shall
be allocated pro rata among such LIBOR Certificates based on the amount of
interest otherwise payable to such Class of LIBOR Certificates, and a Class IO
Shortfall payable from principal collections shall be allocated in reverse
sequential order beginning with the most subordinate Class of LIBOR Certificates
then Outstanding.
Any payments of Class IO Shortfalls shall be treated for tax
purposes as having been received by the Holders of such Class of LIBOR
Certificates in respect of the corresponding Upper Tier Regular Interest and as
having been paid by such Holders to the Holders of the Class X Certificates
through the Supplemental Interest Account.
ARTICLE IX
TERMINATION
Section 9.01 Termination upon Liquidation or Purchase of the
Mortgage Loans. 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) the purchase, on or after the
Optional Termination Date, by the Servicer of all Mortgage Loans (and REO
Properties) at the price (the "Termination Price") equal to the sum of (i) 100%
of the unpaid principal balance of each Mortgage Loan (other than in respect of
REO Property) plus accrued and unpaid interest thereon at the applicable
Mortgage Rate, (ii) the lesser of (x) the appraised value of any REO Property as
determined by the higher of two appraisals completed by two independent
appraisers selected by the Servicer at the expense of the Servicer and (y) the
unpaid principal balance of each Mortgage Loan related to any REO Property, in
each case plus accrued and unpaid interest thereon at the applicable Mortgage
Rate, (iii) all xxxxxxxxxxxx X&X Advances, Servicing Advances and
indemnification payments payable to the Servicer, (iv) any Swap Termination
Payment, other than a Defaulted Swap Termination Payment, owed to the Swap
Provider pursuant to the Interest Rate Swap Agreement, and (v) any unreimbursed
indemnification payments payable to the Trustee under this Agreement and (b) the
later of (i) the maturity or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement. In
no event shall the trusts created hereby continue beyond the expiration of 21
years from the death of the 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.
Notwithstanding anything to the contrary contained herein, no such
purchase by the Servicer shall be permitted unless (i) after distribution of the
proceeds thereof to the Certificateholders (other than the Holders of the Class
X, Class P and Residual Certificates) pursuant to Section 9.02, the distribution
of the remaining proceeds to the Class X and Class P Certificates is sufficient
to pay the outstanding principal amount of and accrued and unpaid interest on
the NIM Securities, to the extent the NIM Securities are then outstanding, or
(ii) prior to such purchase, the Servicer remits to the Trustee an amount that,
together with such remaining proceeds, will be sufficient to pay the outstanding
principal amount of, and accrued and unpaid interest on, the NIM Securities, to
the extent the NIM Securities are then outstanding.
Section 9.02 Final Distribution on the Certificates. If on any
Remittance Date, the Servicer determines that there are no Outstanding Mortgage
Loans and no other funds or assets in the Trust Fund other than the funds in the
Collection Account, the Servicer shall direct the Trustee promptly to send a
Notice of Final Distribution to each Certificateholder and the Swap Provider. If
the Servicer elects to exercise its option to purchase the Mortgage Loans
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date the
Notice of Final Distribution is to be mailed to the affected Certificateholders,
the Servicer shall notify the Depositor and the Trustee of (a) the date on which
the Servicer intends to exercise such purchase option and (b) the Termination
Price.
A Notice of Final Distribution, specifying the Distribution Date on
which Certificateholders may surrender their Certificates for payment of the
final distribution and cancellation, shall be given promptly by the Trustee by
letter to Certificateholders mailed not earlier than the 10th day and not later
than the 15th day of the month of such final distribution. Any such Notice of
Final Distribution shall specify (a) the Distribution Date upon which final
distribution on the Certificates will be made upon presentation and surrender of
Certificates at the office therein designated, (b) the amount of such final
distribution, (c) the location of the office or agency at which such
presentation and surrender must be made and (d) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of the Certificates at the office therein
specified. The Trustee will give such Notice of Final Distribution to each
Rating Agency at the time such Notice of Final Distribution is given to
Certificateholders.
In the event such Notice of Final Distribution is given, the
Servicer shall cause all funds in the Collection Account to be remitted to the
Trustee for deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect to the Trust
Fund and the receipt by the Trustee of a Request for Release therefor, the
Trustee shall promptly release to the Servicer the Custodial Files for the
Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Certificateholders of each Class (after
reimbursement of all amounts due to the Servicer, the Depositor and the Trustee
hereunder), in each case on the final Distribution Date and in the order set
forth in Section 4.02, in proportion to their respective Percentage Interests,
with respect to Certificateholders of the same Class, up to an amount equal to
(i) as to each Class of Regular Certificates (except the Class X Certificates),
the Certificate Balance thereof plus for each such Class and the Class X
Certificates accrued interest thereon in the case of an interest-bearing
Certificate and all other amounts to which such Classes are entitled pursuant to
Section 4.02 and (ii) as to the Residual Certificates, the amount, if any, which
remains on deposit in the Distribution Account (other than the amounts retained
to meet claims) after application pursuant to clause (i) above.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the Notice of Final Distribution, 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 such second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain a part of the Trust Fund. If within one year after the
second notice all Certificates shall not have been surrendered for cancellation,
the Residual Certificateholders shall be entitled to all unclaimed funds and
other assets of the Trust Fund which remain subject hereto.
Section 9.03 Additional Termination Requirements. In the event the
Servicer exercises its purchase option with respect to the Mortgage Loans 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 Servicer, to the effect that the
failure to comply with the requirements of this Section 9.03 will not (i) result
in the imposition of taxes on "prohibited transactions" on any Trust REMIC as
defined in Section 860F of the Code or (ii) cause any Trust REMIC to fail to
qualify as a REMIC at any time that any Certificates are Outstanding:
(a) The Trustee shall sell all of the assets of the Trust Fund to
the Servicer, and, within 90 days of such sale, shall distribute to the
Certificateholders the proceeds of such sale in complete liquidation of each of
the Trust REMICs; and
(b) The Trustee shall attach a statement to the final federal income
tax return for each of the Trust REMICs stating that pursuant to Treasury
Regulations Section 1.860F-1, the first day of the 90-day liquidation period for
each such REMIC was the date on which the Trustee sold the assets of the Trust
Fund to the Servicer.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment. This Agreement may be amended from time to
time by the Depositor, the Responsible Party, the Servicer and the Trustee,
without the consent of any of the Certificateholders (i) to cure any ambiguity
or mistake, (ii) to correct any defective provision herein or to supplement any
provision herein which may be inconsistent with any other provision herein,
(iii) to add to the duties of the Depositor or the Servicer, (iv) to add any
other provisions with respect to matters or questions arising hereunder or (v)
to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement; provided, that any action pursuant to clause (iv)
or (v) above shall not, as evidenced by an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Trustee or the Trust Fund), adversely
affect in any material respect the interests of any Certificateholder; provided,
further, that any such action pursuant to clause (iv) or (v) above shall not be
deemed to adversely affect in any material respect the interests of the
Certificateholders if the Person requesting the amendment obtains a letter from
each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the
Certificates; it being understood and agreed that any such letter in and of
itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating. The Trustee, the Depositor, the Responsible Party and
the Servicer also may at any time and from time to time amend this Agreement,
but without the consent of the Certificateholders to modify, eliminate or add to
any of its provisions to such extent as shall be necessary or helpful to (i)
maintain the qualification of each Trust REMIC under the Code, (ii) avoid or
minimize the risk of the imposition of any tax on any Trust REMIC pursuant to
the Code that would be a claim at any time prior to the final redemption of the
Certificates or (iii) comply with any other requirements of the Code; provided,
that the Trustee has been provided an Opinion of Counsel, which opinion shall be
an expense of the party requesting such opinion but in any case shall not be an
expense of the Trustee or the Trust Fund, to the effect that such action is
necessary or helpful to, as applicable, (i) maintain such qualification, (ii)
avoid or minimize the risk of the imposition of such a tax or (iii) comply with
any such requirements of the Code.
This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Responsible Party and the Trustee, but with the
consent of the Holders of Certificates evidencing Percentage Interests
aggregating not less than 66(2)/3% of each Class of Certificates affected
thereby for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments required to be distributed on any Certificate without the consent
of the Holder of such Certificate, (ii) adversely affect in any material respect
the interests of the Holders of any Class of Certificates in a manner other than
as described in clause (i), without the consent of the Holders of Certificates
of such Class evidencing, as to such Class, Percentage Interests aggregating not
less than 66(2)/3% or (iii) reduce the aforesaid percentages of Certificates the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all such Certificates then Outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless (i) it shall
have first received an Opinion of Counsel, which opinion shall not be an expense
of the Trustee or the Trust Fund, to the effect that such amendment will not
cause the imposition of any tax on any Trust REMIC or the Certificateholders or
cause any such REMIC to fail to qualify as a REMIC or the grantor trust to fail
to qualify as a grantor trust at any time that any Certificates are Outstanding
and (ii) the party seeking such amendment shall have provided written notice to
the Rating Agencies (with a copy of such notice to the Trustee) of such
amendment, stating the provisions of the Agreement to be amended.
Notwithstanding the foregoing provisions of this Section 10.01, with
respect to any amendment that significantly modifies the permitted activities of
the Trustee or the Servicer, any Certificate beneficially owned by the Depositor
shall be deemed not to be Outstanding (and shall not be considered when
determining the percentage of Certificateholders consenting or when calculating
the total number of Certificates entitled to consent) for purposes of
determining if the requisite consents of Certificateholders under this Section
10.01 have been obtained.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section 10.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund), satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with and (ii) either
(A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.
Notwithstanding the foregoing, any amendment to this Agreement shall
require the prior written consent of the Swap Provider if such amendment
materially and adversely affects the rights or interests of the Swap Provider.
Section 10.02 Recordation of Agreement; Counterparts. This Agreement
is subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the direction and expense of the Depositor, but only upon receipt of
an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall 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.
Section 10.04 Intention of Parties. It is the express intent of the
parties hereto that the conveyance (i) of the Mortgage Loans by the Depositor
and (ii) of the Trust Fund by the Depositor to the Trustee each be, and be
construed as, an absolute sale thereof. It is, further, not the intention of the
parties that such conveyances be deemed a pledge thereof. However, in the event
that, notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, as the case may be, or if for any other reason this
Agreement is held or deemed to create a security interest in either 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
conveyances 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 transferred,
whether now owned or hereafter acquired.
The Depositor, for the benefit of the Certificateholders, shall, to
the extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the Trust Fund, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of the Agreement. The Depositor shall arrange for
filing any Uniform Commercial Code continuation statements in connection with
any security interest granted or assigned to the Trustee for the benefit of the
Certificateholders.
Section 10.05 Notices. (a) The Trustee shall use its best efforts to
promptly provide notice to each Rating Agency with respect to each of the
following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been
cured;
3. The resignation or termination of the Servicer or the Trustee
and the appointment of any successor;
4. The repurchase or substitution of Mortgage Loans pursuant to
Section 2.03; and
5. The final payment to Certificateholders.
(b) In addition, the Trustee shall promptly make available on its
internet website to each Rating Agency copies of the following:
1. Each report to Certificateholders described in Section 4.03;
and
2. Any notice of a purchase of a Mortgage Loan pursuant to
Section 2.02, 2.03 or 3.11.
(c) All directions, demands, consents and notices hereunder shall be
in writing and shall be deemed to have been duly given when delivered to: (i) in
the case of the Depositor, Securitized Asset Backed Receivables LLC, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General Counsel, Facsimile: (212)
412-7519, or such other address as the Depositor may hereafter furnish to the
Servicer, the Responsible Party and the Trustee; (ii) in the case of the
Servicer to HomEq Servicing Corporation, 0000 Xxxx Xxxxxx, Xxxxx Xxxxxxxxx,
Xxxxxxxxxx 00000-0000, Attention: Portfolio Management, Facsimile No. (916)
339-6995, with a copy to HomEq Servicing Corporation, 0000 Xxxx Xxxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Legal
Department, Facsimile No. (000) 000-0000, or such other address as may be
hereafter furnished to the Depositor, the Responsible Party and the Trustee by
the Servicer in writing; (iii) in the case of the Responsible Party to Fremont
Investment & Loan, 0000 Xxxx Xxxxxxxx Xxxxxxx, Xxxx, Xxxxxxxxxx 00000,
Attention: Xxxx Xxxxxxxxxxx, Facsimile: (000) 000-0000, or such other address as
may be hereafter furnished to the Depositor, the Servicer and the Trustee by the
Responsible Party in writing; (iv) in the case of the Trustee to Xxxxx Fargo
Bank, National Association, 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services - SABR 2006-FR3, Facsimile: (000) 000-0000,
with a copy to X.X. Xxx 00, Xxxxxxxx, Xxxxxxxx 00000, Attention: Client Manager
SABR 2006-FR3, and a separate copy to Xxxxx Xxxxxx xxx Xxxxxxxxx Xxx.,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Client Manager SABR 2006-FR3, or
in each case such other address as the Trustee may hereafter furnish to the
Depositor the Servicer and the Responsible Party in writing; (v) in the case of
the Loan Performance Advisor, OfficeTiger Global Real Estate Services Inc., 0000
Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, or in each case such other
address as the Responsible Party may hereafter furnish to the Depositor, the
Servicer and Trustee in writing; and (vi) in the case of each of the Rating
Agencies, the address specified therefor in the definition corresponding to the
name of such Rating Agency. Notices to Certificateholders shall be deemed given
when mailed, first class postage prepaid, to their respective addresses
appearing in the Certificate Register.
Section 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 Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust created hereby, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
created hereby, or otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third party by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as herein provided, and
unless the Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.07, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 10.08 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 and independent
public accountants (and by this provision the Servicer hereby authorizes said
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense of the Servicer incident to the exercise by
the Depositor or the Trustee of any right under this Section 10.08 shall be
borne by the Servicer.
Section 10.09 Certificates Nonassessable and Fully Paid. It is the
intention of the Depositor that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the interests in the Trust Fund
represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.
Section 10.10 Assignment; Sales; Advance Facilities. Notwithstanding
anything to the contrary contained herein, except as provided in Section 6.02,
this Agreement may not be assigned by the Servicer without the prior written
consent of the Trustee and Depositor; provided, however, the Servicer is hereby
authorized to enter into an Advance Facility under which (1) the Servicer sells,
assigns or pledges to an Advancing Person the Servicer's rights under this
Agreement to be reimbursed for any P&I Advances or Servicing Advances ("Advance
Reimbursement Amounts") and/or (2) an Advancing Person agrees to fund some or
all P&I 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 P&I Advances and/or Servicing Advances on the Servicer's
behalf, the Servicer shall remain obligated pursuant to this Agreement to make
P&I 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.
Advance Reimbursement Amounts shall consist solely of amounts in
respect of P&I 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 P&I
Advance(s) and/or Servicing Advance(s). The Trustee shall not have any duty or
liability with respect to the calculation of any Advance Reimbursement Amount.
The Trustee shall also not have any responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the related Advancing Person.
The Servicer shall maintain and provide to any successor Servicer
and (upon request) the Trustee a detailed accounting on a loan-by-loan basis as
to amounts advanced by, pledged or assigned to, and reimbursed to any 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 P&I Advances and/or Servicing
Advances, and/or whose obligations hereunder are limited to the funding of P&I
Advances and/or Servicing Advances shall not be required to meet the criteria
for qualification of a Subservicer set forth in this Agreement.
Advance Reimbursement Amounts allocated to reimburse P&I Advances or
Servicing Advances made with respect to any particular Mortgage Loan shall be
allocated to the reimbursement of the xxxxxxxxxxxx X&X Advances or Servicing
Advances (as the case may be) made with respect to such Mortgage Loan on a
"first-in, first out" ("FIFO") basis, such that the Advance Reimbursement
Amounts shall be applied to reimburse the P&I Advance or Servicing Advance (as
the case may be) for such Mortgage Loan that was disbursed earliest in time
first, and to reimburse the P&I Advance or Servicing Advance (as the case may
be) for such Mortgage Loan that was disbursed latest in time last. Liquidation
Proceeds and Subsequent Recoveries with respect to a Mortgage Loan shall be
applied to reimburse Servicing Advances outstanding with respect to such
Mortgage Loan before being applied to reimburse P&I Advances outstanding with
respect to such Mortgage Loan. The Servicer shall provide to the related
Advancing Person, the Advance Facility trustee (or to any designee of either)
loan-by-loan information with respect to each Advance Reimbursement Amount
remitted to such Advancing Person, Advance Facility trustee or designee, to
enable the Advancing Person or Advance Facility trustee to make the FIFO
allocation of each such Advance 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 P&I 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. The Servicer shall indemnify the Trustee and the Trust Fund for any
loss, liability or damage resulting from any claim by the related Advancing
Person.
Any amendment to this Section 10.10 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 10.10, 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. All reasonable costs and expenses (including attorney's fees)
of each party hereto of any such amendment shall be borne by the Servicer.
Prior to entering into an Advance Facility, the Servicer shall
notify the Advancing Person in writing that (1) the Trustee and the Trust are
not obligated or liable to repay any Advances financed by the Advancing Person
and (2) the Trustee shall not have any responsibility to track or monitor the
administration of the Advance Facility between the Servicer and the Advancing
Person.
Section 10.11 Rule of Construction. Article and section headings are
for the convenience of the reader and shall not be considered in interpreting
this Pooling and Servicing Agreement or the intent of the parties hereto.
Section 10.12 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE
LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY.
Section 10.13 Third Party Rights. Each of the Swap Provider, and
each Person entitled to indemnification hereunder who is not a party hereto,
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 its rights
under this Agreement.
Section 10.14 Regulation AB Compliance; Intent of the Parties;
Reasonableness. The parties hereto acknowledge that interpretations of the
requirements of Regulation AB may change over time, whether due to interpretive
guidance provided by the Commission or its staff, consensus among participants
in the asset-backed securities markets, advice of counsel, or otherwise, and, to
the extent practicable from a timing and information systems perspective and to
the extent the Depositor will pay any increased costs of the Trustee, the
Servicer and the Responsible Party caused by such request, agree to comply with
all reasonable requests made by the Depositor in good faith for delivery of
information under these provisions on the basis of evolving interpretations of
Regulation AB. In connection with the Trust, the Servicer and the Trustee shall,
to the extent practicable from a timing and information systems perspective and
to the extent the Depositor will pay any increased costs of the Responsible
Party, the Servicer and the Trustee caused by such request, cooperate fully with
the Depositor to deliver to the Depositor (including its assignees or
designees), any and all statements, reports, certifications, records and any
other information available to such party and reasonably necessary in the good
faith determination of the Depositor to permit the Depositor to comply with the
provisions of Regulation AB, together with such disclosures relating to the
Servicer and the Trustee, as applicable, reasonably believed by the Depositor to
be necessary in order to effect such compliance.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Depositor, the Trustee, the Loan Performance
Advisor, the Responsible Party 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.
SECURITIZED ASSET BACKED RECEIVABLES
LLC
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Director
XXXXX FARGO BANK, NATIONAL ASSOCIATION
solely as Trustee and not in its
individual capacity
By: /s/ Xxx Xxxxx
--------------------------------------
Name: Xxx Xxxxx
Title: Vice President
FREMONT INVESTMENT & LOAN
By: /s/ Xxxx Xxxxxxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: SVP
HOMEQ SERVICING CORPORATION
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
Title: President
OFFICETIGER GLOBAL REAL ESTATE
SERVICES INC.
By: /s/ D. Xxxxx Xxxxxxxx
--------------------------------------
Name: D. Xxxxx Xxxxxxxx
Title: SVP
SCHEDULE I
Mortgage Loan Schedule
Delivered to the Trustee and not attached to the Pooling
and Servicing Agreement.
SCHEDULE II
Mortgage Pass-Through Certificates,
Series 2006-FR3
Representations and Warranties of the Servicer
The Servicer hereby makes the representations and warranties set
forth in this Schedule II to the Depositor and the Trustee as of the Closing
Date. Capitalized terms used but not otherwise defined in this Schedule II shall
have the meaning ascribed thereto in the Pooling and Servicing Agreement.
(1) The Servicer is duly organized as a corporation and is validly
existing and in good standing under the laws of the state of New Jersey,
and is licensed and qualified to transact any and all business
contemplated by this Pooling and Servicing Agreement to be conducted by
the Servicer in any state in which a Mortgaged Property securing a
Mortgage Loan 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 and to service the Mortgage
Loans in accordance with the terms of this Pooling and Servicing
Agreement;
(2) The Servicer has the full power and authority to service each
Mortgage Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Pooling and Servicing
Agreement and has duly authorized by all necessary action on the part of
the Servicer the execution, delivery and performance of this Pooling and
Servicing Agreement; and this Pooling and Servicing Agreement, assuming
the due authorization, execution and delivery thereof by the Depositor,
the Responsible Party and the Trustee, constitutes a legal, valid and
binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms; except to the extent that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought;
(3) The execution and delivery of this Pooling and Servicing
Agreement by the Servicer, the servicing of the Mortgage Loans required to
be serviced by the Servicer hereunder, the consummation by the Servicer of
any other of the transactions herein contemplated, 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 breach of any term or
provision of the organizational documents of the Servicer or (B) conflict
with, result in a breach, violation or acceleration of, or result in a
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 any law,
statute, rule, order, regulation, judgment or decree applicable to the
Servicer or its property of any court, regulatory body, administrative
agency or governmental body having jurisdiction over the Servicer; and the
Servicer is not a party to, bound by, or in breach or violation of any
indenture or other agreement or instrument, or subject to or in violation
of any law, statute, rule, order, regulation, judgment or decree of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it, which (w) materially and adversely affects or, to
the Servicer's knowledge, would in the future materially and adversely
affect, the ability of the Servicer to perform its obligations under this
Pooling and Servicing Agreement, (x) materially and adversely affects or,
to the Servicer's knowledge, would in the future materially and adversely
affect, the business, operations, financial condition, properties or
assets of the Servicer taken as a whole, (y) impair the ability of the
Trust to realize on the Mortgage Loans, or (z) impair the value of the
Mortgage Loans;
(4) The Servicer has the facilities, procedures, and experienced
personnel necessary for the sound servicing of mortgage loans of the same
type as the Mortgage Loans;
(5) The Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained
in this Pooling and Servicing Agreement;
(6) No action, suit, proceeding or investigation is pending or
threatened against the Servicer, before any court, administrative agency
or other tribunal asserting the invalidity of this Pooling and Servicing
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Pooling and Servicing Agreement or which, either in
any one instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or
assets of the Servicer, or in any material impairment of the right or
ability of the Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer, or
which would draw into question the validity of this Pooling and Servicing
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or
which would be likely to impair materially the ability of the Servicer to
perform under the terms of this Pooling and Servicing Agreement;
(7) 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
Pooling and Servicing Agreement or the servicing of the Mortgage Loans as
evidenced by the consummation by the Servicer of the transactions
contemplated by this Pooling and Servicing Agreement, except for such
consents, approvals, authorizations or orders, if any, that have been
obtained prior to the Closing Date; and
(8) With respect to each Mortgage Loan serviced by the Servicer
hereunder, to the extent the Servicer serviced such Mortgage Loan and to
the extent the Servicer provided monthly reports to the three credit
repositories, the Servicer has fully furnished, in accordance with the
Fair Credit Reporting Act and its implementing regulations, accurate and
complete information (i.e., favorable and unfavorable) on its borrower
credit files to Equifax, Experian, and Trans Union Credit Information
Company (three of the credit repositories), on a monthly basis.
SCHEDULE III
Mortgage Pass-Through Certificates,
Series 2006-FR3
Representations and Warranties of the Responsible Party
as to the Mortgage Loans
The Responsible Party hereby makes the representations and
warranties set forth in this Schedule III as to the Mortgage Loans only, to the
Depositor and the Trustee, as of the Closing Date or such other date as may be
specified below. Capitalized terms used in this Schedule but not defined in this
Schedule have the meanings given to them in the Purchase Agreement.
(a) Mortgage Loans as Described. As of the Servicing Transfer Date,
the information set forth in the Mortgage Loan Schedule is complete, true
and correct;
(b) Payments Current. As of the Servicing Transfer Date, except with
respect to the Mortgage Loans identified on Schedule III-A, (i) all
payments required to be made up to the related Closing Date for the
Mortgage Loan under the terms of the Mortgage Note, other than payments
not yet 30 days delinquent, have been made and credited, and (ii) no
payment required under the Mortgage Loan is 30 days or more delinquent nor
has any payment under the Mortgage Loan been 30 days or more delinquent at
any time since the origination of the Mortgage Loan;
(c) No Outstanding Charges. As of the Servicing Transfer Date,
except as described in paragraph (b) above with respect to the Mortgage
Loans identified on Schedule III-A, except for payments due but not yet 30
days delinquent, there are no defaults in complying with the terms of the
Mortgage, and all taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every such
item which remains unpaid and which has been assessed but is not yet due
and payable. The Responsible Party has not advanced funds, or induced,
solicited or knowingly received any advance of funds by a party other than
the Mortgagor, directly or indirectly, for the payment of any amount
required under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage Loan
proceeds, whichever is earlier, to the day which precedes by one month the
related Due Date of the first installment of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any
respect, from the date of origination except by a written instrument which
has been recorded, if necessary to protect the interests of the Purchaser,
and which has been delivered to the Trustee, as custodian (in such
capacity, the "Custodian"), under the Custodial Agreement, dated as of
February 1, 2006, among the Purchaser, the Responsible Party and the
Custodian (the "Custodial Agreement"), and the terms of which are
reflected in the Mortgage Loan Schedule. The substance of any such waiver,
alteration or modification has been approved by the title insurer, if any,
to the extent required by the policy, and its terms are reflected on the
Mortgage Loan Schedule, if applicable. No Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement,
approved by the title insurer, to the extent required by the policy, and
which assumption agreement is part of the Mortgage Loan File delivered to
the Custodian and the terms of which are reflected in the Mortgage Loan
Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right thereunder,
render either the Mortgage Note or the Mortgage unenforceable, in whole or
in part and no such right of rescission, set-off, counterclaim or defense
has been asserted with respect thereto;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by
a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are provided for generally in the
secondary market. If required by the National Flood Insurance Act of 1968,
as amended, each Mortgage Loan is covered by a flood insurance policy
meeting the requirements of the current guidelines of the Federal
Insurance Administration as in effect. All individual insurance policies
contain a standard mortgagee clause naming the Responsible Party and its
successors and assigns as mortgagee, and all premiums thereon have been
paid. The Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor's cost and expense,
and to seek reimbursement therefor from the Mortgagor. Where required by
state law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided the policy
is not a "master" or "blanket" hazard insurance policy covering a
condominium, or any hazard insurance policy covering the common facilities
of a planned unit development. The hazard insurance policy is the valid
and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser
upon the consummation of the transactions contemplated by this Agreement.
The Responsible Party has not engaged in, and has no knowledge of the
Mortgagor's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained
or realized by any attorney, firm or other person or entity, and no such
unlawful items have been received, retained or realized by the Responsible
Party;
(g) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity, disclosure and all predatory,
abusive and fair lending laws applicable to the Mortgage Loan, including,
without limitation, any provisions relating to Prepayment Charges and the
Illinois Interest Act, have been complied with, the consummation of the
transactions contemplated hereby will not involve the violation of any
such laws or regulations, and the Responsible Party shall maintain in its
possession, available for the Purchaser's or the Trustee's inspection, and
shall deliver to the Purchaser or the Trustee upon demand, evidence of
compliance with all such requirements. This representation and warranty is
a Deemed Material and Adverse Representation;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and
the Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed that
would effect any such release, cancellation, subordination or rescission.
The Responsible Party has not waived the performance by the Mortgagor of
any action, if the Mortgagor's failure to perform such action would cause
the Mortgage Loan to be in default, nor has the Responsible Party waived
any default resulting from any action or inaction by the Mortgagor;
(i) Type of Mortgaged Property. With respect to a Mortgage Loan that
is not a Co-op Loan, the Mortgaged Property is a fee simple estate or a
leasehold estate located in a jurisdiction in which the use of a leasehold
estate for residential properties is a widely accepted practice that
consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an
individual residential condominium unit in a condominium project, or an
individual unit in a planned unit development, or an individual unit in a
residential cooperative housing corporation; provided, however, that any
condominium unit, planned unit development or residential cooperative
housing corporation shall conform with the Underwriting Guidelines. No
portion of the Mortgaged Property (or underlying Mortgaged Property, in
the case of a Co-op Loan) is used for commercial purposes, and since the
date of origination, no portion of the Mortgaged Property has been used
for commercial purposes; provided, that Mortgaged Properties which contain
a home office or other business shall not be considered as being used for
commercial purposes as long as the Mortgaged Property has not been altered
for commercial purposes and is not storing any chemicals or raw materials
other than those commonly used for homeowner repair, maintenance and/or
household purposes. None of the Mortgaged Properties are manufactured
homes, log homes, mobile homes, geodesic domes or other unique property
types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan)
or second lien (with respect to a Second Lien Loan) on the Mortgaged
Property, including all buildings and improvements on the Mortgaged
Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such
buildings, and all additions, alterations and replacements made at any
time with respect to the foregoing. The lien of the Mortgage is subject
only to:
(i) with respect to a Second Lien Loan only, the lien of the first
mortgage on the Mortgaged Property;
(ii) the lien of current real property taxes and assessments not yet
due and payable;
(iii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions generally
and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and (a) specifically
referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (b) which do not adversely affect the
Appraised Value of the Mortgaged Property set forth in such appraisal; and
(iv) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related to
and delivered in connection with the Mortgage Loan establishes and creates
a valid, subsisting, enforceable and perfected first lien (with respect to
a First Lien Loan) or second lien (with respect to a Second Lien Loan) and
first priority (with respect to a First Lien Loan) or second priority
(with respect to a Second Lien Loan) security interest on the property
described therein and the Responsible Party has full right to sell and
assign the same to the Purchaser.
(k) Valid First or Second Priority Security Interest. With respect
to any Co-op Loan, the related Mortgage is a valid, subsisting,
enforceable and perfected, first priority security interest (with respect
to a First Lien Loan) or second priority security interest (with respect
to a Second Lien Loan) on the related cooperative shares securing the
Mortgage Note, subject only to (a) liens of the related residential
cooperative housing corporation for unpaid assessments representing the
Mortgagor's pro rata share of the related residential cooperative housing
corporation's payments for its blanket mortgage, current and future real
property taxes, insurance premiums, maintenance fees and other assessments
to which like collateral is commonly subject and (b) other matters to
which like collateral is commonly subject which do not materially
interfere with the benefits of the security interest intended to be
provided by the related Security Agreement;
(l) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required or customary in the jurisdiction in which
the Mortgaged Property is located, the original lender has filed for
record a request for notice of any action by the related senior
lienholder, and the Responsible Party has notified the senior lienholder
in writing of the existence of the Second Lien Loan and requested
notification of any action to be taken against the Mortgagor by the senior
lienholder. Either (a) no consent for the Second Lien Loan is required by
the holder of the related first lien or (b) such consent has been obtained
and is contained in the Mortgage File. This representation and warranty is
a Deemed Material and Adverse Representation;
(m) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor in
connection with a Mortgage Loan are genuine, and each is the legal, valid
and binding obligation of the maker thereof enforceable in accordance with
its terms (including, without limitation, any provisions relating to
Prepayment Charges). All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage
and any such agreement, and the Mortgage Note, the Mortgage and any other
such related agreement have been duly and properly executed by other such
related parties. No fraud, error, omission, misrepresentation, negligence
or similar occurrence with respect to a Mortgage Loan has taken place on
the part of the Responsible Party in connection with the origination of
the Mortgage Loan or in the application of any insurance in relation to
such Mortgage Loan. No fraud, error, omission, misrepresentation,
negligence or similar occurrence in connection with the origination of the
Mortgage Loan or in the application for any insurance in relation to such
Mortgage Loan has taken place on the part of any Person, including without
limitation, the Mortgagor, any appraiser, any builder or developer, or any
other party involved with such actions. The Responsible Party has reviewed
all of the documents constituting the Servicing File and has made such
inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein;
(n) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there
is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and
as to disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing the Mortgage
Loan and the recording of the Mortgage were paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due under the Mortgage Note
or Mortgage;
(o) Ownership. As of the applicable Original Sale Date, the
Responsible Party was the sole owner of record and holder of the Mortgage
Loan and the indebtedness evidenced by each Mortgage Note and upon the
sale of the Mortgage Loans to the Purchaser, the Responsible Party
retained the Mortgage Files or any part thereof with respect thereto not
delivered to the Custodian, the Purchaser or the Purchaser's designee, in
trust only for the purpose of servicing and supervising the servicing of
each Mortgage Loan. As of the applicable Original Sale Date, the Mortgage
Loan was not assigned or pledged, and the Responsible Party had good,
indefeasible and marketable title thereto, and had full right to transfer
and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim
or security interest, and has full right and authority subject to no
interest or participation of, or agreement with, any other party, to sell
and assign each Mortgage Loan pursuant to the Purchase Agreement and
following the sale of each Mortgage Loan, the Purchaser owned such
Mortgage Loan free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest. The
Responsible Party has relinquished all rights to possess, control and
monitor the Mortgage Loan;
(p) Doing Business. All parties which have had any interest in the
Mortgage Loan prior to the applicable Original Sale Date, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (1) in compliance
with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i)
organized under the laws of such state, or (ii) qualified to do business
in such state, or (iii) a federal savings and loan association, a savings
bank or a national bank having a principal office in such state, or (3)
not doing business in such state;
(q) LTV. No Mortgage Loan has an LTV greater than 100%;
(r) Title Insurance. With respect to a Mortgage Loan which is not a
Co-op Loan, the Mortgage Loan is covered by an ALTA lender's title
insurance policy, or with respect to any Mortgage Loan for which the
related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or
insurance and each such title insurance policy is issued by a title
insurer acceptable to the Purchaser and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the
Responsible Party, its successors and assigns, as to the first (with
respect to a First Lien Loan) or second (with respect to a Second Lien
Loan) priority lien of the Mortgage in the original principal amount of
the Mortgage Loan (or to the extent a Mortgage Note provides for negative
amortization, the maximum amount of negative amortization in accordance
with the Mortgage), subject only to the exceptions contained in clauses
(i), (ii), (iii) and (iv) of paragraph (j) of this Schedule III, and in
the case of Adjustable Rate Mortgage Loans, against any loss by reason of
the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment to the Mortgage
Interest Rate and Monthly Payment. Where required by state law or
regulation, the Mortgagor has been given the opportunity to choose the
carrier of the required mortgage title insurance. Additionally, such
lender's title insurance policy affirmatively insures ingress and egress,
and against encroachments by or upon the Mortgaged Property or any
interest therein. The Responsible Party, its successor and assigns, are
the sole insureds of such lender's title insurance policy, and such
lender's title insurance policy is valid and remains in full force and
effect and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made
under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the Responsible Party, has done, by act or
omission, anything which would impair the coverage of such lender's title
insurance policy, including without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind
has been or will be received, retained or realized by any attorney, firm
or other person or entity, and no such unlawful items have been received,
retained or realized by the Responsible Party;
(s) No Defaults. As of the Servicing Transfer Date, except as
described in paragraphs (b) and (c) above with respect to the Mortgage
Loans identified on Schedule III-A, other than payments due but not yet 30
days or more delinquent, there is no default, breach, violation or event
which would permit acceleration existing under the Mortgage or the
Mortgage Note and no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a
default, breach, violation or event which would permit acceleration, and
neither the Responsible Party nor any of its affiliates nor any of their
respective predecessors, have waived any default, breach, violation or
event which would permit acceleration;
(t) No Mechanics' Liens. There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and no rights
are outstanding that under the law could give rise to such liens)
affecting the related Mortgaged Property which are or may be liens prior
to, or equal or coordinate with, the lien of the related Mortgage;
(u) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction lines
of the Mortgaged Property, and no improvements on adjoining properties
encroach upon the Mortgaged Property. No improvement located on or being
part of the Mortgaged Property is in violation of any applicable zoning
law or regulation;
(v) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development
pursuant to Sections 203 and 211 of the National Housing Act, a savings
and loan association, a savings bank, a commercial bank, credit union,
insurance company or other similar institution which is supervised and
examined by a federal or state authority. Principal payments on the
Mortgage Loan commenced no more than seventy days after funds were
disbursed in connection with the Mortgage Loan. The Mortgage Interest Rate
as well as, in the case of an Adjustable Rate Mortgage Loan, the Lifetime
Rate Cap and the Periodic Cap are as set forth on the Mortgage Loan
Schedule. The Mortgage Note is payable in equal monthly installments of
principal and interest, which installments of interest, with respect to
Adjustable Rate Mortgage Loans, are subject to change due to the
adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment
Date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated maturity date, over an
original term of not more than thirty years from commencement of
amortization. Unless otherwise specified on the Mortgage Loan Schedule,
the Mortgage Loan is payable on the first day of each month. The Mortgage
Loan does not require a balloon payment on its stated maturity date;
(w) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property
of the benefits of the security provided thereby, including, (i) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and
(ii) otherwise by judicial foreclosure. Upon default by a Mortgagor on a
Mortgage Loan and foreclosure on, or trustee's sale of, the Mortgaged
Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available to a
Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage,
subject to applicable federal and state laws and judicial precedent with
respect to bankruptcy and right of redemption or similar law;
(x) Conformance with Underwriting Guidelines. The Mortgage Loan was
underwritten in accordance with the Underwriting Guidelines (a copy of
which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on forms acceptable to Xxxxxxx Mac or
Xxxxxx Mae and the Responsible Party has not made any representations have
been made to a Mortgagor that are inconsistent with the mortgage
instruments used;
(y) Occupancy of the Mortgaged Property. To the best of the
Responsible Party's knowledge, as of the Servicing Transfer Date, the
Mortgaged Property is lawfully occupied under applicable law. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities. Unless otherwise
specified on the Mortgage Loan Schedule, the Mortgagor represented at the
time of origination of the Mortgage Loan that the Mortgagor would occupy
the Mortgaged Property as the Mortgagor's primary residence;
(z) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in clause (j) above;
(aa) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to
serve as such, has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will become payable
by the Purchaser to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(bb) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that to the best of the
Responsible Party's knowledge, can reasonably be expected to cause private
institutional investors who invest in mortgage loans similar to the
Mortgage Loan to regard the Mortgage Loan as an unacceptable investment,
cause the Mortgage Loan to become delinquent, or adversely affect the
value or marketability of the Mortgage Loan, or cause the Mortgage Loans
to prepay during any period materially faster or slower than the mortgage
loans originated by the Responsible Party generally;
(cc) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to
be delivered under the Custodial Agreement for each Mortgage Loan have
been delivered to the Custodian. The Responsible Party is in possession of
a complete, true and accurate Mortgage File in compliance with Exhibit A
hereto, except for such documents the originals of which have been
delivered to the Custodian;
(dd) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a
de minimis planned unit development) such condominium or planned unit
development project such Mortgage Loan was originated in accordance with,
and the Mortgaged Property meets the guidelines set forth in the
Originator's Underwriting Guidelines;
(ee) Transfer of Mortgage Loans. The Assignment of Mortgage (except
with respect to any Mortgage that has been recorded in the name of MERS or
its designee) with respect to each Mortgage Loan is in recordable form and
is acceptable for recording under the laws of the jurisdiction in which
the Mortgaged Property is located;
(ff) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, the
Mortgage contains an enforceable provision for the acceleration of the
payment of the unpaid principal balance of the Mortgage Loan in the event
that the Mortgaged Property is sold or transferred without the prior
written consent of the mortgagee thereunder, and to the best of the
Responsible Party's knowledge, such provision is enforceable;
(gg) Assumability. With respect to each Adjustable Rate Mortgage
Loan, if the Mortgage Loan Documents provide that after the related first
Interest Rate Adjustment Date the related Mortgage Loan is assumable, such
Mortgage Loan may only be assumed if the party assuming such Mortgage Loan
meets certain credit requirements stated in the Mortgage Loan Documents;
(hh) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Responsible Party, the Mortgagor, or
anyone on behalf of the Mortgagor, or paid by any source other than the
Mortgagor nor does it contain any other similar provisions which may
constitute a "buydown" provision. The Mortgage Loan is not a graduated
payment mortgage loan and the Mortgage Loan does not have a shared
appreciation or other contingent interest feature;
(ii) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable Cut-off Date have been consolidated
with the outstanding principal amount secured by the Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate
and single repayment term. The lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first (with
respect to a First Lien Loan) or second (with respect to a Second Lien
Loan) lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title
evidence acceptable to the Purchaser. The consolidated principal amount
does not exceed the original principal amount of the Mortgage Loan;
(jj) Mortgaged Property Undamaged; No Condemnation Proceedings. As
of the Servicing Transfer Date, (i) there was no proceeding pending or
threatened for the total or partial condemnation of the Mortgaged
Property, (ii) to the best of the Responsible Party's knowledge, the
Mortgaged Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to affect
adversely the value of the Mortgaged Property as security for the Mortgage
Loan or the use for which the premises were intended and each Mortgaged
Property is inhabitable under applicable state and local laws, and (iii)
there have not been any condemnation proceedings with respect to the
Mortgaged Property;
(kk) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by
the Responsible Party with respect to the Mortgage Loan have been in all
respects in compliance with Accepted Servicing Practices, applicable laws
and regulations, and have been in all respects legal and proper. With
respect to escrow deposits and Escrow Payments, all such payments are in
the possession of, or under the control of, the Responsible Party and
there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. All Escrow Payments
have been collected in full compliance with state and federal law and the
provisions of the related Mortgage Note and Mortgage. An escrow of funds
is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item that remains unpaid and has been assessed
but is not yet due and payable. No escrow deposits or Escrow Payments or
other charges or payments due the Responsible Party have been capitalized
under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law
and the terms of the related Mortgage and Mortgage Note on the related
Interest Rate Adjustment Date. If, pursuant to the terms of the Mortgage
Note, another index was selected for determining the Mortgage Interest
Rate, the same index was used with respect to each Mortgage Note which
required a new index to be selected, and such selection did not conflict
with the terms of the related Mortgage Note. The Responsible Party
executed and delivered any and all notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the
Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been
properly paid and credited;
(ll) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the
Mortgage Interest Rate from an adjustable rate to a fixed rate;
(mm) Other Insurance Policies; No Defense to Coverage. To the best
of the Responsible Party's knowledge, no action, inaction or event has
occurred and no state of facts exists or has existed on or prior to the
Servicing Transfer Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard
insurance policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the
availability of the timely payment of the full amount of the loss
otherwise due thereunder to the insured), irrespective of the cause of
such failure of coverage. In connection with the placement of any such
insurance, no commission, fee, or other compensation has been or will be
received by the Responsible Party or by any officer, director, or employee
of the Responsible Party or any designee of the Responsible Party or any
corporation in which the Responsible Party or any officer, director, or
employee had a financial interest at the time of placement of such
insurance;
(nn) No Violation of Environmental Laws. To the best of the
Responsible Party's knowledge, there is no pending action or proceeding
directly involving the Mortgaged Property in which compliance with any
environmental law, rule or regulation is an issue; there is no violation
of any environmental law, rule or regulation with respect to the Mortgage
Property; and nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a
prerequisite to use and enjoyment of said property;
(oo) Servicemembers Civil Relief Act. The Mortgagor has not notified
the Responsible Party, and the Responsible Party has no knowledge of any
relief requested or allowed to the Mortgagor under the Servicemembers
Civil Relief Act, as amended, or other similar state statute;
(pp) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage
Loan application by a Qualified Appraiser.
(qq) Disclosure Materials. The Mortgagor has received all disclosure
materials required by, and the Responsible Party has complied with, all
applicable law with respect to the making of the Mortgage Loans;
(rr) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(ss) Escrow Analysis. If applicable, with respect to each Mortgage
that provides for an escrow account, the Responsible Party has within the
last twelve months (unless such Mortgage was originated within such twelve
month period) analyzed the required Escrow Payments for each Mortgage and
adjusted the amount of such payments so that, assuming all required
payments are timely made, any deficiency will be eliminated on or before
the first anniversary of such analysis, or any overage will be refunded to
the Mortgagor, in accordance with RESPA and any other applicable law;
(tt) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in compliance with the Interim Servicing Agreement;
(uu) No Default Under First Lien. As of the Servicing Transfer Date,
to the best of the Responsible Party's knowledge and except with respect
to the Mortgage Loans identified on Schedule III-B, with respect to each
Second Lien Loan, the related First Lien Loan related thereto is in full
force and effect, and there is no default, breach, violation or event
which would permit acceleration existing under such first Mortgage or
Mortgage Note, and no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute a
default, breach, violation or event which would permit acceleration
thereunder. This representation and warranty is a Deemed Material and
Adverse Representation;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides
for giving notice of default or breach to the mortgagee under the Mortgage
Loan and allows such mortgagee to cure any default under the related first
lien Mortgage. This representation and warranty is a Deemed Material and
Adverse Representation;
(ww) No Failure to Cure Default. As of the Servicing Transfer Date
and except with respect to the Mortgage Loans identified on Schedule
III-B, with respect to each Second Lien Mortgage Loan, the Responsible
Party has not received a written notice of default of any senior mortgage
loan related to the Mortgaged Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit
information furnished by the Responsible Party to the Purchaser, that
Responsible Party has full right and authority and is not precluded by law
or contract from furnishing such information to the Purchaser and the
Purchaser is not precluded from furnishing the same to any subsequent or
prospective purchaser of such Mortgage;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground
lease will not terminate earlier than five years after the maturity date
of the Mortgage Loan; (3) the ground lease does not provide for
termination of the lease in the event of lessee's default without the
mortgagee being entitled to receive written notice of, and a reasonable
opportunity to cure the default; (4) the ground lease permits the
mortgaging of the related Mortgaged Property; (5) the ground lease
protects the mortgagee's interests in the event of a property
condemnation; (6) all ground lease rents, other payments, or assessments
that have become due have been paid; and (7) the use of leasehold estates
for residential properties is a widely accepted practice in the
jurisdiction in which the Mortgaged Property is located;
(zz) Prepayment Charge. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note is identified
on the Mortgage Loan Schedule. With respect to each Mortgage Loan that has
a Prepayment Charge feature, each such Prepayment Penalty is enforceable
and each Prepayment Charge is permitted pursuant to federal, state and
local law. Each such Prepayment Charge is in an amount not more than the
maximum amount permitted under applicable law and no such Prepayment
Charge may provide for a term in excess of five (5) years with respect to
Mortgage Loans originated prior to October 1, 2002. With respect to
Mortgage Loans originated on or after October 1, 2002, the duration of the
Prepayment Charge period shall not exceed three (3) years from the date of
the Mortgage Note unless the Mortgage Loan was modified to reduce the
Prepayment Charge period to no more than three (3) years from the date of
the related Mortgage Note and the Mortgagor was notified in writing of
such reduction in Prepayment Charge period. This representation and
warranty is a Deemed Material and Adverse Representation.;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or
after October 1, 2002 through March 6, 2003 is governed by the Georgia
Fair Lending Act. No Mortgage Loan is covered by the Home Ownership and
Equity Protection Act of 1994 and no Mortgage Loan is in violation of any
comparable state or local law. This representation and warranty is a
Deemed Material and Adverse Representation;
(bbb) [reserved];
(ccc) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" under Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Each First Lien Loan is covered by a
paid in full, life of loan, tax service contract issued by Lereta Corp.,
and such contract is transferable;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to
the ability of the Mortgagor to repay and the extension of credit which
has no apparent benefit to the Mortgagor, were employed in the origination
of the Mortgage Loan;
(fff) Recordation. Except with respect to MERS Designated Mortgage
Loans, each original Mortgage was recorded and all subsequent assignments
of the original Mortgage (other than the assignment to the Purchaser) have
been recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the
Responsible Party, or is in the process of being recorded;
(ggg) Co-op Loans. With respect to a Mortgage Loan that is a Co-op
Loan, (i) a search for filings of financing statements has been made by a
company competent to make the same, which company is acceptable generally
in the secondary market and qualified to do business in the jurisdiction
where the cooperative unit is located, and such search has not found
anything which would materially and adversely affect the Co-op Loan, (ii)
the stock that is pledged as security for the Mortgage Loan is held by a
person as a "tenant-stockholder" and the related cooperative corporation
that owns title to the related cooperative apartment building is a
"cooperative housing corporation," each within the meaning of Section 216
of the Code and (iii) there is no prohibition against pledging the shares
of the cooperative corporation or assigning the Co-op Lease;
(hhh) Mortgagor Bankruptcy. The Mortgagor has not filed a bankruptcy
petition, has not become the subject of involuntary bankruptcy proceedings
or has not consented to the filing of a bankruptcy proceeding against it
or to a receiver being appointed in respect of the related Mortgaged
Property;
(iii) No Prior Offer. The Mortgage Loan has not previously been
offered for sale by the Responsible Party;
(jjj) Credit Reporting. The Responsible Party has, in its capacity
as servicer for each Mortgage Loan, caused to be fully furnished, in
accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., favorable and
unfavorable) on its borrower credit files to Equifax, Experian, and Trans
Union Credit Information Company (three of the credit repositories), on a
monthly basis. This representation and warranty is a Deemed Material and
Adverse Representation;
(kkk) [reserved];
(lll) [reserved];
(mmm) [reserved];
(nnn) Mortgage Loans with Prepayment Premiums. With respect to any
Mortgage Loan that contains a provision permitting imposition of a penalty
upon a prepayment prior to maturity: (i) the Mortgage Loan provides some
benefit to the Mortgagor (e.g., a rate or fee reduction) in exchange for
accepting such Prepayment Penalty, (ii) prior to the Mortgage Loans's
origination, the Mortgagor was offered the option of obtaining a mortgage
loan that did not require the prepayment of such a penalty, (iii) the
Prepayment Penalty was adequately disclosed to the Mortgagor in the
mortgage loan documents pursuant to applicable state, local and federal
law, and (iv) notwithstanding any state, local or federal law to the
contrary, the Responsible Party shall not impose such Prepayment Penalty
in any instance when the mortgage debt is accelerated or paid off in
connection with the workout of a delinquent Mortgage Loan or as the result
of the Mortgagor's default in making the Mortgage Loan payments. This
representation and warranty is a Deemed Material and Adverse
Representation;
(ooo) Purchase of Insurance. No Mortgagor was required to purchase
any single premium credit insurance policy (e.g., life, mortgage,
disability, property, accident, unemployment or health insurance product)
or debt cancellation agreement as a condition of obtaining the extension
of credit. No Mortgagor obtained a prepaid single-premium credit insurance
policy (e.g., life, mortgage, disability, property, accident, unemployment
or health insurance) in connection with the origination of the Mortgage
Loan. No proceeds from any Mortgage Loan were used to purchase single
premium credit insurance policies or debt cancellation agreements as part
of the origination of, or as a condition to closing, such Mortgage Loan.
This representation and warranty is a Deemed Material and Adverse
Representation;
(ppp) [reserved];
(qqq) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected
or to be collected in connection with the origination and servicing of
each Mortgage Loan, have been disclosed in writing to the Mortgagor in
accordance with applicable state and federal law and regulation. This
representation and warranty is a Deemed Material and Adverse
Representation;
(rrr) No Arbitration. No Mortgage Loan originated on or after August
1, 2004 requires the related Mortgagor to submit to arbitration to resolve
any dispute arising out of or relating in any way to the Mortgage Loan
transaction. This representation and warranty is a Deemed Material and
Adverse Representation; and
(sss) No Negative Amortization of Related First Lien Loan. With
respect to each Second Lien Loan, the related First Lien Loan does not
permit negative amortization This representation and warranty is a Deemed
Material and Adverse Representation.
SCHEDULE III-A
Mortgage Loan Identification Number
6000211208
7000190130
1000301257
1000310568
5000203759
5000195390
5000196843
6000210689
6000207644
8000077531
1000305859
7000189468
1000305545
5000202482
5000197621
5000200822
5000202768
1000308766
1000309473
1000305672
0000000000
1000312600
1000312624
1000310911
7000190092
8000076245
7000188984
8000080810
6000211426
6000210712
6000209164
7000185068
6000212752
1000302396
6000212584
SCHEDULE III-B
Mortgage Loan Identification Number
1000303951
1000310492
0000000000
8000079661
1000306636
1000310568
3000011025
5000190187
5000195363
5000195390
5000198028
5000200081
5000200218
5000201887
5000203066
5000203759
6000196772
6000202707
6000207496
6000207644
6000210657
6000210773
0000000000
6000211669
0000000000
0000000000
7000182401
7000187165
7000188084
8000078486
8000079538
8000077576
1000299068
1000300242
1000301257
1000302057
1000302158
1000302396
1000303232
1000303710
1000304818
1000305545
1000305579
1000305651
1000305975
1000306305
1000306768
1000307626
1000308148
1000308294
1000308689
1000308766
1000309424
1000309659
0000000000
1000310867
0000000000
1000310911
1000311299
1000311483
1000312478
1000312600
1000312611
1000312624
3000003058
3000010353
5000189208
5000193861
5000194110
5000194131
5000194340
5000194548
0000000000
5000195081
5000196594
5000196822
0000000000
5000196843
5000196970
5000197063
5000197093
5000197254
5000197604
5000197621
5000198960
5000199251
5000200377
5000200807
5000202426
5000202482
5000202674
5000202768
5000203769
5000205854
6000199456
6000201822
6000203910
6000204157
6000204297
6000204691
6000205829
0000000000
6000206403
6000206431
6000206503
6000206575
6000206900
6000207057
6000209128
6000209218
6000210689
6000210705
6000210712
6000210900
6000210924
6000211129
6000211176
6000211426
6000212446
6000212752
7000181459
7000182913
7000183246
7000183964
7000184727
7000184898
7000185036
7000185068
7000185787
7000187245
7000187879
7000188401
7000188579
0000000000
7000188984
7000189468
7000190014
7000190092
7000190130
8000072242
8000075204
8000076203
8000076245
8000077178
8000077259
8000077531
8000077681
8000077712
8000077747
8000078322
8000079147
8000079514
8000079629
8000079756
8000080055
8000080083
8000080224
0000000000
8000083031
8000078560
1000303806
6000203384
5000189809
5000201474
6000209086
6000209879
0000000000
8000076533
8000082116
SCHEDULE IV
Mortgage Pass-Through Certificates,
Series 2006-FR3
Representations and Warranties as to the Responsible Party
The Responsible Party hereby makes the representations and
warranties set forth in this Schedule IV to the Depositor and the Trustee, as of
the Closing Date. Capitalized terms used in this Schedule but not defined in
this Schedule have the meanings given to them in the Purchase Agreement.
(a) Due Organization and Authority. The Responsible Party is a
California state-chartered industrial bank, validly existing, and in good
standing under the laws of the State of California and has all licenses
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in the states where the Mortgaged Property is
located if the laws of such state require licensing or qualification in order to
conduct business of the type conducted by the Responsible Party. The Responsible
Party has corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Responsible Party and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement has been duly executed and delivered and constitutes
the valid, legal, binding and enforceable obligation of the Responsible Party,
except as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar laws
affecting the enforcement of the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding in equity or at law.
All requisite corporate action has been taken by the Responsible Party to make
this Agreement valid and binding upon the Responsible Party in accordance with
its terms;
(b) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Responsible Party is required or, if required, such
consent, approval, authorization or order has been or will, prior to the Closing
Date, be obtained;
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Responsible Party, and the transfer, assignment and conveyance
of the Mortgage Notes and the Mortgages by the Responsible Party pursuant to
this Agreement are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the
Responsible Party, the sale of the Mortgage Loans to the Purchaser, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement, will conflict with
or result in a breach of any of the terms, conditions or provisions of the
Responsible Party's charter, by-laws or other organizational documents or any
legal restriction or any agreement or instrument to which the Responsible Party
is now a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Responsible Party or
its property is subject, or result in the creation or imposition of any lien,
charge or encumbrance that would have an adverse effect upon any of its
properties pursuant to the terms of any mortgage, contract, deed of trust or
other instrument, or impair the ability of the Purchaser to realize on the
Mortgage Loans, impair the value of the Mortgage Loans, or impair the ability of
the Purchaser to realize the full amount of any insurance benefits accruing
pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Responsible Party, before any
court, administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Responsible Party,
or in any material impairment of the right or ability of the Responsible Party
to carry on its business substantially as now conducted, or in any material
liability on the part of the Responsible Party, or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of the Responsible Party
contemplated herein, or which would be likely to impair materially the ability
of the Responsible Party to perform under the terms of this Agreement;
(f) Ability to Perform; Solvency. The Responsible Party does not
believe, nor does it have any reason or cause to believe, that it cannot perform
each and every covenant contained in this Agreement. The Responsible Party is
solvent and the sale of the Mortgage Loans will not cause the Responsible Party
to become insolvent. The sale of the Mortgage Loans is not undertaken with the
intent to hinder, delay or defraud any of Responsible Party's creditors;
(g) Responsible Party's Origination. The Responsible Party's
decision to originate any mortgage loan or to deny any mortgage loan application
is an independent decision based upon the Underwriting Guidelines, and is in no
way made as a result of Purchaser's decision to purchase, or not to purchase, or
the price Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Responsible Party has complied
with all applicable anti-money laundering laws, regulations and executive
orders, including without limitation the USA Patriot Act of 2001 (collectively,
the "Anti-Money Laundering Laws"); the Responsible Party has established an
anti-money laundering compliance program as required by the Anti-Money
Laundering Laws, has conducted the requisite due diligence in connection with
the origination of each Mortgage Loan for purposes of the Anti-Money Laundering
Laws, including with respect to the legitimacy of the applicable Mortgagor and
the origin of the assets used by the said Mortgagor to purchase the property in
question, and maintains, and will maintain, sufficient information to identify
the applicable Mortgagor for purposes of the Anti-Money Laundering Laws.
Additionally, no Mortgage Loan is subject to nullification pursuant to Executive
Order 13224 (the "Executive Order") or the regulations promulgated by the Office
of Foreign Assets Control of the United States Department of Treasury (the "OFAC
Regulations") or in violation of the Executive Order or the OFAC Regulations;
and no Mortgagor is subject to the provisions of such Executive Order or the
OFAC Regulations nor listed as a "blocked person" for purposes of the OFAC
Regulations;
(i) Financial Statements. The Responsible Party has delivered to the
Purchaser financial statements as to its last three complete fiscal years and
any later quarter ended more than 60 days prior to the execution of the Purchase
Agreement. All such financial statements fairly present the pertinent results of
operations and changes in financial position for each of such periods and the
financial position at the end of each such period of the Responsible Party and
its subsidiaries and have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as set forth in the notes thereto. In addition, the Responsible Party has
delivered information as to its loan gain and loss experience in respect of
foreclosures and its loan delinquency experience for the immediately preceding
three-year period, in each case with respect to mortgage loans owned by it and
such mortgage loans serviced for others during such period, and all such
information so delivered shall be true and correct in all material respects.
There has been no change in the business, operations, financial condition,
properties or assets of the Responsible Party since the date of the Responsible
Party's financial statements that would have a material adverse effect on its
ability to perform its obligations under this Agreement;
(j) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Responsible Party's
portfolio at the Closing Date as to which the representations and warranties set
forth in Schedule III could be made and such selection was not made in a manner
so as intentionally to affect adversely the interests of the Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered with
respect to each Mortgage Loan pursuant to the Custodial Agreement, have been
delivered to the Custodian all in compliance with the specific requirements of
the Custodial Agreement. With respect to each Mortgage Loan, the Responsible
Party or its designee will be in possession of a complete Mortgage File, except
for such documents as will be delivered to the Trustee; and
(l) Sale Treatment. With respect to each Original Sale Date, the
Responsible Party reflected the transfer of the Mortgage Loans as a sale on its
books and records.
SCHEDULE V
Mortgage Pass-Through Certificates,
Series 2006-FR3
Representations and Warranties of the Depositor as to the Mortgage Loans
The Depositor hereby makes the following representation and warranty
to the Trustee as of the Closing Date:
(a) No Mortgage Loan is a Mortgage Loan categorized as "High Cost"
or "Covered" pursuant to Appendix E of Standard & Poor's Glossary. No Mortgage
Loan originated on or after October 1, 2002 through March 6, 2003 is governed by
the Georgia Fair Lending Act.
(b) Each loan at the time it was made complied in all material
respects with applicable local, state and federal laws, including, but not
limited to, all applicable predatory and abusive lending laws.
EXHIBIT A
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), AND CERTAIN OTHER
ASSETS.
To be added to the Subordinated Certificates: [NEITHER THIS CERTIFICATE NOR ANY
INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE
EITHER A REPRESENTATION LETTER TO THE EFFECT 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"), OR A PLAN SUBJECT TO SECTION 4975 OF
THE CODE, OR A PLAN SUBJECT TO APPLICABLE FEDERAL, STATE OR LOCAL LAW ("SIMILAR
LAW") MATERIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE OR A
PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF SUCH A PLAN, OR, IF THE
TRANSFEREE IS AN INSURANCE COMPANY, A REPRESENTATION LETTER THAT IT IS USING THE
ASSETS OF ITS GENERAL ACCOUNT AND THAT THE PURCHASE AND HOLDING OF THIS
CERTIFICATE ARE COVERED UNDER SECTIONS I AND III OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 OR AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE
SERVICER, TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION WITHIN THE
MEANING OF ERISA, SECTION 4975 OF THE CODE OR SIMILAR LAW AND WILL NOT SUBJECT
THE DEPOSITOR, THE TRUSTEE OR THE SERVICER TO ANY OBLIGATION IN ADDITION TO
THOSE EXPRESSLY UNDERTAKEN IN THE AGREEMENT OR TO ANY LIABILITY. NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE
TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF ERISA, SECTION
4975 OF THE CODE OR SIMILAR LAW WITHOUT THE REPRESENTATION LETTER OR OPINION OF
COUNSEL AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.]
AS LONG AS THE INTEREST RATE SWAP AGREEMENT IS IN EFFECT, EACH BENEFICIAL OWNER
OF THIS CERTIFICATE, OR ANY INTEREST THEREIN, SHALL BE DEEMED TO HAVE
REPRESENTED THAT EITHER (I) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR ARRANGEMENT
SUBJECT TO SECTION 406 OF ERISA, A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A
PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") MATERIALLY
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE, NOR A PERSON ACTING ON
BEHALF OF ANY SUCH PLAN OR ARRANGEMENT NOR USING THE ASSETS OF ANY SUCH PLAN OR
ARRANGEMENT OR (II) THE ACQUISITION AND HOLDING OF THIS CERTIFICATE ARE ELIGIBLE
FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER AT LEAST ONE OF PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 00-00, XXXX 00-0, XXXX 00-00, XXXX 00-00 XX XXXX 96-23
OR A COMPARABLE EXEMPTION AVAILABLE UNDER SIMILAR LAW.
Certificate No: A-1-[ ]
A-2-[ ]
A-3-[ ]
M-1-[ ]
M-2-[ ]
M-3-[ ]
B-1-[ ]
B-2-[ ]
B-3-[ ]
B-4-[ ]
B-5-[ ]
Cut-off Date: July 1, 2006
First Distribution Date: August 25, 2006
Initial Certificate Balance
of this Certificate
("Denomination"): $[ ]
Initial Certificate
Balances of all
Certificates of this Class: A-1 $454,270,000
A-2 $160,383,000
A-3 $142,838,000
M-1 $79,996,000
M-2 $55,305,000
M-3 $15,308,000
B-1 $15,308,000
B-2 $12,839,000
B-3 $10,370,000
B-4 $10,369,000
B-5 $8,889,000
CUSIP: A-1 813765 AA 2
A-2 813765 AB 0
A-3 813765 XX 0
X-0 000000 XX 0
X-0 000000 XX 4
M-3 813765 AF 1
B-1 813765 AG 9
B-2 813765 AH 7
B-3 813765 AJ 3
B-4 813765 AK 0
B-5 813765 AL 8
ISIN: A-1 US813765AA25
A-2 US813765AB08
A-3 US813765AC80
M-1 US813765AD63
M-2 US813765AE47
M-3 US813765AF12
B-1 US813765AG94
B-2 US813765AH77
B-3 US813765AJ34
B-4 US813765AK07
B-5 US813765AL89
SECURITIZED ASSET BACKED RECEIVABLES LLC
SABR Trust 2006-FR3
Mortgage Pass-Through Certificates, Series 2006-FR3
[Class A-][Class M-][Class B-]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Responsible Party, the Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among Securitized Asset Backed
Receivables LLC, as depositor (the "Depositor"), HomEq Servicing Corporation, as
servicer (the "Servicer"), OfficeTiger Global Real Estate Services Inc., as loan
performance advisor, Fremont Investment & Loan, as responsible party (the
"Responsible Party"), and Xxxxx Fargo Bank, National Association, as trustee
(the "Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually authenticated by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as
Trustee
By:____________________________________
Authenticated:
By:____________________________________
Authorized Signatory of
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee
SECURITIZED ASSET BACKED RECEIVABLES LLC
Securitized Asset Backed Receivables LLC Trust 2006-FR3
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Securitized Asset Backed Receivables LLC Trust 2006-FR3 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the Business Day immediately preceding such Distribution
Date; provided, however, that for any Definitive Certificates, the Record Date
shall be the last Business Day of the month next preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes, or such other location specified in the notice to Certificateholders
of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Responsible Party, the Servicer and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the offices designated by the Trustee for such
purposes, accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor any
such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Servicer will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
Dated:
-----------------------------------------
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number __________, or, if mailed by check, to _________________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
EXHIBIT B
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE A REPRESENTATION LETTER TO THE EFFECT 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"), OR A
PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO MATERIALLY SIMILAR
PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") OR A PERSON
INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF SUCH A PLAN. IN THE EVENT THAT
SUCH REPRESENTATION IS VIOLATED, OR ANY ATTEMPT IS MADE TO TRANSFER TO A PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF ERISA, A PLAN SUBJECT TO SECTION 4975 OF
THE CODE OR A PLAN SUBJECT TO SIMILAR LAW, OR A PERSON ACTING ON BEHALF OF ANY
SUCH PLAN OR ARRANGEMENT OR USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT,
SUCH ATTEMPTED TRANSFER OR ACQUISITION SHALL BE VOID AND OF NO EFFECT.
Certificate No. : P-1
Cut-off Date : July 1, 2006
First Distribution Date : August 25, 2006
Percentage Interest of
this Certificate
("Denomination") : [___]%
SECURITIZED ASSET BACKED RECEIVABLES LLC
SABR Trust 2006-FR3
Mortgage Pass-Through Certificates, Series 2006-FR3
Class P
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Responsible
Party, the Servicer or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that __________________ is the registered owner of
the Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among Securitized Asset Backed
Receivables LLC, as depositor (the "Depositor"), HomEq Servicing Corporation, as
servicer (the "Servicer"), OfficeTiger Global Real Estate Services Inc., as loan
performance advisor, Fremont Investment & Loan, as responsible party (the
"Responsible Party"), and Xxxxx Fargo Bank, National Association, as trustee
(the "Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
This Certificate does not have a Pass-Through Rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
offices designated by the Trustee for such purpose, or the office or agency
maintained by the Trustee.
No transfer of a Certificate of this Class shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with the 1933 Act and such laws. In the event of any
such transfer, the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached to the Pooling and Servicing
Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall be an expense of the transferor.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA, Section 4975 of the Code or any materially
similar provisions of applicable federal, state or local law ("Similar Law"), or
a person acting on behalf of or investing plan assets of any such plan, which
representation letter shall not be an expense of the Trustee.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually authenticated by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as
Trustee
By:____________________________________
Authenticated:
By:____________________________________
Authorized Signatory of
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee
SECURITIZED ASSET BACKED RECEIVABLES LLC
Securitized Asset Backed Receivables LLC Trust 2006-FR3
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Securitized Asset Backed Receivables LLC Trust 2006-FR3 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in Minnesota,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor any
such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Servicer will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
Dated:
-----------------------------------------
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number __________, or, if mailed by check, to _________________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
EXHIBIT C-1
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN ONE "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED (I) TO A
PERSON OTHER THAN A PERMITTED TRANSFEREE IN COMPLIANCE WITH SECTION 5.02(C) OF
THE AGREEMENT OR (II) UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE A
REPRESENTATION LETTER TO THE EFFECT 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"), OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR
A PLAN SUBJECT TO MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR
LOCAL LAW ("SIMILAR LAW") OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS
OF SUCH A PLAN. IN THE EVENT THAT SUCH REPRESENTATION IS VIOLATED, OR ANY
ATTEMPT IS MADE TO TRANSFER TO A PLAN OR ARRANGEMENT SUBJECT TO SECTION 406 OF
ERISA, A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO SIMILAR
LAW, OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR USING THE
ASSETS OF ANY SUCH PLAN OR ARRANGEMENT, SUCH ATTEMPTED TRANSFER OR ACQUISITION
SHALL BE VOID AND OF NO EFFECT.
Certificate No. : R-I-[_]
Cut-off Date : July 1, 2006
First Distribution Date : August 25, 2006
Percentage Interest of :
this Certificate
("Denomination") 100%
SECURITIZED ASSET BACKED RECEIVABLES LLC
Securitized Asset Backed Receivables LLC Trust 2006-FR3
Mortgage Pass-Through Certificates, Series 2006-FR3
Class R-I
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
Distributions in respect of this Certificate is distributable
monthly as set forth herein. This Class R-I Certificate has no Certificate
Balance and is not entitled to distributions in respect of principal or
interest. This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Servicer, the Responsible Party
or the Trustee referred to below or any of their respective affiliates. Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that ________________________ is the registered owner
of the Percentage Interest specified above of any monthly distributions due to
the Class R-I Certificates pursuant to a Pooling and Servicing Agreement dated
as of the Cut-off Date specified above (the "Agreement") among Securitized Asset
Backed Receivables LLC, as depositor (the "Depositor"), HomEq Servicing
Corporation, as servicer (the "Servicer"), OfficeTiger Global Real Estate
Services Inc., as loan performance advisor, Fremont Investment & Loan, as
responsible party (the "Responsible Party"), and Xxxxx Fargo Bank, National
Association, as trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the
Trust Fund will be made only upon presentment and surrender of this Class R-I
Certificate at the offices designated by the Trustee for such purposes or the
office or agency maintained by the Trustee in New York, New York.
No transfer of a Class R-I Certificate shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan or
arrangement subject to Section 406 of ERISA, a plan or arrangement subject to
Section 4975 of the Code or a plan subject to Similar Law, or a person acting on
behalf of any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such transfer, which representation letter shall not be an
expense of the Trustee, the Servicer or the Trust Fund. In the event that such
representation is violated, or any attempt is made to transfer to a plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section 4975 of
the Code or a plan subject to Similar Law, or a person acting on behalf of any
such plan or arrangement or using the assets of any such plan or arrangement,
such attempted transfer or acquisition shall be void and of no effect.
Each Holder of this Class R-I Certificate shall be deemed by the
acceptance or acquisition an Ownership Interest in this Class R-I Certificate to
have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in this Class R-I Certificate are
expressly subject to the following provisions: (i) each Person holding or
acquiring any Ownership Interest in this Class R-I 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 this Class R-I Certificate may be registered on the Closing Date or
thereafter transferred, and the Trustee shall not register the Transfer of this
Certificate unless, in addition to the certificates required to be delivered to
the Trustee under Section 5.02(b) of the Agreement, the Trustee shall have been
furnished with a Transfer Affidavit of the initial owner or the proposed
transferee in the form attached as Exhibit G to the Agreement, (iii) each Person
holding or acquiring any Ownership Interest in this Class R-I Certificate shall
agree (A) to obtain a Transfer Affidavit from any other Person to whom such
Person attempts to Transfer its Ownership Interest this Class R-I 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 this
Class R-I Certificate, (C) not to cause income with respect to the Class R-I
Certificate to be attributable to a foreign permanent establishment or fixed
base, within the meaning of an applicable income tax treaty, of such Person or
any other U.S. Person and (D) not to Transfer the Ownership Interest in this
Class R-I Certificate or to cause the Transfer of the Ownership Interest in this
Class R-I Certificate to any other Person if it has actual knowledge that such
Person is a Non-Permitted Transferee and (iv) any attempted or purported
Transfer of the Ownership Interest in this Class R-I Certificate in violation of
the provisions herein shall be absolutely null and void and shall vest no rights
in the purported Transferee.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually authenticated by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as
Trustee
By:____________________________________
Authenticated:
By:____________________________________
Authorized Signatory of
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee
SECURITIZED ASSET BACKED RECEIVABLES LLC
Securitized Asset Backed Receivables LLC Trust 2006-FR3
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Securitized Asset Backed Receivables LLC Trust 2006-FR3 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in Minnesota,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor any
such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Servicer will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
Dated:
-----------------------------------------
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number __________, or, if mailed by check, to _________________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
EXHIBIT C-2
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN THREE "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED (I) TO A
PERSON OTHER THAN A PERMITTED TRANSFEREE IN COMPLIANCE WITH SECTION 5.02(C) OF
THE AGREEMENT OR (II) UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE A
REPRESENTATION LETTER TO THE EFFECT 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"), OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR
A PLAN SUBJECT TO MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR
LOCAL LAW ("SIMILAR LAW") OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS
OF SUCH A PLAN. IN THE EVENT THAT SUCH REPRESENTATION IS VIOLATED, OR ANY
ATTEMPT IS MADE TO TRANSFER TO A PLAN OR ARRANGEMENT SUBJECT TO SECTION 406 OF
ERISA, A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO SIMILAR
LAW, OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR USING THE
ASSETS OF ANY SUCH PLAN OR ARRANGEMENT, SUCH ATTEMPTED TRANSFER OR ACQUISITION
SHALL BE VOID AND OF NO EFFECT.
Certificate No. : R-II-[_]
Cut-off Date : July 1, 2006
First Distribution Date : August 25, 2006
Percentage Interest of :
this Certificate
("Denomination") 100%
SECURITIZED ASSET BACKED RECEIVABLES LLC
Securitized Asset Backed Receivables LLC Trust 2006-FR3
Mortgage Pass-Through Certificates, Series 2006-FR3
Class R-II
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
Distributions in respect of this Certificate is distributable
monthly as set forth herein. This Class R-II Certificate has no Certificate
Balance and is not entitled to distributions in respect of principal or
interest. This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Servicer, the Responsible Party
or the Trustee referred to below or any of their respective affiliates. Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that ________________________ is the registered owner
of the Percentage Interest specified above of any monthly distributions due to
the Class R-II Certificates pursuant to a Pooling and Servicing Agreement dated
as of the Cut-off Date specified above (the "Agreement") among Securitized Asset
Backed Receivables LLC, as depositor (the "Depositor"), HomEq Servicing
Corporation, as servicer (the "Servicer"), OfficeTiger Global Real Estate
Services Inc., as loan performance advisor, Fremont Investment & Loan, as
responsible party (the "Responsible Party"), and Xxxxx Fargo Bank, National
Association, as trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the
Trust Fund will be made only upon presentment and surrender of this Class R-II
Certificate at the offices designated by the Trustee for such purposes or the
office or agency maintained by the Trustee in New York, New York.
No transfer of a Class R-II Certificate shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan or
arrangement subject to Section 406 of ERISA, a plan or arrangement subject to
Section 4975 of the Code or a plan subject to Similar Law, or a person acting on
behalf of any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such transfer, which representation letter shall not be an
expense of the Trustee, the Servicer or the Trust Fund. In the event that such
representation is violated, or any attempt is made to transfer to a plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section 4975 of
the Code or a plan subject to Similar Law, or a person acting on behalf of any
such plan or arrangement or using the assets of any such plan or arrangement,
such attempted transfer or acquisition shall be void and of no effect.
Each Holder of this Class R-II Certificate shall be deemed by the
acceptance or acquisition an Ownership Interest in this Class R-II Certificate
to have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in this Class R-II Certificate are
expressly subject to the following provisions: (i) each Person holding or
acquiring any Ownership Interest in this Class R-II 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 this Class R-II Certificate may be registered on the Closing Date or
thereafter transferred, and the Trustee shall not register the Transfer of this
Certificate unless, in addition to the certificates required to be delivered to
the Trustee under Section 5.02(b) of the Agreement, the Trustee shall have been
furnished with a Transfer Affidavit of the initial owner or the proposed
transferee in the form attached as Exhibit G to the Agreement, (iii) each Person
holding or acquiring any Ownership Interest in this Class R-II Certificate shall
agree (A) to obtain a Transfer Affidavit from any other Person to whom such
Person attempts to Transfer its Ownership Interest this Class R-II 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 this
Class R-II Certificate, (C) not to cause income with respect to the Class R-II
Certificate to be attributable to a foreign permanent establishment or fixed
base, within the meaning of an applicable income tax treaty, of such Person or
any other U.S. Person and (D) not to Transfer the Ownership Interest in this
Class R-II Certificate or to cause the Transfer of the Ownership Interest in
this Class R-II Certificate to any other Person if it has actual knowledge that
such Person is a Non-Permitted Transferee and (iv) any attempted or purported
Transfer of the Ownership Interest in this Class R-II Certificate in violation
of the provisions herein shall be absolutely null and void and shall vest no
rights in the purported Transferee.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually authenticated by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as
Trustee
By:____________________________________
Authenticated:
By:____________________________________
Authorized Signatory of
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee
SECURITIZED ASSET BACKED RECEIVABLES LLC
Securitized Asset Backed Receivables LLC Trust 2006-FR3
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Securitized Asset Backed Receivables LLC Trust 2006-FR3 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in Minnesota,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor any
such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Servicer will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
________________________________________________________________________________
Dated:
-----------------------------------------
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number __________, or, if mailed by check, to _________________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
EXHIBIT D
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN TWO "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER
ASSETS.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
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"), OR A PLAN
SUBJECT TO SECTION 4975 OF THE CODE, OR A PLAN SUBJECT TO APPLICABLE FEDERAL,
STATE OR LOCAL LAW ("SIMILAR LAW") MATERIALLY SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN
ASSETS OF SUCH A PLAN, OR, IF THE TRANSFEREE IS AN INSURANCE COMPANY, A
REPRESENTATION LETTER THAT IT IS USING THE ASSETS OF ITS GENERAL ACCOUNT AND
THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE ARE COVERED UNDER SECTIONS I
AND III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 OR AN OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE AND THE SERVICER, TO THE EFFECT THAT THE PURCHASE OR
HOLDING OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT
PROHIBITED TRANSACTION WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR
SIMILAR LAW AND WILL NOT SUBJECT THE DEPOSITOR, THE TRUSTEE OR THE SERVICER TO
ANY OBLIGATION IN ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN THE AGREEMENT OR TO
ANY LIABILITY. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY
PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN SUBJECT TO TITLE I OF ERISA, SECTION 4975 OF THE CODE OR SIMILAR LAW
WITHOUT THE REPRESENTATION LETTER OR OPINION OF COUNSEL AS DESCRIBED ABOVE SHALL
BE VOID AND OF NO EFFECT.
Certificate No. : X-1
Cut-off Date : July 1, 2006
First Distribution Date : August 25, 2006
Percentage Interest of this
Certificate ("Denomination") : [___]%
SECURITIZED ASSET BACKED RECEIVABLES LLC
Securitized Asset Backed Receivables LLC Trust 2006-FR3
Mortgage Pass-Through Certificates, Series 2006-FR3
Class X
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class.
Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Servicer, the
Responsible Party or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that ____________________ is the registered owner of
the Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among Securitized Asset Backed
Receivables LLC, as depositor (the "Depositor"), Fremont Investment & Loan, as
responsible party (the "Responsible Party"), HomEq Servicing Corporation, as
servicer (the "Servicer"), OfficeTiger Global Real Estate Services Inc., as loan
performance advisor, and Xxxxx Fargo Bank, National Association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
This Certificate does not have a Pass-Through Rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
offices designated by the Trustee for such purposes or the office or agency
maintained by the Trustee.
No transfer of a Certificate of this Class shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with the 1933 Act and such laws. In the event of any
such transfer, the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached to the Pooling and Servicing
Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall be an expense of the transferor.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually authenticated by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated:
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as
Trustee
By:____________________________________
Authenticated:
By:____________________________________
Authorized Signatory of
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee
SECURITIZED ASSET BACKED RECEIVABLES LLC
Securitized Asset Backed Receivables LLC Trust 2006-FR3
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Securitized Asset Backed Receivables LLC Trust 2006-FR3 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the offices designated by the Trustee for such
purposes or the office or agency maintained by the Trustee in Minnesota,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor any
such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Servicer will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:___________________________________________
________________________________________________________________________________
Dated:
-----------------------------------------
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number __________, or, if mailed by check, to _________________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
EXHIBIT E
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
Securitized Asset Backed Receivables LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
HomEq Servicing Corporation
0000 Xxxx Xxxxxx
Xxxxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Re: Pooling and Servicing Agreement, dated as of July 1, 2006, by and
among Securitized Asset Backed Receivables LLC, as Depositor,
Fremont Investment & Loan, as Responsible Party, HomEq Servicing
Corporation, as Servicer, OfficeTiger Global Real Estate Services
Inc., as Loan Performance Advisor, and Xxxxx Fargo Bank, National
Association, as Trustee, Securitized Asset Backed Receivables LLC
Trust 2006-FR3 Mortgage Pass-Through Certificates, Series 2006-FR3
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), for each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan listed
in the attached schedule), it has received:
(i) the original Mortgage Note, endorsed as provided in the
following form: "Pay to the order of ________, without recourse"; and
(ii) a duly executed assignment of the Mortgage (which may be
included in a blanket assignment or assignments).
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:____________________________________
Name:
Title:
EXHIBIT F
FORM OF DOCUMENT CERTIFICATION
AND EXCEPTION REPORT OF TRUSTEE
[date]
Securitized Asset Backed Receivables LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
HomEq Servicing Corporation
0000 Xxxx Xxxxxx
Xxxxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Re: Pooling and Servicing Agreement, dated as of July 1, 2006, among
Securitized Asset Backed Receivables LLC, as Depositor, HomEq
Servicing Corporation, as Servicer, OfficeTiger Global Real Estate
Services Inc., as Loan Performance Advisor, Fremonth Investment &
Loan, as Responsible Party, and Xxxxx Fargo Bank, National
Association, as Trustee, Securitized Asset Backed Receivables LLC
Trust 2006-FR3 Mortgage Pass-Through Certificates, Series 2006-FR3
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or listed on the
attached Document Exception Report) it has received:
(i) The original Mortgage Note, endorsed in the form provided in
Section 2.01 of the Pooling and Servicing Agreement, with all intervening
endorsements showing a complete chain of endorsement from the originator
to the last endorsee.
(ii) The original recorded Mortgage.
(iii) A duly executed assignment of the Mortgage in the form
provided in Section 2.01 of the Pooling and Servicing Agreement; or, if
the Responsible Party has certified or the Trustee otherwise knows that
the related Mortgage has not been returned from the applicable recording
office, a copy of the assignment of the Mortgage (excluding information to
be provided by the recording office).
(iv) The original or duplicate original recorded assignment or
assignments of the Mortgage showing a complete chain of assignment from
the originator to the last endorsee.
(v) The original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy
thereof certified by the title company.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) the information set forth in items (1), (2), (3), (15),
(22) and (29) of the Data Tape Information accurately reflects information set
forth in the Custodial File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review of the Custodial File
specifically required in the Pooling and Servicing Agreement. The Trustee makes
no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan. Notwithstanding anything herein to the contrary, the Trustee has
made no determination and makes no representations as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as Noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or sufficient to effect the assignment
of and transfer to the assignee thereof, under the Mortgage to which the
assignment relates.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:____________________________________
Name:
Title:
EXHIBIT G
RESIDUAL TRANSFER AFFIDAVIT
Securitized Asset Backed Receivables LLC Trust 2006-FR3,
Mortgage Pass-Through Certificates, Series 2006-FR3
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is an officer of ___________________, the
proposed Transferee of an Ownership Interest in a Class [R-I] [R-II] Certificate
(the "Certificate") issued pursuant to the Pooling and Servicing Agreement (the
"Agreement"), relating to the above-referenced Series, by and among Securitized
Asset Backed Receivables LLC, as depositor (the "Depositor"), HomEq Servicing
Corporation, as Servicer, OfficeTiger Global Real Estate Services Inc., as Loan
Performance Advisor, Fremont investment & Loan, as Responsible Party, and Xxxxx
Fargo Bank, National Association, as Trustee. Capitalized terms used, but not
defined herein, shall have the meanings ascribed to such terms in the Agreement.
The Transferee has authorized the undersigned to make this affidavit on behalf
of the Transferee for the benefit of the Depositor and the Trustee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate for its own account. The Transferee has no
knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificate to Persons that are
Non-Permitted Transferees; (ii) such tax will be imposed on the transferor, or,
if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is a Non-Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is a
Non-Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 5.02(c) of
the Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is a Non-Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit H to the Agreement (a "Transferor Certificate") to the
effect that, among other things, such Transferee has no actual knowledge that
the Person to which the Transfer is to be made is a Non-Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Certificate. The Transferee has historically paid its debts as they have
come due and intends to pay its debts as they come due in the future. The
Transferee intends to pay all taxes due with respect to the Certificate as they
become due.
8. The Transferee's taxpayer identification number is __________.
9. The Transferee is not a Disqualified Non-U.S. Person as defined
in the Agreement.
10. The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.
11. The Transferee will not cause income from the Residual
Certificate to be attributable to a foreign permanent establishment or fixed
base, within the meaning of an applicable income tax treaty, of the Transferee
or any other U.S. Person.
12. Check the applicable paragraph:
|_| The present value of the anticipated tax liabilities associated
with holding the Certificate, as applicable, does not exceed the sum of:
(i) the present value of any consideration given to the Transferee
to acquire such Certificate;
(ii) the present value of the expected future distributions on such
Certificate; and
(iii) the present value of the anticipated tax savings associated
with holding such Certificate as the related REMIC generates losses.
For purposes of this calculation, (i) the Transferee is assumed to
pay tax at the highest rate currently specified in Section 11(b) of the Code
(but the tax rate in Section 55(b)(1)(B) of the Code may be used in lieu of the
highest rate specified in Section 11(b) 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 short-term Federal rate prescribed
by Section 1274(d) of the Code for the month of the transfer and the compounding
period used by the Transferee.
|_| The transfer of the Certificate complies with U.S. Treasury
Regulations Sections 1.860E-1(c)(5) and (6) and, accordingly,
(i) the Transferee is an "eligible corporation," as defined in U.S.
Treasury Regulations Section 1.860E-1(c)(6)(i), as to which income from
the Certificate will only be taxed in the United States;
(ii) at the time of the transfer, and at the close of the
Transferee's two fiscal years preceding the year of the transfer, the
Transferee had gross assets for financial reporting purposes (excluding
any obligation of a person related to the Transferee within the meaning of
U.S. Treasury Regulations Section 1.860E-1(c)(6)(ii)) in excess of $100
million and net assets in excess of $10 million;
(iii) the Transferee will transfer the Certificate only to another
"eligible corporation," as defined in U.S. Treasury Regulations Section
1.860E-1(c)(6)(i), in a transaction that satisfies the requirements of
Sections 1.860E-1(c)(4)(i), (ii) and (iii) and Section 1.860E-1(c)(5) of
the U.S. Treasury Regulations; and
(iv) the Transferee determined the consideration paid to it to
acquire the Certificate based on reasonable market assumptions (including,
but not limited to, borrowing and investment rates, prepayment and loss
assumptions, expense and reinvestment assumptions, tax rates and other
factors specific to the Transferee) that it has determined in good faith.
|_| None of the above.
13. The Transferee is not an employee benefit plan that is subject
to Title I of ERISA or a plan that is subject to Section 4975 of the Code or a
plan subject to any Federal, state or local law that is substantially similar to
Title I of ERISA or Section 4975 of the Code, and the Transferee is not acting
on behalf of or investing plan assets of such a plan.
* * *
IN WITNESS WHEREOF, the Transferee has caused this instrument to
be executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ___ day of _______, 20__.
_______________________________________
Print Name of Transferee
By:____________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
_______________________________________
[Assistant] Secretary
Personally appeared before me the above-named __________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ___________ of the Transferee, and acknowledged that he executed the same
as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this day of , 20__.
______________________________________
NOTARY PUBLIC
My Commission expires the __ day
of _________, 20__
EXHIBIT H
FORM OF TRANSFEROR CERTIFICATE
__________, 20__
Securitized Asset Backed Receivables LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [_________]
Xxxxx Fargo Bank, National Association,
as Trustee
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: SABR 2006-FR3
Re: Securitized Asset Backed Receivables LLC Trust 2006-FR3 Mortgage
Pass-Through Certificates, Series 2006-FR3, Class [__ ]
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) to the extent we are disposing of a Residual Certificate, (i) we have no
knowledge the Transferee is a Non-Permitted Transferee and (ii) after conducting
a reasonable investigation of the financial condition of the Transferee, we have
no knowledge and no reason to believe that the Transferee will not pay all taxes
with respect to the Residual Certificates as they become due and (iii) we have
no reason to believe that the statements made in paragraphs 7, 10 and 11 of the
Transferee's Residual Transfer Affidavit are false.
Very truly yours,
_______________________________________
Print Name of Transferor
By:____________________________________
Authorized Officer
EXHIBIT I
FORM OF RULE 144A LETTER
____________, 20__
Securitized Asset Backed Receivables LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [_________]
Xxxxx Fargo Bank, National Association,
as Trustee
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: SABR 2006-FR3
Re: Securitized Asset Backed Receivables LLC Trust 2006-FR3 Mortgage
Pass-Through Certificates, Series 2006-FR3 [__ ]
Ladies and Gentlemen:
In connection with our acquisition of the above 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 Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either we are purchasing a Class A-1, Class A-2
or Class A-3 Certificate or we are not an employee benefit plan that is subject
to Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or a plan or arrangement that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended, or a plan subject to materially
similar provisions of applicable federal, state or local law, nor are we acting
on behalf of any such plan or arrangement nor using the assets of any such plan
or arrangement to effect such acquisition or, with respect to a Subordinated
Certificate or Class X Certificate, the purchaser is an insurance company that
is purchasing this certificate with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under Sections I and III of PTCE 95-60,
(e) we have not, nor has anyone acting on our behalf offered, transferred,
pledged, sold or otherwise disposed of the Certificates, any interest in the
Certificates or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Certificates, any interest
in the Certificates or any other similar security from, or otherwise approached
or negotiated with respect to the Certificates, any interest in the Certificates
or any other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Certificates
under the Securities Act or that would render the disposition of the
Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
and (f) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act and have completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates for our own account or for resale pursuant to Rule 144A and
further, understand that such Certificates may be resold, pledged or transferred
only (i) to a person reasonably believed to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
ANNEX 1 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because (i) the Buyer owned
and/or invested on a discretionary basis $ (1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
____ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
____ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
____ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
____ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
____ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
____ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
____ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974.
____ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
____ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
____ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
_______________________________________
Print Name of Transferee
By:____________________________________
Name:
Title:
Date:
----------
(1) 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.
ANNEX 2 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That Are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
____ The Buyer owned $_______ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $_______ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
_______________________________________
Print Name of Transferee
By:____________________________________
Name:
Title:
IF AN ADVISER:
_______________________________________
Print Name of Buyer
Date:
EXHIBIT J
FORM OF REQUEST FOR RELEASE
(for Trustee)
To: Xxxxx Fargo Bank, N. A.
00 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx - XXXX 0000-XX0
Re: In connection with the administration of the Mortgage Loans held by
you as the Trustee on behalf of the Certificateholders pursuant to
the Pooling and Servicing Agreement, dated as of July 1, 2006, among
Securitized Asset Backed Receivables LLC, as depositor, HomEq
Servicing Corporation, as servicer, Fremonth Investment & Loan, as
responsible party, OfficeTiger Global Real Estate Services Inc., as
loan performance advisor, and Xxxxx Fargo Bank, National
Association, as trustee, Securitized Asset-Backed Receivables LLC
Trust 2006-FR3, we request the release, and acknowledge receipt, of
the (Custodial File/[specify documents]) for the Mortgage Loan
described below, for the reason indicated.
Mortgagor's Name, Address & Zip Code:
Mortgage Loan Number:
Send Custodial File to:
Delivery Method (check one)
____1. Regular mail
____2. Overnight courier (Tracking information: )
If neither box 1 nor 2 is checked, regular mail shall be assumed.
Reason for Requesting Documents (check one)
____1. Mortgage Loan Paid in Full. (The Servicer hereby certifies that all
amounts received in connection therewith have been credited to the
Collection Account as provided in the Pooling and Servicing
Agreement.)
____2. Mortgage Loan Repurchase Pursuant to Section 2.03 of the Pooling and
Servicing Agreement. (The Servicer hereby certifies that the
repurchase price has been credited to the Collection Account as
provided in the Pooling and Servicing Agreement.)
____3. Mortgage Loan Liquidated by _________________. (The Servicer hereby
certifies that all proceeds of foreclosure, insurance, condemnation
or other liquidation have been finally received and credited to the
Collection Account pursuant to the Pooling and Servicing Agreement.)
____4. Mortgage Loan in Foreclosure.
____5. Other (explain).
If box 1, 2 or 3 above is checked, and if all or part of the
Custodial File was previously released to us, please release to us our previous
request and receipt on file with you, as well as any additional documents in
your possession relating to the specified Mortgage Loan.
If box 4 or 5 above is checked, upon our return of all of the above
documents to you as the Trustee, please acknowledge your receipt by signing in
the space indicated below, and returning this form if requested by us.
HOMEQ SERVICING CORPORATION
By:____________________________________
Name:
Title:
Date:
[ACKNOWLEDGED AND AGREED:
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:_______________________________
Name:
Title:
Date: ]
EXHIBIT K
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Sponsor and which shall be retained by the Servicer or delivered to and retained
by the Trustee, as applicable:
(a) The documents or instruments set forth as items (i) to (ix) in
Section 2.01(b) of the Agreement.
(b) Residential loan application.
(c) Mortgage Loan closing statement.
(d) Verification of employment and income, if applicable.
(e) Verification of acceptable evidence of source and amount of down
payment.
(f) Credit report on Mortgagor.
(g) Residential appraisal report.
(h) Photograph of the Mortgaged Property.
(i) Survey of the Mortgaged Property.
(j) Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title policy,
i.e., map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
(k) All required disclosure statements.
(l) If required in an appraisal, termite report, structural
engineer's report, water potability and septic certification.
(m) Sales contract, if applicable.
Evidence of payment of taxes and insurance, insurance claim files,
correspondence, current and historical computerized data files (which include
records of tax receipts and payment history from the date of origination), and
all other processing, underwriting and closing papers and records which are
customarily contained in a mortgage loan file and which are required to document
the Mortgage Loan or to service the Mortgage Loan.
EXHIBIT L
FORM OF CERTIFICATION TO BE
PROVIDED WITH FORM 10-K
Re: Securitized Asset Backed Receivables LLC Trust 2006-FR3 (the
"Trust"), Mortgage Pass-Through Certificates, Series 2006-FR3,
issued pursuant to the Pooling and Servicing Agreement, dated as
July 1, 2006 (the "Pooling and Servicing Agreement"), by and among
Securitized Asset Backed Receivables LLC, as depositor, Xxxxx Fargo
Bank, National Association, as trustee (the "Trustee"), HomEq
Servicing Corporation, as servicer (the "Servicer"), OfficeTiger
Global Real Estate Services Inc., as loan performance advisor, and
Fremont Investment & Loan, as responsible party
I, [identify the certifying individual], certify that:
1. I have reviewed this annual report on Form 10-K ("Annual
Report"), and all reports on Form 10-D (collectively with this Annual Report,
the "Reports") required to be filed in respect of period covered by this Annual
Report, of the Trust;
2. Based on my knowledge, the 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 Annual 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 Annual Report is included in the Reports;
4. Based on my knowledge and the compliance statements required in
this Annual Report under Item 1123 of Regulation AB, and except as disclosed in
the Reports, the Servicer has fulfilled its obligations under the Pooling and
Servicing Agreement in all material respects; and
5. All of the reports on assessment of compliance with servicing
criteria for asset-backed securities and their related attestation reports on
assessment of compliance with servicing criteria required to be included in this
Annual 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 Annual Report,
except as otherwise disclosed in this Annual Report. Any material instances of
non-compliance described in such reports have been disclosed in this Annual
Report.
In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties: the Trustee
and the Servicer.
Date:
By:____________________________________
Name:
Title:
EXHIBIT M
FORM OF CERTIFICATION TO BE
PROVIDED BY THE TRUSTEE TO DEPOSITOR
Re: Securitized Asset Backed Receivables LLC Trust 2006-FR3 (the
"Trust"), Mortgage Pass-Through Certificates, Series 2006-FR3,
issued pursuant to the Pooling and Servicing Agreement, dated as
July 1, 2006 (the "Pooling and Servicing Agreement"), by and among
Securitized Asset Backed Receivables LLC, as depositor (the
"Depositor"), Xxxxx Fargo Bank, National Association, as trustee
(the "Trustee"), HomEq Servicing Corporation, as servicer (the
"Servicer"), OfficeTiger Global Real Estate Services Inc., as loan
performance advisor, and Fremont Investment & Loan, as responsible
party
The Trustee hereby certifies to the Depositor and its 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 [___] (the "Annual Report"), and all reports 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. Based on my knowledge, the 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
the Annual Report;
3. Based on my knowledge, the distribution information required to
be provided by the Trustee under the Pooling and Servicing Agreement for
inclusion in the Reports is included in the Reports;
4. I am responsible for reviewing the activities performed by the
Trustee under the Pooling and Servicing Agreement, and based on my knowledge and
the compliance review conducted in preparing the compliance statement of the
Trustee required in the Annual Report under Item 1123 of Regulation AB, and
except as disclosed in the Reports, the Trustee has fulfilled its obligations
under the Pooling and Servicing Agreement in all material respects; and
5. The report on assessment of compliance with servicing criteria
applicable to the Trustee for asset-backed securities of the Trustee and each
Subcontractor utilized by 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.
Date:
By:____________________________________
Name:
Title:
EXHIBIT N
FORM OF SERVICER'S CERTIFICATION
TO BE PROVIDED TO DEPOSITOR
Re: Securitized Asset Backed Receivables LLC Trust 2006-FR3 (the
"Trust"), Mortgage Pass-Through Certificates, Series 2006-FR3,
issued pursuant to the Pooling and Servicing Agreement, dated as
July 1, 2006 (the "Pooling and Servicing Agreement"), by and among
Securitized Asset Backed Receivables LLC, as depositor (the
"Depositor"), Xxxxx Fargo Bank National Association, as trustee (the
"Trustee"), HomEq Servicing Corporation, as servicer (the
"Servicer"), OfficeTiger Global Real Estate Services Inc., as loan
performance advisor and Fremont Investment & Loan, as responsible
party
I, [identify the certifying individual], certify 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 the
servicer compliance statement of the Servicer and the compliance statements of
each Subservicer, if any, engaged by the Servicer provided to the Depositor and
the Trustee for the 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
Subservicer 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, 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 the Compliance Statement of the Servicer and, if applicable, reviewing
each Compliance Statement of each Subservicer, if any, engaged by the Servicer,
and except as disclosed in such Compliance Statement[(s)], the Servicer
[(directly and through its Subservicers, if any)] has fulfilled its obligations
under the Pooling and Servicing Agreement in all material respects.
5. Each Servicing Assessment of the Servicer and of each Subservicer
or Subcontractor, if any, engaged or utilized by the Servicer and its related
Attestation Report required to be included in the Annual Report in accordance
with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 has
been provided to the Depositor and the Trustee. Any material instances of
non-compliance are described in any such Servicing Assessment or Attestation
Report.
Date:
By:____________________________
Name:
Title:
EXHIBIT O
SPONSOR REPRESENTATION LETTER
SIDE LETTER
THIS AGREEMENT (the "Agreement"), dated as of August 3, 2006 is
entered into between Xxxxxx Funding LLC ("Xxxxxx") and Securitized Asset Backed
Receivables LLC (the "Depositor").
RECITALS
WHEREAS, pursuant to the Pooling and Servicing Agreement, dated as
of July 1, 2006 (the "Pooling Agreement"), among the Depositor, HomEq Servicing
Corporation, as servicer, OfficeTiger Global Real Estate Services Inc., as loan
performance advisor, Fremont Investment & Loan, as responsible party (the
"Responsible Party"), and Xxxxx Fargo Bank, National Association, as trustee
(the "Trustee"), the Responsible Party has made certain representations and
warranties regarding the Mortgage Loans to the Depositor and the Trustee.
WHEREAS, pursuant to the Xxxx of Sale, dated as of August 3, 2006
(the "Xxxx of Sale"), between the Depositor and Xxxxxx, Xxxxxx sold the Mortgage
loans to the Depositor.
NOW, THEREFORE, the parties hereto agree as follows:
Definitions
Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Pooling Agreement.
Representations and Warranties of Xxxxxx
Xxxxxx hereby represents to the Depositor that with respect to each
representation and warranty with respect to any Mortgage Loan made by the
Responsible Party under Schedule III of the Pooling Agreement that is made as of
the Servicing Transfer Date: (i) for the representations and warranties set
forth in paragraphs (a), (y) and (mm), to the best of its knowledge, no event
has occurred since the Servicing Transfer Date that would render such
representations and warranties to be untrue in any material respect as of the
Closing Date, and (ii) notwithstanding the representation and warranty set forth
in paragraph (jj), no event has occurred since the Servicing Transfer Date that
would render such representations and warranties to be untrue in any material
respect as of the Closing Date.
Repurchase of Mortgage Loans
A breach by Xxxxxx of its representations and warranties above will
be deemed automatically to materially and adversely affect the value of such
Mortgage Loan and the interests of the Trustee and Certificateholders in such
Mortgage Loan. Xxxxxx shall repurchase each such Mortgage Loan within 60 days of
the earlier of discovery or receipt of notice of breach with respect to each
such Mortgage Loan.
Third-Party Beneficiary
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. The
Trustee and its successors and assigns under the Pooling Agreement shall be a
third-party beneficiary to the provisions of this Agreement, and shall be
entitled to rely upon and directly to enforce such provisions of this Agreement,
except as expressly limited by the terms hereof. Except as expressly stated
otherwise herein or in the Pooling Agreement, any right of the Trustee to
direct, appoint, consent to, approve of, or take any action under this
Agreement, shall be a right exercised by the Trustee in its sole and absolute
discretion.
Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Counterparts
This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original, but all of which
counterparts shall together constitute but one and the same instrument.
Amendments
This Agreement may be amended from time to time by Xxxxxx and the
Depositor, with the prior written consent of the Trustee.
Executed as of the day and year first above written.
XXXXXX FUNDING LLC
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Director
SECURITIZED ASSET BACKED
RECEIVABLES LLC
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Director
EXHIBIT P
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Trustee], [the Servicer],
[each Subservicer] and [each Subcontractor] shall address, at a minimum, the
criteria identified as below as "Applicable Servicing Criteria":
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APPLICABLE SERVICING
SERVICING CRITERIA CRITERIA
------------------------------------------------------------------------------------------------------------------------------------
Reference Criteria
------------------------------------------------------------------------------------------------------------------------------------
General Servicing Considerations
------------------------------------------------------------------------------------------------------------------------------------
Policies and procedures are instituted to monitor any performance or other Trustee/Servicer
1122(d)(1)(i) triggers and events of default in accordance with the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
If any material servicing activities are outsourced to third parties, policies Trustee/Servicer
and procedures are instituted to monitor the third party's performance and
1122(d)(1)(ii) compliance with such servicing activities.
------------------------------------------------------------------------------------------------------------------------------------
Any requirements in the transaction agreements to maintain a back-up servicer N/A
1122(d)(1)(iii) for the mortgage loans are maintained.
------------------------------------------------------------------------------------------------------------------------------------
A fidelity bond and errors and omissions policy is in effect on the party Servicer
participating in the servicing function throughout the reporting period in the
amount of coverage required by and otherwise in accordance with the terms of
1122(d)(1)(iv) the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Cash Collection and Administration
------------------------------------------------------------------------------------------------------------------------------------
Payments on mortgage loans are deposited into the appropriate custodial bank Servicer/Trustee
accounts and related bank clearing accounts no more than two business days
following receipt, or such other number of days specified in the transaction
1122(d)(2)(i) agreements.
------------------------------------------------------------------------------------------------------------------------------------
Disbursements made via wire transfer on behalf of an obligor or to an investor Servicer/Trustee
1122(d)(2)(ii) are made only by authorized personnel.
------------------------------------------------------------------------------------------------------------------------------------
Advances of funds or guarantees regarding collections, cash flows or Servicer
distributions, and any interest or other fees charged for such advances, are
1122(d)(2)(iii) made, reviewed and approved as specified in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
The related accounts for the transaction, such as cash reserve accounts or Servicer/Trustee
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth in the
1122(d)(2)(iv) transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Each custodial account is maintained at a federally insured depository Servicer/Trustee
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
1122(d)(2)(v) requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.
------------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access. Servicer/Trustee
------------------------------------------------------------------------------------------------------------------------------------
Reconciliations are prepared on a monthly basis for all asset-backed Servicer/Trustee
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
1122(d)(2)(vii) other number of days specified in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Investor Remittances and Reporting
------------------------------------------------------------------------------------------------------------------------------------
Reports to investors, including those to be filed with the Commission, are Trustee/Servicer
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
1122(d)(3)(i) mortgage loans serviced by the Servicer.
------------------------------------------------------------------------------------------------------------------------------------
Amounts due to investors are allocated and remitted in accordance with Trustee/Servicer
timeframes, distribution priority and other terms set forth in the transaction
1122(d)(3)(ii) agreements.
------------------------------------------------------------------------------------------------------------------------------------
Disbursements made to an investor are posted within two business days to the Trustee/Servicer
Servicer's investor records, or such other number of days specified in the
1122(d)(3)(iii) transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Amounts remitted to investors per the investor reports agree with cancelled Trustee/Servicer
1122(d)(3)(iv) checks, or other form of payment, or custodial bank statements.
------------------------------------------------------------------------------------------------------------------------------------
Pool Asset Administration
------------------------------------------------------------------------------------------------------------------------------------
Collateral or security on mortgage loans is maintained as required by the Trustee/Servicer
1122(d)(4)(i) transaction agreements or related mortgage loan documents.
------------------------------------------------------------------------------------------------------------------------------------
Mortgage loan and related documents are safeguarded as required by the Trustee/Servicer
1122(d)(4)(ii) transaction agreements
------------------------------------------------------------------------------------------------------------------------------------
Any additions, removals or substitutions to the asset pool are made, reviewed Servicer
and approved in accordance with any conditions or requirements in the
1122(d)(4)(iii) transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Payments on mortgage loans, including any payoffs, made in accordance with the Servicer
related mortgage loan 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 mortgage
1122(d)(4)(iv) loan documents.
------------------------------------------------------------------------------------------------------------------------------------
The Servicer's records regarding the mortgage loans agree with the Servicer's Servicer
1122(d)(4)(v) records with respect to an obligor's unpaid principal balance.
------------------------------------------------------------------------------------------------------------------------------------
Changes with respect to the terms or status of an obligor's mortgage loans Servicer
(e.g., loan modifications or re-agings) are made, reviewed and approved by
authorized personnel in accordance with the transaction agreements and related
1122(d)(4)(vi) pool asset documents.
------------------------------------------------------------------------------------------------------------------------------------
Loss mitigation or recovery actions (e.g., forbearance plans, modifications and Servicer
deeds in lieu of foreclosure, foreclosures and repossessions, as applicable)
are initiated, conducted and concluded in accordance with the timeframes or
1122(d)(4)(vii) other requirements established by the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Records documenting collection efforts are maintained during the period a Servicer
mortgage loan 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 mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency is deemed
1122(d)(4)(viii) temporary (e.g., illness or unemployment).
------------------------------------------------------------------------------------------------------------------------------------
Adjustments to interest rates or rates of return for mortgage loans with Servicer
1122(d)(4)(ix) variable rates are computed based on the related mortgage loan documents.
------------------------------------------------------------------------------------------------------------------------------------
Regarding any funds held in trust for an obligor (such as escrow accounts): (A) Servicer
such funds are analyzed, in accordance with the obligor's mortgage loan
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 mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar days of full
repayment of the related mortgage loans, or such other number of days specified
1122(d)(4)(x) in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Payments made on behalf of an obligor (such as tax or insurance payments) are Servicer
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,
1122(d)(4)(xi) or such other number of days specified in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Any late payment penalties in connection with any payment to be made on behalf Servicer
of an obligor are paid from the servicer's funds and not charged to the
1122(d)(4)(xii) obligor, unless the late payment was due to the obligor's error or omission.
------------------------------------------------------------------------------------------------------------------------------------
Disbursements made on behalf of an obligor are posted within two business days Servicer
to the obligor's records maintained by the servicer, or such other number of
1122(d)(4)(xiii) days specified in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Delinquencies, charge-offs and uncollectible accounts are recognized and Servicer/Trustee
1122(d)(4)(xiv) recorded in accordance with the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Any external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth in the Trustee, if applicable.
1122(d)(4)(xv) transaction agreements.
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EXHIBIT Q
-------------------------------------------------------------------------------------------------------------------------
ADDITIONAL FORM 10-D DISCLOSURE
-------------------------------------------------------------------------------------------------------------------------
Item on Form 10-D Party Responsible
-------------------------------------------------------------------------------------------------------------------------
Item 1: Distribution and Pool Performance Information
-------------------------------------------------------------------------------------------------------------------------
Information included in the [Monthly Statement] Servicer
Trustee
-------------------------------------------------------------------------------------------------------------------------
Any information required by 1121 which is NOT included on the Depositor
[Monthly Statement]
-------------------------------------------------------------------------------------------------------------------------
Item 2: Legal Proceedings
Any legal proceeding pending against the following entities or
their respective property, that is material to Certificateholders,
including any proceeding known to be contemplated by governmental
authorities:
-------------------------------------------------------------------------------------------------------------------------
Issuing Entity Trustee
Servicer
Depositor
-------------------------------------------------------------------------------------------------------------------------
Depositor Depositor
-------------------------------------------------------------------------------------------------------------------------
Trustee Trustee
-------------------------------------------------------------------------------------------------------------------------
Sponsor Depositor
-------------------------------------------------------------------------------------------------------------------------
Servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
1110(b) Originator Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1108(a)(2) Servicer (other than the Servicer or Trustee) Servicer
-------------------------------------------------------------------------------------------------------------------------
Any other party contemplated by 1100(d)(1) Depositor
-------------------------------------------------------------------------------------------------------------------------
Item 3: Sale of Securities and Use of Proceeds Depositor
Information from Item 2(a) of Part II of Form 10-Q:
With respect to any sale of securities by the sponsor, depositor
or issuing entity, that are backed by the same asset pool or are
otherwise issued by the issuing entity, whether or not registered,
provide the sales and use of proceeds information in Item 701 of
Regulation S-K. Pricing information can be omitted if securities
were not registered.
-------------------------------------------------------------------------------------------------------------------------
Item 4: Defaults Upon Senior Securities Trustee
Information from Item 3 of Part II of Form 10-Q:
Report the occurrence of any Event of Default (after expiration of
any grace period and provision of any required notice)
-------------------------------------------------------------------------------------------------------------------------
Item 5: Submission of Matters to a Vote of Security Holders Trustee
Information from Item 4 of Part II of Form 10-Q
-------------------------------------------------------------------------------------------------------------------------
Item 6: Significant Obligors of Pool Assets N/A
Item 1112(b) - Significant Obligor Financial Information*
-------------------------------------------------------------------------------------------------------------------------
*This information need only be reported on the Form 10-D for the
distribution period in which updated information is required
pursuant to the Item.
-------------------------------------------------------------------------------------------------------------------------
Item 7: Significant Enhancement Provider Information
Item 1114(b)(2) - Credit Enhancement Provider Financial
Information*
-------------------------------------------------------------------------------------------------------------------------
Determining applicable disclosure threshold Depositor
-------------------------------------------------------------------------------------------------------------------------
Requesting required financial information (including any required Depositor
accountants' consent to the use thereof) or effecting
incorporation by reference
-------------------------------------------------------------------------------------------------------------------------
Item 1115(b) - Derivative Counterparty Financial Information*
-------------------------------------------------------------------------------------------------------------------------
Determining current maximum probable exposure Depositor
-------------------------------------------------------------------------------------------------------------------------
Determining current significance percentage Depositor
-------------------------------------------------------------------------------------------------------------------------
Requesting required financial information (including any required Depositor
accountants' consent to the use thereof) or effecting
incorporation by reference
-------------------------------------------------------------------------------------------------------------------------
*This information need only be reported on the Form 10-D for the
distribution period in which updated information is required
pursuant to the Items.
-------------------------------------------------------------------------------------------------------------------------
Item 8: Other Information
-------------------------------------------------------------------------------------------------------------------------
Disclose any information required to be reported on Form 8-K Any party to the Agreement responsible for the
during the period covered by the Form 10-D but not reported applicable Form 8-K Disclosure item
-------------------------------------------------------------------------------------------------------------------------
Item 9: Exhibits
-------------------------------------------------------------------------------------------------------------------------
Monthly Statement to Certificateholders Trustee
-------------------------------------------------------------------------------------------------------------------------
Exhibits required by Item 601 of Regulation S-K, such as material Depositor
agreements
-------------------------------------------------------------------------------------------------------------------------
EXHIBIT R
-------------------------------------------------------------------------------------------------------------------------
ADDITIONAL FORM 10-K DISCLOSURE
-------------------------------------------------------------------------------------------------------------------------
Item on Form 10-K Party Responsible
-------------------------------------------------------------------------------------------------------------------------
Item 9B: Other Information Any party to this Agreement responsible for
Disclose any information required to be reported on Form 8-K disclosure items on Form 8-K
during the fourth quarter covered by the Form 10-K but not
reported
-------------------------------------------------------------------------------------------------------------------------
Item 15: Exhibits, Financial Statement Schedules Trustee
Depositor
-------------------------------------------------------------------------------------------------------------------------
Reg AB Item 1112(b): Significant Obligors of Pool Assets
-------------------------------------------------------------------------------------------------------------------------
Significant Obligor Financial Information* N/A
-------------------------------------------------------------------------------------------------------------------------
*This information need only be reported on the Form 10-K if
updated information is required pursuant to Item 1112(b).
-------------------------------------------------------------------------------------------------------------------------
Reg AB Item 1114(b)(2): Credit Enhancement Provider Financial
Information
-------------------------------------------------------------------------------------------------------------------------
Determining applicable disclosure threshold Depositor
-------------------------------------------------------------------------------------------------------------------------
Requesting required financial information (including any required Depositor
accountants' consent to the use thereof) or effecting
incorporation by reference
-------------------------------------------------------------------------------------------------------------------------
* This information need only be reported on the Form 10-K if
updated information is required pursuant to the Item.
-------------------------------------------------------------------------------------------------------------------------
Reg AB Item 1115(b): Derivative Counterparty Financial
Information
-------------------------------------------------------------------------------------------------------------------------
Determining current maximum probable exposure Depositor
-------------------------------------------------------------------------------------------------------------------------
Determining current significance percentage Depositor
-------------------------------------------------------------------------------------------------------------------------
Requesting required financial information (including any required Depositor
accountants' consent to the use thereof) or effecting
incorporation by reference
-------------------------------------------------------------------------------------------------------------------------
* This information need only be reported on the Form 10-K if
updated information is required pursuant to the Item.
-------------------------------------------------------------------------------------------------------------------------
Reg AB Item 1117: Legal Proceedings
-------------------------------------------------------------------------------------------------------------------------
Any legal proceeding pending against the following entities or
their respective property, that is material to Certificateholders,
including any proceeding known to be contemplated by governmental
authorities:
-------------------------------------------------------------------------------------------------------------------------
Issuing Entity Trustee, Servicer and Depositor
-------------------------------------------------------------------------------------------------------------------------
Depositor Depositor
-------------------------------------------------------------------------------------------------------------------------
Trustee Trustee
-------------------------------------------------------------------------------------------------------------------------
Sponsor Depositor
-------------------------------------------------------------------------------------------------------------------------
Servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
1110(b) Originator Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1108(a)(2) Servicer (other than the Servicer or Trustee) Servicer
-------------------------------------------------------------------------------------------------------------------------
Any other party contemplated by 1100(d)(1) Depositor
-------------------------------------------------------------------------------------------------------------------------
Reg AB Item 1119: Affiliations and Relationships
-------------------------------------------------------------------------------------------------------------------------
Whether (a) the Sponsor (Seller), Depositor or Issuing Entity is Depositor as to (a)
an affiliate of the following parties, and (b) to the extent known
and material, any of the following parties are affiliated with one
another:
-------------------------------------------------------------------------------------------------------------------------
Servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
Trustee Trustee
-------------------------------------------------------------------------------------------------------------------------
Any other 1108(a)(3) servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
Any 1110 Originator Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1112(b) Significant Obligor Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1114 Credit Enhancement Provider Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1115 Derivative Counterparty Provider Depositor
-------------------------------------------------------------------------------------------------------------------------
Any other 1101(d)(1) material party Depositor
-------------------------------------------------------------------------------------------------------------------------
Whether there are any "outside the ordinary course business Depositor as to (a)
arrangements" other than would be obtained in an arm's length
transaction between (a) the Sponsor (Seller), Depositor or Issuing
Entity on the one hand, and (b) any of the following parties (or
their affiliates) on the other hand, that exist currently or
within the past two years and that are material to a
Certificateholder's understanding of the Certificates:
-------------------------------------------------------------------------------------------------------------------------
Servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
Trustee Trustee
-------------------------------------------------------------------------------------------------------------------------
Any other 1108(a)(3) servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
Any 1110 Originator Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1112(b) Significant Obligor Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1114 Credit Enhancement Provider Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1115 Derivative Counterparty Provider Depositor
-------------------------------------------------------------------------------------------------------------------------
Any other 1101(d)(1) material party Depositor
-------------------------------------------------------------------------------------------------------------------------
Whether there are any specific relationships involving the Depositor as to (a)
transaction or the pool assets between (a) the Sponsor (Seller),
Depositor or Issuing Entity on the one hand, and (b) any of the
following parties (or their affiliates) on the other hand, that
exist currently or within the past two years and that are
material:
-------------------------------------------------------------------------------------------------------------------------
Servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
Trustee Trustee
-------------------------------------------------------------------------------------------------------------------------
Any other 1108(a)(3) servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
Any 1110 Originator Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1112(b) Significant Obligor Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1114 Credit Enhancement Provider Depositor
-------------------------------------------------------------------------------------------------------------------------
Any 1115 Derivative Counterparty Provider Depositor
-------------------------------------------------------------------------------------------------------------------------
Any other 1101(d)(1) material party Depositor
-------------------------------------------------------------------------------------------------------------------------
EXHIBIT S
-------------------------------------------------------------------------------------------------------------------------
FORM 8-K DISCLOSURE INFORMATION
-------------------------------------------------------------------------------------------------------------------------
Item on Form 8-K Party Responsible
-------------------------------------------------------------------------------------------------------------------------
Item 1.01- Entry into a Material Definitive Agreement The party to this Agreement entering into
such material definitive agreement
Disclosure is required regarding entry into or amendment of any
definitive agreement that is material to the securitization, even
if depositor is not a party.
Examples: servicing agreement, custodial agreement.
Note: disclosure not required as to definitive agreements
that are fully disclosed in the prospectus
-------------------------------------------------------------------------------------------------------------------------
Item 1.02- Termination of a Material Definitive Agreement The party to this Agreement requesting termination
of a material definitive agreement
Disclosure is required regarding termination of any definitive
agreement that is material to the securitization (other than
expiration in accordance with its terms), even if depositor is not
a party.
Examples: servicing agreement, custodial agreement.
-------------------------------------------------------------------------------------------------------------------------
Item 1.03- Bankruptcy or Receivership Depositor
Disclosure is required regarding the bankruptcy or receivership,
with respect to any of the following:
-------------------------------------------------------------------------------------------------------------------------
Sponsor (Seller) Depositor
-------------------------------------------------------------------------------------------------------------------------
Depositor Depositor
-------------------------------------------------------------------------------------------------------------------------
Servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
Affiliated Servicer Servicer
-------------------------------------------------------------------------------------------------------------------------
Other Servicer servicing 20% or more of the pool assets at the Servicer
time of the report
-------------------------------------------------------------------------------------------------------------------------
Other material servicers Servicer
-------------------------------------------------------------------------------------------------------------------------
Trustee Trustee
-------------------------------------------------------------------------------------------------------------------------
Significant Obligor Depositor
-------------------------------------------------------------------------------------------------------------------------
Credit Enhancer (10% or more) Depositor
-------------------------------------------------------------------------------------------------------------------------
Derivative Counterparty Depositor
-------------------------------------------------------------------------------------------------------------------------
Item 2.04- Triggering Events that Accelerate or Increase a Direct Depositor
Financial Obligation or an Obligation under an Off-Balance Sheet Servicer
Arrangement Trustee
Includes an early amortization, performance trigger or other
event, including event of default, that would materially alter the
payment priority/distribution of cash flows/amortization schedule.
Disclosure will be made of events other than waterfall triggers
which are disclosed in the monthly statements to the
certificateholders.
-------------------------------------------------------------------------------------------------------------------------
Item 3.03- Material Modification to Rights of Security Holders Trustee/Responsible Party/
Depositor/Servicer
Disclosure is required of any material modification to documents
defining the rights of Certificateholders, including the Pooling
and Servicing Agreement.
-------------------------------------------------------------------------------------------------------------------------
Item 5.03- Amendments of Articles of Incorporation or Bylaws; Depositor
Change of Fiscal Year
Disclosure is required of any amendment "to the governing
documents of the issuing entity".
-------------------------------------------------------------------------------------------------------------------------
Item 6.01- ABS Informational and Computational Material Depositor
-------------------------------------------------------------------------------------------------------------------------
Item 6.02- Change of Servicer or Trustee Servicer/ Depositor /Trustee
Requires disclosure of any removal, replacement, substitution or
addition of any master servicer, affiliated servicer, other
servicer servicing 10% or more of pool assets at time of report,
other material servicers or trustee.
-------------------------------------------------------------------------------------------------------------------------
Reg AB disclosure about any new servicer or master servicer is Servicer/Depositor
also required.
-------------------------------------------------------------------------------------------------------------------------
Reg AB disclosure about any new Trustee is also required. Trustee
-------------------------------------------------------------------------------------------------------------------------
Item 6.03- Change in Credit Enhancement or External Support Depositor/Trustee
Covers termination of any enhancement in manner other than by its
terms, the addition of an enhancement, or a material change in the
enhancement provided. Applies to external credit enhancements as
well as derivatives.
-------------------------------------------------------------------------------------------------------------------------
Reg AB disclosure about any new enhancement provider is also Depositor
required.
-------------------------------------------------------------------------------------------------------------------------
Item 6.04- Failure to Make a Required Distribution Trustee
-------------------------------------------------------------------------------------------------------------------------
Item 6.05- Securities Act Updating Disclosure Depositor
If any material pool characteristic differs by 5% or more at the
time of issuance of the securities from the description in the
final prospectus, provide updated Reg AB disclosure about the
actual asset pool.
-------------------------------------------------------------------------------------------------------------------------
If there are any new servicers or originators required to be Depositor
disclosed under Regulation AB as a result of the foregoing,
provide the information called for in Items 1108 and 1110
respectively.
-------------------------------------------------------------------------------------------------------------------------
Item 7.01- Reg FD Disclosure Depositor
-------------------------------------------------------------------------------------------------------------------------
Item 8.01- Other Events Depositor
Any event, with respect to which information is not otherwise
called for in Form 8-K, that the registrant deems of importance
to certificateholders.
-------------------------------------------------------------------------------------------------------------------------
Item 9.01- Financial Statements and Exhibits Party responsible for reporting/disclosing
the financial statement or exhibit
-------------------------------------------------------------------------------------------------------------------------
EXHIBIT T
INTEREST RATE SWAP AGREEMENT
BARCLAYS BANK PLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000-000-0000
DATE: August 3, 2006
TO: Xxxxx Fargo Bank, National Association, not
individually, but solely as Trustee for Securitized
Asset Backed Receivables LLC Trust 2006-FR3, Mortgage
Pass-Through Certificates, Series 2006-FR3
ATTENTION: Client Manager - SABR 2006-FR3
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Barclays Bank PLC
TELEPHONE: 00(00) 000 00000
FACSIMILE: 00(00) 000 00000
SUBJECT: Fixed Income Derivatives Confirmation and Agreement
REFERENCE NUMBER: 1295289B
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 Barclays Bank PLC ("Barclays") and Xxxxx Fargo Bank,
National Association, not individually, but solely as Trustee ("Counterparty")
under the Pooling and Servicing Agreement, dated and effective as of July 1,
2006, among Securitized Asset Backed Receivables LLC, Fremont Invesment & Loan,
as Responsible Party, HomEq Servicing Corporation, as Servicer, Xxxxx Fargo
Bank, National Association, as Trustee, and OfficeTiger Global Real Estate
Services Inc., as Loan Performance Advisor (the "Pooling and Servicing
Agreement") for the Securitized Asset Backed Receivables LLC Trust 2006-FR3,
Mortgage Pass-Through Certificates, Series 2006-FR3. 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 attached hereto as
Exhibit B 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
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:
Notional Amount:................... With respect to any Calculation
Period, the amount set forth for
such period in Schedule I attached
hereto.
Trade Date:........................ August 3, 2006
Effective Date:.................... August 3, 2006
Termination Date:.................. April 25, 2011
Fixed Amount:
Fixed Rate Payer:............ Counterparty
Fixed Rate Payer
Payment Date:.............. Early Payment shall be applicable.
For each Calculation Period, the
Fixed Rate Payer Payment Date shall
be the first Business Day prior to
the related Fixed Rate Payer Period
End Date.
Fixed Rate Payer Period
End Dates:................. The 25th calendar day of each month
during the Term of this Transaction,
commencing August 25, 2006 and
ending on the Termination Date,
subject to No Adjustment.
Fixed Rate:.................. 5.548%
Fixed Amount:................ To be determined in accordance with
the following formula:
Fixed Rate * Notional Amount * Fixed
Rate Day Count Fraction.
Fixed Rate Day Count
Fraction:.................. 30/360
Floating Amounts:
Floating Rate Payer:......... Barclays
Floating Rate Payer
Payment Dates:............. Early Payment shall be applicable.
For each Calculation Period, the
Floating Rate Payer Payment Date
shall be the first Business Day
prior to the related Floating Rate
Payer Period End Date.
Floating Rate Payer
Period End Dates:.......... The 25th calendar day of each month
during the Term of this Transaction,
commencing August 25, 2006 and
ending on the Termination Date,
subject to adjustment in accordance
with the Business Day Convention.
Floating Rate Option:........ USD-LIBOR-BBA
Floating Amount:............. To be determined in accordance with
the following formula:
Floating Rate * Notional Amount *
Floating Rate Day Count Fraction.
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: Each party hereto is hereby advised and
acknowledges that the other party has engaged in (or refrained from
engaging in) substantial financial transactions and has taken (or
refrained from taking) other material actions in reliance upon the entry
by the parties into the Transaction being entered into on the terms and
conditions set forth herein and in the Confirmation relating to such
Transaction, as applicable. This paragraph shall be deemed repeated on the
trade date of each Transaction.
4. Provisions Deemed Incorporated in a Schedule to the ISDA Form Master
Agreement:
1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA
Form Master Agreement will apply to any Transaction.
2) Termination Provisions. For purposes of the ISDA Form Master
Agreement:
(a) "Specified Entity" is not applicable to Barclays or
Counterparty for any purpose.
(b) "Breach of Agreement" provision of Section 5(a)(ii) will not
apply to Barclays or Counterparty.
(c) "Credit Support Default" provisions of Section 5(a)(iii) will
not apply to Counterparty.
(d) "Misrepresentation" provisions of Section 5(a)(iv) will not
apply to Barclays or Counterparty.
(e) "Specified Transaction" is not applicable to Barclays or
Counterparty for any purpose, and, accordingly, Section
5(a)(v) shall not apply to Barclays or Counterparty.
(f) The "Cross Default" provisions of Section 5(a)(vi) will not
apply to Barclays or to Counterparty.
(g) The "Merger Without Assumption" provisions of Section
5(a)(viii) will not apply to Counterparty.
(h) The "Credit Event Upon Merger" provisions of Section 5(b)(iv)
will not apply to Barclays or Counterparty.
(i) With respect to Counterparty only, the "Bankruptcy" provision
of Section 5(a)(vii)(2) will not apply to Counterparty.
(j) The "Automatic Early Termination" provision of Section 6(a)
will not apply to Barclays or to Counterparty; provided that,
if the Event of Default specified in Section 5(a)(vii)(1),
(3), (4), (5), (6) or, to the extent analogous thereto, (8) is
governed by a system of law that does not permit termination
to take place after the occurrence of the relevant Event of
Default with respect to a party, then the Automatic Early
Termination provision of Section 6(a) will apply to such
party.
(k) 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.
(l) "Termination Currency" means United States Dollars.
3) Tax Representations.
Payer Representations. For the purpose of Section 3(e) of the ISDA
Form Master Agreement, Barclays and Counterparty make the following
representations:
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of
any Relevant Jurisdiction to make any deduction or withholding
for or on account of any Tax from any payment (other than
interest under Section 2(e), 6(d)(ii) or 6(e) of the ISDA Form
Master Agreement) to be made by it to the other party under
this Agreement. In making this representation, it may rely on
(i) the accuracy of any representations made by the other
party pursuant to Section 3(f) of the ISDA Form Master
Agreement, (ii) the satisfaction of the agreement contained in
Section 4(a)(i) or 4(a)(iii) of the ISDA Form Master Agreement
and the accuracy and effectiveness of any document provided by
the other party pursuant to Section 4(a)(i) or 4(a)(iii) of
the ISDA Form Master Agreement and (iii) the satisfaction of
the agreement of the other party contained in Section 4(d) of
the ISDA Form Master Agreement, provided that it shall not be
a breach of this representation where reliance is placed on
clause (ii) and the other party does not deliver a form or
document under Section 4(a)(iii) by reason of material
prejudice of its legal or commercial position.
Payee Representations. (i) For the purpose of Section 3(f) of the
ISDA Form Master Agreement, Barclays makes the following
representations:
(a) Barclays is duly incorporated and validly existing as a public
company with liability under English law.
(b) Barclays is fully eligible for the benefits of the "Business
Profits" or "Industrial and Commercial Profits" provision, as
the case may be, the "Interest" provision or the "Other
Income" provision (if any) of the Specified Treaty with
respect to any payment described in such provisions and
received or to be received by it in connection with this
Agreement and no such payment is attributable to a trade or
business carried on by it through a permanent establishment in
the Specified Jurisdiction.
If such representation applies, then:
"Specified Treaty" means, with respect to a Transaction, the
Convention for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income
on Capital Gains, U.S.-U.K. (effective March 31, 2003); and
"Specified Jurisdiction" means United States of America
(c) Barclays is a "non-U.S. branch of a foreign person" for
purposes of section 1.1441-4(a)(3)(ii) and a "foreign person"
for purposes of section 1.6041-4(a)(4) of the United States
Treasury Regulations.
(ii) The following representation applies to Counterparty:
Counterparty represents that it is trustee of the trust formed
under the Pooling and Servicing Agreement and is a "United
States person" as such term is defined in Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended.
4) The ISDA Form Master Agreement is hereby amended as follows:
(a) The word "third" shall be replaced by the word "second" in the
third line of Section 5(a)(i) of the ISDA Form Master
Agreement;
5) Documents to be Delivered. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
Party required Form/Document/ Date by which
to deliver document Certificate to be delivered
--------------------------------------------------------------------------------
Barclays A correct, complete and (i) Before the first
executed U.S. Internal Payment Date under
Revenue Service Form this Agreement,
W-8BEN, or any (ii) before December 31
successor thereto, of each third
including appropriate succeeding calendar
attachments, that year, (iii) promptly
eliminates U.S. federal upon reasonable demand
withholding tax and by Counterparty, and
backup withholding tax (iv) promptly upon
on payments under this learning that any such
Agreement. Form previously
provided by Barclays
has become obsolete or
incorrect.
--------------------------------------------------------------------------------
Counterparty A complete and executed (i) Before the first
U.S. Internal Revenue Payment Date under this
Service Form W-9 (or any Agreement,
successor thereto) that (ii) promptly upon
eliminates U.S. federal reasonable demand by
backup withholding tax Barclays, and
on payments under this (iii) promptly upon
Agreement. learning that any such
form previously
provided by
Counterparty has become
obsolete or incorrect.
(2) Other documents to be delivered are:
Covered by
Party required to Form/Document/ Date by which Section 3(d)
deliver document Certificate to be delivered Representation
--------------------------------------------------------------------------------
Barclays and the Any documents Upon the Yes
Counterparty required by the execution and
receiving party to delivery of this
evidence the Agreement and
authority of the such Confirmation
delivering party or
its Credit Support
Provider, if any, for
it to execute and
deliver this
Agreement, any
Confirmation, and any
Credit Support
Documents to which it
is a party, and to
evidence the
authority of the
delivering party or
its Credit Support
Provider to perform
its obligations under
this Agreement, such
Confirmation and/or
Credit Support
Document, as the case
may be
Barclays and the A certificate of an Upon the Yes
Counterparty authorized officer of execution and
the party, as to the delivery of this
incumbency and Agreement and
authority of the such Confirmation
respective officers
of the party signing
this Agreement, any
relevant Credit
Support Document, or
any Confirmation, as
the case may be
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of the
ISDA Form Master Agreement:
Address for notices or communications to Barclays:
Address: 0 Xxx Xxxxx Xxxxxxxxx
Xxxxxx Xxxxx X00 0XX
Attention: Swap Desk
Facsimile: 00(00) 000 00000
Telephone: 00(00) 000 00000
(For all purposes)
Address for notices or communications to the Counterparty:
Address: Xxxxx Fargo Bank, National Association
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Client Manager - SABR 2006-FR3
Facsimile: 000-000-0000
Phone: 000-000-0000
(For all purposes)
(b) Process Agent. For the purpose of Section 13(c):
Barclays 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 Barclays nor the Counterparty have any
Offices other than as set forth in the Notices Section and
Barclays 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:
Barclays is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Barclays.
(f) Credit Support Document. Not applicable with respect to the
Counterparty. With respect to Barclays, the Credit Support
Annex by and between the parties hereto dated as of a date
even herewith shall be a Credit Support Document in such case
that Barclays elects to post collateral pursuant to Section 12
hereof.
(g) Credit Support Provider.
Barclays: 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 Obligations Law Sections
5-1401 and 5-1402.
(i) Severability. If any term, provision, covenant, or condition
of this Agreement, or the application thereof to any party or
circumstance, shall be held to be invalid or unenforceable (in
whole or in part) for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Agreement had been executed
with the invalid or unenforceable portion eliminated, so long
as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to
the subject matter of this Agreement and the deletion of such
portion of this Agreement will not substantially impair the
respective benefits or expectations of the parties.
The parties shall endeavor to engage in good faith
negotiations to replace any invalid or unenforceable term,
provision, covenant or condition with a valid or enforceable
term, provision, covenant or condition, the economic effect of
which comes as close as possible to that of the invalid or
unenforceable term, provision, covenant or condition.
(j) 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. It is expressly understood and agreed by the
parties hereto that insofar as this Confirmation is executed
by the Trustee (i) this Confirmation is executed and delivered
by Xxxxx Fargo Bank, 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 upon and
vested in it, and pursuant to instructions set for the
therein, (ii) each of the representations, undertakings and
agreements herein made on the part of Securitized Asset Backed
Receivables LLC Trust 2006-FR3 is made and intended not as a
personal representation, undertaking or agreement by Xxxxx
Fargo Bank, National Association but is made and intended for
the purposes of binding only Securitized Asset Backed
Receivables LLC Trust 2006-FR3, (iii) nothing herein contained
shall be construed as imposing any liability upon Xxxxx Fargo
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 hereto and by any Person claiming by, through or
under the parties hereto, and (iv) under no circumstances
shall Xxxxx Fargo Bank, National Association in its individual
capacity be personally liable for the payment of any
indebtedness or expenses or be personally liable for the
breach or failure of any obligation, representation, warranty
or covenant made or undertaken under this Confirmation or any
other related documents.
(m) Proceedings. Barclays shall not institute against or cause any
other person to institute against, or join any other person in
instituting against, Securitized Asset Backed Receivables LLC
Trust 2006-FR3 or Xxxxx Fargo Bank, National Association, not
individually, but solely as Trustee, 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
(or, if longer, the applicable preference period) following
payment in full of the Certificates (as defined below).
7) "Affiliate" Barclays and Counterparty shall be deemed to not 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.
Subject to Section 4(6)(l) of this Agreement, each party
represents to the other party on each date when it enters into
a Transaction that:
(1) Nonreliance. It is not relying on any statement or
representation of the other party regarding the
Transaction (whether written or oral), other than the
representations expressly made in this Agreement or the
Confirmation in respect of that Transaction.
(2) Evaluation and Understanding.
(i) Barclays is acting for its own account and Xxxxx
Fargo Bank, National Association is acting as
Trustee under the Pooling and Servicing Agreement
and not for its own account. Each party has the
capacity to evaluate (internally or through
independent professional advice) the Transaction
and has made its own decision to enter into the
Transaction;
(ii) It understands the terms, conditions and risks of
the Transaction and is willing and able to accept
those terms and conditions and to assume those
risks, financially and otherwise; and
(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.
(4) Status of Parties. The other party is not acting as an
agent, fiduciary or advisor for it in respect of the
Transaction."
9) Set-off. Notwithstanding any other provision of this Agreement or
any other existing or future agreement, each party irrevocably
waives any and all rights it may have to set off, net, recoup or
otherwise withhold, suspend or condition payment or performance of
any obligation between it and the other party hereunder against any
obligation between it and the other party under any other
agreements. The provisions for Set-off set forth in Section 6(e) of
the Agreement shall not apply for purposes of this Transaction.
10) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction
shall be permitted by either party unless each of Standard & Poor's
Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc.
("S&P"), Xxxxx'x Investors Service, Inc. ("Moody's"), Dominion Bond
Rating Service ("DBRS") and Fitch Ratings ("Fitch", and together
with S&P, Moody's and DBRS, the "Rating Agencies"), has been
provided notice of the same and confirms in writing (including by
facsimile transmission) promptly after such notice is given that it
will not downgrade, qualify, withdraw or otherwise modify its
then-current rating of the Securitized Asset Backed Receivables LLC
Trust 2006-FR3, Mortgage Pass-Through Certificates, Series 2006-FR3
(the "Certificates"). In addition, the Trust may not assign or
transfer all or a portion of this Agreement without the prior
written consent of Barclays.
11) Additional Termination Events. The following Additional Termination
Events will apply, in each case with respect to the Counterparty as
the sole Affected Party (unless otherwise provided below):
(i) The Pooling and Servicing Agreement is amended without
the consent of Barclays and such amendment materially
and adversely affects the rights or interests of
Barclays.
(ii) Barclays fails to comply with the Rating Agency
Downgrade provisions as set forth in Section 12 below.
For all purposes of this Agreement, Barclays shall be
the sole Affected Party with respect to the occurrence
of a Termination Event described in this Section 11(ii).
(iii) Notice of the Servicer's intention to exercise its
option to purchase the Mortgage Loans pursuant to
Section 9.01 of the Pooling and Servicing Agreement is
given by the Trustee to Certificateholders pursuant to
Section 9.02 of the Pooling and Servicing Agreement.
Notwithstanding the foregoing, this clause shall not
constitute an Additional Termination Event until such
date as the notice of the Servicer's intention to
exercise its option to purchase the Mortgage Loans can
no longer be withdrawn or rescinded in accordance with
the Pooling and Servicing Agreement.
(iv) Upon the irrevocable direction to dissolve or otherwise
terminate the Trust following which all assets of the
Trust will be liquidated and the proceeds of such
liquidation distributed to the Certificateholders.
12) Rating Agency Downgrade. In the event that (x) any of the Rating
Agencies downgrades Barclays' rating below the Required Swap
Counterparty Rating (but Barclays has (i) a rating of at least
"BBB-" or "A-3", if applicable, by S&P, (ii) a rating of at least
"BBB-" or "F3", if applicable, by Fitch, or (iii) (x) if Barclays
has only a long-term rating, a rating of at least "A2" by Moody's,
or (y) if Barclays has a long-term rating and a short-term rating, a
rating of at least "A3" or "P2", if applicable, by Moody's) or, S&P,
Fitch or Moody's withdraws its ratings of Barclays, then within 30
days after such rating withdrawal or downgrade, Barclays shall,
subject to the Rating Agency Condition, at its own expense, either
(i) cause another entity to replace Barclays as party to this
Agreement that meets or exceeds the Required Swap Counterparty
Rating on terms substantially similar to this Agreement, (ii) obtain
a guaranty of, or a contingent agreement of, another person with the
Required Swap Counterparty Rating to honor Barclays' obligations
under this Agreement, (iii) collateralize its exposure to the Trust
pursuant to an ISDA Credit Support Annex substantially in the form
attached hereto as Exhibit A; provided that such ISDA Credit Support
Annex shall be made a credit support document for Barclays pursuant
to an amendment to this Agreement, or (iv) take other steps, if any,
to enable the Trust to satisfy the Rating Agency Condition.
Notwithstanding the foregoing, in the event that Barclays' long term
rating or short term rating is withdrawn by S&P, it shall, subject
to the Rating Agency Condition, cause another entity to replace
Barclays as party to this Agreement that meets or exceeds the
Required Swap Counterparty Rating on terms substantially similar to
this Agreement within 30 days from such ratings withdrawal. For
purposes of this provision, "Rating Agency Condition" means, with
respect to any particular proposed act or omission to act hereunder
that the party acting or failing to act must consult with each of
the Rating Agencies then providing a rating of the Certificates and
receive from each Rating Agency a prior written confirmation that
the proposed action or inaction would not cause a downgrade or
withdrawal of the then-current rating of the Certificates.
Notwithstanding the foregoing, within 10 days from the occurrence of
any of the following conditions, Barclays must use its commercially
reasonable efforts to find a party, subject to the Rating Agency
Condition, acceptable to Counterparty, which acceptance shall not be
unreasonably withheld, to whom all of Barclays' interests and
obligations under this Agreement shall be assigned at no cost to
Counterparty, and following which Barclays shall be released from
all further obligations under this Agreement:
(1) Barclays' Short Term rating is reduced below "A-3" by S&P
or Barclays' Long Term rating is reduced below "BBB-" by S&P;
(2) Barclays' Short Term rating is reduced below "F3" by Fitch
or Barclays' Long Term rating is reduced below "BBB-" by
Fitch; or
(3) (A) if Barclays has only a long-term rating, its rating is
reduced below "A2" by Moody's, or (B) if Barclays has a
long-term rating and a short-term rating, its rating is
reduced below "A3" or "P2", if applicable, by Moody's.
For purposes of this provision, "Required Swap Counterparty Rating"
means, with respect to a counterparty or entity guaranteeing the
obligations of such counterparty, (x) either (i) if such
counterparty or entity has only a long-term rating by Moody's, a
long-term senior, unsecured debt obligation rating, credit rating or
other similar rating (as the case may be, the "Long-Term Rating") of
at least "Aa3" by Moody's and if rated "Aa3" by Xxxxx'x is not on
negative credit watch by Moody's or (ii) if such counterparty or
entity has a Long-Term Rating and a short-term rating by Moody's, a
Long-Term Rating of at least "A1" by Moody's and a short-term rating
of "P-1" by Moody's and, in each case, such rating is not on
negative credit watch by Moody's, (y) (i) a short-term rating of at
least "A-1" by S&P or (ii) if such counterparty or entity does not
have a short-term rating by S&P, a Long-Term Rating of at least "A+"
by S&P and (z) (i) short-term rating of at least "F1" by Fitch or
(ii) if such counterparty or entity does not have a short-term
rating by Fitch, a Long-Term Rating of at least "A+" by Fitch.
NEITHER BARCLAYS BANK PLC NOR ANY SUBSIDIARY OR AFFILIATE OF
BARCLAYS BANK PLC OTHER THAN BARCLAYS IS AN OBLIGOR OR A CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
5. Account Details and Settlement Information:
Payments to Barclays:
Correspondent: Barclays Bank PLC New York
FEED: 000000000
Beneficiary: Barclays Swaps
Beneficiary Account: 000-00000-0
Payments to Counterparty:
Xxxxx Fargo Bank, National Association
San Francisco, CA
ABA No.: 000-000-000
Account No.: 0000000000
Account Name: Corporate Trust Clearing
FFC: 50938401, SABR 2006 FR3 Supplemental Interest
Account
The time of dealing will be confirmed by Barclays upon written request. Barclays
is regulated by the Financial Services Authority.
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 Barclays a facsimile of the fully-executed
Confirmation to Incoming Transaction Documentation, Barclays Capital Global OTC
Transaction Documentation & Management, Global Operations, Fax +(44)
00-0000-0000/6857, Tel x(00) 00-0000-0000/6904/6965 and mailing the signed copy
to Barclays Bank PLC, 5 Xxx Xxxxx Xxxxxxxxx, Xxxxxx Xxxxx, Xxxxxx X00 0XX,
Attention of Incoming Transaction Documentation, Barclays Capital Global OTC
Transaction Documentation & Management, Global Operation. This facsimile shall
be the only documentation in respect of the Transaction and accordingly no hard
copy versions of this Confirmation for this Transaction shall be provided unless
the Counterparty requests.
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,
BARCLAYS BANK PLC
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Authorised Signatory
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
SECURITIZED ASSET BACKED RECEIVABLES
LLC TRUST 2006-FR3
By: Xxxxx Fargo Bank, National
Association, not individually but
solely as Trustee for Securitized
Asset Backed Receivables LLC Trust
2006-FR3
By: /s/ Xxx Xxxxx
--------------------------------------
Name: Xxx Xxxxx
Title: Vice President
SCHEDULE I
Notional Amount
From and including To but excluding (USD)
------------------ ---------------- ---------------
Effective Date 8/25/2006 962,418,784.70
8/25/2006 9/25/2006 933,276,914.97
9/25/2006 10/25/2006 903,371,423.58
10/25/2006 11/25/2006 872,798,453.70
11/25/2006 12/25/2006 841,656,697.30
12/25/2006 1/25/2007 810,046,849.95
1/25/2007 2/25/2007 778,071,044.44
2/25/2007 3/25/2007 745,531,652.32
3/25/2007 4/25/2007 712,845,594.93
4/25/2007 5/25/2007 680,116,410.94
5/25/2007 6/25/2007 647,446,752.20
6/25/2007 7/25/2007 615,387,924.08
7/25/2007 8/25/2007 584,912,456.65
8/25/2007 9/25/2007 555,942,392.27
9/25/2007 10/25/2007 528,402,773.31
10/25/2007 11/25/2007 502,222,427.35
11/25/2007 12/25/2007 477,333,740.13
12/25/2007 1/25/2008 453,672,504.82
1/25/2008 2/25/2008 431,174,227.64
2/25/2008 3/25/2008 398,402,439.56
3/25/2008 4/25/2008 347,674,624.51
4/25/2008 5/25/2008 303,641,270.61
5/25/2008 6/25/2008 265,395,004.18
6/25/2008 7/25/2008 232,160,844.89
7/25/2008 8/25/2008 203,851,334.91
8/25/2008 9/25/2008 180,723,912.51
9/25/2008 10/25/2008 161,556,599.54
10/25/2008 11/25/2008 145,471,829.41
11/25/2008 12/25/2008 131,820,356.20
12/25/2008 1/25/2009 120,120,631.08
1/25/2009 2/25/2009 110,006,050.34
2/25/2009 3/25/2009 101,193,204.93
3/25/2009 4/25/2009 93,459,403.90
4/25/2009 5/25/2009 86,625,130.43
5/25/2009 6/25/2009 80,549,542.44
6/25/2009 7/25/2009 75,119,063.41
7/25/2009 8/25/2009 70,169,365.26
8/25/2009 9/25/2009 65,503,436.66
9/25/2009 10/25/2009 61,104,864.37
10/25/2009 11/25/2009 56,957,886.98
11/25/2009 12/25/2009 53,048,047.69
12/25/2009 1/25/2010 49,361,636.97
1/25/2010 2/25/2010 45,885,746.25
2/25/2010 3/25/2010 42,848,733.26
3/25/2010 4/25/2010 39,984,453.32
4/25/2010 5/25/2010 37,283,131.36
5/25/2010 6/25/2010 34,735,263.34
6/25/2010 7/25/2010 32,332,027.42
7/25/2010 8/25/2010 30,065,114.21
8/25/2010 9/25/2010 27,926,696.63
9/25/2010 10/25/2010 25,909,457.92
10/25/2010 11/25/2010 24,006,349.73
11/25/2010 12/25/2010 22,210,874.31
12/25/2010 1/25/2011 20,516,868.00
1/25/2011 2/25/2011 18,918,523.99
2/25/2011 3/25/2011 17,590,748.92
3/25/2011 4/25/2011 16,337,310.24
4/25/2011 5/25/2011 --
EXHIBIT A
Credit Support Annex
(Bilateral Form) (ISDA. Agreements Subject to New York Law Only)
ISDA(R)
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA Master Agreement deemed to be entered into
dated as of August 3, 2006
between
BARCLAYS BANK PLC SECURITIZED ASSET BACKED RECEIVABLES
LLC TRUST 2006-FR3
By: Xxxxx Fargo Bank, National
Association, not individually, but
solely as Trustee of Securitized
Asset Backed Receivables LLC Trust
2006-FR3
........................................ and ...................................
("Party A") ("Party B")
This Annex supplements, forms part of, and is subject to, the above-referenced
Agreement, is part of its Schedule and is a Credit Support Document under this
Agreement with respect to each party.
Accordingly, the parties agree as follows:--
Paragraph 1. Interpretation
(a) Definitions and Inconsistency. Capitalized terms not otherwise defined
herein or elsewhere in this Agreement have the meanings specified pursuant to
Paragraph 12, and all references in this Annex to Paragraphs are to Paragraphs
of this Annex. In the event of any inconsistency between this Annex and the
other provisions of this Schedule, this Annex will prevail, and in the event of
any inconsistency between Paragraph 13 and the other provisions of this Annex,
Paragraph 13 will prevail.
(b) Secured Party and Pledgor. All references in this Annex to the "Secured
Party" will be to either party when acting in that capacity and all
corresponding references to the "Pledgor" will be to the other party when acting
in that capacity; provided, however, that if Other Posted Support is held by a
party to this Annex, all references herein to that party as the Secured Party
with respect to that Other Posted Support will be to that party as the
beneficiary thereof and will not subject that support or that party as the
beneficiary thereof to provisions of law generally relating to security
interests and secured parties.
Paragraph 2. Security Interest
Each party, as the Pledgor, hereby pledges to the other party, as the Secured
Party, as security for its Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off against
all Posted Collateral Transferred to or received by the Secured Party hereunder.
Upon the Transfer by the Secured Party to the Pledgor of Posted Collateral, the
security interest and lien granted hereunder on that Posted Collateral will be
released immediately and, to the extent possible, without any further action by
either party.
Elections and Variables
to the ISDA Credit Support Annex
dated as of
between
BARCLAYS BANK PLC and Securitized Asset Backed Receivables
LLC Trust 2006-FR3
("Party A") ("Party B")
Paragraph 13
(a) Security Interest for "Obligations". The term "Obligations" as used in
this Annex includes the following additional obligations:
With respect to Party A: None.
With respect to Party B: None.
(b) Credit Support Obligations.
(i) Delivery Amount, Return Amount and Credit Support Amount.
(A) "Delivery Amount" has the meaning specified in Paragraph 3(a)
, except that the words "upon a demand made by the Secured
Party on or promptly following a Valuation Date" shall be
deleted and replaced with the words "not later than the close
of business on the next Local Business Day following a
Valuation Date".
(B) "Return Amount" has the meaning specified in Paragraph 3(b).
(C) "Credit Support Amount" shall not have the meaning specified
in Paragraph 3(b) and, instead, will have the following
meaning:
"Credit Support Amount" means, (a) for any Valuation Date on
which a Rating Agency Downgrade (as defined in the Agreement)
has occurred and is continuing, the Secured Party's Modified
Exposure for that Valuation Date.
(ii) Eligible Credit Support. On any date, the following items will
qualify as "Eligible Credit Support" for each party:
Valuation
Percentage
(A) cash in U.S. Dollars 100%
(B) negotiable debt obligations issued after 18 July 1984 by the 98.6%
U.S. Treasury Department having a residual maturity on such
date of less than 1 year (with local and foreign currency
issuer ratings of Moody's Aa2 and S&P AA or above)
(C) negotiable debt obligations issued after 18 July 1984 by the To Be Determined
U.S. Treasury Department having a residual maturity on such
date equal to or greater than 1 year but less than 5 years
(with local and foreign currency issuer ratings of Moody's Aa2
and S&P AA or above)
(D) negotiable debt obligations issued after l8 July 1984 by the To Be Determined
U.S. Treasury Department having a residual maturity on such
date equal to or greater than 5 years but less than 10 years
(with local and foreign currency issuer ratings of Moody's Aa2
and S&P AA or above)
(E) negotiable debt obligations of the Government National To Be Determined
Mortgage Association, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, the
Student Loan Marketing Association or a Federal Home Loan Bank
(all entities rated Moody's Aal and S&P AA+ or above) with a
residual maturity on such date equal to or greater than 1 year
but less than 3 years.
(F) negotiable debt obligations of the Government National To Be Determined
Mortgage Association, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, the
Student Loan Marketing Association or a Federal Home Loan Bank
(all entries rated Xxxxx'x Xx 1 and S&P AA+ or above) with a
residual maturity on such date equal to or greater than 3
years but less than 5 years.
(G) negotiable debt obligations of the Government National To Be Determined
Mortgage Association, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, the
Student Loan Marketing Association or a Federal Home Loan Bank
(all entries rated Moody's Aal and S&P AA+ or above) with a
residual maturity on such date equal to or greater than 5
years but less than 7 years.
(H) negotiable debt obligations of the Government National To Be Determined
Mortgage Association, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, the
Student Loan Marketing Association or a Federal Home Loan Bank
(all entries rated Moody's Aal and S&P AA+ or above) with a
residual maturity on such date equal to or greater than 7
years but less than 10 years.
For the avoidance of doubt, where negotiable debt obligations are rated by
only one of the above relevant rating agencies, the rating applied will be
based on the rating of that agency. Notwithstanding the foregoing, the
Eligible Collateral referenced above may only be posted if S&P has
assigned a rating to such Eligible Collateral and concurrently with such
delivery of Eligible Collateral, Party A shall cause its counsel to
deliver an opinion as to the enforceability, perfection and priority of
Counterparty's security interest in such Eligible Collateral if necessary
to satisfy the Rating Agency Condition.
Where the ratings of the relevant agencies differ with respect to the same
negotiable debt obligation, the lower of the ratings shall apply.
In addition, upon a Rating Agency Downgrade, Party A shall agree to the
Valuation Percentage in relation to (C) through (H) above with the
relevant rating agency, which shall be S&P, DBRS, Xxxxx'x and Fitch (to
the extent such ratings agency has provided a rating for the underlying
Certificates); provided, however, that if Party A is required to post
collateral in accordance with the terms of this Agreement it shall post
only (A) and (B) above until such time as the Valuation Percentages are
agreed.
(iii) Other Eligible Support. Such Other Eligible Support as the Pledgor
may designate; provided, at the expense of the Pledgor, the prior
written consent of the relevant rating agency, which shall be S&P,
DBRS, Moody's and Fitch (to the extent such ratings agency has
provided a rating for the underlying Certificates), shall have been
obtained. For the avoidance of doubt there are no items which
qualify as Other Eligible Support as of the date of this Annex.
(iv) Thresholds.
(A) "Independent Amount" means zero.
(B) "Threshold" means for Party A:
1. infinity, unless (i) a Rating Agency Downgrade occurs
and is continuing and (ii) Party A has not otherwise
complied with Section 4(12) of this Agreement, then its
Threshold shall be zero, or
2. in the event that Party A has otherwise complied with
Section 4(12) of this Agreement, its Threshold shall
continue to be infinity.
"Threshold" means, for Party B: infinity
(C) "Minimum Transfer Amount" means USD 20,000, provided, however,
with respect to the Secured Party at any time when the Secured
Party is a Defaulting Party, "Minimum Transfer Amount" means
zero.
(D) Rounding: The Delivery Amount and the Return Amount will not
be rounded.
(c) Valuation and Timing.
(i) "Valuation Agent" means Party A. The Valuation Agent's calculations
shall be in accordance with standard market practice using commonly
accepted third party sources.
(ii) "Valuation Date" means each Local Business Day which, if treated as
a Valuation Date, would result in a Delivery Amount or Return
Amount.
(iii) "Valuation Time" means the close of business in the city of the
Valuation Agent on the Local Business Day before the Valuation Date
or date of calculation, as applicable, provided that the
calculations of Value and Exposure will be made as of approximately
the same time on the same date.
(iv) "Notification Time" means 11:00 a.m., New York time, on a Local
Business Day.
(d) Conditions Precedent and Secured Party's Rights and Remedies. The
following Termination Event will be a "Specified Condition" for the party
specified (that party being the Affected Party if the Termination Event
occurs with respect to that party): None.
(e) Substitution.
(i) "Substitution Date" has the meaning specified in Paragraph 4(d)(ii).
(ii) Consent. Not applicable.
(f) Dispute Resolution.
(i) "Resolution Time" means 1:00 p.m. New York time on the Local
Business Day following the date on which the notice of the dispute
is given under Paragraph 5.
Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), on any date,
the Value of Eligible Credit Support will be calculated as follows:
For Eligible Credit Support comprised of cash, the amount of such
cash.
For Eligible Collateral comprising securities; the sum of (a)(x) the
last bid price on such date for such securities on the principal
national securities exchange on which such securities are listed,
multiplied by the applicable Valuation Percentage or (y) where any
such securities are not listed on a national securities exchange,
the bid price for such securities quoted as at the close of business
on such date by any principal market maker for such securities
chosen by the Valuation Agent, multiplied by the applicable
Valuation Percentage or (z) if no such bid price is listed or quoted
for such date, the last bid price listed or quoted (as the case may
be), as of the day next preceding such date on which such prices
were available; multiplied by the applicable Valuation Percentage;
plus (b) the accrued interest on such securities (except to the
extent that such interest shall have been paid to the Pledgor
pursuant to Paragraph 6(d)(ii) or included in the applicable price
referred to in subparagraph (a) above) as of such date.
(ii) Alternative. The provisions of Paragraph 5 will apply; provided that
the obligation of the appropriate party to deliver the undisputed
amount to the other party will not arise prior to the time that
would otherwise have applied to the Transfer pursuant to, or deemed
made, under Paragraph 3 if no dispute had arisen.
(g) Holding and Using Posted Collateral.
(i) Eligibility to Hold Posted Collateral; Custodians.
Party B is not and will not be entitled to hold Posted Collateral.
Party B's Custodian will be entitled to hold Posted Collateral
pursuant to Paragraph 6(b); provided that initially, the Custodian
for Party B is Xxxxx Fargo Bank, National Association, not in its
individual capacity, but solely as Administrator.
(ii) Use of Posted Collateral. The provisions of Paragraph 6(c) will not
apply to Party B; therefore, Party B will not have any of the rights
specified in Paragraph 6(c)(i) or 6(c)(ii); provided, however, that
the Trustee shall invest Cash Posted Credit Support in such
investments as designated by Party A, with losses (net of gains)
incurred in respect of such investments to be for the account of
Party A. The Secured Party is authorized to liquidate any Posted
Credit Support pursuant to written instructions from Party A.
(h) Distributions and Interest Amount.
(i) Interest Rate. The "Interest Rate" will be the rate earned on Cash
Posted Credit Support pursuant to clause (g)(ii) above.
(ii) Transfer of Interest Amount. The Transfer of the Interest Amount
will be made on each Distribution Date only to the extent of the
interest rate provided for in (h)(i) above.
(iii) Alternative to Interest Amount. The provisions of Paragraph 6(d)(ii)
will not apply.
(i) Additional Representation(s).
There are no additional representations by either party.
(j) Other Eligible Support and Other Posted Support.
(i) "Value" with respect to Other Eligible Support and Other Posted
Support shall have such meaning as the parties shall agree in
writing from time to time.
(ii) "Transfer" with respect to Other Eligible Support and Other Posted
Support shall have such meaning as the parties shall agree in
writing from time to time.
(k) Demands and Notices.
All demands, specifications and notices under this Annex will be made
pursuant to the Notices Section of this Agreement, save that any demand,
specification or notice:
(i) shall be given to or made at the following addresses:
If to Party A:
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Collateral Management
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
General Counsel's Office
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
If to Party B:
Securitized Asset Backed Receivables LLC Trust 2006-FR3
Xxxxx Fargo Bank, National Association
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Client Manager - SABR 2006-FR3
Facsimile No.: (000) 000-0000
Telephone No: (000) 000-0000
with copies to:
Fitch Ratings
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Standard & Poor's
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dominion Bond Rating Service
Xxx Xxxxxxxx Xxxxx
00 Xxxxxxxx
Xxx Xxxx, XX 00000
or at such other address as the relevant party may from time to time
designate by giving notice (in accordance with the terms of this
paragraph) to the other party;
(ii) shall (unless otherwise stated in this Annex) be deemed to be
effective at the time such notice is actually received unless such
notice is received on a day which is not a Local Business Day or
after the Notification Time on any Local Business Day in which event
such notice shall be deemed to be effective on the next succeeding
Local Business Day.
(l) Address for Transfers.
Party A:
For Cash: For Treasury Securities:
Barclays Bank PLC, NY Bank of NYC/BBPLCLDN
ABA No.: 000-000-000 ABA No.: 000-000-000
F/O Barclays Swaps & Options Group NY
A/C No.: 050019228
REF: Collateral
Party B:
Xxxxx Fargo Bank, National Association
San Francisco, CA
ABA No.: 000-000-000
Account No: 0000000000
Account Name: Corporate Trust Clearing
FFC: 50938401, SABR 2006 FR3 Supplemental Interest Account
REF: SABR 2006-FR3 Swap Account
(m) Other Provisions.
(i) Additional Definitions. As used in this Annex:
"Local Business Day" means: (i) any day on which commercial banks
are open for business (including dealings in foreign exchange and
foreign currency deposits) in London, New York and the location of
the Trustee, and (ii) in relation to a Transfer of Eligible Credit
Support, a day on which the clearance system agreed between the
parties for the delivery of Eligible Credit Support is open for
acceptance and execution of settlement instructions (or in the case
of a Transfer of Cash or other Eligible Credit Support for which
delivery is contemplated by other means, a day on which commercial
banks are open for business (including dealings for foreign exchange
and foreign deposits) in New York and such other places as the
parties shall agree).
(ii) Holding Collateral. The Secured Party shall cause any Custodian
appointed hereunder to open and maintain a segregated account and to
hold, record and identify all the Posted Collateral in such
segregated account and, subject to Paragraph 8(a), such Posted
Collateral shall at all times be and remain the property of the
Pledgor and shall at no time constitute the property of, or be
commingled with the property of, the Secured Party or the Custodian.
(iii) Agreement as to Single Secured Party and Pledgor. Party A and Party
B agree that, notwithstanding anything to the contrary in this
Annex, (a) the term "Secured Party" as used in this Annex means only
Party B, (b) the term "Pledgor" as used in this Annex means only
Party A, (c) only Party A makes the pledge and grant in Paragraph 2,
the acknowledgement in the final sentence of Paragraph 8(a) and the
representations in Paragraph 9 and (d) Party A shall have no
obligations under this Annex other than during a Collateral
Requirement Period.
(iv) Form of Annex. The parties hereby agree that the text of the body of
this Annex is intended to be the printed form of ISDA Credit Support
Annex (Bilateral Form - ISDA Agreements Subject to New York Law
version) as published and copyrighted by the International Swaps and
Derivatives Association, Inc.
(v) Exposure. The Parties agree that in the event of a Rating Agency
Downgrade relating to an action taken by S&P, the Valuation Agent
shall verify its calculation of the Secured Party's Exposure on a
weekly basis but shall verify such valuation by seeking two
quotations from Reference Market-makers at the end of each quarter.
For the avoidance of doubt, the Valuation Agent must (i) obtain at
least 2 Market Quotations (as stated above) and (ii) may not obtain
the quotations referred to above from the same Reference
Market-maker in excess of four times during any 12 month period.
Furthermore, the Exposure valuations should reflect the higher of
two bids from Reference Market-makers that would be eligible and
willing to provide the market quotation in the absence of the
current provider. The collateral requirement should be based on the
greater of the internal and external market quotations. In the event
the verification procedures set forth above indicate that there is a
deficiency in the amount of Eligible Collateral that has been posted
to the Secured Party, the Pledgor shall post the amount of Eligible
Collateral necessary to cure such deficiency to the Secured Party
within three Local Business Days.
(vi) Expenses. Notwithstanding Paragraph 10, the Pledgor will be
responsible for, and will reimburse the Secured Party for, all
transfer and other taxes and other costs involved in the transfer of
Eligible Collateral.
(n) Trustee Capacity
It is expressly understood and agreed by the parties hereto that (i) this
Annex is executed and delivered by Xxxxx Fargo Bank, National Association,
not individually or personally but solely as Trustee of the Trust under
the pooling and servicing agreement pursuant to which the Trust was
formed, in the exercise of the powers and authority conferred upon and
vested in it, and pursuant to instructions set forth therein, (ii) each of
the representations, undertakings and agreements by Xxxxx Fargo Bank,
National Association is made and intended not as a personal
representation, undertaking or agreement of Xxxxx Fargo Bank, National
Association, but solely for the purpose of binding only the Trust, (iii)
nothing herein contained shall be construed as imposing any liability upon
Xxxxx Fargo Bank, National Association, individually or personally, to
perform any covenant (either express or implied) contained herein, and all
such liability, if any, is hereby expressly waived by the parties hereto,
and such waiver shall bind any third party making a claim by or through
one of the parties hereto, and (iv) under no circumstances shall Xxxxx
Fargo Bank, National Association be personally liable for the payment of
any indebtedness or expenses of the Trust, or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Annex or any related document.
(o) Additional Definitions. As used in this Annex:
"Rating Agency Downgrade" means a "Rating Agency Downgrade " (as defined
in the Agreement).
"Modified Exposure" means, for any Valuation Date, an amount equal to the
greater of (a) the sum of Secured Party's Exposure for that Valuation Date
plus (the Notional Volatility Buffer multiplied by the Notional Amount)
and (b) zero.
"Notional Volatility Buffer" as determined by the Valuation Agent for any
date, means the outstanding Notional Amount of the Transaction on such
date multiplied by the relevant percentage for such date as set out in the
table below on such date.
Less than
or equal to Less than or equal to
5 years to 10 years but greater
Termination than 5 years to
Party A S&P Rating Date of the Termination Date of
on such date Transaction the Transaction
--------------------------------------------------------
S-T Rating of A-2 3.25% 4.00%
S-T Rating of A-3 4.00% 5.00%
L-T Rating of BB+ or 4.50% 5.75%
lower
IN WITNESS WHEREOF, the parties have executed this Annex by their
duly authorized representatives as of the date of the Agreement.
BARCLAYS BANK PLC SECURITIZED ASSET BACKED RECEIVABLES
LLC TRUST 2006-FR3
By: Xxxxx Fargo Bank, National
Association, not individually, but
solely as trustee of Securitized
Asset Backed Receivables LLC Trust
2006-FR3
By:____________________________________ By:__________________________________
Name: Name:
Title: Title:
(Multicurrency -- Cross Border)
EXHIBIT B
---------
ISDA Form Master Agreement
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of ............
...................................... and ....................................
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows: --
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than by
payment), such delivery will be made for receipt on the due date in the
manner customary for the relevant obligation unless otherwise specified in
the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing,
(2) the condition precedent that no Early Termination Date in respect of
the relevant Transaction has occurred or been effectively designated and
(3) each other applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified by
the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party
("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y under
this Section 2(d)) promptly upon the earlier of determining that
such deduction or withholding is required or receiving notice that
such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net amount
actually received by Y (free and clear of Indemnifiable Taxes,
whether assessed against X or Y) will equal the full amount Y would
have received had no such deduction or withholding been required.
However, X will not be required to pay any additional amount to Y to
the extent that it would not be required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure would
not have occurred but for (I) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on
or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (II) a Change in Tax
Law.
(ii) Liability. If: --
(1) X is required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, to make any
deduction or withholding in respect of which X would not be required
to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against
X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
o-f the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:--
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant
under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform
its obligations under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken all necessary
action to authorise such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of
its constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in lull
force and effect and all conditions of any such consents have been
complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding
in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of Default
or, to its knowledge, Termination Event with respect to it has occurred and is
continuing and no such event or circumstance would occur as a result of its
entering into or performing its obligations under this Agreement or any Credit
Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligations under this Agreement or such
Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) Furnish Specified Information. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation specified in
the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to allow
such other party or its Credit Support Provider to make a payment under
this Agreement or any applicable Credit Support Document without any
deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of such
demand), with any such form or document to be accurate and completed in a
manner reasonably satisfactory to such other party and to be executed and
to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or an Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organised, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party:--
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
required to be made by it if such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to the
party;
(ii) Breach of Agreement. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any payment
under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give
notice of a Termination Event or any agreement or obligation under Section
4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party
in accordance with this Agreement if such failure is not remedied on or
before the thirtieth day after notice of such failure is given to the
party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applicable
grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or
the failing or ceasing of such Credit Support Document to be in full
force and effect for the purpose of this Agreement (in either case
other than in accordance with its terms) prior to the satisfaction
of all obligations of such party under each Transaction to which
such Credit Support Document relates without the written consent of
the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the
validity of such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made or
repeated by the party or any Credit Support Provider of such party in this
Agreement or any Credit Support Document proves to have been incorrect or
misleading in any material respect when made or repeated or deemed to have
been made or repeated;
(v) Default under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or delivery due
on the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at
least three Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is
taken by any person or entity appointed or empowered to operate it or act
on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default, event
of default or other similar condition or event (however described) in
respect of such party, any Credit Support Provider of such party or any
applicable Specified Entity of such party under one or more agreements or
instruments relating to Specified Indebtedness of any of them
(individually or collectively) in an aggregate amount of not less than the
applicable Threshold Amount (as specified in the Schedule) which has
resulted in such Specified Indebtedness becoming, or becoming capable at
such time of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2) a
default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments on
the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its creditors;
(4) institutes or has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition (A)
results in a judgment of insolvency or bankruptcy or the entry of an
order for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or substantially all
its assets or has a distress, execution, attachment, sequestration
or other legal process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed
or restrained, in each case within 30 days thereafter; (8) causes or
is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect to any
of the events specified in clauses (1) to (7) (inclusive); or (9)
takes any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or transfer:--
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below, a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an Additional Termination Event if the event
is specified pursuant to (v) below:--
(i) Illegality. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party): --
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action is
taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is
required to be paid in respect of such Tax under Section 2(d)(i)(4) (other
than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on the next
succeeding Scheduled Payment Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which
the other party is not required to pay an additional amount (other than by
reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a
party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates
or amalgamates with, or merges with or into, or transfers all or
substantially all its assets to, another entity and such action does not
constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) Additional Termination Event. If any "Additional Termination Event" is
specified in the Schedule or any Confirmation as applying, the occurrence
of such event (and, in such event, the Affected Party or Affected Parties
shall be as specified for such Additional Termination Event in the
Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying the
nature of that Termination Event and each Affected Transaction and will
also give such other information about that Termination Event as the other
party may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
Affected Party, the Affected Party will, as a condition to its right to
designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and obligations
under this Agreement in respect of the Affected Transactions to another of
its Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days after
the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or a
Tax Event occurs and there are two Affected Parties, each party will use
all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that Termination
Event.
(iv) Right to Terminate. If: --
(1) a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect to
all Affected Transactions within 30 days after an Affected Party
gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the case
of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event
or an Additional Termination Event if there is more than one Affected
Party, or the party which is not the Affected Party in the case of a
Credit Event Upon Merger or an Additional Termination Event if there is
only one Affected Party may, by not more than 20 days notice to the other
party and provided that the relevant Termination Event is then continuing,
designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under Section
6(a) or (b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination
Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in
respect of the Terminated Transactions will be required to be made, but
without prejudice to the other provisions of this Agreement. The amount,
if any, payable in respect of an Early Termination Date shall be
determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant
account to which any amount payable to it is to be paid. In the absence of
written confirmation from the source of a quotation obtained in
determining a Market Quotation, the records of the party obtaining such
quotation will be conclusive evidence of the existence and accuracy of
such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day that
notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event of
Default) and on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (in the case of an Early
Termination Date which is designated as a result of a Termination Event).
Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon (before as well as after judgment) in the
Termination Currency, from (and including) the relevant Early Termination
Date to (but excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from an Event
of Default: --
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a positive
number, the Non-Defaulting Party's Loss in respect of this
Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party less (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party. If that amount is
a positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of that amount to the Defaulting
Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Non-defaulting Party will pay the absolute
value of that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event: --
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3), if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies,
except that, in either case, references to the Defaulting Party and
to the Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected Party,
respectively, and, if Loss applies and fewer than all the
Transactions are being terminated, Loss shall be calculated in
respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties: --
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with the
lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under
this Agreement (and retained by such other party) during the period from
the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies an
amount recoverable under this Section 6(e) is a reasonable pre-estimate of
loss and not a penalty. Such amount is payable for the loss of bargain and
the loss of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.
7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that: --
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this Agreement will
be made in the relevant currency specified in this Agreement for that payment
(the "Contractual Currency"). To the extent permitted by applicable law, any
obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire Agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect
of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered
or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Xxx 0000 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any reason any party's
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. Definitions
As used in this Agreement:--
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:--
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the ease of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except so as to avoid duplication, if Section 6(e)(i)(l) or (3) or
6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with a respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such determination as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head or
home office.
"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) its relation to any payment, from or through which such
payment is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of: --
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meanings specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either ease) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each ease
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the Termination Currency Equivalents of the fair market
values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
........................................ .......................................
(Name of Party) (Name of Party
By:.................................... By:....................................
Name: Name:
Title: Title:
Date: Date:
ISDA(R)
International Swap Dealers Association, Inc.
SCHEDULE
to the
Master Agreement
dated as of ............
between................................ and ....................................
("Party A") ("Party B")
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A for the purpose of: --
Section 5(a)(v),........................................................
Section 5(a)(vi),.......................................................
Section 5(a)(vii),......................................................
Section 5(b)(iv),.......................................................
and in relation to Party B for the purpose of:--
Section 5(a)(v),........................................................
Section 5(a)(vi),.......................................................
Section 5(a)(vii),......................................................
Section 5(b)(iv),.......................................................
(b) "Specified Transaction" will have the meaning specified in Section 14 of
this Agreement unless another meaning is specified here ................
........................................................................
........................................................................
(c) The "Cross Default" provisions of Section 5(a)(vi)
will/will not * apply to Party A
will/will not * apply to Party B
If such provisions apply:--
"Specified Indebtedness" will have the meaning specified in Section 14 of
this Agreement unless another meaning is specified here ................
........................................................................
"Threshold Amount" means ...............................................
........................................................................
(d) The "Credit Event Upon Merger" provisions of Section 5(b)(iv)
will/will not * apply to Party A
will/will not * apply to Party B
(e) The "Automatic Early Termination" provisions of Section 6(a)
will/will not * apply to Party A
will/will not * apply to Party B
(f) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement: --
(i) Market Quotation/Loss * will apply.
(ii) The First Method/The Second Method * will apply.
(g) "Termination Currency" means .................., if such currency is
specified and freely available, and otherwise United States Dollars.
(h) Additional Termination Event will/will not apply*. The following shall
constitute an Additional Termination Event: -- .........................
........................................................................
........................................................................
........................................................................
........................................................................
........................................................................
For the purpose of the foregoing Termination Event, the Affected Party or
Affected Parties shall be: -- ..........................................
........................................................................
Part 2. Tax Representations.
(a) Payer Representations. For the purpose of Section 3(e) of this Agreement,
Party A will/will not* make the following representation and Party B
will/will not* make the following representation: --
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this Agreement. In
making this representation, it may rely on (i) the accuracy of any
representations made by the other party pursuant to Section 3(f) of this
Agreement, (ii) the satisfaction of the agreement contained in Section
4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness
of any document provided by the other party pursuant to Section 4(a)(i) or
4(a)(iii) of this Agreement and (iii) the satisfaction of the Agreement of
the other party contained in Section 4(d) of this Agreement, provided that
it shall not be a breach of this representation where reliance is placed
on clause (ii) and the other party does not deliver a form or document
under Section 4(a)(iii) by reason of material prejudice to its legal or
commercial position.
(b) Payee Representations. For the purpose of Section 3(f) of this Agreement,
Party A and Party B make the representations specified below, if any:
(i) The following representation will/will not* apply to Party A and
will/will not* apply to Party B: --
It is fully eligible for the benefits of the "Business Profits" or
"Industrial and Commercial Profits" provision, as the case may be, the
"Interest" provision or the "Other Income" provision (if any) of the
Specified Treaty with respect to any payment described in such provisions
and received or to be received by it in connection with this Agreement and
no such payment is attributable to a trade or business carried on by it
through a permanent establishment in the Specified Jurisdiction.
If such representation applies, then: --
"Specified Treaty" means with respect to Party A..............................
"Specified Jurisdiction" means with respect to Party A........................
"Specified Treaty" means with respect to Party B..............................
"Specified Jurisdiction" means with respect to Party B........................
(ii) The following representation will/will not* apply to Party A and
will/will not* apply to Party B: --
Each payment received or to be received by it in connection with this
Agreement will be effectively connected with its conduct of a trade or
business in the Specified Jurisdiction.
If such representation applies, then: --
"Specified Jurisdiction" means with respect to Party A........................
"Specified Jurisdiction" means with respect to Party B........................
(iii) The following representation will/will not* apply to Party A and
will/will not* apply to Party B: --
(A) It is entering into each Transaction in the ordinary course of its
trade as, and is, either (1) a recognized U.K. bank or (2) a recognised
U.K. swaps dealer (in either ease (1) or (2), for purposes of the United
Kingdom Inland Revenue extra statutory concession C17 on interest and
currency swaps dated March 14, 1989), and (B) it will bring into account
payments made and received in respect of each Transaction in computing its
income for United Kingdom tax purposes.
(iv) Other Payee Representations: -- ...................................
........................................................................
........................................................................
........................................................................
N.B. The above representations may need modification if either party is a
Multibranch Party.
Part 3. Agreement to Deliver Documents.
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable: --
(a) Tax forms, documents or certificates to be delivered are: --
Party required to Form/Document/ Date by which
deliver document Certificate to be delivered
....................... ....................... .......................
....................... ....................... .......................
....................... ....................... .......................
....................... ....................... .......................
....................... ....................... .......................
....................... ....................... .......................
(b) Other documents to be delivered are: --
Covered by
Party required to Form/Document/ Date by which Section 3(d)
deliver document Certificate to be delivered Representation
.................. ................. ................. Yes/No*
.................. ................. ................. Yes/No*
.................. ................. ................. Yes/No*
.................. ................. ................. Yes/No*
.................. ................. ................. Yes/No*
Part 4. Miscellaneous.
(a) Addresses for Notices. For the purpose of Section 12(a) of this
Agreement: --
Address for notices or communications to Party A: --
Address: ...............................................................
Attention: .............................................................
Telex No.: ............................ Answerback:.....................
Facsimile No.: ........................ Telephone No.: .................
Electronic Messaging System Details:....................................
Address for notices or communications to Party B: --
Address: ...............................................................
Attention: .............................................................
Telex No.: ............................ Answerback:.....................
Facsimile No.: ........................ Telephone No.: .................
Electronic Messaging System Details:....................................
(b) Process Agent. For the purpose of Section 13(c) of this Agreement: --
Party A appoints as its Process Agent ..................................
Party B appoints as its Process Agent ..................................
(c) Offices. The provisions of Section 10(a) will/will not* apply to this
Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:
Party A is/is not* a Multibranch Party and, if so, may act through the following
Offices: --
....................... ....................... ......................
....................... ....................... ......................
Party B is/is not* a Multibranch Party and, if so, may act through the following
Offices: --
....................... ....................... ......................
....................... ....................... ......................
(e) Calculation Agent. The Calculation Agent is ............, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) Credit Support Document. Details of any Credit Support Document: -- ....
........................................................................
........................................................................
........................................................................
(g) Credit Support Provider. Credit Support Provider means in relation to
Party A, ...............................................................
........................................................................
........................................................................
Credit Support Provider means in relation to Party B, ..................
........................................................................
........................................................................
(h) Governing Law. This Agreement will be governed by and construed in
accordance with English law/the laws of the State of New York (without
reference to choice of law doctrine)*.
(i) Netting of Payments. Subparagraph (ii) of Section 2(c) of this Agreement
will not apply to the following Transactions or groups of Transactions (in
each ease starting from the date of this Agreement/in each case starting
from .....................*) ...........................................
........................................................................
........................................................................
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement unless another meaning is specified here
........................................................................
........................................................................
Part 5. Other Provisions.
--------
* Delete as applicable.
EXHIBIT U
CAP AGREEMENT
Barclays Capital
5 Xxx Xxxxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Tel x00 (0)00 0000 0000
To: Securitized Asset Backed Receivables LLC Trust 2006-FR3 (the
"Trust" or the "Counterparty")
Xxxxx Fargo Bank, National Association,
not individually, but solely as trustee
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
From: BARCLAYS BANK PLC (LONDON HEAD OFFICE) ("Barclays")
Date: August 3, 2006
Reference: 1294613B (the Class X-0, Xxxxx X-0, Class A-3, Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5
Certificates)
Interest Rate Cap Confirmation
The purpose of this facsimile (this "Confirmation") is to confirm the terms and
conditions of the Transaction entered into between us on the Trade Date
specified below (the "Transaction").
The definitions and provisions contained in the 2000 ISDA Definitions (the "2000
Definitions"), as published by the International Swaps and Derivatives
Association, Inc. ("ISDA") are incorporated into this Confirmation. In the event
of any inconsistency between the 2000 Definitions and this Confirmation, this
Confirmation will govern for the purposes of the Transaction. References herein
to a "Transaction" shall be deemed to be references to a "Swap Transaction" for
the purposes of the 2000 Definitions. Capitalized terms used in this
Confirmation and not defined in this Confirmation or the 2000 Definitions shall
have the respective meanings assigned in the Agreement. Each party hereto agrees
to make payment to the other party hereto in accordance with the provisions of
this Confirmation and of the Agreement. In this Confirmation, "Party A" means
Barclays and "Party B" means the Counterparty.
This Confirmation supersedes any previous Confirmation or other communication
with respect to the Transaction and evidences a complete and binding agreement
between you and us as to the terms of the Swap Transaction to which this
Confirmation relates. This Confirmation, together with all other documents
referring to the form of the 1992 ISDA Master Agreement (Multicurrency -- Cross
Border) (the "ISDA Form") (each a "Confirmation") confirming transactions (each
a "Transaction") entered into between us (notwithstanding anything to the
contrary in a Confirmation), shall supplement, form part of, and be subject to,
an agreement in the form of the ISDA Form as if we had executed an agreement in
such form (but without any Schedule except for the election of the laws of the
State of New York (without reference to choice of law doctrine except Section
5-1401 and Section 5-1402 of the New York General Obligation Law) as governing
law, the election of Market Quotation and Second Method for purposes of Section
6(e) of the ISDA Form, U.S. Dollars as the Termination Currency and the
additional material set forth in Part 5) on the Trade Date for the first such
Transaction between us.
The terms of the particular Transaction to which this Confirmation relates are
as follows:
TRADE DETAILS
Party A: Barclays
Party B: Counterparty
Notional Amount: An amount equal to the lesser of:
(x) the applicable Cap Notional Amount
(amortizing in accordance with the Cap
Notional Amount Amortization Schedule
attached in Annex I) and
(y) the excess, if any of:
(A) the aggregate Class Certificate
Balance of the LIBOR Certificates
over
(B) the applicable Swap Notional
Amount (amortizing in accordance
with the Swap Notional Amount
Amortization Schedule attached in
Annex II).
Trade Date: August 3, 2006
Effective Date: August 3, 2006
Termination Date: October 25, 2009; subject to adjustment in
accordance with the Modified Following
Business Day Convention
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer Payment Date(s): August 3, 2006; subject to adjustment in
accordance with the Modified Following
Business Day Convention
Fixed Amount: USD 917,000
Floating Amounts:
Floating Rate Payer: Barclays
Cap Rate: 5.50%
Floating Rate Payer Period End The 25th of each month in each year from and
Date(s): including August 25, 2006 to and including
October 25, 2011, subject to adjustment in
accordance with the Modified Following
Business Day Convention
Floating Rate Payer Payment Each day that is one day prior to each
Floating Rate Payer Period End Date subject
to adjustment in accordance with the
Preceding Business Day Convention.
Floating Rate Option: USD-LIBOR-BBA
Floating Amount: To be determined in accordance with the
following formula: Greater of (i) Notional
Amount * (Floating Rate - Cap Rate) *
Floating Rate Day Count Fraction and (ii)
zero.
Floating Rate Day Count Fraction: Actual / 360
Designated Maturity: 1 Month
Reset Dates: The first day in each Calculation Period
Compounding: Inapplicable
Business Days: New York, New York; Columbia, Maryland
Calculation Agent: Party A
Governing Law: The Transaction and this Confirmation will be
governed by and construed in accordance with
the laws of the State of New York (without
reference to choice of law doctrine except
Section 5-1401 and Section 5-1402 of the New
York General Obligation Law)
ACCOUNT DETAILS
Payments to Barclays: Correspondent: BARCLAYS BANK PLC NEW YORK
FFED: 000000000
Beneficiary: BARCLAYS SWAPS
Beneficiary Account: 000-00000-0
Payments to the Counterparty: Xxxxx Fargo Bank, National Association
San Francisco, California
ABA No. 000-000-000
Account No. 0000000000
Account Name: Corporate Trust Clearing
FFC: 50938401, SABR 2006 FR3
Supplemental Interest Account
OFFICES
Barclays: Address for Notices:
0 XXX XXXXX XXXXXXXXX
XXXXXX XXXXX
X00 0XX
Tel: 00(00) 00000000
Fax: 00(00) 00000000
Counterparty: Address for Notices:
Xxxxx Fargo Bank, National Association
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx - Xxxxxx
Xxxxxxx - XXXX 0000-XX0
Tel: (000) 000-0000
Fax: (000) 000-0000
Miscellaneous Provisions with respect to the ISDA Form
1) The parties agree that subparagraph (ii) of Section 2(c) of the ISDA Form
will apply to any Transaction.
2) Termination Provisions. For purposes of the Agreement:
(a) "Specified Entity" means in relation to Party A for the purpose of the
Agreement:
Section 5(a)(v): None;
Section 5(a)(vi): None;
Section 5(a)(vii): None;
Section 5(b)(iv): None;
and in relation to Party B for the purpose of this Agreement:
Section 5(a)(v): None;
Section 5(a)(vi): None;
Section 5(a)(vii): None;
Section 5(b)(iv): None.
(b) "Specified Transaction" shall have the meaning specified in Section 14 of
the Agreement.
(c) The "Breach of Agreement" provisions of Section 5(a)(ii) of the Agreement
will be inapplicable to Party A and Party B.
(d) The "Credit Support Default" provisions of Section 5(a)(iii) of the
Agreement will be inapplicable to Party B.
(e) The "Misrepresentation" provisions of Section 5(a)(iv) of the Agreement will
be inapplicable to Party A and Party B.
(f) The "Default Under Specified Transaction" provisions of Section 5(a)(v) of
the Agreement will be inapplicable to Party A and Party B.
(g) The "Cross Default" provisions of Section 5(a)(vi) of the Agreement will be
inapplicable to Party A and Party B.
(h) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of the
Agreement will be inapplicable to Party A and Party B.
(i) The "Automatic Early Termination" provision of Section 6(a) of the Agreement
will be inapplicable to Party A and Party B; provided that where there is an
Event of Default under Section 5(a)(vii)(1), (3), (4), (5), (6) or, to the
extent analogous thereto, (8), and the Defaulting Party is governed by a system
of law that does not permit termination to take place after the occurrence of
such Event of Default, then the Automatic Early Termination provisions of
Section 6(a) will apply; provided, however, that this proviso shall only apply
with respect to an Event of Default specified in Section 5(a)(vii)(4) or, to the
extent analogous thereto, Section 5(a)(vii)(8), if the proceeding is instituted
by, or the relevant petition is presented to a court or other authority in the
jurisdiction where the Defaulting Party is incorporated.
If an Early Termination Date has occurred under Section 6(a) of the Agreement as
a result of Automatic Early Termination, and if the Non-defaulting Party
determines that it has either sustained or incurred a loss or damage or
benefited from a gain in respect of any Transaction, as a result of movement in
interest rates, currency exchange rates, other relevant rates or market
quotations between the Early Termination Date and the date upon which the
Non-defaulting Party first becomes aware that such Event of Default has occurred
under Section 6(a) of the Agreement, then without any duplication (i) the amount
of such loss or damage shall be added to the amount due by the Defaulting Party
or deducted from the amount due by the Non-defaulting Party, as the case may be
(in both cases pursuant to Section 6(e)(i)(3) of the Agreement); or (ii) the
amount of such gain shall be deducted from the amount due by the Defaulting
Party or added to the amount due by the Non-defaulting Party, as the case may be
(in both cases pursuant to Section 6(e)(i)(3) of the Agreement).
(j) Payments on Early Termination. For the purpose of Section 6(e) of the
Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(k) "Termination Currency" means United States Dollars.
3) Tax Representations.
Payer Tax Representations. For the purpose of Section 3(e), each of
Barclays and the Counterparty makes the following representation:
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of any
Relevant Jurisdiction to make any deduction or withholding for or on
account of any Tax from any payment (other than interest under
Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it
to the other party under this Agreement. In making this
representation, it may rely on: (i) the accuracy of any
representation made by the other party pursuant to Section 3(f) of
this Agreement; (ii) the satisfaction of the agreement of the other
party contained in Section 4(a)(i) or 4(a)(iii) of this Agreement
and the accuracy and effectiveness of any document provided by the
other party pursuant to Section 4(a)(i) or 4(a)(iii) of this
Agreement; and (iii) the satisfaction of the agreement of the other
party contained in Section 4(d) of this Agreement, provided that it
shall not be a breach of this representation where reliance is
placed on clause (ii) and the other party does not deliver a form or
document under Section 4(a)(iii) by reason of material prejudice to
its legal or commercial position.
Barclays Payee Tax Representations. For the purpose of Section 3(f),
Barclays makes the following representations:
With respect to payments made to Barclays which are not effectively
connected to the U.S.: It is a non-U.S. branch of a foreign person
for U.S. federal income tax purposes.
With respect to payments made to Barclays which are effectively
connected to the U.S.: Each payment received or to be received by it
in connection with this Agreement will be effectively connected with
its conduct of a trade or business in the U.S.
Counterparty Payee Tax Representations. For the purpose of Section 3(f),
Counterparty makes the following representation:
Counterparty represents that it is trustee of the trust formed under
the Pooling and Servicing Agreement and is a "United States person"
as such term is defined in Section 7701(a)(30) of the Internal
Revenue Code of 1986, as amended.
4) Documents to be Delivered. For the purpose of Section 4(a):
(1) Tax forms, documents, or certificates to be delivered are:
Party required to Date by which to be
deliver document Form/Document/Certificate delivered
----------------------------- ----------------------------- -----------------------------
Barclays and the Counterparty Any document required or Promptly after the earlier of
reasonably requested to allow (i) reasonable demand by
the other party to make either party or (ii) learning
payments under this Agreement that such form or document is
without any deduction or required.
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 Form/Document/ Date by which to be Covered by Section
deliver document Certificate delivered 3(d) Representation
--------------------- ---------------------- ---------------------- -------------------
Counterparty An opinion of Within 10 Business Yes
Counterparty's counsel Days from the
addressed to Barclays execution and delivery
in form and substance of the Confirmation
reasonably acceptable
to Barclays
Barclays and the A certificate of an Effective Date Yes
Counterparty authorized officer of
the party, as to the
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
Counterparty Pooling and Servicing Upon receipt by Yes
Agreement, dated as Counterparty of
of July 1, 2006, execution copy
among Securitized
Asset Backed
Receivables LLC,
Fremont Investment &
Loan, HomEq Servicing
Corporation,
OfficeTiger Global
Real Estate Services
Inc. and Xxxxx Fargo
Bank, National
Association (the
"Pooling and Servicing
Agreement".)
5) Miscellaneous.
(a) Address for Notices: For the purposes of Section 12(a) of this Agreement:
Address for notices or communications to Barclays:
Address: 0 XXX XXXXX XXXXXXXXX
XXXXXX XXXXX
X00 0XX
Facsimile: 00(00) 00000000
Phone: 00(00) 00000000
(For all purposes)
Address for notices or communications to the Counterparty:
Address: Xxxxx Fargo Bank, National Association
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx - Xxxxxx Xxxxxxx -
XXXX 0000-XX0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) Process Agent. For the purpose of Section 13(c):
Barclays 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 apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:
Barclays is a Multibranch Party and may act through its London and New
York offices.
Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Barclays.
(f) Credit Support Document. Not Applicable.
(g) Credit Support Provider.
Barclays: Not Applicable
Counterparty: Not Applicable
(h) Governing Law. This Agreement shall be governed by, and construed in
accordance with the laws of the State of New York (without reference to choice
of law doctrine except Section 5-1401 and Section 5-1402 of the New York General
Obligation Law).
(i) 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.
(j) Waiver of Jury Trial. To the extent permitted by applicable law, each party
irrevocably waives any and all right to trial by jury in any legal proceeding in
connection with this Agreement, any Credit Support Document to which it is a
Party, or any Transaction. Each party also acknowledges that this waiver is a
material inducement to the other party's entering into this Agreement.
(k) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement.
6) Additional Representations:
Subject to Section 7(b) of this Confirmation, each party represents to the other
party that (absent a written agreement between the parties that expressly
imposes affirmative obligations to the contrary):
(a) Non-Reliance. Barclays is acting for its own account and Xxxxx Fargo Bank,
National Association is acting as trustee for the Trust under the Pooling and
Servicing Agreement and not for its own account. Each party has made its own
independent decisions to enter into the Transaction and as to whether the
Transaction is appropriate or proper based upon its own judgment and upon advice
from such advisers as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment advice or as a
recommendation to enter into the Transaction; it being understood that
information and explanations related to the terms and conditions of the
Transaction shall not be considered investment advice or a recommendation to
enter into the Transaction. No communication (written or oral) received from the
other party shall be deemed to be an assurance or guarantee as to the expected
results of the Transaction.
(b) Assessment and Understanding. It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice),
and understands and accepts, the terms, conditions and risks of the Transaction.
It is also capable of assuming, and assumes, the risks of the Transaction.
(c) Status of Parties. The other party is not acting as a fiduciary for or an
adviser to it in respect of the Transaction.
(d) Purpose. It is entering into the Transaction for the purposes of hedging its
assets or liabilities or in connection with a line of business.
(e) Eligible Contract Participant Representation. It is an "eligible contract
participant" within the meaning of Section 1(a)(12) of the Commodity Exchange
Act, as amended, including as amended by the Commodity Futures Modernization Act
of 2000.
7) Other Provisions:
(a) Fully-Paid Party Protected. Notwithstanding the terms of Sections 5 and 6 of
the Agreement, if Party B has satisfied in full all its payment obligations
under Section 2(a)(i) of the Agreement, then unless Party A is required pursuant
to appropriate proceedings to return to Party B or otherwise returns to Party B
upon demand of Party B any portion of such payment, (a) the occurrence of an
event described in Section 5(a) of the Agreement with respect to Party B shall
not constitute an Event of Default or Potential Event of Default with respect to
Party B as the Defaulting Party and (b) Party A shall be entitled to designate
an Early Termination Event pursuant to Section 6 of the Agreement only as a
result of a Termination Event set forth in either Section 5(b)(i) or Section
5(b)(ii) of the Agreement with respect to Party A as the Affected Party or
Section 5(b)(iii) of the Agreement with respect to Party A as the Burdened
Party. For purposes of the Transaction to which this Confirmation relates, Party
B's only obligation under Section 2(a)(i) of the Agreement is to pay the Fixed
Amount on the Fixed Rate Payer Payment Date.
(b) Trustee Capacity. It is expressly understood and agreed by the parties
hereto that (i) this Confirmation is executed and delivered by Xxxxx Fargo Bank,
National Association, not individually or personally but solely as Trustee of
the Trust under the Pooling and Servicing Agreement pursuant to which the Trust
was formed, in the exercise of the powers and authority conferred upon and
vested in it, and pursuant to instructions set for the therein, (ii) each of the
representations, undertakings and agreements by Xxxxx Fargo Bank, National
Association is made and intended not as a personal representation, undertaking
or agreement of Xxxxx Fargo Bank, National Association, but solely for the
purpose of binding only the Trust, (iii) nothing herein contained shall be
construed as imposing any liability upon Xxxxx Fargo Bank, National Association,
individually or personally, to perform any covenant (either express or implied)
contained herein, and all such liability, if any, is hereby expressly waived by
the parties hereto, and such waiver shall bind any third party making a claim by
or through one of the parties hereto, and (iv) under no circumstances shall
Xxxxx Fargo Bank, National Association be personally liable for the payment of
any indebtedness or expenses of the Trust, or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Confirmation, the Agreement or any related
document.
(c) 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 the rating agencies listed in the
Pooling and Servicing Agreement applicable to the Securitized Asset Backed
Receivables LLC Trust 2006-FR3, Mortgage Pass-Through Certificates, Series
2006-FR3 (the "Certificates") has been provided notice of such modification and
confirms in writing (including by facsimile transmission) within five Business
Days after such notice is given that it will not downgrade, withdraw or modify
its then-current rating of the Certificates issued by Party B.
(d) Proceedings. Party A shall not institute against or cause any other person
to institute against, or join any other person in instituting against, Party B,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy,
dissolution or similar law, for a period of one year and one day (or, if longer,
the applicable preference period) following indefeasible payment in full of the
Certificates, provided that nothing herein will preclude, or be deemed to estop,
Party A from taking any action in any case or proceeding voluntarily filed or
commenced by or on behalf of Party B or in any involuntary case or proceeding
pertaining to Party B after it has been commenced.
(e) Set-Off. Notwithstanding any provision of this Agreement or any other
existing or future agreement, each party irrevocably waives any and all rights
it may have to set off, net, recoup or otherwise withhold or suspend or
condition payment or performance of any obligation between it and the other
party hereunder against any obligation between it and the other party under any
other agreements. The provisions for Set-off set forth in Section 6(e) of the
Agreement shall not apply for purposes of this Transaction, provided that
nothing herein shall be construed to waive or otherwise limit the netting
provisions contained in Section 2(c) or 6(e) of this Agreement.
(f) 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.
(g) Additional Termination Events. The following Additional Termination Events
will apply, in each case with respect to Party B as the sole Affected Party
(unless otherwise provided below):
(i) Party A fails to comply with the Rating Agency Downgrade provisions as
set forth in clause (h) below. For all purposes of this Agreement, Party A
shall be the sole Affected Party with respect to the occurrence of a
Termination Event described in this clause (g).
(ii) Notice of the Servicer's intention to exercise its option to purchase
the Mortgage Loans pursuant to Section 9.01 of the Pooling and Servicing
Agreement is given by the Trustee to Certificateholders pursuant to
Section 9.02 of the Pooling and Servicing Agreement. Notwithstanding the
foregoing, this clause shall not constitute an Additional Termination
Event until such date as the notice of the Servicer's intention to
exercise its option to purchase the Mortgage Loans can no longer be
withdrawn or rescinded in accordance with the Pooling and Servicing
Agreement.
(iii) Upon the irrevocable direction to dissolve or otherwise terminate
the Trust following which all assets of the Trust will be liquidated and
the proceeds of such liquidation distributed to the Certificateholders.
(h) Rating Agency Downgrade. In the event that (x) any of the Rating Agencies
downgrades Party A's rating below the Required Counterparty Rating (but Party A
has (i) a rating of at least "BBB-" or "A-3", if applicable, by S&P, (ii) a
rating of at least "BBB-" or "F3", if applicable, by Fitch, or (iii) (x) if
Party A has only a long-term rating, a rating of at least "A2" by Moody's, or
(y) if Party A has a long-term rating and a short-term rating, a rating of at
least "A3" or "P2", if applicable, by Moody's) or, S&P, Fitch or Moody's
withdraws its ratings of Party A, then within 30 days after such rating
withdrawal or downgrade, Party A shall, subject to the Rating Agency Condition,
at its own expense, either (i) cause another entity to replace Party A as party
to this Agreement that meets or exceeds the Required Counterparty Rating on
terms substantially similar to this Agreement, (ii) obtain a guaranty of, or a
contingent agreement of, another person with the Required Counterparty Rating to
honor Party A's obligations under this Agreement, (iii) collateralize its
exposure to the Trust pursuant to an ISDA Credit Support Annex substantially in
the form attached hereto as Exhibit A; provided that such ISDA Credit Support
Annex shall be made a credit support document for Party A pursuant to an
amendment to this Agreement, or (iv) take other steps, if any, to enable the
Trust to satisfy the Rating Agency Condition. Notwithstanding the foregoing, in
the event that Party A's long term rating or short term rating is withdrawn by
S&P, it shall, subject to the Rating Agency Condition, cause another entity to
replace Party A as party to this Agreement that meets or exceeds the Required
Counterparty Rating on terms substantially similar to this Agreement within 30
days from such ratings withdrawal. For purposes of this provision, "Rating
Agency Condition" means, with respect to any particular proposed act or omission
to act hereunder that the party acting or failing to act must consult with each
of the Rating Agencies then providing a rating of the Certificates and receive
from each Rating Agency a prior written confirmation that the proposed action or
inaction would not cause a downgrade or withdrawal of the then current rating of
the Certificates.
Notwithstanding the foregoing, within 10 days from the occurrence of any of the
following conditions, Party A must use its commercially reasonable efforts to
find a party, subject to the Rating Agency Condition, acceptable to Party B,
which acceptance shall not be unreasonably withheld, to whom all of Party A's
interests and obligations under this Agreement shall be assigned at no cost to
Party B, and following which Party A shall be released from all further
obligations under this Agreement:
(i) Party A's Short Term rating is reduced below "A-3" by S&P or Party A's
Long Term rating is reduced below "BBB-" by S&P;
(ii) Party A's Short Term rating is reduced below "F3" by Fitch or Party
A's Long Term rating is reduced below "BBB-" by Fitch; or
(iii) A) if Party A has only a long-term rating, its rating is reduced
below "A2" by Moody's, or (B) if Party A has a long-term rating and a
short-term rating, its rating is reduced below "A3" or "P2", if
applicable, by Moody's.
For purposes of this provision, "Required Counterparty Rating" means, with
respect to a counterparty or entity guaranteeing the obligations of such
counterparty, (x) either (i) if such counterparty or entity has only a long-term
rating by Moody's, a long-term senior, unsecured debt obligation rating, credit
rating or other similar rating (as the case may be, the "Long-Term Rating") of
at least "Aa3" by Moody's and if rated "Aa3" by Xxxxx'x is not on negative
credit watch by Moody's or (ii) if such counterparty or entity has a Long-Term
Rating and a short-term rating by Moody's, a Long-Term Rating of at least "A1"
by Moody's and a short-term rating of "P-1" by Moody's and, in each case, such
rating is not on negative credit watch by Moody's, (y) (i) a short-term rating
of at least "A-1" by S&P or (ii) if such counterparty or entity does not have a
short-term rating by S&P, a Long-Term Rating of at least "A+" by S&P and (z) (i)
short-term rating of at least "F1" by Fitch or (ii) if such counterparty or
entity does not have a short-term rating by Fitch, a Long-Term Rating of at
least "A+" by Fitch.
NEITHER BARCLAYS BANK PLC NOR ANY SUBSIDIARY OR AFFILIATE OF BARCLAYS BANK PLC
OTHER THAN BARCLAYS IS AN OBLIGOR OR A CREDIT SUPPORT PROVIDER ON THIS
AGREEMENT.
Exhibit A
The time of dealing will be confirmed by Barclays upon written request. Barclays
is regulated by the Financial Services Authority. Barclays is acting for its own
account in respect of this Transaction.
Please confirm that the foregoing correctly sets forth all the terms and
conditions of our agreement with respect to the Transaction by responding within
three (3) Business Days by promptly signing in the space provided below and both
(i) faxing the signed copy to Incoming Transaction Documentation, Barclays
Capital Global OTC Transaction Documentation & Management, Global Operations,
Fax x(00) 00-0000-0000/6857, Tel x(00) 00-0000-0000/6904/6965, and (ii) mailing
the signed copy to Barclays Bank PLC, 5 Xxx Xxxxx Xxxxxxxxx, Xxxxxx Xxxxx,
Xxxxxx X00 0XX Attention of Incoming Transaction Documentation, Barclays Capital
Global OTC Transaction Documentation & Management, Global Operations. Your
failure to respond within such period shall not affect the validity or
enforceability of the Transaction as against you. This facsimile shall be the
only documentation in respect of the Transaction and accordingly no hard copy
versions of this Confirmation for this Transaction shall be provided unless the
Counterparty requests.
For and on behalf of BARCLAYS BANK PLC For and on behalf of
Securitized Asset Backed Receivables
LLC Trust 2006-FR3
By: Xxxxx Fargo Bank, National
Association, not individually, but
solely as trustee
/s/ Xxxx Xxxxxxx /s/ Xxx Xxxxx
-------------------------------------- ---------------------------------------
NAME Xxxx Xxxxxxx NAME Xxx Xxxxx
Authorised Signatory Authorised Signatory
Date: August 3, 2006 Date: August 3, 2006
Barclays Bank PLC and its affiliates, including Barclays Capital Inc., may share
with each other information, including non-public credit information, concerning
its clients and prospective clients. If you do not want such information to be
shared, you must write to the Director of Compliance, Barclays Bank PLC, 000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Annex I
Cap Notional Amount Amortization Schedule
Period Period Cap Notional
Period Start Date End Date Amount (in USD)
1 3-Aug-06 25-Aug-06 0
2 25-Aug-06 25-Sep-06 10,188,341.90
3 25-Sep-06 25-Oct-06 20,501,711.10
4 25-Oct-06 25-Nov-06 30,885,282.30
5 25-Nov-06 25-Dec-06 41,283,197.11
6 25-Dec-06 25-Jan-07 51,638,957.64
7 25-Jan-07 25-Feb-07 61,895,833.93
8 25-Feb-07 25-Mar-07 71,989,415.66
9 25-Mar-07 25-Apr-07 81,866,812.23
10 25-Apr-07 25-May-07 91,472,954.25
11 25-May-07 25-Jun-07 100,754,227.71
12 25-Jun-07 25-Jul-07 109,496,166.61
13 25-Jul-07 25-Aug-07 117,354,201.45
14 25-Aug-07 25-Sep-07 124,385,646.28
15 25-Sep-07 25-Oct-07 124,304,772.33
16 25-Oct-07 25-Nov-07 121,078,214.05
17 25-Nov-07 25-Dec-07 118,052,477.90
18 25-Dec-07 25-Jan-08 115,034,111.67
19 25-Jan-08 25-Feb-08 110,641,580.15
20 25-Feb-08 25-Mar-08 115,255,824.34
21 25-Mar-08 25-Apr-08 133,088,387.35
22 25-Apr-08 25-May-08 134,214,576.57
23 25-May-08 25-Jun-08 132,880,477.75
24 25-Jun-08 25-Jul-08 129,598,985.97
25 25-Jul-08 25-Aug-08 124,216,299.31
26 25-Aug-08 25-Sep-08 113,047,759.49
27 25-Sep-08 25-Oct-08 103,458,604.84
28 25-Oct-08 25-Nov-08 98,538,614.33
29 25-Nov-08 25-Dec-08 92,070,959.09
30 25-Dec-08 25-Jan-09 84,499,922.01
31 25-Jan-09 25-Feb-09 76,156,407.98
32 25-Feb-09 25-Mar-09 67,289,628.51
33 25-Mar-09 25-Apr-09 58,002,189.93
34 25-Apr-09 25-May-09 48,534,400.54
35 25-May-09 25-Jun-09 39,003,002.43
36 25-Jun-09 25-Jul-09 29,495,789.87
37 25-Jul-09 25-Aug-09 20,148,030.22
38 25-Aug-09 25-Sep-09 10,942,242.02
39 25-Sep-09 25-Oct-09 2,095,772.70
Annex II
Swap Notional Amount Amortization Schedule
Day
Period Start Period End Swap Notional Count
Period Date Date Amount Fraction
1 03-Aug-06 25-Aug-06 962,418,784.70 30/360
2 25-Aug-06 25-Sep-06 933,276,914.97 30/360
3 25-Sep-06 25-Oct-06 903,371,423.58 30/360
4 25-Oct-06 25-Nov-06 872,798,453.70 30/360
5 25-Nov-06 25-Dec-06 841,656,697.30 30/360
6 25-Dec-06 25-Jan-07 810,046,849.95 30/360
7 25-Jan-07 25-Feb-07 778,071,044.44 30/360
8 25-Feb-07 25-Mar-07 745,531,652.32 30/360
9 25-Mar-07 25-Apr-07 712,845,594.93 30/360
10 25-Apr-07 25-May-07 680,116,410.94 30/360
11 25-May-07 25-Jun-07 647,446,752.20 30/360
12 25-Jun-07 25-Jul-07 615,387,924.08 30/360
13 25-Jul-07 25-Aug-07 584,912,456.65 30/360
14 25-Aug-07 25-Sep-07 555,942,392.27 30/360
15 25-Sep-07 25-Oct-07 528,402,773.31 30/360
16 25-Oct-07 25-Nov-07 502,222,427.35 30/360
17 25-Nov-07 25-Dec-07 477,333,740.13 30/360
18 25-Dec-07 25-Jan-08 453,672,504.82 30/360
19 25-Jan-08 25-Feb-08 431,174,227.64 30/360
20 25-Feb-08 25-Mar-08 398,402,439.56 30/360
21 25-Mar-08 25-Apr-08 347,674,624.51 30/360
22 25-Apr-08 25-May-08 303,641,270.61 30/360
23 25-May-08 25-Jun-08 265,395,004.18 30/360
24 25-Jun-08 25-Jul-08 232,160,844.89 30/360
25 25-Jul-08 25-Aug-08 203,851,334.91 30/360
26 25-Aug-08 25-Sep-08 180,723,912.51 30/360
27 25-Sep-08 25-Oct-08 161,556,599.54 30/360
28 25-Oct-08 25-Nov-08 145,471,829.41 30/360
29 25-Nov-08 25-Dec-08 131,820,356.20 30/360
30 25-Dec-08 25-Jan-09 120,120,631.08 30/360
31 25-Jan-09 25-Feb-09 110,006,050.34 30/360
32 25-Feb-09 25-Mar-09 101,193,204.93 30/360
33 25-Mar-09 25-Apr-09 93,459,403.90 30/360
34 25-Apr-09 25-May-09 86,625,130.43 30/360
35 25-May-09 25-Jun-09 80,549,542.44 30/360
36 25-Jun-09 25-Jul-09 75,119,063.41 30/360
37 25-Jul-09 25-Aug-09 70,169,365.26 30/360
38 25-Aug-09 25-Sep-09 65,503,436.66 30/360
39 25-Sep-09 25-Oct-09 61,104,864.37 30/360
40 25-Oct-09 25-Nov-09 56,957,886.98 30/360
41 25-Nov-09 25-Dec-09 53,048,047.69 30/360
42 25-Dec-09 25-Jan-10 49,361,636.97 30/360
43 25-Jan-10 25-Feb-10 45,885,746.25 30/360
44 25-Feb-10 25-Mar-10 42,848,733.26 30/360
45 25-Mar-10 25-Apr-10 39,984,453.32 30/360
46 25-Apr-10 25-May-10 37,283,131.36 30/360
47 25-May-10 25-Jun-10 34,735,263.34 30/360
48 25-Jun-10 25-Jul-10 32,332,027.42 30/360
49 25-Jul-10 25-Aug-10 30,065,114.21 30/360
50 25-Aug-10 25-Sep-10 27,926,696.63 30/360
51 25-Sep-10 25-Oct-10 25,909,457.92 30/360
52 25-Oct-10 25-Nov-10 24,006,349.73 30/360
53 25-Nov-10 25-Dec-10 22,210,874.31 30/360
54 25-Dec-10 25-Jan-11 20,516,868.00 30/360
55 25-Jan-11 25-Feb-11 18,918,523.99 30/360
56 25-Feb-11 25-Mar-11 17,590,748.92 30/360
57 25-Mar-11 25-Apr-11 16,337,310.24 30/360
[Rest of Page Left Intentionally Blank]
EXHIBIT V
ADDITIONAL DISCLOSURE NOTIFICATION
Securitized Asset Backed Receivables LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [_________]
Xxxxx Fargo Bank, N.A., as Trustee
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
E-mail: x&x.xxx.xxxxxxxxxxxx@Xxxxxxxxxx.xxx
Attn: Corporate Trust Services - SABR 2006-FR3--SEC REPORT PROCESSING
Re: RE: **Additional Form [10-D][10-K][8-K] Disclosure** Required
Ladies and Gentlemen:
In accordance with Section [ ] of the Pooling and Servicing
Agreement, dated as of [____] [__], 2006, among [____], as [____], [____], as
[____], [____], as [____] and [____], as [____]. The undersigned, as [____],
hereby notifies you that certain events have come to our attention that [will]
[may] need to be disclosed on Form [10-D][10-K][8-K].
Description of Additional Form [10-D][10-K][8-K] Disclosure:
List of any Attachments hereto to be included in the Additional Form
[10-D][10-K][8-K] Disclosure:
Any inquiries related to this notification should be directed to
[____], phone number: [____]; email address: [____].
[NAME OF PARTY],
as [role]
By:____________________________________
Name:
Title:
