<PAGE>
Exhibit 4.1
EXECUTION COPY
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
Depositor
WILSHIRE CREDIT CORPORATION,
Servicer
and
LASALLE BANK NATIONAL ASSOCIATION,
Trustee
----------
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2006
----------
MERRILL LYNCH MORTGAGE INVESTORS TRUST,
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-HE4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
ARTICLE I
DEFINITIONS....................................................
12
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES.. 66
SECTION 2.01.
Conveyance of Mortgage
Loans........................... 66
SECTION 2.02.
Acceptance by the
Trustee of the Mortgage Loans........ 68
SECTION 2.03.
Representations,
Warranties and Covenants of the
Depositor..............................................
70
SECTION 2.04.
Representations and
Warranties of the Servicer......... 74
SECTION 2.05.
Substitutions and
Repurchases of Mortgage Loans that
are not "Qualified Mortgages"..........................
75
SECTION 2.06.
Authentication and
Delivery of Certificates............ 75
SECTION 2.07.
REMIC
Elections........................................ 76
SECTION 2.08.
Covenants of the
Servicer.............................. 81
SECTION 2.09.
Permitted Activities
of the Trust...................... 81
SECTION 2.10.
Qualifying Special
Purpose Entity...................... 81
SECTION 2.11.
Depositor Notification
of NIM Notes.................... 81
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS............... 81
SECTION 3.01.
Servicer to Service
Mortgage Loans..................... 81
SECTION 3.02.
Servicing and
Subservicing; Enforcement of the
Obligations of Servicer................................
83
SECTION 3.03.
Rights of the
Depositor and the Trustee in Respect of
the Servicer...........................................
84
SECTION 3.04.
Trustee to Act as
Servicer............................. 84
SECTION 3.05.
Collection of Mortgage
Loan Payments; Collection
Account; Certificate Account...........................
85
SECTION 3.06.
Collection of Taxes,
Assessments and Similar Items;
Escrow Accounts........................................
88
SECTION 3.07.
Access to Certain
Documentation and Information
Regarding the Mortgage Loans...........................
89
SECTION 3.08.
Permitted Withdrawals
from the Collection Account and
Certificate Account....................................
89
SECTION 3.09.
[RESERVED].............................................
91
SECTION 3.10.
Maintenance of Hazard
Insurance........................ 91
SECTION 3.11.
Enforcement of
Due-On-Sale Clauses; Assumption
Agreements.............................................
92
SECTION 3.12.
Realization Upon
Defaulted Mortgage Loans;
Determination of Excess Proceeds; Special Loss
Mitigation.............................................
93
SECTION 3.13.
Trustee to Cooperate;
Release of Mortgage Files........ 96
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
SECTION 3.14.
Documents, Records and
Funds in Possession of Servicer
to be Held for the Trustee.............................
98
SECTION 3.15.
Servicing
Compensation................................. 98
SECTION 3.16.
Access to Certain
Documentation........................ 98
SECTION 3.17.
Annual Statement as to
Compliance...................... 99
SECTION 3.18.
Annual Independent
Public Accountants' Servicing
Statement; Financial Statements........................
99
SECTION 3.19.
Rights of the NIMs
Insurer............................. 101
SECTION 3.20.
Periodic
Filings....................................... 102
SECTION 3.21.
Indemnification by
Trustee............................. 105
SECTION 3.22.
Indemnification by
Servicer............................ 105
SECTION 3.23.
Prepayment Charge
Reporting Requirements............... 106
SECTION 3.24.
Information to the
Trustee............................. 106
SECTION 3.25.
Indemnification........................................
106
SECTION 3.26.
Nonsolicitation........................................
107
SECTION 3.27.
High Cost Mortgage
Loans............................... 107
SECTION 3.28.
Special Servicing
Agreements........................... 107
ARTICLE IV
DISTRIBUTIONS.................................................
107
SECTION 4.01.
Advances...............................................
107
SECTION 4.02.
Reduction of Servicing
Compensation in Connection with
Prepayment Interest Shortfalls.........................
109
SECTION 4.03.
Distributions on the
REMIC Interests................... 109
SECTION 4.04.
Distributions..........................................
109
SECTION 4.05.
Monthly Statements to
Certificateholders............... 118
ARTICLE V THE
CERTIFICATES...............................................
122
SECTION 5.01.
The
Certificates....................................... 122
SECTION 5.02.
Certificate Register;
Registration of Transfer and
Exchange of Certificates...............................
123
SECTION 5.03.
Mutilated, Destroyed,
Lost or Stolen Certificates...... 128
SECTION 5.04.
Persons Deemed
Owners.................................. 128
SECTION 5.05.
Access to List of
Certificateholders' Names and
Addresses..............................................
128
SECTION 5.06.
Book-Entry
Certificates................................ 128
SECTION 5.07.
Notices to
Depository.................................. 129
SECTION 5.08.
Definitive
Certificates................................ 130
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
SECTION 5.09.
Maintenance of Office
or Agency........................ 130
SECTION 5.10.
Authenticating
Agents.................................. 130
ARTICLE VI THE DEPOSITOR AND THE
SERVICER................................ 131
SECTION 6.01.
Respective Liabilities
of the Depositor and the
Servicer...............................................
131
SECTION 6.02.
Merger or
Consolidation of the Depositor or the
Servicer...............................................
131
SECTION 6.03.
Limitation on
Liability of the Depositor, the Servicer
and Others.............................................
132
SECTION 6.04.
Limitation on
Resignation of Servicer.................. 132
SECTION 6.05.
Errors and Omissions
Insurance; Fidelity Bonds......... 133
ARTICLE VII DEFAULT; TERMINATION OF
SERVICER............................. 133
SECTION 7.01.
Events of
Default...................................... 133
SECTION 7.02.
Trustee to Act;
Appointment of Successor............... 135
SECTION 7.03.
Notification to
Certificateholders..................... 136
ARTICLE VIII CONCERNING THE
TRUSTEE...................................... 136
SECTION 8.01.
Duties of the
Trustee.................................. 136
SECTION 8.02.
Certain Matters
Affecting the Trustee.................. 137
SECTION 8.03.
Trustee Not Liable for
Certificates or Mortgage Loans.. 139
SECTION 8.04.
Trustee May Own
Certificates........................... 139
SECTION 8.05.
Trustee's Fees and
Expenses............................ 139
SECTION 8.06.
Indemnification and
Expenses of Trustee................ 139
SECTION 8.07.
Eligibility
Requirements for Trustee................... 141
SECTION 8.08.
Resignation and
Removal of Trustee..................... 141
SECTION 8.09.
Successor
Trustee...................................... 142
SECTION 8.10.
Merger or
Consolidation of Trustee..................... 142
SECTION 8.11.
Appointment of
Co-Trustee or Separate Trustee.......... 142
SECTION 8.12.
Tax
Matters............................................ 144
ARTICLE IX
TERMINATION...................................................
146
SECTION 9.01.
Termination upon
Liquidation or Repurchase of all
Mortgage Loans.........................................
146
SECTION 9.02.
Final Distribution on
the Certificates................. 147
SECTION 9.03.
Additional Termination
Requirements.................... 148
ARTICLE X MISCELLANEOUS
PROVISIONS....................................... 149
SECTION 10.01.
Amendment..............................................
149
SECTION 10.02.
Counterparts...........................................
151
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S>
<C>
SECTION 10.03.
Governing Law..........................................
151
SECTION 10.04.
Intention of Parties...................................
151
SECTION 10.05.
Notices................................................
152
SECTION 10.06.
Severability of Provisions.............................
153
SECTION 10.07.
Assignment.............................................
153
SECTION 10.08.
Limitation on Rights of Certificateholders.............
154
SECTION 10.09.
Inspection and Audit Rights............................
155
SECTION 10.10.
Certificates Nonassessable and Fully Paid..............
155
SECTION 10.11.
Compliance with Regulation AB..........................
155
SECTION 10.12.
Third Party Rights.....................................
156
SECTION 10.13.
Additional Rights of the NIMs Insurer..................
156
</TABLE>
-iv-
<PAGE>
EXHIBIT A FORMS OF
CERTIFICATES
EXHIBIT B MORTGAGE LOAN
SCHEDULE
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF TRUSTEE
CERTIFICATION
EXHIBIT E-1 FORM
OF CLASS R TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2 FORM
OF CLASS R TRANSFEROR'S AFFIDAVIT
EXHIBIT F FORM OF
TRANSFEROR CERTIFICATE
EXHIBIT G FORM OF
INVESTMENT LETTER (ACCREDITED INVESTOR)
EXHIBIT H FORM OF RULE
144A LETTER (QUALIFIED INSTITUTIONAL BUYER)
EXHIBIT I FORM OF REQUEST
FOR RELEASE
EXHIBIT J [RESERVED]
EXHIBIT K FORM OF BACK-UP
CERTIFICATION OF TRUSTEE
EXHIBIT L FORM OF
OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M-1 FORM
OF CLASS A-1 CAP CONTRACT
EXHIBIT M-2 FORM
OF CLASS A-2 CAP CONTRACT
EXHIBIT M-3 FORM
OF SUBORDINATE CERTIFICATES CAP CONTRACT
EXHIBIT N-1
ONE-MONTH LIBOR CAP TABLE -- CLASS A-1 CAP CONTRACT
EXHIBIT N-2
ONE-MONTH LIBOR CAP TABLE -- CLASS A-2 CAP CONTRACT
EXHIBIT N-3
ONE-MONTH LIBOR CAP TABLE -- SUBORDINATE CERTIFICATES CAP
CONTRACT
EXHIBIT O FORM OF
TRANSFEROR REPRESENTATION LETTER FOR TRANSFER TO
REGULATION S BOOK-ENTRY CERTIFICATE FROM A HOLDER OF A RULE
144A
BOOK-ENTRY CERTIFICATE OR DEFINITIVE CERTIFICATE
EXHIBIT P FORM OF
TRANSFEROR REPRESENTATION LETTER FOR TRANSFER PURSUANT TO
RULE 144A FROM A HOLDER OF A REGULATION S BOOK-ENTRY
CERTIFICATE
OR DEFINITIVE CERTIFICATE
EXHIBIT Q FORM OF SWAP
AGREEMENT
EXHIBIT R FORM OF
ASSESSMENT OF COMPLIANCE
EXHIBIT S SERVICING
CRITERIA TO BE ADDRESSED
EXHIBIT T FORM OF
SARBANES-OXLEY CERTIFICATION
EXHIBIT U FORM OF ITEM
1123 CERTIFICATION OF SERVICER
SCHEDULE X
SCHEDULE Y
SCHEDULE Z
-i-
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of July 1, 2006, among
MERRILL
LYNCH MORTGAGE INVESTORS, INC., a Delaware corporation, as
depositor (the
"Depositor"), WILSHIRE CREDIT CORPORATION, a Nevada corporation, as
servicer
(the "Servicer"), and LASALLE BANK NATIONAL ASSOCIATION, a national
banking
association, as trustee (the "Trustee").
The
Depositor is the owner of the Trust Fund that is hereby conveyed to
the
Trustee in return for the Certificates. The Trust Fund for federal
income tax
purposes will consist of (i) three real estate mortgage investment
conduits,
(ii) the right to receive payments distributable to the Class P
Certificates
pursuant to Section 4.04(b)(i) hereof, (iii) each Cap Contract and
the Cap
Contract Account, (iv) the grantor trusts described in Section 2.07
hereof and
(v) the Supplemental Interest Trust, which in turn will hold the
Swap Agreement.
The SWAP REMIC will consist of all of the assets constituting the
Trust Fund
(other than the assets described in clauses (ii), (iii), (iv) and
(v) above,
other than the SWAP REMIC Regular Interests and other than the
Lower Tier REMIC
Regular Interests) and will be evidenced by the SWAP REMIC Regular
Interests
(which will be uncertificated and will represent the "regular
interests" in the
SWAP REMIC) and the Class SWR Interest as the single "residual
interest" in the
SWAP REMIC. The Lower Tier REMIC will consist of SWAP REMIC Regular
Interests
and will be evidenced by the Lower Tier REMIC Regular Interests
(which will be
uncertificated and will represent the "regular interests" in the
Lower Tier
REMIC) and the Class LTR Interest as the single "residual interest"
in the Lower
Tier REMIC. The Trustee will hold the Lower Tier REMIC Regular
Interests. The
Upper Tier REMIC will consist of the Lower Tier REMIC Regular
Interests and will
be evidenced by the REMIC Regular Interests (which will represent
the "regular
interests" in the Upper Tier REMIC) and the Residual Interest as
the single
"residual interest" in the Upper Tier REMIC. The Class R
Certificate will
represent beneficial ownership of the Class SWR Interest, the Class
LTR Interest
and the Residual Interest. The "latest possible maturity date" for
federal
income tax purposes of all interests created hereby will be the
Latest Possible
Maturity Date.
All
covenants and agreements made by the Sponsor in the Sale Agreement
and
by the Depositor and the Trustee herein with respect to the
Mortgage Loans and
the other property constituting the Trust Fund are for the benefit
of the
Holders from time to time of the Certificates and, to the extent
provided
herein, the NIMs Insurer.
THE SWAP REMIC
The following table sets forth the designations, initial principal
balances and
interest rates for each interest in the SWAP REMIC:
<TABLE>
<CAPTION>
Initial
Class Principal
Balance Interest
Rate
-------
----------------- -------------
<S>
<C>
<C>
1-SW1
$21,419,303.709
(1)
1-SW1A $ 2,057,296.706
(2)
1-SW1B $ 2,057,296.706
(3)
1-SW2A $ 2,383,511.371
(2)
1-SW2B $ 2,383,511.371
(3)
1-SW3A $ 2,729,270.848
(2)
1-SW3B $ 2,729,270.848
(3)
1-SW4A $ 3,140,566.602
(2)
1-SW4B $ 3,140,566.602
(3)
1-SW5A $ 3,595,414.649
(2)
1-SW5B $ 3,595,414.649
(3)
</TABLE>
<PAGE>
<TABLE>
<S>
<C>
<C>
1-SW6A $ 3,994,312.663
(2)
1-SW6B $ 3,994,312.663
(3)
1-SW7A $ 4,210,886.409
(2)
1-SW7B $ 4,210,886.409
(3)
1-SW8A $ 4,307,860.376
(2)
1-SW8B $ 4,307,860.376
(3)
1-SW9A $ 4,126,351.487
(2)
1-SW9B $ 4,126,351.487
(3)
1-SW10A $
3,628,397.142
(2)
1-SW10B $
3,628,397.142
(3)
1-SW11A $
3,121,818.011
(2)
1-SW11B $
3,121,818.011
(3)
1-SW12A $
2,744,119.523
(2)
1-SW12B $
2,744,119.523
(3)
1-SW13A $
2,446,550.574
(2)
1-SW13B $
2,446,550.574
(3)
1-SW14A $
2,219,046.767
(2)
1-SW14B $
2,219,046.767
(3)
1-SW15A $
2,074,572.051
(2)
1-SW15B $
2,074,572.051
(3)
1-SW16A $
2,012,062.343
(2)
1-SW16B $
2,012,062.343
(3)
1-SW17A $
2,029,454.918
(2)
1-SW17B $
2,029,454.918
(3)
1-SW18A $
2,048,354.897
(2)
1-SW18B $
2,048,354.897
(3)
1-SW19A $ 1,849,836.833
(2)
1-SW19B $
1,849,836.833
(3)
1-SW20A $
15,255.336
(2)
1-SW20B $
15,255.336
(3)
1-SW21A $
1,446,233.826
(2)
1-SW21B $
1,446,233.826
(3)
1-SW22A $
1,278,817.422 (2)
1-SW22B $
1,278,817.422
(3)
1-SW23A $
1,135,073.334
(2)
1-SW23B $
1,135,073.334
(3)
1-SW24A $
1,014,450.629
(2)
1-SW24B $
1,014,450.629
(3)
1-SW25A $
914,126.533
(2)
1-SW25B $
914,126.533
(3)
1-SW26A $
829,490.999
(2)
1-SW26B $
829,490.999
(3)
1-SW27A $
761,834.115
(2)
1-SW27B $
761,834.115
(3)
1-SW28A $
737,973.186
(2)
1-SW28B $
737,973.186
(3)
1-SW29A $
715,831.565
(2)
1-SW29B $
715,831.565
(3)
</TABLE>
-2-
<PAGE>
<TABLE>
<S>
<C>
<C>
1-SW30A $
715,370.496
(2)
1-SW30B $
715,370.496
(3)
1-SW31A $
712,769.156
(2)
1-SW31B $
712,769.156
(3)
1-SW32A $
678,986.616
(2)
1-SW32B $
678,986.616
(3)
1-SW33A $
610,973.579
(2)
1-SW33B $
610,973.579
(3)
1-SW34A $
533,843.424
(2)
1-SW34B $
533,843.424
(3)
1-SW35A $
472,757.521
(2)
1-SW35B $
472,757.521
(3)
1-SW36A $
427,537.198
(2)
1-SW36B $
427,537.198
(3)
1-SW37A $
391,973.278
(2)
1-SW37B $
391,973.278
(3)
1-SW38A $
363,037.533
(2)
1-SW38B $
363,037.533
(3)
1-SW39A $
337,413.066
(2)
1-SW39B $
337,413.066
(3)
1-SW40A $
314,500.490
(2)
1-SW40B $
314,500.490
(3)
1-SW41A $
293,715.420
(2)
1-SW41B $
293,715.420
(3)
1-SW42A $
274,914.906
(2)
1-SW42B $
274,914.906
(3)
1-SW43A $
257,831.811
(2)
1-SW43B $
257,831.811
(3)
1-SW44A $
236,338.087
(2)
1-SW44B $
236,338.087
(3)
1-SW45A $
220,430.030
(2)
1-SW45B $
220,430.030
(3)
1-SW46A $
211,504.687
(2)
1-SW46B $
211,504.687
(3)
1-SW47A $
4,476,731.376
(2)
1-SW47B $
4,476,731.376
(3)
2-SW2
$41,208,378.841
(4)
2-SW1A $ 3,958,012.044
(5)
2-SW1B $ 3,958,012.044
(6)
2-SW2A $ 4,585,613.094
(5)
2-SW2B $ 4,585,613.094
(6)
2-SW3A $ 5,250,816.207
(5)
2-SW3B $ 5,250,816.207
(6)
2-SW4A $ 6,042,103.893
(5)
2-SW4B $ 6,042,103.893
(6)
2-SW5A $ 6,917,181.386
(5)
2-SW5B $ 6,917,181.386
(6)
2-SW6A $ 7,684,617.187
(5)
</TABLE>
-3-
<PAGE>
<TABLE>
<S>
<C>
<C>
2-SW6B $ 7,684,617.187
(6)
2-SW7A $ 8,101,281.196
(5)
2-SW7B $ 8,101,281.196
(6)
2-SW8A $ 8,287,848.419
(5)
2-SW8B $ 8,287,848.419
(6)
2-SW9A $ 7,938,645.328
(5)
2-SW9B $ 7,938,645.328
(6)
2-SW10A $
6,980,636.068
(5)
2-SW10B $
6,980,636.068
(6)
2-SW11A $
6,006,033.669
(5)
2-SW11B $
6,006,033.669
(6)
2-SW12A $
5,279,383.422
(5)
2-SW12B $
5,279,383.422
(6)
2-SW13A $
4,706,893.571
(5)
2-SW13B $
4,706,893.571
(6)
2-SW14A $
4,269,201.328
(5)
2-SW14B $
4,269,201.328
(6)
2-SW15A $
3,991,247.904
(5)
2-SW15B $
3,991,247.904
(6)
2-SW16A $
3,870,986.117
(5)
2-SW16B $
3,870,986.117
(6)
2-SW17A $
3,904,447.512
(5)
2-SW17B $
3,904,447.512
(6)
2-SW18A $
3,940,808.988
(5)
2-SW18B $
3,940,808.988
(6)
2-SW19A $
3,558,882.122
(5)
2-SW19B $
3,558,882.122
(6)
2-SW20A $
29,349.584
(5)
2-SW20B $
29,349.584
(6)
2-SW21A $
2,782,394.434
(5)
2-SW21B $
2,782,394.434
(6)
2-SW22A $
2,460,303.728
(5)
2-SW22B $
2,460,303.728
(6)
2-SW23A $
2,183,755.951
(5)
2-SW23B $
2,183,755.951
(6)
2-SW24A $
1,951,691.166
(5)
2-SW24B $
1,951,691.166
(6)
2-SW25A $
1,758,678.667
(5)
2-SW25B $
1,758,678.667
(6)
2-SW26A $
1,595,849.231
(5)
2-SW26B $
1,595,849.231
(6)
2-SW27A $
1,465,684.845
(5)
2-SW27B $
1,465,684.845
(6)
2-SW28A $
1,419,779.049
(5)
2-SW28B $
1,419,779.049
(6)
2-SW29A $
1,377,181.010
(5)
2-SW29B $
1,377,181.010
(6)
2-SW30A $
1,376,293.964
(5)
</TABLE>
-4-
<PAGE>
<TABLE>
<S>
<C>
<C>
2-SW30B $
1,376,293.964
(6)
2-SW31A $
1,371,289.274
(5)
2-SW31B $
1,371,289.274
(6)
2-SW32A $
1,306,295.389
(5)
2-SW32B $
1,306,295.389
(6)
2-SW33A $
1,175,445.806
(5)
2-SW33B $
1,175,445.806
(6)
2-SW34A $
1,027,055.891
(5)
2-SW34B $
1,027,055.891
(6)
2-SW35A $
909,533.349
(5)
2-SW35B $
909,533.349
(6)
2-SW36A $
822,534.432
(5)
2-SW36B $
822,534.432
(6)
2-SW37A $
754,113.372
(5)
2-SW37B $
754,113.372
(6)
2-SW38A $
698,444.187
(5)
2-SW38B $
698,444.187
(6)
2-SW39A $
649,145.539
(5)
2-SW39B $
649,145.539
(6)
2-SW40A $
605,064.270
(5)
2-SW40B $
605,064.270
(6)
2-SW41A $
565,076.085
(5)
2-SW41B $
565,076.085
(6)
2-SW42A $
528,905.969
(5)
2-SW42B $
528,905.969
(6)
2-SW43A $
496,039.979
(5)
2-SW43B $
496,039.979
(6)
2-SW44A $
454,688.423
(5)
2-SW44B $
454,688.423
(6)
2-SW45A $
424,083.075
(5)
2-SW45B $
424,083.075
(6)
2-SW46A $
406,911.698
(5)
2-SW46B $
406,911.698
(6)
2-SW47A $
8,612,737.604
(5)
2-SW47B $
8,612,737.604
(6)
SWR
(7)
(7)
</TABLE>
(1) The interest rate
on the Class 1-SW1 Interest shall be a per annum rate
equal to the Group One
Net WAC.
(2) For any
Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the
designation
"A"
shall be a per annum rate equal to 2 times the Group One Net
WAC,
subject to a maximum rate of 2 times the REMIC Swap Rate for
such
Distribution Date.
(3) For any
Distribution Date, the interest rate on each SWAP REMIC Regular
Interest beginning with the designation "1" and ending with the
designation
"B"
shall be a per annum rate equal to the greater of (x) the excess,
if
any,
of (i) 2 times the Group One Net WAC over (ii) 2 times the REMIC
Swap
Rate
for such Distribution Date and (y) 0.00%.
(4) The interest rate
on the Class 2-SW2 Interest shall be a per annum rate
equal to the Group Two Net WAC.
-5-
<PAGE>
(5) For any Distribution Date, the interest rate on each SWAP REMIC
Regular
Interest beginning with the designation "2" and ending with the
designation "A"
shall be a per annum rate equal to 2 times the Group Two Net WAC,
subject to a
maximum rate of 2 times the REMIC Swap Rate for such Distribution
Date.
(6) For any Distribution Date, the interest rate on each SWAP REMIC
Regular
Interest beginning with the designation "2" and ending with the
designation "B"
shall be a per annum rate equal to the greater of (x) the excess,
if any, of (i)
2 times the Group Two Net WAC over (ii) 2 times the REMIC Swap Rate
for such
Distribution Date and (y) 0.00%.
(7) The Class SWR Interest shall have no principal amount and shall
bear no
interest.
THE LOWER TIER REMIC
The following table sets forth the designations, initial principal
balances,
interest rates, Corresponding Classes of Certificates and related
Mortgage Group
for each interest in the Lower Tier REMIC:
<TABLE>
<CAPTION>
Class(es) of
Corresponding
Initial Principal
Certificates or Related
Class
Balance
Interest Rate
Mortgage Group
------
----------------- ------------- -----------------------
<S> <C>
<C>
<C>
LTA-1
(1)
(8)
A-1, R
LTA-2A
(1)
(8)
A-2A
LTA-2B
(1)
(8)
A-2B
LTA-2C
(1)
(8)
A-2C
LTA-2D
(1)
(8)
A-2D
LTM-1
(1)
(8)
M-1
LTM-2
(1)
(8)
M-2
LTM-3
(1)
(8)
M-3
LTM-4
(1)
(8)
M-4
LTM-5
(1)
(8)
M-5
LTM-6
(1)
(8)
M-6
LTB-1
(1)
(8)
B-1
LTB-2
(1)
(8)
B-2
LTB-3
(1)
(8)
B-3
LTIX
(2)
(8)
N/A
LTII1A
(3)
(8)
Group One
LTII1B
(4)
(9)
Group One
LTII2A
(5)
(8)
Group Two
LTII2B
(6)
(10)
Group Two
LTIIX
(7)
(8)
N/A
LT-IO
(11)
(11)
N/A
LTR
(12)
(12)
N/A
</TABLE>
(1) The initial principal balance of each of these Lower Tier REMIC
Regular
Interests shall equal 1/4 of the initial Certificate Principal
Balance of its
Corresponding Certificates.
-6-
<PAGE>
(2) The initial principal balance of the Class LTIX Interest shall
equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance
of the
Mortgage Loans over (ii) the initial principal balance of the Lower
Tier REMIC I
Marker Interests.
(3) The initial principal balance of the Class LTII1A Interest
shall equal 0.05%
of the excess of (i) the aggregate Cut-off Date Principal Balance
of the Group
One Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal
Balances of Certificate Group One.
(4) The initial principal balance of the Class LTII1B Interest
shall equal 0.05%
of the aggregate Cut-off Date Principal Balance of the Group One
Mortgage Loans.
(5) The initial principal balance of the Class LTII2A Interest
shall equal 0.05%
of the excess of (i) the aggregate Cut-off Date Principal Balance
of the Group
Two Mortgage Loans over (ii) the aggregate of the initial
Certificate Principal
Balances of Certificate Group Two.
(6) The initial principal balance of the Class LTII2B Interest
shall equal 0.05%
of the aggregate Cut-off Date Principal Balance of the Group Two
Mortgage Loans.
(7) The initial principal balance of the Class LTIIX Interest shall
equal the
excess of (i) 50% of the aggregate Cut-off Date Principal Balance
of the
Mortgage Loans over (ii) the initial principal balance of the Lower
Tier REMIC
II Marker Interests.
(8) For each Distribution Date, the interest rate for each of the
Lower Tier
REMIC Regular Interests (other than the Class LTII1B, the Class
LTII2B and the
Class LT-IO Interests) shall be a per annum rate (but not less than
zero) equal
to the product of (i) the weighted average of the interest rates on
the SWAP
REMIC Regular Interests for such Distribution Date and (ii) a
fraction the
numerator of which is 30 and the denominator of which is the actual
number of
days in the Accrual Period for the LIBOR Certificates, provided
however, that
for any Distribution Date on which the Class LT-IO Interest is
entitled to a
portion of interest accruals on a SWAP REMIC Regular Interest
ending with a
designation "A" as described in footnote 11 below, such weighted
average shall
be computed by first subjecting the rate on such SWAP REMIC Regular
Interest to
a cap equal to Swap LIBOR for such Distribution Date.
(9) For each Distribution Date, the interest rate for the Class
LTII1B Interest
shall be a per annum rate equal to the product of (i) the weighted
average of
the interest rates on the SWAP REMIC Regular Interests beginning
with the
designation "1" for such Distribution Date and (ii) a fraction the
numerator of
which is 30 and the denominator of which is the actual number of
days in the
Accrual Period for the LIBOR Certificates, provided, however, that
for any
Distribution Date on which the Class LT-IO Interest is entitled to
a portion of
interest accruals on a SWAP REMIC Regular Interest ending with a
designation "A"
as described in footnote 11 below, such weighted average shall be
computed by
first subjecting the rate on such SWAP REMIC Regular Interest to a
cap equal to
Swap LIBOR for such Distribution Date.
(10) For each Distribution Date, the interest rate for the Class
LTII2B Interest
shall be a per annum rate equal to the product of (i) the weighted
average of
the interest rates on the SWAP REMIC Regular Interests beginning
with the
designation "2" for such Distribution Date and (ii) a fraction the
numerator of
which is 30 and the denominator of which is the actual number of
days in the
Accrual Period for the LIBOR Certificates, provided, however, that
for any
Distribution Date on which the Class LT-IO Interest is entitled to
a portion of
interest accruals on a SWAP REMIC Regular Interest ending with a
designation "A"
as described in footnote 11 below, such weighted average shall be
computed by
first subjecting the rate on such SWAP REMIC Regular Interest to a
cap equal to
Swap LIBOR for such Distribution Date.
(11) The Class LT-IO Interest is an interest-only class that does
not have a
principal balance. For only those Distribution Dates listed in the
first column
of the table below, the Class LT1-IO shall be entitled to interest
accrued on
the SWAP REMIC Regular Interest listed in the second column below
at a per annum
rate equal to the excess, if any, of (i) the interest rate for such
SWAP REMIC
Regular Interest for such Distribution Date over (ii) Swap LIBOR
for such
Distribution Date.
-7-
<PAGE>
<TABLE>
<CAPTION>
SWAP REMIC
Distribution Date Regular Interest
----------------- ----------------
<S>
<C>
7
Class 1-SW1A
Class 2-SW1A
7-8
Class 1-SW2A
Class 2-SW2A
7-9
Class 1-SW3A
Class 2-SW3A
7-10
Class 1-SW4A
Class 2-SW4A
7-11
Class 1-SW5A
Class 2-SW5A
7-12
Class 1-SW6A
Class 2-SW6A
7-13
Class 1-SW7A
Class 2-SW7A
7-14
Class 1-SW8A
Class 2-SW8A
7-15
Class 1-SW9A
Class 2-SW9A
7-16
Class 1-SW10A
Class 2-SW10A
7-17
Class 1-SW11A
Class 2-SW11A
7-18
Class 1-SW12A
Class 2-SW12A
7-19
Class 1-SW13A
Class 2-SW13A
7-20
Class 1-SW14A
Class 2-SW14A
7-21
Class 1-SW15A
Class 2-SW15A
7-22
Class 1-SW16A
Class 2-SW16A
7-23
Class 1-SW17A
Class 2-SW17A
7-24
Class 1-SW18A
Class 2-SW18A
7-25
Class 1-SW19A
Class 2-SW19A
7-26
Class 1-SW20A
Class 2-SW20A
7-27
Class 1-SW21A
Class 2-SW21A
7-28
Class 1-SW22A
Class 2-SW22A
7-29
Class 1-SW23A
Class 2-SW23A
7-30
Class 1-SW24A
Class 2-SW24A
7-31
Class 1-SW25A
Class
2-SW25A
7-32
Class 1-SW26A
Class 2-SW26A
</TABLE>
-8-
<PAGE>
<TABLE>
<S>
<C>
7-33
Class 1-SW27A
Class 2-SW27A
7-34
Class 1-SW28A
Class 2-SW28A
7-35
Class 1-SW29A
Class 2-SW29A
7-36
Class 1-SW30A
Class 2-SW30A
7-37
Class 1-SW31A
Class 2-SW31A
7-38
Class 1-SW32A
Class 2-SW32A
7-39
Class 1-SW33A
Class 2-SW33A
7-40
Class 1-SW34A
Class 2-SW34A
7-41
Class 1-SW35A
Class 2-SW35A
7-42
Class 1-SW36A
Class 2-SW36A
7-43
Class 1-SW37A
Class 2-SW37A
7-44
Class 1-SW38A
Class 2-SW38A
7-45
Class 1-SW39A
Class 2-SW39A
7-46
Class 1-SW40A
Class 2-SW40A
7-47
Class 1-SW41A
Class 2-SW41A
7-48
Class 1-SW42A
Class 2-SW42A
7-49
Class 1-SW43A
Class 2-SW43A
7-50
Class 1-SW44A
Class 2-SW44A
7-51
Class 1-SW45A
Class 2-SW45A
7-52
Class 1-SW46A
Class 2-SW46A
7-53
Class 1-SW47A
Class 2-SW47A
</TABLE>
(12) The Class LTR Interest shall have no principal amount and
shall bear no
interest.
UPPER TIER REMIC
The following table sets forth the designation, the initial
principal balances,
the interest rates and Classes of Related Certificates for each of
the interests
in the Upper Tier REMIC.
-9-
<PAGE>
<TABLE>
<CAPTION>
Initial Principal
Class of Related
Class
Balance
Rate
Certificates
-----
----------------- ---- ----------------
<S>
<C>
<C>
<C>
UTA-1
(1)
(2)
A-1
UTA-2A
(1)
(2)
A-2A
UTA-2B
(1)
(2)
A-2B
UTA-2C
(1)
(2)
A-2C
UTA-2D
(1)
(2)
A-2D
UTM-1
(1)
(2)
M-1
UTM-2
(1)
(2)
M-2
UTM-3
(1)
(2)
M-3
UTM-4
(1)
(2)
M-4
UTM-5
(1)
(2)
M-5
UTM-6
(1)
(2)
M-6
UTB-1
(1)
(2)
B-1
UTB-2
(1)
(2)
B-2
UTB-3
(1)
(2)
B-3
Uncertificated Class C Interest
(3)
(3)
N/A
UT-IO
(4)
(4)
N/A
Residual Interest
(1)
(2)
R
</TABLE>
(1) The initial principal balance of each of these REMIC Regular
Interests shall
equal the initial principal balance of its Class of Related
Certificates.
(2) The interest rates on each of these REMIC Regular Interests
shall be an
annual rate equal to the Pass-Through Rate for the Class of
Related
Certificates, provided that in lieu of the applicable Available
Funds Caps set
forth in the definition of an applicable Pass-Through Rate, the
applicable Upper
Tier REMIC Net WAC Cap shall be used.
(3) The Uncertificated Class C Interest shall have an initial
principal balance
equal to the initial Overcollateralization Amount. The
Uncertificated Class C
Interest shall accrue interest on a notional balance set forth in
the definition
of Class C Current Interest at a rate equal to the Class C
Distributable
Interest Rate. The Uncertificated Class C Interest shall be
represented by the
Class C Certificates.
(4) The Class UT-IO Interest shall have no principal amount and
will not have an
interest rate, but will be entitled to 100% of the interest accrued
with respect
to the Class LT-IO Interest. The Class UT-IO Interest shall be
represented by
the Class C Certificates.
THE CERTIFICATES
The following table sets forth the Class designation, interest rate
and initial
Class principal amount for each Class of Certificates comprising
interests in
the Trust Fund.
<TABLE>
<CAPTION>
Initial Class
Class Principal
Amount Interest
Rate
-----
----------------
-------------
<S> <C>
<C>
A-1
(1)
(2)
A-2A
(1)
(2)
A-2B
(1)
(2)
A-2C
(1)
(2)
A-2D
(1)
(2)
M-1
(1)
(2)
M-2
(1)
(2)
M-3
(1)
(2)
M-4
(1)
(2)
</TABLE>
-10-
<PAGE>
<TABLE>
<S> <C>
<C>
M-5
(1)
(2)
M-6
(1)
(2)
B-1
(1)
(2)
B-2
(1)
(2)
B-3
(1)
(2)
C
(3)
(3)
P
(4)
(4)
R
(1)
(2)(5)
</TABLE>
(1) Each of these Classes of Certificates shall have initial
principal balances
as set forth in Section 5.01 hereof.
(2) Each of these Classes of Certificates shall bear interest at a
per annum
rate equal to the Pass-Through Rate for such Certificates set forth
in the
definitions herein.
(3) For federal income tax purposes, the Class C Certificate shall
represent (i)
the right to receive all distributions with respect to the REMIC
Regular
Interests represented by the Uncertificated Class C Interest and
the Class UT-IO
Interest and (ii) certain rights and obligations with respect to
notional
principal contracts as described in Section 2.07.
(4) The Class P Certificates shall be entitled to the amounts
distributable
pursuant to Section 4.04(b) hereof and shall not represent a REMIC
regular
interest.
(5) The Class R Interest represents ownership of the Class SWR
Interest, the
Class LTR Interest and the Residual Interest.
In
consideration of the mutual agreements herein contained, the
Depositor,
the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless
the context otherwise requires, shall have the following
meanings:
Accepted Servicing Practices: The Servicer's normal servicing
practices,
which will conform to the mortgage servicing practices of prudent
mortgage
lending institutions that service for their own account mortgage
loans of the
same type as the Mortgage Loans in the jurisdictions in which the
related
Mortgaged Properties are located.
Accountant's Attestation: As defined in Section 3.18.
Accrual Period: With respect to each Class of Class A, Class M and
Class B
Certificates, their Corresponding REMIC Regular Interests and the
Lower Tier
REMIC Interests and any Distribution Date, the period commencing on
the
immediately preceding Distribution Date (or, in the case of the
first
Distribution Date, the Closing Date) and ending on the day
immediately preceding
such Distribution Date and with respect to the SWAP REMIC Regular
Interests and
any Distribution Date, the calendar month immediately preceding the
month in
which such Distribution Date occurs. All calculations of interest
on each Class
of Class A, Class M and Class B Certificates, their Corresponding
REMIC Regular
Interests and the Lower Tier REMIC Interests will be made on the
basis of the
actual number of days elapsed in the related Accrual Period and a
360 day year
and all calculations of interest on the SWAP REMIC Regular
Interests will be
made on the basis of a 360-day year consisting of twelve 30-day
months.
-11-
<PAGE>
Additional Form 10-D Disclosure: Has the meaning set forth in
Section 3.20.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the
Mortgage
Loan Schedule as having a Mortgage Rate that is adjustable.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each
date on
which the related Mortgage Rate is subject to adjustment, as
provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the
Servicer
with respect to any Distribution Date pursuant to Section 4.01, the
amount of
any such advances being equal to the sum of the aggregate amount of
all payments
of principal and interest (or, with respect to the interest-only
Mortgage Loans,
payments of scheduled interest) (net of the Servicing Fee) on the
related
Mortgage Loans that were due during the applicable Due Period and
not received
as of the close of business on the related Determination Date,
except as
provided in Section 4.01 hereof, less the aggregate amount of any
such
Delinquent payments that the Servicer has determined would
constitute a
Non-Recoverable Advance were an advance to be made with respect
thereto;
provided, however, that with respect to any Mortgage Loan which is
not a first
lien Mortgage Loan that is 150 days delinquent or more (whether or
not the
Mortgage Loan has been converted to an REO Property) or any
shortfalls due to
bankruptcy proceedings or the application of the Relief Act or
similar state
legislation or regulations, there will be no obligation to make
advances and,
provided further, however, that with respect to any Mortgage Loan
that has been
converted to an REO Property, which is less that 150 days
delinquent, the
obligation to make Advances shall only be to payments of interest
(subject to
the exceptions described above and net of the related Servicing
Fees), to be
calculated after taking into account rental income.
Advance Facility: A financing or other facility as described in
Section
10.07.
Advancing Person: A Person to whom the Servicer's rights under
this
Agreement to be reimbursed for any Advances or Servicing Advances
have been
assigned pursuant to Section 10.07.
Affiliate: With respect to any specified Person, any other
Person
controlling, controlled by or under common control with such
Person. For the
purposes of this definition, "control" means the power to direct
the management
and policies of a Person, directly or indirectly, whether through
ownership of
voting securities, by contract or otherwise; and the terms
"controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of
determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A
Certificate
Principal Balance, the Class A-2B Certificate Principal Balance,
the Class A-2C
Certificate Principal Balance, the Class A-2D Certificate Principal
Balance, the
Class R Certificate Principal Balance, the Class M-1 Certificate
Principal
Balance, the Class M-2 Certificate Principal Balance, the Class M-3
Certificate
Principal Balance, the Class M-4 Certificate Principal Balance, the
Class M-5
Certificate Principal Balance, the Class M-6 Certificate Principal
Balance, the
Class B-1 Certificate Principal Balance, the Class B-2 Certificate
Principal
Balance and the Class B-3 Certificate Principal Balance, in each
case as of such
date of determination.
Agreement: This Pooling and Servicing Agreement and any and all
amendments
or supplements hereto made in accordance with the terms herein.
Applied Realized Loss Amount: With respect to any Distribution
Date, the
amount, if any, by which the sum of (i) the Aggregate Certificate
Principal
Balance and (ii) the Class C Certificate Principal
-12-
<PAGE>
Balance after distributions of principal on such Distribution Date
exceeds the
aggregate Stated Principal Balance of the Mortgage Loans as of such
Distribution
Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of
which were
used to purchase the related Mortgaged Property, the "Appraised
Value" of a
Mortgaged Property is the lesser of (1) the appraised value based
on an
appraisal made for the Sponsor by an independent fee appraiser at
the time of
the origination of the related Mortgage Loan, and (2) the sales
price of such
Mortgaged Property at such time of origination. With respect to a
Mortgage Loan
the proceeds of which were used to refinance an existing mortgage
loan, the
"Appraised Value" is the appraised value of the Mortgaged Property
based upon
the appraisal obtained at the time of refinancing.
Assessment of Compliance: As defined in Section 3.18.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer
or equivalent instrument, in recordable form, sufficient under the
laws of the
jurisdiction where the related Mortgaged Property is located to
reflect of
record the sale and assignment of the Mortgage Loan to the Trustee,
which
assignment, notice of transfer or equivalent instrument may, if
permitted by
law, be in the form of one or more blanket assignments covering
Mortgages
secured by Mortgaged Properties located in the same county.
Auction: The one-time auction conducted by the Trustee, as
described in
Section 9.01(b) hereof.
Auction Date: The date on which the Auction occurs.
Authenticating Agent: As defined in Section 5.10.
Available Funds Cap: Any of the Class A-1 Available Funds Cap, the
Class
A-2 Available Funds Cap or the Weighted Average Available Funds
Cap.
Balloon Loan: A Mortgage Loan having an original term to stated
maturity of
approximately 15 or 30 years which provides for level monthly
payments of
principal and interest based on a 30- or 40-year amortization
schedule, with a
balloon payment of the remaining outstanding principal balance due
on such
Mortgage Loan at its stated maturity.
Book-Entry Certificates: Any
of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of
which is
reflected on the books of the Depository or on the books of a
Person maintaining
an account with the Depository (directly, as a "Depository
Participant", or
indirectly, as an indirect participant in accordance with the rules
of the
Depository and as described in Section 5.06). As of the Closing
Date, each of
the Class A, Class M and Class B Certificates constitutes a Class
of Book-Entry
Certificates.
Bring Down Letters: Those certain letter agreements, each dated as
of July
25, 2006 between each related Transferor and MLML.
Business Day: Any day other than (1) a Saturday or a Sunday, or (2)
a day
on which banking institutions in the State of Oregon, State of
Illinois or in
the City of New York, New York are authorized or obligated by law
or executive
order to be closed.
Cap
Contract: Any of the Class A-1 Cap Contract, the Class A-2 Cap
Contract
or the Subordinate Certificates Cap Contract.
-13-
<PAGE>
Cap
Contract Account: The separate Eligible Account created and
maintained
by the Trustee pursuant to Section 4.04(k)(i) in the name of the
trustee of the
Supplemental Interest Trust and designated "LaSalle Bank National
Association,
as trustee of the Supplemental Interest Trust." Funds in the Cap
Contract
Account shall be held in trust for the Supplemental Interest Trust
for the uses
and purposes set forth in this Agreement.
Cap
Contract Counterparty: The Credit Suisse International and its
successors.
Cap
Contract Notional Balance: Any of the Class A-1 Cap Contract
Notional
Balance, the Class A-2 Cap Contract Notional Balance or the
Subordinate
Certificates Cap Contract Notional Balance.
Cap
Contract Termination Date: The Distribution Date in January
2007.
Certificate: Any one of the certificates of any Class executed by
the
Trustee and authenticated by the Authenticating Agent in
substantially the forms
attached hereto as Exhibit A.
Certificate Account: The separate Eligible Account created and
maintained
by the Trustee pursuant to Section 3.05(e) in the name of the
Trustee for the
benefit of the Certificateholders and designated "LaSalle Bank
National
Association, as trustee, in trust for registered holders of Merrill
Lynch
Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates,
Series
2006-HE4." Funds in the Certificate Account shall be held in trust
for the
Certificateholders for the uses and purposes set forth in this
Agreement.
Certificate Group: Either of Certificate Group One or Certificate
Group
Two.
Certificate Group One: The Class A-1 and Class R Certificates. For
purposes
of Section 2.07 hereof, Certificate Group One shall be related to
Group One.
Certificate Group Two: The Class A-2 Certificates. For purposes of
Section
2.07 hereof, Certificate Group Two shall be related to Group
Two.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of
any
Distribution Date, the Initial Certificate Principal Balance of
such Certificate
less the sum of (1) all amounts distributed with respect to such
Certificate in
reduction of the Certificate Principal Balance thereof on previous
Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss
Amounts
allocated to such Certificate on previous Distribution Dates
pursuant to Section
4.04(i). On each Distribution Date, after all distributions of
principal on such
Distribution Date, a portion of the Class C Interest Carry Forward
Amount in an
amount equal to the excess of the Overcollateralization Amount on
such
Distribution Date over the Overcollateralization Amount as of the
preceding
Distribution Date (or, in the case of the first Distribution Date,
the initial
Overcollateralization Amount (based on the Stated Principal Balance
of the
Mortgage Loans as of the Cut-off Date)) will be added to the
aggregate
Certificate Principal Balance of the Class C Certificates (on a pro
rata basis).
Notwithstanding the foregoing on any Distribution Date relating to
a Due Period
in which a Subsequent Recovery has been received by the Servicer or
on any
Distribution Date on which amounts are to be distributed in respect
of principal
from the Supplemental Interest Trust pursuant to Section
4.04(l)(vii), the
Certificate Principal Balance of any Class of Certificates then
outstanding for
which any Applied Realized Loss Amount has been allocated will be
increased, in
order of seniority, by an amount equal to the lesser of (i) the
Unpaid Realized
Loss Amount for such Class of Certificates and (ii) the total of
any Subsequent
Recovery distributed on such date to the
-14-
<PAGE>
Certificateholders and amounts to be distributed in respect of
principal from
the Supplemental Interest Trust pursuant to Section 4.04(l)(vii) on
such
Distribution Date (reduced by the amount of the increase in the
Certificate
Principal Balance of any more senior Class of Certificates pursuant
to this
sentence on such Distribution Date).
Certificate Register: The register maintained pursuant to Section
5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate
is
registered in the Certificate Register (initially, Cede & Co.,
as nominee for
the Depository) in the case of any Class of Regular Certificates or
the Class R
Certificate, except that solely for the purpose of giving any
consent pursuant
to this Agreement, any Certificate registered in the name of the
Depositor or
any Affiliate of the Depositor shall be deemed not to be
Outstanding and the
Percentage Interest evidenced thereby shall not be taken into
account in
determining whether the requisite amount of Percentage Interests
necessary to
effect such consent has been obtained; provided, however, that if
any such
Person (including the Depositor) owns 100% of the Percentage
Interests evidenced
by a Class of Certificates, such Certificates shall be deemed to be
Outstanding
for purposes of any provision hereof that requires the consent of
the Holders of
Certificates of a particular Class as a condition to the taking of
any action
hereunder. The Trustee is entitled to rely conclusively on a
certification of
the Depositor or any Affiliate of the Depositor in determining
which
Certificates are registered in the name of an Affiliate of the
Depositor.
Class: All Certificates bearing the same Class designation as set
forth in
Section 5.01 hereof.
Class A Certificate Principal Balance: As of any date of
determination, the
sum of the Class A-1 Certificate Principal Balance, the Class A-2A
Certificate
Principal Balance, the Class A-2B Certificate Principal Balance,
the Class A-2C
Certificate Principal Balance, the Class A-2D Certificate Principal
Balance and
the Class R Certificate Principal Balance.
Class A Certificates: Any of the Class A-1 Certificates, the Class
A-2
Certificates and the Class R Certificates.
Class A Principal Distribution Amount: With respect to any
Distribution
Date (1) prior to the related Stepdown Date or any Distribution
Date on which a
Stepdown Trigger Event exists, 100% of the Principal Distribution
Amount for
such Distribution Date and (2) on or after the Stepdown Date where
a Stepdown
Trigger Event does not exist, the excess of (A) the Class A
Certificate
Principal Balance immediately prior to such Distribution Date over
(B) the
lesser of (i) 46.40% of the aggregate Stated Principal Balance of
the Mortgage
Loans as of such Distribution Date and (ii) the excess of the
aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution
Date over the
Minimum Required Overcollateralization Amount; provided, however,
that in no
event will the Class A Principal Distribution Amount with respect
to any
Distribution Date exceed the aggregate Certificate Principal
Balance of the
Class A Certificates.
Class A-1 Available Funds Cap: With respect to a Distribution Date,
the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x)
the total
scheduled interest on the Mortgage Loans in Group One based on the
Net Mortgage
Rates, less the pro rata portion (calculated based on the ratio of
the Group One
Mortgage Loans to the total pool of Mortgage Loans) allocable to
the Group One
Mortgage Loans of any Net Swap Payments or Swap Termination
Payments (other than
Defaulted Swap Termination Payments) owed to the Swap Counterparty
for such
Distribution Date in effect on the related Due Date divided by (y)
the aggregate
Stated Principal Balance of the Mortgage Loans in Group One as of
the first day
of the related Accrual Period (or, in the case of the first
Distribution Date,
as of the Cut-off
-15-
<PAGE>
Date) and (iii) a fraction, the numerator of which is 30, and the
denominator of
which is the actual number of days in the related Accrual
Period.
Class A-1 Cap Contract: The master agreement, credit support annex
and
confirmation between the Trustee on behalf of the Supplemental
Interest Trust
and the Cap Contract Counterparty (in the form of Exhibit M-1
hereto).
Class A-1 Cap Contract Notional Balance: With respect to any
Distribution
Date, the Class A-1 Cap Contract Notional Balance set forth for
such
Distribution Date in the Class A-1 One-Month LIBOR Cap Table
attached hereto as
Exhibit N-1.
Class A-1 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-1
Certificates.
Class A-1 Certificates: Any Certificate designated as a "Class
A-1
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-1 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-1
Pass-Through Rate on
the Class A-1 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class A-1 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-1
Certificates.
Class A-1 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class A-1 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-1 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class A-1 Pass-Through Rate for the related Accrual Period.
Class A-1 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.1600% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.3200% per
annum.
Class A-1 Maximum Rate Cap: With respect to a Distribution Date,
the per
annum rate equal to the product of (i) 12, (ii) the quotient of (x)
the total
scheduled interest that would have been due on the Group One
Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their
maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans
provided for
interest at their Net Mortgage Rates less the pro rata portion
(calculated based
on the ratio of the Group One Mortgage Loans to the total pool of
Mortgage
Loans) allocable to the Group One Mortgage Loans of any Net Swap
Payments or
Swap Termination Payments owed to the Swap Counterparty for such
Distribution
Date (other than Defaulted Swap Termination Payments), divided by
(y) the
aggregate Stated Principal Balance of the Group One Mortgage Loans
as of the
first day of the related Accrual Period and (iii) a fraction, the
numerator of
which is 30 and the denominator of which is the actual number of
days in the
related Accrual Period.
Class A-1 Pass-Through Rate: For the first Distribution Date,
5.5450% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-1 Margin, (2) the Class A-1 Available Funds Cap
for such
Distribution Date and (3) the Class A-1 Maximum Rate Cap for such
Distribution
Date.
-16-
<PAGE>
Class A-2 Available Funds Cap: With respect to a Distribution Date,
the per
annum rate equal to the product of (i) 12 and (ii) the quotient of
(x) the total
scheduled interest on the Group Two Mortgage Loans based on the Net
Mortgage
Rates in effect on the related Due Date, less the pro rata portion
(calculated
based on the ratio of the Group Two Mortgage Loans to the total
pool of Mortgage
Loans) allocable to the Group Two Mortgage Loans of any Net Swap
Payments or
Swap Termination Payments (other than Defaulted Swap Termination
Payments) owed
to the Swap Counterparty for such Distribution Date, divided by (y)
the
aggregate Stated Principal Balance of the Group Two Mortgage Loans
as of the
first day of the related Accrual Period and multiplied by a
fraction, the
numerator of which is 30 and the denominator of which is the actual
number of
days in the related Accrual Period.
Class A-2 Cap Contract: The master agreement, credit support annex
and
confirmation between the Trustee on behalf of the Supplemental
Interest Trust
and the Cap Contract Counterparty (in the form of Exhibit M-2
hereto).
Class A-2 Cap Contract Notional Balance: With respect to any
Distribution
Date, the Class A-2 Cap Contract Notional Balance set forth for
such
Distribution Date in the Class A-2 One-Month LIBOR Cap Table
attached hereto as
Exhibit N-2.
Class A-2 Certificates: Any of the Class A-2A, Class A-2B, Class
A-2C and
Class A-2D Certificates.
Class A-2 Maximum Rate Cap: With respect to a Distribution Date,
the per
annum rate equal to the product of (i) 12 and (ii) the quotient of
(x) the total
scheduled interest that would have been due on the Group Two
Mortgage Loans had
the Adjustable Rate Mortgage Loans provided for interest at their
maximum
lifetime Net Mortgage Rates and the Fixed Rate Mortgage Loans
provided for
interest at their Net Mortgage Rates less the pro rata portion
(calculated based
on the ratio of the Group Two Mortgage Loans to the total pool of
Mortgage
Loans) allocable to the Group Two Mortgage Loans of any Net Swap
Payments or
Swap Termination Payments owed to the Swap Counterparty for such
Distribution
Date (other than Defaulted Swap Termination Payments), divided by
(y) the
aggregate Stated Principal Balance of the Group Two Mortgage Loans
as of the
first day of the related Accrual Period and multiplied by a
fraction, the
numerator of which is 30 and the denominator of which is the actual
number of
days in the related Accrual Period.
Class A-2A Certificate: Any Certificate designated as a "Class
A-2A
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-2A Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-2A
Certificates.
Class A-2A Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-2A
Pass-Through Rate on
the Class A-2A Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class A-2A Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2A
Certificates.
For purposes of calculating interest, principal distributions on a
Distribution
Date will be deemed to have been made on the first day of the
Accrual Period in
which such Distribution Date occurs.
Class A-2A Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class A-2A Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2A Certificates with respect to interest on such prior
-17-
<PAGE>
Distribution Dates and (2) interest on such excess (to the extent
permitted by
applicable law) at the Class A-2A Pass-Through Rate for the related
Accrual
Period.
Class A-2A Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.0600% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.1200% per
annum.
Class A-2A Pass-Through Rate: For the first Distribution Date,
5.4450% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2A Margin, (2) the Class A-2 Available Funds Cap
for such
Distribution Date and (3) the Class A-2 Maximum Rate Cap for such
Distribution
Date.
Class A-2B Certificate: Any Certificate designated as a "Class
A-2B
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-2B Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-2B
Certificates.
Class A-2B Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-2B
Pass-Through Rate on
the Class A-2B Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class A-2B Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2B
Certificates.
For purposes of calculating interest, principal distributions on a
Distribution
Date will be deemed to have been made on the first day of the
Accrual Period in
which such Distribution Date occurs.
Class A-2B Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class A-2B Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2B Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class A-2B Pass-Through Rate for the related Accrual Period.
Class A-2B Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.1000% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.2000% per
annum.
Class A-2B Pass-Through Rate: For the first Distribution Date,
5.4850% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2B Margin, (2) the Class A-2 Available Funds Cap
for such
Distribution Date and (3) the Class A-2 Maximum Rate Cap for such
Distribution
Date.
Class A-2C Certificate: Any Certificate designated as a "Class
A-2C
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-2C Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-2C
Certificates.
Class A-2C Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-2C
Pass-Through Rate on
the Class A-2C Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of
-18-
<PAGE>
Current Interest or a Class A-2C Interest Carry Forward Amount that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
A-2C
Certificates. For purposes of calculating interest, principal
distributions on a
Distribution Date will be deemed to have been made on the first day
of the
Accrual Period in which such Distribution Date occurs.
Class A-2C Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class A-2C Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2C Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class A-2C Pass-Through Rate for the related Accrual Period.
Class A-2C Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.1500% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.3000% per
annum.
Class A-2C Pass-Through Rate: For the first Distribution Date,
5.5350% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2C Margin, (2) the Class A-2 Available Funds Cap
for such
Distribution Date and (3) the Class A-2 Maximum Rate Cap for such
Distribution
Date.
Class A-2D Certificate: Any Certificate designated as a "Class
A-2D
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class A-2D Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class A-2D
Certificates.
Class A-2D Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class A-2D
Pass-Through Rate on
the Class A-2D Certificate Principal Balance as of such
Distribution Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or a Class A-2D Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2D
Certificates.
For purposes of calculating interest, principal distributions on a
Distribution
Date will be deemed to have been made on the first day of the
Accrual Period in
which such Distribution Date occurs.
Class A-2D Interest Carry Forward Amount: As of any Distribution
Date,
the sum of (1) the excess of (A) the Class A-2D Current Interest
with respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
A-2D Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class A-2D Pass-Through Rate for the related Accrual Period.
Class A-2D Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.2500% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.5000% per
annum.
Class A-2D Pass-Through Rate: For the first Distribution Date,
5.6350% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class A-2D Margin, (2) the Class A-2 Available Funds Cap
for such
Distribution Date and (3) the Class A-2 Maximum Rate Cap for such
Distribution
Date.
-19-
<PAGE>
Class B Certificates: Any of the Class B-1, Class B-2 and Class
B-3
Certificates.
Class B-1 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class B-1 Certificates.
Class B-1 Certificate: Any Certificate designated as "Class B-1
Certificate
"on the face thereof in the form of Exhibit A hereto, representing
the right to
distributions as set forth herein.
Class B-1 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class B-1
Certificates.
Class B-1 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class B-1
Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class B-1 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-1
Certificates.
Class B-1 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class B-1 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
B-1 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class B-1 Pass-Through Rate for the related Accrual Period.
Class B-1 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 1.0500% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 1.5750% per
annum.
Class B-1 Pass-Through Rate: For the first Distribution Date,
6.4350% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class B-1 Margin, (2) the Weighted Average Available Funds
Cap for such
Distribution Date and (3) the Weighted Average Maximum Rate Cap for
such
Distribution Date.
Class B-1 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance and the
Class M Certificate Principal Balance, have been reduced to zero
and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does
not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal
Balance (after
taking into account distributions of the Class A Principal
Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal
Balance
(after taking into account distributions of the Class M-1 Principal
Distribution
Amount on such Distribution Date), (C) the Class M-2 Certificate
Principal
Balance (after taking into account distributions of the Class M-2
Principal
Distribution Amount on such Distribution Date), (D) the Class M-3
Certificate
Principal Balance (after taking into account distributions of the
Class M-3
Principal Distribution Amount on such Distribution Date), (E) the
Class M-4
Certificate Principal Balance (after taking into account
distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date,
(F) the Class
M-5 Certificate Principal Balance (after taking into account
distributions of
the Class M-5 Principal Distribution Amount on such Distribution
Date, (G) the
Class M-6 Certificate Principal Balance (after taking into account
distributions
of the Class M-6 Principal Distribution Amount on such Distribution
Date and (H)
the Class B-1 Certificate Principal Balance immediately prior to
such
Distribution Date over (2) the lesser of (A) 87.20% of the Stated
Principal
Balance of the Mortgage Loans as of such
-20-
<PAGE>
Distribution Date and (B) the excess of the Stated Principal
Balance of the
Mortgage Loans as of such Distribution Date over the Minimum
Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on
any
Distribution Date prior to the Stepdown Date on which the
Certificate Principal
Balance of each Class of Class A Certificates and Class M
Certificates has been
reduced to zero, the Class B-1 Principal Distribution Amount will
equal the
lesser of (x) the outstanding Certificate Principal Balance of the
Class B-1
Certificates and (y) 100% of the Principal Distribution Amount
remaining after
any distributions on such Class A and Class M Certificates and (II)
in no event
will the Class B-1 Principal Distribution Amount with respect to
any
Distribution Date exceed the Class B-1 Certificate Principal
Balance.
Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of the Class B-1 Certificates pursuant to the
last sentence of
the definition of "Certificate Principal Balance."
Class B-2 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class B-2 Certificates.
Class B-2 Certificate: Any Certificate designated as a "Class
B-2
Certificate" on the face thereof in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class B-2 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class B-2
Certificates.
Class B-2 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class B-2
Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class B-2 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-2
Certificates.
Class B-2 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class B-2 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
B-2 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class B-2 Pass-Through Rate for the related Accrual Period.
Class B-2 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 1.1500% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 1.7250% per
annum.
Class B-2 Pass-Through Rate: For the first Distribution Date,
6.5350% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class B-2 Margin, (2) the Weighted Average Available Funds
Cap for such
Distribution Date and (3) the Weighted Average Maximum Rate Cap for
such
Distribution Date.
Class B-2 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, the
Class M Certificate Principal Balance and the Class B-1
Certificate
-21-
<PAGE>
Principal Balance have been reduced to zero and a Stepdown Trigger
Event exists,
or as long as a Stepdown Trigger Event does not exist, the excess
of (1) the sum
of (A) the Class A Certificate Principal Balance (after taking into
account
distributions of the Class A Principal Distribution Amount on such
Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after
taking into
account distributions of the Class M-1 Principal Distribution
Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance
(after
taking into account distributions of the Class M-2 Principal
Distribution Amount
on such Distribution Date), (D) the Class M-3 Certificate Principal
Balance
(after taking into account distributions of the Class M-3 Principal
Distribution
Amount on such Distribution Date), (E) the Class M-4 Certificate
Principal
Balance (after taking into account distributions of the Class M-4
Principal
Distribution Amount on such Distribution Date), (F) the Class M-5
Certificate
Principal Balance (after taking into account distributions of the
Class M-5
Principal Distribution Amount on such Distribution Date), (G) the
Class M-6
Certificate Principal Balance (after taking into account
distributions of the
Class M-6 Principal Distribution Amount on such Distribution Date),
(H) the
Class B-1 Certificate Principal Balance (after taking into account
distributions
of the Class B-1 Principal Distribution Amount on such Distribution
Date) and
(I) the Class B-2 Certificate Principal Balance immediately prior
to such
Distribution Date over (2) the lesser of (A) 89.20% of the Stated
Principal
Balance of the Mortgage Loans as of such Distribution Date and (B)
the excess of
the Stated Principal Balance of the Mortgage Loans as of such
Distribution Date
over the Minimum Required Overcollateralization Amount.
Notwithstanding the
foregoing, (I) on any Distribution Date prior to the Stepdown Date
on which the
Certificate Principal Balance of each Class of Class A, Class M and
Class B-1
Certificates has been reduced to zero, the Class B-2 Principal
Distribution
Amount will equal the lesser of (x) the outstanding Certificate
Principal
Balance of the Class B-2 Certificates and (y) 100% of the Principal
Distribution
Amount remaining after any distributions on such Class A, Class M
and Class B-1
Certificates and (II) in no event will the Class B-2 Principal
Distribution
Amount with respect to any Distribution Date exceed the Class B-2
Certificate
Principal Balance.
Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of the Class B-2 Certificates pursuant to the
last sentence of
the definition of "Certificate Principal Balance."
Class B-3 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class B-3 Certificates.
Class B-3 Certificate: Any Certificate designated as a "Class
B-3
Certificate" on the face thereof in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class B-3 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class B-3
Certificates.
Class B-3 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class B-3
Pass-Through Rate on
the Class B-3 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class B-3 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-3
Certificates.
-22-
<PAGE>
Class B-3 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class B-3 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
B-3 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class B-3 Pass-Through Rate for the related Accrual Period.
Class B-3 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 1.9000% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 2.8500% per
annum.
Class B-3 Pass-Through Rate: For the first Distribution Date,
7.2850% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class B-3 Margin, (2) the Weighted Average Available Funds
Cap for such
Distribution Date and (3) the Weighted Average Maximum Rate Cap for
such
Distribution Date.
Class B-3 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, the
Class M Certificate Principal Balance, the Class B-1 Certificate
Principal
Balance and the Class B-2 Certificate Principal Balance have been
reduced to
zero and a Stepdown Trigger Event exists, or as long as a Stepdown
Trigger Event
does not exist, the excess of (1) the sum of (A) the Class A
Certificate
Principal Balance (after taking into account distributions of the
Class A
Principal Distribution Amount on such Distribution Date), (B) the
Class M-1
Certificate Principal Balance (after taking into account
distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date),
(C) the
Class M-2 Certificate Principal Balance (after taking into account
distributions
of the Class M-2 Principal Distribution Amount on such Distribution
Date), (D)
the Class M-3 Certificate Principal Balance (after taking into
account
distributions of the Class M-3 Principal Distribution Amount on
such
Distribution Date), (E) the Class M-4 Certificate Principal Balance
(after
taking into account distributions of the Class M-4 Principal
Distribution Amount
on such Distribution Date), (F) the Class M-5 Certificate Principal
Balance
(after taking into account distributions of the Class M-5 Principal
Distribution
Amount on such Distribution Date), (G) the Class M-6 Certificate
Principal
Balance (after taking into account distributions of the Class M-6
Principal
Distribution Amount on such Distribution Date), (H) the Class B-1
Certificate
Principal Balance (after taking into account distributions of the
Class B-1
Principal Distribution Amount on such Distribution Date), (I) the
Class B-2
Certificate Principal Balance (after taking into account
distributions of the
Class B-2 Principal Distribution Amount on such Distribution Date)
and (J) the
Class B-3 Certificate Principal Balance immediately prior to such
Distribution
Date over (2) the lesser of (A) 92.10% of the Stated Principal
Balance of the
Mortgage Loans as of such Distribution Date and (B) the excess of
the Stated
Principal Balance of the Mortgage Loans as of such Distribution
Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which
the Certificate
Principal Balance of each Class of Class A, Class M, Class B-1 and
Class B-2
Certificates has been reduced to zero, the Class B-3 Principal
Distribution
Amount will equal the lesser of (x) the outstanding Certificate
Principal
Balance of the Class B-3 Certificates and (y) 100% of the Principal
Distribution
Amount remaining after any distributions on such Class A, Class M,
Class B-1 and
Class B-2 Certificates and (II) in no event will the Class B-3
Principal
Distribution Amount with respect to any Distribution Date exceed
the Class B-3
Certificate Principal Balance.
Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class B-3 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class B-3 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
-23-
<PAGE>
Certificate Principal Balance of the Class B-3 Certificates
pursuant to the last
sentence of the definition of "Certificate Principal Balance".
Class C Applied Realized Loss Amount: As of any Distribution Date,
the sum
of all Applied Realized Loss Amounts with respect to the Mortgage
Loans which
have been applied to the reduction of the Certificate Principal
Balance of the
Class C Certificates.
Class C Certificate: Any Certificate designated as a "Class C
Certificate"
on the face thereof, in the form of Exhibit A hereto, representing
the right to
distributions as set forth herein.
Class C Certificate Principal Balance: As of any date of
determination, the
aggregate Certificate Principal Balance of the Class C
Certificates.
Class C Current Interest: As of any Distribution Date, the interest
accrued
during the related Accrual Period at the Class C Distributable
Interest Rate on
a notional amount equal to the aggregate principal balance of the
Lower Tier
REMIC Regular Interests immediately prior to such Distribution
Date, plus the
interest portion of any previous distributions on such Class that
is recovered
as a voidable preference by a trustee in bankruptcy, less any
Non-Supported
Interest Shortfall allocated on such Distribution Date to the Class
C
Certificates.
Class C Distributable Interest Rate: The excess, if any, of (a)
the
weighted average of the interest rates on the Lower Tier REMIC
Regular Interests
(other than the Class LT-IO Interest) over (b) two times the
weighted average of
the interest rates on the Lower Tier REMIC I Marker Interests and
the Class LTIX
Interest (treating for purposes of this clause (b) the interest
rate on each of
the Lower Tier REMIC I Marker Interests as being subject to a cap
and a floor
equal to the interest rate of the Corresponding REMIC Regular
Interest of the
Corresponding Certificates (as adjusted, if necessary, to reflect
the length of
the Accrual Period for the LIBOR Certificates) and treating the
Class LTIX
Interest as being capped at zero). The averages described in the
preceding
sentence shall be weighted on the basis of the respective principal
balances of
the Lower Tier REMIC Regular Interests immediately prior to any
date of
determination.
Class C Interest Carry Forward Amount: As of any Distribution Date,
the
excess of (A) the Class C Current Interest with respect to prior
Distribution
Dates over (B) the amount actually distributed to the Class C
Certificates with
respect to interest on such prior Distribution Dates or added to
the aggregate
Certificate Principal Balance of the Class C Certificates.
Class C Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class C Applied Realized Loss Amount over (2) the
sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss
Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class C Certificates pursuant to the last
sentence of
the definition of "Certificate Principal Balance."
Class LTA-1 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificates and an interest rate
equal to the Net
Rate.
Class LTA-2A Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
-24-
<PAGE>
Class LTA-2B Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTA-2C Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTA-2D Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTB-1 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTB-2 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTB-3 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LT-IO Interest: An uncertificated regular interest in the
Lower Tier
REMIC with the characteristics set forth in the description of the
Lower Tier
REMIC in the Preliminary Statement.
Class LTIX Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to the excess of (i)
50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over
(ii) the
initial principal balance of the Lower Tier REMIC I Marker
Interests, and with
an interest rate equal to the Net Rate.
Class LTIIX Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to the excess of (i)
50% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans over
(ii) the
initial principal balance of the Lower Tier REMIC II Marker
Interests, and with
an interest rate equal to the Net Rate.
Class LTII1A Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 0.05% of the
excess of (i) the
aggregate Cut-off Date Principal Balance of the Group One Mortgage
Loans over
(ii) the aggregate of the initial Certificate Principal Balances of
Certificate
Group One, and with an interest rate equal to the Net Rate.
Class LTII1B Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 0.05% the
aggregate Cut-off
Date Principal Balance of the Group One Mortgage Loans, and with an
interest
rate equal to the rate set forth in footnote 9 to the description
of the Lower
Tier REMIC in the Preliminary Statement.
Class LTII2A Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 0.05% of the
excess of (i) the
aggregate Cut-off Date Principal Balance of the Group Two Mortgage
Loans over
(ii) the aggregate of the initial Certificate Principal Balances of
Certificate
Group Two, and with an interest rate equal to the Net Rate.
-25-
<PAGE>
Class LTII2B Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 0.05% of the
aggregate Cut-off
Date Principal Balance of the Group Two Mortgage Loans and with an
interest rate
equal to the rate set forth in footnote 10 to the description of
the Lower Tier
REMIC in the Preliminary Statement.
Class LTM-1 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-2 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-3 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-4 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-5 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTM-6 Interest: An uncertificated regular interest in the
Lower Tier
REMIC with an initial principal balance equal to 1/4 of the initial
principal
balance of its Corresponding Certificate and an interest rate equal
to the Net
Rate.
Class LTR Interest: The sole class of "residual interest" in the
Lower Tier
REMIC.
Class M Certificates: Any of the Class M-1, Class M-2, Class M-3,
Class
M-4, Class M-5 and Class M-6 Certificates.
Class M Certificate Principal Balance: For any date of
determination, the
sum of the Class M-1 Certificate Principal Balance, Class M-2
Certificate
Principal Balance, Class M-3 Certificate Principal Balance, Class
M-4
Certificate Principal Balance, Class M-5 Certificate Principal
Balance and Class
M-6 Certificate Principal Balance.
Class M-1 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-1 Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class
M-1
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-1 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-1
Certificates.
Class M-1 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-1
Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of
-26-
<PAGE>
such Distribution Date plus the portion of any previous
distributions on such
Class in respect of Current Interest or Class M-1 Interest Carry
Forward Amount
that is recovered as a voidable preference by a trustee in
bankruptcy, less any
Non-Supported Interest Shortfall allocated on such Distribution
Date to the
Class M-1 Certificates.
Class M-1 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-1 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-1 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-1 Pass-Through Rate for the related Accrual Period.
Class M-1 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.2900% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.4350% per
annum.
Class M-1 Pass-Through Rate: For the first Distribution Date,
5.6750% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-1 Margin, (2) the Weighted Average Available Funds
Cap for such
Distribution Date and (3) the Weighted Average Maximum Rate Cap for
such
Distribution Date.
Class M-1 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance has been
reduced to zero and a Stepdown Trigger Event exists, or as long as
a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the
Class A
Certificate Principal Balance (after taking into account
distributions of the
Class A Principal Distribution Amount on such Distribution Date)
and (B) the
Class M-1 Certificate Principal Balance immediately prior to such
Distribution
Date over (2) the lesser of (A) 58.00% of the Stated Principal
Balances of the
Mortgage Loans as of such Distribution Date and (B) the excess of
the Stated
Principal Balances for the Mortgage Loans as of such Distribution
Date over the
Minimum Required Overcollateralization Amount. Notwithstanding the
foregoing,
(I) on any Distribution Date prior to the Stepdown Date on which
the Certificate
Principal Balance of each Class of Class A Certificates has been
reduced to
zero, the Class M-1 Principal Distribution Amount will equal the
lesser of (x)
the outstanding Certificate Principal Balance of the Class M-1
Certificates and
(y) 100% of the Principal Distribution Amount remaining after any
distributions
on such Class A Certificates and (II) in no event will the Class
M-1 Principal
Distribution Amount with respect to any Distribution Date exceed
the Class M-1
Certificate Principal Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-1 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-2 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class
M-2
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-2
Certificates.
-27-
<PAGE>
Class M-2 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-2
Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-2 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-2
Certificates.
Class M-2 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-2 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-2 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-2 Pass-Through Rate for the related Accrual Period.
Class M-2 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.3100% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.4650% per
annum.
Class M-2 Pass-Through
Rate: For the first Distribution Date, 5.6950% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-2 Margin, (2) the Weighted Average Available Funds
Cap for such
Distribution Date and (3) the Weighted Average Maximum Rate Cap for
such
Distribution Date.
Class M-2 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance and the
Class M-1 Certificate Principal Balance have been reduced to zero
and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does
not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal
Balance (after
taking into account distributions of the Class A Principal
Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal
Balance
(after taking into account distributions of the Class M-1 Principal
Distribution
Amount on such Distribution Date) and (C) the Class M-2 Certificate
Principal
Balance immediately prior to such Distribution Date over (2) the
lesser of (A)
68.00% of the Stated Principal Balances of the Mortgage Loans as of
such
Distribution Date and (B) the excess of the Stated Principal
Balances of the
Mortgage Loans as of such Distribution Date over the Minimum
Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on
any
Distribution Date prior to the Stepdown Date on which the
Certificate Principal
Balance of each Class of Class A Certificates and the Class M-1
Certificates has
been reduced to zero, the Class M-2 Principal Distribution Amount
will equal the
lesser of (x) the outstanding Certificate Principal Balance of the
Class M-2
Certificates and (y) 100% of the Principal Distribution Amount
remaining after
any distributions on such Class A and Class M-1 Certificates and
(II) in no
event will the Class M-2 Principal Distribution Amount with respect
to any
Distribution Date exceed the Class M-2 Certificate Principal
Balance.
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-2 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-3 Applied
Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-3 Certificates.
-28-
<PAGE>
Class M-3 Certificate: Any Certificate designated as a "Class
M-3
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-3 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-3
Certificates.
Class M-3 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-3
Pass-Through Rate on
the Class M-3 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-3 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-3
Certificates.
Class M-3 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-3 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-3 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-3 Pass-Through Rate for the related Accrual Period.
Class M-3 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.3300% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.4950% per
annum.
Class M-3 Pass-Through Rate: For the first Distribution Date,
5.7150% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-3 Margin, (2) the Weighted Average Available Funds
Cap for such
Distribution Date and (3) the Weighted Average Maximum Rate Cap for
such
Distribution Date.
Class M-3 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, Class
M-1 Certificate Principal Balance and Class M-2 Certificate
Principal Balance
have been reduced to zero and a Stepdown Trigger Event exists, or
as long as a
Stepdown Trigger Event does not exist, the excess of (1) the sum of
(A) the
Class A Certificate Principal Balance (after taking into account
distributions
of the Class A Principal Distribution Amount on such Distribution
Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account
distributions
of the Class M-1 Principal Distribution Amount on such Distribution
Date), (C)
the Class M-2 Certificate Principal Balance (after taking into
account
distributions of the Class M-2 Principal Distribution Amount on
such
Distribution Date) and (D) the Class M-3 Certificate Principal
Balance
immediately prior to such Distribution Date over (2) the lesser of
(A) 71.80% of
the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date
and (B) the excess of the Stated Principal Balances for the
Mortgage Loans as of
such Distribution Date over the Minimum Required
Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any Distribution Date prior
to the
Stepdown Date on which the Certificate Principal Balance of each
Class of Class
A Certificates, the Class M-1 Certificates and the Class M-2
Certificates has
been reduced to zero, the Class M-3 Principal Distribution Amount
will equal the
lesser of (x) the outstanding Certificate Principal Balance of the
Class M-3
Certificates and (y) 100% of the Principal Distribution Amount
remaining after
any distributions on such Class A, Class M-1 and Class M-2
Certificates and (II)
in no event will the Class M-3 Principal Distribution Amount with
respect to any
Distribution Date exceed the Class M-3 Certificate Principal
Balance.
Class M-3 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-3 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the
-29-
<PAGE>
Class M-3 Unpaid Realized Loss Amounts on all previous Distribution
Dates and
(y) all increases in the Certificate Principal Balance of such
Class M-3
Certificates pursuant to the last sentence of the definition of
"Certificate
Principal Balance."
Class M-4 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-4 Certificates.
Class M-4 Certificate: Any Certificate designated as a "Class
M-4
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-4 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-4
Certificates.
Class M-4 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-4
Pass-Through Rate on
the Class M-4 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-4 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-4
Certificates.
Class M-4 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-4 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-4 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-4 Pass-Through Rate for the related Accrual Period.
Class M-4 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.4000% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.6000% per
annum.
Class M-4 Pass-Through Rate: For the first Distribution Date,
5.7850% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-4 Margin, (2) the Weighted Average Available Funds
Cap for such
Distribution Date and (3) the Weighted Average Maximum Rate Cap for
such
Distribution Date.
Class M-4 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, Class
M-1 Certificate Principal Balance, Class M-2 Certificate Principal
Balance and
Class M-3 Certificate Principal Balance have been reduced to zero
and a Stepdown
Trigger Event exists, or as long as a Stepdown Trigger Event does
not exist, the
excess of (1) the sum of (A) the Class A Certificate Principal
Balance (after
taking into account distributions of the Class A Principal
Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal
Balance
(after taking into account distributions of the Class M-1 Principal
Distribution
Amount on such Distribution Date), (C) the Class M-2 Certificate
Principal
Balance (after taking into account distributions of the Class M-2
Principal
Distribution Amount on such Distribution Date), (C) the Class M-3
Certificate
Principal Balance (after taking into account distributions of the
Class M-3
Principal Distribution Amount on such Distribution Date) and (D)
the Class M-4
Certificate Principal Balance immediately prior to such
Distribution Date over
(2) the lesser of (A) 77.10% of the Stated Principal Balances of
the Mortgage
Loans as of such Distribution Date and (B) the excess of the Stated
Principal
Balances for the Mortgage Loans as of such Distribution Date over
the Minimum
Required Overcollateralization Amount.
-30-
<PAGE>
Notwithstanding the foregoing, (I) on any Distribution Date prior
to the
Stepdown Date on which the Certificate Principal Balance of each
Class of Class
A Certificates, the Class M-1 Certificates, the Class M-2
Certificates and the
Class M-3 Certificates has been reduced to zero, the Class M-4
Principal
Distribution Amount will equal the lesser of (x) the outstanding
Certificate
Principal Balance of the Class M-4 Certificates and (y) 100% of the
Principal
Distribution Amount remaining after any distributions on such Class
A, Class
M-1, Class M-2 and Class M-3 Certificates and (II) in no event will
the Class
M-4 Principal Distribution Amount with respect to any Distribution
Date exceed
the Class M-4 Certificate Principal Balance.
Class M-4 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-4 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-4 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-4 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-5 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-5 Certificates.
Class M-5 Certificate: Any Certificate designated as a "Class
M-5
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-5 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-5
Certificates.
Class M-5 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-5
Pass-Through Rate on
the Class M-5 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-5 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-5
Certificates.
Class M-5 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-5 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-5 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-5 Pass-Through Rate for the related Accrual Period.
Class M-5 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.4300% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.6450% per
annum.
Class M-5 Pass-Through Rate: For the first Distribution Date,
5.8150% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-5 Margin, (2) the Weighted Average Available Funds
Cap for such
Distribution Date and (3) the Weighted Average Maximum Rate Cap for
such
Distribution Date.
Class M-5 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, Class
M-1 Certificate Principal Balance, Class M-2 Certificate Principal
Balance,
Class M-3 Certificate Principal Balance and Class M-4 Certificate
Principal
Balance have been
-31-
<PAGE>
reduced to zero and a Stepdown Trigger Event exists, or as long as
a Stepdown
Trigger Event does not exist, the excess of (1) the sum of (A) the
Class A
Certificate Principal Balance (after taking into account
distributions of the
Class A Principal Distribution Amount on such Distribution Date),
(B) the Class
M-1 Certificate Principal Balance (after taking into account
distributions of
the Class M-1 Principal Distribution Amount on such Distribution
Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account
distributions
of the Class M-2 Principal Distribution Amount on such Distribution
Date), (D)
the Class M-3 Certificate Principal Balance (after taking into
account
distributions of the Class M-3 Principal Distribution Amount on
such
Distribution Date), (E) the Class M-4 Certificate Principal Balance
(after
taking into account distributions of the Class M-4 Principal
Distribution Amount
on such Distribution Date) and (F) the Class M-5 Certificate
Principal Balance
immediately prior to such Distribution Date over (2) the lesser of
(A) 80.90% of
the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date
and (B) the excess of the Stated Principal Balances for the
Mortgage Loans as of
such Distribution Date over the Minimum Required
Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any Distribution Date prior
to the
Stepdown Date on which the Certificate Principal Balance of each
Class of Class
A Certificates, the Class M-1 Certificates, the Class M-2
Certificates, the
Class M-3 Certificates and the Class M-4 Certificates has been
reduced to zero,
the Class M-5 Principal Distribution Amount will equal the lesser
of (x) the
outstanding Certificate Principal Balance of the Class M-5
Certificates and (y)
100% of the Principal Distribution Amount remaining after any
distributions on
such Class A, Class M-1, Class M-2, Class M-3 and Class M-4
Certificates and
(II) in no event will the Class M-5 Principal Distribution Amount
with respect
to any Distribution Date exceed the Class M-5 Certificate Principal
Balance.
Class M-5 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-5 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-5 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-5 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class M-6 Applied Realized Loss Amount: As of any Distribution
Date, the
sum of all Applied Realized Loss Amounts with respect to the
Mortgage Loans
which have been applied to the reduction of the Certificate
Principal Balance of
the Class M-6 Certificates.
Class M-6 Certificate: Any Certificate designated as a "Class
M-6
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing
the right to distributions as set forth herein.
Class M-6 Certificate Principal Balance: As of any date of
determination,
the aggregate Certificate Principal Balance of the Class M-6
Certificates.
Class M-6 Current Interest: As of any Distribution Date, the
interest
accrued during the related Accrual Period at the Class M-6
Pass-Through Rate on
the Class M-6 Certificate Principal Balance as of such Distribution
Date plus
the portion of any previous distributions on such Class in respect
of Current
Interest or Class M-6 Interest Carry Forward Amount that is
recovered as a
voidable preference by a trustee in bankruptcy, less any
Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class M-6
Certificates.
Class M-6 Interest Carry Forward Amount: As of any Distribution
Date, the
sum of (1) the excess of (A) the Class M-6 Current Interest with
respect to
prior Distribution Dates over (B) the amount actually distributed
to the Class
M-6 Certificates with respect to interest on such prior
Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable
law) at the
Class M-6 Pass-Through Rate for the related Accrual Period.
-32-
<PAGE>
Class M-6 Margin: As of any Distribution Date up to and including
the
Initial Optional Termination Date, 0.4800% per annum and, as of any
Distribution
Date after the Initial Optional Termination Date, 0.7200% per
annum.
Class M-6 Pass-Through Rate: For the first Distribution Date,
5.8650% per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class M-6 Margin, (2) the Weighted Average Available Funds
Cap for such
Distribution Date and (3) the Weighted Average Maximum Rate Cap for
such
Distribution Date.
Class M-6 Principal Distribution Amount: With respect to any
Distribution
Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount
for such Distribution Date if the Class A Certificate Principal
Balance, Class
M-1 Certificate Principal Balance, Class M-2 Certificate Principal
Balance,
Class M-3 Certificate Principal Balance, Class M-4 Certificate
Principal Balance
and Class M-5 Certificate Principal Balance have been reduced to
zero and a
Stepdown Trigger Event exists, or as long as a Stepdown Trigger
Event does not
exist, the excess of (1) the sum of (A) the Class A Certificate
Principal
Balance (after taking into account distributions of the Class A
Principal
Distribution Amount on such Distribution Date), (B) the Class M-1
Certificate
Principal Balance (after taking into account distributions of the
Class M-1
Principal Distribution Amount on such Distribution Date), (C) the
Class M-2
Certificate Principal Balance (after taking into account
distributions of the
Class M-2 Principal Distribution Amount on such Distribution Date),
(D) the
Class M-3 Certificate Principal Balance (after taking into account
distributions
of the Class M-3 Principal Distribution Amount on such Distribution
Date), (E)
the Class M-4 Certificate Principal Balance (after taking into
account
distributions of the Class M-4 Principal Distribution Amount on
such
Distribution Date), (F) the Class M-5 Certificate Principal Balance
(after
taking into account distributions of the Class M-5 Principal
Distribution Amount
on such Distribution Date), and (G) the Class M-6 Certificate
Principal Balance
immediately prior to such Distribution Date over (2) the lesser of
(A) 83.90% of
the Stated Principal Balances of the Mortgage Loans as of such
Distribution Date
and (B) the excess of the Stated Principal Balances for the
Mortgage Loans as of
such Distribution Date over the Minimum Required
Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any Distribution Date prior
to the
Stepdown Date on which the Certificate Principal Balance of each
Class of Class
A Certificates, the Class M-1 Certificates, the Class M-2
Certificates, the
Class M-3 Certificates, the Class M-4 Certificates and the Class
M-5
Certificates has been reduced to zero, the Class M-6 Principal
Distribution
Amount will equal the lesser of (x) the outstanding Certificate
Principal
Balance of the Class M-6 Certificates and (y) 100% of the Principal
Distribution
Amount remaining after any distributions on such Class A, Class
M-1, Class M-2,
Class M-3, Class M-4 and Class M-5 Certificates and (II) in no
event will the
Class M-6 Principal Distribution Amount with respect to any
Distribution Date
exceed the Class M-6 Certificate Principal Balance.
Class M-6 Unpaid Realized Loss Amount: As of any Distribution Date,
the
excess of (1) the Class M-6 Applied Realized Loss Amount over (2)
the sum of (x)
all distributions in reduction of the Class M-6 Unpaid Realized
Loss Amounts on
all previous Distribution Dates and (y) all increases in the
Certificate
Principal Balance of such Class M-6 Certificates pursuant to the
last sentence
of the definition of "Certificate Principal Balance."
Class P Certificate: Any Certificate designated as a Class P
Certificate on
the face thereof, executed by the Trustee and authenticated by the
Trustee in
substantially the form set forth in Exhibit A, representing the
right to
distributions as set forth herein.
Class Payment Shortfall: As defined in Section 2.07(d)(ii)
herein.
-33-
<PAGE>
Class R Certificate: The Class R Certificate executed by the
Trustee and
authenticated by the Trustee in substantially the form set forth in
Exhibit A.
Class R Certificate Principal Balance: As of any date of
determination, the
aggregate Certificate Principal Balance of the Class R
Certificate.
Class R Current Interest: As of any Distribution Date, the interest
accrued
during the related Accrual Period at the Class R Pass-Through Rate
on the Class
R Certificate Principal Balance as of such Distribution Date plus
the portion of
any previous distributions on such Class in respect of Current
Interest or a
Class R Interest Carry Forward Amount that is recovered as a
voidable preference
by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated
on such Distribution Date to the Class R Certificate. For purposes
of
calculating interest, principal distributions on a Distribution
Date will be
deemed to have been made on the first day of the Accrual Period in
which such
Distribution Date occurs.
Class R Interest Carry Forward Amount: As of any Distribution Date,
the sum
of (1) the excess of (A) the Class R Current Interest with respect
to prior
Distribution Dates over (B) the amount actually distributed to the
Class R
Certificate with respect to interest on such prior Distribution
Dates and (2)
interest on such excess (to the extent permitted by applicable law)
at the Class
R Pass-Through Rate for the related Accrual Period.
Class R Margin: As of any Distribution Date up to and including the
Initial
Optional Termination Date for the Certificates, 0.1600% per annum
and, as of any
Distribution Date after the Initial Optional Termination Date,
0.3200% per
annum.
Class R Pass-Through Rate: For the first Distribution Date, 5.5450%
per
annum. As of any Distribution Date thereafter, the least of (1)
One-Month LIBOR
plus the Class R Margin, (2) the Class A-1 Available Funds Cap for
such
Distribution Date and (3) the Class A-1 Maximum Rate Cap for such
Distribution
Date.
Class SWR Interest: The sole class of "residual interest" in the
SWAP
REMIC.
Closing Date: July 25, 2006.
Code: The Internal Revenue Code of 1986, including any successor
or
amendatory provisions.
Collection Account: The separate Eligible Accounts created and
initially
maintained by the Servicer pursuant to Section 3.05(d) in the name
of the
Trustee for the benefit of the Certificateholders and designated,
"Wilshire
Credit Corporation, as servicer for LaSalle Bank National
Association, as
trustee, in trust for registered holders of Merrill Lynch Mortgage
Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-HE4".
Funds in the
Collection Account shall be held in trust for the
Certificateholders for the
uses and purposes set forth in this Agreement.
Combined Loan-to-Value Ratio: The fraction, expressed as a
percentage, the
numerator of which is the sum of (1) the original principal balance
of the
related Mortgage Loan and (2) any outstanding principal balances of
Mortgage
Loans the liens on which are senior to the lien on such related
Mortgage Loan
(such sum calculated at the date of origination of such related
Mortgage Loan)
and the denominator of which is the lesser of (A) the Appraised
Value of the
related Mortgaged Property and (B) the sales price of the related
Mortgaged
Property at time of origination.
Commission: The Securities and Exchange Commission.
-34-
<PAGE>
Compensating Interest: For any Distribution Date and all
Principal
Prepayments in full in respect of a Mortgage Loan that are received
during the
period from the first day of the related Prepayment Period through
the last day
of the calendar month preceding such Distribution Date, a payment
made by the
Servicer in an amount not to exceed the product of (a) one-twelfth
of 0.25% and
(b) the aggregate Stated Principal Balance of the Mortgage Loans
for such
Distribution Date, equal to the amount of interest at the Net
Mortgage Rate for
that Mortgage Loan from the date of prepayment through the 30th day
of such
preceding calendar month; provided that any month consisting of
less than 30
days shall be deemed to consist of 30 days.
Corresponding Certificates: With respect to the Class LTA-1
Interest, the
Class A-1 and Class R Certificates. With respect to the Class
LTA-2A Interest,
the Class A-2A Certificates. With respect to the Class LTA-2B
Interest, the
Class A-2B Certificates. With respect to the Class LTA-2C Interest,
the Class
A-2C Certificates. With respect to the Class LTA-2D Interest, the
Class A-2D
Certificates. With respect to the Class LTM-1 Interest, the Class
M-1
Certificates. With respect to the Class LTM-2 Interest, the Class
M-2
Certificates. With respect to the Class LTM-3 Interest, the Class
M-3
Certificates. With respect to the Class LTM-4 Interest, the Class
M-4
Certificates. With respect to the Class LTM-5 Interest, the Class
M-5
Certificates. With respect to the Class LTM-6 Interest, the Class
M-6
Certificates. With respect to the Class LTB-1 Interest, the Class
B-1
Certificates. With respect to the Class LTB-2 Interest, the Class
B-2
Certificates. With respect to the Class LTB-3 Interest, the Class
B-3
Certificates.
Corresponding REMIC Regular Interest: For each Class of
Certificates, the
interest in the Upper Tier REMIC listed on the same row in the
table entitled
"Upper Tier REMIC" in the Preliminary Statement.
Current Interest: Any of the Class A-1 Current Interest, the Class
A-2A
Current Interest, the Class A-2B Current Interest, the Class A-2C
Current
Interest, the Class A-2D Current Interest, the Class R Current
Interest, the
Class M-1 Current Interest, the Class M-2 Current Interest, the
Class M-3
Current Interest, the Class M-4 Current Interest, the Class M-5
Current
Interest, the Class M-6 Current Interest, the Class B-1 Current
Interest, the
Class B-2 Current Interest, the Class B-3 Current Interest and the
Class C
Current Interest.
Cut-off Date: July 1, 2006.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
unpaid
principal balance thereof as of the close of business on the
calendar day
immediately preceding the Cut-off Date after application of all
payments of
principal due on or prior to the Cut-off Date, whether or not
received, and all
Principal Prepayments received prior to the Cut-off Date, but
without giving
effect to any installments of principal received in respect of Due
Dates after
the Cut-off Date.
Defaulted Swap Termination Payment: Any payment required to be made
by the
Supplemental Interest Trust to the Swap Counterparty pursuant to
the Swap
Agreement as a result of an event of default under the Swap
Agreement with
respect to which the Swap Counterparty is the defaulting party or a
termination
event (including a Downgrade Termination Event) under that
agreement (other than
illegality or a tax event) with respect to which the Swap
Counterparty is the
sole Affected Party (as defined in the Swap Agreement).
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
by a
Replacement Mortgage Loan.
-35-
<PAGE>
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon is
not made pursuant to the terms of such Mortgage Loan by the close
of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30
days
delinquent" if such payment has not been received by the close of
business on
the corresponding day of the month immediately succeeding the month
in which
such payment was due, or, if there is no such corresponding day
(e.g., as when a
30-day month follows a 31-day month in which a payment was due on
the 31st day
of such month), then on the last day of such immediately succeeding
month. With
respect to any Mortgage Loan due on any day other than the first
day of the
month, such Mortgage Loan shall be deemed to be due on the first
day of the
immediately succeeding month. Similarly for "60 days delinquent,"
"90 days
delinquent" and so on.
Denomination: With respect to each Certificate, the amount set
forth on the
face thereof as the "Initial Principal Balance of this
Certificate."
Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware
corporation,
or any successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company
("DTC"), the nominee of which is Cede & Co., or any other
organization
registered as a "clearing agency" pursuant to Section 17A of the
Securities
Exchange Act of 1934, as amended. The Depository shall initially be
the
registered Holder of the Book-Entry Certificates. The Depository
shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of
the Uniform
Commercial Code of the State of New York.
Depository Agreement: With respect to Classes of Book-Entry
Certificates,
the agreement between the Trustee and the initial Depository.
Depository Participant: A broker, dealer, bank or other
financial
institution or other Person for whom from time to time a Depository
effects
book-entry transfers and pledges of securities deposited with the
Depository.
Designated Transaction: A transaction in which the assets
underlying the
Certificates consist of single-family residential, multi-family
residential,
home equity, manufactured housing and/or commercial mortgage
obligations that
are secured by single-family residential, multi-family residential,
commercial
real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th
day of
the month of such Distribution Date or, if such 15th day is not a
Business Day,
the immediately preceding Business Day.
Disqualified Organization: (1) the United States, any state or
political
subdivision thereof, any foreign government, any international
organization, or
any agency or instrumentality of any of the foregoing, (2) any
organization
(other than a cooperative described in Section 521 of the Code)
which is exempt
from tax under Chapter 1 of Subtitle A of the Code unless such
organization is
subject to the tax imposed by Section 511 of the Code and (3) any
organization
described in Section 1381(a)(2)(C) of the Code.
Distribution Date: The 25th day of each calendar month after the
initial
issuance of the Certificates, or if such 25th day is not a Business
Day, the
next succeeding Business Day, commencing in August 2006.
Downgrade Termination Event: An event whereby (x) the Swap
Counterparty (or
its guarantor) ceases to have short term unsecured and/or long term
debt ratings
at least equal to the levels specified in the Swap Agreement, and
(y) at least
one of the following events has not occurred (except to the
extent
-36-
<PAGE>
otherwise approved by the Rating Agencies): (i) within the time
period specified
in the Swap Agreement with respect to such downgrade, the Swap
Counterparty
shall transfer the Swap Agreement, in whole, but not in part, to a
substitute
swap counterparty that satisfies the requirements set forth in the
Swap
Agreement, subject to the satisfaction of the Rating Agency
Condition or (ii)
within the time period specified in the Swap Agreement with respect
to such
downgrade, the Swap Counterparty shall collateralize its exposure
to the Trust
Fund pursuant to an ISDA Credit Support Annex, subject to the
satisfaction of
the Rating Agency Condition; provided that such ISDA Credit Support
Annex shall
be made a credit support document for the Swap Counterparty
pursuant to an
amendment to the Swap Agreement.
Due
Date: With respect to any Distribution Date and any Mortgage Loan,
the
day during the related Due Period on which a Scheduled Payment is
due.
Due
Period: With respect to any Distribution Date, the period beginning
on
the second day of the calendar month preceding the calendar month
in which such
Distribution Date occurs and ending on the first day of the month
in which such
Distribution Date occurs.
Eligible Account: An account that is (1) maintained with a
depository
institution the long-term unsecured debt obligations of which are
rated by each
Rating Agency in one of its two highest rating categories, or (2)
maintained
with the corporate trust department of a bank which (A) has a
rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the
corporate trust
department of a national banking association or banking corporation
which has a
rating of at least A-1 by S&P or F1 by Fitch, or (iii) an
account or accounts
the deposits in which are fully insured by the FDIC, or (iv) an
account or
accounts, acceptable to each Rating Agency without reduction or
withdrawal of
the rating of any Class of Certificates, as evidenced in writing,
by a
depository institution in which such accounts are insured by the
FDIC (to the
limit established by the FDIC), the uninsured deposits in which
accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to
and acceptable to the Trustee and each Rating Agency, the
Certificateholders
have a claim with respect to the funds in such account and a
perfected first
security interest against any collateral (which shall be limited to
Permitted
Investments) securing such funds that is superior to claims of any
other
depositors or creditors of the depository institution with which
such account is
maintained, or (v) maintained at an eligible institution whose
commercial paper,
short-term debt or other short-term deposits are rated at least
A-1+ by S&P and
F-1+ by Fitch, or (vi) maintained with a federal or state chartered
depository
institution the deposits in which are insured by the FDIC to the
applicable
limits and the short-term unsecured debt obligations of which (or,
in the case
of a depository institution that is a subsidiary of a holding
company, the
short-term unsecured debt obligations of such holding company) are
rated A-1 by
S&P, F-1 by Fitch or Prime-1 by Moody's at the time any
deposits are held on
deposit therein, or (vii) a segregated trust account or accounts
maintained with
the corporate trust department of a federal or state chartered
depository
institution or trust company having capital and surplus of not less
than
$50,000,000 or (viii) otherwise acceptable to each Rating Agency,
as evidenced
by a letter from each Rating Agency to the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974,
including any
successor or amendatory provisions.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment
underwriting or private placement that would satisfy the
requirements would
satisfy the requirements of Prohibited Transaction Exemption 90-29,
Exemption
Application No. D-8012, 55 Fed. Reg. 21459 (1990), as amended,
granted by the
United States Department of Labor (or any other applicable
underwriter's
exemption granted by the United States Department of Labor),
except, in relevant
part, for the requirement that the certificates
-37-
<PAGE>
have received a rating at the time of acquisition that is in one of
the three
(or four, in the case of a "designated transaction") highest
generic rating
categories by at least one of S&P, Moody's or Fitch.
ERISA Restricted Certificates: The Class C Certificates and Class
P
Certificates and any other Certificate, as long as the acquisition
and holding
of such Certificate is not covered by and exempt under an
underwriter's
exemption.
Event of Default: As defined in Section 7.01 hereof.
Excess Interest: On any Distribution Date, for each Class of the
Class A,
Class M and Class B Certificates, the excess, if any, of (1) the
amount of
interest such Class of Certificates is entitled to receive on such
Distribution
Date over (2) the amount of interest such Class of Certificates
would have been
entitled to receive on such Distribution Date at an interest rate
equal to the
REMIC Pass-Through Rate.
Excess Proceeds: With respect to any Liquidated Loan, any
Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal
balance of
such Liquidated Loan as of the date of such liquidation plus (2)
interest at the
Mortgage Rate from the Due Date as to which interest was last paid
or advanced
to Certificateholders (and not reimbursed to the Servicer) up to
the Due Date in
the month in which such Liquidation Proceeds are required to be
distributed on
the unpaid principal balance of such Liquidated Loan outstanding
during each Due
Period as to which such interest was not paid or advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Extra Principal Distribution Amount: With respect to any
Distribution Date,
(1) prior to the Stepdown Date, the excess of (A) the sum of (i)
the Aggregate
Certificate Principal Balance immediately preceding such
Distribution Date
reduced by the Principal Funds with respect to such Distribution
Date and (ii)
$19,820,800 and over (B) the aggregate Stated Principal Balance of
the Mortgage
Loans as of such Distribution Date and (2) on and after the
Stepdown Date, (A)
the sum of (x) the Aggregate Certificate Principal Balance
immediately preceding
such Distribution Date, reduced by the Principal Funds with respect
to such
Distribution Date and (y) the greater of (a) 7.90% of the aggregate
Stated
Principal Balance of the Mortgage Loans and (b) the Minimum
Required
Overcollateralization Amount less (B) the aggregate Stated
Principal Balance of
the Mortgage Loans as of such Distribution Date; provided, however,
that if on
any Distribution Date a Stepdown Trigger Event is in effect, the
Extra Principal
Distribution Amount will not be reduced to the applicable
percentage of the
then-current aggregate Stated Principal Balance of the Mortgage
Loans (and will
remain fixed at the applicable percentage of the aggregate Stated
Principal
Balance of the Mortgage Loans as of the Due Date immediately prior
to the
Stepdown Trigger Event) until the next Distribution Date on which
the Stepdown
Trigger Event is not in effect.
Fannie Mae: A federally chartered and privately owned corporation
organized
and existing under the Federal National Mortgage Association
Charter Act, or any
successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Fitch: Fitch, Inc., or any successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the
Mortgage Loan
Schedule as having a Mortgage Rate that is fixed.
Floating Rate Certificate Carryover: With respect to a Distribution
Date,
in the event that the Pass-Through Rate for a class of Offered
Certificates is
based upon the related Available Funds Cap or
-38-
<PAGE>
the related Maximum Rate Cap, the sum of (A) the excess of (1) the
amount of
interest that such Class would have been entitled to receive on
such
Distribution Date had the Pass-Through Rate for that Class not been
calculated
based on the related Available Funds Cap or the related Maximum
Rate Cap, up to
but not exceeding greater of (x) the related Maximum Rate Cap or
(y) the sum of
(i) the related Available Funds Cap and (ii) the product of (A) a
fraction, the
numerator of which is 360 and the denominator of which is the
actual number of
days in the related Accrual Period and (B) the sum of (x) the
quotient obtained
by dividing (I) an amount equal to the proceeds, if any, payable
under the
related Cap Contract with respect to such Distribution Date by (II)
the
aggregate Certificate Principal Balance of each of the Classes of
Certificates
to which such Cap Contract relates for such Distribution Date and
(y) the
quotient obtained by dividing (I) an amount equal to any Net Swap
Payments owed
by the Swap Counterparty for such Distribution Date by (II) the
aggregate Stated
Principal Balance of the Mortgage Loans as of the immediately
preceding
Distribution Date over (2) the amount of interest such class was
entitled to
receive on such Distribution Date based on the related Available
Funds Cap, (B)
the unpaid portion of any such excess from prior Distribution Dates
(and
interest accrued thereon at the then applicable Pass-Through Rate
for such
class, without giving effect to the applicable Available Funds Cap
or the
related Maximum Rate Cap) and (C) any amount previously distributed
with respect
to Floating Rate Certificate Carryover for such Class that is
recovered as a
voidable preference by a trustee in bankruptcy.
Freddie Mac: A corporate instrumentality of the United States
created and
existing under Title III of the Emergency Home Finance Act of 1970,
as amended,
or any successor thereto.
Grantor Trusts: The grantor trusts described in Section 2.07
hereof.
Gross Margin: The percentage set forth in the related Mortgage Note
for
each of the Adjustable Rate Mortgage Loans which is to be added to
the
applicable index for use in determining the Mortgage Rate on each
Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each
Adjustable
Rate Mortgage Loan.
Group One: The portion of the Mortgage Pool identified as "Group
One" in
the Prospectus Supplement.
Group One Mortgage Loan: Any Mortgage Loan at any time identified
in the
Group One Mortgage Loan Schedule attached hereto as Exhibit
B-2.
Group One Net WAC: The Net WAC of Group One.
Group One Principal Distribution Amount: As of any Distribution
Date, the
amount equal to the lesser of (i) the aggregate Certificate
Principal Balance of
the Class A-1 and Class R Certificates and (ii) the product of (x)
the Group One
Principal Distribution Percentage and (y) the Class A Principal
Distribution
Amount; provided, however, that with respect to any Distribution
Date on which
the Class A-1 and Class R Certificates are outstanding and the
Certificate
Principal Balance of the Class A-2 Certificates has been reduced to
zero, the
Group One Principal Distribution Amount will equal the Class A
Principal
Distribution Amount.
Group One Principal Distribution Percentage: With respect to
any
Distribution Date, a fraction expressed as a percentage, the
numerator of which
is the amount of Principal Funds received with respect to Mortgage
Loans in
Group One and the denominator of which is the amount of Principal
Funds received
from all of the Mortgage Loans in the mortgage pool.
Group Two: The portion of the Mortgage Pool identified as "Group
Two" in
the Prospectus Supplement.
-39-
<PAGE>
Group Two Mortgage Loan: Any Mortgage Loan at any time identified
in the
Group Two Mortgage Loan Schedule attached hereto as Exhibit
B-3.
Group Two Net WAC: The Net WAC of Group Two.
Group Two Principal Distribution Amount: As of any Distribution
Date, the
amount equal to the lesser of (i) the aggregate Certificate
Principal Balance of
the Class A-2 Certificates and (ii) the product of (x) the Group
Two Principal
Distribution Percentage and (y) the Class A Principal Distribution
Amount;
provided, however, that (A) with respect to any Distribution Date
on which the
Class A 2 Certificates are outstanding and the Certificate
Principal Balances of
the Class A-1 and Class R Certificates is reduced to zero, the
Group One
Principal Distribution Amount in excess of the amount necessary to
reduce the
Certificate Principal Balance of the Class A-1 Certificates and
Class R
Certificates to zero will be applied to increase the Group Two
Principal
Distribution Amount and (B) with respect to any Distribution Date
thereafter,
the Group Two Principal Distribution Amount will equal the Class A
Principal
Distribution Amount.
Group Two Principal Distribution Percentage: With respect to
any
Distribution Date, a fraction expressed as a percentage, the
numerator of which
is the amount of Principal Funds received with respect to Mortgage
Loans in
Group Two and the denominator of which is the amount of Principal
Funds received
from all of the Mortgage Loans in the mortgage pool.
Indenture: An indenture relating to the issuance of notes
guaranteed by the
NIMs Insurer.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan,
the first
Adjustment Date following the origination of such Mortgage
Loan.
Initial Certificate Principal Balance: With respect to any
Certificate, the
Certificate Principal Balance of such Certificate or any
predecessor Certificate
on the Closing Date as set forth in Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate
in
effect prior to the Initial Adjustment Date.
Initial Optional Termination Date: The first Distribution Date on
which the
aggregate Stated Principal Balance of the Mortgage Loans (or if
such Mortgage
Loan is an REO Property, the fair market value of such REO
Property) is equal to
or less than 10% of the aggregate Stated Principal Balance of the
Mortgage Loans
as of the Cut-off Date.
Insurance Policy: With respect to any Mortgage Loan or the
related
Mortgaged Property included in the Trust Fund, any insurance
policy, including
all riders and endorsements thereto in effect with respect to such
Mortgage Loan
or Mortgaged Property, including any replacement policy or policies
for any
insurance policies.
Insurance Proceeds: Proceeds paid in respect of a Mortgage Loan or
the
related Mortgaged Property pursuant to any Insurance Policy or any
other
insurance policy covering such Mortgage Loan or Mortgaged Property,
to the
extent such proceeds are payable to the mortgagee under the
Mortgage, the
Servicer or the Trustee under the deed of trust and are not applied
to the
restoration of the related Mortgaged Property or released either to
the
Mortgagor or to the holder of a senior lien on the related
Mortgaged Property in
accordance with the procedures that the Servicer would follow in
servicing
mortgage loans held for its own account, in each case other than
any amount
included in such Insurance Proceeds in respect of Insured
Expenses.
-40-
<PAGE>
Insured Expenses: Expenses covered by an Insurance Policy or any
other
insurance policy with respect to a Mortgage Loan or the related
Mortgaged
Property.
Interest Carry Forward Amount: Any of the Class A-1 Interest Carry
Forward
Amount, the Class A-2A Interest Carry Forward Amount, the Class
A-2B Interest
Carry Forward Amount, the Class A-2C Interest Carry Forward Amount,
the Class
A-2D Interest Carry Forward Amount, the Class R Interest Carry
Forward Amount,
the Class M-1 Interest Carry Forward Amount, the Class M-2 Interest
Carry
Forward Amount, the Class M-3 Interest Carry Forward Amount, the
Class M-4
Interest Carry Forward Amount, the Class M-5 Interest Carry Forward
Amount, the
Class M-6 Interest Carry Forward Amount, the Class B-1 Interest
Carry Forward
Amount, the Class B-2 Interest Carry Forward Amount, the Class B-3
Interest
Carry Forward Amount or the Class C Interest Carry Forward Amount,
as the case
may be.
Interest Determination Date: With respect to the Offered
Certificates, (i)
for any Accrual Period other than the first Accrual Period, the
second LIBOR
Business Day preceding the commencement of such Accrual Period and
(ii) for the
first Accrual Period, July 23, 2006.
Interest Funds: With respect to any Distribution Date, the sum,
without
duplication, of (1) all scheduled interest due during the related
Due Period and
received before the related Servicer Remittance Date or advanced on
or before
the related Servicer Remittance Date less the Servicing Fee, (2)
all Advances
relating to interest with respect to the Mortgage Loans, (3) all
Compensating
Interest with respect to the Mortgage Loans, (4) Liquidation
Proceeds with
respect to the Mortgage Loans (to the extent such Liquidation
Proceeds relate to
interest) collected during the related Prepayment Period, (5) all
proceeds of
any purchase pursuant to Section 2.02 or 2.03 during the related
Prepayment
Period or pursuant to Section 9.01 not later than the related
Determination Date
(to the extent that such proceeds relate to interest) less the
Servicing Fee and
(6) all Prepayment Charges received with respect to the Mortgage
Loans during
the related Prepayment Period, less (A) all Non-Recoverable
Advances relating to
interest and (B) other amounts reimbursable (including without
limitation
indemnity payments) to the Servicer and the Trustee pursuant to
this Agreement
allocable to interest.
Issuing Entity: Merrill Lynch Mortgage Investors Trust, Series
2006-HE4.
Latest Possible Maturity Date: The latest maturity date for any
Mortgage
Loan in the Trust Fund plus one year.
LIBOR Business Day: Any day on which banks in the City of London,
England,
Chicago, Illinois and New York City, U.S.A. are open and conducting
transactions
in foreign currency and exchange.
LIBOR Certificates: The Class A, Class M and Class B
Certificates.
Liquidated Loan: With respect to any Distribution Date, a
defaulted
Mortgage Loan that either (a) has been liquidated through
deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization
as provided
by applicable law governing the real property subject to the
related Mortgage
and any security agreements and as to which the Servicer has
certified (in
accordance with Section 3.12) in the related Prepayment Period that
it has
received all amounts it expects to receive in connection with such
liquidation
or (b) as to which is not a first lien Mortgage Loan and is
delinquent 180 days
or longer, Servicer has certified in a certificate of an officer of
the Servicer
delivered to the Trustee that it does not believe that there is a
reasonable
likelihood that any further net proceeds will be received or
recovered with
respect to such Mortgage Loan.
-41-
<PAGE>
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in
connection with the partial or complete liquidation of Mortgage
Loans, whether
through trustee's sale, foreclosure sale, sale by the Servicer
pursuant to this
Agreement or otherwise or amounts received in connection with any
condemnation
or partial release of a Mortgaged Property and any other proceeds
received in
connection with an REO Property, less the sum of related
unreimbursed Advances,
Servicing Fees, Servicing Advances and any other expenses related
to such
Mortgage Loan.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the
fraction,
expressed as a percentage, the numerator of which is the original
principal
balance of the related Mortgage Loan and the denominator of which
is the lesser
of (X) the Appraised Value of the related Mortgaged Property and
(Y) the sales
price of the related Mortgaged Property at the time of
origination.
Losses: Any losses, claims, damages, liabilities or expenses
collectively.
Lower Tier REMIC: As described in the Preliminary Statement and
Section
2.07.
Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the
Class
LTA-2A Interest, the Class LTA-2B Interest, the Class LTA-2C
Interest, the Class
LTA-2D Interest, the Class LTM-1 Interest, the Class LTM-2
Interest, the Class
LTM-3 Interest, the Class LTM-4 Interest, the Class LTM-5 Interest,
the Class
LTM-6 Interest, the Class LTB-1 Interest, the Class LTB-2 Interest,
the Class
LTB-3 Interest, the Class LTIX Interest, the Class LTIIX Interest,
the Class
LTII1A Interest, the Class LTII1B Interest, the Class LTII2A
Interest, the Class
LTII2B Interest, the Class LT-IO Interest and the Class LTR
Interest.
Lower Tier REMIC I Marker Interests: Each of the classes of Lower
Tier
REMIC Regular Interests other than the Class LTIX Interest, the
Class LTIIX
Interest, the Class LTII1A Interest, the Class LTII1B Interest, the
Class LTII2A
Interest, the Class LTII2B Interest and the Class LT-IO
Interest.
Lower Tier REMIC II Marker Interests: Each of the Class LTII1A
Interest,
the Class LTII1B Interest, the Class LTII2A Interest and the Class
LTII2B
Interest.
Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC
Interests
other than the Class LTR Interest.
Lower Tier REMIC Subordinated Balance Ratio: The ratio of (i) the
principal
balance of the Class LTII1A Interest to (ii) the principal balance
of the Class
LTII2A Interest that is equal to the ratio of (i) the excess of (A)
the
aggregate Stated Principal Balance of Group One over (B) the
current Certificate
Principal Balance of the Class A-1 and Class R Certificates to (ii)
the excess
of (A) the aggregate Stated Principal Balance of Group Two over (B)
the current
Certificate Principal Balance of the Class A-2 Certificates.
Maximum Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan,
the maximum rate of interest set forth as such in the related
Mortgage Note and
with respect to each Fixed Rate Mortgage Loan, the rate of interest
set forth in
the related Mortgage Note.
Maximum Rate Cap: Any of the Class A-1 Maximum Rate Cap, the Class
A-2
Maximum Rate Cap or the Weighted Average Maximum Rate Cap.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation
organized and existing under the laws of the State of Delaware, or
any successor
thereto.
MERS
Loan: Any Mortgage Loan registered with MERS on the MERS
System.
-42-
<PAGE>
MERS
System: The system of recording transfers of mortgage
electronically
maintained by MERS.
MIN:
The loan number for any MERS Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan,
the minimum rate of interest set forth as such in the related
Mortgage Note.
Minimum Required Overcollateralization Amount: An amount equal to
the
product of (x) 0.50% and (y) the Stated Principal Balance of the
Mortgage Loans
as of the Cut-off Date.
MLML: Merrill Lynch Mortgage Lending, Inc., a Delaware corporation,
or its
successors in interest.
MOM
Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely
as nominee for the originator of such Mortgage Loan and its
successors and
assigns.
Monthly Statement: The statement delivered to the
Certificateholders
pursuant to Section 4.05.
Moody's: Moody's Investors Service, Inc. or any successor in
interest.
Mortgage: With respect to a Mortgage Loan, the mortgage, deed of
trust or
other instrument with all riders thereto creating a first or second
lien or a
first or second priority ownership interest in an estate in fee
simple in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
hereof
pertaining to a particular Mortgage Loan and any additional
documents delivered
to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Group: Either of Group One or Group Two.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
time
amended by the Trustee to reflect the deletion of Deleted Mortgage
Loans and the
addition of Replacement Mortgage Loans pursuant to the provisions
of this
Agreement) transferred to the Trustee as part of the Trust Fund and
from time to
time subject to this Agreement, attached hereto as Exhibits B-1,
B-2 and B-3,
setting forth the following information with respect to each
Mortgage Loan:
(i) the loan
number;
(ii) borrower name and address;
(iii) the unpaid principal balance of the Mortgage Loans;
(iv) the Initial Mortgage Rate;
(v) the original
maturity date and the months remaining before
maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
-43-
<PAGE>
(viii) the first payment due date of the Mortgage Loan;
(ix) the Loan-to-Value Ratio at origination with respect to a
first
lien Mortgage Loan, or the Combined Loan-to-Value Ratio with
respect to a second lien Mortgage Loan;
(x) a code indicating
whether the residential dwelling at the time of
origination was represented to be owner-occupied;
(xi) a code indicating the property type;
(xii) with respect to each Adjustable Rate Mortgage Loan;
(A) the frequency of
each Adjustment Date;
(B) the next
Adjustment Date;
(C) the Maximum
Mortgage Rate;
(D) the Minimum
Mortgage Rate;
(E) the Mortgage Rate
as of the Cut-off Date;
(F) the related
Periodic Rate Cap;
(G) the Gross
Margin;
(H) the lifetime rate
cap;
(xiii) location of the related Mortgaged Property;
(xiv) a code indicating whether a Prepayment Charge is
applicable;
(A) the period during
which such Prepayment Charge is in effect;
(B) the amount of such
Prepayment Charge;
(C) any limitations or
other conditions on the enforceability of
such Prepayment Charge; and
(D) any other
information pertaining to the Prepayment Charge
specified in the related Mortgage Note;
(xv) the Credit Score and date obtained; and
(xvi) the MIN.
Mortgage Loans: Such of the mortgage loans transferred and assigned
to the
Trustee pursuant to the provisions hereof as from time to time are
held as a
part of the Trust Fund (including any REO Property), the mortgage
loans so held
being identified in the Mortgage Loan Schedule, notwithstanding
foreclosure or
other acquisition of title of the related Mortgaged Property. Any
mortgage loan
that was
-44-
<PAGE>
intended by the parties hereto to be transferred to the Trust Fund
as indicated
by such Mortgage Loan Schedule which is in fact not so transferred
for any
reason shall continue to be a Mortgage Loan hereunder until the
Purchase Price
with respect thereto has been paid to the Issuing Entity.
Mortgage Note: The original executed note or other evidence of
indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all
amendments, modifications and attachments thereto with all riders
attached
thereto.
Mortgage Pool: The
aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from
time to time.
Mortgagor: The obligor on a Mortgage Note.
Net
Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum
rate equal to the then current Mortgage Rate less the Servicing Fee
Rate.
Net
Rate: The per annum rate set forth in footnote 8 to the description
of
the Lower Tier REMIC in the Preliminary Statement hereto (such rate
being based
on the weighted average of the interest rates on the SWAP REMIC
Regular
Interests as adjusted and as set forth in such footnote).
Net
Swap Payment: With respect to any Distribution Date, any net
payment
(other than a Swap Termination Payment or Defaulted Swap
Termination Payment)
made by the Supplemental Interest Trust to the Swap Counterparty on
the related
Fixed Rate Payer Payment Date (as defined in the Swap Agreement) or
made by the
Swap Counterparty to the Supplemental Interest Trust on the related
Floating
Rate Payer Payment Date (as defined in the Swap Agreement). In each
case, the
Net Swap Payment shall not be less than zero.
Net WAC: With respect
to any Distribution Date and for any Mortgage Group,
the weighted average Net Mortgage Rate for the Mortgage Loans in
such Mortgage
Group calculated based on the respective Net Mortgage Rates and the
Stated
Principal Balances of such Mortgage Loans as of the preceding
Distribution Date
(or, in the case of the first Distribution Date, as of the Cut-off
Date).
NIM
Notes: The notes to be issued pursuant to the Indenture.
NIMs
Insurer: Any of the one or more insurers, if any, that is
guaranteeing
certain payments under any NIM Notes; provided, that upon the
payment in full of
the NIM Notes, all rights of the NIMs Insurer hereunder shall
terminate.
NIMs
Insurer Default: As defined in Section 10.13.
Non-Recoverable Advance: Any portion of an Advance previously made
or
proposed to be made by the Servicer that, in the good faith
judgment of the
Servicer, will not or, in the case of a current delinquency, would
not, be
ultimately recoverable by the Servicer from the related Mortgagor,
related
Liquidation Proceeds or otherwise related to the Mortgage
Loans.
Non-Recoverable Servicing Advance: Any portion of a Servicing
Advance
previously made or proposed to be made by the Servicer that, in the
good faith
judgment of the Servicer, will not or, in the
-45-
<PAGE>
case of a current Servicing Advance, would not, be ultimately
recoverable by the
Servicer from the related Mortgagor, related Liquidation Proceeds
or otherwise
related to the Mortgage Loans.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A, Class M and Class B
Certificates.
Officer's Certificate: A certificate (1) signed by the Chairman of
the
Board, the Vice Chairman of the Board, the President, a vice
president (however
denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one
of the assistant treasurers or assistant secretaries of the
Depositor, or
Trustee, the Servicer (or any other officer customarily performing
functions
similar to those performed by any of the above designated officers
and to whom,
with respect to a particular matter, such matter is referred
because of such
officer's knowledge of and familiarity with a particular subject)
or (2), if
provided for in this Agreement, signed by a Servicing Officer, as
the case may
be, and delivered to the Depositor, the Servicer or the Trustee, as
the case may
be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
determined by
the Trustee on the related Interest Determination Date on the basis
of (a) the
offered rates for one-month United States dollar deposits, as such
rates appear
on Telerate page 3750, as of 11:00 a.m. (London time) on such
Interest
Determination Date or (b) if such rate does not appear on Telerate
Page 3750 as
of 11:00 a.m. (London time), the offered rates of the Reference
Banks for
one-month United States dollar deposits, as such rates appear on
the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest
Determination
Date. If One-Month LIBOR is determined pursuant to clause (b)
above, on each
Interest Determination Date, One-Month LIBOR for the related
Accrual Period will
be established by the Trustee as follows:
(i) If on such
Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the arithmetic mean of such
offered
quotations (rounded upwards if necessary to the nearest
whole multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two
Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the higher of (i) One-Month
LIBOR
as determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be
counsel for
the Depositor or the Servicer reasonably acceptable to each
addressee of such
opinion; provided, however, that with respect to Section 6.04 or
10.01, or the
interpretation or application of the REMIC Provisions, such counsel
must (1) in
fact be independent of the Depositor or the Servicer, (2) not have
any direct
financial interest in the Depositor or the Servicer or in any
Affiliate of
either such party, and (3) not be connected with the Depositor or
the Servicer
as an officer, employee, promoter, underwriter, trustee, partner,
director or
person performing similar functions.
Optional Termination: The termination of the Trust Fund hereunder
pursuant
to clause (a) of Section 9.01 hereof.
Optional Termination Amount: The repurchase price received by the
Trustee
in connection with any repurchase of all of the Mortgage Loans
pursuant to
Section 9.01.
-46-
<PAGE>
Optional Termination Price: On any date after the Initial
Optional
Termination Date an amount equal to the sum of (i) the then
aggregate
outstanding Stated Principal Balance of the Mortgage Loans (or, if
such Mortgage
Loan is an REO Property, the fair market value of such REO
Property) plus
accrued interest thereon at the applicable Mortgage Rate through
the Due Date in
the month in which the proceeds of the auction will be distributed
on the
Certificates; (ii) any unreimbursed fees and out-of-pocket costs
and expenses
owed to the Trustee or the Servicer and all unreimbursed Advances
and Servicing
Advances, in each case incurred by such party in the performance of
its
obligations; (iii) any unreimbursed costs, penalties and/or damages
incurred by
the Trust Fund in connection with any violation relating to any of
the Mortgage
Loans of any predatory or abusive lending law; and (iv) any unpaid
Net Swap
Payments and any Swap Termination Payment owed to the Swap
Counterparty.
OTS:
The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and
authenticated under
this Agreement except: (1) Certificates theretofore canceled by the
Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in
exchange for
which or in lieu of which other Certificates have been executed by
the Trustee
and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage
Loan
with a Stated Principal Balance greater than zero that was not the
subject of a
Principal Prepayment in full, and that did not become a Liquidated
Loan, prior
to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the
excess
of (1) the Stated Principal Balance of the Mortgage Loans over (2)
the
Certificate Principal Balance of the Certificates (other than the
Class P
Certificates and the Class C Certificates).
Ownership Interest: As to any Certificate, any ownership interest
in such
Certificate including any interest in such Certificate as the
Holder thereof and
any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through Rate: With respect to any Class of Certificates,
the
corresponding Pass-Through Rate for such Class of Certificates.
Percentage Interest: With respect to:
(i) any Class, the
percentage interest in the undivided beneficial
ownership interest evidenced by such Class which shall be equal
to the Certificate Principal Balance of such Class divided by
the
aggregate Certificate Principal Balance of all Classes; and
(ii) any Certificate, the Percentage Interest evidenced thereby of
the
related Class shall equal the percentage obtained by dividing
the
Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of such Class; except that in
the case of any Class P Certificates, the Percentage Interest
with respect to such Certificate shown on the face of such
Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related
Mortgage Note, the provision therein that limits permissible
increases and
decreases in the Mortgage Rate on any Adjustment Date.
-47-
<PAGE>
Permitted Activities: The primary activities of the trust created
pursuant
to this Agreement which shall be:
(i) holding the
Mortgage Loans transferred from the Depositor and
other assets of the Issuing Entity, including the Cap Contracts
and the Supplemental Interest Trust subtrust, which in turn
holds
the Swap Agreement, and any credit enhancement and passive
derivative financial instruments that pertain to beneficial
interests issued or sold to parties other than the Depositor,
its
Affiliates, or its agents;
(ii) issuing Certificates and other interests in the assets of
the
Trust Fund;
(iii) through the appropriate subtrust, as applicable,
receiving
collections on the Mortgage Loans and the Swap Agreement and
making payments on such Certificates and interests in
accordance
with the terms of this Agreement; and
(iv) engaging in other activities that are necessary or incidental
to
accomplish these limited purposes, which activities cannot be
contrary to the status of the Issuing Entity as a qualified
special purpose entity under existing accounting literature.
Permitted Investments: At any time, any one or more of the
following
obligations and securities:
(i) obligations of the
United States or any agency thereof, provided
the timely payment of such obligations is backed by the full
faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by any state
of
the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates;
(iii) commercial or finance company paper, other than commercial
or
finance company paper issued by the Depositor, the Trustee or
any
of their Affiliates, which is then receiving the highest
commercial or finance company paper rating of each such Rating
Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers'
acceptances (other than banker's acceptances issued by the
Trustee or any of its Affiliates) issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to
supervision
and examination by federal and/or state banking authorities,
provided that the commercial paper and/or long term unsecured
debt obligations of such depository institution or trust
company
are then rated one of the two highest long-term and the highest
short-term ratings of each such Rating Agency for such
securities;
(v) demand or time
deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that
such deposits are
fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance
company or other corporation rated in the two highest long-term
or the highest short-term ratings of each Rating Agency
containing, at the time of the issuance of such
-48-
<PAGE>
agreements, such terms and conditions as will not result in the
downgrading or withdrawal of the rating then assigned to the
Certificates by any such Rating Agency as evidenced by a letter
from each Rating Agency;
(vii) repurchase obligations with respect to any security described
in
clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (v) above;
(viii) securities (other than stripped bonds, stripped coupons
or
instruments sold at a purchase price in excess of 115% of the
face amount thereof) bearing interest or sold at a discount
issued by any corporation, other than the Trustee or any of its
Affiliates, incorporated under the laws of the United States or
any state thereof which, at the time of such investment, have
one
of the two highest long term ratings of each Rating Agency;
(ix) interests in any money market fund (including those managed
or
advised by the Trustee or its Affiliates), which at the date of
acquisition of the interests in such fund and throughout the
time
such interests are held in such fund has the highest applicable
long term rating by each Rating Agency rating such fund; and
(x) short term
investment funds sponsored by any trust company or
national banking association incorporated under the laws of the
United States or any state thereof, other than the Trustee or
any
of its Affiliates, which on the date of acquisition has been
rated by each such Rating Agency in their respective highest
applicable rating category;
provided, that no such instrument shall be a Permitted Investment
if such
instrument (i) evidences the right to receive interest only
payments with
respect to the obligations underlying such instrument, (ii) is
purchased at a
premium or above par or (iii) is purchased at a deep discount;
provided,
further, that no such instrument shall be a Permitted Investment
(A) if such
instrument evidences principal and interest payments derived from
obligations
underlying such instrument and the interest payments with respect
to such
instrument provide a yield to maturity of greater than 120% of the
yield to
maturity at par of such underlying obligations, or (B) if it may be
redeemed at
a price below the purchase price (the foregoing clause (B) not to
apply to
investments in units of money market funds pursuant to clause (ix)
above); and
provided, further, (I) that no amount beneficially owned by any
REMIC
(including, without limitation, any amounts collected by the
Servicer but not
yet deposited in the Collection Account) may be invested in
investments (other
than money market funds) treated as equity interests for Federal
income tax
purposes, unless the Servicer shall receive an Opinion of Counsel,
at the
expense of the party requesting that such investment be made, to
the effect that
such investment will not adversely affect the status of the any
REMIC provided
for herein as a REMIC under the Code or result in imposition of a
tax on the
Issuing Entity or any REMIC provided for herein and (II) each such
investment
must be a "permitted investment" within the meaning of Section
860G(a)(5) of the
Code. Permitted Investments that are subject to prepayment or call
may not be
purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United States,
any
State or political subdivision thereof, or any agency or
instrumentality of any
of the foregoing, (ii) a foreign government, International
Organization or any
agency or instrumentality of either of the foregoing, (iii) an
organization
(except certain farmers' cooperatives described in Section 521 of
the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the
tax imposed
by Section 511 of the Code on unrelated business taxable income) on
any excess
inclusions (as defined in Section 860E(c)(1) of the
-49-
<PAGE>
Code) with respect to the Class R Certificate, (iv) rural electric
and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, and
(v) a Person
that is not a citizen or resident of the United States, a
corporation or
partnership (or other entity treated as a corporation or
partnership for United
States federal income tax purposes) created or organized in or
under the laws of
the United States or any State thereof or the District of Columbia
or an estate
whose income from sources without the United States is includable
in gross
income for United States federal income tax purposes regardless of
its
connection with the conduct of a trade or business within the
United States, or
a trust if a court within the United States is able to exercise
primary
supervision over the administration of the trust and one or more
United States
persons have authority to control all substantial decisions of the
trust,
unless, in the case of this clause (v), such Person has furnished
the transferor
and the Trustee with a duly completed Internal Revenue Service Form
W-8ECI or
applicable successor form. The terms "United States," "State" and
"International
Organization" shall have the meanings set forth in Section 7701 of
the Code. A
corporation will not be treated as an instrumentality of the United
States or of
any State thereof for these purposes if all of its activities are
subject to tax
and, with the exception of the Federal Home Loan Mortgage
Corporation, a
majority of its board of directors is not selected by such
government unit.
Person: Any individual, corporation, partnership, limited
liability
company, joint venture, association, joint-stock company, trust,
unincorporated
organization or government, or any agency or political subdivision
thereof.
Pool
Stated Principal Balance: As to any Distribution Date, the
aggregate
of the Stated Principal Balances, as of such Distribution Date, of
the Mortgage
Loans that were Outstanding Mortgage Loans as of such date.
Preference Claim: The meaning set forth in Section 4.04(j)
hereof.
Preliminary Statement: The paragraphs in the preamble to this
Agreement
that precede the heading "The SWAP REMIC."
Prepayment Assumption: A rate of prepayment, as described in the
Prospectus
Supplement in the definition of "Modeling Assumptions," relating to
the Offered
Certificates.
Prepayment Charges: Any prepayment premium or charge payable by a
Mortgagor
in connection with any Principal Prepayment on a Mortgage Loan
pursuant to the
terms of the related Mortgage Note or Mortgage, as applicable.
Prepayment Interest Excess: With respect to any Servicer Remittance
Date,
for each Mortgage Loan that was the subject of a Principal
Prepayment in full
during the portion of the related Prepayment Period occurring
between the first
day of the calendar month in which such Servicer Remittance Date
occurs and the
last day of the related Prepayment Period, an amount equal to
interest (to the
extent received) at the applicable Net Mortgage Rate on the amount
of such
Principal Prepayment for the number of days commencing on the first
day of the
calendar month in which such Servicer Remittance Date occurs and
ending on the
date on which such Principal Prepayment is so applied.
Prepayment Interest Shortfall: With respect to any Distribution
Date, for
each Mortgage Loan that was the subject of a Principal Prepayment
in full (other
than a Principal Prepayment in full resulting from the purchase of
a Mortgage
Loan pursuant to Section 2.02, 2.03 or 9.01 hereof and other than a
Principal
Prepayment in full on a Mortgage Loan received during the period
from and
including the first day to and including the 14th day of the month
of such
Distribution Date), the amount, if any, by which (i) one month's
interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of
such
-50-
<PAGE>
Mortgage Loan as of the preceding Distribution Date exceeds (ii)
the amount of
interest paid or collected in connection with such Principal
Prepayment.
Prepayment Period: With respect to any Distribution Date, the
period
beginning with the opening of business on the 15th day of the
calendar month
preceding the month in which such Distribution Date occurs (or in
the case of
the first Distribution Date, beginning with the opening of business
on the
Cut-off Date) and ending on the close of business on the 14th day
of the month
in which such Distribution Date occurs.
Principal Distribution Amount: With respect to each Distribution
Date, the
sum of (i) the Principal Funds for such Distribution Date and (ii)
any Extra
Principal Distribution Amount for such Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any
Distribution
Date, the sum, without duplication, of (1) the scheduled principal
due during
the related Due Period and received before the related Servicer
Remittance Date
or advanced on or before the related Servicer Remittance Date, (2)
prepayments
in full collected in the related Prepayment Period, (3) the Stated
Principal
Balance of each Mortgage Loan that was purchased by the Depositor
during the
related Prepayment Period or, in the case of a purchase pursuant to
Section
9.01, on the Business Day prior to such Distribution Date, (4) the
amount, if
any, by which the aggregate unpaid principal balance of any
Replacement Mortgage
Loan is less than the aggregate unpaid principal of the related
Deleted Mortgage
Loans delivered by the Sponsor in connection with a substitution of
a Mortgage
Loan pursuant to Section 2.03(c), (5) all Liquidation Proceeds
collected during
the related Prepayment Period (to the extent such Liquidation
Proceeds relate to
principal and represent payment in full), (6) all Subsequent
Recoveries received
during the related Due Period and (7) all other collections and
recoveries in
respect of principal during the related Due Period, less (A) all
Non-Recoverable
Advances relating to principal with respect to the Mortgage Loans
and (B) other
amounts reimbursable (including without limitation indemnity
payments) to the
Servicer and the Trustee pursuant to this Agreement allocable to
principal.
Principal Prepayment: Any Mortgagor payment or other recovery of
(or
proceeds with respect to) principal on a Mortgage Loan (including
Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03 and 9.01 hereof)
that is
received or recovered in advance of its scheduled Due Date and is
not
accompanied by an amount as to interest representing scheduled
interest due on
any date or dates in any month or months subsequent to the month of
prepayment.
Partial Principal Prepayments shall be applied by the Servicer in
accordance
with the terms of the related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated July 21,
2006,
relating to the public offering of the Offered Certificates.
PUD:
A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to
be
repurchased by the Sponsor or the Transferor pursuant to Section
2.02 or 2.03
hereof, an amount equal to the sum of (i) 100% of the unpaid
principal balance
of the Mortgage Loan as of the date of such purchase together with
any
unreimbursed Servicing Advances, (ii) accrued interest thereon at
the applicable
Mortgage Rate from (a) the date through which interest was last
paid by the
Mortgagor to (b) the Due Date in the month in which the Purchase
Price is to be
distributed to Certificateholders and (iii) any unreimbursed costs,
penalties
and/or damages incurred by the Issuing Entity in connection with
any violation
relating to such Mortgage Loan of any predatory or abusive lending
law. With
respect to any REO Property purchased by the Servicer pursuant to
Section
3.12(c) hereof, an amount equal to the fair market value of such
REO Property,
as determined in good faith by the Servicer.
-51-
<PAGE>
QIB:
A "qualified institutional buyer" within the meaning of Rule
144A.
Rating Agency: Either of S&P or Moody's. If any such
organization or its
successor is no longer in existence, "Rating Agency" shall be a
nationally
recognized statistical rating organization, or other comparable
Person,
designated by the Depositor, notice of which designation shall be
given to the
Trustee. References herein to a given rating category of a Rating
Agency shall
mean such rating category without giving effect to any
modifiers.
Rating Agency Condition: As defined in the Swap Agreement.
Realized Loss: With respect to (1) a Liquidated Loan, the amount,
if any,
by which the Stated Principal Balance and accrued interest thereon
at the Net
Mortgage Rate exceeds the amount actually recovered by the Servicer
with respect
thereto (net of reimbursement of Advances and Servicing Advances)
at the time
such Mortgage Loan became a Liquidated Loan or (2) with respect to
a Mortgage
Loan which is not a Liquidated Loan, any amount of principal that
the Mortgagor
is no longer legally required to pay (except for the extinguishment
of debt that
results from the exercise of remedies due to default by the
Mortgagor).
Record Date: With respect to the first Distribution Date, the
Closing Date.
With respect to any other Distribution Date, the close of business
on the last
Business Day of the month preceding the month in which the
applicable
Distribution Date occurs.
Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A.,
Citibank,
N.A., Wells Fargo Bank, N.A. and NatWest, N.A.; provided that if
any of the
foregoing banks are not suitable to serve as a Reference Bank, then
any leading
banks selected by the Trustee which are engaged in transactions in
Eurodollar
deposits in the international Eurocurrency market (i) with an
established place
of business in London, England, (ii) whose quotations appear on the
Reuters
Screen LIBO Page on the relevant Interest Determination Date and
(iii) which
have been designated as such by the Servicer.
Regular Certificate: Any one of the Class A, Class M and Class
B
Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from
time to time,
and subject to such clarification and interpretation as have been
provided by
the Commission in the adopting release (Asset-Backed Securities,
Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005)) or by
the staff of
the Commission, or as may be provided by the Commission or its
staff from time
to time.
Regulation S: Regulation S promulgated under the Securities Act or
any
successor provision thereto, in each case as the same may be
amended from time
to time; and all references to any rule, section or subsection of,
or definition
or term contained in, Regulation S means such rule, section,
subsection,
definition or term, as the case may be, or any successor thereto,
in each case
as the same may be amended from time to time.
Regulation S Book-Entry Certificates: Certificates sold in
offshore
transactions in reliance on Regulation S in the form of one or more
permanent
global Certificates in definitive, fully registered form without
interest
coupons, which shall be deposited on behalf of the subscribers for
such
Certificates represented thereby with the Trustee, as custodian for
DTC and
registered in the name of a nominee of DTC.
Related Certificates: For each interest in the Upper Tier REMIC,
the Class
of Certificates listed on the same row in the table entitled "Upper
Tier REMIC"
in the Preliminary Statement.
-52-
<PAGE>
Relief Act: The Servicemembers Civil Relief Act or any similar
state or
local law.
Relief Act Shortfall: With respect to any Distribution Date and
any
Mortgage Loan, any reduction in the amount of interest or principal
collectible
on such Mortgage Loan for the most recently ended calendar month as
a result of
the application of the Relief Act.
REMIC: A "real estate mortgage investment conduit" within the
meaning of
section 860D of the Code. References herein to "the REMICs" or "a
REMIC" shall
mean any of (or, as the context requires, all of) the SWAP REMIC,
the Lower Tier
REMIC and the Upper Tier REMIC.
REMIC Pass-Through Rate: In the case of a Class of the Class A,
Class M and
Class B Certificates, the Upper Tier REMIC Net WAC Cap for the
Corresponding
REMIC Regular Interest.
REMIC Provisions: Provisions of the federal income tax law relating
to real
estate mortgage investment conduits, which appear at sections 860A
through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions,
and proposed,
temporary and final regulations and published rulings, notices and
announcements
promulgated thereunder, as the foregoing may be in effect from time
to time as
well as provisions of applicable state laws.
REMIC Regular Interests: Each of the interests in the Upper Tier
REMIC as
set forth in the Preliminary Statement other than the Residual
Interest.
REMIC SWAP Rate: For each Distribution Date (and the related
Accrual
Period), a per annum rate equal to the Fixed Rate under the Swap
Agreement for
such Distribution Date, as set forth in the Prospectus
Supplement.
Remittance Report: As defined in Section 4.04(j) hereof.
REO
Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted
Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the
Depositor for
a Deleted Mortgage Loan, which must, on the date of such
substitution, as
confirmed in a Request for Release, substantially in the form of
Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal
portion of the
Scheduled Payment due in the month of substitution, not in excess
of, and not
less than 90% of the Stated Principal Balance of the Deleted
Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate
not less than
or no more than 1% per annum higher than the Mortgage Rate of the
Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage
Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower
than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum
Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage
Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate
Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per
annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit
conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F)
currently be accruing
interest at a rate not more than 1% per annum higher or lower than
that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or
credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value
Ratio (or
Combined Loan-to-Value Ratio, in the case of the Mortgage Loans in
a second lien
position) no higher than that of the Deleted Mortgage Loan; (5)
have a remaining
term to maturity no greater than (and not more than one year less
than) that of
the Deleted Mortgage Loan; (6) provide for a Prepayment Charge on
terms
substantially similar to those of the Prepayment Charge, if any, of
the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted
Mortgage Loan; (8)
constitute the same occupancy
-53-
<PAGE>
type as the Deleted Mortgage Loan; and (9) comply with each
representation and
warranty set forth in Section 2.03 hereof.
Request for Release: The Request for Release of Documents submitted
by the
Servicer to the Trustee, substantially in the form of Exhibit I
hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance
policy that is required to be maintained from time to time under
this Agreement.
Required Percentage: As of any Distribution Date following the
Stepdown
Date, the quotient of (1) the excess of (A) the aggregate Stated
Principal
Balance of the Mortgage Loans as of such Distribution Date, over
(B) the
Certificate Principal Balance of the most senior Class of
Certificates
outstanding as of such Distribution Date, prior to giving effect
to
distributions to be made on such Distribution Date and (2) the
aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution
Date.
Requirements: Any rules or regulations promulgated pursuant to
the
Sarbanes-Oxley Act of 2002 (as such may be amended from time to
time).
Reserve Interest Rate: With respect to any Interest Determination
Date, the
rate per annum that the Trustee determines to be (1) the arithmetic
mean
(rounded upwards if necessary to the nearest whole multiple of
0.03125%) of the
one-month United States dollar lending rates which New York City
banks selected
by the Trustee are quoting on the relevant Interest Determination
Date to the
principal London offices of leading banks in the London interbank
market or (2)
in the event that the Trustee can determine no such arithmetic
mean, the lowest
one-month United States dollar lending rate which New York City
banks selected
by the Trustee are quoting on such Interest Determination Date to
leading
European banks.
Residual Interest: An interest in the Upper Tier REMIC that is
entitled to
all distributions of principal and interest on the Class R
Certificate other
than distributions in respect of the Class SWR Interest and Class
LTR Interest
and distributions on the Class R Certificate in respect of Excess
Interest.
Responsible Officer: When used with respect to the Trustee or the
Servicer,
any officer of the Trustee or the Servicer with direct
responsibility for the
administration of this Agreement and any other officer to whom,
with respect to
a particular matter, such matter is referred because of such
officer's knowledge
of and familiarity with the particular subject.
Reuters Screen LIBO Page: The display designated as page "LIBO" on
the
Reuters Monitor Money Rates Service (or such other page as may
replace such LIBO
page on that service) for the purpose of displaying London
interbank offered
rates of major banks.
S&P: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., or
any successor in interest.
Sale
Agreement: The Mortgage Loan Sale and Assignment Agreement dated as
of
July 1, 2006, between the Depositor and the Sponsor.
Sarbanes-Oxley Certification: Has the meaning set forth in Section
3.20.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan
due on
any Due Date allocable to principal and/or interest on such
Mortgage Loan.
-54-
<PAGE>
Securities Act: The Securities Act of 1933, as amended.
Servicer: Wilshire Credit Corporation, a Nevada corporation, or
its
successor in interest.
Servicer Advance Date: As to any Distribution Date, the related
Servicer
Remittance Date.
Servicer Remittance Date: With respect to any Distribution Date,
the later
of two Business Days after the 15th day of the month in which such
Distribution
Date occurs and the 18th day (or if such day is not a Business Day,
the next
preceding Business Day) of the month in which such Distribution
Date occurs.
Servicing Advances: All customary, reasonable and necessary "out of
pocket"
costs and expenses incurred in the performance by the Servicer of
its servicing
obligations hereunder, including, but not limited to, the cost of
(1) the
preservation, inspection, restoration and protection of a Mortgaged
Property,
including without limitation advances in respect of real estate
taxes and
assessments, (2) any collection, enforcement or judicial
proceedings, including
without limitation foreclosures, collections and liquidations, (3)
the
conservation, management, sale and liquidation of any REO Property,
(4)
executing and recording instruments of satisfaction, deeds of
reconveyance,
substitutions of trustees on deeds of trust or Assignments of
Mortgage to the
extent not otherwise recovered from the related Mortgagors or
payable under this
Agreement, (5) correcting errors of prior servicers; costs and
expenses charged
to the Servicer by the Trustee; tax tracking; title research;
flood
certifications; and lender paid mortgage insurance, (6) obtaining
or correcting
any legal documentation required to be included in the Mortgage
Files and
reasonably necessary for the Servicer to perform its obligations
under this
Agreement and (7) compliance with the obligations under Sections
3.01 and 3.10.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing Fee: As to each Mortgage Loan and any Distribution Date,
an
amount equal to the product of (x) the Servicing Fee Rate and (y)
the Stated
Principal Balance of such Mortgage Loan as of the preceding
Distribution Date
or, in the event of any payment of interest that accompanies a
Principal
Prepayment in full made by the Mortgagor, interest at the Servicing
Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the
preceding
Distribution Date for the period covered by such payment of
interest.
Servicing Fee Rate: 0.50% per annum for each Mortgage Loan.
Servicing Officer: Any officer of the Servicer involved in, or
responsible
for, the administration and servicing of the Mortgage Loans whose
name and
facsimile signature appear on a list of servicing officers
furnished to the
Trustee by the Servicer on the Closing Date pursuant to this
Agreement, as such
lists may from time to time be amended.
Servicing Rights Pledgee: One or more lenders, selected by the
Servicer, to
which the Servicer may pledge and assign all of its right, title
and interest
in, to and under this Agreement.
Servicing Transfer Costs: In the event that the Servicer does not
reimburse
the Trustee under this Agreement, all costs associated with the
transfer of
servicing from the predecessor Servicer, including, without
limitation, any
costs or expenses associated with the termination of the
predecessor Servicer,
the appointment of a successor servicer, the complete transfer of
all servicing
data and the completion, correction or manipulation of such
servicing data as
may be required by the Trustee or any successor
-55-
<PAGE>
servicer to correct any errors or insufficiencies in the servicing
data or
otherwise to enable the Trustee or successor servicer to service
the Mortgage
Loans properly and effectively.
SFAS
140: Statement of Financial Accounting Standard No. 140,
Accounting
for Transfers and Servicing of Financial Assets and Extinguishments
of
Liabilities dated September 2000, published by the Financial
Accounting
Standards Board of the Financial Accounting Foundation.
Significance Estimate: With respect to any Distribution Date, and
in
accordance with Item 1115 of Regulation AB, shall be an amount
determined based
on the reasonable good-faith estimate by the Depositor or its
Affiliate (and
reported to the Trustee) of the aggregate maximum probable exposure
of the
outstanding Certificates to the Swap Agreement.
Significance Percentage: With respect to any Distribution Date, and
in
accordance with Item 1115 of Regulation AB, shall be a percentage
equal to the
Significance Estimate divided by the aggregate outstanding
Certificate Principal
Balance of the Certificates, prior to the distribution of the
Principal
Distribution Amount on such Distribution Date.
Sponsor: Merrill Lynch Mortgage Lending, Inc., a Delaware
corporation, or
its successor in interest.
Startup Day: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or
related REO
Property (1) as of the Cut-off Date, the Cut-off Date Principal
Balance thereof,
and (2) as of any Distribution Date, such Cut-off Date Principal
Balance, minus
the sum of (A) the principal portion of the Scheduled Payments (x)
due with
respect to such Mortgage Loan during each Due Period ending prior
to such
Distribution Date and (y) that were received by the Servicer as of
the close of
business on the Determination Date related to such Distribution
Date or with
respect to which Advances were made on the Servicer Advance Date
prior to such
Distribution Date and (B) all Principal Prepayments with respect to
such
Mortgage Loan received on or prior to the last day of the related
Prepayment
Period, and all Liquidation Proceeds to the extent applied by the
Servicer as
recoveries of principal in accordance with Section 3.12 with
respect to such
Mortgage Loan, that were received by the Servicer as of the close
of business on
the last day of the related Due Period. Notwithstanding the
foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be
zero.
Stepdown Date: The earlier of: (A) the first Distribution Date on
which the
aggregate Certificate Principal Balance of the Class A Certificates
has been
reduced to zero; and (B) the later to occur of (1) the Distribution
Date in
August 2009 or (2) the first Distribution Date on which (A) the
Class A
Certificate Principal Balance (reduced by the Principal Funds with
respect to
such Distribution Date) is less than or equal to (B) 46.40% of the
aggregate
Stated Principal Balances of the Mortgage Loans as of such
Distribution Date.
Stepdown Required Loss Percentage: For any Distribution Date,
the
applicable percentage for such Distribution Date set forth in the
following
table:
<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN STEPDOWN
REQUIRED LOSS PERCENTAGE
------------------------------
---------------------------------
<S>
<C>
August 2008 -- July 2009
1.65% with respect to August 2008,
plus an additional 1/12th of 2.00% for
each month thereafter
</TABLE>
-56-
<PAGE>
<TABLE>
<S>
<C>
August 2009 -- July 2010
3.65% with respect to August 2009,
plus an additional 1/12th of 2.05% for
each month thereafter
August 2010 -- July 2011
5.70% with respect to August 2010,
plus an additional 1/12th of 1.65% for
each month thereafter
August 2011 -- July 2012
7.35% with respect to August 2011,
plus an additional 1/12th of 0.85% for
each month thereafter
August 2012 and thereafter
8.20%
</TABLE>
Stepdown Trigger Event: With respect to the Certificates on or
after the
Stepdown Date, a Distribution Date on which (1) the quotient of (A)
the
aggregate Stated Principal Balance of all Mortgage Loans that are
60 or more
days Delinquent measured on a rolling three month basis (including,
for the
purposes of this calculation, Mortgage Loans in foreclosure and REO
Properties
and Mortgage Loans with respect to which the applicable Mortgagor
is in
bankruptcy) and (B) the Stated Principal Balance of the Mortgage
Loans as of the
preceding Servicer Remittance Date, equals or exceeds the product
of (i) 29.75%
and (ii) the Required Percentage or (2) the quotient (expressed as
a percentage)
of (A) the aggregate Realized Losses incurred from the Cut-off Date
through the
last day of the calendar month preceding such Distribution Date and
(B) the
aggregate principal balance of the Mortgage Loans as of the Cut-off
Date exceeds
the Stepdown Required Loss Percentage.
Subcontractor: Any outsourcer that performs one or more discrete
functions
identified in Item 1122(d) of Regulation AB with respect to 5% or
more of the
Mortgage Loans under the direction or authority of a Servicer
(measured by
aggregate Stated Principal Balance of the Mortgage Loans, annually
at the
commencement of the calendar year prior to the year in which an
Assessment of
Compliance is required to be delivered, multiplied by a fraction,
the numerator
of which is the number of months during which such Subcontractor
performs such
discrete functions and the denominator of which is 12, or, in the
case of the
year in which the Closing Date occurs, the number of months elapsed
in such
calendar year).
Subordinate Certificates: Each of the Class M and Class B
Certificates.
Subordinate Certificates Cap Contract: The master agreement, credit
support
annex and confirmation between the Trustee on behalf of the
Supplemental
Interest Trust and the Cap Contract Counterparty (in the form of
Exhibit M-3
hereto).
Subordinate Certificates Cap Contract Notional Balance: With
respect to any
Distribution Date, the Subordinate Certificates Cap Contract
Notional Balance
set forth for such Distribution Date in the Subordinate
Certificates One-Month
LIBOR Cap Table attached hereto as Exhibit N-3.
Subsequent Recovery: Any amount received on a Mortgage Loan (net of
amounts
reimbursed to the Servicer related to Liquidated Mortgage Loans)
subsequent to
such Mortgage Loan being determined to be a Liquidated Mortgage
Loan.
Sub-Servicer: Any Person that services Mortgage Loans on behalf of
the
Servicer pursuant to a Subservicing Agreement and is responsible
for the
performance of the material servicing functions required to be
performed by the
Servicer under this Agreement that are identified in Item 1122(d)
of Regulation
AB with respect to 10% or more of the Mortgage Loans under the
direction or
authority of the Servicer (measured by aggregate Stated Principal
Balance of the
Mortgage Loans, annually at the
-57-
<PAGE>
commencement of the calendar year prior to the year in which an
Assessment of
Compliance is required to be delivered, multiplied by a fraction,
the numerator
of which is the number of months during which such Subservicer
services the
related Mortgage Loans and the denominator of which is 12, or, in
the case of
the year in which the Closing Date occurs, the number of months
elapsed in such
calendar year). Any subservicer shall meet the qualifications set
forth in
Section 3.02.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant
to Section 2.03(c).
Supplemental Interest Trust: The separate trust, established
pursuant to
Section 4.04(l) of this Agreement and held by the Trustee for the
benefit of the
holders of the Certificates as a segregated subtrust of the Trust
Fund, in which
the Swap Agreement will be held, out of which any Swap Termination
Payments or
Net Swap Payments owed to the Swap Counterparty will be paid,
certain
distributions to Certificateholders will be made, and into which
any Swap
Termination Payments or Net Swap Payments received from the Swap
Counterparty
will be deposited as set forth in Section 4.04 hereof.
Swap
Agreement: The swap agreement, dated as of July 25, 2006, between
the
Swap Counterparty and the Supplemental Interest Trust evidenced by
the master
agreement, credit support annex and confirmation.
Swap
Counterparty: Credit Suisse International, or any successor
counterparty who meets the requirements set forth in the Swap
Agreement.
Swap
LIBOR: With respect to any Distribution Date (and the related
Accrual
Period) the product of (i) the Floating Rate Option (as defined in
the Swap
Agreement for the related Swap Payment Date), (ii) two and (iii)
the quotient of
(a) the actual number of days in the Accrual Period for the Lower
Tier REMIC
Interests divided by (b) 30.
Swap
Payment Date: For so long as the Swap Agreement is in effect or
amounts remain unpaid thereunder, the second Business Day (as
defined in the
Swap Agreement) immediately preceding each Distribution Date.
SWAP
REMIC: As described in the Preliminary Statement and Section
2.07.
SWAP
REMIC Interests: Each of the interests in the SWAP REMIC as set
forth
in the Preliminary Statement.
SWAP
REMIC Regular Interests: Each of the SWAP REMIC Interests other
than
the Class SWR Interest.
Swap
Termination Payment: Any payment payable by the Supplemental
Interest
Trust or the Swap Counterparty upon termination of the Swap
Agreement.
Tax
Matters Person: The Person designated as "tax matters person" in
the
manner provided under Treasury regulation Section 1.860F-4(d) and
Treasury
regulation Section 301.6231(a)(7)-1.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest
in a Certificate.
-58-
<PAGE>
Transfer Agreement: Each document set out on Exhibit J hereto
pursuant to
which the Sponsor acquired any Mortgage Loan from the Transferor of
such
Mortgage Loan.
Transferor: Each originator of a Mortgage Loan.
Trust Fund: The corpus of the Issuing Entity (the "Merrill Lynch
Mortgage
Investors Trust, Series 2006-HE4") created hereunder consisting of
(i) the
Mortgage Loans and all interest and principal received on or with
respect
thereto on and after the Cut-off Date to the extent not applied in
computing the
Cut-off Date Principal Balance thereof, exclusive of interest not
required to be
deposited in the Collection Account; (ii) the Collection Account
and the
Certificate Account and all amounts deposited therein pursuant to
the applicable
provisions of this Agreement; (iii) property that secured a
Mortgage Loan and
has been acquired by foreclosure, deed in lieu of foreclosure or
otherwise; (iv)
the mortgagee's rights under the Insurance Policies with respect to
the Mortgage
Loans; (v) all proceeds of the conversion, voluntary or
involuntary, of any of
the foregoing into cash or other liquid property; (vi) the Cap
Contracts and Cap
Contract Account and (vii) the Supplemental Interest Trust, which
in turn holds
the Swap Agreement.
Trustee: LaSalle Bank National Association, a national banking
association,
not in its individual capacity, but solely in its capacity as
trustee for the
benefit of the Certificateholders under this Agreement, and any
successor
thereto, and any corporation or national banking association
resulting from or
surviving any consolidation or merger to which it or its successors
may be a
party and any successor trustee as may from time to time be serving
as successor
trustee hereunder.
Uncertificated Class C Interest: An uncertificated REMIC Regular
Interest
having the characteristics described in the Preliminary
Statement.
United States Person: (i) A citizen or resident of the United
States, (ii)
a corporation, partnership or other entity treated as a corporation
or
partnership for federal income tax purposes organized in or under
the laws of
the United States or any state thereof or the District of Columbia
(unless, in
the case of a partnership, Treasury regulations provide otherwise),
(iii) an
estate the income of which is includible in gross income for United
States tax
purposes regardless of its source or (iv) a trust if a court within
the United
States is able to exercise primary supervision over the
administration of the
trust and one or more United States persons have authority to
control all
substantial decisions of the trust. Notwithstanding the preceding
sentence, to
the extent provided in Treasury regulations, certain trusts in
existence on
August 20, 1996, and treated as United States persons prior to such
date, that
elect to continue to be treated as United States persons will also
be United
States Persons.
Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss
Amount,
Class M-2 Unpaid Realized Loss Amount, Class M-3 Unpaid Realized
Loss Amount,
Class M-4 Unpaid Realized Loss Amount, Class M-5 Unpaid Realized
Loss Amount,
Class M-6 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized
Loss Amount,
Class B-2 Unpaid Realized Loss Amount, Class B-3 Unpaid Realized
Loss Amount and
Class C Unpaid Realized Loss Amount, collectively.
Upper Tier REMIC: As described in the Preliminary Statement and
Section
2.07.
Upper Tier REMIC Net WAC Cap: In the case of the Class UTA-1
Interest and
the Residual Interest, a per annum rate equal to the weighted
average of the
interest rate of the Class LTII1B Interest for such Distribution
Date. In the
case of the Class UTA-2A, Class UTA-2B, Class UTA-2C and Class
UTA-2D Interests,
a per annum rate equal to the weighted average of the interest rate
for the
Class LTII2B for such Distribution Date. In the case of the Class
UTM-1, Class
UTM-2, Class UTM-3, Class UTM-4, Class UTM-5, Class UTM-6, Class
UTB-1, Class
UTB-2 and Class UTB-3 Interests, a per
-59-
<PAGE>
annum rate equal to the weighted average of the interest rates of
Class LTII1B
and Class LTII2B Interests for such Distribution weighted,
respectively, on the
basis of the uncertificated principal balances of the Class LTII1A
and the Class
LTII2A Interests.
USAP
Report: A report in compliance with the Uniform Single
Attestation
Program for Mortgage Bankers delivered in accordance with Section
3.18.
Voting Rights: The portion of the voting rights of all the
Certificates
that is allocated to any of the Certificates for purposes of the
voting
provisions hereunder. Voting Rights allocated to each Class of
Certificates
shall be allocated as follows: (1) 98% to the Class A, Class M and
Class B
Certificates, with the allocation among such Certificates to be in
proportion to
the Certificate Principal Balance of each Class relative to the
Certificate
Principal Balance of all other Classes and (2) each Class of the
Class C and
Class P will be allocated 1% of the Voting Rights. Voting Rights
will be
allocated among the Certificates of each such Class in accordance
with their
respective Percentage Interests.
Weighted Average Available Funds Cap: With respect to a
Distribution Date,
the per annum rate equal to the weighted average of the Class A-1
Available
Funds Cap and the Class A-2 Available Funds Cap (weighted in
proportion to the
results of subtracting from the aggregate Stated Principal Balance
of each
Mortgage Group, the current Certificate Principal Balance of the
Class A-1 and
Class R Certificates, in the case of Group One, or the Class A-2A,
Class A-2B,
Class A-2C and Class A-2D Certificates, in the case of Group
Two).
Weighted Average Maximum Rate Cap: With respect to a Distribution
Date, the
per annum rate equal to the weighted average (weighted in
proportion to the
results of subtracting from the aggregate Stated Principal Balance
of each
Mortgage Group, the current Certificate Principal Balance of the
Class A-1 and
Class R Certificates, in the case of Group One, or the Class A-2A,
Class A-2B,
Class A-2C and Class A-2D Certificates, in the case of Group Two)
of the Class
A-1 Maximum Rate Cap and the Class A-2 Maximum Rate Cap.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans
The
Depositor, concurrently with the execution and delivery hereof,
does
hereby sell, transfer, assign, set over and convey to the Trustee
without
recourse all the right, title and interest of the Depositor in and
to the assets
of the Trust Fund. Such assignment includes all interest and
principal received
on or with respect to the Mortgage Loans on or after the Cut-off
Date (other
than Scheduled Payments due on the Mortgage Loans on or before the
Cut-off
Date).
It
is agreed and understood by the Depositor, the Servicer and the
Trustee
that it is not intended that any Mortgage Loan be included in the
Trust that is,
without limitation, either (i) a "High-Cost Home Loan" as defined
in the New
Jersey Home Ownership Act effective November 27, 2003; (ii) a
"High-Cost Home
Loan" as defined in the New Mexico Home Loan Protection Act
effective January 1,
2004; (iii) a "High-Cost Home Mortgage Loan" as defined in the
Massachusetts
Predatory Home Loan Practices Act effective November 7, 2004; (iv)
a "High-Cost
Home Loan" as defined by the Indiana High Cost Home Loan Law
effective January
1, 2005 or (v) a "High-Cost Home Loan" as defined by the Illinois
High Risk Home
Loan Act effective January 1, 2004.
-60-
<PAGE>
In
connection with such assignment, the Depositor does hereby deliver
to,
and deposit with the Trustee the following documents or instruments
with respect
to each Mortgage Loan:
(A) The original Mortgage Note endorsed in blank or, "Pay to the
order
of
LaSalle Bank National Association, as trustee, without
recourse"
together with all riders thereto. The Mortgage Note shall include
all
intervening endorsements showing a complete chain of the title from
the
Transferor to [___________________].
(B) Except as provided below and for each Mortgage Loan that is not
a
MERS
Loan, the original recorded Mortgage together with all riders
thereto,
with
evidence of recording thereon, or, if the original Mortgage has
not
yet
been returned from the recording office, a copy of the original
Mortgage together with all riders thereto certified to be a true
copy of
the
original of the Mortgage that has been delivered for recording in
the
appropriate recording office of the jurisdiction in which the
Mortgaged
Property is located and in the case of each MERS Loan, the
original
Mortgage together with all riders thereto, noting the presence of
the MIN
of
the Loan and either language indicating that the Mortgage Loan is a
MOM
Loan
or if the Mortgage Loan was not a MOM Loan at origination, the
original Mortgage and the assignment thereof to MERS, with evidence
of
recording indicated thereon, or a copy of the Mortgage certified by
the
public recording office in which such Mortgage has been
recorded.
(C) In the case of each Mortgage Loan that is not a MERS Loan,
the
original Assignment of each Mortgage in blank or, to "LaSalle Bank
National
Association, as trustee."
(D) The original policy of title insurance (or a preliminary
title
report, commitment or binder if the original title insurance policy
has not
been
received from the title insurance company).
(E) Originals of any intervening assignments of the Mortgage,
with
evidence of recording thereon or, if the original intervening
assignment
has
not yet been returned from the recording office, a copy of such
assignment certified to be a true copy of the original of the
assignment
which has been sent for recording in the appropriate jurisdiction
in which
the
Mortgaged Property is located.
(F) Originals of all assumption and modification agreements, if
any.
(G) If in connection with any Mortgage Loan, the Depositor
cannot
deliver the Mortgage, Assignments of Mortgage or assumption,
consolidation
or
modification, as the case may be, with evidence of recording
thereon, if
applicable, concurrently with the execution and delivery of this
Agreement
solely because of a delay caused by the public recording office
where such
Mortgage, Assignments of Mortgage or assumption, consolidation
or
modification, as the case may be, has been delivered for
recordation, the
Depositor shall deliver or cause to be delivered to the Trustee
written
notice stating that such Mortgage or assumption, consolidation
or
modification, as the case may be, has been delivered to the
appropriate
public recording office for recordation. Thereafter, the Depositor
shall
deliver or cause to be delivered to the Trustee such Mortgage,
Assignments
of
Mortgage or assumption, consolidation or modification, as the case
may
be,
with evidence of recording indicated thereon, if applicable,
upon
receipt thereof from the public recording office. To the extent
any
required endorsement is not contained on a Mortgage Note or an
Assignment
of
Mortgage, the Depositor shall make or cause to be made such
endorsement.
-61-
<PAGE>
(H) With respect to any Mortgage Loan, none of the Depositor,
the
Servicer or the Trustee shall be obligated to cause to be recorded
the
Assignment of Mortgage referred to in this Section 2.01. In the
event an
Assignment of Mortgage is not recorded, the Servicer shall have
no
liability for its failure to receive and act on notices related to
such
Assignment of Mortgage.
The
ownership of each Mortgage Note, the Mortgage and the contents of
the
related Mortgage File is vested in the Trustee on behalf of the
Certificateholders. Neither the Depositor nor the Servicer shall
take any action
inconsistent with such ownership and shall not claim any ownership
interest
therein. The Depositor and the Servicer shall respond to any third
party
inquiries with respect to ownership of the Mortgage Loans by
stating that such
ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage
documents relating to the Mortgage Loans not delivered to the
Trustee are and
shall be held in trust by the Servicer, for the benefit of the
Trustee as the
owner thereof, and the Servicer's possession of the contents of
each Mortgage
File so retained is for the sole purpose of servicing the related
Mortgage Loan,
and such retention and possession by the Servicer, is in a
custodial capacity
only. The Depositor agrees to take no action inconsistent with the
Trustee's
ownership of the Mortgage Loans, to promptly indicate to all
inquiring parties
that the Mortgage Loans have been sold and to claim no ownership
interest in the
Mortgage Loans.
It
is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund
pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a
conveyance
of Mortgage Loans from the Sponsor to the Depositor is
characterized as a pledge
and not a sale, then the Depositor shall be deemed to have
transferred to the
Trustee all of the Depositor's right, title and interest in, to and
under the
obligations of the Sponsor deemed to be secured by said pledge; and
it is the
intention of this Agreement that the Depositor shall also be deemed
to have
granted to the Trustee a first priority security interest in all of
the
Depositor's right, title, and interest in, to and under the
obligations of the
Sponsor to the Depositor deemed to be secured by said pledge and
that the
Trustee shall be deemed to be an independent custodian for purposes
of
perfection of the security interest granted to the Depositor. If
the conveyance
of the Mortgage Loans from the Depositor to the Trustee is
characterized as a
pledge, it is the intention of this Agreement that this Agreement
shall
constitute a security agreement under applicable law, and that the
Depositor
shall be deemed to have granted to the Trustee a first priority
security
interest in all of the Depositor's right, title and interest in, to
and under
the Mortgage Loans, all payments of principal of or interest on
such Mortgage
Loans, all other rights relating to and payments made in respect of
the Trust
Fund, and all proceeds of any thereof. If the trust created by this
Agreement
terminates prior to the satisfaction of the claims of any Person in
any
Certificates, the security interest created hereby shall continue
in full force
and effect and the Trustee shall be deemed to be the collateral
agent for the
benefit of such Person.
In
addition to the conveyance made in the first paragraph of this
Section
2.01, the Depositor does hereby convey, assign and set over to the
Trustee for
the benefit of the Certificateholders its rights and interests
under the Sale
Agreement, including the Depositor's right, title and interest in
the
representations and warranties contained in the Sale Agreement, the
rights in
the Transfer Agreements described therein, and the benefit of the
repurchase
obligations and the obligation of the Sponsor contained in the Sale
Agreement to
take, at the request of the Depositor or the Trustee, all action on
its part
which is reasonably necessary to ensure the enforceability of a
Mortgage Loan.
The Trustee hereby accepts such assignment, and shall be entitled
to exercise
all rights of the Depositor under the Sale Agreement as if, for
such purpose, it
were the Depositor. The foregoing sale, transfer, assignment,
set-over, deposit
and conveyance does not and is not intended to result in creation
or assumption
by the Trustee of any obligation of the Depositor, the Sponsor, or
any other
Person in connection with the Mortgage Loans or any other agreement
or
instrument relating thereto.
-62-
<PAGE>
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans
Except as set forth in the exception report delivered
contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt
of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage
File (but does
not acknowledge receipt of all documents required to be included in
such
Mortgage File) with respect to each Mortgage Loan and declares that
it holds and
will hold such documents and any other documents constituting a
part of the
Mortgage Files delivered to it in trust for the use and benefit of
all present
and future Certificateholders. The Depositor will cause the Sponsor
to
repurchase any Mortgage Loan to which a material exception was
taken in the
Exception Report unless such exception is cured to the satisfaction
of the
Trustee within 45 Business Days of the Closing Date.
The
Trustee acknowledges receipt of the three Cap Contracts (forms of
which
are attached hereto as Exhibits M-1, M-2 and M-3) and is hereby
authorized and
instructed to enter into such contracts not in its individual
capacity but
solely as trustee for the Supplemental Interest Trust, and is
further directed
to execute and deliver the Transfer Agreements, the Bring Down
Letters and the
Sale Agreement.
The
Trustee acknowledges receipt of the Swap Agreement that will be
held in
the Supplemental Interest Trust and is hereby instructed to enter
into the Swap
Agreement, not in its individual capacity, but solely as trustee
for the
Supplemental Interest Trust.
The
Trustee agrees, for the benefit of Certificateholders, and the
NIMs
insurer, to review each Mortgage File delivered to it within 60
days after the
Closing Date. The Trustee will ascertain and to certify, within 70
days of the
Closing Date, to the NIMs Insurer, the Depositor and the Servicer
that all
documents required by Section 2.01 (A)-(B), (C) (if applicable),
and (D)-(E),
and the documents if actually received by it, under Section
2.01(F), have been
executed and received, and that such documents relate to the
Mortgage Loans
identified in Exhibit B-1 that have been conveyed to it. It is
herein
acknowledged that, in conducting such review, the Trustee shall not
be under any
duty or obligation to inspect, review or examine any such
documents,
instruments, certificates or other papers to determine that they
are genuine,
enforceable or appropriate for the represented purpose, that they
have actually
been recorded or that they are other than what they purport to be
on their face.
If the Trustee finds any document or documents constituting a part
of a Mortgage
File to be missing or defective (that is, mutilated, damaged,
defaced or
unexecuted) in any material respect, the Trustee shall promptly
(and in any
event within no more than five Business Days) after such finding so
notify the
NIMs Insurer, the Servicer, the Sponsor and the Depositor. In
addition, the
Trustee shall also notify the NIMs Insurer, the Servicer, the
Sponsor and the
Depositor if the original Mortgage with evidence of recording
thereon with
respect to a Mortgage Loan is not received within 70 days of the
Closing Date;
if it has not been received because of a delay caused by the public
recording
office where such Mortgage has been delivered for recordation, the
Depositor
shall deliver or cause to be delivered to the Trustee written
notice stating
that such Mortgage has been delivered to the appropriate public
recording office
for recordation and thereafter the Depositor shall deliver or cause
to be
delivered such Mortgage with evidence of recording thereon upon
receipt thereof
from the public recording office. The Trustee shall request that
the Sponsor
correct or cure such omission, defect or other irregularity, or
substitute a
Mortgage Loan pursuant to the provisions of Section 2.03(c), within
90 days from
the date the Sponsor was notified of such omission or defect and,
if the Sponsor
does not correct or cure such omission or defect within such
period, that the
Sponsor purchase such Mortgage Loan from the Issuing Entity within
90 days from
the date the Trustee notified the Sponsor of such omission, defect
or other
irregularity at the Purchase Price of such Mortgage Loan. The
Purchase Price for
any Mortgage Loan purchased pursuant to this Section 2.02 shall be
paid to the
Servicer and deposited by the Servicer in the Certificate Account
or Collection
Account, as appropriate, promptly upon receipt, and upon receipt by
the Trustee
of written notification of such deposit signed by a Servicing
Officer or receipt
of such deposit by the Trustee, upon receipt of a Request for
-63-
<PAGE>
Release and certification of the Servicer of such required deposit,
shall
promptly release to the Sponsor the related Mortgage File and the
Trustee shall
execute and deliver such instruments of transfer or assignment,
without
recourse, as shall be requested by the Sponsor and necessary to
vest in the
Sponsor or its designee, as the case may be, any Mortgage Loan
released pursuant
hereto, and the Trustee shall have no further responsibility with
regard to such
Mortgage Loan. It is understood and agreed that the obligation of
the Sponsor to
purchase, cure or substitute any Mortgage Loan as to which a
material defect in
or omission of a constituent document exists shall constitute the
sole remedy
respecting such defect or omission available to the Trustee on
behalf of
Certificateholders and the NIMs Insurer. The preceding sentence
shall not,
however, limit any remedies available to the Certificateholders,
the NIMs
Insurer, the Depositor or the Trustee pursuant to the Sale
Agreement, the
Transfer Agreements and or the Bring Down Letters. The Trustee
shall be under no
duty or obligation to inspect, review and examine such documents,
instruments,
certificates or other papers to determine that they are genuine,
enforceable,
recordable, duly authorized, sufficient, legal, valid or
appropriate to the
represented purpose, or that they have actually been recorded, or
that they are
other than what they purport to be on their face. The Servicer and
the Trustee
shall keep confidential the name of each Mortgagor except as
required for
performance of this Agreement and the Servicer and the Trustee
shall not solicit
any such Mortgagor for the purpose of refinancing the related
Mortgage Loan;
notwithstanding anything herein to the contrary, the foregoing
shall not be
construed to prohibit (i) disclosure of any and all information
that is or
becomes publicly known, or information obtained by the Trustee or
the Servicer
from sources other than the other parties hereto, (ii) disclosure
of any and all
information (A) if required to do so by any applicable law, rule or
regulation,
(B) to any government agency or regulatory body having or claiming
authority to
regulate or oversee any aspects of the business of the Trustee, the
Servicer or
that of any Affiliate, (C) pursuant to any subpoena, civil
investigation demand
or similar demand or request of any court, regulatory authority,
arbitrator or
arbitration to which the Trustee, the Servicer or any Affiliate or
an officer,
director, employer or shareholder thereof is a party or (D) to any
Affiliate,
independent or internal auditor, agent, employee or attorney of the
Trustee, or
the Servicer having a need to know the same, provided that the
Trustee or the
Servicer, as applicable, advises such recipient of the confidential
nature of
the information being disclosed, or (iii) any other disclosure
authorized by the
Depositor.
Within 70 days of the Closing Date, the Trustee shall deliver to
the NIMs
Insurer, the Depositor and the Servicer the Trustee's
Certification,
substantially in the form of Exhibit D attached hereto, evidencing
the
completeness of the Mortgage Files, with any exceptions noted
thereto.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor
(a) The Depositor hereby represents and warrants to the NIMs
Insurer,
the Servicer and the Trustee as follows, as of the date hereof:
(i) The Depositor is duly organized and is validly existing as
a
corporation in good standing under the laws of the State of
Delaware and
has
full power and authority (corporate and other) necessary to own or
hold
its properties and to
conduct its business as now conducted by it and to
enter into and perform its obligations under this Agreement and the
Sale
Agreement.
(ii) The Depositor has the full corporate power and authority
to
execute, deliver and perform, and to enter into and consummate
the
transactions contemplated by, this Agreement and the Sale Agreement
and has
duly
authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement and the
Sale
Agreement; and this Agreement and the Sale Agreement, assuming the
due
authorization, execution and delivery hereof by the other parties
hereto,
constitutes a legal, valid and binding obligation of the
Depositor,
enforceable against the Depositor in accordance with its terms,
subject, as
to
-64-
<PAGE>
enforceability, to (i) bankruptcy, insolvency, reorganization,
moratorium
and
other similar laws affecting creditors' rights generally and
(ii)
general principles of equity, regardless of whether enforcement is
sought
in a
proceeding in equity or at law.
(iii) The execution and delivery of this Agreement and the Sale
Agreement by the Depositor, the consummation of the
transactions
contemplated by this Agreement and the Sale Agreement, and the
fulfillment
of
or compliance with the terms hereof are in the ordinary course
of
business of the Depositor and will not (A) result in a material
breach of
any
term or provision of the charter or by-laws of the Depositor or
(B)
materially conflict with, result in a violation or acceleration of,
or
result in a material default under, the terms of any other
material
agreement or instrument to which the Depositor is a party or by
which it
may
be bound or (C) constitute a material violation of any statute,
order
or
regulation applicable to the Depositor of any court, regulatory
body,
administrative agency or governmental body having jurisdiction over
the
Depositor; and the Depositor is not in breach or violation of any
material
indenture or other material agreement or instrument, or in
violation of any
statute, order or regulation of any court, regulatory body,
administrative
agency or governmental body having jurisdiction over it which
breach or
violation may materially impair the Depositor's ability to perform
or meet
any
of its obligations under this Agreement.
(iv)
No litigation is pending, or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would materially
and
adversely affect the execution, delivery or enforceability of
this
Agreement and the Sale Agreement or the ability of the Depositor to
perform
its
obligations under this Agreement and the Sale Agreement in
accordance
with
the terms hereof.
(v) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by the Depositor of, or compliance by the Depositor
with, this
Agreement and the Sale Agreement or the consummation of the
transactions
contemplated hereby, or if any such consent, approval,
authorization or
order is required, the Depositor has obtained the same. The
Depositor
hereby represents and warrants to the Trustee with respect to each
Mortgage
Loan
as of the Closing Date, and following the transfer of the
Mortgage
Loans to it by the Sponsor, the Depositor had good title to the
Mortgage
Loans and the Mortgage Notes were subject to no offsets, claims,
liens,
mortgage, pledge, charge, security interest, defenses or
counterclaims.
(b) The representations and warranties of each Transferor with
respect
to the related Mortgage Loans in the applicable Transfer Agreement,
which have
been assigned to the Trustee hereunder, were made as of the date
specified in
the applicable Transfer Agreement and brought forward to the
Closing Date
pursuant to the related Bring Down Letter. The representations and
warranties of
each Transferor with respect to the Mortgage Loans contained in the
Bring Down
Letter were made as of the Closing Date. The representations and
warranties of
the Sponsor with respect to the Mortgage Loans contained in the
Sale Agreement
were made as of the Closing Date. To the extent that any fact,
condition or
event with respect to a Mortgage Loan constitutes a breach of (i)
both
representation or warranty of the applicable Transferor under the
applicable
Transfer Agreements or Bring Down Letters and (ii) a representation
or warranty
of the Sponsor under the Sale Agreement, the obligations of the
Sponsor under
the Sale Agreement shall be enforced against the Transferor or the
Sponsor, as
applicable, as set forth in the Sale Agreement. The Trustee is
hereby directed
to and does acknowledge that the Sponsor shall have no obligation
or liability
with respect to any breach of a representation or warranty made by
it with
respect to any related Mortgage Loans, except as otherwise set
forth in the Sale
Agreement, if (as certified to the Trustee by the Sponsor) the
fact, condition
or event constituting such breach also constitutes a
-65-
<PAGE>
breach of a representation or warranty made by the related
Transferor in the
related Transfer Agreement or Bring Down Letter, without regard to
whether the
related Transferor fulfills its contractual obligations in respect
of such
representation or warranty. The Trustee also is hereby directed to
and does
acknowledge that the Sponsor shall have no obligation or liability
with respect
to any breach of a representation or warranty made solely by the
Transferors
with respect to the Mortgage Loans, without regard to whether the
related
Transferor fulfills its contractual obligations in respect of
such
representation or warranty. The Trustee further acknowledges that
the Depositor
shall have no obligation or liability with respect to any breach of
any
representation or warranty with respect to the Mortgage Loans
(except as set
forth in Section 2.03(a)(v)) under any circumstances.
In
addition to the representations and warranties of the Transferors
in the
Transfer Agreements that were brought forward to the Closing Date
pursuant to
the related Bring Down Letter, with respect to each Mortgage Loan,
each
Transferor made certain additional covenants regarding such
Mortgage Loan, as
set forth in the related Transfer Agreement. With respect to any
breach of such
additional covenants that materially and adversely affects the
interests of the
Certificateholders in such Mortgage Loan, the Sponsor shall (1) use
reasonable
efforts to enforce such covenant against the related Transferor and
(2) if the
Sponsor successfully enforces any obligation of the related
Transferor to
repurchase such Mortgage Loan, the Sponsor shall repurchase such
Mortgage Loan
in accordance with this Section 2.03. If the Sponsor does not
successfully
enforce the obligation, if any, of the Transferor to repurchase a
Mortgage Loan
with respect to any breach of any such additional covenants, the
Sponsor shall
have no obligation or right to repurchase or cure such Mortgage
Loan.
(c) Upon discovery by any of the NIMs Insurer, the Depositor,
the
Servicer or the Trustee of a breach of any of such representations
and
warranties that adversely and materially affects the value of the
related
Mortgage Loan, Prepayment Charges or the interests of the
Certificateholders,
the party discovering such breach shall give prompt written notice
to the other
parties. Within 90 days of the discovery of such breach of any
representation or
warranty, the applicable Transferor or the Sponsor, as applicable,
shall either
(a) cure such breach in all material respects, (b) repurchase such
Mortgage Loan
or any property acquired in respect thereof from the Trustee at the
Purchase
Price or (c) within the two year period following the Closing Date,
substitute a
Replacement Mortgage Loan for the affected Mortgage Loan. In the
event of
discovery of a breach of any representation and warranty of any
Transferor or
the Sponsor, the Trustee's rights shall be enforced under
applicable Transfer
Agreement and the Sale Agreement for the benefit of
Certificateholders and the
NIMs Insurer. If a breach of the representations and warranties set
forth in a
Transfer Agreement hereof exists solely due to the unenforceability
of a
Prepayment Charge, the Trustee (if it has had actual notice
thereof) or the
other party having notice thereof shall notify the Servicer thereof
and not seek
to enforce the repurchase remedy provided for herein unless such
Mortgage Loan
is not current. In the event of a breach of the representations and
warranties
with respect to the Mortgage Loans set forth in the Transfer
Agreement, the
Trustee shall use reasonable efforts to enforce the right of the
Issuing Entity
to be indemnified for such breach of representation and warranty.
In the event
that such breach relates solely to the unenforceability of a
Prepayment Charge,
amounts received in respect of such indemnity up to the amount of
such
Prepayment Charge shall be distributed pursuant to Section
4.04(b)(i). As
provided in the Sale Agreement, if the Sponsor substitutes for a
Mortgage Loan
for which there is a breach of any representations and warranties
in the related
Transfer Agreement which adversely and materially affects the value
of such
Mortgage Loan and such substitute mortgage loan is not a
Replacement Mortgage
Loan, under the terms of the Sale Agreement, the Sponsor will, in
exchange for
such substitute Mortgage Loan, (i) provide the applicable Purchase
Price for the
affected Mortgage Loan or (ii) within two years of the Closing
Date, substitute
such affected Mortgage Loan with a Replacement Mortgage Loan. Any
such
substitution shall not be effected prior to the additional delivery
to the
Trustee of a Request for Release substantially in the form of
Exhibit I and
shall not be effected unless it is within two years of the Startup
Day. The
Sponsor indemnifies and holds
-66-
<PAGE>
the Issuing Entity, the Trustee, the Depositor, the Servicer, the
NIMs Insurer
and each Certificateholder harmless against any and all taxes,
claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related
costs,
judgments, and any other costs, fees and expenses that the Issuing
Entity, the
Trustee, the Depositor, the Servicer, the NIMs Insurer and any
Certificateholder
may sustain in connection with any actions of the Sponsor relating
to a
repurchase of a Mortgage Loan other than in compliance with the
terms of this
Section 2.03 and the Sale Agreement, to the extent that any such
action causes
(i) any federal or state tax to be imposed on the Issuing Entity or
any REMIC
provided for herein, including without limitation, any federal tax
imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or
on
"contributions after the startup day" under Section 860G(d)(1) of
the Code, or
(ii) any REMIC created hereunder to fail to qualify as a REMIC at
any time that
any Certificate is outstanding. In furtherance of the foregoing, if
the
Transferor or the Sponsor, as applicable, is not a member of MERS
and
repurchases a Mortgage Loan which is registered on the MERS System,
the
Transferor or the Sponsor, as applicable, at its own expense and
without any
right of reimbursement, shall cause MERS to execute and deliver an
assignment of
the Mortgage in recordable form to transfer the Mortgage from MERS
to the
Transferor or the Sponsor, as applicable, and shall cause such
Mortgage to be
removed from registration on the MERS System in accordance with
MERS' rules and
regulations.
With
respect to any Mortgage Loan repurchased by the Sponsor pursuant
to
the Sale Agreement, or by any Transferor pursuant to the applicable
Transfer
Agreement, the principal portion of the funds received by the
Servicer in
respect of such repurchase of a Mortgage Loan will be considered a
Principal
Prepayment and shall be deposited in the Certificate Account
pursuant to Section
3.05. Upon receipt by the Trustee of notice from the Servicer of
receipt by the
Servicer of the full amount of the Purchase Price for a Deleted
Mortgage Loan,
and upon receipt by the Trustee of the Mortgage File for a
Replacement Mortgage
Loan substituted for a Deleted Mortgage Loan and a Request for
Release, the
Trustee shall release and reassign to the Sponsor or the applicable
Transferor,
as applicable, the related Mortgage File for the Deleted Mortgage
Loan and shall
execute and deliver such instruments of transfer or assignment, in
each case
without recourse, representation or warranty, as shall be necessary
to vest in
such party or its designee or assignee title to any Deleted
Mortgage Loan
released pursuant hereto, free and clear of all security interests,
liens and
other encumbrances created by this Agreement, which instruments
shall be
prepared by the Depositor, the Sponsor or the related Transferor
and the Trustee
shall have no further responsibility with respect to the Mortgage
File relating
to such Deleted Mortgage Loan.
With
respect to each Replacement Mortgage Loan to be delivered to
the
Trustee pursuant to the terms of this Article II in exchange for a
Deleted
Mortgage Loan: (i) the applicable Transferor or the Sponsor, as
applicable, must
deliver to the Trustee the Mortgage File for the Replacement
Mortgage Loan
containing the documents set forth in Section 2.01 along with a
written
certification certifying as to the Mortgage Loan satisfying all
requirements
under the definition of Replacement Mortgage Loan and the delivery
of such
Mortgage File and containing the granting language set forth in
Section 2.01;
and (ii) the Depositor will be deemed to have made, with respect to
such
Replacement Mortgage Loan, each of the representations and
warranties made by it
with respect to the related Deleted Mortgage Loan. The Trustee
shall review the
Mortgage File with respect to each Replacement Mortgage Loan and
certify to the
Depositor that all documents required by Section 2.01(A)-(B), (C)
(if
applicable), and (D)-(E) have been executed and received.
For
any month in which the Sponsor substitutes one or more
Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Sponsor
will
determine the amount (if any) by which the aggregate principal
balance of all
such Replacement Mortgage Loans as of the date of substitution and
the aggregate
Prepayment Charges with respect to such Replacement Mortgage Loans
is less than
the aggregate Stated Principal Balance (after application of the
principal
portion of the Scheduled Payment due in the month of substitution)
and aggregate
Prepayment Charges of all such Deleted Mortgage Loans.
-67-
<PAGE>
An amount equal to the aggregate of the deficiencies described in
the preceding
sentence (such amount, the "Substitution Adjustment Amount") plus
an amount
equal to any unreimbursed costs, penalties and/or damages incurred
by the
Issuing Entity in connection with any violation relating to such
Deleted
Mortgage Loan of any predatory or abusive lending law shall be
remitted by the
Sponsor to the Trustee for deposit into the Certificate Account by
the Sponsor
on the Determination Date for the Distribution Date relating to the
Prepayment
Period during which the related Mortgage Loan became required to be
purchased or
replaced hereunder.
Notwithstanding any other provision of this Agreement, the right
to
substitute Mortgage Loans pursuant to this Article II shall be
subject to the
additional limitations that no substitution of a Replacement
Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee and the NIMs
Insurer
shall each have received an Opinion of Counsel (at the expense of
the party
seeking to make the substitution) that, under current law, such
substitution
will not (A) affect adversely the status of any REMIC established
hereunder as a
REMIC, or of the related "regular interests" as "regular interests"
in any such
REMIC, or (B) cause any such REMIC to engage in a "prohibited
transaction" or
prohibited contribution pursuant to the REMIC Provisions.
The
Depositor shall amend the Mortgage Loan Schedule to reflect the
removal
of such Deleted Mortgage Loan from the terms of this Agreement and
the
substitution of the Replacement Mortgage Loan or Replacement
Mortgage Loans.
Upon such substitution by the Sponsor, such Replacement Mortgage
Loan or
Replacement Mortgage Loans shall constitute part of the Mortgage
Pool and shall
be subject in all respects to the terms of this Agreement and the
applicable
Sale Agreement, including all applicable representations and
warranties thereof
included in the applicable Sale Agreement as of the date of
substitution.
(d) It is understood and agreed that the representations,
warranties
and indemnification (i) set forth in this Section 2.03, (ii) of the
Sponsor and
the Depositor set forth in the Sale Agreement and assigned to the
Trustee by the
Depositor hereunder and (iii) of each Transferor, assigned by the
Sponsor to the
Depositor pursuant to the Sale Agreement and assigned to the
Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage
Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and
shall continue
throughout the term of this Agreement.
(e) The Depositor shall deliver a copy of the Mortgage Loan
Schedule
to the Servicer on the Closing Date.
(f) The Depositor shall notify the Servicer and the Trustee when
any
NIM Notes are issued and when such NIM Notes are no longer
outstanding.
SECTION 2.04. Representations and Warranties of the Servicer
The
Servicer hereby represents and warrants to the Depositor and
the
Trustee as follows, as of the date hereof:
(i) The Servicer is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Nevada
and is
duly
authorized and qualified to transact any and all business
contemplated
by
this Agreement to be conducted by the Servicer in any state in
which a
Mortgaged Property is located or is otherwise not required under
applicable
law
to effect such qualification and, in any event, is in compliance
with
the
doing business laws of any such state, to the extent necessary
to
ensure its ability to enforce each Mortgage Loan, to service the
Mortgage
Loans in accordance with the terms of this Agreement and to perform
any of
its
other obligations under this Agreement in accordance with the
terms
hereof.
-68-
<PAGE>
(ii) The Servicer has the corporate power and authority to
service
each
Mortgage Loan, and to execute, deliver and perform, and to enter
into
and
consummate the transactions contemplated by this Agreement and has
duly
authorized by all necessary corporate action on the part of the
Servicer
the
execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and delivery
hereof by
the
other parties hereto, constitutes a legal, valid and binding
obligation
of
the Servicer, enforceable against the Servicer in accordance with
its
terms, except that (a) the enforceability hereof may be limited
by
bankruptcy, insolvency, moratorium, receivership and other similar
laws
relating to creditors' rights generally and (b) the remedy of
specific
performance and injunctive and other forms of equitable relief may
be
subject to equitable defenses and to the discretion of the court
before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the
Servicer,
the
servicing of the Mortgage Loans under this Agreement, the
consummation
of
any other of the transactions contemplated by this Agreement, and
the
fulfillment of or compliance with the terms hereof are in the
ordinary
course of business of the Servicer and will not (A) result in a
material
breach of any term or provision of the charter or by-laws of the
Servicer
or
(B) materially conflict with, result in a material breach,
violation or
acceleration of, or result in a material default under, the terms
of any
other material agreement or instrument to which the Servicer is a
party or
by
which it may be bound, or (C) constitute a material violation of
any
statute, order or regulation applicable to the Servicer of any
court,
regulatory body, administrative agency or governmental body
having
jurisdiction over the Servicer; and the Servicer is not in breach
or
violation of any material indenture or other material agreement
or
instrument, or in violation of any statute, order or regulation of
any
court, regulatory body, administrative agency or governmental body
having
jurisdiction over it which breach or violation may materially
impair the
Servicer's ability to perform or meet any of its obligations under
this
Agreement.
(iv) The Servicer is an approved servicer of mortgage loans for
Fannie
Mae
and is an approved servicer of mortgage loans for Freddie Mac.
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened, against the Servicer that would materially
and
adversely affect the execution, delivery or enforceability of
this
Agreement or the ability of the Servicer to service the Mortgage
Loans or
to
perform any of its other obligations under this Agreement in
accordance
with
the terms hereof.
(vi) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by the Servicer of, or compliance by the Servicer with,
this
Agreement or the
consummation of the transactions contemplated hereby, or
if
any such consent, approval, authorization or order is required,
the
Servicer has obtained the same.
(vii) The Servicer has fully furnished and will fully furnish (for
the
period it serviced the Mortgage Loans), in accordance with the Fair
Credit
Reporting Act and its implementing regulations, accurate and
complete
information (e.g., favorable and unfavorable) on its borrower
credit files
to
Equifax, Experian and Trans Union Credit Information Company on
a
monthly basis.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans that
are not
"Qualified Mortgages"
-69-
<PAGE>
Upon
discovery by the Depositor, the Servicer or the Trustee that
any
Mortgage Loan does not constitute a "qualified mortgage" within the
meaning of
section 860G(a)(3) of the Code, the party discovering such fact
shall promptly
(and in any event within five Business Days of discovery) give
written notice
thereof to the other parties. In connection therewith, the
Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in
Section
2.03(c) with respect to substitutions are satisfied, a Replacement
Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected
Mortgage Loan
within 90 days of such discovery in the same manner as it would a
Mortgage Loan
for a breach of representation or warranty contained in Section
2.03. The
Trustee, upon the written direction of the Depositor, shall
reconvey to the
Depositor the Mortgage Loan to be released pursuant hereto in the
same manner,
and on the same terms and conditions, as it would a Mortgage Loan
repurchased
for breach of a representation or warranty contained in Section
2.03.
SECTION 2.06. Authentication and Delivery of Certificates
The
Trustee acknowledges the transfer and assignment to it of the
Trust
Fund and, concurrently with such transfer and assignment, the
Trustee has caused
to be authenticated and delivered to or upon the order of the
Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by
the
Authenticating Agent in authorized denominations evidencing
ownership of the
entire Trust Fund. The Trustee agrees to hold the Trust Fund and
exercise the
rights referred to above for the benefit of all present and future
Holders of
the Certificates and to perform its duties set forth in this
Agreement in
accordance with the provisions hereof.
SECTION 2.07. REMIC
Elections
(a) The Depositor hereby instructs and authorizes the Trustee to
make
an appropriate election to treat each of the Upper Tier REMIC, the
Lower Tier
REMIC and the SWAP REMIC as a REMIC. The Trustee shall sign the
returns
providing for such elections and such other tax or information
returns that are
required to be signed by the Trustee under applicable law. This
Agreement shall
be construed so as to carry out the intention of the parties that
each of the
Upper Tier REMIC, the Lower Tier REMIC and the SWAP REMIC be
treated as a REMIC
at all times prior to the date on which the Trust Fund is
terminated.
(b) The Preliminary Statement sets forth the designations and
"latest
possible maturity date" for federal income tax purposes of all
interests created
hereby. The "Startup Day" for purposes of the REMIC Provisions
shall be the
Closing Date. Each REMIC's fiscal year shall be the calendar
year.
The
SWAP REMIC shall consist of all of the assets of the Trust Fund,
other
than (i) amounts distributable to the Class P Certificates pursuant
to Section
4.04(b)(i) hereof, (ii) the interests issued by the SWAP REMIC and
the interests
issued by the Lower Tier REMIC, (iii) the grantor trusts described
in Section
2.07 hereof, (iv) each Cap Contract and the Cap Contract Account
and (v) the
Swap Agreement and the Supplemental Interest Trust. The SWAP REMIC
shall issue
the SWAP REMIC Regular Interests, which shall be designated as
regular interests
of such REMIC, and shall issue the Class SWR Interest, which shall
be designated
as the sole class of residual interest in the SWAP REMIC. Each of
the SWAP REMIC
Regular Interests shall have the characteristics set forth in the
Preliminary
Statement and this Section 2.07.
The
Lower Tier REMIC shall consist of the SWAP REMIC Regular Interests.
The
Lower Tier REMIC shall issue the Lower Tier REMIC Regular
Interests, which shall
be designated as regular interests of such REMIC and shall issue
the Class LTR
Interest, which shall be designated as the sole
-70-
<PAGE>
class of residual interest in the Lower Tier REMIC. Each of the
Lower Tier REMIC
Regular Interests shall have the characteristics set forth in its
definition and
the Preliminary Statement.
The
assets of the Upper Tier REMIC shall be the Lower Tier REMIC
Regular
Interests. The REMIC Regular Interests shall be designated as the
regular
interests in the Upper Tier REMIC and the Residual Interest shall
be designated
as the sole class of residual interest in the Upper Tier REMIC. For
federal
income tax purposes, the pass-through rate on each REMIC Regular
Interest (other
than the Uncertificated Class C Interest and the Class UT-IO
Interest) and on
the sole class of residual interest in the Upper Tier REMIC shall
be subject to
a cap equal to the Upper Tier REMIC Net WAC Cap.
The
beneficial ownership of the Class SWR Interest, Class LTR Interest
and
the Residual Interest shall be represented by the Class R
Certificate. The Class
SWR Interest and Class LTR Interest shall not have a principal
balance or bear
interest.
(c) The "tax matters person" with respect to each REMIC for
purposes
of the REMIC Provisions shall be the beneficial owner of the Class
R
Certificate; provided, however, that the Holder of the Class R
Certificate, by
its acceptance thereof, irrevocably appoints the Trustee as its
agent and
attorney-in-fact to act as "tax matters person" with respect to
each such REMIC
for purposes of the REMIC Provisions. If there is more than one
beneficial owner
of the Class R Certificate, the "tax matters person" shall be the
Person with
the greatest percentage interest in the Class R Certificate and, if
there is
more than one such Person, shall be determined under Treasury
regulation Section
1.860F-4(d) and Treasury regulation Section 301.6231(a)(7)-1.
(d) (i) It is intended that the rights of each Class of the Class
A,
Class M and Class B Certificates to receive payments in respect of
Excess
Interest shall be treated as a right in interest rate cap contracts
written by
the Class C Certificateholders in favor of the holders of each
Class of the
Class A, Class M and Class B Certificates and such shall be
accounted for as
property held separate and apart from the regular interests in the
Upper Tier
REMIC held by the holders of the Class A Certificates (other than
the Class R
Certificate), Class M Certificates, Class B Certificates and the
residual
interest in the Upper Tier REMIC held by the holder of the Class R
Certificate.
For information reporting requirements, the rights of the Class A,
Class M and
Class B Certificates to receive payments in respect of Excess
Interest shall be
assumed to have zero or a de minimis value. This provision is
intended to
satisfy the requirements of Treasury Regulations Section
1.860G-2(i) for the
treatment of property rights coupled with REMIC interests to be
separately
respected and shall be interpreted consistently with such
regulation. On each
Distribution Date, to the extent that any of the Class A, Class M
and Class B
Certificates receive payments in respect of Excess Interest, such
amounts, to
the extent not derived from payments on the Cap Contracts or the
Swap Agreement,
will be treated as distributed by the Upper Tier REMIC to the Class
C
Certificates pro rata in payment of the amounts specified in
Section 4.04(g) and
then paid to the relevant Class of Certificates pursuant to the
related interest
rate cap agreement.
(ii) It is intended that the beneficial owners of the
Certificates
(other than the Class P and Class C Certificates) shall be treated
as
having entered into a notional principal contract with respect to
the
beneficial owners of the Class C Certificates. Pursuant to each
such
notional principal contract, all beneficial owners of each Class
of
Certificates (other than the Class P and Class C Certificates)
shall be
treated as having agreed to pay, on each Distribution Date, to
the
beneficial owners of the Class C Certificates an aggregate amount
equal to
the
excess, if any, of (i) the amount payable on such Distribution Date
on
the
Corresponding REMIC Regular Interest of such Class of Certificates
over
(ii)
the amount payable on such Class of Certificates on such
Distribution
Date
(such excess, a "Class Payment Shortfall"). A Class Payment
Shortfall
shall be allocated to each Class of Certificates to the extent
that
interest accrued on such Class for the related Accrual Period at
the
Pass-Through Rate for a Class,
-71-
<PAGE>
computed by substituting "Upper Tier REMIC Net WAC Cap" for the
Available Funds
Cap set forth in the definition thereof, exceeds the amount of
interest accrued
on such Certificate at the Pass-Through Rate (without such
substitution) for the
related Accrual Period, and a Class Payment Shortfall payable from
principal
collections shall be allocated to the most subordinate Class of
Certificates
with an outstanding principal balance to the extent of such
balance.
(e) The parties intend that the portion of the Trust Fund
consisting
of the Uncertificated Class C Interest, the uncertificated Class
UT-IO Interest,
the rights to receive payments deemed made by the Class A, Class M
and Class B
Certificates in respect of notional principal contracts described
in Section
2.07(d)(ii), the Supplemental Interest Trust which holds the Swap
Agreement, the
Cap Contracts, the Cap Contract Account and the obligation of the
holders of the
Class C Certificates to pay amounts in respect of Excess Interest
to the holders
of the Class A, Class M and Class B Certificates shall be treated
as a "grantor
trust" under the Code, for the benefit of the holders of the Class
C
Certificates, and the provisions hereof shall be interpreted
consistently with
this intention. In furtherance of such intention, the Trustee shall
(i) furnish
or cause to be furnished to the holders of the Class C Certificates
information
regarding their allocable share, if any, of the income with respect
to such
grantor trust, (ii) file or cause to be filed with the Internal
Revenue Service
Form 1041 (together with any necessary attachments) and such other
forms as may
be applicable and (iii) comply with such information reporting
obligations with
respect to payments from such grantor trust to the holders of Class
A, Class M,
Class B and Class C Certificates as may be applicable under the
Code.
(f) The parties intend that the portion of the Trust Fund
consisting
of the right to receive amounts distributable to the Class P
Certificates
pursuant to Section 4.04(b)(i) hereof shall be treated as a
"grantor trust"
under the Code, for the benefit of the holders of the Class P
Certificates, and
the provisions hereof shall be interpreted consistently with this
intention. In
furtherance of such intention, the Trustee shall (i) furnish or
cause to be
furnished to the holders of the Class P Certificates information
regarding their
allocable share of the income with respect to such grantor trust
and (ii) file
or cause to be filed with the Internal Revenue Service Form 1041
(together with
any necessary attachments) and such other forms as may be
applicable.
(g) The parties intend that amounts paid to the Swap
Counterparty
under the Swap Agreement shall be deemed for federal income tax
purposes to be
paid by the Class C Certificates first, out of funds deemed
received in respect
of the Class UT-IO Interest, second, out of funds deemed received
in respect of
the Uncertificated Class C Interest and third, out of funds deemed
received in
respect of notional principal contracts described in Section
2.07(d)(ii), and
the provisions hereof shall be interpreted consistently with this
intention. On
each Distribution Date, to the extent that amounts paid to the Swap
Counterparty
are deemed paid out of funds received in respect of the
Uncertificated Class C
Interest, such amounts will be treated as distributed by the Upper
Tier REMIC to
the Class C Certificates pro rata in payment of the amounts
specified in Section
4.04(g) and then paid to the Swap Counterparty pursuant to the Swap
Agreement.
The
Supplemental Interest Trust shall be an "outside reserve fund"
for
federal income tax purposes and not an asset of any REMIC.
Furthermore, the
Holders of the Class C Certificates shall be the beneficial owners
of the
Supplemental Interest Trust for all federal income tax purposes,
and shall be
taxable on all income earned thereon.
(h) All payments of principal and interest at the Net Mortgage Rate
on
each of the Mortgage Loans (other than amounts distributable to the
Class P
Certificates pursuant to Section 4.04(b)(i) hereof) received by the
SWAP REMIC
with respect to the Mortgage Loans shall be paid to the SWAP REMIC
Regular
Interests until the principal balance of all such interests have
been reduced to
-72-
<PAGE>
zero and any losses allocated to such interests have been
reimbursed. Any
available funds remaining in the SWAP REMIC on a Distribution Date
after
distributions to the SWAP REMIC Regular Interests shall be
distributed to the
Class R Certificates on account of the Class SWR Interest. On each
Distribution
Date, the Trustee shall distribute the aggregate Interest Funds
(net of expenses
and payments to the Class P Certificates) with respect to each of
the SWAP REMIC
Regular Interests based on the interest rates for each such SWAP
REMIC Regular
Interest. On each Distribution Date, the Trustee shall distribute
the aggregate
Principal Funds with respect to the Group One Mortgage Loans first
to the Class
1-SW1 Interest until its principal balance is reduced to zero and
then
sequentially to each of the other SWAP REMIC Regular Interests
beginning with
designation "1" in ascending order of their numerical class
designation, in
equal amounts to each such class in such numerical designation,
until the
principal balance of each such class is reduced to zero. All losses
with respect
to the Group One Mortgage Loans shall be allocated among the SWAP
REMIC Regular
Interests beginning with the designation "1" in the same manner
that principal
distributions are allocated. On each Distribution Date, the Trustee
shall
distribute the aggregate Principal Funds with respect to the Group
Two Mortgage
Loans first to the Class 2-SW2 Interest until its principal balance
is reduced
to zero and then sequentially to each of the other SWAP REMIC
Regular Interests
beginning with designation "2" in ascending order of their
numerical class
designation, in equal amounts to each such class in such numerical
designation,
until the principal balance of each such class is reduced to zero.
All losses
with respect to the Group Two Mortgage Loans shall be allocated
among the SWAP
REMIC Regular Interests beginning with the designation "2" in the
same manner
that principal distributions are allocated. Subsequent Recoveries
with respect
to the Group One and Group Two Mortgage Loans shall be allocated in
the reverse
fashion from the manner in which losses are allocated.
All
payments received by the Lower Tier REMIC with respect to the
SWAP
REMIC Regular Interests shall be paid to the Lower Tier REMIC
Regular Interests
until the principal balance of all such interests have been reduced
to zero and
any losses allocated to such interests have been reimbursed. Any
excess amounts
shall be distributed to the Class LTR Interest. On each
Distribution Date,
payments and losses shall be allocated among the Lower Tier REMIC
Regular
Interests so that (i) each of the Lower Tier REMIC I Marker
Interests shall have
a principal balance equal to 25% of the principal balance of the
Corresponding
Certificates, (ii) the Class LTIX Interest has a principal balance
equal to the
excess of (x) 50% of the remaining principal balance of the
Mortgage Loans over
(y) the aggregate principal balance of the Lower Tier REMIC I
Marker Interests
(if necessary to reflect an increase in overcollateralization,
accrued and
unpaid interest on the Class LTIX interest may be added to its
principal amount
to achieve this result) and (iii) the aggregate principal amount of
the Class
LTII1A Interest, Class LTII1B Interest, Class LTII2A Interest,
Class LTII2B
Interest and the Class LTIIX Interest shall equal 50% of the
remaining principal
balance of the Mortgage Loans. Distributions and losses allocated
to the Lower
Tier REMIC Regular Interests described in clause (iii) of the
preceding sentence
will be allocated among such Lower Tier REMIC Regular Interests in
the following
manner: (x) such distributions shall be deemed made to such Lower
Tier REMIC
Regular Interests first, so as to keep the principal balance of the
each such
Lower Tier REMIC Regular Interest with "B" at the end of its
designation equal
to 0.05% of the aggregate scheduled principal balance of the
Mortgage Loans in
the related Mortgage Group and second, to such Lower Tier REMIC
Regular
Interests with "A" at the end of its designation so that the
uncertificated
principal balance of each such Lower Tier REMIC Regular Interest is
equal to
0.05% of the excess of (I) the aggregate scheduled principal
balance of the
Mortgage Loans in the related Mortgage Group over (II) the
aggregate principal
balance of Certificate Group One, in the case of the Class LTII1A
Interest, or
Certificate Group Two, in the case of the Class LTII2A Interest
(except that if
0.05% of any such excess is greater than the principal amount of
the related
Lower Tier REMIC II Marker Interest with "A" at the end of its
designation, the
least amount of principal shall be distributed to each Lower Tier
REMIC II
Marker Interest with "A" at the end of its designation such that
the Lower Tier
REMIC Subordinated Balance Ratio is maintained) and finally, any
remaining
distributions of principal to the
-73-
<PAGE>
Class LTIIX Interest and (y) such losses shall be allocated among
the Lower Tier
REMIC Regular Interests described in clause (iii) of the preceding
sentence
first, so as to keep the principal balance of the each such Lower
Tier REMIC
Regular Interest with "B" at the end of its designation equal to
0.05% of the
aggregate scheduled principal balance of the Mortgage Loans in the
related
Mortgage Group; second, to such Lower Tier REMIC Regular Interests
with "A" at
the end of its designation so that the uncertificated principal
balance of each
such Lower Tier REMIC Regular Interest is equal to 0.05% of the
excess of (I)
the aggregate scheduled principal balance of the Mortgage Loans in
the related
Mortgage Group over (II) the aggregate principal balance of
Certificate Group
One, in the case of the Class LTII1A Interest, or Certificate Group
Two, in the
case of the Class LTII2A Interest (except that if 0.05% of any such
excess is
greater than the principal amount of the related Lower Tier REMIC
II Marker
Interest with "A" at the end of its designation, the least amount
of losses
shall be allocated to each Lower REMIC II Marker Interest with "A"
at the end of
its designation such that the Lower Tier REMIC Subordinated Balance
Ratio is
maintained) and finally, any remaining losses to the Class LTIIX
Interest.
Notwithstanding the preceding two sentences, however, losses not
allocated to
any Class of Certificates will not be allocated to any Lower Tier
REMIC Regular
Interests. All computations with respect to the Lower Tier REMIC
Regular
Interests shall be taken out to ten decimal places.
Any
available funds remaining in the Lower Tier REMIC on a
Distribution
Date after distributions to the Lower Tier REMIC Regular Interests
shall be
distributed to the Class R Certificates in respect of the Class LTR
Interest.
If
on any Distribution Date the Certificate Principal Balance of any
Class
of Certificates is increased pursuant to the last sentence of the
definition of
"Certificate Principal Balance", then there shall be an equivalent
increase in
the principal amounts of the Lower Tier REMIC Regular Interests,
with such
increase allocated (before the making of distributions and the
allocation of
losses on the Lower Tier REMIC Regular Interests on such
Distribution Date)
among the Lower Tier REMIC Regular Interests so that, to the
greatest extent
possible, (i) each of the Lower Tier REMIC I Marker Interests has a
principal
balance equal to 25% of the principal balance of the Corresponding
Certificates,
(ii) the Class LTIX Interest has a principal balance equal to the
excess of (x)
50% of the remaining principal balance of the Mortgage Loans over
(y) the
aggregate principal balance of the Lower Tier REMIC I Marker
Interests and (iii)
the aggregate principal amount of the Lower Tier REMIC II Marker
Interests and
the Class LTIIX Interest shall equal 50% of the remaining principal
balance of
the Mortgage Loans. Allocations in connection with clause (iii)
shall be made so
that, to the greatest extent possible, (a) the principal balance of
each Lower
Tier REMIC II Marker Interest with "B" at the end of its
designation equals
0.05% of the aggregate scheduled principal balance of the Mortgage
Loans in
related Mortgage Group, (b) the principal balance of each Lower
Tier REMIC II
Marker Interest with "A" at the end of its designation equals 0.05%
of the
excess of (x) the aggregate scheduled principal balance of the
Mortgage Loans in
related Mortgage Group over (y) the aggregate principal balance of
Certificate
Group One in the case of the Class LTII1A Interest, or Certificate
Group Two in
the case of the Class LTII2A Interest and (c) any remaining
allocations are made
to the Class LTIIX Interest.
(i) In the event that any REMIC provided for herein fails to
qualify
as a REMIC, loses its status as a REMIC or incurs federal, state or
local taxes
as a result of a prohibited transaction or prohibited contribution
under the
REMIC Provisions due to the negligent performance by the Servicer
of its duties
and obligations set forth herein, the Servicer shall indemnify the
NIMs Insurer,
the Trustee and the Issuing Entity against any and all Losses
resulting from
such negligence; provided, however, that the Servicer shall not be
liable for
any such Losses attributable to the action or inaction of the
Trustee, the
Depositor or the Holder of the residual interest in such REMIC, as
applicable,
nor for any such Losses resulting from misinformation provided by
the Holder of
the residual interest in such REMIC on which the Servicer has
relied. The
foregoing shall not be deemed to limit or restrict the rights and
remedies of
-74-
<PAGE>
the Holder of the residual interest in such REMIC now or hereafter
existing at
law or in equity. Notwithstanding the foregoing, however, in no
event shall the
Servicer have any liability (1) for any action or omission that is
taken in
accordance with and in compliance with the express terms of, or
which is
expressly permitted by the terms of, this Agreement, (2) for any
Losses other
than those arising out of a negligent performance by the Servicer
of its duties
and obligations set forth herein, and (3) for any special or
consequential
damages to Certificateholders (in addition to payment of principal
and interest
on the Certificates).
(j) In the event that any REMIC provided for herein fails to
qualify
as a REMIC, loses its status as a REMIC, or incurs federal, state
or local taxes
as a result of a prohibited transaction or prohibited contribution
under the
REMIC Provisions due to the negligent performance by the Trustee of
its duties
and obligations set forth herein, the Trustee shall indemnify the
NIMs Insurer
and the Issuing Entity against any and all Losses resulting from
such
negligence; provided, however, that the Trustee shall not be liable
for any such
Losses attributable to the action or inaction of the Servicer, the
Depositor or
the Holder of the residual interest in such REMIC, as applicable,
nor for any
such Losses resulting from misinformation provided by the Holder of
the residual
interest in such REMIC on which the Trustee has relied. The
foregoing shall not
be deemed to limit or restrict the rights and remedies of the
Holder of the
residual interest in such REMIC now or hereafter existing at law or
in equity.
Notwithstanding the foregoing, however, in no event shall the
Trustee have any
liability (1) for any action or omission that is taken in
accordance with and in
compliance with the express terms of, or which is expressly
permitted by the
terms of, this Agreement, (2) for any Losses other than those
arising out of a
negligent performance by the Trustee of its duties and obligations
set forth
herein, and (3) for any special or consequential damages to
Certificateholders
(in addition to payment of principal and interest on the
Certificates).
SECTION 2.08. Covenants of the Servicer
The
Servicer hereby covenants to each of the other parties to this
Agreement that the Servicer shall comply in the performance of its
obligations
under this Agreement with all reasonable rules and requirements of
the insurer
under each Required Insurance Policy.
SECTION 2.09. Permitted Activities of the Trust
The
Issuing Entity is created for the object and purpose of engaging in
the
Permitted Activities. In furtherance of the foregoing, the Trustee
is hereby
authorized and directed to execute and deliver on behalf of the
Issuing Entity,
and to perform the duties and obligations of the Issuing Entity
under, the Cap
Contracts, an insurance and indemnity agreement with a NIMs Insurer
and any
other agreement or instrument related thereto, in each case in such
form as the
Depositor shall direct or shall approve, the execution and delivery
of any such
agreement by the Depositor to be conclusive evidence of its
approval thereof.
SECTION 2.10. Qualifying Special Purpose Entity
For
purposes of SFAS 140, the parties hereto intend that the Issuing
Entity
shall be treated as a "qualifying special purpose entity" as such
term is used
in SFAS 140 and any successor rule thereto and its power and
authority as stated
in Section 2.09 of this Agreement shall be limited in accordance
with paragraph
35 or SFAS 140.
SECTION 2.11. Depositor Notification of NIM Notes
-75-
<PAGE>
The Depositor shall notify
the Servicer and the Trustee in writing when NIM
Notes are issued and of the identity of the NIMs Insurer, if
applicable, and
when all previously issued NIM Notes are no longer outstanding.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans
For
and on behalf of the Certificateholders, the Servicer shall service
and
administer the Mortgage Loans in accordance with the Accepted
Servicing
Practices. In connection with such servicing and administration,
the Servicer
shall have full power and authority, acting alone and/or through
subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and
all things
that it may deem necessary or desirable in connection with such
servicing and
administration, including but not limited to, the power and
authority, subject
to the terms hereof (i) to execute and deliver, on behalf of
the
Certificateholders and the Trustee, customary consents or waivers
and other
instruments and documents, (ii) to consent to transfers of any
Mortgaged
Property and assumptions of the Mortgage Notes and related
Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any
Insurance
Proceeds and other Liquidation Proceeds and (iv) subject to Section
3.12(a), to
effectuate foreclosure or other conversion of the ownership of the
Mortgaged
Property securing any Mortgage Loan; provided that, subject to
Section 6.03, the
Servicer shall not take any action that is inconsistent with or
prejudices the
interests of the Trust Fund or the Certificateholders in any
Mortgage Loan
serviced by it under this Agreement or the rights and interests of
the other
parties to this Agreement except as otherwise required by this
Agreement or by
law. Notwithstanding anything in this Agreement to the contrary,
the Servicer
shall not make or permit any modification, waiver or amendment of
any term of
any Mortgage Loan which would cause any of the REMICs provided for
herein to
fail to qualify as a REMIC or result in the imposition of any tax
under Section
860G(a) or 860G(d) of the Code. The Servicer shall represent and
protect the
interest of the Trust Fund in the same manner as it currently
protects its own
interest in mortgage loans in its own portfolio in any claim,
proceeding or
litigation regarding a Mortgage Loan, but in any case not in any
manner that is
a lesser standard than that provided in the first sentence of this
Section 3.01.
Without limiting the generality of the foregoing, the Servicer, in
its own name
or in the name of the Depositor and the Trustee, is hereby
authorized and
empowered by the Depositor and the Trustee, when the Servicer
believes it
appropriate in its reasonable judgment, to execute and deliver, on
behalf of the
Trustee, the Depositor, the Certificateholders or any of them, any
and all
instruments of satisfaction or cancellation, or of partial or full
release or
discharge, subordinations and all other comparable instruments,
with respect to
the Mortgage Loans, and with respect to the Mortgaged Properties
held for the
benefit of the Certificateholders. The Servicer shall prepare and
deliver to the
Depositor and/or the Trustee such documents requiring execution and
delivery by
any or all of them as are necessary or appropriate to enable the
Servicer to
service and administer the Mortgage Loans, to the extent that the
Servicer is
not permitted to execute and deliver such documents pursuant to the
preceding
sentence. Upon receipt of such documents, the Depositor and/or the
Trustee shall
execute such documents and deliver them to the Servicer. For
purposes of this
Section 3.01, the Trustee hereby grants to the Servicer a limited
power of
attorney to execute and file any and all documents necessary to
fulfill the
obligations of the Servicer under this Section 3.01.
-76-
<PAGE>
Upon
request of the Servicer, the Trustee shall furnish the Servicer
with
any powers of attorney and other documents in form as provided to
it necessary
or appropriate to enable the Servicer to service and administer the
Mortgage
Loans. The Trustee shall not be responsible for and the Servicer
shall indemnify
the Trustee for any action taken by the Servicer pursuant to the
application of
any power of attorney. Notwithstanding anything contained herein to
the
contrary, the Servicer shall not without the Trustee's written
consent, hire or
procure counsel to represent the Trustee without indicating its
representative
capacity.
The
Servicer shall not be required to make any Servicing Advance
with
respect to a Mortgage Loan that is 150 days or more delinquent.
The
Servicer and the Trustee shall have at least 30 days' notice of
the
appointment of a NIMs Insurer prior to being required to deliver
any notices
pursuant to this Agreement to such NIMs Insurer.
The
Servicer and the Trustee shall have at least 10 days' notice of
the
issuance of any NIM Notes.
The
Servicer shall deliver a list of Servicing Officers to the Trustee
by
the Closing Date.
The
Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 97-02 and
for each
Mortgage Loan, the Servicer agrees that it shall report one of the
following
statuses each month as follows: current, delinquent (30-, 60-,
90-days, etc.),
foreclosed or charged-off.
The
Servicer further is authorized and empowered by the Trustee, on
behalf
of the Certificateholders and the Trustee, in its own name or in
the name of the
Sub-Servicer, when the Servicer or the Sub-Servicer, as the case
may be,
believes it is appropriate in its best judgment to register any
Mortgage Loan on
the MERS System, or cause the removal from the registration of any
Mortgage Loan
on the MERS System, to execute and deliver, on behalf of the
Trustee and the
Certificateholders or any of them, any and all instruments of
assignment and
other comparable instruments with respect to such assignment or
re-recording of
a Mortgage in the name of MERS, solely as nominee for the Trustee
and its
successors and assigns. Any reasonable expenses incurred in
connection with the
actions described in the preceding sentence or as a result of MERS
discontinuing
or becoming unable to continue operations in connection with the
MERS System,
shall be subject to withdrawal by the Servicer from the Collection
Account
(provided that such expenses constitute "unanticipated expenses"
within the
meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)).
With
respect to any Mortgage Loan, the Servicer may consent to the
refinancing of the prior senior lien relating to such Mortgage
Loan, provided
that the following requirements are met:
(a) the resulting Combined Loan-to-Value Ratio of such Mortgage
Loan
is no higher than the Combined Loan-to-Value Ratio prior to such
refinancing;
(b) the interest rate for the loan evidencing the refinanced
senior
lien is no more than 2.0% higher than the interest rate on the loan
evidencing
the existing senior lien immediately prior to the date of such
refinancing; and
(c) the loan evidencing the refinanced senior lien is not subject
to
negative amortization.
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of
Servicer
-77-
<PAGE>
(a) The Servicer may arrange for the subservicing of any Mortgage
Loan
by a subservicer, which may be an affiliate, pursuant to a
subservicing
agreement (each, a "Subservicing Agreement"); provided, however,
that (i) such
subservicing arrangement and the terms of the related Subservicing
Agreement
must provide for the servicing of such Mortgage Loans in a manner
consistent
with the servicing arrangements contemplated hereunder, (ii) that
such agreement
would not result in a withdrawal or downgrading by any Rating
Agency of the
ratings of any Certificates or any of the NIM Notes evidenced by a
letter to
that effect delivered by each Rating Agency to the Depositor and
the NIMs
Insurer and (iii) the NIMs Insurer shall have consented to such
Subservicing
Agreement, which consent shall not be unreasonably withheld.
Notwithstanding the
provisions of any Subservicing Agreement, any of the provisions of
this
Agreement relating to agreements or arrangements between the
Servicer and a
subservicer or reference to actions taken through a subservicer or
otherwise,
the Servicer shall remain obligated and liable to the Depositor,
the Trustee and
the Certificateholders for the servicing and administration of the
Mortgage
Loans in accordance with the provisions of this Agreement without
diminution of
such obligation or liability by virtue of such Subservicing
Agreements or
arrangements or by virtue of indemnification from the subservicer
and to the
same extent and under the same terms and conditions as if the
Servicer alone
were servicing and administering the Mortgage Loans. Every
Subservicing
Agreement entered into by the Servicer shall contain a provision
giving any
successor servicer the option to terminate such agreement, with the
consent of
the NIMs Insurer (which consent shall not be unreasonably
withheld), in the
event a successor servicer is appointed. All actions of the each
subservicer
performed pursuant to the related Subservicing Agreement shall be
performed as
an agent of the Servicer with the same force and effect as if
performed directly
by the Servicer. The Servicer shall deliver to the NIMs Insurer and
the Trustee
copies of all Subservicing Agreements. The Trustee shall have no
obligations,
duties or liabilities with respect to a subservicer, including,
without
limitation, any obligation, duty or liability to monitor such
subservicer or to
pay a Subservicer's fees and expenses.
(b) For purposes of this Agreement, the Servicer shall be deemed
to
have received any collections, recoveries or payments with respect
to the
related Mortgage Loans that are received by a subservicer
regardless of whether
such payments are remitted by the subservicer to the Servicer.
(c) The Servicer shall not permit a Subservicer to perform any
servicing responsibilities hereunder with respect to the Mortgage
Loans unless
that Subservicer first agrees in writing with the Servicer to
deliver an
Assessment of Compliance and an Accountant's Attestation in such
manner and at
such times that permits that Servicer to comply with Section 3.17
of this
Agreement.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
the
Servicer
Neither the Trustee nor the Depositor shall have any responsibility
or
liability for any action or failure to act by the Servicer, and
neither of them
is obligated to supervise the performance of the Servicer hereunder
or
otherwise.
SECTION 3.04. Trustee to Act as Servicer
Subject to Sections 6.04 and 7.02, in the event that the Servicer
shall for
any reason no longer be the servicer hereunder (including by reason
of an Event
of Default), the Trustee or its designee shall, within a period of
time not to
exceed ninety (90) days from the date of notice of termination or
resignation,
thereupon assume all of the rights and obligations of the Servicer
hereunder
arising thereafter (except that the Trustee shall not be (i) liable
for losses
arising out of any acts or omissions of the predecessor servicer
hereunder, (ii)
obligated to make Advances or Servicing Advances if it is
prohibited from doing
so by applicable law, (iii) obligated to effectuate repurchases or
substitutions
of Mortgage Loans hereunder, including pursuant to Section 2.02 or
2.03 hereof,
(iv) responsible for any expenses of
-78-
<PAGE>
the Servicer pursuant to Section 2.03 or (v) deemed to have made
any
representations and warranties hereunder, including pursuant to
Section 2.04 or
the first paragraph of Section 6.02 hereof; provided, however that
the Trustee
(subject to clause (ii) above) or its designee, in its capacity as
the successor
servicer, shall immediately assume the terminated or resigning
Servicer's
obligation to make Advances and Servicing Advances). No such
termination or
resignation shall affect any obligation of the Servicer to pay
amounts owed
under this Agreement and to perform its duties under this Agreement
until its
successor assumes all of its rights and obligations hereunder. If
