HOME EQUITY MORTGAGE TRUST 2006-2 Issuer and Indenture Trustee INDENTURE Dated as of April 28, 2006 ASSET-BACKED NOTES, SERIES 2006-2
Issuer
and
U.S.
BANK
NATIONAL ASSOCIATION
Indenture
Trustee
Dated
as
of April 28, 2006
_________________________________________________________
ASSET-BACKED
NOTES, SERIES 2006-2
_________________________________________________________
ARTICLE
I
DEFINITIONS
|
Section
1.01
|
Definitions
|
|
Section
1.02
|
Incorporation
by Reference of Trust Indenture Act
|
|
Section
1.03
|
Rules
of Construction
|
|
Section
1.04
|
Calculations
of Interest
|
ARTICLE
II
ORIGINAL
ISSUANCE OF NOTES
|
Section
2.01
|
Form
|
|
Section
2.02
|
Execution,
Authentication and Delivery
|
|
Section
2.03
|
Acceptance
of the Swap Agreement by Indenture Trustee
|
|
Section
2.04
|
Conveyance
of Subsequent Loans.
|
|
Section
2.05
|
Conveyance
of REMIC Regular Interests and Acceptance of REMIC IA, REMIC IB,
REMIC IC,
REMIC ID, REMIC IIA, REMIC IIB and REMIC IIC by the Indenture Trustee;
Issuance of Notes.
|
ARTICLE
III
COVENANTS
|
Section
3.01
|
Collection
of Payments with Respect to Loans
|
|
Section
3.02
|
Maintenance
of Office or Agency
|
|
Section
3.03
|
Money
for Payments To Be Held in Trust; Paying Agent.
|
|
Section
3.04
|
Existence
|
|
Section
3.05
|
Payment
of Principal and Interest; Defaulted Interest.
|
|
Section
3.06
|
Protection
of Trust Estate.
|
|
Section
3.07
|
Opinions
as to Trust Estate.
|
|
Section
3.08
|
Performance
of Obligations; Servicing Agreement.
|
|
Section
3.09
|
Negative
Covenants
|
|
Section
3.10
|
Annual
Statement as to Compliance
|
|
Section
3.11
|
Representations
and Warranties Concerning the Loans
|
|
Section
3.12
|
Assignee
of Record of the Loans
|
|
Section
3.13
|
Investment
Company
|
|
Section
3.14
|
Servicer
as Agent and Bailee of the Indenture Trustee
|
|
Section
3.15
|
Issuer
May Consolidate, etc.
|
|
Section
3.16
|
Successor
or Transferee.
|
|
Section
3.17
|
No
Other Business
|
|
Section
3.18
|
No
Borrowing
|
|
Section
3.19
|
Guarantees,
Loans, Advances and Other Liabilities
|
|
Section
3.20
|
Capital
Expenditures
|
|
Section
3.21
|
Owner
Trustee Not Liable for Certificates or Related Documents
|
|
Section
3.22
|
Restricted
Payments
|
|
Section
3.23
|
Notice
of Events of Default
|
|
Section
3.24
|
Further
Instruments and Acts
|
|
Section
3.25
|
Statements
to Noteholders
|
|
Section
3.26
|
Allocation
of Realized Losses
|
|
Section
3.27
|
Determination
of the LIBOR Rate
|
|
Section
3.28
|
Liquidation
on Final Maturity Date
|
|
Section
3.29
|
No
Recourse
|
|
Section
3.30
|
Additional
Representations
|
|
Section
3.31
|
The
Swap Agreement.
|
|
Section
3.32
|
Basis
Risk Reserve Funds.
|
|
Section
3.33
|
Pre-Funding
Accounts and Capitalized Interest Account.
|
|
Section
3.34
|
Payments
Under the Policy
|
|
Section
3.35
|
Suspension
of Rights During Insurer Default
|
ARTICLE
IV
THE
NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
|
Section
4.01
|
The
Notes
|
|
Section
4.02
|
Registration
of and Limitations on Transfer and Exchange of Notes; Appointment
of
Certificate Registrar
|
|
Section
4.03
|
Mutilated,
Destroyed, Lost or Stolen Notes
|
|
Section
4.04
|
Persons
Deemed Owners
|
|
Section
4.05
|
Cancellation
|
|
Section
4.06
|
Book-Entry
Notes
|
|
Section
4.07
|
Notices
to Depository
|
|
Section
4.08
|
Definitive
Notes
|
|
Section
4.09
|
Tax
Treatment
|
|
Section
4.10
|
Satisfaction
and Discharge of Indenture
|
|
Section
4.11
|
Application
of Trust Money
|
|
Section
4.12
|
Repayment
of Monies Held by Paying Agent
|
|
Section
4.13
|
Temporary
Notes
|
|
Section
4.14
|
Subrogation
and Cooperation
|
ARTICLE
V
DEFAULT
AND REMEDIES
|
Section
5.01
|
Events
of Default.
|
|
Section
5.02
|
Acceleration
of Maturity; Rescission and Annulment
|
|
Section
5.03
|
Collection
of Indebtedness and Suits for Enforcement by Indenture
Trustee.
|
|
Section
5.04
|
Remedies;
Priorities.
|
|
Section
5.05
|
Optional
Preservation of the Trust Estate
|
|
Section
5.06
|
Limitation
of Suits
|
|
Section
5.07
|
Unconditional
Rights of Noteholders to Receive Principal and Interest
|
|
Section
5.08
|
Restoration
of Rights and Remedies
|
|
Section
5.09
|
Rights
and Remedies Cumulative
|
|
Section
5.10
|
Delay
or Omission Not a Waiver
|
|
Section
5.11
|
Control
by Noteholders
|
|
Section
5.12
|
Waiver
of Past Defaults
|
|
Section
5.13
|
Undertaking
for Costs
|
|
Section
5.14
|
Waiver
of Stay or Extension Laws
|
|
Section
5.15
|
Sale
of Trust Estate.
|
|
Section
5.16
|
Action
on Notes
|
ARTICLE
VI
THE
INDENTURE TRUSTEE
|
Section
6.01
|
Duties
of Indenture Trustee.
|
|
Section
6.02
|
Rights
of Indenture Trustee.
|
|
Section
6.03
|
Individual
Rights of The Indenture Trustee
|
|
Section
6.04
|
Indenture
Trustee’s Disclaimer
|
|
Section
6.05
|
Notice
of Event of Default
|
|
Section
6.06
|
Reports
by Indenture Trustee to Holders
|
|
Section
6.07
|
Compensation
and Indemnity
|
|
Section
6.08
|
Replacement
of Indenture Trustee
|
|
Section
6.09
|
Successor
Indenture Trustee by Xxxxxx
|
|
Section
6.10
|
Appointment
of Co-Indenture Trustee or Separate Indenture Trustee.
|
|
Section
6.11
|
Eligibility;
Disqualification
|
|
Section
6.12
|
Preferential
Collection of Claims Against Issuer
|
|
Section
6.13
|
Representations
and Warranties. The Indenture Trustee hereby represents
that:
|
|
Section
6.14
|
Directions
to Indenture Trustee
|
|
Section
6.15
|
Compliance with Withholding-Requirements
|
|
Section
6.16
|
Commission
Reporting.
|
|
Section
6.17
|
Assessments
of Compliance and Attestation Reports
|
ARTICLE
VII
NOTEHOLDERS’
LISTS AND REPORTS
|
Section
7.01
|
Issuer
To Furnish Indenture Trustee Names and Addresses of
Noteholders
|
|
Section
7.02
|
Preservation
of Information; Communications to Noteholders.
|
|
Section
7.03
|
Reports
by Issuer.
|
|
Section
7.04
|
Reports
by Indenture Trustee
|
ARTICLE
VIII
ACCOUNTS,
DISBURSEMENTS AND RELEASES
|
Section
8.01
|
Collection
of Money
|
|
Section
8.02
|
Trust
Accounts.
|
|
Section
8.03
|
Officer’s
Certificate
|
|
Section
8.04
|
Termination
Upon Payment to Noteholders
|
|
Section
8.05
|
Release
of Trust Estate.
|
|
Section
8.06
|
Surrender
of Notes Upon Final Payment
|
ARTICLE
IX
SUPPLEMENTAL
INDENTURES
|
Section
9.01
|
Supplemental
Indentures Without Consent of Noteholders.
|
|
Section
9.02
|
Supplemental
Indentures With Consent of Noteholders
|
|
Section
9.03
|
Execution
of Supplemental Indentures
|
|
Section
9.04
|
Effect
of Supplemental Indenture
|
|
Section
9.05
|
Conformity
with Trust Indenture Act
|
|
Section
9.06
|
Reference
in Notes to Supplemental Indentures
|
|
Section
9.07
|
Supplemental
Indentures Affecting the Servicers
|
ARTICLE
X
MISCELLANEOUS
|
Section
10.01
|
Compliance
Certificates and Opinions, etc.
|
|
Section
10.02
|
Form
of Documents Delivered to Indenture Trustee
|
|
Section
10.03
|
Acts
of Noteholders.
|
|
Section
10.04
|
Notices,
etc., to Indenture Trustee, Issuer, Insurer and Rating
Agencies.
|
|
Section
10.05
|
Notices
to Noteholders; Waiver
|
|
Section
10.06
|
Alternate
Payment and Notice Provisions
|
|
Section
10.07
|
Conflict
with Trust Indenture Act
|
|
Section
10.08
|
Effect
of Headings
|
|
Section
10.09
|
Successors
and Assigns
|
|
Section
10.10
|
Separability
|
|
Section
10.11
|
Benefits
of Indenture
|
|
Section
10.12
|
Legal
Holidays
|
|
Section
10.13
|
GOVERNING
LAW
|
|
Section
10.14
|
Counterparts
|
|
Section
10.15
|
Recording
of Indenture
|
|
Section
10.16
|
Issuer
Obligation
|
|
Section
10.17
|
No
Petition
|
|
Section
10.18
|
Optional
Termination.
|
|
Section
10.19
|
Inspection
|
|
Section
10.20
|
Limitation
of Liability of Owner Trustee
|
|
Section
10.21
|
Determination
of the Terminating Entity.
|
|
Section
10.22
|
Additional
Termination Requirements.
|
|
Section
10.23
|
Third
Party Beneficiary
|
ARTICLE
XI
REMIC
PROVISIONS
|
Section
11.01
|
REMIC
Provisions.
|
|
Section
11.02
|
Distributions
on the REMIC IA Regular Interests, the REMIC IB Regular Interests,
the
REMIC IC Regular Interests, the REMIC ID Regular Interests, the REMIC
IIA
Regular Interests, the REMIC IIB Regular Interests and the REMIC
IIC
Regular Interests.
|
ARTICLE
XII
CERTAIN
MATTERS REGARDING THE INSURER
|
Section
12.01
|
Rights
of the Insurer to Exercise the Rights of the Class 2A-1
Notes
|
|
Section
12.02
|
Claims
Upon the Policy; Insurance Account.
|
|
Section
12.03
|
Effect
of Payments by the Insurer; Subrogation
|
|
Section
12.04
|
Notices
and Information to the Insurer
|
EXHIBITS
|
EXHIBIT
A-1
|
FORM
OF CLASS A NOTES
|
|
EXHIBIT
A-2
|
FORM
OF CLASS M NOTES
|
|
EXHIBIT
A-3
|
FORM
OF CLASS B NOTES
|
|
EXHIBIT
B
|
FORM
OF DEPOSITOR CERTIFICATION
|
|
EXHIBIT
C
|
FORM
OF INDENTURE TRUSTEE CERTIFICATION
|
|
EXHIBIT
D
|
FORM
OF INVESTOR REPRESENTATION LETTER
|
|
EXHIBIT
E
|
FORM
OF TRANSFEREE REPRESENTATION LETTER
|
|
EXHIBIT
F
|
FORM
OF RULE 144A INVESTMENT
REPRESENTATION
|
|
EXHIBIT
G
|
FORM
OF CONFIRMATION TO THE SWAP
AGREEMENT
|
|
EXHIBIT
H
|
[RESERVED]
|
|
EXHIBIT
I
|
[RESERVED]
|
|
EXHIBIT
J
|
FORM
OF ISDA MASTER AGREEMENT
|
|
EXHIBIT
K
|
FORM
10-D, FORM 8-K AND FORM 10-K REPORTING
RESPONSIBILITY
|
|
EXHIBIT
L
|
SERVICING
CRITERIA TO BE ADDRESSED IN ASSESSMENT OF
COMPLIANCE
|
|
EXHIBIT
M
|
FORM
OF POLICY
|
|
EXHIBIT
N
|
FORM
OF MONTHLY STATEMENT TO CERTIFICATEHOLDERS AND
NOTEHOLDERS
|
|
APPENDIX
A
|
DEFINITIONS
|
This
Indenture, dated as of April 28, 2006, between Home Equity Mortgage Trust
2006-2, a Delaware statutory trust, as Issuer (the “Issuer”) and U.S. Bank
National Association, a national banking association organized under the laws
of
the United States, and any successor thereto, as Indenture Trustee (the
“Indenture Trustee”).
WITNESSETH
THAT:
Each
party hereto agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Insurer, with regard to the Group 2 Notes,
and
the Holders of the Issuer’s Asset-Backed Notes, Series 2006-2, Class 1A-1, Class
1A-2, Class 1A-3, Class 2A-1, Class 1M-1, Class 1M-2, Class 1M-3, Class 1M-3,
Class 1M-4, Class 1M-5, Class 1M-6, Class 1M-7, Class 1M-8, Class 1M-9, Class
2M-1, Class 2M-2, Class 1B-1 and Class 1B-2 Notes (collectively, the
“Notes”).
GRANTING
CLAUSE
The
Issuer hereby Grants to the Indenture Trustee, all of the Issuer’s right, title
and interest, whether now owned or hereafter acquired, in, to, and under the
following: (a) the Initial Loans and any Additional Balances arising thereafter,
and all monies due or to become due thereunder; (b) the Payment Account, Basis
Risk Reserve Funds, Pre-Funding Accounts and Capitalized Interest Accounts
and
all funds on deposit or credited thereto from time to time and all proceeds
thereof; (c) all hazard insurance policies; (d) all present and future claims,
demands, causes and choses in action in respect of any or all of the foregoing
and all payments on or under, and all proceeds of every kind and nature
whatsoever in respect of, any or all of the foregoing and all payments on or
under, and all proceeds of every kind and nature whatsoever in the conversion
thereof, voluntary or involuntary, into cash or other liquid property, all
cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, checks,
deposit accounts, rights to payment of any and every kind, and other forms
of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing; (e) all accounts, chattel paper, deposit accounts, documents, general
intangibles, goods, instruments, investment property, letter-of-credit rights,
letters of credit, money, and oil, gas, and other minerals, consisting of,
arising from, or relating to, any of the foregoing; (f) the rights with respect
to the Swap Agreement and the Swap Account and (g) all proceeds of the
foregoing (collectively, the “Trust Estate” or the “Collateral”). Excluded
Amounts shall not be transferred to the Trust Estate. The foregoing Grant is
made in trust to secure the payment of principal of and interest on, and any
other amounts owing in respect of, the Notes, equally and ratably without
prejudice, priority or distinction, and to secure compliance with the provisions
of this Indenture, all as provided in this Indenture.
The
Indenture Trustee acknowledges such Xxxxx, accepts the trust under this
Indenture in accordance with the provisions hereof and agrees to perform its
duties as Indenture Trustee as required herein.
PRELIMINARY
STATEMENT
The
Notes
will consist of seventeen classes of notes, designated as (i) the Class 1A-1
Notes, (ii) the Class 1A-2 Notes, (iii) the Class 1A-3 Notes, (iv) the Class
2A-1 Notes, (v) the Class 1M-1 Notes, (vi) the Class 1M-2 Notes, (vii) the
Class
1M-3 Notes, (viii) the Class 1M-4 Notes, (ix) the Class 1M-5 Notes, (x) the
Class 1M-6 Notes, (xi) the Class 1M-7 Notes, (xii) the Class 1M-8 Notes, (xiii)
the Class 1M-9 Notes, (xiv) the Class 2M-1 Notes, (xv) the Class 2M-2, (xvi)
the
Class 1B-1 Notes and (xvii) the Class 1B-2 Notes.
REMIC
IA
As
provided herein, the REMIC Administrator will make an election to treat the
segregated pool of assets consisting of Loan Group 1 and certain other related
assets subject to this Agreement (exclusive of the Swap Account, the related
Basis Risk Reserve Fund, the related Pre-Funding Account, the related
Capitalized Interest Account, and the related Subsequent Loan Interest) as
a
real estate mortgage investment conduit (a “REMIC”) for federal income tax
purposes, and such segregated pool of assets will be designated as “REMIC IA.”
The Class 1A-R Certificates (with respect to the Class R-IA Interest) will
represent the sole class of “residual interests” in REMIC IA for purposes of the
REMIC Provisions under federal income tax law. The following table irrevocably
sets forth the designation, the Uncertificated REMIC IA Pass-Through Rate and
the initial Uncertificated Principal Balance for each of the “regular interests”
in REMIC IA (the “REMIC IA Regular Interests”). The latest possible maturity
date (determined for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) of each of the REMIC IA Regular Interests will be the
Latest Possible Maturity Date as defined herein.
|
Designation
|
Uncertificated
REMIC IA Pass-Through Rate
|
Initial
Uncertificated Principal Balance
|
|
LTIA-1
|
Variable(1)
|
$
329,712,628.23
|
|
LTIA-PF
|
Variable(1)
|
$
20,287,571.77
|
|
LTIA-S1
|
Variable(1)
|
(2)
|
|
LTIA-S2
|
Variable(1)
|
(2)
|
___________________
| (1) |
Calculated
as provided in the definition of Uncertificated REMIC IA Pass-Through
Rate.
|
| (2) |
REMIC
IA Regular Interest LTIA-S1 and REMIC IA Regular Interest LTIA-S2
will not
have an Uncertificated Principal Balance but will accrue interest
on an
uncertificated notional amount calculated in accordance with the
definition of “Uncertificated Notional Amount”
herein.
|
REMIC
IB
As
provided herein, an election will be made to treat the segregated pool of assets
consisting of the REMIC IA Regular Interests as a REMIC for federal income
tax
purposes, and such segregated pool of assets will be designated as REMIC IB.
The
Class 1A-R Certificates (with respect to the Class R-IB Interest) will represent
the sole class of “residual interests” in REMIC IB for purposes of the REMIC
Provisions under federal income tax law. The following table irrevocably sets
forth the designation, Uncertificated REMIC IB Pass-Through Rate and initial
Uncertificated Principal Balance for each of the “regular interests” in REMIC IB
(the “REMIC IB Regular Interests”). The latest possible maturity date
(determined for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) of each of the REMIC IB Regular Interests will be the
Latest Possible Maturity Date as defined herein.
|
Designation
|
Uncertificated
REMIC IB Pass-Through Rate
|
Initial
Uncertificated Principal Balance
|
|
LTIB-1-A
|
Variable(1)
|
$
57,635,000.00
|
|
LTIB-1-B
|
Variable(1)
|
$
57,635,000.00
|
|
LTIB-1A-1
|
Variable(1)
|
$
205,670,000.00
|
|
LTIB-1A-2
|
Variable(1)
|
$
25,700,000.00
|
|
LTIB-1A-R
|
Variable(1)
|
$
100.00
|
|
LTIB-1P
|
Variable(1)
|
$
100.00
|
|
LTIB-1X-1
|
Variable(1)
|
$
3,360,000.00
|
|
LTIB-S
|
(2)
|
(3)
|
___________________
| (1) |
Calculated
as provided in the definition of Uncertificated REMIC IB Pass-Through
Rate.
|
| (2) |
REMIC
IB Regular Interest LTIB-S will not have an Uncertificated REMIC
IB
Pass-Through Rate, but will be entitled to 100% of the amounts distributed
on REMIC IA Regular Interest LTIA-S1 and REMIC IA Regular Interest
LTIA-S2.
|
| (3) |
REMIC
IB Regular Interest LTIB-S will not have an Uncertificated Principal
Balance, but will have an Uncertificated Notional Amount equal to
the
Uncertificated Notional Amount of REMIC IA Regular Interest LTIA-S1
and
REMIC IA Regular Interest LTIA-S2.
|
REMIC
IC
As
provided herein, an election will be made to treat the segregated pool of assets
consisting of the REMIC IB Regular Interests as a REMIC for federal income
tax
purposes, and such segregated pool of assets will be designated as REMIC IC.
The
Class 1A-R Certificates (with respect to the Class R-IC Interest) will represent
the sole class of “residual interests” in REMIC IC for purposes of the REMIC
Provisions under federal income tax law. The following table irrevocably sets
forth the designation, Uncertificated REMIC IC Pass-Through Rate and initial
Uncertificated Principal Balance for each of the “regular interests” in REMIC IC
(the “REMIC IC Regular Interests”). The latest possible maturity date
(determined for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) of each of the REMIC IC Regular Interests will be the
Latest Possible Maturity Date as defined herein.
|
Designation
|
Uncertificated
REMIC IC Pass-Through Rate
|
Initial
Uncertificated Principal Balance
|
|
LTIC-1AA
|
Variable(1)
|
$
343,000,000.00
|
|
LTIC-1A-1
|
Variable(1)
|
$
2,056,700.00
|
|
LTIC-1A-2
|
Variable(1)
|
$
257,000.00
|
|
LTIC-1A-3
|
Variable(1)
|
$ 257,000.00
|
|
LTIC-1M-1
|
Variable(1)
|
$
157,500.00
|
|
LTIC-1M-2
|
Variable(1)
|
$
182,000.00
|
|
LTIC-1M-3
|
Variable(1)
|
$
70,000.00
|
|
LTIC-1M-4
|
Variable(1)
|
$
87,500.00
|
|
LTIC-1M-5
|
Variable(1)
|
$
73,500.00
|
|
LTIC-1M-6
|
Variable(1)
|
$
56,000.00
|
|
LTIC-1M-7
|
Variable(1)
|
$
64,700.00
|
|
LTIC-1M-8
|
Variable(1)
|
$
49,000.00
|
|
LTIC-1M-9
|
Variable(1)
|
$ 45,500.00
|
|
LTIC-1B-1
|
Variable(1)
|
$
70,000.00
|
|
LTIC-1B-2
|
Variable(1)
|
$
40,000.00
|
|
LTIC-1ZZ
|
Variable(1)
|
$
3,533,600.00
|
|
LTIC-1P
|
Variable(1)
|
$
100.00
|
|
LTIC-1R
|
Variable(1)
|
$
100.00
|
|
LTIC-1S
|
(2)
|
(3)
|
|
LTIC-1IO
|
(1)
|
(4)
|
___________________
| (1) |
Calculated
as provided in the definition of Uncertificated REMIC IC Pass-Through
Rate.
|
| (2) |
REMIC
IC Regular Interest LTIC-1S will not have an Uncertificated REMIC
IC
Pass-Through Rate, but will be entitled to 100% of the amounts distributed
on REMIC IB Regular Interest
LTIB-S.
|
| (3) |
REMIC
IC Regular Interest LTIC-1S will not have an Uncertificated Principal
Balance, but will have an Uncertificated Notional Amount equal to
the
Uncertificated Notional Amount of REMIC IB Regular Interest
LTIB-S.
|
| (4) |
REMIC
IC Regular Interest LTIC-1IO will not have an Uncertificated Principal
Balance, but will accrue interest on its uncertificated notional
amount
calculated in accordance with the definition of Uncertificated Notional
Amount herein. REMIC IC Regular Interest LTIC-1IO will be held as
an asset
of the Swap Account.
|
REMIC
ID
As
provided herein, an election will be made to treat the segregated pool of assets
consisting of the REMIC IC Regular Interests as a REMIC for federal income
tax
purposes, and such segregated pool of assets will be designated as REMIC ID.
The
Class 1A-R Certificates (with respect to the Class R-ID Interest) will represent
the sole class of “residual interests” in REMIC ID for purposes of the REMIC
Provisions under federal income tax law. The following table irrevocably sets
forth the designation, Note Interest Rate, aggregate Initial Note Balance or
Initial Certificate Balance and minimum denominations for each Class of Notes
and the Class 1P, Class 1X-1 and Class 1X-S Certificates comprising the
interests representing “regular interests” in REMIC ID, and the Class 1A-R
Certificates and Class 1X-2 Certificates which are not “regular interests” in
REMIC ID. The latest possible maturity date (determined for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii)) of each of the
Notes
and Certificates will be the Latest Possible Maturity Date as defined
herein.
|
Note
Balance or Certificate Balance
|
Note
Interest Rate
|
Minimum
Denomination
|
Integral
Multiples in Excess of Minimum
|
|
|
Class
1A-1
|
$
205,670,000.00
|
5.3672%
|
$ 25,000
|
$1
|
|
Class
1A-2
|
$
25,700,000.00
|
5.4100%
|
$ 25,000
|
$1
|
|
Class
1A-3
|
$
25,700,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1M-1
|
$
15,750,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1M-2
|
$
18,200,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1M-3
|
$
7,000,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1M-4
|
$
8,750,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1M-5
|
$
7,350,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1M-6
|
$
5,600,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1M-7
|
$
6,470,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1M-8
|
$
4,900,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1M-9
|
$
4,550,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1B-1
|
$
7,000,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1B-2
|
$
4,000,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
1P
|
$
100.00
|
Variable(2)
|
$
100
|
N/A
|
|
Class
1A-R
|
$
100.00
|
Variable(2)
|
$
100
|
N/A
|
|
Class
1X-1
|
$
3,360,000.00
|
Variable(3)(4)
|
100%
|
N/A
|
|
Class
1X-S
|
$ 0.00
(5)
|
Variable(6)
|
100%
|
N/A
|
|
Class
1X-2
|
$
0.00
|
0.00%
|
N/A
|
N/A
|
|
REMIC
ID Regular Interest IO(7)
|
(8)
|
(9)
|
N/A
|
N/A
|
______________
|
(1)
|
The
Class 1A-3, Class 1M-1, Class 1M-2, Class 1M-3, Class 1M-4, Class
1M-5,
Class 1M-6, Class 1M-7, Class 1M-8, Class 1M-9, Class 1B-1 and Class
1B-2
Notes have an adjustable rate and will receive interest pursuant
to
formulas based on LIBOR, subject to the related Net Funds
Cap.
|
|
(2)
|
The
Note Interest Rate on the Class 1P and Class 1A-R Certificates is
equal to
the related Net Funds Cap.
|
|
(3)
|
The
Class 1X-1 Certificates will have an initial principal balance of
$3,360,000.00 and will accrue interest on its notional amount. For
any
Payment Date, the notional amount of the Class 1X-1 Certificates
will be
equal to the related Aggregate Collateral Balance minus the aggregate
Certificate Balance of the Class 1A-R Certificates and Class 1P
Certificates immediately prior to such Payment Date. The initial
notional
amount of the Class 1X-1 Certificates is $350,000,000.00.
|
|
(4)
|
The
Class 1X-1 Certificates are variable rate and will accrue interest
on a
related notional amount.
|
|
(5)
|
For
federal income tax purposes, the Class 1X-S Certificates will not
have a
Principal Balance, but will have a notional amount equal to the
Uncertificated Notional Amount of REMIC IC Regular Interest
LTIC-1S.
|
|
(6)
|
The
Class 1X-S Certificates are an interest only Class and for each Payment
Date the Class 1X-S Certificates shall receive the aggregate Excess
Servicing Fee. For federal income tax purposes, the Class 1X-S
Certificates will not have a Pass-Through Rate, but will be entitled
to
100% of the amounts distributed on REMIC IC Regular Interest
LTIC-1S.
|
|
(7)
|
REMIC
ID Regular Interest IO will be held as an asset of the Swap Account.
|
|
(8)
|
REMIC
ID Regular Interest IO will not have an Uncertificated Principal
Balance,
but will have a notional amount equal to the Uncertificated Notional
Amount of the REMIC IC Regular Interest
LTIC-1IO.
|
|
(9)
|
REMIC
ID Regular Interest IO will not have a Pass-Through Rate, but will
receive
100% of amounts received in respect of the REMIC IC Regular Interest
LTIC-1IO.
|
REMIC
IIA
As
provided herein, the REMIC Administrator will make an election to treat the
segregated pool of assets consisting of Loan Group 2 and certain other related
assets subject to this Agreement (exclusive of the related Basis Risk Reserve
Fund, the related Pre-Funding Account, the related Capitalized Interest Account,
and the related Subsequent Loan Interest) as a real estate mortgage investment
conduit (a “REMIC”) for federal income tax purposes, and such segregated pool of
assets will be designated as “REMIC IIA.” The Class G Certificates will
represent the sole class of “residual interests” in REMIC IIA for purposes of
the REMIC Provisions under federal income tax law. The following table
irrevocably sets forth the designation, the Uncertificated REMIC IIA
Pass-Through Rate and the initial Uncertificated Principal Balance for each
of
the “regular interests” in REMIC IIA (the “REMIC IIA Regular Interests”). The
latest possible maturity date (determined for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii)) of each of the REMIC IIA Regular
Interests will be the Latest Possible Maturity Date as defined herein.
|
Designation
|
Uncertificated
REMIC IIA Pass-Through Rate
|
Initial
Uncertificated Principal Balance
|
|
LTIIA-1
|
Variable(1)
|
$
209,102,310.87
|
|
LTIIA-PF
|
Variable(1)
|
$
40,897,889.13
|
___________________
| (1) |
Calculated
as provided in the definition of Uncertificated REMIC IIA Pass-Through
Rate.
|
REMIC
IIB
As
provided herein, an election will be made to treat the segregated pool of assets
consisting of the REMIC IIA Regular Interests as a REMIC for federal income
tax
purposes, and such segregated pool of assets will be designated as REMIC IIB.
The Class 2A-R Certificates (with respect to the Class R-IIB Interest) will
represent the sole class of “residual interests” in REMIC IIB for purposes of
the REMIC Provisions under federal income tax law. The following table
irrevocably sets forth the designation, Uncertificated REMIC IIB Pass-Through
Rate and initial Uncertificated Principal Balance for each of the “regular
interests” in REMIC IIB (the “REMIC IIB Regular Interests”). The latest possible
maturity date (determined for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) of each of the REMIC IIB Regular Interests will be the
Latest Possible Maturity Date as defined herein.
|
Designation
|
Uncertificated
REMIC IIC Pass-Through Rate
|
Initial
Uncertificated Principal Balance
|
|
LTIIB-2AA
|
Variable(1)
|
$
245,000,000.00
|
|
LTIIB-2A-1
|
Variable(1)
|
$
2,400,000.00
|
|
LTIIB-2M-1
|
Variable(1)
|
$
22,500.00
|
|
LTIIB-2M-2
|
Variable(1)
|
$ 25,000.00
|
|
LTIIB-2ZZ
|
Variable(1)
|
$
2,552,500.00
|
|
LTIIB-2P
|
Variable(1)
|
$
100.00
|
|
LTIIB-2R
|
Variable(1)
|
$
100.00
|
___________________
| (1) |
Calculated
as provided in the definition of Uncertificated REMIC IIC Pass-Through
Rate.
|
REMIC
IIC
As
provided herein, an election will be made to treat the segregated pool of assets
consisting of the REMIC IIB Regular Interests as a REMIC for federal income
tax
purposes, and such segregated pool of assets will be designated as REMIC IIC.
The Class A-R Certificates (with respect to the Class R-IIC Interest) will
represent the sole class of “residual interests” in REMIC IIC for purposes of
the REMIC Provisions under federal income tax law. The following table
irrevocably sets forth the designation, Note Interest Rate, aggregate Initial
Note Balance or Initial Certificate Balance and minimum denominations for each
Class of Notes and the Class 2P and Class 2X-1 Certificates comprising the
interests representing “regular interests” in REMIC IIC, and the Class 2A-R
Certificates, Class G Certificates and Class 2X-2 Certificates which are not
“regular interests” in REMIC IIC. The latest possible maturity date (determined
for purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii))
of
each of the Notes and Certificates will be the Latest Possible Maturity Date
as
defined herein.
|
Note
Balance or Certificate Balance
|
Note
Interest Rate
|
Minimum
Denomination
|
Integral
Multiples in Excess of Minimum
|
|
|
Class
2A-1
|
$
240,000,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
2M-1
|
$
2,250,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
2M-2
|
$
2,500,000.00
|
Adjustable(1)
|
$ 25,000
|
$1
|
|
Class
2P
|
$
100.00
|
Variable(2)
|
$
100
|
N/A
|
|
Class
2A-R
|
$
100.00
|
Variable(2)
|
$
100
|
N/A
|
|
Class
G
|
$
0.00
|
Adjustable(1)
|
100%
|
N/A
|
|
Class
2X-1
|
$
5,250,000.00
|
Variable(3)(4)
|
100%
|
N/A
|
|
Class
2X-2
|
$
0.00
|
0.00%
|
N/A
|
N/A
|
______________
|
(1)
|
The
Class 2A-1, Class 2M-1 and Class 2M-2 Notes and the Class G Certificates
have an adjustable rate and will receive interest pursuant to formulas
based on LIBOR, subject to the related Net Funds
Cap.
|
|
(2)
|
The
Note Interest Rate on the Class 2P Certificates and Class 2A-R
Certificates is equal to the related Net Funds
Cap.
|
|
(3)
|
The
Class 2X-1 Certificates will have an initial principal balance of
$5,250,000.00 and will accrue interest on its notional amount. For
any
Payment Date, the notional amount of the Class 2X-1 Certificates
will be
equal to the related Aggregate Collateral Balance minus the aggregate
Certificate Balance of the Class 2A-R and Class 2P Certificates
immediately prior to such Payment Date. The initial notional amount
of the
Class 2X-1 Certificates is
$250,000,000.00.
|
|
(4)
|
The
Class 2X-1 Certificates are variable rate and will accrue interest
on a
related notional amount.
|
ARTICLE
I
DEFINITIONS
Section
1.01 Definitions.
For all
purposes of this Indenture, except as otherwise expressly provided herein or
unless the context otherwise requires, capitalized terms not otherwise defined
herein shall have the meanings assigned to such terms in the Definitions
attached hereto as Appendix A which is incorporated by reference herein. All
other capitalized terms used herein shall have the meanings specified
herein.
Section
1.02 Incorporation
by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act (the
“TIA”), the provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
“Commission”
means the Securities and Exchange Commission.
“indenture
securities” means the Notes.
“indenture
security holder” means a Noteholder.
“indenture
to be qualified” means this Indenture.
“indenture
trustee” or “institutional trustee” means the Indenture Trustee.
“obligor”
on the indenture securities means the Issuer and any other obligor on the
indenture securities.
All
other
TIA terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by Commission rule have the meaning
assigned to them by such definitions.
Section
1.03 Rules
of Construction.
Unless
the context otherwise requires:
(i) a
term
has the meaning assigned to it;
(ii) an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles as in effect from
time
to time;
(iii) “or”
includes “and/or”;
(iv) “including”
means including without limitation;
(v) words
in
the singular include the plural and words in the plural include the
singular;
(vi) the
term
“proceeds” has the meaning ascribed thereto in the UCC; and
(vii) any
agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented
and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns.
Section
1.04 Calculations
of Interest.
The
calculation of the Indenture Trustee Fee, the Servicing Fee, the Credit Risk
Manger Fee, the Insurer Premium and interest on the Class 1A-1 Notes, Class
1A-2
Notes, the Class 1P Certificates, Class 1A-R Certificates, Class 1X-S
Certificates, Class 1X-1 Certificates, Class 2X-1 Certificates, Class 2P
Certificates and Class 2A-R Certificates and the REMIC Regular Interests shall
be made on the basis of a 360-day year consisting of twelve 30-day months.
All
calculations of interest on the Class 1A-3, Class 2A-1, Class 1M-1, Class 1M-2,
Class 1M-3, Class 1M-3, Class 1M-4, Class 1M-5, Class 1M-6, Class 1M-7, Class
1M-8, Class 1M-9, Class 2M-1, Class 2M-2, Class 1B-1 and Class 1B-2 Notes and
Class G Certificates shall be made on the basis of the actual number of days
in
the Accrual Period and a year assumed to consist of 360 days. All dollar amounts
calculated hereunder shall be rounded to the nearest xxxxx with one-half of
one
xxxxx being rounded up.
ARTICLE
II
ORIGINAL
ISSUANCE OF NOTES
Section
2.01 Form.
The
Notes, together with the Indenture Trustee’s certificate of authentication,
shall be in substantially the form set forth in Exhibits A-1, A-2 and A-3 with
such appropriate insertions, omissions, substitutions and other variations
as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes. Any portion of the text
of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The
Notes
shall be typewritten, printed, lithographed or engraved or produced by any
combination of these methods (with or without steel engraved borders), all
as
determined by the Authorized Officers executing such Notes, as evidenced by
their execution of such Notes.
The
terms
of the Notes set forth in Exhibits A-1, A-2 and A-3 are part of the terms of
this Indenture.
Section
2.02 Execution,
Authentication and Delivery.
The
Notes shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes may be
manual or facsimile.
Notes
bearing the manual or facsimile signature of individuals who were at any time
Authorized Officers of the Issuer shall bind the Issuer, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Notes or did not hold such offices at the
date of such Notes.
The
Indenture Trustee shall authenticate and deliver the Notes and Certificates
for
original issue in an aggregate initial principal amount of approximately
$600,000,400.00, upon receipt of an Issuer Request containing instructions
to do
so.
Each
Class of Notes shall be dated the date of its authentication. The
Book-Entry Notes shall be issuable in book entry format and shall be issuable
in
minimum Initial Note Balances of $25,000 and in integral multiples of $1 in
excess thereof.
No
Note
shall be entitled to any benefit under this Indenture or be valid or obligatory
for any purpose, unless there appears on such Note a certificate of
authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered
hereunder.
Section
2.03 Acceptance
of the Swap Agreement by Indenture Trustee.
The
Issuer hereby directs the Indenture Trustee to perform the Issuer’s obligations
under Swap Agreement (in the form of Exhibit G hereto) on the Closing Date
and
thereafter on behalf of the Holders of the Notes. The Issuer and the Holders
of
the Notes by their acceptance of such Notes acknowledge and agree that the
Indenture Trustee shall prepare and deliver any notices required to be delivered
to the Counterparty under Sections 2(b), 2(d), 5(a), 6(a), 6(b), 6(d) and 12(b)
of the ISDA Master Agreement and shall do so solely in its capacity as Indenture
Trustee and not in its individual capacity.
The
Indenture Trustee acknowledges receipt of the Swap Agreement and declares that
it holds and will continue to hold these documents and any amendments,
replacements or supplements thereto and all other assets of the Trust as
Indenture Trustee in trust for the use and benefit of all present and future
Holders of the Notes. Every provision of this Indenture affording protection
to
the Indenture Trustee shall apply to the performance of the Indenture Trustee’s
duties under the Swap Agreement and satisfaction of its obligations
thereunder.
Section
2.04 Conveyance
of Subsequent Loans.
(a) The
Seller, pursuant to the Loan Purchase Agreement, sells, transfers, assigns,
sets
over and otherwise conveys to the Trust for the benefit of the Noteholders,
without recourse, all right, title and interest in such Subsequent Loans (which
does not include servicing rights), including all interest and principal due
on
or with respect to such Subsequent Loans on or after the related Subsequent
Transfer Date and all interest and principal payments on such Subsequent Loans
received prior to the Subsequent Transfer Date in respect of installments of
interest and principal due thereafter, but not including principal and interest
due on such Subsequent Loans prior to the related Subsequent Transfer Date,
any
insurance policies in respect of such Subsequent Loans and all proceeds of
any
of the foregoing. Upon one Business Day’s prior written notice to the Indenture
Trustee, the Servicers, the Insurer and the Rating Agencies, on any Business
Day
during the related Pre-Funding Period designated by the Depositor, the
Depositor, the Seller, the Servicers and the Indenture Trustee shall complete,
execute and deliver a Subsequent Transfer Agreement, and with regards to any
Subsequent Loans transferred as Group 2 Loans, with the consent of the Insurer,
so long as no Rating Agency has provided notice that the execution and delivery
of such Subsequent Transfer Agreement will result in a reduction or withdrawal
of the ratings assigned to the Notes or the Class G Certificates, without regard
to the Policy.
The
transfer of Subsequent Loans and the other property and rights relating to
them
on a Subsequent Transfer Date is subject to the satisfaction of each of the
following conditions:
(i) each
Subsequent Loan conveyed on such Subsequent Transfer Date satisfies the
representations and warranties applicable to it under the Loan Purchase
Agreement as of the applicable Subsequent Transfer Date; provided, however,
that
with respect to a breach of a representation and warranty with respect to a
Subsequent Loan, the obligation under Section 2(d) of the Loan Purchase
Agreement of the Seller to cure, repurchase or replace such Subsequent Loan
shall constitute the sole remedy against the Seller respecting such breach
available to Noteholders, the Depositor or the Indenture Trustee;
(ii) the
Indenture Trustee, the Insurer and the Rating Agencies are provided with an
Opinion of Counsel or Opinions of Counsel, at the expense of the Depositor,
stating that each REMIC in the Trust Fund is and shall continue to qualify
as a
REMIC following the transfer of the Subsequent Loans, to be delivered as
provided pursuant to paragraph (b) below;
(iii) the
Rating Agencies, the Insurer, the Indenture Trustee and the Indenture Trustee
are provided with an Opinion of Counsel or Opinions of Counsel, at the expense
of the Depositor, confirming that the transfer of the Subsequent Loans conveyed
on such Subsequent Transfer Date is a true sale, to be delivered as provided
pursuant to paragraph (b) below;
(iv) the
execution and delivery of such Subsequent Transfer Agreement or conveyance
of
the related Subsequent Loans does not result in a reduction or withdrawal of
any
ratings assigned to the Notes or the Class G Certificates by the Rating
Agencies, without regard to the Policy;
(v) no
Subsequent Loan conveyed on such Subsequent Transfer Date is 30 or more days
contractually delinquent as of such date;
(vi) the
servicer of each Subsequent Loan in Loan Group 1 will be Wilshire or Ocwen,
and
in Loan Group 2 will be PNC;
(vii) the
remaining term to stated maturity of such Subsequent Loan does not exceed 30
years for fully amortizing loans or 15 years for balloon loans;
(viii) such
Subsequent Mortgage Loan does not have a Net Mortgage Rate less than 6.00%
or
6.00% per annum in the case of a Subsequent Loan relating to the Group 1 Loans
and Group 2 Loans, respectively;
(ix) the
Seller shall have deposited in the related Custodial Account all principal
and
interest collected with respect to the related Subsequent Loans on or after
the
related Subsequent Transfer Date;
(x) such
Subsequent Loan does not have a Combined Loan-to-Value Ratio greater than
100.00%;
(xi) such
Subsequent Loan has a principal balance not greater than $400,000 or $1,250,000
in the case of a Subsequent Loan relating to the Group 1 Loans and Group 2
Loans, respectively;
(xii) no
Subsequent Loan shall have a final maturity date after June 1,
2036;
(xiii) such
Subsequent Loan is secured by a first or second lien;
(xiv) such
Subsequent Loan is otherwise acceptable to the Rating Agencies, and, in the
case
of a Subsequent Loan related to Loan Group 2, the Insurer;
(xv) [reserved];
(xvi) following
the conveyance of such Subsequent Loans on such Subsequent Transfer Date the
characteristics of the Loans in each Loan Group (based on the Initial Loans
as
of the Cut-off Date and the Subsequent Loans as of their related Subsequent
Transfer Date) will be as follows:
| (A) |
a
weighted average Mortgage Interest Rate of at least 10.75% or 9.25%
per
annum in the case of the Group 1 Loans and Group 2 Loans,
respectively;
|
| (B) |
a
weighted average remaining term to stated maturity of less than 210
months
or 270 months in the case of the Group 1 Loans and Group 2 Loans,
respectively;
|
| (C) |
a
weighted average Combined Loan-to-Value Ratio of not more than 95.50%
or
87.50% in the case of the Group 1 Loans and Group 2 Loans,
respectively;
|
| (D) |
a
weighted average Credit Score of at least 675 and 705 in the case
of the
Group 1 Loans and Group 2 Loans,
respectively;
|
| (E) |
no
more than 75.00% and 5.00% of the Group 1 Loans and Group 2 Loans,
respectively, by aggregate Cut-off Date Principal Balance are balloon
loans;
|
| (F) |
no
more than 25.00% and 50.00% of the Group 1 Loans and Group 2 Loans,
respectively, by aggregate Cut-off Date Principal Balance are concentrated
in one state; and
|
| (G) |
no
more than 12.00% and 11.00% of the Group 1 Loans and Group 2 Loans,
respectively by aggregate Cut-off Date Principal Balance relate to
non-owner occupied properties;
|
(xvii) neither
the Seller nor the Depositor shall be insolvent or shall be rendered insolvent
as a result of such transfer;
(xviii) no
Event
of Default has occurred hereunder; and
(xix) the
Depositor shall have delivered to the Indenture Trustee an Officer’s Certificate
confirming the satisfaction of each of these conditions precedent.
(b) Upon
(1)
delivery to the Indenture Trustee and
the
Insurer
by the
Depositor of the Opinions of Counsel referred to in Sections 2.04(a)(ii) and
(iii), (2) delivery to the Indenture Trustee and the Insurer by the Depositor
of
a revised Loan Schedule reflecting the Subsequent Loans conveyed on such
Subsequent Transfer Date and delivery of the related Subsequent Loans to the
Indenture Trustee or the related Custodians and (3) delivery to the Indenture
Trustee and the Insurer by the Depositor of an Officer’s Certificate confirming
the satisfaction of each of the conditions precedent set forth in Section
2.04(a), the Indenture Trustee shall remit to the Seller the Aggregate
Subsequent Transfer Amount related to the Subsequent Loans transferred by the
Seller on such Subsequent Transfer Date from funds in the related Pre-Funding
Account.
(c) The
Indenture Trustee shall not be required to investigate or otherwise verify
compliance with the conditions set forth in the preceding paragraph, except
for
its own receipt of documents specified above, and shall be entitled to rely
on
the required Officer’s Certificate.
Section
2.05 Conveyance
of REMIC Regular Interests and Acceptance of REMIC IA, REMIC IB, REMIC IC,
REMIC
ID, REMIC IIA, REMIC IIB and REMIC IIC by the Indenture Trustee; Issuance of
Notes.
(a) The
Issuer, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey in trust to the Indenture
Trustee without recourse all the right, title and interest of the Issuer in
and
to the REMIC IA Regular Interests for the benefit of the Holder of the REMIC
IB
Regular Interests and the Holders of the Class 1A-R Certificates (with respect
to the Class R-IB Interest). The Indenture Trustee acknowledges receipt of
the
REMIC IA Regular Interests and declares that it holds and will hold the same
in
trust for the exclusive use and benefit of the Holders of the REMIC IB Regular
Interests and Holder of the Class 1A-R Certificates (with respect to the Class
R-IB Interest). The interests evidenced by the Class 1A-R Certificates (with
respect to the Class R-IB Interest), together with the REMIC IB Regular
Interests, constitute the entire beneficial ownership interest in REMIC IB.
(b) The
Issuer, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey in trust to the Indenture
Trustee without recourse all the right, title and interest of the Issuer in
and
to the REMIC IB Regular Interests for the benefit of the Holder of the REMIC
IC
Regular Interests and the Holders of the Class 1A-R Certificates (with respect
to the Class R-IC Interest). The Indenture Trustee acknowledges receipt of
the
REMIC IB Regular Interests and declares that it holds and will hold the same
in
trust for the exclusive use and benefit of the Holders of the REMIC IC Regular
Interests and Holder of the Class 1A-R Certificates (with respect to the
Class R-IC Interest). The interests evidenced by the Class 1A-R Certificates
(with respect to the Class R-IC Interest), together with the REMIC IC Regular
Interests, constitute the entire beneficial ownership interest in REMIC
IC.
(c) The
Issuer, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey in trust to the Indenture
Trustee without recourse all the right, title and interest of the Issuer in
and
to the REMIC IC Regular Interests for the benefit of the Holders of the Group
1
Notes and the Group 1 Certificates (other than the Class 1X-2 Certificates).
The
Indenture Trustee acknowledges receipt of the REMIC IC Regular Interests and
declares that it holds and will hold the same in trust for the exclusive use
and
benefit of the Holders of the Group 1 Notes and the Group 1 Certificates (other
than the Class 1X-2 Certificates). The interests evidenced by the Class 1A-R
Certificates (with respect to the Class R-ID Interest), together with the other
Group 1 Certificates (other than the Class 1X-2 Certificates) and the Group
1
Notes, constitute the entire beneficial ownership interest in REMIC ID.
(d) In
exchange for the REMIC IC Regular Interests and, concurrently with the
assignment to the Indenture Trustee thereof, pursuant to the written request
of
the Issuer executed by an officer of the Issuer, the Issuer has executed and
the
Indenture Trustee has authenticated and delivered to or upon the order of the
Issuer, the Group 1 Notes and the Group 1 Certificates (other than the Class
1X-2 Certificates) in authorized denominations evidencing the entire beneficial
ownership interest in REMIC ID.
(e) Concurrently
with (i) the assignment and delivery to the Indenture Trustee of REMIC IA
(including the Class R-IA Interest therein represented by the Class 1A-R
Certificates) and the acceptance by the Indenture Trustee thereof; (ii) the
assignment and delivery to the Indenture Trustee of REMIC IB (including the
Class R-IB Interest therein represented by the Class 1A-R Certificates), (ii)
the assignment and delivery to the Indenture Trustee of REMIC IC (including
the
Class R-IC Interest therein represented by the Class 1A-R Certificates) and
(iii) the assignment and delivery to the Indenture Trustee of REMIC ID
(including the Class R-ID Interest therein represented by the Class 1A-R
Certificates) and the acceptance by the Indenture Trustee thereof, the Issuer
has executed and the Indenture Trustee has authenticated and delivered to or
upon the order of the Issuer, the Group 2 Notes and the Group 2 Certificates
in
authorized denominations.
(f) The
Issuer, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey in trust to the Indenture
Trustee without recourse all the right, title and interest of the Issuer in
and
to the REMIC IIA Regular Interests for the benefit of the Holder of the REMIC
IIB Regular Interests and the Holders of the Class 1A-R Certificates. The
Indenture Trustee acknowledges receipt of the REMIC IIA Regular Interests and
declares that it holds and will hold the same in trust for the exclusive use
and
benefit of the Holders of the REMIC IIB Regular Interests and Holder of the
Class 1A-R Certificates (with respect to the Class R-IIB Interest). The
interests evidenced by the Class 1A-R Certificates (with respect to the Class
R-IIB Interest), together with the REMIC IIB Regular Interests, constitute
the
entire beneficial ownership interest in REMIC IIB.
(g) The
Issuer, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey in trust to the Indenture
Trustee without recourse all the right, title and interest of the Issuer in
and
to the REMIC IIB Regular Interests for the benefit of the Holders of the Group
2
Notes and the Group 2 Certificates (other than the Class G and the Class 2X-2
Certificates). The Indenture Trustee acknowledges receipt of the REMIC IIB
Regular Interests and declares that it holds and will hold the same in trust
for
the exclusive use and benefit of the Holders of the Group 2 Notes and the Group
2 Certificates (other than the Class G and the Class 2X-2 Certificates). The
interests evidenced by the Class 1A-R Certificates (with respect to the Class
R-ID Interest), together with the other Group 2 Certificates (other than the
Class G and the Class 2X-2 Certificates) and the Group 2 Notes, constitute
the
entire beneficial ownership interest in REMIC IIC.
(h) In
exchange for the REMIC IIB Regular Interests and, concurrently with the
assignment to the Indenture Trustee thereof, pursuant to the written request
of
the Issuer executed by an officer of the Issuer, the Issuer has executed and
the
Indenture Trustee has authenticated and delivered to or upon the order of the
Issuer, the Group 2 Notes and the Group 2 Certificates (other than the Class
G
and the Class 2X-2 Certificates) in authorized denominations evidencing the
entire beneficial ownership interest in REMIC IIC.
(i) Concurrently
with (i) the assignment and delivery to the Indenture Trustee of REMIC IIA
(including the residual interest therein represented by the Class G
Certificates) and the acceptance by the Indenture Trustee thereof; (ii) the
assignment and delivery to the Indenture Trustee of REMIC IIB (including the
Class R-IIB Interest therein represented by the Class 1A-R Certificates) and
(ii) the assignment and delivery to the Indenture Trustee of REMIC IIC
(including the Class R-IIC Interest therein represented by the Class 1A-R
Certificates) and the acceptance by the Indenture Trustee thereof, the Issuer
has executed and the Indenture Trustee has authenticated and delivered to or
upon the order of the Issuer, the Group 2 Notes and the Group 2 Certificates
in
authorized denominations.
ARTICLE
III
COVENANTS
Section
3.01 Collection
of Payments with Respect to Loans.
The
Indenture Trustee shall establish and maintain with itself the Payment Account
in which the Indenture Trustee shall, subject to the terms of this paragraph,
deposit, on the same Business Day as it is received from the Servicers (if
received prior to 2 PM New York City time, or if received thereafter, on the
next Business Day), each remittance received by the Indenture Trustee with
respect to the Loans. The Indenture Trustee shall use reasonable care, based
on
the information it receives from the Servicers, to establish and maintain
accounting entries for the Payment Account that indicate the deposit therein
of
principal and interest collections for the Loans. The Indenture Trustee shall
make all payments of principal and interest on the Notes, subject to
Section 3.03, as provided in Section 3.05 from monies on deposit in
the Payment Account.
Section
3.02 Maintenance
of Office or Agency.
The
Issuer will maintain in the City of New York, an office or agency where, subject
to satisfaction of conditions set forth herein, Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee
as
its agent to receive all such surrenders, notices and demands.
Section
3.03 Money
for Payments To Be Held in Trust; Paying Agent.
(a) As
provided in Section 3.01, all payments of amounts due and payable with
respect to any Notes that are to be made from amounts withdrawn from the Payment
Account pursuant to Section 3.01 shall be made on behalf of the Issuer by
the Indenture Trustee or by the Paying Agent, and no amounts so withdrawn from
the Payment Account for payments of Notes shall be paid over to the Issuer
except as provided in this Section 3.03. The Issuer hereby appoints the
Indenture Trustee to act as initial Paying Agent hereunder.
The
Issuer will cause each Paying Agent other than the Indenture Trustee to execute
and deliver to the Indenture Trustee an instrument in which such Paying Agent
shall agree with the Indenture Trustee (and if the Indenture Trustee acts as
Paying Agent it hereby so agrees), subject to the provisions of this
Section 3.03, that such Paying Agent will:
(i) hold
all
sums held by it for the payment of amounts due with respect to the Notes in
trust for the benefit of the Persons entitled thereto until such sums shall
be
paid to such Persons or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided;
(ii) give
the
Indenture Trustee and Insurer written notice of any default by the Issuer of
which it has actual knowledge in the making of any payment required to be made
with respect to the Notes;
(iii) at
any
time during the continuance of any such default, upon the written request of
the
Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held
in
trust by such Paying Agent;
(iv) immediately
resign as Paying Agent and forthwith pay to the Indenture Trustee all sums
held
by it in trust for the payment of Notes if at any time it ceases to meet the
standards required to be met by a Paying Agent at the time of its
appointment;
(v) comply
with all requirements of the Code with respect to the withholding from any
payments made by it on any Notes of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting requirements in connection
therewith; and
(vi) deliver
to the Indenture Trustee a copy of the Servicing Certificate prepared with
respect to each Payment Date by each Servicer pursuant to Section 4.01 of
the Servicing Agreement.
The
Issuer may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, by Issuer Request direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by
such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall
be
released from all further liability with respect to such money.
Subject
to applicable laws with respect to escheat of funds, any money held by the
Indenture Trustee or any Paying Agent in trust for the payment of any amount
due
with respect to any Note and remaining unclaimed for one year after such amount
has become due and payable shall be discharged from such trust and be paid
to
the Issuer upon receipt by the Indenture Trustee or any Paying Agent (as
applicable) of an Issuer Request containing instructions to do so; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts
so
paid to the Issuer), and all liability of the Indenture Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; provided, however,
that the Indenture Trustee or such Paying Agent, before being required to make
any such payment, shall at the expense and direction of the Issuer cause to
be
published once, in an Authorized Newspaper, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than
30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Issuer. The Indenture Trustee may
also
adopt and employ, at the expense and direction of the Issuer, any other
reasonable means of notification of such payment (including, but not limited
to,
mailing notice of such payment to Noteholders whose Notes have been called
but
have not been surrendered for redemption or whose right to or interest in monies
due and payable but not claimed is determinable from the records of the
Indenture Trustee or of any Paying Agent, at the last address of record for
each
such Noteholder).
Section
3.04 Existence.
The
Issuer will keep in full effect its existence, rights and franchises as a
statutory trust under the laws of the State of Delaware (unless it becomes,
or
any successor Issuer hereunder is or becomes, organized under the laws of any
other state or of the United States of America, in which case the Issuer will
keep in full effect its existence, rights and franchises under the laws of
such
other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Loans and each other instrument or agreement included in the Trust
Estate.
Section
3.05 Payment
of Principal and Interest; Defaulted Interest.
(a) On
each
Payment Date from amounts on deposit in the Payment Account with respect to
the
Group 2 Loans (after payment of the applicable Servicing Fee to each Servicer,
the Insurer Premium to the Insurer and amounts described in Section 6.07),
the Indenture Trustee shall pay the Certificate Paying Agent on behalf of the
Class G Certificateholders from Principal Collections related to Loan Group
2, an amount equal to the lesser of the Additional Balance Advance Amount,
if
any, as of such Payment Date and the Principal Collections related to Loan
Group
2 for such Payment Date.
(b) (I)
On
each Payment Date, payments shall be made from the Interest Remittance Amount
for Loan Group 1 in the following priority, in each case to the extent of the
remaining related Interest Remittance Amount:
(i) first,
to
the Certificate Paying Agent on behalf of the Class 1X-S Certificates, the
aggregate Excess Servicing Fee for such Payment Date;
(ii) second,
pro rata, to the Class 1A-1, Class 1A-2, Class 1A-3 Notes, and to the
Certificate Paying Agent on behalf of the Class 1A-R Certificates and Class
1P
Certificates, Current Interest and any Carryforward Interest for such Class
and
such Payment Date;
(iii) third,
to
the Class 1M-1 Notes, Current Interest and any Carryforward Interest for such
Class and such Payment Date;
(iv) fourth,
to the Class 1M-2 Notes, Current Interest and any Carryforward Interest for
such
Class and such Payment Date;
(v) fifth,
to
the Class 1M-3 Notes, Current Interest and any Carryforward Interest for such
Class and such Payment Date;
(vi) sixth,
to
the Class 1M-4 Notes, Current Interest and any Carryforward Interest for such
Class and such Payment Date;
(vii) seventh,
to the Class 1M-5 Notes, Current Interest and any Carryforward Interest for
such
Class and such Payment Date;
(viii) eighth,
to the Class 1M-6 Notes, Current Interest and any Carryforward Interest for
such
Class and such Payment Date;
(ix) ninth,
to
the Class 1M-7 Notes, Current Interest and any Carryforward Interest for such
Class and such Payment Date;
(x) tenth,
to
the Class 1M-8 Notes, Current Interest and any Carryforward Interest for such
Class and such Payment Date;
(xi) eleventh,
to the Class 1M-9 Notes, Current Interest and any Carryforward Interest for
such
Class and such Payment Date;
(xii) twelfth,
to the Class 1B-1 Notes, Current Interest and any Carryforward Interest for
such
Class and such Payment Date;
(xiii) thirteenth,
to the Class 1B-2 Notes, Current Interest and any Carryforward Interest for
such
Class and such Payment Date;
(xiv) on
the
Payment Dates occurring in May 2006, June 2006 and July 2006, to the Seller
an
amount equal to the amount received during the related Collection Period which
constitutes related Subsequent Loan Interest; and
(xv) for
application as part of the related Monthly Excess Cashflow for such Payment
Date, as provided in paragraph (e)(I) of this Section 3.05, the related Interest
Remittance Amount remaining after application pursuant to clauses (i) through
(xiv) above.
(II)
On
each Payment Date, payments shall be made from the Interest Remittance Amount
for Loan Group 2 in the following priority, in each case to the extent of the
remaining related Interest Remittance Amount:
(i) first,
to
the Certificate Paying Agent on behalf of the Class G Certificates, Current
Interest and any Carryforward Interest for that Payment Date;
(ii) second,
pro rata, to the Class 2A-1 Notes and to the Certificate Paying Agent on
behalf of the Class 2A-R Certificates and Class 2P Certificates, Current
Interest and any Carryforward Interest for such Class and such Payment
Date;
(iii) third,
to
the Insurer, the aggregate of all payments, if any, made by the Insurer under
the Policy, including interest thereon, to the extent not previously paid or
reimbursed or covered;
(iv) fourth,
to the Class 2M-1 Notes, Current Interest and any Carryforward Interest for
such
Class and such Payment Date;
(v) fifth,
to
the Class 2M-2 Notes, Current Interest and any Carryforward Interest for such
Class and such Payment Date;
(vi) on
the
Payment Dates occurring in May 2006, June 2006 and July 2006, to the Seller
an
amount equal to the amount received during the related Collection Period which
constitutes related Subsequent Loan Interest; and
(vii) for
application as part of the related Monthly Excess Cashflow for such Payment
Date, as provided in paragraph (e)(II) of this Section 3.05, the related
Interest Remittance Amount remaining after application pursuant to clauses
(i)
through (vi) of Section above.
(c) (I)
On
each Payment Date that is prior to the related Stepdown Date, or if a related
Trigger Event has occurred and is continuing, the Principal Payment Amount
for
Loan Group 1 shall be distributed in the following order of
priority:
(i) first,
commencing on the payment date in July 2011, to the Certificate Paying Agent
on
behalf of the Class 1P Certificates, until the Class Principal Balance thereof
has been reduced to zero;
(ii) second,
to the Certificate Paying Agent on behalf of the Class 1A-R Certificates,
until the Class Principal Balance thereof has been reduced to zero, and then
sequentially to the Class 1A-1, Class 1A-2 and Class 1A-3 Notes, in that order,
in each case until the Class Principal Balances thereof have been reduced to
zero;
(iii) third,
to
the Class 1M-1 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(iv) fourth,
to the Class 1M-2 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(v) fifth,
to
the Class 1M-3 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(vi) sixth,
to
the Class 1M-4 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(vii) seventh,
to the Class 1M-5 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(viii) eight,
to
the Class 1M-6 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(ix) ninth,
to
the Class 1M-7 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(x) tenth,
to
the Class 1M-8 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(xi) eleventh,
to the Class 1M-9 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(xii) twelfth,
to the Class 1B-1 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(xiii) thirteenth,
to the Class 1B-2 Notes, until the Class Principal Balance of such
Class has been reduced to zero; and
(xiv) for
application in the same manner as the related Monthly Excess Cashflow for such
Payment Date, as provided in paragraph (e)(I) of this Section 3.05, any such
related Principal Payment Amount remaining after application pursuant to clauses
(i) through (xiii) above.
(II)
On
each Payment Date that is prior to the related Stepdown Date, or if a related
Trigger Event has occurred and is continuing, the Principal Payment Amount
for
Loan Group 2, less any principal payment made to the Certificate Paying Agent
on
behalf of the Class G Certificates, shall be distributed in the following order
of priority:
(i) first,
commencing on the payment date in July 2011, to the Certificate Paying Agent
on
behalf of the Class 2P Certificates, until the Class Principal Balance thereof
has been reduced to zero;
(ii) second,
to the Certificate Paying Agent on behalf of the Class 2A-R Certificates,
until the Class Principal Balance thereof has been reduced to zero, and then
to
the Class 2A-1 Notes until the Class Principal Balances thereof has been reduced
to zero;
(iii) third,
to
the Insurer, any Insurer Reimbursements, to the extent not paid from interest
distributions;
(iv) fourth,
to the Class 2M-1 Notes, until the Class Principal Balance of such
Class has been reduced to zero;
(v) fifth,
to
the Class 2M-2 Notes, until the Class Principal Balance of such
Class has been reduced to zero; and
(vi) for
application in the same manner as the related Monthly Excess Cashflow for such
Payment Date, as provided in paragraph (e)(II) of this Section 3.05, any such
related Principal Payment Amount remaining after application pursuant to clauses
(i) through (v) above.
(d) (I)
On
each Payment Date, on or after the related Stepdown Date and provided that
no
related Trigger Event has occurred and is continuing, the Principal Payment
Amount for Loan Group 1 shall be distributed as follows:
(i) first,
commencing on the Payment Date in July 2011, to the Certificate Paying Agent
on
behalf of the Class 1P Certificates, until the Class Principal Balance thereof
has been reduced to zero;
(ii) second,
sequentially to the Class 1A-1, Class 1A-2A and Class 1A-3 Notes, in that order,
the related Senior Principal Payment Amount in each case until the Class
Principal Balances thereof have been reduced to zero;
(iii) third,
to
the Class 1M-1 Notes, the
Class
1M-1 Principal Payment Amount for such Payment Date,
until
the Class Principal Balance of such Class has been reduced to
zero;
(iv) fourth,
to the Class 1M-2 Notes, the Class 1M-2 Principal Payment Amount for such
Payment Date, until the Class Principal Balance of such Class has been
reduced to zero;
(v) fifth,
to
the Class 1M-3 Notes, the Class 1M-3 Principal Payment Amount for such Payment
Date, until the Class Principal Balance of such Class has been reduced
to zero;
(vi) sixth,
to
the Class 1M-4 Notes, the Class 1M-4 Principal Payment Amount for such Payment
Date, until the Class Principal Balance of such Class has been reduced
to zero;
(vii) seventh,
to the Class 1M-5 Notes, the Class 1M-5 Principal Payment Amount for such
Payment Date, until the Class Principal Balance of such Class has been
reduced to zero;
(viii) eighth,
to the Class 1M-6 Notes, the Class 1M-6 Principal Payment Amount for such
Payment Date, until the Class Principal Balance of such Class has been
reduced to zero;
(ix) ninth,
to
the Class 1M-7 Notes, the Class 1M-7 Principal Payment Amount for such Payment
Date, until the Class Principal Balance of such Class has been reduced
to zero;
(x) tenth,
to
the Class 1M-8 Notes, the Class 1M-8 Principal Payment Amount for such Payment
Date, until the Class Principal Balance of such Class has been reduced
to zero;
(xi) eleventh,
to the Class 1M-9 Notes, the Class 1M-9 Principal Payment Amount for such
Payment Date, until the Class Principal Balance of such Class has been
reduced to zero;
(xii) twelfth,
to the Class 1B-1 Notes, the Class 1B-1 Principal Payment Amount for such
Payment Date, until the Class Principal Balance of such Class has been
reduced to zero;
(xiii) thirteenth,
to the Class 1B-2 Notes, the Class 1B-2 Principal Payment Amount for such
Payment Date, until the Class Principal Balance of such Class has been
reduced to zero; and
(xiv) for
application in the same manner as the related
Monthly
Excess Cashflow for such Payment Date, as provided in paragraph (e)(I) of this
Section 3.05, any such related Principal Payment Amount remaining after
application pursuant to clauses (i) through (xiii) above.
(II)
On
each Payment Date, on or after the related Stepdown Date and provided that
no
related Trigger Event has occurred and is continuing, the Principal Payment
Amount for Loan Group 2, less any payment made to the Certificate Paying Agent
on behalf of the Class G Certificates, shall be distributed as
follows:
(i) first,
commencing on the Payment Date in July 2011, to the Certificate Paying Agent
on
behalf of the Class 2P Certificates, until the Class Principal Balance thereof
has been reduced to zero;
(ii) second,
to the Class 2A-1 Notes, the related Senior Principal Payment Amount until
the
Class Principal Balance thereof has been reduced to zero;
(iii) third,
to
the Insurer, any
Insurer Reimbursements, to the extent not paid from interest
distributions;
(iv) fourth,
to the Class 2M-1 Notes, the Class 2M-1 Principal Payment Amount for such
Payment Date, until the Class Principal Balance of such Class has been
reduced to zero;
(v) fifth,
to
the Class 2M-2 Notes, the Class 2M-2 Principal Payment Amount for such Payment
Date, until the Class Principal Balance of such Class has been reduced
to zero; and
(vi) for
application in the same manner as the related Monthly Excess Cashflow for such
Payment Date, as provided in paragraph (e)(II) of this Section 3.05, any such
related Principal Payment Amount remaining after application pursuant to clauses
(i) through (v) above.
(e) (I)
On
each Payment Date, the Monthly Excess Cashflow for Loan Group 1 shall be
distributed in the following order of priority:
(i) first,
an
amount equal to the aggregate Realized Losses on the Group 1 Loans incurred
during the related Collection Period, such amount to be added to the related
Principal Payment Amount and distributed as set forth above in Section
3.05(c)(I) and (d)(I) (any such amount, an “Excess Cashflow Loss
Payment”);
(ii) second,
on the first Payment Date, to the Certificate Paying Agent on behalf of the
Class 1X-1 Certificateholders, 100% of the remaining related Monthly Excess
Cashflow;
(iii) third,
except for the first Payment Date, until the Group 1 Overcollateralization
Amount equals the Group 1 Targeted Overcollateralization Amount for such date,
on each Payment Date
(1) (a)
prior
to the related Stepdown Date or (b) with respect to which a related Trigger
Event has occurred, to the extent of related Monthly Excess Interest for such
Payment Date, to fund any principal payments to the Class
1A-1, Class 1A-2, Class 1A-3,
Class
1M-1, Class 1M-2, Class 1M-3, Class 1M-4, Class 1M-5, Class 1M-6, Class 1M-7,
Class 1M-8, Class 1M-9, Class 1B-1 and Class 1B-2 Notes and Class A-R
Certificates and Class 1P Certificates required to be made on such Payment
Date
set forth above in clause (c)(I) above, after giving effect to the payment
of
the related Principal Payment Amount for such Payment Date, in accordance with
the priorities set forth therein; and
(2) on
each
Distribution Date on or after the related Stepdown Date and with respect to
which a related Trigger Event has not occurred, to fund any principal payments
to the Class 1A-1, Class 1A-2, Class 1A-3, Class 1M-1, Class 1M-2, Class 1M-3,
Class 1M-4, Class 1M-5, Class 1M-6, Class 1M-7, Class 1M-8, Class 1M-9, Class
1B-1 and Class 1B-2 Notes and Class 1A-R Certificates and Class 1P Certificates
required to be made on such Payment Date set forth above in clause (d)(I) above,
after giving effect to the payment of the related Principal Payment Amount
for
such Payment Date, in accordance with the priorities set forth
therein;
(iv) fourth,
to the Class 1M-1 Notes, any Deferred Amount for such Class, to the extent
not
paid from amounts in the Swap Account;
(v) fifth,
to
the Class 1M-2 Notes, any Deferred Amount for such Class, to the extent not
paid
from amounts in the Swap Account;
(vi) sixth,
to
the Class 1M-3 Notes, any Deferred Amount for such Class, to the extent not
paid
from amounts in the Swap Account;
(vii) seventh,
to the Class 1M-4 Notes, any Deferred Amount for such Class, to the extent
not
paid from amounts in the Swap Account;
(viii) eighth,
to the Class 1M-5 Notes, any Deferred Amount for such Class, to the extent
not
paid from amounts in the Swap Account;
(ix) ninth,
to
the Class 1M-6 Notes, any Deferred Amount for such Class, to the extent not
paid
from amounts in the Swap Account;
(x) tenth,
to
the Class 1M-7 Notes, any Deferred Amount for such Class, to the extent not
paid
from amounts in the Swap Account;
(xi) eleventh,
to the Class 1M-8 Notes, any Deferred Amount for such Class, to the extent
not
paid from amounts in the Swap Account;
(xii) twelfth,
to the Class 1M-9 Notes, any Deferred Amount for such Class, to the extent
not
paid from amounts in the Swap Account;
(xiii) thirteenth,
to the Class 1B-1 Notes, any Deferred Amount for such Class, to the extent
not
paid from amounts in the Swap Account;
(xiv) fourteenth,
to the Class 1B-2 Notes, any Deferred Amount for such Class, to the extent
not
paid from amounts in the Swap Account;
(xv) fifteenth,
to the Class 1A-1, Class 1A-2 and Class 1A-3 Notes, pro rata, any applicable
Basis Risk Shortfall for each such Class, to the extent not paid from amounts
in
the Swap Account;
(xvi) sixteenth,
to the Class 1M-1 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xvii) seventeenth,
to the Class 1M-2 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xviii) eighteenth,
to the Class 1M-3 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xix) nineteenth,
to the Class 1M-4 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xx) twentieth,
to the Class 1M-5 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xxi) twenty-first,
to the Class 1M-6 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xxii) twenty-second,
to the Class 1M-7 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xxiii) twenty-third,
to the Class 1M-8 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xxiv) twenty-fourth,
to the Class 1M-9 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xxv) twenty-fifth,
to the Class 1B-1 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xxvi) twenty-sixth,
to the Class 1B-2 Notes, any applicable Basis Risk Shortfall for such Class,
to
the extent not paid from amounts in the Swap Account;
(xxvii) twenty-seventh,
to the Indenture Trustee and the Administrator, any Trustee Additional Expenses
and any amounts owing to the Indenture Trustee and the Administrator pursuant
to
Section 6.07 and the Owner Trustee pursuant to Article VII of the
Trust Agreement, in each case remaining unpaid;
(xxviii)
twenty-eighth, to the Counterparty, the amount of any Swap Termination Payment
resulting from a Counterparty Trigger Event not previously paid;
(xxix) twenty-ninth,
from amounts otherwise distributable to the Class 1X-1 Certificates, to the
related Basis Risk Reserve Fund, the related Required Reserve Fund Deposit;
and
(xxx) thirtieth,
to the Certificate Paying Agent on behalf of the Class 1X-1 Certificates, (a)
the Class 1X-1 Distribution Amount for such Payment Date reduced by amounts
distributed pursuant to clause (xvi) of Section 3.05(b)(I) for such Payment
Date, (b) the amount of any Group 1 Overcollateralization Release Amount for
such Distribution Date, (c) any amounts withdrawn from the related Basis Risk
Reserve Fund for distribution to such Class 1X-1 Certificates pursuant to
Section 3.32(b) and (d) for any Payment Date on or after which the aggregate
Class Principal Balance of the related Notes and Certificates has been reduced
to zero, the Group 1 Overcollateralization Amount.
(II)
On
each Payment Date, the Monthly Excess Cashflow for Loan Group 2 shall be
distributed in the following order of priority:
(i) first,
an
amount equal to the aggregate Realized Losses on the Group 2 Loans incurred
during the related Collection Period, such amount to be added to the related
Principal Payment Amount and distributed as set forth above in Section
3.05(c)(II) and (d)(II) (any such amount, an “Excess Cashflow Loss
Payment”);
(ii) second,
to the Certificate Paying Agent on behalf of the Class G Certificates, an amount
equal to the lesser of the related Monthly Excess Cashflow and the Additional
Balance Advance Amount after the application of all other payments thereon
on
that Payment Date;
(iii) third,
to
the Insurer, any Insurer Reimbursement Amounts, to the extent not paid from
interest and principal distributions;
(iv) fourth,
until the Group 2 Overcollateralization Amount equals the Group 2 Targeted
Overcollateralization Amount for such date, on each Payment Date
(1) (a)
prior
to the related Stepdown Date or (b) with respect to which a related Trigger
Event has occurred, to the extent of related Monthly Excess Interest for such
Payment Date, to fund any principal payments to the Class 2A-1, Class 2M-1
and
Class 2M-2 Notes and Class 2A-R Certificates and Class 2P Certificates required
to be made on such Payment Date set forth above in clause (c)(II) above, after
giving effect to the payment of the related Principal Payment Amount for such
Payment Date, in accordance with the priorities set forth therein;
and
(2) on
each
Distribution Date on or after the related Stepdown Date and with respect to
which a related Trigger Event has not occurred, to fund any principal payments
to the Class 2A-1, Class 2M-1 and Class 2M-2 Notes and Class 2A-R Certificates
and Class 2P Certificates required to be made on such Payment Date set forth
above in clause (d)(II) above, after giving effect to the payment of the related
Principal Payment Amount for such Payment Date, in accordance with the
priorities set forth therein;
(v) fifth,
to
the Class 2M-1 Notes, any Deferred Amount for such Class;
(vi) sixth,
to
the Class 2M-2 Notes, any Deferred Amount for such Class;
(vii) seventh,
to the Class 2A-1 Notes and to the Certificate Paying Agent on behalf of the
Class G Certificates, any applicable Basis Risk Shortfall for each such Class,
on a pro rata basis;
(viii) eighth,
to the Class 2M-1 Notes, any applicable Basis Risk Shortfall for such
Class;
(ix) ninth,
to
the Class 2M-2 Notes, any applicable Basis Risk Shortfall for such
Class;
(x) tenth,
to
the Indenture Trustee and the Administrator, any Trustee Additional Expenses
and
any amounts owing to the Indenture Trustee and the Administrator pursuant to
Section 6.07 and the Owner Trustee pursuant to Article VII of the
Trust Agreement, in each case remaining unpaid;
(xi) eleventh,
from amounts otherwise distributable to the Class 2X-1 Certificates, to the
related
Basis
Risk Reserve Fund, the related Required Reserve Fund Deposit; and
(xii) twelfth,
to the Certificate Paying Agent on behalf of the Class 2X-1 Certificates, (a)
the Class 2X-1 Distribution Amount for such Payment Date reduced by amounts
distributed pursuant to clause (vii) of Section 3.05(b)(II) for such Payment
Date, (b) the amount of any Group 2 Overcollateralization Release Amount for
such Distribution Date, (c) any amounts withdrawn from the related Basis Risk
Reserve Fund for distribution to such Class 2X-1 Certificates pursuant to
Section 3.32(b) and (d) for any Payment Date on or after which the aggregate
Class Principal Balance of the related Notes and Certificates has been reduced
to zero, the Group 2 Overcollateralization Amount.
(f) Amounts
received from the Counterparty pursuant to the Swap Agreement on deposit in
the
Swap Account will be available on any Payment Date to pay the following
amounts:
(i) to
the
Class 1A-1, Class 1A-2, Class 1A-3 Notes and the Certificate Registrar on behalf
of the Class 1A-R Certificates, pro rata based on amounts due, Current Interest
and any Carryforward Interest for each such class, after giving effect to
distributions to be paid in respect of Current Interest and Carryforward
Interest as described above in Section 3.05(b)(I) on such Payment
Date;
(ii) to
the
Class 1M-1, Class 1M-2, Class 1M-3, Class 1M-4, Class 1M-5, Class 1M-6, Class
1M-7, Class 1M-8, Class 1M-9, Class 1B-1 and Class 1B-2 Notes, in that order,
Current Interest and any Carryforward Interest for each such class, after giving
effect to distributions to be paid in respect of Current Interest and
Carryforward Interest as described above in Section 3.05(b)(I) on such Payment
Date;
(iii) to
the
Principal Remittance Amount for Loan Group 1, up to the amount of Realized
Losses on the Group 1 Loans incurred during the related Collection Period prior
to giving effect to amounts available to be paid in respect of related Excess
Cashflow Loss Payments as described above in Section 3.05(e)(I) on such Payment
Date;
(iv) to
the
Class 1M-1, Class 1M-2, Class 1M-3, Class 1M-4, Class 1M-5, Class 1M-6, Class
1M-7, Class 1M-8, Class 1M-9, Class 1B-1 and Class 1B-2 Notes, in that order,
any applicable Deferred Amounts, with interest thereon at the applicable Note
Interest Rate, prior to giving effect to amounts available to be paid in respect
of Deferred Amounts as described above in Section 3.05(e)(I) on such Payment
Date; and
(v) first
(i)
to the Class 1A-1, Class 1A-2 and Class 1A-3 Notes, on a pro rata basis, and
then (ii) to the Class 1M-1, Class 1M-2, Class 1M-3, Class 1M-4, Class 1M-5,
Class 1M-6, Class 1M-7, Class 1M-8, Class 1M-9, Class 1B-1 and Class 1B-2 Notes,
in that order, any applicable Basis Risk Shortfall for each such class, in
each
case prior to giving effect to amounts available to be paid in respect of Basis
Risk Shortfalls as described above in Section 3.05(e)(I) on such Payment
Date.
Amounts
paid under the Swap Agreement not used on any Payment Date to cover Basis Risk
Shortfalls, Current Interest, Carryforward Interest, Realized Losses on the
related Loans or to pay Deferred Amounts will remain on deposit in the Swap
Account and may be available on future Payment Dates to make the payments
described in the preceding paragraph. On the Payment Date on which the aggregate
Class Principal Balance of the Notes relating to Loan Group 1 is reduced to
zero, any amounts from the Swap Agreement remaining in the Swap Account will
be
released to the Certificate Paying Agent for payment to the Class 1X-1
Certificateholders.
(g) On
each
Payment Date, the Certificate Paying Agent shall deposit in the Certificate
Distribution Account all amounts it received pursuant to this Section 3.05
for the purpose of reimbursing the Owner Trustee with respect to certain amounts
and distributing such funds to the Certificateholder.
(h) The
amounts paid to Noteholders shall be paid to the Notes in accordance with the
applicable percentage as set forth in paragraph (i) below. Any installment
of
interest or principal, if any, payable on any Note that is punctually paid
or
duly provided for by the Issuer on the applicable Payment Date shall, if such
Noteholder holds Notes of an aggregate initial Note Balance of at least
$1,000,000, be paid to each Noteholder of record on the preceding Record Date,
by wire transfer to an account specified in writing by such Noteholder
reasonably satisfactory to the Indenture Trustee as of the preceding Record
Date
or in all other cases or if no such instructions have been delivered to the
Indenture Trustee, by check to such Noteholder mailed to such Noteholder’s
address as it appears in the Note Register the amount required to be distributed
to such Noteholder on such Payment Date pursuant to such Noteholder’s Notes;
provided, however, that the Indenture Trustee shall not pay to such Noteholders
any amount required to be withheld from a payment to such Noteholder by the
Code.
(i) The
principal of each Note shall be due and payable in full on the Final Scheduled
Payment Date for such Note as provided in the related form of Note set forth
in
Exhibits A-1, A-2 and A-3. All principal payments on the Notes shall be made
to
the Noteholders entitled thereto in accordance with the Percentage Interests
represented by such Notes. The Indenture Trustee shall notify the Person in
whose name a Note is registered at the close of business on the Record Date
relating to the Payment Date immediately preceding the Final Scheduled Payment
Date or other final Payment Date. Such notice shall be mailed or transmitted
by
facsimile no later than five Business Days prior to such Final Scheduled Payment
Date or other final Payment Date and shall specify that payment of the principal
amount and any interest due with respect to such Note at the Final Scheduled
Payment Date or other final Payment Date will be payable only upon presentation
and surrender of such Note and shall specify the place where such Note may
be
presented and surrendered for such final payment.
(j) On
each
Payment Date, following the foregoing distributions described in this Section
3.05, an amount equal to the amount of Subsequent Recoveries included in the
Principal Collections for each Loan Group and for such Payment Date shall be
applied to increase the Class Principal Balance of the related Class of Notes
with the Highest Priority up to the extent of such Realized Losses previously
allocated to that Class of Notes pursuant to Section 3.26. An amount equal
to
the amount of any remaining Subsequent Recoveries shall be applied to increase
the Class Principal Balance of the related Class of Notes with the next Highest
Priority, up to the amount of such Realized Losses previously allocated to
that
Class of Notes pursuant to Section 3.26, and so on. Holders of such Notes will
not be entitled to any distribution in respect of interest on the amount of
such
increases for any Accrual Period preceding the Payment Date on which such
increase occurs. Any such increases shall be applied to the Class Principal
Balance of each Note of such Class in accordance with its respective Percentage
Interest.
Section
3.06 Protection
of Trust Estate.
(a) As
and
when requested by the Indenture Trustee or the Insurer, the Issuer will from
time to time authorize, execute and deliver all such supplements and amendments
hereto and all such financing statements, continuation statements, instruments
of further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) maintain
or preserve the lien and security interest (and the priority thereof) of this
Indenture or carry out more effectively the purposes hereof;
(ii) perfect,
publish notice of or protect the validity of any Grant made or to be made by
this Indenture; or
(iii) cause
the
Trust Estate to enforce any of the Loans;
(iv) preserve
and defend title to the Trust Estate and the rights of the Indenture Trustee,
the Insurer and the Noteholders in such Trust Estate against the claims of
all
persons and parties.
(b) Except
as
otherwise provided in this Indenture, the Indenture Trustee shall not remove
any
portion of the Trust Estate that consists of money, an instrument, tangible
chattel paper, a negotiable document, a certificated security, or goods, or
is
evidenced by an instrument, certificate or other writing from the jurisdiction
in which it was held at the date of the most recent Opinion of Counsel delivered
pursuant to Section 3.07 (or from the jurisdiction in which it was held as
described in the Opinion of Counsel delivered at the Closing Date pursuant
to
Section 3.07(a), if no Opinion of Counsel has yet been delivered pursuant
to Section 3.07(b)) unless the Indenture Trustee shall have first received
an Opinion of Counsel to the effect that the lien and security interest created
by this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
The
Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact
to
execute any instrument required to be executed pursuant to this
Section 3.06.
Section
3.07 Opinions
as to Trust Estate.
(a) On
the
Closing Date, the Issuer shall furnish to the Indenture Trustee, the Insurer
and
the Owner Trustee an Opinion of Counsel at the expense of the Issuer either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to
the
filing of any financing statements and continuation statements, as are necessary
to perfect the lien and security interest in the Loans and reciting the details
of such action, or stating that, in the opinion of such counsel, no such action
is necessary to perfect such lien and security interest.
(b) On
or
before December 31st in each calendar year, beginning in 2007, the Issuer shall
furnish to the Indenture Trustee and the Insurer an Opinion of Counsel at the
expense of the Issuer either stating that, in the opinion of such counsel,
such
action has been taken with respect to the recording, filing, rerecording and
re-filing of this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the filing of any financing statements
and continuation statements as is necessary to maintain the lien and security
interest in the Loans and reciting the details of such action or stating that
in
the opinion of such counsel no such action is necessary to maintain such lien
and security interest. Such Opinion of Counsel shall also describe the
recording, filing, re-recording and re-filing of this Indenture, any indentures
supplemental hereto and any other requisite documents and the filing of any
financing statements and continuation statements that will, in the opinion
of
such counsel, be required to maintain the lien and security interest in the
Loans until December 31 in the following calendar year.
Section
3.08 Performance
of Obligations; Servicing Agreement.
(a) The
Issuer will punctually perform and observe all of its obligations and agreements
contained in this Indenture, the Basic Documents and in the instruments and
agreements included in the Trust Estate.
(b) The
Issuer may contract with other Persons to assist it in performing its duties
under this Indenture, and any performance of such duties by a Person identified
to the Indenture Trustee in an Officer’s Certificate of the Issuer shall
constitute performance of its duties under this Indenture.
(c) The
Issuer will not take any action or permit any action to be taken by others
which
would release any Person from any of such Person’s covenants or obligations
under any of the documents relating to the Loans or under any instrument
included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the documents relating to the Loans or
any
such instrument, except such actions as the Servicer is expressly permitted
to
take in the Servicing Agreement. The Indenture Trustee may exercise the rights
of the Issuer to direct the actions of the Servicers pursuant to the Servicing
Agreement.
(d) The
Issuer may retain an administrator and may enter into contracts with other
Persons for the performance of the Issuer’s obligations hereunder, and
performance of such obligations by such Persons shall be deemed to be
performance of such obligations by the Issuer.
Section
3.09 Negative
Covenants.
So long
as any Notes are Outstanding, the Issuer shall not:
(i) except
as
expressly permitted by this Indenture, sell, transfer, exchange or otherwise
dispose of the Trust Estate, unless directed to do so in writing by the
Indenture Trustee;
(ii) claim
any
credit on, or make any deduction from the principal or interest payable in
respect of, the Notes (other than amounts properly withheld from such payments
under the Code) or assert any claim against any present or former Noteholder
by
reason of the payment of the taxes levied or assessed upon any part of the
Trust
Estate;
(iii) (A)
permit the validity or effectiveness of this Indenture to be impaired, or permit
the lien of this Indenture to be amended, hypothecated, subordinated, terminated
or discharged, or permit any Person to be released from any covenants or
obligations with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or burden
the
Trust Estate or any part thereof or any interest therein or the proceeds thereof
or (C) permit the lien of this Indenture not to constitute a valid first
priority security interest in the Trust Estate; or
(iv) waive
or
impair, or fail to assert rights under, the Loan Purchase Agreement or in any
Basic Document, if any such action would materially and adversely affect the
interests of the Noteholders or the Insurer.
Section
3.10 Annual
Statement as to Compliance.
The
Issuer will deliver to the Indenture Trustee and the Insurer, within 120 days
after the end of each fiscal year of the Issuer (commencing with the fiscal
year
2006), an Officer’s Certificate stating, as to the Authorized Officer signing
such Officer’s Certificate, that:
(i) a
review
of the activities of the Issuer during such year and of its performance under
this Indenture and the Trust Agreement has been made under such Authorized
Officer’s supervision; and
(ii) to
the
best of such Authorized Officer’s knowledge, based on such review, the Issuer
has complied with all conditions and covenants under this Indenture and the
provisions of the Trust Agreement throughout such year, or, if there has been
a
default in its compliance with any such condition or covenant, specifying each
such default known to such Authorized Officer and the nature and status
thereof.
Section
3.11 Representations
and Warranties Concerning the Loans.
The
Indenture Trustee, as the holder of a security interest in the Loans, has the
benefit of the representations and warranties made by the Seller in the Loan
Purchase Agreement concerning the Loans and the right to enforce, and upon
direction of the Issuer, the Indenture Trustee shall endorse the remedies
against the Seller provided in such Loan Purchase Agreement to the same extent
as though such representations and warranties were made directly to the
Indenture Trustee.
Section
3.12 Assignee
of Record of the Loans.
The
Issuer hereby directs and authorizes the Indenture Trustee to hold record title
to the Loans by being named as payee in the endorsements of the Mortgage Notes
and assignee in any Assignments of Mortgage required to be recorded under the
terms of the Loan Purchase Agreement. Except as expressly provided in the Loan
Purchase Agreement or in the Servicing Agreement with respect to any specific
Loan, the Indenture Trustee shall not execute any endorsement or assignment
or
otherwise release or transfer such record title to any of the Loans until such
time as the remaining Trust may be released pursuant to Section 8.05(b).
The Indenture Trustee’s holding of such record title shall in all respects be
subject to its fiduciary obligations to the Noteholders hereunder.
Section
3.13 Investment
Company.
The
Issuer shall not become an “investment company” or under the “control” of an
“investment company” as such terms are defined in the Investment Company Act of
1940, as amended (or any successor or amendatory statute), and the rules and
regulations thereunder (taking into account not only the general definition
of
the term “investment company” but also any available exceptions to such general
definition); provided, however, that the Issuer shall be in compliance with
this
Section 3.13 if it shall have obtained an order exempting it from
regulation as an “investment company” so long as it is in compliance with the
conditions imposed in such order.
Section
3.14 Servicer
as Agent and Bailee of the Indenture Trustee.
Solely
for purposes of perfection under Article 9 of the UCC or other similar
applicable law, rule or regulation, the Issuer, the Indenture Trustee hereby
acknowledge that the Servicers are acting as agent and bailee of the Indenture
Trustee in holding amounts (a) on deposit in the Custodial Accounts pursuant
to
Section 3.02 of the Servicing Agreement that are allocable to the Loans, as
well as its agent and bailee in holding any Related Documents released to the
Servicers pursuant to Section 3.06(c) of the Servicing Agreement, and any
other items constituting a part of the Trust Estate which from time to time
come
into the possession of the Servicers. It is intended that, by the Servicer’s
acceptance of such agency pursuant to Section 3.02 of the Servicing
Agreement, the Indenture Trustee will have a perfected security interest in
such
Related Documents, such monies and such other items for purposes of
Article 9 of the UCC.
Section
3.15 Issuer
May Consolidate, etc.
(a) The
Issuer shall not consolidate or merge with or into any other Person, unless
the
Insurer consents thereto and:
(i) the
Person (if other than the Issuer) formed by or surviving such consolidation
or
merger shall be a Person organized and existing under the laws of the United
States of America or any state or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form reasonably satisfactory to the Indenture Trustee
and
Insurer, the due and punctual payment of the principal of and interest on all
Notes, the payment of the Insurer Premium to the Insurer and all other amounts
payable to the Indenture Trustee, the Counterparty, the Insurer, the payment
to
the Certificate Paying Agent, of all amounts due to the Certificateholders
and
the performance or observance of every agreement and covenant of this Indenture
on the part of the Issuer to be performed or observed, all as provided
herein;
(ii) immediately
after giving effect to such transaction, no Event of Default shall have occurred
and be continuing;
(iii) the
Rating Agencies shall have notified the Issuer and the Insurer, with respect
to
the Class 2A-1 Notes and Class G Certificates, that such transaction shall
not
cause the rating of any of the Notes or Certificates to be reduced, suspended
or
withdrawn or to be considered by either Rating Agency to be below investment
grade, without regard to the Policy;
(iv) the
Issuer shall have received an Opinion of Counsel (and shall have delivered
copies thereof to the Indenture Trustee) to the effect that such transaction
will not have any material adverse tax consequence to the Issuer, any Noteholder
or any Certificateholder;
(v) any
action that is necessary to maintain the lien and security interest created
by
this Indenture, and the perfection and priority thereof, shall have been taken;
and
(vi) the
Issuer shall have delivered to the Indenture Trustee and Insurer an Officer’s
Certificate and an Opinion of Counsel each stating that such consolidation
or
merger and such supplemental indenture comply with this Section 3.15 and
that all conditions precedent herein provided for relating to such transaction
have been complied with (including any filing required by the Exchange
Act).
(b) The
Issuer shall not convey or transfer its properties or assets, including those
included in the Trust Estate as an entirety or substantially as an entirety,
to
any Person, unless the Insurer consents thereto and:
(i) the
Person that acquires by conveyance or transfer the properties and assets of
the
Issuer the conveyance or transfer of which is hereby restricted shall (A) be
a
United States citizen or a Person organized and existing under the laws of
the
United States of America or any state, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee and the
Insurer, in form satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all Notes, the payment of the
Insurer Premium and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein, (C) expressly agrees by means of such
supplemental indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of Noteholders,
(D)
unless otherwise provided in such supplemental indenture, expressly agrees
to
indemnify, defend and hold harmless the Issuer, the Insurer and the Indenture
Trustee against and from any loss, liability or expense arising under or related
to this Indenture and the Notes and (E) expressly agrees by means of such
supplemental indenture that such Person (or if a group of Persons, then one
specified Person) shall make all filings with the Securities and Exchange
Commission (and any other appropriate Person) required by the Exchange Act
in
connection with the Notes;
(ii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing;
(iii) the
Rating Agencies shall have notified the Issuer (with a copy to the Indenture
Trustee and the Insurer) that such transaction shall not cause the rating of
the
Notes or the Certificates to be reduced, suspended or withdrawn without regard
to the Policy;
(iv) the
Issuer shall have received an Opinion of Counsel (and shall have delivered
copies thereof to the Indenture Trustee and the Insurer) to the effect that
such
transaction will not have any material adverse tax consequence to the Issuer
or
any Noteholder;
(v) any
action that is necessary to maintain the lien and security interest created
by
this Indenture, and the perfection and priority thereof, shall have been taken;
and
(vi) the
Issuer shall have delivered to the Indenture Trustee and the Insurer an
Officer’s Certificate and an Opinion of Counsel stating that such conveyance or
transfer and such supplemental indenture comply with this Article III and
that all conditions precedent herein provided for relating to such transaction
have been complied with (including any filing required by the Exchange
Act).
Section
3.16 Successor
or Transferee.
(a) Upon
any
consolidation or merger of the Issuer in accordance with Section 3.15(a),
the Person formed by or surviving such consolidation or merger (if other than
the Issuer) shall succeed to, and be substituted for, and may exercise every
right and power of, the Issuer under this Indenture with the same effect as
if
such Person had been named as the Issuer herein.
(b) Upon
a
conveyance or transfer of all the assets and properties of the Issuer pursuant
to Section 3.15(b), the Issuer will be released from every covenant and
agreement of this Indenture to be observed or performed on the part of the
Issuer with respect to the Notes immediately upon the delivery of written notice
to the Indenture Trustee and the Insurer of such conveyance or
transfer.
Section
3.17 No
Other Business.
The
Issuer shall not engage in any business other than financing, purchasing, owning
and selling and managing the Loans and the issuance of the Notes and
Certificates in the manner contemplated by this Indenture and the Basic
Documents and all activities incidental thereto.
Section
3.18 No
Borrowing.
Except
as contemplated by the Indenture or the Basic Documents, the Issuer shall not
issue, incur, assume, guarantee or otherwise become liable, directly or
indirectly, for any indebtedness except for the Notes.
Section
3.19 Guarantees,
Loans, Advances and Other Liabilities.
Except
as contemplated by this Indenture or the Basic Documents, the Issuer shall
not
make any loan or advance or credit to, or guarantee (directly or indirectly
or
by an instrument having the effect of assuring another’s payment or performance
on any obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire
(or
agree contingently to do so) any stock, obligations, assets or securities of,
or
any other interest in, or make any capital contribution to, any other
Person.
Section
3.20 Capital
Expenditures.
The
Issuer shall not make any expenditure (by long-term or operating lease or
otherwise) for capital assets (either realty or personalty).
Section
3.21 Owner
Trustee Not Liable for Certificates or Related Documents.
The
recitals contained herein shall not be taken as the statements of the Owner
Trustee, and the Owner Trustee assumes no responsibility for the correctness
thereof. The Owner Trustee makes no representations as to the validity or
sufficiency of this Indenture, of any Basic Document or of the Certificate
(other than the signatures of the Owner Trustee on the Certificate) or the
Notes, or of any Related Documents. The Owner Trustee shall at no time have
any
responsibility or liability with respect to the sufficiency of the Owner Trust
Estate or its ability to generate the payments to be distributed to the
Certificateholder under the Trust Agreement or the Noteholders under this
Indenture, including, the compliance by the Depositor or the Seller with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation, or any action
of the Certificate Paying Agent, the Certificate Registrar or the Indenture
Trustee taken in the name of the Owner Trustee other than any such action taken
at the direction of the Owner Trustee.
Section
3.22 Restricted
Payments.
The
Issuer shall not, directly or indirectly, (i) pay any dividend or make any
distribution (by reduction of capital or otherwise), whether in cash, property,
securities or a combination thereof, to the Owner Trustee or any owner of a
beneficial interest in the Issuer or otherwise with respect to any ownership
or
equity interest or security in or of the Issuer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, (x)
distributions to the Owner Trustee and the Certificateholder as contemplated
by,
and to the extent funds are available for such purpose under the Trust Agreement
and this Indenture and (y) payments to the Servicers pursuant to the terms
of
the Servicing Agreement. The Issuer shall not, directly or indirectly, make
payments to or distributions from the Custodial Account except in accordance
with this Indenture and the Basic Documents.
Section
3.23 Notice
of Events of Default.
The
Issuer shall give the Indenture Trustee, the Insurer and the Rating Agencies
prompt written notice of each Event of Default hereunder and under the Trust
Agreement.
Section
3.24 Further
Instruments and Acts.
Upon
request of the Indenture Trustee or the Insurer, the Issuer will authorize,
execute and deliver such further instruments and do such further acts as may
be
reasonably necessary or proper to carry out more effectively the purpose of
this
Indenture.
Section
3.25 Statements
to Noteholders.
On each
Payment Date, the Indenture Trustee shall make available on its website at
xxxx://xxx.xxxxxx.xxx/xxx or such other website as the Indenture Trustee may
designate from time to time to the Insurer, each Noteholder and
Certificateholder, respectively, (a) the Servicing Certificates received by
it,
on the related Data Remittance Date pursuant to Section 4.01 of the
Servicing Agreement and (b) a monthly statement prepared by the Indenture
Trustee on the basis of the Servicing Certificates setting forth the items
listed on Exhibit N
Assistance
in using the Indenture Trustee’s website can be obtained by calling the
Indenture Trustee’s customer service desk at (000) 000-0000.
Section
3.26 Allocation
of Realized Losses.
(i) On
any Payment Date in which the Group 1 Overcollateralization Amount has been
reduced to zero, and an Applied Loss Amount exists for Loan Group 1, such
Applied Loss Amount shall be allocated in the following priority:
(a) first,
the Class Principal Balance of the Class 1B-2 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
(b) second,
the Class Principal Balance of the Class 1B-1 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
(c) third,
the Class Principal Balance of the Class 1M-9 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
(d) fourth,
the Class Principal Balance of the Class 1M-8 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
(e) fifth,
the Class Principal Balance of the Class 1M-7 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
(f) sixth,
the Class Principal Balance of the Class 1M-6 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
(g) seventh,
the Class Principal Balance of the Class 1M-5 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
(h) eighth,
the Class Principal Balance of the Class 1M-4 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
(i) ninth,
the Class Principal Balance of the Class 1M-3 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
(j) tenth,
the Class Principal Balance of the Class 1M-2 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
and
(k) eleventh,
the Class Principal Balance of the Class 1M-1 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero.
(ii)
On
any Payment Date in which the Group 2 Overcollateralization Amount has been
reduced to zero, and an Applied Loss Amount exists, such Applied Loss Amount
shall be allocated in the following priority:
(a) first,
the Class Principal Balance of the Class 1M-2 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero;
and
(b) second,
the Class Principal Balance of the Class 1M-1 Notes shall be reduced, until
the Class Principal Balance thereof has been reduced to zero.
The
Class Principal Balance of the Class 1A-1, Class 1A-2, Class 1A-3 and Class
2A-1 Notes and the Class G, Class 1A-R, Class 1P, Class 2A-R and Class 2P
Certificates will not be so reduced and will continue to receive Current
Interest thereon in accordance with Section 3.05(b). After the aggregate
Class Principal Balance of the related Class M Notes and Class B Notes has
been
reduced to zero, any payments of principal to the related Class A Notes shall
continue to made in accordance with the payment priorities set forth in Section
3.05 hereof.
(iii) All
Realized Losses on the Group 1 Loans shall be allocated on each Payment Date
to
the following REMIC IA Regular Interests: first,
to
REMIC IA Regular Interests LTIA-1 until the Uncertificated Principal Balance
thereof has been reduced to zero, then to REMIC IA Regular Interest LTIA-PF
until the Uncertificated Principal Balance thereof has been reduced to zero,
however, that with respect to the first three Payment Dates, Realized Losses
relating to the Initial Group I Loans shall be allocated to REMIC IA Regular
Interest LTIA-1 and Realized Losses relating to the Subsequent Group 1 Loans
shall be allocated to REMIC IA Regular Interest LTIA-PF until the Uncertificated
Principal Balance thereof has been reduced to zero.
(iv) All
Realized Losses on the REMIC IA Regular Interests LTIA-1 and LTIA-PF shall
be
deemed to have been allocated to the following REMIC IB Regular Interests in
the
specified percentages, as follows: first, on each Distribution Date, to REMIC
IB
Regular Interest LTIB-1X-1, in the same amount and in the same priority as
Realized Losses are allocated to the Corresponding Certificate until such REMIC
IB Regular Interest has been reduced to zero; and second, to the REMIC IB
Regular Interest LTIB-1-A and REMIC 2 Regular Interest LTIB-1-B, pro rata until
each such REMIC IB Regular Interest has been reduced to zero.
(v) All
Realized Losses on the REMIC IB Regular Interests shall be deemed to have been
allocated to the following REMIC IC Regular Interests in the specified
percentages, as follows: first to Uncertificated Accrued Interest payable to
the
REMIC IC Regular Interests LTIC-1AA and LTIC-1ZZ up to an aggregate amount
equal
to the excess of (a) the REMIC IC Interest Loss Allocation Amount over (b)
Prepayment Interest Shortfalls (to the extent not covered by Compensating
Interest) relating to the Loans for such Payment Date, 98% and 2%, respectively;
second, to the Uncertificated Principal Balances of the REMIC IC Regular
Interests LTIC-1AA and LTIC-1ZZ up to an aggregate amount equal to the REMIC
IC
Principal Loss Allocation Amount, 98% and 2%, respectively; third, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1B-2 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interests LTIC-1B-2 have been reduced to zero; fourth, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1B-1 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1B-1 has been reduced to zero; fifth, concurrently to
the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1M-9 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1M-9 has each been reduced to zero; sixth, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1M-8 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1M-8 has been reduced to zero; seventh, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1M-7 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1M-7 has been reduced to zero; eighth, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1M-6 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1M-6 has been reduced to zero; ninth, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1M-5 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1M-5 has been reduced to zero; tenth, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1M-4 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1M-4 has been reduced to zero; eleventh, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1M-3 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1M-3 has been reduced to zero; twelfth, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1M-2 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1M-2 has been reduced to zero; and thirteenth, to the
Uncertificated Principal Balances of REMIC IC Regular Interest LTIC-1AA, REMIC
IC Regular Interest LTIC-1M-1 and REMIC IC Regular Interest LTIC-1ZZ, 98%,
1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC IC
Regular Interest LTIC-1M-1 has been reduced to zero.
(vi) All
Realized Losses on the Group 2 Loans shall be allocated on each Payment Date
to
the following REMIC IIA Regular Interests:
first,
to REMIC IIA Regular Interests LTIIA-1 until the Uncertificated Principal
Balance thereof has been reduced to zero, then to REMIC IIA Regular Interest
LTIIA-PF until the Uncertificated Principal Balance thereof has been reduced
to
zero, however, that with respect to the first three Payment Dates, Realized
Losses relating to the Initial Group I Loans shall be allocated to REMIC IIA
Regular Interest LTIIA-1 and Realized Losses relating to the Subsequent Group
2
Loans shall be allocated to REMIC IIA Regular Interest LTIIA-PF until the
Uncertificated Principal Balance thereof has been reduced to zero.
(vii)
All
Realized Losses on the REMIC IIA Regular Interests LTIIA-1 and LTIIA-PF shall
be
deemed to have been allocated to the following REMIC IIB Regular Interests
in
the specified percentages, as follows: first to Uncertificated Accrued Interest
payable to the REMIC IIB Regular Interests LTIIB-2AA and LTIIB-2ZZ up to an
aggregate amount equal to the excess of (a) the REMIC IIB Interest Loss
Allocation Amount over (b) Prepayment Interest Shortfalls (to the extent not
covered by Compensating Interest) relating to the Loans for such Payment Date,
98% and 2%, respectively; second, to the Uncertificated Principal Balances
of
the REMIC IIB Regular Interests LTIIB-2AA and LTIIB-2ZZ up to an aggregate
amount equal to the REMIC IIB Principal Loss Allocation Amount, 98% and 2%,
respectively; third, to the Uncertificated Principal Balances of REMIC IIB
Regular Interest LTIIB-2AA, REMIC IIB Regular Interest LTIIB-2M-2 and REMIC
IIB
Regular Interest LTIIB-2ZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC IIB Regular Interest LTIIB-2M-2 has
been reduced to zero; and fourth, to the Uncertificated Principal Balances
of
REMIC IIB Regular Interest LTIIB-2AA, REMIC IIB Regular Interest LTIIB-2M-1
and
REMIC IIB Regular Interest LTIIB-2ZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC IIB Regular Interest LTIIB-2M-1 has
been reduced to zero.
Section
3.27 Determination
of the LIBOR Rate.
On each
LIBOR Rate Adjustment Date, LIBOR shall be established by the Indenture Trustee
and as to any Accrual Period, LIBOR will equal the rate for United States dollar
deposits for one month which appears on the Dow Xxxxx Telerate Screen Page
3750
as of 11:00 A.M., London time, on that LIBOR rate adjustment date. Dow Xxxxx
Telerate Screen Page 3750 means the display designated as page 3750 on the
Telerate Service or any other page as may replace page 3750 on that service
for
the purpose of displaying London interbank offered rates of major banks. If
the
rate does not appear on that page or any other page as may replace that page
on
that service, or if the service is no longer offered, any other service for
displaying LIBOR or comparable rates as may be selected by the Indenture Trustee
after consultation with the Seller, the rate will be the reference bank
rate.
The
Reference Bank Rate will be determined on the basis of the rates at which
deposits in the U.S. Dollars are offered by the reference banks, which shall
be
three major banks that are engaged in transactions in the London interbank
market, selected by the Indenture Trustee after consultation with the Seller.
The Reference Bank Rate will be determined as of 11:00 A.M., London time, on
the
LIBOR Rate Adjustment Date on the basis of rates offered by the Reference Banks
to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the aggregate Class Principal Balance of the
Class 1A-3, Class 2A-1, Class M and Class B Notes and Class G
Certificates. The Indenture Trustee will request the principal London office
of
each of the Reference Banks to provide a quotation of its rate. If at least
two
quotations are provided, the rate will be the arithmetic mean of the quotations.
If on that date fewer than two quotations are provided as requested, the rate
will be the arithmetic mean of the rates quoted by one or more major banks
in
New York City, selected by the Indenture Trustee after consultation with the
Seller, as of 11:00 A.M., New York City time, on that date for loans in
U.S. Dollars to leading European banks for a period of one month in amounts
approximately equal to the aggregate Class Principal Balance of the
Class 1A-3, Class 2A-1, Class M and Class B Notes and Class G
Certificates. If no quotations can be obtained, the rate will be LIBOR for
the
prior Payment Date; provided however, if, under the priorities listed previously
in this paragraph, LIBOR for a Payment Date would be based on LIBOR for the
previous Payment Date for the third consecutive Payment Date, the Indenture
Trustee after consultation with the Seller shall select an alternative
comparable index over which the Indenture Trustee has no control, used for
determining one-month Eurodollar lending rates that is calculated and published
or otherwise made available by an independent party.
The
establishment of LIBOR by the Indenture Trustee and the Indenture Trustee’s
subsequent calculation of the Note Interest Rate applicable to the Class A,
Class M and Class B Notes and Class G Certificates for the relevant
Accrual Period, in the absence of manifest error, will be final and
binding.
Section
3.28 Liquidation
on Final Maturity Date.
On the
Final Maturity Date, if the Securities are not paid in full on or prior to
the
Final Maturity Date, the Indenture Trustee shall take full account of the assets
and liabilities of the Issuer, shall liquidate the assets, in a commercially
reasonable manner and on commercially reasonable terms, as promptly as is
consistent with obtaining the fair value thereof and in accordance with
Section 5.15, and shall apply and distribute the proceeds therefrom in the
order of priority described in Section 3.05(b), (c), (d) and
(e).
Section
3.29 No
Recourse.
Upon
the occurrence of an Event of Default under the Notes, this Indenture or the
other Basic Documents, Noteholders shall have recourse only to the related
Collateral and all proceeds thereof, as and to the extent provided herein,
and
no recourse shall be had by such Noteholders against the Issuer or its other
assets or properties.
Section
3.30 Additional
Representations.
The
Issuer hereby represents and warrants to the Indenture Trustee and the Insurer
that as of the Closing Date:
(a) This
Indenture creates a valid and continuing security interest (as defined in the
applicable UCC) in the Mortgage Notes in favor of the Indenture Trustee, which
security interest is prior to all other Liens (except as expressly permitted
otherwise in this Indenture), and is enforceable as such as against creditors
of
and purchasers from the Issuer.
(b) The
Mortgage Notes constitute “instruments” within the meaning of the applicable
UCC.
(c) The
Issuer owns and has good and marketable title to the Mortgage Notes free and
clear of any Lien of any Person.
(d) The
original executed copy of each Mortgage Note (except for any Mortgage Note
with
respect to which a Lost Note Affidavit has been delivered to a Custodian) has
been delivered to a Custodian.
(e) The
Issuer has received a written acknowledgment from a Custodian that such
Custodian is acting solely as agent of the Indenture Trustee.
(f) Other
than the security interest granted to the Indenture Trustee pursuant to this
Indenture, the Issuer has not pledged, assigned, sold, granted a security
interest in, or otherwise conveyed any of the Mortgage Notes. The Issuer has
not
authorized the filing of and is not aware of any financing statements against
the Issuer that include a description of collateral covering the Mortgage Notes
other than any financing statement relating to the security interest granted
to
the Indenture Trustee hereunder or any security interest that has been
terminated. The Issuer is not aware of any judgment or tax lien filings against
the Issuer.
(g) None
of
the Mortgage Notes has any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the Indenture
Trustee, except for (i) any endorsements that are part of a complete chain
of
endorsements from the originator of the Mortgage Note to the Indenture Trustee,
and (ii) any marks or notations pertaining to Liens that have been terminated
or
released.
(h) With
respect to that portion of the Collateral described in clause (f), the Issuer
represents to the Indenture Trustee that:
(i) This
Indenture creates a valid and continuing security interest (as defined in the
applicable UCC) in the Collateral in favor of the Indenture Trustee and, with
respect to Loan Group 1, the Counterparty, which security interest is prior
to
all other liens, and is enforceable as such as against creditors of and
purchasers from the Issuer.
(ii) The
Collateral constitutes “general intangibles” within the meaning of the
applicable UCC.
(iii) The
Issuer owns and has good and marketable title to the Collateral, free and clear
of any lien, claim or encumbrance of any Person.
(iv) Other
than the security interest granted to the Indenture Trustee pursuant to this
Indenture, the Issuer has not pledged, assigned, sold, granted a security
interest in, or otherwise conveyed any of the Collateral.
Section
3.31 The
Swap Agreement.
(a) The
Indenture Trustee shall deposit any amounts received by it with respect to
the
Swap Agreement into the Swap Account.
(b) On
the
Closing Date, the Indenture Trustee shall establish and maintain in its name,
in
trust for the benefit of the Noteholders and Certificateholders related to
Loan
Group 1, the Swap Account. The Swap Account shall be an Eligible Account, and
funds on deposit therein shall be held separate and apart from, and shall not
be
commingled with, any other moneys, including without limitation, other moneys
held by the Indenture Trustee pursuant to this Agreement.
(c) Net
Swap
Payments and Swap Termination Payments (other than Swap Termination Payments
resulting from a Counterparty Trigger Event and to the extent not paid by the
Indenture Trustee from any upfront payment received pursuant to any related
replacement swap agreement that may be entered into by the Indenture Trustee)
payable by the Indenture Trustee, to the Counterparty pursuant to the Swap
Agreement shall be deducted from the Interest Remittance Amount for Loan Group
1, and to the extent of any such remaining amounts due, from the Principal
Remittance Amount for Loan Group 1, prior to any distributions to the related
Securityholders. On or before each Swap Payment Date, such amounts will be
remitted to the Counterparty, first to make any Net Swap Payment owed to the
Counterparty pursuant to the Swap Agreement for such Swap Payment Date, and
second to make any Swap Termination Payment (not due to a Counterparty Trigger
Event and to the extent not paid by the Indenture Trustee from any upfront
payment received pursuant to any related replacement swap agreement that may
be
entered into by the Indenture Trustee) owed to the Counterparty pursuant to
the
Swap Agreement for such Swap Payment Date. For federal income tax purposes,
such
amounts paid to the Counterparty on each Swap Payment Date shall first be deemed
paid to the Counterparty in respect of REMIC ID Regular Interest IO to the
extent of the amount distributable on such REMIC ID Regular Interest IO on
such
Payment Date, and any remaining amount shall be deemed paid to the Counterparty
in respect of a Class IO Distribution Amount. Any Swap Termination Payment
triggered by a Counterparty Trigger Event owed to the Counterparty pursuant
to
the Swap Agreement will be subordinated to distributions to the Holders of
the
Class 1A, Class 1M, Class 1B Notes and Class 1X-1 and Class 1P Certificates
and
shall be paid as set forth under Section 3.05(e)(I)(xxviii).
(d) The
Indenture Trustee shall terminate the Swap Agreement upon the occurrence of
an
event of default under the Swap Agreement of which a Responsible Officer of
the
Indenture Trustee has actual knowledge. Upon such a termination, the
Counterparty may be required to pay a termination payment to the Indenture
Trustee in respect of the Swap Agreement. Any such termination payment shall
be
applied by the Indenture Trustee to the purchase of a substantially equivalent
swap agreement at the written direction of the Majority in Interest Class 1X-1
Certificateholder. In the event that a replacement swap agreement is not
obtained within 30 days after receipt by the Indenture Trustee, on behalf of
the
Trust, of the Swap Termination Payment paid by the original Counterparty, the
Indenture Trustee will deposit such Swap Termination Payment into the Swap
Account and will, on each Payment Date, withdraw from the Swap Account an amount
equal to the Net Swap Payment, if any, that would have been paid to the Trust
by
the original Counterparty (computed in accordance with the terms of the original
Swap Agreement) and distribute such amount in the priority set forth
below.
(e) In
connection with paragraph 7(i) of the ISDA credit support annex, upon the
Counterparty's failure to post collateral with the Indenture Trustee, the
Indenture Trustee (to the extent it has actual knowledge) shall provide, no
later than the next Business Day after the date such collateral was required
to
be posted, to the Counterparty a written notice of such
failure.
(f) For
federal income tax purposes, each holder of a Class 1A, Class 1M and Class
1B
Note is deemed to own an undivided beneficial ownership interest in a REMIC
regular interest and the right to receive payments from either the related
Basis
Risk Reserve Fund or the Swap Account in respect of the Basis Risk Shortfall
or
the obligation to make payments to the Swap Account. For federal income tax
purposes, the Indenture Trustee will account for payments to each Class 1A,
Class 1M and Class 1B Note as follows: each Class 1A, Class 1M and Class 1B
Note
will be treated as receiving their entire payment from REMIC ID (regardless
of
any Swap Termination Payment or obligation under the Swap Agreement) and
subsequently paying their portion of any Swap Termination Payment in respect
of
each such Class’ obligation under the Swap Agreement. In the event that any such
Class is resecuritized in a REMIC, the obligation under the Swap Agreement
to
pay any such Swap Termination Payment will be made by one or more of the REMIC
Regular Interests issued by the resecuritization REMIC subsequent to such REMIC
Regular Interest receiving its full payment from any such Class 1A, Class 1M
and
Class 1B Note.
(g) The
REMIC
regular interest corresponding to a Class 1A, Class 1M and Class 1B Note will
be
entitled to receive interest and principal payments at the times and in the
amounts equal to those made on the Note to which it corresponds, except that
(i)
the maximum interest rate of that REMIC regular interest will equal the related
Net Funds Cap computed for this purpose by limiting the notional amount of
the
Swap Agreement to the aggregate principal balance of the related Loans and
(ii)
any Swap Termination Payment will be treated as being payable solely from
related Monthly Excess Cashflow. As a result of the foregoing, the amount of
distributions and taxable income on the REMIC regular interest corresponding
to
a Class 1A, Class 1M and Class 1B Note may exceed the actual amount of
distributions on the Class 1A, Class 1M and Class 1B Note.
(h) It
is the
intention of the parties hereto that, for federal and state income and state
and
local franchise tax purposes, the Swap Account be disregarded as an entity
separate from the Holder of the Class 1X-1 Certificates unless and until the
date when either (a) there is more than one Class 1X-1 Certificateholder or
(b)
any Class of Notes or Certificates in addition to the Class 1X-1 Certificates
is
recharacterized as an equity interest in the Swap Account for federal income
tax
purposes, in which case it is the intention of the parties hereto that, for
federal and state income and state and local franchise tax purposes, the Swap
Account be treated as a partnership. The Swap Account will be an “outside
reserve fund” within the meaning of Treasury Regulation Section 1.860G-2(h).
Section
3.32 Basis
Risk Reserve Funds.
(a) On
the
Closing Date, the Indenture Trustee shall establish and maintain in its name,
in
trust for the benefit of the Holders of the Class A, Class M and Class B Notes,
the Basis Risk Reserve Funds. Each Basis Risk Reserve Fund shall be an Eligible
Account, and funds on deposit therein shall be held separate and apart from,
and
shall not be commingled with, any other moneys, including without limitation,
other moneys held by the Indenture Trustee pursuant to this
Indenture.
(b) On
the
Closing Date, $1,000 will be deposited by the Depositor into each Basis Risk
Reserve Fund. On each Payment Date, the Indenture Trustee shall transfer from
the Payment Account to related Basis Risk Reserve Fund pursuant to Sections
3.05(e)(I)(xxix) and 3.05(e)(II)(xi), the related Required Reserve Fund Deposit.
Amounts on deposit in the related Basis Risk Reserve Fund may be withdrawn
by
the Indenture Trustee in connection with any Payment Date to fund the amounts
required to be distributed to holders of the related
(c) Class
A,
Class M and Class B Notes and Class G Certificates pursuant to Sections
3.05(e)(I)(xv) through (xxvi) and 3.05(e)(II)(vii) through (ix) to the extent
related Monthly Excess Cashflow and amounts from the Swap Agreement on such
date
are insufficient to make such payments. Any such amounts distributed shall
be
treated for federal tax purposes as amounts distributed by REMIC ID to the
Class
1X-1 Certificateholders in the case of the Basis Risk Reserve Fund related
to
Loan Group 1, and as amounts distributed by REMIC IIC to the Class 2X-1
Certificateholders in the case of the Basis Risk Reserve Fund related to Loan
Group 2. On any Payment Date, any amounts on deposit in related Basis Risk
Reserve Fund in excess of the related Required Reserve Fund Amount shall be
distributed to the Class 1X-1 Certificateholder or Class 2X-1 Certificateholder,
as applicable, pursuant to Sections 3.05(e)(I)(xxx) and
3.05(e)(II)(xii).
(d) Amounts
distributed pursuant to clauses (xv) through (xxvi) of Section 3.05(e)(I) for
such Payment Date shall be treated for federal income tax purposes as amounts
distributed by REMIC ID to the Class 1X-1 Certificateholders. Amounts
distributed pursuant to clauses (vii) through (ix) of Section 3.05(e)(II) for
such Payment Date shall be treated for federal income tax purposes as amounts
distributed by REMIC IIC to the Class 2X-1 Certificateholders
(e) Funds
in
each Basis Risk Reserve Fund may be invested in Permitted Investments by the
Indenture Trustee at the written direction of the majority Holder of the Class
1X-1 Certificates or the Class 2X-1 Certificates. Any net investment earnings
on
such amounts shall be payable to the Holder of the Class 1X-1 Certificates
or
the Class 2X-1 Certificates, as applicable, on each Payment Date. In the absence
of such written direction, all funds in the Basis Risk Reserve Funds shall
be
invested by the Indenture Trustee in the First American Prime Obligations Fund
(Class A). Amounts held in the Basis Risk Reserve Funds from time to time shall
continue to constitute assets of the Trust Fund, but not of REMIC IA, REMIC
IB,
REMIC IC, REMIC ID, REMIC IIA, REMIC IIB or REMIC IIC until released from the
Basis Risk Reserve Funds pursuant to this Section 3.32. Each Basis Risk Reserve
Fund constitutes an “outside reserve fund” within the meaning of Treasury
Regulation §1.860G-2(h) and is not an asset of REMIC IA, REMIC IB, REMIC IC,
REMIC ID, REMIC IIA, REMIC IIB or REMIC IIC. For all federal tax purposes,
amounts transferred by REMIC ID to the Basis Risk Reserve Fund shall be treated
as amounts distributed by REMIC ID to the Class 1X-1 Certificateholders, and
amounts transferred by REMIC IIC to the Basis Risk Reserve Fund shall be treated
as amounts distributed by REMIC IIC to the Class 2X-1 Certificateholders. For
federal tax purposes, the Class 1X-1 Certificates shall evidence ownership
of
the Basis Risk Reserve Fund related to Loan Group 1 and the Class 2X-1
Certificates shall evidence ownership of the Basis Risk Reserve Fund related
to
Loan Group 2. The Indenture Trustee shall have no liability for losses on
investments in Permitted Investments made pursuant to this Section 3.32(d)
(other than as obligor on any such investments). Upon termination of the Trust
Fund, any amounts remaining in each Basis Risk Reserve Fund shall be distributed
to the Holder of the Class 1X-1 Certificate or to the Holder of the Class 2X-1
Certificate, as applicable, in the same manner as if distributed pursuant to
Sections 3.05(e)(I)(xxx) or 3.05(e)(II)(xii) hereof.
(f) It
is the
intention of the parties hereto that, for federal and state income and state
and
local franchise tax purposes, the Basis Risk Reserve Fund related to Loan Group
1 be disregarded as an entity separate from the Holder of the Class 1X-1
Certificates unless and until the date when either (a) there is more than one
Class 1X-1 Certificateholder or (b) any related Class of Notes or Certificates
in addition to the Class 1X-1 Certificates is recharacterized as an equity
interest in the related Basis Risk Reserve Fund for federal income tax purposes,
in which case it is the intention of the parties hereto that, for federal and
state income and state and local franchise tax purposes, the related Basis
Risk
Reserve Fund be treated as a partnership. It is also the intention of the
parties hereto that, for federal and state income and state and local franchise
tax purposes, the related Basis Risk Reserve Fund related to Loan Group 2 be
disregarded as an entity separate from the Holder of the Class 2X-1 Certificates
unless and until the date when either (a) there is more than one Class 2X-1
Certificateholder or (b) any related Class of Notes or Certificates in addition
to the Class 2X-1 Certificates is recharacterized as an equity interest in
the
related Basis Risk Reserve Fund for federal income tax purposes, in which case
it is the intention of the parties hereto that, for federal and state income
and
state and local franchise tax purposes, the related Basis Risk Reserve Fund
be
treated as a partnership.
(g) On
the
Payment Date immediately after the Payment Date on which the aggregate Class
Principal Balance of the Class 1A, Class 1M and Class 1B Notes equals zero,
any
amounts on deposit in the Basis Risk Reserve Fund related to Loan Group 1 not
payable on the Class 1A, Class 1M and Class 1B Notes shall be distributed to
the
Holder of the Class 1X-1 Certificates in the same manner as if distributed
pursuant to Section 3.05(e)(I)(xxx) hereof. On the Payment Date immediately
after the Payment Date on which the aggregate Class Principal Balance of the
Class 2A-1, Class 2M-1 and Class 2M-2 Notes equals zero, any amounts on deposit
in the Basis Risk Reserve Fund related to Loan Group 2 not payable on the Class
1A Notes and Class 1M Notes shall be distributed to the Holder of the Class
2X-1
Certificates in the same manner as if distributed pursuant to Section
3.05(e)(II)(xii) hereof.
Section
3.33 Pre-Funding
Accounts and Capitalized Interest Account.
(a) The
Indenture Trustee shall establish and maintain, on behalf of the Noteholders
and, with respect to the Group 2 Loans, the Insurer, the related Pre-Funding
Accounts. On the Closing Date, the Depositor shall remit the related Pre-Funding
Amount to the Indenture Trustee for deposit in the related Pre-Funding Account.
On each Subsequent Transfer Date, upon satisfaction of the conditions for such
Subsequent Transfer Date set forth in Section 2.04(a), with respect to the
related Subsequent Transfer Agreement, the Indenture Trustee shall remit to
the
Seller the applicable Aggregate Subsequent Transfer Amount as payment of the
purchase price for the related Subsequent Loans.
If
any
funds remain in the Pre-Funding Accounts on July 24, 2006, to the extent they
represent interest earnings on the amounts originally deposited into the related
Pre-Funding Account, the Indenture Trustee shall distribute them to the order
of
the Depositor. The remaining funds in the related Pre-Funding Account shall
be
transferred to the related Payment Account to be included as part of principal
payments to the related Notes, in accordance with the priorities set forth
herein, on the July 2006 Payment Date.
(b) The
Indenture Trustee shall establish and maintain, on behalf of the Noteholders
and, with respect to the Group 2 Loans, the Insurer, the related Capitalized
Interest Accounts. On the Closing Date, the Depositor shall remit each
Capitalized Interest Deposit to the Indenture Trustee for deposit in the related
Capitalized Interest Account. On the Business Day prior to each of the May
2006,
June 2006 and July 2006 Payment Dates, the Indenture Trustee shall transfer
from
the related Capitalized Interest Account to the Payment Account an amount equal
to the related Capitalized Interest Requirement for such Payment Date. On each
of the May 2006 and June 2006 Payment Dates, the related Overfunded Interest
Amount shall be withdrawn from the related Capitalized Interest Account and
paid
to the Seller. Any funds remaining in the Capitalized Interest Accounts
immediately after the July 2006 Payment Date shall be paid to the
Depositor.
Section
3.34 Payments
Under the Policy.
(a)
By 12:00
noon (New York Time) on the later of (i) the second Business Day following
the
Business Day on which the Insurer shall have received Notice (as defined in
the
Policy) that a Deficiency Amount is due in respect of the Class 2A-1 Notes
or
Class G Certificates and (ii) the Payment Date on which the related Deficiency
Amount is payable to the Noteholders, the Indenture Trustee on behalf of the
Class 2A-1 Notes or Class G Certificates, as applicable, shall make a draw
on
the Policy in an amount, if any, equal to the Deficiency Amount.
(b) If
the
Indenture Trustee determines that a Deficiency Amount will exist for the
following Payment Date, then the Indenture Trustee shall submit a Notice (as
defined in the Policy) for payment in the amount of the Deficiency Amount to
the
Insurer no later than 12:00 Noon, New York City time, on the second Business
Day
prior to the applicable Payment Date. Upon receipt of such Deficiency Amount
in
accordance with the terms of the Policy, the Indenture Trustee shall deposit
such Deficiency Amount in the Payment Account for distribution to the Class
2A-1
Notes or Class G Certificates, as applicable, pursuant to Section 3.05
hereof.
In
addition, according to the terms of the Policy (in the form attached hereto
as
Exhibit M), a draw may be made under the Policy in respect of any Preference
Amount applicable to any of the Class 2A-1 Noteholders or Class G Certificates
(as defined in and pursuant to the terms and conditions of the such Policy)
and
the Indenture Trustee shall submit a Notice (as defined in such Policy) for
payment with respect thereto together with the other documents required to
be
delivered to the Insurer pursuant to the Policy in connection with a draw in
respect of any Preference Amount.
(c) Upon
its
receipt of a Final Order (as defined in the Policy), the Indenture Trustee
shall
notify the Insurer when a draw on the Policy is required to be made with respect
to any Preference Amount and the Indenture Trustee shall furnish to the Insurer,
at the Issuer’s expense, any documents, prepared for and received by the
Indenture Trustee (provided, however, that any such documents shall not be
prepared by the Indenture Trustee) required to be delivered under the Policy
(other than the Notice) for payment with respect to such Preference Amount.
The
Indenture Trustee also shall furnish to the Insurer the wire transfer
instructions to be included in any Notice.
Section
3.35 Suspension
of Rights During Insurer Default.
Upon
the occurrence and continuation of an Insurer Default, any right of the Insurer
to take or cause another Person to take any action relating to control or voting
rights, or to give any consent, approval or waiver under this Indenture, shall
be suspended (except as otherwise specifically provided herein) until such
time
as such Insurer Default shall have been cured or waived or otherwise ceased
to
continue.
ARTICLE
IV
THE
NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
Section
4.01 The
Notes.
The
Book-Entry Notes shall be registered in the name of a nominee designated by
the
Depository. Beneficial Owners will hold security entitlements to the Book-Entry
Notes through the book-entry facilities of the Depository in minimum Initial
Note Balances of $25,000 and integral multiples of $1 in excess
thereof.
The
Indenture Trustee may for all purposes (including the making of payments due
on
the Book-Entry Notes) deal with the Depository as the authorized representative
of the Beneficial Owners with respect to the Book-Entry Notes for the purposes
of exercising the rights of Holders of Book-Entry Notes hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights
of Beneficial Owners with respect to the Book-Entry Notes shall be limited
to
those established by law and agreements between such Beneficial Owners and
the
Depository and Depository Participants. Except as provided in Section 4.08,
Beneficial Owners shall not be entitled to definitive certificates for the
Book-Entry Notes as to which they are the Beneficial Owners. Requests and
directions from, and votes of, the Depository as Holder of the Book-Entry Notes
shall not be deemed inconsistent if they are made with respect to different
Beneficial Owners. The Indenture Trustee may establish a reasonable record
date
in connection with solicitations of consents from or voting by Holders of the
Book-Entry Notes and give notice to the Depository of such record date. Without
the written consent of the Issuer and the Indenture Trustee, no Book-Entry
Note
may be transferred by the Depository except to a successor Xxxxxxxxxx that
agrees to hold such Book-Entry Note for the account of the Beneficial
Owners.
In
the
event the Depository Trust Company resigns or is removed as Depository, the
Indenture Trustee with the written approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within
30
days of the effective date of the Depository’s resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Book-Entry
Notes to which it has a security entitlement in the manner prescribed in
Section 4.08.
The
Notes
shall, on original issue, be executed on behalf of the Issuer by the Owner
Trustee, not in its individual capacity but solely as Owner Trustee,
authenticated and delivered by the Indenture Trustee to or upon the order of
the
Issuer.
Section
4.02 Registration
of and Limitations on Transfer and Exchange of Notes; Appointment of Certificate
Registrar.
The
Issuer shall cause to be kept at the Indenture Trustee’s Corporate Trust Office
a Note Register in which, subject to such reasonable regulations as it may
prescribe, the Note Registrar shall provide for the registration of Notes and
of
transfers and exchanges of Notes as herein provided.
Each
purchaser of a Note (other than a Class 1B-1 Note and Class 1B-2 Note), who is a
trustee of a plan subject to the Employee Retirement Income Security Act of
1974, as amended or section 4975 of the Code (a “Plan”) or is acting on behalf
of a Plan, or using Plan assets to effect such transfer, is required to provide
written confirmation (or in the case of any such Note transferred in book-entry
form, will be deemed to have confirmed) that at the time of such transfer such
Notes are rated at least investment grade, and that such transferee believes
that such Notes are properly treated as indebtedness without substantial equity
features for purposes of the regulations, and agrees to so treat such Notes
and
that the acquisition and holding of such notes will not give rise to a
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975
of
the Internal Revenue Code. Regardless of the rating of such Notes, a prospective
purchaser or transferee may instead provide the Indenture Trustee with an
opinion of counsel, which opinion of counsel will not be at the expense of
the
Indenture Trustee, the Issuer, the Servicers or the Underwriter, which opines
that the purchase, holding and transfer of such note or interest therein is
permissible under applicable law, will not constitute or result in a non-exempt
prohibited transaction under ERISA or Section 4975 of the Internal Revenue
Code
and will not subject the Indenture Trustee, the Issuer, the Servicers or the
Underwriter to any obligation in addition to those undertaken in this
Indenture.
No
transfer, sale, pledge or other disposition of a Class 1B-1 Note and Class
1B-2
Note shall be made unless such transfer, sale, pledge or other disposition
is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the “1933 Act”), and any applicable state securities laws or is made in
accordance with said Act and laws. Except as otherwise provided in this
Section 4.02, in the event that a transfer of a Class 1B-1 Note or Class
1B-2 Note is to be made, (i) unless the Depositor directs the Indenture Trustee
otherwise in writing, the Indenture Trustee shall require a written Opinion
of
Counsel acceptable to and in form and substance satisfactory to the Indenture
Trustee, the Issuer and the Depositor that such transfer may be made pursuant
to
an exemption, describing the applicable exemption and the basis therefor, from
said Act and laws or is being made pursuant to said Act and laws, which Opinion
of Counsel shall not be an expense of the Indenture Trustee, the Trust Estate,
the Depositor, the Issuer, the Servicers, and (ii) the Indenture Trustee shall
require the transferee to execute a representation letter, substantially in
the
form of Exhibit D hereto, and the Indenture Trustee shall require the transferor
to execute a representation letter, substantially in the form of Exhibit E
hereto, each acceptable to and in form and substance satisfactory to the
Depositor, the Issuer and the Indenture Trustee certifying to the Depositor,
the
Issuer and the Indenture Trustee the facts surrounding such transfer, which
representation letters shall not be an expense of the Indenture Trustee, the
Trust Estate, the Depositor, the Issuer or the Servicers. In lieu of the
requirements set forth in the preceding sentence, transfers of Class 1B-1 Notes
and Class 1B-2 Notes may be made in accordance with this Section 4.02 if
the prospective transferee of such a Certificate provides the Indenture Trustee,
the Depositor and the Issuer with an investment letter substantially in the
form
of Exhibit F attached hereto, which investment letter shall not be an expense
of
the Indenture Trustee, the Issuer, the Trust Estate, the Depositor, the
Servicers, and which investment letter states that, among other things, such
transferee (i) is a “qualified institutional buyer” as defined under Rule 144A,
acting for its own account or the accounts of other “qualified institutional
buyers” as defined under Rule 144A, and (ii) is aware that the proposed
transferor intends to rely on the exemption from registration requirements
under
the 1933 Act provided by Rule 144A. The Holder of a Class 1B-1 Note or Class
1B-2 Note desiring to effect any transfer, sale, pledge or other disposition
shall, and does hereby agree to, indemnify the Indenture Trustee, the
Administrator, the Depositor, the Servicers, the Issuer and the Note Registrar
against any liability that may result if the transfer, sale, pledge or other
disposition is not so exempt or is not made in accordance with such federal
and
state laws and this Indenture. In the case of any Class 1B-2 Notes presented
for
registration in the name of any Person, either (i) the Indenture Trustee shall
require an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Indenture Trustee, the Depositor and the Issuer to the
effect that the purchase or holding of such Class 1B-2 Notes is permissible
under applicable law, will not constitute or result in any non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), and will not subject the
Indenture Trustee, the Issuer or the Depositor to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the
Code) in addition to those undertaken in this Indenture or the Servicing
Agreement, which Opinion of Counsel shall not be an expense of the Indenture
Trustee, the Issuer, the Depositor, the Servicers, or (ii) the prospective
transferee shall be required to provide the Indenture Trustee and the Depositor
with a certification to the effect set forth in Exhibit F, which the Indenture
Trustee may rely upon without further inquiry or investigation, in order to
establish that such transferee or the Person in whose name such registration
is
requested is not an employee benefit plan or other plan or arrangement subject
to the prohibited transaction provisions of ERISA or Section 4975 of the
Code, or any Person (including an insurance company investing its general
accounts, an investment manager, a named fiduciary or a trustee of any such
plan) who is using “plan assets” of any such plan to effect such acquisition
(each of the foregoing, a “Plan Investor”).
If
any
such transfer of a Class 1B-1 Note or Class 1B-2 Note held by the related
transferor and also to be held by the related transferee in the form of a
Book-Entry Note is to be made without registration under the Securities Act,
the
transferor will be deemed to have made as of the transfer date each of the
representations and warranties set forth on Exhibit E hereto in respect of
such
Class 1B-1 Note or Class 1B-2 Note and the transferee will be deemed to have
made as of the transfer date each of the representations and warranties set
forth on Exhibit F hereto in respect of such Class 1B-1 Note or Class 1B-2
Note.
No
transfer of any Class 1B-1 Note or Class 1B-2 Note that is a Book-Entry Note
or
interest therein shall be made by any related Beneficial Owner except (A) in
the
manner set forth in the preceding paragraph and in reliance on Rule 144A under
the 1933 Act to a “qualified institutional buyer” that is acquiring such
Book-Entry Note for its own account or for the account of another “qualified
institutional buyer” or (B) in the manner set forth in the second preceding
paragraph and in the form of a Definitive Note.
If
any
Beneficial Owner that is required under this Section 4.02 to transfer its
Book-Entry Notes in the form of Definitive Notes, (i) notifies the Indenture
Trustee of such transfer or exchange and (ii) transfers such Book-Entry Notes
to
the Indenture Trustee, in its capacity as such, through the book-entry
facilities of the Depository, then the Indenture Trustee shall decrease the
balance of such Book-Entry Notes or, the Indenture Trustee shall use reasonable
efforts to cause the surrender to the Note Registrar of such Book-Entry Notes
by
the Depository, and thereupon, the Indenture Trustee shall execute, authenticate
and deliver to such Beneficial Owner or its designee one or more Definitive
Notes in authorized denominations and with a like aggregate principal
amount.
Subject
to the provisions of this Section 4.02 governing registration of transfer and
exchange, Class 1B-1 Notes or Class 1B-2 Notes (i) held as Definitive Notes
may
be transferred in the form of Book-Entry Notes in reliance on Rule 144A under
the 1933 Act to one or more “qualified institutional buyers” that are acquiring
such Definitive Notes for their own accounts or for the accounts of other
“qualified institutional buyers” and (ii) held as Definitive Notes by a
“qualified institutional buyer” for its own account or for the account of
another “qualified institutional buyer” may be exchanged for Book-Entry Notes,
in each case upon surrender of such Class 1B-1 Notes or Class 1B-2 Notes for
registration of transfer or exchange at the offices of the Indenture Trustee
maintained for such purpose. Whenever any such Class 1B-1 Notes or Class 1B-2
Notes are so surrendered for transfer or exchange, either the Indenture Trustee
shall increase the balance of the related Book-Entry Notes or the Indenture
Trustee shall execute, authenticate and deliver the Book-Entry Notes for which
such Class 1B-1 Notes or Class 1B-2 Notes were transferred or exchanged, as
necessary and appropriate. No Holder of Definitive Notes other than a “qualified
institutional buyer” holding such Notes for its own account or for the account
of another “qualified institutional buyer” may exchange such Class 1B-1 Notes or
Class 1B-2 Notes for Book-Entry Notes. Further, any Beneficial Owner of a
Book-Entry Note other than any such “qualified institutional buyers” shall
notify the Indenture Trustee of its status as such and shall transfer such
Book-Entry Note to the Indenture Trustee, through the book-entry facilities
of
the Depository, whereupon, and also upon surrender to the Indenture Trustee
of
such Book-Entry Note by the Depository, (which surrender the Indenture Trustee
shall use reasonable efforts to cause to occur), the Indenture Trustee shall
execute, authenticate and deliver to such Beneficial Owner or such Benefical
Owner’s nominee one or more Definitive Notes in authorized denominations and
with a like aggregate principal amount.
Subject
to the restrictions and limitations set forth below, upon surrender for
registration of transfer of any Note at the Corporate Trust Office, the Issuer
shall execute and the Note Registrar shall authenticate and deliver, in the
name
of the designated transferee or transferees, one or more new Notes of the same
Class in authorized initial Note Balances evidencing the same aggregate
Percentage Interests.
Subject
to the foregoing, at the option of the Noteholders, Notes may be exchanged
for
other Notes of the same Class and of like tenor, in authorized initial Note
Balances evidencing the same aggregate Percentage Interests upon surrender
of
the Notes to be exchanged at the Corporate Trust Office of the Note Registrar.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute
and
the Note Registrar shall authenticate and deliver the Notes which the Noteholder
making the exchange is entitled to receive. Each Note presented or surrendered
for registration of transfer or exchange shall (if so required by the Note
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer in form reasonably satisfactory to the Note Registrar duly executed
by,
the Holder thereof or such Holder’s attorney duly authorized in writing with
such signature guaranteed by an “eligible guarantor institution” meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent’s Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with
the Securities Exchange Act of 1934, as amended. Notes delivered upon any such
transfer or exchange will evidence the same obligations, and will be entitled
to
the same rights and privileges, as the Notes surrendered.
No
service charge shall be imposed for any registration of transfer or exchange
of
Notes, but the Note Registrar shall require payment of a sum sufficient to
cover
any tax or governmental charge that may be imposed in connection with any
registration of transfer or exchange of Notes.
All
Notes
surrendered for registration of transfer and exchange shall be canceled by
the
Note Registrar and delivered to the Indenture Trustee for subsequent
destruction.
The
Issuer hereby appoints the Indenture Trustee as Certificate Registrar to keep
at
its Corporate Trust Office a Certificate Register pursuant to Section 3.05
of the Trust Agreement in which, subject to such reasonable regulations as
it
may prescribe, the Certificate Registrar shall provide for the registration
of
Certificates and of transfers and exchanges thereof pursuant to
Section 3.09 of the Trust Agreement. The Indenture Trustee hereby accepts
such appointment.
Section
4.03 Mutilated,
Destroyed, Lost or Stolen Notes.
If (i)
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) in the case of a destroyed, lost or stolen note, there
is
delivered to the Indenture Trustee such security or indemnity as may be required
by it to hold the Issuer and the Indenture Trustee harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the Indenture Trustee
that such Note has been acquired by a protected purchaser, and provided that
the
requirements of Section 8-405 of the UCC are met, the Issuer shall execute,
and upon its request the Indenture Trustee shall authenticate and deliver,
in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note,
a
replacement Note of the same Class; provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become
or
within seven days shall be due and payable, instead of issuing a replacement
Note, the Issuer may pay such destroyed, lost or stolen Note when so due or
payable without surrender thereof. If, after the delivery of such replacement
Note or payment of a destroyed, lost or stolen Note pursuant to the proviso
to
the preceding sentence, a protected purchaser of the original Note in lieu
of
which such replacement Note was issued presents for payment such original Note,
the Issuer and the Indenture Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered
or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a
protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon
the
issuance of any replacement Note under this Section 4.03, the Issuer may
require the payment by the Holder of such Note of a sum sufficient to cover
any
tax or other governmental charge that may be imposed in relation thereto and
any
other reasonable expenses (including the fees and expenses of the Indenture
Trustee) connected therewith.
Every
replacement Note issued pursuant to this Section 4.03 in replacement of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone,
and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The
provisions of this Section 4.03 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or
payment of mutilated, destroyed, lost or stolen Notes.
Section
4.04 Persons
Deemed Owners.
Prior
to due presentment for registration of transfer of any Note, the Issuer, the
Indenture Trustee, the Paying Agent, the Insurer and any agent of any of them
may treat the Person in whose name any Note is registered (as of the day of
determination) as the owner of such Note for the purpose of receiving payments
of principal of and interest, if any, on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Issuer, the
Indenture Trustee, the Paying Agent, the Insurer nor any agent of any of them
shall be affected by notice to the contrary.
Section
4.05 Cancellation.
All
Notes surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly canceled by the
Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee
for cancellation any Notes previously authenticated and delivered hereunder
which the Issuer may have acquired in any manner whatsoever, and all Notes
so
delivered shall be promptly canceled by the Indenture Trustee. No Notes shall
be
authenticated in lieu of or in exchange for any Notes canceled as provided
in
this Section 4.05, except as expressly permitted by this Indenture. All
canceled Notes may be held or disposed of by the Indenture Trustee in accordance
with its standard retention or disposal policy as in effect at the time unless
the Issuer shall direct by an Issuer Request that they be destroyed or returned
to it; provided however, that such Issuer Request is timely and the Notes have
not been previously disposed of by the Indenture Trustee.
Section
4.06 Book-Entry
Notes.
The
Notes, upon original issuance, will be issued in the form of typewritten Notes
constituting the Book-Entry Notes, to be delivered to The Depository Trust
Company, the initial Depository, by, or on behalf of, the Issuer. The Notes
shall initially be registered on the Note Register in the name of Cede &
Co., the nominee of the initial Depository, and no Beneficial Owner will receive
a Definitive Note representing such Beneficial Owner’s security entitlement to
such Book-Entry Note, except as provided in Section 4.08. Unless and until
definitive, fully registered Notes (the “Definitive Notes”) have been issued to
Beneficial Owners pursuant to Section 4.08:
(i) the
provisions of this Section 4.06 shall be in full force and
effect;
(ii) the
Note
Registrar, the Paying Agent, the Indenture Trustee and the Indenture Trustee
shall be entitled to deal with the Depository for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Beneficial Owners;
(iii) to
the
extent that the provisions of this Section 4.06 conflict with any other
provisions of this Indenture, the provisions of this Section 4.06 shall
control;
(iv) the
rights of Beneficial Owners shall be exercised only through the Depository
and
shall be limited to those established by law and agreements between such
Beneficial Owners and the Depository and/or the Depository Participants. Unless
and until Definitive Notes are issued pursuant to Section 4.08, the initial
Depository will make book-entry transfers among the Depository Participants
and
receive and transmit payments of principal of and interest on the Notes to
such
Depository Participants; and
(v) whenever
this Indenture requires or permits actions to be taken based upon instructions
or directions of Holders of Notes evidencing a specified percentage of the
Note
Balances of the Notes, the Depository shall be deemed to represent such
percentage only to the extent that it has received instructions to such effect
from Beneficial Owners and/or Depository Participants owning or representing,
respectively, such required percentage of the security entitlements to the
Book-Entry Notes and has delivered such instructions to the Indenture
Trustee.
Section
4.07 Notices
to Depository.
Whenever a notice or other communication to the Noteholders is required under
this Indenture, unless and until Definitive Notes shall have been issued to
Beneficial Owners pursuant to Section 4.08, the Indenture Trustee shall
give all such notices and communications specified herein to be given to
Noteholders to the Depository, and shall have no obligation to the Beneficial
Owners.
Section
4.08 Definitive
Notes.
If (i)
the Issuer determines that the Depository is no longer willing or able to
properly discharge its responsibilities with respect to the Notes and the Issuer
is unable to locate a qualified successor, (ii) the Issuer elects to terminate
the book-entry system through the Depository or (iii) after the occurrence
of an
Event of Default, Holders of the Notes representing security entitlements to
at
least a majority of the Note Balances of the Notes advise the Depository (with
a
copy to the Indenture Trustee) in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests of the
Beneficial Owners, then the Depository shall notify all Beneficial Owners and
the Indenture Trustee of the occurrence of any such event and of the
availability of Definitive Notes to Beneficial Owners. Upon surrender to the
Indenture Trustee of the typewritten Notes constituting the Book-Entry Notes
by
the Depository, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Depository. None of the Issuer, the
Note
Registrar or the Indenture Trustee shall be liable for any delay in delivery
of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Notes, the
Indenture Trustee shall recognize the Holders of the Definitive Notes as
Noteholders.
Section
4.09 Tax
Treatment.
The
Issuer has entered into this Indenture, and the Notes will be issued, with
the
intention that, for federal tax purposes, the Notes will qualify as regular
interests in a REMIC as defined in the Code. The Issuer, the Indenture Trustee
by entering into this Indenture, and each Noteholder, by its acceptance of
its
Note (and each Beneficial Owner by its acceptance of an interest in the
applicable Book-Entry Note), agree to treat the Notes as regular interests
in a
REMIC as defined in the Code.
Section
4.10 Satisfaction
and Discharge of Indenture.
This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution
of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders (and
the
Insurer, as subrogee of the Class 2A-1 Noteholders and Class G
Certificateholders) to receive payments of principal thereof and interest
thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09, 3.13, 3.15, 3.16 and the last
paragraph of Section 4.02, (v) the rights, obligations and immunities of
the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.07 and the obligations of the Indenture Trustee under
Section 4.11) and (vi) the rights of Noteholders and the Insurer as
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them, and the Indenture Trustee,
on
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to
the
Notes, when:
(A) either:
(1) each
Class of Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 4.03 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and held
in
trust by the Issuer and thereafter repaid to the Issuer or discharged from
such
trust, as provided in Section 3.03) have been delivered to the Indenture
Trustee for cancellation; or
(2) each
Class of Notes not theretofore delivered to the Indenture Trustee for
cancellation:
a. have
become due and payable,
b. will
become due and payable within one year, or
c. have
been
declared immediately due and payable pursuant to Section 5.02.
and
the
Issuer, in the case of a. or b. above, has irrevocably deposited or caused
to be
irrevocably deposited with the Indenture Trustee cash or direct obligations
of
or obligations guaranteed by the United States of America (which will mature
prior to the date such amounts are payable), in trust for such purpose, in
an
amount sufficient to pay and discharge the entire indebtedness on such Notes
then outstanding not theretofore delivered to the Indenture Trustee for
cancellation when due on the Final Scheduled Payment Date;
(B) the
Issuer has paid or caused to be paid all other sums payable hereunder by the
Issuer (including amounts payable to the Indenture Trustee and the Insurer);
and
(C) the
Issuer has delivered to the Indenture Trustee an Officer’s Certificate and an
Opinion of Counsel, meeting the applicable requirements of Section 10.01,
each stating that all conditions precedent herein provided for relating to
the
satisfaction and discharge of this Indenture have been complied with and, if
the
Opinion of Counsel relates to a deposit made in connection with
Section 4.10(A)(2)b. above, such opinion shall further be to the effect
that such deposit will not have any material adverse tax consequences to the
Issuer, any Noteholders or any Certificateholders.
Section
4.11 Application
of Trust Money.
All
monies deposited with the Indenture Trustee pursuant to Section 4.10 hereof
shall be held in trust and applied by it, in accordance with the provisions
of
the Notes and this Indenture, to the payment, either directly or through any
Paying Agent of the Issuer, or Certificate Paying Agent as designee of the
Issuer and the Insurer, as the Indenture Trustee may determine, to the
Securityholders, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from other funds except to
the
extent required herein or required by law.
Section
4.12 Repayment
of Monies Held by Paying Agent.
In
connection with the satisfaction and discharge of this Indenture with respect
to
the Notes, all monies then held by any Person other than the Indenture Trustee
under the provisions of this Indenture with respect to such Notes shall, upon
demand of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.05 and thereupon such Paying Agent shall be released
from all further liability with respect to such monies.
Section
4.13 Temporary
Notes.
Pending
the preparation of any Definitive Notes, the Issuer may execute and upon its
written direction, the Indenture Trustee may authenticate and make available
for
delivery, temporary Notes that are printed, lithographed, typewritten,
photocopied or otherwise produced, in any denomination, substantially of the
tenor of the Definitive Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Notes may determine, as evidenced by their execution
of
such Notes.
If
temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of the Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Indenture
Trustee, without charge to the Noteholder. Upon surrender for cancellation
of
any one or more temporary Notes, the Issuer shall execute and the Indenture
Trustee shall authenticate and make available for delivery, in exchange
therefor, Definitive Notes of authorized denominations and of like tenor and
aggregate principal amount. Until so exchanged, such temporary Notes shall
in
all respects be entitled to the same benefits under this Indenture as Definitive
Notes.
Section
4.14 Subrogation
and Cooperation.
(a)
The
Issuer and the Indenture Trustee acknowledge that (i) to the extent the Insurer
makes payments under the Policy on account of principal of or interest on the
Class 2A-1 Notes and Class G Certificates, as applicable, the Insurer will
be
fully subrogated to the rights of such Holders to receive such principal and
interest from the Issuer, and (ii) the Insurer shall be paid such principal
and
interest but only from the sources and in the manner provided herein and in
the
Insurance Agreement for the payment of such principal and interest.
(b) The
Indenture Trustee shall, so long as it is indemnified to its satisfaction,
cooperate in all respects with any reasonable written request by the Insurer
(unless a Insurer Default exists) for action to preserve or enforce the
Insurer’s rights or interest under this Indenture or the Insurance Agreement,
consistent with this Indenture and without limiting the rights of the
Noteholders as otherwise set forth in the Indenture, including, without
limitation, upon the occurrence and continuance of a default under the Insurance
Agreement, a request to take any one or more of the following
actions:
(i) institute
Proceedings for the collection of all amounts then payable on the Class 2A-1
Notes or Class G Certificates, as applicable, or under this Indenture in respect
of the Class 2A-1 Notes, or under the Trust Agreement in respect of the Class
G
Certificates and all amounts payable under the Insurance Agreement, enforce
any
judgment obtained and collect from the Issuer monies adjudged due;
(ii) sell
or
cause to be sold the Trust Estate or any portion thereof or rights or interest
therein, at one or more public or private Sales called and conducted in any
manner permitted by law;
(iii) institute
Proceedings from time to time for the complete or partial foreclosure of this
Indenture; and
(iv) exercise
any remedies of a secured party under the UCC and take any other appropriate
action to protect and enforce the rights and remedies of the Insurer
hereunder;
provided,
however, action shall be taken pursuant to this Section 4.14 by the Indenture
Trustee to preserve the Insurer’s rights or interest under this Agreement or the
Insurance Agreement only to the extent such action is available to the Class
2A-1 Noteholders or the Insurer under other provisions of this Indenture or
the
Holders of the Class G Certificates under the Trust Agreement.
Notwithstanding
any provision of this Indenture to the contrary, so long as no Insurer Default
exists, the Insurer shall at all times be treated as if it were the exclusive
owner of all Class 2A-1 Notes and Class G Certificates, as applicable,
Outstanding for the purposes of all approvals, consents, waivers and the
institution of any action and the written direction of all remedies, and the
Indenture Trustee shall act in accordance with the written directions of the
Insurer.
ARTICLE
V
DEFAULT
AND REMEDIES
Section
5.01 Events
of Default.
(a) The
Issuer shall deliver to the Indenture Trustee and the Insurer, within five
days
after learning of the occurrence any event which with the giving of notice
and
the lapse of time would become an Event of Default under clause (iii) of the
definition of “Event of Default” written notice in the form of an Officer’s
Certificate of its status and what action the Issuer is taking or proposes
to
take with respect thereto.
(b) An
Event
of Default shall be determined for each respective Loan Group and may be
directed or called by the Insurer with respect to the Group 2
Loans.
Section
5.02 Acceleration
of Maturity; Rescission and Annulment.
If an
Event of Default should occur and be continuing with respect to the Notes
related to either Loan Group, then and in every such case the Indenture Trustee
may (or on request of the Insurer in the case of Loan Group 2), and upon the
request of the Holders of Notes representing not less than a majority of the
Voting Rights of all Notes (or the insurer in the case of Loan Group 2), the
Indenture Trustee shall, declare the Notes to be immediately due and payable,
by
a notice in writing to the Issuer (and to the Indenture Trustee if given by
Noteholders), and upon any such declaration the unpaid principal amount of
each
Class of Notes, together with accrued and unpaid interest thereon through the
date of acceleration, shall become immediately due and payable.
At
any
time after such declaration of acceleration of maturity with respect to an
Event
of Default has been made and before a judgment or decree for payment of the
money due has been obtained by the Indenture Trustee as hereinafter in this
Article V provided, the Holders of Notes representing a majority of the
Voting Rights of all Notes or the Insurer with respect to Loan Group 2, by
written notice to the Issuer and the Indenture Trustee may in writing waive
the
related Event of Default and rescind and annul such declaration and its
consequences if
(i) the
Issuer has paid or deposited with the Indenture Trustee a sum sufficient to
pay:
(A) all
payments of principal of and interest on the Notes and Class G Certificates
and
all other amounts that would then be due hereunder or upon the Notes if the
Event of Default giving rise to such acceleration had not occurred;
and
(B) all
sums
paid by the Indenture Trustee hereunder and the reasonable compensation,
expenses and disbursements of the Indenture Trustee and its agents and counsel;
and
(ii) all
Events of Default, other than the nonpayment of the principal of the Notes
that
has become due solely by such acceleration, have been cured or waived as
provided in Section 5.12.
No
such
rescission shall affect any subsequent default or impair any right consequent
thereto.
Section
5.03 Collection
of Indebtedness and Suits for Enforcement by Indenture Trustee.
(a) The
Issuer covenants that if a default occurs in the payment of (i) any interest
on
any Note when the same becomes due and payable, and such default continues
for a
period of five days, or (ii) the principal of or any installment of the
principal of any Note when the same becomes due and payable, the Issuer shall,
upon demand of the Indenture Trustee, pay to it, for the benefit of the
Noteholders the whole amount then due and payable on the Notes for principal
and
interest, with interest upon the overdue principal, and in addition thereto
such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses and disbursements
of
the Indenture Trustee and their respective agents and counsel.
(b) In
case
the Issuer shall fail forthwith to pay such amounts upon such demand, the
Indenture Trustee, in its own name and as trustee of an express trust, subject
to the provisions of Section 10.17 hereof may institute a Proceeding for
the collection of the sums so due and unpaid, and may prosecute such Proceeding
to judgment or final decree, and may enforce the same against the Issuer or
other obligor upon the Notes and collect in the manner provided by law out
of
the property of the Issuer or other obligor upon the Notes, wherever situated,
the monies adjudged or decreed to be payable.
(c) If
an
Event of Default occurs and is continuing, the Indenture Trustee subject to
the
provisions of Section 10.17 hereof may, as more particularly provided in
Section 5.04, in its discretion, proceed to protect and enforce its rights
and the rights of the Noteholders or the Insurer, by such appropriate
Proceedings as the Indenture Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant
or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Indenture Trustee by this Indenture or by law.
(d) In
case
there shall be pending, relative to the Issuer or any other obligor upon the
Notes or any Person having or claiming an ownership interest in the Trust
Estate, Proceedings under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
in
case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for
or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or
by
declaration or otherwise and irrespective of whether the Indenture Trustee
shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or
otherwise:
(i) to
file
and prove a claim or claims for the whole amount of principal and interest
owing
and unpaid in respect of the Notes and to file such other papers or documents
as
may be necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and liabilities
incurred, by the Indenture Trustee and each predecessor Indenture Trustee,
except as a result of negligence, willful misconduct or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless
prohibited by applicable law and regulations, to vote on behalf of the
Noteholders in any election of a trustee, a standby trustee or Person performing
similar functions in any such Proceedings;
(iii) to
collect and receive any monies or other property payable or deliverable on
any
such claims and to distribute all amounts received with respect to the claims
of
the Noteholders and of the Indenture Trustee on their behalf; and
(iv) to
file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee or the
Noteholders allowed in any judicial proceedings relative to the Issuer, its
creditors and its property;
and
any
trustee, receiver, liquidator, custodian or other similar official in any such
Proceeding is hereby authorized by each of such Noteholders to make payments
to
the Indenture Trustee, and, in the event that the Indenture Trustee shall
consent to the making of payments directly to such Noteholders, to pay to the
Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, by the Indenture Trustee, the Insurer and each predecessor
Indenture Trustee except as a result of negligence, willful misconduct or bad
faith.
(e) Nothing
herein contained shall be deemed to authorize the Indenture Trustee to authorize
or consent to or vote for or accept or adopt on behalf of any Noteholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof or to authorize the Indenture Trustee
to vote in respect of the claim of any Noteholder in any such proceeding except,
as aforesaid, to vote for the election of a trustee in bankruptcy or similar
Person.
(f) All
rights of action and of asserting claims under this Indenture, or under any
of
the Notes, may be enforced by the Indenture Trustee without the possession
of
any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or proceedings instituted by the Indenture
Trustee shall be brought in its own name as trustee of an express trust, and
any
recovery of judgment, subject to the payment of the expenses, disbursements
and
compensation of the Indenture Trustee, each predecessor Indenture Trustee and
its respective agents and attorneys, shall be for the ratable benefit of the
Noteholders.
(g) In
any
Proceedings brought by the Indenture Trustee (and also any Proceedings involving
the interpretation of any provision of this Indenture to which the Indenture
Trustee shall be a party), the Indenture Trustee shall be held to represent
all
the Noteholders, and it shall not be necessary to make any Noteholder a party
to
any such Proceedings.
Section
5.04 Remedies;
Priorities.
(a) If
an
Event of Default shall have occurred and be continuing, the Indenture Trustee
subject to the provisions of Section 10.17, hereof, and with respect to the
Class 2A-1 Notes or Class G Certificates, so long as there is no current Insurer
Default under the Policy, at the written direction of the Insurer or the Holders
of the majority of the aggregate Note Principal Balance of the Class 2A-1 Notes
or aggregate Certificate Principal Balance of the Class G Certificates, with
the
consent of the Insurer may do one or more of the following (subject to
Section 5.05):
(i) institute
Proceedings in its own name and as trustee of an express trust for the
collection of all amounts then payable on the Notes or under this Indenture
with
respect thereto, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Issuer and any other obligor upon such Notes
monies adjudged due;
(ii) institute
Proceedings from time to time for the complete or partial foreclosure of this
Indenture with respect to the Trust Estate;
(iii) exercise
any remedies of a secured party under the UCC and take any other appropriate
action to protect and enforce the rights and remedies of the Indenture Trustee
and the Noteholders;
(iv) refrain
from selling the Trust Estate (unless otherwise directed by a majority of
Noteholders) and continue to apply all amounts received thereon to payments
on
the Notes in accordance with Section 3.05; and
(v) sell
the
Trust Estate or any portion thereof or rights or interest therein, at one or
more public or private sales called and conducted in any manner permitted by
law.
provided,
however, that the Indenture Trustee must sell or otherwise liquidate the Trust
Estate following an Event of Default, if (i) the Holders of the Notes
representing not less than a majority of the Voting Rights of all of the Notes
direct the Indenture Trustee to sell or otherwise liquidate the Trust Estate
or
(ii) the Indenture Trustee determines that the Loans will not continue to
provide sufficient funds for (A) the payment of expenses under this Indenture
and (B) the payment of principal of and interest on the Notes as they would
have
become due if the Notes had not been declared due and payable. In determining
such sufficiency or insufficiency with respect to clause (A) and (B), the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as
to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose. Notwithstanding the foregoing, so long as a Servicing
Default has not occurred, any Sale of the Trust Estate shall be made subject
to
the continued servicing of the Loans by the related Servicers as provided in
the
Servicing Agreement.
The
Indenture Trustee may fix a record date and Payment Date for any payment to
Noteholders pursuant to this Section 5.04. At least 15 days before such
record date, the Indenture Trustee shall mail to each Noteholder a notice that
states the record date, the Payment Date and the amount to be paid.
Section
5.05 Optional
Preservation of the Trust Estate.
If the
Notes have been declared to be due and payable under Section 5.02 following
an Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee, unless otherwise directed to
by,
with respect to Loan Group 1, a majority of the Voting Rights of the Notes
or,
with respect to Loan Group 2, the Insurer, elect to take and maintain possession
of the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of
and
interest on the Notes and other obligations of the Issuer.
Section
5.06 Limitation
of Suits.
No
Noteholder, other than the Insurer acting pursuant to Section 4.14 hereof,
shall
have any right to institute any Proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for
any
other remedy hereunder, unless and subject to the provisions of
Section 10.17 hereof:
(i) such
Noteholder has previously given written notice to the Indenture Trustee of
a
continuing Event of Default;
(ii) the
Holders of not less than 25% of the Voting Rights of the Notes have made written
request to the Indenture Trustee to institute such Proceeding in respect of
such
Event of Default in its own name as Indenture Trustee hereunder;
(iii) such
Noteholder or Noteholders have offered to the Indenture Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request;
(iv) the
Indenture Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute such Proceedings;
(v) such
Holder or Holders have the written consent of the Insurer unless a Insurer
Default exists; and
(vi) no
direction inconsistent with such written request has been given to the Indenture
Trustee during such 60-day period by the Holders of a majority of the Note
Balances of the Notes.
It
is
understood and intended that no one or more Noteholders shall have any right
in
any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Noteholder
or
to obtain or to seek to obtain priority or preference over any other Noteholder
or to enforce any right under this Indenture, except in the manner herein
provided.
In
the
event the Indenture Trustee shall receive conflicting or inconsistent requests
and indemnity from two or more groups of Holders of Notes, each representing
less than a majority of the Voting Rights of the Notes, the Indenture Trustee
in
their sole discretion may determine what action, if any, shall be taken,
notwithstanding any other provisions of this Indenture.
Section
5.07 Unconditional
Rights of Noteholders to Receive Principal and Interest.
Notwithstanding any other provisions in this Indenture each Noteholders shall
have the right, which is absolute and unconditional, to receive payment of
the
principal of, and interest, on such Note on or after the respective due dates
thereof expressed in such Note or in this Indenture and to institute suit for
the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
Section
5.08 Restoration
of Rights and Remedies.
If the
Indenture Trustee or any Noteholder has instituted any Proceeding to enforce
any
right or remedy under this Indenture and such Proceeding has been discontinued
or abandoned for any reason or has been determined adversely to the Indenture
Trustee, the Insurer or to such Noteholder, then and in every such case the
Issuer, the Indenture Trustee, the
Insurer
and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Indenture Trustee, the Insurer and the
Noteholders shall continue as though no such Proceeding had been
instituted.
Section
5.09 Rights
and Remedies Cumulative.
No
right or remedy herein conferred upon or reserved to the Indenture Trustee,
the
Insurer or to the Noteholders is intended to be exclusive of any other right
or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder
or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the
concurrent assertion or employment of any other appropriate right or
remedy.
Section
5.10 Delay
or Omission Not a Waiver.
No
delay or omission of the Indenture Trustee, the Insurer or any Noteholder to
exercise any right or remedy accruing upon any Event of Default shall impair
any
such right or remedy or constitute a waiver of any such Event of Default or
an
acquiescence therein. Every right and remedy given by this Article V or by
law to the Indenture Trustee or to the Noteholders may be exercised from time
to
time, and as often as may be deemed expedient, by the Indenture Trustee or
by
the Noteholders, as the case may be.
Section
5.11 Control
by Noteholders.
Subject
to the rights of the Insurer pursuant to Section 12.01, the Holders of a
majority of the Voting Rights of Notes shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that:
(i) such
direction shall not be in conflict with any rule of law or with this
Indenture;
(ii) subject
to the express terms of Section 5.04, any direction to the Indenture
Trustee to sell or liquidate the Trust Estate shall be by Holders of Notes
representing not less than a majority of the Voting Rights of
Notes;
(iii) if
the
conditions set forth in Section 5.05 have been satisfied and the Indenture
Trustee is required to retain the Trust Estate pursuant to such Section, then
any direction to the Indenture Trustee by Holders of Notes representing less
than a majority of the Voting Rights of Notes to sell or liquidate the Trust
Estate shall be of no force and effect; and
(iv) the
Indenture Trustee may take any other action deemed proper by the Indenture
Trustee that is not inconsistent with such direction.
Notwithstanding
the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
Section
5.12 Waiver
of Past Defaults.
Prior
to the declaration of the acceleration of the maturity of the Notes as provided
in Section 5.02, with respect to Loan Group 1, the Holders of Notes of not
less than a majority of the Voting Rights of the Notes, or with respect to
the
Loan Group 2, the Insurer, may waive any past Event of Default and its
consequences except an Event of Default (a) with respect to payment of principal
of or interest on any of the Notes or (b) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of each
Noteholder. In the case of any such waiver, the Issuer, the Indenture Trustee
and the Noteholders shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent
or
other Event of Default or impair any right consequent thereto.
Upon
any
such waiver, any Event of Default arising therefrom shall be deemed to have
been
cured and not to have occurred, for every purpose of this Indenture; but no
such
waiver shall extend to any subsequent or other Event of Default or impair any
right consequent thereto.
Section
5.13 Undertaking
for Costs.
All
parties to this Indenture agree, and each Noteholder by such Noteholder’s
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under
this Indenture, or in any suit against the Indenture Trustee for any action
taken, suffered or omitted by it as Indenture Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and
that
such court may in its discretion assess reasonable costs, including reasonable
attorneys’ fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.13 shall not apply to (a) any suit
instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10%
of
the Voting Rights of the Notes or (c) any suit instituted by any Noteholder
for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this
Indenture.
Section
5.14 Waiver
of Stay or Extension Laws.
The
Issuer covenants (to the extent that it may lawfully do so) that it will not
at
any time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or
at
any time hereafter in force, that may affect the covenants or the performance
of
this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it
shall not hinder, delay or impede the execution of any power herein granted
to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section
5.15 Sale
of Trust Estate.
(a) The
power
to effect any sale or other disposition (a “Sale”) of any portion of the Trust
Estate pursuant to Section 5.04 is expressly subject to the provisions of
Section 5.05 and this Section 5.15. The power to effect any such Sale
shall not be exhausted by any one or more Sales as to any portion of the Trust
Estate remaining unsold, but shall continue unimpaired until the entire Trust
Estate shall have been sold or all amounts payable on the Notes and under this
Indenture shall have been paid; provided however, that subject to the consent
of
the Insurer with respect to Loan Group 2 (unless the Class 2A-1 Notes and Class
G Certificates and all other amounts owed to the Insurer under the Policy will
be paid in full as a result of such sale), the Indenture Trustee must sell
the
assets included in the Trust Estate if collections in respect of such assets
are
determined to be insufficient to pay certain expenses payable under this
Indenture and to make all scheduled payments on the Notes. The Indenture Trustee
may from time to time postpone any public Sale by public announcement made
at
the time and place of such Sale. The Indenture Trustee hereby expressly waives
its right to any amount fixed by law as compensation for any Sale.
(b) The
Indenture Trustee shall not in any private Sale sell the Trust Estate, or any
portion thereof, unless:
(1) all
Noteholders consent to or direct the Indenture Trustee to make, such Sale,
(2) the
Insurer consents, unless an Insurer Default exists, or
(3) the
proceeds of such Sale would be not less than the entire amount which would
be
payable to the Noteholders under the Notes and the Certificateholder under
the
Certificate, in full payment thereof in accordance with Section 5.02, on
the Payment Date next succeeding the date of such Sale.
The
purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a
private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(c) Unless
the Securityholders have otherwise consented or directed the Indenture Trustee
will not sell at any public Sale all or any portion of the Trust Estate at
which
a minimum bid equal to or greater than the amount described in paragraph (2)
of
subsection (b) of this Section 5.15 has not been established by the
Indenture Trustee and no Person bids an amount equal to or greater than such
amount.
(d) In
connection with a Sale of all or any portion of the Trust Estate:
(1) any
Noteholder may bid for and purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain and possess and dispose
of
such property, without further accountability, and may, in paying the purchase
money therefor, deliver any Notes or claims for interest thereon in lieu of
cash
up to the amount which shall, upon distribution of the net proceeds of such
sale, be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Holders
thereof after being appropriately stamped to show such partial
payment;
(2) the
Indenture Trustee may bid for and acquire the property offered for Sale in
connection with any Sale thereof, and, subject to any requirements of, and
to
the extent permitted by, applicable law in connection therewith, may purchase
all or any portion of the Trust Estate in a private sale, and, in lieu of paying
cash therefor, may make settlement for the purchase price by crediting the
gross
Sale price against the sum of (A) the amount which would be distributable to
the
Securityholders as a result of such Sale in accordance with Section 5.04(b)
on the Payment Date next succeeding the date of such Sale and (B) the expenses
of the Sale and of any Proceedings in connection therewith which are
reimbursable to it, without being required to produce the Notes in order to
complete any such Sale or in order for the net Sale price to be credited against
such Notes, and any property so acquired by the Indenture Trustee shall be
held
and dealt with by it in accordance with the provisions of this
Indenture;
(3) the
Indenture Trustee shall execute and deliver an appropriate instrument of
conveyance transferring its interest in any portion of the Trust Estate in
connection with a Sale thereof;
(4) the
Indenture Trustee is hereby irrevocably appointed the agent and attorney-in-fact
of the Issuer to transfer and convey its interest in any portion of the Trust
Estate in connection with a Sale thereof, and to take all action necessary
to
effect such Sale; and
(5) no
purchaser or transferee at such a Sale shall be bound to ascertain the Indenture
Trustee’s authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
Section
5.16 Action
on Notes.
The
Indenture Trustee’s right to seek and recover judgment on the Notes or under
this Indenture shall not be affected by the seeking, obtaining or application
of
any other relief under or with respect to this Indenture. Neither the lien
of
this Indenture nor any rights or remedies of the Indenture Trustee or the
Noteholders shall be impaired by the recovery of any judgment by the Indenture
Trustee against the Issuer or by the levy of any execution under such judgment
upon any portion of the Trust Estate or upon any of the assets of the Issuer.
Any money or property collected by the Indenture Trustee shall be applied in
accordance with Section 5.04(b).
ARTICLE
VI
THE
INDENTURE TRUSTEE
Section
6.01 Duties
of Indenture Trustee.
(a) If
an
Event of Default has occurred and is continuing, the Indenture Trustee shall
exercise the rights and powers vested in it by this Indenture 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.
(b) Except
during the continuance of an Event of Default:
(i) the
Indenture Trustee undertakes to perform such duties and only such duties as
are
specifically set forth in this Indenture and no implied covenants or obligations
shall be read into this Indenture against the Indenture Trustee ;
and
(ii) in
the
absence of bad faith on its part, the Indenture Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; however, the Indenture Trustee
shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The
Indenture Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this
paragraph does not limit the effect of paragraph (b) of this
Section 6.01;
(ii) The
Indenture Trustee shall not be
liable
for any error of judgment made in good faith by a Responsible Officer unless
it
is proved that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) The
Indenture Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by the
Indenture Trustee pursuant to Section 5.11.
(d) The
Indenture Trustee shall not be liable for interest on any money received by
it
except as it may agree in writing with the Issuer.
(e) Money
held in trust by the Indenture Trustee need not be segregated from other funds
except to the extent required by law or the terms of this Indenture or the
Trust
Agreement.
(f) No
provision of this Indenture shall require the Indenture Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance
of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayment of such funds
or
adequate indemnity against such risk or liability is not reasonably assured
to
it.
(g) Every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Indenture Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
(h) The
Indenture Trustee shall act in accordance with Section 7.01 of the Servicing
Agreement and shall act as successor to a Servicer or appoint a successor
Servicer in accordance with Section 7.02 of the Servicing
Agreement.
Section
6.02 Rights
of Indenture Trustee.
(a) The
Indenture Trustee may conclusively rely on, and shall be fully protected from
acting or refraining from acting upon, any document believed by it to be genuine
and to have been signed or presented by the proper person. The Indenture Trustee
need not investigate any fact or matter stated in the document.
(b) Before
the Indenture Trustee acts or refrains from acting, it may require an Officer’s
Certificate or an Opinion of Counsel. The Indenture Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on an
Officer’s Certificate or Opinion of Counsel.
(c) The
Indenture Trustee shall not be liable for any action it takes or omits to take
in good faith which it believes to be authorized or within its rights or powers;
provided, however, that the Indenture Trustee’s conduct does not constitute
willful misconduct, negligence or bad faith.
(d) The
Indenture Trustee may consult with counsel, and the advice or opinion of counsel
with respect to legal matters relating to this Indenture and the Notes shall
be
full and complete authorization and protection from liability in respect to
any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(e) The
Indenture Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder, either directly or by or through agents, attorneys,
custodians or nominees appointed with due care, and shall not be responsible
for
any willful misconduct or negligence on the part of any agent, attorney,
custodian or nominee so appointed.
Section
6.03 Individual
Rights of The Indenture Trustee.
The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee subject
to
the requirements of the Trust Indenture Act. Any Note Registrar, co-registrar
or
co-paying agent may do the same with like rights. However, the Indenture Trustee
must comply with Sections 6.11 and 6.12.
Section
6.04 Indenture
Trustee’s Disclaimer.
The
Indenture Trustee shall not be (i) responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Trust
Agreement or the Notes, (ii) accountable for the Issuer’s use of the proceeds
from the Notes or (iii) responsible for any statement of the Issuer or any
other
Person in the Indenture, the Trust Agreement or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee’s certificate of authentication.
Section
6.05 Notice
of Event of Default.
Subject
to Section 5.01, the Indenture Trustee shall mail to each Noteholder and the
Insurer notice of an Event of Default of which a Responsible Officer of the
Indenture Trustee has actual knowledge within the later of 90 days after it
occurs and 90 days after such Responsible Officer’s knowledge thereof. Except in
the case of an Event of Default in payment of principal of or interest on any
Note, the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
Section
6.06 Reports
by Indenture Trustee to Holders.
The
Indenture Trustee shall deliver to each Noteholder such information with respect
to the Notes as may be required to enable such holder to prepare its federal
and
state income tax returns including without limitation Form 1099, to the extent
such form is required by law. In addition, upon the Issuer’s written request,
the Indenture Trustee shall promptly furnish information reasonably requested
by
the Issuer with respect to the Notes that is reasonably available to the
Indenture Trustee to enable the Issuer to perform its federal and state income
tax reporting obligations.
Section
6.07 Compensation
and Indemnity.
The
Issuer shall reimburse the Indenture Trustee, the Administrator and the Owner
Trustee for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to compensation for its services.
Such expenses shall include reasonable compensation and expenses, disbursements
and advances of the Indenture Trustee’s, the Administrator’s or the Owner
Trustee’s agents, counsel, accountants and experts.
The
Issuer shall indemnify the Indenture Trustee and Insurer and hold each of them
harmless against any and all loss, liability or expense (including attorneys’
fees) incurred by it in connection with the administration of this trust and
the
performance of its duties hereunder. The Indenture Trustee shall notify the
Issuer promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee, the Insurer or the Administrator to so notify the Issuer
shall not relieve the Issuer of its obligations hereunder, unless the Issuer
is
materially prejudiced thereby. The Issuer shall defend any such claim, and
the
Indenture Trustee or the Insurer (each an “Indemnified Party”) shall have the
right to employ separate counsel with respect to any such claim and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless: (i) the employment
thereof has been specifically authorized by the Issuer in writing; (ii) such
Indemnified Party shall have been advised by such counsel that there may be
one
or more legal defenses available to it which are different from or additional
to
those available to the Issuer and in the reasonable judgment of such counsel
it
is advisable for such Indemnified Party to employ separate counsel or (iii)
the
Issuer has failed to assume the defense of such claim within a reasonable period
of time following written notice thereof, it being understood, however, with
respect to any event described in clause (ii) or clause (iii) hereof, that
the
Issuer shall not, in connection with any one such claim or separate but
substantially similar or related claims in the same jurisdiction arising out
of
the same general allegations or circumstances, be liable for the reasonable
fees
and expenses of more than one separate firm of attorneys (in addition to local
counsel) at any time for all such Indemnified Parties, which firm shall be
designated in writing by the Indemnified Parties. The Issuer is not obligated
to
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee’s own willful
misconduct, negligence or bad faith.
The
Issuer’s payment obligations to the Indenture Trustee, the Administrator and the
Owner Trustee pursuant to this Section 6.07 shall survive the discharge of
this
Indenture and the termination or resignation of the Indenture Trustee, the
Administrator. When the Indenture Trustee or the Owner Trustee incurs expenses
after the occurrence of an Event of Default with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title
11 of
the United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
Section
6.08 Replacement
of Indenture Trustee.
No
resignation or removal of the Indenture Trustee and no appointment of a
successor Indenture Trustee shall become effective until the acceptance of
appointment by the successor Indenture Trustee pursuant to this
Section 6.08. No termination of the Indenture Trustee without cause will be
effective unless the costs and expenses of such Indenture Trustee have been
reimbursed to the Indenture Trustee in connection with such removal. The
Indenture Trustee may resign at any time by so notifying the Issuer. The Insurer
or the Holders of a majority of Note Balances of the Notes, with the consent
of
the Insurer, may remove the Indenture Trustee by so notifying the Indenture
Trustee, and may appoint a successor Indenture Trustee. The Issuer shall remove
the Indenture Trustee if
(i) the
Indenture Trustee fails to comply with Section 6.11;
(ii) the
Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a
receiver or other public officer takes charge of the Indenture Trustee or its
property; or
(iv) the
Indenture Trustee otherwise becomes incapable of acting.
If
the
Indenture Trustee resigns or is removed or if a vacancy exists in the office
of
the Indenture Trustee for any reason (the Indenture Trustee in such event being
referred to herein as the retiring Indenture Trustee in such event being
referred to herein as the retiring Indenture Trustee), the Issuer shall promptly
appoint a successor Indenture Trustee. In addition, the Indenture Trustee will
resign to avoid being directly or indirectly controlled by the
Issuer.
A
successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon,
the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee
to
the successor Indenture Trustee.
If
a
successor Indenture Trustee does not take office within 60 days after the
retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer, the Insurer or the Holders of a majority of Note Balances
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If
the
Indenture Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Indenture
Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding
the replacement of the Indenture Trustee pursuant to this Section, the Issuer’s
obligations under Section 6.07 shall continue for the benefit of the
retiring Indenture Trustee.
Section
6.09 Successor
Indenture Trustee by Xxxxxx.
If the
Indenture Trustee consolidates with, merges or converts into, or transfers
all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall
provide the Rating Agencies written notice of any such transaction after the
Closing Date.
In
case
at the time such successor or successors by merger, conversion or consolidation
to the Indenture Trustee shall succeed to the trusts created by this Indenture
any of the Notes shall have been authenticated but not delivered, any such
successor to the Indenture Trustee may adopt the certificate of authentication
of any predecessor trustee, and deliver such Notes so authenticated; and in
case
at that time any of the Notes shall not have been authenticated, any successor
to the Indenture Trustee may authenticate such Notes either in the name of
any
predecessor hereunder or in the name of the successor to the Indenture Trustee;
and in all such cases such certificates shall have the full force which it
is
anywhere in the Notes or in this Indenture.
Section
6.10 Appointment
of Co-Indenture Trustee or Separate Indenture Trustee.
(a) Notwithstanding
any other provisions of this Indenture, at any time, for the purpose of meeting
any legal requirement of any jurisdiction in which any part of the Trust Estate
may at the time be located, the Indenture Trustee shall have the power and
may
execute and deliver all instruments to appoint one or more Persons to act as
a
co-trustee or co-trustees, or separate trustee or separate trustees, of all
or
any part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Trust Estate,
or any part thereof, and, subject to the other provisions of this Section,
such
powers, duties, obligations, rights and trusts as the Indenture Trustee may
consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 6.11 and no notice to Noteholders of the appointment of any
co-trustee or separate trustee shall be required under Section 6.08
hereof.
(b) 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 Indenture
Trustee shall be conferred or imposed upon and exercised or performed by the
Indenture 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 Indenture 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 the Indenture 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 Estate
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 Indenture Trustee;
(ii) no
trustee hereunder shall be personally liable by reason of any act or omission
of
any other trustee hereunder; and
(iii) the
Indenture Trustee may at any time accept the resignation of or remove any
separate trustee or co-trustee.
(c) Any
notice, request or other writing given to the Indenture 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 VI. 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 Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Indenture Trustee. Every such instrument shall be filed with the
Indenture Trustee.
(d) Any
separate trustee or co-trustee may at any time constitute the Indenture 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
Indenture Trustee, to the extent permitted by law, without the appointment
of a
new or successor trustee.
Section
6.11 Eligibility;
Disqualification.
The
Indenture Trustee shall at all times satisfy the requirements of TIA §310(a).
The Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of condition
and it or its parent shall have a long-term debt rating of A or better by
S&P, A2 or better by Xxxxx’x and A or better by Fitch. The Indenture Trustee
shall comply with TIA §310(b), including the optional provision permitted
by the second sentence of TIA §310(b)(9); provided, however, that there
shall be excluded from the operation of TIA §310(b)(1) any indenture or
indentures under which other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA §310(b)(1) are
met.
Section
6.12 Preferential
Collection of Claims Against Issuer.
The
Indenture Trustee shall comply with TIA §311(a), excluding any creditor
relationship listed in TIA §311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA §311(a) to the extent indicated
therein.
Section
6.13 Representations
and Warranties.
The
Indenture Trustee hereby represents that:
(a) It
is a
national banking association duly organized, validly existing and in good
standing under the laws of the United States.
(b) The
execution and delivery of this Indenture by it, and the performance and
compliance with the terms of this Indenture by it, will not violate its charter
or bylaws.
(c) It
has
the full power and authority to enter into and consummate all transactions
contemplated by this Indenture, has duly authorized the execution, delivery
and
performance of this Indenture, and has duly executed and delivered this
Indenture.
(d) This
Indenture, assuming due authorization, execution and delivery by the other
parties thereto, constitutes a valid, legal and binding obligation of it,
enforceable against it in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, receivership, reorganization, moratorium
and
other laws affecting the enforcement of creditors’ rights generally, and (B)
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
(e) The
Indenture Trustee is a “securities intermediary,” as such term is defined in
Section 8-102(a)(14)(B) of the New York UCC, that in the ordinary course of
its
business maintains “securities accounts” for others, as such term is used in
Section 8-501 of the New York UCC. The local law of jurisdiction of the
Indenture Trustee as securities intermediary shall be the State of New
York.
Section
6.14 Directions
to Indenture Trustee.
The
Indenture Trustee is hereby directed:
(a) To
accept
the grant of a security interest in the Trust Estate and hold the assets of
the
Trust in trust for the Noteholders;
(b) To
authenticate and deliver the Notes substantially in the form prescribed by
Exhibits A-1, A-2 and A-3 in accordance with the terms of this Indenture;
(c) To
enter
into the Swap Agreement; and
(d) To
take
all other actions as shall be required to be taken by the terms of this
Indenture.
Section
6.15 Compliance with Withholding-Requirements.
Notwithstanding any other provision of this Indenture, the Indenture Trustee
shall comply with all federal withholding requirements respecting payments
to
Noteholders of interest that the Indenture Trustee reasonably believes are
applicable under the Code. The consent of Noteholders shall not be required
for
such withholding.
Section
6.16 Commission
Reporting.
The
Indenture Trustee shall reasonably cooperate with the Depositor in connection
with the Trust’s satisfying the reporting requirements under the Exchange
Act.
(a) (i)
For
so
long as the Trust Fund is subject to the Exchange Act reporting
requirements,
within
15 days after each Distribution Date, the Indenture Trustee shall file with
the
Commission via the Electronic Data Gathering and Retrieval System (“XXXXX”), a
Distribution Report on Form 10-D, signed by the Depositor, with a copy of the
monthly statement described in Section 3.25 to be furnished by the Indenture
Trustee to the Certificateholders for such Distribution Date. Any disclosure
in
addition to the monthly statement required to be included on the Form 10-D
(“Additional Form 10-D Disclosure”) shall be determined and prepared by the
Indenture Trustee provided the entity indicated in Exhibit K as the responsible
party for providing that information notifies the Indenture Trustee in writing
thereof within 5 calendar days after each Payment Date, and the Indenture
Trustee shall have no liability with respect to any failure to properly prepare
or file such Form 10-D resulting from or relating to the Indenture Trustee’s
inability or failure to obtain any information in a timely manner from the
party
responsible for delivery of such Additional Form 10-D Disclosure.
For
so
long as the Trust Fund is subject to the Exchange Act reporting requirements,
within 5 calendar days after the related Payment Date, each entity that is
indicated in Exhibit K as the responsible party for providing Additional Form
10-D Disclosure shall be required to provide to the Indenture Trustee and the
Depositor, to the extent known by a Responsible Officer, clearly identifying
which item of Form 10-D the information relates to, any Additional Form 10-D
Disclosure, if applicable. The Indenture Trustee shall compile the information
provided to it, prepare the Form 10-D and forward the Form 10-D to the Depositor
for verification. The Depositor will approve, as to form and substance, or
disapprove, as the case may be, the Form 10-D. No later than three Business
Days
prior to the 15th calendar day after the related Payment Date, an officer of
the
Depositor shall sign the Form 10-D and return an electronic or fax copy of
such
signed Form 10-D (with an original executed hard copy to follow by overnight
mail) to the Indenture Trustee.
(ii) For
so
long as the Trust Fund is subject to the Exchange Act reporting requirements,
within four (4) Business Days after the occurrence of an event requiring
disclosure on Form 8-K (each such event, a “Reportable Event”), and if requested
by the Depositor, the Indenture Trustee shall prepare and file on behalf of
the
Trust a Form 8-K reporting such Reportable Event, provided that the Depositor
shall file the initial Form 8-K in connection with the issuance of the
Securities. Any disclosure or information related to a Reportable Event or
that
is otherwise required to be included on Form 8-K (“Form 8-K Disclosure
Information”) shall be determined and provided to the Indenture Trustee by the
entity that is indicated in Exhibit K as the responsible party for providing
that information, if other than the Indenture Trustee, to the Indenture Trustee
within two Business Days after the Reportable Event, and the Indenture Trustee
shall have no liability with respect to any failure to properly prepare or
file
such Form 8-K resulting from or relating to the Indenture Trustee’s inability or
failure to obtain any information in a timely manner from the party responsible
for delivery of such Form 8-K Disclosure Information.
For
so
long as the Trust Fund is subject to the Exchange Act reporting requirements,
no
later than the end of business on the second Business Day after the occurrence
of a Reportable Event, the entity that is indicated in Exhibit K as the
responsible party for providing Form 8-K Disclosure Information shall be
required to provide to the Indenture Trustee and the Depositor, to the extent
known by a Responsible Officer, the substance of any Form 8-K Disclosure
Information, if applicable. The Indenture Trustee shall compile the information
provided to it, prepare the Form 8-K and forward the Form 8-K to the Depositor
for verification. The Depositor will approve, as to form and substance, or
disapprove, as the case may be, the Form 8-K. No later than 5 p.m. New York
City
time on the third Business Day after the Reportable Event, an officer of the
Depositor shall sign the Form 8-K and return an electronic or fax copy of such
signed Form 8-K (with an original executed hard copy to follow by overnight
mail) to the Indenture Trustee.
(iii) Prior
to
January 30 of the first year in which the Indenture Trustee is able to do so
under applicable law, the Indenture Trustee shall file a Form 15 Suspension
Notice with respect to the Trust Fund. Prior to (x) March 15, 2007 and (y)
unless and until a Form 15 Suspension Notice shall have been filed, prior to
March 15 of each year thereafter, each Servicer and the Special Servicer shall
provide the Indenture Trustee (for inclusion in the Form 10-K) with an Annual
Compliance Statement, together with a copy of the Assessment of Compliance
and
Attestation Report to be delivered by the related Servicer or the Special
Servicer pursuant to Sections 3.10 and 3.11 of the Servicing Agreement
(including with respect to any Subservicer to which such Servicer has delegated
any of its responsibilities with respect to the related Mortgage Loans and
each
Subcontractor determined by such Servicer to be “participating in the servicing
function” within the meaning of Item 1122 of Regulation AB, if required to be
filed). Prior to (x) March 31, 2007 and (y) unless and until a Form 15
Suspension Notice shall have been filed, March 31 of each year thereafter,
the
Indenture Trustee shall file a Form 10-K with respect to the Trust Fund. Such
Form 10-K shall include the items provided by the Servicers and the Special
Servicer pursuant to the second preceding sentence, the Assessment of Compliance
and Attestation Report provided pursuant to Section 6.17 hereof with respect
to
the Indenture Trustee, and the Form 10-K certification in the form attached
hereto as Exhibit B (the “Depositor Certification”) signed by the senior officer
of the Depositor in charge of securitization. The Indenture Trustee shall
receive the items described in the preceding sentence no later than March 15
of
each calendar year prior to the filing deadline for the Form 10-K for so long
as
the Trust Fund is subject to the Exchange Act reporting requirements. If the
Indenture Trustee or the Depositor has not received such items by March 10
of
the related year, such party shall notify the related Servicer by telephone
and
email, or by telephone and fax, of such failure.
Not
later
than 5 Business Days before the date on which the Form 10-K is required to
be
filed in accordance with the Exchange Act and the rules and regulations of
the
Commission, the Depositor will deliver to the Indenture Trustee a form of the
Depositor Certification. The Depositor shall subsequently deliver to the
Indenture Trustee the executed Depositor Certification no later than the date
on
which the Form 10-K is required to be filed.
Any
disclosure or information in addition to that described in the preceding
paragraph that is required to be included on Form 10-K (“Additional Form 10-K
Disclosure”) shall be determined and provided to the Indenture Trustee by the
entity that is indicated in Exhibit K as the responsible party for providing
that information, if other than the Indenture Trustee.
If
information, data and exhibits to be included in the Form 10-K are not so timely
delivered, the Indenture Trustee shall file an amended Form 10-K including
such
documents as exhibits reasonably promptly after they are delivered to the
Indenture Trustee. The Indenture Trustee shall have no liability with respect
to
any failure to properly prepare or file such periodic reports resulting from
or
relating to the Indenture Trustee’s inability or failure to timely obtain any
information from any other party.
Prior
to
(x) March 15, 2007 and (y) unless and until a Form 15 Suspension Notice shall
have been filed, prior to March 1 of each year thereafter, each entity that
is
indicated in Exhibit K as the responsible party for providing Additional Form
10-K Disclosure information shall be required to provide to the Indenture
Trustee and the Depositor, to the extent known by a Responsible Officer, the
substance of any Additional Form 10-K Disclosure information, if applicable.
The
Indenture Trustee shall compile the information provided to it, prepare the
Form
10-K and forward the Form 10-K to the Depositor for verification. The Depositor
will approve, as to form and substance, or disapprove, as the case may be,
the
Form 10-K by no later than March 25 of the relevant year (or the immediately
preceding Business Day if March 25 is not a Business Day), an officer of the
Depositor shall sign the Form 10-K and return an electronic or fax copy of
such
signed Form 10-K (with an original executed hard copy to follow by overnight
mail) to the Indenture Trustee.
The
Indenture Trustee will post electronic copies of all Form 10-D, 8-K and 10-K
filings on its internet website referred to in Section 3.25 as soon as
reasonably practicable after such filings have been made with the
Commission.
(b) Not
later
than 15 calendar days before the date on which the Form 10-K is required to
be
filed in accordance with the Exchange Act and the rules and regulations of
the
Commission (or, if such day is not a Business Day, the immediately preceding
Business Day), the Indenture Trustee shall sign a certification in the form
attached hereto as Exhibit C (the “Indenture Trustee Certification”) for the
benefit of the Depositor and its officers, directors and affiliates regarding
certain aspects of items 1 through 3 of the Depositor Certification. In
addition, the Indenture Trustee shall, subject to the provisions of Section
6.07
hereof, indemnify and hold harmless the Depositor and each Person, if any,
who
“controls” the Depositor 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 arising out of or based upon
(i)
the failure of the Indenture Trustee to deliver when required any Assessment
of
Compliance required pursuant to Section 6.17 hereof or (ii) any material
misstatement or omission contained in the Indenture Trustee Certification or
the
Assessment of Compliance prepared by the Indenture Trustee pursuant to Section
6.17 hereof. If the indemnification provided for in this Section 6.16(b) is
unavailable or insufficient to hold harmless such Persons, then the Indenture
Trustee shall contribute to the amount paid or payable by such Persons as a
result of the losses, claims, damages or liabilities of such Persons in such
proportion as is appropriate to reflect the relative fault of the Depositor
on
the one hand and the Indenture Trustee on the other. The Indenture Trustee
acknowledges that the Depositor is relying on the Indenture Trustee’s
performance of its obligations under this Section 6.16 in order to perform
its
obligations under Section 6.16(a) above.
(c) [reserved]
(d) Upon
any
filing with the Commission, the Indenture Trustee shall promptly deliver to
the
Depositor a copy of any executed report, statement or information.
(e) If
the
Commission issues additional interpretative guidance or promulgates additional
rules or regulations, 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 6.16, to be conducted differently
than as described, the Depositor, Servicers, the Special Servicer and Indenture
Trustee will reasonably cooperate to amend the provisions of this Section 6.16
in order to comply with such amended reporting requirements and such amendment
of this Section 6.16. 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 Indenture Trustee on behalf of the Trust
under the Exchange Act. Notwithstanding the foregoing, the Depositor, Servicers,
the Special Servicer and Indenture Trustee shall not be obligated to enter
into
any amendment pursuant to this Section 6.16 that adversely affects its
obligations and immunities under this Agreement.
Each
of
the parties acknowledges and agrees that the purpose of Section 6.16 of this
Agreement is to facilitate compliance by the Seller and the Depositor with
the
provisions of Regulation AB promulgated by the SEC under the Exchange Act (17
C.F.R. §§ 229.1100 - 229.1123), as such may be amended from time to time and
subject to clarification and interpretive advice as may be issued by the staff
of the Commission from time to time. Therefore, each of the parties agrees
that
(a) the obligations of the parties hereunder shall be interpreted in such a
manner as to accomplish that purpose, (b) the parties’ obligations hereunder
will be supplemented and modified as necessary to be consistent with any such
amendments, or SEC interpretive advice or guidance in respect of the
requirements of Regulation AB, (c) the parties shall comply with reasonable
requests made by the Seller or the Depositor for delivery of additional or
different information as is necessary to comply with the provisions of
Regulation AB, and (d) no amendment of this Agreement shall be required to
effect any such changes in the parties’ obligations as are necessary to
accommodate evolving interpretations of the provisions of Regulation
AB.
Section
6.17 Assessments
of Compliance and Attestation Reports.
For so
long as the Trust Fund is subject to the Exchange Act reporting requirements,
the Indenture Trustee shall provide to the Depositor by March 15 of each year,
beginning in 2007, an Assessment of Compliance regarding the Indenture Trustee’s
assessment of 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, which as of the date hereof, require a report by
an
authorized officer of the Indenture Trustee that contains the
following:
(a) A
statement by such officer of its responsibility for assessing compliance with
the Servicing Criteria applicable to the Indenture Trustee;
(b) A
statement by such officer that such officer used the Servicing Criteria to
assess compliance with the Servicing Criteria applicable to the Indenture
Trustee;
(c) An
assessment by such officer of the Indenture Trustee’s compliance with the
applicable Servicing Criteria for the period consisting of the preceding
calendar year, including disclosure of any material instance of noncompliance
with respect thereto during such period, which assessment shall be based on
the
activities it performs with respect to asset-backed securities transactions
taken as a whole involving the Indenture Trustee, that are backed by the same
asset type as the Loans;
(d) A
statement that a registered public accounting firm has issued an attestation
report on the Indenture Trustee’s Assessment of Compliance for the period
consisting of the preceding calendar year; and
(e) A
statement as to which of the Servicing Criteria, if any, are not applicable
to
the Indenture Trustee, which statement shall be based on the activities it
performs with respect to asset-backed securities transactions taken as a whole
involving the Indenture Trustee, that are backed by the same asset type as
the
Loans.
Such
report at a minimum shall address each of the Servicing Criteria specified
on a
certification substantially in the form of Exhibit L hereto delivered to the
Depositor concurrently with the execution of this Agreement.
In
addition, for so long as the Trust Fund is subject to the Exchange Act reporting
requirements, the Indenture Trustee shall provide to the Depositor by March
15
of each year, beginning in 2007, an Attestation Report by a registered public
accounting firm that attests to, and reports on, the Assessment of Compliance
made by the Indenture Trustee, as required by Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122(b) of Regulation AB, which Attestation Report must
be
made in accordance with standards for attestation reports issued or adopted
by
the Public Company Accounting Oversight Board.
ARTICLE
VII
NOTEHOLDERS’
LISTS AND REPORTS
Section
7.01 Issuer
To Furnish Indenture Trustee Names and Addresses of Noteholders.
The
Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not
more than five days after each Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Noteholders as of such Record Date and, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer
of
any such request, a list of similar form and content as of a date not more
than
10 days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished.
Section
7.02 Preservation
of Information; Communications to Noteholders.
(a) The
Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Noteholders contained in the most
recent list furnished to the Indenture Trustee as provided in Section 7.01
and the names and addresses of Noteholders received by the Indenture Trustee
in
its capacity as Note Registrar. The Indenture Trustee may destroy any list
furnished to it as provided in such Section 7.01 upon receipt of a new list
so furnished.
(b) Noteholders
may communicate pursuant to TIA § 312(b) with other Noteholders with respect to
their rights under this Indenture or under the Notes.
(c) The
Issuer, the Indenture Trustee and the Note Registrar shall have the protection
of TIA § 312(c).
Section
7.03 Reports
by Issuer.
(a) The
Issuer shall:
(i) file
with
the Indenture Trustee, within 15 days after the Issuer is required to file
the
same with the Commission, copies of the annual reports and the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations prescribe)
that
the Issuer may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file
with
the Indenture Trustee, and the Commission in accordance with rules and
regulations prescribed from time to time by the Commission such additional
information, documents and reports with respect to compliance by the Issuer
with
the conditions and covenants of this Indenture as may be required from time
to
time by such rules and regulations; and
(iii) supply
to
the Indenture Trustee (and the Indenture Trustee shall transmit by mail to
all
Noteholders described in TIA § 313(c) such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to clauses
(i)
and (ii) of this Section 7.03(a) and by rules and regulations prescribed
from time to time by the Commission.
(b) Unless
the Issuer otherwise determines, the fiscal year of the Issuer shall end on
December 31 of each year.
Section
7.04 Reports
by Indenture Trustee.
If
required by TIA §313(a), within 60 days after each January 1 beginning with
January 1, 2006, the Indenture Trustee shall mail to each Noteholder as required
by TIA §313(c) a brief report dated as of such date that complies with
TIA §313(a). The Indenture Trustee also shall comply with TIA
§313(b).
The
Issuer shall notify the Indenture Trustee in writing if and when the Notes
are
listed on any stock exchange. A copy of each report at the time of its mailing
to Noteholders shall be filed by the Indenture Trustee with the Commission
and
each stock exchange, if any, on which the Notes are listed (to the extent the
Indenture Trustee has been notified by the Issuer of such listing).
ARTICLE
VIII
ACCOUNTS,
DISBURSEMENTS AND RELEASES
Section
8.01 Collection
of Money.
Except
as otherwise expressly provided herein, the Indenture Trustee may demand payment
or delivery of, and shall receive and collect, directly and without intervention
or assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee pursuant to this
Indenture. The Indenture Trustee shall apply all such money received by it
as
provided in this Indenture. Except as otherwise expressly provided in this
Indenture, if any default occurs in the making of any payment or performance
under any agreement or instrument that is part of the Trust Estate, the
Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim
a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.
Section
8.02 Trust
Accounts.
(a) On
or
prior to the Closing Date, the Indenture Trustee shall establish and maintain,
in the name of the Indenture Trustee, for the benefit of the Noteholders, the
Insurer and the Certificate Paying Agent, on behalf of the Certificateholder
and
the Insurer, the Payment Account as provided in Section 3.01 of this
Indenture.
(b) All
monies deposited from time to time in the Payment Account pursuant to the
Servicing Agreement and all deposits therein pursuant to this Indenture are
for
the benefit of the Noteholders, the Insurer and the Certificate Paying Agent,
on
behalf of the Certificateholder and the Insurer.
(c) On
each
Payment Date, the Indenture Trustee shall distribute all amounts on deposit
in
the Payment Account to Noteholders or the Insurer, as applicable, in respect
of
the Notes and in its capacity as Certificate Paying Agent to the
Certificateholder or the Insurer, as applicable, in the order of priority set
forth in Section 3.05 (except as otherwise provided in
Section 5.04(b)).
Section
8.03 Officer’s
Certificate.
The
Indenture Trustee shall receive at least seven days notice when requested by
the
Issuer to take any action pursuant to Section 8.05(a), accompanied by
copies of any instruments to be executed, and the Indenture Trustee shall also
require, as a condition to such action, an Opinion of Counsel, in form and
substance satisfactory to the Indenture Trustee, stating the legal effect of
any
such action, outlining the steps required to complete the same, and concluding
that all conditions precedent to the taking of such action have been complied
with.
Section
8.04 Termination
Upon Payment to Noteholders.
This
Indenture and the respective obligations and responsibilities of the Issuer
and
the Indenture Trustee created hereby shall terminate upon the payment to the
Noteholders, the Certificate Paying Agent (on behalf of the Owner Trustee,
the
Certificateholders, the Indenture Trustee of all amounts required to be
distributed pursuant to Article III; provided, however, that in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the death of the survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
ambassador of the United States to the Court of St. James’s, living on the date
hereof.
Section
8.05 Release
of Trust Estate.
(a) Subject
to the payment of its fees and expenses and the fees and the expenses of the
Indenture Trustee, the Indenture Trustee may, and when required by the
provisions of this Indenture shall, execute instruments to release property
from
the lien of this Indenture, or convey the Indenture Trustee’s interest in the
same, in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture. No party relying upon an instrument executed
by
the Indenture Trustee as provided in Article VIII hereunder shall be bound
to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of
any conditions precedent, or see to the application of any monies.
(b) The
Indenture Trustee shall, at such time as (i) there are no Notes Outstanding
and
(ii) all sums due the Indenture Trustee pursuant to this Indenture have been
paid, release any remaining portion of the Trust Estate that secured the Notes
from the lien of this Indenture.
Section
8.06 Surrender
of Notes Upon Final Payment.
By
acceptance of any Note, the Holder thereof agrees to surrender such Note to
the
Indenture Trustee promptly, prior to such Noteholder’s receipt of the final
payment thereon.
ARTICLE
IX
SUPPLEMENTAL
INDENTURES
Section
9.01 Supplemental
Indentures Without Consent of Noteholders.
(a) Without
the consent of any Noteholders and the Insurer but with prior notice to the
Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an
Issuer Request, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following
purposes:
(i) to
correct or amplify the description of any property at any time subject to the
lien of this Indenture, or better to assure, convey and confirm unto the
Indenture Trustee any property subject or required to be subjected to the lien
of this Indenture, or to subject to the lien of this Indenture additional
property;
(ii) to
evidence the succession, in compliance with the applicable provisions hereof,
of
another person to the Issuer, and the assumption by any such successor of the
covenants of the Issuer herein and in the Notes contained;
(iii) to
add to
the covenants of the Issuer, for the benefit of the Noteholders, or to surrender
any right or power herein conferred upon the Issuer;
(iv) to
convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee;
(v) to
cure
any ambiguity, to correct or supplement any provision herein or in any
supplemental indenture that may be inconsistent with any other provision herein
or in any supplemental indenture;
(vi) to
make
any other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided, that such action shall
not
materially and adversely affect the interests of the Insurer or the
Noteholders;
(vii) to
evidence and provide for the acceptance of the appointment hereunder by a
successor trustee with respect to the Notes and to add to or change any of
the
provisions of this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one trustee, pursuant to
the
requirements of Article VI; or
(viii) to
modify, eliminate or add to the provisions of this Indenture to such extent
as
shall be necessary to effect the qualification of this Indenture under the
TIA
or under any similar federal statute hereafter enacted and to add to this
Indenture such other provisions as may be expressly required by the
TIA;
provided,
however, that no such indenture supplements shall be entered into unless the
Indenture Trustee and the Insurer shall have received an Opinion of Counsel
that
entering into such indenture supplement is permitted hereunder and will not
(A)
have any material adverse tax consequences to the Noteholders, including any
Adverse REMIC Event and (B) adversely affect in any material respect the
interests of the Noteholders or the Certificateholders.
The
Indenture Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, may,
also without the consent of any of the Noteholders and the Insurer but with
prior notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing
in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Noteholders under this Indenture;
provided, however, that such action shall, as evidence by an Opinion of Counsel,
be permitted hereunder and shall not, as evidenced by such Opinion of Counsel,
(i) adversely affect in any material respect the interests of any Noteholder
or
(ii) cause the Issuer to be subject to an entity level tax.
(c) The
Issuer, the Indenture Trustee shall, as directed by the Insurer and the Holders
of not less than 100% of the Certificate Percentage Interests, enter into an
indenture or indentures supplemental hereto for the purpose of providing for
the
issuance of one or more additional Classes of Notes entitled to payments derived
solely from all or a portion of the payments to which the Certificates issued
on
the Closing Date pursuant to the Trust Agreement are entitled; provided,
however, that such action shall as evidenced by an Opinion of Counsel, be
permitted hereunder and shall not as evidenced by an Opinion of Counsel, (i)
adversely affect in any material respect the interests of any existing
Noteholder or (ii) cause the Issuer to be subject to an entity level tax. Each
such Class of Notes shall be a non-recourse obligation of the Issuer and
shall be entitled to interest and principal in such amounts, and to such
security for the repayment thereof, as shall be specified in such amendment
or
amendments. Promptly after the execution by the Issuer, the Indenture Trustee
of
any amendments pursuant to this Section or the creation of a new Indenture
and the issuance of the related Class or Classes of Notes, the Issuer shall
require the Indenture Trustee to give notice to the Noteholders and the Rating
Agencies setting forth in general terms the substance of the provisions of
such
amendment. Any failure of the Indenture Trustee to provide such notice as is
required under this paragraph, or any defect therein, shall not, however, in
any
way impair or affect the validity of such amendment or any Class of Notes
issued pursuant thereto.
(d) Notwithstanding
any of the other provisions of this Section 9.01, neither the Issuer nor the
Indenture Trustee shall enter into any supplemental indenture to Section 3.31
or
Section 3.05(e)(I)(xxviii) of this Indenture or any other supplemental indenture
that would have a material adverse effect on the Counterparty without the prior
written consent of the Counterparty.
Section
9.02 Supplemental
Indentures With Consent of Noteholders.
The
Issuer and, the Indenture Trustee, when authorized by an Issuer Request, also
may, with prior notice to the Rating Agencies and with the consent of the
Insurer and the Holders of not less than a majority of the Voting Rights of
the
Notes affected thereby, by Act of Noteholders delivered to the Issuer and the
Indenture Trustee, enter into an indenture or indentures supplemental hereto
for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided
however, that no such supplemental indenture shall, without the consent of
each
Noteholder of each Note affected thereby:
(a) change
the date of payment of any installment of principal of or interest on any Note,
or reduce the principal amount thereof or the interest rate thereon, change
the
provisions of this Indenture relating to the application of collections on,
or
the proceeds of the sale of, the Trust Estate to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair the
right to institute suit for the enforcement of the provisions of this Indenture
requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Notes on or after
the respective due dates thereof;
(b) reduce
the percentage of the Note Balances of the Notes, the consent of the Holders
of
which is required for any such supplemental indenture, or the consent of the
Holders of which is required for any waiver of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture;
(c) modify
or
alter the provisions of the exception in the definition of the term
“Outstanding”;
(d) reduce
the percentage of the Note Balances of the Notes required to direct the
Indenture Trustee to direct the Issuer to sell or liquidate the Trust Estate
pursuant to Section 5.04;
(e) modify
any provision of this Section 9.02 except to increase any percentage
specified herein or to provide that certain additional provisions of this
Indenture or the Basic Documents cannot be modified or waived without the
consent of each Noteholder affected thereby;
(f) modify
any of the provisions of this Indenture in such manner as to affect the
calculation of the amount of any payment of interest or principal due on any
Note on any Payment Date (including the calculation of any of the individual
components of such calculation); or
(g) permit
the creation of any lien ranking prior to or on a parity with the lien of this
Indenture with respect to any part of the Trust Estate or, except as otherwise
permitted or contemplated herein, terminate the lien of this Indenture on any
property at any time subject hereto or deprive any Noteholder of the security
provided by the lien of this Indenture; and provided, further, that such action
shall not, as evidenced by an Opinion of Counsel, cause the Issuer to be subject
to an entity level tax.
The
Indenture Trustee may in its discretion determine whether or not any Notes
would
be affected by any supplemental indenture and any such determination shall
be
conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Indenture Trustee shall not be liable
for any such determination made in good faith.
It
shall
not be necessary for any Act of Noteholders under this Section 9.02 to
approve the particular form of any proposed supplemental indenture, but it
shall
be sufficient if such Act shall approve the substance thereof.
Promptly
after the execution by the Issuer, the Indenture Trustee of any supplemental
indenture pursuant to this Section 9.02, the Indenture Trustee shall mail
to Noteholders to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity
of
any such supplemental indenture.
Notwithstanding
any of the other provisions of this Section 9.02, neither the Issuer nor the
Indenture Trustee shall enter into any supplemental indenture to Section 3.31
or
Section 3.05(e)(I)(xxviii) of this Indenture or any other supplemental indenture
that would have a material adverse effect on the Counterparty without the prior
written consent of the Counterparty.
Section
9.03 Execution
of Supplemental Indentures.
In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modification thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.01 and 6.02, shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee’s own rights, duties,
liabilities or immunities under this Indenture or otherwise.
Section
9.04 Effect
of Supplemental Indenture.
Upon
the execution of any supplemental indenture pursuant to the provisions hereof,
this Indenture shall be and shall be deemed to be modified and amended in
accordance therewith with respect to the Notes affected thereby, and the
respective rights, limitations of rights, obligations, duties, liabilities
and
immunities under this Indenture of the Indenture Trustee, the Issuer and the
Noteholders shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to
be
part of the terms and conditions of this Indenture for any and all
purposes.
Section
9.05 Conformity
with Trust Indenture Act.
Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture
Act as then in effect so long as this Indenture shall then be qualified under
the Trust Indenture Act.
Section
9.06 Reference
in Notes to Supplemental Indentures.
Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform,
in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding
Notes.
Section
9.07 Supplemental
Indentures Affecting the Servicers.
Notwithstanding any other provision of this Article IX, no supplemental
indenture shall be executed that would materially and adversely affect the
interests of the Servicers described under Sections 3.22 or 10.18 hereunder
or
in Appendix A without the consent of the Servicers.
ARTICLE
X
MISCELLANEOUS
Section
10.01 Compliance
Certificates and Opinions, etc.
(a) Upon
any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee (i) an Officer’s Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have
been
complied with and (ii) an Opinion of Counsel stating that in the opinion of
such
counsel all such conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture,
no additional certificate or opinion need be furnished.
Every
Officer’s Certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a
statement that each signatory of such Officer’s Certificate or opinion has read
or has caused to be read such covenant or condition and the definitions herein
relating thereto;
(ii) a
brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based;
(iii) a
statement that, in the opinion of each such signatory, such signatory has made
such examination or investigation as is necessary to enable such signatory
to
express an informed opinion as to whether or not such covenant or condition
has
been complied with;
(iv) a
statement as to whether, in the opinion of each such signatory, such condition
or covenant has been complied with; and
(v) if
the
signatory to such Certificate or Opinion is required to be Independent, the
statement required by the definition of the term “Independent
Certificate”.
(b) (i)Prior
to
the deposit of any Collateral or other property or securities with the Indenture
Trustee that is to be made the basis for the release of any property or
securities subject to the lien of this Indenture, the Issuer shall, in addition
to any obligation imposed in Section 10.01(a) or elsewhere in this
Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying
or stating the opinion of each person signing such certificate as to the fair
value (within 90 days of such deposit) to the Issuer of the Collateral or other
property or securities to be so deposited.
(ii) Whenever
the Issuer is required to furnish to the Indenture Trustee an Officer’s
Certificate certifying or stating the opinion of any signatory thereof as to
the
matters described in clause (i) above, the Issuer shall also deliver to the
Indenture Trustee an Independent Certificate as to the same matters, if the
fair
value to the Issuer of the securities to be so deposited and of all other such
securities made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set forth in
the
certificates delivered pursuant to clause (i) above and this clause (ii), is
10%
or more of the Note Balances of the Notes, but such a certificate need not
be
furnished with respect to any securities so deposited, if the fair value thereof
to the Issuer as set forth in the related Officer’s Certificate is less than
$25,000 or less than one percent of the Note Balances of the Notes.
(iii) Whenever
any property or securities are to be released from the lien of this Indenture,
the Issuer shall also furnish to the Indenture Trustee an Officer’s Certificate
certifying or stating the opinion of each person signing such certificate as
to
the fair value (within 90 days of such release) of the property or securities
proposed to be released and stating that in the opinion of such person the
proposed release will not impair the security under this Indenture in
contravention of the provisions hereof.
(iv) Whenever
the Issuer is required to furnish to the Indenture Trustee an Officer’s
Certificate certifying or stating the opinion of any signer thereof as to the
matters described in clause (iii) above, the Issuer shall also furnish to the
Indenture Trustee an Independent Certificate as to the same matters if the
fair
value of the property or securities and of all other property, other than
property as contemplated by clause (v) below or securities released from the
lien of this Indenture since the commencement of the then-current calendar
year,
as set forth in the certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Note Balances of the Notes, but such certificate
need not be furnished in the case of any release of property or securities
if
the fair value thereof as set forth in the related Officer’s Certificate is less
than $25,000 or less than one percent of the then Note Balances of the
Notes.
(v) Notwithstanding
any provision of this Indenture, the Issuer may, without compliance with the
requirements of the other provisions of this Section 10.01, (A) collect,
sell or otherwise dispose of the Loans as and to the extent permitted or
required by the Basic Documents or (B) make cash payments out of the Payment
Account as and to the extent permitted or required by the Basic Documents,
so
long as the Issuer shall deliver to the Indenture Trustee every six months,
commencing January 1, 2007, an Officer’s Certificate of the Issuer stating that
all the dispositions of Collateral described in clauses (A) or (B) above that
occurred during the preceding six calendar months were in the ordinary course
of
the Issuer’s business and that the proceeds thereof were applied in accordance
with the Basic Documents.
Section
10.02 Form
of Documents Delivered to Indenture Trustee.
In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters
be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any
certificate or opinion of an Authorized Officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise
of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer’s certificate or opinion is
based are erroneous. Any such certificate of an Authorized Officer or Opinion
of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of
the
Seller, the Depositor or the Issuer, stating that the information with respect
to such factual matters is in the possession of the Seller, the Depositor or
the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where
any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one
instrument.
Whenever
in this Indenture, in connection with any application or certificate or report
to the Indenture Trustee, it is provided that the Issuer shall deliver any
document as a condition of the granting of such application, or as evidence
of
the Issuer’s compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the effective
date of such certificate or report (as the case may be), of the facts and
opinions stated in such document shall in such case be conditions precedent
to
the right of the Issuer to have such application granted or to the sufficiency
of such certificate or report. The foregoing shall not, however, be construed
to
affect the Indenture Trustee’s right to rely upon the truth and accuracy of any
statement or opinion contained in any such document as provided in
Article VI.
Section
10.03 Acts
of Noteholders.
(a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Noteholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by agents duly appointed in
writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee, and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the “Act of Noteholders” signing
such instrument or instruments. Proof of execution of any such instrument or
of
a writing appointing any such agent shall be sufficient for any purpose of
this
Indenture and (subject to Section 6.01) conclusive in favor of the
Indenture Trustee and the Issuer, if made in the manner provided in this
Section 10.03.
(b) The
fact
and date of the execution by any person of any such instrument or writing may
be
proved in any manner that the Indenture Trustee deems sufficient.
(c) The
ownership of Notes shall be proved by the Note Registrar.
(d) Any
request, demand, authorization, direction, notice, consent, waiver or other
action by any Noteholder shall bind the Holder of every Note issued upon the
registration thereof or in exchange therefor or in lieu thereof, in respect
of
anything done, omitted or suffered to be done by the Indenture Trustee or the
Issuer in reliance thereon, whether or not notation of such action is made
upon
such Note.
Section
10.04 Notices,
etc., to Indenture Trustee, Issuer, Insurer and Rating Agencies.
(a) Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture shall
be
in writing and if such request, demand, authorization, direction, notice,
consent, waiver or Act of Noteholders is to be made upon, given or furnished
to
or filed with:
(i) the
Indenture Trustee by any Noteholder or by the Issuer, it shall be sufficient
for
every purpose hereunder if made, given, furnished or filed in writing to or
with
the Indenture Trustee at the Corporate Trust Office. The Indenture Trustee
shall
promptly transmit any notice received by it from the Noteholders to the Issuer,
(ii) the
Issuer by the Indenture Trustee or by any Noteholder, it shall be sufficient
for
every purpose hereunder if in writing and mailed first-class, postage prepaid
to
the Issuer addressed to: Home Equity Mortgage Trust 2006-2, in care of
Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration,
or
at any other address previously furnished in writing to the Indenture Trustee
by
the Issuer. The Issuer shall promptly transmit any notice received by it from
the Noteholders to the Indenture Trustee.
(iii) the
Insurer by the Issuer, the Indenture Trustee or by any Noteholders shall be
sufficient for every purpose hereunder if in writing and mailed first-class,
postage prepaid, or personally delivered or telecopied to: Financial Guaranty
Insurance Company, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Research and Risk Management and via electronic mail to XXXxxxxxxxxxxx@xxxx.xxx.
The Insurer shall promptly transmit any notice received by it from the Issuer,
the Indenture Trustee or the Noteholders to the Issuer or Indenture Trustee
as
the case may be;
Notices
required to be given to the Rating Agencies by the Issuer or the Indenture
Trustee or the Owner Trustee shall be in writing, personally delivered or mailed
by certified mail, return receipt requested, to (i) in the case of Moody’s, at
the following address: Xxxxx’x Investors Service, Inc., ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Residential Mortgage Surveillance Group and (ii) in the case of
Standard & Poor’s, at the following address: Standard & Poor’s, 00
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed
Surveillance Department; or as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
Section
10.05 Notices
to Noteholders; Waiver.
Where
this Indenture provides for notice to Noteholders of any event, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if
in
writing and mailed, first-class, postage prepaid to each Noteholder affected
by
such event, at such Person’s address as it appears on the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice
so
mailed to any particular Noteholder shall affect the sufficiency of such notice
with respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given
regardless of whether such notice is in fact actually received.
Where
this Indenture provides for notice in any manner, such notice may be waived
in
writing by any Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers
of
notice by Noteholders shall be filed with the Indenture Trustee but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such a waiver.
In
case,
by reason of the suspension of regular mail service as a result of a strike,
work stoppage or similar activity, it shall be impractical to mail notice of
any
event to Noteholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall
be
satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving
of such notice.
Where
this Indenture provides for notice to the Rating Agencies, failure to give
such
notice shall not affect any other rights or obligations created hereunder,
and
shall not under any circumstance constitute an Event of Default.
Section
10.06 Alternate
Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Noteholder providing
for a method of payment, or notice by the Indenture Trustee to such Noteholder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer shall furnish to the Indenture Trustee a copy
of
each such agreement and the Indenture Trustee shall cause payments to be made
and notices to be given in accordance with such agreements.
Section
10.07 Conflict
with Trust Indenture Act.
If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this Indenture by any of the provisions
of
the Trust Indenture Act, such required provision shall control.
The
provisions of TIA §§310 through 317 that impose duties on any Person (including
the provisions automatically deemed included herein unless expressly excluded
by
this Indenture) are a part of and govern this Indenture, whether or not
physically contained herein.
Section
10.08 Effect
of Headings.
The
Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
Section
10.09 Successors
and Assigns.
All
covenants and agreements in this Indenture and the Notes by the Issuer shall
bind its successors and assigns, whether so expressed or not. All agreements
of
the Indenture Trustee in this Indenture shall bind its successors, co-trustees
and agents.
Section
10.10 Separability.
In case
any provision in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section
10.11 Benefits
of Indenture.
Nothing
in this Indenture or in the Notes, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, the Insurer and
the Noteholders and any other party secured hereunder, and any other Person
with
an ownership interest in any part of the Trust Estate, any benefit or any legal
or equitable right, remedy or claim under this Indenture. The Insurer shall
be
an intended 3rd
party
beneficiary.
Section
10.12 Legal
Holidays.
In any
case where the date on which any payment is due shall not be a Business Day,
then (notwithstanding any other provision of the Notes or this Indenture)
payment need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the date on which
nominally due, and no interest shall accrue for the period from and after any
such nominal date.
Section
10.13 GOVERNING
LAW.
THIS
INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section
10.14 Counterparts.
This
Indenture may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section
10.15 Recording
of Indenture.
If this
Indenture is subject to recording in any appropriate public recording offices,
such recording is to be effected by the Issuer and at its expense accompanied
by
an Opinion of Counsel (which may be counsel to the Indenture Trustee or any
other counsel reasonably acceptable to the Indenture Trustee) to the effect
that
such recording is necessary either for the protection of the Noteholders or
any
other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
Section
10.16 Issuer
Obligation.
No
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee, the Indenture Trustee on the Notes or under
this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee
in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director, employee
or
agent of the Indenture Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Owner Trustee, the
Indenture Trustee or of any successor or assign of any of them in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary of the Issuer shall be fully liable, to the extent provided
by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
For
all purposes of this Indenture, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled
to
the benefits of, the terms and provisions of Article VI, VII and VIII of
the Trust Agreement.
Section
10.17 No
Petition.
The
Indenture Trustee by entering into this Indenture, and each Noteholder, by
accepting a Note, hereby covenant and agree that they will not at any time
prior
to the day one year and one day after the date this Indenture terminates
institute against the Depositor or the Issuer, or join in any institution
against the Depositor or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection
with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents.
Section
10.18 Optional
Termination.
(a) With
respect to either Loan Group, the related Terminating Entity shall have the
right, but not the obligation, upon the related Aggregate Collateral Balance
(after applying payments received in the related Collection Period) as of such
Payment Date being less than ten percent of the related Aggregate Collateral
Balance as of the Cut-off Date, to purchase from the Issuer all of the related
assets of the Trust Estate at a price equal to the greater of (I) the sum of
(A)
100% of the related Aggregate Collateral Balance (other than in respect of
REO)
plus one month’s accrued interest thereon at the applicable Mortgage Interest
Rate with respect to each Loan, (B) with respect to any REO, the lesser of
(x)
the appraised value of any REO as determined by the higher of two independent
valuations completed by two independent companies selected by the Depositor
at
the expense of the Depositor and (y) the Principal Balance of each Loan related
to any REO, in each case plus accrued and unpaid interest thereon at the
applicable Mortgage Interest Rate, (C) any remaining unreimbursed Advances,
Servicing Advances and Servicing Fees payable to a Servicer (other than a
Servicer that is the Terminating Entity) or the Indenture Trustee and any
unreimbursed Advances (made by the Indenture Trustee as a successor Servicer)
and expenses payable to the Indenture Trustee, (D) in the case of Loan Group
1,
any Swap Termination Payment payable to the Counterparty which remains unpaid
or
which is due to the exercise of such option and (E) in the case of Loan Group
2,
any outstanding Insurer Reimbursement Amounts (the sum of (A), (B), (C), (D)
and
(E), collectively, the “Par Value”) and (II) the Fair Market Value;
(b) If
the
Terminating Entity for a Loan Group has not exercised its purchase option
described above, on any Payment Date on or after the date on which the aggregate
Principal Balance of the related Loans and the appraised value of the REOs
at
the time of the purchase is less than five percent of the related Aggregate
Collateral Balance as of the Cut-off Date (the “Auction Date”), the Indenture
Trustee shall solicit, or cause to be solicited, good faith bids for the Loans
and all property acquired in respect of any remaining related Loan (the “Trust
Collateral”) from at least three institutions that are regular purchasers and/or
sellers in the secondary market of residential whole mortgage loans similar
to
the related Loans. If the Indenture Trustee receives at least three bids for
the
related Trust Collateral, and one of such bids is equal to or greater than
the
Par Value, the Indenture Trustee shall sell the related Trust Collateral to
the
highest bidder (the “Auction Purchaser”) at the price offered by the Auction
Purchaser (the “Loan Auction Price”) and following such sale shall have no
further liability or responsibility therefor. If the Indenture Trustee receives
less than three bids, or does not receive any bid that is equal to or greater
than the related Par Value, the Indenture Trustee shall continue conducting
auctions every six months until the earlier of (a) the completion of a
successful auction and (b) the related Terminating Entity exercises its purchase
option. All of the expenses incurred by the Indenture Trustee in connection
with
the solicitation of bids for a successful auction described in this paragraph
shall be payable to the Indenture Trustee, out of the related Loan Auction
Price
received in connection with such successful auction; provided, however that
any
indemnification rights available to the Indenture Trustee under this Indenture
in connection with any auctions will not be limited by this sentence and the
Indenture Trustee shall not be entitled to be reimbursed for any expenses
incurred in connection with an auction that is not successful. Notwithstanding
anything to the contrary herein, the Auction Purchaser shall not be the
Depositor or the Seller or any of their respective affiliates.
(c) If
any
right to purchase is exercised, the related Terminating Entity or Auction
Purchaser, as applicable, shall deposit the related Termination Price, with
the
Indenture Trustee pursuant to Section 4.10 hereof and, upon the receipt of
such deposit, the Indenture Trustee or the Custodians shall release to the
designee appointed by the related
Terminating Entity or the Auction Purchaser,
as
applicable, the files pertaining to the Loans being purchased. The related
Terminating Entity or the Auction Purchaser, as applicable, at their expense,
shall prepare and deliver to the Indenture Trustee or the related Custodians,
for execution, at the time the related Loans are to be released to the related
Terminating Entity or the Auction Purchaser, as applicable, appropriate
documents assigning each such Loan from the Indenture Trustee and the Issuer
to
the Terminating Entity or the Auction Purchaser, as applicable. The related
Terminating Entity shall give the Indenture Trustee, the Servicers not less
than
fifteen Business Days’ prior written notice of the Payment Date on which the
Terminating Entity anticipates that the final distribution will be made to
the
related Securityholders. Notice of any termination, specifying the anticipated
Final Scheduled Payment Date or other Payment Date (which shall be a date that
would otherwise be a Payment Date) upon which the Noteholders may surrender
their Notes and/or the Certificateholders may surrender their Certificates
to
the Indenture Trustee (if so required by the terms hereof) for payment of the
final distribution and cancellation, shall be given promptly by the Indenture
Trustee by first class mail to Holders of the affected Securities. Such notice
shall be mailed no earlier than the 15th day and not later than the 10th day
preceding the applicable Optional Termination Date and shall specify: (i) the
anticipated Final Scheduled Payment Date or other Payment Date upon which final
payment of the Notes and/or Certificates is anticipated to be made upon
presentation and surrender of Notes and/or Certificates at the office or agency
of the Indenture Trustee therein designated; and (ii) the amount of any such
final payment, if known.
Section
10.19 Inspection.
The
Issuer agrees that, on reasonable prior notice, it shall permit any
representative of the Indenture Trustee, during the Issuer’s normal business
hours, to examine all the books of account, records, reports and other papers
of
the Issuer, to make copies and extracts therefrom, to cause such books to be
audited by Independent certified public accountants, and to discuss the Issuer’s
affairs, finances and accounts with the Issuer’s officers, employees, and
Independent certified public accountants, all at such reasonable times and
as
often as may be reasonably requested. The Indenture Trustee shall cause its
representatives to hold in confidence all such information except to the extent
disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
Section
10.20 Limitation
of Liability of Owner Trustee.
Notwithstanding anything to the contrary herein, this Indenture has been
executed and delivered by Wilmington Trust Company, not individually or
personally, but solely as Owner Trustee of Home Equity Mortgage Trust 2006-2,
in
the exercise of the powers and authority conferred and vested in it, (a) each
of
the representations, undertakings and agreements herein made on the part of
the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company, but is made and intended for the purpose
for binding only the Issuer, (b) nothing herein contained shall be construed
as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (c) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Indenture or any other related
documents.
Section
10.21 Determination
of the Terminating Entity.
(a) If
any
Servicer intends to be the Terminating Entity, such party must give written
notice to the Indenture Trustee no later than twenty (20) days prior to the
first day of the Optional Termination Notice Period. Upon receiving such notice,
the Indenture Trustee shall immediately request from the Seller and the Seller
shall deliver no later than seventeen (17) days prior to the first day of the
Optional Termination Notice Period a letter indicating whether or not the Seller
retains the servicing rights to any Loan.
(b) The
Indenture Trustee shall determine the “Terminating Entity” as
follows:
(i) the
Seller, if it is the owner of the servicing rights with respect to any Loans
on
the related Optional Termination Date;
(ii) SPS,
if
(a) the Seller is not the owner of the servicing rights with respect to any
related Loans on the related Optional Termination Date and (b) SPS is a Special
Servicer with respect to any related Loans on the Optional Termination Date
and
SPS has given notice to the Indenture Trustee pursuant to Section 10.21(a)
above; or
(iii) the
related Majority Servicer on the Optional Termination Date, if (a) the Seller
is
not the owner of the servicing rights with respect to any related Loans on
the
Optional Termination Date and (b) SPS has not given notice to the Indenture
Trustee pursuant to Section 10.21(a) above.
(c)
No later
than fifteen (15) days prior to the first day of the Optional Termination Notice
Period, the Indenture Trustee shall provide notice to each Servicer that is
a
servicer of any of the Loans of the identity of the Terminating
Entity.
Section
10.22 Additional
Termination Requirements.
(a) In
the
event that the related Optional Termination Holder exercises its purchase option
with respect to the Loans as provided in Section 10.18 or the Auction Purchaser
purchases the Loans pursuant to Section 10.18, at such time as the Loans are
so
purchased, the related REMICs shall be terminated in accordance with the
following additional requirements, unless the Indenture Trustee has been
supplied with an Opinion of Counsel, at the expense of the Depositor, to the
effect that the failure to comply with the requirements of this Section 10.22
will not (i) result in the imposition of taxes on “prohibited transactions” on
any REMIC as defined in Section 860F of the Code, or (ii) cause REMIC IA, REMIC
IB, REMIC IC, REMIC ID, REMIC IIA, REMIC IIB or REMIC IIC to fail to qualify
as
a REMIC at any time that any Certificates are outstanding:
(i) Within
90
days prior to the final Payment Date set forth in the notice given by the
Indenture Trustee under Section 10.18, the Depositor shall prepare and the
Indenture Trustee, at the expense of the Depositor, shall adopt a plan of
complete liquidation within the meaning of Section 860F(a)(4) of the Code which,
as evidenced by an Opinion of Counsel (which opinion shall not be an expense of
the Indenture Trustee, the Tax Matters Person or the Trust Fund), meets the
requirements of a qualified liquidation;
(ii) Within
90
days after the time of adoption of such a plan of complete liquidation, the
Indenture Trustee shall sell all of the assets of the Trust Fund to the
Depositor for cash in accordance with Section 9.01; and
(iii) On
the
date specified for final payment of the related Notes and Certificates, the
Indenture Trustee shall, after payment of any unreimbursed Advances, Servicing
Advances, Servicing Fees or other payment or compensation payable to each
Servicer pursuant to the Servicing Agreement and other payments required to
be
made to the Indenture Trustee or the Administrator under the Basic Documents,
make final payments of principal and interest on the Notes and Certificates
in
accordance with Section 3.05 and distribute or credit, or cause to be
distributed or credited, to the Holders of the Class 1A-R, Class 2A-R and Class
G Certificates all cash on hand after such final payment (other than the cash
retained to meet claims), and the related REMIC shall terminate at that
time.
(b) The
Indenture Trustee as agent for REMIC IA, REMIC IB, REMIC IC, REMIC ID, XXXXX
XXX, REMIC IIB and REMIC IIC hereby agrees to adopt and sign such a plan of
complete liquidation upon the written request of the Depositor, and the receipt
of the Opinion of Counsel referred to in Section 10.22(a)(1) and to take such
other action, at the Depositor’s expense, in connection therewith as may be
reasonably requested by the Depositor.
(c) By
their
acceptance of the Notes and Certificates, the Holders thereof hereby authorize
the Depositor to prepare and the Indenture Trustee to adopt and sign a plan
of
complete liquidation.
Section
10.23 Third
Party Beneficiary.
Each of
the Counterparty and the Insurer is an express third-party beneficiary of this
Indenture, and shall have the right to enforce the provisions of this
Indenture.
ARTICLE
XI
REMIC
PROVISIONS
Section
11.01 REMIC
Provisions.
(a) The
REMIC
Administrator shall make an election to treat the Loans and the proceeds of
the
Loans and the proceeds on deposit in the Payment Account as seven REMICs under
the Code and, if necessary, under applicable state law, in accordance with
Section 2.06 of the Trust Agreement, designated as REMIC IA, REMIC IB,
REMIC IC, REMIC ID, REMIC IIA, REMIC IIB or REMIC IIC. Such election will be
made on Form 1066 or other appropriate federal tax or information return
(including Form 8811) or any appropriate state return for the taxable year
ending on the last day of the calendar year in which the Securities are issued.
For the purposes of the REMIC elections in respect of that portion of the Trust
Estate, the REMIC IA Regular Interests will be designated as the “regular
interests” and the Class 1A-R Certificates (with respect to the Class R-IA
Interest) will be the sole class of “residual interests” in REMIC IA, (ii) the
REMIC IB Regular Interests will be designated as the “regular interests” and the
Class 1A-R Certificates (with respect to the Class R-IB Interest) will be
the sole class of “residual interests” in REMIC IB, (iii) the REMIC IC Regular
Interests will be designated as the “regular interests” and the Class 1A-R
Certificates (with respect to the Class R-IC Interest) will be the sole class
of
“residual interests” in REMIC IC and (iv) the REMIC ID Regular Interests will be
designated as the “regular interests” and the Class 1A-R Certificates (with
respect to the Class R-ID Interest) will be the sole class of “residual
interests” in REMIC ID, (v) the REMIC IIA Regular Interests will be designated
as the “regular interests” and the Class G Certificates will be the sole
class of “residual interests” in REMIC IIA, (vi) the REMIC IIB Regular Interests
will be designated as the “regular interests” and the Class 2A-R Certificates
(with respect to the Class R-IIB Interest) will be the sole class of “residual
interests” in REMIC IIB, (vii) the REMIC IIC Regular Interests will be
designated as the “regular interests” and the Class 2A-R Certificates (with
respect to the Class R-IIC Interest) will be the sole class of “residual
interests” in REMIC IIC. The REMIC Administrator and the Indenture Trustee shall
not permit the creation of any “interests” (within the meaning of
Section 860G of the Code) in each REMIC elected in respect of the Trust
Fund other than the “regular interests” and “residual interests” so
designated.
(b) The
Closing Date is hereby designated as the “Startup Day” of each of REMIC IA,
REMIC IB, REMIC IC, REMIC ID, REMIC IIA, REMIC IIB or REMIC IIC, as designated
in clause (a) above, within the meaning of Section 860G(a)(9) of the
Code.
(c) The
“tax
matters person” with respect to each of REMIC IA, REMIC IB, REMIC IC and REMIC
ID shall be the Holder of the Class 1A-R Certificate at any time holding the
largest Percentage Interest thereof in the manner provided under Treasury
regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1. The “tax matters person” with respect to REMIC IIA shall be
the Holder of the Class G Certificate at any time holding the largest Percentage
Interest thereof in the manner provided under Treasury regulations section
1.860F-4(d) and Treasury regulations section 301.6231(a)(7)-1. The “tax matters
person” with respect to each of REMIC IIB and REMIC IIC shall be the Holder of
the Class 2A-R Certificate at any time holding the largest Percentage Interest
thereof in the manner provided under Treasury regulations section 1.860F-4(d)
and Treasury regulations section 301.6231(a)(7)-1.
(d) The
REMIC
Administrator shall (i) prepare, sign and file, or cause to be prepared, signed
and filed, federal and state tax returns using a calendar year as the taxable
year for each REMIC created hereunder when and as required by the REMIC
Provisions and other applicable federal income tax laws as the direct
representative of each such REMIC in compliance with the Code and shall provide
copies of such returns as required by the Code; (ii) make an election, on behalf
of each REMIC created hereunder, to be treated as a REMIC on the federal tax
return of such REMIC for its first taxable year, in accordance with the REMIC
Provisions; and (iii) prepare and forward, or cause to be prepared and
forwarded, to the Noteholders and to any governmental taxing authority all
information reports as and when required to be provided to them in accordance
with the REMIC Provisions and, otherwise, shall, shall deliver such tax returns
in a timely manner to the Owner Trustee, if the Owner Trustee is required to
sign such returns in accordance with Section 5.03 of the Trust Agreement,
and shall sign (if the Owner Trustee is not so required) and file such tax
returns in a timely manner. The expenses of preparing such returns shall be
borne by the REMIC Administrator without any right of reimbursement therefor.
The REMIC Administrator agrees to indemnify and hold harmless the Owner Trustee
with respect to any tax or liability arising from the Owner Trustee’s signing of
Tax Returns that contain errors or omissions. Each Servicer shall promptly
provide the REMIC Administrator with such information as the REMIC Administrator
may from time to time request for the purpose of enabling the REMIC
Administrator to prepare Tax Returns.
(e) The
REMIC
Administrator shall provide (i) to any Transferor of a Class 1A-R
Certificate, Class 2A-R Certificate and Class G Certificate such
information as is necessary for the application of any tax relating to the
transfer of a Class 1A-R Certificate, Class 2A-R Certificate and Class
G Certificate to any Person who is not a Permitted Transferee, (ii) to the
Indenture Trustee, and the Indenture Trustee shall forward to the Noteholders
and the Certificateholders, such information or reports as are required by
the
Code or the REMIC Provisions including reports relating to interest, original
issue discount and market discount or premium (using the Prepayment Assumption)
and (iii) to the Internal Revenue Service the name, title, address and telephone
number of the person who will serve as the representative of each
REMIC.
(f) Each
Servicer and the REMIC Administrator shall take such actions and shall cause
each REMIC created hereunder to take such actions as are reasonably within
each
Servicer’s or the REMIC Administrator’s control and the scope of its duties more
specifically set forth herein as shall be necessary or desirable to maintain
the
status of each REMIC as a REMIC under the REMIC Provisions (and the Indenture
Trustee shall assist each Servicer and the REMIC Administrator, to the extent
reasonably requested by each Servicer and the REMIC Administrator to do so).
Each Servicer and the REMIC Administrator shall not knowingly or intentionally
take any action, cause the Trust Estate to take any action or fail to take
(or
fail to cause to be taken) any action reasonably within their respective control
that, under the REMIC Provisions, if taken or not taken, as the case may be,
could (i) endanger the status of any portion of any of the REMICs as a REMIC
or
(ii) result in the imposition of a tax upon any of the REMICs (including but
not
limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set
forth in Section 860G(d) of the Code) (either such event, in the absence of
an Opinion of Counsel or the indemnification referred to in this sentence,
an
“Adverse REMIC Event”) unless each Servicer or the REMIC Administrator, as
applicable, has received an Opinion of Counsel (at the expense of the party
seeking to take such action or, if such party fails to pay such expense, and
each Servicer or the REMIC Administrator, as applicable, determines that taking
such action is in the best interest of the Trust Estate and the Noteholders
and
the Certificateholders, at the expense of the Trust Estate, but in no event
at
the expense of each Servicer, the REMIC Administrator, the Owner Trustee or
the
Indenture Trustee) to the effect that the contemplated action will not, with
respect to each REMIC created hereunder, endanger such status or, unless each
Servicer, the REMIC Administrator or both, as applicable, determine in its
or
their sole discretion to indemnify the Trust Estate against the imposition
of
such a tax, result in the imposition of such a tax. Wherever in this Agreement
a
contemplated action may not be taken because the timing of such action might
result in the imposition of a tax on the Trust Estate, or may only be taken
pursuant to an Opinion of Counsel that such action would not impose a tax on
the
Trust Estate, such action may nonetheless be taken provided that the indemnity
given in the preceding sentence with respect to any taxes that might be imposed
on the Trust Estate has been given and that all other preconditions to the
taking of such action have been satisfied. Neither the Indenture Trustee nor
the
Indenture Trustee shall take or fail to take any action (whether or not
authorized hereunder) as to which each Servicer or the REMIC Administrator,
as
applicable, has advised it in writing that it has received an Opinion of Counsel
to the effect that an Adverse REMIC Event could occur with respect to such
action. In addition, prior to taking any action with respect to any of the
REMICs created hereunder or any related assets thereof, or causing any of the
REMICs to take any action, which is not expressly permitted under the terms
of
this Agreement, the Indenture Trustee will consult with each Servicer or the
REMIC Administrator, as applicable, or its designee, in writing, with respect
to
whether such action could cause an Adverse REMIC Event to occur with respect
to
any of the REMICs, and the Indenture Trustee shall not take any such action
or
cause any REMIC to take any such action as to which each Servicer or the REMIC
Administrator, as applicable, has advised it in writing that an Adverse REMIC
Event could occur. Each Servicer or the REMIC Administrator, as applicable,
may
consult with counsel to make such written advice, and the cost of same shall
be
borne by the party seeking to take the action not expressly permitted by this
Agreement, but in no event at the expense of each Servicer or the REMIC
Administrator. At all times as may be required by the Code, each Servicer,
the
Indenture Trustee will to the extent within its control and the scope of its
duties more specifically set forth herein, maintain substantially all of the
assets of each REMIC created hereunder as “qualified mortgages” as defined in
Section 860G(a)(3) of the Code and “permitted investments” as defined in
Section 860G(a)(5) of the Code.
(g) In
the
event that any tax is imposed on “prohibited transactions” of any of the REMICs
created hereunder as defined in Section 860F(a)(2) of the Code, on “net
income from foreclosure property” of any of the REMICs as defined in
Section 860G(c) of the Code, on any contributions to any of the REMICs
after the Startup Day therefor pursuant to Section 860G(d) of the Code, or
any other tax is imposed by the Code or any applicable provisions of state
or
local tax laws, such tax shall be charged (i) to each Servicer, if such tax
arises out of or results from a breach by each Servicer of any of its
obligations under this Agreement or each Servicer has in its sole discretion
determined to indemnify the Trust Estate against such tax, (ii) to the Indenture
Trustee, if such tax arises out of or results from a breach by the Trustee
of
any of its obligations under this Article XI, (iii) to the Indenture Trustee,
if
such tax arises out of or results from a breach by the Indenture Trustee of
any
of its obligations under this Article XI or (iv) otherwise against amounts
on
deposit in the Custodial Account and on the Payment Date(s) following such
reimbursement the aggregate of such taxes shall be allocated in reduction of
the
accrued interest due on each Class entitled thereto on a pro rata
basis.
(h) The
Indenture Trustee and each Servicer shall, for federal income tax purposes,
maintain books and records with respect to each REMIC created hereunder on
a
calendar year and on an accrual basis or as otherwise may be required by the
REMIC Provisions.
(i) Following
the Startup Day, neither the Servicers, nor the Indenture Trustee shall accept
any contributions of assets to any of the REMICs created hereunder unless
(subject to Section 11.01(f)) the Servicers, the Indenture Trustee shall
have received an Opinion of Counsel (at the expense of the party seeking to
make
such contribution) to the effect that the inclusion of such assets in such
REMIC
will not cause any of the REMICs to fail to qualify as a REMIC at any time
that
any Notes or Class A-R Certificates or Class G Certificates are outstanding
or subject any of the REMICs to any tax under the REMIC Provisions or other
applicable provisions of federal, state and local law or
ordinances.
(j) Neither
the Servicers nor the Indenture Trustee shall (subject to Section 11.01(f))
enter into any arrangement by which any of the REMICs created hereunder will
receive a fee or other compensation for services nor permit any of the REMICs
to
receive any income from assets other than “qualified mortgages” as defined in
Section 860G(a)(3) of the Code or “permitted investments” as defined in
Section 860G(a)(5) of the Code.
(k) Solely
for the purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
Regulations, the “latest possible maturity date” by which the Class Principal
Balance of each Class of Notes representing a regular interest in the applicable
REMIC is the Final Payment Date.
(l) Within
30
days after the Closing Date, the REMIC Administrator shall prepare and file
with
the Internal Revenue Service Form 8811, “Information Return for Real Estate
Mortgage Investment Conduits (REMIC) and Issuers of Collateralized Debt
Obligations” for each REMIC created hereunder.
(m) Neither
the Depositor, the Indenture Trustee nor the Servicers shall sell, dispose
of or
substitute for any of the Loans (except in connection with (i) the default,
imminent default or foreclosure of a Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of either of the REMICs created hereunder,
(iii) the termination of the applicable REMIC pursuant to Section 3.05 of
the Trust Agreement or (iv) a purchase of Loans pursuant to the Purchase
Agreement) nor acquire any assets for any of the REMICs, nor sell or dispose
of
any investments in the Custodial Account or the Payment Account for gain nor
accept any contributions to any of the REMICs after the Closing Date unless
it
has received an Opinion of Counsel that such sale, disposition, substitution
or
acquisition will not (a) affect adversely the status of any of the REMICs as
a
REMIC or (b) unless each Servicer has determined in its sole discretion to
indemnify the Trust Estate against such tax, cause any REMIC to be subject
to a
tax on “prohibited transactions” or “contributions” pursuant to the REMIC
Provisions.
(n) The
Indenture Trustee will apply for an employer identification number from the
Internal Revenue Service on a Form SS-4 or any other acceptable method for
all
tax entities.
Section
11.02 Distributions
on the REMIC IA Regular Interests, the REMIC IB Regular Interests, the REMIC
IC
Regular Interests, the REMIC ID Regular Interests, the REMIC IIA Regular
Interests, the REMIC IIB Regular Interests and the REMIC IIC Regular
Interests.
(a) Distributions
on the REMIC IA Regular Interests.
On
each
Payment Date, the Indenture Trustee shall cause in the following order of
priority, the following amounts to be distributed by REMIC IA to REMIC IB on
account of the REMIC IA Regular Interests or withdrawn from the Payment Account
and distributed to the holders of the Class 1A-R Certificates (with respect
to
the Class R-IA Interest), as the case may be:
(i) first,
to
the Holders of REMIC IA Regular Interests LTIA-1, LTIA-S1, LTIA-S2 and LTIA-PF
an amount equal to (x) the related Uncertificated Accrued Interest for such
Payment Date, plus (y) any amounts in respect thereof remaining unpaid from
previous Payment Dates;
(ii) second,
to the Holders of REMIC IA Regular Interests, in an amount equal to the
remainder of the available funds for such Payment Date after the distributions
made pursuant to clauses (i) and (ii) above and, in the case of distributions
made pursuant to Section 11.02(a)(iii)(c), the amount of any Prepayment Charges
for such Payment Date, allocated as follows:
(a) to
the
Holders of REMIC IA Regular Interest LTIA-1, until the Uncertificated Principal
Balance of REMIC IA Regular Interest LTIA-1 is reduced to zero; and
(b) to
the
Holders of REMIC IA Regular Interest LTIA-PF, until the Uncertificated Principal
Balance of REMIC IA Regular Interest LTIA-PF is reduced to zero;
and
(b) to
the
Holders of REMIC IA Regular Interest LTIA-1 and REMIC IA Regular Interest
LTIA-PF, pro
rata,
the
amount of any Prepayment Charges for such Payment Date.
Any
remaining amount to the Holders of the Class 1A-R Certificates (with respect
to
the Class R-IA Interest); provided, however, that for the first three Payment
Dates, such amounts constituting available funds relating to the Initial Group
1
Loans shall be allocated to REMIC IA Regular Interest LTIA-1, and such amounts
constituting available funds relating to the Subsequent Group 1 Loans and shall
be allocated to REMIC IA Regular Interest LTIA-PF.
|
(b)
|
Distributions
on the REMIC IB Regular Interests.
|
On
each
Distribution Date, the following amounts, in the following order of priority,
shall be distributed by REMIC IB to REMIC IC on account of REMIC IB Regular
Interests or withdrawn from the Distribution Account and distributed to the
holders of the Class 1A-R Certificates (in respect of the Class R-IB Interest),
as the case may be:
(i) first,
to
the Holders of each REMIC IB Regular Interest, pro
rata,
in an
amount equal to (A) Uncertificated Accrued Interest for such REMIC IB Regular
Interests for such Distribution Date, plus (B) any amounts payable in respect
thereof remaining unpaid from previous Distribution Dates.
(ii) second,
to the Holders of REMIC IB Regular Interests, in an amount equal to the
remainder of the Available Funds for such Distribution Date after the
distributions made pursuant to clause (i) above and, in the case of
distributions made pursuant to Section 4.07(b)(ii)(C), the amount of any
Prepayment Charges for such Distribution Date, allocated as
follows:
(A) to
the
Holders of REMIC IB Regular Interest LTIB-1A-1, LTIB-1A-2, LTIB-1A-R, LTIB-1A-P
and LTIB-1X-1, an amount of principal shall be distributed to such Holders
in
the same amount and priority as principal is distributed to the Corresponding
Certificate until the Uncertificated Principal Balance of each such REMIC IB
Regular Interest is reduced to zero;
(B) to
the
extent of amounts remaining after the distributions made pursuant to clause
(i)
and (ii) above, payments of principal shall be allocated, pro
rata,
to
REMIC IB Regular Interests LTIB-1-A and LTIB-1-B until the Uncertificated
Principal Balance of each such REMIC IB Regular Interest is reduced to zero;
and
(C) to
the
Holders of REMIC IB Regular Interest LTIB-1P, the amount of any Prepayment
Charges for such Distribution Date.
Any
remaining amount to the Holders of the Class 1A-R Certificates (with respect
to
the Class R-IB Interest).
|
(c)
|
Distributions
on the REMIC IC Regular Interests.
|
On
each
Payment Date, the Indenture Trustee shall cause in the following order of
priority, the following amounts to be distributed by REMIC IC to REMIC ID on
account of the REMIC IC Regular Interests or withdrawn from the Payment Account
and distributed to the holders of the Class 1A-R Certificates (with respect
to the Class R-IC Interest), as the case may be:
(i) first,
to
the extent of the sum of available funds for such Payment Date, to Holders
of
REMIC IC Regular Interests LTIC-1AA, LTIC-1A-1, LTIC-1A-2, LTIC-1A-3, LTIC-1M-1,
LTIC-1M-2, LTIC-1M-3, LTIC-1M-4, LTIC-1M-5, LTIC-1M-6, LTIC-1M-7, LTIC-1M-8,
LTIC-1M-9, LTIC-1B-1, LTIC-1B-2, LTIC-1ZZ, LTIC-1P, LTIC-1R, LTIC-1S and
LTIC-1IO, pro
rata,
in an
amount equal to (A) the Uncertificated Accrued Interest for such Payment Date,
plus (B) any amounts in respect thereof remaining unpaid from previous
Distribution Dates. Amounts payable as Uncertificated Accrued Interest in
respect of REMIC IC Regular Interest LTIC-1ZZ shall be reduced when the REMIC
IC
Overcollateralization Amount is less than the REMIC IC Overcollateralization
Target Amount, by the lesser of (x) the amount of such difference and (y) the
REMIC IC Regular Interest LTIC-ZZ Maximum Interest Deferral Amount and such
amount will be payable to the Holders of REMIC IC Regular Interest LTIC-1A-1,
REMIC IC Regular Interest LTIC-1A-2, REMIC IC Regular Interest LTIC-1A-3, REMIC
IC Regular Interest LTIC-1M-1, REMIC IC Regular Interest LTIC-1M-2, REMIC IC
Regular Interest LTIC-1M-3, REMIC IC Regular Interest LTIC-1M-4, REMIC IC
Regular Interest LTIC-1M-5, REMIC IC Regular Interest LTIC-1M-6, REMIC IC
Regular Interest LTIC-1M-7, REMIC IC Regular Interest LTIC-1M-8, REMIC IC
Regular Interest LTIC-1M-9, REMIC IC Regular Interest LTIC-1B-1 and REMIC IC
Regular Interest LTIC-1B-2 in the same proportion as the amounts are allocated
to the Corresponding Note, pursuant to Section 3.05(b) herein, for each such
REMIC IC Regular Interest, and the Uncertificated Principal Balance of the
REMIC
IC Regular Interest LTIC-1ZZ shall be increased by such amount;
(ii) second,
to the Holders of REMIC IC Regular Interests, in an amount equal to the
remainder of the available funds for such Payment Date after the distributions
made pursuant to clause (i) above and, in the case of distributions made
pursuant to Section 11.02(b)(ii)(b), the amount of any Prepayment Charges for
such Payment Date, allocated as follows:
(a) to
the
Holders of REMIC IC Regular Interest LTIC-1R, an amount equal to the amount
distributed to the holder of the Corresponding Note on such Payment Date
pursuant to Section 3.05(b); and
(b) to
the
Holders of REMIC IC Regular Interest LTIC-1P, an amount equal to the amount
distributed to the holder of the Corresponding Note on such Payment Date
pursuant to Section 3.05(b); and
(iii) third,
to
the Holders of REMIC IC Regular Interests, in an amount equal to the remainder
of the available funds for such Payment Date after the distributions made
pursuant to clauses (i) and (ii) above, allocated as follows:
(a) 98%
of
such remainder to the Holders of REMIC IC Regular Interest LTIC-1AA, until
the
Uncertificated Principal Balance of such REMIC IC Regular Interest is reduced
to
zero;
(b) 2%
of
such remainder, first, to the Holders of REMIC IC Regular Interest LTIC-1A-1,
LTIC-1A-2, LTIC-1A-3, LTIC-1M-1, LTIC-1M-2, LTIC-1M-3, LTIC-1M-4, LTIC-1M-5,
LTIC-1M-6, LTIC-1M-7, LTIC-1M-8, LTIC-1M-9, LTIC-1B-1 and LTIC-1B-2, equal
to 1%
of and in the same proportion as principal payments are allocated to the
Corresponding Note, until the Uncertificated Principal Balances of such REMIC
IC
Regular Interests are reduced to zero; and second, to the Holders of REMIC
IC
Regular Interest LTIC-1ZZ, until the Uncertificated Principal Balance of such
REMIC IC Regular Interest is reduced to zero; and
(c) any
remaining amount to the Holders of the Class 1A-R Certificates (with respect
to
the Class R-IC Interest).
(d) Distributions
on the REMIC IIA Regular Interests.
On
each
Payment Date, the Indenture Trustee shall cause in the following order of
priority, the following amounts to be distributed by REMIC IIA to REMIC IIB
on
account of the REMIC IIA Regular Interests or withdrawn from the Payment Account
and distributed to the holders of the Class G Certificates, as the case may
be:
(i) first,
to
the Holders of the Class G Certificates, an amount equal to any Additional
Balance Advance Amount with respect to the Group 2 Loans for such Payment
Date;
(ii) second,
to the Holders of REMIC IIA Regular Interests LTIIA-1 and LTIA-PF an amount
equal to (x) the related Uncertificated Accrued Interest for such Payment Date,
plus (y) any amounts in respect thereof remaining unpaid from previous Payment
Dates;
(iii) second,
to the Holders of REMIC IIA Regular Interests, in an amount equal to the
remainder of the available funds for such Payment Date after the distributions
made pursuant to clauses (i) and (ii) above and, in the case of distributions
made pursuant to Section 11.02(a)(iii)(c), the amount of any Prepayment Charges
for such Payment Date, allocated as follows:
(a) to
the
Holders of REMIC IA Regular Interest LTIA-1, until the Uncertificated Principal
Balance of REMIC IA Regular Interest LTIA-1 is reduced to zero; and
(b) to
the
Holders of REMIC IA Regular Interest LTIA-PF, until the Uncertificated Principal
Balance of REMIC IA Regular Interest LTIA-PF is reduced to zero;
and
any
remaining amount to the Holders of the Class G Certificates; provided, however,
that for the first three Payment Dates, such amounts constituting available
funds relating to the Initial Group 1 Loans shall be allocated to REMIC IIA
Regular Interest LTIIA-1, and such amounts constituting available funds relating
to the Subsequent Group 1 Loans and shall be allocated to REMIC IIA Regular
Interest LTIIA-PF.
|
(e)
|
Distributions
on the REMIC IIB Regular Interests.
|
On
each
Payment Date, the Indenture Trustee shall cause in the following order of
priority, the following amounts to be distributed by REMIC IIB to REMIC IIC
on
account of the REMIC IIB Regular Interests or withdrawn from the Payment Account
and distributed to the holders of the Class 2A-R Certificates (with respect
to the Class R-IIB Interest), as the case may be:
(i) first,
to
the extent of the sum of available funds for such Payment Date, to Holders
of
REMIC IIB Regular Interests LTIIB-2AA, LTIIB-2A-1, LTIIB-2M-1, LTIIB-2M-2,
LTIIB-2ZZ, LTIIB-2P and LTIIB-2R, pro
rata,
in an
amount equal to (A) the Uncertificated Accrued Interest for such Payment Date,
plus (B) any amounts in respect thereof remaining unpaid from previous
Distribution Dates. Amounts payable as Uncertificated Accrued Interest in
respect of REMIC IIB Regular Interest LTIIB-2ZZ shall be reduced when the REMIC
IIB Overcollateralization Amount is less than the REMIC IIB
Overcollateralization Target Amount, by the lesser of (x) the amount of such
difference and (y) the REMIC IIB Regular Interest LTIIB-2ZZ Maximum Interest
Deferral Amount and such amount will be payable to the Holders of REMIC IIB
Regular Interest LTIIB-2A-1, REMIC IIB Regular Interest LTIIB-2M-1 and REMIC
IIB
Regular Interest LTIIB-2M-2, in the same proportion as the amounts are allocated
to the Corresponding Note, pursuant to Section 3.05(b) herein, for each such
REMIC IIB Regular Interest, and the Uncertificated Principal Balance of the
REMIC IIB Regular Interest LTIIB-2ZZ shall be increased by such
amount;
(ii) second,
to the Holders of REMIC IIB Regular Interests, in an amount equal to the
remainder of the available funds for such Payment Date after the distributions
made pursuant to clause (i) above and, in the case of distributions made
pursuant to Section 11.02(b)(ii)(b), the amount of any Prepayment Charges for
such Payment Date, allocated as follows:
(a) to
the
Holders of REMIC IIB Regular Interest LTIIB-2R, an amount equal to the amount
distributed to the holder of the Corresponding Note on such Payment Date
pursuant to Section 3.05(b); and
(b) to
the
Holders of REMIC IIB Regular Interest LTIIB-2P, an amount equal to the amount
distributed to the holder of the Corresponding Note on such Payment Date
pursuant to Section 3.05(b); and
(iii) third,
to
the Holders of REMIC IIB Regular Interests, in an amount equal to the remainder
of the available funds for such Payment Date after the distributions made
pursuant to clauses (i) and (ii) above, allocated as follows:
(a) 98%
of
such remainder to the Holders of REMIC IIB Regular Interest LTIIB-2AA, until
the
Uncertificated Principal Balance of such REMIC IIB Regular Interest is reduced
to zero;
(b) 2%
of
such remainder, first, to the Holders of REMIC IIB Regular Interest LTIIB-2A-1,
LTIIB-2M-1 and LTIIB-2M-2 equal to 1% of and in the same proportion as principal
payments are allocated to the Corresponding Note, until the Uncertificated
Principal Balances of such REMIC IIB Regular Interests are reduced to zero;
and
second, to the Holders of REMIC IIB Regular Interest LTIIB-2ZZ, until the
Uncertificated Principal Balance of such REMIC IIB Regular Interest is reduced
to zero; and
(c) any
remaining amount to the Holders of the Class 2A-R Certificates (with respect
to
the Class R-IC Interest).
ARTICLE
XII
Certain
matters regarding the Insurer
Section
12.01 Rights
of the Insurer to Exercise the Rights of the Class 2A-1 Notes.
By
accepting its Note or Certificate, each Class 2A-1 Noteholder or Class G
Certificateholder agrees that unless an Insurer Default exists, the Insurer
shall have the right to exercise all consent, voting, direction and other
control rights of the Class 2A-1 Noteholders or Class G Certificateholders
under
this Indenture without any further consent of the Class 2A-1 Noteholders or
Class G Certificateholders.
Section
12.02 Claims
Upon the Policy; Insurance Account.
(a) If
the
Indenture Trustee determines that there will be a Deficiency Amount, the
Indenture Trustee shall give notice by telephone or telecopy of the aggregate
amount of such Deficiency Amount, confirmed in writing in the form set forth
as
Exhibit A to the Policy, to the Insurer at or before 12:00 noon, New York City
time, on the Business Day prior to such Payment Date. If, subsequent to such
notice, and prior to payment by the Insurer pursuant to such notice, additional
amounts are deposited in the Payment Account, the Indenture Trustee shall
reasonably promptly notify the Insurer and the Indenture Trustee and withdraw
the notice or reduce the amount claimed, as appropriate.
(b) The
Indenture Trustee shall establish a separate special purpose non-interest
bearing trust account for the benefit of Holders of the Class 2A-1 Notes or
Class G Certificates and the Insurer referred to herein as the “Insurance
Account” over which the Indenture Trustee shall have exclusive control and sole
right of withdrawal. The Indenture Trustee shall deposit any amount paid to
it
under the Policy in the Insurance Account and distribute such amount only for
purposes of payment to Holders of Class 2A-1 Notes of the Class 2A-1 Insured
Amount or Class G Certificates of the Class G Insured Amount, as applicable,
for
which a claim was made. Such amount may not be applied to satisfy any costs,
expenses or liabilities of the Indenture Trustee or the Trust Estate. Amounts
paid under the Policy shall be transferred to the Payment Account in accordance
with the next succeeding paragraph and disbursed by the Indenture Trustee to
Holders of Class 2A-1 Notes or Class G Certificates, as applicable, in
accordance with Section 3.05, as applicable. It shall not be necessary for
such
payments to be made by checks or wire transfers separate from the checks or
wire
transfers used to pay the Class 2A-1 Insured Amount with other funds available
to make such payment. However, the amount of any payment of principal of or
interest on the Class 2A-1 Notes or Class G Certificates to be paid from funds
transferred from the Insurance Account shall be noted as provided in paragraph
(c) below and in the statement to be furnished to Holders of the Notes and
Certificates pursuant to Section 3.25. Funds held in the Insurance Account
shall
be held uninvested by the Indenture Trustee.
On
any
Payment Date with respect to which a claim has been made under the Policy,
the
amount of any funds received by the Indenture Trustee as a result of any claim
under the Policy, to the extent required to pay the Class 2A-1 Insured Amount
or
Class G Insured Amount on such Payment Date, shall be withdrawn by the Indenture
Trustee from the Insurance Account and deposited in the Payment Account and
applied by the Indenture Trustee, together with the other funds to be
distributed to the Class 2A-1 Noteholders or Class G Certificateholders pursuant
to Section 3.06, directly to the payment in full of the Insured Amount due
on
the Class 2A-1 Notes or Class G Certificates, as applicable. Any funds remaining
in the Insurance Account on the first Business Day following a Payment Date
shall be remitted by the Indenture Trustee to the Insurer, pursuant to the
written instructions of the Insurer, by the end of such Business
Day.
(c) The
Indenture Trustee shall keep a complete and accurate record of the amount of
interest and principal paid into the Insurance Account in respect of any Class
2A-1 Notes or Class G Certificates from moneys received by the Indenture Trustee
under the Policy. The Insurer shall have the right to inspect such records
at
reasonable times during normal business hours upon two Business Day’s prior
written notice to the Indenture Trustee.
Section
12.03 Effect
of Payments by the Insurer; Subrogation.
Anything herein to the contrary notwithstanding, for purposes of this Section
11.03, any payment with respect to principal of or interest on the Class 2A-1
Notes or Class G Certifcates which is made with monies received pursuant to
the
terms of the Policy shall not be considered payment of the Class 2A-1 Notes
or
Class G Certificates from the Trust Estate. The Indenture Trustee and the
Indenture Trustee acknowledge, and each Holder by its acceptance of a Class
2A-1
Note or Class G Certificates agrees, that without the need for any further
action on the part of the Insurer, the Indenture Trustee or the Certificate
Registrar, to the extent the Insurer makes payments, directly or indirectly,
on
account of principal of or interest on the Class 2A-1 Notes or Class G
Certificates to the Holders of such Notes, the Insurer will be fully subrogated
to, and each Class 2A-1 Noteholder or Class G Noteholder, as applicable, and
the
Indenture Trustee hereby delegate and assign to the Insurer, to the fullest
extent permitted by law, the rights of such Holders to receive such principal
and interest from the Trust Estate; provided that the Insurer shall be paid
such
amounts only from the sources and in the manner explicitly provided for
herein.
The
Indenture Trustee and the Indenture Trustee shall cooperate in all respects
with
any reasonable request by the Insurer for action to preserve or enforce the
Insurer’s rights or interests under this Indenture without limiting the rights
or affecting the interests of the Holders as otherwise set forth
herein.
Section
12.04 Notices
and Information to the Insurer.
All
notices, statements, reports, certificates or opinions required by this
Indenture to be sent or made available to any other party hereto or to the
Noteholders or Certificateholders shall also be sent or made available to the
Insurer.
IN
WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused their names
to
be signed hereto by their respective officers thereunto duly authorized, all
as
of the day and year first above written.
HOME
EQUITY MORTGAGE TRUST
2006-2, as Issuer
By:Wilmington
Trust Company, not in its individual capacity but solely as Owner
Trustee
By:
/s/ Xxxxx X.
Xxxxxxx
Name:
Xxxxx X. Xxxxxxx
Title:
Senior
Financial Services Officer
U.S.
BANK
NATIONAL ASSOCIATION,
as
Indenture Trustee
By:
/s/ Xxxxx
Xxxxxx
Name:
Xxxxx Xxxxxx
Title:
Assistant Vice President
ASSET
BACKED SECURITIES CORPORATION hereby acknowledges and agrees to the provisions
set forth in Section 6.16
By:
/s/ Xxxxx
Xxxxxx
Name:
Xxxxx Xxxxxx
Title:
Vice
President
|
STATE
OF_____________
|
)
|
|
|
)
|
ss.:
|
|
|
COUNTY
OF___________
|
)
|
On
this
____ day of ___________, 2006, before me personally appeared Xxxxx X. Xxxxxxx
to
me known, who being by me duly sworn, did depose and say, that she is the Senior
Financial Services Officer of Wilmington Trust Company, one of the companies
described in and which executed the above instrument; and that she signed her
name thereto by like order.
Notary
Public
NOTARIAL
SEAL
|
STATE
OF_____________
|
)
|
|
|
)
|
ss.:
|
|
|
COUNTY
OF___________
|
)
|
On
this
____ day of _____________, before me personally appeared Xxxxx Xxxxxx to me
known, who being by me duly sworn, did depose and say, that she is the Assistant
Vice President of U.S. Bank National Association, one of the corporations
described in and which executed the above instrument; that she knows the seal
of
said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation; and that she signed her name thereto by like order.
Notary
Public
NOTARIAL
SEAL
|
STATE
OF_____________
|
)
|
|
|
)
|
ss.:
|
|
|
COUNTY
OF___________
|
)
|
On
this
____ day of _____________, before me personally appeared Xxxxx Xxxxxx to me
known, who being by me duly sworn, did depose and say, that he is the Vice
President of Asset Backed Securities Corporation, one of the companies described
in and which executed the above instrument; and that he signed his name thereto
by like order.
Notary
Public
NOTARIAL
SEAL
EXHIBIT
A-1
FORM
OF
CLASS A NOTES
UNLESS
THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS NOTE IS A “REGULAR INTEREST” IN A
“REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE “CODE”).
THE
PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY
BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
EACH
HOLDER OR BENEFICIAL OWNER OF THIS NOTE, BY ACCEPTANCE OF THIS NOTE OR A
SECURITY ENTITLEMENT THERETO, SHALL BE DEEMED TO MAKE THE REPRESENTATIONS IN
SECTION 4.02 OF THE INDENTURE.
THIS
NOTE
DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER, THE DEPOSITOR,
THE SERVICERS, THE SPECIAL SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE
OR
ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE
INDENTURE OR THE BASIC DOCUMENTS.
Asset-Backed
Notes, Series 2006-2
|
Class [1][2]A-[__]
|
Principal
Amount: $[____________]
|
|
Registered
|
Cut-off
Date: April 1, 2006
|
|
No.
1
|
Percentage
Interest: 100%
|
|
CUSIP
NO. [___________]
|
Note
Interest Rate: Adjustable
|
|
First
Payment Date: May 25, 2006
|
Assumed
Final Payment Date: July 25, 2036
|
Home
Equity Mortgage Trust 2006-2, a statutory trust duly organized and existing
under the laws of the State of Delaware (herein referred to as the “Issuer”),
for value received, hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of $[___________], payable on each Payment Date
in an
amount equal to the Percentage Interest specified above of the aggregate amount,
if any, payable from the Payment Account in respect of principal and interest
on
the Class [1][2]A-[__] Notes pursuant to Section 3.05 of the Indenture
dated as of April 28, 2006 (the “Indenture”), among the Issuer, as issuer, and
U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”);
provided,
however,
that
the entire unpaid principal amount of this Note shall be due and payable on
the
Final Scheduled Payment Date, to the extent not previously paid on a prior
Payment Date (as defined below). Capitalized terms used but not defined herein
are defined in Appendix A of the Indenture.
Pursuant
to the terms of the Indenture, a distribution will be made on the 25th day
of
each month, or, if any such date is not a Business Day, then the next Business
Day (the “Payment Date”), commencing as described in the Indenture, to the
Person in whose name this Note is registered at the close of business on the
last day (or if such last day is not a Business Day, the Business Day
immediately preceding such last day) related Accrual Period, or, in the case
of
the first Payment Date, April 28, 2006, from the Remittance Amount in an amount
equal to the product of the Percentage Interest evidenced by this Notes and
the
amount of interest and principal, if any required to be distributed to Holders
of Class [1][2]A-[__] Notes on such Payment Date.
Interest
will be computed on the basis of the actual number of days in each Accrual
Period and a year assumed to consist of 360 days.
Principal
of and interest on this Note are payable in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts. All payments made by the Issuer with respect to this
Note shall be applied first to interest due and payable on this Note as provided
above and then to the unpaid principal of this Note.
Unless
the certificate of authentication hereon has been executed by the Indenture
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for
any
purpose.
This
Note
is one of a duly authorized issue of Notes of the Issuer, designated as its
Asset-Backed Notes, Series 2006-2, all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made
for a
statement of the respective rights and obligations thereunder of the Issuer,
the
Indenture Trustee and the Noteholders. The Notes are subject to all terms of
the
Indenture.
The
Notes
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture.
The
entire unpaid principal amount of this Note shall be due and payable in full
on
the Final Scheduled Payment Date pursuant to the Indenture, to the extent not
previously paid on a prior Payment Date. Notwithstanding the foregoing, if
an
Event of Default shall have occurred and be continuing, then the Indenture
Trustee or the holders of Notes representing not less than a majority of the
Voting Rights of all Notes may declare the Notes to be immediately due and
payable in the manner provided in Section 5.02 of the
Indenture.
Payments
of interest on this Note due and payable on each Payment Date, together with
the
installment of principal, if any, to the extent not in full payment of this
Note, shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of the nominee of
the
Depository Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as
of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or
any
one or more Predecessor Notes) effected by any payments made on any Payment
Date
shall be binding upon all future holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available,
as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee,
in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date with respect to the preceding
Payment Date by notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the address specified in such notice
of final payment.
As
provided in the Indenture and subject to certain limitations set forth therein,
the transfer of this Note may be registered on the Note Register upon surrender
of this Note for registration of transfer at the Corporate Trust Office, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the holder hereof or
such holder’s attorney duly authorized in writing, with such signature
guaranteed by an “eligible guarantor institution” meeting the requirements of
the Note Registrar, which requirements include membership or participation
in
the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other
“signature guarantee program” as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes
in authorized denominations and in the same aggregate principal amount will
be
issued to the designated transferee or transferees. No service charge will
be
charged for any registration of transfer or exchange of this Note, but the
Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration
of
transfer or exchange of this Note.
Each
Holder or Beneficial Owner of a Note, by acceptance of a Note, or, in the case
of a Beneficial Owner of a Note, a security entitlement to a Note, covenants
and
agrees that no recourse may be taken, directly or indirectly, with respect
to
the obligations of the Issuer, the Owner Trustee, the Seller, the Servicers,
the
Special Servicer, the Depositor, the Indenture Trustee on the Notes or under
the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Indenture Trustee, the Servicers, the Special Servicer or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director or employee of the Indenture Trustee, the Servicers, the Special
Servicer or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee
or
of any successor or assign of the Indenture Trustee or the Owner Trustee in
its
individual capacity, except as any such Person may have expressly
agreed.
Each
Holder or Beneficial Owner of a Note, by acceptance of a Note or, in the case
of
a Beneficial Owner of a Note, a security entitlement to a Note, covenants and
agrees by accepting the benefits of the Indenture that such Holder or Beneficial
Owner of a Note will not prior to the day that is one year and one day after
the
date this Indenture terminates, institute against the Issuer or the Depositor,
or join in any institution against the Issuer or the Depositor of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the Basic
Documents.
Each
Holder or Beneficial Owner of this Note, by acceptance of this Note or a
security entitlement thereto shall be deemed to make the representations set
forth in Section 4.02 of the Indenture.
The
Issuer has entered into the Indenture and this Note is issued with the intention
that, for federal, state and local income, single business and franchise tax
purposes, the Notes will qualify as indebtedness of the Issuer. Each holder
of a
Note, by acceptance of a Note (and each Beneficial Owner of a Note by acceptance
of a security entitlement to a Note), agrees to treat the Notes for federal,
state and local income, single business and franchise tax purposes as
indebtedness of the Issuer.
Prior
to
the due presentment for registration of transfer of this Note, the Issuer,
the
Indenture Trustee and any agent of the Issuer or the Indenture Trustee may
treat
the Person in whose name this Note is registered (as of the day of determination
or as of such other date as may be specified in the Indenture) as the owner
hereof for all purposes, whether or not this Note be overdue, and none of the
Issuer, the Indenture Trustee or any such agent shall be affected by notice
to
the contrary.
The
Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Issuer and
the
Indenture Trustee and the rights of the holders of the Notes under the Indenture
at any time by the Issuer and the Indenture Trustee with the consent of the
holders of Notes representing a majority of the Voting Rights of all Notes
at
the time Outstanding and with prior notice to the Rating Agencies. The Indenture
also contains provisions permitting the holders of Notes representing specified
percentages of the Voting Rights of all Notes, on behalf of the holders of
all
the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such holder and upon
all
future holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits
the
Issuer and the Indenture Trustee to amend or waive certain terms and conditions
set forth in the Indenture without the consent of the Noteholders but with
prior
notice to the Rating Agencies.
The
term
“Issuer” as used in this Note includes any successor or the Issuer under the
Indenture.
The
Issuer is permitted by the Indenture, under certain circumstances, to merge
or
consolidate, subject to the rights of the Indenture Trustee and the
Noteholders.
The
Notes
are issuable only in registered form in denominations as provided in the
Indenture, subject to certain limitations therein set forth.
This
Note
and the Indenture shall be construed in accordance with the laws of the State
of
New York, without reference to its conflict of law provisions and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair, the obligation of the Issuer, which is absolute
and unconditional, to pay the principal of and interest on this Note at the
times, place and rate, and in the coin or currency herein
prescribed.
Anything
herein to the contrary notwithstanding, except as expressly provided in the
Basic Documents, none of U.S. Bank National Association, in its individual
capacity, Wilmington Trust Company, in its individual capacity, any owner of
a
beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The holder of this Note by its acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case
of
an Event of Default under the Indenture, the holder shall have no claim against
any of the foregoing for any deficiency, loss or claim therefrom; provided,
however,
that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations
and
undertakings contained in the Indenture or in this Note.
IN
WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
HOME
EQUITY MORTGAGE TRUST
2006-2
|
By
|
WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as Owner
Trustee
|
Dated:
April 28, 2006
By
_______________________________________
Authorized
Signatory
CERTIFICATE
OF AUTHENTICATION
This
is
one of the Class [1][2]A-[__] Notes referred to in the within mentioned
Indenture.
U.S.
BANK
NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture
Trustee
Dated:
April 28, 2006
By
_______________________________________
Authorized
Signatory
ASSIGNMENT
Social
Security or taxpayer I.D. or other identifying number of assignee:
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfer unto
(name
and
address of assignee)
the
within Note and all rights thereunder, and hereby irrevocably constitutes and
appoints ___________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof,
with
full power of substitution in the premises.
Dated:_______________________
__________________________________*
Signature
Guaranteed:
__________________________________*/
* NOTICE:
The signature to this assignment must correspond with the name of the registered
owner as it appears on the face of the within Note in every particular,
without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an “eligible guarantor institution” meeting the requirements of
the Note Registrar, which requirements include membership or participation
in
STAMP or such other “signature guarantee program” as may be determined by the
Note Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as
amended.
EXHIBIT
A-2
FORM
OF
CLASS M NOTES
THIS
NOTE
IS SUBORDINATED IN RIGHT OF PAYMENT TO THE [CLASS 1A-1, CLASS 1A-2, CLASS 1A-3,
CLASS 2A-1][CLASS 2A-1] [AND CLASS [1][2]M-[__]] NOTES AS DESCRIBED IN THE
INDENTURE (AS DEFINED HEREIN).
UNLESS
THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS NOTE IS A “REGULAR INTEREST” IN A
“REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE “CODE”).
THE
PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY
BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
EACH
HOLDER OR BENEFICIAL OWNER OF THIS NOTE, BY ACCEPTANCE OF THIS NOTE OR A
SECURITY ENTITLEMENT THERETO, SHALL BE DEEMED TO MAKE THE REPRESENTATIONS IN
SECTION 4.02 OF THE INDENTURE.
THIS
NOTE
DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER, THE DEPOSITOR,
THE SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE
BASIC DOCUMENTS.
.
ASSET-BACKED
NOTES, SERIES 2006-2
|
Class
[1][2]M-[__]
|
Initial
Notional Amount: $[___________]
|
|
Registered
|
Cut-off
Date: April 1, 2006
|
|
No.
1
|
Percentage
Interest: 100%
|
|
CUSIP
NO. [_____________]
|
Note
Interest Rate: Adjustable
|
|
First
Payment Date: May 25, 2006
|
Assumed
Final Payment Date: July 25, 2036
|
Home
Equity Mortgage Trust 2006-2, a statutory trust duly organized and existing
under the laws of the State of Delaware (herein referred to as the “Issuer”),
for value received, hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of $[__________], payable on each Payment Date in
an
amount equal to the Percentage Interest specified above of the aggregate amount,
if any, payable from the Payment Account in respect of principal on the
Class [1][2]M-[__] Notes pursuant to Section 3.05 of the Indenture
dated as of April 28, 2006 (the “Indenture”), among the Issuer, as issuer, and
U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”);
provided,
however,
that
the entire unpaid principal amount of this Note shall be due and payable on
the
Final Scheduled Payment Date, to the extent not previously paid on a prior
Payment Date (as defined below). Capitalized terms used but not defined herein
are defined in Appendix A of the Indenture.
Pursuant
to the terms of the Indenture, a distribution will be made on the 25th day
of
each month, or, if any such date is not a Business Day, then the next Business
Day (the “Payment Date”), commencing as described in the Indenture, to the
Person in whose name this Note is registered at the close of business on the
last day (or if such last day is not a Business Day, the Business Day
immediately preceding such last day) related Accrual Period, or, in the case
of
the first Payment Date, April 28, 2006, from the Remittance Amount in an amount
equal to the product of the Percentage Interest evidenced by this Notes and
the
amount of interest and principal, if any required to be distributed to Holders
of Class [1][2]M-[__] Notes on such Payment Date.
Interest
will be computed on the basis of the actual number of days in each Accrual
Period and a year assumed to consist of 360 days.
Principal
of and interest on this Note are payable in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts. All payments made by the Issuer with respect to this
Note shall be applied first to interest due and payable on this Note as provided
above and then to the unpaid principal of this Note.
Unless
the certificate of authentication hereon has been executed by the Indenture
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for
any
purpose.
This
Note
is one of a duly authorized issue of Notes of the Issuer, designated as its
Asset-Backed Notes, Series 2006-2, all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made
for a
statement of the respective rights and obligations thereunder of the Issuer,
the
Indenture Trustee and the Noteholders. The Notes are subject to all terms of
the
Indenture.
The
Notes
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture.
The
entire unpaid principal amount of this Note shall be due and payable in full
on
the Final Scheduled Payment Date pursuant to the Indenture, to the extent not
previously paid on a prior Payment Date. Notwithstanding the foregoing, if
an
Event of Default shall have occurred and be continuing, then the Indenture
Trustee or the holders of Notes representing not less than a majority of the
Voting Rights of all Notes may declare the Notes to be immediately due and
payable in the manner provided in Section 5.02 of the
Indenture.
Payments
of interest on this Note due and payable on each Payment Date, together with
the
installment of principal, if any, to the extent not in full payment of this
Note, shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of the nominee of
the
Depository Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as
of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or
any
one or more Predecessor Notes) effected by any payments made on any Payment
Date
shall be binding upon all future holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available,
as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee,
in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date with respect to the preceding
Payment Date by notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the address specified in such notice
of final payment.
As
provided in the Indenture and subject to certain limitations set forth therein,
the transfer of this Note may be registered on the Note Register upon surrender
of this Note for registration of transfer at the Corporate Trust Office, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the holder hereof or
such holder’s attorney duly authorized in writing, with such signature
guaranteed by an “eligible guarantor institution” meeting the requirements of
the Note Registrar, which requirements include membership or participation
in
the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other
“signature guarantee program” as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes
in authorized denominations and in the same aggregate principal amount will
be
issued to the designated transferee or transferees. No service charge will
be
charged for any registration of transfer or exchange of this Note, but the
Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration
of
transfer or exchange of this Note.
Each
Holder or Beneficial Owner of a Note, by acceptance of a Note, or, in the case
of a Beneficial Owner of a Note, a security entitlement to a Note, covenants
and
agrees that no recourse may be taken, directly or indirectly, with respect
to
the obligations of the Issuer, the Owner Trustee, the Seller, the Servicers,
the
Special Servicer, the Depositor or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee, the Servicers, the Special
Servicer or the Owner Trustee in its individual capacity, (ii) any owner of
a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee, the Servicers,
the Special Servicer or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed.
Each
Holder or Beneficial Owner of a Note, by acceptance of a Note or, in the case
of
a Beneficial Owner of a Note, a security entitlement to a Note, covenants and
agrees by accepting the benefits of the Indenture that such Holder or Beneficial
Owner of a Note will not prior to the day that is one year and one day after
the
date this Indenture terminates, institute against the Issuer or the Depositor,
or join in any institution against the Issuer or the Depositor of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the Basic
Documents.
Each
Holder or Beneficial Owner of this Note, by acceptance of this Note or a
security entitlement thereto shall be deemed to make the representations set
forth in Section 4.02 of the Indenture.
The
Issuer has entered into the Indenture and this Note is issued with the intention
that, for federal, state and local income, single business and franchise tax
purposes, the Notes will qualify as indebtedness of the Issuer. Each holder
of a
Note, by acceptance of a Note (and each Beneficial Owner of a Note by acceptance
of a security entitlement to a Note), agrees to treat the Notes for federal,
state and local income, single business and franchise tax purposes as
indebtedness of the Issuer.
Prior
to
the due presentment for registration of transfer of this Note, the Issuer,
the
Indenture Trustee and any agent of the Issuer or the Indenture Trustee may
treat
the Person in whose name this Note is registered (as of the day of determination
or as of such other date as may be specified in the Indenture) as the owner
hereof for all purposes, whether or not this Note be overdue, and none of the
Issuer, the Indenture Trustee or any such agent shall be affected by notice
to
the contrary.
The
Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Issuer and
the
Indenture Trustee and the rights of the holders of the Notes under the Indenture
at any time by the Issuer and the Indenture Trustee with the consent of the
holders of Notes representing a majority of the Voting Rights of all Notes
at
the time Outstanding and with prior notice to the Rating Agencies. The Indenture
also contains provisions permitting the holders of Notes representing specified
percentages of the Voting Rights of all Notes, on behalf of the holders of
all
the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such holder and upon
all
future holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits
the
Issuer and the Indenture Trustee to amend or waive certain terms and conditions
set forth in the Indenture without the consent of the Noteholders but with
prior
notice to the Rating Agencies.
The
term
“Issuer” as used in this Note includes any successor or the Issuer under the
Indenture.
The
Issuer is permitted by the Indenture, under certain circumstances, to merge
or
consolidate, subject to the rights of the Indenture Trustee and the
Noteholders.
The
Notes
are issuable only in registered form in denominations as provided in the
Indenture, subject to certain limitations therein set forth.
This
Note
and the Indenture shall be construed in accordance with the laws of the State
of
New York, without reference to its conflict of law provisions and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair, the obligation of the Issuer, which is absolute
and unconditional, to pay the principal of and interest on this Note at the
times, place and rate, and in the coin or currency herein
prescribed.
Anything
herein to the contrary notwithstanding, except as expressly provided in the
Basic Documents, none of U.S. Bank National Association, in its individual
capacity, Wilmington Trust Company, in its individual capacity, any owner of
a
beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The holder of this Note by its acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case
of
an Event of Default under the Indenture, the holder shall have no claim against
any of the foregoing for any deficiency, loss or claim therefrom; provided,
however,
that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations
and
undertakings contained in the Indenture or in this Note.
IN
WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
HOME
EQUITY MORTGAGE
TRUST
2006-2
|
By
|
WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as Owner
Trustee
|
Dated:
April 28, 2006
By
/s/
Xxxxx X.
Xxxxxxx
Senior
Financial Services Officer
Authorized
Signatory
CERTIFICATE
OF AUTHENTICATION
This
is
one of the Class [1][2]M-[__] Notes referred to in the within mentioned
Indenture.
U.S.
BANK
NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture
Trustee
Dated:
April 28, 2006
By
/s/
Xxxxx
Xxxxxx
Assistant
Vice President
Authorized
Signatory
ASSIGNMENT
Social
Security or taxpayer I.D. or other identifying number of assignee:
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfer unto
(name
and
address of assignee)
the
within Note and all rights thereunder, and hereby irrevocably constitutes and
appoints ___________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof,
with
full power of substitution in the premises.
Dated:_______________________
__________________________________*
Signature
Guaranteed:
__________________________________*/
* NOTICE:
The signature to this assignment must correspond with the name of the registered
owner as it appears on the face of the within Note in every particular,
without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an “eligible guarantor institution” meeting the requirements of
the Note Registrar, which requirements include membership or participation
in
STAMP or such other “signature guarantee program” as may be determined by the
Note Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as
amended.
EXHIBIT
A-3
FORM
OF
CLASS B NOTES
THIS
NOTE
IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS 1A-1, CLASS 1A-2, CLASS 1A-3,
CLASS 2A-1, CLASS 1M-1, CLASS 1M-2, CLASS 1M-3, CLASS 1M-4, CLASS 1M-5, CLASS
1M-6, CLASS 1M-7, CLASS 1M-8, CLASS 1M-9, CLASS 1B-1, CLASS 2M-1, CLASS 2M-2
[AND CLASS 1B-1] NOTES AS DESCRIBED IN THE INDENTURE (AS DEFINED
HEREIN).
THE
PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY
BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS
NOTE
HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR
TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD
OR
TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT
AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 4.02 OF THE INDENTURE.
SOLELY
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS NOTE IS A “REGULAR INTEREST” IN A
“REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
(THE “CODE”).
EACH
HOLDER OR BENEFICIAL OWNER OF THIS NOTE, BY ACCEPTANCE OF THIS NOTE OR A
SECURITY ENTITLEMENT THERETO, SHALL BE DEEMED TO MAKE THE REPRESENTATIONS IN
SECTION 4.02 OF THE INDENTURE.
THIS
NOTE
DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER, THE DEPOSITOR,
THE SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE
BASIC DOCUMENTS.
Asset-Backed
Notes, Series 2006-2
|
Class
B-[__]
|
Principal
Amount: $[_________]
|
|
Registered
|
Cut-off
Date: April 1, 2006
|
|
No.
1
|
Percentage
Interest: 100%
|
|
CUSIP
NO. [____________]
|
Note
Interest Rate: Variable
|
|
First
Payment Date: May 25, 2006
|
Assumed
Final Payment Date: July 25, 2036
|
Home
Equity Mortgage Trust 2006-2, a statutory trust duly organized and existing
under the laws of the State of Delaware (herein referred to as the “Issuer”),
for value received, hereby promises to pay to CREDIT SUISSE FIRST BOSTON LLC
or
registered assigns, the principal sum of $[_________], payable on each Payment
Date in an amount equal to the Percentage Interest specified above of the
aggregate amount, if any, payable from the Payment Account in respect of
principal on the Class B-[__] Notes pursuant to Section 3.05 of the
Indenture dated as of April 28, 2006 (the “Indenture”), between the Issuer, as
issuer, and U.S. Bank National Association, as indenture trustee (the “Indenture
Trustee”); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the Final Scheduled Payment Date, to the extent
not previously paid on a prior Payment Date. Capitalized terms used but not
defined herein are defined in Appendix A of the Indenture.
Pursuant
to the terms of the Indenture, a distribution will be made on the 25th day
of
each month, or, if any such date is not a Business Day, then the next Business
Day (the “Payment Date”), commencing as described in the Indenture, to the
Person in whose name this Note is registered at the close of business on the
last day (or if such last day is not a Business Day, the Business Day
immediately preceding such last day) related Accrual Period, or, in the case
of
the first Payment Date, April 28, 2006, from the Remittance Amount in an amount
equal to the product of the Percentage Interest evidenced by this Notes and
the
amount of interest and principal, if any required to be distributed to Holders
of Class B-[__] Notes on such Payment Date.
Interest
will be computed on the basis of the actual number of days in each Accrual
Period and a year assumed to consist of 360 days
Principal
of and interest on this Note are payable in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts. All payments made by the Issuer with respect to this
Note shall be applied first to interest due and payable on this Note as provided
above and then to the unpaid principal of this Note.
Unless
the certificate of authentication hereon has been executed by the Indenture
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for
any
purpose.
This
Note
is one of a duly authorized issue of Notes of the Issuer, designated as its
Asset-Backed Notes, Series 2006-2, all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made
for a
statement of the respective rights and obligations thereunder of the Issuer,
the
Indenture Trustee and the Noteholders. The Notes are subject to all terms of
the
Indenture.
The
Notes
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture.
The
entire unpaid principal amount of this Note shall be due and payable in full
on
the Final Scheduled Payment Date pursuant to the Indenture, to the extent not
previously paid on a prior Payment Date. Notwithstanding the foregoing, if
an
Event of Default shall have occurred and be continuing, then the Indenture
Trustee or the holders of Notes representing not less than a majority of the
Voting Rights of all Notes may declare the Notes to be immediately due and
payable in the manner provided in Section 5.02 of the
Indenture.
Payments
of interest on this Note due and payable on each Payment Date, together with
the
installment of principal, if any, to the extent not in full payment of this
Note, shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of the nominee of
the
Depository Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as
of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or
any
one or more Predecessor Notes) effected by any payments made on any Payment
Date
shall be binding upon all future holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available,
as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee,
in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date with respect to the preceding
such Payment Date by notice mailed or transmitted by facsimile prior to such
Payment Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the address specified in such notice
of final payment.
As
provided in the Indenture and subject to certain limitations set forth therein,
the transfer of this Note may be registered on the Note Register upon surrender
of this Note for registration of transfer at the Corporate Trust Office, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the holder hereof or
such holder’s attorney duly authorized in writing, with such signature
guaranteed by an “eligible guarantor institution” meeting the requirements of
the Note Registrar, which requirements include membership or participation
in
the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other
“signature guarantee program” as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes
in authorized denominations and in the same aggregate principal amount will
be
issued to the designated transferee or transferees. No service charge will
be
charged for any registration of transfer or exchange of this Note, but the
Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration
of
transfer or exchange of this Note.
Each
Holder or Beneficial Owner of a Note, by acceptance of a Note, or, in the case
of a Beneficial Owner of a Note, a security entitlement to a Note, covenants
and
agrees that no recourse may be taken, directly or indirectly, with respect
to
the obligations of the Issuer, the Owner Trustee, the Seller, the Servicers,
the
Special Servicer, the Depositor or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee, the Servicers, the Special
Servicer or the Owner Trustee in its individual capacity, (ii) any owner of
a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee, the Servicers,
the Special Servicer or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed.
Each
Holder or Beneficial Owner of a Note, by acceptance of a Note or, in the case
of
a Beneficial Owner of a Note, a security entitlement to a Note, covenants and
agrees by accepting the benefits of the Indenture that such Holder or Beneficial
Owner of a Note will not prior to the day that is one year and one day after
the
date this Indenture terminates, institute against the Issuer or the Depositor,
or join in any institution against the Issuer or the Depositor of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the Basic
Documents.
No
transfer of this Class B-[__] Note shall be made unless such transfer is exempt
from the registration requirements of the Securities Act of 1933, as amended
(the “1933 Act”), and any applicable state securities laws or is made in
accordance with said Act and laws. Except as otherwise provided in this
Section 4.02 of the Indenture, in connection with any transfer of this
Class B-[__] Note, (i) the Indenture Trustee shall require a written Opinion
of
Counsel acceptable to and in form and substance satisfactory to the Indenture
Trustee, the Issuer and the Depositor that such transfer may be made pursuant
to
an exemption, describing the applicable exemption and the basis therefor, from
said 1933 Act and laws or is being made pursuant to said 1933 Act and laws,
which Opinion of Counsel shall not be an expense of the Indenture Trustee,
the
Trust Estate, the Depositor, the Issuer, the Servicers or the Special Servicer,
and (ii) the Indenture Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit D to the Indenture,
and the Indenture Trustee shall require the transferor to execute a
representation letter, substantially in the form of Exhibit E to the Indenture,
each acceptable to and in form and substance satisfactory to the Depositor,
the
Issuer and the Indenture Trustee certifying to the Depositor, the Issuer and
the
Indenture Trustee the facts surrounding such transfer, which representation
letters shall not be an expense of the Indenture Trustee, the Trust Estate,
the
Depositor, the Issuer, the Servicers or the Special Servicer. In lieu of the
requirements set forth in the preceding sentence, transfers of this Class B-[__]
Note may be made if the prospective transferee provides the Indenture Trustee,
the Depositor and the Issuer with an investment letter substantially in the
form
of Exhibit F to the Indenture, which investment letter shall not be an expense
of the Indenture Trustee, the Issuer, the Trust Estate, the Depositor, the
Servicers or the Special Servicer, and which investment letter states that,
among other things, such transferee (i) is a “qualified institutional buyer” as
defined under Rule 144A, acting for its own account or the accounts of other
“qualified institutional buyers” as defined under Rule 144A, and (ii) is aware
that the proposed transferor intends to rely on the exemption from registration
requirements under the 1933 Act provided by Rule 144A. The Holder of a
Class B-[__] Note desiring to effect any transfer shall, and does hereby
agree to, indemnify the Indenture Trustee, the Depositor, the Servicers, the
Special Servicer, the Issuer and the Note Registrar 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 and this Indenture.
Each
Holder or Beneficial Owner of this Note, by acceptance of this Note or a
security entitlement thereto shall be deemed to make the representations set
forth in Section 4.02 of the Indenture.
The
Issuer has entered into the Indenture and this Note is issued with the intention
that, for federal, state and local income, single business and franchise tax
purposes, the Notes will qualify as indebtedness of the Issuer. Each holder
of a
Note, by acceptance of a Note (and each Beneficial Owner of a Note by acceptance
of a security entitlement to a Note), agrees to treat the Notes for federal,
state and local income, single business and franchise tax purposes as
indebtedness of the Issuer.
Prior
to
the due presentment for registration of transfer of this Note, the Issuer,
the
Indenture Trustee and any agent of the Issuer or the Indenture Trustee may
treat
the Person in whose name this Note is registered (as of the day of determination
or as of such other date as may be specified in the Indenture) as the owner
hereof for all purposes, whether or not this Note be overdue, and none of the
Issuer, the Indenture Trustee or any such agent shall be affected by notice
to
the contrary.
The
Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Issuer and
the
Indenture Trustee and the rights of the holders of the Notes under the Indenture
at any time by the Issuer and the Indenture Trustee with the consent of the
holders of Notes representing a majority of the Voting Rights of all Notes
at
the time Outstanding and with prior notice to the Rating Agencies. The Indenture
also contains provisions permitting the holders of Notes representing specified
percentages of the Voting Rights of all Notes, on behalf of the holders of
all
the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such holder and upon
all
future holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits
the
Issuer and the Indenture Trustee to amend or waive certain terms and conditions
set forth in the Indenture without the consent of the Noteholders but with
prior
notice to the Rating Agencies.
The
term
“Issuer” as used in this Note includes any successor or the Issuer under the
Indenture.
The
Issuer is permitted by the Indenture, under certain circumstances, to merge
or
consolidate, subject to the rights of the Indenture Trustee and the
Noteholders.
The
Notes
are issuable only in registered form in denominations as provided in the
Indenture, subject to certain limitations therein set forth.
This
Note
and the Indenture shall be construed in accordance with the laws of the State
of
New York, without reference to its conflict of law provisions and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair, the obligation of the Issuer, which is absolute
and unconditional, to pay the principal of and interest on this Note at the
times, place and rate, and in the coin or currency herein
prescribed.
Anything
herein to the contrary notwithstanding, except as expressly provided in the
Basic Documents, none of U.S. Bank National Association, in its individual
capacity, Wilmington Trust Company, in its individual capacity, any owner of
a
beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The holder of this Note by its acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case
of
an Event of Default under the Indenture, the holder shall have no claim against
any of the foregoing for any deficiency, loss or claim therefrom; provided,
however,
that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations
and
undertakings contained in the Indenture or in this Note.
IN
WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
HOME
EQUITY MORTGAGE
TRUST
2006-2
|
By
|
WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as Owner
Trustee
|
Dated:
April 28, 2006
By
_______________________________________
Authorized
Signatory
CERTIFICATE
OF AUTHENTICATION
This
is
one of the Class B-[__] Notes referred to in the within mentioned
Indenture.
U.S.
BANK
NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture
Trustee
Dated:
April 28, 2006
By
_______________________________________
Authorized
Signatory
ASSIGNMENT
Social
Security or taxpayer I.D. or other identifying number of assignee:
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfer unto
(name
and
address of assignee)
the
within Note and all rights thereunder, and hereby irrevocably constitutes and
appoints ___________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof,
with
full power of substitution in the premises.
Dated:_______________________
__________________________________*
Signature
Guaranteed:
__________________________________*/
* NOTICE:
The signature to this assignment must correspond with the name of the registered
owner as it appears on the face of the within Note in every particular,
without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an “eligible guarantor institution” meeting the requirements of
the Note Registrar, which requirements include membership or participation
in
STAMP or such other “signature guarantee program” as may be determined by the
Note Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as
amended.
EXHIBIT
B
FORM
OF
DEPOSITOR CERTIFICATION
Re:
Asset Backed Securities Corporation
Home Equity Mortgage Trust 2006-2
Asset-Backed Notes, Series 2006-2
I,
__________________________, certify that:
1. I
have
reviewed this annual report on Form 10-K, and all reports on Form 8-K
containing distribution and servicing reports filed in respect of periods
included in the year covered by this annual report, of Home Equity Mortgage
Trust 2006-2 (the “Trust”);
2. Based
on
my knowledge, the information in these 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 as of the last day of the period
covered by this annual report;
3. Based
on
my knowledge, the distribution information required to be prepared by the
Indenture Trustee based upon the servicing information required to be provided
by each Servicer and the Special Servicer under the Servicing Agreement is
included in these reports;
4. Based
on
my knowledge and upon the annual compliance statements included in the report
and required to be delivered to the Indenture Trustee in accordance with the
terms of the Servicing Agreement and based upon the review required under the
Servicing Agreement, and except as disclosed in the report, each Servicer and
the Special Servicer has fulfilled its obligations under the Servicing
Agreement; and
5. The
reports disclose all significant deficiencies relating to each Servicer’s and
the Special Servicer’s compliance with the minimum servicing standards based, in
each case, upon the report provided by an independent public accountant, after
conducting a review in compliance with the Uniform Single Attestation Program
for Mortgage Bankers or similar standard as set forth in the Servicing
Agreement, that is included in these reports.
Capitalized
terms used but not defined herein have the meanings ascribed to them in Appendix
A to the Indenture, dated as of April 28, 2006 (the “Indenture”), among the
Trust and U.S. Bank National Association, as indenture trustee.
ASSET
BACKED SECURITIES CORPORATION
By:
______________________________________
Name:
Title:
Date:
EXHIBIT
C
FORM
OF
INDENTURE TRUSTEE CERTIFICATION
Re:
Asset Backed Securities Corporation
Home Equity Mortgage Trust 2006-2
Asset-Backed Notes, Series 2006-2
U.S.
Bank
National Association (the “Indenture Trustee”) hereby certifies to Asset Backed
Securities Corporation (the “Depositor”), and each Person, if any, who
“controls” the Depositor within the meaning of the Securities Act of 1933, as
amended, and its officers, directors and affiliates, and with the knowledge
and
intent that they will rely upon this certification, that:
1. The
Indenture Trustee has reviewed the annual report on Form 10-K for the fiscal
year [___], and all reports on Form 10-D containing Monthly Statements filed
in
respect of periods included in the year covered by that annual report, of the
Depositor relating to the above-referenced trust;
2. Subject
to paragraph 4 hereof, based on the Indenture Trustee’s knowledge and assuming
the accuracy and completeness of the information supplied to the Indenture
Trustee by each Servicer, the Distribution Information in the Monthly Statements
contained in such reports on Form 10-D, taken as a whole, does not contain
any
untrue statement of a material fact or omit to state a material fact required
by
the Indenture to be included therein and necessary to make the statements made,
in light of the circumstances under which such statements were made, not
misleading as of the last day of the period covered by that annual report;
and
3. Based
on
the Indenture Trustee’s knowledge, the Distribution Information required to be
provided by the Indenture Trustee under the Indenture is included in these
reports.
4. In
compiling the Distribution Information and making the foregoing certifications,
the Indenture Trustee has relied upon information furnished to it by the
Servicers under the Servicing Agreement. The Indenture Trustee shall have no
responsibility or liability for any inaccuracy in such reports on Form 10-D
to
the extent such inaccuracy results from information received from the
Servicers.
For
purposes of this Certificate, the following terms shall have the meanings
ascribed below:
“Distribution
Information”
shall
mean that information (x) calculated and reported by the Indenture Trustee
and
(y) reported by the Indenture Trustee, in either case, pursuant to Section
3.25
of the Indenture.
“Monthly
Statements”
shall
mean the monthly statements prepared by the Indenture Trustee pursuant to
Section 3.25 of the Indenture.
Any
additional capitalized terms used but not defined herein have the meanings
ascribed to them in Appendix A to the Indenture, dated as of April 28, 2006
(the
“Indenture”), among Home Equity Mortgage Trust 2006-2 and U.S. Bank National
Association as Indenture Trustee.
U.S.
BANK
NATIONAL ASSOCIATION,
as
Indenture Trustee
By:
___________________________________
Name:
Title:
Date:
EXHIBIT
D
FORM
OF
INVESTOR REPRESENTATION LETTER
______________,
20__
Credit
Suisse First Boston
Mortgage
Acceptance Corp.
11
Xxxxxxx Xxxxxx, 0xx Xloor
New
York,
New York 10010-3629
U.S.
Bank
National Association
as
Indenture Trustee for the
Home
Equity Mortgage
Trust
2006-2, Asset-Backed
Notes,
Series 2006-2
60
Xxxxxxxxxx Xxxxxx
St.
Xxxx,
Minnesota 55107-2292
Attention:
Corporate Trust - Structured Finance
|
Re:
|
Home
Equity Mortgage Trust 2006-2, Asset-Backed
Notes,
|
Series 2006-2, [Class 1B-1] [Class 1B-2]
Ladies
and Gentlemen:
_________________________
(the “Purchaser”) intends to purchase from ___________________________ (the
“Seller”) $_____________ Initial Certificate Principal Balance Home Equity
Mortgage Trust 2006-2, Asset-Backed Notes, Series 2006-2, [Class 1B-1]
[Class 1B-2] (the “Notes”), issued pursuant to the Indenture (the
“Indenture”), dated as of April 28, 2006, between Home Equity Mortgage Trust
2006-2, (the “Issuer) and U.S. Bank National Association, as indenture trustee
(the “Indenture Trustee”). All terms used herein and not otherwise defined shall
have the meanings set forth in the Indenture. The Purchaser hereby certifies,
represents and warrants to, and covenants with, the Depositor, the Indenture
Trustee and the Issuer that:
(a) The
Purchaser understands that (a) the Notes have not been and will not be
registered or qualified under the Securities Act of 1933, as amended (the “Act”)
or any state securities law, (b) the Depositor is not required to so register
or
qualify the Notes, (c) the Notes may be resold only if registered and qualified
pursuant to the provisions of the Act or any state securities law, or if an
exemption from such registration and qualification is available, (d) the
Indenture contains restrictions regarding the transfer of the Notes and (e)
the
Notes will bear a legend to the foregoing effect.
(b) The
Purchaser is acquiring the Notes for its own account for investment only and
not
with a view to or for sale in connection with any distribution thereof in any
manner that would violate the Act or any applicable state securities
laws.
(c) The
Purchaser is (a) 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 Notes, such that it is
capable of evaluating the merits and risks of investment in the Notes, (b)
able
to bear the economic risks of such an investment and (c) an “accredited
investor” within the meaning of Rule 501(a) promulgated pursuant to the
Act.
(d) The
Purchaser has been furnished with, and has had an opportunity to review (a)
a
copy of the Indenture and (b) such other information concerning the Notes,
the
Loans and the Depositor as has been requested by the Purchaser from the
Depositor or the Issuer and is relevant to the Purchaser’s decision to purchase
the Notes. The Purchaser has had any questions arising from such review answered
by the Depositor or the Issuer to the satisfaction of the
Purchaser.
(e) The
Purchaser has not and will not nor has it authorized or will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any Note,
any interest in any Note or any other similar security to any person in any
manner, (b) solicit any offer to buy or to accept a pledge, disposition of
other
transfer of any Note, any interest in any Note or any other similar security
from any person in any manner, (c) otherwise approach or negotiate with respect
to any Note, any interest in any Note 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 (as to
any
of (a) through (e) above) would constitute a distribution of any Note under
the
Act, that would render the disposition of any Note a violation of Section 5
of the Act or any state securities law, or that would require registration
or
qualification pursuant thereto. The Purchaser will not sell or otherwise
transfer any of the Notes, except in compliance with the provisions of the
Indenture.
(f) The
Purchaser hereby certifies, represents and warrants to, and covenants with
the
Depositor, the Indenture Trustee and the Issuer that the following statements
in
(i) or (ii) are correct:
(i) The
Purchaser is not an employee benefit plan or other plan or arrangement subject
to the prohibited transaction provisions of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), or Section 4975 of the Internal
Revenue Code of 1986, as amended (the “Code”), or any person (including an
insurance company investing its general account, an investment manager, a named
fiduciary or a trustee of any such plan) who is using “plan assets” of any such
plan to effect such acquisition (each of the foregoing, a “Plan Investor”);
or
(ii) the
Purchaser has provided the Indenture Trustee, the Depositor and the Issuer
with
an Opinion of Counsel acceptable to and in form and substance satisfactory
to
the Indenture Trustee, the Depositor and the Issuer to the effect that the
purchase or holding of Notes is permissible under applicable law, will not
constitute or result in any non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), and will not subject the Indenture
Trustee, the Depositor, the Issuer, the Servicers or the Special Servicer to
any
obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in the Indenture,
which Opinion of Counsel shall not be an expense of the Indenture Trustee,
the
Issuer, the Depositor, the Servicers or the Special Servicer.
In
addition, the Purchaser hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Indenture Trustee and the Issuer that the
Purchaser will not transfer such Certificates to any Plan or person unless
either such Plan or person meets the requirements set forth in either (i) or
(ii) above.
Very
truly yours,
____________________________________
(Purchaser)
By:
________________________________
Name:
______________________________
Title:
EXHIBIT
E
FORM
OF
TRANSFEROR REPRESENTATION LETTER
______________,
20__
Credit
Suisse First Boston
Mortgage
Acceptance Corp.
11
Xxxxxxx Xxxxxx, 0xx Xloor
New
York,
New York 10010-3629
U.S.
Bank
National Association
as
Indenture Trustee for the
Home
Equity Mortgage
Trust
2006-2, Asset-Backed
Notes,
Series 2006-2
60
Xxxxxxxxxx Xxxxxx
St.
Xxxx,
Minnesota 55107-2292
Attention:
Corporate Trust - Structured Finance
|
Re:
|
Home
Equity Mortgage Trust 2006-2, Asset-Backed
Notes,
|
Series 2006-2, [Class 1B-1] [Class 1B-2]
Ladies
and Gentlemen:
_________________________
(the “Purchaser”) intends to purchase from ___________________________ (the
“Seller”) $_____________ Initial Certificate Principal Balance Home Equity
Mortgage Trust 2006-2, Asset-Backed Notes, Series 2006-2, [Class 1B-1]
[Class 1B-2] (the “Notes”), issued pursuant to the Indenture (the
“Indenture”), dated as of April 28, 2006, among Home Equity Mortgage Trust
2006-2, (the “Issuer) and U.S. Bank National Association, as indenture trustee
(the “Indenture Trustee”). All terms used herein and not otherwise defined shall
have the meanings set forth in the Indenture. The Purchaser hereby certifies,
represents and warrants to, and covenants with, the Depositor, the Indenture
Trustee and the Issuer that:
Neither
the Seller nor anyone acting on its behalf has (a) offered, pledged, sold,
disposed of or otherwise transferred any Note, any interest in any Note or
any
other similar security to any person in any manner, (b) has solicited any offer
to buy or to accept a pledge, disposition or other transfer of any Note, any
interest in any Note or any other similar security from any person in any
manner, (c) has otherwise approached or negotiated with respect to any Note,
any
interest in any Note or any other similar security with any person in any
manner, (d) has made any general solicitation by means of general
advertising or in any other manner, or (e) has taken any other action, that
(as to any of (a) through (e) above) would constitute a distribution of the
Notes under the Securities Act of 1933 (the “Act”), that would render the
disposition of any Note a violation of Section 5 of the Act or any state
securities law, or that would require registration or qualification pursuant
thereto. The Seller will not act, in any manner set forth in the foregoing
sentence with respect to any Note. The Seller has not and will not sell or
otherwise transfer any of the Notes, except in compliance with the provisions
of
the Indenture.
Very
truly yours,
___________________________________
(Purchaser)
By:
Name:
Title:
EXHIBIT
F
FORM
OF
RULE 144A INVESTMENT REPRESENTATION
DESCRIPTION
OF RULE 144A SECURITIES, INCLUDING NUMBERS:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
The
undersigned seller, as registered holder (the “Seller”), intends to transfer the
Rule 144A Securities described above to the undersigned buyer (the
“Buyer”).
(1) In
connection with such transfer and in accordance with the agreements pursuant
to
which the Rule 144A Securities were issued, the Seller hereby certifies the
following facts: Neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Rule 144A Securities,
any interest in the Rule 144A Securities or any other similar security to,
or
solicited any offer to buy or accept a transfer, pledge or other disposition
of
the Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security from, or otherwise approached or negotiated with respect to
the
Rule 144A Securities, any interest in the Rule 144A Securities 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 Rule 144A
Securities under the Securities Act of 1933, as amended (the “1933 Act”), or
that would render the disposition of the Rule 144A Securities a violation of
Section 5 of the 1933 Act or require registration pursuant thereto, and
that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or another “qualified institutional buyer” as defined in Rule
144A under the 1933 Act.
(2) The
Buyer, pursuant to Section 4.02 of the Indenture (the “Indenture”), dated
as of April 28, 2006, among Home Equity Mortgage Trust 2006-2 (the “Issuer”) and
U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”)
warrants and represents to, and covenants with, the Seller, the Indenture
Trustee, the Depositor, the Issuer, the Servicers and each Special Servicer
as
follows:
(iii) The
Buyer
understands that the Rule 144A Securities have not been registered under the
1933 Act or the securities laws of any state.
(iv) The
Buyer
considers itself a substantial, sophisticated institutional investor having
such
knowledge and experience in financial and business matters that it is capable
of
evaluating the merits and risks of investment in the Rule 144A
Securities.
(v) The
Buyer
has been furnished with all information regarding the Rule 144A Securities
that
it has requested from the Seller, the Indenture Trustee or any
Servicer.
(vi) Neither
the Buyer nor anyone acting on its behalf has offered, transferred, pledged,
sold or otherwise disposed of the Rule 144A Securities, any interest in the
Rule
144A Securities or any other similar security to, or solicited any offer to
buy
or accept a transfer, pledge or other disposition of the Rule 144A Securities,
any interest in the Rule 144A Securities or any other similar security from,
or
otherwise approached or negotiated with respect to the Rule 144A Securities,
any
interest in the Rule 144A Securities 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 Rule 144A Securities under the 1933 Act or
that
would render the disposition of the Rule 144A Securities a violation of
Section 5 of the 1933 Act or require registration pursuant thereto, nor
will it act, nor has it authorized or will it authorize any person to act,
in
such manner with respect to the Rule 144A Securities.
(vii) The
Buyer
is a “qualified institutional buyer” as that term is defined in Rule 144A under
the 1933 Act and has completed either of the forms of certification to that
effect attached hereto as Annex I or Xxxxx XX. The Buyer is aware that the
sale
to it is being made in reliance on Rule 144A. The Buyer is acquiring the Rule
144A Securities for its own account or the accounts of other qualified
institutional buyers, understands that such Rule 144A Securities may be resold,
pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the
1933 Act.
(1) The
Buyer:
(viii) is
not a
Plan Investor; or
(ix) has
provided the Indenture Trustee, the Depositor and the Issuer with an Opinion
of
Counsel acceptable to and in form and substance satisfactory to the Indenture
Trustee, the Depositor, and the Issuer to the effect that the purchase or
holding of this Note is permissible under applicable law, will not constitute
or
result in any non-exempt prohibited transaction under Section 406 of ERISA
or Section 4975 of the Code (or comparable provisions of any subsequent
enactments), and will not subject the Indenture Trustee, the Issuer, the
Depositor, any Servicer or the Special Servicer to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the
Code) in addition to those undertaken in the Agreement, which Opinion of Counsel
shall not be an expense of the Indenture Trustee, the Depositor, the Issuer,
the
Servicers or the Special Servicer.
(1) This
document may be executed in one or more counterparts and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed to be an original; such counterparts, together, shall constitute
one
and the same document.
IN
WITNESS WHEREOF, each of the parties has executed this document as of the date
set forth below.
|
______________________________________
Print
Name of Seller
|
_____________________________________
Print
Name of Purchaser
|
|
By:
__________________________________
Name:
Title:
|
By:
__________________________________
Name:
Title:
|
|
Taxpayer
Identification:
|
Taxpayer
Identification:
|
|
No.
|
No.
|
|
Date:
|
Date:
|
ANNEX
I
TO EXHIBIT F
QUALIFIED
INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[FOR
BUYERS OTHER THAN REGISTERED INVESTMENT COMPANIES]
The
undersigned hereby certifies as follows in connection with the Rule 144A
Investment Representation to which this Certification is attached:
(2) As
indicated below, the undersigned is the President, Chief Financial Officer,
Senior Vice President or other executive officer of the Buyer.
(3) In
connection with purchases by the Buyer, the Buyer is a “qualified institutional
buyer” as that term is defined in Rule 144A under the Securities Act of 1933
(“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.
|
|
___
|
Bank.
The Buyer (a) is a national bank or banking institution organized
under
the laws of any State, territory or the District of Columbia, the
business
of which is substantially confined to banking and is supervised by
the
State or territorial banking commission or similar official or is
a
foreign bank or equivalent institution, and (b) has an audited net
worth
of at least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached
hereto.
|
|
___
|
Savings
and Loan.
The Buyer (a) is a savings and loan association, building and loan
association, cooperative bank, homestead association or similar
institution, which is supervised and examined by a State or Federal
authority having supervision over any such institutions or is a foreign
savings and loan association or equivalent institution and (b) has
an
audited net worth of at least $25,000,000 as demonstrated in its
latest
annual financial statements.
|
|
___
|
Broker-Dealer.
The Buyer is a dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934.
|
|
___
|
Insurance
Company.
The Buyer is an insurance company whose primary and predominant business
activity is the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is subject to supervision
by
the insurance commissioner or a similar official or agency of a State
or
territory or the District of
Columbia.
|
|
___
|
State
or Local Plan.
The Buyer is a plan established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the State or its
political subdivisions, for the benefit of its
employees.
|
|
___
|
ERISA
Plan.
The Buyer is an employee benefit plan within the meaning of Title
I of the
Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).
|
|
___
|
Investment
Adviser.
The Buyer is an investment adviser registered under the Investment
Advisers Act of 1940.
|
|
___
|
SBIC.
The Buyer is a Small Business Investment Company licensed by the
U.S.
Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of
1958.
|
|
___
|
Business
Development Company.
The Buyer is a business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of
1940.
|
|
___
|
Trust
Fund.
The Buyer is a trust fund whose trustee is a bank or trust company
and
whose participants are exclusively (a) plans 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,
or (b) employee benefit plans within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, but is not a trust
fund
that includes as participants individual retirement accounts or H.R.
10
plans.
|
(4) The
term
“securities”
as
used
herein does
not include
(i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is
a dealer, (iii) 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) 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. 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.
(6) 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.
|
____
Yes
|
___
No
|
Will
the Buyer be purchasing the Rule 144A
Securities
for the Buyer’s own account?
|
(7) If
the
answer to the foregoing question is “no”, the Buyer agrees that, in connection
with any purchase of securities sold to the Buyer for the account of a third
party (including any separate account) in reliance on Rule 144A, the Buyer
will
only purchase for the account of a third party that at the time is a “qualified
institutional buyer” within the meaning of Rule 144A. In addition, the Buyer
agrees that the Buyer will not purchase securities for a third party unless
the
Buyer has obtained a current representation letter from such third party or
taken other appropriate steps contemplated by Rule 144A to conclude that such
third party independently meets the definition of “qualified institutional
buyer” set forth in Rule 144A.
(8) 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 Rule 144A Securities will constitute a reaffirmation of
this certification as of the date of such purchase.
Print
Name of Buyer
|
By:
|
__________________________________
|
Name:
Title:
Date:
ANNEX
II
TO EXHIBIT F
QUALIFIED
INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[FOR
BUYERS THAT ARE REGISTERED INVESTMENT COMPANIES]
The
undersigned hereby certifies as follows in connection with the Rule 144A
Investment Representation to which this Certification is attached:
(9) 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 (“Rule 144A”) because Buyer is part of a Family of Investment
Companies (as defined below), is such an officer of the Adviser.
(10) In
connection with purchases by Xxxxx, the Buyer is a “qualified institutional
buyer” as defined in SEC Rule 144A because (i) the Buyer is an investment
company registered under the Investment Company Act of 1940, 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.
|
____
|
The
Buyer owned $___________________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer’s most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
|
|
____
|
The
Buyer is part of a Family of Investment Companies which owned in
the
aggregate $______________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer’s most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
|
(11) 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).
(12) 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) bank deposit notes and certificates of deposit, (iii) loan
participations, (iv) repurchase agreements, (v) securities owned but subject
to
a repurchase agreement and (vi) currency, interest rate and commodity
swaps.
(13) The
Buyer
is familiar with Rule 144A and understands that each of the parties to which
this certification is made 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.
(14) The
undersigned will notify each of the parties to which this certification is
made
of any changes in the information and conclusions herein. Until such notice,
the
Buyer’s purchase of Rule 144A Securities will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
Print Name of Buyer
|
By:
|
____________________________________
|
Name:
Title:
IF
AN
ADVISER:
__________________________________________
Print
Name of Buyer
Date:
EXHIBIT
G
FORM
OF
CONFIRMATION TO THE SWAP AGREEMENT
Facsimile
Cover Sheet
To:
U.S.
Bank
National Association, not individually, but
solely
as
indenture trustee on behalf of The Home Equity Mortgage Trust
2006-2, Asset-Backed Notes, Series 2006-2
Attention: Xxxxxxxx
Xxxxx, CSi Marketer
Fax
number:
To
be
delivered by Xxxxxxxx Xxxxx
Date:
28
April
2006
Pages
(including cover
page): 9
Our
Reference No: External ID: 0000000X0 / Risk ID: 560960093
Credit
Suisse International has entered into a transaction with you as attached. Please
find attached a letter agreement (the "Confirmation") which confirms the terms
and conditions of the above transaction.
If
you
agree with the terms specified therein, please
arrange for the Confirmation to be signed by your authorised
signatories
and
return a signed copy to this office to the facsimile listed below.
|
For
Interest Rate Products:
Telephone
Numbers: (000) 000-0000
Facsimile
number: (000) 000-0000
Email:
xxxx.xxx-xxx-xxxxxx-xx@xxxxxx-xxxxxx.xxx
|
|
For
Equity Derivatives:
Telephone
numbers: (000) 000-0000 / (000) 000-0000 / (000) 000-0000
Facsimile
number: (000) 000-0000
|
|
For
Credit Derivatives:
Telephone
Numbers: (000) 000-0000
Facsimile
number: (000) 000-0000
Email:
xxxx.xxx-xxx-xxxxxx-xx@xxxxxx-xxxxxx.xxx
|
|
We
are
delighted to have entered into this transaction with you.
CONFIDENTIALITY
NOTICE: This facsimile is intended only for the use of the individual or entity
to which it is addressed and may contain information which is privileged and
confidential. If the reader of this message is not the intended recipient or
an
employee or agent responsible for delivering the message to the intended
recipient, you are hereby notified that any dissemination, distribution or
copying of this communication is strictly prohibited. If you have received
this
communication in error, please notify us immediately by telephone and return
the
original message to us by mail. Thank you.
28
April
2006
U.S.
Bank
National Association, not individually, but
solely
as
indenture trustee on behalf of the Home Equity Mortgage Trust 2006-2,
Asset-Backed Notes, Series 2006-2
(B) External
ID: 0000000X0
______________________________________________________________________________
Dear
Sir/Madam
The
purpose of this letter agreement (this "Confirmation") is to confirm the terms
and conditions of the Transaction entered into between us on the Trade Date
specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below.
In
this Confirmation "CSi" means Credit Suisse International and "Counterparty"
means U.S. Bank National Association, not individually, but solely as indenture
trustee on behalf of The Home Equity Mortgage Trust 2006-2, Asset Backed-Notes,
Series 2006-2.
|
1.
|
The
definitions and provisions contained in the 2000 ISDA Definitions
(as
published by the International Swaps and Derivatives Association,
Inc.)
(the "Definitions") are incorporated into this Confirmation. In the
event
of any inconsistency between those definitions and provisions and
this
Confirmation, this Confirmation will govern. References herein to
a
"Transaction" shall be deemed to be references to a "Swap Transaction"
for
the purposes of the 2000 ISDA
Definitions.
|
|
For
the Purposes hereof, "Note Payment Date" shall have the meaning ascribed
to the term "Payment Date" in the
Indenture.
|
|
This
Confirmation supplements, forms part of, and is subject to, the 1992
ISDA
Master Agreement dated as of 28 April 2006 as amended and supplemented
from time to time (the "Agreement"), between you and us. All provisions
contained in the Agreement govern this Confirmation except as expressly
modified below.
|
|
CSi
and Counterparty each represents to the other that it has entered
into
this Swap Transaction in reliance upon such tax, accounting, regulatory,
legal, and financial advice as it deems necessary and not upon any
view
expressed by the other.
|
|
Capitalized
terms used but not defined herein or in the Definitions shall have
the
meanings given to such terms in the Indenture dated as of April 28,
2006,
between Home Equity Mortgage Trust 2006-2, as Issuer and U.S. Bank
National Association as Indenture Trustee, as amended and supplemented
from time to time (the "Indenture
").
|
|
2.
|
The
terms of the particular Transaction to which this Confirmation relates
are
as follows:
|
Notional
Amount: For
any
Payment Date:
|
1.
If the aggregate Class Principal Balance of the Class 1A, Class 1M
and
Class 1B Notes for the immediately preceding Note Payment Date, after
giving effect to payments on such Note Payment Date (or as of the
closing
date in the case of the first Payment Date) is greater than the Lower
Bound for such Payment Date and less than the Upper Bound for such
Payment
Date, the Notional Amount will be the excess, if any, of (i) the
aggregate
Class Principal Balance of the Class 1A, Class 1M and Class 1B Notes
for
the immediately preceding Note Payment Date, after giving effect
to
payments on such Note Payment Date(or as of the closing date in the
case
of the first Payment Date) over (ii) the aggregate Class Principal
Balance
of the Class 1A-1 Notes and Class 1A-2 Notes for the immediately
preceding
Note Payment Date, after giving effect to payments on such Note Payment
Date (or as of the closing date in the case of the first Payment
Date)
|
|
2.
If the aggregate Class Principal Balance of the Class 1A, Class 1
M and
Class 1B Notes for the immediately preceding Note Payment Date, after
giving effect to payments on such Note Payment Date (or as of the
closing
date in the case of the first Payment Date) is less than or equal
to the
Lower Bound for such Payment Date, the Notional Amount will be the
excess,
if any, of (i) the Lower Bound for such Payment Date over (ii) the
aggregate Class Principal Balance of the Class 1A-1 Notes and Class
1A-2
Notes for the immediately preceding Note Payment Date, after giving
effect
to payments on such Note Payment Date (or as of the closing date
in the
case of the first Payment Date).
|
|
3.
If the aggregate Class Principal Balance of the Class 1A, Class 1M
and
Class 1B Notes for the immediately preceding Note Payment Date, after
giving effect to payments on such Note Payment Date (or as of the
closing
date in the case of the first Payment Date) is greater than or equal
to
the Upper Bound for such Payment Date, the Notional amount will be
excess,
if any, of (i) the Upper Bound for such Payment Date over (ii) the
aggregate Class Principal Balance of the Class 1A-1 Notes and Class
1A-2
Notes for the immediately preceding Note Payment Date, after giving
effect
to payments on such Note Payment Date (or as of the closing date
in the
case of the first Payment Date).
|
Trade
Date: 06
April
2006
Effective
Date: 28
April
2006
|
Termination
Date:
|
25
October 2009, subject to adjustment in accordance with the Following
Business Day Convention
|
Fixed
Amounts:
Fixed
Rate Payer: Counterparty
Fixed
Rate Payer
Period
End Dates: The
25th
calendar
day of each month, commencing on 25 May 2006, subject to No
Adjustment.
Fixed
Rate Payer Payment
Dates: One
Business Day prior to Fixed Rate Payer Period End Date.
Fixed
Rate: 5.40
%
per annum
Fixed
Rate
Day
Count
Fraction: 30/360
Floating
Amounts:
Floating
Rate Payer: CSi
Floating
Rate Payer
Period
End
Dates:
The
25th
calendar
day of each month commencing on 25 May 2006, subject to adjustment in accordance
with the Following Business Day Convention.
Floating
Rate Payer
Payment
Dates:
One
Business Day prior to the Fixed Rate Payer Period End Date.
|
Floating
Rate Option:
|
USD-LIBOR-BBA
|
Floating
Rate
Day
Count
Fraction: Actual/360
|
Reset
Dates:
|
The
first day of each Calculation Period
|
Compounding:
Inapplicable
Business
Day: New
York
Calculation
Agent:
CSi
|
3.
|
Account
Details:
|
Payments
to
CSi:
As
advised separately in writing
Payments
to
Counterparty:
U.S.
Bank
National Association
ABA:
000000000
DDA:
173103322058
Ref:
ABSC HEMT 2006-2
Attn:
Xxxx Xxxxxxxxx
4. Calculation
of Market Quotation or Loss following a designation of an Early Termination
Date:
Upon
designation of an Early Termination Date with respect to this Transaction,
the
relevant party in calculating the Market Quotation or Loss, as appropriate,
for
this Transaction shall take into account the anticipated amortization of the
Aggregate Class Principal of the Notes for all Calculation Periods that would
otherwise have ended on Period End Dates that would otherwise have fallen after
such Early Termination Date.
For
the
purpose of facilitating this Transaction, an Affiliate of CSi, which is
organized in the United States of America (the “Agent”), has acted as agent for
CSi. The Agent is not a principal with respect to this Transaction and shall
have no responsibility or liability to the parties as a principal with respect
to this Transaction.
Credit
Suisse International is authorized and regulated by the Financial Services
Authority and has entered into this transaction as principal. The time at which
the above transaction was executed will be notified to Counterparty on
request.
ADDITIONAL
TERMS
|
Payment
Date
|
Lower
Bound
|
Upper
Bound
|
|
May-06
|
343,000,000
|
343,000,000
|
|
Jun-06
|
327,530,000
|
336,175,000
|
|
Jul-06
|
311,675,000
|
329,000,000
|
|
Aug-06
|
295,365,000
|
321,475,000
|
|
Sep-06
|
278,670,000
|
313,600,000
|
|
Oct-06
|
261,660,000
|
305,410,000
|
|
Nov-06
|
244,405,000
|
296,905,000
|
|
Dec-06
|
226,975,000
|
288,085,000
|
|
Jan-07
|
209,440,000
|
279,055,000
|
|
Feb-07
|
193,235,000
|
270,235,000
|
|
Mar-07
|
178,185,000
|
261,660,000
|
|
Apr-07
|
164,255,000
|
253,330,000
|
|
May-07
|
151,375,000
|
245,245,000
|
|
Jun-07
|
139,405,000
|
237,370,000
|
|
Jul-07
|
128,380,000
|
229,705,000
|
|
Aug-07
|
118,125,000
|
222,250,000
|
|
Sep-07
|
108,640,000
|
215,005,000
|
|
Oct-07
|
99,890,000
|
207,970,000
|
|
Nov-07
|
91,770,000
|
201,145,000
|
|
Dec-07
|
84,245,000
|
194,495,000
|
|
Jan-08
|
77,280,000
|
188,055,000
|
|
Feb-08
|
70,875,000
|
181,790,000
|
|
Mar-08
|
64,925,000
|
175,700,000
|
|
Apr-08
|
59,395,000
|
169,820,000
|
|
May-08
|
54,320,000
|
164,080,000
|
|
Jun-08
|
49,630,000
|
158,515,000
|
|
Jul-08
|
45,290,000
|
153,125,000
|
|
Aug-08
|
41,265,000
|
147,875,000
|
|
Sep-08
|
37,555,000
|
142,800,000
|
|
Oct-08
|
34,125,000
|
137,865,000
|
|
Nov-08
|
30,940,000
|
133,105,000
|
|
Dec-08
|
28,000,000
|
128,485,000
|
|
Jan-09
|
0
|
124,005,000
|
|
Feb-09
|
0
|
119,665,000
|
|
Mar-09
|
0
|
115,465,000
|
|
Apr-09
|
0
|
111,440,000
|
|
Payment
Date
|
Lower
Bound
|
Upper
Bound
|
|
May-09
|
0
|
107,520,000
|
|
Jun-09
|
0
|
103,705,000
|
|
Jul-09
|
0
|
100,065,000
|
|
Aug-09
|
0
|
96,495,000
|
|
Sep-09
|
0
|
93,100,000
|
|
Oct-09
|
0
|
89,775,000
|
Please
confirm that the foregoing correctly sets forth the terms of our agreement
by
signing and returning this Confirmation.
Yours
faithfully,
Credit
Suisse International
By:______________________________
Name:
Title:
Confirmed
as of the date first written above:
U.S.
Bank
National Association, not individually, but
solely
as
indenture trustee on behalf of The Home Equity
Mortgage
Trust 2006-2, Asset Backed-Notes, Series 2006-2
By:________________________________
Name:
Title:
Our
Reference No: External ID: 0000000X0 / Risk ID: 560960093
EXHIBIT
H
[RESERVED]
EXHIBIT
I
[RESERVED]
EXHIBIT
J
FORM
OF ISDA MASTER AGREEMENT
ISDAÒ
International
Swap Dealers Association, Inc.
MASTER
AGREEMENT
dated
as
of April 28, 2006
|
CREDIT
SUISSE INTERNATIONAL
(“Party
A”)
|
And
|
U.S.
BANK NATIONAL ASSOCIATION, NOT INDIVIDUALLY, BUT SOLELY AS INDENTURE
TRUSTEE ON BEHALF OF THE HOME EQUITY MORTGAGE TRUST 2006-2, ASSET-BACKED
NOTES, SERIES 2006-2
("Party
B")
|
have
entered and/or anticipate entering into one or more transactions (each a
“Transaction”) that are or will
be
governed by this Master Agreement, which includes the schedule (the “Schedule”),
and the documents
and
other
confirming evidence (each a “Confirmation”) exchanged between the parties
confirming those Transactions.
Accordingly,
the parties agree as follows:—
1. Interpretation
(a) Definitions.
The
terms defined in Section 14 and in the Schedule will have the meanings therein
specified for the purpose of this Master Agreement.
(b) Inconsistency.
In the
event of any inconsistency between the provisions of the Schedule and the other
provisions of this Master Agreement, the Schedule will prevail. In the event
of
any inconsistency between the provisions of any Confirmation and this Master
Agreement (including the Schedule), such Confirmation will prevail for the
purpose of the relevant Transaction.
(c) Single
Agreement.
All
Transactions are entered into in reliance on the fact that this Master Agreement
and all Confirmations form a single agreement between the parties (collectively
referred to as
this
“Agreement”), and the parties would not otherwise enter into any
Transactions.
2. Obligations
(a) General
Conditions.
(i) Each
party will make each payment or delivery specified in each Confirmation to
be
made by it, subject to the other provisions
of this
Agreement.
(ii) Payments
under this Agreement will be made on the due date for value on that date in
the
place
of
the
account specified in the relevant Confirmation or otherwise pursuant to this
Agreement, in freely transferable funds and in the manner customary for payments
in the required currency. Where
settlement is by delivery (that is, other than by payment), such delivery will
be made for
receipt
on the due date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each
obligation of each party under Section 2(a)(i) is subject to (1) the condition
precedent
that
no
Event of Default or Potential Event of Default with respect to the other party
has occurred
and
is
continuing, (2) the condition precedent that no Early Termination Date in
respect of the relevant Transaction has occurred or been effectively designated
and (3) each other applicable condition precedent specified in this
Agreement.
(b) Change
of Account.
Either
party may change its account for receiving a payment or delivery by giving
notice to the other party at least five Local Business Days prior to the
scheduled date for the payment or delivery to which such change applies unless
such other party gives timely notice of a reasonable objection to such
change.
(c) Netting.
If on
any date amounts would otherwise be payable:—
(i) in
the
same currency; and
(ii) in
respect of the same Transaction,
by
each
party to the other, then, on such date, each party’s obligation to make payment
of any such amount will be automatically satisfied and discharged and, if the
aggregate amount that would otherwise have been payable by one party exceeds
the
aggregate amount that would otherwise have been payable by the other party,
replaced by an obligation upon the party by whom the larger aggregate amount
would have been payable to pay to the other party the excess of the larger
aggregate amount over the smaller aggregate amount.
The
parties may elect in respect of two or more Transactions that a net amount
will
be determined in respect of all amounts payable on the same date in the same
currency in respect of such Transactions, regardless of whether such amounts
are
payable in respect of the same Transaction. The election may be made in the
Schedule or a Confirmation by specifying that subparagraph (ii) above will
not
apply to the Transactions identified as being subject to the election, together
with the starting date (in which case subparagraph (ii) above will not, or
will
cease to, apply to such Transactions from such date). This election may be
made
separately for different groups of Transactions and will apply separately to
each pairing of Offices through which the parties make and receive payments
or
deliveries.
(d) Deduction
or Withholding for Tax.
(i) Gross-Up.
All
payments under this Agreement will be made without any deduction or withholding
for or on account of any Tax unless such deduction or withholding is required
by
any applicable law, as modified by the practice of any relevant governmental
revenue authority, then in effect. If a party is so required to deduct or
withhold, then that party (“X”) will:—
(1) promptly
notify the other party (“Y”) of such requirement;
(2) pay
to
the relevant authorities the full amount required to be deducted or withheld
(including the full amount required to be deducted or withheld from any
additional amount paid by X to Y under this Section 2(d)) promptly upon the
earlier of determining that such deduction or withholding is required or
receiving notice that such amount has been assessed against Y;
(3) promptly
forward to Y an official receipt (or a certified copy), or other documentation
reasonably acceptable to Y, evidencing such payment to such authorities;
and
(4) if
such
Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which
Y is
otherwise
entitled under this Agreement, such additional amount as is necessary to
ensure that
the
net
amount actually received by Y (free and clear of Indemnifiable Taxes, whether
assessed against X or Y) will equal the full amount Y would have received had
no
such deduction or withholding been required. However, X will not be required
to
pay any additional amount to Y
to
the
extent that it would not be required to be paid but for:—
(A) the
failure by Y to comply with or perform any agreement contained in
Section
4(a)(i), 4(a)(iii) or 4(d); or
(B) the
failure of a representation made by Y pursuant to Section 3(f) to be accurate
and true unless such failure would not have occurred but for (I) any action
taken by a taxing authority, or brought in a court of competent jurisdiction,
on
or after the date on which a Transaction is entered into (regardless of whether
such action is taken or brought with respect to a party to this Agreement)
or
(II) a Change in Tax Law.
(ii) Liability.
If:—
(1) X
is
required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, to make any deduction or withholding in respect
of which X would not be required to pay an additional amount to Y under Section
2(d)(i)(4);
(2) X
does
not so deduct or withhold; and
(3) a
liability resulting from such Tax is assessed directly against X,
then,
except to the extent Y has satisfied or then satisfies the liability resulting
from such Tax, Y will promptly pay to X the amount of such liability (including
any related liability for interest, but including any related liability for
penalties only if Y has failed to comply with or perform any agreement contained
in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default
Interest; Other Amounts.
Prior
to the occurrence or effective designation of an Early Termination Date in
respect of the relevant Transaction, a party that defaults in the performance
of
any payment obligation will, to the extent permitted by law and subject to
Section 6(c), be required to pay interest (before as well as after judgment)
on
the overdue amount to the other party on demand in the same currency as such
overdue amount, for the period from (and including) the original due date for
payment to (but excluding) the date of actual payment, at the Default Rate.
Such
interest will be calculated on the basis of daily compounding and the actual
number of days elapsed. If, prior to the occurrence or effective designation
of
an Early Termination Date in respect of the relevant Transaction, a party
defaults in the performance of any obligation required to be settled by
delivery, it will compensate the other party on demand if and to the extent
provided for in the relevant Confirmation or elsewhere in this
Agreement.
3. Representations
Each
party represents to the other party (which representations will be deemed to
be
repeated by each party on each date on which a Transaction is entered into
and,
in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:—
(a) Basic
Representations.
(i) Status.
It is
duly organised and validly existing under the laws of the jurisdiction of its
organisation or incorporation and, if relevant under such laws, in good
standing;
(ii) Powers.
It has
the power to execute this Agreement and any other documentation relating to
this
Agreement to which it is a party, to deliver this Agreement and any other
documentation relating to this Agreement that it is required by this Agreement
to deliver and to perform its obligations under this Agreement and any
obligations it has under any Credit Support Document to which it is a party
and
has taken all necessary action to authorise such execution, delivery and
performance;
(iii) No
Violation or Conflict.
Such
execution, delivery and performance do not violate or conflict with any law
applicable to it, any provision of its constitutional documents, any order
or
judgment of any court or other agency of government applicable to it or any
of
its assets or any contractual restriction binding on or affecting it or any
of
its assets;
(iv) Consents.
All
governmental and other consents that are required to have been obtained by
it
with respect to this Agreement or any Credit Support Document to which it is
a
party have been obtained and are in full force and effect and all conditions
of
any such consents have been complied with; and
(v) Obligations
Binding.
Its
obligations under this Agreement and any Credit Support Document to which it
is
a party constitute its legal, valid and binding obligations, enforceable in
accordance with their respective terms (subject to applicable bankruptcy,
reorganisation, insolvency, moratorium or similar laws affecting creditors’
rights generally and subject, as to enforceability, to equitable principles
of
general application (regardless of whether enforcement is sought in a proceeding
in equity or at law)).
(b) Absence
of Certain Events.
No
Event of Default or Potential Event of Default or, to its knowledge, Termination
Event with respect to it has occurred and is continuing and no such event or
circumstance would occur as a result of its entering into or performing its
obligations under this Agreement or any Credit Support Document to which it
is a
party.
(c) Absence
of Litigation.
There
is not pending or, to its knowledge, threatened against it or any of its
Affiliates any action, suit or proceeding at law or in equity or before any
court, tribunal, governmental body, agency or official or any arbitrator that
is
likely to affect the legality, validity or enforceability against it of this
Agreement or any Credit Support Document to which it is a party or its ability
to perform its obligations under this Agreement or such Credit Support
Document.
(d) Accuracy
of Specified Information.
All
applicable information that is furnished in writing by or on behalf of it to
the
other party and is identified for the purpose of this Section 3(d) in the
Schedule is, as of the date of the information, true, accurate and complete
in
every material respect.
(e) Payer
Tax Representation.
Each
representation specified in the Schedule as being made by it for the purpose
of
this Section 3(e) is accurate and true.
(f) Payee
Tax Representations.
Each
representation specified in the Schedule as being made by it for the purpose
of
this Section 3(f) is accurate and true.
4. Agreements
Each
party agrees with the other that, so long as either party has or may have any
obligation under this Agreement or under any Credit Support Document to which
it
is a party:—
(a) Furnish
Specified Information.
It will
deliver to the other party or, in certain cases under subparagraph (iii) below,
to such government or taxing authority as the other party reasonably
directs:
(i) any
forms, documents or certificates relating to taxation specified in the Schedule
or any Confirmation;
(ii) any
other
documents specified in the Schedule or any Confirmation; and
(iii) upon
reasonable demand by such other party, any form or document that may be required
or reasonably requested in writing in order to allow such other party or its
Credit Support Provider to make a payment under this Agreement or any applicable
Credit Support Document without any deduction or withholding for or on account
of any Tax or with such deduction or withholding at a reduced rate (so long
as
the completion, execution or submission of such form or document would not
materially prejudice the legal or commercial position of the party in receipt
of
such demand), with any such form or document to be accurate and completed in
a
manner reasonably satisfactory to such other party and to be executed and to
be
delivered with any reasonably required certification,
in
each
case by the date specified in the Schedule or such Confirmation or, if none
is
specified, as soon as reasonably practicable.
(b) Maintain
Authorisations.
It will
use all reasonable efforts to maintain in full force and effect all consents
of
any governmental or other authority that are required to be obtained by it
with
respect to this Agreement or any Credit Support Document to which it is a party
and will use all reasonable efforts to obtain any that may become necessary
in
the future.
(c) Comply
with Laws.
It will
comply in all material respects with all applicable laws and orders to which
it
may be subject if failure so to comply would materially impair its ability
to
perform its obligations under this Agreement or any Credit Support Document
to
which it is a party.
(d) Tax
Agreement.
It will
give notice of any failure of a representation made by it under Section 3(f)
to
be accurate and true promptly upon learning of such failure.
(e) Payment
of Stamp Tax.
Subject
to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect
of its execution or performance of this Agreement by a jurisdiction in which
it
is incorporated, organised, managed and controlled, or considered to have its
seat, or in which a branch or office through which it is acting for the purpose
of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify the
other party against any Stamp Tax levied or imposed upon the other party or
in
respect of the other party’s execution or performance of this Agreement by any
such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with
respect to the other party.
5. Events
of Default and Termination Events
(a) Events
of Default.
The
occurrence at any time with respect to a party or, if applicable, any Credit
Support Provider of such party or any Specified Entity of such party of any
of
the following events constitutes an event of default (an “Event of Default”)
with respect to such party:—
(i) Failure
to Pay or Deliver.
Failure
by the party to make, when due, any payment under this Agreement or delivery
under Section 2(a)(i) or 2(e) required to be made by it if such failure is
not
remedied on or before the third Local Business Day after notice of such failure
is given to the party;
(ii) Breach
of Agreement.
Failure
by the party to comply with or perform any agreement or obligation (other than
an obligation to make any payment under this Agreement or delivery under Section
2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or
performed by the party in accordance with this Agreement if such failure is
not
remedied on or before the thirtieth day after notice of such failure is given
to
the party;
(iii) Credit
Support Default.
(1) Failure
by the party or any Credit Support Provider of such party to comply with or
perform any agreement or obligation to be complied with or performed by it
in
accordance with any Credit Support Document if such failure is continuing after
any applicable grace period has elapsed;
(2) the
expiration or termination of such Credit Support Document or the failing or
ceasing of such Credit Support Document to be in full force and effect for
the
purpose of this Agreement (in either case other than in accordance with its
terms) prior to the satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without the written
consent of the other party; or
(3) the
party
or such Credit Support Provider disaffirms, disclaims, repudiates or rejects,
in
whole or in part, or challenges the validity of, such Credit Support
Document;
(iv) Misrepresentation.
A
representation (other than a representation under Section 3(e) or (f)) made
or
repeated or deemed to have been made or repeated by the party or any Credit
Support Provider of such party in this Agreement or any Credit Support Document
proves to have been incorrect or misleading in any material respect when made
or
repeated or deemed to have been made or repeated;
(v) Default
under Specified Transaction.
The
party, any Credit Support Provider of such party or any applicable Specified
Entity of such party (1) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period, there occurs
a liquidation of, an acceleration of obligations under, or an early termination
of, that Specified Transaction, (2) defaults, after giving effect to any
applicable notice requirement or grace period, in making any payment or delivery
due on the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at least
three Local Business Days if there is no applicable notice requirement or grace
period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in
part, a Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) Cross
Default.
If
“Cross Default” is specified in the Schedule as applying to the party, the
occurrence or existence of (1) a default, event of default or other similar
condition or event (however
described)
in respect of such party, any Credit Support Provider of such party or any
applicable Specified Entity of such party under one or more agreements or
instruments relating to Specified Indebtedness of any of them (individually
or
collectively) in an aggregate amount of not less than the applicable Threshold
Amount (as specified in the Schedule) which has resulted in such Specified
Indebtedness becoming, or becoming capable at such time of being declared,
due
and payable under such agreements or instruments, before it would otherwise
have
been due and payable or (2) a default by such party, such Credit Support
Provider or such Specified Entity (individually or collectively) in making
one
or more payments on the due date thereof in an aggregate amount of not less
than
the applicable Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace
period);
(vii) Bankruptcy.
The
party, any Credit Support Provider of such party or any applicable Specified
Entity of such party:—
(1) is
dissolved (other than pursuant to a consolidation, amalgamation or merger);
(2)
becomes insolvent or is unable to pay its debts or fails or admits in writing
its inability generally to pay its debts as they become due; (3) makes a general
assignment, arrangement or composition with or for the benefit of its creditors;
(4) institutes or has instituted against it a proceeding seeking a judgment
of
insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors’ rights, or a petition is presented
for its winding-up or liquidation, and, in the case of any such proceeding
or
petition instituted or presented against it, such proceeding or petition (A)
results in a judgment of insolvency or bankruptcy or the entry of an order
for
relief or the making of an order for its winding-up or liquidation or (B) is
not
dismissed, discharged, stayed or restrained in each case within 30 days of
the
institution or presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject to the
appointment of an administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or substantially
all its assets; (7) has a secured party take possession of all or substantially
all its assets or has a distress, execution, attachment, sequestration or other
legal process levied, enforced or sued on or against all or substantially all
its assets and such secured party maintains possession, or any such process
is
not dismissed, discharged, stayed or restrained, in each case within 30 days
thereafter; (8) causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an analogous effect to any
of
the events specified in clauses (1) to (7) (inclusive); or (9) takes any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the foregoing acts; or
(viii) Merger
Without Assumption.
The
party or any Credit Support Provider of such party consolidates or amalgamates
with, or merges with or into, or transfers all or substantially all its assets
to, another entity and, at the time of such consolidation, amalgamation, merger
or transfer:—
(1) the
resulting, surviving or transferee entity fails to assume all the obligations
of
such party or such Credit Support Provider under this Agreement or any Credit
Support Document to which it or its predecessor was a party by operation of
law
or pursuant to an agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the
benefits of any Credit Support Document fail to extend (without the consent
of
the other party) to the performance by such resulting, surviving or transferee
entity of its obligations under this Agreement.
(b) Termination
Events.
The
occurrence at any time with respect to a party or, if applicable, any Credit
Support Provider of such party or any Specified Entity of such party of any
event specified below constitutes an Illegality if the event is specified in
(i)
below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon
Merger if the event is specified in (iii) below, and, if specified to be
applicable, a Credit Event
Upon
Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:—
(i) Illegality.
Due to
the adoption of, or any change in, any applicable law after the date on which
a
Transaction is entered into, or due to the promulgation of, or any change in,
the interpretation by any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after such date, it becomes unlawful (other
than as a result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party):—
(1) to
perform any absolute or contingent obligation to make a payment or delivery
or
to receive a payment or delivery in respect of such Transaction or to comply
with any other material provision of this Agreement relating to such
Transaction; or
(2) to
perform, or for any Credit Support Provider of such party to perform, any
contingent or other obligation which the party (or such Credit Support Provider)
has under any Credit Support Document relating to such Transaction;
(ii) Tax
Event.
Due to
(x) any action taken by a taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with respect to a party
to this Agreement) or (y) a Change in Tax Law, the party (which will be the
Affected Party) will, or there is a substantial likelihood that it will, on
the
next succeeding Scheduled Payment Date (1) be required to pay to the other
party
an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4)
(except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2)
receive a payment from which an amount is required to be deducted or withheld
for or on account of a Tax (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect
of
such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
or (B));
(iii) Tax
Event Upon Merger.
The
party (the “Burdened Party”) on the next succeeding Scheduled Payment Date will
either (1) be required to pay an additional amount in respect of an
Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under
Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
has been deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional amount
(other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a
result of a party consolidating or amalgamating with, or merging with or into,
or transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit
Event Upon Merger.
If
“Credit Event Upon Merger” is specified in the Schedule as applying to the
party, such party (“X”), any Credit Support Provider of X or any applicable
Specified Entity of X consolidates or amalgamates with, or merges with or into,
or transfers all or substantially all its assets to, another entity and such
action does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is materially
weaker than that of X, such Credit Support Provider or such Specified Entity,
as
the case may be, immediately prior to such action (and, in such event, X or
its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) Additional
Termination Event.
If any
“Additional Termination Event” is specified in the Schedule or any Confirmation
as applying, the occurrence of such event (and, in such event, the Affected
Party or Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) Event
of Default and Illegality.
If an
event or circumstance which would otherwise constitute or give rise to an Event
of Default also constitutes an Illegality, it will be treated as an Illegality
and will not constitute an Event of Default.
6. Early
Termination
(a) Right
to Terminate Following Event of Default.
If at
any time an Event of Default with respect to a party (the “Defaulting Party”)
has occurred and is then continuing, the other party (the “Non-defaulting
Party”) may, by not more than 20 days notice to the Defaulting Party specifying
the relevant Event of Default, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all outstanding
Transactions. If, however, “Automatic Early Termination” is specified in the
Schedule as applying to a party, then an Early Termination Date in respect
of
all outstanding Transactions will occur immediately upon the occurrence with
respect to such party of an Event of Default specified in Section 5(a)(vii)(1),
(3), (5), (6) or, to the extent analogous thereto, (8), and as of the time
immediately preceding the institution of the relevant proceeding or the
presentation of the relevant petition upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent
analogous thereto, (8).
(b) Right
to Terminate Following Termination Event.
(i) Notice.
If a
Termination Event occurs, an Affected Party will, promptly upon becoming aware
of it, notify the other party, specifying the nature of that Termination Event
and each Affected Transaction and will also give such other information about
that Termination Event as the other party may reasonably require.
(ii) Transfer
to Avoid Termination Event.
If
either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there
is
only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition to its
right to designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss, excluding
immaterial, incidental expenses) to transfer within 20 days after it gives
notice under Section 6(b)(i) all its rights and obligations under this Agreement
in respect of the Affected Transactions to another of its Offices or Affiliates
so that such Termination Event ceases to exist.
If
the
Affected Party is not able to make such a transfer it will give notice to the
other party to that effect within such 20 day period, whereupon the other party
may effect such a transfer within 30 days after the notice is given under
Section 6(b)(i).
Any
such
transfer by a party under this Section 6(b)(ii) will be subject to and
conditional upon the prior written consent of the other party, which consent
will not be withheld if such other party’s policies in effect at such time would
permit it to enter into transactions with the transferee on the terms
proposed.
(iii) Two
Affected Parties.
If an
Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two
Affected Parties, each party will use all reasonable efforts to reach agreement
within 30 days after notice thereof is given under Section 6(b)(i) on action
to
avoid that Termination Event.
(iv) Right
to Terminate.
If:—
(1) a
transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as
the case may be, has not been effected with respect to all Affected Transactions
within 30 days after an Affected Party gives notice under Section 6(b)(i);
or
(2) an
Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional
Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened
Party is not the Affected Party,
either
party in the case of an Illegality, the Burdened Party in the case of a Tax
Event Upon Merger, any Affected Party in the case of a Tax Event or an
Additional Termination Event if there is more than one Affected Party, or the
party which is not the Affected Party in the case of a Credit Event Upon Merger
or an Additional Termination Event if there is only one Affected Party may,
by
not
more
than
20 days notice to the other party and provided that the relevant Termination
Event is then
continuing,
designate a day not earlier than the day such notice is effective as an Early
Termination Date in respect of all Affected Transactions.
(c) Effect
of Designation.
(i) If
notice
designating an Early Termination Date is given under Section 6(a) or (b),
the Early Termination Date will occur on the date so designated, whether or
not
the relevant Event of Default or Termination Event is then
continuing.
(ii) Upon
the
occurrence or effective designation of an Early Termination Date, no further
payments or deliveries under Section 2(a)(i) or 2(e) in respect of the
Terminated Transactions will be required to be made, but without prejudice
to
the other provisions of this Agreement. The amount, if any, payable in respect
of an Early Termination Date shall be determined pursuant to Section
6(e).
(d) Calculations.
(i) Statement.
On or
as soon as reasonably practicable following the occurrence of an Early
Termination Date, each party will make the calculations on its part, if any,
contemplated by Section 6(e) and will provide to the other party a statement
(1)
showing, in reasonable detail, such calculations (including all relevant
quotations and specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to be
paid.
In the absence of written confirmation from the source of a quotation obtained
in determining a Market Quotation, the records of the party obtaining such
quotation will be conclusive evidence of the existence and accuracy of such
quotation.
(ii) Payment
Date.
An
amount calculated as being due in respect of any Early Termination Date under
Section 6(e) will be payable on the day that notice of the amount payable is
effective (in the case of an Early Termination Date which is designated or
occurs as a result of an Event of Default) and on the day which is two Local
Business Days after the day on which notice of the amount payable is effective
(in the case of an Early Termination Date which is designated as a result of
a
Termination Event). Such amount will be paid together with (to the extent
permitted under applicable law) interest thereon (before as well as after
judgment) in the Termination Currency, from (and including) the relevant Early
Termination Date to (but excluding) the date such amount is paid, at the
Applicable Rate. Such interest will be calculated on the basis of daily
compounding and the actual number of days elapsed.
(e) Payments
on Early Termination.
If an
Early Termination Date occurs, the following provisions shall apply based on
the
parties’ election in the Schedule of a payment measure, either “Market
Quotation” or “Loss”, and a payment method, either the “First Method” or the
“Second Method”. If the parties fail to designate a payment measure or payment
method in the Schedule, it will be deemed that “Market Quotation” or the “Second
Method”, as the case may be, shall apply. The amount, if any, payable in respect
of an Early Termination Date and determined pursuant to this Section will be
subject to any Set-off.
(i) Events
of Default.
If the
Early Termination Date results from an Event of Default:—
(1) First
Method and Market Quotation.
If the
First Method and Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the sum of the
Settlement Amount (determined by the Non-defaulting Party) in respect of the
Terminated Transactions and the Termination Currency Equivalent of the Unpaid
Amounts owing to the Non-defaulting Party over (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party.
(2) First
Method and Loss.
If the
First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting
Party, if a positive number, the Non-defaulting Party’s Loss in respect of this
Agreement.
(3) Second
Method and Market Quotation.
If the
Second Method and Market Quotation apply, an amount will be payable equal to
(A)
the sum of the Settlement Amount (determined by
the
Non-defaulting
Party) in respect of the Terminated Transactions and the Termination Currency
Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B)
the
Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting
Party. If that amount is a positive number, the Defaulting Party will pay it
to
the Non-defaulting Party; if it is a negative number, the Non-defaulting Party
will pay the absolute value of that amount to the Defaulting Party.
(4) Second
Method and Loss.
If the
Second Method and Loss apply, an amount will be payable equal to the
Non-defaulting Party’s Loss in respect of this Agreement. If that amount is a
positive number, the Defaulting Party will pay it to the Non-defaulting Party;
if it is a negative number, the Non-defaulting Party will pay the absolute
value
of that amount to the Defaulting Party.
(ii) Termination
Events.
If the
Early Termination Date results from a Termination Event:—
(1) One
Affected Party.
If
there is one Affected Party, the amount payable will be determined in accordance
with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if
Loss applies, except that, in either case, references to the Defaulting Party
and to the Non-defaulting Party will be deemed to be references to the Affected
Party and the party which is not the Affected Party, respectively, and, if
Loss
applies and fewer than all the Transactions are being terminated, Loss shall
be
calculated in respect of all Terminated Transactions.
(2) Two
Affected Parties.
If
there are two Affected Parties:—
(A) if
Market
Quotation applies, each party will determine a Settlement Amount in respect
of
the Terminated Transactions, and an amount will be payable equal to (I) the
sum
of (a) one-half of the difference between the Settlement Amount of the party
with the higher Settlement Amount (“X”) and the Settlement Amount of the party
with the lower Settlement Amount (“Y”) and (b) the Termination Currency
Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency
Equivalent of the Unpaid Amounts owing to Y; and
(B) if
Loss
applies, each party will determine its Loss in respect of this Agreement (or,
if
fewer than all the Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal to one-half of
the
difference between the Loss of the party with the higher Loss (“X”) and the Loss
of the party with the lower Loss (“Y”).
If
the
amount payable is a positive number, Y will pay it to X; if it is a negative
number, X will pay the absolute value of that amount to Y.
(iii) Adjustment
for Bankruptcy.
In
circumstances where an Early Termination Date occurs because “Automatic Early
Termination” applies in respect of a party, the amount determined under this
Section 6(e) will be subject to such adjustments as are appropriate and
permitted by law to reflect any payments or deliveries made by one party to
the
other under this Agreement (and retained by such other party) during the period
from the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) Pre-Estimate.
The
parties agree that if Market Quotation applies an amount recoverable under
this
Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount
is payable for the loss of bargain and the loss of protection against future
risks and except as otherwise provided in this Agreement neither party will
be
entitled to recover any additional damages as a consequence of such
losses.
7. Transfer
Subject
to Section 6(b)(ii), neither this Agreement nor any interest or obligation
in or
under this Agreement may be transferred (whether by way of security or
otherwise) by either party without the prior written consent of the other party,
except that:—
(a) a
party
may make such a transfer of this Agreement pursuant to a consolidation or
amalgamation with, or merger with or into, or transfer of all or substantially
all its assets to, another entity (but without prejudice to any other right
or
remedy under this Agreement); and
(b) a
party
may make such a transfer of all or any part of its interest in any amount
payable to it from a Defaulting Party under Section 6(e).
Any
purported transfer that is not in compliance with this Section will be
void.
8. Contractual
Currency
(a) Payment
in the Contractual Currency.
Each
payment under this Agreement will be made in the relevant currency specified
in
this Agreement for that payment (the “Contractual Currency”). To the extent
permitted by applicable law, any obligation to make payments under this
Agreement in the Contractual Currency will not be discharged or satisfied by any
tender in any currency other than the Contractual Currency, except to the extent
such tender results in the actual receipt by the party to which payment is
owed,
acting in a reasonable manner and in good faith in converting the currency
so
tendered into the Contractual Currency, of the full amount in the Contractual
Currency of all amounts payable in respect of this Agreement. If for any reason
the amount in the Contractual Currency so received falls short of the amount
in
the Contractual Currency payable in respect of this Agreement, the party
required to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in
the
Contractual Currency so received exceeds the amount in the Contractual Currency
payable in respect of this Agreement, the party receiving the payment will
refund promptly the amount of such excess.
(b) Judgments.
To the
extent permitted by applicable law, if any judgment or order expressed in a
currency other than the Contractual Currency is rendered (i) for the payment
of
any amount owing in respect of this Agreement, (ii) for the payment of any
amount relating to any early termination in respect of this Agreement or (iii)
in respect of a judgment or order of another court for the payment of any amount
described in (i) or (ii) above, the party seeking recovery, after recovery
in
full of the aggregate amount to which such party is entitled pursuant to the
judgment or order, will be entitled to receive immediately from the other party
the amount of any shortfall of the Contractual Currency received by such party
as a consequence of sums paid in such other currency and will refund promptly
to
the other party any excess of the Contractual Currency received by such party
as
a consequence of sums paid in such other currency if such shortfall or such
excess arises or results from any variation between the rate of exchange at
which the Contractual Currency is converted into the currency of the judgment
or
order for the purposes of such judgment or order and the rate of exchange at
which such party is able, acting in a reasonable manner and in good faith in
converting the currency received into the Contractual Currency, to purchase
the
Contractual Currency with the amount of the currency of the judgment or order
actually received by such party. The term “rate of exchange” includes, without
limitation, any premiums and costs of exchange payable in connection with the
purchase of or conversion into the Contractual Currency.
(c) Separate
Indemnities.
To the
extent permitted by applicable law, these indemnities constitute separate and
independent obligations from the other obligations in this Agreement, will
be
enforceable as separate and independent causes of action, will apply
notwithstanding any indulgence granted by the party to which any payment is
owed
and will not be affected by judgment being obtained or claim or proof being
made
for any other sums payable in respect of this Agreement.
(d) Evidence
of Loss.
For the
purpose of this Section 8, it will be sufficient for a party to demonstrate
that
it would have suffered a loss had an actual exchange or purchase been
made.
9. Miscellaneous
(a) Entire
Agreement.
This
Agreement constitutes the entire agreement and understanding of the parties
with
respect to its subject matter and supersedes all oral communication and prior
writings with respect thereto.
(b) Amendments.
No
amendment, modification or waiver in respect of this Agreement will be effective
unless in writing (including a writing evidenced by a facsimile transmission)
and executed by each of the parties or confirmed by an exchange of telexes
or
electronic messages on an electronic messaging system.
(c) Survival
of Obligations.
Without
prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties
under this Agreement will survive the termination of any
Transaction.
(d) Remedies
Cumulative.
Except
as provided in this Agreement, the rights, powers, remedies and privileges
provided in this Agreement are cumulative and not exclusive of any rights,
powers, remedies and privileges provided by law.
(e) Counterparts
and Confirmations.
(i) This
Agreement (and each amendment, modification and waiver in respect of it) may
be
executed and delivered in counterparts (including by facsimile transmission),
each of which will be deemed an original.
(ii) The
parties intend that they are legally bound by the terms of each Transaction
from
the moment they agree to those terms (whether orally or otherwise). A
Confirmation shall he entered into as soon as practicable and may he executed
and delivered in counterparts (including by facsimile transmission) or be
created by an exchange of telexes or by an exchange of electronic messages
on an
electronic messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The parties will
specify therein or through another effective means that any such counterpart,
telex or electronic message constitutes a Confirmation.
(f) No
Waiver of Rights.
A
failure or delay in exercising any right, power or privilege in respect of
this
Agreement will not be presumed to operate as a waiver, and a single or partial
exercise of any right, power or privilege will not be presumed to preclude
any
subsequent or further exercise, of that right, power or privilege or the
exercise of any other right, power or privilege.
(g) Headings.
The
headings used in this Agreement are for convenience of reference only and are
not to affect the construction of or to be taken into consideration in
interpreting this Agreement.
10. Offices;
Multibranch Parties
(a) If
Section 10(a) is specified in the Schedule as applying, each party that enters
into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through
its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither
party may change the Office through which it makes and receives payments or
deliveries for the purpose of a Transaction without the prior written consent
of
the other party.
(c) If
a
party is specified as a Multibranch Party in the Schedule, such Multibranch
Party may make and receive payments or deliveries under any Transaction through
any Office listed in the Schedule, and the Office through which it makes and
receives payments or deliveries with respect to a Transaction will be specified
in the relevant Confirmation.
11. Expenses
A
Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees
and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
to
which the Defaulting Party is a party or by reason of the early termination
of
any Transaction, including, but not limited to, costs of
collection.
12. Notices
(a) Effectiveness.
Any
notice or other communication in respect of this Agreement may be given in
any
manner set forth below (except that a notice or other communication under
Section 5 or 6 may not be given by facsimile transmission or electronic
messaging system) to the address or number or in accordance with the electronic
messaging system details provided (see the Schedule) and will be deemed
effective as indicated:—
(i) if
in
writing and delivered in person or by courier, on the date it is
delivered;
(ii) if
sent
by xxxxx, on the date the recipient’s answerback is received;
(iii) if
sent
by facsimile transmission, on the date that transmission is received by a
responsible employee of the recipient in legible form (it being agreed that
the
burden of proving receipt will be on the sender and will not be met by a
transmission report generated by the sender’s facsimile machine);
(iv) if
sent
by certified or registered mail (airmail, if overseas) or the equivalent (return
receipt requested), on the date that mail is delivered or its delivery is
attempted; or
(v) if
sent
by electronic messaging system, on the date that electronic message is
received,
unless
the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered
(or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change
of Addresses.
Either
party may by notice to the other change the address, telex or facsimile number
or electronic messaging system details at which notices or other communications
are to be given to it.
13. Governing
Law and Jurisdiction
(a) Governing
Law.
This
Agreement will be governed by and construed in accordance with the law specified
in the Schedule.
(b) Jurisdiction.
With
respect to any suit, action or proceedings relating to this Agreement
(“Proceedings”), each party irrevocably:—
(i) submits
to the jurisdiction of the English courts, if this Agreement is expressed to
be
governed by English law, or to the non-exclusive jurisdiction of the courts
of
the State of New York and the United States District Court located in the
Borough of Manhattan in New York City, if this Agreement is expressed to be
governed by the laws of the State of New York; and
(ii) waives
any objection which it may have at any time to the laying of venue of any
Proceedings brought in any such court, waives any claim that such Proceedings
have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not have any
jurisdiction over such party.
Nothing
in this Agreement precludes either party from bringing Proceedings in any other
jurisdiction (outside, if this Agreement is expressed to be governed by English
law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service
of Process.
Each
party irrevocably appoints the Process Agent (if any) specified opposite its
name in the Schedule to receive, for it and on its behalf, service of process
in
any Proceedings. If for any
reason
any party’s Process Agent is unable to act as such, such party will promptly
notify the other party and within 30 days appoint a substitute process agent
acceptable to the other party. The parties irrevocably consent to service of
process given in the manner provided for notices in Section 12. Nothing in
this
Agreement will affect the right of either party to serve process in any other
manner permitted by law.
(d) Waiver
of Immunities.
Each
party irrevocably waives, to the fullest extent permitted by applicable law,
with respect to itself and its revenues and assets (irrespective of their use
or
intended use), all immunity on the grounds of sovereignty or other similar
grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way
of
injunction, order for specific performance or for recovery of property, (iv)
attachment of its assets (whether before or after judgment) and (v) execution
or
enforcement of any judgment to which it or its revenues or assets might
otherwise be entitled in any Proceedings in the courts of any jurisdiction
and
irrevocably agrees, to the extent permitted by applicable law, that it will
not
claim any such immunity in any Proceedings.
14. Definitions
As
used
in this Agreement:—
“Additional
Termination Event”
has the
meaning specified in Section 5(b).
“Affected
Party”
has the
meaning specified in Section 5(b).
“Affected
Transactions”
means
(a) with respect to any Termination Event consisting of an Illegality, Tax
Event
or Tax Event Upon Merger, all Transactions affected by the occurrence of such
Termination Event and (b) with respect to any other Termination Event, all
Transactions.
“Affiliate”
means,
subject to the Schedule, in relation to any person, any entity controlled,
directly or indirectly, by the person, any entity that controls, directly or
indirectly, the person or any entity directly or indirectly under common control
with the person. For this purpose, “control” of any entity or person means
ownership of a majority of the voting power of the entity or
person.
“Applicable
Rate”
means:—
(a) in
respect of obligations payable or deliverable (or which would have been but
for
Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in
respect of an obligation to pay an amount under Section 6(e) of either party
from and after the date (determined in accordance with Section 6(d)(ii)) on
which that amount is payable, the Default Rate;
(c) in
respect of all other obligations payable or deliverable (or which would have
been but for
Section
2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and
(d) in
all
other cases, the Termination Rate.
“Burdened
Party”
has the
meaning specified in Section 5(b).
“Change
in Tax Law”
means
the enactment, promulgation, execution or ratification of, or any change in
or
amendment to, any law (or in the application or official interpretation of
any
law) that occurs on or after the date on which the relevant Transaction is
entered into.
“consent”
includes
a consent, approval, action, authorisation, exemption, notice, filing,
registration or exchange control consent.
“Credit
Event Upon Merger”
has the
meaning specified in Section 5(b).
“Credit
Support Document”
means
any agreement or instrument that is specified as such in this Agreement.
“Credit
Support Provider”
has the
meaning specified in the Schedule.
“Default
Rate”
means a
rate per annum equal to the cost (without proof or evidence of any actual cost)
to the relevant payee (as certified by it) if it were to fund or of funding
the
relevant amount plus 1% per annum.
“Defaulting
Party”
has the
meaning specified in Section 6(a).
“Early
Termination Date”
means
the date determined in accordance with Section 6(a) or 6(b)(iv).
“Event
of Default”
has the
meaning specified in Section 5(a) and, if applicable, in the
Schedule.
“Illegality”
has the
meaning specified in Section 5(b).
“Indemnifiable
Tax”
means
any Tax other than a Tax that would not be imposed in respect of a payment
under
this Agreement but for a present or former connection between the jurisdiction
of the government or taxation authority imposing such Tax and the recipient
of
such payment or a person related to such recipient (including, without
limitation, a connection arising from such recipient or related person being
or
having been a citizen or resident of such jurisdiction, or being or having
been
organised, present or engaged in a trade or business in such jurisdiction,
or
having or having had a permanent establishment or fixed place of business in
such jurisdiction, but excluding a connection arising solely from such recipient
or related person having executed, delivered, performed its obligations or
received a payment under, or enforced, this Agreement or a Credit Support
Document).
“law”
includes
any treaty, law, rule or regulation (as modified, in the case of tax matters,
by
the practice of any relevant governmental revenue authority) and “lawful” and
“unlawful” will be construed accordingly.
“Local
Business Day”
means,
subject to the Schedule, a day on which commercial banks are open for business
(including dealings in foreign exchange and foreign currency deposits) (a)
in
relation to any obligation under Section 2(a)(i), in the place(s) specified
in
the relevant Confirmation or, if not so specified, as otherwise agreed by the
parties in writing or determined pursuant to provisions contained, or
incorporated by reference, in this Agreement, (b) in relation to any other
payment, in the place where the relevant account is located and, if different,
in the principal financial centre, if any, of the currency of such payment,
(c)
in relation to any notice or other communication, including notice contemplated
under Section 5(a)(i), in the city specified in the address for notice provided
by the recipient and, in the case of a notice contemplated by Section 2(b),
in
the place where the relevant new account is to be located and (d) in relation
to
Section 5(a)(v)(2), in the relevant locations for performance with respect
to
such Specified Transaction.
“Loss”
means,
with respect to this Agreement or one or more Terminated Transactions, as the
case may be, and a party, the Termination Currency Equivalent of an amount
that
party reasonably determines in good faith to be its total losses and costs
(or
gain, in which case expressed as a negative number) in connection with this
Agreement or that Terminated Transaction or group of Terminated Transactions,
as
the case may be, including any loss of bargain, cost of funding or, at the
election of such party but without duplication, loss or cost incurred as a
result of its terminating, liquidating, obtaining or reestablishing any hedge
or
related trading position (or any gain resulting from any of them). Loss includes
losses and costs (or gains) in respect of any payment or delivery required
to
have been made (assuming satisfaction of each applicable condition precedent)
on
or before the relevant Early Termination Date and not made, except, so as to
avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies.
Loss
does not include a party’s legal fees and out-of-pocket expenses referred to
under Section 11. A party will determine its Loss as of the relevant Early
Termination Date, or, if that is not reasonably practicable, as of the earliest
date thereafter as is reasonably practicable. A party may (but need not)
determine its Loss by reference to quotations of relevant rates or prices from
one or more leading dealers in the relevant markets.
“Market
Quotation”
means,
with respect to one or more Terminated Transactions and a party making the
determination, an amount determined on the basis of quotations from Reference
Market-makers. Each quotation will be for an amount, if any, that would be
paid
to such party (expressed as a negative number) or by such party (expressed
as a
positive number) in consideration of an agreement between such party (taking
into account any existing Credit Support Document with respect to the
obligations of such party) and the quoting Reference Market-maker to enter
into
a transaction (the “Replacement Transaction”) that would have the effect of
preserving for such party the economic equivalent of any payment or delivery
(whether the underlying obligation was absolute or contingent and assuming
the
satisfaction of each applicable condition precedent) by the parties under
Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated
Transactions that would, but for the occurrence of the relevant Early
Termination Date, have
been
required after that date. For this purpose, Unpaid Amounts in respect of the
Terminated Transaction or group of Terminated Transactions are to be excluded
but, without limitation, any payment or delivery that would, but for the
relevant Early Termination Date, have been required (assuming satisfaction
of
each applicable condition precedent) after that Early Termination Date is to
be
included. The Replacement Transaction would be subject to such documentation
as
such party and the Reference Market-maker may, in good faith, agree. The party
making the determination (or its agent) will request each Reference Market-maker
to provide its quotation to the extent reasonably practicable as of the same
day
and time (without regard to different time zones) on or as soon as reasonably
practicable after the relevant Early Termination Date. The day and time as
of
which those quotations are to be obtained will be selected in good faith by
the
party obliged to make a determination under Section 6(e), and, if each party
is
so obliged, after consultation with the other. If more than three quotations
are
provided, the Market Quotation will be the arithmetic mean of the quotations,
without regard to the quotations having the highest and lowest values. If
exactly three such quotations are provided, the Market Quotation will be the
quotation remaining after disregarding the highest and lowest quotations. For
this purpose, if more than one quotation has the same highest value or lowest
value, then one of such quotations shall be disregarded. If fewer than three
quotations are provided, it will be deemed that the Market Quotation in respect
of such Terminated Transaction or group of Terminated Transactions cannot be
determined.
“Non-default
Rate”
means a
rate per annum equal to the cost (without proof or evidence of any actual cost)
to the Non-defaulting Party (as certified by it) if it were to fund the relevant
amount.
“Non-defaulting
Party”
has the
meaning specified in Section 6(a).
“Office”
means a
branch or office of a party, which may be such party’s head or home
office.
“Potential
Event of Default”
means
any event which, with the giving of notice or the lapse of time or both, would
constitute an Event of Default.
“Reference
Market-makers”
means
four leading dealers in the relevant market selected by the party determining
a
Market Quotation in good faith (a) from among dealers of the highest credit
standing which satisfy all the criteria that such party applies generally at
the
time in deciding whether to offer or to make an extension of credit and (b)
to
the extent practicable, from among such dealers having an office in the same
city.
“Relevant
Jurisdiction”
means,
with respect to a party, the jurisdictions (a) in which the party is
incorporated, organised, managed and controlled or considered to have its seat,
(b) where an Office through which the party is acting for purposes of this
Agreement is located, (c) in which the party executes this Agreement and (d)
in
relation to any payment, from or through which such payment is
made.
“Scheduled
Payment Date”
means a
date on which a payment or delivery is to be made under Section 2(a)(i) with
respect to a Transaction.
“Set-off”
means
set-off, offset, combination of accounts, right of retention or withholding
or
similar right or requirement to which the payer of an amount under Section
6 is
entitled or subject (whether arising under this Agreement, another contract,
applicable law or otherwise) that is exercised by, or imposed on, such
payer.
“Settlement
Amount”
means,
with respect to a party and any Early Termination Date, the sum
of:—
(a) the
Termination Currency Equivalent of the Market Quotations (whether positive
or
negative) for each Terminated Transaction or group of Terminated Transactions
for which a Market Quotation is determined; and
(b) such
party’s Loss (whether positive or negative and without reference to any Unpaid
Amounts) for each Terminated Transaction or group of Terminated Transactions
for
which a Market Quotation cannot be determined or would not (in the reasonable
belief of the party making the determination) produce a commercially reasonable
result.
“Specified
Entity”
has the
meanings specified in the Schedule.
“Specified
Indebtedness”
means,
subject to the Schedule, any obligation (whether present or future, contingent
or otherwise, as principal or surety or otherwise) in respect of borrowed
money.
“Specified
Transaction”
means,
subject to the Schedule, (a) any transaction (including an agreement with
respect thereto) now existing or hereafter entered into between one party to
this Agreement (or any Credit Support Provider of such party or any applicable
Specified Entity of such party) and the other party to this Agreement (or any
Credit Support Provider of such other party or any applicable Specified Entity
of such other party) which is a rate swap transaction, basis swap, forward
rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any
of
these transactions), (b) any combination of these transactions and (c) any
other
transaction identified as a Specified Transaction in this Agreement or the
relevant confirmation.
“Stamp
Tax”
means
any stamp, registration, documentation or similar tax.
“Tax”
means
any present or future tax, levy, impost, duty, charge, assessment or fee of
any
nature (including interest, penalties and additions thereto) that is imposed
by
any government or other taxing authority in respect of any payment under this
Agreement other than a stamp, registration, documentation or similar
tax.
“Tax
Event”
has the
meaning specified in Section 5(b).
“Tax
Event Upon Merger”
has the
meaning specified in Section 5(b).
“Terminated
Transactions”
means
with respect to any Early Termination Date (a) if resulting from a Termination
Event, all Affected Transactions and (b) if resulting from an Event of Default,
all Transactions (in either case) in effect immediately before the effectiveness
of the notice designating that Early Termination Date (or, if “Automatic Early
Termination” applies, immediately before that Early Termination
Date).
“Termination
Currency”
has the
meaning specified in the Schedule.
“Termination
Currency Equivalent”
means,
in respect of any amount denominated in the Termination Currency, such
Termination Currency amount and, in respect of any amount denominated in a
currency other than the Termination Currency (the “Other Currency”), the amount
in the Termination Currency determined by the party making the relevant
determination as being required to purchase such amount of such Other Currency
as at the relevant Early Termination Date, or, if the relevant Market Quotation
or Loss (as the case may be), is determined as of a later date, that later
date,
with the Termination Currency at the rate equal to the spot exchange rate of
the
foreign exchange agent (selected as provided below) for the purchase of such
Other Currency with the Termination Currency at or about 11:00 a.m. (in the
city
in which such foreign exchange agent is located) on such date as would be
customary for the determination of such a rate for the purchase of such Other
Currency for value on the relevant Early Termination Date or that later date.
The foreign exchange agent will, if only one party is obliged to make a
determination under Section 6(e), be selected in good faith by that party and
otherwise will be agreed by the parties.
“Termination
Event”
means an
Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be
applicable, a Credit Event Upon Merger or an Additional Termination
Event.
“Termination
Rate”
means a
rate per annum equal to the arithmetic mean of the cost (without proof or
evidence of any actual cost) to each party (as certified by such party) if
it
were to fund or of funding such amounts.
“Unpaid
Amounts”
owing to
any party means, with respect to an Early Termination Date, the aggregate of
(a)
in respect of all Terminated Transactions, the amounts that became payable
(or
that would have become payable but for Section 2(a)(iii)) to such party under
Section 2(a)(i) on or prior to such Early Termination Date and which remain
unpaid as at such Early Termination Date and (b) in respect of each Terminated
Transaction, for each obligation under Section 2(a)(i) which was (or would
have
been but for Section 2(a)(iii)) required to be settled by delivery to such
party
on or prior to such Early Termination Date and which has not been so settled
as
at such Early Termination Date, an amount equal to the fair market
value
of
that which was (or would have been) required to be delivered as of the
originally scheduled date for
delivery, in each case together with (to the extent permitted under applicable
law) interest, in the currency, of
such
amounts, from (and including) the date such amounts or obligations were or
would
have been required to
have
been paid or performed to (but excluding) such Early Termination Date, at the
Applicable Rate. Such amounts
of interest will be calculated on the basis of daily compounding and the actual
number of days elapsed.
The fair market value of any obligation referred to in clause (b) above shall
be
reasonably determined
by the party obliged to make the determination under Section 6(e) or, if each
party is so obliged, it
shall
be the average of the Termination Currency Equivalents of the fair market values
reasonably determined
by both parties.
IN
WITNESS WHEREOF the parties have executed this document on the respective dates
specified below with
effect from the date specified on the first page of this document.
|
CREDIT
SUISSE INTERNATIONAL
|
U.S.
BANK NATIONAL ASSOCIATION, NOT INDIVIDUALLY, BUT SOLELY AS INDENTURE
TRUSTEE ON BEHALF OF THE HOME EQUITY MORTGAGE TRUST 2006-2, ASSET-BACKED
NOTES, SERIES 2006-2
|
|
("Party
A")
|
("Party
B")
|
|
By:
_______________________________
Name:
Title:
|
|
|
By:
_______________________________
Name:
Title:
|
By:
_______________________________
Name:
Title:
|
EXHIBIT
K
FORM
10-D, FORM 8-K AND FORM 10-K REPORTING RESPONSIBILITY
As
to
each item described below, the entity indicated as the Responsible Party shall
be primarily responsible for reporting the information to the Indenture Trustee
pursuant to Section 6.16(a)(i), (ii) and (iii). If the Indenture Trustee is
indicated below as to any item, then the Indenture Trustee is primarily
responsible for obtaining that information.
Under
Item 1 of Form 10-D: a) items marked “3.25 statement” are required to be
included in the monthly statement under Section 3.25, provided by the Indenture
Trustee based on information received from the Servicers to the extent required
of the Servicers under the Servicing Agreement; and b) items marked “Form 10-D
report” are required to be in the Form 10-D report but not the 3.25 statement,
provided by the party indicated. Information under all other Items of Form
10-D
is to be included in the Form 10-D report. Items indicated as “N/A” are not
applicable to the transaction.
For
purposes of this Exhibit, “Servicer” includes the Special Servicer.
|
Form
|
Item
|
Description
|
Responsible
Party
|
|
10-D
|
|||
|
1
|
Distribution
and Pool Performance Information
|
||
|
Item
1121(a) - Distribution and Pool Performance
Information
|
|||
|
(1)
Any applicable record dates, accrual dates, determination dates for
calculating distributions and actual distribution dates for the
distribution period.
|
3.25
statement
|
||
|
(2)
Cash flows received and the sources thereof for distributions, fees
and
expenses.
|
3.25
statement
|
||
|
(3)
Calculated amounts and distribution of the flow of funds for the
period
itemized by type and priority of payment, including:
|
3.25
statement
|
||
|
(i)
Fees or expenses accrued and paid, with an identification of the
general
purpose of such fees and the party receiving such fees or
expenses.
|
3.25
statement
|
||
|
(ii)
Payments accrued or paid with respect to enhancement or other support
identified in Item 1114 of Regulation AB (such as insurance premiums
or
other enhancement maintenance fees), with an identification of the
general
purpose of such payments and the party receiving such
payments.
|
3.25
statement
|
||
|
(iii)
Principal, interest and other distributions accrued and paid on the
asset-backed securities by type and by class or series and any principal
or interest shortfalls or carryovers.
|
3.25
statement
|
||
|
(iv)
The amount of excess cash flow or excess spread and the disposition
of
excess cash flow.
|
3.25
statement
|
||
|
(4)
Beginning and ending principal balances of the asset-backed
securities.
|
3.25
statement
|
||
|
(5)
Interest rates applicable to the pool assets and the asset-backed
securities, as applicable. Consider providing interest rate information
for pool assets in appropriate distributional groups or incremental
ranges.
|
3.25
statement
|
||
|
(6)
Beginning and ending balances of transaction accounts, such as reserve
accounts, and material account activity during the period.
|
3.25
statement
|
||
|
(7)
Any amounts drawn on any credit enhancement or other support identified
in
Item 1114 of Regulation AB, as applicable, and the amount of coverage
remaining under any such enhancement, if known and
applicable.
|
3.25
statement
|
||
|
(8)
Number and amount of pool assets at the beginning and ending of each
period, and updated pool composition information, such as weighted
average
coupon, weighted average life, weighted average remaining term, pool
factors and prepayment amounts.
|
3.25
statement
Updated
pool composition information fields to be as reasonably requested
by
Depositor in writing to each Servicer and the Indenture Trustee at
least
30 days prior to the related Servicer Data Remittance Date from time
to
time
|
||
|
(9)
Delinquency and loss information for the period.
In
addition, describe any material changes to the information specified
in
Item 1100(b)(5) of Regulation AB regarding the pool
assets.
|
3.25
statement.
Form
10-D report: Servicer/Depositor
|
||
|
(10)
Information on the amount, terms and general purpose of any advances
made
or reimbursed during the period, including the general use of funds
advanced and the general source of funds for
reimbursements.
|
3.25
statement
|
||
|
(11)
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.
|
Form
10-D report: Depositor
|
||
|
(12)
Material breaches of pool asset representations or warranties or
transaction covenants.
|
Form
10-D report: Seller (subject to Depositor approval)
|
||
|
(13)
Information on ratio, coverage or other tests used for determining
any
early amortization, liquidation or other performance trigger and
whether
the trigger was met.
|
3.25
statement
|
||
|
(14)
Information regarding any new issuance of asset-backed securities
backed
by the same asset pool,
[information
regarding] any pool asset changes (other than in connection with
a pool
asset converting into cash in accordance with its terms), such as
additions or removals in connection with a prefunding or revolving
period
and pool asset substitutions and repurchases (and purchase rates,
if
applicable), and cash flows available for future purchases, such
as the
balances of any prefunding or revolving accounts, if
applicable.
Disclose
any material changes in the solicitation, credit-granting, underwriting,
origination, acquisition or pool selection criteria or procedures,
as
applicable, used to originate, acquire or select the new pool
assets.
|
Form
10-D report: Depositor
Form
10-D report: Seller (subject to Depositor approval)
Form
10-D report: Seller (subject to Depositor approval)
|
||
|
Item
1121(b) - Pre-Funding or Revolving Period Information
Updated
pool information as required under Item 1121(b).
|
Seller
(subject to Depositor approval)
|
||
|
2
|
Legal
Proceedings
|
||
|
Item
1117 - Legal proceedings pending against the following entities,
or their
respective property, that is material to Certificateholders, including
proceedings known to be contemplated by governmental
authorities:
Sponsor
(Seller)
Depositor
Indenture
Trustee
Issuing
entity
Servicer
or any Subservicer to which Servicer delegates servicing function
to that
is servicing 20% or more of pool assets at time of report
Originator
of 20% or more of pool assets as of the Cut-off Date
Custodian
|
Seller
Depositor
Indenture
Trustee
Depositor
Servicer
Depositor
Custodian
|
||
|
3
|
Sales
of Securities and Use of Proceeds
|
||
|
Information
from Item 2(a) of Part II of Form 10-Q:
With
respect to any sale of securities by the sponsor, depositor or issuing
entity, that are backed by the same asset pool or are otherwise issued
by
the issuing entity, whether or not registered, provide the sales
and use
of proceeds information in Item 701 of Regulation S-K. Pricing information
can be omitted if securities were not registered.
|
Depositor
|
||
|
4
|
Defaults
Upon Senior Securities
|
||
|
Information
from Item 3 of Part II of Form 10-Q:
Report
the occurrence of any Event of Default of which the Indenture Trustee
has
received written notice or has actual knowledge (after expiration
of any
grace period and provision of any required notice)
|
Indenture
Trustee
|
||
|
5
|
Submission
of Matters to a Vote of Security Holders
|
||
|
Information
from Item 4 of Part II of Form 10-Q
|
Indenture
Trustee
|
||
|
6
|
Significant
Obligors of Pool Assets
|
||
|
Item
1112(b) - Significant
Obligor Financial Information*
|
N/A
|
||
|
*This
information need only be reported on the Form 10-D for the distribution
period in which updated information is required pursuant to the
Item.
|
|||
|
7
|
Significant
Enhancement Provider Information
|
||
|
Item
1114(b)(2) - Credit Enhancement Provider Financial
Information*
Determining
applicable disclosure threshold
Obtaining
required financial information or effecting incorporation by
reference
|
Depositor
Depositor
|
||
|
Item
1115(b) - Derivative Counterparty Financial Information*
Determining
current maximum probable exposure
Determining
current significance percentage
Obtaining
required financial information or effecting incorporation by
reference
|
Depositor
Depositor
Depositor
|
||
|
*This
information need only be reported on the Form 10-D for the distribution
period in which updated information is required pursuant to the
Items.
|
|||
|
8
|
Other
Information
|
||
|
Disclose
any information required to be reported on Form 8-K during the period
covered by the Form 10-D but not reported
|
The
Responsible Party for the applicable Form 8-K item as indicated
below
|
||
|
9
|
Exhibits
|
||
|
Distribution
report
|
Indenture
Trustee
|
||
|
Exhibits
required by Item 601 of Regulation S-K, such as material
agreements
|
Depositor
|
||
|
8-K
|
|||
|
1.01
|
Entry
into a Material Definitive Agreement
|
||
|
Disclosure
is required regarding entry into or amendment of any definitive agreement
that is material to the securitization, even if depositor is not
a party.
Examples:
servicing agreement, custodial agreement.
Note:
disclosure not required as to definitive agreements that are fully
disclosed in the prospectus
|
Any
of the following that is entering into a material definitive agreement:
Servicer, Indenture Trustee, Seller, Depositor
|
||
|
1.02
|
Termination
of a Material Definitive Agreement
|
||
|
Disclosure
is required regarding termination of any definitive agreement that
is
material to the securitization (other than expiration in accordance
with
its terms), even if depositor is not a party.
Examples:
servicing agreement, custodial agreement.
|
Any
of the following that is requesting termination of a material definitive
agreement: Servicer, Indenture Trustee, Seller,
Depositor
|
||
|
1.03
|
Bankruptcy
or Receivership
|
||
|
Disclosure
is required regarding the bankruptcy or receivership, if known to
the
Depositor, with respect to any of the following:
Sponsor
(Seller), Depositor, Master Servicer, affiliated Servicer, other
Servicer
servicing 20% or more of pool assets at time of report, other material
servicers, Indenture Trustee, significant obligor, credit enhancer
(10% or
more), derivatives counterparty, Custodian
|
Any
of the following that is in bankruptcy or receivership: Servicer,
Indenture Trustee, Seller, Depositor, Custodian
|
||
|
2.04
|
Triggering
Events that Accelerate or Increase a Direct Financial Obligation
or an
Obligation under an Off-Balance Sheet Arrangement
|
||
|
Includes
an early amortization, performance trigger or other event, including
event
of default, that would materially alter the payment priority/distribution
of cash flows/amortization schedule.
Disclosure
will be made of events other than waterfall triggers which are disclosed
in the 3.25 statement
|
Indenture
Trustee
|
||
|
3.03
|
Material
Modification to Rights of Security Holders
|
||
|
Disclosure
is required of any material modification to documents defining the
rights
of Certificateholders, including the Pooling and Servicing
Agreement
|
Indenture
Trustee (or Depositor, if the Indenture Trustee is not a party to
such
agreement or required to provide prior written consent to such
amendment)
|
||
|
5.03
|
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year
|
||
|
Disclosure
is required of any amendment “to the governing documents of the issuing
entity”
|
Depositor
|
||
|
5.06
|
Change
in Shell Company Status
|
||
|
[Not
applicable to ABS issuers]
|
N/A
|
||
|
6.01
|
ABS
Informational and Computational Material
|
Depositor
|
|
|
[Not
included in reports to be filed under Section 8.12]
|
|||
|
6.02
|
Change
of Servicer or Indenture Trustee
|
||
|
Requires
disclosure of any removal, replacement, substitution or addition
of any
master servicer, affiliated servicer, other servicer servicing 10%
or more
of pool assets at time of report, other material servicers, certificate
administrator or Indenture Trustee. Reg AB disclosure about any new
servicer or Indenture Trustee is also required.
|
Indenture
Trustee
|
||
|
6.03
|
Change
in Credit Enhancement or Other External Support
|
||
|
Covers
termination of any enhancement in manner other than by its terms,
the
addition of an enhancement, or a material change in the enhancement
provided. Applies to external credit enhancements as well as derivatives.
Reg AB disclosure about any new enhancement provider is also
required.
|
Indenture
Trustee
|
||
|
6.04
|
Failure
to Make a Required Distribution
|
Indenture
Trustee
|
|
|
6.05
|
Securities
Act Updating Disclosure
|
||
|
If
any material pool characteristic differs by 5% or more at the time
of
issuance of the securities from the description in the final prospectus,
provide updated Reg AB disclosure about the actual asset
pool.
|
Depositor
|
||
|
If
there are any new servicers or originators required to be disclosed
under
Regulation AB as a result of the foregoing, provide the information
called
for in Items 1108 and 1110 respectively.
|
Depositor
|
||
|
7.01
|
Regulation
FD Disclosure
|
Depositor
|
|
|
8.01
|
Other
Events
|
||
|
Any
event, with respect to which information is not otherwise called
for in
Form 8-K, that the registrant deems of importance to security
holders.
|
Depositor
|
||
|
9.01
|
Financial
Statements and Exhibits
|
The
Responsible Party applicable to reportable event
|
|
|
10-K
|
|||
|
9B
|
Other
Information
|
||
|
Disclose
any information required to be reported on Form 8-K during the fourth
quarter covered by the Form 10-K but not reported
|
The
Responsible Party for the applicable Form 8-K item as indicated
above
|
||
|
15
|
Exhibits
and Financial Statement Schedules
|
||
|
Item
1112(b) - Significant
Obligor Financial Information
|
N/A
|
||
|
Item
1114(b)(2) - Credit Enhancement Provider Financial
Information
Determining
applicable disclosure threshold
Obtaining
required financial information or effecting incorporation by
reference
|
Depositor
Depositor
|
||
|
Item
1115(b) - Derivative Counterparty Financial Information
Determining
current maximum probable exposure
Determining
current significance percentage
Obtaining
required financial information or effecting incorporation by
reference
|
Depositor
Depositor
Depositor
|
||
|
Item
1117 - Legal proceedings pending against the following entities,
or their
respective property, that is material to Certificateholders, including
proceedings known to be contemplated by governmental
authorities:
Sponsor
(Seller)
Depositor
Indenture
Trustee
Issuing
entity
Servicer
or any other Subservicer to which Servicer delegates servicing function
to
that is servicing 20% or more of pool assets at time of
report
Originator
of 20% or more of pool assets as of the Cut-off Date
Custodian
|
Seller
Depositor
Indenture
Trustee
Depositor
Servicer
Depositor
Custodian
|
||
|
Item
1119 - Affiliations and relationships between the following entities,
or
their respective affiliates, that are material to
Certificateholders:
Sponsor
(Seller)
Depositor
Indenture
Trustee
Servicer
or any other Subservicer to which Servicer delegates servicing function
to
that is servicing 20% or more of pool assets at time of
report
Originator
Custodian
Counterparty
|
Seller
Depositor
Indenture
Trustee
Servicer
Depositor
Custodian
Depositor
|
||
|
Item
1122 - Assessment of Compliance with Servicing
Criteria
|
Indenture
Trustee, Servicer, Custodian
|
||
|
Item
1123 - Servicer Compliance Statement
|
Servicer
|
EXHIBIT
L
SERVICING
CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
Key:
X
-
obligation
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.
|
Reg
AB Reference
|
Servicing
Criteria
|
Servicer
and Special Servicer
|
Custodian
|
IndentureTrustee
|
||||
|
General
Servicing Considerations
|
||||||||
|
1122(d)(1)(i)
|
Policies
and procedures are instituted to monitor any performance or other
triggers
and events of default in accordance with the transaction
agreements.
|
X
(Ocwen
only)
|
X
|
|||||
|
1122(d)(1)(ii)
|
If
any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party’s
performance and compliance with such servicing activities.
|
X
|
||||||
|
1122(d)(1)(iii)
|
Any
requirements in the transaction agreements to maintain a back-up
servicer
for the Pool Assets are maintained.
|
N/A
|
||||||
|
1122(d)(1)(iv)
|
A
fidelity bond and errors and omissions policy is in effect on the
party
participating in the servicing function throughout the reporting
period in
the amount of coverage required by and otherwise in accordance with
the
terms of the transaction agreements.
|
X
|
||||||
|
Cash
Collection and Administration
|
||||||||
|
1122(d)(2)(i)
|
Payments
on pool assets are deposited into the appropriate custodial bank
accounts
and related bank clearing accounts no more than two business days
following receipt, or such other number of days specified in the
transaction agreements.
|
X
|
||||||
|
1122(d)(2)(ii)
|
Disbursements
made via wire transfer on behalf of an obligor or to an investor
are made
only by authorized personnel.
|
X
|
X
|
|||||
|
1122(d)(2)(iii)
|
Advances
of funds or guarantees regarding collections, cash flows or distributions,
and any interest or other fees charged for such advances, are made,
reviewed and approved as specified in the transaction agreements.
|
X
|
||||||
|
1122(d)(2)(iv)
|
The
related accounts for the transaction, such as cash reserve accounts
or
accounts established as a form of over collateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth
in the
transaction agreements.
|
N/A
|
X
|
|||||
|
1122(d)(2)(v)
|
Each
custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes
of
this criterion, “federally insured depository institution” with respect to
a foreign financial institution means a foreign financial institution
that
meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange
Act.
|
X
|
||||||
|
1122(d)(2)(vi)
|
Unissued
checks are safeguarded so as to prevent unauthorized access.
|
X
|
||||||
|
1122(d)(2)(vii)
|
Reconciliations
are prepared on a monthly basis for all asset-backed securities related
bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate;
(B)
prepared within 30 calendar days after the bank statement cutoff
date, or
such other number of days specified in the transaction agreements;
(C)
reviewed and approved by someone other than the person who prepared
the
reconciliation; and (D) contain explanations for reconciling items.
These
reconciling items are resolved within 90 calendar days of their original
identification, or such other number of days specified in the transaction
agreements.
|
X
|
||||||
|
Investor
Remittances and Reporting
|
||||||||
|
1122(d)(3)(i)
|
Reports
to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared
in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with
the
terms specified in the transaction agreements; (C) are filed with
the
Commission as required by its rules and regulations; and (D) agree
with
investors’ or the trustee’s records as to the total unpaid principal
balance and number of Pool Assets serviced by the Servicer.
|
X
|
||||||
|
1122(d)(3)(ii)
|
Amounts
due to investors are allocated and remitted in accordance with timeframes,
distribution priority and other terms set forth in the transaction
agreements.
|
X
|
||||||
|
1122(d)(3)(iii)
|
Disbursements
made to an investor are posted within two business days to the Servicer’s
investor records, or such other number of days specified in the
transaction agreements.
|
X
|
||||||
|
1122(d)(3)(iv)
|
Amounts
remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank statements.
|
X
|
||||||
|
Pool
Asset Administration
|
||||||||
|
1122(d)(4)(i)
|
Collateral
or security on pool assets is maintained as required by the transaction
agreements or related pool asset documents.
|
X
|
X
|
|||||
|
1122(d)(4)(ii)
|
Pool
assets and related documents are safeguarded as required by the
transaction agreements
|
X
|
X
|
|||||
|
1122(d)(4)(iii)
|
Any
additions, removals or substitutions to the asset pool are made,
reviewed
and approved in accordance with any conditions or requirements in
the
transaction agreements.
|
X
|
X
|
|||||
|
1122(d)(4)(iv)
|
Payments
on pool assets, including any payoffs, made in accordance with the
related
pool asset documents are posted to the Servicer’s obligor records
maintained no more than two business days after receipt, or such
other
number of days specified in the transaction agreements, and allocated
to
principal, interest or other items (e.g., escrow) in accordance with
the
related pool asset documents.
|
X
|
||||||
|
1122(d)(4)(v)
|
The
Servicer’s records regarding the pool assets agree with the Servicer’s
records with respect to an obligor’s unpaid principal balance.
|
X
|
||||||
|
1122(d)(4)(vi)
|
Changes
with respect to the terms or status of an obligor's pool assets (e.g.,
loan modifications or re-agings) are made, reviewed and approved
by
authorized personnel in accordance with the transaction agreements
and
related pool asset documents.
|
X
|
||||||
|
1122(d)(4)(vii)
|
Loss
mitigation or recovery actions (e.g., forbearance plans, modifications
and
deeds in lieu of foreclosure, foreclosures and repossessions, as
applicable) are initiated, conducted and concluded in accordance
with the
timeframes or other requirements established by the transaction
agreements.
|
X
|
||||||
|
1122(d)(4)(viii)
|
Records
documenting collection efforts are maintained during the period a
pool
asset is delinquent in accordance with the transaction agreements.
Such
records are maintained on at least a monthly basis, or such other
period
specified in the transaction agreements, and describe the entity’s
activities in monitoring delinquent pool assets including, for example,
phone calls, letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or unemployment).
|
X
|
||||||
|
1122(d)(4)(ix)
|
Adjustments
to interest rates or rates of return for pool assets with variable
rates
are computed based on the related pool asset documents.
|
X
|
||||||
|
1122(d)(4)(x)
|
Regarding
any funds held in trust for an obligor (such as escrow accounts):
(A) such
funds are analyzed, in accordance with the obligor’s pool asset documents,
on at least an annual basis, or such other period specified in the
transaction agreements; (B) interest on such funds is paid, or credited,
to obligors in accordance with applicable pool asset documents and
state
laws; and (C) such funds are returned to the obligor within 30 calendar
days of full repayment of the related pool assets, or such other
number of
days specified in the transaction agreements.
|
X
|
||||||
|
1122(d)(4)(xi)
|
Payments
made on behalf of an obligor (such as tax or insurance payments)
are made
on or before the related penalty or expiration dates, as indicated
on the
appropriate bills or notices for such payments, provided that such
support
has been received by the servicer at least 30 calendar days prior
to these
dates, or such other number of days specified in the transaction
agreements.
|
X
|
||||||
|
1122(d)(4)(xii)
|
Any
late payment penalties in connection with any payment to be made
on behalf
of an obligor are paid from the Servicer’s funds and not charged to the
obligor, unless the late payment was due to the obligor’s error or
omission.
|
X
|
||||||
|
1122(d)(4)(xiii)
|
Disbursements
made on behalf of an obligor are posted within two business days
to the
obligor’s records maintained by the servicer, or such other number of days
specified in the transaction agreements.
|
X
|
||||||
|
1122(d)(4)(xiv)
|
Delinquencies,
charge-offs and uncollectible accounts are recognized and recorded
in
accordance with the transaction agreements.
|
X
|
||||||
|
1122(d)(4)(xv)
|
Any
external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth
in
the transaction agreements.
|
N/A
|
X
|
|||||
EXHIBIT
M
FORM
OF
POLICY
|
Issuing
Entity: Home Equity Mortgage Trust 2006-2
|
Policy
Number: 06030043
Control
Number: 0010001
|
Insured
Obligations:
$[
]
in aggregate class principal balance of Home Equity Mortgage Trust 2006-2,
Asset-Backed Notes, Series 2006-2 Class 2A-1 Notes and $[ ] in aggregate maximum
class principal balance of Home Equity Mortgage Trust 2006-2, Asset-Backed
Certificates, Series 2006-2, Class G Certificates (the “Insured
Securities”)
Indenture
Trustee: U.S. Bank National Association
Financial
Guaranty Insurance Company (“Financial Guaranty”), a New York stock insurance
company, in consideration of the right of Financial Guaranty to receive monthly
premiums pursuant to the Indenture (as defined below) and the Insurance
Agreement referred to therein, and subject to the terms of this Financial
Guaranty Insurance Policy (this “Policy”), hereby unconditionally and
irrevocably agrees to pay each Insured Amount, to the extent set forth in the
Indenture, to the Indenture Trustee named above or its successor, not in its
individual capacity, but solely as indenture trustee for Insured
Securityholders, except as otherwise provided herein with respect to Preference
Amounts. Capitalized terms used and not otherwise defined herein shall have
the
meanings assigned to such terms in the [Indenture] as in effect and executed
on
the date hereof without giving effect to any subsequent amendments or
modifications thereto unless such amendments or modifications have been approved
in writing by Financial Guaranty.
The
following terms used herein shall have the meanings assigned to them
below:
The
term
“Deficiency Amount” means, with respect to any Payment Date and each of the
Insured Securities, an amount, if any, equal to the sum of:
(i) the
excess of (x) Current Interest for the related class of Insured Securities
on
such Payment Date, over (y) the Interest Remittance Amount from the Group 2
Mortgage Loans on such Payment Date allocated to pay Current Interest on the
related class of Insured Securities on such Payment Date as provided in Section
[ ] of the Indenture;
(ii)
on
any
Payment Date prior to the Final Scheduled Payment Date, the excess, if any,
of
the Aggregate Collateral Balance of the Group 2 Loans for such Payment Date
over
the aggregate Class Principal Balance of the Insured Securities (after giving
effect to any principal payments other than the amounts paid in respect of
the
Policy on such Payment Date); and
(iii)
the
Class
Principal Balance of each class of Insured Securities to the extent unpaid
on
the Final Scheduled Payment Date or earlier termination of the Issuing Entity
pursuant to the terms of the Indenture, in each case after giving effect to
payments made on such date from all sources other than this Policy.
The
term
“Final Scheduled Payment Date” with respect to the Insured Securities means the
Payment Date occurring in [ ].
The
term
“Insured Amount” means, with respect to the Insured Securities (1) any
Deficiency Amount and (2) any Preference Amount.
The
term
“Insured Securityholder” means, as to a particular Insured Security, the Person,
other than the Depositor, any Servicer, the Indenture Trustee, the Owner
Trustee, the Sponsor or any subservicers retained by a Servicer who, on the
applicable Payment Date, is entitled under the terms of the Insured Securities
to a distribution on the related class of Insured Securities.
Financial
Guaranty will pay a Deficiency Amount with respect to any class of Insured
Securities by 12:00 noon (New York City time) in immediately available funds
to
the Indenture Trustee on the later of (i) the second Business Day following
the
Business Day on which Financial Guaranty shall have received Notice that a
Deficiency Amount is due in respect of the Insured Securities, and (ii) the
Payment Date on which the related Deficiency Amount is payable to the related
Insured Securityholders pursuant to the Indenture, for payment to the related
Insured Securityholders in the same manner as other payments with respect to
the
Insured Securities are required to be made. Any Notice received by Financial
Guaranty after 12:00 noon New York City time on a given Business Day or on
any
day that is not a Business Day shall be deemed to have been received by
Financial Guaranty on the next succeeding Business Day.
Upon
payment of an Insured Amount hereunder, Financial Guaranty shall be fully
subrogated to the rights of the related Insured Securityholders to receive
the
amount so paid. Financial Guaranty’s obligations with respect to the Insured
Securities hereunder with respect to each Payment Date shall be discharged
to
the extent funds consisting of the related Deficiency Amount are received by
the
Indenture Trustee as trustee for the Insured Securityholders for payment to
such
Insured Securityholders, as provided in the Indenture and herein, whether or
not
such funds are properly applied by the Indenture Trustee.
If
any
portion or all of any amount that is insured hereunder that was previously
distributed to a Insured Securityholder is recoverable and sought to be
recovered from such Insured Securityholder as a voidable preference by a trustee
in bankruptcy pursuant to the U.S. Bankruptcy Code, pursuant to a final
non-appealable order of a court exercising proper jurisdiction in an insolvency
proceeding (a “Final Order”) (such recovered amount, a “Preference Amount”),
Financial Guaranty will pay on the guarantee described in the first paragraph
hereof, an amount equal to each such Preference Amount by 12:00 noon on the
second Business Day following receipt by Financial Guaranty of (w) a certified
copy of the Final Order, (x) an opinion of counsel satisfactory to Financial
Guaranty that such order is final and not subject to appeal, (y) an assignment,
in form reasonably satisfactory to Financial Guaranty, irrevocably assigning
to
Financial Guaranty all rights and claims of the Indenture Trustee and/or such
Insured Securityholder relating to or arising under such Preference Amount
and
constituting an appropriate instrument , in form satisfactory to the insurer,
and appointing Financial Guaranty as the agent of the Indenture Trustee and/or
such Insured Securityholder in respect of such Preference Amount, including
without limitation in any legal proceeding relating to the Preference Amount
and
(z) a Notice appropriately completed and executed by the Indenture Trustee
or
such Insured Securityholder, as the case may be. Such payment shall be made
to
the receiver, conservator, debtor-in-possession or trustee in bankruptcy named
in the Final Order and not to the Indenture Trustee or Insured Securityholder
directly (unless the Insured Securityholder has previously paid such amount
to
such receiver, conservator, debtor-in-possession or trustee named in such Final
Order in which case payment shall be made to the Indenture Trustee for payment
to the Insured Securityholder upon delivery of proof of such payment reasonably
satisfactory to Financial Guaranty). Notwithstanding the foregoing, in no event
shall Financial Guaranty be (i) required to make any payment under this Policy
in respect of any Preference Amount to the extent such Preference Amount is
comprised of amounts previously paid by Financial Guaranty hereunder, or (ii)
obligated to make any payment in respect of any Preference Amount, which payment
represents a payment of the principal amount of any Insured Securities, prior
to
the time Financial Guaranty otherwise would have been required to make a payment
in respect of such principal, in which case Financial Guaranty shall pay the
balance of the Preference Amount when such amount otherwise would have been
required.
Any
of
the documents required under clauses (w) through (z) of the preceding paragraph
that are received by Financial Guaranty after 12:00 noon New York City time
on a
given Business Day or on any day that is not a Business Day shall be deemed
to
have been received by Financial Guaranty on the next succeeding Business Day.
If
any notice received by Financial Guaranty is not in proper form or is otherwise
insufficient for the purpose of making a claim under this Policy, it will be
deemed not to have been received by Financial Guaranty, and Financial Guaranty
will promptly so advise the Indenture Trustee, and the Indenture Trustee may
submit an amended Notice. All payments made by Financial Guaranty hereunder
in
respect of Preference Amounts will be made with Financial Guaranty’s own
funds.
This
Policy is non-cancelable for any reason, including nonpayment of any premium.
The premium on this Policy is not refundable for any reason, including the
payment of any Insured Securities prior to the maturity of the Insured
Securities. This Policy shall expire and terminate without any action on the
part of Financial Guaranty or any other Person on the date that is the later
of
(i) the date that is one year and one day following the date on which the
Insured Securities shall have been paid in full and (ii) if any insolvency
proceeding referenced in the second preceding paragraph with respect to which
the Depositor is the debtor has been commenced on or prior to the date specified
in clause (i) above, the 30th day after the entry of a final, non-appealable
order in resolution or settlement of such proceeding.
A
monthly
premium shall be due and payable in arrears as provided in the Indenture and
the
Insurance Agreement.
This
Policy does not cover Interest Shortfalls or Basis Risk Shortfalls on the
Insured Securities, nor does it guarantee to the Insured Securityholders any
particular rate of principal payment. In addition, this Policy does not cover
shortfalls, if any, attributable to the liability of the Depositor, the Issuing
Entity, any REMIC, the Indenture Trustee or the Insured Securityholder for
withholding taxes or REMIC liabilities, if any (including interest and penalties
in respect of any liability for withholding taxes). This Policy does not cover
the failure of the Indenture Trustee to make any distribution required under
the
Indenture to any Insured Securityholders. The Policy does not guaranty the
payment of any Excluded amount or any interest accrued thereon.
To
the
fullest extent permitted by applicable law, Financial Guaranty hereby waives,
solely for the benefit of the Insured Securityholders all defenses of any kind
(including, without limitation, the defense of fraud in inducement or fact,
any
defense based on any duty claimed to arise from the doctrine of “utmost good
faith” or any similar or related doctrine or any other circumstances that would
have the effect of discharging a surety, guarantor or any other person in law
or
in equity) that Financial Guaranty otherwise might have asserted as a defense
to
its obligation to pay in full any amounts that have become due and payable
in
accordance with the terms and conditions of this Policy. Nothing in this
paragraph, however, shall be deemed to constitute a waiver of any rights,
remedies, claims or counterclaims that Financial Guaranty may have with respect
to the Issuing Entity or the Sponsor, or any of their affiliates, whether
acquired by subrogation, assignment or otherwise.
This
Policy is subject to and shall be governed by the laws of the State of New
York,
without giving effect to the conflicts of laws principles thereof. The proper
venue for any action or proceeding on this Policy shall be the County of New
York, State of New York.
THE
INSURANCE PROVIDED BY THIS POLICY IS NOT COVERED BY THE NEW YORK
PROPERTY/CASUALTY INSURANCE SECURITY FUND (NEW YORK INSURANCE CODE, ARTICLE
76).
“Notice”
means
a
written notice in the form of Exhibit A
to this
Policy by registered or certified mail or telephonic or telegraphic notice,
subsequently confirmed by written notice delivered via telecopy, telex or hand
delivery from the Indenture Trustee to Financial Guaranty specifying the
information set forth therein. “Indenture” means the [Indenture] relating to the
Insured Securities dated as of among Home Equity Mortgage Trust 2006-2 and
the
Indenture Trustee. The “Insurance Agreement” means the Insurance and Indemnity
Agreement, dated as of April 28, 2006, among DLJ Mortgage Capital, Inc., as
Sponsor and Seller, Financial Guaranty, Asset Backed Securities Corporation,
the
Issuing Entity, PNC Bank, N.A., as Servicer and U.S. Bank National Association,
as Indenture Trustee.
In
the
event that payments under any Insured Security are accelerated, nothing herein
contained shall obligate Financial Guaranty to make any payment of principal
or
interest on such Insured Security on an accelerated basis, unless such
acceleration of payment by Financial Guaranty is at the sole option of Financial
Guaranty; it being understood that a payment shortfall in respect of the
redemption of any Insured Security by reason of the repurchase of the assets
of
the Trust Estate pursuant to Section [ ] of the Indenture does not constitute
acceleration for the purposes hereof.
IN
WITNESS WHEREOF, Financial Guaranty has caused this Policy to be affixed with
its corporate seal and to be signed by its duly authorized officer in facsimile
to become effective and binding upon Financial Guaranty by virtue of the
countersignature of its duly authorized representative.
|
President
|
Authorized
Representative
|
Effective
Date: April 28, 2006
EXHIBIT
A
NOTICE
OF
NONPAYMENT
AND
DEMAND FOR PAYMENT OF INSURED AMOUNTS
To: Financial
Guaranty Insurance Company
000 Xxxx Xxxxxx
New York, New York 10017
(000) 000-0000
Attention:
Structured Finance Surveillance
Telephone:
(000) 000-0000
Telecopier:
(000) 000-0000
|
Re:
|
$[
] in aggregate certificate principal balance of Home Equity Mortgage
Trust
2006-2, Class 2A-1 Certificates and $[ ] in aggregate maximum certificate
principal balance of Home Equity Mortgage Trust 2006-2, Home Equity
Mortgage Pass-Through Certificates, Series 2006-2, Class G Certificates
(the “Insured Securities”)
|
Policy
No. 06030043
(the
“Policy”)
Payment
Date: ___________________________
We
refer
to that certain [Indenture], dated as of April 1, 2006, among Home
Equity Mortgage Trust 2006-2 as Issuing Entity and
U.S.
Bank National Association, as Indenture Trustee (the “Pooling and Servicing
Agreement”), relating to the above referenced Insured Securities. All
capitalized terms not otherwise defined herein or in the Policy shall have
the
same respective meanings assigned to such terms in the Indenture.
ARTICLE
XIII
THE
INDENTURE TRUSTEE HAS DETERMINED UNDER THE INDENTURE THAT IN RESPECT OF SUCH
PAYMENT DATE:
| Section 13.01 |
the
excess of (x) Current Interest for the related class of Insured Securities
on such Payment Date, over (y) the Interest Remittance Amount from
the
Group 2 Mortgage Loans on such Payment Date allocated to pay Current
Interest on the related class of Insured Securities on such Payment
Date
as provided in Section [ ] of the Indenture is $[__];
|
| Section 13.02 |
on
any Payment Date prior to the Final Scheduled Payment Date, the excess,
if
any, of the Aggregate Collateral Balance of the Group 2 Loans for
such
Payment Date over the aggregate Class Principal Balance of the Insured
Securities (after giving effect to any principal payments other than
the
amounts paid in respect of the Policy on such Payment Date) is $[__];
and
|
| Section 13.03 |
the
Class Principal Balance of each class of Insured Securities to the
extent
unpaid on the Final Scheduled Payment Date or earlier termination
of the
Issuing Entity pursuant to the terms of the Indenture, in each case
after
giving effect to payments made on such date from all sources other
than
this Policy is $[__].
|
(b) The
amounts available to pay the items identified in items (1) through (3) above,
as
reduced by any portion thereof that has been deposited in the [Master Servicer
Collection Account] or the [Distribution Account] but may not be withdrawn
therefrom pursuant to an order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to Section 362 of the United States
Bankruptcy Code), is $[_______].
Please
be
advised that accordingly, a Deficiency Amount is due for the Payment Date
identified above for the Insured Securities in the amount of $__________. This
Deficiency Amount constitutes an Insured Amount payable by Financial Guaranty
under the Policy.
[In
addition, attached hereto is a copy of the Final Order in connection with a
Preference Amount in the amount set forth therein, together with an assignment
of rights and appointment of agent and other documents required by the Policy
in
respect of Preference Amounts. The amount of the Preference Amount is
$______________. This Preference Amount constitutes an Insured Amount payable
by
Financial Guaranty under the Policy.]
Accordingly,
pursuant to the Pooling and Servicing Agreement, this statement constitutes
a
notice for payment of an Insured Amount by Financial Guaranty in the amount
of
$_______________ under the Policy.
(c) No
payment claimed hereunder is in excess of the amount payable under the
Policy.
The
amount requested in this Notice should be paid to: [Payment
Instructions]
Any
person who knowingly and with intent to defraud any insurance company or other
person files an application for insurance or statement of claim containing
any
materially false information or conceals for the purpose of misleading,
information concerning any fact material thereto, commits a fraudulent insurance
act, which is a crime, and shall also be subject to a civil penalty not to
exceed Five Thousand Dollars ($5,000.00) and the stated value of the claim
for
each such violation.
IN
WITNESS WHEREOF, the Indenture Trustee has executed and delivered this Notice
of
Nonpayment and Demand for Payment of Insured Amounts this _____ day of
______________.
U.S.
BANK
NATIONAL ASSOCIATION, as INDENTURE TRUSTEE
By:
___________________________________
Title:
__________________________________
EXHIBIT
N
STATEMENT
TO NOTEHOLDERS AND CERTIFICATEHOLDERS
(a) with
respect to each Class of Notes or Certificates which are not Notional Amount
Certificates and, unless otherwise stated, the related Payment
Date,
(i) the
initial Class Principal Balance of such Class as of the Closing
Date;
(ii) the
Class
Principal Balance of such Class before giving effect to the distribution of
principal and interest;
(iii) the
amount of the related distribution on such Class allocable to
interest;
(iv) the
amount of the related distribution on such Class allocable to
principal;
(v) the
sum
of the principal and interest payable to such Class;
(vi) the
Realized Loss allocable to such Class;
(vii) the
Carryforward Interest allocable to such Class;
(viii) the
Class
Principal Balance of such Class after giving effect to the distribution of
principal and interest;
(ix) the
Pass-Through Rate for such Class and whether such Pass-Through Rate was limited
by the Net Funds Cap;
(x) [reserved];
(xi) any
shortfall in principal allocable to such Class, if such amount is greater than
zero; and
(xii) any
shortfall in interest allocable to such Class, if such amount is greater than
zero.
(b) with
respect to each Class of Notes or Certificates which are Notional Amount
Certificates and, unless otherwise stated, the related Payment
Date,
(i) the
Notional Amount of such Class as of the Cut-off Date;
(ii) the
Notional Amount of such Class before giving effect to the distribution of
interest;
(iii) the
amount of the related distribution on such Class allocable to
interest;
(iv) the
amount of the related distribution on such Class allocable to
principal;
(v) the
sum
of the principal and interest payable to such class;
(vi) the
Realized Loss allocable to such Class;
(vii) the
Deferred Amount allocable to such Class;
(viii) the
Notional Amount of such Class after giving effect to the distribution of
interest;
(ix) the
Pass-Through Rate for such Class; and
(x) [reserved].
(c) with
respect to a $1000 factor of the Initial Class Principal Balance of each Class
of Notes or Certificates which are not Notional Amount Certificates and the
related Payment Date,
(i) the
CUSIP
number assigned to such Class;
(ii) the
Class
Principal Balance of such Class factor prior to giving effect to the
distribution of principal and interest;
(iii) the
amount of the related distribution allocable to interest on such Class
factor;
(iv) the
amount of the related distribution allocable to principal on such Class
factor;
(v) the
sum
of the principal and interest payable to such Class factor; and
(vi) the
Class
Principal Balance of such Class factor after giving effect to the distribution
of principal and interest.
(d) with
respect to a $1000 factor of the Initial Class Principal Balance of each Class
of Notes or Certificates which are Notional Amount Certificates and the related
Payment Date,
(i) the
CUSIP
number assigned to such Class;
(ii) the
Notional Amount of such Class factor prior to giving effect to the distribution
of interest;
(iii) the
amount of the related distribution allocable to interest on such Class
factor;
(iv) the
amount of the related distribution allocable to principal on such Class
factor;
(v) the
sum
of the principal and interest payable to such Class factor; and
(vi) the
Notional Amount of such Class factor after giving effect to the distribution
of
interest.
(e) with
respect to the related Payment Date and each Loan Group,
(i) the
Principal Payment Amount, Principal Collections and Principal Xxxxxxxxxx
Xxxxxx;
(ii) the
amount of Curtailments;
(iii) the
amount of Curtailment interest adjustments;
(iv) the
Scheduled Payment of principal;
(v) the
amount of Principal Prepayments;
(vi) the
amount of principal as a result of repurchased Loans;
(vii) the
Substitution Adjustment Amount;
(viii) the
aggregate amount of scheduled interest prior to reduction for fees;
(ix) the
amount of Net Recoveries;
(x) the
amount of reimbursements of Nonrecoverable Advances previously
made;
(xi) the
amount of recovery of reimbursements previously deemed
nonrecoverable;
(xii) the
amount of net Liquidation Proceeds;
(xiii) the
amount of Insurance Proceeds;
(xiv) the
amount of any other distributions allocable to principal;
(xv) the
number of Loans as of the first day of the related Collection
Period;
(xvi) the
aggregate Stated Principal Balance of the Loans as of the first day of the
related Collection Period;
(xvii) the
number of Loans as of the last day of the related Collection
Period;
(xviii) the
aggregate Stated Principal Balance of the Loans as of the last day of the
related Collection Period;
(xix) the
sum
of the Servicing Fee, the Excess Servicing Fee, the Credit Risk Manager Fee
and
the Indenture Trustee Fee and the Expense Fee, with an identification of each
payee and the general purpose of such fees;
(xx) the
amount of current Advances (including the general purpose of such
Advances);
(xxi) the
amount of outstanding Advances and the general source of funds for
reimbursements;
(xxii) the
number and aggregate principal amounts of Loans Delinquent (1) 30 to 59 days,
(2) 60 to 89 days and (3) 90 days or more, including Delinquent bankrupt Loans
but excluding Loans in foreclosure and REO Property;
(xxiii) the
number and aggregate principal amounts of Loans that are currently in
bankruptcy, but not Delinquent;
(xxiv) the
number and aggregate principal amounts of Loans that are in
foreclosure;
(xxv) the
Delinquency Rate, Rolling Three Month Delinquency Rate, the Senior Enhancement
Percentage and whether a Trigger Event is in effect ;
(xxvi) the
number and aggregate principal amount of any REO Properties as of the close
of
business on the Determination Date preceding such Payment Date;
(xxvii) current
Realized Losses;
(xxviii) Cumulative
Net Realized Losses and whether a Cumulative Loss Event is
occurring;
(xxix) the
weighted average term to maturity of the Loans as of the close of business
on
the last day of the calendar month preceding the related Payment
Date;
(xxx) the
number of Loans that have Prepayment Penalties and for which prepayments were
made during the related Collection Period, as applicable;
(xxxi) the
aggregate principal balance of Loans that have Prepayment Penalties and for
which prepayments were made during the related Collection Period, as
applicable;
(xxxii) the
aggregate amount of Prepayment Penalties collected during the related Collection
Period, as applicable;
(xxxiii) the
total
cashflows received and the general sources thereof;
(xxxiv) the
amount of any funds remaining in the related Pre-Funding Account as of such
Payment Date;
(xxxv) the
weighted average Net Mortgage Rate and the Net Funds Cap;
(xxxvi) the
Net
Excess Spread; and
(xxxvii) the
applicable Record Dates, Interest Accrual Periods, Determination Date for
calculating distributions and the actual Payment Date.
(f) with
respect to the related Payment Date,
(i) the
Targeted Overcollateralization Amount;
(ii) the
Overcollateralization Amount;
(iii) the
amount, if any, by which the Targeted Overcollateralization Amount exceeds
the
Overcollateralization Amount;
(iv) the
Overcollateralization Release Amount;
(v) the
Monthly Excess Interest and the Monthly Excess Cashflow;
(vi) the
amount of any payment to the Class 1X-1 Certificates or Class 2X-1
Certificates;
(vii) the
amount of any Net Swap Payment payable by the Indenture Trustee on behalf of
the
Trust or payable to the Indenture Trustee on behalf of the Trust;
(viii) the
Realized Loss Percentage;
(ix) the
amount of any Additional Balance Advance Amount for any period;
(x) the
amount of Excluded Amounts for the related Collection Period;
(xi) the
amount, if any, received under the Policy; and
(xii) the
occurrence of any Rapid Amortization Event or any Event of Default in respect
of
the Notes in either Loan Group under the Indenture.
APPENDIX
A
DEFINITIONS
Accepted
Servicing Practices:
With
respect to any Loan, those mortgage servicing practices (including collection
procedures) of prudent mortgage banking institutions which service mortgage
loans of the same type as such Loan in the jurisdiction where the related
Mortgaged Property is located.
Accrual
Period:
For the
Class A, Class M and Class B Notes and the Class G Certificates and
any Payment Date, the period commencing on the immediately preceding Payment
Date (or the Closing Date, in the case of the first Accrual Period) and ending
on the day immediately preceding the related Payment Date. For the Class 1A-R,
Class 1P, Class 1X-1, Class 1X-2, Class 1X-S, Class 2A-R, Class 2P, Class 2X-1
and Class 2X-2 Certificates and any Payment Date, the calendar month preceding
such Payment Date.
Accrued
Certificate Interest:
With
respect to each Payment Date and the REMIC IA, REMIC IB, REMIC IC,
REMIC IIA or REMIC IIB Regular Interests, the Uncertificated Accrued Interest
for such Regular Interest. With respect to each Payment Date, interest accrued
during the related Accrual Period at the interest rate for such Notes or
Certificates, as applicable, on the related Notes Balance or Certificate
Balance, as applicable, for such Payment Date.
Act
of
Noteholder:
As
defined in Section 10.03 of the Indenture.
Additional
Balance:
With
respect to any Group 2 Loan, any future Draw (other than a Draw representing
an
Excluded Amount) made by the related Mortgagor pursuant to the related Loan
Agreement after the Cut-Off Date, together with all money due or to become
due
in respect of such Draw.
Additional
Balance Advance Amount:
Shall
mean, with respect to the Group 2 Loans and any Payment Date during the Managed
Amortization Period, the sum of (a) the excess, if any, of (1) the
aggregate principal amount of Additional Balances conveyed to the Issuing Entity
during the related Collection Period, over (2) related Principal Collections
applied to purchase such Additional Balances and (b) any Additional Balance
Advance Amount remaining unreimbursed from the prior Payment Date. The
Additional Balance Advance Amount shall be evidenced by the Class G
Certificates. With respect to the Group 2 Loans and any Payment Date during
a
Rapid Amortization Period, the Additional Balance Advance Amount for any such
Payment Date shall only equal the amount noted in clause (b) above as reduced
by
any amounts paid to the Class G Certificates in respect of principal prior
to
the related Payment Date during the Rapid Amortization Period, pursuant to
Section 5.01(a) of the Trust Agreement. In no event shall Excluded Amounts
constitute a part of the Additional Balance Advance Amount.
Additional
Form 10-D Disclosure:
As
defined in Section 6.16(a)(i) of the Indenture.
Additional
Form 10-K Disclosure:
As
defined in Section 6.16(a)(iii) of the Indenture.
Adjustment
Date:
With
respect to each HELOC, the date set forth in the related Mortgage Note on which
the related Mortgage Interest Rate on the HELOC is adjusted in accordance with
the terms of the Loan Agreement.
Administrator:
U.S.
Bank National Association and its successors or assigns or any successor
administrator appointed pursuant to the terms of the Administration
Agreement.
Administration
Agreement:
The
administration agreement dated as of the Closing Date among the Seller, the
Issuer and the Indenture Trustee.
Advance:
The
payment required to be made by a Servicer with respect to any Payment Date
pursuant to Section 3.19 of the Servicing Agreement.
Affected
Party:
As
defined in the Swap Agreement.
Affiliate:
With
respect to any Person, any other Person controlling, controlled by or under
common control with such Person. For purposes of this definition, “control”
means the power to direct the management and policies of a Person, directly
or
indirectly, whether through ownership of voting securities, by contract or
otherwise and “controlling” and “controlled” shall have meanings correlative to
the foregoing.
Aggregate
Collateral Balance:
As
of any
date of determination and with respect to each Loan Group, an amount equal
to
the related Aggregate Loan Balance plus the amount, if any, then on deposit
in
the related Pre-Funding Account. The Aggregate Collateral Balance of each Loan
Group as of the Cut-off Date is equal to the Aggregate Loan Balance as of the
Cut-off Date plus the amount on deposit in the related Pre-Funding Account
as of
the Closing Date.
Aggregate
Loan Balance:
As of
any Payment Date and with respect to each Loan Group, an amount equal to the
aggregate of the Principal Balances of the Group 1 Loans or Group 2 Loans,
as
applicable, as of the last day of the prior month.
Aggregate
Subsequent Transfer Amount:
With
respect to any Subsequent Transfer Date, the aggregate Principal Balance as
of
the applicable Cut-off Date of the related Subsequent Loans conveyed on such
Subsequent Transfer Date, as listed on the revised Loan Schedule delivered
pursuant to Section 2.04(b) of the Indenture; provided,
however,
that
such amount shall not exceed the amount on deposit in the related Pre-Funding
Account.
Annual
Statement of Compliance:
As
defined in Section 3.10 of the Servicing Agreement.
Applied
Loss Amount:
For any
Payment Date, the excess of the aggregate Class Principal Balance of the
Notes related to a Loan Group over the Aggregate Collateral Balance for that
Loan Group after giving effect to all Realized Losses incurred with respect
to
related Loans during the Collection Period for such Payment Date and payments
of
principal on such Payment Date.
Appraised
Value:
With
respect to any Mortgaged Property, the value thereof as determined by the most
recent property valuation made on behalf of the Seller.
Assessment
of Compliance:
As
defined in Section 3.11 of the Servicing Agreement.
Assignment
of Mortgage:
With
respect to any Mortgage, an assignment, notice of transfer or equivalent
instrument, in recordable form, sufficient under the laws of the jurisdiction
in
which the related Mortgaged Property is located to reflect the sale of the
Mortgage, which assignment, notice of transfer or equivalent instrument may
be
in the form of one or more blanket assignments covering Mortgages secured by
Mortgaged Properties located in the same jurisdiction.
Auction
Purchaser:
As
defined in Section 10.18 of the Indenture
Auction
Price:
As
defined in Section 10.18 of the Indenture
Authorized
Newspaper:
A
newspaper of general circulation in the Borough of Manhattan, the City of New
York, printed in the English language and customarily published on each Business
Day, whether or not published on Saturdays, Sundays or holidays.
Authorized
Officer:
With
respect to the Issuer, any officer of the Owner Trustee, Seller or Administrator
who is authorized to act in matters relating to the Issuer under the Trust
Agreement or Administration Agreement and who is identified on the list of
Authorized Officers delivered to the Indenture Trustee on the Closing Date
(as
such list may be modified or supplemented from time to time
thereafter).
Attestation
Report:
As
defined in Section 3.11 of the Servicing Agreement.
Bankruptcy
Code:
The
United States Bankruptcy Code of 1978, as amended.
Basic
Documents:
The
Trust Agreement, the Indenture, the Loan Purchase Agreement, the Servicing
Agreement, the Administration Agreement, the Custodial Agreements, the Interest
Rate Cap Agreement and the other documents and certificates delivered in
connection with any of the above.
Basis
Risk Reserve Fund:
With
respect to each Loan Group, the separate Eligible Account created and initially
maintained by the Indenture Trustee pursuant to Section 3.32 of the Indenture
in
the name of the Indenture Trustee for the benefit of the Noteholders. Funds
in
the Basis Risk Reserve Funds shall be held in trust for the holders of the
related Class A, Class M and, if applicable, Class B Notes and Class G
Certificates for the uses and purposes set forth in the Indenture. Each Basis
Risk Reserve Fund will be an “outside reserve fund” within the meaning of
Treasury regulation Section 1.860G-2(h) established and maintained pursuant
to
Section 3.32 of the Indenture. The Basis Risk Reserve Funds are not assets
of
any REMIC. Ownership
of the Basis Risk Reserve Fund related to the Group 1 Loans is evidenced by
the
Class 1X-1 Certificates.
Ownership of the Basis Risk Reserve Fund related to the Group 2 Loans is
evidenced by the Class 2X-1 Certificates.
Basis
Risk Shortfall:
For
each Class of Notes and the Class G Certificates and any Payment Date, the
sum of:
(1) the
excess, if any, of (A) the related Current Interest for such
Class calculated on the basis of the lesser of (x)(i) LIBOR plus the
applicable Note Margin with respect to each such Class of Notes
or
the
Class G Certificates
or (ii)
in the case of the Class 1A-1 Notes and Class 1A-2 Notes, the related fixed
pass-through rate and (y) except with respect to the Group
1
Notes,
the
Maximum Interest Rate, over (B) Current Interest for such Class calculated
on the basis of the Net Funds Cap, for the applicable Payment Date;
(2) any
amounts relating to clause (1) remaining unpaid from prior Payment Dates,
and
(3) interest
on the amount in clause (2) calculated on the basis of the lesser of
(x)(i) LIBOR plus the applicable Note Margin with respect to each such
Class of Notes or the Class G Certificates or (ii) in the case of the Class
1A-1 Notes and Class 1A-2 Notes, the related fixed pass-through rate and (y)
except with respect to the Group 1 Notes, the Maximum Interest Rate, on the
basis of a 360-day year and the actual number of days elapsed in the related
Accrual Period (or 30 days, in the case of the Class 1A-1 and Class 1A-2
Notes).
Beneficial
Owner:
With
respect to any Note, the Person who is the owner of a security entitlement
to
such Note as reflected on the books of the Depository or on the books of a
Person maintaining an account with such Depository (directly as a Depository
Participant or indirectly through a Depository Participant, in accordance with
the rules of such Depository).
Book-Entry
Notes:
Notes
held by the Depository as described in Section 4.06 of the Indenture.
Initially, the Notes shall be Book-Entry Notes.
Business
Day:
Any day
other than (i) a Saturday or a Sunday, or (ii) a legal holiday in the State
of
New York, Pennsylvania, Oregon, Florida, Delaware, Minnesota or Utah, or (iii)
a
day on which banks in the State of New York, Pennsylvania, Oregon, Florida,
Delaware, Minnesota or Utah are authorized or obligated by law or executive
order to be closed.
Capitalized
Interest Account:
With
respect to each Loan Group, the separate Eligible Account designated as such
and
created and maintained by the Indenture Trustee pursuant to Section 3.33(b)
of
the Indenture. Each Capitalized Interest Account shall be treated as an “outside
reserve fund” under applicable Treasury regulations and shall not be part of any
REMIC. Except as provided in Section 3.33(b) of the Indenture, any investment
earnings on the Capitalized Interest Accounts shall be treated as owned by
the
Depositor and will be taxable to the Depositor.
Capitalized
Interest Deposit:
With
regards to the Group 1 Loans and Group 2 Loans, $196,745.91 and $ 396,300.41,
respectively.
Carryforward
Interest:
For any
class of Notes, the Class 1A-R, Class 1P, Class 2A-R, Class 2P and Class G
Certificates and any Payment Date, the sum of (1) the amount, if any, by
which (x) the sum of (A) Current Interest for such Class for the
immediately preceding Payment Date and (B) any unpaid Carryforward Interest
from
previous Payment Dates exceeds (y) the amount paid in respect of interest on
such Class on such immediately preceding Payment Date, and (2) interest on
such amount for the related Accrual Period at the applicable Note Interest
Rate
for each class of Notes and the Class 1A-R, Class 1P, Class 2A-R, Class 2P
and
Class G Certificates.
Certificate
Balance:
With
respect to the Class G Certificates and any date of determination, the
Initial Class G Certificate Balance, increased by any unreimbursed
Additional Balance Advance Amounts. With respect to the Class 1A-R Certificates
and any date of determination, the Initial Class 1A-R Certificate Balance,
reduced by all payments of principal on such Certificates prior to such date
of
determination. With respect to the Class 2A-R Certificates and any date of
determination, the Initial Class 2A-R Certificate Balance, reduced by all
payments of principal on such Certificates prior to such date of determination.
With respect to the Class 1P Certificates and any date of determination, the
Initial 1P Certificate Balance, reduced by all payments of principal on such
Certificates prior to such date of determination. With respect to the Class
2P
Certificates and any date of determination, the Initial Class 2P Certificate
Balance, reduced by all payments of principal on such Certificates prior to
such
date of determination.
Certificates:
Collectively, the Class G Certificates, Class 1A-R Certificates, Class 2A-R
Certificates, Class 1P Certificates, Class 2P Certificates, Class 1X-1
Certificates, Class 2X-1 Certificates, Class 1X-2 Certificates, Class 2X-2
Certificates and Class 1X-S Certificates.
Certificate
Distribution Account:
The
account or accounts created and maintained by the Certificate Paying Agent
pursuant to Section 3.10(c) of the Trust Agreement. The Certificate Paying
Agent will make all distributions on the Certificates from money on deposit
in
the Certificate Distribution Account. The Certificate Distribution Account
shall
be an Eligible Account.
Certificate
of Trust:
The
Certificate of Trust filed for the Owner Trust pursuant to Section 3 810(a)
of the Statutory Trust Statute, including all amendments and
restatements.
Certificate
Paying Agent:
The
paying agent appointed pursuant to Section 3.10 of the Trust
Agreement.
Certificate
Percentage Interest:
With
respect to the Certificates, the Certificate Percentage Interest stated on
the
face thereof.
Certificate
Register:
The
register maintained by the Certificate Registrar in which the Certificate
Registrar shall provide for the registration of the Certificates and of
transfers and exchanges of the Certificates.
Certificate
Registrar:
Initially, the Indenture Trustee, in its capacity as Certificate Registrar,
or
any successor to the Indenture Trustee in such capacity.
Certificateholder:
The
Person in whose name a Certificate is registered in the Certificate Register
except that, any Certificate registered in the name of the Issuer, the Owner
Trustee, the Indenture Trustee or any Affiliate of the Owner Trustee, the
Indenture Trustee shall be deemed not to be outstanding and the registered
holder will not be considered a Certificateholder or a holder for purposes
of
giving any request, demand, authorization, direction, notice, consent or waiver
under the Indenture or the Trust Agreement provided that, in determining whether
the Indenture Trustee or the Owner Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Certificates that the Indenture Trustee or the Owner Trustee knows to
be so
owned shall be so disregarded. Owners of Certificates that have been pledged
in
good faith may be regarded as Holders if the pledgee establishes to the
satisfaction of the Indenture Trustee or the Owner Trustee, as the case may
be,
the pledgee’s right so to act with respect to such Certificates and that the
pledgee is not the Issuer, any other obligor upon the Certificates or any
Affiliate of the Owner Trustee, the Indenture Trustee.
Charged
Off Loan:
With
respect to any Payment Date, a defaulted Loan that has not yet been liquidated,
giving rise to a Realized Loss, on the date on which the related Servicer
determines, pursuant to the procedures set forth in Section 3.07 of the
Servicing Agreement, that there will be (i) no Significant Net Recoveries with
respect to such Loan or (ii) the potential Net Recoveries are anticipated to
be
an amount, determined by the related Servicer in its good faith judgment and
in
light of other mitigating circumstances, that is insufficient to warrant
proceeding through foreclosure or other liquidation of the related Mortgaged
Property.
Class:
Collectively, all of the Notes bearing the same designation.
Class
1A Notes:
The
Class 1A-1 Notes, the Class 1A-2 Notes and the Class 1A-3 Notes.
Class
1A-1 Notes:
The
Class 1A-1 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-1 to the Indenture.
Class
1A-2 Notes:
The
Class 1A-2 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-1 to the Indenture.
Class
1A-3 Notes:
The
Class 1A-3 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-1 to the Indenture.
Class
1A-R Certificates:
The
Class 1A-R Certificates substantially in the form set forth in Exhibit I to
the Trust Agreement. The Class 1A-R Certificates represents beneficial ownership
of the Class R-IA Interest, the Class R-IB Interest, the Class R-IC Interest
and
the Class R-ID Interest.
Class
1A-R Certificate Balance:
An
amount equal to $100.00 less amounts distributed in respect of principal
pursuant to Section 5.01(a) of the Trust Agreement.
Class
1A-R Certificate Distribution Amount:
The
amount payable to the Certificate Paying Agent under
Section 3.05(b)(I)(iii) and Section 3.05(c)(I)(ii) of the Indenture
for payment to the Class 1A-R Certificates under the Trust
Agreement.
Class
1B-1 Notes:
The
Class 1B-1 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-3 to the Indenture.
Class
1B-1 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, will be the amount, if any, by which (x) the
sum
of (i) the aggregate Class Principal Balance of the Class 1A Notes,
Class 1M Notes and Class 1P Certificates, after giving effect to payments on
such Payment Date and (ii) the Class Principal Balance of the Class 1B-1
Notes immediately prior to such Payment Date exceeds (y) the lesser of
(A) the product of (i) 86.71% and (ii) the related Aggregate Collateral
Balance for such Payment Date and (B) the amount, if any, by which (i) the
related Aggregate Collateral Balance for such Payment Date exceeds
(ii) 0.50% of the related Aggregate Collateral Balance.
Class
1B-2 Notes:
The
Class 1B-2 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-3 to the Indenture.
Class
1B-2 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, will be the amount, if any, by which (x) the
sum
of (i) the aggregate Class Principal Balance of the Class A Notes,
Class M Notes, Class 1B-1 Notes and Class 1P Certificates, after giving effect
to payments on such Payment Date and (ii) the Class Principal Balance of
the Class 1B-2 Notes immediately prior to such Payment Date exceeds (y) the
lesser of (A) the product of (i) 89.00% and (ii) the related Aggregate
Collateral Balance for such Payment Date and (B) the amount, if any, by
which (i) the related Aggregate Collateral Balance for such Payment Date exceeds
(ii) 0.50% of the related Aggregate Collateral Balance.
Class
1M Notes:
The
Class 1M-1 Notes, Class 1M-2 Notes, Class 1M-3 Notes, Class 1M-4 Notes, Class
1M-5 Notes, Class 1M-6 Notes, Class 1M-7 Notes, Class 1M-8 Notes and Class
1M-9
Notes.
Class
1M-1 Notes:
The
Class 1M-1 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
1M-1 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, will be the amount, if any, by which (x) the
sum
of (i) the aggregate Class Principal Balance of the Class A Notes and
Class 1P Certificates after giving effect to payments on such Payment Date
and
(ii) the Class Principal Balance of the Class 1M-1 Notes immediately prior
to such Payment Date exceeds (y) the lesser of (A) the product of
(i) 46.82% and (ii) the related Aggregate Collateral Balance for such
Payment Date and (B) the amount, if any, by which (i) the related Aggregate
Collateral Balance for such Payment Date exceeds (ii) 0.50% of the related
Aggregate Collateral Balance.
Class
1M-2 Notes:
The
Class 1M-2 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
1M-2 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, with respect to such Payment Date, will be
the
amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Class 1A Notes, Class 1M-1 Notes and Class 1P Certificates,
in each case, after giving effect to payments on such Payment Date and
(ii) the Class Principal Balance of the Class 1M-2 Notes immediately
prior to such Payment Date exceeds (y) the lesser of (A) the product of (i)
57.22% and (ii) the related Aggregate Collateral Balance for such Payment Date
and (B) the amount, if any, by which (i) the related Aggregate Collateral
Balance for such Payment Date exceeds (ii) 0.50% of the related Aggregate
Collateral Balance.
Class
1M-3 Notes:
The
Class 1M-3 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
1M-3 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, with respect to such Payment Date, will be
the
amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Class 1A Notes, Class 1M-1 Notes, Class 1M-2 Notes and Class
1P Certificates, in each case, after giving effect to payments on such Payment
Date and (ii) the Class Principal Balance of the Class 1M-3 Notes
immediately prior to such Payment Date exceeds (y) the lesser of (A) the product
of (i) 61.22% and (ii) the related Aggregate Collateral Balance for such Payment
Date and (B) the amount, if any, by which (i) the related Aggregate Collateral
Balance for such Payment Date exceeds (ii) 0.50% of the related Aggregate
Collateral Balance.
Class
1M-4 Notes:
The
Class 1M-4 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
1M-4 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, with respect to such Payment Date, will be
the
amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Class 1A Notes, Class 1M-1 Notes, Class 1M-2 Notes, Class
1M-3 Notes and Class 1P Certificates, in each case, after giving effect to
payments on such Payment Date and (ii) the Class Principal Balance of
the Class 1M-4 Notes immediately prior to such Payment Date exceeds (y) the
lesser of (A) the product of (i) 66.22% and (ii) the related Aggregate
Collateral Balance for such Payment Date and (B) the amount, if any, by which
(i) the related Aggregate Collateral Balance for such Payment Date exceeds
(ii)
0.50% of the related Aggregate Collateral Balance.
Class
1M-5 Notes:
The
Class 1M-5 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
1M-5 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, with respect to such Payment Date, will be
the
amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Class 1A Notes, Class 1M-1 Notes, Class 1M-2 Notes, Class
1M-3 Notes, Class 1M-4 Notes and Class 1P Certificates, in each case, after
giving effect to payments on such Payment Date and (ii) the
Class Principal Balance of the Class 1M-5 Notes immediately prior to such
Payment Date exceeds (y) the lesser of (A) the product of (i) 70.42% and (ii)
the related Aggregate Collateral Balance for such Payment Date and (B) the
amount, if any, by which (i) the related Aggregate Collateral Balance for such
Payment Date exceeds (ii) 0.50% of the related Aggregate Collateral
Balance.
Class
1M-6 Notes:
The
Class 1M-6 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
1M-6 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, with respect to such Payment Date, will be
the
amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Class 1A Notes, Class 1M-1 Notes, Class 1M-2 Notes, Class
1M-3 Notes, Class 1M-4, Class 1M-5 Notes and Class 1P Certificates, in each
case, after giving effect to payments on such Payment Date and (ii) the
Class Principal Balance of the Class 1M-6 Notes immediately prior to such
Payment Date exceeds (y) the lesser of (A) the product of (i) 73.62% and (ii)
the related Aggregate Collateral Balance for such Payment Date and (B) the
amount, if any, by which (i) the related Aggregate Collateral Balance for such
Payment Date exceeds (ii) 0.50% of the related Aggregate Collateral
Balance.
Class
1M-7 Notes:
The
Class 1M-7 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
1M-7 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, with respect to such Payment Date, will be
the
amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Class 1A Notes, Class 1M-1 Notes, Class 1M-2 Notes, Class
1M-3 Notes, Class 1M-4 Notes, Class 1M-5 Notes, Class 1M-6 Notes and Class
1P
Certificates, in each case, after giving effect to payments on such Payment
Date
and (ii) the Class Principal Balance of the Class 1M-7 Notes
immediately prior to such Payment Date exceeds (y) the lesser of (A) the product
of (i) 77.31% and (ii) the related Aggregate Collateral Balance for such Payment
Date and (B) the amount, if any, by which (i) the related Aggregate Collateral
Balance for such Payment Date exceeds (ii) 0.50% of the related Aggregate
Collateral Balance.
Class
1M-8 Notes:
The
Class 1M-8 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
1M-8 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, with respect to such Payment Date, will be
the
amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Class 1A Notes, Class 1M-1 Notes, Class 1M-2 Notes, Class
1M-3 Notes, Class 1M-4 Notes, Class 1M-5 Notes, Class 1M-6 Notes, Class 1M-7
Notes and Class 1P Certificates, in each case, after giving effect to payments
on such Payment Date and (ii) the Class Principal Balance of the Class
1M-8 Notes immediately prior to such Payment Date exceeds (y) the lesser of
(A)
the product of (i) 80.11% and (ii) the related Aggregate Collateral Balance
for
such Payment Date and (B) the amount, if any, by which (i) the related Aggregate
Collateral Balance for such Payment Date exceeds (ii) 0.50% of the related
Aggregate Collateral Balance.
Class
1M-9 Notes:
The
Class 1M-9 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
1M-9 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, with respect to such Payment Date, will be
the
amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Class 1A Notes, Class 1M-1 Notes, Class 1M-2 Notes, Class
1M-3 Notes, Class 1M-4 Notes, Class 1M-5 Notes, Class 1M-6 Notes, Class 1M-7
Notes, Class 1M-8 Notes and Class 1P Certificates, in each case, after giving
effect to payments on such Payment Date and (ii) the Class Principal
Balance of the Class 1M-9 Notes immediately prior to such Payment Date exceeds
(y) the lesser of (A) the product of (i) 82.71% and (ii) the related Aggregate
Collateral Balance for such Payment Date and (B) the amount, if any, by which
(i) the related Aggregate Collateral Balance for such Payment Date exceeds
(ii)
0.50% of the related Aggregate Collateral Balance.
Class
1P Certificates:
The
Class 1P Certificates substantially in the form of Exhibit L to the
Trust Agreement.
Class 1P
Certificate Distribution Amount:
The
amount payable to the Certificate Paying Agent under
Section 3.05(b)(I)(iii), Section 3.05(c)(I)(i) and Section
3.05(d)(I)(i) of the Indenture for payment to the Class 1A-R Certificates under
the Trust Agreement.
Class
1X-1 Certificates:
The
Class 1X-1 Certificates substantially in the form of Exhibit A to the Trust
Agreement.
Class
1X-1 Distribution Amount:
On any
Payment Date, the sum of Accrued Certificate Interest for such Payment Date
and
the related Overcollateralization Release Amount, if any, for the Determination
Date related to such Payment Date.
Class
1X-1 Notional Amount:
With
respect to the Class 1X-1 Certificates and any Payment Date, the aggregate
of
the Class Principal Balances for all Classes of REMIC IC Regular Interests
(other than REMIC IC Regular Interest LTIC-1P and LTIC-1R) before giving effect
to payments to be made and the allocation of Applied Loss Amounts to occur
on
such Payment Date.
Class
1X-2 Certificates:
The
Class 1X-2 Certificates substantially in the form of Exhibit A to the Trust
Agreement.
Class
1X-S Certificates:
The
Class 1X-S Certificates substantially in the form of Exhibit A to the Trust
Agreement.
Class
1X-S Certificate Distribution Amount:
The
amount payable to the Certificate Paying Agent under Section 3.05(b)(I)(i)
of the Indenture for payment to the Class 1X-S Certificates under the Trust
Agreement.
Class
1X-S Notional Amount:
Immediately prior to any Payment Date, with respect to the Class 1X-S
Certificates, an amount equal to the aggregate Principal Balance of the Group
1
Loans as of the Due Date in the month of such Payment Date (prior to giving
effect to any Scheduled Payments due on such Loans on such Due Date). For
federal income tax purposes, however, the Class 1X-S Notional Amount will equal
the Uncertificated Notional Amount of REMIC IC Regular Interest
LTIC-1S.
Class
2A-1 Notes:
The
Class 2A-1 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-1 to the Indenture.
Class
2A-R Certificates:
The
Class 2A-R Certificates substantially in the form set forth in Exhibit I to
the Trust Agreement. The Class 2A-R Certificates represents beneficial ownership
of the Class R-IIB Interest and the Class R-IIC Interest.
Class
2A-R Certificate Balance:
An
amount equal to $100.00 less amounts distributed in respect of principal
pursuant to Section 5.01(a) of the Trust Agreement.
Class
2A-R Certificate Distribution Amount:
The
amount payable to the Certificate Paying Agent under
Section 3.05(b)(II)(iii) and Section 3.05(c)(II)(ii) of the Indenture
for payment to the Class 2A-R Certificates under the Trust
Agreement.
Class
2M Notes:
The
Class 2M-1 Notes and Class 2M-2 Notes.
Class
2M-1 Notes:
The
Class 2M-1 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
2M-1 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, will be the amount, if any, by which (x) the
sum
of (i) the aggregate Class Principal Balance of the Class 2A-1 Notes
and Class 2P Certificates after giving effect to payments on such Payment Date
and (ii) the Class Principal Balance of the Class 2M-1 Notes immediately
prior to such Payment Date exceeds (y) the lesser of (A) the product of
(i) 93.80% and (ii) the related Aggregate Collateral Balance for such
Payment Date and (B) the amount, if any, by which (i) the related Aggregate
Collateral Balance for such Payment Date exceeds (ii) 0.50% of the related
Aggregate Collateral Balance.
Class
2M-2 Notes:
The
Class 2M-2 Asset-Backed Notes, Series 2006-2, in substantially the form set
forth in Exhibit A-2 to the Indenture.
Class
2M-2 Principal Payment Amount:
For any
Payment Date on or after the related Stepdown Date and for which a related
Trigger Event is not in effect, with respect to such Payment Date, will be
the
amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Class 2A-1 Notes, Class 2M-1 Notes and Class 2P
Certificates, in each case, after giving effect to payments on such Payment
Date
and (ii) the Class Principal Balance of the Class 2M-2 Notes
immediately prior to such Payment Date exceeds (y) the lesser of (A) the product
of (i) 95.80% and (ii) the related Aggregate Collateral Balance for such Payment
Date and (B) the amount, if any, by which (i) the related Aggregate Collateral
Balance for such Payment Date exceeds (ii) 0.50% of the related Aggregate
Collateral Balance.
Class
2P Certificates:
The
Class 2P Certificates substantially in the form of Exhibit L to the
Trust Agreement.
Class
2X-1 Certificates:
The
Class 2X-1 Certificates substantially in the form of Exhibit A to the Trust
Agreement.
Class
2X-1 Distribution Amount:
On any
Payment Date, the sum of Accrued Certificate Interest for such Payment Date
and
the related Overcollateralization Release Amount, if any, for the Determination
Date related to such Payment Date.
Class
2X-1 Notional Amount:
With
respect to the Class 2X-1 Certificates and any Payment Date, the aggregate
of
the Class Principal Balances for all Classes of REMIC IIB Regular Interests
(other than REMIC IIB Regular Interest LTIIB-2P and LTIIB-2R) before giving
effect to payments to be made and the allocation of Applied Loss Amounts to
occur on such Payment Date.
Class
2X-2 Certificates:
The
Class 2X-2 Certificates substantially in the form of Exhibit A to the Trust
Agreement.
Class
A Notes:
The
Class 1A Notes and the Class 2A Notes.
Class B
Notes:
The
Class 1B-1 Notes and Class 1B-2 Notes.
Class G
Certificate Distribution Amount:
The
amount payable to the Certificate Paying Agent under Section 3.05(a),
Section 3.05(b)(II)(i) and Section 3.05(e)(II)(ii) of the Indenture
for payment to the Class G Certificates under the Trust
Agreement.
Class G
Certificates:
The
Class G Certificates substantially in the form of Exhibit K to the
Trust Agreement. The Class G Certificates are designated as the sole class
of
“residual interest” in REMIC IIA.
Class
M Notes:
The
Class 1M Notes and Class 2M Notes.
Class Principal
Balance:
For any
Class of Notes or Certificates (other than the Class 1X-1, Class 2X-1,
Class 1X-2, Class 2X-2 and Class 1X-S Certificates) and as of any date of
determination, an amount equal to the Initial Note Balance or Certificate
Balance of that Class, reduced by the aggregate of the following amounts
allocable to that Class: (i) all amounts previously distributed to holders
of
Notes or Certificates of that Class as payments of principal; and (ii) in
the case of any Class of Subordinate Notes, any reductions to the
Class Principal Balance thereof due to Realized Losses. The Class Principal
Balance of any class of Class M Notes or Class B Notes will be increased
pursuant to Section 3.05(j) of the Indenture, due to the receipt of Subsequent
Recoveries.
With
respect to the Class G Certificates and as of any date of determination, any
unreimbursed Additional Balance Advance Amounts. After the occurrence of the
Rapid Amortization Period, the Class Principal Balance of the Class G
Certificates will not increase.
With
respect to the Class 1X-1 Certificates and as of any date of determination,
an amount equal to the Group 1 Overcollateralization Amount as of such date
of
determination. With respect to the Class 2X-1 Certificates and as of any
date of determination, an amount equal to the Group 2 Overcollateralization
Amount as of such date of determination.
Class
R-IA Interest:
The
uncertificated Residual Interest in REMIC IA.
Class
R-IB Interest:
The
uncertificated Residual Interest in REMIC IB.
Class
R-IC Interest:
The
uncertificated Residual Interest in REMIC IC.
Class
R-ID Interest:
The
uncertificated Residual Interest in REMIC ID.
Class
R-IIB Interest:
The
uncertificated Residual Interest in REMIC IIB.
Class
R-IIC Interest:
The
uncertificated Residual Interest in REMIC IIC.
Closing
Date:
April
28, 2006.
Code:
The
Internal Revenue Code of 1986 (or any successor statute thereto) and the rules
and regulations promulgated thereunder, as the same may be amended from time
to
time.
Collateral:
The
meaning specified in the Granting Clause of the Indenture.
Collection
Period:
With
respect to each Payment Date, the calendar month preceding the month of that
Payment Date.
Combined
Loan-to-Value Ratio:
With
respect to any Loan, the ratio, expressed as a percentage of (i) the sum of
(A)
the original principal balance of such Loan or, in the case of a Group 2 Loan,
the credit limit at origination, and (B) any principal balance of all other
Permitted Liens, if any, secured by senior liens on the related Mortgaged
Property as of either (i) the date of origination of those senior liens or
(ii)
the date of origination of such Loan, to (ii) the Appraised Value.
Compensating
Interest Payment:
For any
Payment Date, an amount to be paid by the applicable Servicer (other than PNC)
for such Payment Date, equal to the lesser of (i) the sum of (x) an amount
equal
to 0.25% per annum on the aggregate Principal Balance of the related Loans
otherwise payable to the related Servicer on such Payment Date (prior to giving
effect to any Scheduled Payments due on the Loans on such Due Date) and (y)
any
Prepayment Interest Excess payable to such Servicer for such Payment Date and
(ii) the aggregate Prepayment Interest Shortfall for the Loans being serviced
by
the related Servicer relating to Principal Prepayments received during the
portion of the related Prepayment Period occurring in the prior calendar
month.
Commission:
The
United States Securities and Exchange Commission.
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 to a Mortgagor in
accordance with the terms of the documents contained in the Mortgage
File.
Confirmation:
With
respect to the Swap Agreement, the separate Confirmation, dated April 28, 2006,
and evidencing a transaction between the Counterparty and the Indenture
Trustee.
Corporate
Trust Office:
With
respect to the Indenture Trustee, Certificate Registrar, Certificate Paying
Agent and Paying Agent, the principal corporate trust office of the Indenture
Trustee and Note Registrar at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution of
this instrument is located at 00 Xxxxxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000,
Attention: Corporate Trust - Structured Finance, Ref: Home Equity Mortgage
Trust
2006-2. With respect to the Owner Trustee, the principal corporate trust office
of the Owner Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution of
the
Trust Agreement is as set forth in the Trust Agreement.
Corresponding
Certificate:
With
respect to each REMIC IB and REMIC IC Regular Interest set forth below and
where
applicable, the corresponding Regular Certificate or Corresponding
Uncertificated Interest set forth in the table below:
|
REMIC
IB Regular Interest
|
REMIC
IC Regular Interest
|
Regular
Certificate
|
|
LTIB-1A-1
|
LTIC-1A-1
|
Class
A-1
|
|
LTIB-1A-2
|
LTIC-1A-2
|
Class
A-2
|
|
…………
|
LTIC-1A-3
|
Class
A-3
|
|
…………
|
LTIC-1M-1
|
Class
M-1
|
|
…………
|
LTIC-1M-2
|
Class
M-2
|
|
…………
|
LTIC-1M-3
|
Class
M-3
|
|
…………
|
LTIC-1M-4
|
Class
M-4
|
|
…………
|
LTIC-1M-5
|
Class
M-5
|
|
…………
|
LTIC-1M-6
|
Class
M-6
|
|
…………
|
LTIC-1M-7
|
Class
M-7
|
|
…………
|
LTIC-1M-8
|
Class
M-8
|
|
…………
|
LTIC-1M-9
|
Class
M-9
|
|
…………
|
LTIC-1B-1
|
Class
B-1
|
|
…………
|
LTIC-1B-2
|
Class
B-2
|
|
LTIC-1P
|
LTIC-1P
|
Class
P
|
|
LTIC-1A-R
|
LTIC-1R
|
…………
|
|
LTIC-1X-1
|
…………
|
Class
1X-1
|
With
respect to each REMIC IIB Regular Interest set forth below and where applicable,
the corresponding Regular Certificate set forth in the table below:
|
REMIC
IIB Regular Interest
|
Regular
Certificate
|
|
LTIIB-2A-1
|
Class
A-1
|
|
LTIIB-2A-2
|
Class
A-2
|
|
LTIIB-2M-1
|
Class
M-1
|
|
LTIIB-2M-2
|
Class
M-2
|
|
LTIC-2P
|
Class
P
|
Corresponding
Uncertificated Interest:
With
respect to (a)(i) REMIC IA Regular Interest LTIA-P and (ii) REMIC IA Regular
Interest LTIA-R, (b)(i) REMIC IC Regular Interest LTIC-1P and (ii) REMIC IC
Regular Interest LTIC-1R, respectively.
Counterparty:
Credit
Suisse International or CSi.
Counterparty
Trigger Event:
With
respect to any Payment Date, (i) an Event of Default under the Swap Agreement
with respect to which the Counterparty is a Defaulting Party, (ii) a Termination
Event under the Swap Agreement with respect to which the Counterparty is the
sole Affected Party, or (iii) an Additional Termination Event under the Swap
Agreement with respect to which the Counterparty is the sole Affected
Party.
Credit
Limit:
With
respect to any HELOC, the maximum loan balance permitted under the terms of
the
related Loan Agreement.
Credit
Risk Manager:
Xxxxxxx
Fixed Income Services Inc. (formerly known as The Murrayhill Company), a
Colorado corporation.
Credit
Risk Management Agreement:
Any of
the agreements between Wilshire, SPS and Ocwen and the Credit Risk Manager
dated
as of April 28, 2006.
Credit
Risk Manager Fee:
With
respect to any Loan and any Collection Period, the product of (i) the
Credit Risk Manager Fee Rate divided by 12 and (ii) the Principal Balance of
such Loan as of the first day of such Collection Period.
Credit
Risk Manager Fee Rate:
0.0175%
per annum.
Credit
Scores:
The
credit score for each Loan shall be obtained in accordance with the related
originator’s underwriting guidelines. In cases in which one credit score was
obtained for purposes of origination, that shall be the credit score. If two
credit bureau scores were obtained, the Credit Score will be the lower score.
If
three credit bureau scores were obtained, the Credit Score will be the middle
of
the three. When there is more than one applicant, the Credit Score of the
applicant with the higher income will be used. There is only one (1) score
for
any Loan regardless of the number of borrowers and/or applicants.
Cumulative
Realized Losses:
With
respect to any date of determination and each Loan Group, the cumulative amount
of Realized Losses in such Loan Group since the Cut-off Date, less (i) any
amounts in respect of recoveries and applied as principal on a related Loan
in
any month subsequent to the month in which such related Loan was designated
as a
Liquidated Loan and (ii) Net Recoveries received on related Charged Off
Loans.
Current
Interest:
For any
Payment Date and any Class of Notes and the Class 1A-R, Class 2A-R, Class
1P, Class 2P and Class G Certificates, the amount of interest accruing at the
applicable Note Interest Rate on the related Class Principal Balance during
the related Accrual Period, as reduced by a pro rata portion of any Interest
Shortfalls.
Custodial
Account:
The
account or accounts created and maintained by a Servicer pursuant to
Section 3.02(b) of the Servicing Agreement, in which the related Servicer
shall deposit or cause to be deposited certain amounts in respect of the
Loans.
Custodial
Agreement:
Any of
the Custodial Agreements between a Custodian and the Indenture Trustee, relating
to the custody of the Loans and the related Loan Files.
Custodian:
Either
LaSalle Bank, National Association or JPMorgan Trust Company, N.A. Each
Custodian shall act as agent on behalf of the Indenture Trustee, and its
on-going fees and expenses shall be paid by the Indenture Trustee or as
otherwise specified therein.
Cut-off
Date:
For any
Loan (other than a Subsequent Loan), the open of business on April 1, 2006.
For
any Subsequent Loan, the related Subsequent Transfer Date.
Cut-off
Date Loan Balance:
With
respect to any Loan, the unpaid principal balance thereof as of the close of
business on the Business Day immediately prior to the Cut-off Date.
Data
Remittance Date:
With
respect to each Payment Date and any Ocwen Serviced Loan or Wilshire Serviced
Loan, the second Business Day immediately following the 15th day of the month
of
such Payment Date. With respect to any Group 2 Loan, is the 18th
day of
the month or the next Business Day.
Default:
Any
occurrence which is or with notice or the lapse of time or both would become
an
Event of Default.
Deficiency
Amount:
means,
with respect to any Payment Date and each of the Class 2A-1 Notes and Class
G
Certificates, an amount, if any, equal to the sum of: (i) the excess of (x)
Current Interest for the Class 2A-1 Notes or Class G Certificates, as
applicable, on such Payment Date, over (y) the Interest Remittance Amount from
Group 2 Loans on such Payment Date allocated to pay Current Interest on the
Class 2A-1 Notes or Class G Certificates, as applicable, on such Payment Date
as
provided in the Indenture, (ii) on any Payment Date prior to the Final Scheduled
Payment Date, the excess, if any, of the Aggregate Collateral Balance for Loan
Group 2 for such Payment Date over the aggregate Class Principal Balance of
the
Class 2A-1 Notes and the Class G Certificates (after giving effect to any
Principal Payment Amount other than the amounts paid in respect of the Policy
on
such Payment Date) and (iii) the Class Principal Balance of the Class 2A-1
Notes
or Class G Certificates, as applicable, to the extent unpaid on the Final
Scheduled Payment Date or earlier termination of the Issuing Entity pursuant
to
the terms of the Indenture, in each case after giving effect to payments made
on
such date from sources other than the Policy.
Deficient
Valuation:
With
respect to any Loan, a reduction in the scheduled Monthly Payment for such
Loan
by a court of competent jurisdiction in a proceeding under the Bankruptcy Code,
provided,
however,
that a
Deficient Valuation shall not include any reduction that results in the
permanent forgiveness of the principal of a Loan.
Deferred
Amount:
For any
Class of Class M Notes or Class B Notes and any Payment Date, will equal
the amount by which (x) the aggregate of the related Applied Loss Amounts
previously applied in reduction of the Class Principal Balance thereof
exceeds (y) the sum of (i) the aggregate of amounts previously paid in
reimbursement thereof and (ii) the amount of the increase in the related Class
Principal Balance due to the receipt of Subsequent Recoveries as provided in
Section 3.05(j) of the Indenture.
Definitive
Notes:
The
meaning specified in Section 4.06 of the Indenture.
Deleted
Loan:
A Loan
replaced or to be replaced with an Eligible Substitute Loan pursuant to
Section 2(d) of the Loan Purchase Agreement.
Delinquent:
As used
herein, a Loan is considered to be: “30 to 59 days” or “30 or more days”
delinquent when a payment due on any scheduled due date remains unpaid as of
the
close of business on the next following monthly scheduled due date; “60 to 89
days” or “60 or more days” delinquent when a payment due on any scheduled due
date remains unpaid as of the close of business on the second following monthly
scheduled due date; and so on. The determination as to whether a Loan falls
into
these categories is made as of the close of business on the last business day
of
each month. For example, a Loan with a payment due on July 1 that remained
unpaid as of the close of business on August 31 would then be considered to
be
30 to 59 days delinquent.
Delinquency
Rate:
With
respect to any month and each Loan Group, the fraction, expressed as a
percentage, the numerator of which is the aggregate outstanding balance of
all
Group 1 Loans or Group 2 Loans, as applicable, 60 or more days delinquent
(including all foreclosures and REOs but excluding Liquidated Loans) as of
the
close of business on the last day of such month and the denominator of which
is
the Aggregate Collateral Balance for such Loan Group as of the close of business
on the last day of such month.
Denomination:
With
respect to each Note, the amount set forth on the face thereof as the “Initial
Note Balance of this Note” or the “Initial Notional Amount of this Note” or, if
neither of the foregoing, the percentage interest appearing on the face thereof.
With respect to each Certificate the amount set forth on the face thereof as
the
“Initial Certificate Balance of this Certificate” or, if not the foregoing, the
percentage interest appearing on the face thereof.
Depositor:
Asset
Backed Securities Corporation, or its successor in interest.
Depository
or Depository Agency:
The
Depository Trust Company or a successor appointed by the Indenture Trustee
with
the approval of the Issuer. Any successor to the Depository shall be an
organization registered as a “clearing agency” pursuant to Section 17A of
the Exchange Act and the regulations of the Securities and Exchange Commission
thereunder.
Depository
Participant:
A
Person for whom, from time to time, the Depository effects book-entry transfers
and pledges of securities deposited with the Depository.
Determination
Date:
With
respect to any Payment Date, the 15th day (or if such 15th day is not a Business
Day, the Business Day immediately preceding such 15th day) of the month of
the
related Payment Date.
Disqualified
Organization:
Any
organization defined as a “disqualified organization” under
Section 860E(e)(5) of the Code, and if not otherwise included, any of the
following: (i) the United States, any State or political subdivision thereof,
any possession of the United States, or any agency or instrumentality of any
of
the foregoing (other than an instrumentality which is a corporation if all
of
its activities are subject to tax and, except for Freddie Mac, a majority of
its
board of directors is not selected by such governmental unit), (ii) a foreign
government, any international organization, or any agency or instrumentality
of
any of the foregoing, (iii) any organization (other than certain farmers’
cooperatives described in Section 521 of the Code) which is exempt from the
tax imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of
the Code, (v) any “electing large partnership,” as defined in
Section 775(a) of the Code and (vi) any other Person so designated by the
Indenture Trustee based upon an Opinion of Counsel that the holding of an
Ownership Interest in a Class 2A-R Certificate by such Person may cause the
Trust Estate or any Person having an Ownership Interest in any Class of
Certificates (other than such Person) or an interest in any Class of Notes
to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a
Class 2A-R Certificate to such Person. The terms “United States”, “State”
and “international organization” shall have the meanings set forth in
Section 7701 of the Code or successor provisions.
Draw:
With
respect to any HELOC, a borrowing by the Mortgagor under the related Loan
Agreement.
Draw
Period:
With
respect to each HELOC, the period commencing after the date of origination
of
such Loan, during which the related Mortgagor is permitted to make Draws on
such
HELOC.
Due
Date:
The day
of the month on which the Monthly Payment is due on a Loan, exclusive of any
days of grace.
Eligible
Account:
With
respect to each Custodial Account, an account or accounts that satisfy the
requirements of either (I), (II), (III) or (IV) of clause (b) below and (ii)
the
Payment Account, either (a) a trust account or accounts maintained at the
corporate trust department of the Indenture Trustee or (b) one or more accounts
that satisfy the following requirements:
(I) that
are
maintained with a depository institution or trust company whose short-term
unsecured debt obligations (or, in the case of a depository institution or
trust
company that is the principal subsidiary of a bank holding company, the debt
obligations of such holding company) at the time of deposit therein have been
rated by each Rating Agency in its highest short-term rating category (provided,
that if there at any time shall be a downgrading, withdrawal or suspension
of
the short-term unsecured debt obligations of such depository institution or
trust company, the related Servicer or the Indenture Trustee, as applicable,
shall, within ten Business Days thereof, move such account to another depository
institution or trust company having such required ratings);
(II) that
are
maintained with a depository institution or trust company the long-term
unsecured debt obligations of which have been rated Baa3 or higher by Xxxxx’x,
XX or higher by Fitch and AA- or higher by Standard & Poor’s (provided,
that if there at any time shall be a downgrading, withdrawal or suspension
of
the long-term unsecured debt obligations of such depository institution or
trust
company, the related Servicer or the Indenture Trustee, as applicable, shall,
within ten Business Days thereof, move such account to another depository
institution or trust company having such required ratings), and the deposits
in
which are fully insured by the Federal Deposit Insurance
Corporation;
(III) that
are
segregated trust accounts maintained with the corporate trust department of
a
depository institution or a trust company, acting in its fiduciary capacity;
or
(IV) such
other accounts that are acceptable to each Rating Agency, as evidenced by a
letter from each Rating Agency to the related Servicer, the Indenture Trustee,
without reduction or withdrawal of the rating of any Class of
Notes.
The
depository institution or trust company with which the Eligible Account is
maintained shall be organized under the laws of the United States or any state
thereof, have a net worth in excess of $100,000,000 and deposits insured to
the
full extent permitted by law by the Federal Deposit Insurance Corporation and
be
subject to supervision and examination by federal or state banking authorities.
An Eligible Account may bear interest, and may include, if otherwise permitted
by this definition, an account maintained with the Indenture
Trustee.
Eligible
Substitute Loan:
A Loan
substituted by the Seller for a Deleted Loan which must, on the date of such
substitution, as confirmed in an Officer’s Certificate delivered to the
Indenture Trustee, (i) have an outstanding principal balance, after deduction
of
the principal portion of the monthly payment due in the month of substitution
(or in the case of a substitution of more than one Loan for a Deleted Loan,
an
aggregate outstanding principal balance, after such deduction), not in excess
of
the outstanding principal balance of the Deleted Loan (the amount of any
shortfall to be deposited by the Seller in the Custodial Account in the month
of
substitution); (ii) comply with each representation and warranty set forth
in
Annex B to the Loan Purchase Agreement; (iii) have a Mortgage Rate no lower
than
and not more than 1% per annum higher than the Mortgage Rate of the Deleted
Loan
as of the date of substitution; (iv) have a Combined Loan-to-Value Ratio at
the
time of substitution no higher than that of the Deleted Loan at the time of
substitution; (v) have a remaining term to stated maturity not greater than
(and
not more than one year less than) that of the Deleted Loan; (vi) meet the
conditions set forth for treatment as a “qualified mortgage” as set forth in
Section 860G(a)(3)(A) of the Code and Treasury Regulations Section
1.860G-2(a)(1), (2), (4), (5), (6), (7) and (9), without reliance on the
provisions of Treasury Regulation Section 1.860G-2(a)(3) or Treasury Regulation
Section 1.860G-2(f)(2) or any other provision that would allow a Loan to be
treated as a “qualified mortgage” notwithstanding its failure to meet the
requirements of Section 860G(a)(3)(A) of the Code and Treasury Regulation
Section 1.860G-2(a)(1), (2), (4), (5), (6), (7) and (9); and (vii) not be 30
days or more delinquent.
ERISA:
The
Employee Retirement Income Security Act of 1974, as amended.
Event
of Default:
With
respect to the Indenture and either Loan Group, any one of the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the
failure to pay the Current Interest on any related Note on any Payment
Date;
(ii) the
failure by the Issuer on the final maturity date to reduce the
Class Principal Balances of any related Note then outstanding to
zero;
(iii) there
occurs a default in the observance or performance of any negative covenant,
covenant or agreement of the Issuer made in the Indenture, or any representation
or warranty of the Issuer made in the Indenture or in any certificate, note
or
other writing delivered pursuant hereto or in connection herewith proving to
have been incorrect in any material respect as of the time when the same shall
have been made which has a material adverse effect on Securityholders, and
such
default shall continue or not be cured, or the circumstance or condition in
respect of which such representation or warranty was incorrect shall not have
been eliminated or otherwise cured, for a period of 30 days after there shall
have been given, by registered or certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Holders of at least
25% of the outstanding Note Balance of the Notes, a written notice specifying
such default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a notice of default hereunder;
or
(iv) there
occurs the filing of a decree or order for relief by a court having jurisdiction
in the premises in respect of the Issuer or any substantial part of the Trust
Estate in an involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the Trust Estate, or
ordering the winding-up or liquidation of the Issuer’s affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(v) there
occurs the commencement by the Issuer of a voluntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or hereafter
in
effect, or the consent by the Issuer to the entry of an order for relief in
an
involuntary case under any such law, or the consent by the Issuer to the
appointment or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer or for any substantial
part of the assets of the Trust Estate, or the making by the Issuer of any
general assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of any action
by the Issuer in furtherance of any of the foregoing.
Event
of Liquidation:
Following the occurrence of an Event of Default under the Indenture, as
evidenced by a written notice provided by the Indenture Trustee to the Owner
Trustee, the Depositor, the Securities Insurer and the Issuer that all
conditions precedent to the sale or other liquidation of the Trust Estate
pursuant to Section 5.04 of the Indenture have been satisfied.
Event
of Servicer Termination:
With
respect to the Servicing Agreement, a Servicing Default as defined in
Section 7.01 of the Servicing Agreement.
Exchange
Act:
The
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
Excess
Cashflow Loss Payment:
An
amount equal to the aggregate Realized Losses on the Group 1 Loans or Group
2
Loans, as applicable, incurred during the related Collection Period, such amount
to distributed as part of the related Principal Payment Amount as set forth
in
Section 3.05(d) and (e) of the Indenture.
Excess
Servicing Fee:
With
respect to each Loan (other than the HELOCs) and any Payment Date, an amount
equal to one month’s interest at the Excess Servicing Fee Rate on the Class 1X-S
Notional Amount for such Payment Date.
Excess
Servicing Fee Rate:
With
respect to the Wilshire Serviced Loans, the excess, if any, of 0.50% over the
“Wilshire Servicing Fee Rate” as defined in the Wilshire Letter Agreement. With
respect to the Ocwen Serviced Loans, the excess, if any, of 0.50% over the
“Ocwen Servicing Fee Rate” as defined in the Ocwen Letter Agreement.
Excluded
Amount:
For any
Payment Date during the Rapid Amortization Period, all Draws made by a Mortgagor
under the related HELOC during the related Collection Period. Excluded Amounts
will not be transferred to the Trust Estate, and the portion of the aggregate
collections in respect of principal and interest for the related Collection
Period from the related Mortgagor shall be allocated to an Excluded Amount
based
on a pro rata allocation between such Excluded Amount and the Principal Balance
of the related HELOC in proportion to the respective amounts outstanding as
of
the end of the calendar month preceding such Collection Period.
Fair
Market Value:
The
fair market value of all of the property of the Trust related to a Loan Group,
as agreed upon between the Terminating Entity and a majority of the Holders
of
the Class 1X-1 Certificates or Class 2X-1 Certificates, as applicable; provided,
however, that if the Terminating Entity and a majority of the Holders of the
Class 1X-1 Certificates or Class 2X-1 Certificates, as applicable do not agree
upon the fair market value of all the property of the Trust related to a Loan
Group, the Terminating Entity shall solicit, or cause the solicitation of,
good
faith bids for all of the property of the Trust related to a Loan Group until
it
has received three bids from institutions that are regular purchasers and/or
sellers in the secondary market of residential whole mortgage loans similar
to
the related Loans, and the Fair Market Value shall be equal to the highest
of
such three bids.
Xxxxxx
Xxx:
Xxxxxx
Xxx or any successor thereto.
FDIC:
The
Federal Deposit Insurance Corporation or any successor thereto.
Final
Maturity Date:
July
25, 2036.
Fitch:
Fitch,
Inc., or its successor in interest.
Final
Scheduled Payment Date:
The
Payment Date occurring in July 2036.
Foreclosure
Profit:
With
respect to a Liquidated Loan, the amount, if any, by which (i) the aggregate
of
its Net Liquidation Proceeds plus Subsequent Recoveries (net of any unpaid
related Servicing Fee) exceeds (ii) the related Loan Balance (plus accrued
and
unpaid interest thereon at the applicable Mortgage Rate from the date interest
was last paid through the date of receipt of the final Liquidation Proceeds)
of
such Liquidated Loan immediately prior to the final recovery of its Liquidation
Proceeds.
Form
8-K Disclosure Information:
As
defined in Section 6.16(a)(ii) of the Indenture.
Freddie
Mac:
Freddie
Mac or any successor thereto.
Xxxxx:
Pledge,
bargain, sell, warrant, alienate, remise, release, convey, assign, transfer,
create, and xxxxx x xxxx upon and a security interest in and right of set-off
against, deposit, set over and confirm. A Grant of any item of Collateral shall
include all rights, powers and options (but none of the obligations) of the
granting party thereunder, including the immediate and continuing right to
claim
for, collect, receive and give receipt for principal and interest payments
in
respect of such item of Collateral and all other moneys payable thereunder,
to
give and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring proceedings in the
name
of the granting party or otherwise, and generally to do and receive anything
that the granting party is or may be entitled to do or receive thereunder or
with respect thereto.
Gross
Margin:
With
respect to any HELOC, the fixed percentage amount set forth in the related
Loan
Agreement and the related Loan Schedule that is added to the Index on each
Adjustment Date in accordance with the terms of the related Loan Agreement
to
determine the new Mortgage Interest Rate for such Loan.
Group
1 Capitalized Interest Requirement:
With
respect to the May 2006 Payment Date, an amount equal to interest accruing
during the related Accrual Period for the Class 1A, Class 1M and Class 1B Notes
at a per annum rate equal to (x) the weighted average Note Interest Rate of
the
Class 1A, Class 1M and Class 1B Notes multiplied by (y) the related Pre-Funding
Amount outstanding at the end of the related Collection Period. With respect
to
the June 2006 Payment Date, an amount equal to interest accruing during the
related Accrual Period for the Class 1A, Class 1M and Class 1B Notes at a per
annum rate equal to (x) the weighted average Note Interest Rate of the Class
1A,
Class 1M and Class 1B Notes for such Payment Date multiplied by (y) the sum
of
(c) the Pre-Funding Amount at the end of the related Collection Period and
(d)
the aggregate Principal Balance of the Subsequent Loans that do not have a
first
Due Date prior to June 1, 2006, transferred to the Trust during the related
Collection Period. With respect to the July 2006 Payment Date, an amount equal
to interest accruing during the related Accrual Period for the Class 1A, Class
1M and Class 1B Notes at a per annum rate equal to (x) the weighted average
Note
Interest Rate of the Class 1A, Class 1M and Class 1B Notes for such Payment
Date
multiplied by (y) the sum of (c) the related Pre-Funding Amount at the end
of
the related Collection Period and (d) the aggregate Principal Balance of the
related Subsequent Loans that do not have a first Due Date prior to July 1,
2006, transferred to the Trust during the related Collection
Period.
Group
1 Certificates:
The
Class 1P, Class 1X-1, Class 1X-2, Class 1X-S and Class 1A-R
Certificates.
Group
1 Loan:
An
individual mortgage loan which is sold and assigned to the Depositor identified
on the Loan Schedule, which Loan includes without limitation the Mortgage File,
the Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, proceeds of any REO disposition, any escrow
accounts related to the Loan, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Loan, excluding replaced
or
repurchased mortgage loans. The Group 1 Loans shall be designated on the Loan
Schedule attached as Exhibit A to the Servicing Agreement and Exhibit A to
the Loan Purchase Agreement.
Group
1 Net Funds Cap:
For any
Payment Date and any Class of Group 1 Notes and the Class 1P Certificates
and Class 1A-R Certificates, the annual rate equal to a fraction, expressed
as a
percentage, (a) the numerator of which is (1) the sum of (A) the amount of
interest which accrued on the Group 1 Loans during the immediately preceding
Collection Period and (B) amounts withdrawn from the related Capitalized
Interest Account to pay interest on the Group 1 Securities minus (2) the sum
of
the Servicing Fee, the Excess Servicing Fee, the Indenture Trustee Fee and
the
Credit Risk Manager Fee on the Group 1 Loans, any Net Swap Payment payable
to
the Counterparty and any Swap Termination Payment not due to a Counterparty
Trigger Event payable to the Counterparty and (b) the denominator of which
is
the product of (1) the Aggregate Collateral Balance of the Group 1 Loans as
of
the immediately preceding Payment Date (or as of the Cut-off Date with respect
to the first Payment Date) and (2)(x) 1/12 in the case of the Class 1A-1 Notes
and the Class 1A-2 Notes and the Class 1P Certificates and Class 1A-R
Certificates and (y) the actual number of days in the related Accrual Period
divided by 360 with respect to any other Group 1 Securities. For federal income
tax purposes, however, as to any Payment Date will be the equivalent of the
foregoing, expressed as a per annum rate equal to the weighted average of the
Uncertificated Pass-Through Rates on the REMIC IC Regular Interests (other
than
REMIC IC Regular Interests LTIC-1S and REMIC IC Regular Interests LTIC-1IO)
multiplied by (in the case of the Group 1 Securities other than the Class 1A-1
Notes and Class 1A-2 Notes and the Class 1P Certificates and Class 1A-R
Certificates) a fraction, the numerator of which is 30 and the denominator
of
which is the actual number of days in the related Accrual Period.
Group
1 Notes:
Class
1A-1, Class 1A-2, Class 1A-3, Class 1M-1, Class 1M-2, Class 1M-3, Class 1M-4,
Class 1M-5, Class 1M-6, Class 1M-7, Class 1M-8, Class 1M-9, Class 1B-1 and
Class
1B-2 Notes.
Group
1 Overcollateralization Amount:
For any
Payment Date and the Group 1 Loans, the amount, if any, by which (x) the
Aggregate Collateral Balance with respect to such Loan Group for such Payment
Date exceeds (y) the aggregate Class Principal Balance of all of the Group
1 Notes and the Class 1P Certificates and Class 1A-R Certificates.
Group
1 Overcollateralization Deficiency:
For any
Payment Date and the Group 1 Loans the amount, if any, by which (x) the Group
1
Targeted Overcollateralization Amount for such Payment Date exceeds (y) the
Group 1 Overcollateralization Amount for such Payment Date, calculated for
this
purpose after giving effect to the reduction on such Payment Date of the
aggregate Class Principal Balance of the Group 1 Notes and the Class 1P
Certificates and Class 1A-R Certificates resulting from the payment of the
Principal Payment Amount or Principal Collections, as applicable, on such
Payment Date, but prior to allocation of any Applied Loss Amount on such Payment
Date.
Group
1 Overcollateralization Release Amount:
For any
Payment Date and the Group 1 Loans, the lesser of (x) the Principal
Remittance Amount for such Loan Group for such Payment Date and (y) the amount,
if any, by which (1) the Group 1 Overcollateralization Amount for such date,
calculated for this purpose on the basis of the assumption that 100% of the
aggregate of the related Principal Remittance Amount and related Excess Cashflow
Loss Payment for such date is applied on such date in reduction of the aggregate
of the Class Principal Balances of the Group 1 Notes and the Class 1A-R
Certificates and Class 1P Certificates exceeds (2) the Group 1 Targeted
Overcollateralization Amount for such date.
Group
1 Overfunded Interest Amount:
With
respect to any Subsequent Transfer Date and the Subsequent Loans for the Group
1
Loans, the excess of (A) the amount on deposit in the Group 1 Capitalized
Interest Account on such date over (B) the excess of (i) the amount of interest
accruing at (x) the assumed weighted average Note Interest Rates of the Class
1A, Class 1M and Class 1B Notes multiplied by (y) the related Pre-Funding Amount
outstanding at the end of the related Collection Period for the total number
of
days remaining through the end of the Accrual Periods ending (a) May 25, 2006,
(b) June 26, 2006 and (c) July 25, 2006 over (ii) one month of investment
earnings on the amount on deposit in the related Capitalized Interest Account
on
such date at an annual rate of 1.750%. The assumed weighted average Note
Interest Rate of the Class 1A, Class 1M and Class 1B Notes will be calculated
assuming LIBOR is 5.000% for any Subsequent Transfer Date for the Subsequent
Loans prior to the May 2006 Payment Date, 5.350% for any Subsequent Transfer
Date for the Subsequent Loans prior to the June 2006 Payment Date and 5.700%
for
any Subsequent Transfer Date for the Subsequent Loans prior to the July 2006
Payment Date.
Group
1 Securities:
The
Group 1 Notes and the Group 1 Certificates.
Group
1 Senior Enhancement Percentage:
For any
Payment Date the fraction, expressed as a percentage, the numerator of which
is
the sum of the Class Principal Balance of the Class 1M Notes and
Class 1B Notes and the Group 1 Overcollateralization Amount (which, for
purposes of this definition only, shall not be less than zero), in each case
after giving effect to payments on such Payment Date, and the denominator of
which is the Aggregate Collateral Balance of the Group 1 Loans for such Payment
Date.
Group
1 Targeted Overcollateralization Amount:
For any
Payment Date prior to the related Stepdown Date and the Group 1 Loans, (i)
5.50%
of the related Aggregate Collateral Balance. With respect to any Payment Date
on
or after the related Stepdown Date, the greater of (a) 11.00% of the related
Aggregate Collateral Balance for such Payment Date and (b) 0.50% of the related
Aggregate Collateral Balance. With respect to any Payment Date on or after
the
related Stepdown Date with respect to which a related Trigger Event is in effect
and is continuing, the Group 1 Targeted Overcollateralization Amount for the
Payment Date immediately preceding such Payment Date. Notwithstanding the
foregoing, on and after any Payment Date following the reduction of the
aggregate Class Principal Balance of the Class 1A, Class 1M and Class 1B Notes
to zero, the Group 1 Targeted Overcollateralization Amount shall be zero. Upon
(x) written direction by the majority Holder of the Class 1X-1 Certificates
and
(y) the issuance by an affiliate of the Depositor of a credit enhancement
contract in favor of REMIC IA which is satisfactory to the Rating Agencies
and
(z) receipt by the Indenture Trustee of an Opinion of Counsel, which opinion
shall not be an expense of the Indenture Trustee or the Trust Fund, but shall
be
at the expense of the majority Holder of the Class 1X-1 Certificates, to the
effect that such credit enhancement contract will not cause the imposition
of
any federal tax on the Trust Fund or the Noteholders or Certificateholders
or
cause REMIC IA, REMIC IB, REMIC IC and REMIC ID to fail to qualify as a REMIC
at
any time that any related Notes or Certificates are outstanding, the Group
1
Targeted Overcollateralization Amount shall be reduced to the level approved
by
the Rating Agencies as a result of such credit enhancement contract. Any credit
enhancement contract referred to in the previous sentence shall be
collateralized by cash or mortgage loans, provided that (i) the Aggregate Loan
Balance of the Group 1 Loans collateralizing any such credit enhancement
contract shall not be less than the excess, if any, of (x) the initial Group
1
Targeted Overcollateralization Amount over (y) the then-current Group 1
Overcollateralization Amount and (ii) the issuance of any credit enhancement
contract supported by mortgage loans shall not result in a downgrading of the
ratings assigned by the Rating Agencies.
Group
2 Capitalized Interest Requirement:
With
respect to the May 2006 Payment Date, an amount equal to interest accruing
during the related Accrual Period for the Class 2A Notes and Class 2M Notes
and
the Class G Certificates at a per annum rate equal to (x) the weighted average
Note Interest Rate of the Class 2A Notes and Class 2M Notes and the Class G
Certificates multiplied by (y) the related Pre-Funding Amount outstanding at
the
end of the related Collection Period. With respect to the June 2006 Payment
Date, an amount equal to interest accruing during the related Accrual Period
for
the Class 2A and Class 2M Notes and the Class G Certificates at a per annum
rate
equal to (x) the weighted average Note Interest Rate of the Class 2A and Class
2M Notes and the Class G Certificates for such Payment Date multiplied by (y)
the sum of (c) the related Pre-Funding Amount at the end of the related
Collection Period and (d) the aggregate Principal Balance of the related
Subsequent Loans that do not have a first Due Date prior to June 1, 2006,
transferred to the Trust during the related Collection Period. With respect
to
the July 2006 Payment Date, an amount equal to interest accruing during the
related Accrual Period for the Class 2A Notes and Class 2M Notes and the Class
G
Certificates at a per annum rate equal to (x) the weighted average Note Interest
Rate of the Class 2A Notes and Class 2M Notes and the Class G Certificates
for
such Payment Date multiplied by (y) the sum of (c) the related Pre-Funding
Amount at the end of the related Collection Period and (d) the aggregate
Principal Balance of the related Subsequent Loans that do not have a first
Due
Date prior to July 1, 2006, transferred to the Trust during the related
Collection Period.
Group
2 Certificates:
Class
2P, Class 2X-1, Class 2X-2, Class 2A-R and Class G Certificates.
Group
2 Loan:
An
individual mortgage loan which is sold and assigned to the Depositor identified
on the Loan Schedule, which Loan includes without limitation the Mortgage File,
the Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, proceeds of any REO disposition, Additional
Balances, any escrow accounts related to the Loan, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Loan,
excluding replaced or repurchased mortgage loans. The Group 2 Loan are all
HELOCs The Group 2 Loans shall be designated on the Loan Schedule attached
as
Exhibit A to the Servicing Agreement and Exhibit A to the Loan Purchase
Agreement.
Group
2 Net Funds Cap:
For any
Payment Date and any Class of Group 2 Notes and the Class G, Class 2P and
Class 2A-R Certificates the annual rate equal to a fraction, expressed as a
percentage, (a) the numerator of which is (1) the sum of (A) the amount of
interest which accrued on the Group 2 Loans during the immediately preceding
Collection Period and (B) amounts withdrawn from the related Capitalized
Interest Account to pay interest on the Group
2
Securities
minus
(2) the sum of the Servicing Fee, the Indenture Trustee Fee and the Credit
Risk
Manager Fee on the Group 2 Loans for that Payment Date and (b) the denominator
of which is the product of (1) the Aggregate Collateral Balance of the Group
2
Loans as of the immediately preceding Payment Date (or as of the Cut-off Date
with respect to the first Payment Date) and (2)(x) 1/12 in the case of the
Class
2P Certificates and Class 2A-R Certificates and (y) the actual number
of
days in the related Accrual Period divided by 360
with
respect to any Group 2 Notes and the Class G Certificates. In the case of the
Class 2A-1 Notes and the Class G Certificates, such rate shall be reduced by
a
per annum rate equal to the product of (1) 0.150% and (2) a fraction, the
numerator of which is 30 and the denominator of which is the actual number
of
days in the related Accrual Period. For federal income tax purposes, however,
as
to any Payment Date will be the equivalent of the foregoing, expressed as a
per
annum rate equal to the weighted average of the Uncertificated Pass-Through
Rates on the REMIC IIB Regular Interests multiplied by (in the case of the
Group
2 Notes and the Class G Certificates) a fraction, the numerator of which is
30
and the denominator of which is the actual number of days in the related Accrual
Period.
Group
2 Notes:
Class
2A-1, Class 2M-1 and Class 2M-2 Notes.
Group
2 Overcollateralization Amount:
For any
Payment Date and the Group 2 Loans, the amount, if any, by which (x) the
Aggregate Collateral Balance with respect to such Loan Group for such Payment
Date exceeds (y) the aggregate Class Principal Balance of all of the Group
2 Notes and the Class G, Class 2P and Class 2A-R Certificates after giving
effect to payments on such Payment Date.
Group
2 Overcollateralization Deficiency:
For any
Payment Date and the Group 2 Loans the amount, if any, by which (x) the Group
2
Targeted Overcollateralization Amount for such Payment Date exceeds (y) the
Group 2 Overcollateralization Amount for such Payment Date, calculated for
this
purpose after giving effect to the reduction on such Payment Date of the
aggregate Class Principal Balance of the Group 2 Notes and the Class G,
Class 2P and Class 2A-R Certificates resulting from the payment of the Principal
Payment Amount or Principal Collections, as applicable, on such Payment Date,
but prior to allocation of any Applied Loss Amount on such Payment
Date.
Group
2 Overcollateralization Release Amount:
For any
Payment Date and the Group 2 Loans, the lesser of (x) the Principal
Remittance Amount for such Loan Group for such Payment Date and (y) the amount,
if any, by which (1) the Group 2 Overcollateralization Amount for such date,
calculated for this purpose on the basis of the assumption that 100% of the
aggregate of the related Principal Remittance Amount and related Excess Cashflow
Loss Payment for such date is applied on such date in reduction of the aggregate
of the Class Principal Balances of the Group 2 Notes and the Class G, Class
2A-R and Class 2P Certificates, exceeds (2) the Group 2 Targeted
Overcollateralization Amount for such date.
Group
2 Overfunded Interest Amount:
With
respect to any Subsequent Transfer Date and the Subsequent Loans for the Group
2
Loans, the excess of (A) the amount on deposit in the Group 2 Capitalized
Interest Account on such date over (B) the excess of (i) the amount of interest
accruing at (x) the assumed weighted average Note Interest Rates of the Class
2A
Notes and Class 2M Notes and Class G Certificates multiplied by (y) the related
Pre-Funding Amount outstanding at the end of the related Collection Period
for
the total number of days remaining through the end of the Accrual Periods ending
(a) May 25, 2006, (b) June 26, 2006 and (c) July 25, 2006 over (ii) one month
of
investment earnings on the amount on deposit in the Group 2 Capitalized Interest
Account on such date at an annual rate of 1.750%. The assumed weighted average
Note Interest Rate of the related Class 2A Notes and Class 2M Notes and Class
G
Certificates will be calculated assuming LIBOR is 5.000% for any Subsequent
Transfer Date for the Subsequent Loans prior to the May 2006 Payment Date,
5.350% for any Subsequent Transfer Date for the Subsequent Loans prior to the
June 2006 Payment Date and 5.700% for any Subsequent Transfer Date for the
Subsequent Loans prior to the July 2006 Payment Date.
Group
2 Securities:
The
Class 2A-1, Class 2M-1 and Class 2M-2 Notes, and the Class 2P, Class 2X-1,
Class
2X-2, Class 2A-R and Class G Certificates.
Group
2 Senior Enhancement Percentage:
For any
Payment Date the fraction, expressed as a percentage, the numerator of which
is
the sum of the Class Principal Balance of the Class 2M Notes and the
Group 2 Overcollateralization Amount (which, for purposes of this definition
only, shall not be less than zero), in each case after giving effect to payments
on such Payment Date, and the denominator of which is the Aggregate Collateral
Balance of the Group 2 Loans for such Payment Date over the outstanding Class
Principal Balance of the Class G Certificates.
Group
2 Targeted Overcollateralization Amount:
For any
Payment Date prior to the related Stepdown Date and the Group 2 Loans, the
sum
of (i) 2.10% of the related Aggregate Collateral Balance and (ii) the Additional
Balance Advance Amount for that Payment Date. With respect to any Payment Date
on or after the related Stepdown Date, the greater of (a) 4.20% of the related
Aggregate Collateral Balance for such Payment Date and (b) 0.50% of the related
Aggregate Collateral Balance. With respect to any Payment Date on or after
the
related Stepdown Date with respect to which a related Trigger Event is in effect
and is continuing, the Group 2 Targeted Overcollateralization Amount for the
Payment Date immediately preceding such Payment Date. Notwithstanding the
foregoing, on and after any Payment Date following the reduction of the
aggregate Class Principal Balance of the Class 2A Notes and Class 2M Notes
to
zero, the Group 2 Targeted Overcollateralization Amount shall be zero. Upon
(x)
written direction by the majority Holder of the Class 2X-1 Certificates and
(y)
the issuance by an affiliate of the Depositor of a credit enhancement contract
in favor of REMIC IIA which is satisfactory to the Rating Agencies and (z)
receipt by the Indenture Trustee of an Opinion of Counsel, which opinion shall
not be an expense of the Indenture Trustee or the Trust Fund, but shall be
at
the expense of the majority Holder of the Class 2X-1 Certificates, to the effect
that such credit enhancement contract will not cause the imposition of any
federal tax on the Trust Fund or the Noteholders or Certificateholders or cause
REMIC IIA, REMIC IIB and REMIC IIC to fail to qualify as a REMIC at any time
that any related Notes or Certificates are outstanding, the Group 2 Targeted
Overcollateralization Amount shall be reduced to the level approved by the
Rating Agencies as a result of such credit enhancement contract. Any credit
enhancement contract referred to in the previous sentence shall be
collateralized by cash or mortgage loans, provided that (i) the Aggregate Loan
Balance of the Group 2 Loans collateralizing any such credit enhancement
contract shall not be less than the excess, if any, of (x) the initial Group
2
Targeted Overcollateralization Amount over (y) the then-current Group 2
Overcollateralization Amount and (ii) the issuance of any credit enhancement
contract supported by mortgage loans shall not result in a downgrading of the
ratings assigned by the Rating Agencies.
HELOC:
An
individual adjustable rate, residential home equity revolving line of credit
secured by a first or second deed of trust or mortgage, including any Additional
Balances with respect thereto, each HELOC sold and subject to this Agreement
being identified on the Loan Schedule and being identified as a HELOC. The
Group
2 Loans are all HELOCs.
Highest
Priority:
As of
any date of determination, the related Class of Subordinate Notes then
outstanding with a Class Principal Balance greater than zero, with the highest
priority for payments pursuant to Section 3.05(j) of the Indenture, in the
following order of decreasing priority with respect to the Group 1 Notes: Class
1M-1, Class 1M-2, Class 1M-3, Class 1M-4, Class 1M-5, Class 1M-6, Class 1M-7,
Class 1M-8, Class 1M-9, Class 1B-1 and Class 1B-2 Notes; and with respect to
the
Group 2 Notes,: Class 2M-1 Notes and Class 2M-2 Notes.
Holder:
Any of
the Noteholders or Certificateholders.
HUD:
The
United States Department of Housing and Urban Development and any successor
thereto.
Indemnified
Party:
The
meaning specified in Section 7.02 of the Trust Agreement.
Indenture:
The
indenture dated as of the Closing Date between the Issuer, as issuer and the
Indenture Trustee, as indenture trustee.
Indenture
Trustee:
U.S.
Bank National Association, and its successors and assigns or any successor
indenture trustee appointed pursuant to the terms of the Indenture.
Indenture
Trustee Fee:
As to
each Loan and any Payment Date, an amount equal to one month’s interest at the
Indenture Trustee Fee Rate on the Stated Principal Balance of such Loan as
of
the Due Date in the month of such Payment Date (prior to giving effect to any
Scheduled Payments due on such Loan on such Due Date).
Indenture
Trustee Fee Rate:
With
respect to any Payment Date, 0.0075% per annum.
Independent:
When
used with respect to any specified Person, the Person (i) is in fact independent
of the Issuer, any other obligor on the Notes, the Seller, the Issuer, the
Depositor and any Affiliate of any of the foregoing Persons, (ii) does not
have
any direct financial interest or any material indirect financial interest in
the
Issuer, any such other obligor, the Seller, the Issuer, the Depositor or any
Affiliate of any of the foregoing Persons and (iii) is not connected with the
Issuer, any such other obligor, the Seller, the Depositor or any Affiliate
of
any of the foregoing Persons as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
Independent
Certificate:
A
certificate or opinion to be delivered to the Indenture Trustee under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 10.01 of the Indenture, made by an Independent
appraiser or other expert appointed by an Issuer Order, and such opinion or
certificate shall state that the signer has read the definition of “Independent”
in this Indenture and that the signer is Independent within the meaning
thereof.
Index:
With
respect to any HELOC, the index identified on the Loan Schedule and set forth
in
the related Mortgage Note for the purpose of calculating the Mortgage Interest
Rate thereon.
Initial
Class 1A-R Certificate Balance:
$100.00.
Initial
Class 1P Certificate Balance:
$100.00.
Initial
Class 2A-R Certificate Balance:
$100.00.
Initial
Class 2P Certificate Balance:
$100.00.
Initial
Class G Certificate Balance:
$0.00.
Initial
Group 1 Loan:
A Group
1 Loan conveyed to the Trust on the Closing Date pursuant to the Indenture
as
identified on the Loan Schedule delivered to the Indenture Trustee on the
Closing Date.
Initial
Group 2 Loan:
A Group
2 Loan conveyed to the Trust on the Closing Date pursuant to the Indenture
as
identified on the Loan Schedule delivered to the Indenture Trustee on the
Closing Date.
Initial
Loan:
A Loan
conveyed to the Trust on the Closing Date pursuant to the Indenture as
identified on the Loan Schedule delivered to the Indenture Trustee on the
Closing Date.
Initial
Note Balance:
With
respect to the (i) Class 1A-1 Notes, $205,670,000, (ii) the Class 1A-2
Notes, $25,700,000, (iii) the Class 1A-3 Notes, $25,700,000, (iv) the
Class 1M-1 Notes, $15,750,000, (v) the Class 1M-2 Notes, $18,200,000, (vi)
the
Class 1M-3 Notes $7,000,000, (vii) the Class 1M-4 Notes, $8,750,000, (viii)
the
Class 1M-5 Notes, $7,350,000, (ix) Class 1M-6 Notes, $5,600,000, (x) the
Class 1M-7 Notes, $6,470,000, (xi) the Class 1M-8 Notes, $4,900,000, (xiii)
the
Class 1M-9 Notes, $4,550,000, (xiii) the Class 1B-1 Notes, $7,000,000, (xiv)
the
Class 1B-2 Notes, $4,000,000, (xv) the Class 2A-1 Notes, $240,000,000, (xvi)
the
Class 2M-1 Notes, $2,250,000 and (xvii) the Class 2M-2 Notes,
$2,500,000.
Insolvency
Event:
With
respect to a specified Person, (a) the filing of a decree or order for relief
by
a court having jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or
similar official for such Person or for any substantial part of its property,
or
ordering the winding-up or liquidation of such Person’s affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by such Person to the entry of an order for relief in
an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for
any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due or the admission by such Person in
writing (as to which a Responsible Officer of the Indenture Trustee shall have
received notice) of its inability to pay its debts generally, or the adoption
by
the Board of Directors or managing member of such Person of a resolution which
authorizes action by such Person in furtherance of any of the
foregoing.
Insurance
Account:
The
account created and maintained pursuant to Section 12.02 of the Indenture.
The
Insurance Account shall be an Eligible Account.
Insurance
Agreement:
The
Insurance and Indemnity Agreement, dated as of April 28, 2006 among the
Indenture Trustee, the Sponsor, the Issuer, the Depositor and the Securities
Insurer, including any amendments and supplements thereto in accordance with
the
terms thereof.
Insured
Payment:
With
respect to the Class 2A-1 Notes and Class G Certificates, (a) as of any Payment
Date, any Deficiency Amount and (b) any Preference Amount.
Insurance
Proceeds:
Proceeds paid by any insurer pursuant to any insurance policy covering a Loan
which are required to be remitted to the related Servicer, net of any component
thereof (i) covering any expenses incurred by or on behalf of the related
Servicer in connection with obtaining such proceeds, (ii) that is applied to
the
restoration or repair of the related Mortgaged Property, (iii) released to
the
Mortgagor in accordance with the related Servicer’s normal servicing procedures
or (iv) required to be paid to any holder of a mortgage senior to such
Loan.
Insured
Securities:
means
the Class 2A-1 Notes and the Class G Certificates.
Insurer:
Financial Guaranty Insurance Company, and its successors and
assigns.
Insurer
Default:
The
existence and continuance of a failure by the Insurer to make a payment required
under the Policy in accordance with its terms.
Insurer
Premium:
means
the premium payable in accordance with the Policy which shall be an amount
equal
to 1/12th of the product of (i) the Premium Percentage and (ii) the
aggregate Class Principal Balance of the Insured Securities on each Payment
Date
(prior to giving effect to any distributions of principal to be made on such
Payment Date).
Insurer
Reimbursement Amount:
The sum
of (a) the aggregate unreimbursed amount of any payments made by the Insurer
under the Policy, together with interest on such amount from the date of payment
by the Insurer until paid in full at the Late
Payment Rate
(as
defined in the Insurance Agreement) and (b) any other amounts owed to the
Insurer under the Class I-A Insurance Agreement or pursuant to Section
3.03.
Interest
Remittance Amount:
With
respect to any Payment Date and Loan Group 1 or Loan Group 2, applicable, (A)
the sum of the following:
(i) all
interest collected (other than Payaheads and any interest collections allocated
to the Reimbursable Excluded Amount in the case of Loan Group 2, or advanced
in
respect of Scheduled Payments on the Loans during the related Collection Period,
the interest portion of Xxxxxxxxx previously received and intended for
application in the related Collection Period and the interest portion of all
prepayments received on the loans during the related Prepayment Period, less
the
Servicing Fee, the Credit Risk Manager Fee, the Indenture Trustee Fee with
respect to such Loans and unreimbursed Advances due to a Servicer or the
Indenture Trustee with respect to the Loans and in the case Loan Group 2, the
Insurer Premium due to the Securities Insurer.
(ii) the
portion of any Substitution Amount or purchase price paid with respect to such
Group
1
Loans or Group 2 Loan, as applicable,
during
the related Collection Period allocable to interest and the interest portion
of
the Termination Price paid in connection with any related Optional
Termination;
(iii) all
Net
Liquidation Proceeds, Net Recoveries and Subsequent Recoveries (net of any
unpaid related Servicing Fees and unreimbursed Advances) collected with respect
to the Group 1 Loans or Group 2 Loan, as applicable, during the related
Collection Period, in each case to the extent allocable to
interest;
(iv) all
Compensating Interest Payments paid by each Servicer with respect to the Group
1
Loans it is servicing for such Payment Date; and
(v) any
amounts withdrawn from the Capitalized Interest Account to pay interest on
the
related Notes and Certificates with respect to such Payment Date.
minus
(B)
with
respect to the Group 1 Loans, amounts payable by the Trust to the Counterparty
in respect of Net Swap Payments and Swap Termination Payments (other than Swap
Termination Payments resulting from a Counterparty Trigger Event and to the
extent not paid by the Indenture Trustee from any upfront payment received
pursuant to any related replacement swap agreement that may be entered into
by
the Indenture Trustee) for such Payment Date (or, if such Payment Date is not
also a Swap Payment Date, for the related Swap Payment Date).
Interest
Shortfall:
For any
Payment Date, the aggregate shortfall, if any, in collections of interest for
the previous month (adjusted to the related Net Mortgage Rate) on Group 1 Loans
or Group 2 Loans, as applicable, resulting from (a) related Principal
Prepayments received during the related Prepayment Period to the extent not
covered by Compensating Interest and (b) Relief Act Reductions.
ISDA:
International Swaps and Derivatives Association, Inc.
ISDA
Master Agreement:
With
respect to the Swap Agreement, the Master Agreement dated as of the Closing
Date
between the Indenture Trustee, on behalf of the Issuing Entity, and the
Counterparty, including the Schedule thereto.
Issuer,
Issuing Entity, Owner Trust or Trust:
The
Home Equity Mortgage Trust 2006-2, a Delaware statutory trust, or its successor
in interest, created by the Certificate of Trust.
Issuer
Request:
A
written order or request signed in the name of the Issuer by any one of its
Authorized Officers and delivered to the Indenture Trustee.
LIBOR:
On each
LIBOR Rate Adjustment Date, LIBOR shall be established by the Indenture Trustee
and as to any Accrual Period, LIBOR will equal the rate for United States dollar
deposits for one month which appears on the Dow Xxxxx Telerate Screen Page
3750
as of 11:00 A.M., London time, on that LIBOR Rate Adjustment Date. Dow
Xxxxx Telerate Screen Page 3750 means the display designated as page 3750 on
the
Telerate Service or any other page as may replace page 3750 on that service
for
the purpose of displaying London interbank offered rates of major banks. If
the
rate does not appear on that page or any other page as may replace that page
on
that service, or if the service is no longer offered, any other service for
displaying LIBOR or comparable rates as may be selected by the Indenture Trustee
after consultation with the Seller, the rate will be the Reference Bank
Rate.
The
establishment of LIBOR by the Indenture Trustee and the Indenture Trustee’s
subsequent calculation of the Note Interest Rate applicable to the Class A,
Class M and Class B Notes for the relevant Accrual Period, in the
absence of manifest error, will be final and binding.
LIBOR
Business Day:
Any day
other than (i) a Saturday or a Sunday or (ii) a day on which banking
institutions in the city of London, England or New York, New York are required
or authorized by law to be closed.
LIBOR
Rate Adjustment Date:
With
respect to the first Payment Date, the second LIBOR Business Day preceding
the
Closing Date, and thereafter, the second LIBOR Business Day preceding each
Accrual Period.
Lien:
Any
mortgage, deed of trust, pledge, conveyance, hypothecation, assignment,
participation, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing;
provided,
however,
that
any assignment pursuant to Section 6.02 of the Servicing Agreement shall
not be deemed to constitute a Lien.
Liquidated
Loan:
With
respect to any Payment Date, any Loan in respect of which the related Servicer
has determined, in accordance with the servicing procedures specified in the
Servicing Agreement, as of the end of the related Collection Period that
substantially all Liquidation Proceeds which it reasonably expects to recover,
if any, with respect to the disposition of the Loan and any related REO have
been recovered.
Liquidation
Expenses:
All
out-of-pocket expenses (exclusive of overhead) incurred by or on behalf of
the
Servicer in connection with the liquidation of any Loan and not recovered under
any insurance policy, including legal fees and expenses, any unreimbursed amount
expended (including, without limitation, amounts advanced to cure defaults
on
any mortgage loan which is senior to such Loan and amounts advanced to keep
current or pay off a mortgage loan that is senior to such Loan) respecting
such
Loan and any related and unreimbursed expenditures for real estate property
taxes or for property restoration, preservation or insurance against casualty
loss or damage.
Liquidation
Proceeds:
Amounts
received in connection with the partial or complete liquidation of a defaulted
Loan, whether through the sale or assignment of such Loan, trustee’s sale,
foreclosure sale or otherwise remaining after, or not otherwise required to
be
applied to, the satisfaction of any related first lien loan, less the sum of
unreimbursed Servicing Advances and Advances.
Loan:
Any of
the Group 1 Loans or Group 2 Loans.
Loan
Agreement:
With
respect to any HELOC, the credit line account agreement executed by the related
Mortgagor and any amendment or modification thereof.
Loan
File:
With
respect to each Loan, the documents indicated on Exhibit C to the Loan
Purchase Agreement.
Loan
Group:
Either
the Group 1 Loans or Group 2 Loans.
Loan
Purchase Agreement:
The
loan purchase agreement dated the Closing Date among the Seller, as assignor,
the Depositor, as assignee, the Indenture Trustee and the Issuer.
Loan
Schedule:
The
schedule of Loans transferred to the Issuer, a copy of which shall be attached
as Exhibit A to the Servicing Agreement and as Exhibit A to the Loan
Purchase Agreement, which schedule shall be amended or supplemented to include
Subsequent Loans as they are transferred to the Issuer and which sets forth
as
to each Loan, among other things:
| (i) |
the
Loan identifying number;
|
| (ii) |
a
code indicating the type of Mortgaged Property and the occupancy
status;
|
| (iii) |
a
code indicating the Servicer of the
Loan;
|
| (iv) |
the
original months to maturity;
|
| (v) |
the
Loan-to-Value Ratio at origination;
|
| (vi) |
the
Combined Loan-to-Value Ratio at
origination;
|
| (vii) |
the
related borrower’s debt-to-income ratio at
origination;
|
| (viii) |
the
related borrower’s Credit Score
at
origination;
|
| (ix) |
the
Mortgage Rate Interest as of the Cut-off
Date;
|
| (x) |
the
stated maturity date;
|
| (xi) |
the
amount of the Scheduled Payment as of the Cut-off
Date;
|
| (xii) |
the
original principal amount of the
Loan;
|
| (xiii) |
the
principal balance of the Loan as of the close of business on the
Cut-off
Date, after deduction of payments of principal due on or before the
Cut-off Date whether or not
collected;
|
| (xiv) |
the
purpose of the Loan (i.e., purchase, rate and term refinance, equity
take-out refinance);
|
| (xv) |
a
code indicating whether a Prepayment Charge is required to be paid
in
connection with a prepayment of the Loan and the term and the amount
of
the Prepayment Charge;
|
| (xvi) |
an
indication whether the Loan accrues interest at an adjustable Mortgage
Interest Rate or a fixed Mortgage Interest
Rate;
|
| (xvii) |
the
index that is associated with such Loan, if
applicable;
|
| (xviii) |
the
gross margin, if applicable;
|
| (xix) |
the
periodic rate cap, if applicable;
|
| (xx) |
the
minimum mortgage rate, if
applicable;
|
| (xxi) |
the
maximum mortgage rate, if
applicable;
|
| (xxii) |
the
first adjustment date after the Cut-off Date, if
applicable;
|
| (xxiii) |
the
Servicing Fee Rate;
|
| (xxiv) |
the
Expense Fee Rate;
|
| (xxv) |
a
code indicating whether the Loan is a MERS Loan and, if so, its
corresponding MIN; and
|
| (xxvi) |
a
code indicating whether the Loan is a Balloon
Loan.
|
| (xxvii) |
with
respect to each Loan that is not a HELOC, the amount of the Monthly
Payment as of the Cut-off Date and with respect to each HELOC, the
amount
of the Minimum Monthly Payment as of the Cut off
Date;
|
| (xxviii) |
a
code indicating whether the Loan is a Group 1 Loan or Group 2 Loan;
and
|
| (xxix) |
with
respect to each HELOC, the Credit
Limit;
|
| (xxx) |
with
respect to each HELOC, the Draw
Period;
|
| (xxxi) |
with
respect to each HELOC, the amortization
period;
|
| (xxxii) |
with
respect to each HELOC, the first Adjustment Date and the Adjustment
Date
frequency;
|
| (xxxiii) |
with
respect to each HELOC, the Index;
|
| (xxxiv) |
with
respect to each HELOC, the Gross
Margin;
|
| (xxxv) |
with
respect to each HELOC, the Maximum Mortgage Interest Rate under the
terms
of the Mortgage Note;
|
| (xxxvi) |
with
respect to each HELOC, the Minimum Mortgage Interest Rate under the
terms
of the Mortgage Note;
|
| (xxxvii) |
with
respect to each HELOC, the first Adjustment Date immediately following
the
related Cut-off Date;
|
| (xxxviii) |
with
respect to each HELOC, the Index;
and
|
| (xxxix) |
with
respect to each HELOC, the termination
fees.
|
Such
schedule may consist of multiple reports that collectively set forth all of
the
information required.
Loan-to-Value
Ratio or LTV:
With
respect to any Loan, the ratio of the original outstanding principal amount
of
the Loan or with respect to any HELOC, the related Credit Limit, to the
Appraised Value of the related Mortgaged Property.
Lost
Note Affidavit:
With
respect to any Loan as to which the original Mortgage Note has been permanently
lost or destroyed and has not been replaced, an affidavit from the Seller
certifying that the original Mortgage Note has been lost, misplaced or destroyed
(together with a copy of the related Mortgage Note).
Majority
Servicer:
With
respect to each Loan Group, the Servicer servicing the largest percentage by
Principal Balance of outstanding Loans in such Loan Group on the related
Optional Termination Date; provided, however, that if such Servicer does not
exercise its right to purchase the Loans under Section 10.18 of the Indenture,
each other Servicer, in sequential order from the Servicer servicing the second
largest percentage in such Loan Group, the third largest percentage, and so
forth, to the Servicer servicing the smallest percentage, in each case by
Principal Balance of outstanding Loans on the related Optional Termination
Date,
shall be the Majority Servicer.
Managed
Amortization Period:
With
respect to Loan Group 2, the period beginning on the Cut-off Date and ending
on
the occurrence of a Rapid Amortization Event.
Marker
Rate:
With
respect to the Class 1X-1 Certificates and any Payment Date, a per annum rate
equal to two (2) times the weighted average of the Uncertificated REMIC IC
Pass-Through Rates for REMIC IC Regular Interests LTIC-1A-1, LTIC-1A-2,
LTIC-1A-3, LTIC-1M-1, LTIC-1M-2, LTIC-1M-3, LTIC-1M-4, LTIC-1M-5, LTIC-1M-6,
LTIC-1M-7, LTIC-1M-8, LTIC-1M-9, LTIC-1B-1, LTIC-1B-2 and LTIC-1ZZ, with the
per
annum rate on each such REMIC IC Regular Interests (other than REMIC IC Regular
Interest LTIC-1ZZ) subject to a cap equal to the Note Interest Rate on the
Corresponding Note for the purpose of this calculation; and with the per annum
rate on REMIC IC Regular Interest LTIC-1ZZ subject to a cap of zero for the
purpose of this calculation; provided, however, that for this purpose, the
calculation of the Uncertificated REMIC IC Pass-Through Rate and the related
cap
with respect to each such REMIC IC Regular Interest (other than REMIC IC Regular
Interests LTIC-1A-1, LTIC-1A-2 and LTIC-1ZZ) shall be multiplied by a fraction,
the numerator of which is the actual number of days in the Accrual Period and
the denominator of which is thirty (30).
With
respect to the Class 2X-1 Certificates and any Payment Date, a per annum rate
equal to two (2) times the weighted average of the Uncertificated REMIC IIB
Pass-Through Rates for REMIC IIB Regular Interests LTIIB-2A-1, LTIIB-2M-1,
LTIIB-2M-2 and LTIIB-2ZZ, with the per annum rate on each such REMIC IIB Regular
Interests (other than REMIC IIB Regular Interest LTIIB-2ZZ) subject to a cap
equal to the Note Interest Rate on the Corresponding Note for the purpose of
this calculation, with the cap on REMIC IIB Regular Interests LTIIB-2A-1
increased by a per annum rate equal to 0.150% for the purposes of this
calculation; and with the per annum rate on REMIC IIB Regular Interest LTIIB-2ZZ
subject to a cap of zero for the purpose of this calculation; provided, however,
that for this purpose, the calculation of the Uncertificated REMIC IIB
Pass-Through Rate and the related cap with respect to each such REMIC IIB
Regular Interest (other than REMIC IIB Regular Interest LTIIB-2ZZ) shall be
multiplied by a fraction, the numerator of which is the actual number of days
in
the Accrual Period and the denominator of which is thirty (30).
Maximum
Interest Rate:
With
respect to any Payment Date and Loan Group 2, an amount equal to the weighted
average of the Mortgage Interest Rates of the Group 2 Loans as of the last
day
of the Collection Period immediately preceding such Payment Date less the sum
of
the Servicing Fee Rate, the Indenture Trustee Fee Rate and the Credit Risk
Manager Fee Rate on the Group 2 Loans multiplied by 30 divided by the actual
number of days in the related Accrual Period.
Maximum
Mortgage Interest Rate:
With
respect to each Group 2 Loan, a rate that is set forth on the related Loan
Schedule and in the related Mortgage Note and is the maximum interest rate
to
which the Mortgage Interest Rate on such Group 2 Loan may be increased on any
Adjustment Date.
MERS:
Mortgage Electronic Registration Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor
thereto.
MERS®
System:
The
system of recording transfers of Mortgages electronically maintained by
MERS.
MIN:
The
Mortgage Identification Number for Loans registered with MERS on the MERS®
System.
Minimum
Monthly Payment:
With
respect to any HELOC and any month, the minimum monthly payment required to
be
paid by the related Mortgagor in that month pursuant to the terms of the related
Loan Agreement.
Minimum
Mortgage Interest Rate:
With
respect to each Group 2 Loan, a rate that is set forth on the related Loan
Schedule and in the related Mortgage Note and is the minimum interest rate
to
which the Mortgage Interest Rate on such Loan may be decreased on any Adjustment
Date.
MOM
Loan:
Any
Loan for which MERS acts as the mortgagee of such Loan, solely as nominee for
the originator of such Loan and its successors and assigns, at the origination
thereof.
Monthly
Excess Cashflow:
For any
Payment Date and either Loan Group, an amount equal to the sum of (1) the
related Monthly Excess Interest and (2) the related Overcollateralization
Release Amount for such Payment Date.
Monthly
Excess Interest:
As to
any Payment Date, the sum of (A) the related Interest Remittance Amount
remaining after the application of payments pursuant to clauses (i) through
(xiv) of Section 3.05(b)(I) or clauses (i) through (vi) of Section 3.05(b)(II)
of the Indenture plus (B) the related Principal Payment Amount remaining after
the application of payments pursuant to clauses (i) through (xiii) of Section
3.05(c)(I) or (d)(I) or clauses (i) through (v) of Section 3.05(v)(II) or
(d)(II) of the Indenture.
Monthly
Payment:
With
respect to any Loan that is not a HELOC and any Due Date, the payment of
principal and interest due thereon in accordance with the amortization schedule
at the time applicable thereto and with respect to any HELOC, the Minimum
Monthly Payment (in each case, after adjustment, if any, for partial Principal
Prepayments and for Deficient Valuations occurring prior to such Due Date but
before any adjustment to such amortization schedule by reason of any bankruptcy,
other than a Deficient Valuation, or similar proceeding or any moratorium or
similar waiver or grace period).
Moody’s:
Xxxxx’x
Investors Service, Inc. or its successor in interest.
Mortgage:
The
mortgage, deed of trust or other instrument securing a Mortgage Note which
creates a first or junior lien on an unsubordinated estate in fee simple in
real
property securing the Mortgage Note; except that with respect to real property
located in jurisdictions in which the use of leasehold estates for residential
properties is a widely-accepted practice, the mortgage, deed of trust or other
instrument securing the Mortgage Note may secure and create a first or junior
lien upon a leasehold estate of the Mortgagor.
Mortgage
File:
The
Mortgage documents pertaining to a particular Initial Loan or Subsequent Loan
and any additional documents delivered to the Indenture Trustee or the related
Custodian to be added to the Mortgage File pursuant to the Indenture or the
related Custodial Agreement.
Mortgage
Interest Rate:
The
annual rate at which interest accrues on any Loan in accordance with the
provisions of the related Mortgage Note.
Mortgage
Note:
With
respect to a Loan, the mortgage note, Loan Agreement or other evidence of the
indebtedness pursuant to which the related Xxxxxxxxx agrees to pay the
indebtedness evidenced thereby and secured by the related Mortgage as modified
or amended.
Mortgaged
Property:
The
underlying real property securing repayment of a Mortgage Note, consisting
of a
fee simple parcel of real estate or leasehold estate, the term of which is
equal
to or longer than the term of the related Mortgage Note.
Mortgagor:
The
obligor or obligors under a Mortgage Note.
National
Housing Act:
The
National Housing Act of 1934, as amended.
Net
Liquidation Proceeds:
With
respect to any Liquidated Loan, Liquidation Proceeds net of Liquidation Expenses
and unreimbursed Advances and unpaid Master Servicing Fees and Servicing Fees
related thereto.
Net
Mortgage Rate:
With
respect to any Loan and any day, the related Mortgage Interest Rate less the
sum
of the related Servicing Fee Rate, the Excess Servicing Fee Rate (with respect
a
Group 1 Loan), the Indenture Trustee Fee Rate and the Credit Risk Manager Fee
Rate.
Net
Swap Payment:
With
respect to each Swap Payment Date, the net payment required to be made pursuant
to the terms of the Swap Agreement by either the Counterparty or the Indenture
Trustee, on behalf of the Issuing Entity, which net payment shall not take
into
account any Swap Termination Payment.
Net
Recovery:
Any
proceeds received by a Servicer on a delinquent or Charged Off Loan (including
any Liquidation Proceeds received on a Charged Off Loan), net of any Servicing
Fee and any other related expenses.
Nonrecoverable
Advance:
Any
portion of an Advance or Servicing Advance previously made or proposed to be
made by the applicable Servicer that, in the good faith judgment of the
applicable Servicer will not be ultimately recoverable by the applicable
Servicer from the related Mortgagor, related Liquidation Proceeds or
otherwise.
Non-United
States Person:
Any
Person other than a United States Person.
Note
Balance:
With
respect to any Note and any date of determination, the product of (i) the
Percentage Interest of such Note and (ii) the Class Principal Balance for such
Class of Notes.
Noteholder:
The
Person in whose name a Note is registered in the Note Register, except that,
any
Note registered in the name of the Depositor, the Issuer, the Indenture Trustee
or any Affiliate of any of them shall be deemed not to be outstanding and the
registered holder will not be considered a Noteholder or holder for purposes
of
giving any request, demand, authorization, direction, notice, consent or waiver
under the Indenture or the Trust Agreement provided that, in determining whether
the Indenture Trustee or the Owner Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Notes that the Indenture Trustee or the Owner Trustee knows to be so owned
shall be so disregarded. Owners of Notes that have been pledged in good faith
may be regarded as Holders if the pledgee establishes to the satisfaction of
the
Indenture Trustee or the Owner Trustee the pledgee’s right so to act with
respect to such Notes and that the pledgee is not the Issuer, any other obligor
upon the Notes or any Affiliate of any of the foregoing Persons.
Note
Interest Rate:
With
respect to the Class A Notes (other than the Class 1A-1 Notes and Class
1A-2 Notes), Class M Notes, Class B Notes and Class G Certificates and any
Payment Date, a per annum rate equal to the lesser of (i) One-Month LIBOR
plus the applicable Note Margin and (ii) the Net Funds Cap for that Payment
Date. With respect to the Class 1A-1 Notes and any Payment Date, the lesser
of
(i) 5.3672% per annum and (ii) the related Net Funds Cap for that Payment Date;
provided that after the first possible Optional Termination Date for the Group
1
Loans, clause (i) will increase by 0.50% per annum. With respect to the Class
1A-2 Notes and any Payment Date, the lesser of (i) 5.4100% per annum and (ii)
the related Net Funds Cap for that Payment Date; provided that after the first
possible Optional Termination Date for Group 1 Loans, clause (i) will increase
by 0.50% per annum. For the Class 1P, Class 2P, Class 1A-R and Class 2A-R
Certificates, the related Net Funds Cap.
With
respect to the Class 1X-1 Certificates and any Payment Date, a per annum rate
equal to the percentage equivalent of a fraction, the numerator of which is
the
sum of the amounts calculated pursuant to clauses (A) through (R) below, and
the
denominator of which is the aggregate of the Uncertificated Principal Balances
of REMIC IC Regular Interest LTIC-1AA, REMIC IC Regular Interest LTIC-1A-1,
REMIC IC Regular Interest LTIC-1A-2, REMIC IC Regular Interest LTIC-1A-3, REMIC
IC Regular Interest LTIC-1M-1, REMIC IC Regular Interest LTIC-1M-2, REMIC IC
Regular Interest LTIC-1M-3, REMIC IC Regular Interest LTIC-1M-4, REMIC
IC
Regular Interest LTIC-1M-5, REMIC
IC
Regular Interest LTIC-1M-6, REMIC IC Regular Interest LTIC-1M-7, REMIC IC
Regular Interest LTIC-1M-8, REMIC IC Regular Interest LTIC-1M-9, REMIC IC
Regular Interest LTIC-1B-1, REMIC IC Regular Interest LTIC-1B-2 and REMIC IC
Regular Interest LTIC-1ZZ. For purposes of calculating the Pass-Through Rate
for
the Class 1X-1 Certificates, the numerator is equal to the sum of the following
components:
(A) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest LTIC-1AA
minus the Marker Rate, applied to an amount equal to the Uncertificated
Principal Balance of REMIC IC Regular Interest LTIC-1AA;
(B) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1A-1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1A-1;
(C) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1A-2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1A-2;
(D) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1A-3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1A-3;
(E) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1M-1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1M-1;
(H) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1M-2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1M-2;
(I) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1M-3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1M-3;
(J) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1M-4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1M-4;
(K) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1M-5 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1M-5;
(L) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1M-6 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1M-6;
(M) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1M-7 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1M-7;
(N) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1M-8 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1M-8;
(O) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1M-9 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1M-9;
(P) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1B-1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1B-1;
(Q) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1B-2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IC Regular Interest LTIC-1B-2;
and
(R) the
Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest LTIC-1ZZ
minus the Marker Rate, applied to an amount equal to the Uncertificated
Principal Balance of REMIC IC Regular Interest LTIC-1ZZ.
With
respect to the Class 2X-1 Certificates and any Payment Date, a per annum rate
equal to the percentage equivalent of a fraction, the numerator of which is
the
sum of the amounts calculated pursuant to clauses (A) through (E) below, and
the
denominator of which is the aggregate of the Uncertificated Principal Balances
of REMIC IIB Regular Interest LTIIB-2AA, REMIC IIB Regular Interest LTIIB-2A-1,
REMIC IIB Regular Interest LTIIB-2M-1, REMIC IIB Regular Interest LTIIB-2M-2
and
REMIC IIB Regular Interest LTIIB-2ZZ. For purposes of calculating the
Pass-Through Rate for the Class 2X-1 Certificates, the numerator is equal to
the
sum of the following components:
(A) the
Uncertificated REMIC IIB Pass-Through Rate for REMIC IIB Regular Interest
LTIIB-2AA minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IIB Regular Interest
LTIIB-2AA;
(B) the
Uncertificated REMIC IIB Pass-Through Rate for REMIC IIB Regular Interest
LTIIB-2A-1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IIB Regular Interest
LTIIB-2A-1;
(C) the
Uncertificated REMIC IIB Pass-Through Rate for REMIC IIB Regular Interest
LTIIB-2M-1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IIB Regular Interest
LTIIB-2M-1;
(D) the
Uncertificated REMIC IIB Pass-Through Rate for REMIC IIB Regular Interest
LTIIB-2M-2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IIB Regular Interest LTIIB-2M-2;
and
(E) the
Uncertificated REMIC IIB Pass-Through Rate for REMIC IIB Regular Interest
LTIIB-2ZZ minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC IIB Regular Interest
LTIIB-2ZZ.
Note
Margin:
|
Class
|
Note
Margin
|
|
|
On
or prior to the date upon which the related Optional Termination
can
occur
|
After
the
date upon which the related Optional Termination can
occur
|
|
|
Class
1A-3
|
0.250%
|
0.500%
|
|
Class
1M-1
|
0.340%
|
0.510%
|
|
Class
1M-2
|
0.360%
|
0.540%
|
|
Class
1M-3
|
0.380%
|
0.570%
|
|
Class
1M-4
|
0.480%
|
0.720%
|
|
Class
1M-5
|
0.520%
|
0.780%
|
|
Class
1M-6
|
0.600%
|
0.900%
|
|
Class
1M-7
|
1.100%
|
1.600%
|
|
Class
1M-8
|
1.200%
|
1.700%
|
|
Class
1M-9
|
2.200%
|
2.700%
|
|
Class
1B-1
|
3.500%
|
4.000%
|
|
Class
1B-2
|
3.500%
|
4.000%
|
|
Class
2A-1
|
0.160%
|
0.320%
|
|
Class
2M-1
|
2.050%
|
2.550%
|
|
Class
2M-2
|
2.950%
|
3.450%
|
|
Class G
|
0.160%
|
0.320%
|
Note
Owner:
The
Beneficial Owner of a Note.
Note
Register:
The
register maintained by the Note Registrar in which the Note Registrar shall
provide for the registration of Notes and of transfers and exchanges of
Notes.
Note
Registrar:
The
Indenture Trustee, in its capacity as Note Registrar.
Notes:
The
Class A Notes, Class M Notes and Class B Notes issued and
outstanding at any time pursuant to the Indenture.
Notional
Balance:
With
respect to each of the Class 1X-2 Certificates and Class 1X-S Certificates
for purposes solely of the face thereof, $350,000,000. With respect to the
Class
2X-2 Certificates for purposes solely of the face thereof,
$250,000,000.
Ocwen:
Ocwen
Loan Servicing, LLC, a Delaware limited liability company.
Ocwen
Letter Agreement:
The
securitization servicing side letter agreement, dated as of April 1, 2006,
between the Seller and Ocwen, as amended, supplemented or superceded from time
to time.
Ocwen
Serviced Loans:
The
Loans identified as such on the Loan Schedule.
Ocwen
Termination Test:
With
respect to the Ocwen Serviced Loans and each Determination Date, the Ocwen
Termination Test will be failed if (A) the Realized Loss Percentage for the
Ocwen Serviced Loans exceeds the applicable percentages set forth below with
respect to the related Payment Date:
|
Range
of Payment Dates
|
Percentage
|
|
April
2006 - March 2010
|
5.30%*
|
|
April
2010 - March 2011
|
7.70%*
|
|
April
2011 - March 2012
|
9.60%*
|
|
April
2012 and thereafter
|
10.55%
|
*
The
percentages set forth above are the percentages applicable for the first Payment
Date in the corresponding range of Payment Dates. The percentage for each
succeeding Payment Date in a range increases incrementally by a fraction, the
numerator of which is one and the denominator of which is the number of months
in the corresponding range of Payment Dates, inclusive, of the positive
difference between the percentage applicable to the first Payment Date in that
range and the percentage applicable to the first Payment Date in the succeeding
range.
and
(B)
Holders of the related Notes entitled to 51% or more of the Voting Rights
request in writing to the Indenture Trustee to terminate Ocwen as a Servicer
under the Servicing Agreement pursuant to the terms of Section 7.01 of the
Servicing Agreement.
Officer’s
Certificate:
With
respect to any Servicer or the Special Servicer, a certificate signed by the
President, Managing Director, a Director, a Vice President or an Assistant
Vice
President, of such Servicer or the Special Servicer and delivered to the
Indenture Trustee. With respect to the Issuer, a certificate signed by the
Issuer, under the circumstances described in, and otherwise complying with,
the
applicable requirements of Section 10.01 of the Indenture, and delivered to
the Indenture Trustee. Unless otherwise specified, any reference in the
Indenture to an Officer’s Certificate shall be to an Officer’s Certificate of
any Authorized Officer of the Issuer, the Administrator, a Servicer or the
Special Servicer.
Opinion
of Counsel:
A
written opinion of counsel. Any Opinion of Counsel for a Servicer may be
provided by in-house counsel for such Servicer if reasonably acceptable to
the
Indenture Trustee and the Rating Agencies or the Depositor, as the case may
be.
Optional
Termination:
The
right of the Terminating Entity or the Auction Purchaser, as applicable, to
purchase the Loans in a Loan Group pursuant to Section 10.18 of the
Indenture on a Payment Date as set forth in Section 10.18 of the
Indenture.
Optional
Termination Date:
The
Payment Date on which the Terminating Entity or the Auction Purchaser, as
applicable, may exercise an Optional Termination.
Optional
Termination Notice Period:
The
period during which notice is to be given to the affected Securityholders of
an
Optional Termination pursuant to Section 10.18(c) of the Indenture.
Outstanding:
With
respect to the Notes, as of the date of determination, all Notes theretofore
executed, authenticated and delivered under this Indenture except:
(i) Notes
theretofore cancelled by the Note Registrar or delivered to the Indenture
Trustee for cancellation; and
(ii) Notes
in
exchange for or in lieu of which other Notes have been executed, authenticated
and delivered pursuant to the Indenture unless proof satisfactory to the
Indenture Trustee is presented that any such Notes are held by a protected
purchaser.
Outstanding
Loan:
As to
any Payment Date, a Loan which was not (i) the subject of a Principal Prepayment
in full during any preceding Collection Period, (ii) purchased, deleted or
substituted for during any preceding Collection Period pursuant to the Servicing
Agreement or (iii) a Liquidated Loan or Charged Off Loan during any preceding
Collection Period as of such Payment Date.
Owner
Trustee:
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee of the Trust, and its successors and assigns or any successor owner
trustee appointed pursuant to the terms of the Trust Agreement.
Owner
Trust Estate:
The
meaning specified in Section 3.01 of the Trust Agreement.
Ownership
Interest:
As to
any Certificate, any ownership or security interest in such Certificate,
including any interest in such Certificate as the Certificateholder thereof
and
any other interest therein, whether direct or indirect, legal or beneficial,
as
owner or as pledgee.
Par
Value:
As
defined in Section 10.18 of the Indenture; provided that the “Par Value” for any
Auction Date shall also include the auction expenses of the Indenture Trustee
(which auction expenses shall not exceed $25,000)
Payahead:
Any
Scheduled Payment directed by the related mortgagor in writing to be applied
in
a Collection Period subsequent to the Collection Period in which such payment
was received.
Paying
Agent:
With
respect to the Indenture, any paying agent or co-paying agent appointed pursuant
to Section 3.03 of the Indenture, which initially shall be the Indenture
Trustee.
Payment
Account:
The
account established by the Indenture Trustee pursuant to Section 8.02 of
the Indenture and Section 5.01 of the Servicing Agreement. Amounts
deposited in the Payment Account will be distributed by the Indenture Trustee
in
accordance with Section 3.05 of the Indenture.
Payment
Date:
The
25th day of each month, or if such day is not a Business Day, then the next
Business Day.
Percentage
Interest:
With
respect to any Note, either the percentage set forth on the face thereof or
equal to the percentage obtained by dividing the Denomination of such Note
by
the aggregate of the Denominations of all Notes of the same Class.
Permitted
Investments:
One or
more of the following:
(i) obligations
of or guaranteed as to principal and interest by the United States or any agency
or instrumentality thereof when such obligations are backed by the full faith
and credit of the United States;
(ii) repurchase
agreements on obligations specified in clause (i) maturing not more than one
month from the date of acquisition thereof, provided that the unsecured
obligations of the party agreeing to repurchase such obligations are at the
time
rated by each Rating Agency in its highest short-term rating
available;
(iii) federal
funds, certificates of deposit, demand deposits, time deposits and bankers’
acceptances (which shall each have an original maturity of not more than
90 days and, in the case of bankers’ acceptances, shall in no event have an
original maturity of more than 365 days or a remaining maturity of more than
30
days) denominated in United States dollars of any U.S. depository institution
or
trust company incorporated under the laws of the United States or any state
thereof or of any domestic branch of a foreign depository institution or trust
company; provided
that the
debt obligations of such depository institution or trust company (or, if the
only Rating Agency is Standard & Poor’s, in the case of the principal
depository institution in a depository institution holding company, debt
obligations of the depository institution holding company) at the date of
acquisition thereof have been rated by each Rating Agency in its highest
short-term rating available; and provided further that, if the only Rating
Agency is Standard & Poor’s and if the depository or trust company is a
principal subsidiary of a bank holding company and the debt obligations of
such
subsidiary are not separately rated, the applicable rating shall be that of
the
bank holding company; and, provided further that, if the original maturity
of
such short-term obligations of a domestic branch of a foreign depository
institution or trust company shall exceed 30 days, the short term rating of
such
institution shall be A-1+ in the case of Standard & Poor’s if Standard &
Poor’s is the Rating Agency;
(iv)
commercial paper (having original maturities of not more than 365 days) of
any
corporation incorporated under the laws of the United States or any state
thereof which on the date of acquisition has been rated by each Rating Agency
that rates such securities in its highest short-term rating available;
provided
that
such commercial paper shall have a remaining maturity of not more than 30
days;
(v) a
money
market fund or a qualified investment fund rated by each Rating Agency in its
highest long-term rating available; and
(vi)
other obligations or securities that are acceptable to each Rating Agency as
a
Permitted Investment hereunder and will not reduce the rating assigned to any
Securities by such Rating Agency below the lower of the then-current rating
or
the rating assigned to such Securities as of the Closing Date by such Rating
Agency, as evidenced in writing, provided that if a Servicer or any other Person
controlled by such Servicer is the issuer or the obligor of any obligation
or
security described in this clause (vi) such obligation or security must have
an
interest rate or yield that is fixed or is variable based on an objective index
that is not affected by the rate or amount of losses on the Loans;
provided,
however,
that no
instrument shall be a Permitted Investment if it represents, (1) the right
to
receive only interest payments with respect to the underlying debt instrument,
(2) the right to receive both principal and interest payments derived from
obligations underlying such instrument and the principal and interest payments
with respect to such instrument provide a yield to maturity greater than 120%
of
the yield to maturity at par of such underlying obligations, or (3) an
obligation of the Seller or Depositor. References herein to the highest rating
available on unsecured long-term debt shall mean AAA (or the equivalent in
the
case of Xxxxx’x), and references herein to the highest rating available on
unsecured commercial paper and short-term debt obligations shall mean A-1 (or
the equivalent in the case of Xxxxx’x).
Permitted
Liens:
Liens
for (i) real estate taxes and special assessments not yet delinquent (provided,
that property taxes may be delinquent up to one year); (ii) as to the Loans
identified as junior Loans on the data tapes provided by the related Servicer
to, among others, the Seller, any senior mortgage loans secured by such
Mortgaged Property; (iii) covenants, conditions and restrictions, rights of
way,
easements and other matters of public record as of the date of recording that
are acceptable to mortgage lending institutions generally; (iv) liens prior
to
the related first mortgage, if verified as paid, and liens and judgments of
$5,000 or less, including sewer or maintenance liens, mechanics’ liens or UCC
filings that have been included in the first mortgage balance for the purpose
of
calculating Combined Loan-to-Value Ratio for any related Loan; and other matters
to which like properties are commonly subject that do not materially interfere
with the benefits of the security intended to be provided by the related
Mortgage Documents; provided, however, that Permitted Liens discovered after
final approval is given on a Loan application that are less than 1.0% of the
Appraised Value or less than 10% of the original Principal Balance of the Loan,
whichever is less, do not have to be included in the first mortgage balance
for
the purpose of calculating Combined Loan-to-Value Ratio for any related
Loan
Permitted
Transferee:
Any
Transferee of Class 1A-R, Class 2A-R or Class G Certificate, other than a
Disqualified Organization or Non-United States Person.
Person:
Any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof, or any other entity or organization of any type
(whether or not a legal entity).
Plan:
Any
employee benefit plan or certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Xxxxx plans and bank
collective investment funds and insurance company general or separate accounts
in which such plans, accounts or arrangements are invested, that are subject
to
ERISA or Section 4975 of the Code, as described in Section 3.05 of the
Trust Agreement.
Plan
Assets:
The
meaning specified in Section 2510.3-101 of the Department of Labor
Regulations.
PNC:
PNC
Bank, N.A., a national banking association.
PNC
Serviced Loans:
The
Loans identified as such on the Loan Schedule.
Policy:
The
note guaranty insurance policy (No. 06030043) with respect to the Class 2A-1
Notes and Class G Certificates and all endorsements thereto, if any, dated
the
Closing Date, issued by the Securities Insurer for the benefit of the Holders
of
the Class 2A-1 Notes and Class G Certificates.
Predecessor
Note:
With
respect to any particular Note, every previous Note evidencing all or a portion
of the same debt as that evidenced by such particular Note; and, for the purpose
of this definition, any Note authenticated and delivered under Section 4.03
of the Indenture in lieu of a mutilated, lost, destroyed or stolen Note shall
be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Note.
Preference
Amount:
Any
amount from an Insured Payment previously distributed that is recoverable and
sought to be recovered from such Insured Securityholder as a voidable preference
by a trustee in bankruptcy pursuant to the U.S. Bankruptcy Code, pursuant to
a
final non-appealable order of a court exercising proper jurisdiction in an
insolvency proceeding (a “Final Order”) (such recovered amount, a “Preference
Amount”)
Pre-Funding
Accounts:
The two
separate Eligible Accounts created and maintained by the Indenture Trustee
with
respect to the Group 1 Loans and Group 2 Loans pursuant to Section 3.33(a)
of
the Indenture in the name of the Indenture Trustee for the benefit of the
Noteholders and designated “U.S. Bank, National Association”, in trust for
registered holders of Asset-Backed Notes, Series 2006-2.” Funds in each of the
Pre-Funding Accounts shall be held in trust for the related Noteholders for
the
uses and purposes set forth in the Indenture and shall not be a part of any
REMIC created under the Indenture; provided, however, that any investment income
earned from Permitted Investments made with funds in each Pre-Funding Account
shall be for the account of the Depositor.
Pre-Funding
Amount:
The
amount deposited in the Pre-Funding Accounts with respect to the Group 1 Loans
and Group 2 Loans, on the Closing Date, which shall equal $20,287,571.77 and
$40,897,889.13.
Pre-Funding
Period:
With
respect to either Loan Group, the period from the Closing Date until the
earliest of (i) the date on which the amount on deposit in the related
Pre-Funding Account is reduced to zero, (ii) the date on which a related Event
of Default occurs or (iii) July 24, 2006.
Premium
Percentage:
With
respect to the Insured Securities, 0.15% per annum.
Prepayment
Assumption:
100%
PPC.
Prepayment
Charge:
With
respect to each Loan, the charge if the Mortgagor prepays such Loan as provided
in the related Mortgage Note or Mortgage.
Prepayment
Interest Excess:
As to
any Loan (other than a HELOC), Payment Date and Principal Prepayment in full
during the portion of the related Prepayment Period occurring from the first
day
through the fourteenth day of the calendar month in which such Payment Date
occurs, an amount equal to interest (to the extent received) at the applicable
Mortgage Rate (giving effect to any applicable Relief Act Reduction) on the
amount of such Principal Prepayment for the number of days commencing on the
first day of the calendar month in which such Payment Date occurs and ending
on
the date on which such Principal Prepayment is so applied; provided that
Prepayment Interest Excess shall only exist with respect to any Loan and any
Payment Date if the related Principal Prepayment in full is deposited by the
applicable Servicer in the related Custodial Account pursuant to Section
3.02(b)(i) of the Servicing Agreement in the same month as such Principal
Prepayment in full is made, to be included with distributions on such Payment
Date.
Prepayment
Interest Shortfall:
As to
any Loan (other than a HELOC), Payment Date and Principal Prepayment, other
than
Principal Prepayments in full that occur during the portion of the Prepayment
Period that is in the same calendar month as the Payment Date, the difference
between (i) one full month’s interest at the applicable Mortgage Interest Rate
(giving effect to any applicable Relief Act Reduction), as reduced by the sum
of
the Servicing Fee Rate, Credit Risk Manager Fee Rate and Master Servicing Fee
Rate, on the Principal Balance of such Loan immediately prior to such Principal
Prepayment and (ii) the amount of interest actually received that accrued during
the month immediately preceding such Payment Date or, with respect to any Loan
with a Due Date other than the first of the month, the amount of interest
actually received that accrued during the one-month period immediately preceding
the Due Date following the Principal Prepayment, with respect to such Loan
in
connection with such Principal Prepayment.
Prepayment
Period:
For any
HELOC and any Payment Date, the
calendar month preceding that Payment Date.
For any
Loan (other than a HELOC) and any Payment Date (other than the May 2006 Payment
Date), and each Principal Prepayment in full, the 15th of the month preceding
the month in which the related Payment Date occurs through the 14th of the
month
in which the related Payment Date occurs. With respect to the May 2006 Payment
Date, each Loan (other than a HELOC) and each Principal Prepayment in full,
April 1, 2006 through May 14, 2006. With respect to each Loan (other than a
HELOC), each Payment Date and each Principal Prepayment in part, the calendar
month preceding that Payment Date.
Principal
Balance:
For any
Outstanding Loan (other than a HELOC) as to any Due Date, the unpaid principal
balance of such Loan as of such Due Date as specified in the amortization
schedule at the time relating thereto (before any adjustment to such
amortization schedule by reason of any moratorium or similar waiver or grace
period) after giving effect to any previous partial Principal Prepayments and
Liquidation Proceeds allocable to principal (other than with respect to any
Liquidated Loan) and to the payment of principal due on such Due Date and
irrespective of any delinquency in payment by the related Mortgagor; provided,
however, for purposes of calculating the Servicing Fee and the Master Servicing
Fee, the Principal Balance of any REO will be the unpaid principal balance
immediately prior to foreclosure. For any Outstanding Loan that is a HELOC
as of
any Determination Date, its outstanding principal balance as of the Cut-off
Date
plus any Additional Balances in respect of such HELOC, reduced by the principal
received on or before the Due Date in the Collection Period immediately
preceding such Determination Date. For any Liquidated Loan, $0.
Principal
Collections:
For any
Payment Date and either Loan Group, will be equal to (A) the sum of (1) all
Principal collected (other than Payaheads and, with respect to the Group 2
Loans, any principal collections allocated to the Reimbursable Excluded Amount)
or advanced in respect of Scheduled Payments on the Group 1 Loans or Group
2
Loans, as applicable, during the related Collection Period (less amounts due
to
the Servicers and the Indenture Trustee with respect to the Group 1 Loans or
Group 2 Loans, as applicable, to the extent allocable to principal, including
Advances) and the principal portion of Payaheads on the Loans previously
received and intended for application in the related Collection Period,
(2) all Principal Prepayments on the Loans received during the related
Prepayment Period, (3) the outstanding principal balance of each Loan that
was
repurchased by the Seller or purchased by a Servicer or the majority Class
1X-2
or Class 2X-2 Certificateholder during the related Collection Period and the
principal portion of the Termination Price paid in connection with any related
Optional Termination, (4) the portion of any Substitution Amount paid with
respect to any replaced related Loans during the related Collection Period
allocable to principal, (5) all Net Liquidation Proceeds, Net Recoveries and
Subsequent Recoveries on the Group 1 Loans or Group 2 Loans, as applicable,
(net
of any unpaid related Servicing Fees and unreimbursed Advances) collected with
respect to the related Loans during the related Collection Period, in each
case
to the extent allocable to principal, (6) with respect to the Group 1 Loans,
amounts withdrawn from the Swap Account to cover Realized Losses on the related
Loans incurred during the related Collection Period and (7) with respect to
the
Payment Date in July 2006, the amount remaining in the related Pre-Funding
Account at the end of the Pre-Funding Period minus (B) with respect to the
Group
1 Loans, amounts payable by the Trust to the Counterparty in respect of Net
Swap
Payments and Swap Termination Payments (other than Swap Termination Payments
resulting from a Counterparty Trigger Event and to the extent not paid by the
Indenture Trustee,
on
behalf of the Issuing Entity,
from any
upfront payment received pursuant to any related replacement swap agreement
that
may be entered into by the Indenture Trustee, on behalf of the Issuing Entity)
for such Payment Date (or, if such Payment Date is not also a Swap Payment
Date,
for the related Swap Payment Date) to the extent not paid from the related
Interest Remittance Amount for such Payment Date and the extent remaining unpaid
from any previous Payment Date.
Principal
Prepayment:
Any
full or partial payment of principal on a Loan which is received in advance
of
its scheduled Due Date and which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal
Payment Amount:
For any
Payment Date and each Loan Group will be equal to the related Principal
Remittance Amount plus any related Excess Cashflow Loss Payment for such date
minus the related Overcollateralization Release Amount, if any, for such
date.
Principal
Remittance Amount:
For any
Payment Date and Loan Group I, the related Principal Collections for such
Payment Date. For Loan Group 2 and any Payment Date during the Managed
Amortization Period, the excess, if any, of related Principal Collections for
such Payment Date, over the sum of aggregate amount of Additional Balances
created during the related Collection Period and conveyed to the Issuer and
the
amounts distributed to the Certificate Paying Agent in respect of the Additional
Balance Advance Amount pursuant to Section 3.05(a) of the Indenture. For Loan
Group 2 and any Payment Date during the Rapid Amortization Period, the related
Principal Collections for such Payment Date.
Proceeding:
Any
suit in equity, action at law or other judicial or administrative
proceeding.
Rapid
Amortization Event:
A Rapid
Amortization Event will be in effect for any Payment Date if any one of the
following events is in effect with respect to such Payment Date:
(a) the
Class
Principal Balance of the Class G Certificates, after giving effect to all
payments on such Payment Date, is equal to or greater than 3.00% of the related
Aggregate Collateral Balance on that Payment Date;
(b) a
Servicing Default with respect to PNC occurs;
(c) the
Issuing Entity becomes subject to regulation by the Commission as an investment
company within the meaning of the Investment Company Act of 1940, as
amended;
(d) a
declaration of bankruptcy or insolvency by the Issuing Entity, the Depositor
or
PNC;
(e) a
draw is
made on the Policy that remains unreimbursed for three months;
(f) the
Issuing Entity becomes subject to entity level tax or is taxable as a
corporation;
(g) an
event
of default occurred and is continuing under the Insurance
Agreement;
(h) the
failure on the part of the Sponsor:
| · |
To
make any payment or deposit required to be made under the Loan Purchase
Agreement within five Business Days after the date the payment or
deposit
is required to be made; or
|
| · |
To
observe or perform in any material respect any other covenants or
agreements of the Sponsor set forth in the Loan Purchase Agreement,
which
failure continues unremedied for a period of sixty days after written
notice thereof to the Sponsor, and the failure materially and adversely
affects the interests of the Securities Insurer or the related
Securityholders; provided that a Rapid Amortization Event will not
be
deemed to occur if the Sponsor has repurchased or caused to be repurchased
or substituted for the related Loans or all related Loans, as applicable,
during that period in accordance with the provisions of the
Indenture;
|
(i) any
representation or warranty made by the Sponsor in the Loan Purchase Agreement
shall prove to have been incorrect in any material respect when made and shall
continue to be incorrect in any material respect for the related cure period
specified in the Servicing Agreement after written notice and as a result of
which the interests of the Securities Insurer or the related Securityholders
are
materially and adversely affected; provided, that Rapid Amortization Event
will
not be deemed to occur if the Sponsor has repurchased or caused to be
repurchased or substituted for the related Loans or all related Loans, as
applicable, during that period in accordance with the provisions of the
Indenture;
(j) the
entry
against the Sponsor of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any decree or order unstayed and in effect for a period
of
sixty consecutive days;
(k) the
Sponsor shall voluntarily submit to proceedings under any federal or state
bankruptcy, insolvency or other similar law or code relating to the sponsor
or
the Issuing Entity or relating to all or substantially all of its property
or
the Sponsor or the Issuing Entity shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of
any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;
or
(l) the
cumulative Realized Losses on the Group 2 Loans for that Payment Date exceeds
the percentage of the initial related Aggregate Collateral Balance as specified
below:
|
Payment
Date
|
Percentage
of Initial
Aggregate
Collateral Balance
|
|
May
2006 - April 2009
|
N/A
|
|
May
2009 - April 2010
|
3.15%
for the first month, plus an additional 1/12th of 1.40% for each
month
thereafter
|
|
May
2010 - April 2011
|
4.55%
for the first month, plus an additional 1/12th of 1.05% for each
month
thereafter
|
|
May
2011 - April 2012
|
5.60%
for the first month, plus an additional 1/12th of 0.70% for each
month
thereafter
|
|
May
2012 - April 2013
|
6.30%
for the first month, plus an additional 1/12th of 0.70% for each
month
thereafter
|
|
May
2013 and thereafter
|
7.00%
|
Rapid
Amortization Period:
With
respect to Loan Group 2, the period beginning upon the occurrence of a Rapid
Amortization Event.
Rating
Agency:
Any
nationally recognized statistical rating organization, or its successor, that
rated the Securities at the request of the Depositor at the time of the initial
issuance of the Securities. Initially, Fitch, Xxxxx’x or Standard & Poor’s.
If such organization or a successor is no longer in existence, “Rating Agency”
shall be such nationally recognized statistical rating organization, or other
comparable Person, designated by the Issuer, notice of which designation shall
be given to the Indenture Trustee. References herein to the highest short term
unsecured rating category of a Rating Agency shall mean A-1 + or better in
the
case of Standard & Poor’s and Fitch and P-1 or better in the case of Xxxxx’x
and in the case of any other Rating Agency shall mean such equivalent ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean “AAA” in the case of Standard & Poor’s and Fitch and “Aaa” in the
case of Xxxxx’x and in the case of any other Rating Agency, such equivalent
rating.
Realized
Loss:
With
respect to each Liquidated Loan, an amount (not less than zero) equal to (i)
the
Principal Balance of the Loan as of the date the Loan becomes a Liquidated
Loan,
minus (ii) the proceeds, if any, received during the month in which such Loan
becomes a Liquidated Loan, to the extent applied as recoveries of principal
of
the Loan, net of the portion thereof reimbursable to the related Servicer or
any
Subservicer with respect to related expenses as to which the related Servicer
or
Subservicer is entitled to reimbursement thereunder but which have not been
previously reimbursed. Any Charged Off Loan will give rise to a Realized Loss
(calculated as if clause (ii) of the previous sentence is equal to zero) at
the
time it is charged off, as described in Section 3.07(e) of the Servicing
Agreement.
Realized
Loss Percentage:
For the
purposes of the Ocwen Termination Test, and with respect to the Ocwen Serviced
Loans, respectively, and any Payment Date, the percentage produced by the
following calculation: (i) the aggregate amount of cumulative Realized Losses
incurred on the Ocwen Serviced Loans from the Cut-off Date through the last
day
of the related Due Period, minus (ii) any Net Recoveries on such Ocwen Serviced
Loans, divided by (iii) the aggregate Cut-off Date Principal Balance of the
Ocwen Serviced Loans.
Record
Date:
With
respect to the Class 1A-1, Class 1A-2, Class 1A-3, Class 1M-1, Class 1M-2,
Class
1M-3, Class 1M-4, Class 1M-5, Class 1M-6, Class 1M-7, Class 1M-8, Class 1M-9,
Class 1B-1, Class 1B-2, Class 2A-1, Class 2M-1 and Class 2M-2 Notes and Class
G
Certificates and any Payment Date, the close of business on the Business Day
immediately prior to that Payment Date. With respect to the Class 1P, Class
2P,
Class 1X-1, Class 1X-2, Class 1X-S, Class 2X-1, Class 2X-2, Class 1A-R and
Class 2A-R Certificates and any Payment Date, the close of business on the
last
Business Day of the preceding calendar month (or, in the case of the May 2006
Payment Date, the Closing Date).
Reference
Bank Rate:
With
respect to any Accrual Period, as follows: the arithmetic mean (rounded upwards,
if necessary, to the nearest one sixteenth of a percent) of the offered rates
for United States dollar deposits for one month which are offered by the
Reference Banks as of 11:00 A.M., London, England time, on the second LIBOR
Business Day prior to the first day of such Accrual Period to prime banks in
the
London interbank market for a period of one month in amounts approximately
equal
to the sum of the outstanding Class Principal Balance of the Class 1A-3,
Class M and Class B Notes and Class G Certificates; provided that at least
two
such Reference Banks provide such rate. If fewer than two offered rates appear,
the Reference Bank Rate will be the arithmetic mean of the rates quoted by
one
or more major banks in New York City, selected by the Indenture Trustee, as
of
11:00 a.m., New York time, on such date for loans in U.S. Dollars to leading
European Banks for a period of one month in amounts approximately equal to
the
aggregate outstanding Class Principal Balance of the Class 1A-3, Class M and
Class B Notes and Class G Certificates. If no quotations can be obtained, the
rate will be the rate for the prior Payment Date; provided however, if, under
the priorities listed previously in this paragraph, the rate for a Payment
Date
would be based on the rate for the previous Payment Date for the third
consecutive Payment Date, the Indenture Trustee after consultation with the
Seller, shall select an alternative comparable index over which the Indenture
Trustee has no control, used for determining one-month Eurodollar lending rates
that is calculated and published or otherwise made available by an independent
party.
Reference
Banks:
The
leading banks selected by the Indenture Trustee, which are engaged in
transactions in Eurodollar deposits in the London interbank market.
Refinanced
Loan:
A Loan
which was made to a Mortgagor who owned the Mortgaged Property prior to the
origination of such Loan and the proceeds of which were used in whole or part
to
satisfy an existing mortgage.
Registered
Holder:
The
Person in whose name a Note is registered in the Note Register on the applicable
Record Date.
Reimbursable
Excluded Amount:
As
defined in Section 3.16(b) of the Servicing Agreement.
Released
Loan:
Any
Charged Off Loan that is released by the related Servicer to the Class 1X-2
Certificateholders or the Class 2X-2 Certificateholders pursuant to Section
3.07(f) of the Servicing Agreement, generally on the date that is six months
after the date on which such Servicer begins using Special Servicing on such
Charged Off Loans. Any Released Loan will no longer be an asset of any REMIC
or
the Trust Estate.
Relief
Act:
The
Servicemembers Civil Relief Act or any similar state law or
regulation.
Relief
Act Reductions:
With
respect to any Payment Date and any Loan as to which there has been a reduction
in the amount of interest or principal collectible thereon (attributable to
any
previous month) as a result of the application of the Relief Act or similar
state law or regulation, the amount, if any, by which (i) interest and/or
principal collectible on such Loan for the most recently ended calendar month
is
less than (ii) interest and/or principal accrued thereon for such month pursuant
to the Mortgage Note.
REMIC:
A “real
estate mortgage investment conduit” within the meaning of Section 860D of
the Code.
REMIC
Administrator:
U.S.
Bank National Association; provided that if the REMIC Administrator is found
by
a court of competent jurisdiction to no longer be able to fulfill its
obligations as REMIC Administrator under this Agreement, the Indenture Trustee
shall appoint a successor REMIC Administrator, subject to assumption of the
REMIC Administrator obligations under this Agreement.
REMIC IA:
The
segregated pool of assets consisting of the portion of the Trust Estate relating
to the Group 1 Loans (but excluding the Swap Account, the related Basis Risk
Reserve Fund, the related Pre-Funding Account, the related Capitalized Interest
Account and the related Subsequent Loan Interest) with respect to which a REMIC
election is to be made.
REMIC
IA Regular Interest LTIA-1:
One of
the separate non-certificated beneficial ownership interests in REMIC IA issued
under the Indenture and designated as a Regular Interest in REMIC IA. REMIC
IA
Regular Interest LTIA-1 shall accrue interest at the related Uncertificated
REMIC IA Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IA Regular Interest LTIA-PF:
One of
the separate non-certificated beneficial ownership interests in REMIC IA issued
under the Indenture and designated as a Regular Interest in REMIC IA. REMIC
IA
Regular Interest LTIA-PF shall accrue interest at the related Uncertificated
REMIC IA Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IA Regular Interest LTIA-S1:
One of
the separate non-certificated beneficial ownership interests in REMIC IA issued
under the Indenture and designated as a Regular Interest in REMIC IA. REMIC
IA
Regular Interest LTIA-S1 shall accrue interest at the related Uncertificated
REMIC IA Pass-Through Rate in effect from time to time, and shall not be
entitled to distributions of principal.
REMIC
IA Regular Interest LTIA-S2:
One of
the separate non-certificated beneficial ownership interests in REMIC IA issued
under the Indenture and designated as a Regular Interest in REMIC IA. REMIC
IA
Regular Interest LTIA-S2 shall accrue interest at the related Uncertificated
REMIC IA Pass-Through Rate in effect from time to time, and shall not be
entitled to distributions of principal.
REMIC
IA Regular Interests:
REMIC
IA Regular Interest LTIA-1, LTIA-PF, LTIA-S1 and LTIA-S2.
REMIC
IB:
The
segregated pool of assets consisting of all of the REMIC IA Regular Interests
conveyed in the trust to the Indenture Trustee, for the benefit of the Holders
of the REMIC IB Regular Interests and the Class 1A-R Certificates (in respect
of
the Class R-IB Interest), pursuant to Article II of the Indenture, and all
amounts deposited therein, with respect to which a separate REMIC election
is to
be made.
REMIC
IB Regular Interest:
Any of
the separate non-certificated beneficial ownership interests in REMIC IB issued
under the Indenture and designated as a “regular interest” in REMIC IB. Each
REMIC IB Regular Interest shall accrue interest at the related Uncertificated
REMIC IB Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement to the Indenture. The designations for the
respective REMIC IB Regular Interests are set forth in the Preliminary Statement
to the Indenture.
REMIC
IB Regular Interest LTIB-1-A:
One of
the separate non-certificated beneficial ownership interests in REMIC IB issued
under the Indenture and designated as a Regular Interest in REMIC IB. REMIC
IB
Regular Interest LTIB-1-A shall accrue interest at the related Uncertificated
REMIC IB Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IB Regular Interest LTIB-1-B:
One of
the separate non-certificated beneficial ownership interests in REMIC IB issued
under the Indenture and designated as a Regular Interest in REMIC IB. REMIC
IB
Regular Interest LTIB-1-B shall accrue interest at the related Uncertificated
REMIC IB Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IB Regular Interest LTIB-1A-1:
One of
the separate non-certificated beneficial ownership interests in REMIC IB issued
under the Indenture and designated as a Regular Interest in REMIC IB. REMIC
IB
Regular Interest LTIB-1A-1 shall accrue interest at the related Uncertificated
REMIC IB Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IB Regular Interest LTIB-1A-2:
One of
the separate non-certificated beneficial ownership interests in REMIC IB issued
under the Indenture and designated as a Regular Interest in REMIC IB. REMIC
IB
Regular Interest LTIB-1A-2 shall accrue interest at the related Uncertificated
REMIC IB Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IB Regular Interest LTIB-1P:
One of
the separate non-certificated beneficial ownership interests in REMIC IB issued
under the Indenture and designated as a Regular Interest in REMIC IB. REMIC
IB
Regular Interest LTIB-1P shall accrue interest at the related Uncertificated
REMIC IB Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IB Regular Interest LTIB-1A-R:
One of
the separate non-certificated beneficial ownership interests in REMIC IB issued
under the Indenture and designated as a Regular Interest in REMIC IB. REMIC
IB
Regular Interest LTIB-1A-R shall accrue interest at the related Uncertificated
REMIC IB Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IB Regular Interest LTIB-S:
One of
the separate non-certificated beneficial ownership interests in REMIC IB issued
under the Indenture and designated as a Regular Interest in REMIC IB. REMIC
IB
Regular Interest LTIB-S shall accrue interest as set forth in the Preliminary
Statement to the Indenture. REMIC IB Regular Interest LTIB-S shall not be
entitled to distributions of principal.
REMIC
IB Regular Interest LTIB-1X-1:
One of
the separate non-certificated beneficial ownership interests in REMIC IB issued
under the Indenture and designated as a Regular Interest in REMIC IB. REMIC
IB
Regular Interest LTIB-1X-1 shall accrue interest at the related Uncertificated
REMIC IB Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IB Regular Interests:
REMIC
IB Regular Interest LTIB-1-A, REMIC IB Regular Interest LTIB-1-B, REMIC IB
Regular Interest LTIC-1A-1, REMIC IB Regular Interest LTIB-1A-2, REMIC IB
Regular Interest LTIB-1A-R, REMIC IB Regular Interest LTIB-1P, REMIC IB Regular
Interest LTIB-1X-1 and REMIC IB Regular Interest LTIB-S.
REMIC
IC:
The
segregated pool of assets consisting of all of the REMIC IB Regular Interests
conveyed in the trust to the Indenture Trustee, for the benefit of the Holders
of the REMIC IC Regular Interests and the Class 1A-R Certificates, pursuant
to
Article II of the Indenture, and all amounts deposited therein, with respect
to
which a separate REMIC election is to be made.
REMIC
IC Regular Interest:
Any of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a “regular interest” in REMIC IC. Each
REMIC IC Regular Interest shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions hereof, in
an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement to the Indenture. The designations for the
respective REMIC IC Regular Interests are set forth in the Preliminary Statement
to the Indenture.
REMIC
IC Interest Loss Allocation Amount:
With
respect to any Payment Date, an amount equal to (a) the product of (i) the
aggregate Principal Balance of the Loans and related REO then outstanding and
(ii) the Uncertificated REMIC IC Pass-Through Rate for REMIC IC Regular Interest
LTIC-1AA minus the Marker Rate, divided by (b) 12.
REMIC
IC Overcollateralization Amount:
With
respect to any date of determination, (i) 1% of the aggregate Uncertificated
Principal Balances of the REMIC IC Regular Interests (other than REMIC IC
Regular Interests LTIC-1R and LTIC-1P) minus (ii) the aggregate Uncertificated
Principal Balances of REMIC IC Regular Interests LTIC-1A-1, LTIC-1A-2,
LTIC-1A-3, LTIC-1M-1, LTIC-1M-2, LTIC-1M-3, LTIC-1M-4, LTIC-1M-5, LTIC-1M-6,
LTIC-1M-7, LTIC-1M-8, LTIC-1M-9, LTIC-1B-1 and LTIC-1B-2, in each case as of
such date of determination.
REMIC
IC Principal Loss Allocation Amount:
With
respect to any Payment Date, an amount equal to the product of (i) the aggregate
Principal Balance of the Loans and related REO then outstanding and (ii) 1
minus
a fraction, the numerator of which is two times the aggregate Uncertificated
Principal Balance of REMIC IC Regular Interests LTIC-1A-1, LTIC-1A-2, LTIC-1A-3,
LTIC-1M-1, LTIC-1M-2, LTIC-1M-3, LTIC-1M-4, LTIC-1M-5, LTIC-1M-6, LTIC-1M-7,
LTIC-1M-8, LTIC-1M-9, LTIC-1B-1 and LTIC-1B-2 and the denominator of which
is
the aggregate Uncertificated Principal Balance of REMIC IC Regular Interests
LTIC-1A-1, LTIC-1A-2, LTIC-1A-3, LTIC-1M-1, LTIC-1M-2, LTIC-1M-3, LTIC-1M-4,
LTIC-1M-5, LTIC-1M-6, LTIC-1M-7, LTIC-1M-8, LTIC-1M-9, LTIC-1B-1, LTIC-1B-2
and
LTIC-1ZZ.
REMIC
IC Regular Interest LTIC-1AA:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1AA shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1A-1:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1A-1 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1A-2:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1A-2 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1A-3:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1A-3 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1M-1:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1M-1 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1M-2:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1M-2 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1M-3:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1M-3 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1M-4:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC REMIC
IC
Regular Interest LTIC-1M-4 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1M-5:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1M-5 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1M-6:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1M-6 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1M-7:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1M-7 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1M-8:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1M-8 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1M-9:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1M-9 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1B-1:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1B-1 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1B-2:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1B-2 shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1IO:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1IO shall accrue interest as set forth in the Preliminary
Statement to the Indenture. REMIC IC Regular Interest LTIC-1IO shall not be
entitled to distributions of principal.
REMIC
IC Regular Interest LTIC-1P:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1P shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1R:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1R shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1S:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1S shall accrue interest as set forth in the Preliminary
Statement to the Indenture. REMIC IC Regular Interest LTIC-1S shall not be
entitled to distributions of principal.
REMIC
IC Regular Interest LTIC-1ZZ:
One of
the separate non-certificated beneficial ownership interests in REMIC IC issued
under the Indenture and designated as a Regular Interest in REMIC IC. REMIC
IC
Regular Interest LTIC-1ZZ shall accrue interest at the related Uncertificated
REMIC IC Pass-Through Rate in effect from time to time, and shall be entitled
to
distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IC Regular Interest LTIC-1ZZ Maximum Interest Deferral Amount:
With
respect to any Payment Date, the excess of (i) REMIC IC Uncertificated Accrued
Interest calculated with the Uncertificated Pass-Through Rate for REMIC IC
Regular Interest LTIC-1ZZ and an Uncertificated Principal Balance equal to
the
excess of (x) the Uncertificated Principal Balance of REMIC IC Regular Interest
LTIC-1ZZ over (y) the REMIC IC Overcollateralization Amount, in each case for
such Payment Date, over (ii) the sum of REMIC IC Uncertificated Accrued Interest
on REMIC IC Regular Interests LTIC-1A-1, LTIC-1A-2, LTIC-1A-3, LTIC-1M-1,
LTIC-1M-2, LTIC-1M-3, LTIC-1M-4, LTIC-1M-5, LTIC-1M-6, LTIC-1M-7, LTIC-1M-8,
LTIC-1M-9, LTIC-1B-1 and LTIC-1B-2, with the rates on the REMIC IC Regular
Interests LTIC-1A-1, LTIC-1A-2, LTIC-1A-3, LTIC-1M-1, LTIC-1M-2, LTIC-1M-3,
LTIC-1M-4, LTIC-1M-5, LTIC-1M-6, LTIC-1M-7, LTIC-1M-8, LTIC-1M-9, LTIC-1B-1
and
LTIC-1B-2 subject to a cap, for the purpose of this calculation, equal to the
Note Interest Rate for the Corresponding Note and with the rate on the REMIC
IC
Regular Interest LTIC-1ZZ subject to a cap, for the purpose of this calculation,
equal to zero.
REMIC
IC Regular Interests:
REMIC
IC Regular Interest LTIC-1AA, REMIC IC Regular Interest LTIC-1A-1, REMIC IC
Regular Interest LTIC-1A-2, REMIC IC Regular Interest LTIC-1A-3, REMIC IC
Regular Interest LTIC-1M-1, REMIC IC Regular Interest LTIC-1M-2, REMIC IC
Regular Interest LTIC-1M-3, REMIC IC Regular Interest LTIC-1M-4, REMIC IC
Regular Interest LTIC-1M-5, REMIC IC Regular Interest LTIC-1M-6, REMIC IC
Regular Interest LTIC-1M-7, REMIC IC Regular Interest LTIC-1M-8, REMIC IC
Regular Interest LTIC-1M-9, REMIC IC Regular Interest LTIC-1B-1, REMIC IC
Regular Interest LTIC-1B-2, REMIC IC Regular Interest LTIC-1ZZ, REMIC IC Regular
Interest LTIC-1P, REMIC IC Regular Interest LTIC-1R, REMIC IC Regular Interest
LTIC-1S and REMIC IC Regular Interest LTIC-1IO.
REMIC
IC Targeted Overcollateralization Amount:
1% of
the Targeted Overcollateralization Amount.
REMIC
ID:
The
segregated pool of assets consisting of all of the REMIC IC Regular Interests
conveyed in the trust to the Indenture Trustee, for the benefit of the Holders
of the Group 1 Notes, the Group 1 Certificates (other than the Class 1X-2 and
the Class G Certificates) and REMIC ID Regular Interest IO, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
REMIC
ID Regular Interests:
The
Group 1 Notes, the Group 1 Certificates (other than the Class 1X-2 Certificates)
and REMIC ID Regular Interest IO.
REMIC
IIA:
The
segregated pool of assets consisting of the portion of the Trust Estate relating
to the Group 2 Loans (but excluding, the related Basis Risk Reserve Fund, the
related Pre-Funding Account, the related Capitalized Interest Account and the
related Subsequent Loan Interest) with respect to which a REMIC election is
to
be made.
REMIC
IIA Regular Interest LTIIA-1:
One of
the separate non-certificated beneficial ownership interests in REMIC IIA issued
under the Indenture and designated as a Regular Interest in REMIC IIA. REMIC
IIA
Regular Interest LTIIA-1 shall accrue interest at the related Uncertificated
REMIC IIA Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IIA Regular Interest LTIIA-PF:
One of
the separate non-certificated beneficial ownership interests in REMIC IIA issued
under the Indenture and designated as a Regular Interest in REMIC IIA. REMIC
IIA
Regular Interest LTIIA-PF shall accrue interest at the related Uncertificated
REMIC IIA Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IIA Regular Interests:
REMIC
IIA Regular Interest LTIIA-1 and LTIIA-PF.
REMIC
IIB:
The
segregated pool of assets consisting of all of the REMIC IIA Regular Interests
conveyed in the trust to the Indenture Trustee, for the benefit of the Holders
of the REMIC IIB Regular Interests and the Class 2A-R Certificates (in respect
of the Class R-IIB Interest), pursuant to Article II of the Indenture, and
all
amounts deposited therein, with respect to which a separate REMIC election
is to
be made.
REMIC
IIB Regular Interest:
Any of
the separate non-certificated beneficial ownership interests in REMIC IIB issued
under the Indenture and designated as a “regular interest” in REMIC IIB. Each
REMIC IIB Regular Interest shall accrue interest at the related Uncertificated
REMIC IIB Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions hereof,
in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement to the Indenture. The designations for the
respective REMIC IIB Regular Interests are set forth in the Preliminary
Statement to the Indenture.
REMIC
IIB Interest Loss Allocation Amount:
With
respect to any Payment Date, an amount equal to (a) the product of (i) the
aggregate Principal Balance of the Loans and related REO then outstanding and
(ii) the Uncertificated REMIC IIB Pass-Through Rate for REMIC IIB Regular
Interest LTIIB-2AA minus the Marker Rate, divided by (b) 12.
REMIC
IIB Overcollateralization Amount:
With
respect to any date of determination, (i) 1% of the aggregate Uncertificated
Principal Balances of the REMIC IIB Regular Interests (other than REMIC IIB
Regular Interests LTIIB-2R and LTIIB-2P) minus (ii) the aggregate Uncertificated
Principal Balances of REMIC IIB Regular Interests LTIIB-2A-1, LTIIB-2M-1 and
LTIIB-2M-2, in each case as of such date of determination.
REMIC
IIB Principal Loss Allocation Amount:
With
respect to any Payment Date, an amount equal to the product of (i) the aggregate
Principal Balance of the Loans and related REO then outstanding and (ii) 1
minus
a fraction, the numerator of which is two times the aggregate Uncertificated
Principal Balance of REMIC IIB Regular Interests LTIIB-2A-1, LTIIB-2M-1 and
LTIIB-2M-2, and the denominator of which is the aggregate Uncertificated
Principal Balance of REMIC IIB Regular Interests LTIIB-2A-1, LTIIB-2M-1,
LTIIB-2M-2 and LTIIB-2ZZ.
REMIC
IIB Regular Interest LTIIB-2AA:
One of
the separate non-certificated beneficial ownership interests in REMIC IIB issued
under the Indenture and designated as a Regular Interest in REMIC IIB. REMIC
IIB
Regular Interest LTIIB-2AA shall accrue interest at the related Uncertificated
REMIC IIB Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IIB Regular Interest LTIIB-2A-1:
One of
the separate non-certificated beneficial ownership interests in REMIC IIB issued
under the Indenture and designated as a Regular Interest in REMIC IIB. REMIC
IIB
Regular Interest LTIIB-2A-1 shall accrue interest at the related Uncertificated
REMIC IIB Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IIB Regular Interest LTIIB-2M-1:
One of
the separate non-certificated beneficial ownership interests in REMIC IIB issued
under the Indenture and designated as a Regular Interest in REMIC IIB. REMIC
IIB
Regular Interest LTIIB-2M-1 shall accrue interest at the related Uncertificated
REMIC IIB Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IIB Regular Interest LTIIB-2M-2:
One of
the separate non-certificated beneficial ownership interests in REMIC IIB issued
under the Indenture and designated as a Regular Interest in REMIC IIB. REMIC
IIB
Regular Interest LTIIB-2M-2 shall accrue interest at the related Uncertificated
REMIC IIB Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IIB Regular Interest LTIIB-2P:
One of
the separate non-certificated beneficial ownership interests in REMIC IIB issued
under the Indenture and designated as a Regular Interest in REMIC IIB. REMIC
IIB
Regular Interest LTIIB-2P shall accrue interest at the related Uncertificated
REMIC IIB Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IIB Regular Interest LTIIB-2R:
One of
the separate non-certificated beneficial ownership interests in REMIC IIB issued
under the Indenture and designated as a Regular Interest in REMIC IIB. REMIC
IIB
Regular Interest LTIIB-2R shall accrue interest at the related Uncertificated
REMIC IIB Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IIB Regular Interest LTIIB-2ZZ:
One of
the separate non-certificated beneficial ownership interests in REMIC IIB issued
under the Indenture and designated as a Regular Interest in REMIC IIB. REMIC
IIB
Regular Interest LTIIB-2ZZ shall accrue interest at the related Uncertificated
REMIC IIB Pass-Through Rate in effect from time to time, and shall be entitled
to distributions of principal, subject to the terms and conditions of the
Indenture, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement to the Indenture.
REMIC
IIB Regular Interest LTIIB-2ZZ Maximum Interest Deferral Amount:
With
respect to any Payment Date, the excess of (i) REMIC IIB Uncertificated Accrued
Interest calculated with the Uncertificated Pass-Through Rate for REMIC IIB
Regular Interest LTIIB-2ZZ and an Uncertificated Principal Balance equal to
the
excess of (x) the Uncertificated Principal Balance of REMIC IIB Regular Interest
LTIIB-2ZZ over (y) the REMIC IIB Overcollateralization Amount, in each case
for
such Payment Date, over (ii) the sum of REMIC IIB Uncertificated Accrued
Interest on REMIC IIB Regular Interests LTIIB-2A-1, LTIIB-2M-1 and LTIIB-2M-2,
subject to a cap, for the purpose of this calculation, equal to the Note
Interest Rate for the Corresponding Note and with the rate on the REMIC IIB
Regular Interest LTIIB-2ZZ subject to a cap, for the purpose of this
calculation, equal to zero.
REMIC
IIB Regular Interests:
REMIC
IIB Regular Interest LTIIB-2AA, REMIC IIB Regular Interest LTIIB-2A-1, REMIC
IIB
Regular Interest LTIIB-2M-1, REMIC IIB Regular Interest LTIIB-2M-2, REMIC IIB
Regular Interest LTIIB-2ZZ, REMIC IIB Regular Interest LTIIB-2P and REMIC IIB
Regular Interest LTIIB-R.
REMIC
IIB Targeted Overcollateralization Amount:
1% of
the Targeted Overcollateralization Amount.
REMIC
IIC:
The
segregated pool of assets consisting of all of the REMIC IIB Regular Interests
conveyed in the trust to the Indenture Trustee, for the benefit of the Holders
of the Group 2 Notes, the Group 2 Certificates (other than the Class 2X-2 and
the Class G Certificates), and all amounts deposited therein, with respect
to
which a separate REMIC election is to be made.
REMIC
IIC Regular Interests:
The
Group 2 Notes and the Group 2 Certificates (other than the Class 2X-2 and the
Class G Certificates).
REMIC
Provisions:
Provisions of the federal income tax law relating to real estate mortgage
investment conduits, which appear at Sections 860A through 860G of Subchapter
M
of Chapter 1 of the Code, and related provisions, and temporary and final
regulations (or, to the extent not inconsistent with such temporary or final
regulations, proposed regulations) and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time.
REMIC
Regular Interests:
The
REMIC IA Regular Interests, the REMIC IB Regular Interests, the REMIC IC Regular
Interests, the REMIC IIA Regular Interests and the REMIC IIB Regular
Interests.
REMIC Ineligible
Loan:
A Loan
will be a REMIC Ineligible Loan, if (a) the value of the real property
securing the Loan was not at least equal to 80% of the original principal
balance of the Loan, calculated by subtracting the principal balance of any
home
equity loans that are secured by liens that are senior to the Loan and a
proportionate amount of any home equity loans that are secured by a lien of
equal priority as the Loan from the Appraised Value of the property when the
Loan was originated and (b) substantially all of the proceeds of the Loans
were
not used to acquire, improve or protect an interest in the real property
securing the Loan.
Remittance
Amount:
The sum
of the Interest Remittance Amount and the Principal Remittance
Amount.
REO:
A
Mortgaged Property that is acquired by or on behalf of the Issuer in full or
partial satisfaction of the related Mortgage.
Repurchase
Price:
With
respect to any Loan required to be repurchased on any date pursuant to the
Loan
Purchase Agreement or the Servicing Agreement, an amount equal to the sum of
(i)
100% of the Loan Balance thereof (without reduction for any amounts charged
off), (ii) unpaid accrued interest at the Mortgage Rate (or with respect to
the
last day of the month in the month of repurchase, the Mortgage Rate will be
the
Mortgage Rate in effect as to second to last day in such month) on the
outstanding principal balance thereof from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month
of
purchase, (iii) and all expenses advanced and reimbursable to the Servicer
and
(iv) in connection with any Loan required to be repurchased pursuant to
Section 2 of the Loan Purchase Agreement, any costs and damages incurred by
the Trust Estate with respect to such Loan in connection with a breach of clause
(b) to Exhibit B of the Loan Purchase Agreement.
Required
Reserve Fund Deposit:
With
respect to any Payment Date and each Basis Risk Reserve Fund, the excess, if
any, of (i) $1,000 over (ii) the amount of funds on deposit in the related
Basis
Risk Reserve Fund prior to deposits thereto on such Payment Date.
Responsible
Officer:
With
respect to the Indenture Trustee or any Servicer, any officer of the Indenture
Trustee or such Servicer with direct responsibility for the administration
of
the Indenture or Servicing Agreement, as applicable, and also, with respect
to a
particular matter, any other officer to whom such matter is referred because
of
such officer’s knowledge of and familiarity with the particular
subject.
Rolling
Three Month Delinquency Average:
For any
Payment Date and each Loan Group, the fraction, expressed as a percentage,
equal
to the average of the related Delinquency Rates for each of the three (or one
through two, in the case of the first through second Payment Dates) immediately
preceding months.
Scheduled
Payment:
For any
Loan, the monthly scheduled payment of interest and principal, as determined
in
accordance with the provisions of the related Mortgage Note, as reduced by
any
Relief Act Reductions.
Securities
Act:
The
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
Security:
Any of
the Certificates or Notes.
Securityholder
or Holder:
Any
Noteholder or a Certificateholder.
Seller
or Sponsor:
DLJ
Mortgage Capital, Inc.
Senior
Principal Payment Amount:
For the
Group 1 Loans and any Payment Date that is on or after the related Stepdown
Date, the amount, if any, by which (x) the aggregate Class Principal Balance
of
the Class 1A Notes and the Class 1P Certificates immediately prior to such
Payment Date exceeds (y) the lesser of (A) the product of (i) approximately
37.82% and (ii) the Aggregate Collateral Balance for Loan Group 1 for such
Payment Date and (B) the amount, if any, by which (i) the related Aggregate
Collateral Balance for such Payment Date exceeds (ii) 0.50% of the related
Aggregate Collateral Balance as of the Cut-Off Date. For the Group 2 Loans
and
any Payment Date that is on or after the related Stepdown Date, the amount,
if
any, by which (x) the aggregate Class Principal Balance of the Class 2A-1
Notes and the Class 2P Certificates immediately prior to such Payment Date
exceeds (y) the lesser of (A) the product of (i) approximately 92.00% and (ii)
the related Aggregate Collateral Balance for such Payment Date and (B) the
amount, if any, by which (i) the related Aggregate Collateral Balance for such
Payment Date exceeds (ii) 0.50% of the related Aggregate Collateral
Balance.
Servicer:
Wilshire, Ocwen or PNC, as applicable, and their respective successors and
assigns.
Servicing
Criteria:
The
criteria set forth in paragraph (d) of Item 1122 of Regulation AB, as such
may
be amended from time to time.
Servicer
Remittance Date:
With
respect to each Payment Date, the second Business Day immediately preceding
such
Payment Date.
Servicing
Advances:
All
customary, reasonable and necessary “out of pocket” costs and expenses
(including reasonable attorneys’ fees and disbursements) incurred in the
performance by the related Servicer of its servicing obligations, including,
but
not limited to, the cost of (a) the inspection, preservation, restoration and
protection of a Mortgaged Property, (b) any enforcement, administrative or
judicial proceedings, or any legal work or advice specifically related to
servicing the Loans, including but not limited to, foreclosures, bankruptcies,
condemnations, drug seizures, elections, foreclosures by subordinate or superior
lienholders, and other legal actions incidental to the servicing of the Loans
including any expenses incurred in relation to any such proceedings that result
from the Loan being registered on the MERS System (provided that such expenses
are reasonable and that the related Servicer specifies the Loan(s) to which
such
expenses relate, and provided further that any such enforcement, administrative
or judicial proceeding does not arise out of a breach of any representation,
warranty or covenant of the related Servicer), (c) the management and
liquidation of any REO (including default management and similar services,
appraisal services and real estate broker services), (d) taxes, assessments,
water rates, sewer rates and other charges which are or may become a lien upon
the Mortgaged Property, and primary mortgage insurance policy premiums and
fire
and hazard insurance coverage, (e) any expenses reasonably sustained by the
related Servicer, with respect to the liquidation of the Mortgaged Property
in
accordance with the terms of the Servicing Agreement, (f) compliance with the
obligations under Section 3.04 of the Servicing Agreement (except for
deposits made in connection with the deductible clause in a blanket policy),
(g)
the cost of obtaining any broker’s price opinion in accordance with Section 3.07
of the Servicing Agreement, (h) expenses incurred in connection with the
recordation of Assignments of Mortgage or substitutions of trustees, (i)
obtaining any legal documentation required to be included in a Mortgage File
and/or correcting any outstanding title issues (ie. any lien or encumbrance
on
the related Mortgaged Property that prevents the effective enforcement of the
intended lien position) reasonably necessary for such Servicer to perform its
obligations under this Agreement and (j) expenses incurred in connection with
any instrument of satisfaction or deed of reconveyance or substitutions of
trustees on deeds of trust.
Servicing
Agreement:
The
Servicing Agreement dated as of the Cut-Off Date among the Issuer, the
Servicers, the Special Servicer and the Indenture Trustee.
Servicing
Certificate:
A
certificate completed and executed by a Servicing Officer on behalf of a
Servicer in accordance with Section 4.01 of the Servicing
Agreement.
Servicing
Default:
The
meaning specified in Section 7.01 of the Servicing Agreement.
Servicing
Fee:
With
respect to each Servicer and any Collection Period, the sum of (i) late
fees and other fees to which the Servicer is entitled under the Servicing
Agreement and Prepayment Interest Excess, that have been paid during such
Collection Period, and (ii) one-twelfth of the product of (A) the Servicing
Fee Rate and (B) the aggregate Principal Balance of the Loans serviced by such
Servicer as of the first day of the month for which such fee is being calculated
(such fee shall be payable monthly and pro-rated for any partial
month).
Servicing
Fee Rate:
With
respect to each Wilshire Serviced Loan, the
“Wilshire Servicing Fee Rate” as defined in the Wilshire Letter Agreement, which
rate may increase up to 0.50% per annum.
With
respect to each Ocwen Serviced Loan, the “Ocwen Servicing Fee Rate” as defined
in the Ocwen Letter Agreement, which rate may increase up to 0.50% per annum.
With respect to each PNC Serviced Loan, 0.50% per annum. In the event of the
appointment of a successor servicer pursuant to Section 6.04 of the Servicing
Agreement, the Servicing Fee Rate as to each Wilshire Serviced Loan or Ocwen
Serviced Loan, as applicable, may increase to up to 0.50% per
annum.
Servicing
Officer:
Any
officer of a Servicer involved in, or responsible for, the administration and
servicing of the Loans serviced by such Servicer whose name and specimen
signature appear on a list of servicing officers furnished to the Indenture
Trustee by such Servicer, as such list may be amended from time to
time.
Significant
Net Recoveries:
With
respect to a defaulted Loan, a determination by a Servicer that either (A)
the
potential Net Recoveries are anticipated to be greater than or equal to the
sum
of (i) the total indebtedness of the senior lien on the related Mortgaged
Property and (ii) $10,000 (after anticipated expenses and attorneys’ fees) or
(B) the related Mortgagor has shown a willingness and ability to pay over the
previous six months.
Single
Note:
A Note
in the amount of $1,000.
Special
Serviced Loan:
The
Loans for which the Special Servicer acts as servicer pursuant to Section 3.21
of the Servicing Agreement.
Special
Servicer:
SPS.
Special
Servicing:
With
regard to any Loans that become Charged Off Loans, the servicing of such Charged
Off Loans using specialized collection procedures (including foreclosure, if
appropriate) to maximize recoveries.
SPS:
Select
Portfolio Servicing, Inc., a Utah corporation.
Standard
& Poor’s:
Standard & Poor’s Ratings Services or its successor in
interest.
Stated
Value:
With
respect to any Loan, the value of the related Mortgaged Property as stated
by
the related Mortgagor in his or her application.
Statutory
Trust Statute:
Chapter
38 of Title 12 of the Delaware Code, 12 Del. Code §§3801
et seq.,
as the
same may be amended from time to time.
Stepdown
Date:
For any
Payment Date and the Group 1 Loans, the later to occur of (x) the Payment Date
occurring in May 2009 and (y) the first Payment Date on which the Senior
Enhancement Percentage, calculated for this purpose only after taking into
account payments of principal on the Group 1 Loans, but prior to any payment
of
the related Principal Payment Amount to the related Notes then entitled to
payments of principal on that Payment Date, is greater than or equal to
approximately 62.18%. For any Payment Date and the Group 2 Loans, the later
to
occur of (x) the Payment Date occurring in May 2009 and (y) the first Payment
Date on which the related Senior Enhancement Percentage, calculated for this
purpose after taking into account payments of principal on the Group 2 Loans,
but prior to any payment of the related Principal Payment Amount to the related
Notes then entitled to payments of principal on that Payment Date, is greater
than or equal to approximately 8.00%.
Subordinate
Notes:
The
Class M Notes and Class B Notes.
Subsequent
Group 1 Loan:
Any
Group 1 Loan other than an Initial Group 1 Loan conveyed to the Trust Fund
pursuant to Section 2.04 of the Indenture and to a Subsequent Transfer
Agreement, which Loan shall be listed on the revised Loan Schedule delivered
pursuant to the Indenture and on Schedule A to such Subsequent Transfer
Agreement. When used with respect to a single Subsequent Transfer Date,
Subsequent Group 1 Loan shall mean a Subsequent Group 1 Loan conveyed to the
Trust on that Subsequent Transfer Date.
Subsequent
Group 1 Loan Interest:
Any
amount constituting an related Interest Remittance Amount (other than an amount
withdrawn from the related Capitalized Interest Account pursuant to clause
(v)
of the definition of “Interest Remittance Amount”) received or advanced with
respect to a Subsequent Group 1 Loan during the Collection Periods relating
to
the May 2006, June 2006 and July 2006 Payment Dates, but only to the extent
of
the excess of such amount over the amount of interest accruing on such
Subsequent Group 1 Loan during the related period at a per annum rate equal
to
5.33%, 5.71% and 5.76%, respectively. The Subsequent Group 1 Loan Interest
shall
not be an asset of any REMIC.
Subsequent
Group 2 Loan:
Any
Group 2 Loan other than an Initial Group 2 Loan conveyed to the Trust Fund
pursuant to Section 2.04 of the Indenture and to a Subsequent Transfer
Agreement, which Loan shall be listed on the revised Loan Schedule delivered
pursuant to the Indenture and on Schedule A to such Subsequent Transfer
Agreement. When used with respect to a single Subsequent Transfer Date,
Subsequent Group 2 Loan shall mean a Subsequent Group 2 Loan conveyed to the
Trust on that Subsequent Transfer Date.
Subsequent
Group 2 Loan Interest:
Any
amount constituting an related Interest Remittance Amount (other than an amount
withdrawn from the related Capitalized Interest Account pursuant to clause
(v)
of the definition of “Interest Remittance Amount”) received or advanced with
respect to a Subsequent Group 2 Loan during the Collection Periods relating
to
the May 2006, June 2006 and July 2006 Payment Dates, but only to the extent
of
the excess of such amount over the amount of interest accruing on such
Subsequent Group 2 Loan during the related period at a per annum rate equal
to
4.84%, 5.90% and 6.06%, respectively. The Subsequent Group 2 Loan Interest
shall
not be an asset of any REMIC.
Subsequent
Loan:
Any
Subsequent Group 1 Loan or Subsequent Group 2 Loan.
Subsequent
Recoveries:
As of
any Payment Date, all amounts (other than Liquidation Proceeds) received by
a
Servicer specifically related to a previously Liquidated Loan during the related
Collection Period.
Subsequent
Transfer Agreement:
A
Subsequent Transfer Agreement substantially in the form of Exhibit D to the
Loan
Purchase Agreement, executed and delivered by the related Servicers, the
Depositor, the Issuer, the Seller and the Indenture Trustee as provided in
Section 2.04 of the Indenture.
Subsequent
Transfer Date:
For any
Subsequent Transfer Agreement, the date the related Subsequent Loans are
transferred to the Trust Fund pursuant to the related Subsequent Transfer
Agreement.
Subservicer:
Any
Person with whom a Servicer has entered into a Subservicing Agreement as a
Subservicer by such Servicer.
Subservicing
Account:
An
Eligible Account established or maintained by a Subservicer as provided for
in
Section 3.02(c) of the Servicing Agreement.
Subservicing
Agreement:
Any
written contract between a Servicer and any Subservicer relating to servicing
and administration of certain Loans as provided in Section 3.01 of the
Servicing Agreement.
Subservicing
Fee:
With
respect to any Collection Period, any fee retained monthly by a Subservicer
which will be paid out of the Servicing Fee.
Substitution
Amount:
The
amount, if any, by which the Principal Balance of a Loan required to be removed
from the trust due to a breach of a representation and warranty or defective
documentation exceeds the Principal Balance of the related substitute loan,
plus
unpaid interest accrued thereon.
Swap
Account:
The
account established by the Indenture Trustee pursuant to Section 3.31(b) of
the Indenture. Amounts deposited in the Swap Account will be distributed by
the
Indenture Trustee in accordance with Section 3.05(f) of the
Indenture.
Swap
Agreement:
Collectively, the ISDA Master Agreement (including the Schedule thereto, the
transaction evidenced by the related confirmation and novation confirmation
by
and between the Indenture Trustee, not in its individual capacity but solely
on
behalf of the Issuing Entity, and the Counterparty), forms of which are attached
hereto as Exhibit G to the Indenture.
Swap
LIBOR:
LIBOR
as determined pursuant to the Swap Agreement.
Swap
Payment Date:
A
payment date as defined in the Swap Agreement.
Swap
Termination Payment:
Upon
the designation of an “Early Termination Date” as defined in the Swap Agreement,
the payment to be made by the Indenture Trustee, on behalf of the Issuing
Entity, to the Counterparty from payments from the Trust Fund, or by the
Counterparty to the Indenture Trustee, on behalf of the Issuing Entity, for
payment to the Trust Fund, as applicable, pursuant to the terms of the Swap
Agreement.
Terminating
Entity:
With
respect to either Loan Group, (i) The Seller, if it is the owner of the
servicing rights with respect to any related Loan on the related Optional
Termination Date, or (ii) SPS, if (a) the Seller is not the owner of the
servicing rights with respect to any related Loan on the related Optional
Termination Date and (b) SPS is a Special Servicer with respect to any related
Loan on the related Optional Termination Date, or (iii) the Majority Servicer
on
the related Optional Termination Date, if (a) the Seller is not the owner of
the
servicing rights with respect to any related Loan on the related Optional
Termination Date and (b) SPS is not a Special Servicer with respect to any
related Loan on the related Optional Termination Date. The Terminating Entity
for each Loan Group shall be determined on each related Optional Termination
Date.
Termination
Price:
With
respect to the exercise of the Optional Termination for a Loan Group by the
related Terminating Entity pursuant to Section 10.18(a) of the Indenture,
an amount equal to the greater of (a) the related Par Value and (b) the
related Fair Market Value. With respect to the exercise of the Optional
Termination by the related Auction Purchaser pursuant to Section 10.18(b)
of the Indenture, an amount equal to the related Loan Auction
Price.
Transfer:
Any
direct or indirect transfer, sale, pledge, hypothecation or other form of
assignment of any Ownership Interest in a Certificate.
Transferee:
Any
Person who is acquiring by Transfer any Ownership Interest in a
Certificate.
Transferor:
Any
Person who is disposing by Transfer of any Ownership Interest in a
Certificate.
Treasury
Regulations:
Regulations, including proposed or temporary Regulations, promulgated under
the
Code. References in the Basic Documents to specific provisions of proposed
or
temporary regulations shall include analogous provisions of final Treasury
Regulations or other successor Treasury Regulations.
Trigger
Event:
With
respect to any Payment Date and the Group 1 Loans, a Trigger Event will be
in
effect if either (i) the related Rolling Three Month Delinquency Average equals
or exceeds 12.80% of the Group 1 Senior Enhancement Percentage as of such
Payment Date or (ii) the Cumulative Realized Losses on the Group 1 Loans
exceed the percentage of the initial Aggregate Collateral Balance of the Group
1
Loans for such Payment Date as specified below:
|
Payment
Date
|
Percentage
of Initial
Aggregate
Loan Balance
|
|
May
2006 - April
2009
|
N/A
|
|
May
2009 - April 2010
|
4.30%
for the first month, plus an additional 1/12th of 2.40% for each
month
thereafter
|
|
May
2010 - April 2011
|
6.70%
for the first month, plus an additional 1/12th of 1.90% for each
month
thereafter
|
|
May
2011 - April 2012
|
8.60%
for the first month, plus an additional 1/12th of 0.95% for each
month
thereafter
|
|
May
2012 and thereafter
|
9.55%
|
With
respect to any Payment Date and the Group 2 Loans, a Trigger Event will be
in
effect if either (i) the related Rolling Three Month Delinquency Average equals
or exceeds 5.50% of the Aggregate Collateral Balance of the Group 2 Loans as
of
such Payment Date or (ii) the Cumulative Realized Losses on the Group 2
Loans exceed the percentage of the initial Aggregate Collateral Balance of
the
Group 2 Loans for such Payment Date as specified below:
|
Payment
Date
|
Percentage
of Initial
Aggregate
Loan Balance
|
|
May
2006 - April 2009
|
N/A
|
|
May
2009 - April 2010
|
2.65%
for the first month, plus an additional 1/12th of 1.15% for each
month
thereafter
|
|
May
2010 - April 2011
|
3.80%
for the first month, plus an additional 1/12th of 0.85% for each
month
thereafter
|
|
May
2011 - April 2012
|
4.65%
for the first month, plus an additional 1/12th of 0.95% for each
month
thereafter
|
|
May
2012 and thereafter
|
5.60%
|
Trust
Agreement:
The
Trust Agreement, dated as of the Closing Date, between the Owner Trustee and
the
Depositor.
Trust
Collateral:
The
meaning specified in Section 10.18(b) of the Indenture.
Trust
Estate:
The
meaning specified in the Granting Clause of the Indenture.
Trust
Indenture Act or TIA:
The
Trust Indenture Act of 1939, as amended from time to time, as in effect on
any
relevant date.
Trustee
Additional Expenses:
All
reasonable expenses and disbursements incurred or made by the Indenture Trustee
and the Administrator in accordance with any of the provisions of the Indenture
and the Administration Agreement with respect to: (A) the reasonable
compensation and the expenses and disbursements of its counsel not associated
with the closing of the issuance of the Notes, (B) the reasonable compensation,
expenses and disbursements of any accountant, engineer or appraiser that is
not
regularly employed by the Indenture Trustee, to the extent that the Indenture
Trustee or the Administrator must engage such persons to perform acts or
services hereunder, (C) printing and engraving expenses in connection with
preparing any Definitive Notes and (D) any other reasonable expenses incurred
other than in the ordinary course of its business by the Indenture Trustee
or
the Administrator in connection with its duties hereunder or under the
Administration Agreement.
UCC:
The
Uniform Commercial Code, as amended from time to time, as in effect in the
applicable jurisdiction.
Uncertificated
Notional Amount:
With
respect to REMIC IA Regular Interest LTIA-S1, the Uncertificated Notional Amount
shall be equal to the principal balance of the Ocwen Serviced Loans. With
respect to REMIC IA Regular Interest LTIA-S2, the Uncertificated Notional Amount
shall be equal to the principal balance of the Wilshire Serviced Loans. With
respect to REMIC IB Regular Interest LTIB-S, the Uncertificated Notional Amount
shall be equal to the Uncertificated Notional Amount of REMIC IA Regular
Interest LTIA-S1 and REMIC IA Regular Interest LTIA-S2. With respect to REMIC
IC
Regular Interest LTIC-1S, the Uncertificated Notional Amount shall be equal
to
the Uncertificated Notional Amount of REMIC IB Regular Interest LTIB-S. With
respect to REMIC IC Regular Interest LTIC-1IO, the Uncertificated Notional
Amount shall be equal to the Uncertificated Principal Balance of REMIC IB
Regular Interest LTIB-1-A.
Uncertificated
Pass-Through Rate:
The
Uncertificated REMIC IA Pass-Through Rate, the Uncertificated REMIC IB
Pass-Through Rate, the Uncertificated REMIC IC Pass-Through Rate, the
Uncertificated REMIC IIA Pass-Through Rate and the Uncertificated REMIC IIB
Pass-Through Rate.
Uncertificated
Principal Balance:
With
respect to each REMIC Regular Interest, the amount of such REMIC Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Principal Balance of each REMIC Regular Interest shall equal
the amount set forth in the Preliminary Statement hereto as its initial
Uncertificated Principal Balance. On each Payment Date, the Uncertificated
Principal Balance of each REMIC Regular Interest shall be reduced by all
distributions of principal made on such REMIC Regular Interest on such Payment
Date pursuant to Section 3.05 of the Indenture and, if and to the extent
necessary and appropriate, shall be further reduced on such Payment Date by
Realized Losses as provided in Section 3.26 of the Indenture, and the
Uncertificated Principal Balance of REMIC IC Regular Interest LTIC-1ZZ shall
be
increased by interest deferrals as provided in Section 11.02 of the Indenture
and the Uncertificated Principal Balance of REMIC IIB Regular Interest LTIIB-2ZZ
shall be increased by interest deferrals as provided in Section 11.02 of the
Indenture. The Uncertificated Principal Balance of each REMIC Regular Interest
that has an Uncertificated Principal Balance shall never be less than
zero.
Uncertificated
REMIC IA Pass-Through Rate:
With
respect to REMIC IA Regular Interest LTIA-1, and the Accrual Periods in May
2006, June 2006 and July 2006, a per annum rate equal to the weighted average
of
the Net Mortgage Rates of the Initial Group 1 Loans; with respect to REMIC
IA
Regular Interest LTIA-PF and the Accrual Periods in May 2006, June 2006 and
July
2006, a per annum rate equal to 5.33%, 5.71% and 5.76%, respectively, and with
respect to each REMIC IA Regular Interest LTIA-1 and REMIC IA Regular Interest
LTIA-PF and each Accrual Period thereafter, the weighted average of the Net
Mortgage Rates on the Group 1 Loans.
With
respect to REMIC IA Regular Interest LTIA-S1, a per annum rate, determined
on a
Loan by Loan basis, equal to the excess of (i) the excess of (a) the Mortgage
Interest Rate for each Ocwen Serviced Loan over (b) the sum of the Ocwen
Servicing Fee Rate, the Credit Risk Manager Fee Rate and the Indenture Trustee
Fee Rate, over (ii) the Net Mortgage Rate of each such Loan.
With
respect to REMIC IA Regular Interest LTIA-S2, a per annum rate, determined
on a
Loan by Loan basis, equal to the excess of (i) the excess of (a) the Mortgage
Interest Rate for each Wilshire Serviced Loan over (b) the sum of the Wilshire
Servicing Fee Rate, the Credit Risk Manager Fee Rate and the Indenture Trustee
Fee Rate, over (ii) the Net Mortgage Rate of each such Loan.
Uncertificated
REMIC IB Pass-Through Rate:
For any
Payment Date, With respect to REMIC IB Regular Interest LTIB-1-A, a per annum
rate equal to the weighted average of the Uncertificated REMIC IA Pass-Through
Rates on REMIC IA Regular Interest LTIA-1 and REMIC IA Regular Interest LTIA-PF
multiplied by 2, subject to a maximum rate of 10.80%. With respect to REMIC
IB
Regular Interest LTIB-1-B, the greater of (x) a per annum rate equal to the
excess, if any, of (i) 2 multiplied by the weighted average of the
Uncertificated REMIC IA Pass-Through Rates on REMIC IA Regular Interest LTIA-1
and REMIC IA Regular Interest LTIA-PF over (ii) 10.80% and (y) 0.00000%. With
respect to REMIC IB Regular Interest LTIB-1A-1, REMIC IB Regular Interest
LTIB-1A-2, REMIC IB Regular Interest LTIB-1A-R, REMIC IB Regular Interest
LTIB-1A-P and REMIC IB Regular Interest LTIB-1X-1, the weighted average of
the
Uncertificated REMIC IA Pass-Through Rates on REMIC IA Regular Interest LTIA-1
and REMIC IA Regular Interest LTIA-PF, weighted on the basis of each such REMIC
IA Regular Interest prior to the related Payment Date. REMIC IB Regular Interest
LTIB-S will not have an Uncertificated REMIC IB Pass-Through Rate, but will
be
entitled to 100% of the amounts distributed on REMIC IA Regular Interest LTIA-S1
and REMIC IA Regular Interest LTIA-S2.
Uncertificated
REMIC IC Pass-Through Rate:
For any
Payment Date, with respect to REMIC IC Regular Interest LTIC-1AA, REMIC IC
Regular Interest LTIC-1A-1, REMIC IC Regular Interest LTIC-1A-2, REMIC IC
Regular Interest LTIC-1A-3, REMIC IC Regular Interest LTIC-1M-1, REMIC IC
Regular Interest LTIC-1M-2, REMIC IC Regular Interest LTIC-1M-3, REMIC IC
Regular Interest LTIC-1M-4, REMIC IC Regular Interest LTIC-1M-5, REMIC IC
Regular Interest LTIC-1M-6, REMIC IC Regular Interest LTIC-1M-7, REMIC IC
Regular Interest LTIC-1M-8, REMIC IC Regular Interest LTIC-1M-9, REMIC IC
Regular Interest LTIC-1B-1, REMIC IC Regular Interest LTIC-1B-2 and REMIC IC
Regular Interest LTIC-1ZZ, , REMIC IC Regular Interest LTIC-1P and REMIC IC
Regular Interest LTIC-1R, a
per
annum rate (but not less than zero) equal to the weighted average of (t) with
respect to REMIC IB Regular Interest LTIB-1-B, the weighted average of the
Uncertificated REMIC IB Pass-Through Rate for such REMIC IB Regular Interest,
weighted on the basis of the Uncertificated Principal Balance of such REMIC
IB
Regular Interest for each such Payment Date, (u) with respect to REMIC IB
Regular Interest LTIB-1A-1, the weighted average of the Uncertificated REMIC
IB
Pass-Through Rate for such REMIC IB Regular Interest, weighted on the basis
of
the Uncertificated Principal Balance of such REMIC IB Regular Interest for
each
such Payment Date, (v) with respect to REMIC IB Regular Interest LTIB-1A-2,
the
weighted average of the Uncertificated REMIC IB Pass-Through Rate for such
REMIC
IB Regular Interest, weighted on the basis of the Uncertificated Principal
Balance of such REMIC IB Regular Interest for each such Payment Date, (w) with
respect to REMIC IB Regular Interest LTIB-1A-R, the weighted average of the
Uncertificated REMIC IB Pass-Through Rate for such REMIC IB Regular Interest,
weighted on the basis of the Uncertificated Principal Balance of such REMIC
IB
Regular Interest for each such Payment Date, (x) with respect to REMIC IB
Regular Interest LTIB-1A-P, the weighted average of the Uncertificated REMIC
IB
Pass-Through Rate for such REMIC IB Regular Interest, weighted on the basis
of
the Uncertificated Principal Balance of such REMIC IB Regular Interest for
each
such Payment Date, (y) with respect to REMIC IB Regular Interest LTIB-1X-1,
the
weighted average of the Uncertificated REMIC IB Pass-Through Rate for such
REMIC
IB Regular Interest, weighted on the basis of the Uncertificated Principal
Balance of such REMIC IB Regular Interest for each such Payment Date, and (z)
with respect to REMIC IB Regular Interest LTIB-1-A, 2 multiplied by Swap LIBOR,
subject to a maximum rate of the Uncertificated REMIC IB Pass-Through Rate
for
such REMIC IB Regular Interest, weighted on the basis of the Uncertificated
Principal Balance of such REMIC IB Regular Interest for each such Payment
Date.
REMIC
IC
Regular Interest LTIC-1S will not have an Uncertificated REMIC IC Pass-Through
Rate, but shall be entitled to 100% of the amounts distributed on REMIC IA
Regular Interest LTIB-S.
With
respect to REMIC IC Regular Interest LTIC-1IO, the excess of (i) the weighted
average of the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest MTI-1-A over (ii) 2 multiplied by Swap LIBOR.
Uncertificated
REMIC IIA Pass-Through Rate:
With
respect to REMIC IIA Regular Interest LTIIA-1, and the Accrual Periods in May
2006, June 2006 and July 2006, a per annum rate equal to the weighted average
of
the Net Mortgage Rates of the Initial Group 2 Loans; with respect to REMIC
IIA
Regular Interest LTIIA-PF and the Accrual Periods in May 2006, June 2006 and
July 2006, a per annum rate equal to 4.84%, 5.90% and 6.06%, respectively,
and
with respect to each REMIC IIA Regular Interest LTIIA-1 and REMIC IIA Regular
Interest LTIIA-PF and each Accrual Period thereafter, the weighted average
of
the Net Mortgage Rates on the Group 2 Loans.
Uncertificated
REMIC IIB Pass-Through Rate:
For any
Payment Date, with respect to REMIC IIB Regular Interest LTIIB-2AA, REMIC IIB
Regular Interest LTIIB-2A-1, REMIC IIB Regular Interest LTIIB-2M-1, REMIC IIB
Regular Interest LTIIB-2M-2, REMIC IIB Regular Interest LTIIB-2ZZ, REMIC IIB
Regular Interest LTIIB-2P and REMIC IIB Regular Interest LTIIB-2R, a per annum
rate (but not less than zero) equal to the weighted average of the
Uncertificated REMIC IIA Pass-Through Rates for the REMIC IIA Regular Interests,
weighted on the basis of the Uncertificated Principal Balance of each such
REMIC
IIA Regular Interest for each such Payment Date.
Underwriter:
Credit
Suisse LLC or any successor thereto.
Uniform
Single Attestation Program for Mortgage Bankers:
The
Uniform Single Attestation Program for Mortgage Bankers, as published by the
Mortgage Bankers Association of America and effective with respect to fiscal
periods ending on or after December 15, 1995.
United
States Person:
A
citizen or resident of the United States, a corporation or a partnership
(including an 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 (except, in
the
case of a partnership, to the extent provided in regulations).
Voting
Rights:
The
portion of the voting rights of the Holders of the Notes allocated to each
Class of Notes. 100% of all of the Voting Rights for each Loan Group
exercisable by the related Noteholders shall be allocated among the related
Classes of Class A Notes, Class M Notes and Class B Notes in
accordance with their respective outstanding Note Balances. Voting Rights shall
be allocated among the Holders of a Class of Notes on a pro rata basis in
accordance with their respective Percentage Interests.
Wilshire:
Wilshire Credit Corporation, a Nevada corporation.
Wilshire
Letter Agreement:
The
securitization servicing side letter agreement, dated as of April 1, 2006,
between the Seller and Wilshire, as amended, supplemented or superceded from
time to time.
Wilshire
Serviced Loans:
The
Loans identified as such on the Loan Schedule.
