Exhibit 4.1
EXECUTION COPY
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
Depositor
WILSHIRE CREDIT CORPORATION,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
----------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 2006
----------
SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-BC4
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.................................................... 11
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES.. 60
SECTION 2.01. Conveyance of Mortgage Loans........................... 60
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans............ 63
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.............................................. 64
SECTION 2.04. Representations and Warranties of the Servicer......... 67
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans Which
Are Not "Qualified Mortgages".......................... 68
SECTION 2.06. Authentication and Delivery of Certificates............ 69
SECTION 2.07. REMIC Elections........................................ 69
SECTION 2.08. Covenants of the Servicer.............................. 74
SECTION 2.09. [RESERVED]............................................. 74
SECTION 2.10. [RESERVED]............................................. 74
SECTION 2.11. Permitted Activities of the Issuing Entity............. 74
SECTION 2.12. Qualification of Special Purpose Entity................ 74
SECTION 2.13. Depositor Notification of NIM Notes.................... 74
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS............... 75
SECTION 3.01. Servicer to Service Mortgage Loans..................... 75
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer................................ 76
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
the Servicer........................................... 77
SECTION 3.04. Trustee to Act as Servicer............................. 77
SECTION 3.05. Collection of Mortgage Loan Payments; Collection
Account; Certificate Account........................... 78
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts........................................ 81
SECTION 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans........................... 82
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.................................... 82
SECTION 3.09. [RESERVED]............................................. 84
SECTION 3.10. Maintenance of Hazard Insurance........................ 84
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements............................................. 85
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TABLE OF CONTENTS
(continued)
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SECTION 3.12. Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds....................... 86
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files........ 90
SECTION 3.14. Documents Records and Funds in Possession of Servicer
to be Held for the Trustee............................. 91
SECTION 3.15. Servicing Compensation................................. 92
SECTION 3.16. Access to Certain Documentation........................ 92
SECTION 3.17. Annual Statement as to Compliance...................... 92
SECTION 3.18. Assessment of Compliance; Accountant's Attestation..... 93
SECTION 3.19. Subordination Liens.................................... 95
SECTION 3.20. Periodic Filings....................................... 95
SECTION 3.21. Indemnification by Trustee............................. 99
SECTION 3.22. Indemnification by Servicer............................ 100
SECTION 3.23. Prepayment Charge Reporting Requirements............... 100
SECTION 3.24. Statements to Trustee.................................. 100
SECTION 3.25. Further Indemnification by the Servicer................ 101
SECTION 3.26. Nonsolicitation........................................ 101
SECTION 3.27. Existing Servicing Agreement........................... 101
SECTION 3.28. High Cost Mortgage Loans............................... 101
SECTION 3.29. [RESERVED]............................................. 101
ARTICLE IV DISTRIBUTIONS................................................. 102
SECTION 4.01. Advances............................................... 102
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls......................... 102
SECTION 4.03. Distributions on the REMIC Interests................... 102
SECTION 4.04. Distributions.......................................... 102
SECTION 4.05. Monthly Statements to Certificateholders............... 111
ARTICLE V THE CERTIFICATES............................................... 115
SECTION 5.01. The Certificates....................................... 115
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates............................... 116
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...... 120
SECTION 5.04. Persons Deemed Owners.................................. 120
ii
TABLE OF CONTENTS
(continued)
PAGE
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SECTION 5.05. Access to List of Certificateholders' Names and
Addresses.............................................. 120
SECTION 5.06. Book-Entry Certificates................................ 121
SECTION 5.07. Notices to Depository.................................. 122
SECTION 5.08. Definitive Certificates................................ 122
SECTION 5.09. Maintenance of Office or Agency........................ 122
ARTICLE VI THE DEPOSITOR AND THE SERVICER................................ 122
SECTION 6.01. Respective Liabilities of the Depositor and the
Servicer............................................... 122
SECTION 6.02. Merger or Consolidation of the Depositor or the
Servicer............................................... 123
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer
and Others............................................. 123
SECTION 6.04. Limitation on Resignation of Servicer.................. 123
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds......... 124
ARTICLE VII DEFAULT; TERMINATION OF SERVICER............................. 124
SECTION 7.01. Events of Default...................................... 124
SECTION 7.02. [RESERVED]............................................. 126
SECTION 7.03. Trustee to Act; Appointment of Successor............... 126
SECTION 7.04. Notification to Certificateholders..................... 127
ARTICLE VIII CONCERNING THE TRUSTEE...................................... 127
SECTION 8.01. Duties of Trustee...................................... 127
SECTION 8.02. Certain Matters Affecting the Trustee.................. 128
SECTION 8.03. Trustee Not Liable for Mortgage Loans.................. 130
SECTION 8.04. Trustee May Own Certificates........................... 130
SECTION 8.05. Trustee's Fees......................................... 130
SECTION 8.06. Indemnification of Trustee; Expenses................... 130
SECTION 8.07. Eligibility Requirements for Trustee................... 131
SECTION 8.08. Resignation and Removal of Trustee..................... 132
SECTION 8.09. Successor Trustee...................................... 132
SECTION 8.10. Merger or Consolidation of Trustee..................... 133
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.......... 133
SECTION 8.12. Tax Matters............................................ 134
ARTICLE IX TERMINATION................................................... 136
SECTION 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans......................................... 136
SECTION 9.02. Final Distribution on the Certificates................. 138
iii
TABLE OF CONTENTS
(continued)
PAGE
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SECTION 9.03. Additional Termination Requirements.................... 139
ARTICLE X MISCELLANEOUS PROVISIONS....................................... 140
SECTION 10.01. Amendment.............................................. 140
SECTION 10.02. Counterparts........................................... 142
SECTION 10.03. Governing Law.......................................... 142
SECTION 10.04. Intention of Parties................................... 142
SECTION 10.05. Notices................................................ 142
SECTION 10.06. Severability of Provisions............................. 143
SECTION 10.07. Assignment............................................. 143
SECTION 10.08. Limitation on Rights of Certificateholders............. 144
SECTION 10.09. Inspection and Audit Rights............................ 144
SECTION 10.10. Certificates Nonassessable and Fully Paid.............. 144
SECTION 10.11. [RESERVED]............................................. 145
SECTION 10.12. [RESERVED]............................................. 145
SECTION 10.13. Third Party Rights..................................... 145
SECTION 10.14. Assignment; Sales; Advance Facilities.................. 145
iv
EXHIBIT A FORMS OF OFFERED CERTIFICATES
EXHIBIT B-1 MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
EXHIBIT B-2 MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
EXHIBIT B-3 MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1 FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM OF TRANSFEROR CERTIFICATE FOR CLASS P AND CLASS C CERTIFICATES
EXHIBIT G FORM OF INVESTMENT LETTER
EXHIBIT H FORM OF RULE 144A INVESTMENT LETTER
EXHIBIT I REQUEST FOR RELEASE OF DOCUMENTS
EXHIBIT J FORM OF POWER OF ATTORNEY
EXHIBIT K FORM OF BACK-UP CERTIFICATION OF TRUSTEE
EXHIBIT L FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M [RESERVED]
EXHIBIT N FORM OF AUCTION PROCEDURES
EXHIBIT O-1 FORM OF CLASS A-1 CAP CONTRACT
EXHIBIT O-2 FORM OF CLASS A-2 CAP CONTRACT
EXHIBIT O-3 FORM OF SUBORDINATE CERTIFICATE CONTRACT
EXHIBIT P-1 ONE MONTH LIBOR CAP TABLE - A-1 CAP CONTRACT
EXHIBIT P-2 ONE MONTH LIBOR CAP TABLE - A-2 CAP CONTRACT
EXHIBIT P-3 ONE MONTH LIBOR CAP TABLE - SUBORDINATE CERTIFICATE CAP CONTRACT
EXHIBIT Q FORM OF ASSESSMENT OF COMPLIANCE
EXHIBIT R SERVICING CRITERIA TO BE ADDRESSED
EXHIBIT S FORM OF XXXXXXXX-XXXXX CERTIFICATION
EXHIBIT T FORM OF ITEM 1123 CERTIFICATION OF SERVICER
EXHIBIT U FORM OF SWAP AGREEMENT
SCHEDULE V ITEMS FOR FORM 8-K
SCHEDULE W ITEMS FOR FORM 10-D
SCHEDULE X ITEMS FOR FORM 10-K
POOLING AND SERVICING AGREEMENT, dated as of September 1, 2006 (the
"Agreement"), among XXXXXXX XXXXX MORTGAGE INVESTORS, INC., a Delaware
corporation, as depositor (the "Depositor"), WILSHIRE CREDIT CORPORATION, a
Nevada corporation, as servicer (the "Servicer"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (the "Trustee").
The Depositor is the owner of the Trust Fund that is hereby conveyed to the
Trustee in return for the Certificates. The Trust Fund for federal income tax
purposes will consist of (i) three real estate mortgage investment conduits in a
tiered structure, (ii) the right to receive the payments distributable to the
Class P Certificates pursuant to Section 4.04(b)(i) hereof, (iii) each Cap
Contract and the Cap Contract Account, (iv) the grantor trusts described in
Section 2.07 hereof and (v) the Supplemental Interest Trust, which in turn will
hold the Swap Agreement. The SWAP REMIC will consist of all of the assets
constituting the Trust Fund (other than the assets described in clauses (ii),
(iii), (iv) and (v) above, other than the SWAP REMIC Regular Interests and other
than the Lower Tier REMIC Regular Interests) and will be evidenced by the SWAP
REMIC Regular Interests (which will be uncertificated and will represent the
"regular interests" in the SWAP REMIC) and the Class SWR Interest as the single
"residual interest" in the SWAP REMIC. The Lower Tier REMIC will consist of SWAP
REMIC Regular Interests and will be evidenced by the Lower Tier REMIC Regular
Interests (which will be uncertificated and will represent the "regular
interests" in the Lower Tier REMIC) and the Class LTR Interest as the single
"residual interest" in the Lower Tier REMIC. The Trustee will hold the Lower
Tier REMIC Regular Interests. The Upper Tier REMIC will consist of the Lower
Tier REMIC Regular Interests and will be evidenced by the REMIC Regular
Interests (which will represent the "regular interests" in the Upper Tier REMIC)
and the Residual Interest as the single "residual interest" in the Upper Tier
REMIC. The Class R Certificate will represent beneficial ownership of the Class
SWR Interest, the Class LTR Interest and the Residual Interest. The "latest
possible maturity date" for federal income tax purposes of all interests created
hereby will be the Latest Possible Maturity Date.
All covenants and agreements made by the Sponsor in the Sale Agreement and
by the Depositor and the Trustee herein with respect to the Mortgage Loans and
the other property constituting the Trust Fund are for the benefit of the
Holders from time to time of the Certificates.
THE SWAP REMIC
The following table sets forth the designations, initial principal balances and
interest rates for each interest in the SWAP REMIC:
Initial
Principal Interest
Class Balance Rate
----- --------------- --------
1-SW1 $86,497,363.547 (1)
1-SW1A $ 9,138,567.494 (2)
1-SW1B $ 9,138,567.494 (3)
1-SW2A $ 9,952,405.630 (2)
1-SW2B $ 9,952,405.630 (3)
1-SW3A $10,653,301.220 (2)
1-SW3B $10,653,301.220 (3)
1-SW4A $11,158,936.983 (2)
1-SW4B $11,158,936.983 (3)
1-SW5A $11,361,862.267 (2)
1-SW5B $11,361,862.267 (3)
1-SW6A $11,148,663.353 (2)
1
1-SW6B $11,148,663.353 (3)
1-SW7A $10,718,138.050 (2)
1-SW7B $10,718,138.050 (3)
1-SW8A $10,081,358.688 (2)
1-SW8B $10,081,358.688 (3)
1-SW9A $ 9,451,830.285 (2)
1-SW9B $ 9,451,830.285 (3)
1-SW10A $ 8,742,067.013 (2)
1-SW10B $ 8,742,067.013 (3)
1-SW11A $ 8,069,933.408 (2)
1-SW11B $ 8,069,933.408 (3)
1-SW12A $ 7,500,574.498 (2)
1-SW12B $ 7,500,574.498 (3)
1-SW13A $ 7,066,550.651 (2)
1-SW13B $ 7,066,550.651 (3)
1-SW14A $ 6,981,383.080 (2)
1-SW14B $ 6,981,383.080 (3)
1-SW15A $ 7,543,289.397 (2)
1-SW15B $ 7,543,289.397 (3)
1-SW16A $ 8,918,756.995 (2)
1-SW16B $ 8,918,756.995 (3)
1-SW17A $10,465,919.975 (2)
1-SW17B $10,465,919.975 (3)
1-SW18A $10,291,956.481 (2)
1-SW18B $10,291,956.481 (3)
1-SW19A $ 8,337,690.561 (2)
1-SW19B $ 8,337,690.561 (3)
1-SW20A $ 6,639,792.912 (2)
1-SW20B $ 6,639,792.912 (3)
1-SW21A $ 5,435,214.685 (2)
1-SW21B $ 5,435,214.685 (3)
1-SW22A $ 2,105,538.887 (2)
1-SW22B $ 2,105,538.887 (3)
1-SW23A $ 2,911,240.391 (2)
1-SW23B $ 2,911,240.391 (3)
1-SW24A $ 3,092,567.154 (2)
1-SW24B $ 3,092,567.154 (3)
1-SW25A $ 2,902,816.459 (2)
1-SW25B $ 2,902,816.459 (3)
1-SW26A $ 2,776,346.728 (2)
1-SW26B $ 2,776,346.728 (3)
1-SW27A $ 2,741,480.636 (2)
1-SW27B $ 2,741,480.636 (3)
1-SW28A $ 2,693,257.128 (2)
1-SW28B $ 2,693,257.128 (3)
1-SW29A $ 2,521,655.773 (2)
1-SW29B $ 2,521,655.773 (3)
1-SW30A $ 2,230,501.071 (2)
2
1-SW30B $ 2,230,501.071 (3)
1-SW31A $ 1,947,920.481 (2)
1-SW31B $ 1,947,920.481 (3)
1-SW32A $ 1,728,087.260 (2)
1-SW32B $ 1,728,087.260 (3)
1-SW33A $ 1,571,969.872 (2)
1-SW33B $ 1,571,969.872 (3)
1-SW34A $ 1,440,372.859 (2)
1-SW34B $ 1,440,372.859 (3)
1-SW35A $ 1,319,328.420 (2)
1-SW35B $ 1,319,328.420 (3)
1-SW36A $ 1,210,869.340 (2)
1-SW36B $ 1,210,869.340 (3)
1-SW37A $ 1,114,940.250 (2)
1-SW37B $ 1,114,940.250 (3)
1-SW38A $ 1,031,220.416 (2)
1-SW38B $ 1,031,220.416 (3)
1-SW39A $ 957,049.169 (2)
1-SW39B $ 957,049.169 (3)
1-SW40A $ 890,955.787 (2)
1-SW40B $ 890,955.787 (3)
1-SW41A $ 834,990.556 (2)
1-SW41B $ 834,990.556 (3)
1-SW42A $ 774,560.926 (2)
1-SW42B $ 774,560.926 (3)
1-SW43A $ 738,327.542 (2)
1-SW43B $ 738,327.542 (3)
1-SW44A $14,858,361.862 (2)
1-SW44B $14,858,361.862 (3)
2-SW2 $79,090,348.653 (4)
2-SW1A $ 8,356,006.006 (5)
2-SW1B $ 8,356,006.006 (6)
2-SW2A $ 9,100,152.870 (5)
2-SW2B $ 9,100,152.870 (6)
2-SW3A $ 9,741,028.780 (5)
2-SW3B $ 9,741,028.780 (6)
2-SW4A $10,203,365.517 (5)
2-SW4B $10,203,365.517 (6)
2-SW5A $10,388,913.733 (5)
2-SW5B $10,388,913.733 (6)
2-SW6A $10,193,971.647 (5)
2-SW6B $10,193,971.647 (6)
2-SW7A $ 9,800,313.450 (5)
2-SW7B $ 9,800,313.450 (6)
2-SW8A $ 9,218,063.312 (5)
2-SW8B $ 9,218,063.312 (6)
2-SW9A $ 8,642,443.215 (5)
2-SW9B $ 8,642,443.215 (6)
3
2-SW10A $ 7,993,458.987 (5)
2-SW10B $ 7,993,458.987 (6)
2-SW11A $ 7,378,882.092 (5)
2-SW11B $ 7,378,882.092 (6)
2-SW12A $ 6,858,279.002 (5)
2-SW12B $ 6,858,279.002 (6)
2-SW13A $ 6,461,421.849 (5)
2-SW13B $ 6,461,421.849 (6)
2-SW14A $ 6,383,547.420 (5)
2-SW14B $ 6,383,547.420 (6)
2-SW15A $ 6,897,336.103 (5)
2-SW15B $ 6,897,336.103 (6)
2-SW16A $ 8,155,018.505 (5)
2-SW16B $ 8,155,018.505 (6)
2-SW17A $ 9,569,693.525 (5)
2-SW17B $ 9,569,693.525 (6)
2-SW18A $ 9,410,627.019 (5)
2-SW18B $ 9,410,627.019 (6)
2-SW19A $ 7,623,710.439 (5)
2-SW19B $ 7,623,710.439 (6)
2-SW20A $ 6,071,208.588 (5)
2-SW20B $ 6,071,208.588 (6)
2-SW21A $ 4,969,781.815 (5)
2-SW21B $ 4,969,781.815 (6)
2-SW22A $ 1,925,235.613 (5)
2-SW22B $ 1,925,235.613 (6)
2-SW23A $ 2,661,942.609 (5)
2-SW23B $ 2,661,942.609 (6)
2-SW24A $ 2,827,741.846 (5)
2-SW24B $ 2,827,741.846 (6)
2-SW25A $ 2,654,240.041 (5)
2-SW25B $ 2,654,240.041 (6)
2-SW26A $ 2,538,600.272 (5)
2-SW26B $ 2,538,600.272 (6)
2-SW27A $ 2,506,719.864 (5)
2-SW27B $ 2,506,719.864 (6)
2-SW28A $ 2,462,625.872 (5)
2-SW28B $ 2,462,625.872 (6)
2-SW29A $ 2,305,719.227 (5)
2-SW29B $ 2,305,719.227 (6)
2-SW30A $ 2,039,496.929 (5)
2-SW30B $ 2,039,496.929 (6)
2-SW31A $ 1,781,114.519 (5)
2-SW31B $ 1,781,114.519 (6)
2-SW32A $ 1,580,106.240 (5)
2-SW32B $ 1,580,106.240 (6)
2-SW33A $ 1,437,357.628 (5)
2-SW33B $ 1,437,357.628 (6)
4
2-SW34A $ 1,317,029.641 (5)
2-SW34B $ 1,317,029.641 (6)
2-SW35A $ 1,206,350.580 (5)
2-SW35B $ 1,206,350.580 (6)
2-SW36A $ 1,107,179.160 (5)
2-SW36B $ 1,107,179.160 (6)
2-SW37A $ 1,019,464.750 (5)
2-SW37B $ 1,019,464.750 (6)
2-SW38A $ 942,914.084 (5)
2-SW38B $ 942,914.084 (6)
2-SW39A $ 875,094.331 (5)
2-SW39B $ 875,094.331 (6)
2-SW40A $ 814,660.713 (5)
2-SW40B $ 814,660.713 (6)
2-SW41A $ 763,487.944 (5)
2-SW41B $ 763,487.944 (6)
2-SW42A $ 708,233.074 (5)
2-SW42B $ 708,233.074 (6)
2-SW43A $ 675,102.458 (5)
2-SW43B $ 675,102.458 (6)
2-SW44A $13,585,998.138 (5)
2-SW44B $13,585,998.138 (6)
SWR (7) (7)
(1) The interest rate on the Class 1-SW1 Interest shall be a per annum rate
equal to the Group One Net WAC.
(2) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the designation
"A" shall be a per annum rate equal to 2 times the Group One Net WAC,
subject to a maximum rate of 2 times the REMIC Swap Rate for such
Distribution Date.
(3) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the designation
"B" shall be a per annum rate equal to the greater of (x) the excess, if
any, of (i) 2 times the Group One Net WAC over (ii) 2 times the REMIC Swap
Rate for such Distribution Date and (y) 0.00%.
(4) The interest rate on the Class 2-SW2 Interest shall be a per annum rate
equal to the Group Two Net WAC.
(5) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "2" and ending with the designation
"A" shall be a per annum rate equal to 2 times the Group Two Net WAC,
subject to a maximum rate of 2 times the REMIC Swap Rate for such
Distribution Date.
(6) For any Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "2" and ending with the designation
"B" shall be a per annum rate equal to the greater of (x) the excess, if
any, of (i) 2 times the Group Two Net WAC over (ii) 2 times the REMIC Swap
Rate for such Distribution Date and (y) 0.00%.
(7) The Class SWR Interest shall have no principal amount and shall bear no
interest.
THE LOWER TIER REMIC
5
The following table sets forth the designations, initial principal
balances, interest rates, Corresponding Classes of Certificates and related
Mortgage Group for each interest in the Lower Tier REMIC:
Class(es) of
Corresponding
Initial Certificates
Principal Interest or Related
Class Balance Rate Mortgage Group
----- --------- -------- --------------
LTA-1 (1) (8) A-1, R
LTA-2A (1) (8) A-2A
LTA-2B (1) (8) A-2B
LTA-2C (1) (8) A-2C
LTA-2D (1) (8) A-2D
LTM-1 (1) (8) M-1
LTM-2 (1) (8) M-2
LTM-3 (1) (8) M-3
LTM-4 (1) (8) M-4
LTM-5 (1) (8) M-5
LTM-6 (1) (8) M-6
LTB-1 (1) (8) B-1
LTB-2 (1) (8) B-2
LTB-3 (1) (8) B-3
LTIX (2) (8) N/A
LTII1A (3) (8) Group One
LTII1B (4) (9) Group One
LTII2A (5) (8) Group Two
LTII2B (6) (10) Group Two
LTIIX (7) (8) N/A
LT-IO (11) (11) N/A
LTR (12) (12) N/A
(1) The initial principal balance of each of these Lower Tier REMIC Regular
Interests shall equal 1/4 of the initial Certificate Principal Balance of
its Corresponding Certificates.
(2) The initial principal balance of the Class LTIX Interest shall equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance of the
Mortgage Loans over (ii) the initial principal balance of the Lower Tier
REMIC I Marker Interests.
(3) The initial principal balance of the Class LTII1A Interest shall equal
0.05% of the excess of (i) the aggregate Cut-off Date Principal Balance of
the Group One Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal Balances of Certificate Group One.
(4) The initial principal balance of the Class LTII1B Interest shall equal
0.05% of the aggregate Cut-off Date Principal Balance of the Group One
Mortgage Loans.
(5) The initial principal balance of the Class LTII2A Interest shall equal
0.05% of the excess of (i) the aggregate Cut-off Date Principal Balance of
the Group Two Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal Balances of Certificate Group Two.
(6) The initial principal balance of the Class LTII2B Interest shall equal
0.05% of the aggregate Cut-off Date Principal Balance of the Group Two
Mortgage Loans.
6
(7) The initial principal balance of the Class LTIIX Interest shall equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance of the
Mortgage Loans over (ii) the initial principal balance of the Lower Tier
REMIC II Marker Interests.
(8) For each Distribution Date, the interest rate for each of the Lower Tier
REMIC Regular Interests (other than the Class LTII1B, the Class LTII2B and
the Class LT-IO Interests) shall be a per annum rate (but not less than
zero) equal to the product of (i) the weighted average of the interest
rates on the SWAP REMIC Regular Interests for such Distribution Date and
(ii) a fraction the numerator of which is 30 and the denominator of which
is the actual number of days in the Accrual Period for the LIBOR
Certificates, provided however, that for any Distribution Date on which the
Class LT-IO Interest is entitled to a portion of interest accruals on a
SWAP REMIC Regular Interest ending with a designation "A" as described in
footnote 11 below, such weighted average shall be computed by first
subjecting the rate on such SWAP REMIC Regular Interest to a cap equal to
Swap LIBOR for such Distribution Date.
(9) For each Distribution Date, the interest rate for the Class LTII1B Interest
shall be a per annum rate equal to the product of (i) the weighted average
of the interest rates on the SWAP REMIC Regular Interests beginning with
the designation "1" for such Distribution Date and (ii) a fraction the
numerator of which is 30 and the denominator of which is the actual number
of days in the Accrual Period for the LIBOR Certificates, provided,
however, that for any Distribution Date on which the Class LT-IO Interest
is entitled to a portion of interest accruals on a SWAP REMIC Regular
Interest ending with a designation "A" as described in footnote 11 below,
such weighted average shall be computed by first subjecting the rate on
such SWAP REMIC Regular Interest to a cap equal to Swap LIBOR for such
Distribution Date.
(10) For each Distribution Date, the interest rate for the Class LTII2B Interest
shall be a per annum rate equal to the product of (i) the weighted average
of the interest rates on the SWAP REMIC Regular Interests beginning with
the designation "2" for such Distribution Date and (ii) a fraction the
numerator of which is 30 and the denominator of which is the actual number
of days in the Accrual Period for the LIBOR Certificates, provided,
however, that for any Distribution Date on which the Class LT-IO Interest
is entitled to a portion of interest accruals on a SWAP REMIC Regular
Interest ending with a designation "A" as described in footnote 11 below,
such weighted average shall be computed by first subjecting the rate on
such SWAP REMIC Regular Interest to a cap equal to Swap LIBOR for such
Distribution Date.
(11) The Class LT-IO Interest is an interest-only class that does not have a
principal balance. For only those Distribution Dates listed in the first
column of the table below, the Class LT-IO Interest shall be entitled to
interest accrued on the SWAP REMIC Regular Interest listed in the second
column below at a per annum rate equal to the excess, if any, of (i) the
interest rate for such SWAP REMIC Regular Interest for such Distribution
Date over (ii) Swap LIBOR for such Distribution Date.
SWAP REMIC
Distribution Date Regular Interest
----------------- ----------------
7 Class 1-SW1A
Class 2-SW1A
7-8 Class 1-SW2A
Class 2-SW2A
7-9 Class 1-SW3A
Class 2-SW3A
7-10 Class 1-SW4A
Class 2-SW4A
7-11 Class 1-SW5A
Class 2-SW5A
7-12 Class 1-SW6A
Class 2-SW6A
7-13 Class 1-SW7A
Class 2-SW7A
7-14 Class 1-SW8A
7
Class 2-SW8A
7-15 Class 1-SW9A
Class 2-SW9A
7-16 Class 1-SW10A
Class 2-SW10A
7-17 Class 1-SW11A
Class 2-SW11A
7-18 Class 1-SW12A
Class 2-SW12A
7-19 Class 1-SW13A
Class 2-SW13A
7-20 Class 1-SW14A
Class 2-SW14A
7-21 Class 1-SW15A
Class 2-SW15A
7-22 Class 1-SW16A
Class 2-SW16A
7-23 Class 1-SW17A
Class 2-SW17A
7-24 Class 1-SW18A
Class 2-SW18A
7-25 Class 1-SW19A
Class 2-SW19A
7-26 Class 1-SW20A
Class 2-SW20A
7-27 Class 1-SW21A
Class 2-SW21A
7-28 Class 1-SW22A
Class 2-SW22A
7-30 Class 1-SW23A
Class 2-SW23A
7-31 Class 1-SW24A
Class 2-SW24A
7-32 Class 1-SW25A
Class 2-SW25A
7-33 Class 1-SW26A
Class 2-SW26A
7-34 Class 1-SW27A
Class 2-SW27A
7-35 Class 1-SW28A
Class 2-SW28A
7-36 Class 1-SW29A
Class 2-SW29A
7-37 Class 1-SW30A
Class 2-SW30A
7-38 Class 1-SW31A
Class 2-SW31A
7-39 Class 1-SW32A
Class 2-SW32A
7-40 Class 1-SW33A
Class 2-SW33A
7-41 Class 1-SW34A
Class 2-SW34A
7-42 Class 1-SW35A
Class 2-SW35A
7-43 Class 1-SW36A
8
Class 2-SW36A
7-44 Class 1-SW37A
Class 2-SW37A
7-45 Class 1-SW38A
Class 2-SW38A
7-46 Class 1-SW39A
Class 2-SW39A
7-47 Class 1-SW40A
Class 2-SW40A
7-48 Class 1-SW41A
Class 2-SW41A
7-49 Class 1-SW42A
Class 2-SW42A
7-50 Class 1-SW43A
Class 2-SW43A
7-51 Class 1-SW44A
Class 2-SW44A
(12) The Class LTR Interest shall have no principal amount and shall bear no
interest.
UPPER TIER REMIC
The following table sets forth the designation, the initial principal balances,
the interest rates and Classes of Related Certificates for each of the interests
in the Upper Tier REMIC.
Initial
Principal Class of Related
Class Balance Rate Certificates
----- --------- ---- ----------------
UTA-1 (1) (2) A-1
UTA-2A (1) (2) A-2A
UTA-2B (1) (2) A-2B
UTA-2C (1) (2) A-2C
UTA-2D (1) (2) A-2D
UTM-1 (1) (2) M-1
UTM-2 (1) (2) M-2
UTM-3 (1) (2) M-3
UTM-4 (1) (2) M-4
UTM-5 (1) (2) M-5
UTM-6 (1) (2) M-6
UTB-1 (1) (2) B-1
UTB-2 (1) (2) B-2
UTB-3 (1) (2) B-3
Uncertificated Class C Interest (3) (3) N/A
UT-IO (4) (4) N/A
Residual Interest (1) (2) R
(1) The initial principal balance of each of these REMIC Regular Interests
shall equal the initial principal balance of its Class of Related
Certificates.
(2) The interest rates on each of these REMIC Regular Interests shall be an
annual rate equal to the Pass-Through Rate for the Class of Related
Certificates, provided that in lieu of the applicable Available Funds Caps
set forth in the definition of an applicable Pass-Through Rate, the
applicable Upper Tier REMIC Net WAC Cap shall be used.
9
(3) The Uncertificated Class C Interest shall have an initial principal balance
equal to the initial Overcollateralization Amount. The Uncertificated Class
C Interest shall accrue interest on a notional balance set forth in the
definition of Class C Current Interest at a rate equal to the Class C
Distributable Interest Rate. The Uncertificated Class C Interest shall be
represented by the Class C Certificates.
(4) The Class UT-IO Interest shall have no principal amount and will not have
an interest rate, but will be entitled to 100% of the interest accrued with
respect to the Class LT-IO Interest. The Class UT-IO Interest shall be
represented by the Class C Certificates.
THE CERTIFICATES
The following table sets forth the Class designation, interest rate and initial
Class principal amount for each Class of Certificates comprising interests in
the Trust Fund.
Initial Class
Class Principal Amount Interest Rate
----- ---------------- -------------
A-1 (1) (2)
A-2A (1) (2)
A-2B (1) (2)
A-2C (1) (2)
A-2D (1) (2)
M-1 (1) (2)
M-2 (1) (2)
M-3 (1) (2)
M-4 (1) (2)
M-5 (1) (2)
M-6 (1) (2)
B-1 (1) (2)
B-2 (1) (2)
B-3 (1) (2)
C (3) (3)
P (4) (4)
R (1) (2)(5)
(1) Each of these Classes of Certificates shall have initial principal balances
as set forth in Section 5.01 hereof.
(2) Each of these Classes of Certificates shall bear interest at a per annum
rate equal to the Pass-Through Rate for such Certificates set forth in the
definitions herein.
(3) For federal income tax purposes, the Class C Certificate shall represent
(i) the right to receive all distributions with respect to the REMIC
Regular Interests represented by the Uncertificated Class C Interest and
the Class UT-IO Interest and (ii) certain rights and obligations with
respect to notional principal contracts as described in Section 2.07.
(4) The Class P Certificates shall be entitled to the amounts distributable
pursuant to Section 4.04(b) hereof and shall not represent a REMIC regular
interest.
(5) The Class R Interest represents ownership of the Class SWR Interest, the
Class LTR Interest and the Residual Interest.
10
In consideration of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions that service for their own account mortgage loans of the
same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.
Accountant's Attestation: As defined in Section 3.18 hereof.
Accrual Period: With respect to each Class of the LIBOR Certificates, their
Corresponding REMIC Regular Interests and the Lower Tier REMIC Interests and any
Distribution Date, the period commencing on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) and ending on the day immediately preceding such Distribution Date, and
with respect to the SWAP REMIC Regular Interests and any Distribution Date, the
calendar month immediately preceding the month in which such Distribution Date
occurs. All calculations of interest on each Class of the LIBOR Certificates,
their Corresponding REMIC Regular Interests and the Lower Tier REMIC Interests
will be made on the basis of the actual number of days elapsed in the related
Accrual Period and a 360 day year, and all calculations of interest on the SWAP
REMIC Regular Interests will be made on the basis of a 360-day year consisting
of twelve 30-day months.
Additional Form 10-D Disclosure: As defined in Section 3.20 hereof.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate that is adjustable.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the Servicer
with respect to any Distribution Date pursuant to Section 4.01, the amount of
any such advances being equal to the sum of the aggregate amount of all payments
of principal and interest (or, with respect to interest-only Mortgage Loans,
payments of scheduled interest) (net of the Servicing Fee) on the Mortgage Loans
that were due during the applicable Due Period and not received as of the close
of business on the related Determination Date, except as provided in Section
4.01 hereof, less the aggregate amount of any such Delinquent payments that the
Servicer has determined would constitute a Non-Recoverable Advance were an
advance to be made with respect thereto; provided, however, that with respect to
(i) any Mortgage Loan which is not a first lien Mortgage Loan that is 150 days
delinquent or more (whether or not the Mortgage Loan has been converted to an
REO Property), (ii) shortfalls due to bankruptcy proceedings or the application
of the Relief Act or similar law and (iii) the principal portion of any amount
paid on a Balloon Loan, there will be no obligation to make advances and,
provided further, however, that with respect to any Mortgage Loan that has been
converted to an REO Property which is less than 150 days delinquent, the
obligation to make Advances shall only be to payments of interest (subject to
the exceptions described above and net of the related Servicing Fees), to be
calculated after taking into account rental income.
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Advance Facility: A financing or other facility as described in Section
10.14(a).
Advance Facility Notice: As defined in Section 10.14(b).
Advance Financing Person: As defined in Section 10.14(a).
Advance Reimbursement Amounts: As defined in Section 10.14(a).
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A Certificate
Principal Balance, the Class A-2B Certificate Principal Balance, the Class A-2C
Certificate Principal Balance, the Class A-2D Certificate Principal Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate Principal
Balance, the Class M-2 Certificate Principal Balance, the Class M-3 Certificate
Principal Balance, the Class M-4 Certificate Principal Balance, the Class M-5
Certificate Principal Balance, the Class M-6 Certificate Principal Balance, the
Class B-1 Certificate Principal Balance, the Class B-2 Certificate Principal
Balance, and the Class B-3 Certificate Principal Balance, in each case as of
such date of determination.
Agreement: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.
Applied Realized Loss Amount: With respect to any Distribution Date, the
amount, if any, by which, the sum of (i) the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of which were
used to purchase the related Mortgaged Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (1) the appraised value based on an
appraisal made for the Sponsor by an independent fee appraiser at the time of
the origination of the related Mortgage Loan, and (2) the sales price of such
Mortgaged Property at such time of origination. With respect to a Mortgage Loan
the proceeds of which were used to refinance an existing mortgage loan, the
"Appraised Value" is the appraised value of the Mortgaged Property based upon
the appraisal obtained at the time of refinancing.
Assessment of Compliance: As defined in Section 3.18 hereof.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located to reflect of
record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.
Auction Termination: The termination of the Trust Fund hereunder pursuant
to Section 9.01(a)(i) hereof.
12
Auction Termination Amount: The purchase price received by the Trustee in
connection with any purchase of all of the Mortgage Loans pursuant to Section
9.01(a) (i).
Auction Termination Date: The first Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans (or if such Mortgage
Loan is an REO Property, the fair market value of such REO Property) is equal to
or less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.
Auction Termination Price: In the case of an Auction Termination, as of the
initial Distribution Date on or after the Auction Termination Date, an amount
equal to the sum of (a) the aggregate Stated Principal Balance of each Mortgage
Loan (other than any Mortgage Loan that has become an REO Property), plus
accrued interest thereon at the applicable Mortgage Rate through the Due Date
preceding distribution of the proceeds, (b) the fair market value of any REO
Property, plus accrued interest thereon at the applicable Mortgage Rate, (c) any
unreimbursed fees, indemnification amounts, out-of-pocket costs and expenses
owed to the Trustee or the Servicer (including any costs and expenses incurred
in connection with the Auction Termination) and any unreimbursed Servicing Fees,
Advances and Servicing Advances, (d) all interest accrued on, as well as amounts
necessary to retire, the principal balance of any NIM Notes, (e) any costs and
damages incurred by the Issuing Entity (or the Trustee on behalf of the Issuing
Entity) in connection with any violation of any anti-predatory or anti-abusive
lending laws and (f) any Swap Termination Payment, other than a Defaulted Swap
Termination Payment, owed to the Swap Counterparty; such Swap Termination
Payment shall include any payment resulting from the termination of the Swap
Agreement after the Auction Termination Date but prior to the final distribution
to the Certificates.
Available Funds Cap: Any of the Class A-1 Available Funds Cap, the Class
A-2 Available Funds Cap, and the Subordinate Certificate Available Funds Cap.
Balloon Loan: A Mortgage Loan having an original term to stated maturity of
approximately 15 or 30 years which provides for level monthly payments of
principal and interest based on a 30- or 40-year amortization schedule, with a
balloon payment of the remaining outstanding principal balance due on such
Mortgage Loan at its stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.06). As of the Closing Date, each of
the Class A, Class M and Class B Certificates constitute a Class of Book-Entry
Certificates.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a day
on which banking institutions in the State of Oregon or Minnesota or in the City
of New York, New York are authorized or obligated by law or executive order to
be closed.
Cap Contract: Any of the Class A-1 Cap Contract, the Class A-2 Cap Contract
or the Subordinate Certificate Cap Contract.
Cap Contract Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.04(j) in the name of the Trustee for the
benefit of the Issuing Entity and designated "U.S. Bank National Association, as
trustee, in trust for registered holders of Specialty Underwriting and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2006-BC4." Funds in the
13
Cap Contract Account shall be held in trust for the Issuing Entity for the uses
and purposes set forth in this Agreement.
Cap Contract Counterparty: Bear Xxxxxxx Financial Products, and any
successor thereto.
Cap Contract Notional Balance: Any of the Class A-1 Cap Contract Notional
Balance, the Class A-2 Cap Contract Notional Balance or the Subordinate
Certificate Cap Contract Notional Balance.
Cap Contract Termination Date: Any of the Class A-1 Cap Contract
Termination Date, the Class A-2 Cap Contract Termination Date or the Subordinate
Certificate Cap Contract Termination Date.
Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibit A.
Certificate Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05(f) in the name of the Trustee for the
benefit of the Certificateholders and designated "U.S. Bank National
Association, as trustee, in trust for registered holders of Specialty
Underwriting and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-BC4." Funds in the Certificate Account shall be held
in trust for the Certificateholders for the uses and purposes set forth in this
Agreement.
Certificate Group: Either of Certificate Group One or Certificate Group
Two.
Certificate Group One: The Class A-1 and Class R Certificates. For purposes
of Section 2.07 hereof, Certificate Group One shall be related to Group One.
Certificate Group Two: The Class A-2 Certificates. For purposes of Section
2.07 hereof, Certificate Group Two shall be related to Group Two.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(h). On each Distribution Date, after all distributions of principal on such
Distribution Date, a portion of the Class C Interest Carry Forward Amount in an
amount equal to the excess of the Overcollateralization Amount on such
Distribution Date over the Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the first Distribution Date, the initial
Overcollateralization Amount (based on the Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date)) will be added to the aggregate
Certificate Principal Balance of the Class C Certificates (on a pro rata basis).
Notwithstanding the immediately preceding sentence, however, to the extent any
excess referred to in the immediately preceding sentence is attributable to
distributions of proceeds of the Swap Agreement, such sentence shall be applied
by substituting the "Class C Unpaid Realized Loss Amount" for the "Class C
Interest Carry Forward Amount". Notwithstanding the foregoing on any
Distribution Date relating to a Due Period in which a Subsequent Recovery has
been received by the Servicer, the Certificate Principal Balance of any Class of
Certificates then outstanding for which any Applied Realized Loss Amount has
been allocated will be increased, in order of seniority, by an amount equal to
the lesser of (i) the Unpaid Realized Loss Amount for such Class of Certificates
and (ii) the total of any Subsequent Recovery distributed on such date to the
14
Certificateholders (reduced by the amount of the increase in the Certificate
Principal Balance of any more senior Class of Certificates pursuant to this
sentence on such Distribution Date).
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the Depositor) owns 100% of the Percentage Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be Outstanding
for purposes of any provision hereof that requires the consent of the Holders of
Certificates of a particular Class as a condition to the taking of any action
hereunder. The Trustee is entitled to rely conclusively on a certification of
the Depositor or any Affiliate of the Depositor in determining which
Certificates are registered in the name of an Affiliate of the Depositor.
Class: All Certificates bearing the same Class designation as set forth in
Section 5.01 hereof.
Class A Certificate Principal Balance: For any date of determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A Certificate
Principal Balance, the Class A-2B Certificate Principal Balance, the Class A-2C
Certificate Principal Balance and the Class A-2D Certificate Principal Balance.
Class A Certificates: Any of the Class A-1, Class A-2A, Class A-2B, Class
A-2C and Class A-2D Certificates.
Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Stepdown
Trigger Event exists, 100% of the Principal Distribution Amount for such
Distribution Date and (2) on or after the Stepdown Date where a Stepdown Trigger
Event does not exist, the excess of (A) the Certificate Principal Balance of the
Class A and Class R Certificates immediately prior to such Distribution Date
over (B) the lesser of (1) 53.10% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date, and (2) the excess of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount; provided, however, that in no
event will the Class A Principal Distribution Amount with respect to any
Distribution Date exceed the aggregate Certificate Principal Balance of the
Class A and Class R Certificates.
Class A-1 Available Funds Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest on the Mortgage Loans in Group One based on the Net Mortgage
Rates in effect on the related Due Date, less the pro rata portion (calculated
based on the ratio of the Stated Principal Balance of the Mortgage Loans in
Group One to the Stated Principal Balance of the total pool of Mortgage Loans)
allocable to the Mortgage Loans in Group One of any Net Swap Payments or Swap
Termination Payments (other than Defaulted Swap Termination Payments) owed to
the Swap Counterparty for such Distribution Date, and (y) the aggregate Stated
Principal Balance of the Mortgage Loans in Group One as of the first day of the
related Accrual Period (or, in the case of the first Distribution Date, as of
the Cut-off Date) and (iii) a fraction, the numerator of which is 30, and the
denominator of which is the actual number of days in the related Accrual Period.
15
Class A-1 Cap Contract: The confirmation and agreement and any related
confirmation thereto, between the Trustee, on behalf of the Issuing Entity, and
the Cap Contract Counterparty (in the form of Exhibit O-1 hereto), with respect
to the Class A-1 Certificates.
Class A-1 Cap Contract Notional Balance: With respect to any Distribution
Date, the Class A-1 Cap Contract Notional Balance set forth for such
Distribution Date in the Class A-1 One Month LIBOR Cap Table attached hereto as
Exhibit P-1.
Class A-1 Cap Contract Termination Date: The Distribution Date after the
Distribution Date in March 2007.
Class A-1 Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-1 Certificates.
Class A-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1 Pass-Through Rate on
the Class A-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-1
Current Interest or a Class A-1 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-1
Certificates.
Class A-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-1 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-1 Pass-Through Rate for the
related Accrual Period.
Class A-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.1400% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.2800% per annum.
Class A-1 Maximum Rate Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest that would have been due on the Group One Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans provided for
interest at their Net Mortgage Rates less the pro rata portion (calculated based
on the ratio of the Stated Principal Balance of the Group One Mortgage Loans to
the Stated Principal Balance of the total pool of Mortgage Loans) allocable to
the Group One Mortgage Loans of any Net Swap Payments or Swap Termination
Payments owed to the Swap Counterparty for such Distribution Date (other than
Defaulted Swap Termination Payments), and (y) the aggregate Stated Principal
Balance of the Group One Mortgage Loans as of the first day of the related
Accrual Period and (iii) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days in the related Accrual Period.
The Class A-1 Maximum Rate Cap shall relate to the Class A-1 Certificates and
Class R Certificates.
Class A-1 Pass-Through Rate: For the first Distribution Date, 5.466% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-1 Margin, (2) the Class A-1 Available Funds Cap, and (3) the
Class A-1 Maximum Rate Cap for such Distribution Date.
16
Class A-1 Upper Collar: With respect to each Distribution Date with respect
to which payments are received on the Class A-1 Cap Contract, a rate equal to
the lesser of One-Month LIBOR and 10.860% per annum.
Class A-2 Available Funds Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x) the total
scheduled interest on the Mortgage Loans in Group Two based on the Net Mortgage
Rates in effect on the related Due Date, less the pro rata portion (calculated
based on the ratio of the Stated Principal Balance of the Mortgage Loans in
Group Two to the Stated Principal Balance of the total pool of Mortgage Loans)
allocable to the Mortgage Loans in Group Two of any Net Swap Payments or Swap
Termination Payments (other than Defaulted Swap Termination Payments) owed to
the Swap Counterparty for such Distribution Date, and (y) the aggregate Stated
Principal Balance of the Mortgage Loans in Group Two as of the first day of the
related Accrual Period (or, in the case of the first Distribution Date, as of
the Cut-off Date) and, (iii) a fraction, the numerator of which is 30, and the
denominator of which is the actual number of days in the related Accrual Period.
Class A-2 Cap Contract: The confirmation and agreement and any related
confirmation thereto, between the Trustee, on behalf of the Issuing Entity, and
the Cap Contract Counterparty (in the form of Exhibit O-2 hereto), with respect
to the Class A-2 Certificates.
Class A-2 Cap Contract Notional Balance: With respect to any Distribution
Date, the Class A-2 Cap Contract Notional Balance set forth for such
Distribution Date in the Class A-2 One Month LIBOR Cap Table attached hereto as
Exhibit P-2.
Class A-2 Cap Contract Termination Date: The Distribution Date after the
Distribution Date in March 2007.
Class A-2 Certificates: The Class A-2A, Class A-2B, Class A-2C and Class
A-2D Certificates.
Class A-2 Maximum Rate Cap: With respect to a Distribution Date, the per
annum rate equal to the product of (i) 12 and (ii) the quotient of (x) the total
scheduled interest that would have been due on the Group Two Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans provided for
interest at their Net Mortgage Rates less the pro rata portion (calculated based
on the ratio of the Stated Principal Balance of the Group Two Mortgage Loans to
the total pool of Stated Principal Balance of the Mortgage Loans) allocable to
the Group Two Mortgage Loans of any Net Swap Payments or Swap Termination
Payments owed to the Swap Counterparty for such Distribution Date (other than
Defaulted Swap Termination Payments), and (y) the aggregate Stated Principal
Balance of the Group Two Mortgage Loans as of the first day of the related
Accrual Period and (iii) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days in the related Accrual Period.
Class A-2 Upper Collar: With respect to each Distribution Date with respect
to which payments are received on the Class A-2 Cap Contract, a rate equal to
the lesser of One-Month LIBOR and 9.370% per annum.
Class A-2A Certificate: Any Certificate designated as a "Class A-2A
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-2A Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2A Certificates.
17
Class A-2A Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2A Pass-Through Rate on
the Class A-2A Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2A
Current Interest or a Class A-2A Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2A
Certificates.
Class A-2A Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2A Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2A Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2A Pass-Through Rate for the
related Accrual Period.
Class A-2A Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.0500% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.1000% per annum.
Class A-2A Pass-Through Rate: For the first Distribution Date, 5.376% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2A Margin, (2) the Class A-2 Available Funds Cap and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class A-2B Certificate: Any Certificate designated as a "Class A-2B
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-2B Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2B Certificates.
Class A-2B Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2B Pass-Through Rate on
the Class A-2B Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2B
Current Interest or a Class A-2B Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2B
Certificates.
Class A-2B Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2B Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2B Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2B Pass-Through Rate for the
related Accrual Period.
Class A-2B Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.1100% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.2200% per annum.
Class A-2B Pass-Through Rate: For the first Distribution Date, 5.436% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2B Margin, (2) the Class A-2 Available Funds Cap and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
18
Class A-2C Certificate: Any Certificate designated as a "Class A-2C
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-2C Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2C Certificates.
Class A-2C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2C Pass-Through Rate on
the Class A-2C Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2C
Current Interest or a Class A-2C Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2C
Certificates.
Class A-2C Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2C Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2C Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2C Pass-Through Rate for the
related Accrual Period.
Class A-2C Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.1500% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.3000% per annum.
Class A-2C Pass-Through Rate: For the first Distribution Date, 5.476% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2C Margin, (2) the Class A-2 Available Funds Cap and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class A-2D Certificate: Any Certificate designated as a "Class A-2D
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class A-2D Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class A-2D Certificates.
Class A-2D Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2D Pass-Through Rate on
the Class A-2D Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class A-2D
Current Interest or a Class A-2D Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class A-2D
Certificates.
Class A-2D Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class A-2D Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2D Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class A-2D Pass-Through Rate for the
related Accrual Period.
Class A-2D Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.2400% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.4800% per annum.
19
Class A-2D Pass-Through Rate: For the first Distribution Date, 5.566% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class A-2D Margin, (2) the Class A-2 Available Funds Cap and (3) the
Class A-2 Maximum Rate Cap for such Distribution Date.
Class B Certificates: The Class B-1 Certificates, Class B-2 Certificates,
and the Class B-3 Certificates.
Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.
Class B-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-1 Certificates.
Class B-1 Certificates: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-1
Current Interest or a Class B-1 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-1
Certificates.
Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-1 Pass-Through Rate for the
related Accrual Period.
Class B-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.8000% per annum and, as of any
Distribution Date after the Auction Termination Date, 1.2000% per annum.
Class B-1 Pass-Through Rate: For the first Distribution Date, 6.126% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-1 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class B-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R and Class M Certificates have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Certificate Principal Balances of the Class A
and Class R Certificates (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date), (B) the Class M-1
Certificate Principal Balance (after taking into account distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account distributions
of the Class M-2 Principal Distribution Amount on such Distribution Date), (D)
the Class M-3 Certificate Principal Balance (after taking into account
distributions of the Class M-3 Principal Distribution Amount on such
Distribution Date), (E) the Class M-4 Certificate Principal
20
Balance (after taking into account distributions of the Class M-4 Principal
Distribution Amount on such Distribution Date), (F) the Class M-5 Certificate
Principal Balance (after taking into account distributions of the Class M-5
Principal Distribution Amount on such Distribution Date), (G) the Class M-6
Certificate Principal Balance (after taking into account distributions of the
Class M-6 Principal Distribution Amount on such Distribution Date), and (H) the
Class B-1 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 87.40% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of the Class A Certificates, Class R Certificate
and Class M Certificates has been reduced to zero, the Class B-1 Principal
Distribution Amount will equal the lesser of (x) the outstanding Certificate
Principal Balance of the Class B-1 Certificates and (y) 100% of the Principal
Distribution Amount remaining after any distributions on such Class A, Class R
and Class M Certificates and (II) in no event will the Class B-1 Principal
Distribution Amount with respect to any Distribution Date exceed the Class B-1
Certificate Principal Balance.
Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.
Class B-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-2 Certificates.
Class B-2 Certificates: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-2
Current Interest or a Class B-2 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-2
Certificates.
Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-2 Pass-Through Rate for the
related Accrual Period.
Class B-2 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 1.0500% per annum and, as of any
Distribution Date after the Auction Termination Date, 1.5750% per annum.
21
Class B-2 Pass-Through Rate: For the first Distribution Date, 6.376% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-2 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class B-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M and Class B-1 Certificates have been reduced to zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the Certificate Principal Balances of
the Class A and Class R Certificates (after taking into account distributions of
the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date), (D) the Class M-3 Certificate Principal Balance (after
taking into account distributions of the Class M-3 Principal Distribution Amount
on such Distribution Date), (E) the Class M-4 Certificate Principal Balance
(after taking into account distributions of the Class M-4 Principal Distribution
Amount on such Distribution Date), (F) the Class M-5 Certificate Principal
Balance (after taking into account distributions of the Class M-5 Principal
Distribution Amount on such Distribution Date), (G) the Class M-6 Certificate
Principal Balance (after taking into account distributions of the Class M-6
Principal Distribution Amount on such Distribution Date), (H) the Class B-1
Certificate Principal Balance (after taking into account distributions of the
Class B-1 Principal Distribution Amount on such Distribution Date, and (I) the
Class B-2 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 90.30% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of the Class A Certificates, Class R
Certificate, Class M Certificates and Class B-1 Certificates has been reduced to
zero, the Class B-2 Principal Distribution Amount will equal the lesser of (x)
the outstanding Certificate Principal Balance of the Class B-2 Certificates and
(y) 100% of the Principal Distribution Amount remaining after any distributions
on such Class A, Class R, Class M and Class B-1 Certificates and (II) in no
event will the Class B-2 Principal Distribution Amount with respect to any
Distribution Date exceed the Class B-2 Certificate Principal Balance.
Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class B-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-3 Certificates.
Class B-3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class B-3 Certificates.
Class B-3 Certificates: Any Certificate designated as a "Class B-3
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
22
Class B-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3 Pass-Through Rate on
the Class B-3 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class B-3
Current Interest or a Class B-3 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class B-3
Certificates.
Class B-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class B-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class B-3 Pass-Through Rate for the
related Accrual Period.
Class B-3 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 2.0500% per annum and, as of any
Distribution Date after the Auction Termination Date, 3.0750% per annum.
Class B-3 Pass-Through Rate: For the first Distribution Date, 7.376% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class B-3 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class B-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M, Class B-1 and Class B-2 Certificates have been reduced to zero
and a Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does
not exist, the excess of (1) the sum of (A) the Certificate Principal Balances
of the Class A and Class R Certificates (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date), (D) the Class M-3 Certificate Principal Balance (after
taking into account distributions of the Class M-3 Principal Distribution Amount
on such Distribution Date), (E) the Class M-4 Certificate Principal Balance
(after taking into account distributions of the Class M-4 Principal Distribution
Amount on such Distribution Date), (F) the Class M-5 Certificate Principal
Balance (after taking into account distributions of the Class M-5 Principal
Distribution Amount on such Distribution Date), (G) the Class M-6 Certificate
Principal Balance (after taking into account distributions of the Class M-6
Principal Distribution Amount on such Distribution Date), (H) the Class B-1
Certificate Principal Balance (after taking into account distributions of the
Class B-1 Principal Distribution Amount on such Distribution Date, (I) the Class
B-2 Certificate Principal Balance (after taking into account distributions of
the Class B-2 Principal Distribution Amount on such Distribution Date, and (J)
the Class B-3 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 92.60% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date and (B) the excess
of the Stated Principal Balances of the Mortgage Loans as of such Distribution
Date over the Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date on which the
Certificate Principal Balance of each Class of the Class A Certificates, Class R
Certificate, Class M Certificates, Class B-1 and Class B-2 Certificates has been
reduced to zero, the Class B-3 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class B-3
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A, Class R, Class M, Class B-1 and
23
Class B-2 Certificates and (II) in no event will the Class B-3 Principal
Distribution Amount with respect to any Distribution Date exceed the Class B-3
Certificate Principal Balance.
Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class C Applied Realized Loss Amount: As of any Distribution Date, the sum
of all Applied Realized Loss Amounts with respect to the Mortgage Loans which
have been applied to the reduction of the Certificate Principal Balance of the
Class C Certificates.
Class C Certificate: Any Certificate designated as a "Class C Certificate"
on the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.
Class C Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class C Certificates.
Class C Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class C Distributable Interest Rate on
a notional amount equal to the aggregate principal balance of the Lower Tier
REMIC Regular Interests immediately prior to such Distribution Date plus the
interest portion of any previous distributions on such Class that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class C
Certificates.
Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
(other than the Class LT-IO Interest) over (b) two times the weighted average of
the interest rates on the Lower Tier REMIC I Marker Interests and the Class LTIX
Interest (treating for purposes of this clause (b) the interest rate on each of
the Lower Tier REMIC I Marker Interests as being subject to a cap and a floor
equal to the interest rate of the Corresponding REMIC Regular Interest of the
Corresponding Certificates (as adjusted, if necessary, for the length of the
Accrual Period for the LIBOR Certificates) and treating the Class LTIX Interest
as being capped at zero). The averages described in the preceding sentence shall
be weighted on the basis of the respective principal balances of the Lower Tier
REMIC Regular Interests immediately prior to any date of determination.
Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class C Certificates (other than amounts so
added attributable to Subsequent Recoveries or proceeds of the Swap Agreement).
Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss Amount on all
previous Distribution Dates and (y) all increases in the Certificate Principal
Balance of such Class C Certificates (A) pursuant to the last sentence of the
definition of "Certificate Principal Balance" or (B) attributable to
distributions of proceeds of the Swap Agreement.
24
Class LTA-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificates and an interest rate equal to the Net
Rate.
Class LTA-2A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTA-2B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTA-2C Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTA-2D Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTB-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LT-IO Interest: An uncertificated regular interest in the Lower Tier
REMIC with the characteristics set forth in the description of the Lower Tier
REMIC in the Preliminary Statement.
Class LTII1A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the excess of (i) the
aggregate Cut-off Date Principal Balance of the Group One Mortgage Loans over
(ii) the aggregate of the initial Certificate Principal Balances of Certificate
Group One, and with an interest rate equal to the Net Rate.
Class LTII1B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the aggregate Cut-off
Date Principal Balance of the Group One Mortgage Loans, and with an interest
rate equal to the rate set forth in footnote 9 to the description of the Lower
Tier REMIC in the Preliminary Statement.
Class LTII2A Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the excess of (i) the
aggregate Cut-off Date Principal Balance of the Group Two Mortgage Loans over
(ii) the aggregate of the initial Certificate Principal Balances of Certificate
Group Two, and with an interest rate equal to the Net Rate.
25
Class LTII2B Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 0.05% of the aggregate Cut-off
Date Principal Balance of the Group Two Mortgage Loans, and with an interest
rate equal to the rate set forth in footnote 10 to the description of the Lower
Tier REMIC in the Preliminary Statement.
Class LTIX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) 50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over (ii) the
initial principal balance of the Lower Tier REMIC I Marker Interests, and with
an interest rate equal to the Net Rate.
Class LTIIX Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to the excess of (i) 50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over (ii) the
initial principal balance of the Lower Tier REMIC II Marker Interests, and with
an interest rate equal to the Net Rate.
Class LTM-1 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-2 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-3 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-4 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-5 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTM-6 Interest: An uncertificated regular interest in the Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial principal
balance of its Corresponding Certificate and an interest rate equal to the Net
Rate.
Class LTR Interest: The sole class of "residual interest" in the Lower Tier
REMIC.
Class M Certificates: Any of the Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5 and Class M-6 Certificates.
Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
26
Class M-1 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-1 Certificates.
Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-1
Current Interest or a Class M-1 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-1
Certificates.
Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-1 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-1 Pass-Through Rate for the
related Accrual Period.
Class M-1 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.2900% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.4350% per annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 5.616% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-1 Margin and (2) the Subordinate Certificate Available Funds
Cap and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution
Date.
Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A
and Class R Certificates have been reduced to zero and a Stepdown Trigger Event
exists, or as long as a Stepdown Trigger Event does not exist, the excess of (1)
the sum of (A) the Certificate Principal Balances of the Class A and Class R
Certificates (after taking into account distributions of the Class A Principal
Distribution Amount on such Distribution Date) and (B) the Class M-1 Certificate
Principal Balance immediately prior to such Distribution Date over (2) the
lesser of (A) 62.50% of the Stated Principal Balances of the Mortgage Loans as
of such Distribution Date and (B) the excess of the Stated Principal Balances
for the Mortgage Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of the Class A Certificates and Class R Certificate has
been reduced to zero, the Class M-1 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class M-1
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A Certificates and Class R Certificate and (II)
in no event will the Class M-1 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-1 Certificate Principal Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
27
Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-2 Certificates.
Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-2
Current Interest or a Class M-2 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-2
Certificates.
Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-2 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-2 Pass-Through Rate for the
related Accrual Period.
Class M-2 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.3100% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.4650% per annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 5.636% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-2 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R and Class M-1 Certificates have been reduced to zero and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the
excess of (1) the sum of (A) the Certificate Principal Balances of the Class A
and Class R Certificates (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date), (B) the Class M-1
Certificate Principal Balance (after taking into account distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date) and (C) the
Class M-2 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 69.80% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of Class A Certificates, Class R Certificate and
the Class M-1 Certificates has been reduced to zero, the Class M-2 Principal
Distribution Amount will equal the lesser of (x) the outstanding Certificate
Principal Balance of the Class M-2 Certificates and (y) 100% of the Principal
Distribution Amount remaining after any distributions on such Class A, Class R
and Class M-1 Certificates and (II) in no event will the Class M-2 Principal
Distribution Amount with respect to any Distribution Date exceed the Class M-2
Certificate Principal Balance.
28
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-3 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-3 Certificates.
Class M-3 Certificate: Any Certificate designated as a "Class M-3
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-3 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-3 Certificates.
Class M-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-3 Pass-Through Rate on
the Class M-3 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-3
Current Interest or a Class M-3 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-3
Certificates.
Class M-3 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-3 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-3 Pass-Through Rate for the
related Accrual Period.
Class M-3 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.3400% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.5100% per annum.
Class M-3 Pass-Through Rate: For the first Distribution Date, 5.666% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-3 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-3 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M-1 and Class M-2 Certificates have been reduced to zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the Certificate Principal Balances of
the Class A and Class R Certificates (after taking into account distributions of
the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions
of the Class M-1 Principal Distribution Amount on such Distribution Date), (C)
the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date) and (D) the Class M-3 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 73.80% of
the Stated Principal Balances of the Mortgage Loans as of such Distribution Date
and (B) the excess of the Stated Principal Balances for the Mortgage
29
Loans as of such Distribution Date over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of the Class A Certificates, the Class R Certificate, the
Class M-1 Certificates and the Class M-2 Certificates has been reduced to zero,
the Class M-3 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class M-3 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A, Class R, Class M-1 and Class M-2 Certificates and (II) in no event
will the Class M-3 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-3 Certificate Principal Balance.
Class M-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-4 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-4 Certificates.
Class M-4 Certificate: Any Certificate designated as a "Class M-4
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-4 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-4 Certificates.
Class M-4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-4 Pass-Through Rate on
the Class M-4 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-4
Current Interest or a Class M-4 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-4
Certificates.
Class M-4 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-4 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-4 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-4 Pass-Through Rate for the
related Accrual Period.
Class M-4 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.3900% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.5850% per annum.
Class M-4 Pass-Through Rate: For the first Distribution Date, 5.716% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-4 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-4 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate
30
Principal Balances of the Class A, Class R, Class M-1, Class M-2 and Class M-3
Certificates have been reduced to zero and a Stepdown Trigger Event exists, or
as long as a Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the Certificate Principal Balances of the Class A and Class R Certificates
(after taking into account distributions of the Class A Principal Distribution
Amount on such Distribution Date), (B) the Class M-1 Certificate Principal
Balance (after taking into account distributions of the Class M-1 Principal
Distribution Amount on such Distribution Date), (C) the Class M-2 Certificate
Principal Balance (after taking into account distributions of the Class M-2
Principal Distribution Amount on such Distribution Date), (D) the Class M-3
Certificate Principal Balance (after taking into account distributions of the
Class M-3 Principal Distribution Amount on such Distribution Date) and (E) the
Class M-4 Certificate Principal Balance immediately prior to such Distribution
Date over (2) the lesser of (A) 77.50% of the Stated Principal Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of the Stated
Principal Balances for the Mortgage Loans as of such Distribution Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which the Certificate
Principal Balance of each Class of the Class A Certificates, the Class R
Certificate, the Class M-1 Certificates, the Class M-2 and the Class M-3
Certificates has been reduced to zero, the Class M-4 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class M-3 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class R, Class M-1,
Class M-2 and Class M-3 Certificates and (II) in no event will the Class M-4
Principal Distribution Amount with respect to any Distribution Date exceed the
Class M-4 Certificate Principal Balance.
Class M-4 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-4 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-4 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-4 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-5 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-5 Certificates.
Class M-5 Certificate: Any Certificate designated as a "Class M-5
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-5 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-5 Certificates.
Class M-5 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-5 Pass-Through Rate on
the Class M-5 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-5
Current Interest or a Class M-5 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-5
Certificates.
Class M-5 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-5 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-5 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-5 Pass-Through Rate for the
related Accrual Period.
31
Class M-5 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.4000% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.6000% per annum.
Class M-5 Pass-Through Rate: For the first Distribution Date, 5.726% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-5 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-5 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M-1, Class M-2, Class M-3 and Class M-4 Certificates have been
reduced to zero and a Stepdown Trigger Event exists, or as long as a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the Certificate
Principal Balances of the Class A and Class R Certificates (after taking into
account distributions of the Class A Principal Distribution Amount on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance (after
taking into account distributions of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class M-2 Certificate Principal Balance
(after taking into account distributions of the Class M-2 Principal Distribution
Amount on such Distribution Date), (D) the Class M-3 Certificate Principal
Balance (after taking into account distributions of the Class M-3 Principal
Distribution Amount on such Distribution Date), (E) the Class M-4 Certificate
Principal Balance (after taking into account distributions of the Class M-4
Principal Distribution Amount on such Distribution Date) and (F) the Class M-5
Certificate Principal Balance immediately prior to such Distribution Date over
(2) the lesser of (A) 81.00% of the Stated Principal Balances of the Mortgage
Loans as of such Distribution Date and (B) the excess of the Stated Principal
Balances for the Mortgage Loans as of such Distribution Date over the Minimum
Required Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of the Class A Certificates, the Class R Certificate, the
Class M-1 Certificates, the Class M-2, the Class M-3 and the Class M-4
Certificates has been reduced to zero, the Class M-5 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class M-5 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class R, Class M-1,
Class M-2, Class M-3 and Class M-4 Certificates and (II) in no event will the
Class M-5 Principal Distribution Amount with respect to any Distribution Date
exceed the Class M-5 Certificate Principal Balance.
Class M-5 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-5 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-5 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-5 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."
Class M-6 Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-6 Certificates.
Class M-6 Certificate: Any Certificate designated as a "Class M-6
Certificate" on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.
Class M-6 Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class M-6 Certificates.
32
Class M-6 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-6 Pass-Through Rate on
the Class M-6 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Class M-6
Current Interest or a Class M-6 Interest Carry Forward Amount that is recovered
as a voidable preference by a trustee in bankruptcy, less any Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class M-6
Certificates.
Class M-6 Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class M-6 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-6 Certificates with respect to Current Interest or Interest Carry Forward
Amounts on such prior Distribution Dates and (2) interest on such excess (to the
extent permitted by applicable law) at the Class M-6 Pass-Through Rate for the
related Accrual Period.
Class M-6 Margin: As of any Distribution Date up to and including the
Auction Termination Date for the Certificates, 0.4700% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.7050% per annum.
Class M-6 Pass-Through Rate: For the first Distribution Date, 5.796% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class M-6 Margin, (2) the Subordinate Certificate Available Funds Cap
and (3) the Subordinate Certificate Maximum Rate Cap for such Distribution Date.
Class M-6 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date, 100% of the Principal Distribution Amount
for such Distribution Date if the Certificate Principal Balances of the Class A,
Class R, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5 Certificates
have been reduced to zero and a Stepdown Trigger Event exists, or as long as a
Stepdown Trigger Event does not exist, the excess of (1) the sum of (A) the
Certificate Principal Balances of the Class A and Class R Certificates (after
taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance
(after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Class M-2 Certificate Principal
Balance (after taking into account distributions of the Class M-2 Principal
Distribution Amount on such Distribution Date), (D) the Class M-3 Certificate
Principal Balance (after taking into account distributions of the Class M-3
Principal Distribution Amount on such Distribution Date), (E) the Class M-4
Certificate Principal Balance (after taking into account distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date), (F) the
Class M-5 Certificate Principal Balance (after taking into account distributions
of the Class M-5 Principal Distribution Amount on such Distribution Date) and
(G) the Class M-6 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 84.30% of the Stated Principal
Balances of the Mortgage Loans as of such Distribution Date and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of such Distribution
Date over the Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date on which the
Certificate Principal Balance of each Class of the Class A Certificates, the
Class R Certificate, the Class M-1 Certificates, the Class M-2, the Class M-3,
the Class M-4 and the Class M-5 Certificates has been reduced to zero, the Class
M-6 Principal Distribution Amount will equal the lesser of (x) the outstanding
Certificate Principal Balance of the Class M-6 Certificates and (y) 100% of the
Principal Distribution Amount remaining after any distributions on such Class A,
Class R, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5 Certificates
and (II) in no event will the Class M-6 Principal Distribution Amount with
respect to any Distribution Date exceed the Class M-6 Certificate Principal
Balance.
Class M-6 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-6 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the
33
Class M-6 Unpaid Realized Loss Amounts on all previous Distribution Dates and
(y) all increases in the Certificate Principal Balance of such Class M-6
Certificates pursuant to the last sentence of the definition of "Certificate
Principal Balance."
Class P Certificate: Any Certificate designated as a "Class P Certificate"
on the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.
Class R Certificate: Any Certificate designated as a "Class R Certificate"
on the face thereof, executed by the Trustee and authenticated by the Trustee in
substantially the form set forth in Exhibit A, representing the right to
distributions as set forth herein.
Class R Certificate Principal Balance: As of any date of determination, the
aggregate Certificate Principal Balance of the Class R Certificate.
Class R Current Interest: As of any Distribution Date, the interest accrued
during the related Accrual Period at the Class R Pass-Through Rate on the Class
R Certificate Principal Balance as of such Distribution Date plus the portion of
any previous distributions on such Class in respect of Class R Current Interest
or a Class R Interest Carry Forward Amount that is recovered as a voidable
preference by a trustee in bankruptcy, less any Non-Supported Interest Shortfall
allocated on such Distribution Date to the Class R Certificate.
Class R Interest Carry Forward Amount: As of any Distribution Date, the sum
of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class R
Certificate with respect to Current Interest or Interest Carry Forward Amounts
on such prior Distribution Dates and (2) interest on such excess (to the extent
permitted by applicable law) at the Class R Pass-Through Rate for the related
Accrual Period.
Class R Margin: As of any Distribution Date up to and including the Auction
Termination Date for the Certificates, 0.1400% per annum and, as of any
Distribution Date after the Auction Termination Date, 0.2800% per annum.
Class R Pass-Through Rate: For the first Distribution Date, 5.466% per
annum. As of any Distribution Date thereafter, the least of (1) One-Month LIBOR
plus the Class R Margin, (2) the Class A-1 Available Funds Cap for such
Distribution Date and (3) the Class A-1 Maximum Rate Cap.
Class SWR Interest: The sole class of "residual interest" in the SWAP
REMIC.
Clean Up Call: The termination of the Trust Fund hereunder pursuant to
Section 9.01(a)(ii).
Clean Up Call Date: The second Distribution Date immediately following the
Auction Termination Date.
Clean Up Call Price: An amount equal to the sum of (a) the aggregate Stated
Principal Balance of each Mortgage Loan (other than any Mortgage Loan that is an
REO Property), plus accrued interest thereon at the applicable Mortgage Rate
through the Due Date preceding distribution of the proceeds, (b) the fair market
value of any REO Property, plus accrued interest thereon, (c) any unreimbursed
fees, out-of-pocket expenses owed to the Trustee or the Servicer (including the
costs and expenses of conducting the auction described in Section 9.01(a)) and
any unreimbursed Servicing Fees, Advances or Servicing Advances, (d) all
interest accrued on, as well as amounts necessary to retire, the principal
balance of the NIM Notes, (e) any costs and damages incurred by the Issuing
Entity (or the Trustee on behalf of the
34
Issuing Entity) in connection with any violation by the affected Mortgage Loan
of any anti-predatory or anti-abusive lending laws and (f) any Swap Termination
Payment, other than a Defaulted Swap Termination Payment, owed to the Swap
Counterparty; such Swap Termination Payment shall include any payment resulting
from the termination of the Swap Agreement after the Clean Up Call Date but
prior to the final distribution to the Certificates.
Closing Date: September 27, 2006.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(d) in the name of the
Trustee for the benefit of the Certificateholders and designated "Wilshire
Credit Corporation, in trust for registered holders of Specialty Underwriting
and Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2006-BC4". Funds in the Collection Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Combined Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of which is the
sum of (1) the original principal balance of the related Mortgage Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on which are
senior to the lien on such related Mortgage Loan (such sum calculated at the
date of origination of such related Mortgage Loan) and the denominator of which
is the lesser of (A) the Appraised Value of the related Mortgaged Property and
(B) the sales price of the related Mortgaged Property at time of origination.
Commission: The Securities and Exchange Commission.
Compensating Interest: For any Distribution Date and all Principal
Prepayments in full in respect of a Mortgage Loan that are received during the
period from the first day of the related Prepayment Period through the last day
of the calendar month preceding such Distribution Date, a payment made by the
Servicer in an amount not to exceed the product of (a) one-twelfth of 0.25% and
(b) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date, equal to the amount of interest at the Net Mortgage Rate for
that Mortgage Loan from the date of prepayment through the last day of such
preceding calendar month.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released either to a Mortgagor in accordance with the terms of the related
mortgage loan documents or to the holder of a senior lien on the Mortgaged
Property.
Corresponding Certificates: With respect to the Class LTA-1 Interest, the
Class A-1 and Class R Certificates. With respect to the Class LTA-2A Interest,
the Class A-2A Certificates. With respect to the Class LTA-2B Interest, the
Class A-2B Certificates. With respect to the Class LTA-2C Interest, the Class
A-2C Certificates. With respect to the Class LTA-2D Interest, the Class A-2D
Certificates. With respect to the Class LTM-1 Interest, the Class M-1
Certificates. With respect to the Class LTM-2 Interest, the Class M-2
Certificates. With respect to the Class LTM-3 Interest, the Class M-3
Certificates. With respect to the Class LTM-4 Interest, the Class M-4
Certificates. With respect to the Class LTM-5 Interest, the Class M-5
Certificates. With respect to the Class LTM-6 Interest, the Class M-6
Certificates. With respect to the Class LTB-1 Interest, the Class B-1
Certificates. With respect to the Class LTB-2 Interest, the Class B-2
Certificates. With respect to the Class LTB-3 Interest, the Class B-3
Certificates.
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Corresponding REMIC Regular Interest: For each Class of Certificates, the
interest in the Upper Tier REMIC listed on the same row in the table entitled
"Upper Tier REMIC" in the Preliminary Statement.
Current Interest: Any of the Class A-1 Current Interest, the Class A-2A
Current Interest, the Class A-2B Current Interest, the Class A-2C Current
Interest, the Class A-2D Current Interest, the Class R Current Interest, the
Class M-1 Current Interest, the Class M-2 Current Interest, the Class M-3
Current Interest, the Class M-4 Current Interest, the Class M-5 Current
Interest, the Class M-6 Current Interest, the Class B-1 Current Interest, the
Class B-2 Current Interest, the Class B-3 Current Interest and the Class C
Current Interest.
Cut-off Date: September 1, 2006.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates after
the Cut-off Date.
Defaulted Swap Termination Payment: Any payment required to be made by the
Supplemental Interest Trust to the Swap Counterparty pursuant to the Swap
Agreement as a result of an event of default under the Swap Agreement with
respect to which the Swap Counterparty is the defaulting party or a termination
event (including a Downgrade Termination Event) under that agreement (other than
illegality or a tax event) with respect to which the Swap Counterparty is the
sole Affected Party (as defined in the Swap Agreement).
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on the
face thereof as the "Initial Principal Balance of this Certificate."
Depositor: Xxxxxxx Xxxxx Mortgage Investors, Inc., a Delaware corporation,
or any successor in interest.
Depository: The initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
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Depository Agreement: With respect to Classes of Book-Entry Certificates,
the agreement between the Trustee and the initial Depository.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Transaction: A transaction in which the assets underlying the
Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial mortgage obligations that
are secured by single family residential, multi-family residential, commercial
real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th day of
the month of such Distribution Date or, if such 15th day is not a Business Day,
the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (2) any organization
(other than a cooperative described in Section 521 of the Code) which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such organization is
subject to the tax imposed by Section 511 of the Code and (3) any organization
described in Section 1381(a)(2)(C) of the Code.
Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such 25th day is not a Business Day, the
next succeeding Business Day, commencing in October 2006.
Downgrade Termination Event: An event whereby (x) the Swap Counterparty (or
its guarantor) ceases to have short term unsecured and/or long term debt ratings
at least equal to the levels specified in the Swap Agreement, and (y) at least
one of the following events has not occurred (except to the extent otherwise
approved by the Rating Agencies): (i) within the time period specified in the
Swap Agreement with respect to such downgrade, the Swap Counterparty shall
transfer the Swap Agreement, in whole, but not in part, to a substitute swap
counterparty that satisfies the requirements set forth in the Swap Agreement,
subject to the satisfaction of the Rating Agency Condition or (ii) within the
time period specified in the Swap Agreement with respect to such downgrade, the
Swap Counterparty shall collateralize its exposure to the Trust Fund pursuant to
an ISDA Credit Support Annex, subject to the satisfaction of the Rating Agency
Condition; provided that such ISDA Credit Support Annex shall be made a credit
support document for the Swap Counterparty pursuant to an amendment to the Swap
Agreement.
Due Date: With respect to any Distribution Date and any Mortgage Loan, the
day during the related Due Period on which a Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period beginning on
the second day of the calendar month preceding the calendar month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
Eligible Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Xxxxx'x and (B) is either the Depositor or the corporate trust
department of a national banking association or banking corporation which has a
rating of at least A-1 by S&P or F1 by
37
Fitch, or (iii) an account or accounts the deposits in which are fully insured
by the FDIC, or (iv) an account or accounts, acceptable to each Rating Agency
without reduction or withdrawal of the rating of any Class of Certificates, as
evidenced in writing, by a depository institution in which such accounts are
insured by the FDIC (to the limit established by the FDIC), the uninsured
deposits in which accounts are otherwise secured such that, as evidenced by an
Opinion of Counsel delivered to and acceptable to the Trustee and each Rating
Agency, the Certificateholders have a claim with respect to the funds in such
account and a perfected first security interest against any collateral (which
shall be limited to Permitted Investments) securing such funds that is superior
to claims of any other depositors or creditors of the depository institution
with which such account is maintained, or (v) maintained at an eligible
institution whose commercial paper, short-term debt or other short-term deposits
are rated at least A-1+ by S&P and F-1+ by Fitch, or (vi) maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by S&P or Prime-1 by Xxxxx'x at the time any
deposits are held on deposit therein, or (vii) a segregated trust account or
accounts maintained with a federal or state chartered depository institution or
trust company acting in its fiduciary capacity, or (viii) otherwise acceptable
to each Rating Agency, as evidenced by a letter from each Rating Agency to the
Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, including any
successor or amendatory provisions.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of
Prohibited Transaction Exemption 90-29, Exemption Application No. D-8012, 55
Fed. Reg. 21459 (1990), as amended, granted to the Underwriter by the United
States Department of Labor (or any other applicable underwriter's exemption
granted by the United States Department of Labor), except, in relevant part, for
the requirement that the certificates have received a rating at the time of
acquisition that is in one of the three (or four, in the case of a "designated
transaction") highest generic rating categories by at least one of the Rating
Agencies.
ERISA Restricted Certificates: The Class C and Class P Certificates and any
other Certificate, as long as the acquisition and holding of such other
Certificate is not covered by and exempt under any applicable underwriter's
exemption granted by the United States Department of Labor.
Escrow Account: As defined in Section 3.06 hereof.
Event of Default: As defined in Section 7.01 hereof.
Exception Report: As defined in Section 2.02 hereof.
Excess Interest: On any Distribution Date, for any Class of the Class A
Certificates, Class R Certificates, Class M Certificates and Class B
Certificates, the excess, if any, of (1) the amount of interest such Class of
Certificates is entitled to receive on such Distribution Date over (2) the
amount of interest such Class of Certificates would have been entitled to
receive on such Distribution Date at an interest rate equal to the REMIC
Pass-Through Rate.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in
38
which such Liquidation Proceeds are required to be distributed on the unpaid
principal balance of such Liquidated Loan outstanding during each Due Period as
to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Existing Servicing Agreement: The Servicing Agreement between Xxxxxxx Xxxxx
Mortgage Lending, Inc., as Owner, and Wilshire Credit Corporation, as Servicer,
dated as of January 1, 2005, as at any time amended and in effect.
Extra Principal Distribution Amount: (1) Prior to the Stepdown Date, the
excess of (A) the sum of (i) the Aggregate Certificate Principal Balance
immediately preceding such Distribution Date reduced by the Principal Funds with
respect to such Distribution Date and (ii) $40,700,004 over (B) the Pool Stated
Principal Balance of the Mortgage Loans as of such Distribution Date and (2) on
and after the Stepdown Date, the excess, if any, of (A) the sum of (i) the
Aggregate Certificate Principal Balance immediately preceding such Distribution
Date, reduced by the Principal Funds with respect to such Distribution Date and
(ii) the greater of (a) 7.40% of the Pool Stated Principal Balance of the
Mortgage Loans and (b) the Minimum Required Overcollateralization Amount less
(B) the Pool Stated Principal Balance of the Mortgage Loans as of such
Distribution Date; provided, however, that if on any Distribution Date a
Stepdown Trigger Event is in effect, the Extra Principal Distribution Amount
will not be reduced to the applicable percentage of the then-current Stated
Principal Balance of the Mortgage Loans as of the Due Date immediately prior to
the Stepdown Trigger Event until the next Distribution Date on which the
Stepdown Trigger Event is not in effect.
Xxxxxx Mae: A federally chartered and privately owned corporation organized
and existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan
Schedule as having a Mortgage Rate which is fixed.
Floating Rate Certificate Carryover: With respect to a Distribution Date,
in the event that the Pass-Through Rate for a Class of Class A, Class R, Class M
or Class B Certificates is based upon the related Available Funds Cap or the
related Maximum Rate Cap, the sum of (A) the excess of (1) the amount of
interest that such Class would have been entitled to receive on such
Distribution Date had the Pass-Through Rate for that Class not been calculated
based on the related Available Funds Cap or the related Maximum Rate Cap, up to
but not exceeding the greater of (a) the related Maximum Rate Cap or (b) the sum
of (i) the related Available Funds Cap and (ii) the product of (AA) a fraction,
the numerator of which is 360 and the denominator of which is the actual number
of days in the related Accrual Period and (BB) the sum of (x) the quotient of
(I) an amount equal to the proceeds, if any, payable under the related Cap
Contract and (II) the aggregate Certificate Principal Balance of each Class of
Certificates to which such Cap Contract relates for such Distribution Date and
(y) the quotient obtained by dividing (I) an amount equal to any Net Swap
Payments owed by the Swap Counterparty for such Distribution Date by (II) the
aggregate Stated Principal Balance of the Mortgage Loans as of the immediately
preceding Distribution Date over (2) the amount of interest such Class was
entitled to receive on such Distribution Date based on the applicable Available
Funds Cap; (B) the unpaid portion of any such excess from prior Distribution
Dates (and interest accrued thereon at the then applicable Pass-Through Rate,
without giving effect to the applicable Available Funds Cap) and (C) any amount
previously distributed with respect to
39
Floating Rate Certificate Carryover for such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Xxxxxxx Mac: A corporate instrumentality of the United States created and
existing under Title III of the Emergency Home Finance Act of 1970, as amended,
or any successor thereto.
Grantor Trusts: The grantor trusts described in Section 2.07 hereof.
Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Group One: The portion of the Mortgage Pool identified as "Group One" in
the Prospectus Supplement.
Group One Mortgage Loan: Any Mortgage Loan at any time identified in the
Group One Mortgage Loan Schedule attached hereto as Exhibit B-2.
Group One Net WAC: The Net WAC of Group One.
Group One Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-1 and Class R Certificates and (ii) the product of (x) the Group One
Principal Distribution Percentage and (y) the Class A Principal Distribution
Amount; provided, however, that (A) with respect to any Distribution Date on
which the Class A-1 and Class R Certificates are outstanding and the Certificate
Principal Balance of the Class A-2 Certificates has been reduced to zero, the
Group Two Principal Distribution Amount in excess of the amount necessary to
reduce the Certificate Principal Balance of the Class A-2 Certificates to zero
will be applied to increase the Group One Principal Distribution Amount and (B)
with respect to any Distribution Date thereafter, the Group One Principal
Distribution Amount will equal the Class A Principal Distribution Amount.
Group One Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group One and the denominator of which is the amount of Principal Funds received
from all of the Mortgage Loans in the mortgage pool.
Group Two: The portion of the Mortgage Pool identified as "Group Two" in
the Prospectus Supplement.
Group Two Mortgage Loan: Any Mortgage Loan at any time identified in the
Group Two Mortgage Loan Schedule attached hereto as Exhibit B-3.
Group Two Net WAC: The Net WAC of Group Two.
Group Two Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (i) the aggregate Certificate Principal Balance of
the Class A-2 Certificates and (ii) the product of (x) the Group Two Principal
Distribution Percentage and (y) the Class A Principal Distribution Amount;
provided, however, that (A) with respect to any Distribution Date on which the
Class A-2 Certificates are outstanding and the Certificate Principal Balances of
the Class A-1 and Class R Certificates have been reduced to zero, the Group One
Principal Distribution Amount in excess of the
40
amount necessary to reduce the Certificate Principal Balance of the Class A-1
Certificates and Class R Certificates to zero will be applied to increase the
Group Two Principal Distribution Amount and (B) with respect to any Distribution
Date thereafter, the Group Two Principal Distribution Amount will equal the
Class A Principal Distribution Amount.
Group Two Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds received with respect to Mortgage Loans in
Group Two and the denominator of which is the amount of Principal Funds received
from all of the Mortgage Loans in the mortgage pool.
Indenture: An indenture relating to the issuance of NIM Notes.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the first
Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Principal Balance: With respect to any Certificate
(other than the Class P Certificates), the Certificate Principal Balance of such
Certificate or any predecessor Certificate on the Closing Date as set forth in
Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all riders and endorsements thereto in
effect with respect to such Mortgage Loan, including any replacement policy or
policies for any insurance policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans pursuant
to any Insurance Policy or any other insurance policy covering a Mortgage Loan,
to the extent such proceeds are payable to the mortgagee under the Mortgage, the
Servicer or the trustee under the deed of trust and are not applied to the
restoration of the related Mortgaged Property or released to either the
Mortgagor or to the holder of a senior lien on the related Mortgage Property in
accordance with the procedures that the Servicer would follow in servicing
mortgage loans held for its own account, in each case other than any amount
included in such Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Carry Forward Amount: Any of the Class A-1 Interest Carry Forward
Amount, the Class A-2A Interest Carry Forward Amount, the Class A-2B Interest
Carry Forward Amount, the Class A-2C Interest Carry Forward Amount, the Class
A-2D Interest Carry Forward Amount, the Class R Interest Carry Forward Amount,
the Class M-1 Interest Carry Forward Amount, the Class M-2 Interest Carry
Forward Amount, the Class M-3 Interest Carry Forward Amount, the Class M-4
Interest Carry Forward Amount, the Class M-5 Interest Carry Forward Amount, the
Class M-6 Interest Carry Forward Amount, the Class B-1 Interest Carry Forward
Amount, the Class B-2 Interest Carry Forward Amount, the Class B-3 Interest
Carry Forward Amount or the Class C Interest Carry Forward Amount, as the case
may be.
Interest Determination Date: With respect to the LIBOR Certificates, for
any Accrual Period, the second LIBOR Business Day preceding the commencement of
such Accrual Period.
Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance
41
Date or advanced on or before the related Servicer Remittance Date less the
Servicing Fee, (2) all Advances relating to interest with respect to the
Mortgage Loans, (3) all Compensating Interest with respect to the Mortgage
Loans, (4) Liquidation Proceeds with respect to the Mortgage Loans (to the
extent such Liquidation Proceeds relate to interest) collected during the
related Prepayment Period, (5) proceeds of any purchase pursuant to Sections
2.02, 2.03 or 9.01 (to the extent such proceeds relate to interest) and (6)
prepayment charges received with respect to the Mortgage Loans during the
related Prepayment Period less (A) all Non-Recoverable Advances relating to
interest and (B) other amounts reimbursable to the Servicer and the Trustee
pursuant to this Agreement and allocable to interest.
Issuing Entity: Specialty Underwriting and Residential Finance Trust,
Series 2006-BC4.
Last Scheduled Distribution Date: With respect to any Class of
Certificates, the Distribution Date in September 2037.
Latest Possible Maturity Date: The first Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.
Lender: As defined in Section 10.14(a).
LIBOR Business Day: Any day on which banks in the City of London, England
and New York City, U.S.A. are open and conducting transactions in foreign
currency and exchange.
LIBOR Certificates: The Class A, Class M, Class B and Class R Certificates.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) pursuant to Section 3.12 has been realized upon or
liquidated through deed-in-lieu of foreclosure, foreclosure sale, trustee's sale
or other realization as provided by applicable law governing the real property
subject to the related Mortgage and any security agreements and as to which the
Servicer has certified (in accordance with Section 3.12) in the related
Prepayment Period that it has received all amounts it expects to receive in
connection with such liquidation or (b) as to which is not a first lien Mortgage
Loan and is delinquent 180 days or longer, the Servicer has certified in a
certificate of an officer of the Servicer delivered to the Depositor and the
Trustee that it does not believe that there is a reasonable likelihood that any
further net proceeds will be received or recovered with respect to such Mortgage
Loan.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of Mortgage Loans, whether
through trustee's sale, foreclosure sale, sale by the Servicer pursuant to this
Agreement or otherwise or amounts received in connection with any condemnation
or partial release of a Mortgaged Property and any other proceeds received in
connection with an REO Property, less the sum of related unreimbursed Advances,
Servicing Fees, Servicing Advances and any other expenses related to such
Mortgage Loan.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (x) the Appraised Value of the related Mortgaged Property and (y) the sales
price of the related Mortgaged Property at the time of origination.
Losses: Any losses, claims, damages, liabilities or expenses collectively.
Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.
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Lower Tier REMIC I Marker Interests: Each of the classes of Lower Tier
REMIC Regular Interests other than the Class LTIX Interest, the Class LTIIX
Interest, the Class LTII1A Interest, the Class LTII1B Interest, the Class LTII2A
Interest, the Class LTII2B Interest and the Class LT-IO Interest.
Lower Tier REMIC II Marker Interests: Each of the Class LTII1A Interest,
the Class LTII1B Interest, the Class LTII2A Interest and the Class LTII2B
Interest.
Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the Class
LTA-2A Interest, the Class LTA-2B Interest, the Class LTA-2C Interest, the Class
LTA-2D Interest, the Class LTM-1 Interest, the Class LTM-2 Interest, the Class
LTM-3 Interest, the Class LTM-4 Interest, the Class LTM-5 Interest, the Class
LTM-6 Interest, the Class LTB-1 Interest, the Class LTB-2 Interest, the Class
LTB-3 Interest, the Class LTII1A Interest, the Class LTII1B Interest, the Class
LTII2A Interest, the Class LTII2B Interest, the Class LTIX Interest, the Class
LTIIX Interest, the Class LT-IO Interest and the Class LTR Interest.
Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC Interests
other than the Class LTR Interest.
Lower Tier REMIC Subordinate Balance Ratio: The ratio of (i) the principal
balance of the Class LTII1A Interest to (ii) the principal balance of the Class
LTII2A Interest that is equal to the ratio of (i) the excess of (A) the
aggregate Stated Principal Balance of Group One over (B) the current Certificate
Principal Balance of the Class A-1 and Class R Certificates to (ii) the excess
of (A) the aggregate Stated Principal Balance of Group Two over (B) the current
Certificate Principal Balance of the Class A-2 Certificates.
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the maximum rate of interest set forth as such in the related Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest set forth in
the related Mortgage Note.
Maximum Rate Cap: Any of the Class A-1 Maximum Rate Cap, the Class A-2
Maximum Rate Cap, or the Subordinate Certificate Maximum Rate Cap.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgage electronically
maintained by MERS.
MIN: The loan number for any MERS Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan,
the minimum rate of interest set forth as such in the related Mortgage Note.
Minimum Required Overcollateralization Amount: An amount equal to the
product of (x) 0.50% and (y) the Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee, solely
as nominee for the originator of such Mortgage Loan and its successors and
assigns.
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Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: Xxxxx'x Investors Service, Inc. or any successor in interest.
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of trust or
other instrument creating a first or second lien or a first or second priority
ownership interest in an estate in fee simple in real property securing a
Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Group: Either of Group One or Group Two.
Mortgage Loan Schedule: The lists of Mortgage Loans (as from time to time
amended by the Sponsor to reflect the deletion of Deleted Mortgage Loans and the
addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund and from time to
time subject to this Agreement, attached hereto as Exhibits X-0, X-0 and B-3,
setting forth the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the unpaid principal balance of the Mortgage Loans;
(iii) the Initial Mortgage Rate;
(iv) the maturity date and the months remaining before maturity date;
(v) the original principal balance;
(vi) the Cut-off Date Principal Balance;
(vii) the first payment date of the Mortgage Loan;
(viii) the Loan-to-Value Ratio at origination with respect to a first lien
Mortgage Loan or the Combined Loan-to-Value Ratio with respect to a
second lien Mortgage Loan;
(ix) a code indicating whether the residential dwelling at the time of
origination was represented to be owner-occupied;
(x) a code indicating the property type;
(xi) with respect to each Adjustable Rate Mortgage Loan:
(a) the frequency of each Adjustment Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
44
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin; and
(h) the lifetime rate cap;
(xii) the location of the related Mortgaged Property;
(xiii) a code indicating whether a prepayment charge is applicable;
(a) the period during which such prepayment charge is in effect;
(b) the amount of such prepayment charge;
(c) any limitations or other conditions on the enforceability of such
prepayment charge; and
(d) any other information pertaining to the prepayment charge
specified in the related Mortgage Note;
(xiv) the Credit Score and date obtained; and
(xv) the MIN.
Mortgage Loans: Such of the mortgage loans transferred and assigned to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.
Mortgage Note: The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan and all
amendments, modifications and attachments thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum
rate equal to the then current Mortgage Rate less the Servicing Fee Rate.
Net Rate: The per annum rate set forth in footnote 8 to the description of
the Lower Tier REMIC in the Preliminary Statement hereto (such rate being based
on the weighted average of the interest rates on the SWAP REMIC Regular
Interests as adjusted and as set forth in such footnote).
45
Net Swap Payment: With respect to any Distribution Date, any net payment
(other than a Swap Termination Payment or Defaulted Swap Termination Payment)
made by the Supplemental Interest Trust to the Swap Counterparty on the related
Fixed Rate Payer Payment Date (as defined in the Swap Agreement) or made by the
Swap Counterparty to the Supplemental Interest Trust on the related Floating
Rate Payer Payment Date (as defined in the Swap Agreement). In each case, the
Net Swap Payment shall not be less than zero.
Net WAC: With respect to any Distribution Date and for any Mortgage Group,
the weighted average Net Mortgage Rate for the Mortgage Loans in such Mortgage
Group calculated based on the respective Net Mortgage Rates and the Stated
Principal Balances of such Mortgage Loans as of the preceding Distribution Date
(or, in the case of the first Distribution Date, as of the Cut-off Date).
NIM Notes: Any net interest margin or excess cashflow securities to be
issued pursuant to an Indenture.
Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise with respect to the related Mortgage Loan.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise with respect to the related
Mortgage Loan.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A Certificates, Class M Certificates, Class
B Certificates and Class R Certificates.
Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer or the Trustee (or any other officer customarily performing functions
similar to those performed by any of the above designated officers and also to
whom, with respect to a particular matter, such matter is referred because of
such officer's knowledge of and familiarity with a particular subject) or (2),
if provided for in this Agreement, signed by a Servicing Officer, as the case
may be, and delivered to the Depositor, the Servicer or the Trustee, as the case
may be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate determined by
the Trustee on the related Interest Determination Date on the basis of (a) the
offered rates for one-month United States dollar deposits, as such rates appear
on Telerate page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date or (b) if such rate does not appear on Telerate Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference Banks for
one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest Determination Date, One-Month LIBOR for the related Accrual Period will
be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the
related
46
Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole
multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the higher of (i) One-Month LIBOR
as determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, reasonably acceptable to each addressee of such
opinion; provided, however, that with respect to Section 6.04 or 10.01, or the
interpretation or application of the REMIC Provisions, such counsel must (1) in
fact be independent of the Depositor and the Servicer, (2) not have any direct
financial interest in the Depositor or the Servicer or in any Affiliate of
either, and (3) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).
Overcollateralization Deficiency Amount: As of any date of determination,
if the Overcollateralization Amount is less than the Targeted
Overcollateralization Amount, then the amount equal to the Targeted
Overcollateralization Amount over the Overcollateralization Amount; otherwise,
zero.
Overcollateralization Release Amount: As of any date of determination, if
the Overcollateralization Amount is greater than the Targeted
Overcollateralization Amount, then the amount equal to the Overcollateralization
Amount over the Targeted Overcollateralization Amount; otherwise, zero.
Ownership Interest: As to any Certificate, any ownership interest in such
Certificate including any interest in such Certificate as the Holder thereof and
any other interest therein, whether direct or indirect, legal or beneficial.
Pass-Through Rate: With respect to any Class of Certificates, the
corresponding Pass-Through Rate for such Class of Certificates.
Percentage Interest: With respect to:
47
(i) any Class, the percentage interest in the undivided beneficial
ownership interest evidenced by such Class which shall be equal
to the Certificate Principal Balance of such Class divided by the
aggregate Certificate Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced thereby of the
related Class shall equal the percentage obtained by dividing the
Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of such Class; except that in
the case of any Class P Certificates, the Percentage Interest
with respect to such Certificate shown on the face of such
Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the related
Mortgage Note, the provision therein that limits permissible increases and
decreases in the Mortgage Rate on any Adjustment Date.
Permitted Activities: The primary activities of the Issuing Entity created
pursuant to this Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor and other
assets of the Issuing Entity, including the Cap Contracts and the
Supplemental Interest Trust subtrust, which in turn holds the
Swap Agreement, and any credit enhancement and passive derivative
financial instruments that pertain to beneficial interests issued
or sold to parties other than the Depositor, its Affiliates, or
its agents;
(ii) issuing Certificates and other interests in the assets of the
Issuing Entity;
(iii) through the appropriate subtrust, as applicable, receiving
collections on the Mortgage Loans and the Swap Agreement and
making payments on such Certificates and interests in accordance
with the terms of this Agreement; and
(iv) engaging in other activities that are necessary or incidental to
accomplish these limited purposes, which activities cannot be
contrary to the status of the Issuing Entity as a qualified
special purpose entity under existing accounting literature.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the
United States;
(ii) general obligations of or obligations guaranteed by any state of
the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates;
(iii) commercial or finance company paper, other than commercial or
finance company paper issued by the Depositor, the Trustee or any
of their Affiliates, which is then receiving the highest
commercial or finance company paper rating of each such Rating
Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances (other than banker's acceptances issued by the
Trustee or any of its Affiliates) issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to supervision
and examination by
48
federal and/or state banking authorities, provided that the
commercial paper and/or long term unsecured debt obligations of
such depository institution or trust company are then rated one
of the two highest long-term and the highest short-term ratings
of each such Rating Agency for such securities;
(v) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation rated in the two highest long-term
or the highest short-term ratings of each Rating Agency
containing, at the time of the issuance of such agreements, such
terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by any
such Rating Agency as evidenced by a letter from each Rating
Agency;
(vii) repurchase obligations with respect to any security described in
clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (v) above;
(viii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the
face amount thereof) bearing interest or sold at a discount
issued by any corporation, other than the Trustee or any of its
Affiliates, incorporated under the laws of the United States or
any state thereof which, at the time of such investment, have one
of the two highest long term ratings of each Rating Agency;
(ix) interests in any money market fund (including those managed or
advised by the Trustee or its Affiliates) which at the date of
acquisition of the interests in such fund and throughout the time
such interests are held in such fund has the highest applicable
long term rating by each such Rating Agency; and
(x) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the
United States or any state thereof, including the Trustee or any
of its Affiliates, which on the date of acquisition has been
rated by each such Rating Agency in their respective highest
applicable rating category;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer and/or the Trustee, shall receive an Opinion of
Counsel acceptable to the Servicer and/or the Trustee, at the expense of the
party requesting that such investment be made, to the effect that such
investment will not adversely affect the status of the any REMIC provided for
herein as a REMIC under the Code or result in imposition of a tax on the Issuing
Entity or any REMIC provided for herein and (II) any such investment must be a
"permitted investment" within the meaning of Section 860G(a)(5)
49
of the Code. Permitted Investments that are subject to prepayment or call may
not be purchased at a price in excess of par. Any Permitted Investment may be
held by or through the Trustee or any of its Affiliates.
Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with respect to the
Class R Certificate, (iv) rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or
resident of the United States, a corporation or partnership (or other entity
treated as a corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United States or any
State thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such
Person has furnished the transferor and the Trustee with a duly completed
Internal Revenue Service Form W-8ECI or applicable successor form. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in Section 7701 of the Code. A corporation will not be
treated as an instrumentality of the United States or of any State thereof for
these purposes if all of its activities are subject to tax and, with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances, as of such Distribution Date, of the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.
Prepayment Assumption: A rate of prepayment, as described in the Prospectus
Supplement in the definition of "Modeling Assumptions," relating to the
Certificates.
Prepayment Interest Excess: With respect to any Servicer Remittance Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the first
day of the calendar month in which such Servicer Remittance Date occurs and the
last day of the related Prepayment Period, an amount equal to interest (to the
extent received) at the applicable Net Mortgage Rate on the amount of such
Principal Prepayment for the number of days commencing on the first day of the
calendar month in which such Servicer Remittance Date occurs and ending on the
date on which such Principal Prepayment is so applied.
Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full (other
than a Principal Prepayment in full resulting from the purchase of a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof and other than a Principal
Prepayment in full on a Mortgage Loan received during the period from and
including the first day to and including the 14th day of the month of such
Distribution Date), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such
50
Mortgage Loan as of the preceding Distribution Date exceeds (ii) the amount of
interest paid or collected in connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the period beginning with
the opening of business on the 15th day of the calendar month preceding the
month in which such Distribution Date occurs (or in the case of the first
Distribution Date, beginning with the opening of business on the Cut-off Date)
and ending on the close of business on the 14th day of the month in which such
Distribution Date occurs.
Principal Distribution Amount: With respect to each Distribution Date, the
sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any Distribution
Date, the sum, without duplication, of (1) the scheduled principal due during
the related Due Period and received before the related Servicer Remittance Date
or advanced on or before the related Servicer Remittance Date, (2) prepayments
in full collected in the related Prepayment Period, (3) the Stated Principal
Balance of each Mortgage Loan that was purchased by the Depositor or the
Servicer during the related Prepayment Period or, in the case of a purchase
pursuant to Section 9.01, on the Business Day prior to such Distribution Date,
(4) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal of the
related Deleted Mortgage Loans delivered by the Sponsor in connection with a
substitution of a Mortgage Loan pursuant to Section 2.03(c), (5) all Liquidation
Proceeds collected during the related Prepayment Period (to the extent such
Liquidation Proceeds relate to principal and represent payment in full), (6)
Subsequent Recoveries received during the related Due Period and (7) all other
collections and recoveries in respect of principal during the related Due
Period, less (A) all Non-Recoverable Advances relating to principal with respect
to the Mortgage Loans and (B) other amounts reimbursable to the Servicer and the
Trustee pursuant to this Agreement and allocable to principal.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03 and 9.01 hereof) that is
received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement, dated September 25, 2006,
relating to the public offering of the Offered Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Sponsor pursuant to Section 2.02 or 2.03 hereof, or purchased
by the Servicer pursuant to Section 3.12(c) hereof, an amount equal to the sum
of (i) 100% of the unpaid principal balance of the Mortgage Loan as of the date
of such purchase together with any unreimbursed Servicing Advances, (ii) accrued
interest thereon at the applicable Mortgage Rate from (a) the date through which
interest was last paid by the Mortgagor to (b) the Due Date in the month in
which the Purchase Price is to be distributed to Certificateholders and (iii)
any costs and damages incurred by the Issuing Entity (or the Trustee on behalf
of the Issuing Entity) in connection with any violation by the affected Mortgage
Loan of any anti-predatory or anti-abusive lending laws. With respect to any REO
Property purchased by the Servicer pursuant to Section 3.12(c)
51
hereof, an amount equal to the fair market value of such REO Property, as
determined in good faith by the Servicer.
Rating Agency: Either of Xxxxx'x or S&P. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Rating Agency Condition: As defined in the Swap Agreement.
Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any,
by which the Stated Principal Balance and accrued interest thereon at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer with respect
thereto (net of reimbursement of Advances and Servicing Advances) at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to a Mortgage
Loan which is not a Liquidated Loan, any amount of principal that the Mortgagor
is no longer legally required to pay (except for the extinguishment of debt that
results from the exercise of remedies due to default by the Mortgagor).
Record Date: With respect to any Distribution Date, the close of business
on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs (or with respect to the first Distribution
Date, the Closing Date).
Reference Banks: Barclays Bank PLC, U.S. Bank National Association,
Citibank, N.A., and NatWest, N.A.; provided that if any of the foregoing banks
are not suitable to serve as a Reference Bank, then any leading banks selected
by the Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, England and (ii) whose quotations appear on the Reuters Screen LIBO Page
on the relevant Interest Determination Date.
Regular Certificate: Any one of the Class A, Class R, Class M and Class B
Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005)) or by the staff of
the Commission, or as may be provided by the Commission or its staff from time
to time.
Related Certificates: For each interest in the Upper Tier REMIC, the Class
of Certificates listed on the same row in the table entitled "Upper Tier REMIC"
in the Preliminary Statement.
Relief Act: The Servicemembers Civil Relief Act or any similar state laws
or regulations.
REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code. References herein to "the REMICs" or "a REMIC" shall
mean any (or, as the context requires, all) of the SWAP REMIC, the Lower Tier
REMIC and the Upper Tier REMIC.
REMIC Pass-Through Rate: In the case of a Class of the Class A, Class M and
Class B Certificates, the Upper Tier REMIC Net WAC Cap for the Corresponding
REMIC Regular Interest.
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REMIC Provisions: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and proposed,
temporary and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time as
well as provisions of applicable state laws.
REMIC Regular Interests: Each of the interests in the Upper Tier REMIC as
set forth in the Preliminary Statement other than the Residual Interest.
REMIC SWAP Rate: For each Distribution Date (and the related Accrual
Period), a per annum rate equal to the Fixed Rate under the Swap Agreement for
such Distribution Date, as set forth in the Prospectus Supplement.
Remittance Report: As defined in Section 4.04(k) hereof.
REO Property: A Mortgaged Property acquired by the Servicer, on behalf of
the Trustee for the benefit of the Certificateholders, through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor for
a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or a
Combined Loan-to-Value Ratio, in the case of Mortgage Loans in a second lien
position) no higher than that of the Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy type as the Deleted Mortgage Loan; and (9) comply
with each representation and warranty set forth in Section 2.03 hereof.
Request for Release: The Request for Release of Documents submitted by the
Servicer to the Trustee, substantially in the form of Exhibit I hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any insurance
policy that is required to be maintained from time to time under this Agreement.
Required Percentage: With respect to any Distribution Date following a
Stepdown Date, the quotient of (1) the excess of (A) the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date, over (B)
the Certificate Principal Balance of the most senior Class of Certificates
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outstanding as of such Distribution Date, prior to giving effect to
distributions to be made on such Distribution Date and (2) the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date.
Requirements: Any rules or regulations promulgated pursuant to the
Xxxxxxxx-Xxxxx Act of 2002 (as such may be amended from time to time).
Reserve Interest Rate: With respect to any Interest Determination Date, the
rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.
Residual Certificate: The Class R Certificate.
Residual Interest: An interest in the Upper Tier REMIC that is entitled to
all distributions of principal and interest on the Class R Certificate other
than (i) distributions in respect of the Class SWR Interest and the Class LTR
Interest, and (ii) distributions on the Class R Certificate in respect of Excess
Interest.
Responsible Officer: When used with respect to the Trustee or Servicer, any
officer of the Trustee or Servicer with direct responsibility for the
administration of this Agreement and also means any other officer to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks).
S&P: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc., or its successor in interest.
Sale Agreement: The Mortgage Loan Sale and Assignment Agreement, dated as
of September 1, 2006, between the Depositor and the Sponsor.
Xxxxxxxx-Xxxxx Certification: As defined in Section 3.20 hereof.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such Mortgage Loan.
Section 302 Requirements: Any rules or regulations promulgated pursuant to
the Xxxxxxxx-Xxxxx Act of 2002 (as such may be amended from time to time).
Securities Act: The Securities Act of 1933, as amended.
Servicer: Wilshire Credit Corporation, a Nevada corporation, or its
successor in interest.
Servicer Advance Date: As to any Distribution Date, the related Servicer
Remittance Date.
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Servicer Remittance Date: With respect to any Distribution Date, the later
of (x) the date that is two Business Days after the 15th day of the month in
which the related Distribution Date occurs and (y) the 18th day (or, if such day
is not a Business Day, the next succeeding Business Day) of the month in which
the related Distribution Date occurs.
Servicer's Assignee: As defined in Section 10.14(a).
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations hereunder, including, but not limited to, the cost of (1) the
preservation, restoration and protection of a Mortgaged Property, including
without limitation advances in respect of prior liens, real estate taxes and
assessments, (2) any collection, enforcement or judicial proceedings, including
without limitation foreclosures, collections and liquidations, (3) the
conservation, management, sale and liquidation of any REO Property (4) executing
and recording instruments of satisfaction, deeds of reconveyance, substitutions
of trustees on deeds of trust or assignments of mortgage to the extent not
otherwise recovered from the related Mortgagor or payable under this Agreement,
(5) correcting errors of prior servicers; tax tracking; title research; flood
certification; and lender paid mortgage insurance, (6) obtaining or correcting
any legal documentation required to be included in the Mortgage Files and
reasonably necessary for the Servicer to perform its obligations under this
Agreement and (7) compliance with the obligations under Sections 3.01 and 3.10.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time, and in Exhibit R of
this Agreement.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.
Servicing Fee Rate: 0.500% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
facsimile signature appear on a list of servicing officers furnished to the
Trustee by the Servicer on the Closing Date pursuant to this Agreement, as such
lists may from time to time be amended.
Servicing Rights Pledgee: One or more lenders, selected by the Servicer, to
which the Servicer may pledge and assign all of its right, title and interest
in, to and under this Agreement.
Servicing Transfer Costs: In the event that the Servicer does not reimburse
the Trustee under the this Agreement, all costs associated with the transfer of
servicing from the predecessor Servicer, including, without limitation, any
costs or expenses associated with the termination of the predecessor Servicer,
the appointment of a successor servicer, the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee or any successor servicer to correct any errors
or insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans properly and effectively.
SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.
55
Significance Estimate: With respect to any Distribution Date, and in
accordance with Item 1115 of Regulation AB, shall be an amount determined based
on the reasonable good-faith estimate by the Depositor or its affiliate of the
aggregate maximum probable exposure of the outstanding Certificates to the Swap
Agreement.
Significance Percentage: With respect to any Distribution Date, and in
accordance with Item 1115 of Regulation AB, shall be a percentage equal to the
Significance Estimate divided by the aggregate outstanding Certificate Principal
Balance of the Certificates, prior to the distribution of the Principal
Distribution Amount on such Distribution Date.
Sponsor: Xxxxxxx Xxxxx Mortgage Lending, Inc., a Delaware corporation, or
its successor in interest.
SPV: As defined in Section 10.14(a).
Startup Day: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x) due with
respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date and (y) that were received by the Servicer as of the close of
business on the Determination Date related to such Distribution Date or with
respect to which Advances were made on the Servicer Advance Date prior to such
Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.
Stepdown Date: The earlier to occur of (1) the first Distribution Date on
which the Class A Certificate Principal Balance and the Class R Certificate
Principal Balance have been reduced to zero and (2) the later to occur of (A)
the Distribution Date in October 2009 or (B) the first Distribution Date on
which the Class A Certificate Principal Balance (after giving effect to
distributions of the Principal Funds amount for such Distribution Date) is less
than or equal to 53.10% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the end of the immediately preceding Due Period.
Stepdown Required Loss Percentage: For any Distribution Date, the
applicable percentage for such Distribution Date set forth in the following
table:
DISTRIBUTION DATE OCCURRING IN STEPDOWN REQUIRED LOSS PERCENTAGE
------------------------------ ---------------------------------
October 2008 - September 2009 1.55% with respect to October 2008, plus an additional 1/12th of
1.95% for each month thereafter
October 2009 - September 2010 3.50% with respect to October 2009, plus an additional 1/12th of
2.05% for each month thereafter
October 2010 - September 2011 5.55% with respect to October 2010, plus an additional 1/12th of
1.60% for each month thereafter
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October 2011 - September 2012 7.15% with respect to October 2011, plus an additional 1/12th of
0.85% for each month thereafter
October 2012 and thereafter 8.00%
Stepdown Trigger Event: With respect to the Certificates on or after the
Stepdown Date, a Distribution Date on which (1) the quotient of (A) the
aggregate Stated Principal Balance of all Mortgage Loans which are sixty (60) or
more days Delinquent measured on a rolling three month basis (including, for the
purposes of this calculation, Mortgage Loans in foreclosure, REO Properties and
Mortgage Loans with respect to which the applicable Mortgagor is in bankruptcy)
and (B) the Stated Principal Balance of the Mortgage Loans as of the preceding
Servicer Advance Date, equals or exceeds the product of (i) 34.55% and (ii)
Required Percentage or (2) the quotient (expressed as a percentage) of (A) the
aggregate Realized Losses incurred from the Cut-off Date through the last day of
the calendar month preceding such Distribution Date and (B) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date exceeds the
Stepdown Required Loss Percentage.
Subcontractor: Any outsourcer that performs one or more discrete functions
identified in Item 1122(d) of Regulation AB with respect to 5% or more of the
Mortgage Loans under the direction or authority of a Servicer (measured by
aggregate Stated Principal Balance of the Mortgage Loans, annually at the
commencement of the calendar year prior to the year in which an Assessment of
Compliance is required to be delivered, multiplied by a fraction, the numerator
of which is the number of months during which such Subcontractor performs such
discrete functions and the denominator of which is 12, or, in the case of the
year in which the Closing Date occurs, the number of months elapsed in such
calendar year).
Subordinate Certificate Available Funds Cap: With respect to a Distribution
Date, the per annum rate equal to the weighted average (weighted in proportion
to the results of subtracting from the aggregate Stated Principal Balance of
each Mortgage Group, the current Certificate Principal Balance of the Class A-1
and Class R Certificates, in the case of Group One, or the Class A-2A, Class
A-2B, Class A-2C and Class A-2D Certificates, in the case of Group Two) of the
Class A-1 Available Funds Cap and the Class A-2 Available Funds Cap.
Subordinate Certificate Cap Contract: The confirmation and agreement and
any related confirmation thereto, between the Trustee, on behalf of the Issuing
Entity, and the Cap Contract Counterparty (in the form of Exhibit O3 hereto),
with respect to the Subordinate Certificates.
Subordinate Certificate Cap Contract Notional Balance: With respect to any
Distribution Date, the Subordinate Certificate Cap Contract Notional Balance set
forth for such Distribution Date in the Subordinate Certificate One Month LIBOR
Cap Table attached hereto as Exhibit P-3.
Subordinate Certificate Cap Contract Termination Date: The day after the
Distribution Date in March 2007.
Subordinate Certificate Maximum Rate Cap: With respect to a Distribution
Date, the per annum rate equal to the weighted average (weighted in proportion
to the results of subtracting from the aggregate Stated Principal Balance of
each Mortgage Group, the current Certificate Principal Balance of the Class A-1
and Class R Certificates, in the case of Group One, or the Class A-2A, Class
A-2B, Class A-2C and Class A-2D Certificates, in the case of Group Two) of the
Class A-1 Maximum Rate Cap and the Class A-2 Maximum Rate Cap.
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Subordinate Certificate Upper Collar: With respect to each Distribution
Date with respect to which payments are received on the Subordinate Certificate
Cap Contract, a rate equal to the lesser of One-Month LIBOR and 8.970% per
annum.
Subordinate Certificates: The Class M and Class B Certificates.
Subsequent Recovery: The amount, if any, recovered by the Servicer with
respect to a Liquidated Loan with respect to which a Realized Loss has been
incurred after liquidation and disposition of such Mortgage Loan.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Servicer pursuant to a subservicing agreement and is responsible for the
performance of the material servicing functions required to be performed by the
Servicer under this Agreement that are identified in Item 1122(d) of Regulation
AB with respect to 10% or more of the Mortgage Loans under the direction or
authority of the Servicer (measured by aggregate Stated Principal Balance of the
Mortgage Loans, annually at the commencement of the calendar year prior to the
year in which an Assessment of Compliance is required to be delivered,
multiplied by a fraction, the numerator of which is the number of months during
which such Subservicer services the related Mortgage Loans and the denominator
of which is 12, or, in the case of the year in which the Closing Date occurs,
the number of months elapsed in such calendar year). Any subservicer shall meet
the qualifications set forth in Section 3.02.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(c).
Supplemental Interest Trust: The separate trust, established pursuant to
Section 4.04(l) of this Agreement and held by the Trustee for the benefit of the
holders of the Certificates as a segregated subtrust of the Trust Fund, in which
the Swap Agreement will be held, out of which any Swap Termination Payments or
Net Swap Payments owed to the Swap Counterparty will be paid, certain
distributions to Certificateholders will be made, and into which any Swap
Termination Payments or Net Swap Payments received from the Swap Counterparty
will be deposited as set forth in Section 4.04 hereof.
Swap Account: The separate Eligible Account created and maintained by the
Trustee pursuant to Section 4.04(l)(i) in the name of the Trustee for the
benefit of the Trust Fund and designated "U.S. Bank National Association, as
trustee, in trust for registered holders of Specialty Underwriting and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2006-BC4." Funds in the Swap Account shall be held in trust for the Issuing
Entity for the uses and purposes set forth in this Agreement.
Swap Agreement: The confirmation and agreement and any related confirmation
thereto, between the Swap Counterparty and the trustee of the Supplemental
Interest Trust for the benefit of the Issuing Entity.
Swap Counterparty: Bear Xxxxxxx Financial Products or any successor
counterparty who meets the requirements set forth in the Swap Agreement.
Swap LIBOR: With respect to any Distribution Date (and the related Accrual
Period) the product of (i) the Floating Rate Option (as defined in the Swap
Agreement for the related Swap Payment Date), (ii) two and (iii) the quotient of
(a) the actual number of days in the Accrual Period for the Lower Tier REMIC
Interests divided by (b) 30.
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Swap Payment Date: For so long as the Swap Agreement is in effect or
amounts remain unpaid thereunder, the Business Day immediately preceding each
Distribution Date.
SWAP REMIC: As described in the Preliminary Statement and Section 2.07.
SWAP REMIC Interests: Each of the interests in the SWAP REMIC as set forth
in the Preliminary Statement.
SWAP REMIC Regular Interests: Each of the SWAP REMIC Interests other than
the Class SWR Interest.
Swap Termination Payment: Any payment payable by the Supplemental Interest
Trust or the Swap Counterparty upon termination of the Swap Agreement as a
result of termination of the Swap Agreement.
Targeted Overcollateralization Amount: As of any Determination Date, (a)
prior to the Stepdown Date, 3.70% of the Cut-Off Date Principal Balance of the
Mortgage Loans and (b) on or after the Stepdown Date, 7.40% of the Stated
Principal Balance of the Mortgage Loans.
Tax Matters Person: The Person designated as "tax matters person" in the
manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any direct or indirect transfer or sale of any Ownership Interest
in a Certificate.
Trust Fund: The corpus of the Issuing Entity created hereunder consisting
of (i) the Mortgage Loans and all interest and principal received on or with
respect thereto on and after the Cut-off Date to the extent not applied in
computing the Cut-off Date Principal Balance thereof, exclusive of interest not
required to be deposited in the Collection Account; (ii) the Collection Account
and the Certificate Account and all amounts deposited therein pursuant to the
applicable provisions of this Agreement; (iii) property that secured a Mortgage
Loan and has been acquired by foreclosure, deed in lieu of foreclosure or
otherwise; (iv) the mortgagee's rights under the Insurance Policies with respect
to the Mortgage Loans and/or the related Mortgaged Properties; (v) all proceeds
of the conversion, voluntary or involuntary, of any of the foregoing into cash
or other liquid property; (vi) the Cap Contracts and the Cap Contract Account;
and (vii) the Supplemental Interest Trust that in turn holds the Swap Agreement.
Trustee: U.S. Bank National Association, a national banking association,
not in its individual capacity, but solely in its capacity as trustee for the
benefit of the Certificateholders under this Agreement, and any successor
thereto, and any corporation or national banking association resulting from or
surviving any consolidation or merger to which it or its successors may be a
party and any successor trustee as may from time to time be serving as successor
trustee hereunder.
Uncertificated Class C Interest: An uncertificated REMIC Regular Interest
having the characteristics described in the Preliminary Statement.
Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount, Class M-3 Unpaid Realized Loss Amount,
Class M-4 Unpaid Realized Loss Amount, Class M-5 Unpaid Realized Loss Amount,
Class M-6 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount, Class B-3 Unpaid Realized Loss Amount and
Class C Unpaid Realized Loss Amount, collectively.
59
Upper Collar: Any of the Class A-1 Upper Collar, the Class A-2 Upper Collar
or the Subordinate Certificate Upper Collar.
Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.
Upper Tier REMIC Net WAC Cap: In the case of the Class UTA-1 Interest and
the Residual Interest, a per annum rate equal to the weighted average of the
interest rate of the Class LTII1B Interest for such Distribution Date. In the
case of the Class UTA-2A, Class UTA-2B, Class UTA-2C and Class UTA-2D Interests,
a per annum rate equal to the weighted average of the interest rate for the
Class LTII2B for such Distribution Date. In the case of the Class UTM-1, Class
UTM-2, Class UTM-3, Class UTM-4, Class UTM-5, Class UTM-6, Class UTB-1, Class
UTB-2 and Class UTB-3 Interests, a per annum rate equal to the weighted average
of the interest rates of Class LTII1B and Class LTII2B Interests for such
Distribution weighted, respectively, on the basis of the uncertificated
principal balances of the Class LTII1A and the Class LTII2A Interests. In the
case of any interest in the Upper Tier REMIC that accrues interest on a "30/360"
basis, the per annum rates described in this definition shall be adjusted to
reflect accruals on such basis.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 98% to the Offered Certificates, 2% to the Class C and Class
P Certificates, with the allocation among the Offered Certificates to be in
proportion to the Class Certificate Principal Balance of each Class relative to
the Class Certificate Principal Balance of all other Classes. Voting Rights will
be allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, does
hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).
In connection with such assignment, the Depositor does hereby deliver to,
and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned:
(a) all pages of the original Mortgage Note, signed by the borrower(s) and
endorsed, "Pay to the order of blank, without recourse" and signed in the name
of the prior holder by an authorized officer. Such signature on the endorsement
shall be an original signature of such authorized officer and have printed the
endorser's name, title and company name. To the extent that there is no room on
the face of the Mortgage Note for endorsements, the endorsement may be contained
on an allonge, if the law by which such Mortgage Note is governed so permits.
The Mortgage Note shall include all intervening endorsements showing a complete
chain of title from the originator to the Sponsor;
(b) all original pages of any riders referred to in the Mortgage Note;
(c) for each Mortgage Loan that is not a MOM Mortgage Loan, the original
recorded Mortgage, together with all riders referred to in the Mortgage, and
legal description, with evidence of
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recording thereon or if the original is not available, a copy certified by the
applicable public recording office. If the original Mortgage has not yet been
returned from the recording office, a copy of the original Mortgage, together
with all riders thereto, that has been delivered for recording in the
appropriate recording office of the jurisdiction in which the Mortgaged Property
is located;
(d) for each Mortgage Loan that is not a MERS Mortgage Loan, the original
Mortgage Assignment, executed in blank, in form and substance acceptable for
recording and signed in the name of the last endorsee by an authorized officer;
(e) the policy of title insurance (or a preliminary title report if the
original title insurance policy has not been received from the title insurance
company);
(f) for each Mortgage Loan that is not a MERS Mortgage Loan, originals of
any intervening Mortgage Assignments, with evidence of recording thereon, or if
the original is not available, a copy certified by the applicable public
recording office. If the original intervening assignment has not yet been
returned from the recording office, a copy of such assignment which has been
sent for recording in the appropriate jurisdiction in which the Mortgaged
Property is located, showing a complete chain of title from the originator to
the Seller;
(g) in the case of each MOM Loan, the original Mortgage, together with all
riders thereto, with evidence of recording thereon, noting the presence of the
MIN of the Mortgage Loan and language indicating that the Mortgage Loan is a MOM
Loan or if the original Mortgage is not available, a copy certified by the
applicable public recording office. If the original Mortgage has not yet been
returned from the recording office, a copy of such Mortgage which has been sent
for recording in the appropriate jurisdiction in which the Mortgaged Property is
located;
(h) in the case of each MERS Mortgage Loan that is not a MOM Loan, the
original Mortgage Assignment or if the original Mortgage is not available, a
copy certified by the applicable public recording office, with evidence of
recording thereon, and all intervening Mortgage Assignments, with evidence of
recording thereon, showing a complete chain of title from the originator to
MERS;
(i) all original pages of assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon;
(j) with respect to a Mortgage Loan that, according to the Mortgage Loan
Schedule is covered by a primary mortgage insurance policy, the original or a
copy of the policy of primary mortgage insurance; and
(k) if the Mortgage Note or the Mortgage has been signed by any Person on
behalf of the Mortgagor, the original power of attorney or other instrument that
authorized and empowered such Person to sign, or a copy of such power of
attorney that has been delivered for recording in the appropriate recording
office of the jurisdiction in which the Mortgaged Property is located.
If in connection with any Mortgage Loan, the Depositor cannot deliver the
Mortgage, Assignments of Mortgage or assumption, consolidation or modification,
as the case may be, with evidence of recording thereon, if applicable,
concurrently with the execution and delivery of this Agreement solely because of
a delay caused by the public recording office where such Mortgage, Assignments
of Mortgage or assumption, consolidation or modification, as the case may be,
has been delivered for recordation, the Depositor shall deliver or cause to be
delivered to the Trustee written notice stating that such Mortgage or
assumption, consolidation or modification, as the case may be, has been
delivered to the appropriate public recording office for recordation.
Thereafter, the Depositor shall
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deliver or cause to be delivered to the Trustee such Mortgage, Assignments of
Mortgage or assumption, consolidation or modification, as the case may be, with
evidence of recording indicated thereon, if applicable, upon receipt thereof
from the public recording office. To the extent any required endorsement is not
contained on a Mortgage Note or an Assignment of Mortgage, the Depositor shall
make or cause such endorsement to be made.
With respect to any Mortgage Loan, none of the Depositor, the Servicer or
the Trustee shall be obligated to cause to be recorded the Assignment of
Mortgage referred to in this Section 2.01. In the event that any Assignment of
Mortgage is not recorded or is improperly recorded, the Servicer shall have no
liability for its failure to receive or act on notices related to such
Assignment of Mortgage.
The ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File is vested in the Trustee. Neither the Depositor nor the
Servicer shall take any action inconsistent with such ownership and shall not
claim any ownership interest therein. The Depositor and the Servicer shall
respond to any third party inquiries with respect to ownership of the Mortgage
Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans not
delivered to the Trustee are and shall be held in trust by the Servicer, for the
benefit of the Trustee as the owner thereof, and the Servicer's possession of
the contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Servicer is in a custodial capacity only. The Depositor agrees to take no action
inconsistent with the Trustee's ownership of the Mortgage Loans, to promptly
indicate to all inquiring parties that the Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage Loans.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Sponsor to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Sponsor deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Sponsor to the Depositor deemed to be secured by said pledge and that the
Trustee shall be deemed to be an independent custodian for purposes of
perfection of the security interest granted to the Depositor. If the conveyance
of the Mortgage Loans from the Depositor to the Trustee is characterized as a
pledge, it is the intention of this Agreement that this Agreement shall
constitute a security agreement under applicable law, and that the Depositor
shall be deemed to have granted to the Trustee a first priority security
interest in all of the Depositor's right, title and interest in, to and under
the Mortgage Loans, all payments of principal of or interest on such Mortgage
Loans, all other rights relating to and payments made in respect of the Trust
Fund, and all proceeds of any thereof. If the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person in any
Certificates, the security interest created hereby shall continue in full force
and effect and the Trustee shall be deemed to be the collateral agent for the
benefit of such Person.
In addition to the conveyance made in the first paragraph of this Section
2.01, the Depositor does hereby convey, assign and set over to the Trustee for
the benefit of the Certificateholders its rights and interests under the Sale
Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement and the benefit
of the repurchase obligations and the obligation of the Sponsor contained in the
Sale Agreement to take, at the request of the Depositor or the Trustee, all
action on its part which is reasonably necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be
entitled to exercise all rights of the Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor. The foregoing sale,
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transfer, assignment, set-over, deposit and conveyance does not and is not
intended to result in creation or assumption by the Trustee of any obligation of
the Depositor, the Sponsor, or any other Person in connection with the Mortgage
Loans or any other agreement or instrument relating thereto.
The parties hereto agree and understand that it is not intended that any
Mortgage Loan be included in the Trust that is, without limitation, a "High-Cost
Home Loan" as defined by the Home Ownership and Equity Protection Act of 1994 or
any other applicable anti-predatory lending laws, including but not limited to
(i) a "High-Cost Home Loan" as defined in the New Jersey Home Ownership Act
effective November 27, 2003; (ii) a "High-Cost Home Loan" as defined in the New
Mexico Home Loan Protection Act effective January 1, 2004; (iii) a "High-Cost
Home Loan" as defined in the Massachusetts Predatory Home Loan Practices Act
effective November 7, 2004; (iv) a "High-Cost Home Loan" as defined by the
Indiana High Cost Home Loan Law effective January 1, 2005 or (v) a "High-Cost
Home Loan" as defined by the Illinois High Risk Home Loan Act effective January
1, 2004.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Sponsor to
repurchase any Mortgage Loan to which a material exception was taken in the
Exception Report unless such exception is cured to the satisfaction of the
Depositor and the Trustee within 45 Business Days of the Closing Date.
The Trustee acknowledges receipt of the three Cap Contracts (forms of which
are attached hereto as Exhibits O-1, O-2 and O-3) and the Sale Agreement.
The Trustee acknowledges receipt of the Swap Agreement that will be held in
the Supplemental Interest Trust and is hereby instructed to enter into the Swap
Agreement, not in its individual capacity, but solely as Trustee for the Issuing
Entity and for the Supplemental Interest Trust.
The Trustee agrees, for the benefit of Certificateholders, to review each
Mortgage File delivered to it within sixty (60) days after the Closing Date to
ascertain and to certify, within seventy (70) days of the Closing Date, to the
Depositor and the Servicer that all documents required by Section 2.01, except
those listed on the exception report attached thereto, have been executed and
received, and that such documents relate to the Mortgage Loans identified in
Exhibit B that have been conveyed to it. If the Trustee finds any document or
documents constituting a part of a Mortgage File to be missing or defective
(that is, mutilated, damaged, defaced or unexecuted) in any material respect,
the Trustee shall promptly (and in any event within no more than five Business
Days) after such finding so notify the Servicer, the Sponsor and the Depositor.
In addition, the Trustee shall also notify the Servicer, the Sponsor and the
Depositor if the original Mortgage with evidence of recording thereon with
respect to a Mortgage Loan is not received within seventy (70) days of the
Closing Date; if it has not been received because of a delay caused by the
public recording office where such Mortgage has been delivered for recordation,
the Depositor shall deliver or cause to be delivered to the Trustee written
notice stating that such Mortgage has been delivered to the appropriate public
recording officer for recordation and thereafter the Depositor shall deliver or
cause to be delivered such Mortgage with evidence of recording thereon upon
receipt thereof from the public recording office. The Trustee shall request that
the Sponsor correct or cure such omission, defect or other irregularity, or
substitute a Mortgage Loan pursuant to the provisions of Section 2.03(c), within
ninety (90) days from the date the Sponsor was notified of such
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omission or defect and, if the Sponsor does not correct or cure such omission or
defect within such period, that the Sponsor purchase such Mortgage Loan from the
Issuing Entity within ninety (90) days from the date the Trustee notified the
Sponsor of such omission, defect or other irregularity at the Purchase Price of
such Mortgage Loan. The Purchase Price for any Mortgage Loan purchased pursuant
to this Section 2.02 shall be paid to the Servicer and deposited by the Servicer
in the Collection Account promptly upon receipt, and, upon receipt by the
Trustee of written notification of such deposit signed by a Servicing Officer,
the Trustee, upon receipt of a Request for Release, shall promptly release to
the Sponsor the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment, without recourse, representation or
warranty, as shall be necessary to vest in the Sponsor or its designee, as the
case may be, any Mortgage Loan released pursuant hereto, and the Trustee shall
have no further responsibility with regard to such Mortgage Loan. It is
understood and agreed that the obligation of the Sponsor to purchase, cure or
substitute any Mortgage Loan as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy respecting such
defect or omission available to the Trustee on behalf of Certificateholders. The
preceding sentence shall not, however, limit any remedies available to the
Certificateholders, the Depositor or the Trustee pursuant to the Sale Agreement.
The Trustee shall be under no duty or obligation to inspect, review and examine
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, recordable or appropriate to the represented purpose,
or that they have actually been recorded, or that they are other than what they
purport to be on their face. The Trustee shall keep confidential the name of
each Mortgagor and the Trustee shall not solicit any such Mortgagor for the
purpose of refinancing the related Mortgage Loan. It is understood and agreed
that all rights and benefits relating to the solicitation of any Mortgagors and
the attendant rights, title and interest in and to the list of Mortgagors and
data relating to their Mortgages shall be retained by the Servicer.
Within seventy (70) days of the Closing Date, the Trustee shall deliver to
the Depositor and the Servicer the Trustee's Certification, substantially in the
form of Exhibit D attached hereto, evidencing the completeness of the Mortgage
Files, with any exceptions noted thereto.
SECTION 2.03. Representations, Warranties and Covenants of the Depositor.
(a) The Depositor hereby represents and warrants to the Servicer and the
Trustee as follows, as of the date hereof
(i) The Depositor is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has full power and authority (corporate and other) necessary to own or hold
its properties and to conduct its business as now conducted by it and to
enter into and perform its obligations under this Agreement and the Sale
Agreement.
(ii) The Depositor has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and the Sale Agreement and has
duly authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement and the Sale
Agreement; and this Agreement and the Sale Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, subject, as
to enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
(ii) general principles of equity, regardless of whether enforcement is
sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement and the Sale
Agreement by the Depositor, the consummation of the transactions
contemplated by this Agreement and the Sale
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Agreement, and the fulfillment of or compliance with the terms hereof are
in the ordinary course of business of the Depositor and will not (A) result
in a material breach of any term or provision of the charter or by-laws of
the Depositor or (B) materially conflict with, result in a violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Depositor is a party or
by which it may be bound or (C) constitute a material violation of any
statute, order or regulation applicable to the Depositor of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Depositor; and the Depositor is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair the
Depositor's ability to perform or meet any of its obligations under this
Agreement.
(iv) No litigation is pending or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement and the Sale Agreement or the ability of the Depositor to perform
its obligations under this Agreement and the Sale Agreement in accordance
with the terms hereof.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement and the Sale Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same. The Depositor
hereby represents and warrants to the Trustee with respect to each Mortgage
Loan as of the Closing Date, and following the transfer of the Mortgage
Loans to it by the Sponsor, the Depositor had good title to the Mortgage
Loans and the Mortgage Notes were subject to no offsets, claims, liens,
mortgage, pledge, charge, security interest, defenses or counterclaims.
(vi) Each Mortgage Loan in Group One has a Stated Principal Balance as
of the Cut-off Date that complies with the loan limitations of Xxxxxx Xxx
and Xxxxxxx Mac as in effect on the Cut-off Date.
(b) To the extent that any fact, condition or event with respect to a
Mortgage Loan constitutes a breach of a representation or warranty of the
Sponsor under the Sale Agreement, the only right or remedy of the Trustee or of
any Certificateholder shall be the Trustee's right to enforce the obligations of
the Sponsor under any applicable representation or warranty made by it. The
Trustee acknowledges that the Depositor shall have no obligation or liability
with respect to any breach of any representation or warranty with respect to the
Mortgage Loans (except as set forth in Section 2.03(a)(v)) under any
circumstances.
(c) Upon discovery by any of the Depositor, the Servicer, or the Trustee of
a breach of any of representations and warranties set forth in the Sale
Agreement that adversely and materially affects the value of the related
Mortgage Loan, prepayment charges or the interests of the Certificateholders,
the party discovering such breach shall give prompt written notice to the other
parties. Within ninety (90) days of the discovery of a breach of any
representation or warranty given to the Trustee by the Depositor, the Sponsor
and assigned by the Depositor to the Trustee, the Depositor, or the Sponsor
shall either (a) cure such breach in all material respects, (b) repurchase such
Mortgage Loan or any property acquired in respect thereof from the Trustee at
the Purchase Price or (c) within the two year period following the Closing Date,
substitute a Replacement Mortgage Loan for the affected Mortgage Loan. In the
event of discovery of a breach of any representation and warranty of the Sponsor
or the Depositor, the Trustee
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shall enforce its rights under the Sale Agreement or thereunder for the benefit
of Certificateholders. In the event of a breach of the representations and
warranties with respect to the Mortgage Loans set forth in a Sale Agreement, the
Trustee shall enforce the right of the Issuing Entity to be indemnified for such
breach of representation and warranty. In the event that such breach relates
solely to the unenforceability of a prepayment charge, amounts received in
respect of such indemnity up to the amount of such prepayment charge shall be
distributed pursuant to Section 4.04(b)(i)(B). As provided in the Sale
Agreement, if the Sponsor substitutes for a Mortgage Loan for which there is a
breach of any representations and warranties which adversely and materially
affects the value of such Mortgage Loan and such substitute mortgage loan is not
a Replacement Mortgage Loan, under the terms of the Sale Agreement, the Sponsor
will, in exchange for such substitute Mortgage Loan, (i) provide the applicable
Purchase Price for the affected Mortgage Loan or (ii) within two years of the
Closing Date, substitute such affected Mortgage Loan with a Replacement Mortgage
Loan. Any such substitution shall not be effected prior to the additional
delivery to the Trustee of a Request for Release substantially in the form of
Exhibit I and shall not be effected unless it is within two years of the Startup
Day. As provided in the Sale Agreement, the Sponsor indemnifies and holds the
Issuing Entity, the Trustee, the Depositor, the Servicer and each
Certificateholder harmless against any and all taxes, claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, fees and expenses that the Issuing Entity, the Trustee, the
Depositor, the Servicer and any Certificateholder may sustain in connection with
any actions of the Sponsor relating to a repurchase of a Mortgage Loan other
than in compliance with the terms of this Section 2.03 and the Sale Agreement,
to the extent that any such action causes (i) any federal or state tax to be
imposed on the Issuing Entity or any REMIC provided for herein, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the startup day" under
Section 860G(d)(1) of the Code, or (ii) any REMIC created hereunder to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
With respect to any Mortgage Loan repurchased by the Depositor pursuant to
this Agreement or by the Sponsor pursuant to the Sale Agreement, the principal
portion of the funds received by the Servicer in respect of such repurchase of a
Mortgage Loan will be considered a Principal Prepayment and shall be deposited
by the Servicer in the Certificate Account pursuant to Section 3.05. The
Trustee, upon receipt of the full amount of the Purchase Price for a Deleted
Mortgage Loan, or upon receipt of the Mortgage File for a Replacement Mortgage
Loan substituted for a Deleted Mortgage Loan, shall release or cause to be
released and reassign to the Depositor or the Sponsor, as applicable, the
related Mortgage File for the Deleted Mortgage Loan and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as shall be necessary to vest in such
party or its designee or assignee title to any Deleted Mortgage Loan released
pursuant hereto, free and clear of all security interests, liens and other
encumbrances created by this Agreement, which instruments shall be prepared by
the Trustee, and the Trustee shall not have any further responsibility with
respect to the Mortgage File relating to such Deleted Mortgage Loan.
With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor or the Sponsor, as applicable, must deliver to
the Trustee the Mortgage File for the Replacement Mortgage Loan containing the
documents set forth in Section 2.01 along with a written certification
certifying as to the delivery of such Mortgage File and containing the granting
language set forth in the first sentence of Section 2.01; and (ii) the Depositor
will be deemed to have made, with respect to such Replacement Mortgage Loan,
each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. The Trustee shall review the Mortgage File with
respect to each Replacement Mortgage Loan and certify to the Depositor that all
documents required by Section 2.01 have been executed and received.
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For any month in which the Sponsor substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Sponsor will
determine the amount (if any) by which the aggregate principal balance of all
such Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment charges with respect to such Replacement Mortgage Loans is less than
the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment charges of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall be delivered by the Sponsor to the
Servicer for deposit into the Collection Account on the Determination Date for
the Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.
The Sponsor shall give or cause to be given written notice to the
Certificateholders that such substitution has taken place, shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Replacement Mortgage
Loan or Replacement Mortgage Loans and shall deliver a copy of such amended
Mortgage Loan Schedule to the Trustee. Upon such substitution by the Sponsor,
such Replacement Mortgage Loan or Replacement Mortgage Loans shall constitute
part of the Mortgage Pool and shall be subject in all respects to the terms of
this Agreement and the Sale Agreement, including all applicable representations
and warranties thereof included in the Sale Agreement as of the date of
substitution.
In addition, the Sponsor shall obtain at its own expense and deliver to the
Trustee an Opinion of Counsel addressed to the Trustee to the effect that such
substitution will not (a) cause any federal tax to be imposed on the Issuing
Entity or any REMIC provided for herein, including without limitation, any
federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the startup day" under Section 860G(d)(1) of the
Code or (b) adversely affect the status of any REMIC provided for herein as a
REMIC. If any such Opinion of Counsel can not be delivered, then such
substitution may only be effected at such time as the required Opinion of
Counsel can be given.
(d) It is understood and agreed that the representations, warranties and
indemnification (i) set forth in this Section 2.03 and (ii) of the Sponsor and
the Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.
SECTION 2.04. Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the Depositor and the
Trustee as follows, as of the date hereof
(i) The Servicer is a duly formed corporation and is validly existing
and in good standing under the laws of the state of its formation and is
duly authorized and qualified to transact any and all business contemplated
by this Agreement to be conducted by the Servicer in any state in which a
Mortgaged Property is located or is otherwise not required under applicable
law to effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Mortgage Loan, to service the Mortgage
Loans in accordance with the terms of this Agreement and to perform any of
its other obligations under this Agreement in accordance with the terms
hereof.
(ii) The Servicer has the power and authority to service each Mortgage
Loan, and to execute, deliver and perform, and to enter into and consummate
the transactions contemplated by
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this Agreement and has duly authorized by all necessary corporate action on
the part of the Servicer the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization, execution
and delivery hereof by the other parties hereto, constitutes a legal, valid
and binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, except that (a) the enforceability hereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the Servicer,
the servicing of the Mortgage Loans under this Agreement, the consummation
of any other of the transactions contemplated by this Agreement, and the
fulfillment of or compliance with the terms hereof are in the ordinary
course of business of the Servicer and will not (A) result in a material
breach of any term or provision of the charter or by-laws of the Servicer
or (B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Servicer is a party or
by which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to the Servicer of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Servicer; and the Servicer is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair the
Servicer's ability to perform or meet any of its obligations under this
Agreement.
(iv) The Servicer is an approved servicer of mortgage loans for Xxxxxx
Xxx and is an approved servicer of mortgage loans for Xxxxxxx Mac.
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened, against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Servicer to service the Mortgage Loans or
to perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation of the transactions contemplated hereby, or
if any such consent, approval, authorization or order is required, the
Servicer has obtained the same.
(vii) The Servicer has fully furnished and will fully furnish (for the
period it serviced the Mortgage Loans), in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files
to Equifax, Experian and Trans Union Credit Information Company on a
monthly basis.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans Which Are Not
"Qualified Mortgages".
Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within five (5) Business Days of discovery) give
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written notice thereof to the other parties. In connection therewith, the
Depositor shall, at the Depositor's option, either (i) substitute, if the
conditions in Section 2.03(c) with respect to substitutions are satisfied, a
Replacement Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the
affected Mortgage Loan within ninety (90) days of such discovery in the same
manner as it would a Mortgage Loan for a breach of representation or warranty
contained in Section 2.03. The Trustee shall reconvey to the Depositor the
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the Trustee
in authorized denominations evidencing ownership of the entire Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates and to
perform its duties set forth in this Agreement in accordance with the provisions
hereof.
SECTION 2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to make an
appropriate election to treat each of the SWAP REMIC, the Lower Tier REMIC and
the Upper Tier REMIC as a REMIC. The Trustee shall sign the returns providing
for such elections and such other tax or information returns which are required
to be signed by the Trustee under applicable law. This Agreement shall be
construed so as to carry out the intention of the parties that each of the SWAP
REMIC, the Lower Tier REMIC and the Upper Tier REMIC be treated as a REMIC at
all times prior to the date on which the Trust Fund is terminated.
(b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day," as defined in Section 860G(a)(9) of the Code, for
purposes of the REMIC Provisions shall be the Closing Date. Each REMIC's fiscal
year shall be the calendar year.
The SWAP REMIC shall consist of all of the assets of the Trust Fund, other
than (i) amounts distributable to the Class P Certificates pursuant to Section
4.04(b)(i) hereof, (ii) the interests issued by the SWAP REMIC and the interests
issued by the Lower Tier REMIC, (iii) the grantor trusts described in Section
2.07 hereof, (iv) each Cap Contract and the Cap Contract Account and (v) the
Swap Agreement and the Supplemental Interest Trust. The SWAP REMIC shall issue
the SWAP REMIC Regular Interests, which shall be designated as regular interests
of such REMIC, and shall issue the Class SWR Interest, which shall be designated
as the sole class of residual interest in the SWAP REMIC. Each of the SWAP REMIC
Regular Interests shall have the characteristics set forth in the Preliminary
Statement and this Section 2.07.
The Lower Tier REMIC shall consist of the SWAP REMIC Regular Interests. The
Lower Tier REMIC shall issue the Lower Tier REMIC Regular Interests, which shall
be designated as regular interests of such REMIC and shall issue the Class LTR
Interest, which shall be designated as the sole class of residual interest in
the Lower Tier REMIC. Each of the Lower Tier REMIC Regular Interests shall have
the characteristics set forth in its definition and the Preliminary Statement.
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The assets of the Upper Tier REMIC shall be the Lower Tier REMIC Regular
Interests. The REMIC Regular Interests shall be designated as the regular
interests in the Upper Tier REMIC and the Residual Interest shall be designated
as the sole class of residual interest in the Upper Tier REMIC. For federal
income tax purposes, the pass-through rate on each REMIC Regular Interest (other
than the Uncertificated Class C Interest and the Class UT-IO Interest) and on
the sole class of residual interest in the Upper Tier REMIC shall be subject to
a cap equal to the Upper Tier REMIC Net WAC Cap.
The beneficial ownership of the Class SWR Interest, the Class LTR Interest
and the Residual Interest shall be represented by the Class R Certificate. The
Class SWR Interest and the Class LTR Interest shall not have a principal balance
or bear interest.
(c) The "tax matters person" with respect to each REMIC for purposes of the
REMIC Provisions shall be the beneficial owner of the Class R Certificate;
provided, however, that the Holder of the Class R Certificate, by its acceptance
thereof, irrevocably appoints the Trustee as its agent and attorney-in-fact to
act as "tax matters person" with respect to each such REMIC for purposes of the
REMIC Provisions. If there is more than one beneficial owner of the Class R
Certificate, the "tax matters person" shall be the Person with the greatest
percentage interest in the Class R Certificate and, if there is more than one
such Person, shall be determined under Treasury regulation Section 1.860F-4(d)
and Treasury regulation Section 301.6231(a)(7)-1.
(d) (i) It is intended that the rights of the Class A Certificates, Class R
Certificate, Class M Certificates and Class B Certificates to receive payments
in respect of Excess Interest shall be treated as a right in interest rate cap
contracts written by the Class C Certificateholders in favor of the holders of
the Class A Certificates, Class R Certificate, Class M Certificates and Class B
Certificates, and such shall be accounted for as property held separate and
apart from the regular interests in the Upper Tier REMIC held by the holders of
the Class A Certificates, Class M Certificates and Class B Certificates and the
residual interest in the Upper Tier REMIC held by the holder of the Class R
Certificate. This provision is intended to satisfy the requirements of Treasury
Regulations Section 1.860G-2(i) for the treatment of property rights coupled
with REMIC interests to be separately respected and shall be interpreted
consistently with such regulation. On each Distribution Date, to the extent that
any of the Class A Certificates, Class R Certificate, Class M Certificates and
Class B Certificates receive payments in respect of Excess Interest, such
amounts, to the extent not derived from payments on the Cap Contracts or the
Swap Agreement, will be treated as distributed by the Upper Tier REMIC to the
Class C Certificates pro rata in payment of the amounts specified in Section
4.04(f) and then paid to the relevant Class of Certificates pursuant to the
related interest rate cap agreement.
(ii) It is intended that the beneficial owners of the Certificates
(other than the Class P and Class C Certificates) shall be treated as having
entered into a notional principal contract with respect to the beneficial owners
of the Class C Certificates. Pursuant to each such notional principal contract,
all beneficial owners of each Class of Certificates (other than the Class P and
Class C Certificates) shall be treated as having agreed to pay, on each
Distribution Date, to the beneficial owners of the Class C Certificates an
aggregate amount equal to the excess, if any, of (i) the amount payable on such
Distribution Date on the Corresponding REMIC Regular Interest of such Class of
Certificates over (ii) the amount payable on such Class of Certificates on such
Distribution Date (such excess, a "Class Payment Shortfall"). A Class Payment
Shortfall shall be allocated to each Class of Certificates to the extent that
interest accrued on such Class for the related Accrual Period at the
Pass-Through Rate for a Class, computed by substituting "Upper Tier REMIC Net
WAC Cap" for the Available Funds Cap set forth in the definition thereof,
exceeds the amount of interest accrued on such Certificate at the Pass-Through
Rate (without such substitution) for the related Accrual Period, and a Class
Payment Shortfall payable from principal collections shall be allocated to the
most subordinate Class of Certificates with an outstanding principal balance to
the extent of such balance.
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(e) The parties intend that the portion of the Trust Fund consisting of the
Uncertificated Class C Interest, the uncertificated Class UT-IO Interest, the
rights to receive payments deemed made by the Class A, Class R, Class M and
Class B Certificates in respect of notional principal contracts described in
Section 2.07(d)(ii), the Cap Contract Account, the Cap Contracts, the
Supplemental Interest Trust that holds the Swap Agreement and the obligation of
the holders of the Class C Certificates to pay amounts in respect of Excess
Interest to the holders of the Class A Certificates, Class R Certificate, Class
M Certificates and Class B Certificates shall be treated as a "grantor trust"
under the Code, for the benefit of the holders of the Class C Certificates, and
the provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class C Certificates information regarding their
allocable share, if any, of the income with respect to such grantor trust, (ii)
file or cause to be filed with the Internal Revenue Service Form 1041 (together
with any necessary attachments) and such other forms as may be applicable and
(iii) comply with such information reporting obligations with respect to
payments from such grantor trust to the holders of Class A Certificates, Class R
Certificate, Class M Certificates, Class B Certificates and Class C Certificates
as may be applicable under the Code.
(f) The parties intend that the portion of the Trust Fund consisting of the
right to receive the payments distributable to the Class P Certificates pursuant
to Section 4.04(b)(i) hereof shall be treated as a "grantor trust" under the
Code, for the benefit of the holders of the Class P Certificates, and the
provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall (i) furnish or cause to be
furnished to the holders of the Class P Certificates information regarding their
allocable share of the income with respect to such grantor trust and (ii) file
or cause to be filed with the Internal Revenue Service Form 1041 (together with
any necessary attachments) and such other forms as may be applicable.
(g) The parties intend that amounts paid to the Swap Counterparty under the
Swap Agreement shall be deemed for federal income tax purposes to be paid by the
Class C Certificates first, out of funds deemed received in respect of the Class
UT-IO Interest, second, out of funds deemed received in respect of the
Uncertificated Class C Interest and third, out of funds deemed received in
respect of notional principal contracts described in Section 2.07(d)(ii), and
the provisions hereof shall be interpreted consistently with this intention. On
each Distribution Date, to the extent that amounts paid to the Swap Counterparty
are deemed paid out of funds received in respect of the Uncertificated Class C
Interest, such amounts will be treated as distributed by the Upper Tier REMIC to
the Class C Certificates pro rata in payment of the amounts specified in Section
4.04(f) and then paid to the Swap Counterparty pursuant to the Swap Agreement.
The Supplemental Interest Trust shall be an "outside reserve fund" for
federal income tax purposes and not an asset of any REMIC. Furthermore, the
Holders of the Class C Certificates shall be the beneficial owners of the
Supplemental Interest Trust for all federal income tax purposes, and shall be
taxable on all income earned thereon.
(h) All payments of principal and interest at the Net Mortgage Rate on each
of the Mortgage Loans (other than amounts distributable to the Class P
Certificates pursuant to Section 4.04(b)(i) hereof) received by the SWAP REMIC
with respect to the Mortgage Loans shall be paid to the SWAP REMIC Regular
Interests until the principal balance of all such interests have been reduced to
zero and any losses allocated to such interests have been reimbursed. Any
available funds remaining in the SWAP REMIC on a Distribution Date after
distributions to the SWAP REMIC Regular Interests shall be distributed to the
Class R Certificates on account of the Class SWR Interest. On each Distribution
Date, the Trustee shall distribute the aggregate Interest Funds (net of expenses
and payments to the Class P Certificates) with respect to each of the SWAP REMIC
Regular Interests based on the interest rates for each such
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SWAP REMIC Regular Interest. On each Distribution Date, the Trustee shall
distribute the aggregate Principal Funds with respect to the Group One Mortgage
Loans first to the Class 1-SW1 Interest until its principal balance is reduced
to zero and then sequentially to each of the other SWAP REMIC Regular Interests
beginning with designation "1" in ascending order of their numerical class
designation, in equal amounts to each such class in such numerical designation,
until the principal balance of each such class is reduced to zero. All losses
with respect to the Group One Mortgage Loans shall be allocated among the SWAP
REMIC Regular Interests beginning with the designation "1" in the same manner
that principal distributions are allocated. On each Distribution Date, the
Trustee shall distribute the aggregate Principal Funds with respect to the Group
Two Mortgage Loans first to the Class 2-SW2 Interest until its principal balance
is reduced to zero and then sequentially to each of the other SWAP REMIC Regular
Interests beginning with designation "2" in ascending order of their numerical
class designation, in equal amounts to each such class in such numerical
designation, until the principal balance of each such class is reduced to zero.
All losses with respect to the Group Two Mortgage Loans shall be allocated among
the SWAP REMIC Regular Interests beginning with the designation "2" in the same
manner that principal distributions are allocated. Subsequent Recoveries with
respect to the Group One and Group Two Mortgage Loans shall be allocated in the
reverse fashion from the manner in which losses are allocated.
All payments received by the Lower Tier REMIC with respect to the SWAP
REMIC Regular Interests shall be paid to the Lower Tier REMIC Regular Interests
until the principal balance of all such interests have been reduced to zero and
any losses allocated to such interests have been reimbursed. Any excess amounts
shall be distributed to the Class LTR Interest. On each Distribution Date,
payments and losses shall be allocated among the Lower Tier REMIC Regular
Interests so that (i) each of the Lower Tier REMIC I Marker Interests shall have
a principal balance equal to 25% of the principal balance of the Corresponding
Certificates, (ii) the Class LTIX Interest has a principal balance equal to the
excess of (x) 50% of the remaining principal balance of the Mortgage Loans over
(y) the aggregate principal balance of the Lower Tier REMIC I Marker Interests
(if necessary to reflect an increase in overcollateralization, accrued and
unpaid interest on the Class LTIX interest may be added to its principal amount
to achieve this result) and (iii) the aggregate principal amount of the Class
LTII1A Interest, Class LTII1B Interest, Class LTII2A Interest, Class LTII2B
Interest and Class LTIIX Interest shall equal 50% of the remaining principal
balance of the Mortgage Loans. Distributions and losses allocated to the Lower
Tier REMIC Regular Interests described in clause (iii) of the preceding sentence
will be allocated among such Lower Tier REMIC Regular Interests in the following
manner: (x) such distributions shall be deemed made to such Lower Tier REMIC
Regular Interests first, so as to keep the principal balance of the each such
Lower Tier REMIC Regular Interest with "B" at the end of its designation equal
to 0.05% of the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group; second, to such Lower Tier REMIC Regular Interests
with "A" at the end of its designation so that the uncertificated principal
balance of each such Lower Tier REMIC Regular Interest is equal to 0.05% of the
excess of (I) the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group over (II) the aggregate principal balance of
Certificate Group One, in the case of the Class LTII1A Interest, or Certificate
Group Two, in the case of the Class LTII2A Interest (except that if 0.05% of any
such excess is greater than the principal amount of the related Lower Tier REMIC
II Marker Interest with "A" at the end of its designation, the least amount of
principal shall be distributed to each Lower Tier REMIC II Marker Interest with
"A" at the end of its designation such that the Lower Tier REMIC Subordinate
Balance Ratio is maintained) and finally, any remaining distributions of
principal to the Class LTIIX Interest and (y) such losses shall be allocated
among the Lower Tier REMIC Regular Interests described in clause (iii) of the
preceding sentence first, so as to keep the principal balance of the each such
Lower Tier REMIC Regular Interest with "B" at the end of its designation equal
to 0.05% of the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage Group; second, to such Lower Tier REMIC Regular Interests
with "A" at the end of its designation so that the uncertificated principal
balance of each such Lower Tier REMIC Regular Interest is equal to 0.05% of the
excess of (I) the aggregate scheduled principal balance of the Mortgage Loans in
the related Mortgage
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Group over (II) the aggregate principal balance of Certificate Group One, in the
case of the Class LTII1A Interest, or Certificate Group Two, in the case of the
Class LTII2A Interest (except that if 0.05% of any such excess is greater than
the principal amount of the related Lower Tier REMIC II Marker Interest with "A"
at the end of its designation, the least amount of losses shall be allocated to
each Lower REMIC II Marker Interest with "A" at the end of its designation such
that the Lower Tier REMIC Subordinate Balance Ratio is maintained) and finally,
any remaining losses to the Class LTIIX Interest. Notwithstanding the preceding
two sentences, however, losses not allocated to any Class of Certificates will
not be allocated to any Lower Tier REMIC Regular Interests. All computations
with respect to the Lower Tier REMIC Regular Interests shall be taken out to ten
decimal places.
Any available funds remaining in the Lower Tier REMIC on a
Distribution Date after distributions to the Lower Tier REMIC Regular Interests
shall be distributed to the Class R Certificates in respect of the Class LTR
Interest.
If on any Distribution Date the Certificate Principal Balance of any
Class of Certificates is increased pursuant to the last sentence of the
definition of "Certificate Principal Balance", then there shall be an equivalent
increase in the principal amounts of the Lower Tier REMIC Regular Interests,
with such increase allocated (before the making of distributions and the
allocation of losses on the Lower Tier REMIC Regular Interests on such
Distribution Date) among the Lower Tier REMIC Regular Interests so that, to the
greatest extent possible, (i) each of the Lower Tier REMIC I Marker Interests
has a principal balance equal to 25% of the principal balance of the
Corresponding Certificates, (ii) the Class LTIX Interest has a principal balance
equal to the excess of (x) 50% of the remaining principal balance of the
Mortgage Loans over (y) the aggregate principal balance of the Lower Tier REMIC
I Marker Interests and (iii) the aggregate principal amount of the Lower Tier
REMIC II Marker Interests and the Class LTIIX Interest shall equal 50% of the
remaining principal balance of the Mortgage Loans. Allocations in connection
with clause (iii) shall be made so that, to the greatest extent possible, (a)
the principal balance of each Lower Tier REMIC II Marker Interest with "B" at
the end of its designation equals 0.05% of the aggregate scheduled principal
balance of the Mortgage Loans in related Mortgage Group, (b) the principal
balance of each Lower Tier REMIC II Marker Interest with "A" at the end of its
designation equals 0.05% of the excess of (x) the aggregate scheduled principal
balance of the Mortgage Loans in related Mortgage Group over (y) the aggregate
principal balance of Certificate Group One in the case of the Class LTII1A
Interest, or Certificate Group Two in the case of the Class LTII2A Interest and
(c) any remaining allocations are made to the Class LTIIX Interest.
For purposes of this Section 2.07, (i) the Class LTII1A Interest and
Class LTII1B Interest shall be related to Group One, and (ii) the Class LTII2A
Interest and Class LTII2B Interest shall be related to Group Two.
(i) In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the Trustee and the
Issuing Entity against any and all Losses resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
Holder of the Class R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of the Class R Certificate
on which the Servicer has relied. The foregoing shall not be deemed to limit or
restrict the rights and remedies of the Holder of the Class R Certificate now or
hereafter existing at law or in equity. Notwithstanding the foregoing, however,
in no event shall the Servicer have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than those arising out of a negligent performance by the Servicer of its
duties and
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obligations set forth herein, and (3) for any special or consequential damages
to Certificateholders (in addition to payment of principal and interest on the
Certificates).
(j) In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the Issuing Entity
against any and all Losses resulting from such negligence; provided, however,
that the Trustee shall not be liable for any such Losses attributable to the
action or inaction of the Servicer, the Depositor or the Holder of the Class R
Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of the Class R Certificate on which the
Trustee has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of the Class R Certificate now or hereafter
existing at law or in equity. Notwithstanding the foregoing, however, in no
event shall the Trustee have any liability (1) for any action or omission that
is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses
other than those arising out of a negligent performance by the Trustee of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of principal
and interest on the Certificates).
SECTION 2.08. Covenants of the Servicer.
The Servicer hereby covenants to each of the other parties to this
Agreement that the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy.
SECTION 2.09. [RESERVED]
SECTION 2.10. [RESERVED]
SECTION 2.11. Permitted Activities of the Issuing Entity. The Issuing
Entity is created for the object and purpose of engaging in the Permitted
Activities. In furtherance of the foregoing, the Trustee is hereby authorized
and directed to execute and deliver, on behalf of the Issuing Entity, the Cap
Contracts and the Swap Agreement, and to execute and deliver on behalf of the
Issuing Entity, and to perform the duties and obligations of the Issuing Entity
under any agreement or instrument related to the Cap Contracts and the Swap
Agreement, in each case in such form as the Depositor shall direct or shall
approve in writing, the execution and delivery of any such agreement by the
Depositor to be conclusive evidence of its approval thereof.
SECTION 2.12. Qualification of Special Purpose Entity. For purposes of SFAS
140, the parties hereto intend that the Issuing Entity shall be treated as a
"qualifying special purpose entity" as such term is used in SFAS 140 and any
successor rule thereto and its power and authority as stated in Section 2.11 of
this Agreement shall be limited in accordance with paragraph 35 of SFAS 140.
SECTION 2.13. Depositor Notification of NIM Notes. The Depositor shall
notify the Servicer and the Trustee if and when any NIM Notes are issued and
when such NIM Notes are no longer outstanding.
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ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall service and
administer the Mortgage Loans in accordance with Accepted Servicing Practices.
In connection with such servicing and administration, the Servicer shall have
full power and authority, acting alone and/or through subservicers as provided
in Section 3.02 hereof, to do or cause to be done any and all things that it may
deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that, subject to Section 6.03, the
Servicer shall not take any action that is inconsistent with or prejudices the
interests of the Issuing Entity or the Certificateholders in any Mortgage Loan
serviced by it under this Agreement or the rights and interests of the other
parties to this Agreement except as otherwise required by this Agreement or by
law. The Servicer shall represent and protect the interest of the Issuing Entity
in the same manner as it currently protects its own interest in mortgage loans
in its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan, but in any case not in any manner that is a lesser standard than that
provided in the first sentence of this Section 3.01. Notwithstanding anything in
this Agreement to the contrary, the Servicer shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan which would
cause any of the REMICs provided for herein to fail to qualify as a REMIC or
result in the imposition of any tax under Section 860G(a) or 860G(d) of the
Code. Without limiting the generality of the foregoing, the Servicer, in its own
name or in the name of the Depositor and the Trustee, is hereby authorized and
empowered by the Depositor and the Trustee, when the Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of the
Trustee, the Depositor, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, of partial or full release or
discharge, or of subordination and all other comparable instruments, with
respect to the Mortgage Loans, and with respect to the Mortgaged Properties held
for the benefit of the Certificateholders. The Servicer shall prepare and
deliver to the Depositor and/or the Trustee such documents requiring execution
and delivery by any or all of them as are necessary or appropriate to enable the
Servicer to service and administer the Mortgage Loans. If reasonably required by
the Servicer, the Trustee shall furnish the Servicer with a reasonable number of
powers of attorney in the form attached hereto as Exhibit J and execute such
other documents delivered to it by the Servicer that are necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement. Upon receipt of such documents, the Depositor
and/or the Trustee shall execute such documents and deliver them to the
Servicer. The Trustee shall have no liability with respect to any misuse of such
power of attorney and shall be indemnified by the Servicer for any costs,
liabilities or expenses incurred by the Trustee in connection therewith.
In accordance with the standards of the preceding paragraph, the Servicer
shall advance or cause to be advanced funds as necessary for the purpose of
effecting the payment of taxes and assessments on any first lien Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. To the extent that a Mortgage does not provide for
escrow payments, (i) the Servicer shall determine whether any such payments are
made by a first lien Mortgagor in a manner and at a time that is necessary to
avoid the loss of the Mortgaged Property due to a tax sale or the foreclosure as
a result of a tax lien and (ii) the Servicer shall ensure that all insurance
required to be maintained on a first lien Mortgaged
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Property pursuant to this Agreement is maintained. If any such payment has not
been made and the Servicer receives notice of a tax lien with respect to the
Mortgage Loan being imposed, the Servicer will, to the extent required to avoid
loss of the Mortgaged Property, advance or cause to be advanced funds necessary
to discharge such lien on the Mortgaged Property subject to the Servicer's
determination that such advances will be recoverable. All costs incurred by the
Servicer, if any, in effecting the timely payment of taxes and assessments on
the Mortgaged Properties and related insurance premiums shall not, for the
purpose of calculating monthly distributions to the Certificateholders, be added
to the Stated Principal Balance under the related Mortgage Loans,
notwithstanding that the terms of such Mortgage Loans so permit.
The Servicer shall deliver a list of Servicing Officers and specimen
signatures to the Trustee by the Closing Date.
The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Xxxxxx Xxx Guide Announcement 97-02 and for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.
The Servicer further is authorized and empowered by the Trustee, on behalf
of the Certificateholders and the Trustee, in its own name or in the name of the
Sub-Servicer, when the Servicer or the Sub-Servicer, as the case may be,
believes it is appropriate in its best judgment to register any Mortgage Loan on
the MERS System, or cause the removal from the registration of any Mortgage Loan
on the MERS System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns. Any reasonable expenses incurred in connection with the
actions described in the preceding sentence or as a result of MERS discontinuing
or becoming unable to continue operations in connection with the MERS System,
shall be subject to withdrawal by the Servicer from the Collection Account
(provided that such expenses constitute "unanticipated expenses" within the
meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).
With respect to any Mortgage Loan, the Servicer may consent to the
refinancing of the prior senior lien relating to such Mortgage Loan, provided
that the following requirements are met:
(a) the resulting Combined Loan-to-Value Ratio of such Mortgage Loan is no
higher than the Combined Loan-to-Value Ratio prior to such refinancing; and
(b) the interest rate for the loan evidencing the refinanced senior lien is
no more than 2.0% higher than the interest rate on the loan evidencing the
existing senior lien immediately prior to the date of such refinancing; and
(c) the loan evidencing the refinanced senior lien is not subject to
negative amortization.
SECTION 3.02. Servicing and Subservicing; Enforcement of the Obligations of
Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage Loan by a
subservicer, which may be an Affiliate (each, a "subservicer"), pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided, however,
that (i) such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder and (ii) that
such agreement would not result in a withdrawal or downgrading by any Rating
Agency of the ratings of any Certificates
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evidenced by a letter to that effect delivered by each Rating Agency to the
Depositor. Notwithstanding the provisions of any subservicing agreement, any of
the provisions of this Agreement relating to agreements or arrangements between
the Servicer and a subservicer or reference to actions taken through a
subservicer or otherwise, the Servicer shall remain obligated and liable to the
Depositor, the Trustee and the Certificateholders for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. Every
subservicing agreement entered into by the Servicer shall contain a provision
giving any successor servicer the option to terminate such agreement in the
event a successor servicer is appointed. All actions of the each subservicer
performed pursuant to the related subservicing agreement shall be performed as
an agent of the Servicer with the same force and effect as if performed directly
by the Servicer. The Servicer shall deliver to the Trustee copies of all
subservicing agreements.
(b) The Servicer may enter into a special servicing advisory agreement with
a holder of the Class R Certificate and/or one or more other class of
Subordinate Certificates issued by the Issuing Entity or of a net interest
margin trust holding certificates issued by the Issuing Entity and/or an advisor
designated by such holder. Pursuant to such agreement, the Servicer may provide
such holder or advisor, in its capacity as special servicing advisor, with
loan-level information with respect to the Mortgage Loans, and such holder or
the special servicing advisor designated by such holder may advise the Servicer
with regards to efforts to maximize recoveries with respect to such Mortgage
Loans, including without limitation the commencement of foreclosure proceedings
or other actions.
(c) For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the Mortgage
Loans that are received by a subservicer regardless of whether such payments are
remitted by the subservicer to the Servicer.
(d) The Servicer shall not permit a Subservicer to perform any servicing
responsibilities hereunder with respect to the Mortgage Loans unless that
Subservicer first agrees in writing with the Servicer to deliver an Assessment
of Compliance and an Accountant's Attestation in such manner and at such times
that permits that Servicer to comply with Section 3.17 of this Agreement.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.
Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.
SECTION 3.04. Trustee to Act as Servicer.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its designee shall, within a period of time not to exceed ninety (90) days from
the date of notice of termination or resignation, thereupon assume all of the
rights and obligations of the Servicer hereunder arising thereafter except that
the Trustee shall not be (i) liable for losses of the Servicer pursuant to
Section 3.10 hereof or any acts or omissions of such predecessor Servicer
hereunder, (ii) obligated to make Advances or Servicing Advances if it is
prohibited from doing so by applicable law, (iii) obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder, including pursuant to
Section 2.02, 2.03 or 2.05 hereof, (iv) responsible for any expenses of the
Servicer pursuant to Section 2.03 or (v) deemed to have made any representations
and warranties hereunder, including pursuant to Section 2.04 or the first
paragraph of Section 6.02 hereof; provided,
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however that the Trustee (subject to clause (ii) above) or its designee, in its
capacity as the successor servicer, shall immediately assume the terminated or
resigning Servicer's obligation to make Advances and Servicing Advances. No such
termination shall affect any obligation of the Servicer to pay amounts owed
under this Agreement and to perform its duties under this Agreement until its
successor assumes all of its rights and obligations hereunder. If the Servicer
shall for any reason no longer be the Servicer (including by reason of any Event
of Default), the Trustee (or any other successor servicer) may, at its option,
succeed to any rights and obligations of the Servicer under any subservicing
agreement in accordance with the terms thereof; provided, however, that the
Trustee (or any other successor servicer) shall not incur any liability or have
any obligations in its capacity as servicer under a subservicing agreement
arising prior to the date of such succession unless it expressly elects to
assume such obligations of the Servicer thereunder; and the Servicer shall not
thereby be relieved of any liability or obligations under the subservicing
agreement arising prior to the date of such succession. To the extent any costs
or expenses, including without limitation Servicing Transfer Costs incurred by
the Trustee in connection with this Section 3.04 are not paid by the Servicer
pursuant to this Agreement within thirty (30) days of the date of the Trustee's
invoice therefor, such amounts shall be payable out of the Certificate Account;
provided that the terminated Servicer shall reimburse the Issuing Entity for any
such expense incurred by the Issuing Entity upon receipt of a reasonably
detailed invoice evidencing such expenses. If the Trustee is unwilling or unable
to act as servicer, the Trustee shall seek to appoint a successor servicer that
is eligible in accordance with the criteria specified in Section 7.03 of this
Agreement.
The Servicer shall, upon request of the Trustee, but at the expense of the
Servicer, deliver to the assuming party all documents and records relating to
each subservicing agreement and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of any Event of Default),
notwithstanding anything to the contrary above, the Trustee and the Depositor
hereby agree that within ten (10) Business Days or delivery to the Trustee by
the Servicing Rights Pledgee of a letter signed by the Servicer whereby the
Servicer shall resign as Servicer under this Agreement, the Servicing Rights
Pledgee or its designee shall be appointed as successor servicer (provided that
at the time of such appointment the Servicing Rights Pledgee or such designee
meets the requirements of a successor servicer set forth above) and the
Servicing Rights Pledgee agrees to be subject to the terms of this Agreement.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.
(a) The Servicer shall make reasonable efforts in accordance with Accepted
Servicing Practices to collect all payments called for under the terms and
provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing and subject to Section
3.01 hereof, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any default interest, or (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, subject to Section 4.01, the Servicer
shall make any Advances on the related Mortgage Loan during the scheduled period
in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan
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(including modifications that would change the Mortgage Rate, forgive the
payment of principal or interest or extend the final maturity date of such
Mortgage Loan), accept payment from the related Mortgagor of an amount less than
the Stated Principal Balance in final satisfaction of such Mortgage Loan, or
consent to the postponement of strict compliance with any such term or otherwise
grant indulgence to any Mortgagor (any and all such waivers, modifications,
variances, forgiveness of principal or interest, postponements, or indulgences
collectively referred to herein as "forbearance"), provided, however, that in no
event shall the Servicer grant any such forbearance (other than as permitted by
the second sentence of this Section) with respect to any one Mortgage Loan more
than once in any 12 month period or more than three times over the life of such
Mortgage Loan, and provided, further, that in determining which course of action
permitted by this sentence it shall pursue, the Servicer shall adhere to the
standards of Section 3.01. The Servicer's analysis supporting any forbearance
and the conclusion that any forbearance meets the standards of Section 3.01
shall be reflected in writing in the Mortgage File.
(b) The Servicer will not waive any prepayment charge or portion thereof
unless, (i) the enforceability thereof shall have been limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) the prepayment of the
Mortgage Loan is made in connection with the involuntary sale of the related
Mortgaged Property, or (iv) in the Servicer's reasonable judgment as described
in Section 3.01 hereof, (x) such waiver relates to a default or a reasonably
foreseeable default and (y) such waiver would maximize recovery of total
proceeds taking into account the value of such prepayment charge and related
Mortgage Loan, or (v) the collection of such prepayment charge or portion
thereof, or of a similar type of prepayment charge, would be considered
"predatory" or "illegal" pursuant to written guidance published by any
applicable federal, state or local regulatory authority having jurisdiction over
such matters or has been challenged by any such authority, or, only to the
extent that there are no NIM Notes outstanding or to the extent that the
Depositor has notified the Servicer in writing that all previously issued NIM
Notes are no longer outstanding, there is a certificated class action in which a
similar type of prepayment charge is being challenged, or (vi) if sufficient
information is not made available to enable it to collect the prepayment charge.
Except as provided in the preceding sentence, in no event will the Servicer
waive a prepayment charge in connection with a refinancing of a Mortgage Loan
that is not related to a default or a reasonably foreseeable default. If the
Servicer waives or does not collect all or a portion of a prepayment charge
relating to a Principal Prepayment in full or in part due to any action or
omission of the Servicer, other than as provided above, the Servicer shall
deposit the amount of such prepayment charge (or such portion thereof as had
been waived for deposit) into the Collection Account for distribution in
accordance with the terms of this Agreement.
(c) The Servicer shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, Mortgage
Note or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that enforcing the
provision of the Mortgage or other instrument pursuant to which such payment is
required is prohibited by applicable law.
(d) The Servicer shall establish and initially maintain, on behalf of the
Trustee for the benefit of the Certificateholders, the Collection Account. The
Servicer shall deposit into the Collection Account daily, within two (2)
Business Days of receipt thereof, in immediately available funds, the following
payments and collections received or made by it on and after the Cut-off Date
with respect to the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the
Mortgage Loans on or prior to the Cut-off Date;
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(ii) all payments on account of interest on the Mortgage Loans net of
the related Servicing Fee permitted under Section 3.15, other than interest
due on the Mortgage Loans on or prior to the Cut-off Date;
(iii) all Liquidation Proceeds, other than proceeds to be applied to
the restoration or repair of the Mortgaged Property or released to either
the Mortgagor or the holder of a senior lien on the Mortgaged Property in
accordance with the Servicer's normal servicing procedures;
(iv) all Subsequent Recoveries;
(v) all Compensating Interest;
(vi) any amount required to be deposited by the Servicer pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments;
(vii) any amounts required to be deposited by the Servicer pursuant to
Section 3.10 hereof;
(viii) the Purchase Price and any Substitution Adjustment Amount;
(ix) all Advances made by the Servicer pursuant to Section 4.01;
(x) all prepayment charges; and
(xi) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, late payment charges,
insufficient funds charges and payments in the nature of assumption fees (i.e.
fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property) and other similar ancillary fees (other than
prepayment charges) if collected, need not be remitted by the Servicer. In the
event that the Servicer shall remit any amount not required to be remitted and
not otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at
any time withdraw or direct the Trustee, or such other institution maintaining
the Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.
(e) [Reserved]
(f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:
(i) the aggregate amount withdrawn by the Servicer from the Collection
Account and required to be deposited in the Certificate Account;
(ii) any amount required to be deposited by the Trustee pursuant to
Section 3.05(g) in connection with any losses on Permitted Investments; and
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(iii) the Auction Termination Amount or Clean Up Call Price payable
pursuant to Section 9.01.
Any amounts received by the Trustee prior to 2:00 p.m. New York City time
(or such earlier deadline for investment in the Permitted Investments designated
by the Trustee), which are required to be deposited in the Certificate Account
by the Servicer, may be invested in Permitted Investments on the Business Day on
which they were received. The foregoing requirements for remittance by the
Servicer and deposit by the Servicer into the Certificate Account shall be
exclusive. In the event that the Servicer shall remit any amount not required to
be remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time withdraw such amount from the Certificate Account,
any provision herein to the contrary notwithstanding. All funds deposited in the
Certificate Account shall be held by the Trustee in trust for the
Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Certificate Account at the direction of the
Servicer.
(g) Each institution that maintains the Collection Account or the
Certificate Account shall invest the funds in each such account, as directed by
the Servicer or the Trustee, as applicable, in writing, in Permitted
Investments, which shall mature not later than (i) in the case of the Collection
Account the Business Day preceding the related Servicer Remittance Date (except
that if such Permitted Investment is an obligation of the institution that
maintains such Collection Account or is otherwise immediately available, then
such Permitted Investment shall mature not later than the Servicer Remittance
Date) and (ii) in the case of the Certificate Account, the Business Day
immediately preceding the first Distribution Date that follows the date of such
investment (except that if such Permitted Investment is an obligation of the
institution that maintains such Certificate Account or a fund for which such
institution serves as custodian or is otherwise immediately available, then such
Permitted Investment shall mature not later than such Distribution Date) and, in
each case, shall not be sold or disposed of prior to its maturity. All such
Permitted Investments shall be made in the name of the Servicer or the Trustee,
as applicable, for the benefit of the Certificateholders. All income and gain
net of any losses realized from amounts on deposit in the Collection Account
shall be for the benefit of the Servicer as servicing compensation and shall be
remitted to it monthly as provided herein. The amount of any losses incurred in
the Collection Account in respect of any such investments shall be deposited by
the Servicer in the Collection Account out of the Servicer's own funds
immediately as realized. All income and gain net of any losses realized from
amounts on deposit in the Certificate Account shall be for the benefit of the
Trustee and shall be remitted to or withdrawn by it monthly as provided herein.
The amount of any losses incurred in the Certificate Account in respect of any
such investments shall be deposited by the Trustee in the Certificate Account.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.
To the extent required by a related first lien Mortgage Note, the Servicer
shall establish and maintain one or more accounts (each, an "Escrow Account")
and deposit and retain therein all collections from the Mortgagors (or advances
by the Servicer) for the payment of taxes, assessments, hazard insurance
premiums or comparable items for the account of the Mortgagors. Nothing herein
shall require the Servicer to compel a Mortgagor to establish an Escrow Account
in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the
Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes and assessments and insurance premiums) and
3.10 hereof (with respect to hazard insurance), to refund to any Mortgagors any
sums as may be determined to be overages, to pay interest, if required by law or
the terms of the related Mortgage or Mortgage Note, to Mortgagors on balances in
the Escrow Account or to clear and terminate the Escrow Account at the
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termination of this Agreement in accordance with Section 9.01 hereof. The Escrow
Accounts shall not be a part of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information Regarding the
Mortgage Loans.
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.
The Servicer may from time to time provide the Depositor, and any person
designated by the Depositor, with reports and information regarding the Mortgage
Loans, including without limitation, information requested by the Depositor or
an originator of the Mortgage Loans for required institutional risk control. In
addition, subject to limitations of applicable privacy laws, the Servicer may
make public information regarding performance of the Mortgage Loans.
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.
(a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously paid to or
withheld by the Servicer), as servicing compensation in accordance with
Section 3.15, that portion of any payment of interest that equals the
Servicing Fee for the period with respect to which such interest payment
was made, and, as additional servicing compensation, those other amounts
set forth in Section 3.15;
(ii) to reimburse the Servicer for Advances and Servicing Advances (to
the extent such Servicing Advances would constitute "unanticipated
expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for herein)
occurring after the Cut-off Date made by it with respect to the Mortgage
Loans, such right of reimbursement pursuant to this subclause (ii) being
limited to amounts received on particular Mortgage Loan(s) (including, for
this purpose, Condemnation Proceeds, Insurance Proceeds or Liquidation
Proceeds) that represent late recoveries of payments of principal and/or
interest on such particular Mortgage Loan(s) in respect of which any such
Advance was made;
(iii) to reimburse the Servicer for any Non-Recoverable Advance
previously made and, to the extent that such Non-Recoverable Servicing
Advances would constitute "unanticipated expenses" within the meaning of
Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the REMICs
provided for herein, any Non-Recoverable Servicing Advance;
(iv) to pay to the Servicer earnings on or investment income with
respect to funds in or credited to the Collection Account;
(v) to reimburse the Servicer from Insurance Proceeds for Insured
Expenses covered by the related Insurance Policy;
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(vi) to pay to the Servicer any unpaid Servicing Fees and to reimburse
it for any unreimbursed Servicing Advances, the Servicer's right to
reimbursement of Servicing Advances pursuant to this subclause (vi) with
respect to any Mortgage Loan being limited to amounts received on
particular Mortgage Loan(s) (including, for this purpose, Liquidation
Proceeds and purchase and repurchase proceeds and including any Subsequent
Recoveries related to any liquidated Mortgage Loan) that represent late
recoveries of the payments for which such advances were made pursuant to
Section 3.01 or Section 3.06;
(vii) to pay to the Servicer any unpaid Servicing Fees for any
Mortgage Loan upon such Mortgage Loan being charged off and upon
termination of the obligations of the Servicer;
(viii) to pay to the Depositor or the Servicer, as applicable, with
respect to each Mortgage Loan or property acquired in respect thereof that
has been purchased pursuant to Section 2.02, 2.03 or 3.12, all amounts
received thereon and not taken into account in determining the related
Stated Principal Balance of such repurchased Mortgage Loan;
(ix) to reimburse the Servicer or the Depositor for expenses incurred
by either of them in connection with the Mortgage Loans or the Certificates
and reimbursable pursuant to Section 3.25 or Section 6.03 hereof;
(x) to reimburse the Trustee for enforcement expenses reasonably
incurred in respect of a breach or defect giving rise to the purchase
obligation in Section 2.03 that were incurred in the Purchase Price of the
Mortgage Loans including any expenses arising out of the enforcement of the
purchase obligation; provided that any such expenses will be reimbursable
under this subclause (x) only if such expenses would constitute
"unanticipated expenses" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for herein;
(xi) to withdraw pursuant to Section 3.05 any amount deposited in the
Collection Account and not required to be deposited therein;
(xii) to clear and terminate the Collection Account upon termination
of this Agreement pursuant to Section 9.01 hereof; and
(xiii) to reimburse itself for Advances or Servicing Advances from
amounts in the Collection Account held for future distributions that were
not included in Available Funds for the preceding Distribution Date. An
amount equal to the amount withdrawn from the Collection Account pursuant
to this subclause (xiv) shall be deposited in the Collection Account by the
Servicer on the next succeeding Distribution Date that funds are to be
distributed to Certificateholders.
In addition, no later than 2:00 p.m. Eastern Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds(for this purpose only,
neither Interest Funds nor Principal Funds shall include a deduction for any
amount reimbursable to the Trustee unless such amounts have actually been
reimbursed from such funds), to the extent on deposit, and such amount shall be
deposited in the Certificate Account.
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.
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The Servicer shall provide written notification to the Trustee on or prior
to the next succeeding Servicer Remittance Date upon making any withdrawals from
the Collection Account pursuant to subclauses (iii) and (viii) above.
In the event of any failure by the Servicer to remit to the Trustee for
deposit into the Certificate Account any amounts (including any Advance)
required to be so remitted by the Servicer on the Servicer Remittance Date, the
Servicer shall pay to the Trustee, for its own account, interest on such amounts
at the "prime rate" (as specified in the New York edition of the Wall Street
Journal) until such failure is remedied.
(b) The Trustee shall withdraw funds from the Certificate Account for
distribution to the Certificateholders in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn, the amount of any taxes that it
is authorized to retain pursuant to this Agreement). In addition, the Trustee
may from time to time make withdrawals from the Certificate Account for the
following purposes:
(i) to withdraw any amount deposited in the Certificate Account and
not required to be deposited therein;
(ii) to pay the Trustee any indemnification amounts owed it and to
clear and terminate the Certificate Account upon termination of the
Agreement pursuant to Section 9.01 hereof (including paying all amounts
necessary to the Trustee or the Servicer in connection with any such
termination);
(iii) to reimburse the Trustee for expenses incurred by the Trustee
and reimbursable pursuant to Section 8.06 hereof; and
(iv) to pay to the Trustee earnings on or investment income with
respect to funds in or credited to the Certificate Account.
SECTION 3.09. [RESERVED]
SECTION 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each first lien Mortgage
Loan, hazard insurance with extended coverage in an amount, to the extent
permitted by applicable law, that is at least equal to the lesser of (i) the
estimated replacement value of the improvements that are part of such Mortgaged
Property, which may be the last known coverage, or (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds of such policy shall be sufficient to prevent the related Mortgagor
and/or mortgagee from becoming a co-insurer or (iii) the amount required under
applicable HUD/FHA regulations. Each such policy of standard hazard insurance
shall contain, or have an accompanying endorsement that contains, a standard
mortgagee clause. The Servicer shall also cause flood insurance to be maintained
on property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, to the extent required under the standards described below.
Pursuant to Section 3.05 hereof, any amounts collected by the Servicer under any
such policies (other than the amounts to be applied to the restoration or repair
of the related Mortgaged Property or property thus acquired or amounts released
to the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Collection Account. Any cost incurred by the Servicer
in maintaining any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be
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recoverable by the Servicer out of late payments by the related Mortgagor or out
of Liquidation Proceeds to the extent and as otherwise permitted by Section 3.08
hereof. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If a first lien Mortgaged Property is located at the time
of origination of the Mortgage Loan in a federally designated special flood
hazard area and such area is participating in the national flood insurance
program, the Servicer shall cause flood insurance to be maintained with respect
to such Mortgage Loan. Such flood insurance shall be in an amount equal to the
lesser of (i) the outstanding principal balance of the related Mortgage Loan,
(ii) the estimated replacement value of the improvements that are part of such
Mortgaged Property, which may be the last known coverage, or (iii) the maximum
amount of such insurance available for the related Mortgaged Property under the
Flood Disaster Protection Act of 1973, as amended.
In the event that the Servicer shall obtain and maintain a blanket policy
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any property
subject to a Mortgage has been or is about to be conveyed by the Mortgagor, the
Servicer shall to the extent that it has knowledge of such conveyance or
prospective conveyance, enforce any due-on-sale clause contained in any Mortgage
Note or Mortgage, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any Required Insurance Policy;
provided, however, that the Servicer shall not exercise any such right if the
due-on-sale clause, in the reasonable belief of the Servicer, is not enforceable
under applicable law. An Opinion of Counsel, which shall be reimbursable as a
Servicing Advance to the extent provided in Section 3.08(a)(ii) hereof,
delivered to the Trustee and the Depositor to the foregoing shall conclusively
establish the reasonableness of such belief, but which shall not be required. In
addition to the foregoing, the Servicer shall not be required to enforce any
"due-on-sale" clause if in the reasonable judgment of the Servicer, entering
into an assumption and modification agreement with a Person to whom such
property shall be conveyed and releasing the original Mortgagor from liability
would be in the best interest of the Certificateholders. In the event that the
Servicer is prohibited by law from enforcing any such due-on-sale clause, or if
coverage under any Required Insurance Policy would be adversely affected, or if
nonenforcement is otherwise permitted hereunder, the Servicer is authorized,
subject to Section 3.11(b), to take or enter into an assumption and modification
agreement from or with the Person to whom such property has been or is about to
be conveyed, pursuant to which such Person becomes liable under the Mortgage
Note and, unless prohibited by applicable law, the Mortgagor remains liable
thereon, provided that the Mortgage Loan shall continue to be covered (if so
covered before the Servicer enters such agreement) by the applicable Required
Insurance Policies. The Servicer, subject to Section 3.11(b), is also authorized
with the prior approval of the insurers under any Required Insurance Policies to
enter into a substitution of liability agreement with such Person, pursuant to
which the original Mortgagor is released from liability and such Person is
substituted as Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the Servicer shall not be
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deemed to be in default under this Section 3.11(a) by reason of any transfer or
assumption that the Servicer reasonably believes it is restricted by law from
preventing.
(b) Subject to the Servicer's duty to enforce any due-on-sale clause to the
extent set forth in Section 3.11(a) hereof, in any case in which a Mortgaged
Property has been conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption agreement or modification agreement or supplement to
the Mortgage Note or Mortgage that requires the signature of the Trustee, or if
an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Servicer shall prepare and
deliver or cause to be prepared and delivered to the Trustee for signature and
shall direct, in writing, the Trustee to execute the assumption agreement with
the Person to whom the Mortgaged Property is to be conveyed and such
modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment, the Maximum Rate, the Minimum Rate, the Gross Margin, the Periodic Rate
Cap, the Adjustment Date, any prepayment charge and any other term affecting the
amount or timing of payment on the Mortgage Loan) may be changed. The Servicer
shall notify the Trustee that any such substitution or assumption agreement has
been completed by forwarding to the Trustee the original of such substitution or
assumption agreement, which in the case of the original shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Servicer for entering into
an assumption or substitution of liability agreement will be retained by the
Servicer as additional servicing compensation.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds.
(a) The Servicer shall use reasonable efforts consistent with the servicing
standard set forth in Section 3.01 to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of Delinquent payments. In connection with such foreclosure
or other conversion, the Servicer shall follow such practices and procedures as
it shall deem necessary or advisable and as shall be normal and usual in its
general mortgage servicing activities and the requirements of the insurer under
any Required Insurance Policy; provided, however, that the Servicer shall not be
required to expend its own funds in connection with the restoration of any
property that shall have suffered damage due to an uninsured cause unless it
shall determine (i) that such restoration will increase the proceeds of
liquidation of the Mortgage Loan after reimbursement to itself of such expenses
and (ii) that such expenses will be recoverable to it through Liquidation
Proceeds (respecting which it shall have priority for purposes of withdrawals
from the Collection Account pursuant to Section 3.08 hereof). The Servicer shall
be responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the proceeds of liquidation of the related Mortgaged Property, as
contemplated in Section 3.08 hereof. If the Servicer has received written notice
that a Mortgaged Property that the Servicer is contemplating acquiring in
foreclosure or by deed-in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Servicer, the Servicer will, prior to acquiring the Mortgaged Property, consider
such risks and only take action in accordance with Accepted Servicing Practices.
With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee or its nominee. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner
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and to such extent as is customary in the locality where such REO Property is
located and may, incident to its conservation and protection of the interests of
the Certificateholders, rent the same, or any part thereof, as the Servicer
deems to be in the best interest of the Servicer and the Certificateholders for
the period prior to the sale of such REO Property. The Servicer or an Affiliate
may receive usual and customary real estate referral fees for real estate
brokers in connection with the listing and disposition of REO Property. The
Servicer shall prepare a statement with respect to each REO Property that has
been rented showing the aggregate rental income received and all expenses
incurred in connection with the management and maintenance of such REO Property
at such times as is necessary to enable the Servicer to comply with the
reporting requirements of the REMIC Provisions. The net monthly rental income,
if any, from such REO Property shall be deposited in the Collection Account no
later than the close of business on each Determination Date. The Servicer shall
perform the tax reporting and withholding related to foreclosures, abandonments
and cancellation of indebtedness income as specified by Sections 1445, 6050J and
6050P of the Code by preparing and filing such tax and information returns, as
may be required.
In the event that the Issuing Entity acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Issuing Entity or, at the expense of the Issuing Entity, obtain more than sixty
(60) days prior to the day on which such three-year period would otherwise
expire, an extension of the three-year grace period, in which case such property
must be disposed of prior to the end of such extension, unless the Trustee shall
have been supplied with an Opinion of Counsel addressed to the Trustee (such
Opinion of Counsel not to be an expense of the Trustee) to the effect that the
holding by the Issuing Entity of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of the Issuing Entity or any of the REMICs provided for herein as
defined in section 860F of the Code or cause any of the REMICs provided for
herein to fail to qualify as a REMIC at any time that any Certificates are
outstanding, in which case the Issuing Entity may continue to hold such
Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
Property acquired by the Issuing Entity shall be held, rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Issuing Entity in such a manner or pursuant to any terms that
would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of section 860G(a)(8) of the Code or (ii) subject
the Issuing Entity or any REMIC provided for herein to the imposition of any
federal, state or local income taxes on the income earned from such Mortgaged
Property under section 860G(c) of the Code or otherwise, unless the Servicer or
the Depositor has agreed to indemnify and hold harmless the Issuing Entity with
respect to the imposition of any such taxes. The Servicer shall have no
liability for any losses resulting from a foreclosure on a second lien Mortgage
Loan in connection with the foreclosure of the related first lien mortgage loan
that is not a Mortgage Loan if the Servicer does not receive notice of such
foreclosure action.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current) and
all such income shall be deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into
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the Collection Account. To the extent the income received during a Prepayment
Period is in excess of the amount attributable to amortizing principal and
accrued interest at the related Mortgage Rate on the related Mortgage Loan, such
excess shall be considered to be a partial Principal Prepayment for all purposes
hereof.
Notwithstanding the foregoing provisions of this Section 3.12 or any other
provision of this Agreement, with respect to any Mortgage Loan as to which the
assistant vice president for foreclosures or the vice president of default
management of the Servicer has actual knowledge (which shall not be presumed due
to any documents received by the Servicer) of, the presence of any toxic or
hazardous substance on the related Mortgaged Property, the Servicer shall not,
on behalf of the Trustee, either (i) obtain title to such Mortgaged Property as
a result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, or take any other action with respect to, such Mortgaged
Property, if, as a result of any such action, the Trustee, the Issuing Entity or
the Certificateholders would be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Servicer believes, based on its reasonable
judgment and a report prepared by a Person who regularly conducts environmental
audits using customary industry standards, that:
(1) such Mortgaged Property is in material compliance with applicable
environmental laws or, if not, that it would be in the best economic interest of
the Issuing Entity to take such actions as are necessary to bring the Mortgaged
Property into compliance therewith; and
(2) it is probable that there are no circumstances present at such
Mortgaged Property relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based materials
for which additional investigation, testing, monitoring, containment, clean-up
or remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the Issuing
Entity to take such actions with respect to the affected Mortgaged Property.
The Servicer shall forward a copy of the environmental audit report to the
Depositor and the Trustee. The cost of the environmental audit report
contemplated by this Section 3.12 shall be advanced by the Servicer, subject to
the Servicer's right to be reimbursed therefor from the Collection Account, such
right of reimbursement being prior to the rights of Certificateholders to
receive any amount in the Collection Account received in respect of the affected
Mortgage Loan or other Mortgage Loans.
If the Servicer determines, as described above, that it is in the best
economic interest of the Issuing Entity to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer may take such action as it deems to be in the best economic interest of
the Issuing Entity; provided that any amounts disbursed by the Servicer pursuant
to this Section 3.12 shall constitute Advances. The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account,
such right of reimbursement being prior to the rights of Certificateholders to
receive any amount in the Collection Account received in respect of the affected
Mortgage Loan or other Mortgage Loans. If the Servicer decides not to take such
action, it may not obtain title to such Mortgaged Property.
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The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting from
a partial collection of Liquidation Proceeds, will be applied as between the
parties in the following order of priority: first, to reimburse the Servicer for
any related unreimbursed Servicing Advances and unpaid Servicing Fees, pursuant
to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse the Servicer
for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or this Section
3.12; third, to accrued and unpaid interest (to the extent no Advance has been
made for such amount) on the Mortgage Loan, at the Net Mortgage Rate to the Due
Date occurring in the month in which such amounts are required to be
distributed; fourth, as a recovery of principal of the Mortgage Loan; and fifth,
to any prepayment charges.
The proceeds of any net income from an REO Property will be applied as
between the parties in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and unpaid Servicing
Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12; second, to reimburse
the Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or
this Section 3.12; third, as a recovery of principal; and fourth, to accrued and
unpaid interest (to the extent no Advance has been made for such amount) on the
related REO Property, at the applicable Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed.
(b) On each Determination Date, the Servicer shall determine the respective
aggregate amounts of Excess Proceeds, if any, that occurred in the related
Prepayment Period.
(c) The Servicer, in its sole discretion, shall have the right to elect (by
written notice in the form of an Officer's Certificate sent to the Trustee,
which Officer's Certificate shall (i) set forth the affected Mortgage Loan or
REO Property and the Purchase Price, (ii) certify that the Purchase Price has
been deposited into the Collection Account and (iii) confirm that the purchase
complies in all respect with this Section 3.12(c)) to purchase for its own
account from the Issuing Entity any Mortgage Loan that is ninety-one (91) days
or more Delinquent or REO Property for which the Servicer has accepted a
deed-in-lieu of foreclosure at a price equal to the Purchase Price. The Purchase
Price for any Mortgage Loan or REO Property purchased hereunder shall thereafter
be delivered to the Trustee for deposit in the Certificate Account and the
Trustee, upon receipt of such deposit and a Request for Release from the
Depositor in the form of Exhibit I hereto, shall release or cause to be released
to the Servicer the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the Servicer, in each case
without recourse, representation or warranty, as shall be necessary to vest in
the Servicer any Mortgage Loan or REO Property released pursuant hereto and the
Servicer shall succeed to all the Trustee's right, title and interest in and to
such Mortgage Loan and all security and documents related thereto. Such
assignment shall be an assignment outright and not for security. The Servicer
shall thereupon own such Mortgage Loan or REO Property, and all security and
documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto. The Servicer shall not use any
procedure in selecting Mortgage Loans to be repurchased that is materially
adverse to the interests of the Certificateholders.
In the event that the Servicer is acting as the servicer and the Servicer
(or an Affiliate of the Servicer) is the owner of more than 50% of the Class of
Certificates which is then currently in a first loss position and such party is
deemed to be the "Primary Beneficiary" as defined in FIN 46R, the provisions of
the preceding paragraph shall not apply and the Servicer (or an Affiliate of the
Servicer), in its sole discretion, shall have the right to elect (by written
notice in the form of an Officer's Certificate sent to the Trustee, which
Officer's Certificate shall (i) set forth the affected Mortgage Loan or REO
Property and the Purchase Price, (ii) certify that the Purchase Price has been
deposited into the Collection Account and
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(iii) confirm that the purchase complies in all respect with this Section
3.12(c)) to purchase for its own account from the Issuing Entity any Mortgage
Loan that is 120 days or more Delinquent or REO Property for which the Servicer
has accepted a deed-in-lieu of foreclosure, during the period commencing on the
first day of the calendar quarter succeeding the calendar quarter in which the
Initial Delinquency Date (as defined below) occurred with respect to such
Mortgage Loan and ending on the last Business Day of such calendar quarter. If
the Servicer (or an Affiliate of the Servicer) does not exercise its purchase
right with respect to a Mortgage Loan during the period specified in the
preceding sentence, such Mortgage Loan shall thereafter again become eligible
for purchase pursuant to the preceding sentence only after the Mortgage Loan
ceases to be 120 days or more Delinquent and thereafter becomes 120 days
Delinquent again. The "Initial Delinquency Date" of a Mortgage Loan shall mean
the date on which the Mortgage Loan first became 120 days Delinquent. Prior to
repurchase pursuant to this Section 3.12(c), the Servicer shall be required to
continue to make monthly advances pursuant to Section 4.01. The Servicer shall
not use any procedure in selecting Mortgage Loans to be repurchased which is
materially adverse to the interests of the Certificateholders. The Servicer
shall purchase any Mortgage Loan or REO Property pursuant to this paragraph at a
price equal to the Purchase Price. The Purchase Price for any Mortgage Loan or
REO Property purchased hereunder shall be delivered to the Trustee for deposit
in the Certificate Account and the Trustee, upon receipt of such deposit and a
Request for Release from the Depositor in the form of Exhibit I hereto, shall
release or cause to be released to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, representation or warranty, as
shall be necessary to vest in the Servicer any Mortgage Loan or REO Property
released pursuant hereto and the Servicer shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. The provisions in this paragraph shall only apply if
Wilshire Credit Corporation is the servicer.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of such request, the Trustee or its designee shall
promptly release the related Mortgage File to the Servicer, and the Trustee or
its designee shall at the Servicer's written direction execute and deliver to
the Servicer the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such instrument releasing the lien of the Mortgage
in each case provided by the Servicer, together with the Mortgage Note with
written evidence of cancellation thereon. Expenses incurred in connection with
any instrument of satisfaction or deed of reconveyance shall be chargeable to
the Mortgagor to the extent permitted by law, and otherwise to the Trust Fund to
the extent such expenses constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-(1)(b)(3)(ii). From time to time and as
shall be appropriate for the servicing or foreclosure of any Mortgage Loan,
including for such purpose, collection under any policy of flood insurance, any
fidelity bond or errors or omissions policy, or for the purposes of effecting a
partial release of any Mortgaged Property from the lien of the Mortgage or the
making of any corrections to the Mortgage Note or the Mortgage or any of the
other documents included in the Mortgage File, the Trustee or its designee
shall, upon delivery to the Trustee or its designee of a Request for Release in
the form of Exhibit I signed by a Servicing Officer, release the Mortgage File
to the Servicer. Subject to the further limitations set forth below, the
Servicer shall cause the Mortgage File or documents so released to be returned
to the Trustee or its designee when the need therefor by the Servicer no longer
exists, unless the Mortgage Loan is liquidated and the proceeds thereof are
deposited in the Collection Account.
Each Request for Release may be delivered to the Trustee or its designee
(i) via mail or courier, (ii) via facsimile or (iii) by such other means,
including, without limitation, electronic or computer readable medium, as the
Servicer and the Trustee or its designee shall mutually agree. The Trustee or
its
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designee shall make reasonable efforts to release the related Mortgage File(s)
within three (3) Business Days of receipt of a properly completed Request for
Release pursuant to clauses (i), (ii) or (iii) above and shall so release within
four (4) Business Days. Receipt of a properly completed Request for Release
(including any Request for Release delivered in an electronic format pursuant to
(iii) above) shall be authorization to the Trustee or its designee to release
such Mortgage Files, provided the Trustee or its designee has determined that
such Request for Release has been executed, with respect to clauses (i) or (ii)
above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or its designee's negligent
failure to execute and release documents within four (4) Business Days after its
receipt of a Request for Release, the Trustee or its designee, shall be liable
for such penalties or damages directly caused by it and shall have no liability
for penalties or damages attributable to the Servicer's actions or inactions.
If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Servicer
shall deliver or cause to be delivered to the Trustee or its designee, for
signature, as appropriate, any court pleadings, requests for trustee's sale or
other documents necessary to effectuate such foreclosure or any legal action
brought to obtain judgment against the Mortgagor on the Mortgage Note or the
Mortgage or to obtain a deficiency judgment or to enforce any other remedies or
rights provided by the Mortgage Note or the Mortgage or otherwise available at
law or in equity. Notwithstanding the foregoing, the Servicer shall cause
possession of any Mortgage File or of the documents therein that shall have been
released by the Trustee or its designee to be returned to the Trustee promptly
after possession thereof shall have been released by the Trustee or its designee
unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Collection Account, and
the Servicer shall have delivered to the Trustee or its designee a Request for
Release in the form of Exhibit I or (ii) the Mortgage File or document shall
have been delivered to an attorney or to a public trustee or other public
official as required by law for purposes of initiating or pursuing legal action
or other proceedings for the foreclosure of the Mortgaged Property and the
Servicer shall have delivered to the Trustee or its designee an Officer's
Certificate of a Servicing Officer certifying as to the name and address of the
Person to which the Mortgage File or the documents therein were delivered and
the purpose or purposes of such delivery.
SECTION 3.14. Documents Records and Funds in Possession of Servicer to be
Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the control of,
the Servicer in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds, including but not
limited to, any funds on deposit in the Collection Account, shall be held by the
Servicer for and on behalf of the Trustee and shall be and remain the sole and
exclusive property of the Trustee, subject to the applicable provisions of this
Agreement. The Servicer also agrees that it shall not create, incur or subject
any Mortgage File or any funds that are deposited in the Collection Account or
Certificate Account or in any Escrow Account, or any funds that otherwise are or
may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Servicer shall
be entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to the Servicer under this Agreement.
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SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.
Additional servicing compensation in the form of any Excess Proceeds,
Prepayment Interest Excess, late payment fees, assumption fees (i.e. fees
related to the assumption of a Mortgage Loan upon the purchase of the related
Mortgaged Property) and similar fees payable by the Mortgagor, all income and
gain net of any losses realized from Permitted Investments in the Collection
Account, and other benefits arising from the Collection Account or Escrow
Account shall be retained by the Servicer to the extent not required to be
deposited in the Collection Account pursuant to Section 3.05 or 3.12(a) hereof
or the Escrow Account pursuant to Section 3.06 hereof. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance, as
required by Section 3.10 hereof and maintenance of the other forms of insurance
coverage required by Section 3.10 hereof) and shall not be entitled to
reimbursement therefor except as specifically provided in Sections 3.08 and 3.12
hereof.
SECTION 3.16. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices of the Servicer designated by it provided, that
the Servicer shall be entitled to be reimbursed by each such Certificateholder
for actual expenses incurred by the Servicer in providing such reports and
access. Nothing in this Section shall limit the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
SECTION 3.17. Annual Statement as to Compliance.
Not later than (a) March 12 of each calendar year (other than the calendar
year during which the Closing Date occurs) or (b) with respect to any calendar
year during which an annual report on Form 10-K is not required to be filed
pursuant to Section 3.20 on behalf of the Issuing Entity, by April 15 of each
calendar year (or if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer shall deliver to the Trustee and the Depositor an
Officer's Certificate in the form attached hereto as Exhibit T stating, as to
each signatory thereof, that (i) a review of the activities of the Servicer
during the preceding calendar year and of the performance of the Servicer under
this Agreement has been made under such officer's supervision, and (ii) to the
best of such officer's knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement in all material respects
throughout such year or a portion thereof, or, if there has been a failure to
fulfill any such obligation in any material respect, specifying each such
failure known to such officer and the nature and status thereof. With respect to
any Subservicer that meets the criteria of Item 1108(a)(2)(i) through (iii) of
Regulation AB, the Servicer shall deliver, on behalf of that Subservicer, the
Officer's Certificate set forth in this Section 3.17 as and when required with
respect to such Subservicer.
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SECTION 3.18. Assessment of Compliance; Accountant's Attestation.
(a) Not later than (i) March 12 of each calendar year (other than the
calendar year during which the Closing Date occurs) or (ii) with respect to any
calendar year during which an annual report on Form 10-K is not required to be
filed pursuant to Section 3.20 on behalf of the Issuing Entity, by April 15 of
each calendar year (or if such day is not a Business Day, the immediately
succeeding Business Day), the Servicer, at its own expense, shall deliver to the
Trustee and the Depositor an officer's assessment of its compliance with the
Servicing Criteria during the preceding calendar year as required by Rules
13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB (the
"Assessment of Compliance"), which assessment shall be substantially in the form
of Exhibit Q hereto.
(b) Not later than (i) March 12 of each calendar year (other than the
calendar year during which the Closing Date occurs) or (ii) with respect to any
calendar year during which an annual report on Form 10-K is not required to be
filed pursuant to Section 3.20 on behalf of the Issuing Entity, April 15 of each
calendar year (or if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer, at its own expense, shall cause a nationally or
regionally recognized firm of independent registered public accountants (who may
also render other services to any Servicer, the Sponsor or any Affiliate
thereof) which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Trustee and the Depositor that attests
to and reports on the Assessment of Compliance provided by such Servicer
pursuant to Section 3.18(a) (the "Accountant's Attestation"). Such Accountant's
Attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act.
(c) The Servicer shall deliver on behalf of any Subservicer and each
Subcontractor (unless, in the case of any Subcontractor, the Depositor has
notified the Servicer and the Trustee in writing that such compliance statement
is not required by Regulation AB) not later than March 12 of each calendar year
(other than the calendar year during which the Closing Date occurs) with respect
to any calendar year during which the Issuing Entity's annual report on Form
10-K is required to be filed in accordance with the Exchange Act and the rules
and regulations of the Commission, to the Trustee and the Depositor an
Assessment of Compliance, which assessment shall be substantially in the form of
Exhibit Q hereto. The Servicer shall deliver on behalf of any Subservicer (other
than the calendar year during which the Closing Date occurs) with respect to any
calendar year during which the Issuing Entity's annual report on Form 10-K is
not required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, by April 15 of each calendar year (or, in each
case, if such day is not a Business Day, the immediately succeeding Business
Day) to the Trustee and the Depositor an Assessment of Compliance, which
assessment shall be substantially in the form of Exhibit Q hereto.
(d) Not later than March 12 of each calendar year (other than the calendar
year during which the Closing Date occurs) with respect to any calendar year
during which the Issuing Entity's annual report on Form 10-K is required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission, the Servicer shall cause each Subservicer and each Subcontractor
(unless, in the case of any Subcontractor, the Depositor has notified the
Trustee and Servicer in writing that such compliance statement is not required
by Regulation AB) to deliver to the Trustee and the Depositor an Accountant's
Attestation by a registered public accounting firm that attests to, and reports
on, the Assessment of Compliance pursuant to Section 3.18(c) above. Other than
the calendar year during which the Closing Date occurs, with respect to any
calendar year during which the Issuing Entity's annual report on Form 10-K is
not required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, not later than April 15 of each calendar year
(or, in each case, if such day is not a Business Day, the immediately succeeding
Business Day), the Servicer shall cause each Subservicer to deliver to the
Trustee and the Depositor an Accountant's Attestation by a registered public
accounting firm that attests to, and reports on, the Assessment of Compliance
pursuant to Section 3.18(c) above.
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(e) Not later than, with respect to any calendar year during which the
Issuing Entity's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, March 15 (or, in each case, if such day is not a Business Day, the
immediately succeeding Business Day), the Trustee shall deliver to the Depositor
and the Servicer an Assessment of Compliance with regard to the Servicing
Criteria applicable to the Trustee during the preceding calendar year, which
assessment shall be substantially in the form of Exhibit Q hereto.
(f) Not later than, with respect to any calendar year during which the
Issuing Entity's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, March 15 (or, in each case, if such day is not a Business Day, the
immediately succeeding Business Day), the Trustee shall deliver to the Depositor
and the Servicer an Accountant's Attestation by a registered public accounting
firm that attests to, and reports on, the Assessment of Compliance pursuant to
Section 3.18(e) above.
(g) Not later than, with respect to any calendar year during which the
Issuing Entity's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, fifteen (15) calendar days before the date on which the Issuing
Entity's annual report on Form 10-K with respect to the transactions
contemplated by this Agreement is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission (or, in each case,
if such day is not a Business Day, the immediately preceding Business Day), the
Depositor shall cause each custodian, if any, to deliver to the Depositor, the
Servicer and the Trustee an Assessment of Compliance with regard to the
Servicing Criteria applicable to such custodian during the preceding calendar
year, which assessment shall be substantially in the form of Exhibit Q hereto.
(h) Not later than March 12 (or, in each case, if such day is not a
Business Day, the immediately succeeding Business Day), of any calendar year
(other than the calendar year during which the Closing Date occurs) during which
the Issuing Entity's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the
Commission, the Depositor shall cause each custodian, if any, to deliver to the
Depositor, the Servicer and the Trustee an Accountant's Attestation by a
registered public accounting firm that attests to, and reports on, the
Assessment of Compliance pursuant to Section 3.18(g) above.
(i) [Reserved]
(j) [Reserved]
(k) The Depositor agrees to cause the custodian, if any, to indemnify and
hold harmless the Trustee and the Servicer and each Person, if any, who
"controls" the Trustee or the Servicer within the meaning of the Securities Act
and its officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses that such Person may sustain
arising out of third party claims based on (i) the failure of the custodian, if
any, to deliver when required any information required of it pursuant to Section
3.18 or 3.20 or (ii) any material misstatement or omission contained in any
information provided on its behalf pursuant to Section 3.18 or 3.20.
(l) Copies of such Assessments of Compliance and Accountant's Attestations
shall be available on the Trustee's website xxxx://xxx.xxxxxx.xxx/xxx to any
Certificateholder, provided such statement is delivered to the Trustee. The
initial Assessments of Compliance and Accountant's Attestations required
pursuant to this Section 3.18 shall be delivered to the Trustee and the
Depositor, as applicable, by each party no later than March 12, 2007. The
Trustee will post such copies on the Trustee's
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website within five (5) Business Days after filing with the Commission. This
requirement will be satisfied to the extent that the Issuing Entity's Form 10-K
is available on such website.
(m) Each of the parties hereto acknowledges and agrees that the purpose of
this Section 3.18 is to facilitate compliance by the Sponsor and the Depositor
with the provisions of Regulation AB, as such may be amended or clarified from
time to time. Therefore, each of the parties agrees that the parties'
obligations hereunder will be supplemented and modified as necessary to be
consistent with any such amendments, interpretive advice or guidance, convention
or consensus among active participants in the asset-backed securities markets,
advice of counsel, or otherwise in respect of the requirements of Regulation AB
and the parties shall comply with requests made by the Sponsor or the Depositor
for delivery of additional or different information as the Sponsor or the
Depositor may determine in good faith is necessary to comply with the provisions
of Regulation AB, provided that such information is available to such party
without unreasonable effort or expense and within such timeframe as may be
reasonably requested. Any such supplementation or modification shall be made in
accordance with Section 10.01 without the consent of the Certificateholders, and
may result in a change in the reports filed by the Trustee on behalf of the
Issuing Entity under the Exchange Act.
SECTION 3.19. Subordination Liens.
In connection with any governmental program under which a Mortgagor may
obtain a benefit in the event the related Mortgaged Property is subject to a
disaster provided that the Mortgagor files a covenant or other lien against the
Mortgaged Property and is required to obtain the subordination thereto of the
Mortgage, the Servicer may cause such subordination to be executed and filed
provided that either (i) the related Mortgage Loan is in default or default with
respect to such Mortgage Loan is imminent or (ii) such subordination and
participation in such governmental program will not result in a change in
payment expectations with respect to such Mortgage Loan. For purposes of the
preceding sentence, a change in payment expectations occurs if, as a result of
such subordination and participation in such governmental program, (1) there is
a substantial enhancement of the Mortgagor's capacity to meet the payment
obligations under the Mortgage Loan and that capacity was primarily speculative
prior to such subordination and participation in such governmental program and
is adequate after such subordination and participation in such governmental
program or (2) there is a substantial impairment of the Mortgagor's capacity to
meet the payment obligations under the Mortgage Loan and that capacity was
adequate prior to such subordination and participation in such governmental
program and is primarily speculative after such subordination and participation
in such governmental program. The preceding sentence and clause (ii) of the
second preceding sentence are intended to comply with Treasury Regulations
Section 1.1001-3(e)(4) and shall be interpreted in accordance therewith.
SECTION 3.20. Periodic Filings.
As set forth on Schedule V hereto, for so long as the Issuing Entity is
subject to the Exchange Act reporting requirements, no later than the end of
business on the second Business Day after the occurrence of an event requiring
disclosure on Form 8-K (a "reportable event"), the Depositor, the Sponsor or the
Servicer, as applicable, shall have (i) timely notified the Trustee of an item
reportable on a Form 8-K (unless such item is specific to the Trustee, in which
case the Trustee will be deemed to have notice) and (ii) delivered to the
Trustee all information, data, and exhibits required to be provided or filed
with such Form 8-K in an XXXXX-compatible format agreed upon by the Trustee and
Depositor, Sponsor or Servicer. In the event that the reportable event does not
pertain to the Servicer, at the time such notice is provided to the Trustee, the
Depositor or the Trustee, to the extent the reportable item pertains to such
party, shall notify the Servicer thereof by telephone. The Trustee shall not be
responsible for determining what information is required to be filed on a Form
8-K in connection with the transactions contemplated by this Agreement (unless
such information is specific to the Trustee, in which case the Trustee will be
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responsible for consulting with the Depositor or Servicer in making such a
determination) or what events shall cause a Form 8-K to be required to be filed
(unless such event is specific to the Trustee, in which case the Trustee will be
responsible for consulting with the Depositor or Servicer before causing such
Form 8-K to be filed) and shall not be liable for any late filing of a Form 8-K
in the event that it does not receive all information, data and exhibits
required to be provided or filed on or prior to the second Business Day prior to
the applicable filing deadline. After preparing the Form 8-K on behalf of the
Depositor, the Trustee shall forward electronically a draft copy of the Form 8-K
to the Depositor and the Servicer for review. No later than the end of business
on the second Business Day after receiving a final copy of the Form 8-K from the
Trustee, a duly authorized representative of the Servicer shall sign the Form
8-K and return an electronic or fax copy of such signed Form 8-K (with an
original executed hard copy to follow by overnight mail) to the Trustee and the
Trustee shall file such Form 8-K within two (2) Business Days; provided that the
Depositor has notified the Trustee in writing that it approves of the form and
substance of such Form 8-K. If a Form 8-K cannot be filed on time or if a
previously filed Form 8-K needs to be amended, the Trustee will follow the
procedures set forth in this Agreement. After filing a Form 8-K with the
Commission, the Trustee will make available on its internet website a final
executed copy of each Form 8-K. The Trustee will have no obligation to prepare,
execute or file such Form 8-K or any liability with respect to any failure to
properly prepare, execute or file such Form 8-K resulting from the Trustee's
inability or failure to obtain or receive any information or signatures needed
to prepare, arrange for execution or file such Form 8-K within the time frames
required by this paragraph, not resulting from its own negligence, bad faith or
willful misconduct.
Within fifteen (15) days after each Distribution Date, the Trustee shall,
on behalf of the Issuing Entity and in accordance with industry standards, file
with the Commission via the Electronic Data Gathering and Retrieval System
(XXXXX), a Form 10-D with a copy of the report to the Certificateholders for
such Distribution Date as an exhibit thereto. Any other information provided to
the Trustee by the Servicer or Depositor to be included in Form 10-D shall be
determined and prepared by and at the direction of the Depositor pursuant to the
following paragraph, and the Trustee will have no duty or liability for any
failure hereunder to determine or prepare any additional information on Form
10-D ("Additional Form 10-D Disclosure") as set forth in the next paragraph.
The Depositor shall notify the Trustee of its intent to provide Additional
Form 10-D Disclosure prior to the related Distribution Date. As set forth in
Schedule W hereto, within five (5) calendar days after the related Distribution
Date (i) the parties hereto, as applicable, will be required to provide to the
Depositor and the Servicer, to the extent known to such party, any Additional
Form 10-D Disclosure (including any breaches of pool asset representations and
warranties or transaction covenants of which the party has written notice and
which has not been included on the monthly distribution report for the period),
if applicable, and (ii) the Depositor, to the extent it deems necessary, will
forward to the Trustee in XXXXX-compatible form (with a copy to the Servicer),
or in such other form as otherwise agreed upon by the Trustee and the Depositor,
the form and substance of the Additional Form 10-D Disclosure by the fifth (5th)
calendar day after the related Distribution Date. The Depositor will be
responsible for any reasonable fees and expenses incurred by the Trustee in
connection with including any Additional Form 10-D Disclosure on Form 10-D
pursuant to this paragraph.
After preparing the Form 10-D at the direction of the Depositor, the
Trustee will forward electronically a draft copy of the Form 10-D to the
Depositor and the Servicer for review by the ninth (9th) calendar day after the
Distribution Date. No later than two (2) Business Days after receipt of a final
copy after the related Distribution Date, unless the Servicer receives a notice
from the Trustee as described below or a written notice from the Depositor that
it has discovered a material deficiency or irregularity with respect to such
Form 10-D, a duly authorized representative of the Servicer shall sign the Form
10-D and return an electronic or fax copy of such Form 10-D (with an original
executed hard copy to follow by overnight mail) to the Trustee, and the Trustee
shall file such Form 10-D within two (2) Business Days.
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Unless the Servicer shall have received notice from the Trustee to the contrary,
the Trustee will be deemed to have represented to the Servicer that, assuming
that the information provided to the Trustee by the Servicer is correct, the
monthly statement has been properly prepared by the Trustee, and the Servicer
may rely upon the accuracy thereof in it execution of the Form 10-D. If a Form
10-D cannot be filed on time (because of notice from the Trustee per the
previous sentence or otherwise) or if a previously filed Form 10-D needs to be
amended, the Trustee will follow the procedures set forth in this Section. After
filing with the Commission, the Trustee will make available on its internet
website a final executed copy of each Form 10-D. The Trustee will have no
liability (1) with respect to any failure to properly prepare, execute or file
such Form 10-D resulting from the Trustee's inability or failure to obtain or
receive any information needed to prepare, arrange for execution or file such
Form 10-D on a timely basis and (2) with respect to the date of filing so long
as filing occurs by the Commission's deadline.
Prior to Xxxxx 00, 0000 (xxx, if applicable, prior to the ninetieth (90th)
calendar day after the end of the fiscal year for the Issuing Entity), the
Trustee shall, on behalf of the Issuing Entity and in accordance with industry
standards, prepare and file with the Commission via XXXXX a Form 10-K with
respect to the Issuing Entity. Such Form 10-K shall include the following items,
in each case to the extent they have been delivered to the Trustee within the
applicable time frames set forth in this Agreement, (i) an annual compliance
statement for the Servicer and each Subservicer, as described in Section 3.17 of
the Agreement, (ii)(A) the annual reports on Assessment of Compliance with
Servicing Criteria for each Servicer, Subservicer and Subcontractor (unless the
Depositor has notified the Trustee that it has determined that such compliance
statement is not required by Regulation AB), as described in Section 3.18 of the
Agreement, and (B) if any Reporting Servicer's report on Assessment of
Compliance with Servicing Criteria described in Section 3.18 identifies any
material instance of noncompliance, disclosure identifying such instance of
noncompliance as set forth on the Reporting Servicer's report on Assessment of
Compliance or if any report on Assessment of Compliance with Servicing Criteria
described in Section 3.18 of the Agreement is not included as an exhibit to such
Form 10-K, disclosure that such report is not included and an explanation why
such report is not included, (iii)(A) the registered public accounting firm
attestation report for the Servicer and each Subservicer, as described in
Section 3.18 of the Agreement, and (B) if any registered public accounting firm
attestation report described in the Section 3.18 of the Agreement identifies any
material instance of noncompliance, disclosure identifying such instance of
noncompliance, or if any such registered public accounting firm attestation
report is not included as an exhibit to such Form 10-K, disclosure that such
report is not included and an explanation why such report is not included, and
(iv) a certification (the "Xxxxxxxx-Xxxxx Certification") in the form attached
hereto as Exhibit S, executed by the senior officer in charge of securitizations
of the Servicer. In addition to (i) through (iv) above, any Additional Form 10-K
Disclosure shall be determined and prepared by and at the direction of the
Depositor pursuant to the following paragraph, and the Trustee will have no duty
or liability for any failure hereunder to determine or prepare any Additional
Form 10-K Disclosure, except as set forth in the next paragraph.
As set forth in Schedule X hereto, no later than March 12 (other than the
Trustee, who shall not be required to deliver any information until March 15) of
each year that the Issuing Entity is subject to the Exchange Act reporting
requirements, commencing in 2007, (i) certain parties to the transaction shall
be required to provide to the Depositor and the Servicer, to the extent known,
any Additional Form 10-K Disclosure, if applicable, and (ii) the Depositor
shall, to the extent it deems necessary, forward to the Trustee in
XXXXX-compatible form, or in such other form as otherwise agreed upon by the
Trustee and the Depositor, the form and substance of the Additional Form 10-K
Disclosure by March 15. The Depositor will be responsible for any reasonable
fees and expenses incurred by the Trustee in connection with including any
Additional Form 10-K Disclosure on Form 10-K pursuant to this paragraph.
After preparing the Form 10-K, the Trustee shall forward electronically a
draft copy of the Form 10-K to the Depositor and the Servicer for review. Upon
the request of the Servicer, the Depositor shall
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confirm that it has reviewed the Form 10-K, that it has been properly prepared
and that the Servicer may rely on the accuracy thereof (other than with respect
to any portion of the Form 10-K or exhibit thereto provided by the Servicer
(other than any portion thereof with respect to which the Servicer has relied on
the Trustee)). No later than 5:00 p.m. EST on the third Business Day following
receipt of a final copy of the Form 10-K, and if requested, the above described
confirmation from the Depositor, a senior officer of the Servicer shall sign the
Form 10-K and return an electronic or fax copy of such signed Form 10-K (with an
original executed hard copy to follow by overnight mail) to the Trustee, and the
Trustee shall file such Form 10-K by March 20. If a Form 10-K cannot be filed on
time or if a previously filed Form 10-K needs to be amended, the Trustee will
follow the procedures set forth in this Section. After filing with the
Commission, the Trustee will, pursuant to the Agreement, make available on its
internet website a final executed copy of each Form 10-K. The Trustee shall have
no liability (1) with respect to any failure to properly prepare, execute or
file such Form 10-K resulting from the Trustee's inability or failure to obtain
or receive any information or signatures needed to prepare, arrange for
execution or file such Form 10-K on a timely basis and (2) with respect to the
date of filing so long as the filing occurs by the Commission's deadline.
Each Form 10-K shall include a Xxxxxxxx-Xxxxx Certification in the form
attached hereto as Exhibit S. The Servicer will cause its senior officer in
charge of securitization to execute the Xxxxxxxx-Xxxxx Certification required
pursuant to Rule 13a -14 under the Securities Exchange Act of 1934, as amended,
and to deliver the original executed Xxxxxxxx-Xxxxx Certification to the Trustee
by March 12 of each year in which the Issuing Entity is subject to the reporting
requirements of the Exchange Act. In connection therewith, each of the Trustee
and the Servicer shall sign an Officer's Certificate (in the form attached
hereto as Exhibit K and Exhibit L, respectively) for the benefit of the Servicer
and its officers, directors and Affiliates regarding certain aspects of the
Xxxxxxxx-Xxxxx Certification. To the extent any information or exhibits required
to be included in the Form 10 -K are not timely received by the Trustee prior to
March 30, the Trustee shall, on behalf of the Issuing Entity, file a Form 12B-25
and one or more amended Form 10-Ks, to the extent such amendments are accepted
pursuant to the Exchange Act, to include such missing information or exhibits
promptly after receipt thereof by the Trustee.
Promptly following the first date legally permissible under applicable
regulations and interpretations of the Commission, the Trustee shall, on behalf
of the Issuing Entity and in accordance with industry standards, file with the
Commission via XXXXX a Form 15 Suspension Notification with respect to the
Issuing Entity, if applicable.
The Servicer agrees to furnish to the Trustee promptly, from time to time
upon request of the Depositor, such further information, reports, and financial
statements within its control related to this Agreement and the Mortgage Loans
as is reasonably necessary to prepare and file all necessary reports with the
Commission. The Trustee shall have no responsibility to file any items with the
Commission other than those specified in this Section 3.20, and the Servicer
shall execute any and all Form 8-Ks, Form 10-Ds and Form 10-Ks required
hereunder.
If the Commission issues additional interpretative guidance or promulgates
additional rules or regulations with respect to Regulation AB or otherwise, or
if other changes in applicable law occur, that would require the reporting
arrangements, or the allocation of responsibilities with respect thereto,
described in this Section 3.20, to be conducted differently than as described,
the Depositor, the Servicer, and the Trustee will reasonably cooperate to amend
the provisions of this Section 3.20 in order to comply with such amended
reporting requirements and such amendment of this Section 3.20. Any such
amendment shall be made in accordance with Section 10.01 without the consent of
the Certificateholders, and may result in a change in the reports filed by the
Trustee on behalf of the Issuing Entity under the Exchange Act. Notwithstanding
the foregoing, the Depositor, the Servicer, and the Trustee shall not be
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obligated to enter into any amendment pursuant to this Section 3.20 that
adversely affects its obligations and immunities under this Agreement.
The Depositor, the Servicer and the Trustee agree to use their good faith
efforts to cooperate in complying with the requirements of this Section 3.20.
In the event that the Trustee is unable to timely file with the Commission
all or any required portion of any Form 8-K, Form 10-D or Form 10-K required to
be filed pursuant to this Agreement because required disclosure information was
either not delivered to it or delivered to it after the delivery deadlines set
forth in this Agreement, the Trustee will immediately notify the Depositor and
the Servicer. In the case of Form 10-D and 10-K, the Depositor, Servicer and
Trustee will thereupon cooperate to prepare and file a Form 12b-25 and a Form
10-DA and Form 10-KA, as applicable, pursuant to Rule 12b-25 of the Exchange
Act. In the case of Form 8-K, the Trustee will, upon receipt of all disclosure
information required to be included on Form 8-K, include such disclosure
information on the next Form 10-D. In the event that any previously filed Form
8-K, Form 10-D or Form 10-K needs to be amended, the party to this Agreement
deciding that an amendment to such Form 8-K, Form 10-D or Form 10-K is required
will notify the Depositor, the Trustee and the Servicer and such parties will
cooperate to prepare any necessary Form 8-KA, Form 10-DA or Form 10-KA. Any Form
15, Form 12b-25 or any amendment to Form 8-K, Form 10-D or Form 10-K shall be
signed by an officer of the Servicer. Each party acknowledges that the
performance by any party of its duties under this Section 3.20 related to the
timely preparation and filing of Form 15, a Form 12b-25 or any amendment to Form
8-K, Form 10-D or Form 10-K is contingent upon the other parties observing all
applicable deadlines (and the related grace periods thereto) in the performance
of their duties under this Section 3.20 and Sections 3.17 and 3.18. No party
shall have liability for any loss, expense, damage, claim arising out of or with
respect to any failure to properly prepare and/or timely file any such Form 15,
Form 12b-25 or any amendments to Forms 8-K, Form 10-D or Form 10-K, where such
failure results from another party's inability or failure to obtain or receive,
on a timely basis, any information from any party hereto needed to prepare,
arrange for execution or file such Form 15, Form 12b-25 or any amendments to
Forms 8-K, Form 10-D or Form 10-K, not resulting from its own negligence, bad
faith or willful misconduct.
SECTION 3.21. Indemnification by Trustee.
The Trustee shall indemnify and hold harmless the Depositor, the Servicer
and their respective officers, directors, agents and Affiliates from and against
any losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by the Trustee or any of its officers, directors, agents or
Affiliates of its obligations under Sections 3.17, 3.18 (other than Section
3.18(f)) and 3.20, any material misstatement or omission in any documents
prepared thereunder (to the extent the Trustee is responsible for providing
information or calculating amounts included in such information), the failure of
the Trustee to deliver when required any Assessment of Compliance or
Accountant's Attestation required of it pursuant to Section 3.18 or Annual
Statement of Compliance required pursuant to Section 3.17, as applicable, or any
material misstatement or omission contained in any Assessment of Compliance,
Accountant's Attestation or Annual Statement of Compliance provided on its
behalf pursuant to Section 3.17 or 3.18, as applicable, or the negligence, bad
faith or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the indemnified parties, then the Trustee agrees that it shall
contribute to the amount paid or payable by the indemnified parties as a result
of the losses, claims, damages or liabilities of the indemnified parties in such
proportion as is appropriate to reflect the relative fault of the Trustee on the
one hand and of the indemnified parties on the other. Failure by the Trustee to
deliver an Accountant's Attestation when required under Section 3.18(f) will be
grounds for immediate removal of the Trustee under Section 8.08; in the event of
such failure, the Trustee shall pay
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certain costs and expenses of the Depositor caused by such failure as separately
agreed to by the Depositor and the Trustee.
SECTION 3.22. Indemnification by Servicer.
The Servicer shall indemnify and hold harmless the Trustee and the
Depositor and their respective officers, directors, agents and Affiliates from
and against any losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Servicer or any of its officers, directors, agents or
Affiliates of its obligations under Sections 3.17, 3.18 and 3.20, any material
misstatement or omission in any documents prepared thereunder (to the extent the
Servicer is responsible for providing information or calculating amounts
included in such information), the failure of the Servicer to deliver when
required any Assessment of Compliance or Accountant's Attestation required of it
pursuant to Section 3.18 or Annual Statement of Compliance required pursuant to
Section 3.17, as applicable, or any material misstatement or omission contained
in any Assessment of Compliance, Accountant's Attestation or Annual Statement of
Compliance provided on its behalf pursuant to Section 3.17 or 3.18, as
applicable (to the extent the Servicer is responsible for providing information
or calculating amounts included in such information), or the negligence, bad
faith or willful misconduct of the Servicer in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the indemnified parties, then the Servicer agrees that it shall
contribute to the amount paid or payable by the indemnified parties as a result
of the losses, claims, damages or liabilities of the indemnified parties in such
proportion as is appropriate to reflect the relative fault of the Servicer on
the one hand and the indemnified parties on the other.
Notwithstanding the foregoing, the Servicer shall be entitled to rely
conclusively on the accuracy of the information or data provided to the Servicer
by the Trustee or the Depositor in connection with the document preparation
under Sections 3.17, 3.18 and 3.20, and the Servicer shall be entitled to rely
conclusively upon and shall have no liability for any errors in such
information.
SECTION 3.23. Prepayment Charge Reporting Requirements.
(a) Promptly after each Distribution Date, the Servicer shall provide to
the Depositor the following information with regard to each Mortgage Loan that
has prepaid during the related Prepayment Period:
(i) loan number;
(ii) current Mortgage Rate;
(iii) current principal balance;
(iv) original principal balance;
(v) prepayment charge amount due;
(vi) prepayment charge amount collected; and
(vii) reason why full prepayment charge amount was not collected, if
applicable.
SECTION 3.24. Statements to Trustee. Not later than the Servicer Remittance
Date, the Servicer shall furnish to the Trustee an electronic file providing
loan level accounting data for the period
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ending on the last Business Day of the preceding month in the format mutually
agreed upon between the Servicer and the Trustee, including but not limited to
information described in Section 4.05(a).
SECTION 3.25. Further Indemnification by the Servicer.
The Servicer shall indemnify the Sponsor, the Issuing Entity, Trustee (in
its individual capacity and in its capacity as Trustee) and the Depositor and
hold each of them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that any of such
parties may sustain in any way related to the failure of the Servicer to perform
its duties and service the Mortgage Loans in compliance with the terms of this
Agreement by reason of breach of representations of the Servicer or willful
misfeasance, bad faith or negligence, or by reason of reckless disregard of
obligations and duties hereunder. The Servicer promptly shall notify the
Sponsor, the Trustee and the Depositor or any other relevant party if a claim is
made by a third party with respect to such party and this Agreement or the
Mortgage Loans and, if subject to this indemnification obligation, assume (with
the prior written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
any of such parties in respect of such claim. The Servicer shall provide the
Trustee and the Depositor with a written report of all expenses and advances
incurred by the Servicer pursuant to this Section 3.25, and the Servicer from
the assets of the Trust Fund in the Collection Account promptly shall reimburse
itself for all amounts advanced by it pursuant to the second sentence of this
Section 3.25 except when the claim in any way relates to the gross negligence,
bad faith or willful misconduct of the Servicer. The provisions of this
paragraph shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
SECTION 3.26. Nonsolicitation.
The Servicer hereby covenants that neither it nor any Affiliate of the
Servicer will directly solicit any Mortgagor hereunder to refinance the related
Mortgage Loan. For the purposes of the foregoing, neither the Servicer nor any
Affiliate of the Servicer shall be deemed to directly solicit any Mortgagor if
the Mortgagor receives marketing materials which are generally disseminated or
if the Servicer received a request for verification of mortgage, a request for
demand for payoff, a mortgagor initiated written or verbal communication
indicating a desire to prepay or refinance the related Mortgage Loan or the
Mortgagor initiates a title search, or if the Servicer responds to a request
from a Mortgagor regarding a refinancing or if the Mortgage Loan is delinquent
and the Servicer refers a Mortgagor to a person for possible refinancing or
provides Mortgagor's contact information to such person. It is understood that
the promotions undertaken by the Servicer that are directed to the general
public at large, or certain segments thereof, shall not constitute solicitation
as that term is used in this Section 3.26.
SECTION 3.27. Existing Servicing Agreement.
The Servicer acknowledges the transfer on the Closing Date of the servicing
of the Mortgage Loans from the Existing Servicing Agreement to this Agreement
pursuant to the Existing Servicing Agreement.
SECTION 3.28. High Cost Mortgage Loans.
In the event that the Servicer reasonably determines that a Mortgage Loan
may be a "high cost mortgage loan," "high cost home," "covered," "high cost,"
"high risk home," "predatory" or similarly classified loan under any applicable
state, federal or local law, the Servicer may notify the Depositor and the
Trustee, and if the Servicer so notifies such parties, the Servicer may cease
its initiation of collection
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efforts thereon; and such determination shall be deemed to materially and
adversely affect the interests of the Certificateholders in such Mortgage Loan
and the Sponsor will repurchase the Mortgage Loan within a 90-day period from
the date of the notice in the manner described in Section 2.05.
SECTION 3.29. [RESERVED]
ARTICLE IV
DISTRIBUTIONS
SECTION 4.01. Advances.
Subject to the conditions of this Article IV, the Servicer, as required
below, shall make an Advance and deposit such Advance in the Collection Account.
Each such Advance shall be remitted to the Collection Account no later than 2:00
p.m. New York City time on the Servicer Advance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, each Rating Agency and
the Trustee an Officer's Certificate setting forth the basis for such
determination. The Servicer may, in its sole discretion, make an Advance with
respect to the principal portion of the final Scheduled Payment on a Balloon
Loan, but the Servicer is under no obligation to do so; provided, however, that
nothing in this sentence shall affect the Servicer's obligation under this
Section 4.01 to Advance the interest portion of the final Scheduled Payment with
respect to a Balloon Loan as if such Balloon Loan were a fully amortizing
Mortgage Loan. If a Mortgagor does not pay its final Scheduled Payment on a
Balloon Loan for a first lien Mortgage when due, the Servicer shall Advance
(unless it determines in its good faith judgment that such amounts would
constitute a Non Recoverable Advance) a full month of interest (net of the
Servicing Fee) on the Stated Principal Balance thereof each month until its
Stated Principal Balance is reduced to zero.
In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any amount held for future distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Certificate Account.
In addition, the Servicer shall have the right to reimburse itself for any such
Advance from amounts held from time to time in the Collection Account to the
extent such amounts are not then required to be distributed. Any funds so
applied and transferred pursuant to the previous two sentences shall be replaced
by the Servicer by deposit in the Collection Account no later than the close of
business on the Servicer Advance Date on which such funds are required to be
distributed pursuant to this Agreement. The Servicer shall be entitled to be
reimbursed from the Collection Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.08. The obligation to make
Advances with respect to any Mortgage Loan shall continue until such Mortgage
Loan is paid in full or the related Mortgaged Property or related REO Property
has been liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Issuing Entity pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section 4.01.
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SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment Interest
Shortfall, the Servicer shall, from amounts in respect of the Servicing Fee for
such Distribution Date, deposit into the Collection Account, as a reduction of
the Servicing Fee for such Distribution Date, no later than the Servicer Advance
Date immediately preceding such Distribution Date, an amount up to the
Prepayment Interest Shortfall; provided that the amount so deposited with
respect to any Distribution Date shall be limited to the product of (x)
one-twelfth of 0.25% per annum and (y) the aggregate Stated Principal Balance of
the Mortgage Loans. In case of such deposit, the Servicer shall not be entitled
to any recovery or reimbursement from the Depositor, the Trustee, the Issuing
Entity or the Certificateholders. With respect to any Distribution Date, to the
extent that the Prepayment Interest Shortfall exceeds Compensating Interest
(such excess, a "Non-Supported Interest Shortfall"), such Non-Supported Interest
Shortfall shall reduce the Current Interest with respect to each Class of
Certificates, pro rata based upon the amount of interest each such Class would
otherwise be entitled to receive on such Distribution Date. Notwithstanding the
foregoing, there shall be no reduction of the Servicing Fee in connection with
Prepayment Interest Shortfalls related to the Relief Act and the Servicer shall
not be obligated to pay Compensating Interest with respect to Prepayment
Interest Shortfalls related to the Relief Act.
SECTION 4.03. Distributions on the REMIC Interests.
On each Distribution Date, amounts on deposit in the Certificate Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in each of the SWAP REMIC and the Lower Tier REMIC in an amount
sufficient to make the distributions on the respective Certificates on such
Distribution Date in accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
(a) [Reserved]
(b) On each Distribution Date (or in the case of any Net Swap Payments owed
to the Swap Counterparty, two "business days" (as defined in the Swap Agreement)
prior to such Distribution Date), the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Interest
Funds in the following order of priority:
(i) to the Class P Certificates, any prepayment charges collected on
the Mortgage Loans and (A) any amounts paid by the Sponsor or the Servicer
in respect of prepayment charges pursuant to this Agreement or (B) any
amounts received in respect of any indemnification paid as a result of a
prepayment charge being unenforceable in breach of the representations and
warranties set forth in the Sale Agreement received during the related
Prepayment Period;
(ii) to the Supplemental Interest Trust, any Net Swap Payments owed to
the Swap Counterparty;
(iii) to the Supplemental Interest Trust, any Swap Termination Payment
owed by the Issuing Entity to the Swap Counterparty (other than any
Defaulted Swap Termination Payment);
(iv) to each Class of the Class R and Class A Certificates, the
Current Interest and any Interest Carry Forward Amount with respect to each
such Class; provided, however, if such amount is not sufficient to make a
full distribution of the Current Interest and the aggregate Interest Carry
Forward Amount to each of the Class R and Class A Certificates, such amount
will
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be distributed pro rata among each Class of the Class R and Class A
Certificates based on the ratio of (x) the Current Interest and Interest
Carry Forward Amount for such Class to (y) the total amount of Current
Interest and any Interest Carry Forward Amount for the Class R and Class A
Certificates in the aggregate;
(v) to the Class M-1 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(vi) to the Class M-2 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(vii) to the Class M-3 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(viii) to the Class M-4 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(ix) to the Class M-5 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(x) to the Class M-6 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(xi) to the Class B-1 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(xii) to the Class B-2 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class;
(xiii) to the Class B-3 Certificates, the Current Interest and any
Interest Carry Forward Amount for such Class; and
(xiv) any remainder pursuant to Section 4.04(e) hereof.
On each Distribution Date, subject to the proviso in (b)(iv) above, Interest
Funds received on the Group One Mortgage Loans will be deemed to be distributed
to the Class R and Class A-1 Certificates and Interest Funds received on the
Group Two Mortgage Loans will be deemed to be distributed to the Class A-2
Certificates, in each case, until the related Current Interest and Interest
Carry Forward Amount of each such Class of Certificates for such Distribution
Date has been paid in full. Thereafter, Interest Funds not required for such
distributions are available to be applied, if necessary, to the Class or Classes
of Certificates that are not related to such group of Mortgage Loans.
(c) All amounts representing prepayment charges in respect of the Mortgage
Loans, and amounts paid by the Servicer in respect of prepayment charges
pursuant to this Agreement will be distributed by the Trustee to the Holders of
the Class P Certificates pursuant to Section 4.04(b).
(d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b) above shall have been made until such amount shall have been fully
distributed for such Distribution Date:
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(i) to the Supplemental Interest Trust, any Net Swap Payment owed by
the Issuing Entity to the Swap Counterparty to the extent no paid pursuant
to Section 4.04(b)(ii);
(ii) to the Supplemental Interest Trust, any Swap Termination Payment
owed by the Issuing Entity to the Swap Counterparty (other than any
Defaulted Swap Termination Payment) to the extent no paid pursuant to
Section 4.04(b)(iii);
(iii) to the Class A and Class R Certificates, the Class A Principal
Distribution Amount shall be distributed as follows:
(1) the Group One Principal Distribution Amount shall be
distributed sequentially as follows: first, to the Class R
Certificate until its Certificate Principal Balance has been
reduced to zero, and second, to the Class A-1 Certificates until
the Certificate Principal Balance of the Class A-1 Certificates
has been reduced to zero;
(2) the Group Two Principal Distribution Amount shall be
distributed sequentially to the Class A-2A Certificates until the
Certificate Principal Balance thereof has been reduced to zero,
then to the Class A-2B Certificates until the Certificate
Principal Balance thereof has been reduced to zero, then to the
Class A-2C Certificates until the Certificate Principal Balance
thereof has been reduced to zero, then to the Class A-2D
Certificates until the Certificate Principal Balance thereof has
been reduced to zero; provided, however, that on and after the
Distribution Date on which the aggregate Certificate Principal
Balance of the Subordinate Certificates and the Class C
Certificates has been reduced to zero, any principal
distributions allocated to the Class A-2A, Class A-2B, Class A-2C
and Class A-2D Certificates are required to be allocated pro
rata, among such classes of Certificates, based on their
respective Certificate Principal Balances, until their
Certificate Principal Balances have been reduced to zero;
(iv) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount;
(v) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount;
(vi) to the Class M-3 Certificates, the Class M-3 Principal
Distribution Amount;
(vii) to the Class M-4 Certificates, the Class M-4 Principal
Distribution Amount;
(viii) to the Class M-5 Certificates, the Class M-5 Principal
Distribution Amount;
(ix) to the Class M-6 Certificates, the Class M-6 Principal
Distribution Amount;
(x) to the Class B-1 Certificates, the Class B-1 Principal
Distribution Amount;
(xi) to the Class B-2 Certificates, the Class B-2 Principal
Distribution Amount;
(xii) to the Class B-3 Certificates, the Class B-3 Principal
Distribution Amount; and
(xiii) any remainder pursuant to Section 4.04(e) hereof.
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(e) On each Distribution Date, the Trustee shall make the following
distributions up to the following amounts from the Certificate Account of the
remainders pursuant to Section 4.04(b)(xiv) and 4.04(d)(xiii) hereof, and each
such distribution shall be made only after all distributions pursuant to
Sections 4.04(b) and (d) above shall have been made until such remainders shall
have been fully distributed for such Distribution Date:
(i) to the Class A and Class R Certificates, any amounts due as
described in and in the same order of priority as set forth in Section
4.04(b)(iv), to the extent unpaid from Interest Funds;
(ii) to the Subordinate Certificates, any amount due and in the same
priority as set forth pursuant to Section 4.04(b)(v) through Section
4.04(b)(xiii), to the extent unpaid from Interest Funds;
(iii) for distribution as part of the Principal Distribution Amount,
the Extra Principal Distribution Amount;
(iv) to the Class M-1 Certificates, the Class M-1 Unpaid Realized Loss
Amount;
(v) to the Class M-2 Certificates, the Class M-2 Unpaid Realized Loss
Amount;
(vi) to the Class M-3 Certificates, the Class M-3 Unpaid Realized Loss
Amount;
(vii) to the Class M-4 Certificates, the Class M-4 Unpaid Realized
Loss Amount;
(viii) to the Class M-5 Certificates, the Class M-5 Unpaid Realized
Loss Amount;
(ix) to the Class M-6 Certificates, the Class M-6 Unpaid Realized Loss
Amount;
(x) to the Class B-1 Certificates, the Class B-1 Unpaid Realized Loss
Amount;
(xi) to the Class B-2 Certificates, the Class B-2 Unpaid Realized Loss
Amount;
(xii) to the Class B-3 Certificates, the Class B-3 Unpaid Realized
Loss Amount;
(xiii) to the Class A, Class R, Class M and Class B Certificates, on a
pro rata basis, the Floating Rate Certificate Carryover for each such
Class; and
(xiv) the remainder pursuant to Section 4.04(f) hereof.
(f) on each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(e)(xiv) as follows:
(i) to the Supplemental Interest Trust, any Defaulted Swap Termination
Payment;
(ii) to the Class C Certificates in the following order of priority,
(I) the Class C Current Interest, (II) the Class C Interest Carry Forward
Amount, (III) as principal on the Class C Certificate until the Certificate
Principal Balance of the Class C Certificates has been reduced to zero and
(IV) the Class C Unpaid Realized Loss Amount; and
(iii) the remainder pursuant to Section 4.04(g) hereof.
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(g) On each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(f)(iii) hereof, (i) to the Trustee to reimburse amounts
or pay indemnification amounts owing to the Trustee from the Issuing Entity
pursuant to Section 8.06 to the extent such amounts shall have exceeded the cap
set forth in Section 8.06(c), and (ii) thereafter, to the Class R Certificate
and such distributions shall be made only after all preceding distributions
shall have been made until such remainder shall have been fully distributed.
(h) On each Distribution Date, after giving effect to distributions on such
Distribution Date, the Trustee shall allocate the Applied Realized Loss Amount
for the Certificates to reduce the Certificate Principal Balances of the Class C
Certificates and Subordinate Certificates in the following order of priority:
(i) to the Class C Certificates until the Class C Certificate
Principal Balance is reduced to zero;
(ii) to the Class B-3 Certificates until the Class B-3 Certificate
Principal Balance is reduced to zero;
(iii) to the Class B-2 Certificates until the Class B-2 Certificate
Principal Balance is reduced to zero;
(iv) to the Class B-1 Certificates until the Class B-1 Certificate
Principal Balance is reduced to zero;
(v) to the Class M-6 Certificates until the Class M-6 Certificate
Principal Balance is reduced to zero;
(vi) to the Class M-5 Certificates until the Class M-5 Certificate
Principal Balance is reduced to zero;
(vii) to the Class M-4 Certificates until the Class M-4 Certificate
Principal Balance is reduced to zero;
(viii) to the Class M-3 Certificates until the Class M-3 Certificate
Principal Balance is reduced to zero;
(ix) to the Class M-2 Certificates until the Class M-2 Certificate
Principal Balance is reduced to zero; and
(x) to the Class M-1 Certificates until the Class M-1 Certificate
Principal Balance is reduced to zero.
(i) Subject to Section 9.02 hereof respecting the final distribution, on
each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.
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All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective Initial Certificate Principal Balances (or Percentage
Interests).
(j) The Trustee is hereby directed by the Depositor to execute the Cap
Contracts on behalf of the Issuing Entity in the forms presented to it by the
Depositor and shall have no responsibility for the contents of such Cap
Contracts, including, without limitation, the representations and warranties
contained therein. Any funds payable by the Trustee under the Cap Contracts at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in the Cap Contracts, the Trustee shall not be required to
make any payments to the counterparty under the Cap Contracts. Any payments
received under the terms of the related Cap Contract will be available to pay
the holders of the related Classes of Certificates up to the amount of any
Floating Rate Certificate Carryovers remaining after all other distributions
required under this Section 4.04 are made on such Distribution Date, other than
Floating Rate Certificate Carryovers attributable to the fact that Applied
Realized Loss Amounts are not allocated to the Class A and Class R Certificates.
Any amounts received under the terms of any Cap Contract on a Distribution Date
that are not used to pay such Floating Rate Certificate Carryovers will be
distributed to the holders of the Class C Certificates. Payments in respect of
such Floating Rate Certificate Carryovers from proceeds of the Cap Contracts
shall be paid to the related Classes of Certificates, pro rata based upon such
Floating Rate Certificate Carryovers for each such Class of Offered
Certificates.
(i) The Trustee shall establish and maintain, for the benefit of the
Issuing Entity and the Certificateholders, the Cap Contract Account. On or
prior to the related Cap Contract Termination Date, amounts, if any,
received by the Trustee for the benefit of the Issuing Entity in respect of
any Cap Contract shall be deposited by the Trustee into the Cap Contract
Account and will be used to pay Floating Rate Certificate Carryovers on the
related Classes of Certificates as provided in this Section 4.04(j). With
respect to any Distribution Date on or prior to the related Cap Contract
Termination Date, the amount, if any, payable by the Cap Contract
Counterparty under the applicable Cap Contract will equal the product of
(i) the excess of (x) One-Month LIBOR (as determined by the Cap Contract
Counterparty and subject to a cap equal to the rate with respect to such
Distribution Date as shown under the heading "1ML Upper Collar" in the
schedule to the applicable Cap Contract), over (y) the rate with respect to
such Distribution Date as shown under the heading "1ML Lower Collar" in the
schedule to the applicable Cap Contract, (ii) an amount equal to the lesser
of (A) the related Cap Contract Notional Balance for such Distribution Date
and (B) the Certificate Principal Balance of (I) in the case of the Class
A-1 Cap Contract, the Class A-1 and Class R Certificates, (II) in the case
of the Class A-2 Cap Contract, the Class A-2 Certificates and (III) in the
case of the Subordinate Certificate Cap Contract, the Subordinate
Certificates, and (iii) the number of days in such Accrual Period, divided
by 360. If a payment is made to the Issuing Entity under a Cap Contract and
the Trustee is required to distribute excess amounts to the holders of the
Class C Certificates as described above, the Trustee shall, on the monthly
statement to Certificateholders described in Section 4.05 below, report the
amounts paid with respect to Floating Rate Certificate Carryovers and the
amount due to the holders of the Class C Certificates.
(ii) Amounts on deposit in the Cap Contract Account will remain
uninvested pending distribution to Certificateholders.
(iii) Each Cap Contract is scheduled to remain in effect until its
respective Cap Contract Termination Date and will be subject to early
termination only in limited circumstances. Such circumstances include
certain insolvency or bankruptcy events in relation to the Cap Contract
Counterparty (after a grace period of three Local Business Days, as defined
in the
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applicable Cap Contract, after notice of such failure is received by the
Cap Contract Counterparty) to make a payment due under the applicable Cap
Contract, the failure by the Cap Contract Counterparty (after a cure period
of twenty (20) days after notice of such failure is received) to perform
any other agreement made by it under the applicable Cap Contract, the
termination of the Trust Fund and the applicable Cap Contract becoming
illegal or subject to certain kinds of taxation.
(k) In accordance with this Agreement, the Servicer shall prepare and
deliver a report (the "Remittance Report") to the Trustee in the form of a
computer readable magnetic tape (or by such other means as the Servicer and the
Trustee may agree from time to time) containing such data and information such
as to permit the Trustee to prepare the Monthly Statement to Certificateholders
and make the required distributions for the related Distribution Date.
(l) On the Closing Date, the Supplemental Interest Trust shall be
established and maintained pursuant to this Agreement, as a separate trust, the
corpus of which shall be held by the Trustee for the benefit of the holders of
the Certificates as a segregated subtrust of the Trust Fund. The Supplemental
Interest Trust shall contain the Swap Account, which shall be an Eligible
Account, and funds deposited therein shall be held separate and apart from, and
shall not be commingled with, any other moneys, including, without limitation,
other moneys of the Trustee held pursuant to this Agreement. In no event shall
any funds deposited in the Swap Account be credited to or made available to any
other account of the Trust Fund. The records of the Trustee shall at all times
reflect that the Supplemental Interest Trust is a subtrust of the Trust Fund,
the assets of which are segregated from other assets of the Trust Fund.
The Trustee shall enforce all of the rights of the Supplemental
Interest Trust and exercise any remedies under the Swap Agreement and, in the
event the Swap Agreement is terminated as a result of the designation by either
party thereto of an Early Termination Date (as defined in the Swap Agreement),
find a replacement counterparty to enter into a replacement swap agreement
utilizing the amounts of the net Swap Termination Payments received.
For each Distribution Date, through and including the Distribution Date in
December 2010, the Trustee shall, based on the Significance Estimate (which
shall be provided in writing to the Trustee by the Depositor within five (5)
Business Days prior to the Distribution Date), calculate the Significance
Percentage of the Swap Agreement. If on any such Distribution Date, the
Significance Percentage is equal to or greater than 9%, the Trustee shall
promptly notify the Depositor and the Depositor, on behalf of the Trustee, shall
obtain the financial information required to be delivered by the Swap
Counterparty pursuant to the terms of the Swap Agreement. If, on any succeeding
Distribution Date through and including the Distribution Date in December 2010,
the Significance Percentage is equal to or greater than 10%, the Trustee shall
promptly notify the Depositor and the Depositor shall, within five (5) Business
Days of such Distribution Date, deliver to the Trustee the financial information
provided to it by the Swap Counterparty for inclusion in the Form 10-D relating
to such Distribution Date.
Any Swap Termination Payment received by the Trustee shall be
deposited in the Swap Account and shall be used to make any upfront payment
required under a replacement swap agreement and any upfront payment received
from the counterparty to a replacement swap agreement shall be used to pay any
Swap Termination Payment owed to the Swap Counterparty.
Notwithstanding anything contained herein, in the event that a
replacement swap agreement cannot be obtained within thirty (30) days after
receipt by the Trustee of the Swap Termination Payment paid by the terminated
Swap Counterparty, the Trustee shall deposit such Swap Termination Payment into
a separate, segregated non-interest bearing subtrust established by the Trustee
and the Trustee shall, on each Distribution Date following receipt of such Swap
Termination Payment, withdraw
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from such subtrust, an amount equal to the Net Swap Payment, if any, that would
have been paid to the Supplemental Interest Trust by the original Swap
Counterparty (computed in accordance with the original Swap Agreement) and
distribute such amount in accordance with Section 4.04(l)(i)-(viii) of this
Agreement. Any such subtrust shall not be an asset of any REMIC. Any amounts
remaining in such subtrust shall be distributed to the holders of the Class C
Certificates on the Distribution Date following the earlier of (i) the
termination of the Trust Fund pursuant to Section 9.01 and (ii) December 25,
2010.
On any Distribution Date (or in the case of any Net Swap Payments owed
to the Swap Counterparty, two "business days" (as defined in the Swap Agreement)
prior to such Distribution Date), any Swap Termination Payments or Net Swap
Payments owed to the Swap Counterparty will be paid out of, or any Net Swap
Payments or Swap Termination Payments received from the Swap Counterparty will
be deposited into, the Swap Account. The Supplemental Interest Trust will not be
an asset of any REMIC. Funds in the Swap Account within the Supplemental
Interest Trust shall be distributed in the following order of priority by the
Trustee:
(i) to the Swap Counterparty, all Net Swap Payments, if any, owed to
the Swap Counterparty for such Distribution Date;
(ii) to the Swap Counterparty, any Swap Termination Payment, other
than a Defaulted Swap Termination Payment, if any, owed to the Swap
Counterparty;
(iii) to each class of the Class A and Class R Certificates, on a pro
rata basis, any Current Interest and any Interest Carry Forward Amount with
respect to such class to the extent unpaid;
(iv) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the
Class M-5 Certificates, the Class M-6 Certificates, the Class B-1
Certificates, the Class B-2 Certificates and the Class B-3 Certificates, in
that order, any Current Interest for such class to the extent unpaid;
(v) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the
Class M-5 Certificates, the Class M-6 Certificates, the Class B-1
Certificates, the Class B-2 Certificates and the Class B-3 Certificates, in
that order, any Interest Carry Forward with respect to such class to the
extent unpaid;
(vi) to the Class A, Class R, Class M and Class B Certificates, to pay
principal as described and in the same manner and order of priority as set
forth in Sections 4.04(d)(iii) through 4.04(d)(xii) in order to restore
levels of the Overcollateralization Amount, and after giving effect to
distributions from Principal Distribution Amount for each such Class;
(vii) sequentially, to the Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the
Class M-5 Certificates, the Class M-6 Certificates, the Class B-1
Certificates, the Class B-2 Certificates and the Class B-3 Certificates, in
that order, any Unpaid Realized Loss Amount for such class to the extent
unpaid;
(viii) to the Class A, Class R, Class M and Class B Certificates, any
Floating Rate Certificate Carryover to the extent not paid based on the
amount of such unpaid Floating Rate Certificate Carryover;
(ix) to the Swap Counterparty, any Defaulted Swap Termination Payment
owed to the Swap Counterparty to the extent not already paid; and
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(x) to the Class C Certificates any remaining amount.
Notwithstanding the foregoing, however, after giving effect to
proposed distributions on any Distribution Date, the sum of the cumulative
amounts distributed pursuant to clause (vi) above and the cumulative amounts
distributed pursuant to clause (vii) above shall be limited to the aggregate
amount of cumulative Realized Losses incurred from the Cut-off Date through the
last day of the related Prepayment Period.
Upon termination of the Trust Fund, any amounts remaining in the Swap
Account within the Supplemental Interest Trust shall be distributed pursuant to
the priorities set forth in this Section 4.04(l).
With respect to the failure of the Swap Counterparty to perform any of
its obligations under the Swap Agreement, the breach by the Swap Counterparty of
any of its representations and warranties made pursuant to the Swap Agreement,
or the termination of the Swap Agreement, the Trustee shall send any notices and
make any demands required hereunder (to the extent that a Responsible Officer of
the Trustee has actual knowledge or written notice of any such failure, breach
or termination).
SECTION 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date based in part on information
provided by the Servicer, the Trustee shall prepare and make available on its
website located at xxxx://xxx.xxxxxx.xxx/xxx to each Holder of a Class of
Certificates of the Issuing Entity, the Servicer, the Rating Agencies and the
Depositor a statement setting forth for the Certificates the following
information; provided, however, that, with respect to any calendar year during
which an annual report on Form 10-K is not required to be filed with the
Commission on behalf of the Issuing Entity, the information set forth in items
(xxvi) through (xxxiii) below are not required to be included in such statement
during such calendar year:
(i) the amount of the related distribution to Holders of each Class of
Certificates allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein, (B) the
aggregate amount of all scheduled payments of principal included therein
and (C) any Extra Principal Distribution Amount, in the aggregate and with
respect to the Group One Mortgage Loans and Group Two Mortgage Loans;
(ii) the amount of such distribution to Holders of each Class of
Certificates allocable to interest, together with any Non-Supported
Interest Shortfalls allocated to each Class;
(iii) with respect to each Class of Certificates, any Interest Carry
Forward Amount with respect to such Distribution Date for each such Class,
any Interest Carry Forward Amount paid for each such Class and any
remaining Interest Carry Forward Amount for each such Class;
(iv) the Certificate Principal Balance of each Class of Certificates
after giving effect to all distributions allocable to principal on such
Distribution Date;
(v) the Pool Stated Principal Balance for such Distribution Date;
(vi) the amount of the Servicing Fee paid to or retained by the
Servicer and the amount of investment income earned on funds on deposit in
the Certificate Account for the related Due Period;
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(vii) the Pass-Through Rate for each Class of Certificates for such
Distribution Date;
(viii) the amount of Advances included in the distribution on such
Distribution Date;
(ix) the cumulative amount of (A) Realized Losses and (B) Applied
Realized Loss Amounts to date, in the aggregate;
(x) the amount of (A) Realized Losses and (B) Applied Realized Loss
Amounts with respect to such Distribution Date, in the aggregate;
(xi) the number and aggregate principal amounts of Mortgage Loans (A)
Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 31 to 60 days,
(2) 61 to 90 days and (3) 91 or more days, and (B) in foreclosure and
Delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, in
each case as of the close of business on the last day of the calendar month
preceding such Distribution Date, in the aggregate and with respect to the
Group One Mortgage Loans and Group Two Mortgage Loans;
(xii) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number and Stated Principal
Balance of such Mortgage Loan as of the close of business on the
Determination Date and the date of acquisition thereof, in the aggregate;
(xiii) whether a Stepdown Trigger Event has occurred and is in effect;
(xiv) the total number and principal balance of any REO Properties as
of the close of business on the related Determination Date, in the
aggregate;
(xv) the aggregate Stated Principal Balance of all Liquidated Loans as
of the preceding Distribution Date, in the aggregate
(xvi) any Floating Rate Certificate Carryover paid and all Floating
Rate Certificate Carryover remaining on each Class of the Offered
Certificates on such Distribution Date and Stated Principal Balance (as of
the preceding Distribution Date) of any Mortgage Loans which were purchased
or repurchased during the preceding Due Period and since the Cut-off Date;
(xvii) the number and amount of prepayment charges and the amount of
late payment fees received during the related Prepayment Period in the
aggregate;
(xviii) as of each Distribution Date, the amount, if any, received
pursuant to each Cap Contract and the amount thereof, if any, to be paid to
each Class of Certificates;
(xix) as of each Distribution Date, the amount, if any, to be
deposited in the Swap Account within the Supplemental Interest Trust
pursuant to the Swap Agreement as described in Section 4.04(l) and the
amount thereof to be paid to the Certificates;
(xx) the number of Mortgage Loans with respect to which (i) a
reduction in the Mortgage Rate has occurred or (ii) the related borrower's
obligation to repay interest on a monthly basis has been suspended or
reduced pursuant to the Relief Act or the California Military and Veterans
Code, as amended; and (iii) the amount of interest not required to be paid
with respect to any such Mortgage Loans during the related Due Period as a
result of such reductions
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in the aggregate and with respect to the Group One Mortgage Loans and Group
Two Mortgage Loans;
(xxi) the number of Mortgage Loans for which prepayment charges were
received during the related Prepayment Period and, for each such Mortgage
Loan, the amount of prepayment charges received during the related
Prepayment Period and in the aggregate of such amounts for all such
Mortgage Loans since the Cut-off Date;
(xxii) the amount and purpose of any withdrawal from the Collection
Account pursuant to Section 3.08(a)(iv);
(xxiii) the amount of any payments to each Class of Certificates that
are treated as payments received in respect of a REMIC Regular Interest or
REMIC "residual interest" and the amount of any payments to each Class of
Certificates that are not treated as payments received in respect of a
REMIC Regular Interest or REMIC "residual interest".
(xxiv) the aggregate amount of all Advances recovered during the
related Due Period;
(xxv) the allocation to each Class of Certificate of any Realized
Losses during the related Due Period;
(xxvi) with respect to each Class of Certificates, the amount of any
Non-Supported Interest Shortfalls on such Distribution Date;
(xxvii) the number and outstanding principal balance of pool assets at
the beginning and ending of each period, and updated pool composition
information;
(xxviii) any material changes to methodology regarding calculations of
delinquencies and charge-offs;
(xxix) the amount of Servicing Advances made during the related Due
Period and the amount of Servicing Advances recovered during the related
Due Period out of (a) principal and interest collections and (b) other
amounts collected from the related Mortgagors;
(xxx) any material modifications, extensions or waivers to pool asset
terms, fees, penalties or payments during the distribution period or that
have cumulatively become material over time, of which the Trustee has
received written notice thereof from the Servicer;
(xxxi) material breaches of pool asset representations or warranties
or transaction covenants to the extent that the Trustee has received
written notice thereof;
(xxxii) information on ratio, coverage or other tests used for
determining any early amortization, liquidation or other performance
trigger and whether the trigger was met;
(xxxiii) the Overcollateralization Amount, the Targeted
Overcollateralization Amount and the Overcollateralization Deficiency
Amount or the Overcollateralization Release Amount (as applicable) as of
such Distribution Date;
(xxxiv) the amount of Excess Interest for any class of the LIBOR
Certificates;
(xxxv) the Extra Principal Distribution Amount for such Distribution
Date; and
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(xxxvi) information regarding any pool asset changes (other than in
connection with a pool asset converting into cash in accordance with its
terms), such as additions or removals in connection with a prefunding or
revolving period and pool asset substitutions and repurchases (and purchase
rates, if applicable).
Notwithstanding the foregoing, such statement shall also include, with
respect to each Distribution Date, the related Record Date, Determination Date,
Distribution Date and the Accrual Period.
(b) The Trustee will make the Monthly Statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, other parties to this Agreement and
any other interested parties via the Trustee's Internet website. The Trustee's
Internet website shall initially be located at xxx.xxxxxx.xxx/xxx. The Trustee
shall have the right to change the way the monthly statements to
Certificateholders are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes.
The foregoing information and reports shall be prepared and determined
by the Trustee based on Mortgage Loan data and other information provided to the
Trustee by the Servicer, Swap Counterparty or any other third party required to
deliver information hereunder. In preparing or furnishing the foregoing
information, the Trustee shall be entitled to rely conclusively on the accuracy
of the information or data provided to the Trustee by the Servicer, Swap
Counterparty or any other third party required to deliver information and the
Trustee shall be entitled to rely conclusively upon and shall have no liability
for any errors in any such information.
As a condition to access the Trustee's internet website, the Trustee
may require registration and the acceptance of a disclaimer. The Trustee will
not be liable for the dissemination of information in accordance with this
Agreement.
(c) Within a reasonable period of time after the end of each calendar year,
the Trustee shall cause to be furnished each Person who at any time during the
calendar year was a Certificateholder, a statement containing the information
set forth in clauses (a)(i) and (a)(ii) of this Section 4.05 aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code from time to
time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holder of the Class R Certificate each Form 1066 and each Form
1066Q and shall respond promptly to written requests made not more frequently
than quarterly by any Holder of a Class R Certificate with respect to the
following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate assumptions used
in determining the projected principal and interest cash flows described
above;
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(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of the REMICs with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the REMICs;
and
(vii) Any taxes (including penalties and interest) imposed on the
REMICs, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or local
income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above shall be
provided by the Depositor pursuant to Section 8.12.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:
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Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ --------------------- ----------------
A-1 $25,000.00 $1.00 $439,858,000
A-2A $25,000.00 $1.00 $203,623,000
A-2B $25,000.00 $1.00 $ 74,342,000
A-2C $25,000.00 $1.00 $ 90,025,000
A-2D $25,000.00 $1.00 $ 34,202,000
M-1 $25,000.00 $1.00 $ 51,700,000
M-2 $25,000.00 $1.00 $ 40,150,000
M-3 $25,000.00 $1.00 $ 22,000,000
M-4 $25,000.00 $1.00 $ 20,350,000
M-5 $25,000.00 $1.00 $ 19,250,000
M-6 $25,000.00 $1.00 $ 18,150,000
B-1 $25,000.00 $1.00 $ 17,050,000
B-2 $25,000.00 $1.00 $ 15,950,000
B-3 $25,000.00 $1.00 $ 12,650,000
C (1) 1% (1)
R $ 100.00 N/A $ 100.00
P (2) 1% (2)
----------
(1) The Class C Certificates shall not have minimum dollar denominations as the
Certificate Principal Balance thereof shall vary over time as described
herein and shall be issued in a minimum percentage interest of 10% and an
aggregate percentage interest of 100%.
(2) The Class P Certificates shall not have minimum dollar denominations or
Certificate Principal Balance and shall be issued in a minimum percentage
interest of 10% and an aggregate percentage interest of 100%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Issuing Entity, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.09 hereof, a Certificate Register for the
Issuing Entity in which, subject to the provisions of subsections (b) and (c)
below and to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of Transfers and exchanges of
Certificates as herein provided. Upon surrender for registration of Transfer of
any Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.
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At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of a Trustee. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute and the Trustee shall
authenticate and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to a Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by a Trustee in accordance with such
Trustee's customary procedures.
(b) No Transfer of a Class C or Class P Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall (except with
respect to the initial transfer of a Class C or Class P Certificate by Xxxxxxx
Xxxxx & Co. or, in connection with the transfer of a Class C or Class P
Certificate to the indenture trustee under an Indenture pursuant to which NIM
Notes are issued) each certify to the Trustee in writing the facts surrounding
the Transfer in substantially the forms set forth in Exhibit F (the "Transferor
Certificate") and (i) deliver a letter in substantially the form of either
Exhibit G (the "Investment Letter") or Exhibit H (the "Rule 144A Letter") or
(ii) there shall be delivered to the Trustee an Opinion of Counsel addressed to
the Trustee that such Transfer may be made pursuant to an exemption from the
Securities Act, which Opinion of Counsel shall not be an expense of the
Depositor or the Trustee. The Depositor shall provide to any Holder of a Class C
or Class P Certificate and any prospective transferee designated by any such
Holder, information regarding the related Certificates and the Mortgage Loans
and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for Transfer of any such Certificate
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. The Trustee shall cooperate with
the Depositor in providing the Rule 144A information referenced in the preceding
sentence, including providing to the Depositor such information in the
possession of the Trustee regarding the Certificates, the Mortgage Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably request
to meet its obligation under the preceding sentence. Each Holder of a Class C or
Class P Certificate desiring to effect such Transfer shall, and does hereby
agree to, indemnify the Depositor and the Trustee against any liability that may
result if the Transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of a Certificate that is neither an ERISA Restricted Certificate nor
a Class R Certificate shall be registered unless the transferee provides the
Trustee with a representation that either (i) such transferee is not, and is not
acting for, on behalf of or with any assets of, an employee benefit plan or
other arrangement subject to Title I of ERISA or plan subject to Section 4975 of
the Code, or (ii) until the termination of the Swap Agreement, the acquisition
and holding of the Certificate are eligible for exemptive relief under any of
Section 408(b)(17) of ERISA or Section 4975(d)(20) of the Code, Prohibited
Transaction Class Exemption ("PTCE") 00-00, XXXX 00-0, XXXX 91-38, PTCE 95-60 or
PTCE 96-23.
No transfer of an ERISA Restricted Certificate or a Class R Certificate may
be made unless the Trustee has received (I) a representation that the transferee
is not an employee benefit plan or other
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arrangement subject to Title I of ERISA, a plan subject to Section 4975 of the
Code or a plan subject to any state, local, federal, non-U.S. or other law
substantively similar to the foregoing provisions of ERISA or the Code ("Similar
Law") (collectively, "Plan"), or is directly or indirectly acquiring the ERISA
Restricted Certificate or Class R Certificate for, on behalf of, or with any
assets of any such Plan, or (II) solely with respect to ERISA Restricted
Certificates, (A) if the Certificate has been the subject of an ERISA-Qualifying
Underwriting, a representation that such transferee is an insurance company that
is acquiring the Certificate with assets of an "insurance company general
account," as defined in Section V(e) of Prohibited Transaction Class Exemption
("PTCE") 95-60, and the acquisition and holding of the Certificate are covered
and exempt under Section I and III of PTCE 95-60, or (B) solely in the case of
any such Certificate that is a Definitive Certificate, an Opinion of Counsel
satisfactory to the Trustee and the Depositor, and upon which the Trustee shall
be entitled to rely, to the effect that the acquisition and holding of such
Certificate will not constitute or result or result in a nonexempt prohibited
transaction under Title I of ERISA or Section 4975 of the code, or a violation
of Similar Law, and will not subject the Trustee, the Servicer or the Depositor
to any obligation in addition to those expressly undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the Servicer or
the Depositor.
Except in the case of Definitive Certificates, the representations set
forth in the immediately two preceding paragraphs of this Subsection 5.02(b),
other than clause (II)(B) in the immediately preceding paragraph, shall be
deemed to have been made to the Trustee by the transferee's acceptance of a
Certificate (or the acceptance by a Certificate Owner of the beneficial interest
in any Class of Certificate). Notwithstanding any other provision herein to the
contrary, any purported transfer of a Certificate to or on behalf of a Plan
without the delivery to the Trustee of a representation or an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
The Trustee shall not be under any liability to any Person for any registration
of transfer of any Certificate that is in fact not permitted by this Section
5.02(b) nor shall the Trustee be under any liability for making any payments due
on such Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered by the Trustee in accordance with the foregoing
requirements. The Trustee shall be entitled, but not obligated, to recover from
any Holder of any Certificate that was in fact a Plan and that held such
Certificate in violation of this Section 5.02(b) all payments made on such
Certificate at and after the time it commenced such holding. Any such payments
so recovered shall be paid and delivered to the last preceding Holder of such
Certificate that is not a Plan.
(c) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions, and the rights
of each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Ownership Interest in a Class R Certificate may be purchased,
transferred or sold, directly or indirectly, except in accordance with the
provisions hereof. No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and no Transfer
of any Class R Certificate shall be registered unless, in addition to the
certificates required to be delivered to the Trustee under subparagraph (b)
above, the Trustee shall have been furnished with an affidavit (a "Transfer
Affidavit") of the initial owner or the proposed transferee in the form
attached hereto as Exhibit E-1 and an affidavit of the proposed transferor
in the form attached hereto as Exhibit E-2. In the absence of a contrary
instruction from the transferor of a Class R Certificate, declaration (11)
in Appendix A of the Transfer Affidavit may be left blank.
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If the transferor requests by written notice to the Trustee prior to the
date of the proposed transfer that one of the two other forms of
declaration (11) in Appendix A of the Transfer Affidavit be used, then the
requirements of this Section 5.02(c)(ii) shall not have been satisfied
unless the Transfer Affidavit includes such other form of declaration.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from any
other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Class R Certificate and (C) not to
Transfer its Ownership Interest in a Class R Certificate or to cause the
Transfer of an Ownership Interest in a Class R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee. Further, no transfer, sale or other disposition of any
Ownership Interest in a Class R Certificate may be made to a person who is
not a U.S. Person (within the meaning of section 7701 of the Code) unless
such person furnishes the transferor and the Trustee with a duly completed
and effective Internal Revenue Service Form W-8ECI (or any successor
thereto) and the Trustee consents to such transfer, sale or other
disposition in writing.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall become a Holder of
a Class R Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class R
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under
the provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit. The Trustee shall be
entitled but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at and
after either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Permitted
Transferee of such Certificate.
(v) At the option of the Holder of the Class R Certificate, the Class
SWR Interest, the Class LTR Interest, and the Residual Interest may be
severed and represented by separate certificates (with the separate
certificate that represents the Residual Interest also representing all
rights of the Class R Certificate to distributions attributable to an
interest rate on the Class R Certificate in excess of the REMIC
Pass-Through Rate); provided, however, that such separate certification may
not occur until the Trustee receives an Opinion of Counsel addressed to the
Trustee (at the expense of the Holder of the Class R Certificate) to the
effect that separate certification in the form and manner proposed would
not result in the imposition of federal tax upon the Issuing Entity or any
of the REMICs provided for herein or cause any of the REMICs provided for
herein to fail to qualify as a REMIC; and provided further, that the
provisions of Sections 5.02(b) and (c) will apply to each such separate
certificate as if the separate certificate were a Class R Certificate. If,
as evidenced by an Opinion of Counsel, it is necessary to preserve the
REMIC status of any of the REMICs provided for herein, the Class SWR
Interest, the Class LTR Interest, and the Residual Interest shall be
severed and represented by separate Certificates (with the separate
certificate that represents the Residual Interest also representing all
rights of the
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Class R Certificate to distributions attributable to an interest rate on
the Class R Certificate in excess of the REMIC Pass-Through Rate).
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee of an Opinion of Counsel addressed to the Trustee,
which Opinion of Counsel shall not be an expense of the Issuing Entity, the
Trustee or the Depositor, to the effect that the elimination of such
restrictions will not cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that the Certificates are outstanding or result
in the imposition of any tax on the Issuing Entity, any REMIC provided for
herein, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Class R Certificate hereby consents to any amendment
of this Agreement that, based on an Opinion of Counsel addressed to and
furnished to the Trustee, is reasonably necessary (a) to ensure that the record
ownership of, or any beneficial interest in, a Class R Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the Transfer of a Class R
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The transferor of the Class R Certificate shall notify the Trustee in
writing upon the transfer of the Class R Certificate.
(e) The preparation and delivery of all certificates, opinions and other
writings referred to above in this Section 5.02 shall not be an expense of the
Issuing Entity, the Depositor or the Trustee.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee such security or indemnity as may be required by the Trustee to save
the Trustee harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 5.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time. All Certificates
surrendered to the Trustee under the terms of this Section 5.03 shall be
canceled and destroyed by the Trustee in accordance with its standard procedures
without liability on its part.
SECTION 5.04. Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the Person in whose name
any Certificate is registered as the owner of such Certificate for the purpose
of receiving distributions as provided in this Agreement and for all other
purposes whatsoever, and neither the Trustee nor any agent of the Trustee shall
be affected by any notice to the contrary.
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
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their rights under this Agreement or under the Certificates, and (c) provide a
copy of the communication that such Certificateholders propose to transmit or if
the Depositor shall request such information in writing from the Trustee, then
the Trustee shall, within ten Business Days after the receipt of such request,
provide the Depositor or such Certificateholders at such recipients' expense the
most recent list of the Certificateholders of the Issuing Entity held by the
Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor and the Trustee may deal with the Depository and the
Depository Participants for all purposes (including the making of distributions)
as the authorized representative of the respective Certificate Owners of the
Book-Entry Certificates;
(c) registration of the Book-Entry Certificates may not be transferred by
the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.
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SECTION 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners and the Trustee shall give all such
notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Depositor is unable to locate a qualified successor, (b)
the Depositor, at its sole option, advises the Trustee that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall notify
all Certificate Owners of such Book-Entry Certificates, through the Depository,
of the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners of such Class requesting the same. The
Depositor shall provide the Trustee with an adequate inventory of certificates
to facilitate the issuance and transfer of Definitive Certificates. Upon
surrender to the Trustee of any such Certificates by the Depository, accompanied
by registration instructions from the Depository for registration, the Trustee
shall authenticate and deliver such Definitive Certificates. Neither the
Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
office at 00 Xxxxxxxxxx Xxxxxx, Mail Code EP-MN-WS3D, Xx. Xxxx, Xxxxxxxxx
00000-0000, Attention: Structured Finance/SURF 2006-BC4, as offices for such
purposes. The Trustee will give prompt written notice to the Certificateholders
of any change in such location of any such office or agency.
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.
The Depositor and the Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.
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SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.
Except as provided in the next paragraph, the Depositor and the Servicer
will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
Any Person into which the Depositor or Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or Servicer shall be a party, or any Person succeeding to the
business of the Depositor or Servicer, shall be the successor of the Depositor
or Servicer, as the case may be, hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
Xxxxxx Mae or Xxxxxxx Mac.
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.
None of the Depositor, the Servicer or any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Issuing Entity or the Certificateholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Issuing Entity and held harmless against any loss, liability
or expense, incurred in connection with the performance of their duties under
this agreement or incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense (i) incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or (ii) which does not constitute
an "unanticipated expense" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii). Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that either of the
Depositor or the Servicer may, in its discretion, undertake any such action that
it may deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and interests of the Servicer and the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be, expenses, costs and
liabilities of the Issuing Entity, and the Depositor and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account as provided by
Section 3.08 hereof.
SECTION 6.04. Limitation on Resignation of Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such
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determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Trustee. No such
resignation shall become effective until the Trustee or a successor servicer
reasonably acceptable to the Trustee is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Sections 7.01, 7.02 and 7.03 as obligations that survive the resignation or
termination of the Servicer.
The Trustee and the Depositor hereby specifically (i) consent to the pledge
and assignment by the Servicer of all the Servicer's right, title and interest
in, to and under this Agreement to the Servicing Rights Pledgee, for the benefit
of certain lenders, and (ii) provided that no Event of Default exists, agree
that upon delivery to the Trustee by the Servicing Rights Pledgee of a letter
signed by the Servicer whereby the Servicer shall resign as Servicer under this
Agreement, the Trustee shall appoint the Servicing Rights Pledgee or its
designee as successor servicer but only if such successor servicer meets the
requirements of a successor servicer under this Agreement and agrees to be
subject to the terms of this Agreement. If, pursuant to any provision hereof,
the duties of the Servicer are transferred to a successor servicer, the entire
amount of the Servicing Fee and other compensation payable to the Servicer
pursuant hereto shall thereafter be payable to such successor servicer.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy and bond shall, together, meet the requirements of
Xxxxxx Xxx or Xxxxxxx Mac, unless the Servicer has obtained a waiver of such
requirements from the Sponsor. The Servicer shall provide the Trustee, upon
request with reasonable notice, with copies of such policies and fidelity bond
or a certification from the insurance provider evidencing such policies and
fidelity bond. The Servicer may be deemed to have complied with this provision
if an Affiliate of the Servicer has such errors and omissions and fidelity bond
coverage and, by the terms of such insurance policy or fidelity bond, the
coverage afforded thereunder extends to the Servicer. In the event that any such
policy or bond ceases to be in effect, the Servicer shall use its reasonable
commercial efforts to obtain a comparable replacement policy or bond from an
insurer or issuer meeting the requirements set forth above as of the date of
such replacement. The Servicer shall ensure that any such policy or fidelity
bond shall by its terms not be cancelable without thirty (30) days' prior
written notice to the Trustee.
ARTICLE VII
DEFAULT; TERMINATION OF SERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
(i) any failure by the Servicer to make any Advance to deposit in the
Collection Account or the Certificate Account or remit to the Trustee any
payment (excluding a payment required to be made under Section 4.01 hereof)
required to be made under the terms of this Agreement, which failure shall
continue unremedied for three Business Days and, with respect to a payment
required to be made under Section 4.01 hereof, for one Business Day, after
the date on which written notice of such failure shall have been given to
the Servicer by the Trustee or the Depositor; or
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(ii) any failure by the Servicer to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Servicer contained in this Agreement or any representation or warranty
shall prove to be untrue, which failure or breach shall continue unremedied
for a period of sixty (60) days after the date on which written notice of
such failure shall have been given to the Servicer by the Trustee or the
Depositor; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of sixty (60)
consecutive days; or
(iv) consent by the Servicer to the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings of or relating to the Servicer or
all or substantially all of the property of the Servicer; or
(v) admission by the Servicer in writing of its inability to pay its
debts generally as they become due, file a petition to take advantage of,
or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) any failure by the Servicer to duly perform, within the required
time period, its obligations under Sections 3.17, 3.18 and 3.22 of this
Agreement, which failure continues unremedied for a period of ten (10) days
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Trustee or any
other party to this Agreement.
If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00 p.m. on the Servicer Remittance Date, the Trustee may,
or at the direction of the Holders of Certificates evidencing not less than 50%
of the Voting Rights evidenced by the Certificates shall, by notice in writing
to the Servicer (with a copy to each Rating Agency), terminate all of the rights
and obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer hereunder, subject to and in accordance with
Section 6.04 hereof, whether with respect to the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee as successor servicer. To the extent
the Event of Default resulted from the failure of the Servicer to make a
required Advance, the Trustee, in its capacity as successor servicer, shall
thereupon make any Advance described in Section 4.01 hereof subject to Section
3.04 hereof. The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Servicer to pay amounts owed pursuant to Article VIII. The Servicer
agrees to cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee of all cash amounts which shall at the time be
credited to the Collection Account, or thereafter be received with respect to
the Mortgage Loans. The Servicer and the Trustee shall promptly notify the
Rating Agencies of the occurrence of an Event of Default or an event that, with
notice, passage of time, other action or any combination of the
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foregoing would be an Event of Default, such notice to be provided in any event
within two Business Days of such occurrence.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder. Notwithstanding anything herein
to the contrary, upon termination of the Servicer hereunder, any liabilities of
the Servicer which accrued prior to such termination shall survive such
termination.
SECTION 7.02. [RESERVED]
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, as
applicable, the Trustee shall be entitled to all compensation and reimbursement
for costs and expenses that the Servicer would have been entitled to hereunder
if the Servicer had continued to act hereunder. Notwithstanding the foregoing,
if the Trustee has become the successor to the Servicer in accordance with
Section 7.01 hereof, the Trustee may, if it shall be unwilling to so act, or
shall, if it is prohibited by applicable law from making Advances pursuant to
Section 4.01 hereof or if it is otherwise unable to so act, appoint, or petition
a court of competent jurisdiction to appoint, any established mortgage loan
servicing institution the appointment of which successor does not adversely
affect the then current rating of the Certificates by each Rating Agency as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Any successor
servicer shall be an institution that is a Xxxxxx Xxx and Xxxxxxx Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000,
and that is willing to service the Mortgage Loans and executes and delivers to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer (other
than liabilities of the Servicer under Section 6.03 hereof incurred prior to
termination of the Servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; and provided further that each
Rating Agency acknowledges that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation. No appointment of a
successor to the Servicer hereunder shall be effective until the Trustee shall
have consented thereto, and written notice of such proposed appointment shall
have been provided by the Trustee to each Certificateholder. The Trustee shall
not resign as servicer until a successor servicer has been appointed and has
accepted such appointment. Pending appointment of a successor to the Servicer
hereunder, the Trustee, unless the Trustee is prohibited by law from so acting,
shall, subject to Section 3.04 hereof, act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Servicer hereunder.
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither the
Trustee nor any other successor servicer shall be deemed to be in default
hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or
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any portion thereof or any failure to perform, or any delay in performing, any
duties or responsibilities hereunder, in either case caused by the failure of
the Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of any Event of Default),
notwithstanding anything to the contrary above, the Trustee and the Depositor
hereby agree that within ten (10) Business Days or delivery to the Trustee by
the Servicing Rights Pledgee of a letter signed by the Servicer whereby the
Servicer shall resign as Servicer under this Agreement, the Servicing Rights
Pledgee or its designee shall be appointed as successor servicer (provided that
at the time of such appointment the Servicing Rights Pledgee or such designee
meets the requirements of a successor servicer set forth above) and the
Servicing Rights Pledgee agrees to be subject to the terms of this Agreement.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.
SECTION 7.04. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders and
to each Rating Agency.
(b) Within sixty (60) days after the occurrence of any Event of Default,
the Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the majority of the Certificateholders, or may,
proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, and subject
to the foregoing, shall deem most effectual to protect and enforce any of the
rights of the Trustee and the Certificateholders.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they conform on their
face, to the requirements of this Agreement. If any such instrument is found not
to conform, on its face, to the requirements of this Agreement in a material
manner, the Trustee shall notify the person providing such
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Agreement of such non-conformance, and if the instrument is not corrected to
conform to the requirements of this Agreement, the Trustee will provide notice
thereof to the Certificateholders and take such further action as directed by
the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct, its negligent failure to perform its obligations in
compliance with this Agreement, or any liability that would be imposed by reason
of its willful misfeasance or bad faith; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable, individually
or as Trustee, except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement that it reasonably believed in good faith to be genuine and
to have been duly executed by the proper authorities respecting any matters
arising hereunder;
(ii) the Trustee shall not be liable, individually or as Trustee, for
an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless the Trustee was negligent or
acted in bad faith or with willful misfeasance;
(iii) the Trustee shall not be liable, individually or as Trustee,
with respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Holders of each Class of
Certificates evidencing not less than 50% of the Voting Rights of such
Class relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Agreement; and
(iv) except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under
any Permitted Investment, the Trustee may and, subject to Section 8.01 and
Section 8.02, upon the request of the Holders of the Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of
appropriate proceedings.
The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall promptly remit to the Servicer upon receipt any such complaint,
claim, demand, notice or other document (i) which is delivered to the Trustee,
(ii) of which a Responsible Officer has actual knowledge and (iii) which
contains information sufficient to permit the Trustee to make a determination
that the real property to which such document related to is a Mortgaged
Property.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
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(i) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel of its choice and any advice
or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(iii) the Trustee shall not be liable, individually or as Trustee, for
any action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(iv) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing so to do by the Holders of
each Class of Certificates evidencing not less than 50% of the Voting
Rights of such Class;
(v) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys;
(vi) the Trustee shall not be required to expend its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such liability is not
assured to it;
(vii) the Trustee shall not be liable, individually or as Trustee, for
any loss on any investment of funds pursuant to this Agreement (other than
as issuer of the investment security or as provided for in Section
3.05(g));
(viii) the Trustee shall not be deemed to have knowledge of an Event
of Default until a Responsible Officer of the Trustee shall have received
written notice thereof;
(ix) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order
or direction of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; and
(x) if requested by the Servicer, the Trustee may appoint the Servicer
as the trustee's attorney-in-fact in order to carry out and perform certain
activities that are necessary or appropriate for the servicing and
administration of the Mortgage Loans pursuant to this Agreement. Such
appointment shall be evidenced by a power of attorney in such form as may
be agreed to by the Trustee and the Servicer. The Trustee shall have no
liability for any action or inaction of the Servicer in connection with
such power of attorney and the Trustee shall be
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indemnified by the Servicer for all liabilities, costs and expenses
incurred by the Trustee in connection with the Servicer's use or misuse of
such powers of attorney.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.
(c) [Reserved]
SECTION 8.03. Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Mortgage Loan or related
document other than with respect to the Trustee's execution and authentication
of the Certificates. The Trustee shall not be accountable for the use or
application by the Depositor or the Servicer of any funds paid to the Depositor
or the Servicer in respect of the Mortgage Loans or deposited in or withdrawn
from the Collection Account or Certificate Account by the Depositor or the
Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights as it would have if it were not the
Trustee.
SECTION 8.05. Trustee's Fees.
The Trustee shall be entitled to earnings on or investment income with
respect to funds in or credited to the Certificate Account.
SECTION 8.06. Indemnification of Trustee; Expenses.
(a) The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Issuing Entity for any
loss, liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor and the Holders written notice thereof promptly after the Trustee
shall have knowledge thereof; provided that failure to so notify shall not
relieve the Issuing Entity of the obligation to indemnify the Trustee;
however, any reasonable delay by the Trustee to provide written notice to
the Depositor and the Holders promptly after the Trustee shall have
obtained knowledge of a claim shall not relieve the Issuing Entity of the
obligation to indemnify the Trustee under this Section 8.06;
(ii) while maintaining control over its own defense, the Trustee shall
cooperate and consult fully with the Depositor in preparing such defense;
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(iii) notwithstanding anything to the contrary in this Section 8.06,
the Issuing Entity shall not be liable for settlement of any such claim by
the Trustee entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld; and
(iv) any such loss, liability or expense to be indemnified by the
Issuing Entity must constitute an "unanticipated expense" of the Issuing
Entity within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii).
The provisions of this Section 8.06 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
(b) The Trustee shall be entitled to all reasonable expenses, disbursements
and advancements incurred or made by the Trustee in accordance with this
Agreement (including fees and expenses of its counsel and all persons not
regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).
(c) The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $300,000, excluding any Servicing Transfer Costs and any
auction expenses incurred by the Trustee in connection with Section 9.01(a)(i),
in the aggregate in any calendar year; provided, however, that such cap shall
apply only if NIM Notes have been issued and are outstanding and shall cease to
apply after the date on which any NIM Notes are paid in full. Any amounts not in
excess of this cap may be withdrawn by the Trustee from the Certificate Account
at any time.
(d) The Trustee shall be further indemnified by the Issuing Entity for and
held harmless against, any loss, liability or expense arising out of, or in
connection with, the provisions set forth in the last paragraph of Section 2.01
hereof, including, without limitation, all costs, liabilities and expenses
(including reasonably legal fees and expenses) of investigating and defending
itself against any claim, action or proceeding, pending or threatened, relating
to the provisions of such paragraph.
SECTION 8.07. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers having a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and with a credit rating that would
not cause any of the Rating Agencies to reduce their respective ratings of any
Class of Certificates below the ratings issued on the Closing Date (or having
provided such security from time to time as is sufficient to avoid such
reduction). If such corporation or association publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 8.07
the combined capital and surplus of such corporation or association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 8.07, the Trustee
shall resign immediately in the manner and with the effect specified in Section
8.08 hereof. The corporation or national banking association serving as Trustee
may have normal banking and trust relationships with the Depositor and its
Affiliates; provided, however, that such corporation cannot be an Affiliate of
the Servicer other than the Trustee in its role as successor to the Servicer.
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SECTION 8.08. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by (1) giving written notice of resignation to the Depositor and by
mailing notice of resignation by first class mail, postage prepaid, to the
Certificateholders at their addresses appearing on the Certificate Register and
each Rating Agency, not less than sixty (60) days before the date specified in
such notice when, subject to Section 8.09, such resignation is to take effect,
and (2) acceptance of appointment by a successor trustee in accordance with
Section 8.09 and meeting the qualifications set forth in Section 8.07. If no
successor trustee shall have been so appointed and have accepted appointment
within thirty (30) days after the giving of such notice or resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Issuing Entity by any state in
which the Trustee or the Issuing Entity is located, (B) the imposition of such
tax would be avoided by the appointment of a different trustee and (C) the
Trustee fails to indemnify the Issuing Entity against such tax, then the
Depositor may remove the Trustee and shall promptly appoint a successor trustee
by written instrument, in triplicate, one copy of which instrument shall be
delivered to the Trustee, one copy of which shall be delivered to the Servicer
and one copy of which shall be delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates upon failure of the Trustee to perform its obligations hereunder
may at any time remove the Trustee and the Depositor shall appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered by the successor Trustee to the Servicer, one
complete set to the Trustee so removed and one complete set to the successor so
appointed. Notice of any removal of the Trustee shall be given to each Rating
Agency by the Successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.
SECTION 8.09. Successor Trustee.
Any successor trustee appointed as provided in Section 8.08 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
and the Servicer an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein.
No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.09, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If
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the Depositor fails to mail such notice within ten (10) days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Depositor.
SECTION 8.10. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.11, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. Any such
co-trustee or separate trustee shall be subject to the written approval of the
Servicer. The Trustee shall not be liable for the actions of any co-trustee
appointed at the request of the Trustee provided that such co-trustee has been
appointed with due care. If the Servicer shall not have joined in such
appointment within fifteen (15) days after the receipt by it of a request to do
so, or in the case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 8.07 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 8.09.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee, except for the obligation of the Trustee under this
Agreement to advance funds on behalf of the Servicer, shall be conferred or
imposed upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Fund or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
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(ii) No trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the Trustee
its agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.12. Tax Matters.
(a) It is intended that each of the REMICs provided for herein shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such REMIC to qualify as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. It is also intended
that each of the grantor trusts provided for in Section 2.07 hereof shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such grantor trust to qualify as, a grantor trust under the
provisions of Subpart E, Part I of Subchapter J of the Code. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is hereby appointed to act as agent) on behalf of each of the REMICs
provided for herein and that in such capacity it shall: (a) prepare and file, or
cause to be prepared and filed, in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066 or any successor form adopted by
the Internal Revenue Service) and prepare and file or cause to be prepared and
filed with the Internal Revenue Service and applicable state or local tax
authorities income tax or information returns for each taxable year with respect
to each of the REMICs and grantor trusts provided for herein, containing such
information and at the times and in the manner as may be required by the Code or
state or local tax laws, regulations, or rules, and furnish or cause to be
furnished to Certificateholders the schedules, statements or information at such
times and in such manner as may be required thereby; (b) within thirty (30) days
of the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name,
title, address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code for each of
the REMICs provided for herein; (c) make or cause to be made elections, on
behalf of each of the REMICs provided for herein to be treated as a REMIC on the
federal tax return of such REMICs for their first taxable years (and, if
necessary, under applicable state law); (d) prepare and forward, or cause to be
prepared and forwarded, to the Certificateholders and to the Internal Revenue
Service and, if necessary, state tax authorities, all information returns and
reports as and when required to be provided to them in accordance with the REMIC
Provisions or other applicable tax
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law, including without limitation, the calculation of any original issue
discount using the Prepayment Assumption; (e) provide information necessary for
the computation of tax imposed on the transfer of a Class R Certificate to a
Person that is not a Permitted Transferee, or an agent (including a broker,
nominee or other middleman) of a Person that is not a Permitted Transferee, or a
pass-through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct the affairs of each of the REMICs
and grantor trusts provided for herein at all times that any Certificates are
outstanding so as to maintain the status of each of the REMICs provided for
herein as a REMIC under the REMIC Provisions and the status of each of the
grantor trusts provided for herein as a grantor trust under Subpart E, Part I of
Subchapter J of the Code; (g) not knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC status of
any of the REMICs provided for herein or result in the imposition of tax upon
any such REMIC; (h) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the grantor trust status
under Subpart E, Part I of Subchapter J of the Code of any of the grantor trusts
provided for herein or result in the imposition of tax upon any such grantor
trust; (i) pay, from the sources specified in the last paragraph of this Section
8.12(a), the amount of any federal, state and local taxes, including prohibited
transaction taxes as described below, imposed on each of the REMICs provided for
herein prior to the termination of the Trust Fund when and as the same shall be
due and payable (but such obligation shall not prevent the Trustee or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Trustee from withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings); (j) sign or cause to be signed
federal, state or local income tax or information returns; (k) maintain records
relating to each of the REMICs and grantor trusts provided for herein, including
but not limited to the income, expenses, assets and liabilities of each of the
REMICs and grantor trusts provided for herein, and the fair market value and
adjusted basis of the Trust Fund property determined at such intervals as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information; and (l) as and when necessary and
appropriate, represent each of the REMICs and grantor trusts provided for herein
in any administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative adjustment
as to any taxable year of any of the REMICs provided for herein, enter into
settlement agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any of the REMICs provided for herein,
and otherwise act on behalf of each of the REMICs provided for herein in
relation to any tax matter involving any of such REMICs or any controversy
involving the Trust Fund.
In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within ten
(10) days after the Closing Date all information or data that the Trustee
requests in writing and determines to be relevant for tax purposes to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby agrees to indemnify the Trustee for any losses, liabilities, damages,
claims or expenses of the Trustee arising from any errors or miscalculations of
the Trustee that result from any failure of the Depositor to provide, or to
cause to be provided, accurate information or data to the Trustee on a timely
basis.
In the event that any tax is imposed on "prohibited transactions" of any of
the REMICs provided for herein as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of any of such REMICs as defined in
Section 860G(c) of the Code, on any contribution to the Trust Fund after the
Startup Day pursuant to Section 860G(d) of the Code, or any other tax is
imposed, if not paid as otherwise provided for herein, such tax shall be paid by
(i) the Trustee, if any such other tax arises out of
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or results from a breach by the Trustee of any of its obligations under this
Agreement or as a result of the location of the Trustee, (ii) any party hereto
(other than the Trustee) to the extent any such other tax arises out of or
results from a breach by such other party of any of its obligations under this
Agreement or as a result of the location of such other party or (iii) in all
other cases, or in the event that any liable party here fails to honor its
obligations under the preceding clauses (i) or (ii), any such tax will be paid
first with amounts (other than amounts derived by the Issuing Entity from a
payment on any Cap Contract or amounts received by the Supplemental Interest
Trust as payments on the Swap Agreement) otherwise to be distributed to the
Class R Certificateholders (pro rata) pursuant to Section 4.04, and second with
amounts (other than amounts derived by the Issuing Entity from a payment on any
Cap Contract or amounts received by the Supplemental Interest Trust as payments
on the Swap Agreement) otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class C
Certificates (pro rata), second, to the Class B-3 Certificates (pro rata),
third, to the Class B-2 Certificates (pro rata), fourth, to the Class B-1
Certificates (pro rata), fifth, to the Class M-6 Certificates (pro rata), sixth,
to the Class M-5 Certificates (pro rata), seventh, to the Class M-4 Certificates
(pro rata), eighth, to the Class M-3 Certificates (pro rata), ninth, to the
Class M-2 Certificates (pro rata), tenth, to the Class M-1 Certificates (pro
rata) and eleventh, to the Class A Certificates (pro rata). Notwithstanding
anything to the contrary contained herein, to the extent that such tax is
payable by the Class R Certificate, the Trustee is hereby authorized pursuant to
such instruction to retain on any Distribution Date, from the Holders of the
Class R Certificate (and, if necessary, from the Holders of all other
Certificates in the priority specified in the preceding sentence), funds
otherwise distributable to such Holders in an amount sufficient to pay such tax.
The Trustee agrees to promptly notify in writing the party liable for any such
tax of the amount thereof and the due date for the payment thereof.
(b) Each of the Depositor, the Servicer and the Trustee agrees not to
knowingly or intentionally take any action or omit to take any action that would
cause the termination of the REMIC status of any of the REMICs provided for
herein or result in the imposition of a tax upon any of the REMICs provided for
herein.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.
(a) Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earliest of (i) the successful completion of the
auction referred to in Section 9.01(b), (ii) the exercise by the Servicer of the
Clean Up Call on any Distribution Date on or after the Clean Up Call Date and
(iii) the later of (x) the maturity or other liquidation (or any Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (y) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor of
the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States
to the Court of St. James's, living on the date hereof and (ii) the Latest
Possible Maturity Date.
(b) (i) Any termination pursuant to Section 9.01(a)(i) shall be effected by
the auction by the Trustee of all of the Mortgage Loans and REO Properties via a
solicitation of bids in accordance with the auction procedures set forth in
Exhibit N. The Trustee shall accept the highest such bid, provided that such bid
equals or exceeds the amount described in the definition of "Auction Termination
Price." Any sale pursuant to such auction process must occur no earlier than the
second day of the calendar month that includes the Distribution Date on which
the proceeds of such sale will be distributed to the Certificateholders.
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(ii) If no sale under Section 9.01(a)(i) occurs, the Servicer may, at
its option, terminate the Trust Fund on any Distribution Date by purchasing all
of the Mortgage Loans and REO Properties at the price equal to the Clean Up Call
Price.
Notwithstanding anything to the contrary herein, the Auction Termination
Amount received by the Trustee upon the completion of a successful auction or
the Clean Up Call Price paid by the Servicer shall be deposited by the Trustee
directly into the Certificate Account promptly upon receipt of such amount by
the Trustee. Any Clean Up Call Price to be paid by the Servicer shall be paid by
the Servicer to the Trustee for deposit into the Certificate Account.
Notwithstanding anything herein to the contrary, only an amount equal to the
Auction Termination Price or the Clean Up Call Price, reduced in each case by
the portion thereof consisting of any Swap Termination Payment (such portion,
the "Swap Optional Termination Payment"), shall be made available for
distribution to the Certificates. The Swap Optional Termination Payment shall be
withdrawn by the Trustee from the Certificate Account and remitted to the
Supplemental Interest Trust for payment to the Swap Counterparty. The Swap
Optional Termination Payment shall not be part of any REMIC and shall not be
paid into any account which is part of any REMIC.
(c) If the Trustee receives a bid meeting the conditions specified in
Section 9.01(b)(i) or there is a Clean Up Call pursuant to Section 9.01(b)(ii),
then the Trustee's written acceptance of such bid shall constitute a plan of
complete liquidation within the meaning of Section 860F of the Code, and the
Trustee shall release to the winning bidder of the auction or the Servicer
pursuant to the Clean Up Call, upon the Trustee's receipt of the Auction
Termination Price or the Clean Up Call Price and the distribution by the Trustee
of such amounts in accordance with Section 4.04 hereof, the Mortgage Files
pertaining to the Mortgage Loans being purchased and take such other actions as
the winning bidder or such purchaser may reasonably request to effect the
transfer of the Mortgage Loans to the winning bidder or such purchaser.
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall remit to the Trustee for deposit in the Certificate Account
all amounts then on deposit in the Collection Account (less amounts permitted to
be withdrawn by the Servicer pursuant to Section 3.08), which deposit shall be
deemed to have occurred immediately preceding such purchase.
Any purchase shall be accomplished by deposit into the Certificate Account
of the Auction Termination Amount paid by the winning bidder if an Auction
Termination has occurred or the Clean Up Call Price in the event the Servicer
exercises a Clean Up Call and only following the delivery of an Opinion of
Counsel in form and substance acceptable to the Trustee that such termination is
a "Qualified Liquidation" under Section 860F of the Code.
(d) The right of the Depositor to direct the Trustee to effect an Auction
Termination or of the Servicer to effect a Clean Up Call pursuant to clause
(a)(i) or (a)(ii) above shall be conditioned upon the aggregate Stated Principal
Balance of the Mortgage Loans, at the time of any such repurchase, aggregating
ten percent (10%) or less of the Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.
(e) In the event that the Trustee is unable to complete a sale at the
Auction Termination, the Servicer may terminate the Trust Fund by purchasing all
the Mortgage Loans, and REO Properties at a price equal to the Clean Up Call
Price on any Distribution Date on or after the Clean Up Call Date, by exercising
a Clean Up Call.
(f) Notwithstanding anything to the contrary in this Article IX, no Auction
Termination or Clean Up Call shall be effected at any time during which NIM
Notes are outstanding if the Class C
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Certificateholder notifies the Trustee in writing that the Class C
Certificateholder does not consent to such proposed Auction Termination or Clean
Up Call. The parties hereto intend that the portion of any amount received upon
an Auction Termination or Clean Up Call that is attributable to clause (D) of
the definition of Auction Termination Price or clause (d) of the definition of
Clean Up Call Price and required to cover what would otherwise be a shortfall in
the amounts described in clause (D) of the definition of Auction Termination
Price or clause (d) of the definition of Clean Up Call Price shall be treated
for federal income tax purposes as having been paid by the winning bidder of the
auction or the Servicer, as applicable, directly to the Class C
Certificateholder (rather than having been paid to any REMIC) to induce the
Class C Certificateholder to consent to the Auction Termination or Clean Up
Call, as applicable.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder or (ii) the Trustee
determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Trustee shall notify the Certificateholders
within seven (7) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made
on the immediately following Distribution Date. Any final distribution made
pursuant to the immediately preceding sentence will be made only upon
presentation and surrender of the Certificates at the office of the Trustee
specified in such notice. If the Trustee is able to terminate the Trust Fund
pursuant to Section 9.01(a)(i), or if the Servicer conducts a Clean Up Call and
terminates the Trust Fund pursuant to Section 9.01(a)(ii) or 9.01(e), at least
ten (10) days prior to the date notice is to be mailed to the affected
Certificateholders, the Trustee shall notify the Depositor and the Servicer of
the date such electing party intends to terminate the Trust Fund and of the
applicable repurchase price of the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed not earlier than the 10th day and no
later than the 15th day of the month immediately preceding the month of such
final distribution. Any such notice shall specify (a) the Distribution Date upon
which final distribution on the Certificates will be made upon presentation and
surrender of Certificates at the office therein designated, (b) the location of
the office or agency at which such presentation and surrender must be made, and
(c) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Trustee will give such notice
to each Rating Agency at the time such notice is given to Certificateholders.
In the event such notice is given, the Servicer shall cause all funds in
the Collection Account to be deposited in the Certificate Account on the
Business Day prior to the applicable Distribution Date in an amount equal to the
final distribution in respect of the Certificates. Upon such final deposit with
respect to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the Trustee the Mortgage
Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation
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and receive the final distribution with respect thereto. If within six months
after the second notice all the applicable Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholder
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholder of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Trustee is able to effect an Auction Termination or
the Servicer conducts a Clean Up Call as provided in Section 9.01, the Trust
Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee has been supplied with an Opinion of Counsel
addressed to the Trustee, at the expense of the Servicer to the effect that the
failure of the Issuing Entity to comply with the requirements of this Section
9.03 will not (i) result in the imposition of taxes on "prohibited transactions"
of any of the REMICs provided for herein as defined in section 860F of the Code,
or (ii) cause any of the REMICs provided for herein to fail to qualify as a
REMIC at any time that any Certificates are outstanding:
(i) The Depositor shall establish a 90-day liquidation period and
notify the Trustee thereof, which shall in turn specify the first day of
such period in a statement attached to the final tax returns of each of the
REMICs provided for herein pursuant to Treasury Regulation Section
1.860F-1. The Depositor shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations thereunder,
as evidenced by an Opinion of Counsel obtained at the expense of the
Issuing Entity;
(ii) During such 90-day liquidation period, and at or prior to the
time of making the final payment on the Certificates, the Depositor as
agent of the Trustee shall sell all of the assets of the Trust Fund for
cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholder all cash on hand
(other than cash retained to meet outstanding claims known to the Trustee),
and the Trust Fund shall terminate at that time, whereupon the Trustee
shall have no further duties or obligations with respect to sums
distributed or credited to the Class R Certificateholder.
(b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to adopt and sign a
plan of complete liquidation prepared and delivered to it by the Depositor upon
the written request of the Depositor, and the receipt of Opinion of Counsel
referred to in Section 9.03(a)(i) and to take such other action in connection
therewith as may be reasonably requested by the Depositor.
(d) Notwithstanding any other terms of this Agreement, prior to termination
of the Trust Fund, the Servicer may prepare a reconciliation of all Advances and
Servicing Advances made by it for which it has not been reimbursed and a
reasonable estimate of all additional Servicing Advances and other costs for
which it would be entitled to be reimbursed if the Trust Fund were not being
terminated,
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including without limitation, any Servicing Advances and other costs arising
under Section 6.03, and the Servicer may recover these Advances, Servicing
Advances and estimated Servicing Advances and other costs from the Collection
Account (to the extent that such recovery of Servicing Advances, estimated
Servicing Advances and other costs constitutes "unanticipated expenses" within
the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).
(e) Notwithstanding any other terms of this Agreement, unless the Servicer
previously has notified the Trustee that it has entered into a servicing
agreement for the servicing after the termination date of the Trust Fund assets,
at least twenty (20) days prior to any termination of the Trust Fund, the
Depositor shall notify the Servicer in writing to transfer the assets of the
Trust Fund as of the termination date to the person specified in the notice, or
if such person is not then known, to continue servicing the assets until the
date that is twenty (20) days after the termination date and on the termination
date, the Depositor shall notify the Servicer of the person to whom the assets
should be transferred on that date. In the latter event the Servicer shall be
entitled to recover its servicing fee and any advances made for the interim
servicing period from the collections on the assets which have been purchased
from the Trust and the new owner of the assets, and the agreements for the new
owner to obtain ownership of the assets of the Trust Fund shall so provide.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
(i) To cure any ambiguity or correct any mistake,
(ii) To correct, modify or supplement any provision therein which may
be inconsistent with any other provision herein,
(iii) To add any other provisions with respect to matters or questions
arising under this Agreement, or
(iv) To modify, alter, amend, add to or rescind any of the terms or
provisions contained in this Agreement, provided, however, that, in the
case of clauses (iii) and (iv), such amendment will not, as evidenced by an
Opinion of Counsel addressed to the Trustee to such effect, adversely
affect in any material respect the interests of any Holder; provided,
further, however, that such amendment will be deemed to not adversely
affect in any material respect the interest of any Holder if the Person
requesting such amendment obtains a letter from each Rating Agency stating
that such amendment will not result in a reduction or withdrawal of its
rating of any Class of the Certificates, it being understood and agreed
that any such letter in and of itself will not represent a determination as
to the materiality of any such amendment and will represent a determination
only as to the credit issues affecting any such rating. In addition, this
Agreement may be amended from time to time by the Depositor, the Servicer
and the Trustee without the consent of any of the Certificateholders and
without delivery of an Opinion of Counsel to comply with the provisions of
Regulation AB.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the
140
qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel
addressed to the Trustee, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the Trustee
or the Trust Fund, to the effect that such action is necessary or appropriate to
maintain such qualification or to avoid or minimize the risk of the imposition
of such a tax.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Trustee and the Holders of the Certificates affected thereby
evidencing not less than 66 2/3% of the Voting Rights, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing 66
2/3% or more of the Voting Rights of such Class or (iii) reduce the aforesaid
percentages of Certificates the Holders of which are required to consent to any
such amendment without the consent of the Holders of all such Certificates then
outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee shall
not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel addressed to the Trustee, which opinion shall be
an expense of the party requesting such amendment but in any case shall not be
an expense of the Trustee or the Trust Fund, to the effect that such amendment
is permitted hereunder and will not cause the imposition of any tax on the Trust
Fund, any of the REMICs provided for herein or the Certificateholders or cause
any of the REMICs provided for herein to fail to qualify as a REMIC at any time
that any Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder and each Rating
Agency.
It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all conditions precedent for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder,
the Cap Contract Counterparty or the Swap Counterparty or (B) the conclusion set
forth in the immediately preceding clause (A) is not required to be reached
pursuant to this Section 10.01.
The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.
141
The Trustee shall not enter into any amendment to this Agreement that would
have a materially adverse effect on the Swap Counterparty or the Cap Contract
Counterparty without first obtaining the consent of the Swap Counterparty or the
Cap Contract Counterparty, respectively.
SECTION 10.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency with respect to each of the following of which a Responsible
Officer of the Trustee has written notice or actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
142
(iii) The resignation or termination of the Trustee or the Servicer
and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02 and 2.03;
(v) The final payment to Certificateholders; and
(vi) Any change in the location of the Certificate Account or the
Collection Account.
The Trustee shall promptly furnish or make available to each Rating Agency
copies of the following upon its receipt thereof:
(vii) Each report to Certificateholders described in Section 4.05;
(viii) Each annual statement as to compliance described in Section
3.17; and
(ix) Each annual independent public accountants' servicing report
described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor, Xxxxxxx Xxxxx Mortgage Investors, Inc., 000 Xxxxx Xxxxxx, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Trustee, U.S. Bank National Association, 00
Xxxxxxxxxx Xxxxxx, Mail Code EP-MN-WS3D, St. Xxxx, Minnesota 55107-2292,
Attention: Structured Finance/SURF Series 2006-BC4; (c) in the case of the
Rating Agencies, (i) Fitch, Inc. Xxx Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Surveillance Group, (ii) Standard and Poor's Ratings
Services, a division of the McGraw Hill Companies, Inc., 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, (iii) Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000; (d) in the case of the Servicer, Wilshire Credit
Corporation, 00000 X.X. Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx, Xxxxxx 00000,
Attention: VP Client Services, and in the case of any of the foregoing persons,
such other addresses as may hereafter be furnished by any such persons to the
other parties to this Agreement. Notices to Certificateholders shall be deemed
given when mailed, first class postage prepaid, to their respective addresses
appearing in the Certificate Register.
SECTION 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.
143
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Trustee, for sixty (60) days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 10.09. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the Depositor, subject to a reasonable confidentiality
agreement, or the Trustee during the Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Servicer relating to the Mortgage Loans, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants
selected by the Depositor or the Trustee and to discuss its affairs, finances
and accounts relating to the Mortgage Loans with its officers, employees,
agents, counsel and independent public accountants (and by this provision the
Servicer hereby authorizes such accountants to discuss with such representative
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested. Any out-of-pocket expense incident to the
exercise by the Depositor or the Trustee of any right under this Section 10.09
shall be borne by the party requesting such inspection; all other such expenses
shall be borne by the Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Issuing Entity, that the interests in
the Issuing Entity represented by the Certificates
144
shall be nonassessable for any reason whatsoever, and that the Certificates,
upon due authentication thereof by the Trustee pursuant to this Agreement, are
and shall be deemed fully paid.
SECTION 10.11. [RESERVED]
SECTION 10.12. [RESERVED]
SECTION 10.13. Third Party Rights.
The Cap Contract Counterparty shall be deemed a third party beneficiary of
this Agreement regarding provisions related to payments owed to the Cap Contract
Counterparty so long as any of the Cap Contracts remains in effect. The Swap
Counterparty is an express third party beneficiary of this Agreement and shall
have the right to enforce the provisions of this Agreement so long as the Swap
Agreement remains in effect.
SECTION 10.14. Assignment; Sales; Advance Facilities.
(a) The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility"), the documentation for
which complies with Section 10.14(e) below, under which (1) the Servicer assigns
or pledges its rights under this Agreement to be reimbursed for any or all
Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.
(b) If the Servicer enters into an Advance Facility, the Servicer and the
related Advance Financing Person shall deliver to the Trustee at the address set
forth in Section 10.05 hereof a written notice (an "Advance Facility Notice"),
stating (a) the identity of the Advance Financing Person and (b) the identity of
the Person (the "Servicer's Assignee") that will, subject to Section 10.14(c)
hereof, have the right to make withdrawals from the Collection Account pursuant
to Section 3.08(a) hereof to reimburse previously unreimbursed Advances and/or
Servicing Advances ("Advance Reimbursement Amounts"). Advance Reimbursement
Amounts (i) shall consist solely of amounts in respect of Advances and/or
Servicing Advances for which the Servicer would be permitted to reimburse itself
in accordance with Section 3.08 hereof, assuming the Servicer had made the
related Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of
amounts payable to a successor servicer in accordance with Section 3.05 hereof
to the extent permitted under Section 10.14(e) below.
145
(c) Notwithstanding the existence of an Advance Facility, the Servicer, on
behalf of the Advance Financing Person and the Servicer's Assignee, shall be
entitled to receive reimbursements of Advances and/or Servicing Advances in
accordance with Section 4.01 hereof, which entitlement may be terminated by the
Advance Financing Person pursuant to a written notice to the Trustee in the
manner set forth in Section 10.05 hereof. Upon receipt of such written notice,
the Servicer shall no longer be entitled to receive reimbursement for any
Advance Reimbursement Amounts and the Servicer's Assignee shall immediately have
the right to receive from the Collection Account all Advance Reimbursement
Amounts. Notwithstanding the foregoing, and for the avoidance of doubt, (i) the
Servicer and/or the Servicer's Assignee shall only be entitled to reimbursement
of Advance Reimbursement Amounts hereunder from withdrawals from the Collection
Account pursuant to Section 4.01 of this Agreement and shall not otherwise be
entitled to make withdrawals or receive amounts that shall be deposited in the
Distribution Account pursuant to Section 4.01 hereof, and (ii) none of the
Trustee or the Certificateholders shall have any right to, or otherwise be
entitled to, receive any Advance Reimbursement Amounts to which the Servicer or
Servicer's Assignee, as applicable, shall be entitled pursuant to Section 4.01
hereof. An Advance Facility may be terminated by the joint written direction of
the Servicer and the related Advance Financing Person. Written notice of such
termination shall be delivered to the Trustee in the manner set forth in Section
10.05 hereof. None of the Depositor or the Trustee shall, as a result of the
existence of any Advance Facility, have any additional duty or liability with
respect to the calculation or payment of any Advance Reimbursement Amount, nor,
as a result of the existence of any Advance Facility, shall the Depositor or the
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the Servicer's Assignee. The Servicer shall indemnify the Depositor,
the Trustee, any successor servicer and the Issuing Entity for any claim, loss,
liability or damage resulting from any claim by the related Advance Financing
Person, except to the extent that such claim, loss, liability or damage resulted
from or arose out of negligence, recklessness or willful misconduct on the part
of the Depositor, the Trustee or any successor servicer, as the case may be, or
failure by the successor servicer or the Trustee, as the case may be, to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor servicer or the Trustee, as the case may be, and the
passage of any applicable cure or grace period, such that an Event of Default
under this Agreement occurs or such entity is subject to termination for cause
under this Agreement. The Servicer shall maintain and provide to any successor
servicer and, upon request, the Trustee a detailed accounting on a loan-by-loan
basis as to amounts advanced by, pledged or assigned to, and reimbursed to any
Advance Financing Person. The successor servicer shall be entitled to rely on
any such information provided by the predecessor Servicer, and the successor
servicer shall not be liable for any errors in such information.
(d) [Reserved]
(e) As between a predecessor Servicer and its Advance Financing Person, on
the one hand, and a successor servicer and its Advance Financing Person, if any,
on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis with
respect to each Mortgage Loan as to which an Advance and/or Servicing Advance
shall have been made and be outstanding shall be allocated on a "first-in, first
out" basis. In the event the Servicer's Assignee shall have received some or all
of an Advance Reimbursement Amount related to Advances and/or Servicing Advances
that were made by a Person other than such predecessor Servicer or its related
Advance Financing Person in error, then such Servicer's Assignee shall be
required to remit any portion of such Advance Reimbursement Amount to each
Person entitled to such portion of such Advance Reimbursement Amount. Without
limiting the generality of the foregoing, the Servicer shall remain entitled to
be reimbursed by the Advance Financing Person for all Advances and/or Servicing
Advances funded by the Servicer to the extent the related Advance Reimbursement
Amounts have not been assigned or pledged to such Advance Financing Person or
Servicer's Assignee.
146
(f) For purposes of any Officer's Certificate of the Servicer made pursuant
to Section 4.01, any Non-Recoverable Advance or Non-Recoverable Servicing
Advance referred to therein may have been made by such Servicer or any
predecessor Servicer. In making its determination that any Advance or Servicing
Advance theretofore made has become a Non-Recoverable Advance or Non-Recoverable
Servicing Advance, the Servicer shall apply the same criteria in making such
determination regardless of whether such Advance or Servicing Advance shall have
been made by the Servicer or any predecessor Servicer.
(g) Any amendment to this Section 10.14 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an Advance
Facility as described generally in this Section 10.14, including amendments to
add provisions relating to a successor servicer, may be entered into by the
Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 10.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. The parties
hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing
Advances financed by and/or pledged to an Advance Financing Person under any
Advance Facility are obligations owed to the Servicer payable only from the cash
flows and proceeds received under this Agreement for reimbursement of Advances
and/or Servicing Advances only to the extent provided herein, and the Trustee
and the Trust are not, as a result of the existence of any Advance Facility,
obligated or liable to repay any Advances and/or Servicing Advances financed by
the Advance Financing Person; (b) the Servicer will be responsible for remitting
to the Advance Financing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances funded by the Advance
Financing Person, subject to the provisions of this Agreement; and (c) the
Trustee shall not have any responsibility to track or monitor the administration
of the financing arrangement between the Servicer and any Advance Financing
Person.
147
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.,
as Depositor
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
WILSHIRE CREDIT CORPORATION,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
148
EXHIBIT A
FORMS OF OFFERED CERTIFICATES
[Intentionally Omitted]
X-0
XXXXXXX X-0
MORTGAGE LOAN SCHEDULE - MORTGAGE POOL
[Intentionally Omitted]
B-1-1
EXHIBIT B-2
MORTGAGE LOAN SCHEDULE - GROUP ONE MORTGAGE LOANS
[Intentionally Omitted]
B-2-1
EXHIBIT B-3
MORTGAGE LOAN SCHEDULE - GROUP TWO MORTGAGE LOANS
[Intentionally Omitted]
B-3-1
EXHIBIT C-1
[RESERVED]
C-1
EXHIBIT C-2
[RESERVED]
C-1
EXHIBIT D
FORM OF TRUSTEE CERTIFICATION
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Wilshire Credit Corporation
00000 X.X. Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Re: Pooling and Servicing Agreement, dated as of September 1, 2006, among
Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire Credit
Corporation, as servicer, and U.S. Bank National Association, as trustee,
relating to Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC4
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;
(ii) In connection with each Mortgage Loan as to which documentary evidence
of recording was not received on the Closing Date, it has received evidence of
such recording; and
(iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that the Mortgage Loan number and
the name of the Mortgagor in each Mortgage File conform to the respective
Mortgage Loan number and name listed on the Mortgage Loan Schedule and (ii) the
existence in each Mortgage File of each of the documents listed in subparagraphs
(i)(A) through (E), inclusive, of Section 2.01 in the Agreement and documents
listed in clause (F) to the extent the Trustee has received written notice of
the existence of such documents from the Depositor or the Sponsor. The Trustee
makes no representations or warranties as to the validity, legality,
recordability,
D-1
sufficiency, recordability, enforceability or genuineness of any of the
documents contained in each Mortgage Loan or the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
D-2
EXHIBIT E-1
FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
[DATE]
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC4
Ladies and Gentlemen:
We propose to purchase the Specialty Underwriting and Residential Finance
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-BC4, Class R
Certificate, described in the Prospectus Supplement, dated September 25, 2006,
and Prospectus, dated September 8, 2006.
1. We certify that (a) we are not a disqualified organization and (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as they became
due, (b) we intend, and believe that we will be able, to continue to pay our
debts as they become due in the future, (c) we understand that, as beneficial
owner of the Class R Certificate, we may incur tax liabilities in excess of any
cash flows generated by the Class R Certificate, and (d) we intend to pay any
taxes associated with holding the Class R Certificate as they become due and (e)
we will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of ours or another U.S. taxpayer.
3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:(1)
___ The Class R Certificate will be registered in our name.
___ The Class R Certificate will be held in the name of our nominee
____________, which is not a disqualified organization.
----------
(1) Check appropriate box and if necessary fill in the name of the Transferee's
nominee.
E-1-1
4. We certify that we are not an employee benefit plan or other arrangement
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), a plan subject to Section 4975 of the Code or a plan subject
to state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code (each, a "Plan"), and are not directly
or indirectly acquiring the Class R Certificate for, on behalf of or with any
assets of a Plan.
5. We certify that (i) we are a U.S. person or (ii) we will hold the Class
R Certificate in connection with the conduct of a trade or business within the
United States and have furnished the transferor and the Trustee with a duly
completed and effective Internal Revenue Service Form W-8ECI or successor form
at the time and in the manner required by the Code; for this purpose the term
"U.S. person" means a citizen or resident of the United States, a corporation,
or partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any State thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to United States federal income tax regardless
of the source of its income, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more such U.S. persons have the authority to control all substantial
decisions of the trust (or, to the extent provided in applicable Treasury
regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons). We agree that any breach by us of this
certification shall render the transfer of any interest in the Class R
Certificate to us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in us.
6. We agree that in the event that at some future time we wish to transfer
any interest in the Class R Certificate, we will transfer such interest in the
Class R Certificate only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in the Class R Certificate on
behalf of a disqualified organization, (ii) is a U.S. person or will hold the
Class R Certificate in connection with the conduct of a trade or business within
the United States and will furnish us and the Trustee with a duly completed and
effective Internal Revenue Service Form W-8ECI or successor form at the time and
in the manner required by the Code and (iii) has delivered to the Trustee a
letter in the form of this letter (including the affidavit appended hereto) and,
we will provide the Trustee a written statement substantially in the form of
Exhibit E-2 to the Agreement.
E-1-2
7. We hereby designate ___________________ as our fiduciary to act as the
tax matters person for each of the REMICs provided for in the Agreement.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted as of _________ __, 200_.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
E-1-3
APPENDIX A
Affidavit pursuant to (i) Section
860E(e)(4) of the Internal Revenue Code
of 1986, as amended, and (ii) certain
provisions of the Pooling and Servicing
Agreement
Under penalties of perjury, the undersigned declares that the following is true:
(1) He or she is an officer of __________________________________ (the
"Transferee"),
(2) the Transferee's Employer Identification number is _____________________,
(3) the Transferee is not a "disqualified organization" (as defined below), has
no plan or intention of becoming a disqualified organization, and is not
acquiring any of its interest in the Specialty Underwriting and Residential
Finance Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-BC4,
Class R Certificate on behalf of a disqualified organization or any other
entity,
(4) unless Xxxxxxx Xxxxx Mortgage Investors, Inc.("MLMI") has consented to the
transfer to the Transferee by executing the form of Consent affixed as
Appendix B to the Transferee's Letter to which this Certificate is affixed
as Appendix A, the Transferee is a "U.S. person" (as defined below),
(5) that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to continue to
pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class R
Certificate, it may incur tax liabilities in excess of any cash flows
generated by the Class R Certificate,
(9) the Transferee intends to pay any taxes associated with holding the Class R
Certificate as they become due,
(10) the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by Xxxxxxx Xxxxx Mortgage
Investors, Inc. (upon advice of counsel) to constitute a reasonable
arrangement to ensure that the Class R Certificate will not be owned
directly or indirectly by a disqualified organization, and
(11) IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the transfer
is not a direct or indirect transfer of the Class R Certificate to a
foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of the Transferee, and as to each of the
residual interests represented by the Class R Certificate, the present
value of the anticipated tax liabilities associated with holding such
residual interest does not exceed the sum of:
(A) the present value of any consideration given to the Transferee to
acquire such residual interest;
(B) the present value of the expected future distributions on such
residual interest; and
E-1-4
(C) the present value of the anticipated tax savings associated with
holding such residual interest as the related REMIC generates losses.
For purposes of this declaration, (i) the Transferee is assumed to pay tax
at a rate equal to the highest rate of tax specified in Section 11(b)(1) of
the Code, but the tax rate specified in Section 55(b)(1)(B) of the Code may
be used in lieu of the highest rate specified in Section 11(b)(1) of the
Code if the Transferee has been subject to the alternative minimum tax
under Section 55 of the Code in the preceding two years and will compute
its taxable income in the current taxable year using the alternative
minimum tax rate, and (ii) present values are computed using a discount
rate equal to the Federal short-term rate prescribed by Section 1274(d) of
the Code for the month of the transfer and the compounding period used by
the Transferee;]
[(11) (A) at the time of the transfer, and at the close of each of the
Transferee's two fiscal years preceding the Transferee's fiscal year of
transfer, the Transferee's gross assets for financial reporting purposes
exceed $100 million and its net assets for financial reporting purposes
exceed $10 million; and
(B) the Transferee is an eligible corporation as defined in Treasury
regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that any
subsequent transfer of the Class R Certificate will be to another eligible
corporation in a transaction that satisfies Treasury regulation Sections
1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii), 1.860E-1(c)(4)(iii) and
1.860E1(c)(5) and such transfer will not be a direct or indirect transfer
to a foreign permanent establishment (within the meaning of an applicable
income tax treaty) of a domestic corporation.
For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]
(12) The Transferee will not cause income from the Class R Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Transferee or another
U.S. taxpayer.
E-1-5
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust, (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).
_____________________________________
By:
---------------------------------
---------------------------------
Address of Investor for receipt of distribution:
_____________________________________
_____________________________________
Address of Investor for receipt of tax information:
_____________________________________
_____________________________________
(Corporate Seal)
Attest:
-----------------------------
, Secretary
--------------------------
E-1-6
Personally appeared before me the above-named ____________, known or proved to
me to be the same person who executed the foregoing instrument and to be the
____________ of the Investor, and acknowledged to me that he executed the same
as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ____ day of _______, 200_.
_____________________________________
Notary Public
County of ___________________________
State of ____________________________
My commission expires the ____________________________________ day of __________
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Dated:
------------------------------
E-1-7
EXHIBIT E-2
FORM OF TRANSFEROR'S AFFIDAVIT
[DATE]
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC4
Re: Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC4
_________________________________________(the "Transferor") has reviewed
the attached affidavit of __________________________________ (the "Transferee"),
and has no actual knowledge that such affidavit is not true, and has no reason
to believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to the Class R Certificate referred to in the attached affidavit. In
addition, the Transferor has conducted a reasonable investigation at the time of
the transfer and found that the Transferee had historically paid its debts as
they came due and found no significant evidence to indicate that the Transferee
will not continue to pay its debts as they become due.
Very truly yours,
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
E-2-1
EXHIBIT F
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS P AND CLASS C CERTIFICATES
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC4
Re: Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC4
Ladies and Gentlemen:
In connection with our disposition of the Class [__] Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act and (b) we have not offered or sold any Certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of September 1,
2006, among Xxxxxxx Xxxxx Mortgage, Inc., as depositor, Wilshire Credit
Corporation, as servicer, and U.S. Bank National Association, as trustee.
Very truly yours,
----------------------------------------
Name of Transferor
By:
------------------------------------
Name:
----------------------------------
Title
----------------------------------
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER
(ACCREDITED INVESTOR)
[DATE]
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC4
Re: Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC4
Ladies and Gentlemen:
______________________________(the "Purchaser") intends to purchase from
__________(the "Transferor") $________ by original principal balance (the
"Transferred Certificates") of Mortgage Loan Asset-Backed Certificates, Series
2006-BC4 (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of September 1, 2006 (the "Pooling and Servicing
Agreement"), among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor (the
"Depositor"), Wilshire Credit Corporation, as servicer (the "Servicer"), and
U.S. Bank National Association, as trustee (the "Trustee"). [THE PURCHASER
INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF_________________,
AS NOMINEE FOR ____________________.] All terms used and not otherwise defined
herein shall have the meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (1) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE
"1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT, DIRECTLY OR
INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH
TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO TRANSFER
OF THIS CERTIFICATE SHALL BE MADE UNLESS
G-1
THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE
TRUSTEE (A) AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B)
REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE
CERTIFICATES.
3. All Certificates other than ERISA Restricted Certificates and Class R
Certificates will bear a legend to the following effect:
UNTIL THE TERMINATION OF THE SWAP AGREEMENT, EACH TRANSFEREE OF THIS
CERTIFICATE SHALL BE DEEMED TO REPRESENT (OR IN THE CASE OF A DEFINITIVE
CERTIFICATE, SHALL REPRESENT) TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT,
AND IS NOT ACTING FOR, ON BEHALF OF OR WITH ANY ASSETS OF, ANY EMPLOYEE BENEFIT
PLAN OR OTHER ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR ANY PLAN SUBJECT TO SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR (B) THE
TRANSFEREE'S ACQUISITION AND HOLDING OF THIS CERTIFICATE IS COVERED BY AND
EXEMPT UNDER ANY OF SECTION 408(B)(17) OF ERISA OR SECTION 4975(D)(20) OF THE
CODE, PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 00-00, XXXX 00-0, XXXX
00-00, XXXX 00-00, XXXX 96-23, EACH AS AMENDED.
4. All ERISA Restricted Certificates will bear a legend to the following
effect:
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED (A) A REPRESENTATION FROM THE TRANSFEREE THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A
PLAN SUBJECT TO ANY STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
(COLLECTIVELY, A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE FOR, ON BEHALF OF OR WITH ANY ASSETS OF ANY SUCH PLAN, (B) IF THE
CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING, A
REPRESENTATION THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT IS ACQUIRING
THE CERTIFICATE WITH ASSETS OF AN "INSURANCE COMPANY GENERAL ACCOUNT," AS
DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE")
95-60, AND THE ACQUISITION AND HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT
UNDER SECTIONS I AND III OF PTCE 95-60, OR (C) SOLELY IN THE EVENT THE
CERTIFICATE IS A DEFINITIVE CERTIFICATE, AN OPINION OF COUNSEL SATISFACTORY TO
THE TRUSTEE, AND UPON WHICH THE TRUSTEE SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE ACQUISITION AND HOLDING OF THE CERTIFICATE WILL NOT CONSTITUTE OR
RESULT IN A NONEXEMPT PROHIBITED TRANSACTION UNDER TITLE I OF ERISA OR SECTION
4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW, AND WILL NOT SUBJECT THE
TRUSTEE, THE SERVICER OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO THOSE
EXPRESSLY UNDERTAKEN IN THE POOLING AND SERVICING AGREEMENT, WHICH OPINION OF
COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE SERVICER OR THE DEPOSITOR.
IF THE CERTIFICATE IS NOT A DEFINITIVE CERTIFICATE, THE TRANSFEREE IS DEEMED TO
HAVE MADE THE REPRESENTATION IN (A) OR (B) ABOVE.
G-2
5. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY]**/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
6. The Purchaser (a) is a substantial, sophisticated institutional investor
having such knowledge and experience in financial and business matters, and in
particular in such matters related to securities similar to the Certificates,
such that it is capable of evaluating the merits and risks of investment in the
Certificates, (b) is able to bear the economic risks of such an investment and
(c) is an "accredited investor" within the meaning of Rule 501 (a) promulgated
pursuant to the Securities Act.
7. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
8. Either (i) the Purchaser of a Certificate that is neither an ERISA
Restricted Certificate nor a Class R Certificate is not, and is not acting for,
on behalf of or with any assets of, an employee benefit plan or other
arrangement subject to Title I of ERISA or plan subject to Section 4975 of the
Code, or (ii) until the termination of the Swap Agreement, such Purchaser's
acquisition and holding of such Certificates are eligible for exemptive relief
under any of Section 408(b)(17) of ERISA or Section 4975(d)(20) of the Code,
Prohibited Transaction Class Exemption ("PTCE") 00-00, XXXX 00-0, XXXX 91-38,
PTCE 95-60 or XXXX 00-00
0. Xxx Xxxxxxxxx (X) is not an employee benefit plan or other arrangement
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), a plan subject to Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), or a plan subject to any state, local,
federal, non-U.S. or other law substantively similar to the foregoing provisions
of ERISA or the Code ("Similar Law") (collectively, "Plan"), and is not directly
or indirectly acquiring the Certificate for, on behalf of, or with any assets of
any such Plan, (B) if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, is an insurance company that is acquiring the
Certificate with assets of an "insurance company general account," as defined in
Section V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the
acquisition and holding of the Certificate are covered and exempt under Sections
I and III of PTCE 95-60, or (C) solely in the case of any such Certificate that
is a Definitive Certificate, will deliver herewith an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the acquisition and holding of the Certificate will not
constitute or result in a nonexempt prohibited transaction under Title I of
ERISA or Section 4975
----------
**/ Not required of a broker/dealer purchaser.
G-3
of the Code, or a violation of Similar Law, and will not subject the Trustee,
the Servicer or the Depositor to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement, which Opinion of Counsel
shall not be an expense of the Trustee, the Servicer or the Depositor.
10. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit G to the Pooling and Servicing Agreement.
11. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
G-4
EXHIBIT H
FORM OF RULE 144A INVESTMENT LETTER
(QUALIFIED INSTITUTIONAL BUYER)
[DATE]
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC4
Re: Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC4
Ladies and Gentlemen:
______________________________________(the "Purchaser") intends to purchase
from ______________ (the "Transferor") $_______ by original principal balance
(the "Transferred Certificates") of Mortgage Loan Asset-Backed Certificates,
Series 2006-BC4 (the "Certificates"), issued pursuant to a Pooling and Servicing
Agreement, dated as of September 1, 2006 (the "Pooling and Servicing
Agreement'), among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor (the
"Depositor"), Wilshire Credit Corporation, as servicer (the "Servicer"), and
U.S. Bank National Association, as trustee (the "Trustee"). [THE PURCHASER
INTENDS TO REGISTER THE TRANSFERRED CERTIFICATE IN THE NAME OF _________________
AS NOMINEE FOR __________________.] All terms used and not otherwise defined
herein shall have the meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act'), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d) solely in the case of a
Certificate other than an ERISA Restricted Certificate or Class R Certificate,
either (i) we are not, and are not acquiring the Certificate for, on behalf of
or with any assets of, any employee benefit plan or other arrangement subject to
Title I of ERISA or any plan subject to Section 4975 of the Code, or (ii) until
the termination of the Swap Agreement, our acquisition and holding of the
Certificate is covered by and exempt under any of Section 408(b)(17) of ERISA or
Section 4975(d)(20) of the Code, Prohibited Transaction Class Exemption ("PTCE")
00-00, XXXX 00-0, XXXX 91-38, PTCE 95-60, or PTCE 96-23, (e) we (A) are not an
employee benefit plan or other arrangement subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or a
plan subject to any state, local, federal,
H-1
non-U.S. or other law substantively similar to the foregoing provisions of ERISA
or the Code ("Similar Law") (collectively, "Plan"), and are not directly or
indirectly acquiring the Certificate for, on behalf of, or with any assets of
any such Plan, (B) if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, are an insurance company that is acquiring the
Certificate with assets of an "insurance company general account," as defined in
Section V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the
acquisition and holding of the Certificate are covered and exempt under Sections
I and III of PTCE 95-60, or (C) solely in the event the Certificate is a
Definitive Certificate, shall herewith deliver an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the acquisition and holding of the Certificate will not
constitute or result in a nonexempt prohibited transaction under Title I of
ERISA or Section 4975 of the Code, or a violation of Similar Law, and will not
subject the Trustee, the Servicer or the Depositor to any obligation in addition
to those expressly undertaken in the Pooling and Servicing Agreement, which
Opinion of Counsel shall not be an expense of the Trustee, the Servicer or the
Depositor, (f) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, and (g) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed one of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale of the Transferred Certificates to us is being made in
reliance on Rule 144A. We are acquiring the Transferred Certificates for our own
account or for resale pursuant to Rule 144A and further understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed by us, based upon certifications of such purchaser or
information we have in our possession, to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0
XXXXX 0
XXXXXXXXX XXXXXXXXXXXXX BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $____________* in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by
Federal, State or territorial banking commission or similar
official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a
copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which is
supervised and examined by a State or Federal authority
having supervision over such institution or is a foreign
savings and loan association or equivalent institution and
(b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a
copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as
amended.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by
insurance companies and which is
----------
* Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
H-3
subject to supervision by the insurance commissioner or a
similar official or agency of the State, territory or the
District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of
1974, as amended.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940, as
amended.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301 (c) or (d) of the Small
Business Investment Act of 1958, as amended.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
H-4
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0
XXXXX 0
XXXXXXXXX XXXXXXXXXXXXX BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (1) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $_______________securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $_______ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.
H-6
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
IF AN ADVISER:
----------------------------------------
Print Name of Buyer
Date:
----------------------------------
H-7
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: U.S. Bank National Association
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Document Custody Services/SURF 2006-BC4
With a Copy to:
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC4
Re: Pooling and Servicing Agreement, dated as of September 1, 2006, among
Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire Credit
Corporation, as servicer, and U.S. Bank National Association, as trustee,
relating to Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC4
In connection with the administration of the Mortgage Loans held by you, as
Trustee, pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt, of the Mortgage File for
the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number: __________________________________________________________
Mortgagor Name, Address & Zip Code: ____________________________________________
Reason for Requesting Documents (check one): ___________________________________
_______1. Mortgage Paid in Full
_______2. Foreclosure
_______3. Substitution
_______4. Other Liquidation (Repurchases, etc.)
_______5. Nonliquidation
_______6. Other Reason: ________________________________________________________
Address to which the Trustee should deliver the Mortgage File:
I-1
By:
------------------------------------
(authorized signer)
Address:
-------------------------------
Date:
----------------------------------
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
Trustee
U.S. Bank National Association
Please acknowledge the execution of the above request by your signature and date
below:
------------------------------------ ----------------------------------------
Signature Date
Documents returned to Trustee:
------------------------------------ ----------------------------------------
Trustee Date
I-2
EXHIBIT J
FORM OF POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
WILSHIRE CREDIT CORPORATION
00000 X.X. Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Attn: _________________________________
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that U.S. Bank National Association, having
its principal place of business at 00 Xxxxxxxxxx Xxxxxx, Mail Code EP-MN-WS3D,
Xx. Xxxx, Xxxxxxxxx 00000-0000, as Trustee (the "Trustee") pursuant to that
Pooling and Servicing Agreement among Xxxxxxx Xxxxx Mortgage Investors, Inc.
(the "Depositor"), Wilshire Credit Corporation (the "Servicer"), and the
Trustee, dated as of September 1, 2006 (the "Pooling and Servicing Agreement"),
hereby constitutes and appoints the Servicer, by and through the Servicer's
officers, the Trustee's true and lawful Attorney-in-Fact, in the Trustee's name,
place and stead and for the Trustee's benefit, in connection with all mortgage
loans serviced by the Servicer pursuant to the Pooling and Servicing Agreement
for the purpose of performing all acts and executing all documents in the name
of the Trustee as may be customarily and reasonably necessary and appropriate to
effectuate the following enumerated transactions in respect of any of the
mortgages or deeds of trust (the "Mortgages" and the "Deeds of Trust",
respectively) and promissory notes secured thereby (the "Mortgage Notes") for
which the undersigned is acting as Trustee for various certificateholders
(whether the undersigned is named therein as mortgagee or beneficiary or has
become mortgagee by virtue of endorsement of the Mortgage Note secured by any
such Mortgage or Deed of Trust) and for which the Servicer is acting as
servicer, all subject to the terms of the Pooling and Servicing Agreement.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recordings is for the purpose of correcting the Mortgage
or Deed of Trust to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance
was issued and said modification or re-recording, in either instance, does
not adversely affect the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to a lien that
is replacing a lien existing as of the date of the Mortgage or Deed of
Trust or an easement in favor of a public utility company of a government
agency or unit with powers of eminent domain; this section shall include,
without limitation, the execution of partial satisfactions/releases,
partial reconveyances or the execution or requests to trustees to
accomplish same.
3. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
4. The completion of loan assumption agreements.
J-1
5. The full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage Note.
6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the assignment of the related
Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of
a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of any
such foreclosure, including, without limitation, any and all of the
following acts:
(a) the substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
(b) the preparation and issuance of statements of breach or
non-performance;
(c) the preparation and filing of notices of default and/or notices of
sale;
(d) the cancellation/rescission of notices of default and/or notices of
sale;
(e) the taking of a deed in lieu of foreclosure; and
(f) the preparation and execution of such other documents and performance
of such other actions as may be necessary under the terms of the
Mortgage, Deed of Trust or state law to expeditiously complete said
transactions in paragraphs 8(a) through 8(e), above.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.
J-2
IN WITNESS WHEREOF, U.S. Bank National Association, as Trustee pursuant to
that Pooling and Servicing Agreement among the Depositor, the Servicer, and the
Trustee, dated as of September 1, 2006 (Specialty Underwriting and Residential
Finance Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-BC4), has
caused its corporate seal to be hereto affixed and these presents to be signed
and acknowledged in its name and behalf by ____________________________ its duly
elected and authorized ____________ this ___ day of _______________, 200__.
U.S. BANK NATIONAL ASSOCIATION
as Trustee for Specialty Underwriting
and Residential Finance Trust, Mortgage
Loan Asset-Backed Certificates, Series
2006-BC4
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
STATE OF
------------
COUNTY OF
-----------
On _______________ __________, 200__, before me, the undersigned, a Notary
Public in and for said state, personally appeared _______________,
_______________ of U.S. Bank National Association as Trustee for Specialty
Underwriting and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-BC4, personally known to me to be the person whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed that same in his/her authorized capacity, and that by his/her signature
on the instrument the entity upon behalf of which the person acted and executed
the instrument.
WITNESS my hand and official seal.
(SEAL)
------------------------------------
Notary Public
My Commission Expires
---------------
J-3
EXHIBIT K
FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Wilshire Credit Corporation
00000 XX Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Re: Pooling and Servicing Agreement (the "Agreement") dated as of September 1,
2006 among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire
Credit Corporation, as servicer and U.S. Bank National Association, as
trustee, relating to Specialty Underwriting and
Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series
2006-BC4
The Trustee hereby certifies to the Depositor, the Servicer and their
officers, directors and Affiliates, and with the knowledge and intent that they
will rely upon this certification, that:
(1) I have reviewed the annual report on Form 10-K for the fiscal year
[2006] (the "Annual Report"), and all reports on Form 8-K (if any) and on Form
10-D required to be filed in respect of the period covered by the Annual Report
(collectively with the Annual Report, the "Reports"), of the Issuing Entity;
(2) To the best of my knowledge, and assuming the accuracy of the
statements required to be made or data required to be delivered by the Servicer
and Depositor (to the extent that such statements or data were received by the
Trustee and are relevant to the statements made by the Trustee in this Back-Up
Certification), the information in the Reports, taken as a whole, does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
the Annual Report;
(3) To the best of my knowledge, and assuming the accuracy of the
statements required to be made or data required to be delivered by the Servicer
and Depositor (to the extent that such statements or data were received by the
Trustee and are relevant to the statements made by the Trustee in this Back-Up
Certification), the distribution and any other information required to be
provided by the Trustee to the Depositor and each Servicer under the Pooling and
Servicing Agreement for inclusion in the Reports is included in the Reports;
(4) The report on assessment of compliance (the "Assessment of
Compliance') with servicing criteria for asset-backed securities of the Trustee
and its related attestation report (the "Attestation Report") on assessment of
compliance with servicing criteria required to be included in the Annual Report
in accordance with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and
15d-18 has been included as an exhibit to the Annual Report. Any material
instances of non-compliance of the Trustee are described in such report and have
been disclosed in the Annual Report;
K-1
(5) A review of the Trustee's activities during the preceding calendar
year or portion thereof and of such Trustee's performance of its distribution
and calculation activities under the Agreement has been made under my
supervision. Based on my knowledge, based on such review, the Trustee has
fulfilled all its obligations with respect to such distribution and calculation
activities under the Agreement, in all material respects throughout the year or
applicable portion thereof, or, if there has been a failure to fulfill any such
obligation in any material respect, the Trustee has specified each such failure
known to such officer and the nature and status thereof; and
(6) Based on my knowledge, and assuming the accuracy of the statements
required to be made or data required to be delivered by the Servicer and
Depositor (to the extent that such statements or data were received by the
Trustee and are relevant to the statements made by the Trustee in this Back-Up
Certification), the Assessment of Compliance and the related Attestation Report,
taken as a whole, do not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in the light of
the circumstances under which such statements were made, not misleading with
respect to the period of time covered by the Assessment of Compliance and the
related Attestation Report.
Date:
----------------
U.S. Bank National Association,
as Trustee
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
K-2
EXHIBIT L
FORM OF OFFICER'S CERTIFICATE OF SERVICER
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
Wilshire Credit Corporation (the "Servicer") certifies to the
Depositor and the Trustee, and their officers, directors and Affiliates, and
with the knowledge and intent that they will rely upon this certification, that:
(1) I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and I have reviewed, or
persons under my supervision have reviewed, the servicer compliance statement of
the Servicer and the compliance statements of each Subservicer, if any, engaged
by the Servicer provided to the Depositor and the Trustee for the Issuing
Entity's fiscal year [___] in accordance with Item 1123 of Regulation AB (each a
"Compliance Statement"), the report on assessment of the Servicer's compliance
with the servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria") and reports on Assessment of Compliance with servicing
criteria for asset-backed securities of the Servicer and of each Subservicer [or
Subcontractor], if any, engaged or utilized by the Servicer provided to the
Depositor and the Trustee for the Issuing Entity's fiscal year [___] in
accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934,
as amended (the "Exchange Act") and Item 1122 of Regulation AB (each a
"Servicing Assessment"), the registered public accounting firm's attestation
report provided in accordance with Rules 13a-18 and 15d-18 under the Exchange
Act and Section 1122(b) of Regulation AB related to each Servicing Assessment
(each a "Attestation Report"), and all servicing reports, officer's certificates
and other information relating to the servicing of the Mortgage Loans by the
Servicer during 200[ ] that were delivered or caused to be delivered by the
Servicer pursuant to the Agreement (collectively, the "Servicing Information");
(2) Based on my knowledge, and assuming the accuracy of the
information provided to the Servicer in connection with the performance of the
Servicer's duties under the Pooling and Servicing Agreement, and assuming the
accuracy of the information provided to the Servicer in connection with the
transfer of servicing of the Mortgage Loans to the Servicer and in connection
with the performance of the Servicer's duties under the Pooling and Servicing
Agreement, the Servicing Information, taken as a whole, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in the light of the circumstances under which such
statements were made, not misleading with respect to the period of time covered
by the Servicing Information;
(3) Based on my knowledge, the servicing information required to be
provided to the Trustee by the Servicer pursuant to the Pooling and Servicing
Agreement has been provided to the Trustee;
(4) Based on my knowledge and the compliance review conducted in
preparing Compliance Statement of the Servicer and, if applicable, reviewing
each Compliance Statement of each Subservicer, if any, engaged by the Servicer,
and except as disclosed in such Compliance Statement[(s)],
L-1
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:
-------------
Wilshire Credit Corporation,
as Servicer
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
L-2
EXHIBIT M
[RESERVED]
M-1
EXHIBIT N
FORM OF AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with Pooling and Servicing Agreement (the "Agreement") among Xxxxxxx
Xxxxx Mortgage Investors, Inc., U.S. Bank National Association as trustee and
Wilshire Credit Corporation, dated September 1, 2006. Capitalized terms used
herein that are not otherwise defined shall have the meanings described thereto
in the Agreement.
1. Upon notice that the aggregate Stated Principal Balance of the Mortgage
Loans is equal to ten percent (10%) or less of the Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date (which notice will also be
sent to the Servicer), the Trustee will initiate the general auction
procedures consisting of the following: (i) prepare a general solicitation
package along with a confidentiality agreement; (ii) derive a list of
bidders which shall include (x) the Holders of the Class C and Class P
Certificates (other than the Sponsor or any Affiliate of the Sponsor) and
(y) a minimum of three (3) bidders including the Holders of the Class C
Certificates but not including the holders of the Class P Certificates,
each of whom shall be a nationally recognized participant in mortgage
finance; (iii) initiate contact with all bidders, (iv) send a
confidentiality agreement to all bidders; and (v) upon receipt of a signed
confidentiality agreement, send the general bid solicitation package to all
bidders.
2. The general solicitation package will include (i) the Agreement; (ii) a
copy of all monthly trustee reports or electronic access thereto; (iii) a
form of a Mortgage Loan Purchase Agreement acceptable to the Trustee, the
Servicer and Depositor (the Mortgage Loans and other property included in
the Trust Fund will be offered and sold on an "as is, where is" basis,
without any representation or warranty, expressed or implied, of any kind
and without recourse to, or guaranty by, the Trustee); (iv) a description
of the minimum price as set forth in the Agreement; (v) a formal bid sheet
as determined by the Depositor and accepted by the Trustee; (vi) a detailed
timetable (which shall include, but not be limited to, the provisions and
dates preliminary bids, due diligence and final bids); and (vii) a data
tape of the Mortgage Loans as of the related Remittance Period reflecting
substantially the same data attributes used in the Prospectus Supplement
dated September 25, 2006.
3. A detailed timetable will be determined approximately ten (10) days prior
to each auction sale and shall be determined by the Depositor with the
consent of the Trustee, which consent shall not be unreasonably withheld,
within reasonable market conditions at the time of the auction sale.
4. All bids will be submitted directly to the Trustee. Upon acceptance of a
bid which meets or exceeds the conditions set forth in Section 9.01, the
Trustee will complete the auction by selling the Mortgage Loans and the
other property included in the Trust Fund and distribute the proceeds from
the auction to the holders of the Certificates on the next succeeding
Distribution Date as set forth in the Agreement. In the event the Trustee
receives two (2) or more bids from bidders above the Auction Termination
Price and at equal bids (a "Tie Event"), the Trustee shall notify such
bidders to resubmit a bid to break the Tie Event.
5. Upon determination that the minimum price was not met, the Trustee shall
cancel such auction sale and notify the Servicer and Depositor immediately.
6. The Trustee, the Servicer and the Depositor may mutually agree to revise or
supplement these provisions as necessary, provided that the purchase price
is at all times required to be at least the Auction Termination Price.
N-1
EXHIBIT O-1
FORM OF CLASS A-1 CAP CONTRACT
O-1-1
BEAR XXXXXXX
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: September 27, 2006
TO: U.S. Bank National Association, not in its individual
capacity, but solely as Trustee for Specialty Underwriting and
Residential Finance Trust, Series 2006-BC4
ATTENTION: Corporate Trust Services - SURF 2006-BC4
c/o Xxxxx Xxxxxxxx, Vice President
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Fixed Income Derivatives Confirmation and Agreement
REFERENCE NUMBER: FXNEC8666
(SURF BC4)
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
Specialty Underwriting and Residential Finance Trust, Series 2006-BC4 as
represented by U.S. Bank National Association, not in its individual capacity,
but solely as Trustee ("Counterparty") under the Pooling and Servicing
Agreement, dated as of September 1, 2006 among Xxxxxxx Xxxxx Mortgage Investors,
Inc., as Depositor, Wilshire Credit Corporation, as Servicer and U.S. Bank
National Association, as Trustee ("Pooling and Servicing Agreement"). This
Agreement, which evidences a complete and binding agreement between you and us
to enter into the Transaction on the terms set forth below, constitutes a
"Confirmation" as referred to in the "ISDA Form Master Agreement" (as defined
below), as well as a "Schedule" as referred to in the ISDA Form Master
Agreement.
1. This Agreement is subject to the 2000 ISDA Definitions (the "Definitions"),
as published by the International Swaps and Derivatives Association, Inc.
("ISDA"). You and we have agreed to enter into this Agreement in lieu of
negotiating a Schedule to the 1992 ISDA Master Agreement (Multicurrency--Cross
Border) form (the "ISDA Form Master Agreement") but, rather, an ISDA Form Master
Agreement shall be deemed to have been executed by you and us on the date we
entered into the Transaction. In the event of any inconsistency between the
provisions of this Agreement and the Definitions or the ISDA Form Master
Agreement, this Agreement shall prevail for purposes of the Transaction. Terms
capitalized but not defined herein shall have the meanings attributed to them in
the Pooling and Servicing Agreement.
O-1-2
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 2 of 17
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Notional Amount: With respect to the Calculation Period, the lesser
of (i) the amount set forth for such period as
detailed in Schedule I attached hereto and (ii) the
Certificate Principal Balance of the Class A-1
Certificates for such period.
Trade Date: September 8, 2006
Effective Date: September 27, 2006
Termination Date: March 25, 2007, subject to adjustment in accordance
with the Business Day Convention.
FIXED AMOUNT (PREMIUM): Inapplicable. The Fixed Amounts for this Transaction
and for the Transactions with the BSFP Reference
Numbers FXNEC8667 and FXNEC8669 are embedded in the
determination of the Additional Amount specified in
the Confirmation identified by Bear Xxxxxxx Capital
Markets Inc. Reference Number CXNE198370.
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Cap Rate: With respect to any Calculation Period, the rate set
forth for such period as detailed in Schedule I
attached hereto.
Floating Rate Payer
Period End Dates: The 25th calendar day of each month during the Term
of this Transaction, commencing October 25, 2006 and
ending on the Termination Date, subject to
adjustment in accordance with the Business Day
Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The Floating Rate
Payer Payment Dates shall be two Business Days
preceding each Floating Rate Payer Period End Date.
Floating Rate Option: USD-LIBOR-BBA, provided, however, that if the
Floating Rate determined from such Floating Rate
Option for any Calculation Period is greater than
10.86000% then the Floating Rate for such
Calculation Period shall be deemed to be 10.86000%.
O-1-3
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 3 of 17
Designated Maturity: One month
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Following
3. Additional Provisions: 1) Each party hereto is hereby advised and
acknowledges that the other party has engaged in (or
refrained from engaging in) substantial financial
transactions and has taken (or refrained from
taking) other material actions in reliance upon the
entry by the parties into the Transaction being
entered into on the terms and conditions set forth
herein and in the Confirmation relating to such
Transaction, as applicable and, in the case of the
Counterparty, it has been directed under the Pooling
and Servicing Agreement to enter into this
Transaction. This paragraph (1) shall be deemed
repeated on the trade date of each Transaction.
2) No later than each Floating Rate Payer Period End
Date the Counterparty will make available on its
website located at xxxx://xxx.xxxxxx.xxx/xxx the
current principal balance of the Certificates. No
later than each Reset Date, BSFP shall deliver to
U.S. Bank National Association, a written
confirmation containing the results of the
calculations performed on each Reset Date and the
amount which is to be paid to the Counterparty on
the next Floating Rate Payer Payment Date.
4. Provisions Deemed Incorporated in a Schedule to the 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 BSFP or Counterparty for any
purpose.
O-1-4
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 4 of 17
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will not apply to BSFP or
to Counterparty.
(d) The provisions of Section 5(a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) The "Bankruptcy" provision of Section 5(a)(vii)(2) will not apply to
Counterparty; the words "trustee" and "custodian" in Section 5(a)(vii)(6) will
not include the Trustee.
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply
to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
(j) The Counterparty shall not be required to pay any additional amounts
pursuant to Section 2(d)(i)(4) or Section 2(d)(ii) of the ISDA Form Master
Agreement.
3) Tax Representations.
(a) Payer Representations. For purpose of Section 3(e) of the ISDA Form
Master Agreement, each of BSFP and the Counterparty (as directed in the
Pooling and Servicing Agreement and without independent investigation) will
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:
O-1-5
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 5 of 17
(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) of the
ISDA Form Master Agreement by reason of material prejudice to its
legal or commercial position.
(b) Payee Representations. For the purpose of Section 3(f) of the ISDA Form
Master Agreement, each of BSFP and the Counterparty make the following
representations.
The following representation will apply to BSFP:
BSFP is a corporation organized under the laws of the State of
Delaware and its U.S. taxpayer identification number is
00-0000000.
The following representation will apply to the Counterparty:
U.S. Bank National Association represents that it is the Trustee
under the Pooling and Servicing Agreement.
4) Limitation on Event of Default. Notwithstanding the terms of Sections 5 and 6
of the ISDA Form Master Agreement, if Counterparty has satisfied its payment
obligations under Section 2(a)(i) of the ISDA form Master Agreement, then unless
BSFP is required pursuant to appropriate proceedings to return to Counterparty
or otherwise returns to Counterparty upon demand of Counterparty any portion of
such payment, (a) the occurrence of an event described in Section 5(a) of the
ISDA form Master Agreement with respect to Counterparty shall not constitute an
Event of Default or Potential Event of Default with respect to Counterparty as
the Defaulting Party and (b) BSFP shall be entitled to designate an Early
Termination Event pursuant to Section 6 of the ISDA form Master Agreement only
as a result of a Termination Event set forth in either Section 5(b)(i) or
Section 5(b)(ii) of the ISDA form Master Agreement with respect to BSFP as the
Affected Party or Section 5(b)(iii) of the ISDA form Master Agreement with
respect to BSFP as the Burdened Party. For purposes of the Transaction to which
this Agreement relates, Counterparty's only obligation under Section 2(a)(i) of
the ISDA form Master Agreement is to pay the Fixed Amount on the Fixed Rate
Payer Payment Date.
O-1-6
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 6 of 17
5) Documents to be Delivered. For the purpose of Section 4(a) of the ISDA Form
Master Agreement:
(1) Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO DATE BY WHICH TO
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE BE DELIVERED
----------------- -------------------------- ----------------
BSFP and Any document required or reasonably Promptly after the earlier of (i)
the Counterparty requested to allow the other party to reasonable demand by either party or
make payments under this Agreement (ii) learning that such form or
without any deduction or withholding document is required
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 DATE BY WHICH TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE BE DELIVERED 3(D) REPRESENTATION
----------------- -------------------------- ---------------- -------------------
BSFP and Any documents required by the Upon the execution and delivery Yes
the Counterparty receiving party to evidence the of this Agreement and such
authority of the delivering party or Confirmation
its Credit Support Provider, if any,
for it to execute and deliver this
Agreement, any Confirmation, and any
Credit Support Documents to which it
is a party, and to evidence the
authority of the delivering party or
its Credit Support Provider to perform
its obligations under this Agreement,
such Confirmation and/or
O-1-7
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 7 of 17
PARTY REQUIRED TO DATE BY WHICH TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE BE DELIVERED 3(D) REPRESENTATION
----------------- -------------------------- ---------------- -------------------
Credit Support Document, as the
case may be
BSFP and A certificate of an authorized officer Upon the execution and delivery Yes
the Counterparty of the party, as to the incumbency and of this Agreement and such
authority of the respective officers Confirmation
of the party signing this Agreement,
any relevant Credit Support Document,
or any Confirmation, as the case may
be
BSFP Monthly rate set letter to On or prior to each Floating No
Counterparty Rate Payer Payment Date
Counterparty An executed copy of the Pooling and Within 30 days after the date No
Servicing Agreement. of this Agreement.
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: 000-000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: 000-000-0000
(For all purposes)
O-1-8
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 8 of 17
Address for notices or communications to the Counterparty:
Address: U.S. Bank National Association
Mail Code: EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx, Vice President
Reference: Corporate Trust Services - SURF 2006-BC4
Facsimile: 000-000-0000
Phone: 000-000-0000
With a copy to:
Address: Specialty Underwriting and Residential Finance
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c) of the ISDA Form Master
Agreement:
BSFP appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) of the ISDA Form Master will not
apply to this Agreement; neither BSFP nor the Counterparty have any Offices
other than as set forth in the Notices Section and BSFP agrees that, for
purposes of Section 6(b) of the ISDA Form Master Agreement, it shall not in
future have any Office other than one in the United States.
(d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement:
BSFP is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP.
O-1-9
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 9 of 17
(f) Credit Support Document. Not applicable for either BSFP or the Counterparty,
except with respect to credit support furnished pursuant to paragraph 11.
(g) Credit Support Provider.
BSFP: Not Applicable, except with respect to credit support furnished
pursuant to paragraph 11.
The Counterparty: Not Applicable
(h) Governing Law. The parties to this Agreement hereby agree that the law of
the State of New York shall govern their rights and duties in whole, without
regard to conflict of law provisions thereof, other than New York General
Obligation Law Section 5-1401.
(i) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable (in whole or in part) for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Agreement had been executed with the invalid or
unenforceable portion eliminated, so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Agreement and the deletion of such
portion of this Agreement will not substantially impair the respective benefits
or expectations of the parties.
The parties shall endeavor to engage in good faith negotiations to replace any
invalid or unenforceable term, provision, covenant or condition with a valid or
enforceable term, provision, covenant or condition, the economic effect of which
comes as close as possible to that of the invalid or unenforceable term,
provision, covenant or condition.
(j) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and all
communications between officers or employees of the parties, waives any further
notice of such monitoring or recording, and agrees to notify its officers and
employees of such monitoring or recording.
(k) Waiver of Jury Trial. Each party waives any right it may have to a trial by
jury in respect of any Proceedings relating to this Agreement or any Credit
Support Document.
(l) Trustee Capacity and Liability Limitations It is expressly understood and
agreed by the parties hereto that insofar as this Confirmation is executed by
the Trustee (i) this Confirmation is executed and delivered by U.S. Bank
National Association not in its individual capacity but solely as Trustee under
the Pooling and Servicing Agreement referred to in this Confirmation in the
exercise of the powers and authority conferred and invested in it thereunder
pursuant to instructions set forth therein; (ii) any representations,
undertakings and agreements made herein on behalf of the Counterparty are made
and intended not as personal representations, undertakings and agreements by
U.S. Bank National Association but are made and intended for the purpose of
O-1-10
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 10 of 17
binding only the Counterparty; (iii) nothing herein contained shall be construed
and under no circumstances will create any liability on the Trustee
individually, or personally, be liable or obligated to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties who are signatories to this Agreement and by any
person claiming by, through or under such parties and (iv) under no
circumstances shall U.S. Bank National Association in its individual capacity be
personally liable for the payment of any indebtedness or expenses (including the
Fixed Amount) or be personally liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken under this
Confirmation.
(m) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of S&P and Moody's has been provided
notice of the same and confirms in writing (including by facsimile transmission)
after such notice is given that it will not downgrade, withdraw or otherwise
modify its then-current rating of the Securities.
(n) Proceedings. BSFP shall not institute against or cause any other person to
institute against, or join any other person in instituting against, Specialty
Underwriting and Residential Finance Trust, Series 2006-BC4 (the "Issuing
Entity") 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 following
payment in full of the Certificates issued by the Issuing Entity. This provision
shall survive expiration of this Agreement.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP shall not be deemed to have any Affiliates
for purposes of this Agreement, including for purposes of Section 6(b)(ii) of
the ISDA Form Master Agreement.
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it enters
into a Transaction that:--
(1) Nonreliance. It is not relying on any statement or representation
of the other party regarding the Transaction (whether written or
oral), other than the representations expressly made in this Agreement
or the Confirmation in respect of that Transaction.
(2) Evaluation and Understanding.
(i) BSFP is acting for its own account and the Trustee has been
directed under the Pooling and Servicing Agreement to enter into this
Transaction as Trustee
O-1-11
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 11 of 17
on behalf of the Counterparty. Each Party has made its own independent
decisions to enter into this Transaction and as to whether this
Transaction is appropriate or proper for it based upon its own
judgment and upon advice from such advisors as it has deemed necessary
and, in the case of the Trustee, it has been directed to enter into
this Transaction under the Pooling and Servicing Agreement. It is not
relying on any communication (written or oral) of the other party as
investment advice or as a recommendation to enter into this
Transaction; it being understood that information and explanations
related to the terms and conditions of this Transaction shall not be
considered investment advice or a recommendation to enter into this
Transaction. It has not received from the other party any assurance or
guarantee as to the expected results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own
behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of this Transaction. It
is also capable of assuming, and assumes, the financial and other
risks of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor
for it in respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such term is
defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35)
promulgated under, and an "eligible contract participant" as defined
in Section 1(a)(12) of, the Commodity Exchange Act, as amended, and it
is entering into the Transaction for the purposes of managing its
borrowings or investments, hedging its underlying assets or
liabilities or in connection with a line of business."
9) 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
ISDA Form Master Agreement shall not apply for purposes of this Transaction.
10) Additional Termination Events. The following Additional Termination Events
will apply:
(a) If a Ratings Event has occurred and BSFP has not, complied with Section 11
below, then an Additional Termination Event shall have occurred with respect to
BSFP and BSFP shall be the sole Affected Party with respect to such an
Additional Termination Event.
(b) If, upon the occurrence of a Cap Disclosure Event (as defined in Section
12(ii) of this Agreement), BSFP has not, within 10 calendar days after such Cap
Disclosure Event complied with any of the provisions set forth in Section
12(iii) of this Agreement, then an Additional
O-1-12
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 12 of 17
Termination Event shall have occurred with respect to BSFP and BSFP shall be the
sole Affected Party with respect to such Additional Termination Event.
(c) Either the acceptance by the Trustee of a bid in connection with an Auction
or notice by the Servicer that it will purchase the Mortgage Loans pursuant to
Section 9.01 of the Pooling and Servicing Agreement shall constitute an
Additional Termination Event with respect to Counterparty with Counterparty as
the sole Affected Party with respect to such Additional Termination Event;
provided that notwithstanding anything in the first sentence of Section 6(d)(ii)
of the ISDA Form Master Agreement to the contrary, the amount calculated as
being due in respect of such Additional Termination Event shall be payable on
the Distribution Date upon which the final distribution is made to the
Certificateholders.
11) Ratings Event. If a Ratings Event (as defined below) occurs with respect to
BSFP, then BSFP shall, at is own expense, (i) subject to the Rating Agency
Condition (as defined below), assign this Transaction hereunder to a third party
within thirty (30) days of such Ratings Event that meets or exceeds, or as to
which any applicable credit support provider meets or exceeds, the Approved
Ratings Thresholds (as defined below), (ii) deliver collateral, and an executed
ISDA Credit Support Annex, within thirty (30) days of such Ratings Event and
subject to each of Standard and Poor's Ratings Services, Inc. ("S&P's") and
Xxxxx'x Investors Service, Inc. ("Moody's" and together with S&P, the "Rating
Agencies") written confirmation that delivery of such collateral in the context
of such downgrade will not result in a withdrawal, qualification or downgrade of
the then current ratings assigned to the Certificates, (iii) within thirty (30)
days of such Ratings Event, obtain a guaranty subject to the Rating Agency
Condition, of another person with the Approved Rating Thresholds, to honor,
BSFP's obligations under this Agreement, or (iv) take any other action that
satisfies the Rating Agency Condition within thirty (30) days of such Ratings
Event. For the avoidance of doubt, a downgrade of the rating on the Certificates
could occur in the event that BSFP does not post sufficient collateral. For
purposes of this Transaction, a "RATINGS Event" shall occur with respect to
BSFP, if its long-term unsecured and unsubordinated debt rating is reduced below
"AA-" by S&P, or "Aa3" by Moody's (including in connection with a merger,
consolidation or other similar transaction by BSFP) such ratings being referred
to herein as the "Approved Ratings Thresholds", unless, within 30 days after
such withdrawal or downgrade, each of Moody's and S&P has reconfirmed the rating
of the Certificates, as applicable, which was in effect immediately prior to
such withdrawal or downgrade. 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 any of the
Rating Agencies then providing a rating of the Certificates and receive from the
Rating Agencies a prior written confirmation that the proposed action or
inaction would not cause a downgrade or withdrawal of the then-current rating of
the Certificates. Notwithstanding the foregoing, in the event that BSFP's
long-term unsecured and unsubordinated debt rating is either (i) withdrawn or
(ii) reduced below "BBB-" by S&P, or its unsecured, short-term debt obligations
is reduced below "A-3" by S&P then, BSFP shall, within (10) business days of
such reduction, at its own expense, and satisfying the Rating Agency Condition,
(i) secure another entity to replace BSFP as party to this Agreement that meets
or exceeds the Approved Rating Thresholds on terms substantially similar to this
Agreement, (ii) obtain a guaranty acceptable to the Rating Agencies, of another
person with the
O-1-13
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 13 of 17
Approved Rating Thresholds, to honor, BSFP's obligations under this Agreement,
or (iii) take any other action that satisfies the Rating Agency Condition.
Failure to satisfy the foregoing shall constitute an Additional Termination
Event as defined by Section 5(b)(v) of the ISDA Form Master Agreement, with BSFP
as the sole Affected Party. Notwithstanding any of the above downgrades, unless
and until BSFP transfers the Transaction to a replacement counterparty pursuant
to the foregoing, BSFP will continue to perform its obligations under the
Transaction. BSFP's failure to comply with the above downgrade provisions and
requirements shall constitute the sole Additional Termination Events as defined
in Section 5(b)(v) of the ISDA Form Master Agreement.
12) Compliance with Regulation AB.
(i) BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors, Inc.
("MLMI") is required under Regulation AB under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act") ("Regulation AB"), to disclose certain financial information regarding
BSFP or its group of affiliated entities, if applicable, depending on the
aggregate "significance percentage" of this Agreement and any other derivative
contracts between BSFP or its group of affiliated entities, if applicable, and
Counterparty, as calculated from time to time in accordance with Item 1115 of
Regulation AB.
(ii) It shall be a cap disclosure event ("Cap Disclosure Event") if, on any
Business Day after the date hereof, MLMI requests from BSFP the applicable
financial information described in Item 1115 of Regulation AB (such request to
be based on a reasonable determination by MLMI, in good faith, that such
information is required under Regulation AB) (the "Cap Financial Disclosure").
(iii) Upon the occurrence of a Cap Disclosure Event, BSFP, at its own expense,
shall (a) provide to MLMI the Cap Financial Disclosure, (b) secure another
entity to replace BSFP as party to this Agreement on terms substantially similar
to this Agreement and subject to prior notification to the Rating Agencies,
which entity (or a guarantor therefor) meets or exceeds the Approved Rating
Thresholds (and which satisfies the Rating Agency Condition) and which entity is
able to comply with the requirements of Item 1115 of Regulation AB or (c) obtain
a guaranty of the BSFP's obligations under this Agreement from an affiliate of
the BSFP that is able to comply with the financial information disclosure
requirements of Item 1115 of Regulation AB, such that disclosure provided in
respect of the affiliate will satisfy any disclosure requirements applicable to
the BSFP, and cause such affiliate to provide Cap Financial Disclosure. If
permitted by Regulation AB, any required Cap Financial Disclosure may be
provided by incorporation by reference from reports filed pursuant to the
Exchange Act.
(iv) BSFP agrees that, in the event that BSFP provides Cap Financial Disclosure
to MLMI in accordance with Section 12(iii)(a) or causes its affiliate to provide
Cap Financial Disclosure to MLMI in accordance with Section 12(iii)(a), it will
indemnify and hold harmless MLMI, its respective directors or officers and any
person controlling MLMI, from and against any and all losses, claims, damages
and liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in such Cap Financial Disclosure or caused by any
omission or alleged
O-1-14
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 14 of 17
omission to state in such Cap Financial Disclosure a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
13) Third Party Beneficiary. MLMI shall be a third party beneficiary of this
Agreement.
14) Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the Trustee, whereupon such Trustee will promptly remit such amounts to BSFP.
MLML further agrees to provide notice to BSFP upon any remittance to the
Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: 000-000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: 000-000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
O-1-15
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 15 of 17
5. Account Details and
Settlement Information: PAYMENTS TO BSFP:
U.S. Bank N.A., New York
ABA Number: 000-0000-00, for the account of
Bear, Xxxxxxx Securities Corp.
Account Number: 0925-3186, for further credit to
Bear Xxxxxxx Financial Products Inc.
Sub-account Number: 102-04654-1-3
Attention: Derivatives Department
PAYMENTS TO COUNTERPARTY:
U.S. Bank National Association
ABA#: 000000000
Account#: 1731-0332-2058
Attention: Xxxxx Xxxxx
Ref Acct#: 104944000
Ref: SURF 2006-BC4 Cap Contract Account
This Agreement may be executed in several counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact DERIVATIVES DOCUMENTATION by telephone at 000-000-0000. For all other
inquiries please contact DERIVATIVES DOCUMENTATION by telephone at
000-0-000-0000. Originals will be provided for your execution upon your request.
O-1-16
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 16 of 17
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
U.S. BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE FOR SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST, SERIES
2006-BC4
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
lm
O-1-17
Reference Number: FXNEC8666
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 17 of 17
SCHEDULE I
(all such dates subject to adjustment in accordance with the Business Day
Convention)
NOTIONAL AMOUNT
FROM AND INCLUDING TO BUT EXCLUDING (USD) CAP RATE
------------------ ---------------- --------------- --------
Effective Date 25-Oct-2006 441,613,000 8.413%
25-Oct-2006 25-Nov-2006 437,631,218 7.585%
25-Nov-2006 25-Dec-2006 432,430,319 7.842%
25-Dec-2006 25-Jan-2007 426,011,880 7.585%
25-Jan-2007 25-Feb-2007 418,382,554 7.584%
25-Feb-2007 Termination Date 409,559,312 8.412%
O-1-18
EXHIBIT O-2
FORM OF CLASS A-2 CAP CONTRACT
O-2-1
BEAR XXXXXXX
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: September 27, 2006
TO: U.S. Bank National Association, not in its individual
capacity, but solely as Trustee for Specialty Underwriting and
Residential Finance Trust, Series 2006-BC4
ATTENTION: Corporate Trust Services - SURF 2006-BC4
c/o Xxxxx Xxxxxxxx, Vice President
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Fixed Income Derivatives Confirmation and Agreement
REFERENCE NUMBER: FXNEC8667
(SURF BC4)
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
Specialty Underwriting and Residential Finance Trust, Series 2006-BC4 as
represented by U.S. Bank National Association, not in its individual capacity,
but solely as Trustee ("Counterparty") under the Pooling and Servicing
Agreement, dated as of September 1, 2006 among Xxxxxxx Xxxxx Mortgage Investors,
Inc., as Depositor, Wilshire Credit Corporation, as Servicer and U.S. Bank
National Association, as Trustee ("Pooling and Servicing Agreement"). This
Agreement, which evidences a complete and binding agreement between you and us
to enter into the Transaction on the terms set forth below, constitutes a
"Confirmation" as referred to in the "ISDA Form Master Agreement" (as defined
below), as well as a "Schedule" as referred to in the ISDA Form Master
Agreement.
1. This Agreement is subject to the 2000 ISDA Definitions (the "Definitions"),
as published by the International Swaps and Derivatives Association, Inc.
("ISDA"). You and we have agreed to enter into this Agreement in lieu of
negotiating a Schedule to the 1992 ISDA Master Agreement (Multicurrency--Cross
Border) form (the "ISDA Form Master Agreement") but, rather, an ISDA Form Master
Agreement shall be deemed to have been executed by you and us on the date we
entered into the Transaction. In the event of any inconsistency between the
provisions of this Agreement and the Definitions or the ISDA Form Master
Agreement, this Agreement shall prevail for purposes of the Transaction. Terms
capitalized but not defined herein shall have the 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:
O-2-2
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 2 of 17
Notional Amount: With respect to the Calculation Period, the lesser
of (i) the amount set forth for such period as
detailed in Schedule I attached hereto and (ii) the
Certificate Principal Balance of the Class A-2A,
Class A-2B, Class A-2C and Class A-2D Certificates
for such period.
Trade Date: September 8, 2006
Effective Date: September 27, 2006
Termination Date: March 25, 2007, subject to adjustment in accordance
with the Business Day Convention.
FIXED AMOUNT (PREMIUM): Inapplicable. The Fixed Amounts for this Transaction
and for the Transactions with the BSFP Reference
Numbers FXNEC8666 and FXNEC8669 are embedded in the
determination of the Additional Amount specified in
the Confirmation identified by Bear Xxxxxxx Capital
Markets Inc. Reference Number CXNE198370.
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Cap Rate: With respect to any Calculation Period, the rate set
forth for such period as detailed in Schedule I
attached hereto.
Floating Rate Payer
Period End Dates: The 25th calendar day of each month during the Term
of this Transaction, commencing October 25, 2006 and
ending on the Termination Date, subject to
adjustment in accordance with the Business Day
Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The Floating Rate
Payer Payment Dates shall be two Business Days
preceding each Floating Rate Payer Period End Date.
Floating Rate Option: USD-LIBOR-BBA, provided, however, that if the
Floating Rate determined from such Floating Rate
Option for any Calculation Period is greater than
9.36000% then the Floating Rate for such Calculation
Period shall be deemed to be 9.36000%.
O-2-3
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 3 of 17
Designated Maturity: One month
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Following
3. Additional Provisions: 1) Each party hereto is hereby advised and
acknowledges that the other party has engaged in (or
refrained from engaging in) substantial financial
transactions and has taken (or refrained from
taking) other material actions in reliance upon the
entry by the parties into the Transaction being
entered into on the terms and conditions set forth
herein and in the Confirmation relating to such
Transaction, as applicable and, in the case of the
Counterparty, it has been directed under the Pooling
and Servicing Agreement to enter into this
Transaction. This paragraph (1) shall be deemed
repeated on the trade date of each Transaction.
2) No later than each Floating Rate Payer Period End
Date the Counterparty will make available on its
website located at xxxx://xxx.xxxxxx.xxx/xxx the
current principal balance of the Certificates. No
later than each Reset Date, BSFP shall deliver to
U.S. Bank National Association, a written
confirmation containing the results of the
calculations performed on each Reset Date and the
amount which is to be paid to the Counterparty on
the next Floating Rate Payer Payment Date.
4. Provisions Deemed Incorporated in a Schedule to the 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 BSFP or Counterparty for any
purpose.
O-2-4
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 4 of 17
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will not apply to BSFP or
to Counterparty.
(d) The provisions of Section 5(a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) The "Bankruptcy" provision of Section 5(a)(vii)(2) will not apply to
Counterparty; the words "trustee" and "custodian" in Section 5(a)(vii)(6) will
not include the Trustee. .
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply
to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
(j) The Counterparty shall not be required to pay any additional amounts
pursuant to Section 2(d)(i)(4) or Section 2(d)(ii) of the ISDA Form Master
Agreement.
3) Tax Representations.
(a) Payer Representations. For purpose of Section 3(e) of the ISDA Form
Master Agreement, each of BSFP and the Counterparty (as directed in the
Pooling and Servicing Agreement and without independent investigation) will
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:
O-2-5
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 5 of 17
(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) of the
ISDA Form Master Agreement by reason of material prejudice to its
legal or commercial position.
(b) Payee Representations. For the purpose of Section 3(f) of the ISDA Form
Master Agreement, each of BSFP and the Counterparty make the following
representations.
The following representation will apply to BSFP:
BSFP is a corporation organized under the laws of the State of
Delaware and its U.S. taxpayer identification number is
00-0000000.
The following representation will apply to the Counterparty:
U.S. Bank National Association represents that it is the Trustee
under the Pooling and Servicing Agreement.
4) Limitation on Event of Default. Notwithstanding the terms of Sections 5 and 6
of the ISDA Form Master Agreement, if Counterparty has satisfied its payment
obligations under Section 2(a)(i) of the ISDA form Master Agreement, then unless
BSFP is required pursuant to appropriate proceedings to return to Counterparty
or otherwise returns to Counterparty upon demand of Counterparty any portion of
such payment, (a) the occurrence of an event described in Section 5(a) of the
ISDA form Master Agreement with respect to Counterparty shall not constitute an
Event of Default or Potential Event of Default with respect to Counterparty as
the Defaulting Party and (b) BSFP shall be entitled to designate an Early
Termination Event pursuant to Section 6 of the ISDA form Master Agreement only
as a result of a Termination Event set forth in either Section 5(b)(i) or
Section 5(b)(ii) of the ISDA form Master Agreement with respect to BSFP as the
Affected Party or Section 5(b)(iii) of the ISDA form Master Agreement with
respect to BSFP as the Burdened Party. For purposes of the Transaction to which
this Agreement relates, Counterparty's only obligation under Section 2(a)(i) of
the ISDA form Master Agreement is to pay the Fixed Amount on the Fixed Rate
Payer Payment Date.
O-2-6
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 6 of 17
5) Documents to be Delivered. For the purpose of Section 4(a) of the ISDA Form
Master Agreement:
(1) Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO
DELIVER DOCUMENT CERTIFICATE BE DELIVERED
----------------- -------------- ----------------
BSFP and Any document required or Promptly after the
the Counterparty reasonably requested to allow earlier of (i)
the other party to make payments reasonable demand by
under this Agreement without any either party or (ii)
deduction or withholding for or learning that such
on the account of any Tax or form or document is
with such deduction or required
withholding at a reduced rate
(2) Other documents to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY SECTION 3(D)
DELIVER DOCUMENT CERTIFICATE BE DELIVERED REPRESENTATION
----------------- -------------- ---------------- -----------------------
BSFP and Any documents required by the Upon the execution and Yes
the Counterparty receiving party to evidence the delivery of this
authority of the delivering Agreement and such
party or its Credit Support Confirmation
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
O-2-7
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 7 of 17
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY SECTION 3(D)
DELIVER DOCUMENT CERTIFICATE BE DELIVERED REPRESENTATION
----------------- -------------- ---------------- -----------------------
Credit Support Document, as the
case may be
BSFP and A certificate of an authorized Upon the execution and Yes
the Counterparty officer of the party, as to the delivery of this
incumbency and authority of the Agreement and such
respective officers of the party Confirmation
signing this Agreement, any
relevant Credit Support
Document, or any Confirmation,
as the case may be
BSFP Monthly rate set letter to On or prior to each No
Counterparty Floating Rate Payer
Payment Date
Counterparty An executed copy of the Pooling Within 30 days after No
and Servicing Agreement. the date of this
Agreement.
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: 000-000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: 000-000-0000
(For all purposes)
O-2-8
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 8 of 17
Address for notices or communications to the Counterparty:
Address: U.S. Bank National Association
Mail Code: EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx, Vice President
Reference: Corporate Trust Services - SURF 2006-BC4
Facsimile: 000-000-0000
Phone: 000-000-0000
With a copy to:
Address: Specialty Underwriting and Residential Finance
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c) of the ISDA Form Master
Agreement:
BSFP appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) of the ISDA Form Master will not
apply to this Agreement; neither BSFP nor the Counterparty have any Offices
other than as set forth in the Notices Section and BSFP agrees that, for
purposes of Section 6(b) of the ISDA Form Master Agreement, it shall not in
future have any Office other than one in the United States.
(d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement:
BSFP is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP.
O-2-9
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 9 of 17
(f) Credit Support Document. Not applicable for either BSFP or the Counterparty
except with respect to credit support furnished pursuant to paragraph 11. .
(g) Credit Support Provider except with respect to credit support furnished
pursuant to paragraph 11.
BSFP: Not Applicable
The Counterparty: Not Applicable
(h) Governing Law. The parties to this Agreement hereby agree that the law of
the State of New York shall govern their rights and duties in whole, without
regard to conflict of law provisions thereof, other than New York General
Obligation Law Section 5-1401.
(i) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable (in whole or in part) for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Agreement had been executed with the invalid or
unenforceable portion eliminated, so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Agreement and the deletion of such
portion of this Agreement will not substantially impair the respective benefits
or expectations of the parties.
The parties shall endeavor to engage in good faith negotiations to replace any
invalid or unenforceable term, provision, covenant or condition with a valid or
enforceable term, provision, covenant or condition, the economic effect of which
comes as close as possible to that of the invalid or unenforceable term,
provision, covenant or condition.
(j) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and all
communications between officers or employees of the parties, waives any further
notice of such monitoring or recording, and agrees to notify its officers and
employees of such monitoring or recording.
(k) Waiver of Jury Trial. Each party waives any right it may have to a trial by
jury in respect of any Proceedings relating to this Agreement or any Credit
Support Document.
(l) Trustee Capacity and Liability Limitations It is expressly understood and
agreed by the parties hereto that insofar as this Confirmation is executed by
the Trustee (i) this Confirmation is executed and delivered by U.S. Bank
National Association not in its individual capacity but solely as Trustee under
the Pooling and Servicing Agreement referred to in this Confirmation in the
exercise of the powers and authority conferred and invested in it thereunder
pursuant to instructions set forth therein; (ii) any representations,
undertakings and agreements made herein on
O-2-10
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 10 of 17
behalf of the Counterparty are made and intended not as personal
representations, undertakings and agreements by U.S. Bank National Association
but are made and intended for the purpose of binding only the Counterparty;
(iii) nothing herein contained shall be construed and under no circumstances
will create any liability on the Trustee individually, or personally, be liable
or obligated to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties who
are signatories to this Agreement and by any person claiming by, through or
under such parties and (iv) under no circumstances shall U.S. Bank National
Association in its individual capacity be personally liable for the payment of
any indebtedness or expenses (including the Fixed Amount) or be personally
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken under this Confirmation.
(m) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of S&P and Moody's has been provided
notice of the same and confirms in writing (including by facsimile transmission)
after such notice is given that it will not downgrade, withdraw or otherwise
modify its then-current rating of the Securities.
(n) Proceedings. BSFP shall not institute against or cause any other person to
institute against, or join any other person in instituting against, the
Specialty Underwriting and Residential Finance Trust, Series 2006-BC4 (the
"Issuing Entity") 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
following payment in full of the Certificates issued by the Issuing Entity. This
provision shall survive expiration of this Agreement.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP shall not be deemed to have any Affiliates
for purposes of this Agreement, including for purposes of Section 6(b)(ii) of
the ISDA Form Master Agreement.
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
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.
O-2-11
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 11 of 17
(i) BSFP is acting for its own account and the Trustee has been
directed under the Pooling and Servicing Agreement to enter into this
Transaction as Trustee on behalf of the Counterparty. Each Party has
made its own independent decisions to enter into this Transaction and
as to whether this Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisors as it has
deemed necessary and, in the case of the Trustee, it has been directed
to enter into this Transaction under the Pooling and Servicing
Agreement. It is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation to enter
into this Transaction; it being understood that information and
explanations related to the terms and conditions of this Transaction
shall not be considered investment advice or a recommendation to enter
into this Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own
behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of this Transaction. It
is also capable of assuming, and assumes, the financial and other
risks of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor
for it in respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such term is
defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35)
promulgated under, and an "eligible contract participant" as defined
in Section 1(a)(12) of, the Commodity Exchange Act, as amended, and it
is entering into the Transaction for the purposes of managing its
borrowings or investments, hedging its underlying assets or
liabilities or in connection with a line of business."
9) 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
ISDA Form Master Agreement shall not apply for purposes of this Transaction.
10) Additional Termination Events. The following Additional Termination Events
will apply:
(a) If a Ratings Event has occurred and BSFP has not, complied with Section 11
below, then an Additional Termination Event shall have occurred with respect to
BSFP and BSFP shall be the sole Affected Party with respect to such an
Additional Termination Event.
(b) If, upon the occurrence of a Cap Disclosure Event (as defined in Section
12(ii) of this Agreement), BSFP has not, within 10 calendar days after such Cap
Disclosure Event complied
O-2-12
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 12 of 17
with any of the provisions set forth in Section 12(iii) of this Agreement, then
an Additional Termination Event shall have occurred with respect to BSFP and
BSFP shall be the sole Affected Party with respect to such Additional
Termination Event.
(c) Either the acceptance by the Trustee of a bid in connection with an Auction
or notice by the Servicer that it will purchase the Mortgage Loans pursuant to
Section 9.01 of the Pooling and Servicing Agreement shall constitute an
Additional Termination Event with respect to Counterparty with Counterparty as
the sole Affected Party with respect to such Additional Termination Event;
provided that notwithstanding anything in the first sentence of Section 6(d)(ii)
of the ISDA Form Master Agreement to the contrary, the amount calculated as
being due in respect of such Additional Termination Event shall be payable on
the Distribution Date upon which the final distribution is made to the
Certificateholders.
11) Ratings Event. If a Ratings Event (as defined below) occurs with respect to
BSFP, then BSFP shall, at is own expense, (i) subject to the Rating Agency
Condition (as defined below), assign this Transaction hereunder to a third party
within thirty (30) days of such Ratings Event that meets or exceeds, or as to
which any applicable credit support provider meets or exceeds, the Approved
Ratings Thresholds (as defined below), (ii) deliver collateral, and an executed
ISDA Credit Support Annex, within thirty (30) days of such Ratings Event and
subject to each of Standard and Poor's Ratings Services, Inc. ("S&P's"), and
Xxxxx'x Investors Service, Inc. ("Moody's" and together with S&P, the "Rating
Agencies") written confirmation that delivery of such collateral in the context
of such downgrade will not result in a withdrawal, qualification or downgrade of
the then current ratings assigned to the Certificates, (iii) within thirty (30)
days of such Ratings Event, obtain a guaranty subject to the Rating Agency
Condition, of another person with the Approved Rating Thresholds, to honor,
BSFP's obligations under this Agreement, or (iv) take any other action that
satisfies the Rating Agency Condition within thirty (30) days of such Ratings
Event. For the avoidance of doubt, a downgrade of the rating on the Certificates
could occur in the event that BSFP does not post sufficient collateral. For
purposes of this Transaction, a "RATINGS Event" shall occur with respect to
BSFP, if its long-term unsecured and unsubordinated debt rating is reduced below
"AA-" by S&P, or "Aa3" by Moody's (including in connection with a merger,
consolidation or other similar transaction by BSFP) such ratings being referred
to herein as the "Approved Ratings Thresholds", unless, within 30 days after
such withdrawal or downgrade, each of Moody's and S&P has reconfirmed the rating
of the Certificates, as applicable, which was in effect immediately prior to
such withdrawal or downgrade. 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 any of the
Rating Agencies then providing a rating of the Certificates and receive from the
Rating Agencies a prior written confirmation that the proposed action or
inaction would not cause a downgrade or withdrawal of the then-current rating of
the Certificates. Notwithstanding the foregoing, in the event that BSFP's
long-term unsecured and unsubordinated debt rating is either (i) withdrawn or
(ii) reduced below "BBB-" by S&P, or its unsecured, short-term debt obligations
is reduced below "A-3" by S&P then, BSFP shall, within (10) business days of
such reduction, at its own expense, and satisfying the Rating Agency Condition,
(i) secure another entity to replace BSFP as party to this Agreement that meets
or exceeds the Approved Rating Thresholds on terms substantially similar to this
O-2-13
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 13 of 17
Agreement, (ii) obtain a guaranty acceptable to the Rating Agencies, of another
person with the Approved Rating Thresholds, to honor, BSFP's obligations under
this Agreement, or (iii) take any other action that satisfies the Rating Agency
Condition. Failure to satisfy the foregoing shall constitute an Additional
Termination Event as defined by Section 5(b)(v) of the ISDA Form Master
Agreement, with BSFP as the sole Affected Party. Notwithstanding any of the
above downgrades, unless and until BSFP transfers the Transaction to a
replacement counterparty pursuant to the foregoing, BSFP will continue to
perform its obligations under the Transaction. BSFP's failure to comply with the
above downgrade provisions and requirements shall constitute the sole Additional
Termination Events as defined in Section 5(b)(v) of the ISDA Form Master
Agreement.
12) Compliance with Regulation AB.
(i) BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors, Inc.
("MLMI") is required under Regulation AB under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act") ("Regulation AB"), to disclose certain financial information regarding
BSFP or its group of affiliated entities, if applicable, depending on the
aggregate "significance percentage" of this Agreement and any other derivative
contracts between BSFP or its group of affiliated entities, if applicable, and
Counterparty, as calculated from time to time in accordance with Item 1115 of
Regulation AB.
(ii) It shall be a cap disclosure event ("Cap Disclosure Event") if, on any
Business Day after the date hereof, MLMI requests from BSFP the applicable
financial information described in Item 1115 of Regulation AB (such request to
be based on a reasonable determination by MLMI, in good faith, that such
information is required under Regulation AB) (the "Cap Financial Disclosure").
(iii) Upon the occurrence of a Cap Disclosure Event, BSFP, at its own expense,
shall (a) provide to MLMI the Cap Financial Disclosure, (b) secure another
entity to replace BSFP as party to this Agreement on terms substantially similar
to this Agreement and subject to prior notification to the Rating Agencies,
which entity (or a guarantor therefor) meets or exceeds the Approved Rating
Thresholds (and which satisfies the Rating Agency Condition) and which entity is
able to comply with the requirements of Item 1115 of Regulation AB or (c) obtain
a guaranty of the BSFP's obligations under this Agreement from an affiliate of
the BSFP that is able to comply with the financial information disclosure
requirements of Item 1115 of Regulation AB, such that disclosure provided in
respect of the affiliate will satisfy any disclosure requirements applicable to
the BSFP, and cause such affiliate to provide Cap Financial Disclosure. If
permitted by Regulation AB, any required Cap Financial Disclosure may be
provided by incorporation by reference from reports filed pursuant to the
Exchange Act.
O-2-14
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 14 of 17
(iv) BSFP agrees that, in the event that BSFP provides Cap Financial Disclosure
to MLMI in accordance with Section 12(iii)(a) or causes its affiliate to provide
Cap Financial Disclosure to MLMI in accordance with Section 12(iii)(a), it will
indemnify and hold harmless MLMI, its respective directors or officers and any
person controlling MLMI, from and against any and all losses, claims, damages
and liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in such Cap Financial Disclosure or caused by any
omission or alleged omission to state in such Cap Financial Disclosure a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
13) Third Party Beneficiary. MLMI shall be a third party beneficiary of this
Agreement.
14) Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the Trustee, whereupon such Trustee will promptly remit such amounts to BSFP.
MLML further agrees to provide notice to BSFP upon any remittance to the
Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: 000-000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: 000-000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
O-2-15
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 15 of 17
5. Account Details and
Settlement Information: PAYMENTS TO BSFP:
U.S. Bank N.A., New York
ABA Number: 000-0000-00, for the account of
Bear, Xxxxxxx Securities Corp.
Account Number: 0925-3186, for further credit to
Bear Xxxxxxx Financial Products Inc.
Sub-account Number: 102-04654-1-3
Attention: Derivatives Department
PAYMENTS TO COUNTERPARTY:
U.S. Bank National Association
ABA#: 000000000
Account#: 1731-0332-2058
Attention: Xxxxx Xxxxx
Ref Acct#: 104944000
Ref: SURF 2006-BC4 Cap Contract Account
This Agreement may be executed in several counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact DERIVATIVES DOCUMENTATION by telephone at 000-000-0000. For all other
inquiries please contact DERIVATIVES DOCUMENTATION by telephone at
000-0-000-0000. Originals will be provided for your execution upon your request.
O-2-16
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 16 of 17
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
U.S. BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE FOR SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST, SERIES
2006-BC4
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
lm/fs
O-2-17
Reference Number: FXNEC8667
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
September 27, 2006
Page 17 of 17
SCHEDULE I
(all such dates subject to adjustment in accordance with the Business Day
Convention)
NOTIONAL AMOUNT
FROM AND INCLUDING TO BUT EXCLUDING (USD) CAP RATE
------------------ ---------------- --------------- --------
Effective Date 25-Oct-2006 403,737,000 8.573%
25-Oct-2006 25-Nov-2006 400,274,520 7.730%
25-Nov-2006 25-Dec-2006 395,689,265 7.993%
25-Dec-2006 25-Jan-2007 389,982,382 7.731%
25-Jan-2007 25-Feb-2007 383,157,914 7.731%
25-Feb-2007 Termination Date 375,231,068 8.575%
X-0-00
XXXXXXX X-0
XXXX XX XXXXXXXXXXX CERTIFICATE CAP CONTRACT
O-3-1
BEAR XXXXXXX
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: September 27, 2006
TO: U.S. Bank National Association, not in its individual
capacity, but solely as Trustee for Specialty Underwriting
and Residential Finance Trust, Series 2006-BC4
ATTENTION: Corporate Trust Services - SURF 2006-BC4
c/o Xxxxx Xxxxxxxx, Vice President
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Fixed Income Derivatives Confirmation and Agreement
REFERENCE NUMBER: FXNEC8669
(SURF BC4)
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
Specialty Underwriting and Residential Finance Trust, Series 2006-BC4 as
represented by U.S. Bank National Association, not in its individual capacity,
but solely as Trustee ("Counterparty") under the Pooling and Servicing
Agreement, dated as of September 1, 2006 among Xxxxxxx Xxxxx Mortgage Investors,
Inc., as Depositor, Wilshire Credit Corporation, as Servicer and U.S. Bank
National Association, as Trustee ("Pooling and Servicing Agreement"). This
Agreement, which evidences a complete and binding agreement between you and us
to enter into the Transaction on the terms set forth below, constitutes a
"Confirmation" as referred to in the "ISDA Form Master Agreement" (as defined
below), as well as a "Schedule" as referred to in the ISDA Form Master
Agreement.
1. This Agreement is subject to the 2000 ISDA Definitions (the "Definitions"),
as published by the International Swaps and Derivatives Association, Inc.
("ISDA"). You and we have agreed to enter into this Agreement in lieu of
negotiating a Schedule to the 1992 ISDA Master Agreement (Multicurrency--Cross
Border) form (the "ISDA Form Master Agreement") but, rather, an ISDA Form Master
Agreement shall be deemed to have been executed by you and us on the date we
entered into the Transaction. In the event of any inconsistency between the
provisions of this Agreement and the Definitions or the ISDA Form Master
Agreement, this Agreement shall prevail for purposes of the Transaction. Terms
capitalized but not defined herein shall have the meanings attributed to them in
the Pooling and Servicing Agreement.
O-3-2
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 2 of 18
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Notional Amount: With respect to the Calculation Period, the lesser
of (i) the amount set forth for such period as
detailed in Schedule I attached hereto and (ii) the
Certificate Principal Balance of the Class M-1,
Class M-2, Class M-3, Class M-4, Class M-5, Class
M-6. Class B-1, Class B-2 and Class B-3 Certificates
for such period.
Trade Date: September 8, 2006
Effective Date: September 27, 2006
Termination Date: March 25, 2007, subject to adjustment in accordance
with the Business Day Convention.
FIXED AMOUNT (PREMIUM): Inapplicable. The Fixed Amounts for this Transaction
and for the Transactions with the BSFP Reference
Numbers FXNEC8666 and FXNEC8667 are embedded in the
determination of the Additional Amount specified in
the Confirmation identified by Bear Xxxxxxx Capital
Markets Inc. Reference Number CXNE198370.
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Cap Rate: With respect to any Calculation Period, the rate set
forth for such period as detailed in Schedule I
attached hereto. Floating Rate Payer
Period End Dates: The 25th calendar day of each month during the Term
of this Transaction, commencing October 25, 2006 and
ending on the Termination Date, subject to
adjustment in accordance with the Business Day
Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The Floating Rate
Payer Payment Dates shall be two Business Days
preceding each Floating Rate Payer Period End Date.
Floating Rate Option: USD-LIBOR-BBA, provided, however, that if the
Floating Rate determined from such Floating Rate
Option for any
O-3-3
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 3 of 18
Calculation Period is greater than 8.96000% then the
Floating Rate for such Calculation Period shall be
deemed to be 8.96000%.
Designated Maturity: One month
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Following
3. Additional Provisions: 1) Each party hereto is hereby advised and
acknowledges that the other party has engaged in (or
refrained from engaging in) substantial financial
transactions and has taken (or refrained from
taking) other material actions in reliance upon the
entry by the parties into the Transaction being
entered into on the terms and conditions set forth
herein and in the Confirmation relating to such
Transaction, as applicable and, in the case of the
Counterparty, it has been directed under the Pooling
and Servicing Agreement to enter into this
Transaction. This paragraph (1) shall be deemed
repeated on the trade date of each Transaction.
2) No later than each Floating Rate Payer Period End
Date the Counterparty will make available on its
website located at xxxx://xxx.xxxxxx.xxx/xxx the
current principal balance of the Certificates. No
later than each Reset Date, BSFP shall deliver to
U.S. Bank National Association, a written
confirmation containing the results of the
calculations performed on each Reset Date and the
amount which is to be paid to the Counterparty on
the next Floating Rate Payer Payment Date.
4. Provisions Deemed Incorporated in a Schedule to the 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.
O-3-4
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 4 of 18
2) Termination Provisions. For purposes of the ISDA Form Master Agreement:
(a) "Specified Entity" is not applicable to BSFP or Counterparty for any
purpose.
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will not apply to BSFP or
to Counterparty.
(d) The provisions of Section 5(a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) The "Bankruptcy" provision of Section 5(a)(vii)(2) will not apply to
Counterparty; the words "trustee" and "custodian" in Section 5(a)(vii)(6) will
not include the Trustee..
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply
to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
(j) The Counterparty shall not be required to pay any additional amounts
pursuant to Section 2(d)(i)(4) or Section 2(d)(ii) of the ISDA Form Master
Agreement.
3) Tax Representations.
(a) Payer Representations. For purpose of Section 3(e) of the ISDA Form
Master Agreement, each of BSFP and the Counterparty (as directed in the
Pooling and Servicing Agreement and without independent investigation) will
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
O-3-5
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 5 of 18
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) of the
ISDA Form Master Agreement by reason of material prejudice to its
legal or commercial position.
(b) Payee Representations. For the purpose of Section 3(f) of the ISDA Form
Master Agreement, each of BSFP and the Counterparty make the following
representations.
The following representation will apply to BSFP:
BSFP is a corporation organized under the laws of the State of
Delaware and its U.S. taxpayer identification number is
00-0000000.
The following representation will apply to the Counterparty:
U.S. Bank National Association represents that it is the Trustee
under the Pooling and Servicing Agreement.
4) Limitation on Event of Default. Notwithstanding the terms of Sections 5 and 6
of the ISDA Form Master Agreement, if Counterparty has satisfied its payment
obligations under Section 2(a)(i) of the ISDA form Master Agreement, then unless
BSFP is required pursuant to appropriate proceedings to return to Counterparty
or otherwise returns to Counterparty upon demand of Counterparty any portion of
such payment, (a) the occurrence of an event described in Section 5(a) of the
ISDA form Master Agreement with respect to Counterparty shall not constitute an
Event of Default or Potential Event of Default with respect to Counterparty as
the Defaulting Party and (b) BSFP shall be entitled to designate an Early
Termination Event pursuant to Section 6 of the ISDA form Master Agreement only
as a result of a Termination Event set forth in either Section 5(b)(i) or
Section 5(b)(ii) of the ISDA form Master Agreement with respect to BSFP as the
Affected Party or Section 5(b)(iii) of the ISDA form Master Agreement with
respect to BSFP as the Burdened Party. For purposes of the Transaction to which
this Agreement relates, Counterparty's only
O-3-6
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 6 of 18
obligation under Section 2(a)(i) of the ISDA form Master Agreement is to pay the
Fixed Amount on the Fixed Rate Payer Payment Date.
5) Documents to be Delivered. For the purpose of Section 4(a) of the ISDA Form
Master Agreement:
(1) Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO
DELIVER DOCUMENT CERTIFICATE BE DELIVERED
----------------- -------------- ----------------
BSFP and Any document required or Promptly after the earlier
the Counterparty reasonably requested to allow of (i) reasonable demand
the other party to make byeither party or (ii)
payments under this Agreement learning that such form or
without any deduction or documentis 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 COVERED BY SECTION 3(D)
DELIVER DOCUMENT CERTIFICATE BE DELIVERED REPRESENTATION
----------------- -------------- ---------------- -----------------------
BSFP and Any documents required by the Upon the execution and Yes
the Counterparty receiving party to evidence delivery of this Agreement
the authority of the and 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
O-3-7
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 7 of 18
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY SECTION 3(D)
DELIVER DOCUMENT CERTIFICATE BE DELIVERED REPRESENTATION
----------------- -------------- ---------------- -----------------------
or its Credit Support Provider
to perform its obligations
under this Agreement, such
Confirmation and/or Credit
Support Document, as the case
may be
BSFP and A certificate of an authorized Upon the execution and Yes
the Counterparty officer of the party, as to delivery of this Agreement
the incumbency and authority and such Confirmation
of the respective officers of
the party signing this
Agreement, any relevant Credit
Support Document, or any
Confirmation, as the case may
be
BSFP Monthly rate set letter to On or prior to each No
Counterparty Floating Rate Payer
Payment Date
Counterparty An executed copy of the Within 30 days after the No
Pooling and Servicing date of this Agreement.
Agreement.
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: 000-000-0000
with a copy to:
O-3-8
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 8 of 18
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: 000-000-0000
(For all purposes)
Address for notices or communications to the Counterparty:
Address: U.S. Bank National Association
Mail Code: EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx, Vice President
Reference: Corporate Trust Services - SURF 2006-BC4
Facsimile: 000-000-0000
Phone: 000-000-0000
With a copy to:
Address: Specialty Underwriting and Residential Finance
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c) of the ISDA Form Master
Agreement:
BSFP appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) of the ISDA Form Master will not
apply to this Agreement; neither BSFP nor the Counterparty have any Offices
other than as set forth in the Notices Section and BSFP agrees that, for
purposes of Section 6(b) of the ISDA Form Master Agreement, it shall not in
future have any Office other than one in the United States.
(d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement:
BSFP is not a Multibranch Party.
O-3-9
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 9 of 18
The Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP.
(f) Credit Support Document. Not applicable for either BSFP or the Counterparty,
except with respect to credit support furnished pursuant to paragraph 11.
(g) Credit Support Provider.
BSFP: Not Applicable, except with respect to credit support furnished
pursuant to paragraph 11.
The Counterparty: Not Applicable
(h) Governing Law. The parties to this Agreement hereby agree that the law of
the State of New York shall govern their rights and duties in whole, without
regard to conflict of law provisions thereof, other than New York General
Obligation Law Section 5-1401.
(i) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable (in whole or in part) for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Agreement had been executed with the invalid or
unenforceable portion eliminated, so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Agreement and the deletion of such
portion of this Agreement will not substantially impair the respective benefits
or expectations of the parties.
The parties shall endeavor to engage in good faith negotiations to replace any
invalid or unenforceable term, provision, covenant or condition with a valid or
enforceable term, provision, covenant or condition, the economic effect of which
comes as close as possible to that of the invalid or unenforceable term,
provision, covenant or condition.
(j) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and all
communications between officers or employees of the parties, waives any further
notice of such monitoring or recording, and agrees to notify its officers and
employees of such monitoring or recording.
(k) Waiver of Jury Trial. Each party waives any right it may have to a trial by
jury in respect of any Proceedings relating to this Agreement or any Credit
Support Document.
(l) Trustee Capacity and Liability Limitations It is expressly understood and
agreed by the parties hereto that insofar as this Confirmation is executed by
the Trustee (i) this Confirmation is
O-3-10
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 10 of 18
executed and delivered by U.S. Bank National Association not in its individual
capacity but solely as Trustee under the Pooling and Servicing Agreement
referred to in this Confirmation in the exercise of the powers and authority
conferred and invested in it thereunder pursuant to instructions set forth
therein; (ii) any representations, undertakings and agreements made herein on
behalf of the Counterparty are made and intended not as personal
representations, undertakings and agreements by U.S. Bank National Association
but are made and intended for the purpose of binding only the Counterparty;
(iii) nothing herein contained shall be construed and under no circumstances
will create any liability on the Trustee individually, or personally, be liable
or obligated to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties who
are signatories to this Agreement and by any person claiming by, through or
under such parties and (iv) under no circumstances shall U.S. Bank National
Association in its individual capacity be personally liable for the payment of
any indebtedness or expenses (including the Fixed Amount) or be personally
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken under this Confirmation.
(m) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of S&P, and Xxxxx'x has been provided
notice of the same and confirms in writing (including by facsimile transmission)
after such notice is given that it will not downgrade, withdraw or otherwise
modify its then-current rating of the Securities.
(n) Proceedings. BSFP shall not institute against or cause any other person to
institute against, or join any other person in instituting against, Specialty
Underwriting and Residential Finance Trust, Series 2006-BC4 (the "Issuing
Entity") 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 following
payment in full of the Certificates issued by the Issuing Entity. This provision
shall survive expiration of this Agreement.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP shall not be deemed to have any Affiliates
for purposes of this Agreement, including for purposes of Section 6(b)(ii) of
the ISDA Form Master Agreement.
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
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
O-3-11
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 11 of 18
representations expressly made in this Agreement or the Confirmation
in respect of that Transaction.
(2) Evaluation and Understanding.
(i) BSFP is acting for its own account and the Trustee has been
directed under the Pooling and Servicing Agreement to enter into this
Transaction as Trustee on behalf of the Counterparty. Each Party has
made its own independent decisions to enter into this Transaction and
as to whether this Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisors as it has
deemed necessary and, in the case of the Trustee, it has been directed
to enter into this Transaction under the Pooling and Servicing
Agreement. It is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation to enter
into this Transaction; it being understood that information and
explanations related to the terms and conditions of this Transaction
shall not be considered investment advice or a recommendation to enter
into this Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own
behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of this Transaction. It
is also capable of assuming, and assumes, the financial and other
risks of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor
for it in respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such term is
defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35)
promulgated under, and an "eligible contract participant" as defined
in Section 1(a)(12) of, the Commodity Exchange Act, as amended, and it
is entering into the Transaction for the purposes of managing its
borrowings or investments, hedging its underlying assets or
liabilities or in connection with a line of business."
9) 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
ISDA Form Master Agreement shall not apply for purposes of this Transaction.
10) Additional Termination Events. The following Additional Termination Events
will apply:
O-3-12
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 12 of 18
(a) If a Ratings Event has occurred and BSFP has not, complied with Section 11
below, then an Additional Termination Event shall have occurred with respect to
BSFP and BSFP shall be the sole Affected Party with respect to such an
Additional Termination Event.
(b) If, upon the occurrence of a Cap Disclosure Event (as defined in Section
12(ii) of this Agreement), BSFP has not, within 10 calendar days after such Cap
Disclosure Event complied with any of the provisions set forth in Section
12(iii) of this Agreement, then an Additional Termination Event shall have
occurred with respect to BSFP and BSFP shall be the sole Affected Party with
respect to such Additional Termination Event.
(c) Either the acceptance by the Trustee of a bid in connection with an Auction
or notice by the Servicer that it will purchase the Mortgage Loans pursuant to
Section 9.01 of the Pooling and Servicing Agreement shall constitute an
Additional Termination Event with respect to Counterparty with Counterparty as
the sole Affected Party with respect to such Additional Termination Event;
provided that notwithstanding anything in the first sentence of Section 6(d)(ii)
of the ISDA Form Master Agreement to the contrary, the amount calculated as
being due in respect of such Additional Termination Event shall be payable on
the Distribution Date upon which the final distribution is made to the
Certificateholders.
11) Ratings Event. If a Ratings Event (as defined below) occurs with respect to
BSFP, then BSFP shall, at is own expense, (i) subject to the Rating Agency
Condition (as defined below), assign this Transaction hereunder to a third party
within thirty (30) days of such Ratings Event that meets or exceeds, or as to
which any applicable credit support provider meets or exceeds, the Approved
Ratings Thresholds (as defined below), (ii) deliver collateral, and an executed
ISDA Credit Support Annex, within thirty (30) days of such Ratings Event and
subject to each of Standard and Poor's Ratings Services, Inc. ("S&P's") and
Xxxxx'x Investors Service, Inc. ("Moody's" and together with S&P, the "Rating
Agencies") written confirmation that delivery of such collateral in the context
of such downgrade will not result in a withdrawal, qualification or downgrade of
the then current ratings assigned to the Certificates, (iii) within thirty (30)
days of such Ratings Event, obtain a guaranty subject to the Rating Agency
Condition, of another person with the Approved Rating Thresholds, to honor,
BSFP's obligations under this Agreement, or (iv) take any other action that
satisfies the Rating Agency Condition within thirty (30) days of such Ratings
Event. For the avoidance of doubt, a downgrade of the rating on the Certificates
could occur in the event that BSFP does not post sufficient collateral. For
purposes of this Transaction, a "RATINGS EVENT" shall occur with respect to
BSFP, if its long-term unsecured and unsubordinated debt rating is reduced below
"AA-" by S&P, or "Aa3" by Moody's (including in connection with a merger,
consolidation or other similar transaction by BSFP) such ratings being referred
to herein as the "Approved Ratings Thresholds", unless, within 30 days after
such withdrawal or downgrade, each of Moody's and S&P has reconfirmed the rating
of the Certificates, as applicable, which was in effect immediately prior to
such withdrawal or downgrade. 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 any of the
Rating Agencies then providing a rating of the Certificates and receive from the
Rating Agencies a prior written
O-3-13
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 13 of 18
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, in the event that BSFP's long-term unsecured and unsubordinated debt
rating is either (i) withdrawn or (ii) reduced below "BBB-" by S&P, or its
unsecured, short-term debt obligations is reduced below "A-3" by S&P then, BSFP
shall, within (10) business days of such reduction, at its own expense, and
satisfying the Rating Agency Condition, (i) secure another entity to replace
BSFP as party to this Agreement that meets or exceeds the Approved Rating
Thresholds on terms substantially similar to this Agreement, (ii) obtain a
guaranty acceptable to the Rating Agencies, of another person with the Approved
Rating Thresholds, to honor, BSFP's obligations under this Agreement, or (iii)
take any other action that satisfies the Rating Agency Condition. Failure to
satisfy the foregoing shall constitute an Additional Termination Event as
defined by Section 5(b)(v) of the ISDA Form Master Agreement, with BSFP as the
sole Affected Party. Notwithstanding any of the above downgrades, unless and
until BSFP transfers the Transaction to a replacement counterparty pursuant to
the foregoing, BSFP will continue to perform its obligations under the
Transaction. BSFP's failure to comply with the above downgrade provisions and
requirements shall constitute the sole Additional Termination Events as defined
in Section 5(b)(v) of the ISDA Form Master Agreement.
12) Compliance with Regulation AB.
(i) BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors, Inc.
("MLMI") is required under Regulation AB under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act") ("Regulation AB"), to disclose certain financial information regarding
BSFP or its group of affiliated entities, if applicable, depending on the
aggregate "significance percentage" of this Agreement and any other derivative
contracts between BSFP or its group of affiliated entities, if applicable, and
Counterparty, as calculated from time to time in accordance with Item 1115 of
Regulation AB.
(ii) It shall be a cap disclosure event ("Cap Disclosure Event") if, on any
Business Day after the date hereof, MLMI requests from BSFP the applicable
financial information described in Item 1115 of Regulation AB (such request to
be based on a reasonable determination by MLMI, in good faith, that such
information is required under Regulation AB) (the "Cap Financial Disclosure").
(iii) Upon the occurrence of a Cap Disclosure Event, BSFP, at its own expense,
shall (a) provide to MLMI the Cap Financial Disclosure, (b) secure another
entity to replace BSFP as party to this Agreement on terms substantially similar
to this Agreement and subject to prior notification to the Rating Agencies,
which entity (or a guarantor therefor) meets or exceeds the Approved Rating
Thresholds (and which satisfies the Rating Agency Condition) and which entity is
able to comply with the requirements of Item 1115 of Regulation AB or (c) obtain
a guaranty of the BSFP's obligations under this Agreement from an affiliate of
the BSFP that is able to comply with the financial information disclosure
requirements of Item 1115 of Regulation AB, such that disclosure provided in
respect of the affiliate will satisfy any disclosure requirements applicable to
the BSFP, and cause such affiliate to provide Cap Financial Disclosure. If
permitted by Regulation AB, any
O-3-14
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 14 of 18
required Cap Financial Disclosure may be provided by incorporation by reference
from reports filed pursuant to the Exchange Act.
O-3-15
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 15 of 18
(iv) BSFP agrees that, in the event that BSFP provides Cap Financial Disclosure
to MLMI in accordance with Section 12(iii)(a) or causes its affiliate to provide
Cap Financial Disclosure to MLMI in accordance with Section 12(iii)(a), it will
indemnify and hold harmless MLMI, its respective directors or officers and any
person controlling MLMI, from and against any and all losses, claims, damages
and liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in such Cap Financial Disclosure or caused by any
omission or alleged omission to state in such Cap Financial Disclosure a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
13) Third Party Beneficiary. MLMI shall be a third party beneficiary of this
Agreement.
14) Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the Trustee, whereupon such Trustee will promptly remit such amounts to BSFP.
MLML further agrees to provide notice to BSFP upon any remittance to the
Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: 000-000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: 000-000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
O-3-16
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 16 of 18
5. Account Details and
Settlement Information: PAYMENTS TO BSFP:
U.S. Bank N.A., New York
ABA Number: 000-0000-00, for the account of
Bear, Xxxxxxx Securities Corp.
Account Number: 0925-3186, for further credit to
Bear Xxxxxxx Financial Products Inc.
Sub-account Number: 102-04654-1-3
Attention: Derivatives Department
PAYMENTS TO COUNTERPARTY:
U.S. Bank National Association
ABA#: 000000000
Account#: 1731-0332-2058
Attention: Xxxxx Xxxxx
RefAcct#: 104944000
Ref: SURF 2006-BC4 Cap Contract Account
This Agreement may be executed in several counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to BSFP a facsimile of the fully-executed
Confirmation to 000-000-0000. For inquiries regarding U.S. Transactions, please
contact DERIVATIVES DOCUMENTATION by telephone at 000-000-0000. For all other
inquiries please contact DERIVATIVES DOCUMENTATION by telephone at
000-0-000-0000. Originals will be provided for your execution upon your request.
O-3-17
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 17 of 18
We are very pleased to have executed this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Counterparty, acting through its duly authorized signatory, hereby agrees to,
accepts and confirms the terms of the foregoing as of the Trade Date.
U.S. BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE FOR SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST, SERIES
2006-BC4
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
lm
O-3-18
Reference Number: FXNEC8669
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 18 of 18
SCHEDULE I
(all such dates subject to adjustment in accordance with the Business Day
Convention)
NOTIONAL AMOUNT
FROM AND INCLUDING TO BUT EXCLUDING (USD) CAP RATE
------------------ ---------------- --------------- --------
Effective Date 25-Oct-2006 213,950,000 8.089%
25-Oct-2006 25-Nov-2006 213,950,000 7.254%
25-Nov-2006 25-Dec-2006 213,950,000 7.514%
25-Dec-2006 25-Jan-2007 213,950,000 7.254%
25-Jan-2007 25-Feb-2007 213,950,000 7.255%
25-Feb-2007 Termination Date 213,950,000 8.090%
O-3-19
EXHIBIT P-1
ONE-MONTH LIBOR CAP TABLE - A-1 CAP CONTRACT(1)
BEGINNING ENDING
PERIOD ACCRUAL ACCRUAL NOTIONAL BALANCE ($) LOWER COLLAR (%) UPPER COLLAR (%)
------ --------- -------- -------------------- ---------------- ----------------
1 09/27/06 10/25/06 439,858,000 8.397 10.860
2 10/25/06 11/25/06 436,000,719 7.570 10.860
3 11/25/06 12/25/06 430,924,983 7.827 10.860
4 12/25/06 01/25/07 424,632,666 7.570 10.860
5 01/25/07 02/25/07 417,128,870 7.571 10.860
6 02/25/07 03/25/07 408,431,002 8.397 10.860
(1) With respect to any Distribution Date, if One-Month LIBOR (as determined by
the Cap Contract Counterparty and subject to a cap equal to 10.860%)
exceeds the Lower Collar, the Issuing Entity will receive payments pursuant
to the Cap Contract.
P-1-1
EXHIBIT P-2
ONE-MONTH LIBOR CAP TABLE - A-2 CAP CONTRACT(1)
BEGINNING ENDING
PERIOD ACCRUAL ACCRUAL NOTIONAL BALANCE ($) LOWER COLLAR (%) UPPER COLLAR (%)
------ --------- -------- -------------------- ---------------- ----------------
1 09/27/06 10/25/06 402,192,000 8.569 9.370
2 10/25/06 11/25/06 398,631,626 7.728 9.370
3 11/25/06 12/25/06 393,949,180 7.990 9.370
4 12/25/06 01/25/07 388,146,061 7.729 9.370
5 01/25/07 02/25/07 381,227,608 7.730 9.370
6 02/25/07 03/25/07 373,208,998 8.573 9.370
(1) With respect to any Distribution Date, if One-Month LIBOR (as determined by
the Cap Contract Counterparty and subject to a cap equal to 9.370%) exceeds
the Lower Collar, the Issuing Entity will receive payments pursuant to the
Class A-2 Cap Contract.
P-2-1
EXHIBIT P-3
ONE-MONTH LIBOR CAP TABLE - SUBORDINATE CERTIFICATE CAP CONTRACT(1)
BEGINNING ENDING
PERIOD ACCRUAL ACCRUAL NOTIONAL BALANCE ($) LOWER COLLAR (%) UPPER COLLAR (%)
------ --------- -------- -------------------- ---------------- ----------------
1 09/27/06 10/25/06 217,250,000 8.084 8.970
2 10/25/06 11/25/06 217,250,000 7.251 8.970
3 11/25/06 12/25/06 217,250,000 7.510 8.970
4 12/25/06 01/25/07 217,250,000 7.251 8.970
5 01/25/07 02/25/07 217,250,000 7.252 8.970
6 02/25/07 03/25/07 217,250,000 8.086 8.970
(1) With respect to any Distribution Date, if One-Month LIBOR (as determined by
the Cap Contract Counterparty and subject to a cap equal to 8.970%) exceeds
the Lower Collar, the Issuing Entity will receive payments pursuant to the
Subordinate Certificate Cap Contract.
P-3-1
EXHIBIT Q
FORM OF ASSESSMENT OF COMPLIANCE
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code XX-XX-XX0X
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC4
Wilshire Credit Corporation
00000 XX Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Standard & Poor's, a division of
The XxXxxx-Xxxx Companies, Inc.
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of
September 1, 2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as
depositor, Wilshire Credit Corporation, as servicer, and U.S. Bank
National Association, as trustee, relating to Specialty Underwriting
and Residential Finance Trust, Mortgage Loan Asset-Backed
Certificates, Series 2006-BC4 (the "Trust")
For the calendar year ending December 31, [2006] or portion thereof,
[U.S. Bank National Association, as Trustee] [Wilshire Credit Corporation, as
Servicer], for the Trust has complied in all material respects with the relevant
Servicing Criteria in Exhibit R of the Agreement.
Q-1
All capitalized terms used herein but not defined herein shall have
the meanings assigned to them in the Agreement.
Date:
----------------
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Q-2
EXHIBIT R
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
(RMBS unless otherwise noted)
DEFINITIONS KEY:
PRIMARY SERVICER - transaction party having
borrower contact X - obligation
CUSTODIAN - safe keeper of certain pool assets
TRUSTEE - fiduciary of the transaction and safe
keeper of certain pool assets
WHERE THERE ARE MULTIPLE CHECKS FOR CRITERIA THE ATTESTING PARTY WILL IDENTIFY
IN THEIR MANAGEMENT ASSERTION THAT THEY ARE ATTESTING ONLY TO THE PORTION OF THE
DISTRIBUTION CHAIN THEY ARE RESPONSIBLE FOR IN THE RELATED TRANSACTION
AGREEMENTS.
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
------------- ------------------ --------------- ------------- -----------------------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are instituted to X X Servicer and Trustee
monitor any performance or other triggers each responsible only
and events of default in accordance with to the extent that
the transaction agreements. each party, as
applicable, has
actual knowledge or
written notice with
respect to parties
other than itself.
1122(d)(1)(ii) If any material servicing activities are IF APPLICABLE IF APPLICABLE
outsourced to third parties, policies and FOR A FOR A
procedures are instituted to monitor the TRANSACTION TRANSACTION
third party's performance and compliance PARTICIPANT PARTICIPANT
with such servicing activities.
1122(d)(1)(iii) Any requirements in the transaction N/A N/A
agreements to maintain a back-up servicer
for the Pool Assets are maintained.
1122(d)(1)(iv) A fidelity bond and errors and omissions X
policy is in effect on the party
participating in the servicing function
throughout the reporting period in the
amount of coverage required by and
otherwise in accordance with the terms of
the transaction agreements.
CASH COLLECTION AND ADMINISTRATION
1122(d)(2)(i) Payments on pool assets are deposited X X Servicer and Trustee
into the appropriate custodial bank each responsible only
R-1
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
------------- ------------------ --------------- ------------- -----------------------
accounts and related bank clearing for deposits into the
accounts no more than two (2) business accounts held by it.
days following receipt, or such other
number of days specified in the
transaction agreements.
1122(d)(2)(ii) Disbursements made via wire transfer on X X Servicer disburses
behalf of an obligor or to an investor funds to trustee.
are made only by authorized personnel. Trustee disburses
funds to
Certificateholders.
1122(d)(2)(iii) Advances of funds or guarantees regarding X
collections, cash flows or distributions,
and any interest or other fees charged
for such advances, are made, reviewed and
approved as specified in the transaction
agreements.
1122(d)(2)(iv) The related accounts for the transaction, X
such as cash reserve accounts or accounts
established as a form of over
collateralization, are separately
maintained (e.g., with respect to
commingling of cash) as set forth in the
transaction agreements.
1122(d)(2)(v) Each custodial account is maintained at a X
federally insured depository institution
as set forth in the transaction
agreements. For purposes of this
criterion, "federally insured depository
institution" with respect to a foreign
financial institution means a foreign
financial institution that meets the
requirements of Rule 13k-1(b)(1) of the
Securities Exchange Act.
1122(d)(2)(vi) Unissued checks are safeguarded so as to X
prevent unauthorized access.
1122(d)(2)(vii) Reconciliations are prepared on a monthly X X
basis for all asset-backed securities
related bank accounts, including
custodial accounts and related bank
clearing accounts. These reconciliations
are (A) mathematically accurate; (B)
prepared within thirty (30) calendar days
after the bank statement cutoff date, or
such other number of days specified in
the transaction agreements; (C) reviewed
and approved by someone other than the
person who prepared the reconciliation;
and (D) contain explanations for
reconciling items. These reconciling
items are resolved within ninety (90)
calendar days of their original
identification, or such other number of
days specified in the
R-2
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
------------- ------------------ --------------- ------------- -----------------------
transaction agreements.
INVESTOR REMITTANCES AND REPORTING
1122(d)(3)(i) Reports to investors, including those to X X
be filed with the Commission, are
maintained in accordance with the
transaction agreements and applicable
Commission requirements. Specifically,
such reports (A) are prepared in
accordance with timeframes and other
terms set forth in the transaction
agreements; (B) provide information
calculated in accordance with the terms
specified in the transaction agreements;
(C) are filed with the Commission as
required by its rules and regulations;
and (D) agree with investors' or the
trustee's records as to the total unpaid
principal balance and number of Pool
Assets serviced by the Servicer.
1122(d)(3)(ii) Amounts due to investors are allocated X X Wilshire remits cash
and remitted in accordance with and loan level data to
timeframes, distribution priority and trustee based on
other terms set forth in the transaction timelines established
agreements. in the Pooling and
Servicing Agreement.
The trustee is
responsible for the
allocation of funds to
Certificateholders
using the appropriate
distribution priority
as established by the
Pooling and Servicing
Agreement.
1122(d)(3)(iii) Disbursements made to an investor are X Trustee disburses
posted within two (2) business days to funds to
the Servicer's investor records, or such Certificateholders.
other number of days specified in the
transaction agreements.
1122(d)(3)(iv) Amounts remitted to investors per the X X Servicer remits funds
investor reports agree with cancelled and provides certain
checks, or other form of payment, or investor reports to
custodial bank statements. trustees within
guidelines and
timeframes established
in Pooling and
Servicing Agreement.
Trustee disburses
funds to
Certificateholders.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on pool assets is X
R-3
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
------------- ------------------ --------------- ------------- -----------------------
maintained as required by the transaction
agreements or related pool asset
documents.
1122(d)(4)(ii) Pool assets and related documents are X X
safeguarded as required by the
transaction agreements
1122(d)(4)(iii) Any additions, removals or substitutions X X Trustee shall only
to the asset pool are made, reviewed and review, not approve,
approved in accordance with any such additions,
conditions or requirements in the removals or
transaction agreements. substitutions in
accordance with the
transaction agreements.
1122(d)(4)(iv) Payments on pool assets, including any X
payoffs, made in accordance with the
related pool asset documents are posted
to the Servicer's obligor records
maintained no more than two (2) business
days after receipt, or such other number
of days specified in the transaction
agreements, and allocated to principal,
interest or other items (e.g., escrow) in
accordance with the related pool asset
documents.
1122(d)(4)(v) The Servicer's records regarding the pool X
assets agree with the Servicer's records
with respect to an obligor's unpaid
principal balance.
1122(d)(4)(vi) Changes with respect to the terms or X
status of an obligor's pool assets (e.g.,
loan modifications or re-agings) are
made, reviewed and approved by authorized
personnel in accordance with the
transaction agreements and related pool
asset documents.
1122(d)(4)(vii) Loss mitigation or recovery actions X
(e.g., forbearance plans, modifications
and deeds in lieu of foreclosure,
foreclosures and repossessions, as
applicable) are initiated, conducted and
concluded in accordance with the
timeframes or other requirements
established by the transaction
agreements.
1122(d)(4)(viii) Records documenting collection efforts X
are maintained during the period a pool
asset is delinquent in accordance with
the transaction agreements. Such records
are maintained on at least a monthly
basis, or such other period specified in
the transaction agreements, and describe
the entity's activities in monitoring
R-4
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
------------- ------------------ --------------- ------------- -----------------------
delinquent pool assets including, for
example, phone calls, letters and payment
rescheduling plans in cases where
delinquency is deemed temporary (e.g.,
illness or unemployment).
1122(d)(4)(ix) Adjustments to interest rates or rates of X
return for pool assets with variable
rates are computed based on the related
pool asset documents.
1122(d)(4)(x) Regarding any funds held in trust for an X
obligor (such as escrow accounts): (A)
such funds are analyzed, in accordance
with the obligor's pool asset documents,
on at least an annual basis, or such
other period specified in the transaction
agreements; (B) interest on such funds is
paid, or credited, to obligors in
accordance with applicable pool asset
documents and state laws; and (C) such
funds are returned to the obligor within
thirty (30) calendar days of full
repayment of the related pool assets, or
such other number of days specified in
the transaction agreements.
1122(d)(4)(xi) Payments made on behalf of an obligor X
(such as tax or insurance payments) are
made on or before the related penalty or
expiration dates, as indicated on the
appropriate bills or notices for such
payments, provided that such support has
been received by the servicer at least
thirty (30) calendar days prior to these
dates, or such other number of days
specified in the transaction agreements.
1122(d)(4)(xii) Any late payment penalties in connection X
with any payment to be made on behalf of
an obligor are paid from the Servicer's
funds and not charged to the obligor,
unless the late payment was due to the
obligor's error or omission.
1122(d)(4)(xiii) Disbursements made on behalf of an X
obligor are posted within two (2)
business days to the obligor's records
maintained by the servicer, or such other
number of days specified in the
transaction agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and X
uncollectible accounts are recognized and
recorded in accordance with the
transaction agreements.
1122(d)(4)(xv) Any external enhancement or other X
R-5
WILSHIRE CREDIT
REGULATION AB CORPORATION U.S. BANK
REFERENCE SERVICING CRITERIA (SERVICER) (TRUSTEE) ADDITIONAL INFORMATION
------------- ------------------ --------------- ------------- -----------------------
support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation
AB, is maintained as set forth in the
transaction agreements.
R-6
EXHIBIT S
XXXXXXXX-XXXXX CERTIFICATIONS
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC4
Re: Specialty Underwriting and Residential Finance Trust, Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
I, [identify the certifying individual], certify that:
1. I, or persons under my supervision, have reviewed the report on Form
10-K and all reports on Form 10-D required to be filed in respect of the period
covered by this report on Form 10-K of [identify the issuing entity] (the
"Exchange Act periodic reports");
2. Based on my knowledge, the Exchange Act periodic reports does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, all of the distribution, servicing and other
information required to be provided under Form 10-D for the period covered by
this report is included in the Exchange Act periodic reports;
4. [I am responsible for reviewing the activities performed by the
servicer(s) and based on my knowledge and the compliance review(s) conducted in
preparing the servicer compliance statement(s) required in this report under
Item 1123 of Regulation AB, and except as disclosed in the Exchange Act periodic
reports, the servicer(s) [has/have] fulfilled [its/their] obligations under the
servicing agreement(s); and]
5. All of the reports on assessment of compliance with servicing criteria
for ABS and their related attestation reports on assessment of compliance with
servicing criteria for asset-backed securities required to be included in this
report in accordance with Item 1122 of Regulation AB and Exchange Act Rules
13a-18 and 15d-18 have been included as an exhibit to this report, except as
otherwise disclosed in this report. Any material instances of noncompliance
described in such reports have been disclosed in this report on Form 10-K.
S-1
[In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties [name of
servicer, subservicer, co-servicer, depositor or trustee].]
Date:
-------------------
----------------------------------------
[Signature]
----------------------------------------
[Title]
S-2
EXHIBIT T
FORM OF ITEM 1123 CERTIFICATION OF SERVICER
[DATE]
Xxxxxxx Xxxxx Mortgage Investors, Inc.
000 Xxxxx Xxxxxx
4 World Financial Center, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. Bank National Association
00 Xxxxxxxxxx Xxxxxx
Mail Code EP-MN-WS3D
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Structured Finance/SURF 2006-BC4
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of September 1,
2006, among Xxxxxxx Xxxxx Mortgage Investors, Inc., as depositor, Wilshire
Credit Corporation, as servicer, and U.S. Bank National Association, as
trustee, relating to Specialty Underwriting and Residential Finance Trust,
Mortgage Loan Asset-Backed Certificates, Series 2006-BC4
I, [identify name of certifying individual], [title of certifying individual] of
Wilshire Credit Corporation (the "Servicer"), hereby certify that:
(1) A review of the activities of the Servicer during the preceding
calendar year and of the performance of the Servicer under the Agreement has
been made under my supervision; and
(2) To the best of my knowledge, based on such review, the Servicer
has fulfilled all its obligations under the Agreement in all material respects
throughout such year or a portion thereof[, or, if there has been a failure to
fulfill any such obligation in any material respect, I have specified below each
such failure known to me and the nature and status thereof].
Date:
--------------------
Wilshire Credit Corporation,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
T-1
EXHIBIT U
FORM OF SWAP AGREEMENT
U-1
BEAR XXXXXXX
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
EXHIBIT A
DATE: September 27, 2006
TO: U.S. Bank National Association, not in its individual
capacity, but solely as Trustee for Specialty Underwriting
and Residential Finance Trust, Series 2006-BC4Trustee
ATTENTION: Structured Finance/SURF 2006-BC4
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
SUBJECT: Fixed Income Derivatives Confirmation and Agreement
REFERENCE NUMBER: FXNEC8677
(SURF BC4)
The purpose of this letter agreement ("Agreement") is to confirm the terms and
conditions of the Transaction entered into on the Trade Date specified below
(the "Transaction") between Bear Xxxxxxx Financial Products Inc. ("BSFP") and
Specialty Underwriting and Residential Finance Trust, Series 2006-BC4 as
represented by U.S. Bank National Association, not in its individual capacity,
but solely as Trustee ("Counterparty") under the Pooling and Servicing
Agreement, dated as of September 1, 2006 among Xxxxxxx Xxxxx Mortgage Investors,
Inc., as Depositor, Wilshire Credit Corporation, as Servicer and U.S. Bank
National Association, as Trustee ("Pooling and Servicing Agreement"). This
Agreement, which evidences a complete and binding agreement between you and us
to enter into the Transaction on the terms set forth below, constitutes a
"Confirmation" as referred to in the "ISDA Form Master Agreement" (as defined
below), as well as a "Schedule" as referred to in the ISDA Form Master
Agreement.
1. This Agreement is subject to the 2000 ISDA Definitions (the "Definitions"),
as published by the International Swaps and Derivatives Association, Inc.
("ISDA"). You and we have agreed to enter into this Agreement in lieu of
negotiating a Schedule to the 1992 ISDA Master Agreement (Multicurrency--Cross
Border) form (the "ISDA Form Master Agreement") but, rather, an ISDA Form Master
Agreement shall be deemed to have been executed by you and us on the date we
entered into the Transaction. In the event of any inconsistency between the
provisions of this Agreement and the Definitions or the ISDA Form Master
Agreement, this Agreement shall prevail for purposes of the Transaction. Terms
capitalized but not defined herein shall have the meanings attributed to them in
the Pooling and Servicing Agreement.
U-2
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
Trustee
September 27, 2006
Page 2 of 17
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Notional Amount: With respect to the Calculation Period, the
amount set forth for such period as detailed in
Schedule I attached hereto.
Trade Date: September 12, 2006
Termination Date: December 25, 2010, provided, however, for the
purposes of determining the Floating Amount to
be paid in respect of the final Calculation
Period, such date shall be subject to adjustment
in accordance with the Business Day Convention.
FIXED AMOUNT
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Effective Date: March 25, 2007
Fixed Rate Payer
Period End Dates: The 25th calendar day of each month during the
Term of this Transaction, commencing April 25,
2007 and ending on the Termination Date, with No
Adjustment.
Fixed Rate Payer
Payment Dates: Early Payment shall be applicable. The Fixed
Rate Payer Payment Dates shall be two Business
Days preceding each Fixed Rate Payer Period End
Date.
Fixed Rate: 5.22000%
Fixed Rate Day
Count Fraction: 30/360
FLOATING AMOUNTS:
Floating Rate Payer: BSFP
Floating Rate Payer
Effective Date: March 26, 2007
U-3
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
Trustee
September 27, 2006
Page 3 of 17
Floating Rate Payer
Period End Dates: The 25th calendar day of each month during the
Term of this Transaction, commencing April 25,
2007 and ending on the Termination Date, subject
to adjustment in accordance with the Business
Day Convention.
Floating Rate Payer
Payment Dates: Early Payment shall be applicable. The Floating
Rate Payer Payment Dates shall be two Business
Days preceding each Floating Rate Payer Period
End Date.
Floating Rate for
initial Calculation
Period: To be determined.
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: One month
Spread: None
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Business Days: New York
Business Day Convention: Following
3. Additional Provisions: 1) Each party hereto is hereby advised and
acknowledges that the other party has engaged in
(or refrained from engaging in) substantial
financial transactions and has taken (or
refrained from taking) other material actions in
reliance upon the entry by the parties into the
Transaction being entered into on the terms and
conditions set forth herein and in the
Confirmation relating to such Transaction, as
applicable and, in the case of the Counterparty,
it has been directed under the Pooling and
Servicing Agreement to enter into this
Transaction. This paragraph (1) shall be deemed
repeated on the trade date of each Transaction.
U-4
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
Trustee
September 27, 2006
Page 4 of 17
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 BSFP or Counterparty for any
purpose.
(b) "Specified Transaction" is not applicable to BSFP or Counterparty for any
purpose, and, accordingly, Section 5(a)(v) shall not apply to BSFP or
Counterparty.
(c) The "Cross Default" provisions of Section 5(a)(vi) will not apply to BSFP or
to Counterparty.
(d) The provisions of Section 5(a) (ii), (iii), and (iv) will not apply to
Counterparty.
(e) The "Bankruptcy" provision of Section 5(a)(vii)(2) will not apply to
Counterparty the words "trustee" and "custodian" in Section 5(a)(vii)(6) will
not include the Trustee.
(f) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply
to BSFP or Counterparty.
(g) The "Automatic Early Termination" provision of Section 6(a) will not apply
to BSFP or to Counterparty.
(h) Payments on Early Termination. For the purpose of Section 6(e) of the ISDA
Form Master Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(i) "Termination Currency" means United States Dollars.
3) Tax Representations.
(a) Payer Representations. For purpose of Section 3(e) of the ISDA Form
Master Agreement, each of BSFP and the Counterparty (as directed in the
Pooling and Servicing Agreement and without independent investigation) will
make the following representations: It is not required by any applicable
law, as modified by the practice of
U-5
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
Trustee
September 27, 2006
Page 5 of 17
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) of the ISDA Form Master Agreement by reason of
material prejudice to its legal or commercial position.
(b) Payee Representations. For the purpose of Section 3(f) of the ISDA Form
Master Agreement, each of BSFP and the Counterparty make the following
representations.
The following representation will apply to BSFP:
BSFP is a corporation organized under the laws of the State of
Delaware and its U.S. taxpayer identification number is
00-0000000.
The following representation will apply to the Counterparty:
U.S. Bank National Association represents that it is the Trustee
under the Pooling and Servicing Agreement.
4) [Reserved]
5) Documents to be Delivered. For the purpose of Section 4(a) of the ISDA Form
Master Agreement:
(1) Tax forms, documents, or certificates to be delivered are:
U-6
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
Trustee
September 27, 2006
Page 6 of 17
PARTY REQUIRED TO DATE BY WHICH TO
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE BE DELIVERED
----------------- ------------------------- ----------------
BSFP and Any document required or reasonably Promptly after the
the Counterparty requested to allow the other party to earlier of (i)
make payments under this Agreement reasonable demand by
without any deduction or withholding for either party or (ii)
or on the account of any Tax or with learning that such
such deduction or withholding at a form or document is
reduced rate required
(2) Other documents to be delivered are:
PARTY REQUIRED TO DATE BY WHICH TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE BE DELIVERED 3(D) REPRESENTATION
----------------- ------------------------- ---------------- -------------------
BSFP and Any documents required by the receiving Upon the execution Yes
the Counterparty party to evidence the authority of the and delivery of this
delivering party or its Credit Support Agreement and such
Provider, if any, for it to execute and Confirmation
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
U-7
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
Trustee
September 27, 2006
Page 7 of 17
PARTY REQUIRED TO DATE BY WHICH TO COVERED BY SECTION
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE BE DELIVERED 3(D) REPRESENTATION
----------------- ------------------------- ---------------- -------------------
may be
BSFP and A certificate of an authorized officer Upon the execution Yes
the Counterparty of the party, as to the incumbency and and delivery of this
authority of the respective officers of Agreement and such
the party signing this Agreement, any Confirmation
relevant Credit Support Document, or any
Confirmation, as the case may be
BSFP Monthly rate set letter to Counterparty On or prior to each No
Floating Rate Payer
Payment Date
Counterparty An executed copy of the Pooling and Within 30 days after No
Servicing Agreement. the date of this
Agreement.
6) Miscellaneous. Miscellaneous
(a) Address for Notices: For the purposes of Section 12(a) of the ISDA Form
Master Agreement:
Address for notices or communications to BSFP:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: 000-000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
Facsimile: 000-000-0000
(For all purposes)
U-8
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
Trustee
September 27, 2006
Page 8 of 17
Address for notices or communications to the Counterparty:
Address: U.S. Bank National Association
Mail Code: EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/SURF 2006-BC4
Facsimile: 000-000-0000
Phone: 000-000-0000
With a copy to:
Address: Specialty Underwriting and Residential Finance
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Process Agent. For the purpose of Section 13(c) of the ISDA Form Master
Agreement:
BSFP appoints as its
Process Agent: Not Applicable
The Counterparty appoints as its
Process Agent: Not Applicable
(c) Offices. The provisions of Section 10(a) of the ISDA Form Master will not
apply to this Agreement; neither BSFP nor the Counterparty have any Offices
other than as set forth in the Notices Section and BSFP agrees that, for
purposes of Section 6(b) of the ISDA Form Master Agreement, it shall not in
future have any Office other than one in the United States.
(d) Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master
Agreement:
BSFP is not a Multibranch Party.
The Counterparty is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is BSFP.
U-9
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
Trustee
September 27, 2006
Page 9 of 17
(f) Credit Support Document. Not applicable for either BSFP or the Counterparty,
except with respect to credit support furnished pursuant to paragraph 11.
(g) Credit Support Provider.
BSFP: Not Applicable, except with respect to credit support furnished
pursuant to paragraph 11.
The Counterparty: Not Applicable
(h) Governing Law. The parties to this Agreement hereby agree that the law of
the State of New York shall govern their rights and duties in whole, without
regard to conflict of law provisions thereof, other than New York General
Obligation Law Section 5-1401.
(i) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable (in whole or in part) for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Agreement had been executed with the invalid or
unenforceable portion eliminated, so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Agreement and the deletion of such
portion of this Agreement will not substantially impair the respective benefits
or expectations of the parties.
The parties shall endeavor to engage in good faith negotiations to replace any
invalid or unenforceable term, provision, covenant or condition with a valid or
enforceable term, provision, covenant or condition, the economic effect of which
comes as close as possible to that of the invalid or unenforceable term,
provision, covenant or condition.
(j) Consent to Recording. Each party hereto consents to the monitoring or
recording, at any time and from time to time, by the other party of any and all
communications between officers or employees of the parties, waives any further
notice of such monitoring or recording, and agrees to notify its officers and
employees of such monitoring or recording.
(k) Waiver of Jury Trial. Each party waives any right it may have to a trial by
jury in respect of any Proceedings relating to this Agreement or any Credit
Support Document.
(l) Trustee Capacity and Liability Limitations It is expressly understood and
agreed by the parties hereto that insofar as this Confirmation is executed by
the Trustee (i) this Confirmation is executed and delivered by U.S. Bank
National Association not in its individual capacity but solely as Trustee under
the Pooling and Servicing Agreement referred to in this Confirmation in the
exercise of the powers and authority conferred and invested in it thereunder
pursuant to instructions set forth therein; (ii) any representations,
undertakings and agreements made herein on behalf of the Counterparty are made
and intended not as personal representations, undertakings
U-10
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4
Trustee
September 27, 2006
Page 10 of 17
and agreements by U.S. Bank National Association but are made and intended for
the purpose of binding only the Counterparty; (iii) nothing herein contained
shall be construed and under no circumstances will create any liability on the
Trustee individually, or personally, be liable or obligated to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties who are signatories to this Agreement
and by any person claiming by, through or under such parties and (iv) under no
circumstances shall U.S. Bank National Association in its individual capacity be
personally liable for the payment of any indebtedness or expenses (including the
Fixed Amount) or be personally liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken under this
Confirmation.
(m) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of S&P and Moody's has been provided
notice of the same and confirms in writing (including by facsimile transmission)
after such notice is given that it will not downgrade, withdraw or otherwise
modify its then-current rating of the Securities.
(n) Proceedings. BSFP shall not institute against or cause any other person to
institute against, or join any other person in instituting against, Specialty
Underwriting and Residential Finance Trust, Series 2006-BC4 (the "Issuing
Entity") 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 following
payment in full of the Certificates. This provision shall survive expiration of
this Agreement.
7) "Affiliate" will have the meaning specified in Section 14 of the ISDA Form
Master Agreement, provided that BSFP shall not be deemed to have any Affiliates
for purposes of this Agreement, including for purposes of Section 6(b)(ii) of
the ISDA Form Master Agreement.
8) Section 3 of the ISDA Form Master Agreement is hereby amended by adding at
the end thereof the following subsection (g):
"(g) Relationship Between Parties.
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.
U-11
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4 Trustee
September 27, 2006
Page 11 of 17
(i) BSFP is acting for its own account and the Trustee has been
directed under the Pooling and Servicing Agreement to enter into this
Transaction as Trustee on behalf of the Counterparty. Each Party has
made its own independent decisions to enter into this Transaction and
as to whether this Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisors as it has
deemed necessary and, in the case of the Trustee, it has been directed
to enter into this Transaction under the Pooling and Servicing
Agreement. It is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation to enter
into this Transaction; it being understood that information and
explanations related to the terms and conditions of this Transaction
shall not be considered investment advice or a recommendation to enter
into this Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of this Transaction.
(ii) It is capable of evaluating and understanding (on its own
behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of this Transaction. It
is also capable of assuming, and assumes, the financial and other
risks of this Transaction.
(iii) The other party is not acting as a fiduciary or an advisor
for it in respect of this Transaction.
(3) Purpose. It is an "eligible swap participant" as such term is
defined in Section 35.1(b)(2) of the regulations (17 C.F.R 35)
promulgated under, and an "eligible contract participant" as defined
in Section 1(a)(12) of, the Commodity Exchange Act, as amended, and it
is entering into the Transaction for the purposes of managing its
borrowings or investments, hedging its underlying assets or
liabilities or in connection with a line of business."
9) 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
ISDA Form Master Agreement shall not apply for purposes of this Transaction.
10) Additional Termination Events. The following Additional Termination Events
will apply:
(a) If a Ratings Event has occurred and BSFP has not, complied with Section 11
below, then an Additional Termination Event shall have occurred with respect to
BSFP and BSFP shall be the sole Affected Party with respect to such an
Additional Termination Event.
U-12
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4 Trustee
September 27, 2006
Page 12 of 17
(b) If, upon the occurrence of a Swap Disclosure Event (as defined in Section
12(ii) of this Agreement), BSFP has not, within 10 calendar days after such Swap
Disclosure Event complied with any of the provisions set forth in Section
12(iii) of this Agreement, then an Additional Termination Event shall have
occurred with respect to BSFP and BSFP shall be the sole Affected Party with
respect to such Additional Termination Event.
(c) If the Issuing Entity is unable to pay its Class A Notes or fails or admits
in writing its inability to pay its Class A Notes as they become due, then an
Additional Termination Event shall have occurred with respect to Issuing Entity
and Issuing Entity shall be the sole Affected Party with respect to such
Additional Termination Event.
(d) Without the prior written consent of BSFP, where such consent is required
under the Pooling and Servicing Agreement and shall not be unreasonably
withheld, Counterparty shall not consent to any amendment or supplemental
agreement to the Pooling and Servicing Agreement if such amendment or
supplemental agreement could reasonably be expected to have a material adverse
effect on the interests of BSFP. Counterparty will furnish to BSFP a copy of
each proposed and each executed amendment or supplemental agreement and copies
of any related Rating Agencies' confirmation therewith, if any. The failure by
Counterparty to comply with this clause (d) shall constitute an Additional
Termination Event hereunder, upon which Counterparty shall be the sole Affected
Party and all Transactions hereunder shall be Affected Transactions.
(e) Either the acceptance by the Trustee of a bid in connection with an Auction
or notice by the Trustee that it will purchase the Mortgage Loans pursuant to
Section 9.01 of the Pooling and Servicing Agreement shall constitute an
Additional Termination Event with respect to Counterparty with Counterparty as
the sole Affected Party with respect to such Additional Termination Event;
provided that notwithstanding anything in the first sentence of Section 6(d)(ii)
of the ISDA Form Master Agreement to the contrary, the amount calculated as
being due in respect of such Additional Termination Event shall be payable on
the Distribution Date upon which the final distribution is made to the
Certificateholders.
11) Ratings Event. If a Ratings Event (as defined below) occurs with respect to
BSFP, then BSFP shall, at is own expense, (i) subject to the Rating Agency
Condition (as defined below), assign this Transaction hereunder to a third party
within thirty (30) days of such Ratings Event that meets or exceeds, or as to
which any applicable credit support provider meets or exceeds, the Approved
Ratings Thresholds (as defined below), (ii) deliver collateral, and an executed
ISDA Credit Support Annex, within thirty (30) days of such Ratings Event and
subject to each of Standard and Poor's Ratings Services, Inc. ("S&P's") and
Xxxxx'x Investors Service, Inc. ("Moody's" and together with S&P, the "Rating
Agencies") written confirmation that delivery of such collateral in the context
of such downgrade will not result in a withdrawal, qualification or downgrade of
the then current ratings assigned to the Certificates, (iii) within thirty (30)
days of such Ratings Event, obtain a guaranty subject to the Rating Agency
Condition, of another person with the Approved Rating Thresholds, to honor,
BSFP's obligations under this Agreement, or (iv) take any other action that
satisfies the Rating Agency Condition within thirty (30) days of such Ratings
Event.
U-13
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4 Trustee
September 27, 2006
Page 13 of 17
For the avoidance of doubt, a downgrade of the rating on the Certificates could
occur in the event that BSFP does not post sufficient collateral. For purposes
of this Transaction, a "RATINGS EVENT" shall occur with respect to BSFP, if its
long-term unsecured and unsubordinated debt rating is reduced below "AA-" by
S&P, or "Aa3" by Moody's (including in connection with a merger, consolidation
or other similar transaction by BSFP) such ratings being referred to herein as
the "Approved Ratings Thresholds", unless, within 30 days after such withdrawal
or downgrade, each of Moody's and S&P has reconfirmed the rating of the
Certificates, as applicable, which was in effect immediately prior to such
withdrawal or downgrade. 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 any of the
Rating Agencies then providing a rating of the Certificates and receive from the
Rating Agencies a prior written confirmation that the proposed action or
inaction would not cause a downgrade or withdrawal of the then-current rating of
the Certificates. Notwithstanding the foregoing, in the event that BSFP's
long-term unsecured and unsubordinated debt rating is either (i) withdrawn or
(ii) reduced below "BBB-" by S&P, or its unsecured, short-term debt obligations
is reduced below "A-3" by S&P then, BSFP shall, within (10) business days of
such reduction, at its own expense, and satisfying the Rating Agency Condition,
either (i) secure another entity to replace BSFP as party to this Agreement that
meets or exceeds the Approved Rating Thresholds on terms substantially similar
to this Agreement, (ii) obtain a guaranty acceptable to the Rating Agencies, of
another person with the Approved Rating Thresholds, to honor, BSFP's obligations
under this Agreement, or (iii) take any other action that satisfies the Rating
Agency Condition. Failure to satisfy the foregoing shall constitute an
Additional Termination Event as defined by Section 5(b)(v) of the ISDA Form
Master Agreement, with BSFP as the sole Affected Party. Notwithstanding any of
the above downgrades, unless and until BSFP transfers the Transaction to a
replacement counterparty pursuant to the foregoing, BSFP will continue to
perform its obligations under the Transaction. BSFP's failure to comply with the
above downgrade provisions and requirements shall constitute the sole Additional
Termination Events as defined in Section 5(b)(v) of the ISDA Form Master
Agreement.
12) Compliance with Regulation AB.
(i) BSFP agrees and acknowledges that Xxxxxxx Xxxxx Mortgage Investors,
Inc.("MLMI") is required under Regulation AB under the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act") ("Regulation AB"), to disclose certain financial information regarding
BSFP or its group of affiliated entities, if applicable, depending on the
aggregate "significance percentage" of this Agreement and any other derivative
contracts between BSFP or its group of affiliated entities, if applicable, and
Counterparty, as calculated from time to time in accordance with Item 1115 of
Regulation AB.
(ii) It shall be a swap disclosure event ("Swap Disclosure Event") if, on any
Business Day after the date hereof, MLMI requests from BSFP the applicable
financial information described in Item 1115 of Regulation AB (such request to
be based on a reasonable determination by MLMI, in good faith, that such
information is required under Regulation AB) (the "Swap Financial Disclosure").
U-14
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4 Trustee
September 27, 2006
Page 14 of 17
(iii) Upon the occurrence of a Swap Disclosure Event, BSFP, at its own expense,
shall (a) provide to MLMI the Swap Financial Disclosure, (b) secure another
entity to replace BSFP as party to this Agreement on terms substantially similar
to this Agreement and subject to prior notification to the Rating Agencies,
which entity (or a guarantor therefor) meets or exceeds the Approved Rating
Thresholds (and which satisfies the Rating Agency Condition) and which entity is
able to comply with the requirements of Item 1115 of Regulation AB or (c) obtain
a guaranty of the BSFP's obligations under this Agreement from an affiliate of
the BSFP that is able to comply with the financial information disclosure
requirements of Item 1115 of Regulation AB, such that disclosure provided in
respect of the affiliate will satisfy any disclosure requirements applicable to
the BSFP, and cause such affiliate to provide Swap Financial Disclosure. If
permitted by Regulation AB, any required Swap Financial Disclosure may be
provided by incorporation by reference from reports filed pursuant to the
Exchange Act.
(iv) BSFP agrees that, in the event that BSFP provides Swap Financial Disclosure
to MLMI in accordance with Section 12(iii)(a) or causes its affiliate to provide
Swap Financial Disclosure to MLMI in accordance with Section 12(iii)(a), it will
indemnify and hold harmless MLMI, its respective directors or officers and any
person controlling MLMI, from and against any and all losses, claims, damages
and liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in such Swap Financial Disclosure or caused by any
omission or alleged omission to state in such Swap Financial Disclosure a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
13) Third Party Beneficiary. MLMI shall be a third party beneficiary of this
Agreement.
14) Xxxxxxx Xxxxx Mortgage Lending, Inc. ("MLML") agrees and acknowledges that
amounts paid hereunder are not intended to benefit the holder of any class of
certificates rated by any rating agency if such holder is MLML or any of its
affiliates. If MLML or any of its affiliates receives any such amounts, it will
promptly remit (or, if such amounts are received by an affiliate of MLML, MLML
hereby agrees that it will cause such affiliate to promptly remit) such amounts
to the Trustee, whereupon such Trustee will promptly remit such amounts to BSFP.
MLML further agrees to provide notice to BSFP upon any remittance to the
Trustee; such delivery will be made to:
Address: 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: DPC Manager
Facsimile: 000-000-0000
with a copy to:
Address: Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
Attention: Derivative Operations - 7th Floor
U-15
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4 Trustee
September 27, 2006
Page 15 of 17
Facsimile: 000-000-0000
NEITHER THE BEAR XXXXXXX COMPANIES INC. NOR ANY SUBSIDIARY OR AFFILIATE OF
THE BEAR XXXXXXX COMPANIES INC. OTHER THAN BSFP IS AN OBLIGOR OR A CREDIT
SUPPORT PROVIDER ON THIS AGREEMENT.
5. Account Details and
Settlement Information: PAYMENTS TO BSFP:
Citibank, N.A., New York
ABA Number: 000-0000-00, for the account of
Bear, Xxxxxxx Securities Corp.
Account Number: 0925-3186, for further credit to
Bear Xxxxxxx Financial Products Inc.
Sub-account Number: 102-04654-1-3
Attention: Derivatives Department
PAYMENTS TO COUNTERPARTY:
U.S. Bank National Association
ABA#: 000000000
Account#: 1731-0332-2058
Attention: Xxxxx Xxxxx
Ref Acct#: 104944000
Ref: SURF 2006-BC4 Cap Contract Account
lm
U-16
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4 Trustee
September 27, 2006
Page 16 of 17
SCHEDULE I
(where for the purposes of (i) determining Floating Amounts, all such dates
subject to adjustment in accordance with the Following Business Day
Convention and (ii) determining Fixed Amounts, all such dates subject to No
Adjustment.)
NOTIONAL AMOUNTS
FROM AND INCLUDING TO BUT EXCLUDING (USD)
------------------ ---------------- ----------------
Effective Date 4/25/2007 934,412,384
4/25/2007 5/25/2007 899,423,237
5/25/2007 6/25/2007 861,318,120
6/25/2007 7/25/2007 820,529,460
7/25/2007 8/25/2007 777,804,855
8/25/2007 9/25/2007 734,303,303
9/25/2007 10/25/2007 691,618,033
10/25/2007 11/25/2007 650,581,130
11/25/2007 12/25/2007 611,982,286
12/25/2007 1/25/2008 575,793,739
1/25/2008 2/25/2008 542,322,687
2/25/2008 3/25/2008 511,425,056
3/25/2008 4/25/2008 482,707,349
4/25/2008 5/25/2008 455,651,404
5/25/2008 6/25/2008 428,921,543
6/25/2008 7/25/2008 400,040,292
7/25/2008 8/25/2008 365,892,741
8/25/2008 9/25/2008 325,821,514
9/25/2008 10/25/2008 286,416,347
10/25/2008 11/25/2008 254,493,545
11/25/2008 12/25/2008 229,071,542
12/25/2008 1/25/2009 208,261,549
1/25/2009 2/25/2009 200,200,000
2/25/2009 3/25/2009 200,200,000
3/25/2009 4/25/2009 189,053,634
4/25/2009 5/25/2009 177,213,016
5/25/2009 6/25/2009 166,098,903
6/25/2009 7/25/2009 155,469,009
7/25/2009 8/25/2009 144,972,608
8/25/2009 9/25/2009 134,660,842
9/25/2009 10/25/2009 125,006,092
10/25/2009 11/25/2009 116,466,096
11/25/2009 12/25/2009 109,008,026
12/25/2009 1/25/2010 102,391,639
1/25/2010 2/25/2010 96,372,984
2/25/2010 3/25/2010 90,858,179
U-17
Reference Number: FXNEC8677
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Trust, Series
2006-BC4 Trustee
September 27, 2006
Page 17 of 17
3/25/2010 4/25/2010 85,806,821
4/25/2010 5/25/2010 81,170,724
5/25/2010 6/25/2010 76,901,914
6/25/2010 7/25/2010 72,953,645
7/25/2010 8/25/2010 69,289,358
8/25/2010 9/25/2010 65,878,125
9/25/2010 10/25/2010 62,681,168
10/25/2010 11/25/2010 59,715,580
11/25/2010 Termination Date 56,888,720
U-18
(BEAR XXXXXXX LOGO)
BEAR XXXXXXX FINANCIAL PRODUCTS INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
000-000-0000
DATE: September 27, 2006
TO: U.S. Bank National Association, not in its individual
capacity, but solely as Trustee for Specialty Underwriting
and Residential Finance Trust, Series 2006-BC4
ATTENTION: Structured Finance/SURF 2006-BC4
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
TO: Xxxxxxx Xxxxx Mortgage Lending, Inc.
ATTENTION: Xxxxx Xxxxx
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
FROM: Derivatives Documentation
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
RE: NOVATION CONFIRMATION
REFERENCE NUMBER(S): FXNEC8677-CXNE198370
The purpose of this letter is to confirm the terms and conditions of the
Novation Transaction entered into between the parties and effective from the
Novation Date specified below. This Novation Confirmation constitutes a
"Confirmation" as referred to in the New Agreement specified below.
1. The definitions and provisions contained in the 2004 ISDA Novation
Definitions (the "Definitions") and the terms and provisions of the 2000
ISDA Definitions, as published by the International Swaps and Derivatives
Association, Inc. and amended from time to time, are incorporated in this
Novation Confirmation. In the event of any inconsistency between (i) the
Definitions, (ii) the 2000 ISDA Definitions and/or (iii) the Novation
Agreement and this Novation Confirmation, this Novation Confirmation will
govern.
2. The terms of the Novation Transaction to which this Novation Confirmation
relates are as follows:
Novation Trade Date: September 27, 2006
Novation Date: September 27, 2006
Novated Amount: USD 934,412,384
Transferor 1: Xxxxxxx Xxxxx Mortgage Lending, Inc.
Transferor 2: Bear Xxxxxxx Capital Markets Inc.
Transferee 1: U.S. Bank National Association, not in its
individual capacity, but solely as Trustee for
Specialty Underwriting and Residential Finance
Trust, Series 2006-BC4
Transferee 2: Bear Xxxxxxx Financial Products Inc.
New Agreement (between Transferee 1 The Master Agreement as defined in the New
and Transferee 2): Confirmation
3. The terms of the Old Transaction to which this Novation Confirmation
relates, for identification purposes, are as follows:
U-19
Reference Number: FXNEC8677-CXNE198370 - Novation Confirmation
U.S. Bank National Association, not in its individual capacity, but solely as
Trustee for Specialty Underwriting and Residential Finance Mortgage Loan
Asset-Backed Certificates, Series 2006-BC4
September 27, 2006
Page 2 of 2
Trade Date of Old Transaction: September 8, 2006
Effective Date of Old Transaction: March 25, 2007
Termination Date of Old Transaction: December 25, 2010
4. The terms of the New Transaction to which this Novation Confirmation
relates shall be as specified in the New Confirmation attached hereto as
Exhibit A.
Full First Calculation Period: Applicable
5. Offices:
Transferor 1: Not Applicable
Transferor 2: Not Applicable
Transferee 1: Not Applicable
Transferee 2: Not Applicable
The parties confirm their acceptance to be bound by this Novation Confirmation
as of the Novation Date by executing a copy of this Novation Confirmation and
returning a facsimile of the fully-executed Novation Confirmation to
000-000-0000. The Transferor 1 and Transferor 2, by their respective execution
of a copy of this Novation Confirmation, each agrees to the terms of the
Novation Confirmation as it relates to the Old Transaction. The Transferee 1 and
Transferee 2, by their respective execution of a copy of this Novation
Confirmation, agrees to the terms of the Novation Confirmation as it relates to
the New Transaction. For inquiries regarding U.S. Transaction, please contact
DERIVATIVES DOCUMENTATION by telephone at 000-000-0000. For all other inquiries
please contact DERIVATIVES DOCUMENTATION by telephone at 000-0-000-0000.
BEAR XXXXXXX FINANCIAL PRODUCTS INC. XXXXXXX XXXXX MORTGAGE LENDING, INC.
By: By:
--------------------------------- ------------------------------------
Name: As authorized agent or officer for
------------------------------- Xxxxxxx Xxxxx Mortgage Lending, Inc.
Title: Name:
------------------------------ ----------------------------------
Date Title:
-------------------------------- ---------------------------------
Date
-----------------------------------
U.S. BANK NATIONAL ASSOCIATION, NOT BEAR XXXXXXX CAPITAL MARKETS INC.
INDIVIDUALLY, BUT SOLELY AS TRUSTEE
ON BEHALF OF SPECIALTY UNDERWRITING
AND RESIDENTIAL FINANCE TRUST, SERIES
2006-BC4
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
Date Date
-------------------------------- -----------------------------------
lm/fs
U-20
SCHEDULE V
Item on Form 8-K Party Responsible
---------------- -----------------
*Item 1.01- Entry into a Material Definitive Agreement Each party to such agreement
*Item 1.02- Termination of a Material Definitive Agreement Each party to such agreement
Item 1.03- Bankruptcy or Receivership Depositor
Item 2.04- Triggering Events that Accelerate or Increase a Direct Depositor
Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement
*Item 3.03- Material Modification to Rights of Security Holders Depositor
Item 5.03- Amendments of Articles of Incorporation or Bylaws; Change Depositor
of Fiscal Year
Item 6.01- ABS Informational and Computational Material Depositor
*Item 6.02- Change of Servicer or Trustee Servicer (as to Trustee)/Trustee (as to Servicer)
*Item 6.03- Change in Credit Enhancement or External Support Depositor/Trustee
*Item 6.04- Failure to Make a Required Distribution Trustee
Item 6.05- Securities Act Updating Disclosure Depositor
Item 7.01- Regulation FD Disclosure Depositor
Item 8.01 Depositor
Item 9.01 Depositor
V-1
SCHEDULE W
Item on Form 10-D Party Responsible
----------------- -----------------
Item 1: Distribution and Pool Performance Information Trustee, Depositor
Plus any information required by 1121 which is NOT included on Servicer and Trustee (to the extent known and required by
the monthly statement to Certificateholders Regulation AB)
Item 2: Legal Proceedings per Item 1117 of Regulation AB All parties to the Pooling and Servicing Agreement (as to
themselves), the Depositor/Servicer/Trustee (to the extent
known) as to the issuing entity, the Sponsor, 1106(b)
originator, any 1100(d)(1) party
Item 3: Sale of Securities and Use of Proceeds Depositor
Item 4: Defaults Upon Senior Securities Trustee
Item 5: Submission of Matters to a Vote of Security Holders Trustee
Item 6: Significant Obligors of Pool Assets Depositor/Sponsor/Mortgage Loan Sponsor/Servicer
Item 7: Significant Enhancement Provider Information Depositor/Sponsor
Item 8: Other Information Trustee/Servicer/Depositor (to the extent known) and any
other party responsible for disclosure items on Form 8-K
Item 9: Exhibits Trustee/Depositor/Servicer to the extent applicable to each
W-1
SCHEDULE X
Item on Form 10-K Party Responsible
----------------- -----------------
Item 1B: Unresolved Staff Comments Depositor
*Item 9B: Other Information Depositor and any other party responsible for disclosure items
on Form 8-K
*Item 15: Exhibits, Financial Statement Schedules Depositor/Servicer.
*Additional Item: All parties to the Pooling and Servicing Agreement (as to
themselves), the
Disclosure per Item 1117 of Regulation AB Depositor/Servicer/Trustee (to the extent known) as to the issuing
entity, the Sponsor, 1106(b) originator, any 1100(d)(1) party
*Additional Item: All parties to the Pooling and Servicing
Disclosure per Item 1119 of Regulation AB Agreement, the Sponsor, originator, significant obligor,
enhancement or support provider
Additional Item: Depositor/Sponsor/Mortgage Loan
Disclosure per Item 1112(b) of Regulation AB Sponsor/Servicer
Additional Item: Depositor/Sponsor
Disclosure per Items 1114(b) and 1115(b) of Regulation AB
X-1
