EXECUTION COPY
RESIDENTIAL ASSET SECURITIES CORPORATION,
Depositor,
RESIDENTIAL FUNDING CORPORATION,
Master Servicer,
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2006
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2006-KS4
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..................................................................6
Section 1.01. Definitions.......................................................6
Section 1.02. Determination of LIBOR...........................................55
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES.............56
Section 2.01. Conveyance of Mortgage Loans.....................................56
Section 2.02. Acceptance by Trustee............................................59
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Depositor.......................................60
Section 2.04. Representations and Warranties of Sellers........................62
Section 2.05. Execution and Authentication of Certificates; Conveyance of
Uncertificated REMIC Regular Interests...........................64
Section 2.06. Purposes and Powers of the Trust.................................64
Section 2.07. Agreement Regarding Ability to Disclose..........................65
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS..............................65
Section 3.01. Master Servicer to Act as Servicer...............................65
Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers' Obligations...........67
Section 3.03. Successor Subservicers...........................................68
Section 3.04. Liability of the Master Servicer.................................69
Section 3.05. No Contractual Relationship Between Subservicer and Trustee
or Certificateholders............................................69
Section 3.06. Assumption or Termination of Subservicing Agreements by
Trustee..........................................................69
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to
Custodial Account................................................69
Section 3.08. Subservicing Accounts; Servicing Accounts........................72
Section 3.09. Access to Certain Documentation and Information Regarding
the Mortgage Loans...............................................73
Section 3.10. Permitted Withdrawals from the Custodial Account.................73
Section 3.11. Maintenance of Primary Insurance Coverage........................75
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity
Coverage.........................................................75
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.....................76
Section 3.14. Realization Upon Defaulted Mortgage Loans........................78
Section 3.15. Trustee to Cooperate; Release of Mortgage Files..................80
Section 3.16. Servicing and Other Compensation; Compensating Interest..........81
Section 3.17. Reports to the Trustee and the Depositor.........................82
Section 3.18. Annual Statement as to Compliance and Servicing Assessment.......82
Section 3.19. Annual Independent Public Accountants' Servicing Report..........83
Section 3.20. Right of the Depositor in Respect of the Master Servicer.........83
Section 3.21. [Reserved].......................................................84
Section 3.22. Advance Facility.................................................84
Section 3.23. Special Servicing................................................87
Section 3.24. Credit Risk Manager..............................................88
Section 3.25. Limitation Upon Liability of the Credit Risk Manager.............88
Section 3.26. Removal of the Credit Risk Manager...............................89
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS..............................................89
Section 4.01. Certificate Account..............................................89
Section 4.02. Distributions....................................................90
Section 4.03. Statements to Certificateholders; Statements to Rating
Agencies; Exchange Act Reporting.................................93
Section 4.04. Distribution of Reports to the Trustee and the Depositor;
Advances by the Master Servicer..................................97
Section 4.05. Allocation of Realized Losses....................................98
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged
Property........................................................100
Section 4.07. Optional Purchase of Defaulted Mortgage Loans...................100
Section 4.08. [Reserved]......................................................101
Section 4.09. [Reserved]......................................................101
Section 4.10. Swap Agreement..................................................101
ARTICLE V THE CERTIFICATES...........................................................102
Section 5.01. The Certificates................................................102
Section 5.02. Registration of Transfer and Exchange of Certificates...........105
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...............113
Section 5.04. Persons Deemed Owners...........................................113
Section 5.05. Appointment of Paying Agent.....................................113
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER...................................113
Section 6.01. Respective Liabilities of the Depositor and the Master
Servicer........................................................113
Section 6.02. Merger or Consolidation of the Depositor or the Master
Servicer; Assignment of Rights and Delegation of Duties by
Master Servicer.................................................114
Section 6.03. Limitation on Liability of the Depositor, the Master
Servicer and Others.............................................114
Section 6.04. Depositor and Master Servicer Not to Resign.....................115
ARTICLE VII DEFAULT....................................................................115
Section 7.01. Events of Default...............................................115
Section 7.02. Trustee or Depositor to Act; Appointment of Successor...........117
Section 7.03. Notification to Certificateholders..............................118
Section 7.04. Waiver of Events of Default.....................................118
ARTICLE VIII CONCERNING THE TRUSTEE.....................................................119
Section 8.01. Duties of Trustee...............................................119
Section 8.02. Certain Matters Affecting the Trustee...........................120
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans...........121
Section 8.04. Trustee May Own Certificates....................................122
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses;
Indemnification.................................................122
Section 8.06. Eligibility Requirements for Trustee............................122
Section 8.07. Resignation and Removal of the Trustee..........................123
Section 8.08. Successor Trustee...............................................124
Section 8.09. Merger or Consolidation of Trustee..............................124
Section 8.10. Appointment of Co-Trustee or Separate Trustee...................124
Section 8.11. Appointment of Custodians.......................................125
Section 8.12. Appointment of Office or Agency.................................125
Section 8.13. DTC Letter of Representations...................................126
Section 8.14. Swap Agreements.................................................126
ARTICLE IX TERMINATION................................................................126
Section 9.01. Termination Upon Purchase or Liquidation of All Mortgage
Loans...........................................................126
Section 9.02. Additional Termination Requirements.............................130
ARTICLE X REMIC PROVISIONS...........................................................131
Section 10.01. REMIC Administration............................................131
Section 10.02. Master Servicer, REMIC Administrator and Trustee
Indemnification.................................................134
ARTICLE XI MISCELLANEOUS PROVISIONS...................................................134
Section 11.01. Amendment.......................................................134
Section 11.02. Recordation of Agreement; Counterparts..........................137
Section 11.03. Limitation on Rights of Certificateholders......................137
Section 11.04. Governing Law...................................................138
Section 11.05. Notices.........................................................138
Section 11.06. Notices to Rating Agencies......................................138
Section 11.07. Severability of Provisions......................................139
Section 11.08. Supplemental Provisions for Resecuritization....................139
Section 11.09. Third-Party Beneficiary.........................................140
Section 11.10. Tax Treatment...................................................140
ARTICLE XII COMPLIANCE WITH REGULATION AB..............................................140
Section 12.01. Intent of Parties; Reasonableness...............................140
Section 12.02. Additional Representations and Warranties of the Trustee........140
Section 12.03. Information to be Provided by the Trustee.......................141
Section 12.04. Report on Assessment of Compliance and Attestation..............141
Section 12.05. Indemnification; Remedies.......................................142
Exhibit A Form of Class A Certificate................................................A-1
Exhibit B-1 Form of Class M Certificate..............................................B-1-1
Exhibit B-2 Form of Class B Certificate..............................................B-2-1
Exhibit C Form of Class SB Certificate...............................................C-1
Exhibit D Form of Class R Certificate................................................D-1
Exhibit E Form of Custodial Agreement................................................E-1
Exhibit F Mortgage Loan Schedule.....................................................F-1
Exhibit G Form of Request for Release................................................G-1
Exhibit H-1 Form of Transfer Affidavit and Agreement.................................H-1-1
Exhibit H-2 Form of Transferor Certificate...........................................H-2-1
Exhibit I Form of Investor Representation Letter.....................................I-1
Exhibit J Form of Transferor Representation Letter...................................J-1
Exhibit K Text of Amendment to Pooling and Servicing Agreement Pursuant to
Section 11.01(e) for a Limited Guaranty....................................K-1
Exhibit L Form of Limited Guaranty...................................................L-1
Exhibit M Form of Lender Certification for Assignment of Mortgage Loan...............M-1
Exhibit N-1 Form of Rule 144A Investment Representation Letter.......................N-1-1
Exhibit N-2 Form of Transferor Certificate (144A Transferor to 144A Transferee)......N-2-1
Exhibit N-3 Form of Transferor Certificate (144A Transferor to Regulation S
Transferee)..............................................................N-3-1
Exhibit N-4 Form of Regulation S Transferee Certificate..............................N-4-1
Exhibit N-5 Form of Accredited InvestorTransferee Certificate........................N-4-1
Exhibit N-6 Form of Transferor Certificate (Regulation S Transferor).................N-4-1
Exhibit O Swap Agreement.............................................................O-1
Exhibit P Form of ERISA Letter.......................................................P-1
Exhibit Q SB-AM Swap Agreement.......................................................Q-1
Exhibit R Assignment Agreement.......................................................R-1
Exhibit S Servicing Criteria.........................................................S-1
Exhibit T-1 Form of 10-K Certification...............................................T-1-1
Exhibit T-2 Form of Back-Up Certification............................................T-2-1
Exhibit U Information to be Provided by the Master Servicer to the Rating
Agencies Relating to Reportable Modified Mortgage Loans....................U-1
Exhibit V Form of Certificate to be Given by Certificate Owner.......................V-1
Exhibit W Form of Certificate to be Given by Euroclear or Cedel......................W-1
This Pooling and Servicing Agreement, effective as of May 1, 2006, among RESIDENTIAL
ASSET SECURITIES CORPORATION, as the depositor (together with its permitted successors and
assigns, the "Depositor"), RESIDENTIAL FUNDING CORPORATION, as master servicer (together
with its permitted successors and assigns, the "Master Servicer"), and U.S. BANK NATIONAL
ASSOCIATION, a banking association organized under the laws of the United States, as trustee
(together with its permitted successors and assigns, the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage asset-backed pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in sixteen Classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Mortgage Loans (as
defined herein) and certain other related assets.
REMIC I
As provided herein, the REMIC Administrator will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other related assets
(exclusive of the Swap Account and the Swap Agreement) subject to this Agreement as a real
estate mortgage investment conduit (a "REMIC") for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC I." The Class R-I Certificates will
represent the sole Class of "residual interests" in REMIC I for purposes of the REMIC
Provisions (as defined herein) under federal income tax law. The following table
irrevocably sets forth the designation, remittance rate (the "Uncertificated REMIC I Pass
Through Rate") and initial Uncertificated Principal Balance for each of the "regular
interests" in REMIC I (the "REMIC I Regular Interests"). The "latest possible maturity
date" (determined solely for purposes of satisfying Treasury regulation Section 1.860G
1(a)(4)(iii)) for each REMIC I Regular Interest shall be the Maturity Date. None of the
REMIC I Regular Interests will be certificated.
UNCERTIFICATED
REMIC I INITIAL UNCERTIFICATED REMIC I LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE
I-1-A Variable(1) $ 3,660,687.29 June 2036
I-2-A Variable(1) $ 4,838,520.61 June 2036
I-3-A Variable(1) $ 6,014,218.03 June 2036
I-4-A Variable(1) $ 7,172,352.50 June 2036
I-5-A Variable(1) $ 8,295,571.99 June 2036
I-6-A Variable(1) $ 9,350,594.62 June 2036
I-7-A Variable(1) $ 10,274,291.92 June 2036
I-8-A Variable(1) $ 11,077,346.28 June 2036
I-9-A Variable(1) $ 11,734,292.56 June 2036
I-10-A Variable(1) $ 12,254,557.26 June 2036
I-11-A Variable(1) $ 12,413,172.57 June 2036
I-12-A Variable(1) $ 12,019,711.28 June 2036
I-13-A Variable(1) $ 11,432,766.96 June 2036
I-14-A Variable(1) $ 10,938,297.61 June 2036
I-15-A Variable(1) $ 10,466,038.82 June 2036
I-16-A Variable(1) $ 10,005,154.74 June 2036
I-17-A Variable(1) $ 9,756,489.65 June 2036
I-18-A Variable(1) $ 9,536,840.85 June 2036
I-19-A Variable(1) $ 9,344,627.36 June 2036
I-20-A Variable(1) $ 9,366,486.85 June 2036
I-21-A Variable(1) $ 10,792,282.86 June 2036
I-22-A Variable(1) $ 13,209,629.79 June 2036
I-23-A Variable(1) $ 12,897,287.91 June 2036
I-24-A Variable(1) $ 11,394,285.98 June 2036
I-25-A Variable(1) $ 9,961,709.71 June 2036
I-26-A Variable(1) $ 8,041,637.41 June 2036
I-27-A Variable(1) $ 5,768,221.47 June 2036
I-28-A Variable(1) $ 4,858,175.61 June 2036
I-29-A Variable(1) $ 4,581,373.70 June 2036
I-30-A Variable(1) $ 4,320,681.18 June 2036
I-31-A Variable(1) $ 303,845.67 June 2036
I-32-A Variable(1) $ 3,705,645.17 June 2036
I-33-A Variable(1) $ 3,495,739.42 June 2036
I-34-A Variable(1) $ 3,297,962.13 June 2036
I-35-A Variable(1) $ 3,111,418.53 June 2036
I-36-A Variable(1) $ 2,935,453.94 June 2036
I-37-A Variable(1) $ 2,769,963.46 June 2036
I-38-A Variable(1) $ 2,652,268.59 June 2036
I-39-A Variable(1) $ 2,559,850.17 June 2036
I-40-A Variable(1) $ 2,416,490.54 June 2036
I-41-A Variable(1) $ 2,281,362.37 June 2036
I-42-A Variable(1) $ 2,153,988.93 June 2036
I-43-A Variable(1) $ 2,033,976.56 June 2036
I-44-A Variable(1) $ 34,386,729.22 June 2036
I-1-B Variable(1) $ 3,660,687.29 June 2036
I-2-B Variable(1) $ 4,838,520.61 June 2036
I-3-B Variable(1) $ 6,014,218.03 June 2036
I-4-B Variable(1) $ 7,172,352.50 June 2036
I-5-B Variable(1) $ 8,295,571.99 June 2036
I-6-B Variable(1) $ 9,350,594.62 June 2036
I-7-B Variable(1) $ 10,274,291.92 June 2036
I-8-B Variable(1) $ 11,077,346.28 June 2036
I-9-B Variable(1) $ 11,734,292.56 June 2036
I-10-B Variable(1) $ 12,254,557.26 June 2036
I-11-B Variable(1) $ 12,413,172.57 June 2036
I-12-B Variable(1) $ 12,019,711.28 June 2036
I-13-B Variable(1) $ 11,432,766.96 June 2036
I-14-B Variable(1) $ 10,938,297.61 June 2036
I-15-B Variable(1) $ 10,466,038.82 June 2036
I-16-B Variable(1) $ 10,005,154.74 June 2036
I-17-B Variable(1) $ 9,756,489.65 June 2036
I-18-B Variable(1) $ 9,536,840.85 June 2036
I-19-B Variable(1) $ 9,344,627.36 June 2036
I-20-B Variable(1) $ 9,366,486.85 June 2036
I-21-B Variable(1) $ 10,792,282.86 June 2036
I-22-B Variable(1) $ 13,209,629.79 June 2036
I-23-B Variable(1) $ 12,897,287.91 June 2036
I-24-B Variable(1) $ 11,394,285.98 June 2036
I-25-B Variable(1) $ 9,961,709.71 June 2036
I-26-B Variable(1) $ 8,041,637.41 June 2036
I-27-B Variable(1) $ 5,768,221.47 June 2036
I-28-B Variable(1) $ 4,858,175.61 June 2036
I-29-B Variable(1) $ 4,581,373.70 June 2036
I-30-B Variable(1) $ 4,320,681.18 June 2036
I-31-B Variable(1) $ 303,845.67 June 2036
I-32-B Variable(1) $ 3,705,645.17 June 2036
I-33-B Variable(1) $ 3,495,739.42 June 2036
I-34-B Variable(1) $ 3,297,962.13 June 2036
I-35-B Variable(1) $ 3,111,418.53 June 2036
I-36-B Variable(1) $ 2,935,453.94 June 2036
I-37-B Variable(1) $ 2,769,963.46 June 2036
I-38-B Variable(1) $ 2,652,268.59 June 2036
I-39-B Variable(1) $ 2,559,850.17 June 2036
I-40-B Variable(1) $ 2,416,490.54 June 2036
I-41-B Variable(1) $ 2,281,362.37 June 2036
I-42-B Variable(1) $ 2,153,988.93 June 2036
I-43-B Variable(1) $ 2,033,976.56 June 2036
I-44-B Variable(1) $ 34,386,729.22 June 2036
A-I Variable(1) $ 12,606,079.00 June 2036
_______________
(1) Calculated as provided in the definition of Uncertificated REMIC I Pass-Through Rate.
REMIC II
As provided herein, the REMIC Administrator will make an election to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC for federal
income tax purposes, and such segregated pool of assets will be designated as "REMIC II."
The Class R-II Certificates will represent the sole Class of "residual interests" in REMIC
II for purposes of the REMIC Provisions (as defined herein) under federal income tax law.
The following table irrevocably sets forth the designation, remittance rate (the
"Uncertificated REMIC II Pass-Through Rate") and initial Uncertificated Principal Balance for
each of the "regular interests" in REMIC II (the "REMIC II Regular Interests"). The "latest
possible maturity date" (determined solely for purposes of satisfying Treasury regulation
Section 1.860G 1(a)(4)(iii)) for each REMIC II Regular Interest shall be the Maturity Date.
None of the REMIC II Regular Interests will be certificated.
UNCERTIFICATED INITIAL UNCERTIFICATED
REMIC II REMIC II LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE
LT1 Variable(1) $ 700,250,721.22 June 2036
LT2 Variable(1) $ 20,716.24 June 2036
LT3 Variable(1) $ 49,320.77 June 2036
LT4 Variable(1) $ 49,320.77 June 2036
LT-IO Variable(1) (2) June 2036
_______________
(1) Calculated as provided in the definition of Uncertificated REMIC II Pass-Through Rate.
(2) REMIC II Regular Interest LT-IO will not have an Uncertificated Principal Balance but
will accrue interest on its uncertificated notional amount calculated in accordance with
the definition of "Uncertificated Notional Amount" herein.
REMIC III
As provided herein, the REMIC Administrator will elect to treat the segregated pool
of assets consisting of the REMIC II Regular Interests as a REMIC for federal income tax
purposes, and such segregated pool of assets will be designated as REMIC III. The Class
R-III Certificates will represent the sole Class of "residual interests" in REMIC III for
purposes of the REMIC Provisions under federal income tax law. The following table
irrevocably sets forth the designation, Pass Through Rate, aggregate Initial Certificate
Principal Balance, certain features, month of Final Scheduled Distribution Date and initial
ratings for each Class of Certificates comprising the interests representing "regular
interests" in REMIC III. The "latest possible maturity date" (determined solely for
purposes of satisfying Treasury Regulation Section 1.860G 1(a)(4)(iii)) for each of REMIC
III Regular Interest shall be the Maturity Date.
Month of
Final
Aggregate Initial Scheduled
Pass-Through Certificate Distribution
Designation Type Rate Principal Balance Features Date
S&P Xxxxx'x
Class A-1 Regular(1) Adjustable(2)(3) $282,245,000.00 Senior/Adjustable March 2028 AAA Aaa
Rate
Class A-2 Regular(1) Adjustable(2)(3) $100,123,000.00 Senior/Adjustable July 2031 AAA Aaa
Rate
Class A-3 Regular(1) Adjustable(2)(3) $104,883,000.00 Senior/Adjustable January 2035 AAA Aaa
Rate
Class A-4 Regular(1) Adjustable(2)(3) $59,038,000.00 Senior/Adjustable June 2036 AAA Aaa
Rate
Class M-1 Regular(1) Adjustable(2)(3) $26,614,000.00 Mezzanine/Adjustable June 2036 AA+ Aa1
Rate
Class M-2 Regular(1) Adjustable(2)(3) $24,863,000.00 Mezzanine/Adjustable June 2036 AA Aa2
Rate
Class M-3 Regular(1) Adjustable(2)(3) $14,358,000.00 Mezzanine/Adjustable June 2036 AA- Aa3
Rate
Class M-4 Regular(1) Adjustable(2)(3) $12,957,000.00 Mezzanine/Adjustable June 2036 A+ A1
Rate
Class M-5 Regular(1) Adjustable(2)(3) $11,906,000.00 Mezzanine/Adjustable June 2036 A A2
Rate
Class M-6 Regular(1) Adjustable(2)(3) $11,556,000.00 Mezzanine/Adjustable June 2036 A- A3
Rate
Class M-7 Regular(1) Adjustable(2)(3) $10,506,000.00 Mezzanine/Adjustable June 2036 BBB+ Baa1
Rate
Class M-8 Regular(1) Adjustable(2)(3) $ 9,805,000.00 Mezzanine/Adjustable June 2036 BBB Baa2
Rate
Class M-9 Regular(1) Adjustable(2)(3) $ 7,004,000.00 Mezzanine/Adjustable June 2036 BBB- Baa3
Rate
Class M-10 Regular(1) Adjustable(2)(3) $ 4,903,000.00 Mezzanine/Adjustable June 2036 BBB- Ba1
Rate
Class B Regular(1) Adjustable(2)(3) $ 7,003,000.00 Mezzanine/Adjustable June 2036 BB+ Ba2
Rate
Class SB Regular (4) $12,606,078.78 Subordinate N/R N/R
(4)
IO Regular (6) (7) Interest Only N/R N/R
(5)
___________________
(1) This Class of Certificates represents ownership of a REMIC III Regular Interest together
with (i) certain rights to payments to be made from amounts received under the Swap
Agreement which will be deemed made for federal income tax purposes outside of REMIC III
by the holder of the Class SB Certificates as the owner of the Swap Agreement and (ii)
the obligation to pay the Class IO Distribution Amount. Any amount distributed on this
Class of Certificates on any Distribution Date in excess of the amount distributable on
the related REMIC III Regular Interest on such Distribution Date shall be treated for
federal income tax purposes as having been paid from the Swap Account and any amount
distributable on such REMIC III Regular Interest on such Distribution Date in excess of
the amount distributable on such Class of Certificates on such Distribution Date shall be
treated as having been paid to the Swap Account, all pursuant to and as further provided
in Section 4.10 hereof.
(2) The REMIC III Regular Interests ownership of which is represented by the Class A
Certificates and the Class M Certificates, will accrue interest at a per annum rate equal
to LIBOR plus the applicable Margin, each subject to a payment cap as described in the
definition of "Pass-Through Rate" and the provisions for the payment of Basis Risk
Shortfalls herein, which payments will not be part of the entitlement of the REMIC III
Regular Interests related to such Certificates.
(3) The Class A Certificates and Class M Certificates will also entitle their holders to
certain payments from the Holder of the Class SB Certificates from amounts to which the
related REMIC III Regular Interest is entitled and from amounts received under the Swap
Agreement, which will not be a part of their ownership of the REMIC III Regular Interests.
(4) The Class SB Certificates will accrue interest as described in the definition of Accrued
Certificate Interest. The Class SB Certificates will not accrue interest on their
Certificate Principal Balance. The Class SB Certificates will be comprised of two
REMIC III regular interests, a principal only regular interest designated SB-PO and an
interest only regular interest designated SB-IO, which will be entitled to distributions
as set forth herein. The rights of the Holder of the Class SB Certificates to payments
from the Swap Agreement shall be outside and apart from its rights under the REMIC III
Regular Interests SB-IO and SB-PO.
(5) REMIC III Regular Interest IO will be held as an asset of the Swap Account established by
the Trustee and will be treated for federal income tax purposes as owned by the holder of
the Class SB Certificate.
(6) For federal income tax purposes, REMIC III Regular Interest IO will not have a
Pass-Through Rate, but will be entitled to 100% of the amounts distributed on REMIC II
Regular Interest LT-IO.
(7) For federal income tax purposes, REMIC III Regular Interest IO will not have an
Uncertificated Principal Balance, but will have a notional amount equal to the
Uncertificated Notional Amount of REMIC II Regular Interest LT-IO.
In consideration of the mutual agreements herein contained, the Depositor, the Master
Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the meanings specified in this Article.
Accredited Investor: The meaning specified in Rule 501(a) of the Securities Act.
Accrued Certificate Interest: With respect to each Distribution Date and each
Class of Class A Certificates, Class M Certificates and Class B Certificates, an amount equal
to the interest accrued during the related Interest Accrual Period on the Certificate
Principal Balance thereof immediately prior to such Distribution Date at the related
Pass-Through Rate for that Distribution Date.
The amount of Accrued Certificate Interest on each Class of Certificates shall be
reduced by the amount of Prepayment Interest Shortfalls on the related Mortgage Loans during
the prior calendar month to the extent not covered by Compensating Interest pursuant to
Section 3.16, and Relief Act Shortfalls on the related Mortgage Loans during the related Due
Period. All such reductions with respect to the Mortgage Loans will be allocated among the
Certificates in proportion to the amount of Accrued Certificate Interest payable on such
Certificates on such Distribution Date absent such reductions.
Accrued Certificate Interest for any Distribution Date shall further be reduced by
the interest portion of Realized Losses allocated to any Class of Certificates pursuant to
Section 4.05.
Accrued Certificate Interest shall accrue on the basis of a 360-day year and the
actual number of days in the related Interest Accrual Period.
With respect to each Distribution Date and the Class SB Certificates, interest
accrued during the preceding Interest Accrual Period at the Pass-Through Rate on the
Uncertificated Notional Amount as specified in the definition of Pass-Through Rate,
immediately prior to such Distribution Date, reduced by any interest shortfalls with respect
to the Mortgage Loans, including Prepayment Interest Shortfalls to the extent not covered by
Compensating Interest pursuant to Section 3.16 or by Excess Cash Flow pursuant to
Section 4.02(c)(v) and (vi). Accrued Certificate Interest on the Class SB Certificates shall
accrue on the basis of a 360-day year and the actual number of days in the related Interest
Accrual Period.
Adjusted Available Distribution Amount: With respect to any Distribution Date, the
Available Distribution Amount increased by the excess, if any, of the Net Swap Payment owed
to the Swap Counterparty over the amount distributable on such Distribution Date in respect
of the REMIC III Regular Interest IO.
Adjusted Mortgage Rate: With respect to any Mortgage Loan and any date of
determination, the Mortgage Rate borne by the related Mortgage Note, less the rate at which
the related Subservicing Fee accrues.
Adjustment Date: With respect to each adjustable-rate Mortgage Loan, each date set
forth in the related Mortgage Note on which an adjustment to the interest rate on such
Mortgage Loan becomes effective.
Advance: With respect to any Mortgage Loan, any advance made by the Master Servicer,
pursuant to Section 4.04.
Affected Party: As defined in the Swap Agreement.
Affiliate: With respect to any Person, any other Person controlling, controlled by
or under common control with such first Person. For the purposes of this definition,
"control" means the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments hereof and
supplements hereto.
Amount Held for Future Distribution: With respect to any Distribution Date, the
total of the amounts held in the Custodial Account at the close of business on the preceding
Determination Date on account of (i) Liquidation Proceeds, Subsequent Recoveries, Insurance
Proceeds, REO Proceeds, Principal Prepayments, Mortgage Loan purchases made pursuant to
Section 2.02, 2.03, 2.04 or 4.07 and Mortgage Loan substitutions made pursuant to
Section 2.03 or 2.04 received or made in the month of such Distribution Date (other than such
Liquidation Proceeds, Subsequent Recoveries, Insurance Proceeds, REO Proceeds and purchases
of Mortgage Loans that the Master Servicer has deemed to have been received in the preceding
month in accordance with Section 3.07(b)) and (ii) payments which represent early receipt of
scheduled payments of principal and interest due on a date or dates subsequent to the Due
Date in the related Due Period.
Applicable Procedures: The applicable rules, regulations and procedures utilized or
imposed by any Clearance System or the Depository.
Appraised Value: With respect to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at the time of the
origination of the related Mortgage Loan, and (ii) the sales price of the Mortgaged Property
at such time of origination, except in the case of a Mortgaged Property securing a
refinanced or modified Mortgage Loan as to which it is either the appraised value based upon
the appraisal made at the time of origination of the loan which was refinanced or modified
or the appraised value determined in an appraisal at the time of refinancing or
modification, as the case may be.
Assignment: An assignment of the Mortgage, notice of transfer or equivalent
instrument, in recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale of the Mortgage Loan to
the Trustee for the benefit of Certificateholders, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if permitted by law
and accompanied by an Opinion of Counsel to that effect.
Assignment Agreement: The Assignment and Assumption Agreement, dated the Closing
Date, between Residential Funding and the Depositor relating to the transfer and assignment
of the Mortgage Loans, attached hereto as Exhibit R.
Available Distribution Amount: With respect to any Distribution Date, an amount equal
to (a) the sum of (i) the amount relating to the Mortgage Loans on deposit in the Custodial
Account as of the close of business on the immediately preceding Determination Date,
including any Subsequent Recoveries, and amounts deposited in the Custodial Account in
connection with the substitution of Qualified Substitute Mortgage Loans, (ii) the amount of
any Advance made on the immediately preceding Certificate Account Deposit Date with respect
to the Mortgage Loans, (iii) any amount deposited in the Certificate Account on the related
Certificate Account Deposit Date pursuant to the second paragraph of Section 3.12(a) in
respect of the Mortgage Loans, (iv) any amount that the Master Servicer is not permitted to
withdraw from the Custodial Account pursuant to Section 3.16(e) in respect of the Mortgage
Loans, and (v) any amount deposited in the Certificate Account pursuant to Section 4.07 or
9.01 in respect of the Mortgage Loans, reduced by (b) the sum as of the close of business on
the immediately preceding Determination Date of (x) the Amount Held for Future Distribution
with respect to the Mortgage Loans, (y) amounts permitted to be withdrawn by the Master
Servicer from the Custodial Account in respect of the Mortgage Loans pursuant to clauses
(ii)-(x), inclusive, of Section 3.10(a) and (z) any Net Swap Payments required to be made to
the Swap Counterparty and Swap Termination Payments not due to a Swap Counterparty Trigger
Event for such Distribution Date.
Balloon Loan: Each of the Mortgage Loans having an original term to maturity that is
shorter than the related amortization term.
Balloon Payment: With respect to any Balloon Loan, the related Monthly Payment
payable on the stated maturity date of such Balloon Loan.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Basis Risk Shortfalls: With respect to each Class of the Class A Certificates,
Class M Certificates and Class B Certificates, and any Distribution Date, the sum of (a) with
respect to any Distribution Date on which the Net WAC Cap Rate is used to determine the
Pass-Through Rate of such Class, an amount equal to the excess of (x) Accrued Certificate
Interest for such Class calculated at a per annum rate equal to LIBOR plus the related
Margin for such Distribution Date (which shall not exceed 14.000% per annum), over
(y) Accrued Certificate Interest for such Class calculated using the Net WAC Cap Rate,
(b) any shortfalls for such Class calculated pursuant to clause (a) above remaining unpaid
from prior Distribution Dates, and (c) one month's interest on the amount in clause
(b) (based on the number of days in the preceding Interest Accrual Period) at a per annum
rate equal to the Pass-Through Rate for such period.
Book-Entry Certificate: Any Certificate registered in the name of the Depository or
its nominee.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on which
banking institutions in the State of California, the State of Minnesota, the State of Texas,
the State of New York or the State of Illinois (and such other state or states in which the
Custodial Account or the Certificate Account are at the time located) are required or
authorized by law or executive order to be closed.
Calendar Quarter: A Calendar Quarter shall consist of one of the following time
periods in any given year: January 1 through March 31, April 1 through June 30, July 1
through September 30, and October 1 through December 31.
Capitalization Reimbursement Amount: With respect to any Distribution Date, the
amount of Advances or Servicing Advances that were added to the Stated Principal Balance of
the Mortgage Loans during the prior calendar month and reimbursed to the Master Servicer or
Subservicer on or prior to such Distribution Date pursuant to Section 3.10(a)(vii).
Cash Liquidation: With respect to any defaulted Mortgage Loan other than a Mortgage
Loan as to which an REO Acquisition occurred, a determination by the Master Servicer that it
has received all Insurance Proceeds, Liquidation Proceeds and other payments or cash
recoveries which the Master Servicer reasonably and in good faith expects to be finally
recoverable with respect to such Mortgage Loan.
Certificate: Any Class A Certificate, Class M Certificate, Class B Certificate,
Class SB Certificate or Class R Certificate.
Certificate Account: The account or accounts created and maintained pursuant to
Section 4.01, which shall be entitled "U.S. Bank National Association, as trustee, in trust
for the registered holders of Residential Asset Securities Corporation, Home Equity Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS4" and which account shall be held for
the benefit of the Certificateholders and which must be an Eligible Account.
Certificate Account Deposit Date: With respect to any Distribution Date, the
Business Day prior thereto.
Certificateholder or Holder: The Person in whose name a Certificate is registered in
the Certificate Register, except that neither a Disqualified Organization nor a Non-United
States Person shall be a holder of a Class R Certificate for any purpose hereof. Solely for
the purpose of giving any consent or direction pursuant to this Agreement, any Certificate,
other than a Class R Certificate, registered in the name of the Depositor, the Master
Servicer or any Subservicer or any Affiliate thereof shall be deemed not to be outstanding
and the Percentage Interest or Voting Rights evidenced thereby shall not be taken into
account in determining whether the requisite amount of Percentage Interests or Voting Rights
necessary to effect any such consent or direction has been obtained. All references herein
to "Holders" or "Certificateholders" shall reflect the rights of Certificate Owners as they
may indirectly exercise such rights through the Depository and participating members
thereof, except as otherwise specified herein; provided, however, that the Trustee shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in whose name a
Certificate is registered in the Certificate Register. Unless otherwise indicated in this
Agreement, the Custodial Agreement or the Assignment Agreement, whenever reference is made
to the actions taken by the Trustee on behalf of the Certificateholders.
Certificate Owner: With respect to a Book-Entry Certificate, the Person who is the
beneficial owner of such Certificate, as reflected on the books of an indirect participating
brokerage firm for which a Depository Participant acts as agent, if any, and otherwise on
the books of a Depository Participant, if any, and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to any Class A Certificate, Class M
Certificate or Class B Certificate, on any date of determination, an amount equal to (i) the
Initial Certificate Principal Balance of such Certificate as specified on the face thereof,
minus (ii) the sum of (x) the aggregate of all amounts previously distributed with respect
to such Certificate (or any predecessor Certificate) and applied to reduce the Certificate
Principal Balance thereof pursuant to Section 4.02(c) and (y) the aggregate of all
reductions in Certificate Principal Balance deemed to have occurred in connection with
Realized Losses which were previously allocated to such Certificate (or any predecessor
Certificate) pursuant to Section 4.05; provided, that with respect to any Distribution Date,
the Certificate Principal Balance of any outstanding Class of Class A Certificates, Class M
Certificates or Class B Certificates (with respect to the Class A Certificates, on a pro
rata basis based on the amount of Realized Loss previously allocated thereto and remaining
unreimbursed) to which a Realized Loss was previously allocated and remains unreimbursed
will be increased, to the extent of Realized Losses previously allocated thereto and
remaining unreimbursed, but only to the extent of Subsequent Recoveries received during the
preceding calendar month. With respect to any Class SB Certificate, on any date of
determination, an amount equal to the Percentage Interest evidenced by such Certificate,
multiplied by an amount equal to (i) the excess, if any, of (A) the then aggregate Stated
Principal Balance of the Mortgage Loans over (B) the then aggregate Certificate Principal
Balance of the Class A Certificates, Class M Certificates and Class B Certificates then
outstanding, which represents the sum of (i) the Initial Principal Balance of the REMIC II
Regular Interest SB-PO, as reduced by Realized Losses allocated thereto and payments deemed
made thereon, and (ii) accrued and unpaid interest on the REMIC II Regular Interest SB-IO,
as reduced by Realized Losses allocated thereto. The Class R Certificates will not have a
Certificate Principal Balance.
Certificate Register and Certificate Registrar: The register maintained and the
registrar appointed pursuant to Section 5.02.
Class: Collectively, all of the Certificates or uncertificated interests bearing the
same designation.
Class A Certificates: Collectively, the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates and Class A-4 Certificates.
Class A Principal Distribution Amount: With respect to any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in
effect for that Distribution Date, the Principal Distribution Amount for that Distribution
Date or (b) on or after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:
(i)....the Principal Distribution Amount for that Distribution Date; and
(ii)...the excess, if any, of (A) the aggregate Certificate Principal Balance
of the Class A Certificates immediately prior to that Distribution Date over (B) the lesser
of (x) the product of (1) the applicable Subordination Percentage and (2) the aggregate
Stated Principal Balance of the Mortgage Loans after giving effect to distributions to be
made on that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Class A-1 Certificate: Any one of the Class A-1 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit A, senior to the Class M Certificates, Class B Certificates, Class SB Certificates
and Class R Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a "regular
interest" in REMIC III for purposes of the REMIC Provisions, (ii) the right to receive
payments under the Swap Agreement and (iii) the obligation to pay the Class IO Distribution
Amount.
Class A-1 Margin: Initially, 0.40% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date, 0.80%
per annum.
Class A-2 Certificate: Any one of the Class A-2 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit A, senior to the Class M Certificates, Class B Certificates, Class SB Certificates
and Class R Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a "regular
interest" in REMIC III for purposes of the REMIC Provisions, (ii) the right to receive
payments under the Swap Agreement and (iii) the obligation to pay the Class IO Distribution
Amount.
Class A-2 Margin: Initially, 0.100% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.200% per annum.
Class A-3 Certificate: Any one of the Class A-3 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit A, senior to the Class M Certificates, Class B Certificates, Class SB Certificates
and Class R Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a "regular
interest" in REMIC III for purposes of the REMIC Provisions, (ii) the right to receive
payments under the Swap Agreement and (iii) the obligation to pay the Class IO Distribution
Amount.
Class A-3 Margin: Initially, 0.150% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.300% per annum.
Class A-4 Certificate: Any one of the Class A-4 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit A, senior to the Class M Certificates, Class B Certificates, Class SB Certificates
and Class R Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a "regular
interest" in REMIC III for purposes of the REMIC Provisions, (ii) the right to receive
payments under the Swap Agreement and (iii) the obligation to pay the Class IO Distribution
Amount.
Class A-4 Margin: Initially, 0.240% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.480% per annum.
Class B Certificate: Any one of the Class B Certificates executed by the Trustee and
authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-2, senior to the Class SB Certificates and Class R Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section 4.05, and
evidencing (i) an interest designated as a "regular interest" in REMIC III for purposes of
the REMIC Provisions and (ii) the right to receive payments under the Swap Agreement.
Class B Margin: Initially, 2.500% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
3.750% per annum.
Class B Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount and the
Class M Principal Distribution Amount or (b) on or after the Stepdown Date if a Trigger
Event is not in effect for that Distribution Date, the lesser of:
(i) the remaining Principal Distribution Amount for that Distribution Date after
distribution of the Class A Principal Distribution Amount and the Class M Principal
Distribution Amount; and
(ii) the excess, if any, of (A) the sum of (1) the aggregate Certificate Principal
Balance of the Class A Certificates and Class M Certificates (after taking into account the
payment of the Class A Principal Distribution Amount and the Class M Principal Distribution
Amount for that Distribution Date) and (2) the Certificate Principal Balance of the Class B
Certificates immediately prior to that Distribution Date over (B) the lesser of (x) the
product of (1) the applicable Subordination Percentage and (2) the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal Balance
of the Mortgage Loans after giving effect to distributions to be made on that Distribution
Date, over the Overcollateralization Floor.
Class M Certificates: Collectively, the Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates,
Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9
Certificates and Class M-10 Certificates.
Class M-1 Certificate: Any one of the Class M-1 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-1, senior to the Class M-2 Certificates, Class M-3 Certificates, Class M-4
Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates,
Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class B
Certificates, Class SB Certificates and Class R Certificates with respect to distributions
and the allocation of Realized Losses as set forth in Section 4.05, and evidencing (i) an
interest designated as a "regular interest" in REMIC III for purposes of the REMIC
Provisions, (ii) the right to receive payments under the Swap Agreement and (iii) the
obligation to pay the Class IO Distribution Amount.
Class M-1 Margin: Initially, 0.280% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.420% per annum.
Class M-1 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount or (b) on
or after the Stepdown Date if a Trigger Event is not in effect for that Distribution Date,
the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the payment of the
Class A Principal Distribution Amount for that Distribution Date) and (2) the Certificate
Principal Balance of the Class M-1 Certificates immediately prior to that Distribution Date
over (B) the lesser of (x) the product of (1) the applicable Subordination Percentage and
(2) the aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date and (y) the excess, if any, of the
aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date, over the Overcollateralization Floor.
Class M-2 Certificate: Any one of the Class M-2 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-1, senior to the Class M-3 Certificates, Class M-4 Certificates, Class M-5
Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates,
Class M-9 Certificates, Class M-10 Certificates, Class B Certificates, Class SB Certificates
and Class R Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.05, and evidencing (i) an interest designated as a "regular
interest" in REMIC III for purposes of the REMIC Provisions, (ii) the right to receive
payments under the Swap Agreement and (iii) the obligation to pay the Class IO Distribution
Amount.
Class M-2 Margin: Initially, 0.290% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.435% per annum.
Class M-2 Principal Distribution Amount: With respect to any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in
effect for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount and the
Class M-1 Principal Distribution Amount or (b) on or after the Stepdown Date if a Trigger
Event is not in effect for that Distribution Date, the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount and the Class M-1 Principal
Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates and Class M-1 Certificates (after taking into
account the payment of the Class A Principal Distribution Amount and the Class M-1 Principal
Distribution Amount for that Distribution Date) and (2) the Certificate Principal Balance of
the Class M-2 Certificates immediately prior to that Distribution Date over (B) the lesser
of (x) the product of (1) the applicable Subordination Percentage and (2) the aggregate
Stated Principal Balance of the Mortgage Loans after giving effect to distributions to be
made on that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Class M-3 Certificate: Any one of the Class M-3 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-1, senior to the Class M-4 Certificates, Class M-5 Certificates, Class M-6
Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates,
Class M-10 Certificates, Class B Certificates, Class SB Certificates and Class R Certificates
with respect to distributions and the allocation of Realized Losses as set forth in
Section 4.05, and evidencing (i) an interest designated as a "regular interest" in REMIC III
for purposes of the REMIC Provisions, (ii) the right to receive payments under the Swap
Agreement and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-3 Margin: Initially, 0.300% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.450% per annum.
Class M-3 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount and the Class M-2 Principal Distribution Amount or
(b) on or after the Stepdown Date if a Trigger Event is not in effect for that Distribution
Date, the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount and the Class M-2 Principal Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates and Class M-2
Certificates (after taking into account the payment of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount and the Class M-2 Principal Distribution
Amount for that Distribution Date) and (2) the Certificate Principal Balance of the
Class M-3 Certificates immediately prior to that Distribution Date over (B) the lesser of (x)
the product of (1) the applicable Subordination Percentage and (2) the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal Balance
of the Mortgage Loans after giving effect to distributions to be made on that Distribution
Date, over the Overcollateralization Floor.
Class M-4 Certificate: Any one of the Class M-4 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-1, senior to the Class M-5 Certificates, Class M-6 Certificates, Class M-7
Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates,
Class B Certificates, Class SB Certificates and Class R Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section 4.05, and
evidencing (i) an interest designated as a "regular interest" in REMIC III for purposes of
the REMIC Provisions, (ii) the right to receive payments under the Swap Agreement and (iii)
the obligation to pay the Class IO Distribution Amount.
Class M-4 Margin: Initially, 0.350% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.525% per annum.
Class M-4 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount and the
Class M-3 Principal Distribution Amount or (b) on or after the Stepdown Date if a Trigger
Event is not in effect for that Distribution Date, the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount and the Class M-3 Principal
Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates, Class M-2
Certificates and Class M-3 Certificates (after taking into account the payment of the
Class A Principal Distribution Amount, the Class M-1 Principal Distribution Amount, the
Class M-2 Principal Distribution Amount and the Class M-3 Principal Distribution Amount for
that Distribution Date) and (2) the Certificate Principal Balance of the Class M-4
Certificates immediately prior to that Distribution Date over (B) the lesser of (x) the
product of (1) the applicable Subordination Percentage and (2) the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal Balance
of the Mortgage Loans after giving effect to distributions to be made on that Distribution
Date, over the Overcollateralization Floor.
Class M-5 Certificate: Any one of the Class M-5 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-1, senior to the Class M-6 Certificates, Class M-7 Certificates, Class M-8
Certificates, Class M-9 Certificates, Class M-10 Certificates, Class B Certificates,
Class SB Certificates and Class R Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.05, and evidencing (i) an interest
designated as a "regular interest" in REMIC III for purposes of the REMIC Provisions, (ii)
the right to receive payments under the Swap Agreement and (iii) the obligation to pay the
Class IO Distribution Amount.
Class M-5 Margin: Initially, 0.390% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.585% per annum.
Class M-5 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount, the
Class M-3 Principal Distribution Amount and the Class M-4 Principal Distribution Amount or
(b) on or after the Stepdown Date if a Trigger Event is not in effect for that Distribution
Date, the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount and the Class M-4 Principal Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates and Class M-4 Certificates (after taking into account
the payment of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount and the Class M-4 Principal Distribution Amount for that Distribution
Date) and (2) the Certificate Principal Balance of the Class M-5 Certificates immediately
prior to that Distribution Date over (B) the lesser of (x) the product of (1) the applicable
Subordination Percentage and (2) the aggregate Stated Principal Balance of the Mortgage
Loans after giving effect to distributions to be made on that Distribution Date and (y) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans after giving
effect to distributions to be made on that Distribution Date, over the Overcollateralization
Floor.
Class M-6 Certificate: Any one of the Class M-6 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-1, senior to the Class M-7 Certificates, Class M-8 Certificates, Class M-9
Certificates, Class M-10 Certificates, Class B Certificates, Class SB Certificates and
Class R Certificates with respect to distributions and the allocation of Realized Losses as
set forth in Section 4.05, and evidencing (i) an interest designated as a "regular interest"
in REMIC III for purposes of the REMIC Provisions, (ii) the right to receive payments under
the Swap Agreement and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-6 Margin: Initially, 0.460% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
0.690% per annum.
Class M-6 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount, the
Class M-3 Principal Distribution Amount, the Class M-4 Principal Distribution Amount and the
Class M-5 Principal Distribution Amount or (b) on or after the Stepdown Date if a Trigger
Event is not in effect for that Distribution Date, the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount and the Class M-5 Principal
Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates and Class M-5 Certificates
(after taking into account the payment of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount, the
Class M-3 Principal Distribution Amount, the Class M-4 Principal Distribution Amount and the
Class M-5 Principal Distribution Amount for that Distribution Date) and (2) the Certificate
Principal Balance of the Class M-6 Certificates immediately prior to that Distribution Date
over (B) the lesser of (x) the product of (1) the applicable Subordination Percentage and
(2) the aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date and (y) the excess, if any, of the
aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date, over the Overcollateralization Floor.
Class M-7 Certificate: Any one of the Class M-7 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-1, senior to the Class M-8 Certificates, Class M-9 Certificates, Class M-10
Certificates, Class B Certificates, Class SB Certificates and Class R Certificates with
respect to distributions and the allocation of Realized Losses as set forth in Section 4.05,
and evidencing (i) an interest designated as a "regular interest" in REMIC III for purposes
of the REMIC Provisions, (ii) the right to receive payments under the Swap Agreement and
(iii) the obligation to pay the Class IO Distribution Amount.
Class M-7 Margin: Initially, 0.900% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
1.350% per annum.
Class M-7 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount, the
Class M-3 Principal Distribution Amount, the Class M-4 Principal Distribution Amount, the
Class M-5 Principal Distribution Amount and the Class M-6 Principal Distribution Amount or
(b) on or after the Stepdown Date if a Trigger Event is not in effect for that Distribution
Date, the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal
Distribution Amount and the Class M-6 Principal Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates and
Class M-6 Certificates (after taking into account the payment of the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class M-2 Principal
Distribution Amount, the Class M-3 Principal Distribution Amount, the Class M-4 Principal
Distribution Amount, the Class M-5 Principal Distribution Amount and the Class M-6 Principal
Distribution Amount for that Distribution Date) and (2) the Certificate Principal Balance of
the Class M-7 Certificates immediately prior to that Distribution Date over (B) the lesser
of (x) the product of (1) the applicable Subordination Percentage and (2) the aggregate
Stated Principal Balance of the Mortgage Loans after giving effect to distributions to be
made on that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans after giving effect to distributions to be made on that
Distribution Date, over the Overcollateralization Floor.
Class M-8 Certificate: Any one of the Class M-8 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-1, senior to the Class M-9 Certificates, Class M-10 Certificates, Class B
Certificates, Class SB Certificates and Class R Certificates with respect to distributions
and the allocation of Realized Losses as set forth in Section 4.05, and evidencing (i) an
interest designated as a "regular interest" in REMIC III for purposes of the REMIC
Provisions, (ii) the right to receive payments under the Swap Agreement and (iii) the
obligation to pay the Class IO Distribution Amount.
Class M-8 Margin: Initially, 1.100% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
1.650% per annum.
Class M-8 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount, the
Class M-3 Principal Distribution Amount, the Class M-4 Principal Distribution Amount, the
Class M-5 Principal Distribution Amount, Class M-6 Principal Distribution Amount and the
Class M-7 Principal Distribution Amount or (b) on or after the Stepdown Date if a Trigger
Event is not in effect for that Distribution Date, the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal
Distribution Amount, Class M-6 Principal Distribution Amount and the Class M-7 Principal
Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates,
Class M-6 Certificates and Class M-7 Certificates (after taking into account the payment of
the Class A Principal Distribution Amount, the Class M-1 Principal Distribution Amount, the
Class M-2 Principal Distribution Amount, the Class M-3 Principal Distribution Amount, the
Class M-4 Principal Distribution Amount, the Class M-5 Principal Distribution Amount,
Class M-6 Principal Distribution Amount and the Class M-7 Principal Distribution Amount for
that Distribution Date) and (2) the Certificate Principal Balance of the Class M-8
Certificates immediately prior to that Distribution Date over (B) the lesser of (x) the
product of (1) the applicable Subordination Percentage and (2) the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to distributions to be made on
that Distribution Date and (y) the excess, if any, of the aggregate Stated Principal Balance
of the Mortgage Loans after giving effect to distributions to be made on that Distribution
Date, over the Overcollateralization Floor.
Class M-9 Certificate: Any one of the Class M-9 Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit B-1, senior to the Class M-10 Certificates, Class B Certificates, Class SB
Certificates and Class R Certificates with respect to distributions and the allocation of
Realized Losses as set forth in Section 4.05, and evidencing (i) an interest designated as a
"regular interest" in REMIC III for purposes of the REMIC Provisions, (ii) the right to
receive payments under the Swap Agreement and (iii) the obligation to pay the Class IO
Distribution Amount.
Class M-9 Margin: Initially, 2.000% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
3.000% per annum.
Class M-9 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount, the
Class M-3 Principal Distribution Amount, the Class M-4 Principal Distribution Amount, the
Class M-5 Principal Distribution Amount, Class M-6 Principal Distribution Amount, the
Class M-7 Principal Distribution Amount and the Class M-8 Principal Distribution Amount or
(b) on or after the Stepdown Date if a Trigger Event is not in effect for that Distribution
Date, the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal
Distribution Amount, Class M-6 Principal Distribution Amount, Class M-7 Principal
Distribution Amount and the Class M-8 Principal Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates,
Class M-6 Certificates, Class M-7 Certificates and Class M-8 Certificates (after taking into
account the payment of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal
Distribution Amount, Class M-6 Principal Distribution Amount, Class M-7 Principal
Distribution Amount and the Class M-8 Principal Distribution Amount for that Distribution
Date) and (2) the Certificate Principal Balance of the Class M-9 Certificates immediately
prior to that Distribution Date over (B) the lesser of (x) the product of (1) the applicable
Subordination Percentage and (2) the aggregate Stated Principal Balance of the Mortgage
Loans after giving effect to distributions to be made on that Distribution Date and (y) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans after giving
effect to distributions to be made on that Distribution Date, over the Overcollateralization
Floor.
Class M-10 Certificate: Any one of the Class M-9 Certificates executed by the
Trustee and authenticated by the Certificate Registrar substantially in the form annexed
hereto as Exhibit B-1, senior to the Class B Certificates, Class SB Certificates and Class R
Certificates with respect to distributions and the allocation of Realized Losses as set
forth in Section 4.05, and evidencing (i) an interest designated as a "regular interest" in
REMIC III for purposes of the REMIC Provisions, (ii) the right to receive payments under the
Swap Agreement and (iii) the obligation to pay the Class IO Distribution Amount.
Class M-10 Margin: Initially, 2.500% per annum, and on any Distribution Date on or
after the second Distribution Date after the first possible Optional Termination Date,
3.750% per annum.
Class M-10 Principal Distribution Amount: With respect to any Distribution Date (a)
prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect
for that Distribution Date, the remaining Principal Distribution Amount for that
Distribution Date after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution Amount, the
Class M-3 Principal Distribution Amount, the Class M-4 Principal Distribution Amount, the
Class M-5 Principal Distribution Amount, Class M-6 Principal Distribution Amount, the
Class M-7 Principal Distribution Amount, the Class M-8 Principal Distribution Amount and the
Class M-9 Principal Distribution Amount or (b) on or after the Stepdown Date if a Trigger
Event is not in effect for that Distribution Date, the lesser of:
(i)....the remaining Principal Distribution Amount for that Distribution Date
after distribution of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount, the Class M-2 Principal Distribution Amount, the Class M-3 Principal
Distribution Amount, the Class M-4 Principal Distribution Amount, the Class M-5 Principal
Distribution Amount, Class M-6 Principal Distribution Amount, Class M-7 Principal
Distribution Amount, the Class M-8 Principal Distribution Amount and the Class M-9 Principal
Distribution Amount; and
(ii)...the excess, if any, of (A) the sum of (1) the aggregate Certificate
Principal Balance of the Class A Certificates, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates,
Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates and Class M-9
Certificates (after taking into account the payment of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount, the Class M-4 Principal Distribution
Amount, the Class M-5 Principal Distribution Amount, Class M-6 Principal Distribution
Amount, Class M-7 Principal Distribution Amount, the Class M-8 Principal Distribution Amount
and the Class M-9 Principal Distribution Amount for that Distribution Date) and (2) the
Certificate Principal Balance of the Class M-10 Certificates immediately prior to that
Distribution Date over (B) the lesser of (x) the product of (1) the applicable Subordination
Percentage and (2) the aggregate Stated Principal Balance of the Mortgage Loans after giving
effect to distributions to be made on that Distribution Date and (y) the excess, if any, of
the aggregate Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date, over the Overcollateralization Floor.
Class R Certificate: Any one of the Class R Certificates executed by the Trustee and
authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit D and evidencing an interest designated as a "residual interest" in the REMICs for
purposes of the REMIC Provisions. The Class R-I Certificates is designated as the sole
class of "residual interest" in REMIC I, the Class R-II Certificates is designated as the
sole class of "residual interest" in REMIC II and the Class R-III Certificates is designated
as the sole class of "residual interest" in REMIC III .
Class SB Certificate: Any one of the Class SB Certificates executed by the Trustee
and authenticated by the Certificate Registrar substantially in the form annexed hereto as
Exhibit C, subordinate to the Class A Certificates, the Class M Certificates and the Class B
Certificates with respect to distributions and the allocation of Realized Losses as set
forth in Section 4.05, and evidencing an interest comprised of "regular interests" in
REMIC III together with certain rights to payments under the Swap Agreements for purposes of
the REMIC Provisions.
Clearance System: The Euroclear, Clearstream or both, as applicable.
Clearstream: Clearstream Banking, societe anonyme.
Closing Date: May 30, 2006.
Code: The Internal Revenue Code of 1986.
Commission: The Securities and Exchange Commission.
Compensating Interest: With respect to any Distribution Date, any amount paid by the
Master Servicer in accordance with Section 3.16(f).
Corporate Trust Office: The principal office of the Trustee at which at any
particular time its corporate trust business with respect to this Agreement shall be
administered, which office at the date of the execution of this instrument is located at
U.S. Bank National Association, EP-MN-WS3D, 00 Xxxxxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000,
Attn: Structured Finance/RASC 2006-KS4.
Credit Repository: Equifax, Transunion and Experian, or their successors in interest.
Credit Risk Management Agreement: The Credit Risk Management Agreement, dated May
30, 2006, between the Master Servicer and the Credit Risk Manager.
Credit Risk Manager: Xxxxxxx Fixed Income Services Inc., formerly known as The
Murrayhill Company, a Colorado corporation, its successors and assigns.
Credit Risk Manager Fee: With respect to any Mortgage Loan and Distribution Date, the
premium payable to the Credit Risk Manager at the Credit Risk Manager Fee Rate multiplied by
the Stated Principal Balance of such Mortgage Loan as of the first day of the related Due
Period, divided by 12. With respect to each Mortgage Loan, the Credit Risk Manager Fee will
be paid monthly from the related Mortgage Rate in accordance with this Agreement.
Credit Risk Manager Fee Rate: With respect to any Distribution Date, a rate equal to
0.014% per annum.
Curtailment: Any Principal Prepayment made by a Mortgagor which is not a Principal
Prepayment in Full.
Custodial Account: The custodial account or accounts created and maintained pursuant
to Section 3.07 in the name of a depository institution, as custodian for the holders of the
Certificates, for the holders of certain other interests in mortgage loans serviced or sold
by the Master Servicer and for the Master Servicer, into which the amounts set forth in
Section 3.07 shall be deposited directly. Any such account or accounts shall be an Eligible
Account.
Custodial Agreement: An agreement that may be entered into among the Depositor, the
Master Servicer, the Trustee and the Custodian in substantially the form of Exhibit E hereto.
Custodian: Xxxxx Fargo Bank, N.A., or any successor custodian appointed pursuant to
a Custodial Agreement.
Cut-off Date: May 1, 2006.
Cut-off Date Balance: $700,370,078.88
Cut-off Date Principal Balance: With respect to any Mortgage Loan, the unpaid
principal balance thereof at the Cut-off Date after giving effect to all installments of
principal due on or prior thereto (or due in the month of the Cut-off Date), whether or not
received.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction in the
scheduled Monthly Payment for such Mortgage Loan by a court of competent jurisdiction in a
proceeding under the Bankruptcy Code, except such a reduction constituting a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
Defaulting Party: As defined in the Swap Agreement.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a court of
competent jurisdiction of the Mortgaged Property in an amount less than the then outstanding
indebtedness under the Mortgage Loan, or any reduction in the amount of principal to be paid
in connection with any scheduled Monthly Payment that constitutes a permanent forgiveness of
principal, which valuation or reduction results from a proceeding under the Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
Definitive Class B Certificate: Any Definitive Regulation S Class B Certificate or
Definitive U.S. Class B Certificate.
Definitive Regulation S Class B Certificate: As defined in Section 5.01(b). A form
of Definitive Regulation S Class B Certificate will be issued substantially in the form
attached as Exhibit B-2 hereto.
Definitive U.S. Class B Certificate: As defined in Section 5.01(b). A form of
Definitive U.S. Class B Certificate will be issued substantially in the form attached as
Exhibit B-2 hereto.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with a Qualified
Substitute Mortgage Loan.
Delinquent: As used herein, a Mortgage Loan is considered to be: "30 to 59 days" or
"30 or more days" delinquent when a payment due on any scheduled due date remains unpaid as
of the close of business on the next following monthly scheduled due date; "60 to 89 days"
or "60 or more days" delinquent when a payment due on any scheduled due date remains unpaid
as of the close of business on the second following monthly scheduled due date; and so on.
The determination as to whether a Mortgage Loan falls into these categories is made as of
the close of business on the last business day of each month. For example, a Mortgage Loan
with a payment due on July 1 that remained unpaid as of the close of business on August 31
would then be considered to be 30 to 59 days delinquent. Delinquency information as of the
Cut-off Date is determined and prepared as of the close of business on the last business day
immediately prior to the Cut-off Date.
Depositor: As defined in the preamble hereto.
Depository: The Depository Trust Company, or any successor Depository hereafter
named. The nominee of the initial Depository for purposes of registering those Certificates
that are to be Book-Entry Certificates is Cede & Co. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code of
the State of New York and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act.
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.
Destroyed Mortgage Note: A Mortgage Note the original of which was permanently lost
or destroyed and has not been replaced.
Determination Date: With respect to any Distribution Date, the 20th day (or if such
20th day is not a Business Day, the Business Day immediately following such 20th day) of the
month of the related Distribution Date.
Disqualified Organization: Any organization defined as a "disqualified organization"
under Section 860E(e)(5) of the Code, including, if not otherwise included, any of the
following: (i) the United States, any State or political subdivision thereof, any
possession of the United States, or any agency or instrumentality of any of the foregoing
(other than an instrumentality which is a corporation if all of its activities are subject
to tax and, except for Xxxxxxx Mac, a majority of its board of directors is not selected by
such governmental unit), (ii) a foreign government, any international organization, or any
agency or instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is exempt from the
tax imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of the Code
on unrelated business taxable income) and (iv) rural electric and telephone cooperatives
described in Section 1381(a)(2)(C) of the Code. A Disqualified Organization also includes
any "electing large partnership," as defined in Section 775(a) of the Code and any other
Person so designated by the Trustee based upon an Opinion of Counsel that the holding of an
Ownership Interest in a Class R Certificate by such Person may cause any REMIC or any Person
having an Ownership Interest in any Class of Certificates (other than such Person) to incur
a liability for any federal tax imposed under the Code that would not otherwise be imposed
but for the Transfer of an Ownership Interest in a Class R Certificate to such Person. The
terms "United States," "State" and "international organization" shall have the meanings set
forth in Section 7701 of the Code or successor provisions.
Distribution Compliance Period. The period ending on the 40th day after the later of
the conclusion of the offering of the Class B Certificates and the Closing Date.
Distribution Date: The 25th day of any month beginning in June 2006 or, if such 25th
day is not a Business Day, the Business Day immediately following such 25th day.
DTC Letter: The Letter of Representations, dated May 26, 2006, between the Trustee,
on behalf of the Trust Fund, and the Depository.
Due Date: With respect to any Distribution Date and any Mortgage Loan, the day
during the related Due Period on which the Monthly Payment is due.
Due Period: With respect to any Distribution Date, the calendar month of such
Distribution Date.
Early Termination Date: Shall have the meaning set forth in the Swap Agreement.
Eligible Account: An account that is any of the following: (i) maintained with a
depository institution the debt obligations of which have been rated by each Rating Agency
in its highest rating available, or (ii) an account or accounts in a depository institution
in which such accounts are fully insured to the limits established by the FDIC, provided
that any deposits not so insured shall, to the extent acceptable to each Rating Agency, as
evidenced in writing, be maintained such that (as evidenced by an Opinion of Counsel
delivered to the Trustee and each Rating Agency) the registered Holders of Certificates have
a claim with respect to the funds in such account or 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 (iii) in the case of the Custodial
Account, a trust account or accounts maintained in the corporate trust department of U.S.
Bank National Association, or (iv) in the case of the Certificate Account, a trust account
or accounts maintained in the corporate trust division of U.S. Bank National Association, or
(v) an account or accounts of a depository institution acceptable to each Rating Agency (as
evidenced in writing by each Rating Agency that use of any such account as the Custodial
Account or the Certificate Account will not reduce the rating assigned to any Class of
Certificates by such Rating Agency below the then-current rating assigned to such
Certificates by such Rating Agency).
Eligible Master Servicing Compensation: With respect to any Distribution Date, the
lesser of (a) one-twelfth of 0.125% of the Stated Principal Balance of the related Mortgage
Loans immediately preceding such Distribution Date and (b) the sum of the Servicing Fee and
all income and gain on amounts held in the Custodial Account and the Certificate Account and
payable to the Certificateholders with respect to such Distribution Date; provided that for
purposes of this definition the amount of the Servicing Fee will not be reduced pursuant to
Section 7.02(a) except as may be required pursuant to the last sentence of such Section.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Euroclear: Euroclear Bank S.A./N.V.
Event of Default: As defined in Section 7.01.
Excess Cash Flow: With respect to any Distribution Date, an amount equal to the sum
of (A) the excess of (i) the Available Distribution Amount for that Distribution Date over
(ii) the sum of (a) the Interest Distribution Amount for that Distribution Date and (b) the
lesser of (1) the aggregate Certificate Principal Balance of Class A Certificates, the
Class M Certificates and Class B Certificates immediately prior to such Distribution Date and
(2) the Principal Remittance Amount for that Distribution Date to the extent not applied to
pay interest on the Class A Certificates, Class M Certificates and Class B Certificates on
such Distribution Date, (B) the Overcollateralization Reduction Amount, if any, for that
Distribution Date and (C) any Net Swap Payments received by the Trustee under the Swap
Agreement for that Distribution Date and deposited in the Swap Account pursuant to
Section 4.10(c).
Excess Overcollateralization Amount: With respect to any Distribution Date, the
excess, if any, of (a) the Overcollateralization Amount on such Distribution Date over
(b) the Required Overcollateralization Amount for such Distribution Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Date: The date on which all Temporary Regulation S Global Class B
Certificates have been exchanged for Permanent Regulation S Class B Certificates.
Expense Fee Rate: With respect to any Mortgage Loan as of any date of determination,
the sum of the (i) applicable Servicing Fee Rate, (ii) the per annum rate at which the
applicable Subservicing Fee accrues and (iii) and the related Credit Risk Manager Fee Rate.
Xxxxxx Xxx: Xxxxxx Xxx, a federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
Final Distribution Date: The Distribution Date on which the final distribution in
respect of the Certificates will be made pursuant to Section 9.01, which Final Distribution
Date shall in no event be later than the end of the 90-day liquidation period described in
Section 9.02.
Final Scheduled Distribution Date: Solely for purposes of the face of the
Certificates, as follows: with respect to the Class A-1 Certificates, the Distribution Date
occurring in March 2028; with respect to the Class A-2 Certificates the Distribution Date
occurring in July 2031; with respect to the Class A-3 Certificates the Distribution Date
occurring in January 2035; and with respect to the Class A-4 Certificates, Class M
Certificates and the Class B Certificates, the Distribution Date occurring in June 2036. No
event of default under this Agreement will arise or become applicable solely by reason of
the failure to retire the entire Certificate Principal Balance of any Class of Class A
Certificates, Class M Certificates or Class B Certificates on or before its Final Scheduled
Distribution Date.
Fixed Swap Payment: With respect to any Distribution Date on or prior to the
distribution date in January 2010, an amount equal to the product of (x) a fixed rate equal
to 5.45% per annum, (y) the Swap Agreement Notional Balance for that Distribution Date and
(z) a fraction, the numerator of which is 30 and the denominator of which is 360.
Floating Swap Payment: With respect to any Distribution Date on or prior to the
Distribution Date in January 2010, an amount equal to the product of (x) Swap LIBOR, (y) the
Swap Agreement Notional Balance for that Distribution Date and (z) a fraction, the numerator
of which is equal to the number of days in the related calculation period as provided in the
Swap Agreement and the denominator of which is 360.
Foreclosure Profits: With respect to any Distribution Date or related Determination
Date and any Mortgage Loan, the excess, if any, of Liquidation Proceeds, Insurance Proceeds
and REO Proceeds (net of all amounts reimbursable therefrom pursuant to Section 3.10(a)(ii))
in respect of each Mortgage Loan or REO Property for which a Cash Liquidation or REO
Disposition occurred in the related Prepayment Period over the sum of the unpaid principal
balance of such Mortgage Loan or REO Property (determined, in the case of an REO
Disposition, in accordance with Section 3.14) plus accrued and unpaid interest at the
Mortgage Rate on such unpaid principal balance from the Due Date to which interest was last
paid by the Mortgagor to the first day of the month following the month in which such Cash
Liquidation or REO Disposition occurred.
Form 10-K Certification: As defined in Section 4.03(e).
Xxxxxxx Mac: Xxxxxxx Mac, a corporate instrumentality of the United States created
and existing under Title III of the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Global Class B Certificate: A Regulation S Global Class B Certificate or a Rule 144A
Global Class B Certificate, as applicable.
Gross Margin: With respect to each adjustable-rate Mortgage Loan, the fixed
percentage set forth in the related Mortgage Note and indicated on the Mortgage Loan
Schedule as the "NOTE MARGIN," which percentage is added to the related Index on each
Adjustment Date to determine (subject to rounding in accordance with the related Mortgage
Note, the Periodic Cap, the Maximum Mortgage Rate and the Minimum Mortgage Rate) the
interest rate to be borne by such Mortgage Loan until the next Adjustment Date.
HUD: The United States Department of Housing and Urban Development.
Independent: When used with respect to any specified Person, means such a Person who
(i) is in fact independent of the Depositor, the Master Servicer and the Trustee, or any
Affiliate thereof, (ii) does not have any direct financial interest or any material indirect
financial interest in the Depositor, the Master Servicer or the Trustee or in an Affiliate
thereof, and (iii) is not connected with the Depositor, the Master Servicer or the Trustee
as an officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
Index: With respect to any adjustable-rate Mortgage Loan and as to any Adjustment
Date therefor, the related index as stated in the related Mortgage Note.
Initial Certificate Principal Balance: With respect to each Class of Certificates
(other than the Class R Certificates), the Certificate Principal Balance of such Class of
Certificates as of the Closing Date as set forth in the Preliminary Statement hereto.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans pursuant to any
Primary Insurance Policy or any other related insurance policy covering a Mortgage Loan, to
the extent such proceeds are payable to the mortgagee under the Mortgage, any Subservicer,
the Master Servicer or the Trustee and are not applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing mortgage loans held for its own account.
Interest Accrual Period: With respect to the Distribution Date in June 2006, the
period commencing the Closing Date and ending on the day preceding the Distribution Date in
June 2006, and with respect to any Distribution Date after the Distribution Date in June
2006, the period commencing on the Distribution Date in the month immediately preceding the
month in which such Distribution Date occurs and ending on the day preceding such
Distribution Date.
Interest Distribution Amount: For any Distribution Date, the amounts payable
pursuant to Section 4.02(c)(i) and (ii).
Interim Certification: As defined in Section 2.02.
Late Collections: With respect to any Mortgage Loan, all amounts received during any
Due Period, whether as late payments of Monthly Payments or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent late payments or collections of Monthly
Payments due but delinquent for a previous Due Period and not previously recovered.
LIBOR: With respect to any Distribution Date, the arithmetic mean of the London
interbank offered rate quotations for one-month U.S. Dollar deposits, expressed on a per
annum basis, determined in accordance with Section 1.02.
LIBOR Business Day: Any day other than (i) a Saturday or Sunday or (ii) a day on
which banking institutions in London, England are required or authorized by law to be closed.
LIBOR Certificates: Collectively, the Class A Certificates, Class M Certificates and
Class B Certificates.
LIBOR Rate Adjustment Date: With respect to each Distribution Date, the second LIBOR
Business Day immediately preceding the commencement of the related Interest Accrual Period.
Liquidation Proceeds: Amounts (other than Insurance Proceeds) received by the Master
Servicer in connection with the taking of an entire Mortgaged Property by exercise of the
power of eminent domain or condemnation or in connection with the liquidation of a defaulted
Mortgage Loan through trustee's sale, foreclosure sale or otherwise, other than REO Proceeds
and Subsequent Recoveries.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a percentage, the
numerator of which is the current principal balance of the related Mortgage Loan at the date
of determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Margin: The Class A-1 Margin, Class A-2 Margin, Class A-3 Margin, Class A-4 Margin,
Class M-1 Margin, Class M-2 Margin, Class M-3 Margin, Class M-4 Margin, Class M-5 Margin,
Class M-6 Margin, Class M-7 Margin, Class M-8 Margin, Class M-9 Margin, Class M-10 Margin or
Class B Margin, as applicable.
Marker Rate: With respect to the Class SB Certificates or REMIC III Regular Interest
SB-IO and any Distribution Date, in relation to the REMIC II Regular Interests LT1, LT2,
LT3, and LT4, a per annum rate equal to two (2) times the weighted average of the
Uncertificated REMIC II Pass-Through Rates for REMIC II Regular Interest LT2 and REMIC II
Regular Interest LT3.
Master Servicer: As defined in the preamble hereto.
Maturity Date: With respect to each Class of Certificates representing ownership of
regular interests or Uncertificated Regular Interest issued by each of REMIC I, REMIC II and
REMIC III the latest possible maturity date, solely for purposes of
Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, by which the Certificate Principal
Balance of each such Class of Certificates representing a regular interest in the Trust Fund
would be reduced to zero, which is, for each such regular interest, June 25, 2036, which is
the Distribution Date occurring in the month following the last scheduled monthly payment of
the Mortgage Loans.
Maximum Mortgage Rate: With respect to any adjustable-rate Mortgage Loan, the per
annum rate indicated on the Mortgage Loan Schedule as the "NOTE CEILING," which rate is the
maximum interest rate that may be applicable to such Mortgage Loan at any time during the
life of such Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor thereto.
MERS(R)System: The system of recording transfers of Mortgages electronically
maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered with MERS on
the MERS(R)System.
Minimum Mortgage Rate: With respect to any adjustable-rate Mortgage Loan, a per
annum rate equal to the greater of (i) the Note Margin and (ii) the rate indicated on the
Mortgage Loan Schedule as the "NOTE FLOOR," which rate may be applicable to such Mortgage
Loan at any time during the life of such Mortgage Loan.
Modified Mortgage Loan: Any Mortgage Loan that has been the subject of a Servicing
Modification.
Modified Net Mortgage Rate: With respect to any Mortgage Loan that is the subject of
a Servicing Modification, the Net Mortgage Rate minus the rate per annum by which the
Mortgage Rate on such Mortgage Loan was reduced.
MOM Loan: With respect to any Mortgage Loan, MERS acting as the mortgagee of such
Mortgage Loan, solely as nominee for the originator of such Mortgage Loan and its successors
and assigns, at the origination thereof.
Monthly Payment: With respect to any Mortgage Loan (including any REO Property) and
the Due Date in any Due Period, the payment of principal and interest due thereon in
accordance with the amortization schedule at the time applicable thereto (after adjustment,
if any, for Curtailments and for Deficient Valuations occurring prior to such Due Date but
before any adjustment to such amortization schedule by reason of any bankruptcy, other than
a Deficient Valuation, or similar proceeding or any moratorium or similar waiver or grace
period and before any Servicing Modification that constitutes a reduction of the interest
rate on such Mortgage Loan).
Moody's: Xxxxx'x Investors Service, Inc., or its successors in interest.
Mortgage: With respect to each Mortgage Note, the mortgage, deed of trust or other
comparable instrument creating a first or junior lien on an estate in fee simple or
leasehold interest in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to a
particular Mortgage Loan and any additional documents required to be added to the Mortgage
File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned to the Trustee
pursuant to Section 2.01 as from time to time are held or deemed to be held as a part of the
Trust Fund, the Mortgage Loans originally so held being identified in the initial Mortgage
Loan Schedule, and Qualified Substitute Mortgage Loans held or deemed held as part of the
Trust Fund including, without limitation, each related Mortgage Note, Mortgage and Mortgage
File and all rights appertaining thereto.
Mortgage Loan Schedule: The lists of the Mortgage Loans attached hereto as Exhibit F
(as amended from time to time to reflect the addition of Qualified Substitute Mortgage
Loans), which lists shall set forth at a minimum the following information as to each
Mortgage Loan:
(i)....the Mortgage Loan identifying number ("RFC LOAN #");
(ii)...[reserved];
(iii)..the maturity of the Mortgage Note ("MATURITY DATE," or "MATURITY DT");
(iv)...for the adjustable-rate Mortgage Loans, the Mortgage Rate as of
origination ("ORIG RATE");
(v)....the Mortgage Rate as of the Cut-off Date ("CURR RATE");
(vi)...the Net Mortgage Rate as of the Cut-off Date ("CURR NET");
(vii)..the scheduled monthly payment of principal, if any, and interest as of
the Cut-off Date ("ORIGINAL P & I" or "CURRENT P & I");
(viii).the Cut-off Date Principal Balance ("PRINCIPAL BAL");
(ix)...the Loan-to-Value Ratio at origination ("LTV");
(x)....a code "T," "BT" or "CT" under the column "LN FEATURE," indicating that
the Mortgage Loan is secured by a second or vacation residence (the absence of any such code
means the Mortgage Loan is secured by a primary residence);
(xi)...a code "N" under the column "OCCP CODE," indicating that the Mortgage
Loan is secured by a non-owner occupied residence (the absence of any such code means the
Mortgage Loan is secured by an owner occupied residence);
(xii)..for the adjustable-rate Mortgage Loans, the Maximum Mortgage Rate
("NOTE CEILING");
(xiii).for the adjustable-rate Mortgage Loans, the maximum Net Mortgage Rate
("NET CEILING");
(xiv)..for the adjustable-rate Mortgage Loans, the Note Margin ("NOTE MARGIN");
(xv)...for the adjustable-rate Mortgage Loans, the first Adjustment Date after
the Cut-off Date ("NXT INT CHG DT");
(xvi)..for the adjustable-rate Mortgage Loans, the Periodic Cap ("PERIODIC
DECR" or "PERIODIC INCR");
(xvii).[reserved]; and
(xviii)for the adjustable-rate Mortgage Loans, the rounding of the semi-annual
or annual adjustment to the Mortgage Rate ("NOTE METHOD").
Such schedules may consist of multiple reports that collectively set forth all of the
information required.
Mortgage Note: The originally executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan, together with any
modification thereto.
Mortgage Rate: With respect to any Mortgage Loan, the interest rate borne by the
related Mortgage Note, or any modification thereto other than a Servicing Modification. The
Mortgage Rate on the adjustable-rate Mortgage Loans will adjust on each Adjustment Date to
equal the sum (rounded to the nearest multiple of one-eighth of one percent (0.125%) or up
to the nearest one-eighth of one percent, which are indicated by a "U" on the Mortgage Loan
Schedule, except in the case of the adjustable-rate Mortgage Loans indicated by an "X" on
the Mortgage Loan Schedule under the heading "NOTE METHOD"), of the related Index plus the
Note Margin, in each case subject to the applicable Periodic Cap, Maximum Mortgage Rate and
Minimum Mortgage Rate.
Mortgaged Property: The underlying real property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: With respect to any Mortgage Loan as of any date of
determination, a per annum rate equal to the Mortgage Rate for such Mortgage Loan as of such
date minus the related Expense Fee Rate.
Net Swap Payment: With respect to each Distribution Date, the net payment required
to be made pursuant to the terms of the Swap Agreement by either the Swap Counterparty or
the Trustee, on behalf of the Trust, which net payment shall not take into account any Swap
Termination Payment.
Net WAC Cap Rate: With respect to any Distribution Date, a per annum rate (which
will not be less than zero) equal to (i) the product of (a) the weighted average of the Net
Mortgage Rates (or, if applicable, the Modified Net Mortgage Rates) on the Mortgage Loans
using the Net Mortgage Rates in effect for the Monthly Payments due on such Mortgage Loans
during the related Due Period, weighted on the basis of the respective Stated Principal
Balances thereof for such Distribution Date, and (b) a fraction expressed as percentage, the
numerator of which is 30 and the denominator of which is the actual number of days in the
related Interest Accrual Period minus (ii) the product of (a) a fraction expressed as a
percentage, the numerator of which is the amount of any Net Swap Payments or Swap
Termination Payment not due to a Swap Counterparty Trigger Event owed to the Swap
Counterparty as of such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date, and (b) a
fraction expressed as percentage, the numerator of which is 360 and the denominator of which
is the actual number of days in the related Interest Accrual Period.
Non-Permitted Holder: A Holder or Beneficial Owner of an interest in a Global Class
B Certificate or a Definitive Class B Certificate that is a United States Person and (i)
with respect to a Global Class B Certificate, is not a Qualified Institutional Buyer and
that becomes the Beneficial Owner of an interest in a Rule 144A Global Class B Certificate,
(ii) with respect to a Definitive U.S. Class B Certificate, is not (x) a Qualified
Institutional Buyer or (y) an Accredited Investor and that becomes the Beneficial Owner of
an interest in a Definitive U.S. Class B Certificate or (iii) does not have an exemption
available under the Securities Act.
Non-United States Person: Any Person other than a United States Person.
Nonrecoverable Advance: Any Advance previously made or proposed to be made by the
Master Servicer or Subservicer in respect of a Mortgage Loan (other than a Deleted Mortgage
Loan) which, in the good faith judgment of the Master Servicer, will not, or, in the case of
a proposed Advance, would not, be ultimately recoverable by the Master Servicer from related
Late Collections, Insurance Proceeds, Liquidation Proceeds or REO Proceeds. To the extent
that any Mortgagor is not obligated under the related Mortgage documents to pay or reimburse
any portion of any Servicing Advances that are outstanding with respect to the related
Mortgage Loan as a result of a modification of such Mortgage Loan by the Master Servicer,
which forgives amounts which the Master Servicer or Subservicer had previously advanced, and
the Master Servicer determines that no other source of payment or reimbursement for such
advances is available to it, such Servicing Advances shall be deemed to be Nonrecoverable
Advances. The determination by the Master Servicer that it has made a Nonrecoverable
Advance shall be evidenced by a certificate of a Servicing Officer, Responsible Officer or
Vice President or its equivalent or senior officer of the Master Servicer, delivered to the
Depositor, the Trustee, and the Master Servicer setting forth such determination, which
shall include any other information or reports obtained by the Master Servicer such as
property operating statements, rent rolls, property inspection reports and engineering
reports, which may support such determinations. Notwithstanding the above, the Trustee
shall be entitled to rely upon any determination by the Master Servicer that any Advance
previously made is a Nonrecoverable Advance or that any proposed Advance, if made, would
constitute a Nonrecoverable Advance.
Nonsubserviced Mortgage Loan: Any Mortgage Loan that, at the time of reference
thereto, is not subject to a Subservicing Agreement.
Non-United States Person: A Person who is not a United States Person.
Note Margin: With respect to each adjustable-rate Mortgage Loan, the fixed
percentage set forth in the related Mortgage Note and indicated on the Mortgage Loan
Schedule as the "NOTE MARGIN," which percentage is added to the Index on each Adjustment
Date to determine (subject to rounding in accordance with the related Mortgage Note, the
Periodic Cap, the Maximum Mortgage Rate and the Minimum Mortgage Rate) the interest rate to
be borne by such adjustable-rate Mortgage Loan until the next Adjustment Date.
Officers' Certificate: A certificate signed by the Chairman of the Board, the
President, a Vice President, Assistant Vice President, Director, Managing Director, the
Treasurer, the Secretary, an Assistant Treasurer or an Assistant Secretary of the Depositor
or the Master Servicer, as the case may be, and delivered to the Trustee, as required by
this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the Trustee and the
Master Servicer, who may be counsel for the Depositor or the Master Servicer, provided that
any opinion of counsel (i) referred to in the definition of "Disqualified Organization" or
(ii) relating to the qualification of any REMIC hereunder as a REMIC or compliance with the
REMIC Provisions must, unless otherwise specified, be an opinion of Independent counsel.
Optional Termination Date: Any Distribution Date on or after which the Stated
Principal Balance (after giving effect to distributions to be made on such Distribution
Date) of the Mortgage Loans is less than 10.00% of the Cut-off Date Balance.
Outstanding Mortgage Loan: With respect to the Due Date in any Due Period, a
Mortgage Loan (including an REO Property) that was not the subject of a Principal Prepayment
in Full, Cash Liquidation or REO Disposition and that was not purchased, deleted or
substituted for prior to such Due Date pursuant to Section 2.02, 2.03, 2.04 or 4.07.
Overcollateralization Amount: With respect to any Distribution Date, the excess, if
any, of (a) the aggregate Stated Principal Balance of the Mortgage Loans before giving
effect to distributions of principal to be made on such Distribution Date over (b) the
aggregate Certificate Principal Balance of the Class A Certificates, Class M Certificates
and Class B Certificates immediately prior to such date.
Overcollateralization Floor: An amount equal to the product of 0.50% and the Cut-off
Date Balance.
Overcollateralization Increase Amount: With respect to any Distribution Date, the
lesser of (a) Excess Cash Flow for that Distribution Date (to the extent not used to cover
the amounts described in clauses (iv) and (v) of the definition of Principal Distribution
Amount as of such Distribution Date), and (b) the excess of (1) the Required
Overcollateralization Amount for such Distribution Date over (2) the Overcollateralization
Amount for such Distribution Date.
Overcollateralization Reduction Amount: With respect to any Distribution Date on
which the Excess Overcollateralization Amount is, after taking into account all other
distributions to be made on such Distribution Date, greater than zero, the
Overcollateralization Reduction Amount shall be equal to the lesser of (i) the Excess
Overcollateralization Amount for that Distribution Date and (ii) the Principal Remittance
Amount on such Distribution Date.
Ownership Interest: With respect to any Certificate, any ownership or security
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, as
owner or as pledgee.
Pass-Through Rate: With respect to each Class of Class A Certificates, Class M
Certificates and Class B Certificates and any Distribution Date, the least of (i) a per
annum rate equal to LIBOR plus the related Margin for such Distribution Date, (ii) 14.000%
per annum and (iii) the Net WAC Cap Rate for such Distribution Date.
With respect to the Class SB Certificates or the REMIC III Regular Interest SB-IO and
any Distribution Date, a per annum rate equal to the percentage equivalent of a fraction,
the numerator of which is the sum of the amounts calculated pursuant to clauses (i) through
(iii) below, and the denominator of which is the aggregate principal balance of the REMIC II
Regular Interests. For purposes of calculating the Pass-Through Rate for the Class SB
Certificates or the REMIC III Regular Interest SB-IO, the numerator is equal to the sum of
the following components:
(i)....the Uncertificated Pass-Through Rate for REMIC II Regular Interest LT1
minus the related Marker Rate, applied to a notional amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest LT1;
(ii)...the Uncertificated Pass-Through Rate for REMIC II Regular Interest LT2
minus the related Marker Rate, applied to a notional amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest LT2; and
(iii)..the Uncertificated Pass-Through Rate for REMIC II Regular Interest LT4
minus twice the related Marker Rate, applied to a notional amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest LT4.
Paying Agent: U.S. Bank National Association or any successor Paying Agent appointed
by the Trustee.
Percentage Interest: With respect to any Class A Certificate, Class M Certificate or
Class B Certificate, the undivided percentage ownership interest in the related
Class evidenced by such Certificate, which percentage ownership interest shall be equal to
the Initial Certificate Principal Balance thereof divided by the aggregate Initial
Certificate Principal Balance of all of the Certificates of the same Class. The Percentage
Interest with respect to a Class SB Certificate or Class R Certificate shall be stated on
the face thereof.
Periodic Cap: With respect to each adjustable-rate Mortgage Loan, the periodic rate
cap that limits the increase or the decrease of the related Mortgage Rate on any Adjustment
Date pursuant to the terms of the related Mortgage Note.
Permanent Regulation S Global Class B Certificate: As defined in Section 5.01(b). A
form of Permanent Regulation S Global Class B Certificate will be issued substantially in
the form attached as Exhibit B-2 hereto.
Permitted Investments: One or more of the following:
(i) ...obligations of or guaranteed as to principal and interest by the United
States or any agency or instrumentality thereof when such obligations are backed by the full
faith and credit of the United States;
(ii) ..repurchase agreements on obligations specified in clause (i) maturing
not more than one month from the date of acquisition thereof, provided that the unsecured
obligations of the party agreeing to repurchase such obligations are at the time rated by
each Rating Agency in its highest short-term rating available;
(iii) .federal funds, certificates of deposit, demand deposits, time deposits
and bankers' acceptances (which shall each have an original maturity of not more than
90 days and, in the case of bankers' acceptances, shall in no event have an original maturity
of more than 365 days or a remaining maturity of more than 30 days) denominated in United
States dollars of any U.S. depository institution or trust company incorporated under the
laws of the United States or any state thereof or of any domestic branch of a foreign
depository institution or trust company; provided that the debt obligations of such
depository institution or trust company at the date of acquisition thereof have been rated
by each Rating Agency in its highest short-term rating available; and, provided further
that, if the original maturity of such short-term obligations of a domestic branch of a
foreign depository institution or trust company shall exceed 30 days, the short-term rating
of such institution shall be A-1+ in the case of Standard & Poor's if Standard & Poor's is a
Rating Agency;
(iv) ..commercial paper and demand notes (having original maturities of not
more than 365 days) of any corporation incorporated under the laws of the United States or
any state thereof which on the date of acquisition has been rated by each Rating Agency in
its highest short term rating available; provided that such commercial paper and demand
notes shall have a remaining maturity of not more than 30 days;
(v) ...a money market fund or a qualified investment fund rated by each Rating
Agency in its highest long-term rating available (which may be managed by the Trustee or one
of its Affiliates); and
(vi) ..other obligations or securities that are acceptable to each Rating
Agency as a Permitted Investment hereunder and will not reduce the rating assigned to any
Class of Certificates by such Rating Agency below the then-current rating assigned to such
Certificates by such Rating Agency, as evidenced in writing;
provided, however, that no instrument shall be a Permitted Investment if it represents,
either (1) the right to receive only interest payments with respect to the underlying debt
instrument or (2) the right to receive both principal and interest payments derived from
obligations underlying such instrument and the principal and interest payments with respect
to such instrument provide a yield to maturity greater than 120% of the yield to maturity at
par of such underlying obligations. References herein to the highest rating available on
unsecured long-term debt shall mean AAA in the case of Standard & Poor's and Aaa in the case
of Moody's, and for purposes of this Agreement, any references herein to the highest rating
available on unsecured commercial paper and short-term debt obligations shall mean the
following: A-1 in the case of Standard & Poor's and P-1 in the case of Moody's; provided,
however, that any Permitted Investment that is a short-term debt obligation rated A-1 by
Standard & Poor's must satisfy the following additional conditions: (i) the total amount of
debt from A-1 issuers must be limited to the investment of monthly principal and interest
payments (assuming fully amortizing collateral); (ii) the total amount of A-1 investments
must not represent more than 20% of the aggregate outstanding Certificate Principal Balance
of the Certificates and each investment must not mature beyond 30 days; (iii) the terms of
the debt must have a predetermined fixed dollar amount of principal due at maturity that
cannot vary; and (iv) if the investments may be liquidated prior to their maturity or are
being relied on to meet a certain yield, interest must be tied to a single interest rate
index plus a single fixed spread (if any) and must move proportionately with that index.
Any Permitted Investment may be purchased by or through the Trustee or its Affiliates.
Permitted Transferee: Any Transferee of a Class R Certificate, other than a
Disqualified Organization or Non-United States Person.
Person: Any individual, corporation, limited liability company, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
Prepayment Assumption: With respect to the Class A Certificates, Class M
Certificates and Class B Certificates, the prepayment assumption to be used for determining
the accrual of original issue discount and premium and market discount on such Certificates
for federal income tax purposes, which (a) with respect to the fixed-rate Mortgage Loans,
assumes a constant prepayment rate of one-tenth of 23% per annum of the then outstanding
Stated Principal Balance of the fixed-rate Mortgage Loans in the first month of the life of
such Mortgage Loans and an additional one-tenth of 23% per annum in each month thereafter
until the tenth month, and beginning in the tenth month and in each month thereafter during
the life of the fixed-rate Mortgage Loans, a constant prepayment rate of 23% per annum each
month ("23% HEP") and (b) with respect to the adjustable-rate Mortgage Loans assumes a
prepayment assumption of 2% of the constant prepayment rate in month one, increasing by
approximately 2.545% from month 2 until month 12, a constant prepayment rate of 30% from
month 12 to month 22, a constant prepayment rate of 50% from month 23 to month 27, and a
constant prepayment rate of 35% thereafter, used for determining the accrual of original
issue discount and premium and market discount on the Class A Certificates, Class M
Certificates and Class B Certificates for federal income tax purposes. The constant
prepayment rate assumes that the stated percentage of the outstanding Stated Principal
Balance of the adjustable-rate Mortgage Loans is prepaid over the course of a year.
Prepayment Interest Shortfall: With respect to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was the subject
of (a) a Principal Prepayment in Full during the related Prepayment Period, an amount equal
to the excess of one month's interest at the related Net Mortgage Rate (or Modified Net
Mortgage Rate in the case of a Modified Mortgage Loan) on the Stated Principal Balance of
such Mortgage Loan over the amount of interest (adjusted to the related Net Mortgage Rate
(or Modified Net Mortgage Rate in the case of a Modified Mortgage Loan)) paid by the
Mortgagor for such Prepayment Period to the date of such Principal Prepayment in Full or (b)
a Curtailment during the prior calendar month, an amount equal to one month's interest at
the related Net Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified
Mortgage Loan) on the amount of such Curtailment.
Prepayment Period: With respect to any Distribution Date, the calendar month
preceding the month of distribution.
Primary Insurance Policy: Each primary policy of mortgage guaranty insurance as
indicated by a numeric code on the Mortgage Loan Schedule with the exception of code "A23,"
"A34" or "A96" under the column "MI CO CODE."
Principal Distribution Amount: With respect to any Distribution Date, the lesser of
(a) the excess of (x) the Available Distribution Amount over (y) the Interest Distribution
Amount, and (b) the sum of:
(i)....the principal portion of each Monthly Payment received or Advanced with
respect to the related Due Period on each Outstanding Mortgage Loan;
(ii)...the Stated Principal Balance of any Mortgage Loan repurchased during
the related Prepayment Period (or deemed to have been so repurchased in accordance with
Section 3.07(b)) pursuant to Section 2.02, 2.03, 2.04 or 4.07 and the amount of any
shortfall deposited in the Custodial Account in connection with the substitution of a
Deleted Mortgage Loan pursuant to Section 2.03 or 2.04 during the related Prepayment Period;
(iii)..the principal portion of all other unscheduled collections, other than
Subsequent Recoveries, on the Mortgage Loans (including, without limitation, Principal
Prepayments in Full, Curtailments, Insurance Proceeds, Liquidation Proceeds and REO
Proceeds) received during the related Prepayment Period (or deemed to have been so received)
to the extent applied by the Master Servicer as recoveries of principal of the Mortgage
Loans pursuant to Section 3.14;
(iv)...the lesser of (1) Subsequent Recoveries for such Distribution Date and
(2) the principal portion of any Realized Losses allocated to any Class of Certificates on a
prior Distribution Date and remaining unpaid;
(v)....the lesser of (1) the Excess Cash Flow for such Distribution Date (to
the extent not used pursuant to clause (iv) of this definition on such Distribution Date)
and (2) the principal portion of any Realized Losses incurred (or deemed to have been
incurred) on any Mortgage Loans in the calendar month preceding such Distribution Date; and
(vi)...the lesser of (1) the Excess Cash Flow for that Distribution Date (to
the extent not used pursuant to clauses (iv) and (v) of this definition on such Distribution
Date) and (2) the Overcollateralization Increase Amount for such Distribution Date;
minus
(vii)..(A) the amount of any Overcollateralization Reduction Amount for such
Distribution Date and (B) the amount of any Capitalization Reimbursement Amount for such
Distribution Date.
Principal Prepayment: Any payment of principal or other recovery on a Mortgage Loan,
including a recovery that takes the form of Liquidation Proceeds or Insurance Proceeds,
which is received in advance of its scheduled Due Date and is not accompanied by an amount
as to interest representing scheduled interest on such payment due on any date or dates in
any month or months subsequent to the month of prepayment.
Principal Prepayment in Full: Any Principal Prepayment made by a Mortgagor of the
entire principal balance of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution Date, all amounts
described in clauses (b)(i) through (iii) of the definition of Principal Distribution Amount
for that Distribution Date.
Program Guide: The AlterNet Seller Guide as incorporated into the Residential
Funding Seller Guide for mortgage collateral sellers that participate in Residential
Funding's AlterNet Mortgage Program, and Residential Funding's Servicing Guide and any other
subservicing arrangements which Residential Funding has arranged to accommodate the
servicing of the Mortgage Loans and in each case all supplements and amendments thereto
published by Residential Funding.
Purchase Price: With respect to any Mortgage Loan (or REO Property) required to be
or otherwise purchased on any date pursuant to Section 2.02, 2.03, 2.04 or 4.07, an amount
equal to the sum of (i) 100% of the Stated Principal Balance thereof plus the principal
portion of any related unreimbursed Advances and (ii) unpaid accrued interest at either (a)
the Adjusted Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified Mortgage
Loan) plus the rate per annum at which the Servicing Fee is calculated, or (b) in the case
of a purchase made by the Master Servicer, at the Net Mortgage Rate (or Modified Net
Mortgage Rate in the case of a Modified Mortgage Loan) plus the Credit Risk Manager Fee
Rate, in each case on the Stated Principal Balance thereof to the first day of the month
following the month of purchase from the Due Date to which interest was last paid by the
Mortgagor. With respect to any Mortgage Loan (or REO Property) required to be or otherwise
purchased on any date pursuant to Section 4.08, an amount equal to the greater of (i) the
sum of (a) 100% of the Stated Principal Balance thereof plus the principal portion of any
related unreimbursed Advances of such Mortgage Loan (or REO Property) and (b) unpaid accrued
interest at either (1) the Adjusted Mortgage Rate (or Modified Net Mortgage Rate in the case
of a Modified Mortgage Loan) plus the rate per annum at which the Servicing Fee is
calculated, or (2) in the case of a purchase made by the Master Servicer, at the Net
Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified Mortgage Loan), in
each case on the Stated Principal Balance thereof to the first day of the month following
the month of purchase from the Due Date to which interest was last paid by the Mortgagor,
and (ii) the fair market value of such Mortgage Loan (or REO Property).
Qualified Institutional Buyer: The meaning specified in Rule 144A under the
Securities Act.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by Residential
Funding or the Depositor for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate delivered to the Trustee, (i) have an
outstanding principal balance, after deduction of the principal portion of the monthly
payment due in the month of substitution (or in the case of a substitution of more than one
Mortgage Loan for a Deleted Mortgage Loan, an aggregate outstanding principal balance, after
such deduction), not in excess of the Stated Principal Balance of the Deleted Mortgage Loan
(the amount of any shortfall to be deposited by Residential Funding, in the Custodial
Account in the month of substitution); (ii) have a Mortgage Rate and a Net Mortgage Rate no
lower than and not more than 1% per annum higher than the Mortgage Rate and Net Mortgage
Rate, respectively, of the Deleted Mortgage Loan as of the date of substitution; (iii) have
a Loan-to-Value Ratio at the time of substitution no higher than that of the Deleted
Mortgage Loan at the time of substitution; (iv) have a remaining term to stated maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage Loan; (v)
comply with each representation and warranty set forth in Sections 2.03 and 2.04 hereof and
Section 4 of the Assignment Agreement (other than the representations and warranties set
forth therein with respect to the number of loans (including the related percentage) in
excess of zero which meet or do not meet a specified criteria); (vi) not be 30 days or more
Delinquent; (vii) not be subject to the requirements of HOEPA (as defined in the Assignment
Agreement); (viii) have a policy of title insurance, in the form and amount that is in
material compliance with the Program Guide, that was effective as of the closing of such
Mortgage Loan, is valid and binding, and remains in full force and effect, unless the
Mortgage Property is located in the State of Iowa where an attorney's certificate has been
provided as described in the Program Guide; (ix) if the Deleted Loan is not a Balloon Loan,
not be a Balloon Loan; (x) with respect to adjustable rate Mortgage Loans, have a Mortgage
Rate that adjusts with the same frequency and based upon the same Index as that of the
Deleted Mortgage Loan; (xi) with respect to adjustable rate Mortgage Loans, have a Note
Margin not less than that of the Deleted Mortgage Loan; (xii) with respect to adjustable
rate Mortgage Loans, have a Periodic Rate Cap that is equal to that of the Deleted Mortgage
Loan; and (xiii) with respect to adjustable rate Mortgage Loans, have a next Adjustment Date
no later than that of the Deleted Mortgage Loan.
Rating Agency: Each of Standard & Poor's and Moody's. If any agency or a successor
is no longer in existence, "Rating Agency" shall be such statistical credit rating agency,
or other comparable Person, designated by the Depositor, notice of which designation shall
be given to the Trustee and the Master Servicer.
Realized Loss: With respect to each Mortgage Loan (or REO Property) as to which a
Cash Liquidation or REO Disposition has occurred, an amount (not less than zero) equal to
(i) the Stated Principal Balance of the Mortgage Loan (or REO Property) as of the date of
Cash Liquidation or REO Disposition, plus (ii) interest (and REO Imputed Interest, if any)
at the Net Mortgage Rate from the Due Date as to which interest was last paid or advanced to
Certificateholders up to the last day of the month in which the Cash Liquidation (or REO
Disposition) occurred on the Stated Principal Balance of such Mortgage Loan (or REO
Property) outstanding during each Due Period that such interest was not paid or advanced,
minus (iii) the proceeds, if any, received during the month in which such Cash Liquidation
(or REO Disposition) occurred, to the extent applied as recoveries of interest at the Net
Mortgage Rate and to principal of the Mortgage Loan, net of the portion thereof reimbursable
to the Master Servicer or any Subservicer with respect to related Advances, Servicing
Advances or other expenses as to which the Master Servicer or Subservicer is entitled to
reimbursement thereunder but which have not been previously reimbursed. With respect to
each Mortgage Loan which is the subject of a Servicing Modification, (a) (1) the amount by
which the interest portion of a Monthly Payment or the principal balance of such Mortgage
Loan was reduced or (2) the sum of any other amounts owing under the Mortgage Loan that were
forgiven and that constitute Servicing Advances that are reimbursable to the Master Servicer
or a Subservicer, and (b) any such amount with respect to a Monthly Payment that was or
would have been due in the month immediately following the month in which a Principal
Prepayment or the Purchase Price of such Mortgage Loan is received or is deemed to have been
received. With respect to each Mortgage Loan which has become the subject of a Deficient
Valuation, the difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the Mortgage Loan
as reduced by the Deficient Valuation. With respect to each Mortgage Loan which has become
the object of a Debt Service Reduction, the amount of such Debt Service Reduction.
Notwithstanding the above, neither a Deficient Valuation nor a Debt Service Reduction shall
be deemed a Realized Loss hereunder so long as the Master Servicer has notified the Trustee
in writing that the Master Servicer is diligently pursuing any remedies that may exist in
connection with the representations and warranties made regarding the related Mortgage Loan
and either (A) the related Mortgage Loan is not in default with regard to payments due
thereunder or (B) delinquent payments of principal and interest under the related Mortgage
Loan and any premiums on any applicable primary hazard insurance policy and any related
escrow payments in respect of such Mortgage Loan are being advanced on a current basis by
the Master Servicer or a Subservicer, in either case without giving effect to any Debt
Service Reduction.
Realized Losses allocated to the Class SB Certificates shall be allocated first to
the REMIC III Regular Interest SB-IO in reduction of the accrued but unpaid interest thereon
until such accrued and unpaid interest shall have been reduced to zero and then to the
REMIC III Regular Interest SB-PO in reduction of the Principal Balance thereof.
To the extent the Master Servicer receives Subsequent Recoveries with respect to any
Mortgage Loan, the amount of the Realized Loss with respect to that Mortgage Loan will be
reduced to the extent such recoveries are applied to reduce the Certificate Principal
Balance of any Class of Certificates on any Distribution Date.
Record Date: With respect to each Distribution Date and the LIBOR Certificates, the
Business Day immediately preceding such Distribution Date. With respect to each
Distribution Date and the Certificates (other than the LIBOR Certificates), the close of
business on the last Business Day of the month next preceding the month in which the related
Distribution Date occurs, except in the case of the first Record Date which shall be the
Closing Date.
Reference Bank Rate: As defined in Section 1.02.
Regular Interest: Any one of the regular interests in the REMICs.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
ss.ss.229.1100-229.1123, as such may be amended from time to time, and subject to such
clarification and interpretation as have been provided by the Commission in the adopting
release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506,
1,531 (January 7, 2005)) or by the staff of the Commission, or as may be provided by the
Commission or its staff from time to time.
Regulation S: Regulation S promulgated under the Securities Act.
Regulation S Global Class B Certificate: A Permanent Regulation S Global Class B
Certificate or a Temporary Regulation S Global Class B Certificate, as applicable.
Relief Act: The Servicemembers Civil Relief Act, as amended.
Relief Act Shortfalls: Interest shortfalls on the Mortgage Loans resulting from the
Relief Act or similar legislation or regulations.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code. As used herein, the term "REMIC" shall mean REMIC I, REMIC II or
REMIC III.
REMIC Administrator: Residential Funding Corporation. If Residential Funding
Corporation is found by a court of competent jurisdiction to no longer be able to fulfill
its obligations as REMIC Administrator under this Agreement the Master Servicer or Trustee
acting as successor Master Servicer shall appoint a successor REMIC Administrator, subject
to assumption of the REMIC Administrator obligations under this Agreement.
REMIC Interest Amount: For any Distribution Date and each Class of Class A
Certificates and Class M Certificates, the Accrued Certificate Interest for such
Class reduced by the portion thereof attributable to the excess, if any, of the related
Pass-Through Rate for such Distribution Date over the related REMIC II Net WAC Rate for such
Distribution Date.
REMIC I: The segregated pool of assets subject hereto (exclusive of the Swap Account
and the Swap Agreement), constituting a portion of the primary trust created hereby and to
be administered hereunder, with respect to which a separate REMIC election is to be made,
consisting of:
(i)....the Mortgage Loans and the related Mortgage Files;
(ii)...all payments on and collections in respect of the Mortgage Loans due
after the Cut-off Date (other than Monthly Payments due in the month of the Cut-off Date) as
shall be on deposit in the Custodial Account or in the Certificate Account and identified as
belonging to the Trust Fund;
(iii)..property which secured a Mortgage Loan and which has been acquired for
the benefit of the Certificateholders by foreclosure or deed in lieu of foreclosure;
(iv)...the hazard insurance policies and Primary Insurance Policies pertaining
to the Mortgage Loans, if any; and
(v) ...all proceeds of clauses (i) through (iv) above.
REMIC I Available Distribution Amount: The Available Distribution Amount increased
by the amount of any Net Swap Payment described in clause (b)(z) thereof.
REMIC I Distribution Amount: For any Distribution Date, the REMIC I Available
Distribution Amount shall be distributed to REMIC II in respect of the REMIC I Regular
Interests and the Class R-I Certificates in the following amounts and priority:
(a)....to REMIC I Regular Interest A-I and REMIC I Regular Interest I-1-A
through I-44-B, pro rata, in an amount equal to (A) Uncertificated Accrued Interest for such
REMIC I Regular Interests for such Distribution Date, plus (B) any amounts payable in
respect thereof remaining unpaid from previous Distribution Dates; and
(b)....to the extent of amounts remaining after the distributions made
pursuant to clause (a) above, payments of principal shall be allocated as follows: first, to
REMIC I Regular Interests I-1-A through I-44-B starting with the lowest numerical
denomination until the Uncertificated Principal Balance of each such REMIC I Regular
Interest is reduced to zero, provided that, for REMIC I Regular Interests with the same
numerical denomination, such payments of principal shall be allocated pro rata between such
REMIC I Regular Interests and second, to the extent of any Overcollateralization Reduction
Amount to REMIC I Regular Interest A-I until the Uncertificated Principal Balance of such
REMIC I Regular Interest is reduced to zero.
REMIC I Interests: The REMIC I Regular Interests and the Class R I Certificates.
REMIC I Realized Losses: All Realized Losses on the Mortgage Loans shall be
allocated first, on each Distribution Date, to REMIC I Regular Interest A-I until such
REMIC I Regular Interest has been reduced to zero. Second, Realized Losses shall be
allocated to REMIC I Regular Interest I-1-A through REMIC I Regular Interest I-42-B,
starting with the lowest numerical denomination until such REMIC I Regular Interest has been
reduced to zero, provided that, for REMIC I Regular Interests with the same numerical
denomination, such Realized Losses shall be allocated pro rata between such REMIC I Regular
Interests.
REMIC I Regular Interest. Any of the separate non-certificated beneficial ownership
interests in REMIC I issued hereunder and designated as a "regular interest" in REMIC I.
Each REMIC I Regular Interest shall accrue interest at the related Uncertificated REMIC I
Pass-Through Rate in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.
The designations for the respective REMIC I Regular Interests are set forth in the
Preliminary Statement hereto.
REMIC I Regular Interest A-I: A regular interest in REMIC I that is held as an asset
of REMIC II, that has an initial principal balance equal to the related Uncertificated
Principal Balance, that bears interest at the related Uncertificated REMIC I Pass-Through
Rate, and that has such other terms as are described herein.
REMIC II: The segregated pool of assets subject hereto, constituting a portion of
the primary trust created hereby and to be administered hereunder, with respect to which a
separate REMIC election is to be made, consisting of the REMIC I Regular Interests.
REMIC II Available Distribution Amount: For any Distribution Date, the amount
distributed from REMIC I to REMIC II on such Distribution Date in respect of the REMIC I
Regular Interests.
REMIC II Distribution Amount: For any Distribution Date, the REMIC II Available
Distribution Amount shall be distributed to REMIC III in respect of the REMIC II Regular
Interests and the Class R-II Certificates in the following amounts and priority:
(a)....to REMIC II Regular Interest LT-IO, in an amount equal to (i)
Uncertificated Accrued Interest for such REMIC II Regular Interest for such Distribution
Date, plus (ii) any amounts in respect thereof remaining unpaid from previous Distribution
Dates;
(b)....to the extent of amounts remaining after the distributions made
pursuant to clause (a) above, to REMIC II Regular Interests LT1, LT2, LT3 and LT4, pro rata,
in an amount equal to (i) their Uncertificated Accrued Interest for such Distribution Date,
plus (ii) any amounts in respect thereof remaining unpaid from previous Distribution Dates;
and
(c)....to the extent of amounts remaining after the distributions made
pursuant to clauses (a) and (b) above:
(i) to REMIC I Regular Interests LT2, LT3 and LT4,
their respective Principal Distribution Amounts;
(ii) to REMIC I Regular Interest LT1 any remainder
until the Uncertificated Principal Balance thereof is reduced to zero;
(iii) any remainder to REMIC II Regular Interests LT2,
LT3 and LT4, pro rata according to their respective Uncertificated
Principal Balances as reduced by the distributions deemed made pursuant
to (i) above, until their respective Uncertificated Principal Balances
are reduced to zero; and
(d)....to the extent of amounts remaining after the distributions made
pursuant to clauses (a) through (c) above:
(i) first, to each of the REMIC II Regular Interests,
pro rata according to the amount of unreimbursed Realized Losses
allocable to principal previously allocated to each such REMIC II
Regular Interest, the aggregate amount of any distributions to the
Certificates as reimbursement of such Realized Losses on such
Distribution Date pursuant to clause (ix) in Section 4.02(c); provided,
however, that any amounts distributed pursuant to this paragraph (d)(i)
of this definition of "REMIC II Distribution Amount" shall not cause a
reduction in the Uncertificated Principal Balances of any of the
REMIC II Regular Interests; and
(ii) second, to the Class R-III Certificates, any
remaining amount.
REMIC II Net WAC Rate: With respect to any Distribution Date, a per annum rate equal
to the weighted average of (x) with respect to REMIC I Regular Interests ending with the
designation "B," the weighted average of the Uncertificated REMIC I Pass-Through Rates for
such REMIC I Regular Interests, weighted on the basis of the Uncertificated Principal
Balance of such REMIC I Regular Interests for each such Distribution Date, (y) with respect
to REMIC I Regular Interest A-I, the Uncertificated REMIC I Pass-Through Rate for such
REMIC I Regular Interest, and (z) with respect to REMIC I Regular Interests ending with the
designation "A," for each Distribution Date listed below, the weighted average of the rates
listed below for each such REMIC I Regular Interest listed below, weighted on the basis of
the Uncertificated Principal Balance of each such REMIC I Regular Interest for each such
Distribution Date:
DISTRIBUTION
DATE REMIC I REGULAR INTEREST RATE
1 I-1-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
2 I-2-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A Uncertificated REMIC I Pass-Through Rate
3 I-3-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A and I-2-A Uncertificated REMIC I Pass-Through Rate
4 I-4-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-3-A Uncertificated REMIC I Pass-Through Rate
5 I-5-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-4-A Uncertificated REMIC I Pass-Through Rate
6 I-6-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-5-A Uncertificated REMIC I Pass-Through Rate
7 I-7-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-6-A Uncertificated REMIC I Pass-Through Rate
8 I-8-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-7-A Uncertificated REMIC I Pass-Through Rate
9 I-9-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-8-A Uncertificated REMIC I Pass-Through Rate
10 I-10-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-9-A Uncertificated REMIC I Pass-Through Rate
11 I-11-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-10-A Uncertificated REMIC I Pass-Through Rate
12 I-12-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-11-A Uncertificated REMIC I Pass-Through Rate
13 I-13-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-12-A Uncertificated REMIC I Pass-Through Rate
14 I-14-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-13-A Uncertificated REMIC I Pass-Through Rate
15 I-15-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-14-A Uncertificated REMIC I Pass-Through Rate
16 I-16-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-15-A Uncertificated REMIC I Pass-Through Rate
17 I-17-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-16-A Uncertificated REMIC I Pass-Through Rate
18 I-18-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-17-A Uncertificated REMIC I Pass-Through Rate
19 I-19-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-18-A Uncertificated REMIC I Pass-Through Rate
20 I-20-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-19-A Uncertificated REMIC I Pass-Through Rate
21 I-21-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-20-A Uncertificated REMIC I Pass-Through Rate
22 I-22-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-21-A Uncertificated REMIC I Pass-Through Rate
23 I-23-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-22-A Uncertificated REMIC I Pass-Through Rate
24 I-24-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-23-A Uncertificated REMIC I Pass-Through Rate
25 I-25-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-24-A Uncertificated REMIC I Pass-Through Rate
26 I-26-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-25-A Uncertificated REMIC I Pass-Through Rate
27 I-27-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-26-A Uncertificated REMIC I Pass-Through Rate
28 I-28-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-27-A Uncertificated REMIC I Pass-Through Rate
29 I-29-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-28-A Uncertificated REMIC I Pass-Through Rate
30 I-30-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-29-A Uncertificated REMIC I Pass-Through Rate
31 I-31-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-30-A Uncertificated REMIC I Pass-Through Rate
32 I-32-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-31-A Uncertificated REMIC I Pass-Through Rate
33 I-33-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-32-A Uncertificated REMIC I Pass-Through Rate
34 I-34-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-33-A Uncertificated REMIC I Pass-Through Rate
35 I-35-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-34-A Uncertificated REMIC I Pass-Through Rate
36 I-36-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-35-A Uncertificated REMIC I Pass-Through Rate
37 I-37-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-36-A Uncertificated REMIC I Pass-Through Rate
38 I-38-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-37-A Uncertificated REMIC I Pass-Through Rate
39 I-39-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-38-A Uncertificated REMIC I Pass-Through Rate
40 I-40-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-39-A Uncertificated REMIC I Pass-Through Rate
41 I-41-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-40-A Uncertificated REMIC I Pass-Through Rate
42 I-42-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-41-A Uncertificated REMIC I Pass-Through Rate
43 I-43-A through I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-42-A Uncertificated REMIC I Pass-Through Rate
44 I-44-A 2 multiplied by Swap LIBOR, subject to a maximum
rate of Uncertificated REMIC I Pass-Through Rate
I-1-A through I-43-A Uncertificated REMIC I Pass-Through Rate
Thereafter I-1-A through I-44-A Uncertificated REMIC I Pass-Through Rate
----------------------------------------------------------------------------------------------
REMIC II Principal Reduction Amounts: For any Distribution Date, the amounts by
which the principal balances of the REMIC II Regular Interests LT1, LT2, LT3 and LT4,
respectively will be reduced on such Distribution Date by the allocation of Realized Losses
and the distribution of principal, determined as follows:
For purposes of the succeeding formulas the following symbols shall have the meanings
set forth below:
Y1 = the principal balance of the REMIC II Regular Interest LT1 after distributions
on the prior Distribution Date.
Y2 = the principal balance of the REMIC II Regular Interest LT2 after distributions
on the prior Distribution Date.
Y3 = the principal balance of the REMIC II Regular Interest LT3 after distributions
on the prior Distribution Date.
Y4 = the principal balance of the REMIC II Regular Interest LT4 after distributions
on the prior Distribution Date (note: Y3 = Y4).
(DELTA)Y1 = the REMIC II Regular Interest LT1 Principal Reduction Amount.
(DELTA)Y2 = the REMIC II Regular Interest LT2 Principal Reduction Amount.
(DELTA)Y3 = the REMIC II Regular Interest LT3 Principal Reduction Amount.
(DELTA)Y4 = the REMIC II Regular Interest LT4 Principal Reduction Amount.
P0 = the aggregate principal balance of REMIC II Regular Interests LT1, LT2, LT3
and LT4 after distributions and the allocation of Realized Losses on the prior
Distribution Date.
P1 = the aggregate principal balance of the REMIC II Regular Interests LT1, LT2,
LT3 and LT4 after distributions and the allocation of Realized Losses to be
made on such Distribution Date.
(DELTA)P = P0 - P1 = the aggregate of the REMIC II Regular Interests LT1, LT2, LT3
and LT4 Principal Reduction Amounts.
= the aggregate of the principal portions of Realized Losses to be allocated to,
and the principal distributions to be made on, the Certificates on such
Distribution Date (including distributions of accrued and unpaid interest on
the Class SB Certificates for prior Distribution Dates).
R0 = the REMIC II Net WAC Rate (stated as a monthly rate) after giving effect to
amounts distributed and Realized Losses allocated on the prior Distribution
Date.
R1 = the REMIC II Net WAC Rate (stated as a monthly rate) after giving effect to
amounts to be distributed and Realized Losses to be allocated on such
Distribution Date.
(alpha) = (Y2 + Y3)/P0. The initial value of (alpha) on the Closing Date for use
on the first Distribution Date shall be 0.0001.
(gamma)0 = the lesser of (A) the sum for all Classes of Certificates other than
the Class SB Certificates and Class IO Certificates of the product for each
Class of (i) the monthly interest rate (as limited by the REMIC II Net WAC
Rate, if applicable) for such Class applicable for distributions to be made on
such Distribution Date and (ii) the aggregate Certificate Principal Balance
for such Class after distributions and the allocation of Realized Losses on
the prior Distribution Date and (B) R0*P0.
(gamma)1 = the lesser of (A) the sum for all Classes of Certificates other than
the Class SB Certificates and Class IO Certificates of the product for each
Class of (i) the monthly interest rate (as limited by the REMIC II Net WAC
Rate, if applicable) for such Class applicable for distributions to be made on
the next succeeding Distribution Date and (ii) the aggregate Certificate
Principal Balance for such Class after distributions and the allocation of
Realized Losses to be made on such Distribution Date and (B) R1*P1.
Then, based on the foregoing definitions:
(DELTA)Y1 = (DELTA)P - (DELTA)Y2 - Y3 - Y4;
(DELTA)Y2 = (a/2){(a0R1 - a1R0)/R0R1};
(DELTA)Y3 = (a(DELTA)P - (DELTA)Y2; and
(DELTA)Y4 = (DELTA)Y3.
if both (DELTA)Y2 and (DELTA)Y3, as so determined, are non-negative
numbers. Otherwise:
(1) If (DELTA)Y2, as so determined, is negative, then
(DELTA)Y2 = 0
(DELTA)Y3 = a{a1R0P0 - a0R1P1}/{a1R0};
(DELTA)Y4 = (DELTA)Y3; and
(DELTA)Y1 = (DELTA)P - (DELTA)Y2 - (DELTA)Y3 - (DELTA)Y4.
(2) If (DELTA)Y3, as so determined, is negative, then
(DELTA)Y3 = 0;
(DELTA)Y2 = a{a1R0P0 - a0R1P1}/{2R1R0P1 - a1R0};
(DELTA)Y4 = (DELTA)Y3; and
(DELTA)Y1 = (DELTA)P - (DELTA)Y2 - (DELTA)Y3 - (DELTA)Y4.
REMIC II Realized Losses: Realized Losses on the Mortgage Loans shall be allocated
to the REMIC II Regular Interests as follows. The interest portion of Realized Losses on
the Mortgage Loans, if any, shall be allocated among REMIC II Regular Interests LT1, LT2 and
LT4, pro rata according to the amount of interest accrued but unpaid thereon, in reduction
thereof. Any interest portion of such Realized Losses in excess of the amount allocated
pursuant to the preceding sentence shall be treated as a principal portion of Realized
Losses not attributable to any specific Mortgage Loan and allocated pursuant to the
succeeding sentences. The principal portion of Realized Losses with respect to Mortgage
Loans shall be allocated to the REMIC II Regular Interests as follows: first, to REMIC II
Regular Interests LT2, LT3 and LT4, pro-rata according to their respective REMIC II
Principal Reduction Amounts to the extent thereof in reduction of the Uncertificated
Principal Balance of such REMIC II Regular Interests and, second, the remainder, if any, of
such principal portion of such Realized Losses shall be allocated to REMIC II Regular
Interest LT1 in reduction of the Uncertificated Principal Balance thereof.
REMIC II Regular Interests: REMIC II Regular Interest LT1, REMIC II Regular Interest
LT2, REMIC II Regular Interest LT3, REMIC II Regular Interest LT4 and REMIC II Regular
Interest LT-IO.
REMIC II Regular Interest LT1: A regular interest in REMIC II that is held as an
asset of REMIC III, that has an initial principal balance equal to the related
Uncertificated Principal Balance, that bears interest at the related Uncertificated REMIC II
Pass-Through Rate, and that has such other terms as are described herein.
REMIC II Regular Interest LT1 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC II Regular Interest LT1 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to the REMIC II Regular
Interest LT1 on such Distribution Date.
REMIC II Regular Interest LT2: A regular interest in REMIC II that is held as an
asset of REMIC III, that has an initial principal balance equal to the related
Uncertificated Principal Balance, that bears interest at the related Uncertificated REMIC II
Pass-Through Rate, and that has such other terms as are described herein.
REMIC II Regular Interest LT2 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC II Regular Interest LT2 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to the REMIC II Regular
Interest LT2 on such Distribution Date.
REMIC II Regular Interest LT3: A regular interest in REMIC II that is held as an
asset of REMIC III, that has an initial principal balance equal to the related
Uncertificated Principal Balance, that bears interest at the related Uncertificated REMIC II
Pass-Through Rate, and that has such other terms as are described herein.
REMIC II Regular Interest LT3 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC II Regular Interest LT3 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to the REMIC II Regular
Interest LT3 on such Distribution Date.
REMIC II Regular Interest LT4: A regular interest in REMIC II that is held as an
asset of REMIC III, that has an initial principal balance equal to the related
Uncertificated Principal Balance, that bears interest at the related Uncertificated REMIC II
Pass-Through Rate, and that has such other terms as are described herein.
REMIC II Regular Interest LT4 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the REMIC II Regular Interest LT4 Principal Reduction Amount
for such Distribution Date over the Realized Losses allocated to the REMIC II Regular
Interest LT4 on such Distribution Date.
REMIC II Regular Interest LT-IO: A regular interest in REMIC II that is held as an
asset of REMIC III, that has no initial principal balance, that bears interest at the
related Uncertificated REMIC II Pass-Through Rate on its Uncertificated Notional Amount, and
that has such other terms as are described herein.
REMIC III: The segregated pool of assets subject hereto, constituting a portion of
the primary trust created hereby and to be administered hereunder, with respect to which a
separate REMIC election is to be made, consisting of the REMIC II Regular Interests.
REMIC III Available Distribution Amount: For any Distribution Date, the amount
distributed from REMIC II to REMIC III on such Distribution Date in respect of the REMIC II
Regular Interests.
REMIC III Distribution Amount: For any Distribution Date, the REMIC III Available
Distribution Amount shall be deemed distributed to Class A, Class M and Class SB
Certificates in respect of the portion of such Certificates representing ownership of
REMIC III Regular Interests and the Class R- III Certificates in the following amounts and
priority:
(i) to the Class SB Certificateholders in respect of the REMIC III Regular
Interest IO, the amount distributable with respect to such REMIC III Regular Interest as
described in the Preliminary Statement, being paid from and in reduction of the REMIC III
Available Distribution Amount for such Distribution Date;
(ii) to the Class A Certificateholders, the Accrued Certificate Interest payable on
the Class A Certificates with respect to such Distribution Date, plus any related amounts
accrued pursuant to this clause (i) but remaining unpaid from any prior Distribution Date,
being paid from and in reduction of the REMIC III Available Distribution Amount for such
Distribution Date;
(iii) to the Class M Certificateholders, from the amount, if any, of the Available
Distribution Amount remaining after the foregoing distributions, Accrued Certificate
Interest payable on the Class M Certificates with respect to such Distribution Date, plus
any related amounts accrued pursuant to this clause (ii) but remaining unpaid from any prior
Distribution Date, sequentially, to the Class M-1 Certificateholders, Class M-2
Certificateholders, Class M-3 Certificateholders, Class M-4 Certificateholders, Class M-5
Certificateholders, Class M-6 Certificateholders, Class M-7 Certificateholders, Class M-8
Certificateholders, Class M-9 Certificateholders and Class M-10 Certificateholders, in that
order, being paid from and in reduction of the REMIC III Available Distribution Amount for
such Distribution Date;
(iv) to the Class B Certificateholders, the Accrued Certificate Interest payable on
the Class B Certificates with respect to such Distribution Date, plus any related amounts
accrued pursuant to this clause (i) but remaining unpaid from any prior Distribution Date,
being paid from and in reduction of the REMIC III Available Distribution Amount for such
Distribution Date;
(v) the Principal Distribution Amount shall be distributed as follows, to be
applied to reduce the principal balance of the REMIC III Regular Interest related to the
applicable Certificates in each case to the extent of the remaining Principal Distribution
Amount:
(A) first, the Class A Principal Distribution Amount shall be distributed
sequentially to the Class A-1 Certificateholders, Class A-2 Certificateholders, Class A-3
Certificateholders and Class A-4 Certificateholders, in that order, in each case until
the Certificate Principal Balance thereof is reduced to zero;
(B) second, to the Class M-1 Certificateholders, the Class M-1 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-1
Certificates has been reduced to zero;
(C) third, to the Class M-2 Certificateholders, the Class M-2 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-2
Certificates has been reduced to zero;
(D) fourth, to the Class M-3 Certificateholders, the Class M-3 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-3
Certificates has been reduced to zero;
(E) fifth, to the Class M-4 Certificateholders, the Class M-4 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-4
Certificates has been reduced to zero;
(F) sixth, to the Class M-5 Certificateholders, the Class M-5 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-5
Certificates has been reduced to zero;
(G) seventh, to the Class M-6 Certificateholders, the Class M-6 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-6
Certificates has been reduced to zero;
(H) eighth, to the Class M-7 Certificateholders, the Class M-7 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-7
Certificates has been reduced to zero;
(I) ninth, to the Class M-8 Certificateholders, the Class M-8 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-8
Certificates has been reduced to zero;
(J) tenth, to the Class M-9 Certificateholders, the Class M-9 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-9
Certificates has been reduced to zero; and
(K) eleventh, to the Class M-10 Certificateholders, the Class M-10
Principal Distribution Amount, until the Certificate Principal Balance of the Class M-10
Certificates has been reduced to zero; and
(L) twelfth, to the Class B Certificateholders, the Class B Principal
Distribution Amount, until the Certificate Principal Balance of the Class B Certificates
has been reduced to zero; and
(vi) to the Class A Certificateholders, Class M Certificateholders and Class B
Certificateholders, the amount of any Prepayment Interest Shortfalls allocated thereto for
such Distribution Date, on a pro rata basis based on Prepayment Interest Shortfalls
allocated thereto to the extent not offset by Eligible Master Servicing Compensation on such
Distribution Date;
(vii) to the Class A Certificateholders, Class M Certificateholders and Class B
Certificateholders, the amount of any Prepayment Interest Shortfalls previously allocated
thereto remaining unpaid from prior Distribution Dates together with interest thereon at the
related Pass Through Rate, on a pro rata basis based on unpaid Prepayment Interest
Shortfalls previously allocated thereto;
(viii) to the Class SB Certificates, (A) from the amount, if any, of the REMIC III
Available Distribution Amount remaining after the foregoing distributions, the sum of (I)
Accrued Certificate Interest thereon, (II) the amount of any Overcollateralization Reduction
Amount for such Distribution Date and (III) for any Distribution Date after the Certificate
Principal Balance of each Class of Class A Certificates, Class M Certificates and Class B
Certificates has been reduced to zero, the Overcollateralization Amount and (B) from
prepayment charges on deposit in the Certificate Account, any prepayment charges received on
the Mortgage Loans during the related Prepayment Period; and
(ix) to the Holders of the Class R-III Certificates, the balance, if any, of the
REMIC III Available Distribution Amount.
REMIC III Regular Interest SB-PO: A separate non-certificated beneficial ownership
interests in REMIC III issued hereunder and designated as a Regular Interest in REMIC III.
REMIC III Regular Interest SB-PO shall have no entitlement to interest, and shall be
entitled to distributions of principal subject to the terms and conditions hereof, in
aggregate amount equal to the initial Certificate Principal Balance of the Class SB
Certificates as set forth in the Preliminary Statement hereto.
REMIC III Regular Interest SB-IO: A separate non-certificated beneficial ownership
interests in REMIC III issued hereunder and designated as a Regular Interest in REMIC III.
REMIC III Regular Interest SB-IO shall have no entitlement to principal, and shall be
entitled to distributions of interest subject to the terms and conditions hereof, in
aggregate amount equal to the interest distributable with respect to the Class SB
Certificates pursuant to the terms and conditions hereof.
REMIC III Regular Interest IO: A separate non-certificated beneficial ownership
interests in REMIC III issued hereunder and designated as a Regular Interest in REMIC III.
REMIC III Regular Interest IO shall have no entitlement to principal, and shall be entitled
to distributions of interest subject to the terms and conditions hereof, in aggregate amount
equal to the interest distributable with respect to REMIC II Regular Interest LT-IO.
REMIC III Regular Interests: REMIC III Regular Interests SB-IO, SB-PO and IO,
together with the Class A Certificates, Class M Certificates and Class B Certificates
exclusive of their respective rights to receive the payment of Basis Risk Shortfalls and
other amounts pursuant to the SB-AM Swap Agreement.
REMIC Provisions: Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at Sections 860A through 860G of Subchapter M of
Chapter 1 of the Code, and related provisions, and temporary and final regulations (or, to
the extent not inconsistent with such temporary or final regulations, proposed regulations)
and published rulings, notices and announcements promulgated thereunder, as the foregoing
may be in effect from time to time.
REO Acquisition: The acquisition by the Master Servicer on behalf of the Trustee for
the benefit of the Certificateholders of any REO Property pursuant to Section 3.14.
REO Disposition: With respect to any REO Property, a determination by the Master
Servicer that it has received substantially all Insurance Proceeds, Liquidation Proceeds,
REO Proceeds and other payments and recoveries (including proceeds of a final sale) which
the Master Servicer expects to be finally recoverable from the sale or other disposition of
the REO Property.
REO Imputed Interest: With respect to any REO Property, for any period, an amount
equivalent to interest (at a rate equal to the Net Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid principal
balance of the Mortgage Loan as of the date of acquisition thereof for such period.
REO Proceeds: Proceeds, net of expenses, received in respect of any REO Property
(including, without limitation, proceeds from the rental of the related Mortgaged Property)
which proceeds are required to be deposited into the Custodial Account only upon the related
REO Disposition.
REO Property: A Mortgaged Property acquired by the Master Servicer on behalf of the
Trust Fund for the benefit of the Certificateholders through foreclosure or deed in lieu of
foreclosure in connection with a defaulted Mortgage Loan.
Reportable Modified Mortgage Loan: Any Mortgage Loan that (a) has been subject to an
interest rate reduction, (b) has been subject to a term extension or (c) has had amounts
owing on such Mortgage Loan capitalized by adding such amount to the Stated Principal
Balance of such Mortgage Loan; provided, however, that a Mortgage Loan modified in
accordance with (a) above for a temporary period shall not be a Reportable Modified Mortgage
Loan if such Mortgage Loan has not been delinquent in payments of principal and interest for
six months since the date of such modification if that interest rate reduction is not made
permanent thereafter.
Repurchase Event: As defined in the Assignment Agreement.
Request for Release: A request for release, the form of which is attached as
Exhibit G hereto, or an electronic request in a form acceptable to the Custodian.
Required Insurance Policy: With respect to any Mortgage Loan, any insurance policy
which is required to be maintained from time to time under this Agreement, the Program Guide
or the related Subservicing Agreement in respect of such Mortgage Loan.
Required Overcollateralization Amount: With respect to any Distribution Date,
(a) prior to the Stepdown Date, an amount equal to 1.80% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date, (b) on or after the Stepdown Date if a
Trigger Event is not in effect, the greater of (i) an amount equal to 3.60% of the aggregate
outstanding Stated Principal Balance of the Mortgage Loans after giving effect to
distributions made on that Distribution Date and (ii) the Overcollateralization Floor and
(c) on or after the Stepdown Date if a Trigger Event is in effect, an amount equal to the
Required Overcollateralization Amount from the immediately preceding Distribution Date. The
Required Overcollateralization Amount may be reduced so long as written confirmation is
obtained from each Rating Agency that such reduction shall not reduce the ratings assigned
to any Class of Certificates by such Rating Agency below the lower of the then-current
rating or the rating assigned to such Certificates as of the Closing Date by such Rating
Agency.
Residential Funding: Residential Funding Corporation, a Delaware corporation, in its
capacity as seller of the Mortgage Loans to the Depositor and any successor thereto.
Responsible Officer: When used with respect to the Trustee, any officer of the
Corporate Trust Department of the Trustee, including any Senior Vice President, any Vice
President, any Assistant Vice President, any Assistant Secretary, any Trust Officer or
Assistant Trust Officer, or any other officer of the Trustee, in each case with direct
responsibility for the administration of this Agreement.
RFC Exemption: As defined in Section 5.02(e)(ii).
Rule 144A: Rule 144A under the Securities Act.
Rule 144A Global Class B Certificate: As defined in Section 5.01(b). A form of Rule
144A Global Class B Certificate will be issued substantially in the form attached as Exhibit
B-2 hereto.
SB-AM Swap Agreement: The swap between the Class SB Certificateholder and the Class
A and Class M Certificateholders evidenced by the confirmation attached hereto as Exhibit Q
and incorporated herein by reference.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving a sale or other transfer of
mortgage loans directly or indirectly to an issuing in connection with an issuance of
publicly offered or privately placed, rated or unrated mortgage-backed securities.
Seller: With respect to any Mortgage Loan, a Person, including any Subservicer, that
executed a Seller's Agreement applicable to such Mortgage Loan.
Seller's Agreement: An agreement for the origination and sale of Mortgage Loans
generally in the form of the seller contract referred to or contained in the Program Guide,
or in such other form as has been approved by the Master Servicer and the Depositor.
Senior Enhancement Percentage: For any Distribution Date, the fraction, expressed as
a percentage, the numerator of which is the sum of (i) the aggregate Certificate Principal
Balance of the Class M Certificates and Class B Certificates and (ii) the
Overcollateralization Amount, in each case prior to the distribution of the Principal
Distribution Amount on such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of the Mortgage Loans after giving effect to distributions to be
made on that Distribution Date.
Servicing Accounts: The account or accounts created and maintained pursuant to
Section 3.08.
Servicing Advances: All customary, reasonable and necessary "out of pocket" costs
and expenses incurred in connection with a default, delinquency or other unanticipated event
by the Master Servicer or a Subservicer in the performance of its servicing obligations,
including, but not limited to, the cost of (i) the preservation, restoration and protection
of a Mortgaged Property or, with respect to a cooperative loan, the related cooperative
apartment, (ii) any enforcement or judicial proceedings, including foreclosures, including
any expenses incurred in relation to any such proceedings that result from the Mortgage Loan
being registered on the MERS(R)System, (iii) the management and liquidation of any REO
Property, (iv) any mitigation procedures implemented in accordance with Section 3.07, and
(v) compliance with the obligations under Sections 3.01, 3.08, 3.11, 3.12(a) and 3.14,
including, if the Master Servicer or any Affiliate of the Master Servicer provides services
such as appraisals and brokerage services that are customarily provided by Persons other
than servicers of mortgage loans, reasonable compensation for such services.
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: With respect to any Mortgage Loan and Distribution Date, the fee
payable monthly to the Master Servicer in respect of master servicing compensation that
accrues at an annual rate equal to the Servicing Fee Rate multiplied by the Stated Principal
Balance of such Mortgage Loan as of the related Due Date in the related Due Period, as may
be adjusted pursuant to Section 3.16(e).
Servicing Fee Rate: With respect to any Mortgage Loan, the per annum rate designated
on the Mortgage Loan Schedule as the "MSTR SERV FEE," as may be adjusted with respect to
successor Master Servicers as provided in Section 7.02, which rate shall never be greater
than the Mortgage Rate of such Mortgage Loan.
Servicing Modification: Any reduction of the interest rate on or the outstanding
principal balance of a Mortgage Loan, any extension of the final maturity date of a Mortgage
Loan, and any increase to the Stated Principal Balance of a Mortgage Loan by adding to the
Stated Principal Balance unpaid principal and interest and other amounts owing under the
Mortgage Loan, in each case pursuant to a modification of a Mortgage Loan that is in
default, or for which, in the judgment of the Master Servicer, default is reasonably
foreseeable in accordance with Section 3.07(a).
Servicing Officer: Any officer of the Master Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and specimen
signature appear on a list of servicing officers furnished to the Trustee by the Master
Servicer on the Closing Date, as such list may from time to time be amended.
Sixty-Plus Delinquency Percentage: With respect to any Distribution Date and the
Mortgage Loans, the arithmetic average, for each of the three Distribution Dates ending with
such Distribution Date, of the fraction, expressed as a percentage, equal to (x) the
aggregate Stated Principal Balance of the Mortgage Loans that are 60 or more days delinquent
in payment of principal and interest for that Distribution Date, including Mortgage Loans in
foreclosure and REO, over (y) the aggregate Stated Principal Balance of all of the Mortgage
Loans immediately preceding that Distribution Date.
Standard & Poor's: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc. or its successors in interest.
Startup Date: The day designated as such pursuant to Article X hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related REO Property,
as of any date of determination, (i) the sum of (a) the Cut-off Date Principal Balance of
the Mortgage Loan and (b) any amount by which the Stated Principal Balance of the Mortgage
Loan has been increased pursuant to a Servicing Modification, minus (ii) the sum of (a) the
principal portion of the Monthly Payments due with respect to such Mortgage Loan or REO
Property during each Due Period ending with the Due Period relating to the most recent
Distribution Date which were received or with respect to which an Advance was made, (b) all
Principal Prepayments with respect to such Mortgage Loan or REO Property, and all Insurance
Proceeds, Liquidation Proceeds and REO Proceeds, to the extent applied by the Master
Servicer as recoveries of principal in accordance with Section 3.14 with respect to such
Mortgage Loan or REO Property, in each case which were distributed pursuant to Section 4.02
on any previous Distribution Date, and (c) any Realized Loss incurred with respect to such
Mortgage Loan allocated to Certificateholders with respect thereto for any previous
Distribution Date.
Stepdown Date: That Distribution Date which is the earlier to occur of (a) the
Distribution Date immediately succeeding the 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 (i) the Distribution Date in June 2009 and (ii) the first
Distribution Date on which the Senior Enhancement Percentage is equal to or greater than
44.00%.
Subordination: The provisions described in Section 4.05 relating to the allocation
of Realized Losses.
Subordination Percentage: With respect to the Class A Certificates, any Class of
Class M Certificates and the Class B Certificates, the respective percentage set forth below.
SUBORDINATION
CLASS PERCENTAGE
A 56.00%
M-1 63.60%
M-2 70.70%
M-3 74.80%
M-4 78.50%
M-5 81.90%
M-6 85.20%
M-7 88.20%
M-8 91.00%
M-9 93.00%
M-10 94.40%
B 96.40%
----------------------------------------------------------------------------------------------
Subsequent Recoveries: As of any Distribution Date, amounts received by the Master
Servicer (net of any related expenses permitted to be reimbursed pursuant to Section 3.10)
or surplus amounts held by the Master Servicer to cover estimated expenses (including, but
not limited to, recoveries in respect of the representations and warranties made by the
related Seller pursuant to the applicable Seller's Agreement and assigned to the Trustee
pursuant to Section 2.04) specifically related to a Mortgage Loan that was the subject of a
Cash Liquidation or an REO Disposition prior to the related Prepayment Period and that
resulted in a Realized Loss.
Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of reference thereto,
is subject to a Subservicing Agreement.
Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement and who generally satisfied the requirements set forth in the Program
Guide in respect of the qualification of a Subservicer as of the date of its approval as a
Subservicer by the Master Servicer.
Subservicer Advance: Any delinquent installment of principal and interest on a
Mortgage Loan which is advanced by the related Subservicer (net of its Subservicing Fee)
pursuant to the Subservicing Agreement.
Subservicing Account: An account established by a Subservicer in accordance with
Section 3.08.
Subservicing Agreement: The written contract between the Master Servicer and any
Subservicer relating to servicing and administration of certain Mortgage Loans as provided
in Section 3.02, generally in the form of the servicer contract referred to or contained in
the Program Guide or in such other form as has been approved by the Master Servicer and the
Depositor.
Subservicing Fee: With respect to any Mortgage Loan, the fee payable monthly to the
related Subservicer (or, in the case of a Nonsubserviced Mortgage Loan, to the Master
Servicer) in respect of subservicing and other compensation that accrues with respect to
each Distribution Date at an annual rate designated as "SUBSERV FEE" on the Mortgage Loan
Schedule.
Swap Account: The separate trust account created and maintained by the Trustee
pursuant to Section 4.10(a).
Swap Agreement: The interest rate swap agreement between the Swap Counterparty and
the Trustee, on behalf of the Trust, which agreement provides for Net Swap Payments and Swap
Termination Payments to be paid, as provided therein, together with any schedules,
confirmations or other agreements relating thereto, attached hereto as Exhibit O.
Swap Agreement Notional Balance: As to the Swap Agreement and each Floating Rate
Payer Payment Date and Fixed Rate Payer Payment Date (each as defined in the Swap Agreement)
the amount set forth on Schedule I to the Swap Agreement for such Floating Rate Payer
Payment Date.
Swap Counterparty: The swap counterparty under the Swap Agreement either (a)
entitled to receive payments from the Trustee from amounts payable by the Trust Fund under
this Agreement or (b) required to make payments to the Trustee for payment to the Trust
Fund, in either case pursuant to the terms of the Swap Agreement, and any successor in
interest or assign. Initially, the Swap Counterparty shall be Bear Xxxxxxx Financial
Products Inc.
Swap Counterparty Trigger Event: With respect to any Distribution Date, (i) an Event
of Default under the Swap Agreement with respect to which the Swap Counterparty is a
Defaulting Party, (ii) a Termination Event under the Swap Agreement with respect to which
the Swap Counterparty is the sole Affected Party, or (iii) an additional termination event
under the Swap Agreement with respect to which the Swap Counterparty is the sole Affected
Party.
Swap LIBOR: LIBOR as determined pursuant to the Swap Agreement.
Swap Termination Payment: Upon the occurrence of an Early Termination Date, the
payment to be made by the Trustee on behalf of the Trust to the Swap Counterparty from
payments from the Trust Fund, or by the Swap Counterparty to the Trustee for payment to the
Trust Fund, as applicable, pursuant to the terms of the Swap Agreement.
Tax Returns: The federal income tax return on Internal Revenue Service Form 1066,
U.S. Real Estate Mortgage Investment Conduit Income Tax Return, including Schedule Q
thereto, Quarterly Notice to Residual Interest Holders of REMIC Taxable Income or Net Loss
Allocation, or any successor forms, to be filed on behalf of any REMIC hereunder due to its
classification as a REMIC under the REMIC Provisions, together with any and all other
information, reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other governmental
taxing authority under any applicable provisions of federal, state or local tax laws.
Telerate Screen Page 3750: As defined in Section 1.02.
Temporary Regulation S Global Class B Certificate: As defined in Section 5.01(b). A
form of Temporary Regulation S Global Class B Certificate will be issued substantially in
the form attached as Exhibit B-2 hereto.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation or other form
of assignment of any Ownership Interest in a Certificate.
Transfer Affidavit and Agreement: As defined in Section 5.02(f).
Transferee: Any Person who is acquiring by Transfer any Ownership Interest in a
Certificate.
Transferor: Any Person who is disposing by Transfer of any Ownership Interest in a
Certificate.
Transferring Servicer: As defined in Section 3.23(c).
Trigger Event: A Trigger Event is in effect with respect to any Distribution Date on
or after the Stepdown Date if either (a) the Sixty-Plus Delinquency Percentage, as
determined on that Distribution Date, equals or exceeds 36.36% of the Senior Enhancement
Percentage for such Distribution Date or (b) on or after the Distribution Date in June 2008,
the aggregate amount of Realized Losses on the Mortgage Loans as a percentage of the Cut-off
Date Balance exceeds the applicable amount set forth below:
June 2008 to May 2009: 1.40% with respect to June 2008, plus an
additional 1/12th of 1.70% for each month
thereafter.
June 2009 to May 2010: 3.10% with respect to June 2009, plus an
additional 1/12th of 1.75% for each month
thereafter.
June 2010 to May 2011: 4.85% with respect to June 2010, plus an
additional 1/12th of 1.40% for each month
thereafter.
June 2011 to May 2012: 6.25% with respect to June 2011, plus an
additional 1/12th of 0.75% for each month
thereafter.
June 2012 and thereafter: 7.00%.
Trustee: As defined in the preamble hereto.
Trust Fund: Collectively, (i) the assets of each REMIC hereunder, (ii) the Swap
Account and (iii) the rights of the Trustee under the Swap Agreement.
Uncertificated Accrued Interest: With respect to any Uncertificated Regular Interest
for any Distribution Date, one month's interest at the related Uncertificated Pass-Through
Rate for such Distribution Date, accrued on the Uncertificated Principal Balance or
Uncertificated Notional Amount, as applicable, immediately prior to such Distribution Date.
Uncertificated Accrued Interest for the Uncertificated Regular Interests shall accrue on the
basis of a 360-day year consisting of twelve 30-day months. For purposes of calculating the
amount of Uncertificated Accrued Interest for the REMIC I Regular Interests for any
Distribution Date, any Prepayment Interest Shortfalls and Relief Act Shortfalls (to the
extent not covered by Compensating Interest) shall be allocated among REMIC I Regular
Interests, pro rata, based on, and to the extent of, Uncertificated Accrued Interest, as
calculated without application of this sentence. For purposes of calculating the amount of
Uncertificated Accrued Interest for the REMIC II Regular Interests for any Distribution
Date, any Prepayment Interest Shortfalls and Relief Act Shortfalls (to the extent not
covered by Compensating Interest) shall be allocated among the REMIC II Regular Interests,
pro rata, based on, and to the extent of, Uncertificated Accrued Interest, as calculated
without application of this sentence. Uncertificated Interest on REMIC III Regular Interest
SB-PO shall be zero. Uncertificated Accrued Interest on the REMIC III Regular Interest
SB-IO for each Distribution Date shall equal Accrued Certificate Interest for the Class SB
Certificates.
Uncertificated Notional Amount: With respect to the Class SB Certificates or the
REMIC III Regular Interest SB-IO, immediately prior to any Distribution Date, the aggregate
of the Uncertificated Principal Balances of the REMIC II Regular Interests.
With respect to REMIC II Regular Interest LT-IO and each Distribution Date listed
below, the aggregate Uncertificated Principal Balance of the REMIC I Regular Interests
ending with the designation "A" listed below:
DISTRIBUTION
DATE REMIC I REGULAR INTERESTS
1 I-1-A through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through X-00-X
0 X-0-X xxxxxxx X-00-X
0 X-0-X through I-44-A
10 I-10-A through I-44-A
11 I-11-A through I-44-A
12 I-12-A through I-44-A
13 I-13-A through I-44-A
14 I-14-A through I-44-A
15 I-15-A through I-44-A
16 I-16-A through I-44-A
17 I-17-A through I-44-A
18 I-18-A through I-44-A
19 I-19-A through I-44-A
20 I-20-A through I-44-A
21 I-21-A through I-44-A
22 I-22-A through I-44-A
23 I-23-A through I-44-A
24 I-24-A through I-44-A
25 I-25-A through I-44-A
26 I-26-A through I-44-A
27 I-27-A through I-44-A
28 I-28-A through I-44-A
29 I-29-A through I-44-A
30 I-30-A through I-44-A
31 I-31-A through I-44-A
32 I-32-A through I-44-A
33 I-33-A through I-44-A
34 I-34-A through I-44-A
35 I-35-A through I-44-A
36 I-36-A through I-44-A
37 I-37-A through I-44-A
38 I-38-A through I-44-A
39 I-39-A through I-44-A
40 I-40-A through I-44-A
41 I-41-A through I-44-A
42 I-42-A through I-44-A
43 I-43-A through I-44-A
44 I-44-A
thereafter $0.00
With respect to REMIC III Regular Interest IO, immediately prior to any Distribution
Date, an amount equal to the Uncertificated Notional Amount of REMIC II Regular Interest
LT-IO.
Uncertificated Pass-Through Rate: The Uncertificated REMIC I Pass-Through Rate or the
Uncertificated REMIC II Pass-Through Rate, as applicable.
Uncertificated Principal Balance: The principal amount of any Uncertificated Regular
Interest outstanding as of any date of determination. The Uncertificated Principal Balance
of each REMIC Regular Interest shall never be less than zero. With respect to REMIC III
Regular Interest SB-PO the initial amount set forth with respect thereto in the Preliminary
Statement as reduced by distributions deemed made in respect thereof pursuant to
Section 4.02 and Realized Losses allocated thereto pursuant to Section 4.05.
Uncertificated Regular Interests: The REMIC I Regular Interests and the REMIC II
Regular Interests.
Uncertificated REMIC I Pass-Through Rate With respect to each REMIC I Regular
Interest ending with the designation "A," a per annum rate equal to the weighted average Net
Mortgage Rate of the Mortgage Loans multiplied by two (2), subject to a maximum rate of
10.900%. With respect to each REMIC I Regular Interest ending with the designation "B," the
greater of (x) a per annum rate equal to the excess, if any, of (i) 2 multiplied by the
weighted average Net Mortgage Rate of the Mortgage Loans over (ii) 10.900% and (y)
0.00000%. With respect to REMIC I Regular Interest A-I, the weighted average Net Mortgage
Rate of the Mortgage Loans.
Uncertificated REMIC II Pass-Through Rate: With respect to any Distribution Date and
(i) REMIC II Regular Interests LT1 and LT2, the REMIC II Net WAC Rate, (ii) REMIC II Regular
Interest LT3, zero (0.00%), (iii) REMIC II Regular Interest LT4, twice the REMIC II Net WAC
Rate, and (iv) REMIC II Regular Interest LT-IO, the excess of (i) the weighted average of
the Uncertificated REMIC I Pass-Through Rates for REMIC I Regular Interests ending with the
designation "A," over (ii) 2 multiplied by Swap LIBOR.
Uniform Single Attestation Program for Mortgage Bankers: The Uniform Single
Attestation Program for Mortgage Bankers, as published by the Mortgage Bankers Association
of America and effective with respect to fiscal periods ending on or after December 15, 1995.
Uninsured Cause: Any cause of damage to property subject to a Mortgage such that the
complete restoration of such property is not fully reimbursable by the hazard insurance
policies.
United States Person: Either (i) a citizen or resident of the United States, a
corporation, 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, any state thereof, or the District of Columbia (except in the case of a
partnership, to the extent provided in Treasury regulations) provided that, for purposes
solely of the restrictions on the transfer of Class R Certificates, no partnership or other
entity treated as a partnership for United States federal income tax purposes shall be
treated as a United States Person unless all persons that own an interest in such
partnership either directly or through any entity that is not a corporation for United
States federal income tax purposes are required by the applicable operative agreement to be
United States Persons, or an estate that is described in Section 7701(a)(30)(D) of the Code,
or a trust that is described in Section 7701(a)(30)(E) of the Code, or (ii) as defined in
Regulation S, as the context may require.
Voting Rights: The portion of the voting rights of all of the Certificates which is
allocated to any Certificate. 98.00% of all of the Voting Rights shall be allocated among
Holders of the Class A Certificates, Class M Certificates and Class B Certificates, in
proportion to the outstanding Certificate Principal Balances of their respective
Certificates; 1.00% of all of the Voting Rights shall be allocated to the Holders of the
Class SB Certificates; and 0.33%, 0.33% and 0.34% of all of the Voting Rights shall be
allocated to the Holders of the Class R-I, Class R-II and Class R-III Certificates,
respectively; in each case to be allocated among the Certificates of such Class in
accordance with their respective Percentage Interests.
Section 1.02. Determination of LIBOR.
LIBOR applicable to the calculation of the Pass-Through Rate on the LIBOR
Certificates for any Interest Accrual Period will be determined as of each LIBOR Rate
Adjustment Date. On each LIBOR Rate Adjustment Date, or if such LIBOR Rate Adjustment Date
is not a Business Day, then on the next succeeding Business Day, LIBOR shall be established
by the Trustee and, as to any Interest Accrual Period, will equal the rate for one month
United States dollar deposits that appears on the Telerate Screen Page 3750 as of 11:00
a.m., London time, on such LIBOR Rate Adjustment Date. "Telerate Screen Page 3750" means
the display designated as page 3750 on the Bridge Telerate Service (or such other page as
may replace page 3750 on that service for the purpose of displaying London interbank offered
rates of major banks). If such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered, LIBOR shall be
so established by use of such other service for displaying LIBOR or comparable rates as may
be selected by the Trustee after consultation with the Master Servicer), the rate will be
the Reference Bank Rate. The "Reference Bank Rate" will be determined on the basis of the
rates at which deposits in U.S. Dollars are offered by the reference banks (which shall be
any three major banks that are engaged in transactions in the London interbank market,
selected by the Trustee after consultation with the Master Servicer) as of 11:00 a.m.,
London time, on the LIBOR Rate Adjustment Date to prime banks in the London interbank market
for a period of one month in amounts approximately equal to the aggregate Certificate
Principal Balance of the LIBOR Certificates then outstanding. The Trustee shall request the
principal London office of each of the reference banks to provide a quotation of its rate.
If at least two such quotations are provided, the rate will be the arithmetic mean of the
quotations rounded up to the next multiple of 1/16%. If on such date fewer than two
quotations are provided as requested, the rate will be the arithmetic mean of the rates
quoted by one or more major banks in New York City, selected by the Trustee after
consultation with the Master Servicer, as of 11:00 a.m., New York City time, on such date
for loans in U.S. Dollars to leading European banks for a period of one month in amounts
approximately equal to the aggregate Certificate Principal Balance of the LIBOR Certificates
then outstanding. If no such quotations can be obtained, the rate will be LIBOR for the
prior Distribution Date; provided however, if, under the priorities described above, LIBOR
for a Distribution Date would be based on LIBOR for the previous Distribution Date for the
third consecutive Distribution Date, the Trustee, after consultation with the Master
Servicer, shall select an alternative comparable index (over which the Trustee has no
control), used for determining one-month Eurodollar lending rates that is calculated and
published (or otherwise made available) by an independent party. The establishment of LIBOR
by the Trustee on any LIBOR Rate Adjustment Date and the Trustee's subsequent calculation of
the Pass-Through Rates applicable to the LIBOR Certificates for the relevant Interest
Accrual Period, in the absence of manifest error, will be final and binding. Promptly
following each LIBOR Rate Adjustment Date the Trustee shall supply the Master Servicer with
the results of its determination of LIBOR on such date. Furthermore, the Trustee shall
supply to any Certificateholder so requesting by calling 1-800-934-6802, the Pass-Through
Rate on the LIBOR Certificates for the current and the immediately preceding Interest
Accrual Period.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery hereof, does hereby
assign to the Trustee in respect of the Trust Fund without recourse all the right, title and
interest of the Depositor in and to (i) the Mortgage Loans, including all interest and
principal on or with respect to the Mortgage Loans due on or after the Cut-off Date (other
than Monthly Payments due in the month of the Cut-off Date); and (ii) all proceeds of the
foregoing.
(b) In connection with such assignment, and contemporaneously with the delivery of this
Agreement, except as set forth in Section 2.01(c) below and subject to Section 2.01(d)
below, the Depositor does hereby deliver to, and deposit with, the Trustee, or to and with
one or more Custodians, as the duly appointed agent or agents of the Trustee for such
purpose, the following documents or instruments (or copies thereof as permitted by this
Section) with respect to each Mortgage Loan so assigned:
(i) The original Mortgage Note, endorsed without recourse to the order of the Trustee and
showing an unbroken chain of endorsements from the originator thereof to the Person
endorsing it to the Trustee, or with respect to any Destroyed Mortgage Note, an
original lost note affidavit from the related Seller or Residential Funding stating
that the original Mortgage Note was lost, misplaced or destroyed, together with a
copy of the related Mortgage Note;
(ii) The original Mortgage, noting the presence of the MIN of the Mortgage Loan and
language indicating that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a
MOM Loan, with evidence of recording indicated thereon or, if the original Mortgage
has not yet been returned from the public recording office, a copy of the original
Mortgage with evidence of recording indicated thereon;
(iii) Unless the Mortgage Loan is registered on the MERS(R)System, the assignment (which may
be included in one or more blanket assignments if permitted by applicable law) of the
Mortgage to the Trustee with evidence of recording indicated thereon or a copy of
such assignment with evidence of recording indicated thereon;
(iv) The original recorded assignment or assignments of the Mortgage showing an unbroken
chain of title from the originator to the Person assigning it to the Trustee (or to
MERS, if the Mortgage Loan is registered on the MERS(R)System and noting the presence
of a MIN) with evidence of recordation noted thereon or attached thereto, or a copy
of such assignment or assignments of the Mortgage with evidence of recording
indicated thereon; and
(v) The original of each modification, assumption agreement or preferred loan agreement,
if any, relating to such Mortgage Loan, or a copy of each modification, assumption
agreement or preferred loan agreement.
The Depositor may, in lieu of delivering the original of the documents set forth in
Section 2.01(b)(ii), (iii), (iv) and (v) (or copies thereof as permitted by Section 2.01(b))
to the Trustee or the Custodian or Custodians, deliver such documents to the Master
Servicer, and the Master Servicer shall hold such documents in trust for the use and benefit
of all present and future Certificateholders until such time as is set forth in the next
sentence. Within thirty Business Days following the earlier of (i) the receipt of the
original of all of the documents or instruments set forth in Section 2.01(b)(ii), (iii),
(iv) and (v) (or copies thereof as permitted by such Section) for any Mortgage Loan and (ii)
a written request by the Trustee to deliver those documents with respect to any or all of
the Mortgage Loans then being held by the Master Servicer, the Master Servicer shall deliver
a complete set of such documents to the Trustee or the Custodian or Custodians that are the
duly appointed agent or agents of the Trustee.
(c) Notwithstanding the provisions of Section 2.01(b), in the event that in connection
with any Mortgage Loan, if the Depositor cannot deliver the original of the Mortgage, any
assignment, modification, assumption agreement or preferred loan agreement (or copy thereof
as permitted by Section 2.01(b)) with evidence of recording thereon concurrently with the
execution and delivery of this Agreement because of (i) a delay caused by the public
recording office where such Mortgage, assignment, modification, assumption agreement or
preferred loan agreement as the case may be, has been delivered for recordation, or (ii) a
delay in the receipt of certain information necessary to prepare the related assignments,
the Depositor shall deliver or cause to be delivered to the Trustee or the respective
Custodian a copy of such Mortgage, assignment, modification, assumption agreement or
preferred loan agreement.
The Depositor shall promptly cause to be recorded in the appropriate public office
for real property records the Assignment referred to in clause (iii) of Section 2.01(b),
except (a) in states where, in an Opinion of Counsel acceptable to the Master Servicer, such
recording is not required to protect the Trustee's interests in the Mortgage Loan or (b) if
MERS is identified on the Mortgage or on a properly recorded assignment of the Mortgage, as
applicable, as the mortgagee of record solely as nominee for Residential Funding and its
successors and assigns. If any Assignment is lost or returned unrecorded to the Depositor
because of any defect therein, the Depositor shall prepare a substitute Assignment or cure
such defect, as the case may be, and cause such Assignment to be recorded in accordance with
this paragraph. The Depositor shall promptly deliver or cause to be delivered to the
Trustee or the respective Custodian such Mortgage or Assignment, as applicable (or copy
thereof as permitted by Section 2.01(b)), with evidence of recording indicated thereon upon
receipt thereof from the public recording office or from the related Subservicer or Seller.
If the Depositor delivers to the Trustee or Custodian any Mortgage Note or Assignment
of Mortgage in blank, the Depositor shall, or shall cause the Custodian to, complete the
endorsement of the Mortgage Note and the Assignment of Mortgage in the name of the Trustee
in conjunction with the Interim Certification issued by the Custodian, as contemplated by
Section 2.02.
Any of the items set forth in Sections 2.01(b)(ii), (iii), (iv) and (v) and that may
be delivered as a copy rather than the original may be delivered to the Trustee or the
Custodian.
In connection with the assignment of any Mortgage Loan registered on the MERS(R)
System, the Depositor further agrees that it will cause, at the Depositor's own expense,
within 30 Business Days after the Closing Date, the MERS(R)System to indicate that such
Mortgage Loans have been assigned by the Depositor to the Trustee in accordance with this
Agreement for the benefit of the Certificateholders by including (or deleting, in the case
of Mortgage Loans which are repurchased in accordance with this Agreement) in such computer
files (a) the code in the field which identifies the specific Trustee and (b) the code in
the field "Pool Field" which identifies the series of the Certificates issued in connection
with such Mortgage Loans. The Depositor further agrees that it will not, and will not
permit the Master Servicer to, and the Master Servicer agrees that it will not, alter the
codes referenced in this paragraph with respect to any Mortgage Loan during the term of this
Agreement unless and until such Mortgage Loan is repurchased in accordance with the terms of
this Agreement.
(d) It is intended that the conveyances by the Depositor to the Trustee of the Mortgage
Loans as provided for in this Section 2.01 and the Uncertificated Regular Interests be
construed as a sale by the Depositor to the Trustee of the Mortgage Loans and the
Uncertificated Regular Interests for the benefit of the Certificateholders. Further, it is
not intended that any such conveyance be deemed to be a pledge of the Mortgage Loans and the
Uncertificated Regular Interests by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor. Nonetheless, (a) this Agreement is intended to be and hereby
is a security agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code and the Uniform Commercial Code of any other applicable jurisdiction; (b)
the conveyances provided for in this Section 2.01 shall be deemed to be (1) a grant by the
Depositor to the Trustee of a security interest in all of the Depositor's right (including
the power to convey title thereto), title and interest, whether now owned or hereafter
acquired, in and to (A) the Mortgage Loans, including the related Mortgage Note, the
Mortgage, any insurance policies and all other documents in the related Mortgage File, (B)
all amounts payable pursuant to the Mortgage Loans or the Swap Agreement in accordance with
the terms thereof, (C) any Uncertificated Regular Interests and any and all general
intangibles, payment intangibles, accounts, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of credit, advices of credit and
investment property and other property of whatever kind or description now existing or
hereafter acquired consisting of, arising from or relating to any of the foregoing, and (D)
all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including without limitation all amounts from
time to time held or invested in the Certificate Account or the Custodial Account, whether
in the form of cash, instruments, securities or other property and (2) an assignment by the
Depositor to the Trustee of any security interest in any and all of Residential Funding's
right (including the power to convey title thereto), title and interest, whether now owned
or hereafter acquired, in and to the property described in the foregoing clauses (1)(A),
(B), (C) and (D) granted by Residential Funding to the Depositor pursuant to the Assignment
Agreement; (c) the possession by the Trustee, the Custodian or any other agent of the
Trustee of Mortgage Notes or such other items of property as constitute instruments, money,
payment intangibles, negotiable documents, goods, deposit accounts, letters of credit,
advices of credit, investment property, certificated securities or chattel paper shall be
deemed to be "possession by the secured party," or possession by a purchaser or a person
designated by such secured party, for purposes of perfecting the security interest pursuant
to the Minnesota Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction as in effect (including, without limitation, Sections 8-106, 9-313
and 9-106 thereof); and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property, shall be
deemed notifications to, or acknowledgments, receipts or confirmations from, securities
intermediaries, bailees or agents of, or persons holding for, (as applicable) the Trustee
for the purpose of perfecting such security interest under applicable law.
The Depositor and, at the Depositor's direction, Residential Funding and the Trustee
shall, to the extent consistent with this Agreement, take such reasonable actions as may be
necessary to ensure that, if this Agreement were deemed to create a security interest in the
Mortgage Loans and the Uncertificated Regular Interests and the other property described
above, such security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term of this
Agreement. Without limiting the generality of the foregoing, the Depositor shall prepare and
deliver to the Trustee not less than 15 days prior to any filing date and, the Trustee shall
forward for filing, or shall cause to be forwarded for filing, at the expense of the
Depositor, all filings necessary to maintain the effectiveness of any original filings
necessary under the Uniform Commercial Code as in effect in any jurisdiction to perfect the
Trustee's security interest in or lien on the Mortgage Loans and the Uncertificated Regular
Interests, as evidenced by an Officers' Certificate of the Depositor, including without
limitation (x) continuation statements, and (y) such other statements as may be occasioned
by (1) any change of name of Residential Funding, the Depositor or the Trustee (such
preparation and filing shall be at the expense of the Trustee, if occasioned by a change in
the Trustee's name), (2) any change of location of the place of business or the chief
executive office of Residential Funding or the Depositor, (3) any transfer of any interest
of Residential Funding or the Depositor in any Mortgage Loan or (4) any transfer of any
interest of Residential Funding or the Depositor in any Uncertificated Regular Interests.
Section 2.02. Acceptance by Trustee.
The Trustee acknowledges receipt (or, with respect to Mortgage Loans subject to a
Custodial Agreement, and based solely upon a receipt or certification executed by the
Custodian, receipt by the respective Custodian as the duly appointed agent of the Trustee)
of the documents referred to in Section 2.01(b)(i) above (except that for purposes of such
acknowledgement only, a Mortgage Note may be endorsed in blank and an Assignment of Mortgage
may be in blank) and declares that it, or a Custodian as its agent, holds and will hold such
documents and the other documents constituting a part of the Mortgage Files delivered to it,
or a Custodian as its agent, in trust for the use and benefit of all present and future
Certificateholders. The Trustee or Custodian (such Custodian being so obligated under a
Custodial Agreement) agrees, for the benefit of Certificateholders, to review each Mortgage
File delivered to it pursuant to Section 2.01(b) within 90 days after the Closing Date to
ascertain that all required documents (specifically as set forth in Section 2.01(b)), have
been executed and received, and that such documents relate to the Mortgage Loans identified
on the Mortgage Loan Schedule, as supplemented, that have been conveyed to it, and to
deliver to the Trustee a certificate (the "Interim Certification") to the effect that all
documents required to be delivered pursuant to Section 2.01(b) above have been executed and
received and that such documents relate to the Mortgage Loans identified on the Mortgage
Loan Schedule, except for any exceptions listed on Schedule A attached to such Interim
Certification. Upon delivery of the Mortgage Files by the Depositor or the Master Servicer,
the Trustee shall acknowledge receipt (or, with respect to Mortgage Loans subject to a
Custodial Agreement, and based solely upon a receipt or certification executed by the
Custodian, receipt by the respective Custodian as the duly appointed agent of the Trustee)
of the documents referred to in Section 2.01(b) above.
If the Custodian, as the Trustee's agent, finds any document or documents
constituting a part of a Mortgage File to be missing or defective, upon receipt of
notification from the Custodian as specified in the succeeding sentence, the Trustee shall
promptly so notify or cause the Custodian to notify the Master Servicer and the Depositor.
Pursuant to Section 2.3 of the Custodial Agreement, the Custodian will notify the Master
Servicer, the Depositor and the Trustee of any such omission or defect found by it in
respect of any Mortgage File held by it in respect of the items received by it pursuant to
the Custodial Agreement. If such omission or defect materially and adversely affects the
interests in the related Mortgage Loan of the Certificateholders, the Master Servicer shall
promptly notify the related Subservicer or Seller of such omission or defect and request
that such Subservicer or Seller correct or cure such omission or defect within 60 days from
the date the Master Servicer was notified of such omission or defect and, if such
Subservicer or Seller does not correct or cure such omission or defect within such period,
that such Subservicer or Seller purchase such Mortgage Loan from the Trust Fund at its
Purchase Price, in either case within 90 days from the date the Master Servicer was notified
of such omission or defect; provided that if the omission or defect would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code,
any such cure or repurchase must occur within 90 days from the date such breach was
discovered. The Purchase Price for any such Mortgage Loan shall be deposited or caused to
be deposited by the Master Servicer in the Custodial Account maintained by it pursuant to
Section 3.07 and, upon receipt by the Trustee of written notification of such deposit signed
by a Servicing Officer, the Trustee or any Custodian, as the case may be, shall release to
the Master Servicer the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the Subservicer or Seller or its designee, as the
case may be, any Mortgage Loan released pursuant hereto and thereafter such Mortgage Loan
shall not be part of the Trust Fund. In furtherance of the foregoing and Section 2.04, if
the Subservicer or Seller or Residential Funding that repurchases the Mortgage Loan is not a
member of MERS and the Mortgage is registered on the MERS(R)System, the Master Servicer, 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 such Subservicer or Seller or Residential Funding and shall cause such Mortgage to be
removed from registration on the MERS(R)System in accordance with MERS' rules and
regulations. It is understood and agreed that the obligation of the Subservicer or Seller,
to so cure or purchase any Mortgage Loan as to which a material and adverse defect in or
omission of a constituent document exists shall constitute the sole remedy respecting such
defect or omission available to Certificateholders or the Trustee on behalf of
Certificateholders.
Section 2.03. Representations, Warranties and Covenants of the Master Servicer and the
Depositor.
(a) The Master Servicer hereby represents and warrants to the Trustee for the benefit of
the Certificateholders that:
(i) The Master Servicer is a corporation duly organized, validly existing and in good
standing under the laws governing its creation and existence and is or will be in
compliance with the laws of each state in which any Mortgaged Property is located to
the extent necessary to ensure the enforceability of each Mortgage Loan in accordance
with the terms of this Agreement;
(ii) The execution and delivery of this Agreement by the Master Servicer and its
performance and compliance with the terms of this Agreement will not violate the
Master Servicer's Certificate of Incorporation or Bylaws or constitute a material
default (or an event which, with notice or lapse of time, or both, would constitute a
material default) under, or result in the material breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or which may be
applicable to the Master Servicer or any of its assets;
(iii) This Agreement, assuming due authorization, execution and delivery by the Trustee and
the Depositor, constitutes a valid, legal and binding obligation of the Master
Servicer, enforceable against it in accordance with the terms hereof subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights generally and to general principles of
equity, regardless of whether such enforcement is considered in a proceeding in
equity or at law;
(iv) The Master Servicer is not in default with respect to any order or decree of any
court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default might have consequences that would materially and
adversely affect the condition (financial or other) or operations of the Master
Servicer or its properties or might have consequences that would materially adversely
affect its performance hereunder;
(v) No litigation is pending or, to the best of the Master Servicer's knowledge,
threatened against the Master Servicer which would prohibit its entering into this
Agreement or performing its obligations under this Agreement;
(vi) The Master Servicer shall comply in all material respects in the performance of this
Agreement with all reasonable rules and requirements of each insurer under each
Required Insurance Policy;
(vii) No information, certificate of an officer, statement furnished in writing or report
delivered to the Depositor, any Affiliate of the Depositor or the Trustee by the
Master Servicer will, to the knowledge of the Master Servicer, contain any untrue
statement of a material fact or omit a material fact necessary to make the
information, certificate, statement or report not misleading;
(viii) The Master Servicer has examined each existing, and will examine each new,
Subservicing Agreement and is or will be familiar with the terms thereof. The terms
of each existing Subservicing Agreement and each designated Subservicer are
acceptable to the Master Servicer and any new Subservicing Agreements will comply
with the provisions of Section 3.02;
(ix) The Master Servicer is a member of MERS in good standing, and will comply in all
material respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS; and
(x) The Servicing Guide of the Master Servicer requires that the Subservicer for each
Mortgage Loan accurately and fully reports its borrower credit files to each of the
Credit Repositories in a timely manner.
It is understood and agreed that the representations and warranties set forth in this
Section 2.03(a) shall survive delivery of the respective Mortgage Files to the Trustee or any
Custodian. Upon discovery by either the Depositor, the Master Servicer, the Trustee or any
Custodian of a breach of any representation or warranty set forth in this Section 2.03(a)
which materially and adversely affects the interests of the Certificateholders in any
Mortgage Loan, the party discovering such breach shall give prompt written notice to the
other parties (any Custodian being so obligated under a Custodial Agreement). Within
90 days of its discovery or its receipt of notice of such breach, the Master Servicer shall
either (i) cure such breach in all material respects or (ii) to the extent that such breach
is with respect to a Mortgage Loan or a related document, purchase such Mortgage Loan from
the Trust Fund at the Purchase Price and in the manner set forth in Section 2.02; provided
that if the breach would cause the Mortgage Loan to be other than a "qualified mortgage" as
defined in Section 860G(a)(3) of the Code, any such cure or repurchase must occur within
90 days from the date such breach was discovered. The obligation of the Master Servicer to
cure such breach or to so purchase such Mortgage Loan shall constitute the sole remedy in
respect of a breach of a representation and warranty set forth in this Section 2.03(a)
available to the Certificateholders or the Trustee on behalf of the Certificateholders.
(b) The Depositor hereby represents and warrants to the Trustee for the benefit of the
Certificateholders that as of the Closing Date (or, if otherwise specified below, as of the
date so specified): (i) immediately prior to the conveyance of the Mortgage Loans to the
Trustee, the Depositor had good title to, and was the sole owner of, each Mortgage Loan free
and clear of any pledge, lien, encumbrance or security interest (other than rights to
servicing and related compensation) and such conveyance validly transfers ownership of the
Mortgage Loans to the Trustee free and clear of any pledge, lien, encumbrance or security
interest; and (ii) each Mortgage Loan constitutes a "qualified mortgage" under
Section 860G(a)(3)(A) of the Code and Treasury Regulation Section 1.860G-2(a)(1), (2), (4),
(5), (6), (7) and (9), without reliance on the provisions of Treasury
Regulation Section 1.860G-2(a)(3) or Treasury Regulation Section 1.860G-2(f)(2) or any other
provision that would allow a Mortgage Loan to be treated as a "qualified mortgage"
notwithstanding its failure to meet the requirements of Section 860G(a)(3)(A) of the Code
and Treasury Regulation Section 1.860G-2(a)(1), (2), (4), (5), (6), (7) and (9).
It is understood and agreed that the representations and warranties set forth in this
Section 2.03(b) shall survive delivery of the respective Mortgage Files to the Trustee or
any Custodian.
Upon discovery by any of the Depositor, the Master Servicer, the Trustee or any
Custodian of a breach of any of the representations and warranties set forth in this
Section 2.03(b) which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties (any Custodian being so obligated under a Custodial
Agreement); provided, however, that in the event of a breach of the representation and
warranty set forth in Section 2.03(b)(ii), the party discovering such breach shall give such
notice within five days of discovery. Within 90 days of its discovery or its receipt of
notice of breach, the Depositor shall either (i) cure such breach in all material respects
or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase Price and in the
manner set forth in Section 2.02; provided that the Depositor shall have the option to
substitute a Qualified Substitute Mortgage Loan or Loans for such Mortgage Loan if such
substitution occurs within two years following the Closing Date; provided that if the
omission or defect would cause the Mortgage Loan to be other than a "qualified mortgage" as
defined in Section 860G(a)(3) of the Code, any such cure, substitution or repurchase must
occur within 90 days from the date such breach was discovered. Any such substitution shall
be effected by the Depositor under the same terms and conditions as provided in Section 2.04
for substitutions by Residential Funding. It is understood and agreed that the obligation
of the Depositor to cure such breach or to so purchase or substitute for any Mortgage Loan
as to which such a breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Certificateholders or the Trustee on behalf of the
Certificateholders. Notwithstanding the foregoing, the Depositor shall not be required to
cure breaches or purchase or substitute for Mortgage Loans as provided in this
Section 2.03(b) if the substance of the breach of a representation set forth above also
constitutes fraud in the origination of the Mortgage Loan.
Section 2.04. Representations and Warranties of Sellers.
The Depositor, as assignee of Residential Funding under the Assignment Agreement,
hereby assigns to the Trustee for the benefit of the Certificateholders all of its right,
title and interest in respect of the Assignment Agreement and each Seller's Agreement
applicable to a Mortgage Loan as and to the extent set forth in the Assignment Agreement.
Insofar as the Assignment Agreement or such Seller's Agreement relates to the
representations and warranties made by Residential Funding or the related Seller in respect
of such Mortgage Loan and any remedies provided thereunder for any breach of such
representations and warranties, such right, title and interest may be enforced by the Master
Servicer on behalf of the Trustee and the Certificateholders. Upon the discovery by the
Depositor, the Master Servicer, the Trustee or any Custodian of a breach of any of the
representations and warranties made in a Seller's Agreement or the Assignment Agreement in
respect of any Mortgage Loan or of any Repurchase Event which materially and adversely
affects the interests of the Certificateholders in such Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties (any Custodian being so
obligated under a Custodial Agreement). The Master Servicer shall promptly notify the
related Seller and Residential Funding of such breach or Repurchase Event and request that
such Seller or Residential Funding either (i) cure such breach or Repurchase Event in all
material respects within 90 days from the date the Master Servicer was notified of such
breach or Repurchase Event or (ii) purchase such Mortgage Loan from the Trust Fund at the
Purchase Price and in the manner set forth in Section 2.02.
Upon the discovery by the Depositor, the Master Servicer, the Trustee or any
Custodian of a breach of any of such representations and warranties set forth in the
Assignment Agreement in respect of any Mortgage Loan which materially and adversely affects
the interests of the Certificateholders in such Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties (any Custodian being so
obligated under a Custodial Agreement) at the same time as notice is given pursuant to the
preceding paragraph of any corresponding breach of representation or warranty made in
Seller's Agreement. The Master Servicer shall promptly notify Residential Funding of such
breach of a representation or warranty set forth in the Assignment Agreement and request
that Residential Funding either (i) cure such breach in all material respects within 90 days
from the date the Master Servicer was notified of such breach or (ii) purchase such Mortgage
Loan from the Trust Fund within 90 days of the date of such written notice of such breach at
the Purchase Price and in the manner set forth in Section 2.02, but only if the Mortgage
Loan has not been purchased by the Seller due to a breach of representation and warranty of
the related Seller's Agreement as set forth in the preceding paragraph; provided that
Residential Funding shall have the option to substitute a Qualified Substitute Mortgage Loan
or Loans for such Mortgage Loan if such substitution occurs within two years following the
Closing Date; provided that if the breach would cause the Mortgage Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such cure or
substitution must occur within 90 days from the date the breach was discovered. If the
breach of representation and warranty that gave rise to the obligation to repurchase or
substitute a Mortgage Loan pursuant to Section 4 of the Assignment Agreement was the
representation and warranty set forth in clause (xlvii) of Section 4 thereof, then the
Master Servicer shall request that Residential Funding pay to the Trust Fund, concurrently
with and in addition to the remedies provided in the preceding sentence, an amount equal to
any liability, penalty or expense that was actually incurred and paid out of or on behalf of
the Trust Fund, and that directly resulted from such breach, or if incurred and paid by the
Trust Fund thereafter, concurrently with such payment. In the event that Residential
Funding elects to substitute a Qualified Substitute Mortgage Loan or Loans for a Deleted
Mortgage Loan pursuant to this Section 2.04, Residential Funding shall deliver to the
Trustee for the benefit of the Certificateholders with respect to such Qualified Substitute
Mortgage Loan or Loans, the original Mortgage Note, the Mortgage, an Assignment of the
Mortgage in recordable form, and such other documents and agreements as are required by
Section 2.01, with the Mortgage Note endorsed as required by Section 2.01. No substitution
will be made in any calendar month after the Determination Date for such month. Monthly
Payments due with respect to Qualified Substitute Mortgage Loans in the month of
substitution shall not be part of the Trust Fund and will be retained by the Master Servicer
and remitted by the Master Servicer to Residential Funding on the next succeeding
Distribution Date. For the month of substitution, distributions to the Certificateholders
will include the Monthly Payment due on a Deleted Mortgage Loan for such month and
thereafter Residential Funding shall be entitled to retain all amounts received in respect
of such Deleted Mortgage Loan. The Master Servicer shall amend or cause to be amended the
Mortgage Loan Schedule for the benefit of the Certificateholders to reflect the removal of
such Deleted Mortgage Loan and the substitution of the Qualified Substitute Mortgage Loan or
Loans and the Master Servicer shall deliver the amended Mortgage Loan Schedule to the
Trustee. Upon such substitution, the Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement and the related Subservicing Agreement in all
respects, the related Seller shall be deemed to have made the representations and warranties
with respect to the Qualified Substitute Mortgage Loan made in the related Seller Agreements
as of the date of substitution, Residential Funding shall be deemed to have made the
representations and warranties with respect to the Qualified Substitute Mortgage Loan (other
than those of a statistical nature) contained in the Assignment Agreement as of the date of
substitution, and the covenants, representations and warranties set forth in this
Section 2.04, and in Section 2.03(b) hereof.
In connection with the substitution of one or more Qualified Substitute Mortgage
Loans for one or more Deleted Mortgage Loans, the Master Servicer shall determine the amount
(if any) by which the aggregate principal balance of all such Qualified Substitute Mortgage
Loans as of the date of substitution is less than the aggregate Stated Principal Balance of
all such Deleted Mortgage Loans (in each case after application of the principal portion of
the Monthly Payments due in the month of substitution that are to be distributed to the
Certificateholders in the month of substitution). Residential Funding shall deposit or
cause the related Seller to deposit the amount of such shortfall into the Custodial Account
on the day of substitution, without any reimbursement therefor. Residential Funding shall
give notice in writing to the Trustee of such event, which notice shall be accompanied by an
Officers' Certificate as to the calculation of such shortfall and (subject to
Section 10.01(f)) by an Opinion of Counsel to the effect that such substitution will not
cause (a) any federal tax to be imposed on the Trust Fund, including without limitation, any
federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code or (b) any
portion of any REMIC created hereunder to fail to qualify as a REMIC at any time that any
Certificate is outstanding.
It is understood and agreed that the obligation of the Seller or Residential Funding,
as the case may be, to cure such breach or purchase (and in the case of Residential Funding
to substitute for) such Mortgage Loan as to which such a breach has occurred and is
continuing and to make any additional payments required under the Assignment Agreement in
connection with a breach of the representation and warranty in clause (xlvii) of Section 4
thereof shall constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on behalf of the Certificateholders. If the Master
Servicer is Residential Funding, then the Trustee shall also have the right to give the
notification and require the purchase or substitution provided for in the second preceding
paragraph in the event of such a breach of a representation or warranty made by Residential
Funding in the Assignment Agreement. In connection with the purchase of or substitution for
any such Mortgage Loan by Residential Funding, the Trustee shall assign to Residential
Funding all of the right, title and interest in respect of the Seller's Agreement and the
Assignment Agreement applicable to such Mortgage Loan.
Section 2.05. Execution and Authentication of Certificates; Conveyance of Uncertificated
REMIC Regular Interests.
(a) The Trustee acknowledges the assignment to it of the Mortgage Loans and the delivery
of the Mortgage Files to it, or any Custodian on its behalf, subject to any exceptions
noted, together with the assignment to it of all other assets included in the Trust Fund,
receipt of which is hereby acknowledged. Concurrently with such delivery and in exchange
therefor, the Trustee, pursuant to the written request of the Depositor executed by an
officer of the Depositor, has executed and caused to be authenticated and delivered to or
upon the order of the Depositor the Certificates in authorized denominations which evidence
ownership of the entire Trust Fund.
(b) The Depositor, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey in trust to the Trustee without recourse all
the right, title and interest of the Depositor in and to the REMIC I Regular Interests and
the REMIC II Regular Interests for the benefit of the Holders of each Class of Certificates
(other than the Class R-I and Class R-II Certificates). The Trustee acknowledges receipt of
the REMIC I Regular Interests and REMIC II Regular Interests, and declares that it holds and
will hold the same in trust for the exclusive use and benefit of the Holders of each Class
of Certificates (other than the Class R-I and Class R-II Certificates). The interests
evidenced by the Class R-III Certificates, together with the REMIC III Regular Interests,
constitute the entire beneficial ownership interest in REMIC III.
Section 2.06. Purposes and Powers of the Trust.
The purpose of the trust, as created hereunder, is to engage in the following
activities:
(a) to sell the Certificates to the Depositor in exchange for the Mortgage Loans;
(b) to enter into and perform its obligations under this Agreement;
(c) to engage in those activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith; and
(d) subject to compliance with this Agreement, to engage in such other activities as may
be required in connection with conservation of the Trust Fund and the making of
distributions to the Certificateholders.
The trust is hereby authorized to engage in the foregoing activities.
Notwithstanding the provisions of Section 11.01, the trust shall not engage in any activity
other than in connection with the foregoing or other than as required or authorized by the
terms of this Agreement while any Certificate is outstanding, and this Section 2.06 may not
be amended, without the consent of the Certificateholders evidencing a majority of the
aggregate Voting Rights of the Certificates.
Section 2.07. Agreement Regarding Ability to Disclose.
The Depositor, the Master Servicer and the Trustee hereby agree that, notwithstanding
any other express or implied agreement to the contrary, any and all Persons, and any of
their respective employees, representatives, and other agents may disclose, immediately upon
commencement of discussions, to any and all Persons, without limitation of any kind, the tax
treatment and tax structure of the transaction and all materials of any kind (including
opinions or other tax analyses) that are provided to any of them relating to such tax
treatment and tax structure. For purposes of this paragraph, the terms "tax,"
"tax treatment," "tax structure," and "tax benefit" are defined under Treasury Regulationss.
1.6011-4(c).
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Servicer.
(a) The Master Servicer shall service and administer the Mortgage Loans in accordance
with the terms of this Agreement and the respective Mortgage Loans, following such
procedures as it would employ in its good faith business judgment and which are normal and
usual in its general mortgage servicing activities, and shall have full power and authority,
acting alone or through Subservicers as provided in Section 3.02, to do any and all things
which it may deem necessary or desirable in connection with such servicing and
administration. Without limiting the generality of the foregoing, the Master Servicer in
its own name or in the name of a Subservicer is hereby authorized and empowered by the
Trustee when the Master Servicer or the Subservicer, as the case may be, believes it
appropriate in its best judgment, to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them, any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, or of consent to assumption or
modification in connection with a proposed conveyance, or of assignment of any Mortgage and
Mortgage Note in connection with the repurchase of a Mortgage Loan and all other comparable
instruments, or with respect to the modification or re-recording of a Mortgage for the
purpose of correcting the Mortgage, the subordination of the lien of the Mortgage in favor
of a public utility company or government agency or unit with powers of eminent domain, the
taking of a deed in lieu of foreclosure, the commencement, prosecution or completion of
judicial or non-judicial foreclosure, the conveyance of a Mortgaged Property to the related
insurer, the acquisition of any property acquired by foreclosure or deed in lieu of
foreclosure, or the management, marketing and conveyance of any property acquired by
foreclosure or deed in lieu of foreclosure with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. The Master 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 Subservicer, when the Master Servicer or the Subservicer, as the
case may be, believes it is appropriate in its best judgment to register any Mortgage Loan
on the MERS(R)System, or cause the removal from the registration of any Mortgage Loan on the
MERS(R)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 expenses incurred in connection
with the actions described in the preceding sentence shall be borne by the Master Servicer
in accordance with Section 3.16(c), with no right of reimbursement; provided, that if, as a
result of MERS discontinuing or becoming unable to continue operations in connection with
the MERS(R)System, it becomes necessary to remove any Mortgage Loan from registration on the
MERS(R)System and to arrange for the assignment of the related Mortgages to the Trustee, then
any related expenses shall be reimbursable to the Master Servicer as set forth in
Section 3.10(a)(ii). Notwithstanding the foregoing, subject to Section 3.07(a), the Master
Servicer shall not permit any modification with respect to any Mortgage Loan that would both
constitute a sale or exchange of such Mortgage Loan within the meaning of Section 1001 of
the Code and any proposed, temporary or final regulations promulgated thereunder (other than
in connection with a proposed conveyance or assumption of such Mortgage Loan that is treated
as a Principal Prepayment in Full pursuant to Section 3.13(d) hereof) and cause any REMIC
created hereunder to fail to qualify as a REMIC under the Code. The Trustee shall furnish
the Master Servicer with any powers of attorney and other documents necessary or appropriate
to enable the Master Servicer to service and administer the Mortgage Loans. The Trustee
shall not be liable for any action taken by the Master Servicer or any Subservicer pursuant
to such powers of attorney or other documents. In servicing and administering any
Nonsubserviced Mortgage Loan, the Master Servicer shall, to the extent not inconsistent with
this Agreement, comply with the Program Guide as if it were the originator of such Mortgage
Loan and had retained the servicing rights and obligations in respect thereof.
If the Mortgage relating to a Mortgage Loan did not have a lien senior to the
Mortgage Loan on the related Mortgaged Property as of the Cut-off Date, then the Master
Servicer, in such capacity, may not consent to the placing of a lien senior to that of the
Mortgage on the related Mortgaged Property. If the Mortgage relating to a Mortgage Loan had
a lien senior to the Mortgage Loan on the related Mortgaged Property as of the Cut-off Date,
then the Master Servicer, in such capacity, may consent to the refinancing of the prior
senior lien, provided that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting from such refinancing is
less than the original debt-to-income ratio as set forth on the Mortgage Loan
Schedule; provided, however, that in no instance shall the resulting Combined
Loan-to-Value Ratio ("Combined Loan-to-Value Ratio") of such Mortgage Loan be higher
than that permitted by the Program Guide; or
(B) 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; provided,
however, if such refinanced mortgage loan is a "rate and term" mortgage loan (meaning, the
Mortgagor does not receive any cash from the refinancing), the Combined Loan-to-Value Ratio
may increase to the extent of either (x) the reasonable closing costs of such refinancing or
(y) any decrease in the value of the related Mortgaged Property, if the Mortgagor is in good
standing as defined by the Program Guide;
(ii) the interest rate, or, in the case of an adjustable rate existing senior lien, the
maximum interest rate, for the loan evidencing the refinanced senior lien is no more
than 2.0% higher than the interest rate or the maximum interest rate, as the case may
be, on the loan evidencing the existing senior lien immediately prior to the date of
such refinancing; provided, however (A) if the loan evidencing the existing senior
lien prior to the date of refinancing has an adjustable rate and the loan evidencing
the refinanced senior lien has a fixed rate, then the current interest rate on the
loan evidencing the refinanced senior lien may be up to 2.0% higher than the
then-current loan rate of the loan evidencing the existing senior lien and (B) if the
loan evidencing the existing senior lien prior to the date of refinancing has a fixed
rate and the loan evidencing the refinanced senior lien has an adjustable rate, then
the maximum interest rate on the loan evidencing the refinanced senior lien shall be
less than or equal to (x) the interest rate on the loan evidencing the existing
senior lien prior to the date of refinancing plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not subject to negative
amortization.
(b) The Master Servicer shall, to the extent consistent with the servicing standards set
forth herein, take whatever actions as may be necessary to file a claim under or enforce or
allow the Trustee to file a claim under or enforce any title insurance policy with respect
to any Mortgage Loan including, without limitation, joining in or causing any Seller or
Subservicer (or any other party in possession of any title insurance policy) to join in any
claims process, negotiations, actions or proceedings necessary to make a claim under or
enforce any title insurance policy. Notwithstanding anything in this Agreement to the
contrary, the Master Servicer shall not (unless the Mortgagor is in default with respect to
the Mortgage Loan or such default is, in the judgment of the Master Servicer, reasonably
foreseeable) make or permit any modification, waiver, or amendment of any term of any
Mortgage Loan that would both (i) effect an exchange or reissuance of such Mortgage Loan
under Section 1001 of the Code (or final, temporary or proposed Treasury regulations
promulgated thereunder) (other than in connection with a proposed conveyance or assumption
of such Mortgage Loan that is treated as a Principal Prepayment in Full pursuant to
Section 3.13(d) hereof) and (ii) cause any REMIC formed hereunder to fail to qualify as a
REMIC under the Code or the imposition of any tax on "prohibited transactions" or
"contributions" after the startup date under the REMIC Provisions.
(c) In connection with servicing and administering the Mortgage Loans, the Master
Servicer and any Affiliate of the Master Servicer (i) may perform services such as
appraisals and brokerage services that are customarily provided by Persons other than
servicers of mortgage loans, and shall be entitled to reasonable compensation therefor in
accordance with Section 3.10 and (ii) may, at its own discretion and on behalf of the
Trustee, obtain credit information in the form of a "credit score" from a Credit Repository.
(d) All costs incurred by the Master Servicer or by Subservicers in effecting the timely
payment of taxes and assessments on the properties subject to the Mortgage Loans shall not,
for the purpose of calculating monthly distributions to the Certificateholders, be added to
the amount owing under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loan so permit, and such costs shall be recoverable to the extent permitted by
Section 3.10(a)(ii).
(e) The Master Servicer may enter into one or more agreements in connection with the
offering of pass-through certificates evidencing interests in one or more of the
Certificates providing for the payment by the Master Servicer of amounts received by the
Master Servicer as servicing compensation hereunder and required to cover certain Prepayment
Interest Shortfalls on the Mortgage Loans, which payment obligation will thereafter be an
obligation of the Master Servicer hereunder.
(f) The relationship of the Master Servicer (and of any successor to the Master Servicer)
to the Depositor under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner or agent.
(g) The Master Servicer shall comply with the terms of Section 9 of the Assignment
Agreement.
Section 3.02. Subservicing Agreements Between Master Servicer and Subservicers; Enforcement
of Subservicers' Obligations.
(a) The Master Servicer may continue in effect Subservicing Agreements entered into by
Residential Funding and Subservicers prior to the execution and delivery of this Agreement,
and may enter into new Subservicing Agreements with Subservicers, for the servicing and
administration of all or some of the Mortgage Loans. Each Subservicer shall be either (i)
an institution the accounts of which are insured by the FDIC or (ii) another entity that
engages in the business of originating or servicing mortgage loans, and in either case shall
be authorized to transact business in the state or states in which the related Mortgaged
Properties it is to service are situated, if and to the extent required by applicable law to
enable the Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, and in either case shall be a Xxxxxxx Mac, Xxxxxx Mae or HUD approved mortgage
servicer. Each Subservicer of a Mortgage Loan shall be entitled to receive and retain, as
provided in the related Subservicing Agreement and in Section 3.07, the related Subservicing
Fee from payments of interest received on such Mortgage Loan after payment of all amounts
required to be remitted to the Master Servicer in respect of such Mortgage Loan. For any
Mortgage Loan that is a Nonsubserviced Mortgage Loan, the Master Servicer shall be entitled
to receive and retain an amount equal to the Subservicing Fee from payments of interest.
Unless the context otherwise requires, references in this Agreement to actions taken or to
be taken by the Master Servicer in servicing the Mortgage Loans include actions taken or to
be taken by a Subservicer on behalf of the Master Servicer. Each Subservicing Agreement
will be upon such terms and conditions as are generally required by, permitted by or
consistent with the Program Guide and are not inconsistent with this Agreement and as the
Master Servicer and the Subservicer have agreed. With the approval of the Master Servicer,
a Subservicer may delegate its servicing obligations to third-party servicers, but such
Subservicer will remain obligated under the related Subservicing Agreement. The Master
Servicer and a Subservicer may enter into amendments thereto or a different form of
Subservicing Agreement, and the form referred to or included in the Program Guide is merely
provided for information and shall not be deemed to limit in any respect the discretion of
the Master Servicer to modify or enter into different Subservicing Agreements; provided,
however, that any such amendments or different forms shall be consistent with and not
violate the provisions of either this Agreement or the Program Guide in a manner which would
materially and adversely affect the interests of the Certificateholders. The Program Guide
and any other Subservicing Agreement entered into between the Master Servicer and any
Subservicer shall require the Subservicer to accurately and fully report its borrower credit
files to each of the Credit Repositories in a timely manner.
(b) As part of its servicing activities hereunder, the Master Servicer, for the benefit
of the Trustee and the Certificateholders, shall use its best reasonable efforts to enforce
the obligations of each Subservicer under the related Subservicing Agreement and of each
Seller under the related Seller's Agreement, to the extent that the non-performance of any
such obligation would have a material and adverse effect on a Mortgage Loan, including,
without limitation, the obligation to purchase a Mortgage Loan on account of defective
documentation, as described in Section 2.02, or on account of a breach of a representation
or warranty, as described in Section 2.04. Such enforcement, including, without limitation,
the legal prosecution of claims, termination of Subservicing Agreements or Seller's
Agreements, as appropriate, and the pursuit of other appropriate remedies, shall be in such
form and carried out to such an extent and at such time as the Master Servicer would employ
in its good faith business judgment and which are normal and usual in its general mortgage
servicing activities. The Master Servicer shall pay the costs of such enforcement at its
own expense, and shall be reimbursed therefor only (i) from a general recovery resulting
from such enforcement to the extent, if any, that such recovery exceeds all amounts due in
respect of the related Mortgage Loan or (ii) from a specific recovery of costs, expenses or
attorneys fees against the party against whom such enforcement is directed. For purposes of
clarification only, the parties agree that the foregoing is not intended to, and does not,
limit the ability of the Master Servicer to be reimbursed for expenses that are incurred in
connection with the enforcement of a Seller's obligations and are reimbursable pursuant to
Section 3.10(a)(vii).
Section 3.03. Successor Subservicers.
The Master Servicer shall be entitled to terminate any Subservicing Agreement that
may exist in accordance with the terms and conditions of such Subservicing Agreement and
without any limitation by virtue of this Agreement; provided, however, that in the event of
termination of any Subservicing Agreement by the Master Servicer or the Subservicer, the
Master Servicer shall either act as servicer of the related Mortgage Loan or enter into a
Subservicing Agreement with a successor Subservicer which will be bound by the terms of the
related Subservicing Agreement. If the Master Servicer or any Affiliate of Residential
Funding acts as servicer, it will not assume liability for the representations and
warranties of the Subservicer which it replaces. If the Master Servicer enters into a
Subservicing Agreement with a successor Subservicer, the Master Servicer shall use
reasonable efforts to have the successor Subservicer assume liability for the
representations and warranties made by the terminated Subservicer in respect of the related
Mortgage Loans and, in the event of any such assumption by the successor Subservicer, the
Master Servicer may, in the exercise of its business judgment, release the terminated
Subservicer from liability for such representations and warranties.
Section 3.04. Liability of the Master Servicer.
Notwithstanding any Subservicing Agreement, any of the provisions of this Agreement
relating to agreements or arrangements between the Master Servicer or a Subservicer or
reference to actions taken through a Subservicer or otherwise, the Master Servicer shall
remain obligated and liable to the Trustee, and Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section 3.01
without diminution of such obligation or liability by virtue of such Subservicing Agreements
or arrangements or by virtue of indemnification from the Subservicer or the Depositor and to
the same extent and under the same terms and conditions as if the Master Servicer alone were
servicing and administering the Mortgage Loans. The Master Servicer shall be entitled to
enter into any agreement with a Subservicer or Seller for indemnification of the Master
Servicer and nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
Section 3.05. No Contractual Relationship Between Subservicer and Trustee or
Certificateholders.
Any Subservicing Agreement that may be entered into and any other transactions or
services relating to the Mortgage Loans involving a Subservicer in its capacity as such and
not as an originator shall be deemed to be between the Subservicer and the Master Servicer
alone, and the Trustee and Certificateholders shall not be deemed parties thereto and shall
have no claims, rights, obligations, duties or liabilities with respect to the Subservicer
in its capacity as such except as set forth in Section 3.06. The foregoing provision shall
not in any way limit a Subservicer's obligation to cure an omission or defect or to
repurchase a Mortgage Loan as referred to in Section 2.02 hereof.
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee.
(a) In the event the Master Servicer shall for any reason no longer be the master
servicer (including by reason of an Event of Default), the Trustee, as successor Master
Servicer, its designee or its successor shall thereupon assume all of the rights and
obligations of the Master Servicer under each Subservicing Agreement that may have been
entered into. The Trustee, its designee or the successor servicer for the Trustee shall be
deemed to have assumed all of the Master Servicer's interest therein and to have replaced
the Master Servicer as a party to the Subservicing Agreement to the same extent as if the
Subservicing Agreement had been assigned to the assuming party except that the Master
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreement.
(b) The Master Servicer shall, upon request of the Trustee but at the expense of the
Master Servicer, deliver to the assuming party all documents and records relating to each
Subservicing Agreement and the Mortgage Loans then being serviced and an accounting of
amounts collected and held by it and otherwise use its best efforts to effect the orderly
and efficient transfer of each Subservicing Agreement to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to Custodial Account.
(a) The Master Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions of any
related Primary Insurance Policy, follow such collection procedures as it would employ in
its good faith business judgment and which are normal and usual in its general mortgage
servicing activities. Consistent with the foregoing, the Master Servicer may in its
discretion (subject to the terms and conditions of the Assignment Agreement) (i) waive any
late payment charge or any prepayment charge or penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) extend the Due Date for payments due on a Mortgage
Loan in accordance with the Program Guide, provided, however, that the Master Servicer shall
first determine that any such waiver or extension will not impair the coverage of any
related Primary Insurance Policy or materially adversely affect the lien of the related
Mortgage. Notwithstanding anything in this Section to the contrary, the Master Servicer or
any Subservicer shall not enforce any prepayment charge to the extent that such enforcement
would violate any applicable law. In the event of any such arrangement, the Master Servicer
shall make timely advances on the related Mortgage Loan during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan without modification thereof
by reason of such arrangements unless otherwise agreed to by the Holders of the Classes of
Certificates affected thereby; provided, however, that no such extension shall be made if
any advance would be a Nonrecoverable Advance. Consistent with the terms of this Agreement,
the Master Servicer may also waive, modify or vary any term of any Mortgage Loan or consent
to the postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Master Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the interests of the
Certificateholders (taking into account any estimated Realized Loss that might result absent
such action), provided, however, that the Master Servicer may not modify materially or
permit any Subservicer to modify any Mortgage Loan, including without limitation any
modification that would change the Mortgage Rate, forgive the payment of any principal or
interest (unless in connection with the liquidation of the related Mortgage Loan or except
in connection with prepayments to the extent that such reamortization is not inconsistent
with the terms of the Mortgage Loan), capitalize any amounts owing on the Mortgage Loan by
adding such amount to the outstanding principal balance of the Mortgage Loan, or extend the
final maturity date of such Mortgage Loan, unless such Mortgage Loan is in default or, in
the judgment of the Master Servicer, such default is reasonably foreseeable. No such
modification shall reduce the Mortgage Rate on a Mortgage Loan below the greater of
(A) one-half of the Mortgage Rate as in effect on the Cut-off Date and (B) one-half of the
Mortgage Rate as in effect on the date of such modification, but not less than the sum of
the Servicing Fee Rate and the per annum rate at which the Subservicing Fee accrues. The
final maturity date for any Mortgage Loan shall not be extended beyond the Maturity Date.
Also, the aggregate principal balance of all Reportable Modified Mortgage Loans subject to
Servicing Modifications (measured at the time of the Servicing Modification and after giving
effect to any Servicing Modification) can be no more than five percent of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date, provided, that such limit
may be increased from time to time if each Rating Agency provides written confirmation that
an increase in excess of that limit will not reduce the rating assigned to any Class of
Certificates by such Rating Agency below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date by such Rating Agency. In addition, any
amounts owing on a Mortgage Loan added to the outstanding principal balance of such Mortgage
Loan must be fully amortized over the term of such Mortgage Loan, and such amounts may be
added to the outstanding principal balance of a Mortgage Loan only once during the life of
such Mortgage Loan. Also, the addition of such amounts described in the preceding sentence
shall be implemented in accordance with the Program Guide and may be implemented only by
Subservicers that have been approved by the Master Servicer for such purposes. In
connection with any Curtailment of a Mortgage Loan, the Master Servicer, to the extent not
inconsistent with the terms of the Mortgage Note and local law and practice, may permit the
Mortgage Loan to be re-amortized such that the Monthly Payment is recalculated as an amount
that will fully amortize the remaining principal balance thereof by the original maturity
date based on the original Mortgage Rate; provided, that such reamortization shall not be
permitted if it would constitute a reissuance of the Mortgage Loan for federal income tax
purposes.
(b) The Master Servicer shall establish and maintain a Custodial Account in which the
Master Servicer shall deposit or cause to be deposited on a daily basis, except as otherwise
specifically provided herein, the following payments and collections remitted by
Subservicers or received by it in respect of the Mortgage Loans subsequent to the Cut-off
Date (other than in respect of Monthly Payments due before or in the month of the Cut-off
Date):
(i) All payments on account of principal, including Principal Prepayments made by
Mortgagors on the Mortgage Loans and the principal component of any Subservicer
Advance or of any REO Proceeds received in connection with an REO Property for which
an REO Disposition has occurred;
(ii) All payments on account of interest at the Adjusted Mortgage Rate on the Mortgage
Loans, including the interest component of any Subservicer Advance or of any REO
Proceeds received in connection with an REO Property for which an REO Disposition has
occurred;
(iii) Insurance Proceeds, Subsequent Recoveries and Liquidation Proceeds (net of any
related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased pursuant to Section 2.02, 2.03, 2.04 or
4.07 (including amounts received from Residential Funding pursuant to the last
paragraph of Section 4 of the Assignment Agreement in respect of any liability,
penalty or expense that resulted from a breach of the representation and warranty set
forth in clause (xlvii) of Section 4 of the Assignment Agreement) and all amounts
required to be deposited in connection with the substitution of a Qualified
Substitute Mortgage Loan pursuant to Section 2.03 or 2.04; and
(v) Any amounts required to be deposited pursuant to Section 3.07(c) and any payments or
collections received in the nature of prepayment charges.
The foregoing requirements for deposit in the Custodial Account shall be exclusive, it being
understood and agreed that, without limiting the generality of the foregoing, payments on
the Mortgage Loans which are not part of the Trust Fund (consisting of Monthly Payments due
before or in the month of the Cut-off Date) and payments or collections consisting of late
payment charges or assumption fees may but need not be deposited by the Master Servicer in
the Custodial Account. In the event any amount not required to be deposited in the
Custodial Account is so deposited, the Master Servicer may at any time withdraw such amount
from the Custodial Account, any provision herein to the contrary notwithstanding. The
Custodial Account may contain funds that belong to one or more trust funds created for
mortgage pass-through certificates of other series and may contain other funds respecting
payments on mortgage loans belonging to the Master Servicer or serviced or master serviced
by it on behalf of others. Notwithstanding such commingling of funds, the Master Servicer
shall keep records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Mortgage Loans. With respect
to Insurance Proceeds, Liquidation Proceeds, REO Proceeds, Subsequent Recoveries and the
proceeds of the purchase of any Mortgage Loan pursuant to Sections 2.02, 2.03, 2.04 and 4.07
received in any calendar month, the Master Servicer may elect to treat such amounts as
included in the Available Distribution Amount for the Distribution Date in the month of
receipt, but is not obligated to do so. If the Master Servicer so elects, such amounts will
be deemed to have been received (and any related Realized Loss shall be deemed to have
occurred) on the last day of the month prior to the receipt thereof.
(c) The Master Servicer shall use its best efforts to cause the institution maintaining
the Custodial Account to invest the funds in the Custodial Account attributable to the
Mortgage Loans in Permitted Investments which shall mature not later than the Certificate
Account Deposit Date next following the date of such investment (with the exception of the
Amount Held for Future Distribution) and which shall not be sold or disposed of prior to
their maturities. All income and gain realized from any such investment shall be for the
benefit of the Master Servicer as additional servicing compensation and shall be subject to
its withdrawal or order from time to time. The amount of any losses incurred in respect of
any such investments attributable to the investment of amounts in respect of the Mortgage
Loans shall be deposited in the Custodial Account by the Master Servicer out of its own
funds immediately as realized.
(d) The Master Servicer shall give notice to the Trustee and the Depositor of any change
in the location of the Custodial Account and the location of the Certificate Account prior
to the use thereof.
Section 3.08. Subservicing Accounts; Servicing Accounts.
(a) In those cases where a Subservicer is servicing a Mortgage Loan pursuant to a
Subservicing Agreement, the Master Servicer shall cause the Subservicer, pursuant to the
Subservicing Agreement, to establish and maintain one or more Subservicing Accounts which
shall be an Eligible Account or, if such account is not an Eligible Account, shall generally
satisfy the requirements of the Program Guide and be otherwise acceptable to the Master
Servicer and each Rating Agency. The Subservicer will be required thereby to deposit into
the Subservicing Account on a daily basis all proceeds of Mortgage Loans received by the
Subservicer, less its Subservicing Fees and unreimbursed advances and expenses, to the
extent permitted by the Subservicing Agreement. If the Subservicing Account is not an
Eligible Account, the Master Servicer shall be deemed to have received such monies upon
receipt thereof by the Subservicer. The Subservicer shall not be required to deposit in the
Subservicing Account payments or collections in the nature of late charges or assumption
fees, or payments or collections received in the nature of prepayment charges to the extent
that the Subservicer is entitled to retain such amounts pursuant to the Subservicing
Agreement. On or before the date specified in the Program Guide, but in no event later than
the Determination Date, the Master Servicer shall cause the Subservicer, pursuant to the
Subservicing Agreement, to remit to the Master Servicer for deposit in the Custodial Account
all funds held in the Subservicing Account with respect to each Mortgage Loan serviced by
such Subservicer that are required to be remitted to the Master Servicer. The Subservicer
will also be required, pursuant to the Subservicing Agreement, to advance on such scheduled
date of remittance amounts equal to any scheduled monthly installments of principal and
interest less its Subservicing Fees on any Mortgage Loans for which payment was not received
by the Subservicer. This obligation to advance with respect to each Mortgage Loan will
continue up to and including the first of the month following the date on which the related
Mortgaged Property is sold at a foreclosure sale or is acquired by the Trust Fund by deed in
lieu of foreclosure or otherwise. All such advances received by the Master Servicer shall
be deposited promptly by it in the Custodial Account.
(b) The Subservicer may also be required, pursuant to the Subservicing Agreement, to
remit to the Master Servicer for deposit in the Custodial Account interest at the Adjusted
Mortgage Rate (or Modified Net Mortgage Rate plus the rate per annum at which the Servicing
Fee accrues in the case of a Modified Mortgage Loan) on any Curtailment received by such
Subservicer in respect of a Mortgage Loan from the related Mortgagor during any month that
is to be applied by the Subservicer to reduce the unpaid principal balance of the related
Mortgage Loan as of the first day of such month, from the date of application of such
Curtailment to the first day of the following month. Any amounts paid by a Subservicer
pursuant to the preceding sentence shall be for the benefit of the Master Servicer as
additional servicing compensation and shall be subject to its withdrawal or order from time
to time pursuant to Sections 3.10(a)(iv) and (v).
(c) In addition to the Custodial Account and the Certificate Account, the Master Servicer
shall for any Nonsubserviced Mortgage Loan, and shall cause the Subservicers for Subserviced
Mortgage Loans to, establish and maintain one or more Servicing Accounts and deposit and
retain therein all collections from the Mortgagors (or advances from Subservicers) for the
payment of taxes, assessments, hazard insurance premiums, Primary Insurance Policy premiums,
if applicable, or comparable items for the account of the Mortgagors. Each Servicing
Account shall satisfy the requirements for a Subservicing Account and, to the extent
permitted by the Program Guide or as is otherwise acceptable to the Master Servicer, may
also function as a Subservicing Account. Withdrawals of amounts related to the Mortgage
Loans from the Servicing Accounts may be made only to effect timely payment of taxes,
assessments, hazard insurance premiums, Primary Insurance Policy premiums, if applicable, or
comparable items, to reimburse the Master Servicer or Subservicer out of related collections
for any payments made pursuant to Sections 3.11 (with respect to the Primary Insurance
Policy) and 3.12(a) (with respect to hazard insurance), to refund to any Mortgagors any sums
as may be determined to be overages, to pay interest, if required, to Mortgagors on balances
in the Servicing Account or to clear and terminate the Servicing Account at the termination
of this Agreement in accordance with Section 9.01 or in accordance with the Program Guide.
As part of its servicing duties, the Master Servicer shall, and the Subservicers will,
pursuant to the Subservicing Agreements, be required to pay to the Mortgagors interest on
funds in this account to the extent required by law.
(d) The Master Servicer shall advance the payments referred to in the preceding
subsection that are not timely paid by the Mortgagors or advanced by the Subservicers on the
date when the tax, premium or other cost for which such payment is intended is due, but the
Master Servicer shall be required so to advance only to the extent that such advances, in
the good faith judgment of the Master Servicer, will be recoverable by the Master Servicer
out of Insurance Proceeds, Liquidation Proceeds or otherwise.
Section 3.09. Access to Certain Documentation and Information Regarding the Mortgage Loans.
In the event that compliance with this Section 3.09 shall make any Class of
Certificates legal for investment by federally insured savings and loan associations, the
Master Servicer shall provide, or cause the Subservicers to provide, to the Trustee, the
Office of Thrift Supervision or the FDIC and the supervisory agents and examiners thereof
access to the documentation regarding the Mortgage Loans required by applicable regulations
of the Office of Thrift Supervision, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices designated by the Master
Servicer. The Master Servicer shall permit such representatives to photocopy any such
documentation and shall provide equipment for that purpose at a charge reasonably
approximating the cost of such photocopying to the Master Servicer.
Section 3.10. Permitted Withdrawals from the Custodial Account.
(a) The Master Servicer may, from time to time as provided herein, make withdrawals from
the Custodial Account of amounts on deposit therein pursuant to Section 3.07 that are
attributable to the Mortgage Loans for the following purposes:
(i) to make deposits into the Certificate Account in the amounts and in the manner
provided for in Section 4.01;
(ii) to reimburse itself or the related Subservicer for previously unreimbursed Advances,
Servicing Advances or other expenses made pursuant to Sections 3.01, 3.07(a), 3.08,
3.11, 3.12(a), 3.14 and 4.04 or otherwise reimbursable pursuant to the terms of this
Agreement, such withdrawal right being limited to amounts received on the related
Mortgage Loans (including, for this purpose, REO Proceeds, Insurance Proceeds,
Liquidation Proceeds and proceeds from the purchase of a Mortgage Loan pursuant to
Section 2.02, 2.03, 2.04 or 4.07) which represent (A) Late Collections of Monthly
Payments for which any such advance was made in the case of Subservicer Advances or
Advances pursuant to Section 4.04 and (B) recoveries of amounts in respect of which
such advances were made in the case of Servicing Advances;
(iii) to pay to itself or the related Subservicer (if not previously retained by such
Subservicer) out of each payment received by the Master Servicer on account of
interest on a Mortgage Loan as contemplated by Sections 3.14 and 3.16, an amount
equal to that remaining portion of any such payment as to interest (but not in excess
of the Servicing Fee and the Subservicing Fee, if not previously retained) which,
when deducted, will result in the remaining amount of such interest being interest at
a rate per annum equal to the Net Mortgage Rate (or Modified Net Mortgage Rate in the
case of a Modified Mortgage Loan) on the amount specified in the amortization
schedule of the related Mortgage Loan as the principal balance thereof at the
beginning of the period respecting which such interest was paid after giving effect
to any previous Curtailments;
(iv) to pay to itself as additional servicing compensation any interest or investment
income earned on funds and other property deposited in or credited to the Custodial
Account that it is entitled to withdraw pursuant to Section 3.07(c);
(v) to pay to itself as additional servicing compensation any Foreclosure Profits, and
any amounts remitted by Subservicers as interest in respect of Curtailments pursuant
to Section 3.08(b);
(vi) to pay to itself, a Subservicer, a Seller, Residential Funding, the Depositor or any
other appropriate Person, as the case may be, with respect to each Mortgage Loan or
property acquired in respect thereof that has been purchased or otherwise transferred
pursuant to Section 2.02, 2.03, 2.04, 4.07 or 9.01, all amounts received thereon and
not required to be distributed to Certificateholders as of the date on which the
related Stated Principal Balance or Purchase Price is determined;
(vii) to reimburse itself or the related Subservicer for any Nonrecoverable Advance or
Advances in the manner and to the extent provided in subsection (c) below, and any
Advance or Servicing Advance made in connection with a modified Mortgage Loan that is
in default or, in the judgment of the Master Servicer, default is reasonably
foreseeable pursuant to Section 3.07(a), to the extent the amount of the Advance or
Servicing Advance was added to the Stated Principal Balance of the Mortgage Loan in a
prior calendar month;
(viii) to reimburse itself or the Depositor for expenses incurred by and reimbursable to it
or the Depositor pursuant to Section 3.01(a), 3.11, 3.13, 3.14(c), 6.03, 10.01 or
otherwise, or in connection with enforcing any repurchase, substitution or
indemnification obligation of any Seller (other than the Depositor or an Affiliate of
the Depositor) pursuant to the related Seller's Agreement;
(ix) to reimburse itself for amounts expended by it (a) pursuant to Section 3.14 in good
faith in connection with the restoration of property damaged by an Uninsured Cause,
and (b) in connection with the liquidation of a Mortgage Loan or disposition of an
REO Property to the extent not otherwise reimbursed pursuant to clause (ii) or (viii)
above;
(x) to pay the Credit Risk Manager the Credit Risk Manager Fee; and
(xi) to withdraw any amount deposited in the Custodial Account that was not required to be
deposited therein pursuant to Section 3.07, including any payoff fees or penalties or
any other additional amounts payable to the Master Servicer or Subservicer pursuant
to the terms of the Mortgage Note.
(b) Since, in connection with withdrawals pursuant to clauses (ii), (iii), (v) and (vi),
the Master Servicer's entitlement thereto is limited to collections or other recoveries on
the related Mortgage Loan, the Master Servicer shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Custodial Account pursuant to such clauses.
(c) The Master Servicer shall be entitled to reimburse itself or the related Subservicer
for any advance made in respect of a Mortgage Loan that the Master Servicer determines to be
a Nonrecoverable Advance by withdrawal from the Custodial Account of amounts on deposit
therein attributable to the Mortgage Loans on any Certificate Account Deposit Date
succeeding the date of such determination. Such right of reimbursement in respect of a
Nonrecoverable Advance relating to an Advance made pursuant to Section 4.04 on any such
Certificate Account Deposit Date shall be limited to an amount not exceeding the portion of
such advance previously paid to Certificateholders (and not theretofore reimbursed to the
Master Servicer or the related Subservicer).
Section 3.11. Maintenance of Primary Insurance Coverage.
(a) The Master Servicer shall not take, or permit any Subservicer to take, any action
which would result in noncoverage under any applicable Primary Insurance Policy of any loss
which, but for the actions of the Master Servicer or Subservicer, would have been covered
thereunder. To the extent coverage is available, the Master Servicer shall keep or cause to
be kept in full force and effect each such Primary Insurance Policy until the principal
balance of the related Mortgage Loan secured by a Mortgaged Property is reduced to 80% or
less of the Appraised Value at origination in the case of such a Mortgage Loan having a
Loan-to-Value Ratio at origination in excess of 80%, provided that such Primary Insurance
Policy was in place as of the Cut-off Date and the Master Servicer had knowledge of such
Primary Insurance Policy. The Master Servicer shall not cancel or refuse to renew any such
Primary Insurance Policy applicable to a Nonsubserviced Mortgage Loan, or consent to any
Subservicer canceling or refusing to renew any such Primary Insurance Policy applicable to a
Mortgage Loan subserviced by it, that is in effect at the date of the initial issuance of
the Certificates and is required to be kept in force hereunder unless the replacement
Primary Insurance Policy for such canceled or non-renewed policy is maintained with an
insurer whose claims-paying ability is acceptable to each Rating Agency for mortgage
pass-through certificates having a rating equal to or better than the lower of the
then-current rating or the rating assigned to the Certificates as of the Closing Date by such
Rating Agency.
(b) In connection with its activities as administrator and servicer of the Mortgage
Loans, the Master Servicer agrees to present or to cause the related Subservicer to present,
on behalf of the Master Servicer, the Subservicer, if any, the Trustee and
Certificateholders, claims to the insurer under any Primary Insurance Policies, in a timely
manner in accordance with such policies, and, in this regard, to take or cause to be taken
such reasonable action as shall be necessary to permit recovery under any Primary Insurance
Policies respecting defaulted Mortgage Loans. Pursuant to Section 3.07, any Insurance
Proceeds collected by or remitted to the Master Servicer under any Primary Insurance
Policies shall be deposited in the Custodial Account, subject to withdrawal pursuant to
Section 3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each Mortgage Loan fire
insurance with extended coverage in an amount which is equal to the lesser of the principal
balance owing on such Mortgage Loan (together with the principal balance of any mortgage
loan secured by a lien that is senior to the Mortgage Loan) or 100% of the insurable value
of the improvements; provided, however, that such coverage may not be less than the minimum
amount required to fully compensate for any loss or damage on a replacement cost basis. To
the extent it may do so without breaching the related Subservicing Agreement, the Master
Servicer shall replace any Subservicer that does not cause such insurance, to the extent it
is available, to be maintained. The Master Servicer shall also cause to be maintained on
property acquired upon foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan,
fire insurance with extended coverage in an amount which is at least equal to the amount
necessary to avoid the application of any co-insurance clause contained in the related
hazard insurance policy. Pursuant to Section 3.07, any amounts collected by the Master
Servicer under any such policies (other than amounts to be applied to the restoration or
repair of the related Mortgaged Property or property thus acquired or amounts released to
the Mortgagor in accordance with the Master Servicer's normal servicing procedures) shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section 3.10. Any
cost incurred by the Master Servicer in maintaining any such insurance shall not, for the
purpose of calculating monthly distributions to Certificateholders, be added to the amount
owing under the Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so
PERMIT. Such costs shall be recoverable by the Master Servicer out of related late payments
by the Mortgagor or out of Insurance Proceeds and Liquidation Proceeds to the extent
permitted by Section 3.10. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage Loan other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance. Whenever the
improvements securing a Mortgage Loan are located at the time of origination of such
Mortgage Loan in a federally designated special flood hazard area, the Master Servicer shall
cause flood insurance (to the extent available) to be maintained in respect thereof. Such
flood insurance shall be in an amount equal to the lesser of (i) the amount required to
compensate for any loss or damage to the Mortgaged Property on a replacement cost basis and
(ii) the maximum amount of such insurance available for the related Mortgaged Property under
the national flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
In the event that the Master Servicer shall obtain and maintain a blanket fire
insurance policy with extended coverage insuring against hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its obligations as set
forth in the first sentence of this Section 3.12(a), it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.12(a) and there shall have been a loss
which would have been covered by such policy, deposit in the Certificate Account the amount
not otherwise payable under the blanket policy because of such deductible clause. Any such
deposit by the Master Servicer shall be made on the Certificate Account Deposit Date next
preceding the Distribution Date which occurs in the month following the month in which
payments under any such policy would have been deposited in the Custodial Account. In
connection with its activities as administrator and servicer of the Mortgage Loans, the
Master Servicer agrees to present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy.
(b) The Master Servicer shall obtain and maintain at its own expense and keep in full
force and effect throughout the term of this Agreement a blanket fidelity bond and an errors
and omissions insurance policy covering the Master Servicer's officers and employees and
other persons acting on behalf of the Master Servicer in connection with its activities
under this Agreement. The amount of coverage shall be at least equal to the coverage that
would be required by Xxxxxx Xxx or Xxxxxxx Mac, whichever is greater, with respect to the
Master Servicer if the Master Servicer were servicing and administering the Mortgage Loans
for Xxxxxx Mae or Xxxxxxx Mac. In the event that any such bond or policy ceases to be in
effect, the Master Servicer shall obtain a comparable replacement bond or policy from an
issuer or insurer, as the case may be, meeting the requirements, if any, of the Program
Guide and acceptable to the Depositor. Coverage of the Master Servicer under a policy or
bond obtained by an Affiliate of the Master Servicer and providing the coverage required by
this Section 3.12(b) shall satisfy the requirements of this Section 3.12(b).
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and Modification Agreements;
Certain Assignments.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the Master Servicer or
Subservicer, to the extent it has knowledge of such conveyance, shall enforce any
due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent permitted under
applicable law and governmental regulations, but only to the extent that such enforcement
will not adversely affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing: (i) the Master Servicer shall not be deemed to be in default
under this Section 3.13(a) by reason of any transfer or assumption which the Master Servicer
is restricted by law from preventing; and (ii) if the Master Servicer determines that it is
reasonably likely that any Mortgagor will bring, or if any Mortgagor does bring, legal
action to declare invalid or otherwise avoid enforcement of a due-on-sale clause contained
in any Mortgage Note or Mortgage, the Master Servicer shall not be required to enforce the
due-on-sale clause or to contest such action.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale clause to the extent
set forth in Section 3.13(a), in any case in which a Mortgaged Property is to be conveyed to
a Person by a Mortgagor, and such Person is to enter into an assumption or modification
agreement or supplement to the Mortgage Note or Mortgage which requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Master Servicer is authorized, subject to
the requirements of the sentence next following, to execute and deliver, on behalf of the
Trustee, the assumption agreement with the Person to whom the Mortgaged Property is to be
conveyed and such modification agreement or supplement to the Mortgage Note or Mortgage or
other instruments as are reasonable or necessary to carry out the terms of the Mortgage Note
or Mortgage or otherwise to comply with any applicable laws regarding assumptions or the
transfer of the Mortgaged Property to such Person; provided, however, none of such terms and
requirements shall both constitute a "significant modification" effecting an exchange or
reissuance of such Mortgage Loan under the Code (or final, temporary or proposed Treasury
regulations promulgated thereunder) and cause any REMIC created hereunder to fail to qualify
as a REMIC under the Code or the imposition of any tax on "prohibited transactions" or
"contributions" after the Startup Date under the REMIC Provisions. The Master Servicer shall
execute and deliver such documents only if it reasonably determines that (i) its execution
and delivery thereof will not conflict with or violate any terms of this Agreement or cause
the unpaid balance and interest on the Mortgage Loan to be uncollectible in whole or in
part, (ii) any required consents of insurers under any Required Insurance Policies have been
obtained and (iii) subsequent to the closing of the transaction involving the assumption or
transfer (A) the Mortgage Loan will continue to be secured by a first mortgage lien (or,
with respect to any junior lien, a junior lien of the same priority in relation to any
senior lien on such Mortgage Loan) pursuant to the terms of the Mortgage, (B) such
transaction will not adversely affect the coverage under any Required Insurance Policies,
(C) the Mortgage Loan will fully amortize over the remaining term thereof, (D) no material
term of the Mortgage Loan (including the interest rate on the Mortgage Loan) will be altered
nor will the term of the Mortgage Loan be changed and (E) if the seller/transferor of the
Mortgaged Property is to be released from liability on the Mortgage Loan, the
buyer/transferee of the Mortgaged Property would be qualified to assume the Mortgage Loan
based on generally comparable credit quality and such release will not (based on the Master
Servicer's or Subservicer's good faith determination) adversely affect the collectability of
the Mortgage Loan. Upon receipt of appropriate instructions from the Master Servicer in
accordance with the foregoing, the Trustee shall execute any necessary instruments for such
assumption or substitution of liability as directed by the Master Servicer. Upon the
closing of the transactions contemplated by such documents, the Master Servicer shall cause
the originals or true and correct copies of the assumption agreement, the release (if any),
or the modification or supplement to the Mortgage Note or Mortgage to be delivered to the
Trustee or the Custodian and deposited with the Mortgage File for such Mortgage Loan. Any
fee collected by the Master Servicer or such related Subservicer for entering into an
assumption or substitution of liability agreement will be retained by the Master Servicer or
such Subservicer as additional servicing compensation.
(c) The Master Servicer or the related Subservicer, as the case may be, shall be entitled
to approve a request from a Mortgagor for a partial release of the related Mortgaged
Property, the granting of an easement thereon in favor of another Person, any alteration or
demolition of the related Mortgaged Property or other similar matters if it has determined,
exercising its good faith business judgment in the same manner as it would if it were the
owner of the related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby and that any
REMIC created hereunder would not fail to continue to qualify as a REMIC under the Code as a
result thereof and (subject to Section 10.01(f)) that no tax on "prohibited transactions" or
"contributions" after the Startup Date would be imposed on any REMIC created hereunder as a
result thereof. Any fee collected by the Master Servicer or the related Subservicer for
processing such a request will be retained by the Master Servicer or such Subservicer as
additional servicing compensation.
(d) Subject to any other applicable terms and conditions of this Agreement, the Trustee
and Master Servicer shall be entitled to approve an assignment in lieu of satisfaction with
respect to any Mortgage Loan, provided the obligee with respect to such Mortgage Loan
following such proposed assignment provides the Trustee and Master Servicer with a "Lender
Certification for Assignment of Mortgage Loan" in the form attached hereto as Exhibit M, in
form and substance satisfactory to the Trustee and Master Servicer, providing the
following: (i) that the Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to preserve lien
priority, minimize or avoid mortgage recording taxes or otherwise comply with, or facilitate
a refinancing under, the laws of such jurisdiction; (ii) that the substance of the
assignment is, and is intended to be, a refinancing of such Mortgage Loan and that the form
of the transaction is solely to comply with, or facilitate the transaction under, such local
laws; (iii) that the Mortgage Loan following the proposed assignment will have a rate of
interest more than the greater of (A) 3% and (B) 5% of the annual yield of the unmodified
Mortgage Loan, below or above the rate of interest on such Mortgage Loan prior to such
proposed assignment; and (iv) that such assignment is at the request of the borrower under
the related Mortgage Loan. Upon approval of an assignment in lieu of satisfaction with
respect to any Mortgage Loan, the Master Servicer shall receive cash in an amount equal to
the unpaid principal balance of and accrued interest on such Mortgage Loan, and the Master
Servicer shall treat such amount as a Principal Prepayment in Full with respect to such
Mortgage Loan for all purposes hereof.
Section 3.14. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall foreclose upon or otherwise comparably convert (which may
include an REO Acquisition) the ownership of properties securing such of the Mortgage Loans
as come into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.07. Alternatively, the
Master Servicer may take other actions in respect of a defaulted Mortgage Loan, which may
include (i) accepting a short sale (a payoff of the Mortgage Loan for an amount less than
the total amount contractually owed in order to facilitate a sale of the Mortgaged Property
by the Mortgagor) or permitting a short refinancing (a payoff of the Mortgage Loan for an
amount less than the total amount contractually owed in order to facilitate refinancing
transactions by the Mortgagor not involving a sale of the Mortgaged Property), (ii)
arranging for a repayment plan or (iii) agreeing to a modification in accordance with
Section 3.07. In connection with such foreclosure or other conversion or action, the Master
Servicer shall, consistent with Section 3.11, follow such practices and procedures as it
shall deem necessary or advisable, as shall be normal and usual in its general mortgage
servicing activities and as shall be required or permitted by the Program Guide; provided
that the Master Servicer shall not be liable in any respect hereunder if the Master Servicer
is acting in connection with any such foreclosure or other conversion or action in a manner
that is consistent with the provisions of this Agreement. The Master Servicer, however,
shall not be required to expend its own funds or incur other reimbursable charges in
connection with any foreclosure, or attempted foreclosure which is not completed, or towards
the correction of any default on a related senior mortgage loan, or towards the restoration
of any property unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Holders of Certificates of one
or more Classes after reimbursement to itself for such expenses or charges and (ii) that
such expenses and charges will be recoverable to it through Liquidation Proceeds, Insurance
Proceeds, or REO Proceeds (respecting which it shall have priority for purposes of
withdrawals from the Custodial Account pursuant to Section 3.10, whether or not such
expenses and charges are actually recoverable from related Liquidation Proceeds, Insurance
Proceeds or REO Proceeds). In the event of such a determination by the Master Servicer
pursuant to this Section 3.14(a), the Master Servicer shall be entitled to reimbursement of
its funds so expended pursuant to Section 3.10. In addition, the Master Servicer may pursue
any remedies that may be available in connection with a breach of a representation and
warranty with respect to any such Mortgage Loan in accordance with Sections 2.03 and 2.04.
However, the Master Servicer is not required to continue to pursue both foreclosure (or
similar remedies) with respect to the Mortgage Loans and remedies in connection with a
breach of a representation and warranty if the Master Servicer determines in its reasonable
discretion that one such remedy is more likely to result in a greater recovery as to the
Mortgage Loan. Upon the occurrence of a Cash Liquidation or REO Disposition, following the
deposit in the Custodial Account of all Insurance Proceeds, Liquidation Proceeds and other
payments and recoveries referred to in the definition of "Cash Liquidation" or "REO
Disposition," as applicable, upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer, the Trustee or any Custodian, as the case may be,
shall release to the Master Servicer the related Mortgage File and the Trustee shall execute
and deliver such instruments of transfer or assignment prepared by the Master Servicer, in
each case without recourse, as shall be necessary to vest in the Master Servicer or its
designee, as the case may be, the related Mortgage Loan, and thereafter such Mortgage Loan
shall not be part of the Trust Fund. Notwithstanding the foregoing or any other provision
of this Agreement, in the Master Servicer's sole discretion with respect to any defaulted
Mortgage Loan or REO Property as to either of the following provisions, (i) a Cash
Liquidation or REO Disposition may be deemed to have occurred if substantially all amounts
expected by the Master Servicer to be received in connection with the related defaulted
Mortgage Loan or REO Property have been received, and (ii) for purposes of determining the
amount of any Liquidation Proceeds, Insurance Proceeds, REO Proceeds or other unscheduled
collections or the amount of any Realized Loss, the Master Servicer may take into account
minimal amounts of additional receipts expected to be received or any estimated additional
liquidation expenses expected to be incurred in connection with the related defaulted
Mortgage Loan or REO Property.
(b) In the event that title to any Mortgaged Property is acquired by the Trust Fund as an
REO Property by foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be issued to the Trustee or to its nominee on behalf of Certificateholders.
Notwithstanding any such acquisition of title and cancellation of the related Mortgage Loan,
such REO Property shall (except as otherwise expressly provided herein) be considered to be
an Outstanding Mortgage Loan held in the Trust Fund until such time as the REO Property
shall be sold. Consistent with the foregoing for purposes of all calculations hereunder so
long as such REO Property shall be considered to be an Outstanding Mortgage Loan it shall be
assumed that, notwithstanding that the indebtedness evidenced by the related Mortgage Note
shall have been discharged, such Mortgage Note and the related amortization schedule in
effect at the time of any such acquisition of title (after giving effect to any previous
Curtailments and before any adjustment thereto by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period) remain in effect.
(c) In the event that the Trust Fund acquires any REO Property as aforesaid or otherwise
in connection with a default or imminent default on a Mortgage Loan, the Master Servicer on
behalf of the Trust Fund shall dispose of such REO Property as soon as practicable, giving
due consideration to the interests of the Certificateholders, but in all cases, within three
full years after the taxable year of its acquisition by the Trust Fund for purposes of
Section 860G(a)(8) of the Code (or such shorter period as may be necessary under applicable
state (including any state in which such property is located) law to maintain the status of
each REMIC created hereunder as a REMIC under applicable state law and avoid taxes resulting
from such property failing to be foreclosure property under applicable state law) or, at the
expense of the Trust Fund, request, more than 60 days before the day on which such grace
period would otherwise expire, an extension of such grace period unless the Master Servicer
(subject to Section 10.01(f)) obtains for the Trustee an Opinion of Counsel, addressed to
the Trustee and the Master Servicer, to the effect that the holding by the Trust Fund of
such REO Property subsequent to such period will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code or cause any REMIC created
hereunder to fail to qualify as a REMIC (for federal (or any applicable State or local)
income tax purposes) at any time that any Certificates are outstanding, in which case the
Trust Fund may continue to hold such REO Property (subject to any conditions contained in
such Opinion of Counsel). The Master Servicer shall be entitled to be reimbursed from the
Custodial Account for any costs incurred in obtaining such Opinion of Counsel, as provided
in Section 3.10. Notwithstanding any other provision of this Agreement, no REO Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented) or
otherwise used by or on behalf of the Trust Fund in such a manner or pursuant to any terms
that would (i) cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or (ii) subject any REMIC created hereunder to
the imposition of any federal income taxes on the income earned from such REO Property,
including any taxes imposed by reason of Section 860G(c) of the Code, unless the Master
Servicer has agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.
(d) The proceeds of any Cash Liquidation, REO Disposition or purchase or repurchase of
any Mortgage Loan pursuant to the terms of this Agreement, as well as any recovery (other
than Subsequent Recoveries) resulting from a collection of Liquidation Proceeds, Insurance
Proceeds or REO Proceeds, will be applied in the following order of priority: first, to
reimburse the Master Servicer or the related Subservicer in accordance with
Section 3.10(a)(ii); second, to the Certificateholders to the extent of accrued and unpaid
interest on the Mortgage Loan, and any related REO Imputed Interest, at the Net Mortgage
Rate (or the Modified Net Mortgage Rate in the case of a Modified Mortgage Loan), to the Due
Date in the related Due Period prior to the Distribution Date on which such amounts are to
be distributed; third, to the Certificateholders as a recovery of principal on the Mortgage
Loan (or REO Property); fourth, to all Servicing Fees and Subservicing Fees payable
therefrom (and the Master Servicer and the Subservicer shall have no claims for any
deficiencies with respect to such fees which result from the foregoing allocation); and
fifth, to Foreclosure Profits.
(e) In the event of a default on a Mortgage Loan one or more of whose obligors is not a
United States Person, in connection with any foreclosure or acquisition of a deed in lieu of
foreclosure (together, "foreclosure") in respect of such Mortgage Loan, the Master Servicer
shall cause compliance with the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or
any successor thereto) necessary to assure that no withholding tax obligation arises with
respect to the proceeds of such foreclosure except to the extent, if any, that proceeds of
such foreclosure are required to be remitted to the obligors on such Mortgage Loan.
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of any Mortgage Loan, or upon the receipt
by the Master Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer shall immediately notify the Trustee (if it
holds the related Mortgage File) or the Custodian by a certification of a Servicing Officer
(which certification shall include a statement to the effect that all amounts received or to
be received in connection with such payment which are required to be deposited in the
Custodial Account pursuant to Section 3.07 have been or will be so deposited), substantially
in the form attached hereto as Exhibit G, or, in the case of a Custodian, an electronic
request in a form acceptable to the Custodian, requesting delivery to it of the Mortgage
File. Upon receipt of such certification and request, the Trustee shall promptly release,
or cause the Custodian to release, the related Mortgage File to the Master Servicer. The
Master Servicer is authorized to execute and deliver to the Mortgagor the request for
reconveyance, deed of reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Mortgage, together with the Mortgage Note with, as appropriate,
written evidence of cancellation thereon and to cause the removal from the registration on
the MERS(R)System of such Mortgage and to execute and deliver, on behalf of the Trustee and
the Certificateholders or any of them, any and all instruments of satisfaction or
cancellation or of partial or full release, including any applicable UCC termination
statements. No expenses incurred in connection with any instrument of satisfaction or deed
of reconveyance shall be chargeable to the Custodial Account or the Certificate Account.
(b) From time to time as is appropriate for the servicing or foreclosure of any Mortgage
Loan, the Master Servicer shall deliver to the Custodian, with a copy to the Trustee, a
certificate of a Servicing Officer substantially in the form attached as Exhibit G hereto,
or, in the case of a Custodian, an electronic request in a form acceptable to the Custodian,
requesting that possession of all, or any document constituting part of, the Mortgage File
be released to the Master Servicer and certifying as to the reason for such release and that
such release will not invalidate any insurance coverage provided in respect of the Mortgage
Loan under any Required Insurance Policy. Upon receipt of the foregoing, the Trustee shall
deliver, or cause the Custodian to deliver, the Mortgage File or any document therein to the
Master Servicer. The Master Servicer shall cause each Mortgage File or any document therein
so released to be returned to the Trustee, or the Custodian as agent for the Trustee when
the need therefor by the Master Servicer no longer exists, unless (i) the Mortgage Loan has
been liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Custodial Account or (ii) the Mortgage File or such document has been
delivered directly or through a Subservicer to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal action or
other proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Master Servicer has delivered directly or through a Subservicer to
the Trustee a certificate of a Servicing Officer certifying as to the name and address of
the Person to which such Mortgage File or such document was delivered and the purpose or
purposes of such delivery. In the event of the liquidation of a Mortgage Loan, the Trustee
shall deliver the Request for Release with respect thereto to the Master Servicer upon the
Trustee's receipt of notification from the Master Servicer of the deposit of the related
Liquidation Proceeds in the Custodial Account.
(c) The Trustee or the Master Servicer on the Trustee's behalf shall execute and deliver
to the Master Servicer, if necessary, any court pleadings, requests for trustee's sale or
other documents necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any Mortgagor on the
Mortgage Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity. Together with such documents or pleadings (if signed by the Trustee), the
Master Servicer shall deliver to the Trustee a certificate of a Servicing Officer requesting
that such pleadings or documents be executed by the Trustee and certifying as to the reason
such documents or pleadings are required and that the execution and delivery thereof by the
Trustee shall not invalidate any insurance coverage under any Required Insurance Policy or
invalidate or otherwise affect the lien of the Mortgage, except for the termination of such
a lien upon completion of the foreclosure or trustee's sale.
Section 3.16. Servicing and Other Compensation; Compensating Interest.
(a) The Master Servicer, as compensation for its activities hereunder, shall be entitled
to receive on each Distribution Date the amounts provided for by clauses (iii), (iv), (v)
and (vi) of Section 3.10(a), subject to clause (e) below. The amount of servicing
compensation provided for in such clauses shall be accounted for on a Mortgage
Loan-by-Mortgage Loan basis. In the event that Liquidation Proceeds, Insurance Proceeds and
REO Proceeds (net of amounts reimbursable therefrom pursuant to Section 3.10(a)(ii)) in
respect of a Cash Liquidation or REO Disposition exceed the unpaid principal balance of such
Mortgage Loan plus unpaid interest accrued thereon (including REO Imputed Interest) at a per
annum rate equal to the related Net Mortgage Rate (or the Modified Net Mortgage Rate in the
case of a Modified Mortgage Loan), the Master Servicer shall be entitled to retain therefrom
and to pay to itself and/or the related Subservicer, any Foreclosure Profits and any
Servicing Fee or Subservicing Fee considered to be accrued but unpaid.
(b) Additional servicing compensation in the form of assumption fees, late payment
charges, investment income on amounts in the Custodial Account or the Certificate Account or
otherwise shall be retained by the Master Servicer or the Subservicer to the extent provided
herein, subject to clause (e) below. Prepayment charges shall be deposited into the
Certificate Account and shall be paid on each Distribution Date to the holders of the
Class SB Certificates.
(c) The Master Servicer shall be required to pay, or cause to be paid, all expenses
incurred by it in connection with its servicing activities hereunder (including payment of
premiums for the Primary Insurance Policies, if any, to the extent such premiums are not
required to be paid by the related Mortgagors, and the fees and expenses of the Trustee and
any Custodian) and shall not be entitled to reimbursement therefor except as specifically
provided in Sections 3.10 and 3.14.
(d) The Master Servicer's right to receive servicing compensation may not be transferred
in whole or in part except in connection with the transfer of all of its responsibilities
and obligations of the Master Servicer under this Agreement.
(e) Notwithstanding clauses (a) and (b) above, the amount of servicing compensation that
the Master Servicer shall be entitled to receive for its activities hereunder for the period
ending on each Distribution Date shall be reduced (but not below zero) by the amount of
Compensating Interest (if any) for such Distribution Date used to cover Prepayment Interest
Shortfalls as provided in Section 3.16(f) below. Such reduction shall be applied during such
period as follows: first, to any Servicing Fee or Subservicing Fee to which the Master
Servicer is entitled pursuant to Section 3.10(a)(iii); and second, to any income or gain
realized from any investment of funds held in the Custodial Account or the Certificate
Account to which the Master Servicer is entitled pursuant to Sections 3.07(c) or 4.01(c),
respectively. In making such reduction, the Master Servicer shall not withdraw from the
Custodial Account any such amount representing all or a portion of the Servicing Fee to
which it is entitled pursuant to Section 3.10(a)(iii) and shall not withdraw from the
Custodial Account or Certificate Account any such amount to which it is entitled pursuant to
Section 3.07(c) or 4.01(c).
(f) With respect to any Distribution Date, Prepayment Interest Shortfalls on the Mortgage
Loans will be covered first, by the Master Servicer, but only to the extent such Prepayment
Interest Shortfalls do not exceed Eligible Master Servicing Compensation.
Section 3.17. Reports to the Trustee and the Depositor.
Not later than fifteen days after it receives a written request from the Trustee or
the Depositor, the Master Servicer shall forward to the Trustee and the Depositor a
statement, certified by a Servicing Officer, setting forth the status of the Custodial
Account as of the close of business on such Distribution Date as it relates to the Mortgage
Loans and showing, for the period covered by such statement, the aggregate of deposits in or
withdrawals from the Custodial Account in respect of the Mortgage Loans for each category of
deposit specified in Section 3.07 and each category of withdrawal specified in Section 3.10.
Section 3.18. Annual Statement as to Compliance and Servicing Assessment.
The Master Servicer shall deliver to the Depositor and the Trustee on or before the
earlier of (a) March 31 of each year or (b) with respect to any calendar year during which
the Depositor's annual report on Form 10-K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission, the date on which the annual
report on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and regulations of the Commission, (i) a servicing assessment as described in
Section 4.03(f)(ii) and (ii) a servicer compliance statement, signed by an authorized officer
of the Master Servicer, as described in Items 1122(a), 1122(b) and 1123 of Regulation AB, to
the effect that:
(A) A review of the Master Servicer's activities during the reporting period and of its
performance under this Agreement has been made under such officer's
supervision.
(B) To the best of such officer's knowledge, based on such review, the Master Servicer
has fulfilled all of its obligations under this Agreement in all material
respects throughout the reporting period or, if there has been a failure to
fulfill any such obligation in any material respect, specifying each such
failure known to such officer and the nature and status thereof.
The Master Servicer shall use commercially reasonable efforts to obtain from all
other parties participating in the servicing function any additional certifications required
under Item 1123 of Regulation AB to the extent required to be included in a Report on Form
10-K; provided, however, that a failure to obtain such certifications shall not be a breach
of the Master Servicer's duties hereunder if any such party fails to deliver such a
certification.
Section 3.19. Annual Independent Public Accountants' Servicing Report.
On or before the earlier of (a) March 31 of each year or (b) with respect to any
calendar year during which the Depositor's annual report on Form 10-K is required to be
filed in accordance with the Exchange Act and the rules and regulations of the Commission,
the date on which the annual report is required to be filed in accordance with the Exchange
Act and the rules and regulations of the Commission, the Master Servicer at its expense
shall cause a firm of independent public accountants, which shall be members of the American
Institute of Certified Public Accountants, to furnish to the Depositor and the Trustee the
attestation required under Item 1122(b) of Regulation AB. In rendering such statement, such
firm may rely, as to matters relating to the direct servicing of mortgage loans by
Subservicers, upon comparable statements for examinations conducted by independent public
accountants substantially in accordance with standards established by the American Institute
of Certified Public Accountants (rendered within one year of such statement) with respect to
such Subservicers.
Section 3.20. Right of the Depositor in Respect of the Master Servicer.
The Master Servicer shall afford the Depositor and the Trustee, upon reasonable
notice, during normal business hours access to all records maintained by the Master Servicer
in respect of its rights and obligations hereunder and access to officers of the Master
Servicer responsible for such obligations. Upon request, the Master Servicer shall furnish
the Depositor with its most recent financial statements and such other information as the
Master Servicer possesses regarding its business, affairs, property and condition, financial
or otherwise. The Master Servicer shall also cooperate with all reasonable requests for
information including, but not limited to, notices, tapes and copies of files, regarding
itself, the Mortgage Loans or the Certificates from any Person or Persons identified by the
Depositor or Residential Funding. The Depositor may enforce the obligation of the Master
Servicer hereunder and may, but it is not obligated to, perform or cause a designee to
perform, any defaulted obligation of the Master Servicer hereunder or exercise the rights of
the Master Servicer hereunder; provided that the Master Servicer shall not be relieved of
any of its obligations hereunder by virtue of such performance by the Depositor or its
designee. Neither the Depositor nor the Trustee shall have the responsibility or liability
for any action or failure to act by the Master Servicer and they are not obligated to
supervise the performance of the Master Servicer under this Agreement or otherwise.
Section 3.21. [Reserved].
Section 3.22. Advance Facility.
(a) The Master Servicer is hereby authorized to enter into a financing or other facility
(any such arrangement, an "Advance Facility") under which (1) the Master Servicer sells,
assigns or pledges to another Person (an "Advancing Person") the Master Servicer's rights
under this Agreement to be reimbursed for any Advances or Servicing Advances and/or (2) an
Advancing Person agrees to fund some or all Advances and/or Servicing Advances required to
be made by the Master Servicer pursuant to this Agreement. No consent of the Depositor, the
Trustee, the Certificateholders or any other party shall be required before the Master
Servicer may enter into an Advance Facility. Notwithstanding the existence of any Advance
Facility under which an Advancing Person agrees to fund Advances and/or Servicing Advances
on the Master Servicer's behalf, the Master Servicer shall remain obligated pursuant to
this Agreement to make Advances and Servicing Advances pursuant to and as required by this
Agreement. If the Master Servicer enters into an Advance Facility, and for so long as an
Advancing Person remains entitled to receive reimbursement for any Advances including
Nonrecoverable Advances ("Advance Reimbursement Amounts") and/or Servicing Advances
including Nonrecoverable Advances ("Servicing Advance Reimbursement Amounts" and together
with Advance Reimbursement Amounts, "Reimbursement Amounts") (in each case to the extent
such type of Reimbursement Amount is included in the Advance Facility), as applicable,
pursuant to this Agreement, then the Master Servicer shall identify such Reimbursement
Amounts consistent with the reimbursement rights set forth in Section 3.10(a)(ii) and (vii)
and remit such Reimbursement Amounts in accordance with this Section 3.22 or otherwise in
accordance with the documentation establishing the Advance Facility to such Advancing Person
or to a trustee, agent or custodian (an "Advance Facility Trustee") designated by such
Advancing Person in an Advance Facility Notice described below in Section 3.22(b).
Notwithstanding the foregoing, if so required pursuant to the terms of the Advance Facility,
the Master Servicer may direct, and if so directed in writing, the Trustee is hereby
authorized to and shall pay to the Advance Facility Trustee the Reimbursement Amounts
identified pursuant to the preceding sentence. An Advancing Person whose obligations
hereunder are limited to the funding of Advances and/or Servicing Advances shall not be
required to meet the qualifications of a Master Servicer or a Subservicer pursuant to
Section 3.02(a) or 6.02(c) hereof and shall not be deemed to be a Subservicer under this
Agreement. Notwithstanding anything to the contrary herein, in no event shall Advance
Reimbursement Amounts or Servicing Advance Reimbursement Amounts be included in the
Available Distribution Amount or distributed to Certificateholders.
(b) If the Master Servicer enters into an Advance Facility and makes the election set
forth in Section 3.22(a), the Master Servicer and the related Advancing Person shall deliver
to the Trustee a written notice and payment instruction (an "Advance Facility Notice"),
providing the Trustee with written payment instructions as to where to remit Advance
Reimbursement Amounts and/or Servicing Advance Reimbursement Amounts (each to the extent
such type of Reimbursement Amount is included within the Advance Facility) on subsequent
Distribution Dates. The payment instruction shall require the applicable Reimbursement
Amounts to be distributed to the Advancing Person or to an Advance Facility Trustee
designated in the Advance Facility Notice. An Advance Facility Notice may only be
terminated by the joint written direction of the Master Servicer and the related Advancing
Person (and any related Advance Facility Trustee).
(c) Reimbursement Amounts shall consist solely of amounts in respect of Advances and/or
Servicing Advances made with respect to the Mortgage Loans for which the Master Servicer
would be permitted to reimburse itself in accordance with Section 3.10(a)(ii) and (vii)
hereof, assuming the Master Servicer or the Advancing Person had made the related Advance(s)
and/or Servicing Advance(s). Notwithstanding the foregoing, except with respect to
reimbursement of Nonrecoverable Advances as set forth in Section 3.10(c) of this Agreement,
no Person shall be entitled to reimbursement from funds held in the Certificate Account for
future distribution to Certificateholders pursuant to this Agreement. Neither the Depositor
nor the Trustee shall have any duty or liability with respect to the calculation of any
Reimbursement Amount, nor shall the Depositor or the Trustee have any responsibility to
track or monitor the administration of the Advance Facility and the Depositor shall not have
any responsibility to track, monitor or verify the payment of Reimbursement Amounts to the
related Advancing Person or Advance Facility Trustee. The Master Servicer shall maintain and
provide to any successor master servicer a detailed accounting on a loan-by-loan basis as to
amounts advanced by, sold, pledged or assigned to, and reimbursed to any Advancing Person.
The successor master servicer shall be entitled to rely on any such information provided by
the Master Servicer, and the successor master servicer shall not be liable for any errors in
such information.
(d) Upon the direction of and at the expense of the Master Servicer, the Trustee agrees
to execute such acknowledgments, certificates, and other documents reasonably satisfactory
to the Trustee provided by the Master Servicer and reasonable satisfactory to the Trustee
recognizing the interests of any Advancing Person or Advance Facility Trustee in such
Reimbursement Amounts as the Master Servicer may cause to be made subject to Advance
Facilities pursuant to this Section 3.22, and such other documents in connection with such
Advance Facility as may be reasonably requested from time to time by any Advancing Person or
Advance Facility Trustee and reasonably satisfactory to the Trustee.
(e) Reimbursement Amounts collected with respect to each Mortgage Loan shall be allocated
to outstanding unreimbursed Advances or Servicing Advances (as the case may be) made with
respect to that Mortgage Loan on a "first-in, first out" ("FIFO") basis, subject to the
qualifications set forth below:
(i) Any successor Master Servicer to Residential Funding (a "Successor Master Servicer")
and the Advancing Person or Advance Facility Trustee shall be required to apply all
amounts available in accordance with this Section 3.22(e) to the reimbursement of
Advances and Servicing Advances in the manner provided for herein; provided, however,
that after the succession of a Successor Master Servicer, (A) to the extent that any
Advances or Servicing Advances with respect to any particular Mortgage Loan are
reimbursed from payments or recoveries, if any, from the related Mortgagor, and
Liquidation Proceeds or Insurance Proceeds, if any, with respect to that Mortgage
Loan, reimbursement shall be made, first, to the Advancing Person or Advance Facility
Trustee in respect of Advances and/or Servicing Advances related to that Mortgage
Loan to the extent of the interest of the Advancing Person or Advance Facility
Trustee in such Advances and/or Servicing Advances, second to the Master Servicer in
respect of Advances and/or Servicing Advances related to that Mortgage Loan in excess
of those in which the Advancing Person or Advance Facility Trustee Person has an
interest, and third, to the Successor Master Servicer in respect of any other
Advances and/or Servicing Advances related to that Mortgage Loan, from such sources
as and when collected, and (B) reimbursements of Advances and Servicing Advances that
are Nonrecoverable Advances shall be made pro rata to the Advancing Person or Advance
Facility Trustee, on the one hand, and any such Successor Master Servicer, on the
other hand, on the basis of the respective aggregate outstanding unreimbursed
Advances and Servicing Advances that are Nonrecoverable Advances owed to the
Advancing Person, Advance Facility Trustee or Master Servicer pursuant to this
Agreement, on the one hand, and any such Successor Master Servicer, on the other
hand, and without regard to the date on which any such Advances or Servicing Advances
shall have been made. In the event that, as a result of the FIFO allocation made
pursuant to this Section 3.22(e), some or all of a Reimbursement Amount paid to the
Advancing Person or Advance Facility Trustee relates to Advances or Servicing
Advances that were made by a Person other than Residential Funding or the Advancing
Person or Advance Facility Trustee, then the Advancing Person or Advance Facility
Trustee shall be required to remit any portion of such Reimbursement Amount to the
Person entitled to such portion of such Reimbursement Amount. Without limiting the
generality of the foregoing, Residential Funding shall remain entitled to be
reimbursed by the Advancing Person or Advance Facility Trustee for all Advances and
Servicing Advances funded by Residential Funding to the extent the related
Reimbursement Amount(s) have not been assigned or pledged to an Advancing Person or
Advance Facility Trustee. The documentation establishing any Advance Facility shall
require Residential Funding to provide to the related Advancing Person or Advance
Facility Trustee loan by loan information with respect to each Reimbursement Amount
distributed to such Advancing Person or Advance Facility Trustee on each date of
remittance thereof to such Advancing Person or Advance Facility Trustee, to enable
the Advancing Person or Advance Facility Trustee to make the FIFO allocation of each
Reimbursement Amount with respect to each Mortgage Loan.
(ii) By way of illustration, and not by way of limiting the generality of the foregoing,
if the Master Servicer resigns or is terminated at a time when the Master Servicer is
a party to an Advance Facility, and is replaced by a Successor Master Servicer, and
the Successor Master Servicer directly funds Advances or Servicing Advances with
respect to a Mortgage Loan and does not assign or pledge the related Reimbursement
Amounts to the related Advancing Person or Advance Facility Trustee, then all
payments and recoveries received from the related Mortgagor or received in the form
of Liquidation Proceeds with respect to such Mortgage Loan (including Insurance
Proceeds collected in connection with a liquidation of such Mortgage Loan) will be
allocated first to the Advancing Person or Advance Facility Trustee until the related
Reimbursement Amounts attributable to such Mortgage Loan that are owed to the Master
Servicer and the Advancing Person, which were made prior to any Advances or Servicing
Advances made by the Successor Master Servicer, have been reimbursed in full, at
which point the Successor Master Servicer shall be entitled to retain all related
Reimbursement Amounts subsequently collected with respect to that Mortgage Loan
pursuant to Section 3.10 of this Agreement. To the extent that the Advances or
Servicing Advances are Nonrecoverable Advances to be reimbursed on an aggregate basis
pursuant to Section 3.10 of this Agreement, the reimbursement paid in this manner
will be made pro rata to the Advancing Person or Advance Facility Trustee, on the one
hand, and the Successor Master Servicer, on the other hand, as described in clause
(i)(B) above.
(f) The Master Servicer shall remain entitled to be reimbursed for all Advances and
Servicing Advances funded by the Master Servicer to the extent the related rights to be
reimbursed therefor have not been sold, assigned or pledged to an Advancing Person.
(g) Any amendment to this Section 3.22 or to any other provision of this Agreement that
may be necessary or appropriate to effect the terms of an Advance Facility as described
generally in this Section 3.22, including amendments to add provisions relating to a
successor master servicer, may be entered into by the Trustee, the Depositor and the Master
Servicer without the consent of any Certificateholder, with written confirmation from each
Rating Agency that the amendment will not result in the reduction of the ratings on any
class of the Certificates below the lesser of the then current or original ratings on such
Certificates and delivery of an Opinion of Counsel as required under Section 11.01(c),
notwithstanding anything to the contrary in Section 11.01 of or elsewhere in this Agreement.
(h) Any rights of set-off that the Trust Fund, the Trustee, the Depositor, any Successor
Master Servicer or any other Person might otherwise have against the Master Servicer under
this Agreement shall not attach to any rights to be reimbursed for Advances or Servicing
Advances that have been sold, transferred, pledged, conveyed or assigned to any Advancing
Person.
(i) At any time when an Advancing Person shall have ceased funding Advances and/or
Servicing Advances (as the case may be) and the Advancing Person or related Advance Facility
Trustee shall have received Reimbursement Amounts sufficient in the aggregate to reimburse
all Advances and/or Servicing Advances (as the case may be) the right to reimbursement for
which were assigned to the Advancing Person, then upon the delivery of a written notice
signed by the Advancing Person and the Master Servicer or its successor or assign) to the
Trustee terminating the Advance Facility Notice (the "Notice of Facility Termination"), the
Master Servicer or its Successor Master Servicer shall again be entitled to withdraw and
retain the related Reimbursement Amounts from the Custodial Account pursuant to Section 3.10.
(j) After delivery of any Advance Facility Notice, and until any such Advance Facility
Notice has been terminated by a Notice of Facility Termination, this Section 3.22 may not be
amended or otherwise modified without the prior written consent of the related Advancing
Person.
Section 3.23. Special Servicing.
(a) Subject to the conditions described in Section 3.23(b) below, the Holder of the Class
SB Certificates may (but is not obligated to) appoint a special servicer (each, a "Special
Servicer") to service any Mortgage Loan which is delinquent in payment by 120 days or more
as of the related Special Servicing Transfer Date; provided, however, that the aggregate
Stated Principal Balance of Mortgage Loans transferred to a Special Servicer pursuant to
this Section shall not equal or exceed 10% of the Cut-off Date Balance. The Holder of the
Class SB Certificates shall give the Trustee and the Master Servicer not less than 40 days
prior written notice of the date on which it anticipates the transfer of servicing with
respect to any Mortgage Loan to a Special Servicer to occur (the "Special Servicing Transfer
Date"), specifying (i) the Mortgage Loan(s) that it intends to transfer and (ii) the related
Special Servicer.
(b) Any Special Servicer appointed pursuant to Section 3.23(a) above shall (i) be rated
in one of the two highest rating categories as a special servicer by at least two of
Standard & Poor's, Xxxxx'x and Xxxxx Ratings, (ii) satisfy and be subject to all
requirements and obligations of a Subservicer under this Agreement, including but not
limited to, servicing in accordance with the Program Guide and this Agreement, (iii) be
approved by the Master Servicer (which approval shall not be unreasonably withheld), (iv) be
capable of full compliance with Regulation AB and (v) sign an acknowledgement agreeing to be
bound by this Agreement. In addition, no Special Servicer may modify a Mortgage Loan
without the prior written consent of the Master Servicer and such modification shall be in
compliance with Section 3.07(a) hereof.
(c) In connection with the transfer of the servicing of any Mortgage Loan to a Special
Servicer, the Master Servicer or Subservicer of such Mortgage Loan (the "Transferring
Servicer") shall, at such Special Servicer's expense, deliver to such Special Servicer all
documents and records relating to such Mortgage Loan and an accounting of amounts collected
or held by it and otherwise use its best efforts to effect the orderly and efficient
transfer of the servicing of such Mortgage Loan to such Special Servicer. Such Special
Servicer shall thereupon assume all of the rights and obligations of the Transferring
Servicer hereunder arising from and after the Special Servicing Transfer Date, including the
right to receive the related Subservicing Fee from payments of interest received on such
Mortgage Loan (and shall have no rights or entitlement to compensation greater than that of
the Transferring Servicer with respect to such Mortgage Loan) and the Transferring Servicer
shall have no further rights or obligations hereunder with respect to such Mortgage Loan
(except that the Master Servicer shall remain obligated to master service such Mortgage Loan
pursuant to this Agreement). In connection with the transfer of the servicing of any
Mortgage Loan to a Special Servicer, the Master Servicer shall amend the Mortgage Loan
Schedule to reflect that such Mortgage Loans are subserviced by such Special Servicer.
(d) On any Special Servicing Transfer Date, the related Special Servicer shall reimburse
the Transferring Servicer for all unreimbursed Advances, Servicing Advances and Servicing
Fees, as applicable, relating to the Mortgage Loans for which the servicing is being
transferred. The related Special Servicer shall be entitled to be reimbursed pursuant to
Section 3.10 or otherwise pursuant to this Agreement for all such Advances, Servicing
Advances and Servicing Fees, as applicable, paid to the Transferring Servicer pursuant to
this Section 3.23. In addition, in the event that the Transferring Servicer is a
Subservicer, the Holder of the Class SB Certificates or the related Special Servicer shall
pay any termination fees due to such Transferring Servicer pursuant to the applicable
Subservicing Agreement.
(e) Each Special Servicer agrees to indemnify and hold the Master Servicer and the
Transferring Servicer harmless from and against any and all losses, claims, expenses, costs
or liabilities (including attorneys fees and court costs) incurred by the Master Servicer or
Transferring Servicer, as applicable, as a result of or in connection with the failure by
such Special Servicer to perform the obligations or responsibilities imposed upon or
undertaken by such Special Servicer under this Agreement from and after the related Special
Servicing Transfer Date. The Master Servicer agrees to indemnify and hold each Special
Servicer harmless from and against any and all losses, claims, expenses, costs or
liabilities (including attorneys fees and court costs) incurred by such Special Servicer as
a result of or in connection with the failure by the Master Servicer to perform the
obligations or responsibilities imposed upon or undertaken by the Master Servicer under this
Agreement.
Section 3.24. Credit Risk Manager.
For and on behalf of the Trust, the Credit Risk Manager will monitor the performance
of the Master Servicer, and make recommendations to the Master Servicer regarding certain
Delinquent and defaulted Mortgage Loans and will report on the performance of such Mortgage
Loans, pursuant to the Credit Risk Management Agreement. Such reports and recommendations
will be based upon information provided to the Credit Risk Manager pursuant to the Credit
Risk Management Agreement, and the Credit Risk Manager shall look solely to the Master
Servicer for all information and data (including loss and delinquency information and data)
relating to the servicing of the Mortgage Loans.
Section 3.25. Limitation Upon Liability of the Credit Risk Manager.
Neither the Credit Risk Manager, nor any of its directors, officers, employees, or
agents shall be under any liability to the Trustee, the Certificateholders, the Master
Servicer and/or the Depositor for any action taken or for refraining from the taking of any
action made in good faith pursuant to this Agreement, in reliance upon information provided
by the Master Servicer under the Credit Risk Management Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Credit Risk Manager
or any such person against liability that would otherwise be imposed by reason of willful
malfeasance or bad faith in its performance of its duties. The Credit Risk Manager and any
director, officer, employee, or agent of the Credit Risk Manager may rely in good faith on
any document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder, and may rely in good faith upon the accuracy of
information furnished by the Master Servicer pursuant to the Credit Risk Management
Agreement in the performance of its duties thereunder and hereunder.
Section 3.26. Removal of the Credit Risk Manager.
The Credit Risk Manager may be removed as Credit Risk Manager by Certificateholders
holding not less than 66 2/3% of the Voting Rights in the Trust Fund, in the exercise of its
or their sole discretion. The Certificateholders shall provide written notice of the Credit
Risk Manager's removal to the Trustee. Upon receipt of such notice, the Trustee shall
provide written notice to the Credit Risk Manager and the Master Servicer of its removal,
which shall be effective upon receipt of such notice by the Credit Risk Manager and the
Master Servicer. Notwithstanding the foregoing, the termination of the Credit Risk Manager
pursuant to this Section shall not become effective until the appointment of a successor
Credit Risk Manager.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account.
(a) The Master Servicer acting as agent of the Trustee shall establish and maintain a
Certificate Account in which the Master Servicer shall cause to be deposited on behalf of
the Trustee on or before 2:00 P.M. New York time on each Certificate Account Deposit Date by
wire transfer of immediately available funds an amount equal to the sum of (i) any Advance
for the immediately succeeding Distribution Date, (ii) any amount required to be deposited
in the Certificate Account pursuant to Section 3.12(a), (iii) any amount required to be
deposited in the Certificate Account pursuant to Section 3.16(e) or Section 4.07, (iv) any
amount required to be paid pursuant to Section 9.01, and (v) other amounts constituting the
Available Distribution Amount for the immediately succeeding Distribution Date.
(b) On or prior to the Business Day immediately following each Determination Date, the
Master Servicer shall determine any amounts owed by the Swap Counterparty under the Swap
Agreement and inform the Trustee in writing of the amount so calculated. On or prior to
each Distribution Date, the Master Servicer shall withdraw from the Custodial Account an
amount equal to the Credit Risk Manager Fee for such Distribution Date and shall pay such
amount to the Credit Risk Manager.
(c) The Trustee shall, upon written request from the Master Servicer, invest or cause the
institution maintaining the Certificate Account to invest the funds in the Certificate
Account in Permitted Investments designated in the name of the Trustee for the benefit of
the Certificateholders, which shall mature not later than the Business Day next preceding
the Distribution Date next following the date of such investment (except that (i) if such
Permitted Investment is an obligation of the institution that maintains such account or fund
for which such institution serves as custodian, then such Permitted Investment may mature on
such Distribution Date and (ii) any other investment may mature on such Distribution Date if
the Trustee shall advance funds on such Distribution Date to the Certificate Account in the
amount payable on such investment on such Distribution Date, pending receipt thereof to the
extent necessary to make distributions on the Certificates) and shall not be sold or
disposed of prior to maturity. All income and gain realized from any such investment shall
be for the benefit of the Master Servicer and shall be subject to its withdrawal or order
from time to time. The amount of any losses incurred in respect of any such investments
shall be deposited in the Certificate Account by the Master Servicer out of its own funds
immediately as realized.
Section 4.02. Distributions.
(a) On each Distribution Date, the Trustee (or the Paying Agent on behalf of the Trustee)
shall allocate and distribute the Available Distribution Amount, if any, for such date to
the interests issued in respect of REMIC I, REMIC II and REMIC III as specified in this
Section.
(b) (1) On each Distribution Date, the REMIC I Distribution Amount shall be
distributed by REMIC I to REMIC II on account of the REMIC I Regular Interests in the
amounts and with the priorities set forth in the definition thereof.
(2) On each Distribution Date, the REMIC II Distribution Amount shall be
distributed by REMIC II to REMIC III on account of the REMIC II Regular Interests in the
amounts and with the priorities set forth in the definition thereof.
(3) On each Distribution Date, the REMIC III Distribution Amount shall be
deemed to have been distributed by REMIC III to the Certificateholders on account of the
REMIC III Regular Interests represented thereby in the amounts and with the priorities
set forth in the definition thereof.
(4) On each Distribution Date, the amount, if any, deemed received by the
Class SB Certificate in respect of the REMIC III Regular Interest IO and under the SB-AB
Swap Agreement shall be deemed to have been paid on behalf of the Class SB Certificate
by the Trustee pursuant to Section 4.10 in respect of the Net Swap Payment owed to the
Swap Counterparty. On each Distribution Date, the amount, if any, received by the
Trustee from the Swap Counterparty in respect of the Swap Agreement shall be deemed to
have been received by the Trustee on behalf of the Class SB Certificate. On each
Distribution Date, amounts paid to the Class A and Class M Certificates pursuant to
Section 4.02(c)(vii) in respect of Basis Risk Shortfall shall be deemed to have been
paid by the Class SB Certificateholder pursuant to the SB-AM Swap Agreement.
(c) On each Distribution Date (x) the Master Servicer on behalf of the Trustee or (y) the
Paying Agent appointed by the Trustee, shall distribute to each Certificateholder of record
on the next preceding Record Date (other than as provided in Section 9.01 respecting the
final distribution) either in immediately available funds (by wire transfer or otherwise) to
the account of such Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder has so notified the Master Servicer or the
Paying Agent, as the case may be, or, if such Certificateholder has not so notified the
Master Servicer or the Paying Agent by the Record Date, by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate Register such
Certificateholder's share (which share with respect to each Class of Certificates, shall be
based on the aggregate of the Percentage Interests represented by Certificates of the
applicable Class held by such Holder of the following amounts), in the following order of
priority, in each case to the extent of the Available Distribution Amount on deposit in the
Certificate Account and the Swap Account pursuant to Section 4.10(c) (or, with respect to
clause (xi)(B) below, to the extent of prepayment charges on deposit in the Certificate
Account):
(i) to the Class A Certificateholders, the Accrued Certificate Interest payable on the
Class A Certificates with respect to such Distribution Date, plus any related amounts
accrued pursuant to this clause (i) but remaining unpaid from any prior Distribution
Date, being paid from and in reduction of the Available Distribution Amount for such
Distribution Date;
(ii) to the Class M Certificateholders and the Class B Certificateholders, from the
amount, if any, of the Available Distribution Amount remaining after the foregoing
distributions, Accrued Certificate Interest payable on the Class M Certificates and
Class B Certificates with respect to such Distribution Date, plus any related amounts
accrued pursuant to this clause (ii) but remaining unpaid from any prior Distribution
Date, sequentially, to the Class M-1 Certificateholders, Class M-2
Certificateholders, Class M-3 Certificateholders, Class M-4 Certificateholders,
Class M-5 Certificateholders, Class M-6 Certificateholders, Class M-7
Certificateholders, Class M-8 Certificateholders, Class M-9 Certificateholders,
Class M-10 Certificateholders and Class B Certificateholders, in that order, being
paid from and in reduction of the Available Distribution Amount for such Distribution
Date;
(iii) [reserved];
(iv) the Principal Distribution Amount shall be distributed as follows, to be applied to
reduce the Certificate Principal Balance of the applicable Certificates in each case
to the extent of the remaining Principal Distribution Amount:
(A) first, the Class A Principal Distribution Amount shall be distributed sequentially to
the Class A-1 Certificateholders, Class A-2 Certificateholders, Class A-3
Certificateholders and Class A-4 Certificateholders, in that order, in each
case until the Certificate Principal Balance thereof is reduced to zero;
(B) second, to the Class M-1 Certificateholders, the Class M-1 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-1 Certificates
has been reduced to zero;
(C) third, to the Class M-2 Certificateholders, the Class M-2 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-2 Certificates
has been reduced to zero;
(D) fourth, to the Class M-3 Certificateholders, the Class M-3 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-3 Certificates
has been reduced to zero;
(E) fifth, to the Class M-4 Certificateholders, the Class M-4 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-4 Certificates
has been reduced to zero;
(F) sixth, to the Class M-5 Certificateholders, the Class M-5 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-5 Certificates
has been reduced to zero;
(G) seventh, to the Class M-6 Certificateholders, the Class M-6 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-6 Certificates
has been reduced to zero;
(H) eighth, to the Class M-7 Certificateholders, the Class M-7 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-7 Certificates
has been reduced to zero;
(I) ninth, to the Class M-8 Certificateholders, the Class M-8 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-8 Certificates
has been reduced to zero;
(J) tenth, to the Class M-9 Certificateholders, the Class M-9 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-9 Certificates
has been reduced to zero; and
(K) eleventh, to the Class M-10 Certificateholders, the Class M-10 Principal Distribution
Amount, until the Certificate Principal Balance of the Class M-10 Certificates
has been reduced to zero; and
(L) twelfth, to the Class B Certificateholders, the Class B Principal Distribution
Amount, until the Certificate Principal Balance of the Class B Certificates
has been reduced to zero;
(v) to the Class A Certificateholders, Class M Certificateholders and Class B
Certificateholders, the amount of any Prepayment Interest Shortfalls allocated
thereto for such Distribution Date, on a pro rata basis based on Prepayment Interest
Shortfalls allocated thereto to the extent not offset by Eligible Master Servicing
Compensation on such Distribution Date;
(vi) to the Class A Certificateholders, Class M Certificateholders and Class B
Certificateholders, the amount of any Prepayment Interest Shortfalls previously
allocated thereto remaining unpaid from prior Distribution Dates together with
interest thereon at the related Pass-Through Rate, on a pro rata basis based on
unpaid Prepayment Interest Shortfalls previously allocated thereto;
(vii) to the Class A Certificateholders, the amount of any unpaid Basis Risk Shortfalls
allocated thereto, on a pro rata basis based on the amount of unpaid Basis Risk
Shortfalls allocated thereto, and then sequentially, to the Class X-0, Xxxxx X-0,
Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8 Class M-9,
Class M-10 and Class B Certificateholders, in that order, the amount of any unpaid
Basis Risk Shortfalls allocated thereto;
(viii) to the Class A Certificateholders, Class M Certificateholders and Class B
Certificateholders, Relief Act Shortfalls allocated thereto for such Distribution
Date, on a pro rata basis based on Relief Act Shortfalls allocated thereto for such
Distribution Date,
(ix) first, to the Class A Certificateholders, the principal portion of any Realized
Losses previously allocated to those Certificates and remaining unreimbursed, on a
pro rata basis based on their respective principal portion of any Realized Losses
previously allocated to those Certificates and remaining unreimbursed, and then,
sequentially, to the Class X-0, Xxxxx X-0, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class B
Certificateholders, in that order, the principal portion of any Realized Losses
previously allocated to such Class and remaining unreimbursed;
(x) to the Swap Account for payment to the Swap Counterparty, any Swap Termination
Payments due to a Swap Counterparty Trigger Event;
(xi) to the Class SB Certificates, (A) from the amount, if any, of the Excess Cash Flow
remaining after the foregoing distributions, the sum of (I) Accrued Certificate
Interest thereon, (II) the amount of any Overcollateralization Reduction Amount for
such Distribution Date and (III) for any Distribution Date after the Certificate
Principal Balance of each Class of Class A Certificates, Class M Certificates and
Class B Certificates has been reduced to zero, the Overcollateralization Amount, (B)
from prepayment charges on deposit in the Certificate Account, any prepayment charges
received on the Mortgage Loans during the related Prepayment Period and (C) from the
Swap Payments, if any, the amount of such Swap Payments remaining after the foregoing
distributions; and
(xii) to the Holders of the Class R-III Certificates, the balance, if any, of the Excess
Cash Flow.
(d) Notwithstanding the foregoing clause (c), upon the reduction of the Certificate
Principal Balance of a Class of Class A Certificates, Class M Certificates or Class B
Certificates to zero, such Class of Certificates will not be entitled to further
distributions pursuant to Section 4.02.
(e) Each distribution with respect to a Book-Entry Certificate shall be paid to the
Depository, as Holder thereof, and the Depository shall be responsible for crediting the
amount of such distribution to the accounts of its Depository Participants in accordance
with its normal procedures. Each Depository Participant shall be responsible for disbursing
such distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds to the
Certificate Owners that it represents. None of the Trustee, the Certificate Registrar, the
Depositor or the Master Servicer shall have any responsibility therefor except as otherwise
provided by this Agreement or applicable law.
(f) Except as otherwise provided in Section 9.01, if the Master Servicer anticipates that
a final distribution with respect to any Class of Certificates will be made on a future
Distribution Date, the Master Servicer shall, no later than 40 days prior to such final
distribution, notify the Trustee and the Trustee shall, not earlier than the 15th day and
not later than the 25th day of the month next preceding the month of such final
distribution, distribute, or cause to be distributed, to each Holder of such Class of
Certificates a notice to the effect that: (i) the Trustee anticipates that the final
distribution with respect to such Class of Certificates will be made on such Distribution
Date but only upon presentation and surrender of such Certificates at the office of the
Trustee or as otherwise specified therein, and (ii) no interest shall accrue on such
Certificates from and after the end of the prior calendar month. In the event that
Certificateholders required to surrender their Certificates pursuant to Section 9.01(c) do
not surrender their Certificates for final cancellation, the Trustee shall cause funds
distributable with respect to such Certificates to be withdrawn from the Certificate Account
and credited to a separate escrow account for the benefit of such Certificateholders as
provided in Section 9.01(d).
Section 4.03. Statements to Certificateholders; Statements to Rating Agencies; Exchange Act
Reporting.
(a) Concurrently with each distribution charged to the Certificate Account and with
respect to each Distribution Date the Master Servicer shall forward to the Trustee and the
Credit Risk Manager and the Trustee shall forward by mail or otherwise make available
electronically on its website (which may be obtained by any Certificateholder by telephoning
the Trustee at (000) 000-0000) to each Holder and the Depositor a statement setting forth
the following information as to each Class of Certificates, in each case to the extent
applicable:
(i) the applicable Record Date, Determination Date and Distribution Date, and the date on
which the applicable Interest Accrual Period commenced;
(ii) the aggregate amount of payments received with respect to the Mortgage Loans,
including prepayment amounts;
(iii) the Servicing Fee and Subservicing Fee payable to the Master Servicer and the
Subservicer;
(iv) the amount of any other fees or expenses paid, and the identity of the party
receiving such fees or expenses;
(v) (A) the amount of such distribution to the Certificateholders of such Class
applied to reduce the Certificate Principal Balance thereof, and (B) the aggregate
amount included therein representing Principal Prepayments;
(vi) the amount of such distribution to Holders of such Class of Certificates allocable to
interest (including amounts payable as a portion of the Excess Cash Flow);
(vii) if the distribution to the Holders of such Class of Certificates is less than the
full amount that would be distributable to such Holders if there were sufficient
funds available therefor, the amount of the shortfall;
(viii) the Certificate Principal Balance of each Class of the Certificates, before and after
giving effect to the amounts distributed on such Distribution Date, separately
identifying any reduction thereof due to Realized Losses other than pursuant to an
actual distribution of principal;
(ix) the Certificate Principal Balance of each Class of Class A Certificates as of the
Closing Date;
(x) the Certificate Principal Balance of each Class of Class M Certificates as of the
Closing Date;
(xi) the number and Stated Principal Balance of the Mortgage Loans after giving effect to
the distribution of principal on such Distribution Date and the number of Mortgage
Loans at the beginning and end of the related Due Period;
(xii) on the basis of the most recent reports furnished to it by Subservicers, (A) the
number and Stated Principal Balances of Mortgage Loans that are Delinquent (1)
30-59 days, (2) 60-89 days and (3) 90 or more days and the number and Stated
Principal Balance of Mortgage Loans that are in foreclosure, (B) the number and
Stated Principal Balances of the Mortgage Loans in the aggregate that are Reportable
Modified Mortgage Loans that are in foreclosure and are REO Property, indicating in
each case capitalized Mortgage Loans, other Servicing Modifications and totals, and
(C) for all Reportable Modified Mortgage Loans, the number and Stated Principal
Balances of the Mortgage Loans in the aggregate that have been liquidated, the
subject of pay-offs and that have been repurchased by the Master Servicer or Seller;
(xiii) the amount, terms and general purpose of any Advance by the Master Servicer pursuant
to Section 4.04 and the amount of all Advances that have been reimbursed during the
related Due Period;
(xiv) any material modifications, extensions or waivers to the terms of the Mortgage Loans
during the Due Period or that have cumulatively become material over time;
(xv) any material breaches of Mortgage Loan representations or warranties or covenants in
the Agreement;
(xvi) the number, aggregate principal balance and Stated Principal Balance of any REO
Properties with respect to the Mortgage Loans;
(xvii) the aggregate Accrued Certificate Interest remaining unpaid, if any, for each Class
of Certificates, after giving effect to the distribution made on such Distribution
Date;
(xviii) the aggregate amount of Realized Losses with respect to the Mortgage Loans for such
Distribution Date and the aggregate amount of Realized Losses with respect to the
Mortgage Loans incurred since the Cut-off Date;
(xix) the Pass-Through Rate on each Class of Certificates and the Net WAC Cap Rate;
(xx) the Basis Risk Shortfalls and Prepayment Interest Shortfalls;
(xxi) the Overcollateralization Amount and the Required Overcollateralization Amount
following such Distribution Date;
(xxii) the number and Stated Principal Balance of the Mortgage Loans repurchased under
Section 4.07;
(xxiii) the aggregate amount of any recoveries with respect to the Mortgage Loans on
previously foreclosed loans from Residential Funding;
(xxiv) the weighted average remaining term to maturity of the Mortgage Loans after giving
effect to the amounts distributed on such Distribution Date;
(xxv) the weighted average Mortgage Rates of the Mortgage Loans after giving effect to the
amounts distributed on such Distribution Date;
(xxvi) the amount of any Net Swap Payment payable to the Trustee on behalf of the Trust, any
Net Swap Payment payable to the Swap Counterparty, any Swap Termination Payment
payable to the Trustee on behalf of the Trust and any Swap Termination Payment
payable to the Swap Counterparty; and
(xxvii) the occurrence of the Stepdown Date.
In the case of information furnished pursuant to clauses (i) and (ii) above, the
amounts shall be expressed as a dollar amount per Certificate with a $1,000 denomination.
In addition to the statement provided to the Trustee as set forth in this Section 4.03(a),
the Master Servicer shall provide to any manager of a trust fund consisting of some or all
of the Certificates, upon reasonable request, such additional information as is reasonably
obtainable by the Master Servicer at no additional expense to the Master Servicer. Also, at
the request of a Rating Agency, the Master Servicer shall provide the information relating
to the Reportable Modified Mortgage Loans substantially in the form attached hereto as
Exhibit U to such Rating Agency within a reasonable period of time; provided, however, that
the Master Servicer shall not be required to provide such information more than four times
in a calendar year to any Rating Agency.
(b) Within a reasonable period of time after it receives a written request from a Holder
of a Certificate, other than a Class R Certificate, the Master Servicer shall prepare, or
cause to be prepared, and shall forward, or cause to be forwarded, to each Person who at any
time during the calendar year was the Holder of a Certificate, other than a Class R
Certificate, a statement containing the information set forth in clauses (iv) and (v) of
subsection (a) above aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Master Servicer shall be
deemed to have been satisfied to the extent that substantially comparable information shall
be provided by the Master Servicer pursuant to any requirements of the Code.
(c) Within a reasonable period of time after the it receives a written request from any
Holder of a Class R Certificate, the Master Servicer shall prepare, or cause to be prepared,
and shall forward, or cause to be forwarded, to each Person who at any time during the
calendar year was the Holder of a Class R Certificate, a statement containing the applicable
distribution information provided pursuant to this Section 4.03 aggregated for such calendar
year or applicable portion thereof during which such Person was the Holder of a Class R
Certificate. Such obligation of the Master Servicer shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the Master
Servicer pursuant to any requirements of the Code.
(d) Upon the written request of any Certificateholder, the Master Servicer, as soon as
reasonably practicable, shall provide the requesting Certificateholder with such information
as is necessary and appropriate, in the Master Servicer's sole discretion, for purposes of
satisfying applicable reporting requirements under Rule 144A.
(e) The Master Servicer shall, on behalf of the Depositor and in respect of the Trust
Fund, sign and cause to be filed with the Commission any periodic reports required to be
filed under the provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder, including without limitation, reports on Form 10-K, Form 10-D and
Form 8-K. In connection with the preparation and filing of such periodic reports, the
Trustee shall timely provide to the Master Servicer (I) a list of Certificateholders as
shown on the Certificate Register as of the end of each calendar year, (II) copies of all
pleadings, other legal process and any other documents relating to any claims, charges or
complaints involving the Trustee, as trustee hereunder, or the Trust Fund that are received
by a Responsible Officer of the Trustee, (III) notice of all matters that, to the actual
knowledge of a Responsible Officer of the Trustee, have been submitted to a vote of the
Certificateholders, other than those matters that have been submitted to a vote of the
Certificateholders at the request of the Depositor or the Master Servicer, and (IV) notice
of any failure of the Trustee to make any distribution to the Certificateholders as required
pursuant to this Agreement. Neither the Master Servicer nor the Trustee shall have any
liability with respect to the Master Servicer's failure to properly prepare or file such
periodic reports resulting from or relating to the Master Servicer's inability or failure to
obtain any information not resulting from the Master Servicer's own negligence or willful
misconduct.
(f) Any Form 10-K filed with the Commission in connection with this Section 4.03 shall
include, with respect to the Certificates relating to such 10-K:
(i) A certification, signed by the senior officer in charge of the servicing functions of
the Master Servicer, in the form attached as Exhibit T-1 hereto or such other form as
may be required or permitted by the Commission (the "Form 10-K Certification"), in
compliance with Rules 13a-14 and 15d-14 under the Exchange Act and any additional
directives of the Commission.
(ii) A report regarding its assessment of compliance during the preceding calendar year
with all applicable servicing criteria set forth in relevant Commission regulations
with respect to mortgage-backed securities transactions taken as a whole involving
the Master Servicer that are backed by the same types of assets as those backing the
certificates, as well as similar reports on assessment of compliance received from
other parties participating in the servicing function as required by relevant
Commission regulations, as described in Item 1122(a) of Regulation AB. The Master
Servicer shall obtain from all other parties participating in the servicing function
any required assessments.
(iii) With respect to each assessment report described immediately above, a report by a
registered public accounting firm that attests to, and reports on, the assessment
made by the asserting party, as set forth in relevant Commission regulations, as
described in Regulation 1122(b) of Regulation AB and Section 3.19.
(iv) The servicer compliance certificate required to be delivered pursuant Section 3.18.
(g) In connection with the Form 10-K Certification, the Trustee shall provide the Master
Servicer with a back-up certification substantially in the form attached hereto as Exhibit
T-2.
(h) This Section 4.03 may be amended in accordance with this Agreement without the
consent of the Certificateholders.
(i) The Trustee shall make available on the Trustee's internet website each of the
reports filed with the Commission by or on behalf of the Depositor under the Exchange Act,
upon delivery of such report to the Trustee.
Section 4.04. Distribution of Reports to the Trustee and the Depositor; Advances by the
Master Servicer.
(a) Prior to the close of business on the Business Day next succeeding each Determination
Date, the Master Servicer shall furnish a written statement (which may be in a mutually
agreeable electronic format) to the Trustee, any Paying Agent and the Depositor (the
information in such statement to be made available to Certificateholders by the Master
Servicer on request) (provided that the Master Servicer shall use its best efforts to
deliver such written statement not later than 12:00 p.m. New York time on the second
Business Day prior to the Distribution Date) setting forth (i) the Available Distribution
Amount, (ii) the amounts required to be withdrawn from the Custodial Account and deposited
into the Certificate Account on the immediately succeeding Certificate Account Deposit Date
pursuant to clause (iii) of Section 4.01(a), (iii) the amount of Prepayment Interest
Shortfalls and Basis Risk Shortfalls and (iv) the Swap Payments, if any, for such
Distribution Date. The determination by the Master Servicer of such amounts shall, in the
absence of obvious error, be presumptively deemed to be correct for all purposes hereunder
and the Trustee shall be protected in relying upon the same without any independent check or
verification.
(b) On or before 2:00 P.M. New York time on each Certificate Account Deposit Date, the
Master Servicer shall either (i) remit to the Trustee for deposit in the Certificate Account
from its own funds, or funds received therefor from the Subservicers, an amount equal to the
Advances to be made by the Master Servicer in respect of the related Distribution Date,
which shall be in an aggregate amount equal to the sum of (A) the aggregate amount of
Monthly Payments other than Balloon Payments (with each interest portion thereof adjusted to
a per annum rate equal to the Net Mortgage Rate), less the amount of any related Servicing
Modifications, Debt Service Reductions or Relief Act Shortfalls, on the Outstanding Mortgage
Loans as of the related Due Date in the related Due Period, which Monthly Payments were due
during the related Due Period and not received as of the close of business as of the related
Determination Date; provided that no Advance shall be made if it would be a Nonrecoverable
Advance and (B) with respect to each Balloon Loan delinquent in respect of its Balloon
Payment as of the close of business on the related Determination Date, an amount equal to
the assumed Monthly Payment (with each interest portion thereof adjusted to a per annum rate
equal to the Net Mortgage Rate) that would have been due on the related Due Date based on
the original amortization schedule for such Balloon Loan until such Balloon Loan is finally
liquidated, over any payments of interest or principal (with each interest portion thereof
adjusted to a per annum rate equal to the Net Mortgage Rate) received from the related
Mortgagor as of the close of business on the related Determination Date and allocable to the
Due Date during the related Due Period for each month until such Balloon Loan is finally
liquidated, (ii) withdraw from amounts on deposit in the Custodial Account and remit to the
Trustee for deposit in the Certificate Account all or a portion of the Amount Held for
Future Distribution in discharge of any such Advance, or (iii) make advances in the form of
any combination of clauses (i) and (ii) aggregating the amount of such Advance. Any portion
of the Amount Held for Future Distribution so used shall be replaced by the Master Servicer
by deposit in the Certificate Account on or before 11:00 A.M. New York time on any future
Certificate Account Deposit Date to the extent that funds attributable to the Mortgage Loans
that are available in the Custodial Account for deposit in the Certificate Account on such
Certificate Account Deposit Date shall be less than payments to Certificateholders required
to be made on the following Distribution Date. The Master Servicer shall be entitled to use
any Advance made by a Subservicer as described in Section 3.07(b) that has been deposited in
the Custodial Account on or before such Distribution Date as part of the Advance made by the
Master Servicer pursuant to this Section 4.04. The determination by the Master Servicer
that it has made a Nonrecoverable Advance or that any proposed Advance, if made, would
constitute a Nonrecoverable Advance, shall be evidenced by a certificate of a Servicing
Officer delivered to the Depositor and the Trustee. In the event that the Master Servicer
determines as of the Business Day preceding any Certificate Account Deposit Date that it
will be unable to deposit in the Certificate Account an amount equal to the Advance required
to be made for the immediately succeeding Distribution Date, it shall give notice to the
Trustee of its inability to advance (such notice may be given by telecopy), not later than
3:00 P.M., New York time, on such Business Day, specifying the portion of such amount that
it will be unable to deposit. Not later than 3:00 P.M., New York time, on the Certificate
Account Deposit Date the Trustee shall, unless by 12:00 Noon, New York time, on such day the
Trustee shall have been notified in writing (by telecopy) that the Master Servicer shall
have directly or indirectly deposited in the Certificate Account such portion of the amount
of the Advance as to which the Master Servicer shall have given notice pursuant to the
preceding sentence, pursuant to Section 7.01, (a) terminate all of the rights and
obligations of the Master Servicer under this Agreement in accordance with Section 7.01 and
(b) assume the rights and obligations of the Master Servicer hereunder, including the
obligation to deposit in the Certificate Account an amount equal to the Advance for the
immediately succeeding Distribution Date. The Trustee shall deposit all funds it receives
pursuant to this Section 4.04(b) into the Certificate Account.
Section 4.05. Allocation of Realized Losses.
(a) Prior to each Distribution Date, the Master Servicer shall determine the total amount
of Realized Losses, if any, that resulted from any Cash Liquidation, Servicing
Modifications, Debt Service Reduction, Deficient Valuation or REO Disposition that occurred
during the related Prepayment Period or, in the case of a Servicing Modification that
constitutes a reduction of the interest rate on a Mortgage Loan, the amount of the reduction
in the interest portion of the Monthly Payment due in the month in which such Distribution
Date occurs. The amount of each Realized Loss shall be evidenced by an Officers'
Certificate.
(b) All Realized Losses on the Mortgage Loans shall be allocated as follows:
(i) first, to Excess Cash Flow in the amounts and priority as provided in Section 4.02;
(ii) second, in reduction of the Overcollateralization Amount, until such amount has been
reduced to zero;
(iii) third, to the Class B Certificates, until the aggregate Certificate Principal Balance
thereof has been reduced to zero;
(iv) fourth, to the Class M-10 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(v) fifth, to the Class M-9 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(vi) sixth, to the Class M-8 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(vii) seventh, to the Class M-7 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(viii) eighth, to the Class M-6 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(ix) ninth, to the Class M-5 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(x) tenth, to the Class M-4 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(xi) eleventh, to the Class M-3 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(xii) twelfth, to the Class M-2 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero;
(xiii) thirteenth, to the Class M-1 Certificates, until the aggregate Certificate Principal
Balance thereof has been reduced to zero; and
(xiv) thirteenth, to the Class A-1, Class A-2, Class A-3 and Class A-4 Certificates on a
pro rata basis, based on their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such
Distribution Date, until the aggregate Certificate Principal Balance of
each such Class has been reduced to zero.
(c) An allocation of a Realized Loss on a "pro rata basis" among two or more specified
Classes of Certificates means an allocation on a pro rata basis, among the various Classes
so specified, to each such Class of Certificates on the basis of their then outstanding
Certificate Principal Balances prior to giving effect to distributions to be made on such
Distribution Date in the case of the principal portion of a Realized Loss or based on the
Accrued Certificate Interest thereon payable on such Distribution Date in the case of an
interest portion of a Realized Loss. Any allocation of the principal portion of Realized
Losses (other than Debt Service Reductions) to the Class A Certificates, Class M
Certificates or Class B Certificates shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated, which allocation shall be deemed to have
occurred on such Distribution Date; provided, that no such reduction shall reduce the
aggregate Certificate Principal Balance of the Certificates below the aggregate Stated
Principal Balance of the Mortgage Loans. Allocations of the interest portions of Realized
Losses (other than any interest rate reduction resulting from a Servicing Modification)
shall be made by operation of the definition of "Accrued Certificate Interest" for each
Class for such Distribution Date. Allocations of the interest portion of a Realized Loss
resulting from an interest rate reduction in connection with a Servicing Modification shall
be made by operation of the priority of payment provisions of Section 4.02(c). Allocations
of the principal portion of Debt Service Reductions shall be made by operation of the
priority of payment provisions of Section 4.02(c). All Realized Losses and all other losses
allocated to a Class of Certificates hereunder will be allocated among the Certificates of
such Class in proportion to the Percentage Interests evidenced thereby.
(d) All Realized Losses on the Mortgage Loans shall be allocated on each Distribution
Date to the REMIC I Regular Interests and the REMIC II Regular Interests as provided in the
definition of REMIC I Realized Losses and REMIC II Realized Losses, respectively.
(e) Realized Losses allocated to the Excess Cash Flow or the Overcollateralization Amount
pursuant to paragraphs (a), (b) or (c) of this Section, the definition of Accrued
Certificate Interest and the operation of Section 4.02(c) shall be deemed allocated to the
Class SB Certificates. Realized Losses allocated to the Class SB Certificates shall, to the
extent such Realized Losses represent Realized Losses on an interest portion, be allocated
to the REMIC III Regular Interest SB-IO. Realized Losses allocated to the Excess Cash Flow
pursuant to paragraph (b) of this Section shall be deemed to reduce Accrued Certificate
Interest on the REMIC III Regular Interest SB-IO. Realized Losses allocated to the
Overcollateralization Amount pursuant to paragraph (b) of this Section shall be deemed first
to reduce the principal balance of the REMIC III Regular Interest SB-PO until such principal
balance shall have been reduced to zero and thereafter to reduce accrued and unpaid interest
on the REMIC III Regular Interest SB-IO.
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property.
The Master Servicer or the Subservicers shall file information returns with respect
to the receipt of mortgage interest received in a trade or business, the reports of
foreclosures and abandonments of any Mortgaged Property and the informational returns
relating to cancellation of indebtedness income with respect to any Mortgaged Property
required by Sections 6050H, 6050J and 6050P of the Code, respectively, and deliver to the
Trustee an Officers' Certificate on or before March 31 of each year, beginning with the
first March 31 that occurs at least six months after the Cut-off Date, stating that such
reports have been filed. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.
Section 4.07. Optional Purchase of Defaulted Mortgage Loans.
(a) With respect to any Mortgage Loan which is delinquent in payment by 90 days or more,
(i) the Holder of the Class SB Certificate may, at its option, upon twenty days prior
written notice to the Master Servicer, purchase such Mortgage Loan from the Trustee at the
Purchase Price therefore, except that in no event shall the Holder of the Class SB
Certificate purchase such Mortgage Loan where the aggregate value of all such Mortgage Loans
purchased by the Holder of the Class SB Certificate would be greater than three percent (3%)
of the Certificate Principal Balance of any Certificate and (ii) if the Holder of the Class
SB Certificate fails to provide notice pursuant to the immediately preceding sentence, the
Master Servicer may, at its option, purchase such Mortgage Loan from the Trustee at the
Purchase Price therefor; provided, that with respect to the Master Servicer such Mortgage
Loan that becomes 90 days or more delinquent during any given Calendar Quarter shall only be
eligible for purchase pursuant to this Section during the period beginning on the first
Business Day of the following Calendar Quarter, and ending at the close of business on the
second-to-last Business Day of such following Calendar Quarter; and provided, further, that
such Mortgage Loan is 90 days or more delinquent at the time of repurchase. Such option if
not exercised shall not thereafter be reinstated as to any Mortgage Loan, unless the
delinquency is cured and the Mortgage Loan thereafter again becomes delinquent in payment by
90 days or more in a subsequent Calendar Quarter.
(b) If at any time the Master Servicer makes a payment to the Certificate Account
covering the amount of the Purchase Price for such a Mortgage Loan as provided in clause (a)
above, and the Master Servicer provides to the Trustee a certification signed by a Servicing
Officer stating that the amount of such payment has been deposited in the Certificate
Account, then the Trustee shall execute the assignment of such Mortgage Loan at the request
of the Master Servicer without recourse to the Master Servicer which shall succeed to all
the Trustee's right, title and interest in and to such Mortgage Loan, and all security and
documents relative thereto. Such assignment shall be an assignment outright and not for
security. The Master Servicer will thereupon own such Mortgage, and all such security and
documents, free of any further obligation to the Trustee or the Certificateholders with
respect thereto.
Section 4.08. [Reserved].
Section 4.09. [Reserved].
Section 4.10. Swap Agreement.
(a) On the Closing Date, the Trustee shall (i) establish and maintain in its name, in
trust for the benefit of the Certificateholders, the Swap Account and (ii) for the benefit
of the Certificateholders, cause the Trust to enter into the Swap Agreement.
(b) The Trustee shall deposit in the Swap Account all payments that are payable to the
Trust Fund under the Swap Agreement. Net Swap Payments and Swap Termination Payments (other
than Swap Termination Payments resulting from a Swap Counterparty Trigger Event) payable by
the Trust Fund to the Swap Counterparty pursuant to the Swap Agreement shall be excluded
from the Available Distribution Amount and payable to the Swap Counterparty prior to any
distributions to the Certificateholders. On each Distribution Date, such amounts will be
remitted by the Trustee to the Swap Account for payment to the Swap Counterparty, first to
make any Net Swap Payment owed to the Swap Counterparty pursuant to the Swap Agreement for
such Distribution Date, and second to make any Swap Termination Payment (not due to a Swap
Counterparty Trigger Event) owed to the Swap Counterparty pursuant to the Swap Agreement for
such Distribution Date. For federal income tax purposes, such amounts paid to the Swap
Account on each Distribution Date shall first be deemed paid to the Swap Account in respect
of REMIC III Regular Interest IO to the extent of the amount distributable on such REMIC III
Regular Interest IO on such Distribution Date, and any remaining amount shall be deemed paid
to the Swap Account in respect of the SB-AM Swap Agreement. Any Swap Termination Payment
triggered by a Swap Counterparty Trigger Event owed to the Swap Counterparty pursuant to the
Swap Agreement will be subordinated to distributions to the Holders of the Class A
Certificates and Class M Certificates and shall be paid as set forth under Section 4.02.
(c) Net Swap Payments payable by the Swap Counterparty to the Trustee on behalf of the
Trust Fund pursuant to the Swap Agreement shall be deposited by the Trustee into the Swap
Account and shall be applied in accordance with Section 4.02.
(d) Subject to Sections 8.01 and 8.02 hereof, the Trustee agrees to comply with the terms
of the Swap Agreement and to enforce the terms and provisions thereof against the Swap
Counterparty at the written direction of the Holders of Certificates entitled to at least
51% of the Voting Rights, or if the Trustee does not receive such direction from such
Certificateholders, then at the written direction of Residential Funding.
(e) The Swap Account shall be an Eligible Account. Amounts held in the Swap Account from
time to time shall continue to constitute assets of the Trust Fund, but not of the REMICs,
until released from the Swap Account pursuant to this Section 4.10. The Swap Account
constitutes an "outside reserve fund" within the meaning of Treasury
Regulation Section 1.860G-2(h) and is not an asset of the REMICs. The Class SB
Certificateholders shall be the owners of the Swap Account. The Trustee shall keep records
that accurately reflect the funds on deposit in the Swap Account. The Trustee shall, at the
written direction of the Master Servicer, invest amounts on deposit in the Swap Account in
Permitted Investments. In the absence of written direction to the Trustee from the Master
Servicer, all funds in the Swap Account shall remain uninvested.
(f) The Trustee and the Master Servicer shall treat the holders of each Class of
Certificates (other than the Class SB Certificates and Class R Certificates) as having
entered into a notional principal contract (the "SB-AM Swap Agreement") with the holders of
the Class SB Certificates. Pursuant to each such notional principal contract, all holders
of Certificates (other than the Class SB Certificates and Class R Certificates) shall be
treated as having agreed to pay, on each Distribution Date, to the holder of the Class SB
Certificates an aggregate amount equal to the excess, if any, of (i) the amount payable on
such Distribution Date on the REMIC III Regular Interest corresponding to such Class of
Certificates over (ii) the amount payable on such Class of Certificates on such Distribution
Date (such excess, a "Class IO Distribution Amount"). In addition, pursuant to such
notional principal contract, the holder of the Class SB Certificates shall be treated as
having agreed to pay the related Basis Risk Shortfalls to the holders of the Certificates
(other than the Class SB Certificates and Class R Certificates) in accordance with the terms
of this Agreement. Any payments to the Certificates from amounts deemed received in respect
of this notional principal contract shall not be payments with respect to a "regular
interest" in a REMIC within the meaning of Code Section 860G(a)(1). However, any payment
from the Certificates (other than the Class SB Certificates and Class R Certificates) of a
Class IO Distribution Amount shall be treated for tax purposes as having been received by
the holders of such Certificates in respect of the REMIC III Regular Interest corresponding
to such Class of Certificates and as having been paid by such holders to the Swap Account
pursuant to the notional principal contract. Thus, each Certificate (other than the Class R
Certificates) shall be treated as representing not only ownership of regular interests in
REMIC III, but also ownership of an interest in, and obligations with respect to, a notional
principal contract.
(g) Upon the occurrence of an Early Termination Date, the Trustee shall use reasonable
efforts to appoint a successor swap counterparty. To the extent that the Trustee receives a
Swap Termination Payment from the Swap Counterparty, the Trustee shall apply such Swap
Termination Payment to appoint a successor swap counterparty. In the event that the trust
receives a Swap Termination Payment from the Swap Counterparty and a replacement swap
agreement or similar agreement cannot be obtained within 30 days after receipt by the
Trustee of such Swap Termination Payment, then the Trustee shall deposit such Swap
Termination Payment into a separate, non interest bearing account and will, on each
subsequent Distribution Date, withdraw from the amount then remaining on deposit in such
reserve account an amount equal to the Net Swap Payment, if any, that would have been paid
to the Trust by the original Swap Counterparty calculated in accordance with the terms of
the original Swap Agreement, and deposit such amount into the Swap Account for distribution
on such Distribution Date pursuant to Section 4.02(c). To the extent that the Trust is
required to pay a Swap Termination Payment to the Swap Counterparty, any upfront payment
received from the counterparty to a replacement swap agreement will be used to pay such Swap
Termination Payment prior to using any portion of the Available Distribution Amount for such
Distribution Date.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Class A Certificates, Class M Certificates, Class B Certificates, Class SB
Certificates and Class R Certificates shall be substantially in the forms set forth in
Exhibits A, X-0, X-0, C and D, respectively, and shall, on original issue, be executed and
delivered by the Trustee to the Certificate Registrar for authentication and delivery to or
upon the order of the Depositor upon receipt by the Trustee or one or more Custodians of the
documents specified in Section 2.01. Each class of Class A Certificates and Class M
Certificates shall be issuable in minimum dollar denominations of $100,000 and integral
multiples of $1 in excess thereof. The Class B Certificates shall be issuable in minimum
dollar denominations of $250,000 and integral multiples of $1 in excess thereof. The
Class SB Certificates shall be issuable in registered, certificated form in minimum
percentage interests of 5.00% and integral multiples of 0.01% in excess thereof. Each
Class of Class R Certificates shall be issued in registered, certificated form in minimum
percentage interests of 20.00% and integral multiples of 0.01% in excess thereof; provided,
however, that one Class R Certificate of each Class will be issuable to the REMIC
Administrator as "tax matters person" pursuant to Section 10.01(c) in a minimum denomination
representing a Percentage Interest of not less than 0.01%. The Certificates shall be
executed by manual or facsimile signature on behalf of an authorized officer of the
Trustee. Certificates bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Trustee shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the authentication
and delivery of such Certificate or did not hold such offices at the date of such
Certificates. No Certificate shall be entitled to any benefit under this Agreement, or be
valid for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by the Certificate
Registrar by manual signature, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their authentication.
(b) (i) The Class A Certificates, Class M Certificates and Class B Certificates shall
initially be issued as one or more Certificates registered in the name of the Depository or
its nominee and, except as provided below, registration of such Certificates, may not be
transferred by the Trustee except to another Depository that agrees to hold such
Certificates for the respective Certificate Owners with Ownership Interests therein. The
Certificate Owners shall hold their respective Ownership Interests in and to each Class A
Certificate, Class M Certificate and, to the extent applicable, Class B Certificate through
the book-entry facilities of the Depository and, except as provided below, shall not be
entitled to Definitive Certificates in respect of such Ownership Interests. All transfers
by Certificate Owners of their respective Ownership Interests in the Book-Entry Certificates
shall be made in accordance with the procedures established by the Depository Participant or
brokerage firm representing such Certificate Owner. Each Depository Participant shall
transfer the Ownership Interests only in the Book-Entry Certificates of Certificate Owners
it represents or of brokerage firms for which it acts as agent in accordance with the
Depository's normal procedures. The Class B Certificates sold to Non-United States Persons
in off-shore transactions in reliance on Regulation S (i) during the Distribution Compliance
Period, shall be represented by a global certificate in definitive, fully registered form
without interest coupons (the "Temporary Regulation S Class B Certificates"), (ii) after the
Distribution Compliance Period, shall be represented by a global certificate in definitive,
fully registered form without interest coupons (the "Permanent Regulation S Class B
Certificates") or (iii) at any time, shall be represented by a certificated security in
definitive, fully registered form (the "Regulation S Definitive Class B Certificate"). The
Regulation S Global Class B Certificate shall be deposited on behalf of the subscribers for
the Class B Certificates represented thereby with the Trustee as custodian for, and
registered in the name of a nominee of, the Depository for the respective accounts of
Euroclear and Clearstream. The aggregate principal amount of the Regulation S Global Class
B Certificate may from time to time be increased or decreased by adjustments made on the
records of the Trustee or the Depository or its nominee, as the case may be, as hereinafter
provided. The Class B Certificates initially sold to United States Persons that are
Accredited Investors shall each be issued initially in definitive form (a "Definitive U.S.
Class B Certificate"). The Class B Certificates initially sold to United States Persons that
are Qualified Institutional Buyers shall be shall be represented by a global security in
definitive, fully registered form (the "Rule 144A Class B Certificate"), which shall be
deposited on behalf of the subscribers for the Class B Certificates represented thereby with
the Trustee as custodian for, and registered in the name of a nominee of, the Depository or
in the form of a Definitive U.S Class B Certificate. The aggregate principal amount of the
Rule 144A Global Class B Certificates may from time to time be increased or decreased by
adjustments made on the records of the Trustee or the Depository or its nominee, as the case
may be, as hereinafter provided.
(ii) The Trustee, the Master Servicer and the Depositor may for all purposes (including
the making of payments due on the respective Classes of Book-Entry Certificates) deal with
the Depository as the authorized representative of the Certificate Owners with respect to
the respective Classes of Book-Entry Certificates for purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to the
respective Classes of Book-Entry Certificates shall be limited to those established by law
and agreements between such Certificate Owners and the Depository Participants and brokerage
firms representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of any Class of Book-Entry Certificates with respect to
any particular matter shall not be deemed inconsistent if they are made with respect to
different Certificate Owners. The Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by Certificateholders and shall
give notice to the Depository of such record date.
(iii) If with respect to any Book-Entry Certificate (i)(A) the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository with respect to such Book-Entry Certificate and (B) the
Depositor is unable to locate a qualified successor, or (ii) (A) the Depositor at its option
advises the Trustee in writing that it elects to terminate the book-entry system for such
Book-Entry Certificate through the Depository and (B) upon receipt of notice from the
Depository of the Depositor's election to terminate the book-entry system for such
Book-Entry Certificate, the Depository Participants holding beneficial interests in such
Book-Entry Certificates agree to initiate such termination, the Trustee shall notify all
Certificate Owners of such Book-Entry Certificate, through the Depository, of the occurrence
of any such event and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Book-Entry Certificates by the
Depository, accompanied by registration instructions from the Depository for registration of
transfer, the Trustee shall issue the Definitive Certificates.
(iv) In addition, if an Event of Default has occurred and is continuing, each Certificate
Owner materially adversely affected thereby may at its option request a Definitive
Certificate evidencing such Certificate Owner's Percentage Interest in the related Class of
Certificates. In order to make such request, such Certificate Owner shall, subject to the
rules and procedures of the Depository, provide the Depository or the related Depository
Participant with directions for the Certificate Registrar to exchange or cause the exchange
of the Certificate Owner's interest in such Class of Certificates for an equivalent
Percentage Interest in fully registered definitive form. Upon receipt by the Certificate
Registrar of instructions from the Depository directing the Certificate Registrar to effect
such exchange (such instructions to contain information regarding the Class of Certificates
and the Certificate Principal Balance being exchanged, the Depository Participant account to
be debited with the decrease, the registered holder of and delivery instructions for the
Definitive Certificate, and any other information reasonably required by the Certificate
Registrar), (i) the Certificate Registrar shall instruct the Depository to reduce the
related Depository Participant's account by the aggregate Certificate Principal Balance of
the Definitive Certificate, (ii) the Trustee shall execute and the Certificate Registrar
shall authenticate and deliver, in accordance with the registration and delivery
instructions provided by the Depository, a Definitive Certificate evidencing such
Certificate Owner's Percentage Interest in such Class of Certificates and (iii) the Trustee
shall execute and the Certificate Registrar shall authenticate a new Book-Entry Certificate
reflecting the reduction in the aggregate Certificate Principal Balance of such Class of
Certificates by the amount of the Definitive Certificates.
(v) Class B Certificates initially sold to Non-United States Persons in "offshore
transactions" (within the meaning of Regulation S) will be represented by Temporary
Regulation S Global Class B Certificates. The Trustee shall hold such Certificates on
behalf of the subscribers for such Certificates for the Depository, registered in the name
of a nominee of the Depository for the accounts of each of the Clearance Systems, for credit
by the Clearance Systems to the respective accounts designated by the subscribers of such
Certificates (or to such other accounts as they may direct) at each of the Clearance
Systems. The Temporary Regulation S Global Class B Certificates shall be exchanged for
interests in the Permanent Regulation S Global Class B Certificates as set forth below.
Upon the termination of the Distribution Compliance Period, the Trustee shall
cause each Temporary Regulation S Class B Certificate to be exchanged, in whole or in part
from time to time, for a Permanent Regulation S Global Class B Certificate in an equal
aggregate principal amount; provided that (i) the Trustee receives a certificate
substantially in the form set forth in Exhibit W attached hereto, and signed by the
respective Clearance System as to the portions of each Temporary Regulation S Global Class B
Certificate held for the respective accounts of such Clearance System, that it has received
from each beneficial owner of the portion of each Temporary Regulation S Global Class B
Certificate then to be exchanged, written certification substantially to the effect set
forth in Exhibit V attached hereto, with such changes therein as shall be approved by the
Issuer and (ii) the Trustee and any Paying Agent do not have a United States address as the
address for payment to any beneficial owner of the Permanent Regulation S Global Class B
Certificate issuable upon such exchange. Notwithstanding the foregoing, in the event of
redemption in whole or acceleration of all or any part of the Class B Certificates prior to
the termination of the Distribution Compliance Period, the Permanent Regulation S Global
Class B Certificates will not be issuable in respect of the Temporary Regulation S Global
Class B Certificates or portion thereof, and payment thereon will be made as provided in the
Temporary Regulation S Global Class B Certificates.
(vi) None of the Depositor, the Master Servicer or the Trustee shall be liable for any
actions taken by the Depository or its nominee, including, without limitation, any delay in
delivery of any instructions required under this Section 5.01 and may conclusively rely on,
and shall be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee and the Master Servicer shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
(c) Each of the Certificates is intended to be a "security" governed by Article 8 of the
Uniform Commercial Code as in effect in the State of New York and any other applicable
jurisdiction, to the extent that any of such laws may be applicable.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or agencies to be appointed
by the Trustee in accordance with the provisions of Section 8.12 a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee is initially appointed Certificate Registrar for the purpose
of registering Certificates and transfers and exchanges of Certificates as herein provided.
The Certificate Registrar, or the Trustee, shall provide the Master Servicer with a
certified list of Certificateholders as of each Record Date prior to the related
Determination Date.
(b) Upon surrender for registration of transfer of any Certificate at any office or
agency of the Trustee maintained for such purpose pursuant to Section 8.12 and, in the case
of any Class SB Certificate or Class R Certificate, upon satisfaction of the conditions set
forth below, the Trustee shall execute and the Certificate Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more new
Certificates of a like Class and aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be exchanged for other
Certificates of authorized denominations of a like Class and aggregate Percentage Interest,
upon surrender of the Certificates to be exchanged at any such office or agency. Whenever
any Certificates are so surrendered for exchange the Trustee shall execute and the
Certificate Registrar shall authenticate and deliver the Certificates of such Class which
the Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the Trustee or
the Certificate Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(d) (i) No transfer, sale, pledge or other disposition of a Class B Certificate,
Class SB Certificate or Class R Certificate shall be made unless such transfer, sale, pledge
or other disposition is exempt from the registration requirements of the Securities Act, and
any applicable state securities laws or is made in accordance with said Act and laws.
(ii) Except as otherwise provided in this Section 5.02(d), in the event that a transfer of
a Definitive Class B Certificate, Class SB Certificate or Class R Certificate is to be made,
(i) unless the Depositor directs the Trustee otherwise, the Trustee shall require a written
Opinion of Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an expense of the
Trustee, the Trust Fund, the Depositor or the Master Servicer, and (ii) the Trustee shall
require the transferee to execute a representation letter, substantially in the form of
Exhibit I hereto, and the Trustee shall require the transferor to execute a representation
letter, substantially in the form of Exhibit J hereto, each acceptable to and in form and
substance satisfactory to the Depositor and the Trustee certifying to the Depositor and the
Trustee the facts surrounding such transfer, which representation letters shall not be an
expense of the Trustee, the Trust Fund, the Depositor or the Master Servicer. In lieu of
the requirements set forth in the preceding sentence, Class SB Certificates or Class R
Certificates may be made in accordance with this Section 5.02(d) if the prospective
transferee of such a Certificate provides the Trustee and the Master Servicer with an
investment letter substantially in the form of Exhibit N-1 attached hereto, which investment
letter shall not be an expense of the Trustee, the Depositor, or the Master Servicer, and
which investment letter states that, among other things, such transferee (i) is a Qualified
Institutional Buyer, acting for its own account or the accounts of other Qualified
Institutional Buyer, and (ii) is aware that the proposed transferor intends to rely on the
exemption from registration requirements under the Securities Act provided by Rule 144A.
(iii) No transfer, sale, pledge or other disposition of a Class B Certificate shall be made
unless such transfer is made in accordance with the following provisions:
(A) Rule 144A Global Class B Certificate or Definitive Class B Certificate to Permanent
Regulation S Global Class B Certificate. If the owner of a beneficial interest in a Rule
144A Global Class B Certificate deposited with the Depository or the Holder of a Definitive
Class B Certificate after the Distribution Compliance Period wishes at any time to exchange
its interest in the Rule 144A Global Class B Certificate or Definitive Class B Certificate
for an interest in the corresponding Permanent Regulation S Global Class B Certificate, or
to transfer its interest in the Rule 144A Global Class B Certificate or Definitive Class B
Certificate to a person who wishes to take delivery of it in the form of an interest in the
corresponding Permanent Regulation S Global Class B Certificate, such owner or Holder may
exchange or transfer the interest for an equivalent beneficial interest in the corresponding
Permanent Regulation S Global Class B Certificate (subject, in the case of the Rule 144A
Global Class B Certificate, to Applicable Procedures) if such owner or Holder after the
exchange or proposed transferee after the transfer is not a United States Person. In the
case of the transfer of (x) a Rule 144A Global Class B Certificate, the Trustee shall
instruct the Depository to reduce the principal amount of the Rule 144A Global Class B
Certificate and to increase the principal amount of the Permanent Regulation S Global Class
B Certificate by the aggregate principal amount of the beneficial interest in the Rule 144A
Global Class B Certificate to be exchanged (but such exchange shall not be for less than the
minimum denomination applicable to such Class B Certificates) and to credit to the
securities account of the person specified in the instructions a beneficial interest in the
corresponding Regulation S Global Class B Certificate equal to the reduction in the
principal amount of the Rule 144A Global Class B Certificate and (y) a Definitive Class B
Certificate, the Trustee will exchange such Definitive Class B Certificate (and note such
cancellation or reduction in the Certificate Register) for the remaining untransferred
principal amount of or cancel, as applicable, such Definitive Class B Certificate, and the
Trustee shall instruct the Depository to (1) increase the principal amount of the Permanent
Regulation S Global Class B Certificate by the aggregate principal amount of the Definitive
Class B Certificate to be exchanged, and (2) credit to the securities account of the person
specified in the instructions a beneficial interest in the corresponding Regulation S Global
Class B Certificate equal to the reduction or cancellation in the principal amount of the
Definitive Class B Certificate, in each case upon receipt by the Trustee of a (i) a written
order in accordance with the Applicable Procedures containing information regarding the
Euroclear or Clearstream account to be credited with the increase in the Permanent
Regulation S Global Class B Certificate and the name of such account, (ii) a certificate in
the form of Exhibit N-3 given by the transferor, and (iii) a certificate in the form of
Exhibit N-4 given by the proposed transferee.
(B) Rule 144A Global Class B Certificate or Definitive Class B Certificate to Temporary
Regulation S Global Class B Certificate. If the owner of a beneficial interest in a Rule
144A Global Class B Certificate deposited with the Depository or a Holder of a Definitive
Class B Certificate during the Distribution Compliance Period wishes at any time to exchange
its interest in the Rule 144A Global Class B Certificate or Definitive Class B Certificate
during the Distribution Compliance Period for an interest in the corresponding Temporary
Regulation S Global Class B Certificate, or to transfer its interest in the Rule 144A Global
Class B Certificate or Definitive Class B Certificate to a person who wishes to take
delivery of it in the form of an interest in the corresponding Temporary Regulation S Global
Class B Certificate, the owner or Holder may exchange or transfer the interest for an
equivalent beneficial interest in the corresponding Regulation S Global Class B Certificate
(subject, in the case of the Rule 144A Global Class B Certificate, to Applicable Procedures
if the owner or Holder after the exchange or the proposed transferee after the transfer is
not a United States Person. In the case of the transfer of (x) a Rule 144A Global Class B
Certificate, the Trustee shall instruct the Depository to reduce the principal amount of the
Rule 144A Global Class B Certificate and to increase the principal amount of the Temporary
Regulation S Global Class B Certificate by the aggregate principal amount of the beneficial
interest in the Rule 144A Global Class B Certificate to be exchanged (but such exchange
shall not be for less than the minimum denomination applicable to such Class B Certificates)
and to credit to the securities account of the person specified in the instructions a
beneficial interest in the corresponding Regulation S Global Class B Certificate equal to
the reduction in the principal amount of the Rule 144A Global Class B Certificate and (y) a
Definitive Class B Certificate, the Trustee will exchange such Definitive Class B
Certificate (and note such cancellation or reduction in the Certificate Register) for the
remaining untransferred principal amount of or cancel, as applicable, such Definitive Class
B Certificate, and the Trustee shall instruct the Depository to increase the principal
amount of the Temporary Regulation S Global Class B Certificate by the aggregate principal
amount of the Definitive Class B Certificate to be exchanged, and to credit to the
securities account of the person specified in the instructions a beneficial interest in the
corresponding Temporary Regulation S Global Class B Certificate equal to the reduction or
cancellation in the principal amount of the Definitive Class B Certificate, in each case
upon receipt by the Trustee of a (i) a written order in accordance with the Applicable
Procedures containing information regarding the Euroclear or Clearstream account to be
credited with the increase in the Temporary Regulation S Global Class B Certificate and the
name of such account, (ii) a certificate in the form of N-3 given by the transferor, and
(iii) a certificate in the form of Exhibit N-4 given by the proposed transferee.
Notwithstanding anything else in this Section 5.02(d)(iii)(B), prior to the end of the
Distribution Compliance Period, a Rule 144A Global Class B Certificate or Definitive Class B
Certificate may only be exchanged or transferred for an equivalent beneficial interest in
the corresponding Temporary Regulation S Class B Global Certificate.
(C) Regulation S Global Class B Certificate or Definitive Class B Certificate to Rule
144A Global Class B Certificate. If the owner of a beneficial interest in a Regulation S
Global Class B Certificate or the Holder of a Definitive Class B Certificate wishes at any
time to exchange its interest in the Regulation S Global Class B Certificate or Definitive
Class B Certificate for an interest in the corresponding Rule 144A Global Class B
Certificate or to transfer its interest in the Regulation S Global Class B Certificate or
Definitive Class B Certificate to a person who wishes to take delivery of it in the form of
an interest in the corresponding Rule 144A Global Class B Certificate, the owner or Holder
may exchange or transfer, or cause the exchange or transfer of, the interest for an
equivalent beneficial interest in the corresponding Rule 144A Global Class B Certificate
(subject, in the case of a Regulation S Global Class B Certificate, to Applicable
Procedures) if the owner or Holder after the exchange or the proposed transferee after the
transfer is a Qualified Institutional Buyer. In the case of a transfer of (x) a Regulation
S Global Class B Certificate, the Trustee shall instruct Euroclear, Clearstream, or the
Depository, as the case may be, to reduce the principal amount of the Regulation S Global
Class B Certificate and increase the principal amount of the Rule 144A Global Class B
Certificate by the aggregate principal amount of the beneficial interest in the Regulation S
Global Class B Certificate to be exchanged (but such exchange shall not be for less than the
minimum denomination applicable to such Class B Certificates) and to credit to the
securities account of the person specified in the instructions a beneficial interest in the
corresponding Rule 144A Global Class B Certificate equal to the reduction in the principal
amount of the Regulation S Global Class B Certificate and (y) a Definitive Class B
Certificate, the Trustee will exchange such Definitive Class B Certificate for the remaining
untransferred principal amount of or cancel, as applicable, such Definitive Class B
Certificate and the Trustee shall instruct the Depository to increase the principal amount
of the Rule 144A Global Class B Certificate by the aggregate principal amount of the
Definitive Class B Certificate to be exchanged, and to credit to the securities account of
the person specified in the instructions a beneficial interest in the corresponding Rule
144A Global Class B Certificate equal to the reduction or cancellation in the principal
amount of the Definitive Class B Certificate, in each case upon receipt by the Certificate
Registrar of (i) a certificate in the form of Exhibit N-6 given by the transferor if the
transferor is not a United States Person and (ii) a certificate in the form of Exhibit N-1
given by the proposed transferee.
(D) Global Class B Certificate or Definitive Class B Certificate to Definitive U.S. Class
B Certificate. If the owner of a beneficial interest in a Global Class B Certificate
deposited with the Depository, Euroclear or Clearstream, as applicable, or the Holder of a
Definitive Class B Certificate wishes at any time to exchange its interest in the Global
Class B Certificate or Definitive Class B Certificate for an interest in the corresponding
Definitive U.S. Class B Certificate or to transfer its interest in the corresponding
Definitive U.S. Class B Certificate, the Certificate Owner may exchange or transfer, or
cause the exchange or transfer of, the interest for an equivalent beneficial interest in a
corresponding Definitive U.S. Class B Certificate (subject, in the case of a Global Class B
Certificates, to the Applicable Procedures) if the Certificate Owner after the exchange or
the proposed transferee after the transfer is a Qualified Institutional Buyer or an
Accredited Investor. In the case of a transfer of (x) a Global Class B Certificate, the
Trustee shall instruct Euroclear, Clearstream, or the Depository, as the case may be, to
reduce the principal amount of the Global Class B Certificate and the Trustee shall
authenticate and deliver to the proposed transferee the Definitive U.S. Class B Certificate
specified in the transferor's instructions in an aggregate principal amount equal to such
reduction in the principal amount of the Global Class B Certificate and note the issuance,
principal amount and registered holder of such Definitive U.S. Class B Certificate in the
Certificate Register and (y) a Definitive Class B Certificate, the Trustee will exchange
such Definitive Class B Certificate for the remaining untransferred principal amount of or
cancel, as applicable, such Definitive Class B Certificate presented for transfer or
exchange (and note such cancellation or reduction in the Certificate Register) and the
Trustee shall authenticate and deliver to the proposed transferee the Definitive U.S. Class
B Certificate specified in the transferor's instructions in an aggregate principal amount
equal to the portion of the principal amount of the physical Certificate presented for
transfer or exchange (and note the issuance, principal amount and registered holder of such
Definitive U.S. Class B Certificate in the Certificate Register), and, in the case of a
transfer in part, authenticate and deliver to the transferor a Definitive Class B
Certificate for any remaining portion of the principal amount of the Definitive Class B
Certificate presented for transfer of exchange, in each case upon receipt by the Certificate
Registrar of, (i) (A) a certificate in the form of Exhibit N-2 given by the transferor if
the transferor is a Qualified Institutional Buyer, or (B) a certificate in the form of
Exhibit N-6 given by the transferor if the transferor is a Non-United States Person, and
(ii) (A) a certificate in the form of Exhibit N-1 given by the proposed transferee if the
proposed transferee is a Qualified Institutional Buyer or (B) a certificate in the form of
Exhibit N-5 given by the proposed transferee if the proposed transferee is an Accredited
Investor.
(E) Global Class B Certificate or Definitive Class B Certificate to Regulation S
Definitive Class B Certificate. If the owner of a beneficial interest in a Global Class B
Certificate deposited with the Depository, Euroclear or Clearstream, as applicable, or the
Holder of a Definitive Class B Certificate wishes at any time to exchange its interest in
the Global Class B Certificate or Definitive Class B Certificate for an interest in the
corresponding Regulation S Definitive Class B Certificate or to transfer its interest in the
corresponding Regulation S Definitive Class B Certificate, the Certificate Owner may
exchange or transfer, or cause the exchange or transfer of, the interest for an equivalent
beneficial interest in a corresponding Regulation S Definitive Class B Certificate (subject,
in the case of a Global Class B Certificates, to the rules and procedures of Euroclear,
Clearstream, or the Depository, as the case may be) if the Certificate Owner after the
exchange or the proposed transferee after the transfer is not a United States Person. In
the case of a transfer of (x) a Global Class B Certificate, the Trustee shall instruct
Euroclear, Clearstream, or the Depository, as the case may be, to reduce the principal
amount of the Global Class B Certificate and the Trustee shall authenticate and deliver to
the transferee the Regulation S Definitive Class B Certificate specified in the transferor's
instructions in an aggregate principal amount equal to such reduction in the principal
amount of the Global Class B Certificate and note the issuance, principal amount and
registered holder of such Regulation S Definitive Class B Certificate in the Certificate
Register and (y) a Definitive Class B Certificate, the Trustee will exchange such Definitive
Class B Certificate for the remaining untransferred principal amount of or cancel, as
applicable, such Definitive Class B Certificate presented for transfer or exchange (and note
such cancellation or reduction in the Certificate Register) and the Trustee shall
authenticate and deliver to the transferee the Regulation S Definitive Class B Certificate
specified in the transferor's instructions in an aggregate principal amount equal to the
portion of the principal amount of the physical Certificate presented for transfer or
exchange (and note the issuance, principal amount and registered holder of such Regulation S
Definitive Class B Certificate in the Certificate Register), and, in the case of a transfer
in part, authenticate and deliver to the transferor a Definitive Class B Certificate for any
remaining portion of the principal amount of the Definitive Class B Certificate presented
for transfer of exchange, in each case upon receipt by the Trustee of (i) (A) a certificate
in the form of Exhibit N-2 given by the transferor if the transferor is a Qualified
Institutional Buyer, or (B) a certificate in the form of Exhibit N-6 given by the transferor
if the transferor is a Non-United States Person, and (ii) a certificate in the form of
Exhibit N-4 given by the proposed transferee.
(F) Temporary Regulation S Global Class B Certificate to Permanent Regulation S Global
Class B Certificate. On or after the Distribution Compliance Period, a Temporary Regulation
S Global Class B certificates may be exchanged for a corresponding Permanent Regulation S
Global Class B Certificate. Any such Permanent Regulation S Global Class B Certificate
shall be so issued and delivered in exchange for a Temporary Regulation S Global Class B
Certificate if there shall have been presented to the Trustee (i) a certification in the
form of Exhibit N-6 given by the transferor, and (ii) a certification in the form of Exhibit
N-4 given by the proposed transferee.
(iv) If any transfer of a Class B Certificate held by a transferor and to be held by a
transferee in book entry form is to be made without registration under the Securities Act,
the transferor shall be deemed to have made each of the applicable certifications in the
representation letters or certificates required pursuant to Section 5.02(d)(iii) as of the
transfer date and the transferee shall be deemed to have made each of the applicable
certifications in the representation letters or certificates required pursuant to Section
5.02(d)(iii) as of the transfer date, in each case as if such Class B Certificate were in
physical form.
(v) The Holder of a Class B Certificate, Class SB Certificate or Class R Certificate
desiring to effect any transfer, sale, pledge or other disposition shall, and does hereby
agree to, indemnify the Trustee, the Depositor, the Master Servicer and the Certificate
Registrar against any liability that may result if the transfer, sale, pledge or other
disposition is not so exempt or is not made in accordance with such federal and state laws
and this Agreement.
(e) In the case of any Certificate presented for registration in the name of any Person,
either (A) the Trustee shall require an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicer to the effect
that the purchase or holding of such Certificate is permissible under applicable law, will
not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA
or Section 4975 of the Code (or comparable provisions of any subsequent enactments), and
will not subject the Trustee, the Depositor or the Master Servicer to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of the Code) in
addition to those undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Trustee, the Depositor or the Master Servicer, or (B) the prospective
transferee shall be required to provide the Trustee, the Depositor and the Master Servicer
with a certification to the effect set forth in Exhibit P (with respect to a Class A
Certificate, Class M Certificate, Class B or Class SB Certificate, provided, however that
such certification shall be deemed to have been given by any Class A Certificate, Class M or
Class B Certificateholder who acquires a Book-Entry Certificate) or in paragraph fifteen of
Exhibit H-1 (with respect to a Class R Certificate), which the Trustee may rely upon without
further inquiry or investigation, or such other certifications as the Trustee may deem
desirable or necessary in order to establish that such transferee or the Person in whose
name such registration is requested is not an employee benefit plan or other plan or
arrangement subject to the prohibited transaction provisions of ERISA or Section 4975 of the
Code, or any Person (including an insurance company investing its general accounts, an
investment manager, a named fiduciary or a trustee of any such plan) who is using "plan
assets" of any such plan to effect such acquisition (each of the foregoing, a "Plan
Investor").
Any purported Certificate Owner whose acquisition or holding of any Certificate (or
interest therein) was effected in violation of the restrictions in this Section 5.02(e)
shall indemnify and hold harmless the Depositor, the Trustee, the Master Servicer, any
Subservicer, any underwriter and the Trust Fund from and against any and all liabilities,
claims, costs or expenses incurred by such parties as a result of such acquisition or
holding.
(f) (i) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership Interest to
have agreed to be bound by the following provisions and to have irrevocably authorized the
Trustee or its designee under clause (iii)(A) below to deliver payments to a Person other
than such Person and to negotiate the terms of any mandatory sale under clause (iii)(B)
below and to execute all instruments of transfer and to do all other things necessary in
connection with any such sale. The rights of each Person acquiring any Ownership Interest
in a Class R Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly notify the Trustee of
any change or impending change in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery to it, and shall not
register the Transfer of any Class R Certificate until its receipt of,
(I) an affidavit and agreement (a "Transfer Affidavit and
Agreement," in the form attached hereto as Exhibit H-1) from the proposed Transferee, in
form and substance satisfactory to the Master Servicer, representing and warranting, among
other things, that it is a Permitted Transferee, that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person who is not a Permitted Transferee, that for so long
as it retains its Ownership Interest in a Class R Certificate, it will endeavor to remain a
Permitted Transferee, and that it has reviewed the provisions of this Section 5.02(f) and
agrees to be bound by them, and
(II) a certificate, in the form attached hereto as
Exhibit H-2, from the Holder wishing to transfer the Class R Certificate, in form and
substance satisfactory to the Master Servicer, representing and warranting, among other
things, that no purpose of the proposed Transfer is to impede the assessment or collection
of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if a Responsible Officer of the
Trustee who is assigned to this Agreement has actual knowledge that the proposed Transferee
is not a Permitted Transferee, no Transfer of an Ownership Interest in a Class R Certificate
to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (x) to require a Transfer Affidavit and Agreement from any
other Person to whom such Person attempts to transfer its Ownership Interest in a Class R
Certificate and (y) not to transfer its Ownership Interest unless it provides a certificate
to the Trustee in the form attached hereto as Exhibit H-2.
(E) Each Person holding or acquiring an Ownership Interest in a
Class R Certificate, by purchasing an Ownership Interest in such Certificate, agrees to give
the Trustee written notice that it is a "pass-through interest holder" within the meaning of
Temporary Treasury Regulations Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Class R Certificate, if it is, or is holding an Ownership Interest
in a Class R Certificate on behalf of, a "pass-through interest holder."
(ii) The Trustee shall register the Transfer of any Class R Certificate only if it shall
have received the Transfer Affidavit and Agreement, a certificate of the Holder
requesting such transfer in the form attached hereto as Exhibit H-2 and all of such
other documents as shall have been reasonably required by the Trustee as a condition
to such registration. Transfers of the Class R Certificates to Non-United States
Persons and Disqualified Organizations (as defined in Section 860E(e)(5) of the Code)
are prohibited.
(A) If any Disqualified Organization shall become a holder of a
Class R Certificate, then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof retroactive to the
date of registration of such Transfer of such Class R Certificate. If a Non-United States
Person shall become a holder of a Class R Certificate, then the last preceding United States
Person shall be restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such Transfer of such Class R
Certificate. If a transfer of a Class R Certificate is disregarded pursuant to the
provisions of Treasury Regulations Section 1.860E-1 or Section 1.860G-3, then the last
preceding Permitted Transferee shall be restored, to the extent permitted by law, to all
rights and obligations as Holder thereof retroactive to the date of registration of such
Transfer of such Class R Certificate. The Trustee shall be under no liability to any Person
for any registration of Transfer of a Class R Certificate that is in fact not permitted by
this Section 5.02(f) or for making any payments due on such Certificate to the holder
thereof or for taking any other action with respect to such holder under the provisions of
this Agreement.
(B) If any purported Transferee shall become a Holder of a
Class R Certificate in violation of the restrictions in this Section 5.02(f) and to the
extent that the retroactive restoration of the rights of the Holder of such Class R
Certificate as described in clause (iii)(A) above shall be invalid, illegal or
unenforceable, then the Master Servicer shall have the right, without notice to the holder
or any prior holder of such Class R Certificate, to sell such Class R Certificate to a
purchaser selected by the Master Servicer on such terms as the Master Servicer may choose.
Such purported Transferee shall promptly endorse and deliver each Class R Certificate in
accordance with the instructions of the Master Servicer. Such purchaser may be the Master
Servicer itself or any Affiliate of the Master Servicer. The proceeds of such sale, net of
the commissions (which may include commissions payable to the Master Servicer or its
Affiliates), expenses and taxes due, if any, will be remitted by the Master Servicer to such
purported Transferee. The terms and conditions of any sale under this clause (iii)(B) shall
be determined in the sole discretion of the Master Servicer, and the Master Servicer shall
not be liable to any Person having an Ownership Interest in a Class R Certificate as a
result of its exercise of such discretion.
(iii) The Master Servicer, on behalf of the Trustee, shall make available, upon written
request from the Trustee, all information necessary to compute any tax imposed
(A) as a result of the Transfer of an Ownership Interest in a
Class R Certificate to any Person who is a Disqualified Organization, including the
information regarding "excess inclusions" of such Class R Certificates required to be
provided to the Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and
(B) as a result of any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a Class R Certificate having as
among its record holders at any time any Person who is a Disqualified Organization.
Reasonable compensation for providing such information may be required by the Master
Servicer from such Person.
(iv) The provisions of this Section 5.02(f) set forth prior to this clause (iv) may be
modified, added to or eliminated, provided that there shall have been delivered to
the Trustee the following:
(A) written notification from each Rating Agency to the effect
that the modification, addition to or elimination of such provisions will not cause such
Rating Agency to downgrade its then-current ratings, if any, of the Class A Certificates or
Class M Certificates below the lower of the then-current rating or the rating assigned to
such Certificates as of the Closing Date by such Rating Agency; and
(B) a certificate of the Master Servicer stating that the Master
Servicer has received an Opinion of Counsel, in form and substance satisfactory to the
Master Servicer, to the effect that such modification, addition to or absence of such
provisions will not cause any REMIC created hereunder to cease to qualify as a REMIC and
will not cause (x) any REMIC created hereunder to be subject to an entity-level tax caused
by the Transfer of any Class R Certificate to a Person that is a Disqualified Organization
or (y) a Certificateholder or another Person to be subject to a REMIC-related tax caused by
the Transfer of a Class R Certificate to a Person that is not a Permitted Transferee.
(g) No service charge shall be made for any transfer or exchange of Certificates of any
Class, but the Trustee may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or exchange of
Certificates.
(h) All Certificates surrendered for transfer and exchange shall be destroyed by the
Certificate Registrar.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate Registrar, or the
Trustee and the Certificate Registrar receive evidence to their satisfaction of the
destruction, loss or theft of any Certificate, and (ii) there is delivered to the Trustee
and the Certificate Registrar such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser, the Trustee
shall execute and the Certificate Registrar shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like tenor, Class and Percentage Interest but bearing a number not contemporaneously
outstanding. Upon the issuance of any new Certificate under this Section, the Trustee may
require the payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees and expenses
of the Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer, the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Trustee or the Certificate Registrar may treat the
Person in whose name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 4.02 and for all other purposes
whatsoever, except as and to the extent provided in the definition of "Certificateholder,"
and neither the Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor
any agent of the Depositor, the Master Servicer, the Trustee or the Certificate Registrar
shall be affected by notice to the contrary except as provided in Section 5.02(f).
Section 5.05. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making distributions to
Certificateholders pursuant to Section 4.02. In the event of any such appointment, on or
prior to each Distribution Date the Master Servicer on behalf of the Trustee shall deposit
or cause to be deposited with the Paying Agent a sum sufficient to make the payments to
Certificateholders in the amounts and in the manner provided for in Section 4.02, such sum
to be held in trust for the benefit of Certificateholders. The Trustee shall cause each
Paying Agent to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by it for the
payment to Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. Any sums so held by such
Paying Agent shall be held only in Eligible Accounts to the extent such sums are not
distributed to the Certificateholders on the date of receipt by such Paying Agent.
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
Section 6.01. Respective Liabilities of the Depositor and the Master Servicer.
The Depositor and the Master Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon and
undertaken by the Depositor and the Master Servicer herein. By way of illustration and not
limitation, the Depositor is not liable for the servicing and administration of the Mortgage
Loans, nor is it obligated by Section 7.01 or Section 10.01 to assume any obligations of the
Master Servicer or to appoint a designee to assume such obligations, nor is it liable for
any other obligation hereunder that it may, but is not obligated to, assume unless it elects
to assume such obligation in accordance herewith.
Section 6.02. Merger or Consolidation of the Depositor or the Master Servicer; Assignment of
Rights and Delegation of Duties by Master Servicer.
(a) The Depositor and the Master Servicer shall each keep in full effect its existence,
rights and franchises as a corporation under the laws of the state of its incorporation, and
will each obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
(b) Any Person into which the Depositor or the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to which the
Depositor or the Master Servicer shall be a party, or any Person succeeding to the business
of the Depositor or the Master Servicer, shall be the successor of the Depositor or the
Master Servicer, as the case may be, hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to the Master
Servicer shall be qualified to service mortgage loans on behalf of Xxxxxx Xxx or Xxxxxxx
Mac; and provided further that each Rating Agency's ratings, if any, of any Class of Class A
Certificates, Class M Certificates and Class B Certificates in effect immediately prior to
such merger or consolidation will not be qualified, reduced or withdrawn as a result thereof
(as evidenced by a letter to such effect from each Rating Agency).
(c) Notwithstanding anything else in this Section 6.02 and Section 6.04 to the contrary,
the Master Servicer may assign its rights and delegate its duties and obligations under this
Agreement; provided that the Person accepting such assignment or delegation shall be a
Person which is qualified to service mortgage loans on behalf of Xxxxxx Mae or Xxxxxxx Mac,
is reasonably satisfactory to the Trustee and the Depositor, is willing to service the
Mortgage Loans and executes and delivers to the Depositor and the Trustee an agreement, in
form and substance reasonably satisfactory to the Depositor and the Trustee, which contains
an assumption by such Person of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Master Servicer under this
Agreement; provided further that each Rating Agency's rating of the Classes of Certificates
that have been rated in effect immediately prior to such assignment and delegation will not
be qualified, reduced or withdrawn as a result of such assignment and delegation (as
evidenced by a letter to such effect from each Rating Agency). In the case of any such
assignment and delegation, the Master Servicer shall be released from its obligations under
this Agreement, except that the Master Servicer shall remain liable for all liabilities and
obligations incurred by it as Master Servicer hereunder prior to the satisfaction of the
conditions to such assignment and delegation set forth in the next preceding sentence.
Notwithstanding the foregoing, in the event of a pledge or assignment by the Master Servicer
solely of its rights to purchase all assets of the Trust Fund under Section 9.01(a) (or, if
so specified in Section 9.01(a), its rights to purchase the Mortgage Loans and property
acquired related to such Mortgage Loans or its rights to purchase the Certificates related
thereto), the provisos of the first sentence of this paragraph will not apply.
Section 6.03. Limitation on Liability of the Depositor, the Master Servicer and Others.
None of the Depositor, the Master Servicer or any of the directors, officers,
employees or agents of the Depositor or the Master Servicer shall be under any liability to
the Trust Fund or the Certificateholders for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the Master Servicer
or any such Person against any breach of warranties, representations or covenants made
herein or any liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Master Servicer and any
director, officer, employee or agent of the Depositor or the Master Servicer may rely in
good faith on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Depositor, the Master Servicer and any
director, officer, employee or agent of the Depositor or the Master Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties hereunder. Neither the Depositor nor
the Master Servicer shall be under any obligation to appear in, prosecute or defend any
legal or administrative action, proceeding, hearing or examination that is not incidental to
its respective duties under this Agreement and which in its opinion may involve it in any
expense or liability; provided, however, that the Depositor or the Master Servicer may in
its discretion undertake any such action, proceeding, hearing or examination that it may
deem necessary or desirable in respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such event, the
legal expenses and costs of such action, proceeding, hearing or examination and any
liability resulting therefrom shall be expenses, costs and liabilities of the Trust Fund,
and the Depositor and the Master Servicer shall be entitled to be reimbursed therefor out of
amounts attributable to the Mortgage Loans on deposit in the Custodial Account as provided
by Section 3.10 and, on the Distribution Date(s) following such reimbursement, the aggregate
of such expenses and costs shall be allocated in reduction of the Accrued Certificate
Interest on each Class entitled thereto in the same manner as if such expenses and costs
constituted a Prepayment Interest Shortfall.
Section 6.04. Depositor and Master Servicer Not to Resign.
Subject to the provisions of Section 6.02, neither the Depositor nor the Master
Servicer shall resign from its respective obligations and duties hereby imposed on it except
upon determination that its duties hereunder are no longer permissible under applicable
LAW. Any such determination permitting the resignation of the Depositor or the Master
Servicer shall be evidenced by an Opinion of Counsel (at the expense of the resigning party)
to such effect delivered to the Trustee. No such resignation by the Master Servicer shall
become effective until the Trustee or a successor servicer shall have assumed the Master
Servicer's responsibilities and obligations in accordance with Section 7.02.
ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
Event of Default, wherever used herein, means any one of the following events
(whatever reason for such Event of Default and whether it shall be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(i) the Master Servicer shall fail to distribute or cause to be distributed to Holders of
Certificates of any Class any distribution required to be made under the terms of the
Certificates of such Class and this Agreement and, in either case, such failure shall
continue unremedied for a period of 5 days after the date upon which written notice
of such failure, requiring such failure to be remedied, shall have been given to the
Master Servicer by the Trustee or the Depositor or to the Master Servicer, the
Depositor and the Trustee by the Holders of Certificates of such Class evidencing
Percentage Interests aggregating not less than 25%; or
(ii) the Master Servicer shall fail to observe or perform in any material respect any
other of the covenants or agreements on the part of the Master Servicer contained in
the Certificates of any Class or in this Agreement and such failure shall continue
unremedied for a period of 30 days (except that such number of days shall be 15 in
the case of a failure to pay the premium for any Required Insurance Policy) after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Trustee or the Depositor, or to
the Master Servicer, the Depositor and the Trustee by the Holders of Certificates of
any Class evidencing, as to such Class, Percentage Interests aggregating not less
than 25%; or
(iii) a decree or order of a court or agency or supervisory authority having jurisdiction
in the premises in an involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or appointing a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Master Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days; or
(iv) the Master Servicer shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings of, or relating to, the Master Servicer or of, or
relating to, all or substantially all of the property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of, or commence a voluntary
case under, any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its obligations;
or
(vi) the Master Servicer shall notify the Trustee pursuant to Section 4.04(b) that it is
unable to deposit in the Certificate Account an amount equal to the Advance.
If an Event of Default described in clauses (i)-(v) of this Section shall occur,
then, and in each and every such case, so long as such Event of Default shall not have been
remedied, either the Depositor or the Trustee shall at the direction of Holders of
Certificates entitled to at least 51% of the Voting Rights by notice in writing to the
Master Servicer (and to the Depositor if given by the Trustee or to the Trustee if given by
the Depositor), terminate all of the rights and obligations of the Master Servicer under
this Agreement and in and to the Mortgage Loans and the proceeds thereof, other than its
rights as a Certificateholder hereunder; provided, however, that a successor to the Master
Servicer is appointed pursuant to Section 7.02 and such successor Master Servicer shall have
accepted the duties of Master Servicer effective upon the resignation of the Master
SERVICER. If an Event of Default described in clause (vi) hereof shall occur, the Trustee
shall, by notice to the Master Servicer and the Depositor, immediately terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder as provided in Section 4.04(b). On or after the receipt by the Master Servicer of
such written notice, all authority and power of the Master Servicer under this Agreement,
whether with respect to the Certificates (other than as a Holder thereof) or the Mortgage
Loans or otherwise, shall subject to Section 7.02 pass to and be vested in the Trustee or
the Trustee's designee appointed pursuant to Section 7.02; and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect the purposes
of such notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. The Master Servicer
agrees to cooperate with the Trustee (or its designee) as successor Master Servicer in
effecting the termination of the Master Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee or its designee for
administration by it of all cash amounts which shall at the time be credited to the
Custodial Account or the Certificate Account or thereafter be received with respect to the
Mortgage Loans. No such termination shall release the Master Servicer for any liability
that it would otherwise have hereunder for any act or omission prior to the effective time
of such termination. Notwithstanding any termination of the activities of Residential
Funding in its capacity as Master Servicer hereunder, Residential Funding shall be entitled
to receive, out of any late collection of a Monthly Payment on a Mortgage Loan which was due
prior to the notice terminating Residential Funding's rights and obligations as Master
Servicer hereunder and received after such notice, that portion to which Residential Funding
would have been entitled pursuant to Sections 3.10(a)(ii), (vi) and (vii) as well as its
Servicing Fee in respect thereof, and any other amounts payable to Residential Funding
hereunder the entitlement to which arose prior to the termination of its activities
hereunder. Upon the termination of Residential Funding as Master Servicer hereunder the
Depositor shall deliver to the Trustee, as successor Master Servicer, a copy of the Program
Guide.
Section 7.02. Trustee or Depositor to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of termination pursuant
to Section 7.01 or resigns in accordance with Section 6.04, the Trustee or, upon notice to
the Depositor and with the Depositor's consent (which shall not be unreasonably withheld) a
designee (which meets the standards set forth below) of the Trustee, shall be the successor
in all respects to the Master Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Master Servicer
(except for the responsibilities, duties and liabilities contained in Sections 2.02 and
2.03(a), excluding the duty to notify related Subservicers as set forth in such Sections,
and its obligations to deposit amounts in respect of losses incurred prior to such notice or
termination on the investment of funds in the Custodial Account or the Certificate Account
pursuant to Sections 3.07(c) and 4.01(c) by the terms and provisions hereof); provided,
however, that any failure to perform such duties or responsibilities caused by the preceding
Master Servicer's failure to provide information required by Section 4.04 shall not be
considered a default by the Trustee hereunder as successor Master Servicer. As compensation
therefor, the Trustee as successor Master Servicer shall be entitled to all funds relating
to the Mortgage Loans which the Master Servicer would have been entitled to charge to the
Custodial Account or the Certificate Account if the Master Servicer had continued to act
hereunder and, in addition, shall be entitled to the income from any Permitted Investments
made with amounts attributable to the Mortgage Loans held in the Custodial Account or the
Certificate Account. If the Trustee has become the successor to the Master Servicer in
accordance with Section 6.04 or Section 7.01, then notwithstanding the above, the Trustee
may, if it shall be unwilling to so act, or shall, if it is unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any established housing and home
finance institution, which is also a Xxxxxx Xxx or Xxxxxxx Mac-approved mortgage servicing
institution, having a net worth of not less than $10,000,000 as the successor to the Master
Servicer hereunder in the assumption of all or any part of the responsibilities, duties or
liabilities of the Master Servicer hereunder. Pending appointment of a successor to the
Master Servicer hereunder, the Trustee shall become successor to the Master Servicer and
shall act in such capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of such successor
out of payments on Mortgage Loans as it and such successor shall agree; provided, however,
that no such compensation shall be in excess of that permitted the initial Master Servicer
hereunder. The Depositor, the Trustee, the Custodian and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any such
succession. Any successor Master Servicer appointed pursuant to this Section 7.02 shall not
receive a Servicing Fee with respect any Mortgage Loan not directly serviced by the Master
Servicer on which the Subservicing Fee (i) accrues at a rate of less than 0.50% per annum
and (ii) has to be increased to a rate of 0.50% per annum in order to hire a Subservicer.
The Master Servicer shall pay the reasonable expenses of the Trustee in connection with any
servicing transfer hereunder.
(b) In connection with the termination or resignation of the Master Servicer hereunder,
either (i) the successor Master Servicer, including the Trustee if the Trustee is acting as
successor Master Servicer, shall represent and warrant that it is a member of MERS in good
standing and shall agree to comply in all material respects with the rules and procedures of
MERS in connection with the servicing of the Mortgage Loans that are registered with MERS,
in which case the predecessor Master Servicer shall cooperate with the successor Master
Servicer in causing MERS to revise its records to reflect the transfer of servicing to the
successor Master Servicer as necessary under MERS' rules and regulations, or (ii) the
predecessor Master Servicer shall cooperate with the successor Master Servicer in causing
MERS to execute and deliver an assignment of Mortgage in recordable form to transfer the
Mortgage from MERS to the Trustee and to execute and deliver such other notices, documents
and other instruments as may be necessary or desirable to effect a transfer of such Mortgage
Loan or servicing of such Mortgage Loan on the MERS(R)System to the successor Master
SERVICER. The predecessor Master Servicer shall file or cause to be filed any such
assignment in the appropriate recording office. The predecessor Master Servicer shall bear
any and all fees of MERS, costs of preparing any assignments of Mortgage, and fees and costs
of filing any assignments of Mortgage that may be required under this subsection (b). The
successor Master Servicer shall cause such assignment to be delivered to the Trustee or the
Custodian promptly upon receipt of the original with evidence of recording thereon or a copy
certified by the public recording office in which such assignment was recorded.
Section 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to the Master Servicer, the
Trustee shall give prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register.
(b) Within 60 days after the occurrence of any Event of Default, the Trustee shall
transmit by mail to all Holders of Certificates and the Credit Risk Manager notice of each
such Event of Default hereunder known to the Trustee, unless such Event of Default shall
have been cured or waived as provided in Section 7.04 hereof.
Section 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights of Certificates affected
by a default or Event of Default hereunder may waive any default or Event of Default;
provided, however, that (a) a default or Event of Default under clause (i) of Section 7.01
may be waived only by all of the Holders of Certificates affected by such default or Event
of Default and (b) no waiver pursuant to this Section 7.04 shall affect the Holders of
Certificates in the manner set forth in Section 11.01(b)(i), (ii) or (iii). Upon any such
waiver of a default or Event of Default by the Holders representing the requisite percentage
of Voting Rights of Certificates affected by such default or Event of Default, such default
or Event of Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other default or Event
of Default or impair any right consequent thereon except to the extent expressly so waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and after the curing of
all Events of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. In case an Event of Default
has occurred (which has not been cured or waived), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise as a prudent investor would exercise or use under the circumstances in the
conduct of such investor's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments furnished to the Trustee which are
specifically required to be furnished pursuant to any provision of this Agreement, shall
examine them to determine whether they conform to the requirements of this Agreement. The
Trustee shall notify the Certificateholders of any such documents which do not materially
conform to the requirements of this Agreement in the event that the Trustee, after so
requesting, does not receive satisfactorily corrected documents. The Trustee shall forward
or cause to be forwarded in a timely fashion the notices, reports and statements required to
be forwarded by the Trustee pursuant to Sections 4.03, 7.03, and 10.01. The Trustee shall
furnish in a timely fashion to the Master Servicer such information as the Master Servicer
may reasonably request from time to time for the Master Servicer to fulfill its duties as
set forth in this Agreement. The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of each REMIC created
hereunder as a REMIC under the REMIC Provisions and (subject to Section 10.01(f)) to prevent
the imposition of any federal, state or local income, prohibited transaction, contribution
or other tax on the Trust Fund to the extent that maintaining such status and avoiding such
taxes are reasonably within the control of the Trustee and are reasonably within the scope
of its duties under this Agreement.
(c) No provision of this Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the curing or waiver of all
such Events of Default which may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties and obligations
as are specifically set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee by the Depositor or the Master
Servicer and which on their face, do not contradict the requirements of this
Agreement;
(ii) The Trustee shall not be personally liable for an error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to any action taken, suffered
or omitted to be taken by it in good faith in accordance with the direction of the
Certificateholders holding Certificates which evidence, Percentage Interests
aggregating not less than 25% of the affected Classes as to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be charged with knowledge of any default (other than a default
in payment to the Trustee) specified in clauses (i) and (ii) of Section 7.01 or an
Event of Default under clauses (iii), (iv) and (v) of Section 7.01 unless a
Responsible Officer of the Trustee assigned to and working in the Corporate Trust
Office obtains actual knowledge of such failure or event or the Trustee receives
written notice of such failure or event at its Corporate Trust Office from the Master
Servicer, the Depositor or any Certificateholder; and
(v) Except to the extent provided in Section 7.02, no provision in this Agreement shall
require the Trustee to expend or risk its own funds (including, without limitation,
the making of any Advance) or otherwise incur any personal financial liability in the
performance of any of its duties as Trustee hereunder, or in the exercise of any of
its rights or powers, if the Trustee shall have reasonable grounds for believing that
repayment of funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount of any and all federal,
state and local taxes imposed on the Trust Fund or its assets or transactions including,
without limitation, (A) "prohibited transaction" penalty taxes as defined in Section 860F of
the Code, if, when and as the same shall be due and payable, (B) any tax on contributions to
a REMIC after the Closing Date imposed by Section 860G(d) of the Code and (C) any tax on
"net income from foreclosure property" as defined in Section 860G(c) of the Code, but only if
such taxes arise out of a breach by the Trustee of its obligations hereunder, which breach
constitutes negligence or willful misconduct of the Trustee.
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may rely and shall be protected in acting or refraining from acting upon
any resolution, Officers' Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel, and any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any of the trusts or powers
vested in it by this Agreement or to institute, conduct or defend any litigation
hereunder or in relation hereto at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee of the obligation, upon
the occurrence of an Event of Default (which has not been cured), to exercise such of
the rights and powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent investor would exercise or use under
the circumstances in the conduct of such investor's own affairs;
(iv) The Trustee shall not be personally liable for any action taken, suffered or omitted
by it in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder and after the curing of all
Events of Default which may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do by the Holders
of Certificates of any Class evidencing, as to such Class, Percentage Interests,
aggregating not less than 50%; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such expense or
liability as a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer, if an Event of Default shall have
occurred and is continuing, and otherwise by the Certificateholder requesting the
investigation;
(vi) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys provided that the
Trustee shall remain liable for any acts of such agents or attorneys; and
(vii) To the extent authorized under the Code and the regulations promulgated thereunder,
each Holder of a Class R Certificate hereby irrevocably appoints and authorizes the
Trustee to be its attorney-in-fact for purposes of signing any Tax Returns required
to be filed on behalf of the Trust Fund. The Trustee shall sign on behalf of the
Trust Fund and deliver to the Master Servicer in a timely manner any Tax Returns
prepared by or on behalf of the Master Servicer that the Trustee is required to sign
as determined by the Master Servicer pursuant to applicable federal, state or local
tax laws, provided that the Master Servicer shall indemnify the Trustee for signing
any such Tax Returns that contain errors or omissions.
(b) Following the issuance of the Certificates (and except as provided for in
Section 2.04), the Trustee shall not accept any contribution of assets to the Trust Fund
unless (subject to Section 10.01(f)) it shall have obtained or been furnished with an
Opinion of Counsel to the effect that such contribution will not (i) cause any REMIC created
hereunder to fail to qualify as a REMIC at any time that any Certificates are outstanding or
(ii) cause the Trust Fund to be subject to any federal tax as a result of such contribution
(including the imposition of any federal tax on "prohibited transactions" imposed under
Section 860F(a) of the Code).
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the execution of
the Certificates and relating to the acceptance and receipt of the Mortgage Loans) shall be
taken as the statements of the Depositor or the Master Servicer as the case may be, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the Certificates
(except that the Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document, or of MERS or the MERS(R)
System. Except as otherwise provided herein, the Trustee shall not be accountable for the
use or application by the Depositor or the Master Servicer of any of the Certificates or of
the proceeds of such Certificates, or for the use or application of any funds paid to the
Depositor or the Master Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Custodial Account or the Certificate Account by the Depositor or the
Master Servicer.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates with the same rights it would have if it were not Trustee.
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses; Indemnification.
(a) The Master Servicer covenants and agrees to pay to the Trustee and any co-trustee
from time to time, and the Trustee and any co-trustee shall be entitled to, reasonable
compensation (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by each of them in
the execution of the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee and any co-trustee, and the Master Servicer shall
pay or reimburse the Trustee and any co-trustee upon request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee or any co-trustee in accordance
with any of the provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in its employ,
and the expenses incurred by the Trustee or any co-trustee in connection with the
appointment of an office or agency pursuant to Section 8.12) except any such expense,
disbursement or advance as may arise from its negligence or bad faith.
(b) The Master Servicer agrees to indemnify the Trustee for, and to hold the Trustee
harmless against, any loss, liability or expense incurred without negligence or willful
misconduct on its part, arising out of, or in connection with, the acceptance and
administration of the Trust Fund, including its obligation to execute the DTC Letter in its
individual capacity, and including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against any claim in connection with the exercise or
performance of any of its powers or duties under this Agreement and the Swap Agreement,
provided that:
(i) with respect to any such claim, the Trustee shall have given the Master Servicer
written notice thereof promptly after the Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee shall cooperate and
consult fully with the Master Servicer in preparing such defense; and
(iii) notwithstanding anything in this Agreement to the contrary, the Master Servicer shall
not be liable for settlement of any claim by the Trustee entered into without the
prior consent of the Master Servicer which consent shall not be unreasonably
WITHHELD. No termination of this Agreement shall affect the obligations created by
this Section 8.05(b) of the Master Servicer to indemnify the Trustee under the
conditions and to the extent set forth herein. Notwithstanding the foregoing, the
indemnification provided by the Master Servicer in this Section 8.05(b) shall not
pertain to any loss, liability or expense of the Trustee, including the costs and
expenses of defending itself against any claim, incurred in connection with any
actions taken by the Trustee at the direction of Certificateholders pursuant to the
terms of this Agreement.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a national banking association or a New
York banking corporation having its principal office in a state and city acceptable to the
Depositor and organized and doing business under the laws of such state or the United States
of America, authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. If such corporation or national banking association publishes
reports of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for purposes of this Section the combined
capital and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07.
Section 8.07. Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Depositor and the Master Servicer. Upon receiving
such notice of resignation, the Depositor shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, then the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.06 and shall fail to resign after written request therefor by the
Depositor, or if at any time the Trustee shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee. In addition, in the event that the Depositor determines that
the Trustee has failed (i) to distribute or cause to be distributed to Certificateholders
any amount required to be distributed hereunder, if such amount is held by the Trustee or
its Paying Agent (other than the Master Servicer or the Depositor) for distribution or (ii)
to otherwise observe or perform in any material respect any of its covenants, agreements or
obligations hereunder, and such failure shall continue unremedied for a period of 5 days (in
respect of clause (i) above) or 30 days (in respect of clause (ii) above, other than any
failure to comply with the provisions of Article XII, in which case no notice or grace
period shall be applicable) after the date on which written notice of such failure,
requiring that the same be remedied, shall have been given to the Trustee by the Depositor,
then the Depositor may remove the Trustee and appoint a successor trustee by written
instrument delivered as provided in the preceding sentence. In connection with the
appointment of a successor trustee pursuant to the preceding sentence, the Depositor shall,
on or before the date on which any such appointment becomes effective, obtain from each
Rating Agency written confirmation that the appointment of any such successor trustee will
not result in the reduction of the ratings on any Class of the Certificates below the lesser
of the then current or original ratings on such Certificates.
(c) The Holders of Certificates entitled to at least 51% of the Voting Rights may at any
time remove the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact duly
authorized, one complete set of which instruments shall be delivered to the Depositor, one
complete set to the Trustee so removed and one complete set to the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 8.08.
Section 8.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee shall become effective
and such successor trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor hereunder,
with the like effect as if originally named as trustee herein. The predecessor trustee
shall deliver to the successor trustee all Mortgage Files and related documents and
statements held by it hereunder (other than any Mortgage Files at the time held by a
Custodian, which shall become the agent of any successor trustee hereunder), and the
Depositor, the Master Servicer and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights, powers, duties
and obligations.
(b) No successor trustee shall accept appointment as provided in this Section unless at
the time of such acceptance such successor trustee shall be eligible under the provisions of
Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as provided in this Section,
the Depositor shall mail notice of the succession of such trustee hereunder to all Holders
of Certificates at their addresses as shown in the Certificate Register. If the Depositor
fails to mail such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
Section 8.09. Merger or Consolidation of Trustee.
Any corporation or national banking association into which the Trustee may be merged
or converted or with which it may be consolidated or any corporation or national banking
association resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding to the
business of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the provisions of
Section 8.06, without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The Trustee
shall mail notice of any such merger or consolidation to the Certificateholders at their
address as shown in the Certificate Register.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for the purpose of meeting
any legal requirements of any jurisdiction in which any part of the Trust Fund or property
securing the same may at the time be located, the Master Servicer and the Trustee acting
jointly shall have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust Fund, or any
part thereof, and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as the Master Servicer and the Trustee may consider
necessary or desirable. If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, or in case an Event of Default
shall have occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to meet the
terms of eligibility as a successor trustee under Section 8.06 hereunder, and no notice to
Holders of Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.08 hereof.
(b) In the case of any appointment of a co-trustee or separate trustee pursuant to this
Section 8.10, all rights, powers, duties and obligations conferred or imposed upon the
Trustee shall be conferred or imposed upon and exercised or performed by the Trustee, and
such separate trustee or co-trustee jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed by such separate trustee
or co-trustee at the direction of the Trustee.
(c) Any notice, request or other writing given to the Trustee shall be deemed to have
been given to each of the then separate trustees and co-trustees, as effectively as if given
to each of them. Every instrument appointing any separate trustee or co-trustee shall refer
to this Agreement and the conditions of this Article VIII. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct of,
affecting the liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute the Trustee, its
agent or attorney-in-fact, with full power and authority, to the extent not prohibited by
law, to do any lawful act under or in respect of this Agreement on its behalf and in its
name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
Section 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Master Servicer and the Depositor, or shall,
at the direction of the Master Servicer and the Depositor, appoint one or more Custodians
who are not Affiliates of the Depositor or the Master Servicer to hold all or a portion of
the Mortgage Files as agent for the Trustee, by entering into a Custodial Agreement. The
Trustee is hereby directed to enter into a Custodial Agreement with Xxxxx Fargo Bank, N.A.
Subject to Article VIII, the Trustee agrees to comply with the terms of each Custodial
Agreement and to enforce the terms and provisions thereof against the Custodian for the
benefit of the Certificateholders. Each Custodian shall be a depository institution subject
to supervision by federal or state authority, shall have a combined capital and surplus of
at least $15,000,000 and shall be qualified to do business in the jurisdiction in which it
holds any Mortgage File. Each Custodial Agreement may be amended only as provided in
Section 11.01. The Trustee shall notify the Certificateholders of the appointment of any
Custodian (other than the Custodian appointed as of the Closing Date) pursuant to this
Section 8.11.
Section 8.12. Appointment of Office or Agency.
The Trustee shall maintain an office or agency in the City of St. Xxxx, Minnesota
where Certificates may be surrendered for registration of transfer or exchange. The Trustee
initially designates its offices located at the Corporate Trust Office for the purpose of
keeping the Certificate Register. The Trustee shall maintain an office at the address
stated in Section 11.05(c) hereof where notices and demands to or upon the Trustee in
respect of this Agreement may be served.
Section 8.13. DTC Letter of Representations.
The Trustee is hereby authorized and directed to, and agrees that it shall, enter
into the DTC Letter on behalf of the Trust Fund and in its individual capacity as agent
thereunder.
Section 8.14. Swap Agreements.
The Trustee is hereby authorized and directed to, and agrees that it shall (a) enter
into the Swap Agreement on behalf of the Trust Fund and (b) enter into the SB-AM Swap
Agreement on behalf of (i) the Class A Certificateholders, Class M Certificateholders and
Class B Certificateholders on the one hand, and (ii) the Class SB Certificateholders on the
other hand.
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase or Liquidation of All Mortgage Loans.
(a) Subject to Section 9.02, the respective obligations and responsibilities of the
Depositor, the Master Servicer and the Trustee created hereby in respect of the Certificates
(other than the obligation of the Trustee to make certain payments after the Final
Distribution Date to Certificateholders and the obligation of the Depositor to send certain
notices as hereinafter set forth) shall terminate upon the last action required to be taken
by the Trustee on the Final Distribution Date pursuant to this Article IX following the
earlier of:
(i) the later of the final payment or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund or the disposition of
all property acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage
Loan, or
(ii) at the option of the Master Servicer or the Holder of the Class SB Certificates as
provided in Section 9.01(f), the purchase of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust Fund, at a price
equal to the sum of (A) 100% of the unpaid principal balance of each Mortgage Loan
(or, if less than such unpaid principal balance, the fair market value of the related
underlying property of such Mortgage Loan with respect to Mortgage Loans as to which
title has been acquired if such fair market value is less than such unpaid principal
balance) (and if such purchase is made by the Master Servicer only, net of any
unreimbursed Advances attributable to principal) on the day of repurchase, plus
accrued interest thereon at the Net Mortgage Rate (or Modified Net Mortgage Rate in
the case of any Modified Mortgage Loan), to, but not including, the first day of the
month in which such repurchase price is distributed, and (B) any unpaid Swap
Termination Payment and any Net Swap Payments payable to the Swap Counterparty (or
any Swap Termination Payment payable to the Swap Counterparty as a result of the
exercise of the option provided for in this Section 9.01(a)(ii)));
provided, however, that in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late ambassador of the United States to the Court of St. Xxxxx, living on the
date hereof; and provided further, that the purchase price set forth above shall be
increased as is necessary, as determined by the Master Servicer, to avoid disqualification
of any REMIC created hereunder as a REMIC.
The purchase price paid by the Master Servicer or the Holder of the Class SB
Certificates, as applicable, pursuant to Section 9.01(a)(ii) shall also include any amounts
owed by Residential Funding pursuant to the last paragraph of Section 4 of the Assignment
Agreement in respect of any liability, penalty or expense that resulted from a breach of the
representation and warranty set forth in clause (xlvii) of Section 4 of the Assignment
Agreement that remain unpaid on the date of such purchase.
The right of the Master Servicer or the Holder of the Class SB Certificates, as
applicable, to purchase all of the Mortgage Loans pursuant to clause (ii) above is
conditioned upon the date of such purchase occurring on or after the Optional Termination
Date. If such right is exercised by the Master Servicer, the Master Servicer shall be
deemed to have been reimbursed for the full amount of any unreimbursed Advances theretofore
made by it with respect to the Mortgage Loans being purchased. In addition, the Master
Servicer shall provide to the Trustee the certification required by Section 3.15, and the
Trustee and any Custodian shall, promptly following payment of the purchase price, release
to the Master Servicer or the Holder of the Class SB Certificates, as applicable, the
Mortgage Files pertaining to the Mortgage Loans being purchased.
In addition to the foregoing, on any Distribution Date on or after the Optional
Termination Date, the Master Servicer or the Holder of the Class SB Certificates as provided
in Section 9.01(f), shall have the right, at its option, to purchase the Class A
Certificates, Class M Certificates, Class B Certificates and Class SB Certificates in whole,
but not in part, at a price equal to the sum of the outstanding Certificate Principal
Balance of such Certificates plus the sum of one month's Accrued Certificate Interest
thereon, any previously unpaid Accrued Certificate Interest, and any unpaid Prepayment
Interest Shortfalls previously allocated thereto and, in the case of Prepayment Interest
Shortfalls, accrued interest thereon at the applicable Pass-Through Rate, plus, with respect
to any optional termination by the Holder of the Class SB Certificates, an amount equal to
all accrued and unpaid Servicing Fees and reimbursement for all unreimbursed Advances and
Servicing Advances, in each case through the date of such optional termination. If the
Master Servicer or the Holder of the Class SB Certificates, as applicable, exercises this
right to purchase the outstanding Class A Certificates, Class M Certificates, Class B
Certificates and Class SB Certificates, the Master Servicer or the Holder of the Class SB
Certificates, as applicable, will promptly terminate the respective obligations and
responsibilities created hereby in respect of these Certificates pursuant to this Article IX.
(b) The Master Servicer or the Holder of the Class SB Certificates, as applicable, shall
give the Trustee (and the Master Servicer if the Holder of the Class SB Certificates is
exercising its option) not less than 40 days prior notice of the Distribution Date on which
(1) the Master Servicer or the Holder of the Class SB Certificates, as applicable,
anticipates that the final distribution will be made to Certificateholders as a result of
the exercise by the Master Servicer or the Holder of the Class SB Certificates, as
applicable, of its right to purchase the Mortgage Loans or on which (2) the Master Servicer
or the Holder of the Class SB Certificates, as applicable, anticipates that the Certificates
will be purchased as a result of the exercise by the Master Servicer or the Holder of the
Class SB Certificates, as applicable, to purchase the outstanding Certificates. Notice of
any termination, specifying the anticipated Final Distribution Date (which shall be a date
that would otherwise be a Distribution Date) upon which the Certificateholders may surrender
their Certificates to the Trustee (if so required by the terms hereof) for payment of the
final distribution and cancellation or notice of any purchase of the outstanding
Certificates, specifying the Distribution Date upon which the Holders may surrender their
Certificates to the Trustee for payment, shall be given promptly by the Master Servicer (if
it is exercising the right to purchase the Mortgage Loans or to purchase the outstanding
Certificates), or by the Trustee (in any other case) by letter to the Certificateholders
(with a copy to the Certificate Registrar) mailed (or distributed through the Depository
with respect to any Book-Entry Certificates) not earlier than the 15th day and not later
than the 25th day of the month next preceding the month of such final distribution
specifying:
(i) the anticipated Final Distribution Date upon which final payment of the Certificates
is anticipated to be made upon presentation and surrender of Certificates at the
office or agency of the Trustee therein designated where required pursuant to this
Agreement or, in the case of the purchase by the Master Servicer or the Holder of the
Class SB Certificates, as applicable, of the outstanding Certificates, the
Distribution Date on which such purchase is made,
(ii) the amount of any such final payment or, in the case of the purchase of the
outstanding Certificates, the purchase price, in either case, if known, and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, and that payment will be made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
If the Master Servicer or the Trustee is obligated to give notice to
Certificateholders as required above, it shall give such notice to the Certificate Registrar
at the time such notice is given to Certificateholders. In the event of a purchase of the
Mortgage Loans by the Master Servicer or the Holder of the Class SB Certificates, as
applicable, the Master Servicer or the Holder of the Class SB Certificates, as applicable,
shall deposit in the Certificate Account before the Final Distribution Date in immediately
available funds an amount equal to the purchase price computed as provided above. As a
result of the exercise by the Master Servicer or the Holder of the Class SB Certificates, as
applicable, of its right to purchase the outstanding Certificates, the Master Servicer or
the Holder of the Class SB Certificates, as applicable, shall deposit in the Certificate
Account, before the Distribution Date on which such purchase is to occur, in immediately
available funds, an amount equal to the purchase price for the Certificates computed as
provided above, and provide notice of such deposit to the Trustee. The Trustee shall
withdraw from such account the amount specified in subsection (c) below and distribute such
amount to the Certificateholders as specified in subsection (c) below. The Master Servicer
or the Holder of the Class SB Certificates, as applicable, shall provide to the Trustee
written notification of any change to the anticipated Final Distribution Date as soon as
practicable. If the Trust Fund is not terminated on the anticipated Final Distribution
Date, for any reason, the Trustee shall promptly mail notice thereof to each affected
Certificateholder.
(c) Upon presentation and surrender of the Class A Certificates, Class M Certificates,
Class B Certificates and Class SB Certificates by the Certificateholders thereof, the
Trustee shall distribute to such Certificateholders (i) the amount otherwise distributable
on such Distribution Date, if not in connection with the Master Servicer's or the Holder's
of the Class SB Certificates, as applicable, election to repurchase the Mortgage Loans or
the outstanding Class A Certificates, Class M Certificates, Class B Certificates and
Class SB Certificates, or (ii) if the Master Servicer or the Holder of the Class SB
Certificates, as applicable, elected to so repurchase the Mortgage Loans or the outstanding
Class A Certificates, Class M Certificates, Class B Certificates and Class SB Certificates,
an amount equal to the price paid pursuant to Section 9.01(a) as follows: first, with
respect to any optional termination by the Holder of the Class SB Certificates, payment of
any accrued and unpaid Servicing Fees and reimbursement for all unreimbursed Advances and
Servicing Advances, in each case through the date of such optional termination, to the
Master Servicer, second, with respect to the Class A Certificates, pari passu, the
outstanding Certificate Principal Balance thereof, plus Accrued Certificate Interest thereon
for the related Interest Accrual Period and any previously unpaid Accrued Certificate
Interest, third, with respect to the Class M-1 Certificates, the outstanding Certificate
Principal Balance thereof, plus Accrued Certificate Interest thereon for the related
Interest Accrual Period and any previously unpaid Accrued Certificate Interest, fourth, with
respect to the Class M-2 Certificates, the outstanding Certificate Principal Balance
thereof, plus Accrued Certificate Interest thereon for the related Interest Accrual Period
and any previously unpaid Accrued Certificate Interest, fifth, with respect to the Class M-3
Certificates, the outstanding Certificate Principal Balance thereof, plus Accrued
Certificate Interest thereon for the related Interest Accrual Period and any previously
unpaid Accrued Certificate Interest, sixth, with respect to the Class M-4 Certificates, the
outstanding Certificate Principal Balance thereof, plus Accrued Certificate Interest thereon
for the related Interest Accrual Period and any previously unpaid Accrued Certificate
Interest, seventh, with respect to the Class M-5 Certificates, the outstanding Certificate
Principal Balance thereof, plus Accrued Certificate Interest thereon for the related
Interest Accrual Period and any previously unpaid Accrued Certificate Interest, eighth, with
respect to the Class M-6 Certificates, the outstanding Certificate Principal Balance
thereof, plus Accrued Certificate Interest thereon for the related Interest Accrual Period
and any previously unpaid Accrued Certificate Interest, ninth, with respect to the Class M-7
Certificates, the outstanding Certificate Principal Balance thereof, plus Accrued
Certificate Interest thereon for the related Interest Accrual Period and any previously
unpaid Accrued Certificate Interest, tenth, with respect to the Class M-8 Certificates, the
outstanding Certificate Principal Balance thereof, plus Accrued Certificate Interest thereon
for the related Interest Accrual Period and any previously unpaid Accrued Certificate
Interest, eleventh, with respect to the Class M-9 Certificates, the outstanding Certificate
Principal Balance thereof, plus Accrued Certificate Interest thereon for the related
Interest Accrual Period and any previously unpaid Accrued Certificate Interest, twelfth,
with respect to the Class M-10 Certificates, the outstanding Certificate Principal Balance
thereof, plus Accrued Certificate Interest thereon for the related Interest Accrual Period
and any previously unpaid Accrued Certificate Interest, thirteenth, with respect to the
Class B Certificates, the outstanding Certificate Principal Balance thereof, plus Accrued
Certificate Interest thereon for the related Interest Accrual Period and any previously
unpaid Accrued Certificate Interest, fourteenth, to the Class A Certificates,
Class M Certificates and Class B Certificates, the amount of any Prepayment Interest
Shortfalls allocated thereto for such Distribution Date or remaining unpaid from prior
Distribution Dates and accrued interest thereon at the applicable Pass-Through Rate, on a
pro rata basis based on Prepayment Interest Shortfalls allocated thereto for such
Distribution Date or remaining unpaid from prior Distribution Dates, fifteenth, to the Swap
Counterparty (without duplication of amounts payable to the Swap Counterparty on such date
in accordance with Section 4.02) any Swap Termination Payment payable to the Swap
Counterparty then remaining unpaid or which is due to the exercise of any early termination
of the Trust Fund pursuant to this Section 9.01, and sixteenth, to the Class SB
Certificates, all remaining amounts.
(d) In the event that any Certificateholders shall not surrender their Certificates for
final payment and cancellation on or before the Final Distribution Date, the Master Servicer
(if it exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case), shall give a second written notice to the remaining Certificateholders to surrender
their Certificates for cancellation and receive the final distribution with respect
THERETO. If within six months after the second notice any Certificate shall not have been
surrendered for cancellation, the Trustee shall take appropriate steps as directed by the
Master Servicer to contact the remaining Certificateholders concerning surrender of their
Certificates. The costs and expenses of maintaining the Certificate Account and of
contacting Certificateholders shall be paid out of the assets which remain in the
Certificate Account. If within nine months after the second notice any Certificates shall
not have been surrendered for cancellation, the Trustee shall pay to the Master Servicer all
amounts distributable to the holders thereof and the Master Servicer shall thereafter hold
such amounts until distributed to such Holders. No interest shall accrue or be payable to
any Certificateholder on any amount held in the Certificate Account or by the Master
Servicer as a result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 9.01 and the Certificateholders shall
look only to the Master Servicer for such payment.
(e) If any Certificateholders do not surrender their Certificates on or before the
Distribution Date on which a purchase of the outstanding Certificates is to be made, the
Master Servicer shall give a second written notice to such Certificateholders to surrender
their Certificates for payment of the purchase price therefor. If within six months after
the second notice any Certificate shall not have been surrendered for cancellation, the
Trustee shall take appropriate steps as directed by the Master Servicer to contact the
Holders of such Certificates concerning surrender of their Certificates. The costs and
expenses of maintaining the Certificate Account and of contacting Certificateholders shall
be paid out of the assets which remain in the Certificate Account. If within nine months
after the second notice any Certificates shall not have been surrendered for cancellation in
accordance with this Section 9.01, the Trustee shall pay to the Master Servicer all amounts
distributable to the Holders thereof and shall have no further obligation or liability
therefor and the Master Servicer shall thereafter hold such amounts until distributed to
such Holders. No interest shall accrue or be payable to any Certificateholder on any amount
held in the Certificate Account or by the Master Servicer as a result of such
Certificateholder's failure to surrender its Certificate(s) for payment in accordance with
this Section 9.01. Any Certificate that is not surrendered on the Distribution Date on
which a purchase pursuant to this Section 9.01 occurs as provided above will be deemed to
have been purchased and the Holder as of such date will have no rights with respect thereto
except to receive the purchase price therefor minus any costs and expenses associated with
such Certificate Account and notices allocated thereto. Any Certificates so purchased or
deemed to have been purchased on such Distribution Date shall remain outstanding hereunder.
The Master Servicer shall be for all purposes the Holder thereof as of such date.
(f) With respect to the first possible Optional Termination Date, the Master Servicer
shall have the sole option to exercise the purchase options described in Section 9.01(a) and
the Holder of the Class SB Certificates shall have no claim thereto. If, however, the
Master Servicer elects not to exercise one of its options to purchase pursuant to
Section 9.01(a) with respect to the first possible Optional Termination Date, the Holder of
the Class SB Certificates shall have the sole option to exercise the purchase options
described in Section 9.01(a) on the second possible Optional Termination Date and the Master
Servicer shall have no claim thereto. If the Holder of the Class SB Certificates elects not
to exercise one of its options to purchase pursuant to Section 9.01(a) with respect to the
second possible Optional Termination Date, it shall lose such right and have no claim to
exercise any purchase options pursuant to this Section 9.01 thereafter. Beginning with the
third possible Optional Termination Date and thereafter, the Master Servicer shall again
have the sole option to exercise the purchase options described in Section 9.01(a).
Section 9.02. Additional Termination Requirements.
(a) Any REMIC hereunder, as the case may be, shall be terminated in accordance with the
following additional requirements, unless (subject to Section 10.01(f)) the Trustee and the
Master Servicer have received an Opinion of Counsel (which Opinion of Counsel shall not be
an expense of the Trustee) to the effect that the failure of any REMIC created hereunder as
the case may be, to comply with the requirements of this Section 9.02 will not (i) result in
the imposition on the Trust Fund of taxes on "prohibited transactions," as described in
Section 860F of the Code, or (ii) cause any REMIC created hereunder to fail to qualify as a
REMIC at any time that any Certificate is outstanding:
(i) The Master Servicer shall establish a 90-day liquidation period for REMIC I, REMIC II
or REMIC III, as applicable, and any other related terminating REMICs, and specify
the first day of such period in a statement attached to REMIC I's, REMIC II's or
REMIC III's, as applicable, and any other related terminating REMICs', final Tax
Return pursuant to Treasury Regulations Section 1.860F-1. The Master Servicer also
shall satisfy all of the requirements of a qualified liquidation for each of REMIC I,
REMIC II and REMIC III under Section 860F of the Code and the regulations thereunder;
(ii) The Master Servicer shall notify the Trustee at the commencement of such 90-day
liquidation period and, at or prior to the time of making of the final payment on the
Certificates, the Trustee shall sell or otherwise dispose of all of the remaining
assets of the liquidating REMICs in accordance with the terms hereof; and
(iii) If the Master Servicer is exercising its right to purchase the assets of the Trust
Fund, the Master Servicer shall, during the 90-day liquidation period and at or prior
to the Final Distribution Date, purchase all of the assets of the liquidating REMICs
for cash.
(b) Each Holder of a Certificate and the Trustee hereby irrevocably approves and appoints
the Master Servicer as its attorney-in-fact to adopt a plan of complete liquidation for any
REMIC hereunder at the expense of the Trust Fund in accordance with the terms and conditions
of this Agreement.
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
(a) The REMIC Administrator shall make an election to treat all REMICs created hereunder
as a REMIC under the Code and, if necessary, under applicable state law. Each such election
will be made on Form 1066 or other appropriate federal tax or information return (including
Form 8811) or any appropriate state return for the taxable year ending on the last day of
the calendar year in which the Certificates are issued. The REMIC I Regular Interests shall
be designated as the "regular interests" and the Class R-I Certificates shall be designated
as the sole Class of "residual interests" in the REMIC I. The REMIC II Regular Interests
shall be designated as the "regular interests" and the Class R-II Certificates shall be
designated as the sole Class of "residual interests" in the REMIC II. The REMIC III Regular
Interests shall be designated as the "regular interests" and the Class R-III Certificates
shall be designated as the sole Class of "residual interests" in the REMIC III. The REMIC
Administrator and the Trustee shall not permit the creation of any "interests" (within the
meaning of Section 860G of the Code) in REMIC I, REMIC II or REMIC III other than the
REMIC I Regular Interests, the REMIC II Regular Interests, REMIC III Regular Interest IO and
the Certificates.
(b) The Closing Date is hereby designated as the "startup day" of each of REMIC created
hereunder within the meaning of Section 860G(a)(9) of the Code (the "Startup Date").
(c) The REMIC Administrator shall hold a Class R Certificate in each REMIC representing a
0.01% Percentage Interest of the Class R Certificates in each REMIC and shall be designated
as the "tax matters person" with respect to each REMIC in the manner provided under Treasury
regulations Section 1.860F-4(d) and Treasury regulations Section 301.6231(a)(7)-1. The
REMIC Administrator, as tax matters person, shall (i) act on behalf of each REMIC in
relation to any tax matter or controversy involving the Trust Fund and (ii) represent the
Trust Fund in any administrative or judicial proceeding relating to an examination or audit
by any governmental taxing authority with respect thereto. The legal expenses, including
without limitation attorneys' or accountants' fees, and costs of any such proceeding and any
liability resulting therefrom shall be expenses of the Trust Fund and the REMIC
Administrator shall be entitled to reimbursement therefor out of amounts attributable to the
Mortgage Loans on deposit in the Custodial Account as provided by Section 3.10 unless such
legal expenses and costs are incurred by reason of the REMIC Administrator's willful
misfeasance, bad faith or gross negligence. If the REMIC Administrator is no longer the
Master Servicer hereunder, at its option the REMIC Administrator may continue its duties as
REMIC Administrator and shall be paid reasonable compensation not to exceed $3,000 per year
by any successor Master Servicer hereunder for so acting as the REMIC Administrator.
(d) The REMIC Administrator shall prepare or cause to be prepared all of the Tax Returns
that it determines are required with respect to the REMICs created hereunder and deliver
such Tax Returns in a timely manner to the Trustee and the Trustee shall sign and file such
Tax Returns in a timely manner. The expenses of preparing such returns shall be borne by
the REMIC Administrator without any right of reimbursement therefor. The REMIC
Administrator agrees to indemnify and hold harmless the Trustee with respect to any tax or
liability arising from the Trustee's signing of Tax Returns that contain errors or
OMISSIONS. The Trustee and Master Servicer shall promptly provide the REMIC Administrator
with such information as the REMIC Administrator may from time to time request for the
purpose of enabling the REMIC Administrator to prepare Tax Returns.
(e) The REMIC Administrator shall provide (i) to any Transferor of a Class R Certificate
such information as is necessary for the application of any tax relating to the transfer of
a Class R Certificate to any Person who is not a Permitted Transferee, (ii) to the Trustee
and the Trustee shall forward to the Certificateholders such information or reports as are
required by the Code or the REMIC Provisions including reports relating to interest,
original issue discount, if any, and market discount or premium (using the Prepayment
Assumption) and (iii) to the Internal Revenue Service the name, title, address and telephone
number of the person who will serve as the representative of each REMIC created hereunder.
(f) The Master Servicer and the REMIC Administrator shall take such actions and shall
cause each REMIC created hereunder to take such actions as are reasonably within the Master
Servicer's or the REMIC Administrator's control and the scope of its duties more
specifically set forth herein as shall be necessary or desirable to maintain the status
thereof as a REMIC under the REMIC Provisions (and the Trustee shall assist the Master
Servicer and the REMIC Administrator, to the extent reasonably requested by the Master
Servicer and the REMIC Administrator to do so). In performing their duties as more
specifically set forth herein, the Master Servicer and the REMIC Administrator shall not
knowingly or intentionally take any action, cause the Trust Fund to take any action or fail
to take (or fail to cause to be taken) any action reasonably within their respective control
and the scope of duties more specifically set forth herein, that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the status of any
REMIC created hereunder as a REMIC or (ii) result in the imposition of a tax upon any
REMIC created hereunder (including but not limited to the tax on prohibited transactions as
defined in Section 860F(a)(2) of the Code (except as provided in Section 2.04) and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) (either such event, in
the absence of an Opinion of Counsel or the indemnification referred to in this sentence, an
"Adverse REMIC Event") unless the Master Servicer or the REMIC Administrator, as applicable,
has received an Opinion of Counsel (at the expense of the party seeking to take such action
or, if such party fails to pay such expense, and the Master Servicer or the REMIC
Administrator, as applicable, determines that taking such action is in the best interest of
the Trust Fund and the Certificateholders, at the expense of the Trust Fund, but in no event
at the expense of the Master Servicer, the REMIC Administrator or the Trustee) to the effect
that the contemplated action will not, with respect to the Trust Fund created hereunder,
endanger such status or, unless the Master Servicer or the REMIC Administrator or both, as
applicable, determine in its or their sole discretion to indemnify the Trust Fund against
the imposition of such a tax, result in the imposition of such a tax. Wherever in this
Agreement a contemplated action may not be taken because the timing of such action might
result in the imposition of a tax on the Trust Fund, or may only be taken pursuant to an
Opinion of Counsel that such action would not impose a tax on the Trust Fund, such action
may nonetheless be taken provided that the indemnity given in the preceding sentence with
respect to any taxes that might be imposed on the Trust Fund has been given and that all
other preconditions to the taking of such action have been satisfied. The Trustee shall not
take or fail to take any action (whether or not authorized hereunder) as to which the Master
Servicer or the REMIC Administrator, as applicable, has advised it in writing that it has
received an Opinion of Counsel to the effect that an Adverse REMIC Event could occur with
respect to such action or inaction, as the case may be. In addition, prior to taking any
action with respect to the Trust Fund or its assets, or causing the Trust Fund to take any
action, which is not expressly permitted under the terms of this Agreement, the Trustee
shall consult with the Master Servicer or the REMIC Administrator, as applicable, or its
designee, in writing, with respect to whether such action could cause an Adverse REMIC Event
to occur with respect to the Trust Fund and the Trustee shall not take any such action or
cause the Trust Fund to take any such action as to which the Master Servicer or the REMIC
Administrator, as applicable, has advised it in writing that an Adverse REMIC Event could
occur. The Master Servicer or the REMIC Administrator, as applicable, may consult with
counsel to make such written advice, and the cost of same shall be borne by the party
seeking to take the action not expressly permitted by this Agreement, but in no event at the
expense of the Master Servicer or the REMIC Administrator. At all times as may be required
by the Code, the Master Servicer or the REMIC Administrator, as applicable, will to the
extent within its control and the scope of its duties more specifically set forth herein,
maintain substantially all of the assets of the REMIC as "qualified mortgages" as defined in
Section 860G(a)(3) of the Code and "permitted investments" as defined in Section 860G(a)(5)
of the Code.
(g) In the event that any tax is imposed on "prohibited transactions" of any REMIC
created hereunder as defined in Section 860F(a)(2) of the Code, on "net income from
foreclosure property" of any REMIC as defined in Section 860G(c) of the Code, on any
contributions to any REMIC after the Startup Date therefor pursuant to Section 860G(d) of
the Code, or any other tax imposed by the Code or any applicable provisions of state or
local tax laws, such tax shall be charged (i) to the Master Servicer, if such tax arises out
of or results from a breach by the Master Servicer in its role as Master Servicer or REMIC
Administrator of any of its obligations under this Agreement or the Master Servicer has in
its sole discretion determined to indemnify the Trust Fund against such tax, (ii) to the
Trustee, if such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article X, or (iii) otherwise against amounts on deposit in the
Custodial Account as provided by Section 3.10 and on the Distribution Date(s) following such
reimbursement the aggregate of such taxes shall be allocated in reduction of the Accrued
Certificate Interest on each Class entitled thereto in the same manner as if such taxes
constituted a Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicer shall, for federal income tax purposes, maintain
books and records with respect to each REMIC on a calendar year and on an accrual basis or
as otherwise may be required by the REMIC Provisions.
(i) Following the Startup Date, neither the Master Servicer nor the Trustee shall accept
any contributions of assets to any REMIC unless (subject to Section 10.01(f)) the Master
Servicer and the Trustee shall have received an Opinion of Counsel (at the expense of the
party seeking to make such contribution) to the effect that the inclusion of such assets in
any REMIC will not cause any REMIC created hereunder to fail to qualify as a REMIC at any
time that any Certificates are outstanding or subject any such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law or
ordinances.
(j) Neither the Master Servicer nor the Trustee shall (subject to Section 10.01(f)) enter
into any arrangement by which any REMIC created hereunder will receive a fee or other
compensation for services nor permit any REMIC created hereunder to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code.
(k) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the
"latest possible maturity date" by which the principal balance of each regular interest in
each REMIC would be reduced to zero is June 25, 2036, which is the Distribution Date in the
month following the last scheduled payment on any Mortgage Loan.
(l) Within 30 days after the Closing Date, the REMIC Administrator shall prepare and file
with the Internal Revenue Service Form 8811, "Information Return for Real Estate Mortgage
Investment Conduits (REMIC) and Issuers of Collateralized Debt Obligations" for the Trust
Fund.
(m) Neither the Trustee nor the Master Servicer shall sell, dispose of or substitute for
any of the Mortgage Loans (except in connection with (i) the default, imminent default or
foreclosure of a Mortgage Loan, including but not limited to, the acquisition or sale of a
Mortgaged Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of the Trust
Fund, (iii) the termination of any REMIC pursuant to Article IX of this Agreement or (iv) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement) or acquire any
assets for any REMIC or sell or dispose of any investments in the Custodial Account or the
Certificate Account for gain, or accept any contributions to any REMIC after the Closing
Date unless it has received an Opinion of Counsel that such sale, disposition, substitution
or acquisition will not (a) affect adversely the status of any REMIC created hereunder as a
REMIC or (b) unless the Master Servicer has determined in its sole discretion to indemnify
the Trust Fund against such tax, cause any REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
Section 10.02. Master Servicer, REMIC Administrator and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the Depositor, the REMIC
Administrator and the Master Servicer for any taxes and costs including, without limitation,
any reasonable attorneys fees imposed on or incurred by the Trust Fund, the Depositor or the
Master Servicer, as a result of a breach of the Trustee's covenants set forth in
Article VIII or this Article X. In the event that Residential Funding is no longer the
Master Servicer, the Trustee shall indemnify Residential Funding for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or incurred by
Residential Funding as a result of a breach of the Trustee's covenants set forth in
Article VIII or this Article X.
(b) The REMIC Administrator agrees to indemnify the Trust Fund, the Depositor, the Master
Servicer and the Trustee for any taxes and costs (including, without limitation, any
reasonable attorneys' fees) imposed on or incurred by the Trust Fund, the Depositor, the
Master Servicer or the Trustee, as a result of a breach of the REMIC Administrator's
covenants set forth in this Article X with respect to compliance with the REMIC Provisions,
including without limitation, any penalties arising from the Trustee's execution of Tax
Returns prepared by the REMIC Administrator that contain errors or omissions; provided,
however, that such liability will not be imposed to the extent such breach is a result of an
error or omission in information provided to the REMIC Administrator by the Master Servicer
in which case Section 10.02(c) will apply.
(c) The Master Servicer agrees to indemnify the Trust Fund, the Depositor, the REMIC
Administrator and the Trustee for any taxes and costs (including, without limitation, any
reasonable attorneys' fees) imposed on or incurred by the Trust Fund, the Depositor, the
REMIC Administrator or the Trustee, as a result of a breach of the Master Servicer's
covenants set forth in this Article X or in Article III with respect to compliance with the
REMIC Provisions, including without limitation, any penalties arising from the Trustee's
execution of Tax Returns prepared by the Master Servicer that contain errors or omissions.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
(a) This Agreement or any Custodial Agreement may be amended from time to time by the
Depositor, the Master Servicer and the Trustee, without the consent of any of the
Certificateholders:
(i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein or therein, which may be inconsistent
with any other provisions herein or therein or to correct any error,
(iii) to modify, eliminate or add to any of its provisions to such extent as shall be
necessary or desirable to maintain the qualification of any REMIC created hereunder
as a REMIC at all times that any Certificate is outstanding or to avoid or minimize
the risk of the imposition of any tax on the Trust Fund pursuant to the Code that
would be a claim against the Trust Fund, provided that the Trustee has received an
Opinion of Counsel to the effect that (A) such action is necessary or desirable to
maintain such qualification or to avoid or minimize the risk of the imposition of any
such tax and (B) such action will not adversely affect in any material respect the
interests of any Certificateholder,
(iv) to change the timing and/or nature of deposits into the Custodial Account or the
Certificate Account or to change the name in which the Custodial Account is
maintained, provided that (A) the Certificate Account Deposit Date shall in no event
be later than the related Distribution Date, (B) such change shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder and (C) such change shall not result in a reduction of the
rating assigned to any Class of Certificates below the lower of the then-current
rating or the rating assigned to such Certificates as of the Closing Date, as
evidenced by a letter from each Rating Agency to such effect,
(v) to modify, eliminate or add to the provisions of Section 5.02(f) or any other
provision hereof restricting transfer of the Class R Certificates by virtue of their
being the "residual interests" in the Trust Fund provided that (A) such change shall
not result in reduction of the rating assigned to any such Class of Certificates
below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date, as evidenced by a letter from each Rating Agency
to such effect, and (B) such change shall not (subject to Section 10.01(f)), as
evidenced by an Opinion of Counsel (at the expense of the party seeking so to modify,
eliminate or add such provisions), cause the Trust Fund or any of the
Certificateholders (other than the transferor) to be subject to a federal tax caused
by a transfer to a Person that is not a Permitted Transferee, or
(vi) to make any other provisions with respect to matters or questions arising under this
Agreement or such Custodial Agreement which shall not be materially inconsistent with
the provisions of this Agreement, provided that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder and is authorized or permitted under Section 11.01.
(b) This Agreement or any Custodial Agreement may also be amended from time to time by
the Depositor, the Master Servicer, the Trustee and the Holders of Certificates evidencing
in the aggregate not less than 66% of the Percentage Interests of each Class of Certificates
with a Certificate Principal Balance greater than zero affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or such Custodial Agreement or of modifying in any manner the rights of the
Holders of Certificates of such Class; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of, payments which are
required to be distributed on any Certificate without the consent of the Holder of
such Certificate,
(ii) adversely affect in any material respect the interest of the Holders of Certificates
of any Class in a manner other than as described in clause (i) hereof without the
consent of Holders of Certificates of such Class evidencing, as to such Class,
Percentage Interests aggregating not less than 66%, or
(iii) reduce the aforesaid percentage of Certificates of any Class the Holders of which are
required to consent to any such amendment, in any such case without the consent of
the Holders of all Certificates of such Class then outstanding.
(c) Notwithstanding any contrary provision of this Agreement, the Trustee shall not
consent to any amendment to this Agreement unless it shall have first received an Opinion of
Counsel (at the expense of the party seeking such amendment) to the effect that such
amendment or the exercise of any power granted to the Master Servicer, the Depositor or the
Trustee in accordance with such amendment will not result in the imposition of a federal tax
on the Trust Fund or cause any REMIC created hereunder to fail to qualify as a REMIC at any
time that any Certificate is outstanding; provided, that if the indemnity described in
Section 10.01(f) with respect to any taxes that might be imposed on the Trust Fund has been
given, the Trustee shall not require the delivery to it of the Opinion of Counsel described
in this Section 11.01(c). The Trustee may but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and immunities and this
Agreement or otherwise; provided, however, such consent shall not be unreasonably withheld.
(d) Promptly after the execution of any such amendment the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder. It shall not be
necessary for the consent of Certificateholders under this Section 11.01 to approve the
particular form of any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to such
reasonable regulations as the Trustee may prescribe.
(e) The Depositor shall have the option, in its sole discretion, to obtain and deliver to
the Trustee any corporate guaranty, payment obligation, irrevocable letter of credit, surety
bond, insurance policy or similar instrument or a reserve fund, or any combination of the
foregoing, for the purpose of protecting the Holders of the Class SB Certificates against
any or all Realized Losses or other shortfalls. Any such instrument or fund shall be held
by the Trustee for the benefit of the Class SB Certificateholders, but shall not be and
shall not be deemed to be under any circumstances included in any REMIC. To the extent that
any such instrument or fund constitutes a reserve fund for federal income tax purposes, (i)
any reserve fund so established shall be an outside reserve fund and not an asset of such
REMIC, (ii) any such reserve fund shall be owned by the Depositor, and (iii) amounts
transferred by such REMIC to any such reserve fund shall be treated as amounts distributed
by such REMIC to the Depositor or any successor, all within the meaning of Treasury
regulations Section 1.860G-2(h) in effect as of the Cut-off Date. In connection with the
provision of any such instrument or fund, this Agreement and any provision hereof may be
modified, added to, deleted or otherwise amended in any manner that is related or incidental
to such instrument or fund or the establishment or administration thereof, such amendment to
be made by written instrument executed or consented to by the Depositor and such related
insurer but without the consent of any Certificateholder and without the consent of the
Master Servicer or the Trustee being required unless any such amendment would impose any
additional obligation on, or otherwise adversely affect the interests of the
Certificateholders, the Master Servicer or the Trustee, as applicable; provided that the
Depositor obtains an Opinion of Counsel (which need not be an opinion of Independent
counsel) to the effect that any such amendment will not cause (a) any federal tax to be
imposed on the Trust Fund, including without limitation, any federal tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on "contributions after the
startup date" under Section 860G(d)(1) of the Code and (b) any REMIC created hereunder to
fail to qualify as a REMIC at any time that any Certificate is outstanding. In the event
that the Depositor elects to provide such coverage in the form of a limited guaranty
provided by General Motors Acceptance Corporation, the Depositor may elect that the text of
such amendment to this Agreement shall be substantially in the form attached hereto as
Exhibit K (in which case Residential Funding's Subordinate Certificate Loss Obligation as
described in such exhibit shall be established by Residential Funding's consent to such
amendment) and that the limited guaranty shall be executed in the form attached hereto as
Exhibit L, with such changes as the Depositor shall deem to be appropriate; it being
understood that the Trustee has reviewed and approved the content of such forms and that the
Trustee's consent or approval to the use thereof is not required.
(f) Notwithstanding anything to the contrary set forth in Sections 11.01 (b), (c), (d),
and (e), any amendment of Sections 4.02(c)(i) through (x) and Section 4.10 of this Agreement
shall require the consent of the Swap Counterparty as a third-party beneficiary of Sections
4.02(c)(x) and 4.10 of this Agreement.
Section 11.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement is subject to recordation
in all appropriate public offices for real property records in all the counties or other
comparable jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere, such
recordation to be effected by the Master Servicer and at its expense on direction by the
Trustee (pursuant to the request of the Holders of Certificates entitled to at least 25% of
the Voting Rights), but only upon direction accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests of the
Certificateholders.
(b) For the purpose of facilitating the recordation of this Agreement as herein provided
and for other purposes, this Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust Fund, nor otherwise affect the rights, obligations and
liabilities of any of the parties hereto.
(b) No Certificateholder shall have any right to vote (except as expressly provided
herein) or in any manner otherwise control the operation and management of the Trust Fund,
or the obligations of the parties hereto, nor shall anything herein set forth, or contained
in the terms of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any Certificateholder
be under any liability to any third person by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provision of this
Agreement to institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Agreement, unless such Holder previously shall have given to the
Trustee a written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates of any Class evidencing in the
aggregate not less than 25% of the related Percentage Interests of such Class, shall have
made written request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such action, suit
or proceeding it being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no one or more
Holders of Certificates of any Class shall have any right in any manner whatever by virtue
of any provision of this Agreement to affect, disturb or prejudice the rights of the Holders
of any other of such Certificates of such Class or any other Class, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce any right under
this Agreement, except in the manner herein provided and for the common benefit of
Certificateholders of such Class or all Classes, as the case may be. For the protection and
enforcement of the provisions of this Section 11.03, each and every Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or in equity.
Section 11.04. Governing Law.
This agreement and the Certificates shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of law principles
thereof, other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, and
the obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 11.05. Notices.
All demands and notices hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered at or mailed by registered mail, postage prepaid
(except for notices to the Trustee which shall be deemed to have been duly given only when
received), to (a) in the case of the Depositor, 0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: President (RASC), or such other address as may
hereafter be furnished to the Master Servicer and the Trustee in writing by the Depositor;
(b) in the case of the Master Servicer, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
00000-0000, Attention: Bond Administration or such other address as may be hereafter
furnished to the Depositor and the Trustee by the Master Servicer in writing; (c) in the
case of the Trustee, the Corporate Trust Office or such other address as may hereafter be
furnished to the Depositor and the Master Servicer in writing by the Trustee; (d) in the
case of Standard & Poor's, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Mortgage
Surveillance or such other address as may be hereafter furnished to the Depositor, Trustee
and Master Servicer by Standard & Poor's; (e) in the case of Moody's, 00 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: ABS Monitoring Department, or such other address as may be
hereafter furnished to the Depositor, the Trustee and the Master Servicer in writing by
Moody's, (f) in the case of the Credit Risk Manager, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxx 00000, Attention: General Counsel or such other address as may hereafter be
furnished to the Depositor and the Master Servicer in writing by the Trustee, and (g) in the
case of the Swap Counterparty, Bear Xxxxxxx Financial Products Inc., 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or such other address as may be hereafter furnished to the Depositor,
the Trustee and the Master Servicer in writing by the Swap Counterparty. Any notice
required or permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such holder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives such notice.
Section 11.06. Notices to Rating Agencies.
The Depositor, the Master Servicer or the Trustee, as applicable, shall notify each
Rating Agency and each Subservicer at such time as it is otherwise required pursuant to this
Agreement to give notice of the occurrence of, any of the events described in clause (a),
(b), (c), (d), (g), (h), (i) or (j) below or provide a copy to each Rating Agency and each
Subservicer at such time as otherwise required to be delivered pursuant to this Agreement of
any of the statements described in clauses (e) and (f) below:
(a) a material change or amendment to this Agreement,
(b) the occurrence of an Event of Default,
(c) the termination or appointment of a successor Master Servicer or Trustee or a change
in the majority ownership of the Trustee,
(d) the filing of any claim under the Master Servicer's blanket fidelity bond and the
errors and omissions insurance policy required by Section 3.12 or the cancellation or
modification of coverage under any such instrument,
(e) the statement required to be delivered to the Holders of each Class of Certificates
pursuant to Section 4.03,
(f) the statements required to be delivered pursuant to Sections 3.18 and 3.19,
(g) a change in the location of the Custodial Account or the Certificate Account,
(h) the occurrence of any monthly cash flow shortfall to the Holders of any Class of
Certificates resulting from the failure by the Master Servicer to make an Advance pursuant
to Section 4.04,
(i) the occurrence of the Final Distribution Date, and
(j) the repurchase of or substitution for any Mortgage Loan, provided, however, that with
respect to notice of the occurrence of the events described in clauses (d), (g) or (h)
above, the Master Servicer shall provide prompt written notice to each Rating Agency and
each Subservicer of any such event known to the Master Servicer.
Section 11.07. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates or the
rights of the Holders thereof.
Section 11.08. Supplemental Provisions for Resecuritization.
This Agreement may be supplemented by means of the addition of a separate
Article hereto (a "Supplemental Article") for the purpose of resecuritizing any of the
Certificates issued hereunder, under the following circumstances. With respect to any
Class or Classes of Certificates issued hereunder, or any portion of any such Class, as to
which the Depositor or any of its Affiliates (or any designee thereof) is the registered
Holder (the "Resecuritized Certificates"), the Depositor may deposit such Resecuritized
Certificates into a new REMIC, grantor trust or custodial arrangement (a "Restructuring
Vehicle") to be held by the Trustee pursuant to a Supplemental Article. The instrument
adopting such Supplemental Article shall be executed by the Depositor, the Master Servicer
and the Trustee; provided, that neither the Master Servicer nor the Trustee shall withhold
their consent thereto if their respective interests would not be materially adversely
affected thereby. To the extent that the terms of the Supplemental Article do not in any
way affect any provisions of this Agreement as to any of the Certificates initially issued
hereunder, the adoption of the Supplemental Article shall not constitute an "amendment" of
this Agreement. Each Supplemental Article shall set forth all necessary provisions relating
to the holding of the Resecuritized Certificates by the Trustee, the establishment of the
Restructuring Vehicle, the issuing of various classes of new certificates by the
Restructuring Vehicle and the distributions to be made thereon, and any other provisions
necessary to the purposes thereof. In connection with each Supplemental Article, the
Depositor shall deliver to the Trustee an Opinion of Counsel to the effect that (i) the
Restructuring Vehicle will qualify as a REMIC, grantor trust or other entity not subject to
taxation for federal income tax purposes and (ii) the adoption of the Supplemental
Article will not endanger the status of any REMIC created hereunder as a REMIC or result in
the imposition of a tax upon the Trust Fund (including but not limited to the tax on
prohibited transaction as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC as set forth in Section 860G(d) of the Code.
Section 11.09. Third-Party Beneficiary.
The Swap Counterparty is an express third-party beneficiary of Sections 4.02(c)(x)
and 4.10 of this Agreement, and shall have the right to enforce the provisions of Sections
4.02(c)(x) and 4.10 of this Agreement as if it were a party hereto.
Section 11.10. Tax Treatment.
Each party to this Agreement and each holder of a Certificate by it acceptance of its
ownership interest in such Certificate, hereby agrees to treat the payment made and received
hereunder and any payments received with respect to any Certificate for federal income tax
purposes consistently with the REMIC structure, the Swap Agreement and the SB-AM Swap
Agreement as set forth herein or incorporated herein and with the deemed payments made with
respect thereto as set forth herein.
ARTICLE XII
COMPLIANCE WITH REGULATION AB
Section 12.01. Intent of Parties; Reasonableness.
The Depositor, the Trustee and the Master Servicer acknowledge and agree that the
purpose of this Article XII is to facilitate compliance by the Depositor with the provisions
of Regulation AB and related rules and regulations of the Commission. The Depositor shall
not exercise its right to request delivery of information or other performance under these
provisions other than in good faith, or for purposes other than compliance with the
Securities Act, the Exchange Act and the rules and regulations of the Commission under the
Securities Act and the Exchange Act. Each of the Master Servicer and the Trustee
acknowledges that interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff, consensus
among participants in the mortgage-backed securities markets, advice of counsel, or
otherwise, and agrees to comply with requests made by the Depositor in good faith for
delivery of information under these provisions on the basis of evolving interpretations of
Regulation AB. Each of the Master Servicer and the Trustee shall cooperate reasonably with
the Depositor to deliver to the Depositor (including any of its assignees or designees), any
and all disclosure, statements, reports, certifications, records and any other information
necessary in the reasonable, good faith determination of the Depositor to permit the
Depositor to comply with the provisions of Regulation AB.
Section 12.02. Additional Representations and Warranties of the Trustee.
(a) The Trustee shall be deemed to represent to the Depositor as of the date hereof and
on each date on which information is provided to the Depositor under Sections 12.01,
12.02(b) or 12.03 that, except as disclosed in writing to the Depositor prior to such date:
(i) it is not aware and has not received notice that any default, early amortization or
other performance triggering event has occurred as to any other Securitization Transaction
due to any default of the Trustee; (ii) there are no aspects of its financial condition that
could have a material adverse effect on the performance by it of its trustee obligations
under this Agreement or any other Securitization Transaction as to which it is the trustee;
(iii) there are no material legal or governmental proceedings pending (or known to be
contemplated) against it that would be material to Certificateholders; (iv) there are no
relationships or transactions relating to the Trustee with respect to the Depositor or any
sponsor, issuing entity, servicer, trustee, originator, significant obligor, enhancement or
support provider or other material transaction party (as such terms are used in
Regulation AB) relating to the Securitization Transaction contemplated by the Agreement, as
identified by the Depositor to the Trustee in writing as of the Closing Date (each, a
"Transaction Party") that are outside the ordinary course of business or on terms other than
would be obtained in an arm's length transaction with an unrelated third party, apart from
the Securitization Transaction, and that are material to the investors' understanding of the
Certificates; and (v) the Trustee is not an affiliate of any Transaction Party. The
Depositor shall notify the Trustee of any change in the identity of a Transaction Party
after the Closing Date.
(b) If so requested by the Depositor on any date following the Closing Date, the Trustee
shall, within five Business Days following such request, confirm in writing the accuracy of
the representations and warranties set forth in paragraph (a) of this Section or, if any
such representation and warranty is not accurate as of the date of such confirmation,
provide the pertinent facts, in writing, to the Depositor. Any such request from the
Depositor shall not be given more than once each calendar quarter, unless the Depositor
shall have a reasonable basis for a determination that any of the representations and
warranties may not be accurate.
Section 12.03. Information to be Provided by the Trustee.
For so long as the Certificates are outstanding, for the purpose of satisfying the
Depositor's reporting obligation under the Exchange Act with respect to any class of
Certificates, the Trustee shall provide to the Depositor a written description of (a) any
litigation or governmental proceedings pending against the Trustee as of the last day of
each calendar month that would be material to Certificateholders, and (b) any affiliations
or relationships (as described in Item 1119 of Regulation AB) that develop following the
Closing Date between the Trustee and any Transaction Party of the type described in
Section 12.02(a)(iv) or 12.02(a)(v) as of the last day of each calendar year. Any
descriptions required with respect to legal proceedings, as well as updates to previously
provided descriptions, under this Section 12.03 shall be given no later than five Business
Days prior to the Determination Date following the month in which the relevant event occurs,
and any notices and descriptions required with respect to affiliations, as well as updates
to previously provided descriptions, under this Section 12.03 shall be given no later than
January 31 of the calendar year following the year in which the relevant event occurs. As
of the date the Depositor or Master Servicer files each Report on Form 10-D and Report on
Form 10-K with respect to the Certificates, the Trustee will be deemed to represent that any
information previously provided under this Article XII is materially correct and does not
have any material omissions unless the Trustee has provided an update to such information.
The Depositor will allow the Trustee to review any disclosure relating to material
litigation against the Trustee prior to filing such disclosure with the Commission to the
extent the Depositor changes the information provided by the Trustee.
Section 12.04. Report on Assessment of Compliance and Attestation.
On or before March 15 of each calendar year, the Trustee shall:
(a) deliver to the Depositor a report (in form and substance reasonably satisfactory to
the Depositor) regarding the Trustee's assessment of compliance with the applicable
Servicing Criteria during the immediately preceding calendar year, as required under Rules
13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such report shall be
addressed to the Depositor and signed by an authorized officer of the Trustee, and shall
address each of the Servicing Criteria specified on Exhibit S hereto; and
(b) deliver to the Depositor a report of a registered public accounting firm reasonably
acceptable to the Depositor that attests to, and reports on, the assessment of compliance
made by the Trustee and delivered pursuant to the preceding paragraph. Such attestation
shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act.
Section 12.05. Indemnification; Remedies.
(a) The Trustee shall indemnify the Depositor, each affiliate of the Depositor, the
Master Servicer and each broker dealer acting as underwriter, placement agent or initial
purchaser of the Certificates or each Person who controls any of such parties (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act); and the
respective present and former directors, officers, employees and agents of each of the
foregoing, and shall hold each of them harmless from and against any losses, damages,
penalties, fines, forfeitures, legal fees and expenses and related costs, judgments, and any
other costs, fees and expenses that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or alleged to be
contained in any information, report, certification or other material provided under
this Article XII by or on behalf of the Trustee (collectively, the "Trustee
Information"), or (B) the omission or alleged omission to state in the Trustee
Information a material fact required to be stated in the Trustee Information or
necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, by way of clarification, that
clause (B) of this paragraph shall be construed solely by reference to the Trustee
Information and not to any other information communicated in connection with a sale
or purchase of securities, without regard to whether the Trustee Information or any
portion thereof is presented together with or separately from such other information;
or
(ii) any failure by the Trustee to deliver any information, report, certification or other
material when and as required under this Article XII, other than a failure by the
Trustee to deliver the accountants' attestation.
(b) In the case of any failure of performance described in clause (ii) of
Section 12.05(a), the Trustee shall (i) promptly reimburse the Depositor for all costs
reasonably incurred by the Depositor in order to obtain the information, report,
certification or other material not delivered as required by the Trustee and (ii) cooperate
with the Depositor to mitigate any damages that may result from such failure.
(c) The Depositor and the Master Servicer shall indemnify the Trustee, each affiliate of
the Trustee or each Person who controls the Trustee (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the respective present and former
directors, officers, employees and agents of the Trustee, and shall hold each of them
harmless from and against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon (i) any untrue statement of a material fact
contained or alleged to be contained in any information provided under this Agreement by or
on behalf of the Depositor or Master Servicer for inclusion in any report filed with
Commission under the Exchange Act (collectively, the "RFC Information"), or (ii) the
omission or alleged omission to state in the RFC Information a material fact required to be
stated in the RFC Information or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided, by way of
clarification, that clause (ii) of this paragraph shall be construed solely by reference to
the RFC Information and not to any other information communicated in connection with a sale
or purchase of securities, without regard to whether the RFC Information or any portion
thereof is presented together with or separately from such other information.
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
RESIDENTIAL ASSET SECURITIES CORPORATION
By:
Name:
Title:
RESIDENTIAL FUNDING CORPORATION
By:
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
as Trustee
By:
Name:
Title:
For purposes of Sections 3.24, 3.25 and 3.26:
XXXXXXX FIXED INCOME SERVICES INC.
By: ________________________________
Name:
Title:
STATE OF MINNESOTA
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of May 2006 before me, a notary public in and for said State,
personally appeared ________________, known to me to be a Vice President of Residential
Asset Securities Corporation, one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day
and year in this certificate first above written.
Notary Public
________________________________________
[Notarial Seal]
STATE OF MINNESOTA
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of May 2006 before me, a notary public in and for said State,
personally appeared _______________, known to me to be an Associate of Residential Funding
Corporation, one of the corporations that executed the within instrument, and also known to
me to be the person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day
and year in this certificate first above written.
Notary Public
________________________________________
[Notarial Seal]
STATE OF MINNESOTA
) ss.:
COUNTY OF HENNEPIN )
On the ____ day of May 2006 before me, a notary public in and for said State,
personally appeared ____________________, known to me to be a Vice President of U.S. Bank
National Association, a banking association organized under the laws of the United States
that executed the within instrument, and also known to me to be the person who executed it
on behalf of said banking corporation and acknowledged to me that such banking corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day
and year in this certificate first above written.
Notary Public
________________________________________
[Notarial Seal]
EXHIBIT A
FORM OF CLASS A-[_] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 COUPLED WITH THE RIGHT TO RECEIVE PAYMENTS
UNDER THE SWAP AGREEMENT.
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL
PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE
OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM
THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED BY VIRTUE OF ITS
PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST THEREIN) THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE OR A PERSON (INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL
ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING
"PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION.
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY ANY PERSON THAT DOES
NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING PARAGRAPH, THEN THE LAST PRECEDING
TRANSFEREE THAT IS NOT A PLAN INVESTOR SHALL BE RESTORED, TO THE EXTENT PERMITTED BY LAW, TO ALL
RIGHTS AND OBLIGATIONS AS CERTIFICATE OWNER THEREOF RETROACTIVE TO THE DATE OF SUCH TRANSFER OF
THIS CERTIFICATE. THE TRUSTEE SHALL BE UNDER NO LIABILITY TO ANY PERSON FOR MAKING ANY PAYMENTS
DUE ON THIS CERTIFICATE TO SUCH PRECEDING TRANSFEREE.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE (OR
INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN SECTION 5.02(E) OF THE POOLING
AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER
SERVICER, ANY SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH ACQUISITION OR HOLDING.
CUSIP: _____________________ Certificate No. A-[__]-__
Date of Pooling and Servicing Agreement [Adjustable Pass-Through Rate]
and Cut-off Date: May 1, 2006
First Distribution Date: June 26, 2006 Aggregate Initial Certificate Principal
Balance of the Class A-[_] Certificates:
$___________________________
Master Servicer: Initial Certificate Principal Balance of this
Residential Funding Corporation Class A-[_] Certificate:
$___________________________
Final Scheduled Distribution Date:
__________ __, 20__
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS4
evidencing a percentage interest in the distributions allocable to
the Class A-[_] Certificates with respect to a Trust Fund consisting
primarily of a pool of [fixed] [adjustable] interest rate, first [and
junior] lien mortgage loans on one- to four-family residential
properties sold by RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund, and does not
represent an obligation of or interest in Residential Asset Securities Corporation, the Master
Servicer, the Trustee referred to below or GMAC Mortgage Group, Inc. or any of their affiliates.
Neither this Certificate nor the underlying mortgage loans are guaranteed or insured by any
governmental agency or instrumentality or by Residential Asset Securities Corporation, the Master
Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their affiliates. None of the
Depositor, the Master Servicer, GMAC Mortgage Group, Inc. or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or payable from payments
on the Certificates.
This certifies that [Cede & Co.] is the registered owner of the Percentage Interest
evidenced by this Certificate in certain distributions with respect to the Trust Fund consisting
primarily of an interest in a pool of [fixed] [adjustable] interest rate, first [and junior] lien
mortgage loans on one- to four- family residential properties (the "Mortgage Loans"), sold by
Residential Asset Securities Corporation (hereinafter called the "Depositor," which term includes
any successor entity under the Agreement referred to below). The Trust Fund was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, the Master Servicer and U.S. Bank National Association, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th day of each
month or, if such 25th day is not a Business Day, the Business Day immediately following (the
"Distribution Date"), commencing as described in the Agreement, to the Person in whose name this
Certificate is registered at the close of business on the Business Day immediately preceding that
Distribution Date (the "Record Date"), from the related Available Distribution Amount in an amount
equal to the product of the Percentage Interest evidenced by this Certificate and the amount of
interest and principal, if any, required to be distributed to Holders of Class A-[_] Certificates
on such Distribution Date.
Distributions on this Certificate will be made either by the Master Servicer acting on
behalf of the Trustee or by a Paying Agent appointed by the Trustee in immediately available funds
(by wire transfer or otherwise) for the account of the Person entitled thereto if such Person
shall have so notified the Master Servicer or such Paying Agent, or by check mailed to the address
of the Person entitled thereto, as such name and address shall appear on the Certificate Register.
Any Transferee of this Certificate will be deemed to have represented by virtue of its
purchase or holding of this Certificate (or interest therein) that such transferee is not an
employee benefit plan or other plan or arrangement subject to the prohibited transaction
provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code or a person (including an insurance company investing its general
account, an investment manager, a named fiduciary or a trustee of any such plan) who is using
"plan assets" of any such plan to effect such acquisition. Any purported Certificate owner whose
acquisition or holding of this Certificate (or interest therein) was effected in violation of the
restrictions in Section 5.02(e) of the Pooling and Servicing Agreement shall indemnify and hold
harmless the Depositor, the Trustee, the Master Servicer, any Subservicer, and the Trust Fund from
and against any and all liabilities, claims, costs or expenses incurred by such parties as a
result of such acquisition or holding.
Notwithstanding the above, the final distribution on this Certificate will be made after
due notice of the pendency of such distribution and only upon presentation and surrender of, this
Certificate at the office or agency appointed by the Trustee for that purpose in St. Xxxx,
Minnesota. The Initial Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced [from time to time pursuant to the Agreement].
This Certificate is one of a duly authorized issue of Certificates issued in several
Classes designated as Home Equity Mortgage Asset-Backed Pass-Through Certificates of the Series
specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections and recoveries
respecting the Mortgage Loans, all as more specifically set forth herein and in the Agreement. In
the event Master Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement, from related
recoveries on such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account and/or the Certificate
Account created for the benefit of Certificateholders may be made by the Master Servicer from
time to time for purposes other than distributions to Certificateholders, such purposes including
without limitation reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the amendment of the
Agreement and the modification of the rights and obligations of the Depositor, the Master Servicer
and the Trustee and the rights of the Certificateholders under the Agreement from time to time by
the Depositor, the Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of each Class of
Certificates affected thereby. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of any of the
Certificates and, in certain additional circumstances, without the consent of the Holders of
certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein set forth, the
transfer of this Certificate is registrable in the Certificate Register upon surrender of this
Certificate for registration of transfer at the offices or agencies appointed by the Trustee in
St. Xxxx, Minnesota, duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and there
upon one or more new Certificates of authorized denominations evidencing the same Class and
aggregate Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in Classes
and in denominations specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same Class and aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate Registrar and any
agent of the Depositor, the Master Servicer, the Trustee or the Certificate Registrar may treat
the Person in whose name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Master Servicer, the Trustee or any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with the laws of the
State of New York.
The obligations created by the Agreement in respect of the Certificates and the Trust Fund
created thereby shall terminate upon the payment to Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the Agreement following the
earlier of (i) the maturity or other liquidation of the last Mortgage Loan subject thereto or the
disposition of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, and (ii) the purchase by the Holder of the Class SB Certificates or the Master
Servicer, as described in the Agreement, from the Trust Fund of all remaining Mortgage Loans and
all property acquired in respect of such Mortgage Loans or the Certificates, in either case
thereby effecting early retirement of the Certificates. The Agreement permits, but does not
require, the Holder of the Class SB Certificates or the Master Servicer, as described in the
Agreement, (i) to purchase, at a price determined as provided in the Agreement, all remaining
Mortgage Loans and all property acquired in respect of any Mortgage Loan or (ii) to purchase in
whole, but not in part, all of the Certificates from the Holders thereof, provided, that any such
option may only be exercised if the Stated Principal Balance before giving effect to the
distributions to be made on such Distribution Date of the Mortgage Loans, as of the Distribution
Date upon which the proceeds of any such purchase are distributed is less than ten percent of the
Cut-off Date Balance.
Unless the certificate of authentication hereon has been executed by the Certificate
Registrar, by manual signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[_] Certificates referred to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
___________________________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of assignee) the beneficial
interest evidenced by the within Trust Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate to the following
address:
_____________________________________________________________________________________________________
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately available fund
to____________________________________________________________________________
for the account of __________________________________________________________________________
account number ______________________________________________________________________________
or, if mailed by check, to __________________________________________________________________
Applicable statements should be mailed to:___________________________________________.
This information is provided by ___________________________________, the assignee named
above, or ______________________________, as its agent.
EXHIBIT B-1
FORM OF CLASS M-[_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND CLASS M-[_]
CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL
PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE
OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM
THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") COUPLED WITH THE RIGHT TO RECEIVE
PAYMENTS UNDER THE SWAP AGREEMENT.
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED BY VIRTUE OF ITS
PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST THEREIN) THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE OR A PERSON (INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL
ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING
"PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION.
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY ANY PERSON THAT DOES
NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING PARAGRAPH, THEN THE LAST PRECEDING
TRANSFEREE THAT IS NOT A PLAN INVESTOR SHALL BE RESTORED, TO THE EXTENT PERMITTED BY LAW, TO ALL
RIGHTS AND OBLIGATIONS AS CERTIFICATE OWNER THEREOF RETROACTIVE TO THE DATE OF SUCH TRANSFER OF
THIS CERTIFICATE. THE TRUSTEE SHALL BE UNDER NO LIABILITY TO ANY PERSON FOR MAKING ANY PAYMENTS
DUE ON THIS CERTIFICATE TO SUCH PRECEDING TRANSFEREE.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE (OR
INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN SECTION 5.02(E) OF THE POOLING
AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER
SERVICER, ANY SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH ACQUISITION OR HOLDING.
CUSIP: _____________________ Certificate No. M-[__]-__
Date of Pooling and Servicing Agreement [Adjustable Pass-Through Rate]
and Cut-off Date: May 1, 2006 [Fixed Pass-Through Rate]
First Distribution Date: June 26, 2006 Aggregate Initial Certificate Principal
Balance of the Class M-[_] Certificates:
$___________________________
Master Servicer: Initial Certificate Principal Balance of this
Residential Funding Corporation Class M-[_] Certificate:
$___________________________
Final Scheduled Distribution Date:
__________ __, 20__
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS4
evidencing a percentage interest in the distributions allocable to
the Class M-[_] Certificates with respect to a Trust Fund consisting
primarily of a pool of [fixed] [adjustable] interest rate, first [and
junior] lien mortgage loans on one- to four-family residential
properties sold by RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund, and does not
represent an obligation of or interest in Residential Asset Securities Corporation, the Master
Servicer, the Trustee referred to below or GMAC Mortgage Group, Inc. or any of their affiliates.
Neither this Certificate nor the underlying mortgage loans are guaranteed or insured by any
governmental agency or instrumentality or by Residential Asset Securities Corporation, the Master
Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their affiliates. None of the
Depositor, the Master Servicer, GMAC Mortgage Group, Inc. or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or payable from payments
on the Certificates.
This certifies that [Cede & Co.] is the registered owner of the Percentage Interest
evidenced by this Certificate in certain distributions with respect to the Trust Fund consisting
primarily of an interest in a pool of [fixed] [adjustable] interest rate, first [and junior] lien
mortgage loans on one- to four- family residential properties (the "Mortgage Loans"), sold by
Residential Asset Securities Corporation (hereinafter called the "Depositor," which term includes
any successor entity under the Agreement referred to below). The Trust Fund was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, the Master Servicer and U.S. Bank National Association, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th day of each
month or, if such 25th day is not a Business Day, the Business Day immediately following (the
"Distribution Date"), commencing as described in the Agreement, to the Person in whose name this
Certificate is registered at the close of business on the Business Day immediately preceding that
Distribution Date (the "Record Date"), from the related Available Distribution Amount in an amount
equal to the product of the Percentage Interest evidenced by this Certificate and the amount of
interest and principal, if any, required to be distributed to Holders of Class M-[_] Certificates
on such Distribution Date.
Distributions on this Certificate will be made either by the Master Servicer acting on
behalf of the Trustee or by a Paying Agent appointed by the Trustee in immediately available funds
(by wire transfer or otherwise) for the account of the Person entitled thereto if such Person
shall have so notified the Master Servicer or such Paying Agent, or by check mailed to the address
of the Person entitled thereto, as such name and address shall appear on the Certificate Register.
Any Transferee of this Certificate will be deemed to have represented by virtue of its
purchase or holding of this Certificate (or interest therein) that such transferee is not an
employee benefit plan or other plan or arrangement subject to the prohibited transaction
provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code or a person (including an insurance company investing its general
account, an investment manager, a named fiduciary or a trustee of any such plan) who is using
"plan assets" of any such plan to effect such acquisition. Any purported Certificate owner whose
acquisition or holding of this Certificate (or interest therein) was effected in violation of the
restrictions in Section 5.02(e) of the Pooling and Servicing Agreement shall indemnify and hold
harmless the Depositor, the Trustee, the Master Servicer, any Subservicer, and the Trust Fund from
and against any and all liabilities, claims, costs or expenses incurred by such parties as a
result of such acquisition or holding.
Notwithstanding the above, the final distribution on this Certificate will be made after
due notice of the pendency of such distribution and only upon presentation and surrender of, this
Certificate at the office or agency appointed by the Trustee for that purpose in St. Xxxx,
Minnesota. The Initial Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of distributions allocable to
principal and any Realized Losses allocable hereto.
This Certificate is one of a duly authorized issue of Certificates issued in several
Classes designated as Home Equity Mortgage Asset-Backed Pass-Through Certificates of the Series
specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections and recoveries
respecting the Mortgage Loans, all as more specifically set forth herein and in the Agreement. In
the event Master Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement, from related
recoveries on such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account and/or the Certificate
Account created for the benefit of Certificateholders may be made by the Master Servicer from time
to time for purposes other than distributions to Certificateholders, such purposes including
without limitation reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the amendment of the
Agreement and the modification of the rights and obligations of the Depositor, the Master Servicer
and the Trustee and the rights of the Certificateholders under the Agreement from time to time by
the Depositor, the Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of each Class of
Certificates affected thereby. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of any of the
Certificates and, in certain additional circumstances, without the consent of the Holders of
certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein set forth, the
transfer of this Certificate is registrable in the Certificate Register upon surrender of this
Certificate for registration of transfer at the offices or agencies appointed by the Trustee in
St. Xxxx, Minnesota, duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and there
upon one or more new Certificates of authorized denominations evidencing the same Class and
aggregate Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in Classes
and in denominations specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same Class and aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate Registrar and any
agent of the Depositor, the Master Servicer, the Trustee or the Certificate Registrar may treat
the Person in whose name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Master Servicer, the Trustee or any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with the laws of the
State of New York.
The obligations created by the Agreement in respect of the Certificates and the Trust Fund
created thereby shall terminate upon the payment to Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the Agreement following the
earlier of (i) the maturity or other liquidation of the last Mortgage Loan subject thereto or the
disposition of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, and (ii) the purchase by the Holder of the Class SB Certificates or the Master
Servicer, as described in the Agreement, from the Trust Fund of all remaining Mortgage Loans and
all property acquired in respect of such Mortgage Loans or the Certificates, in either case
thereby effecting early retirement of the Certificates. The Agreement permits, but does not
require, the Holder of the Class SB Certificates or the Master Servicer, as described in the
Agreement, (i) to purchase, at a price determined as provided in the Agreement, all remaining
Mortgage Loans and all property acquired in respect of any Mortgage Loan or (ii) to purchase in
whole, but not in part, all of the Certificates from the Holders thereof, provided, that any such
option may only be exercised if the Stated Principal Balance before giving effect to the
distributions to be made on such Distribution Date of the Mortgage Loans, as of the Distribution
Date upon which the proceeds of any such purchase are distributed is less than ten percent of the
Cut-off Date Balance.
Unless the certificate of authentication hereon has been executed by the Certificate
Registrar, by manual signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[_] Certificates referred to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
___________________________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of assignee) the beneficial
interest evidenced by the within Trust Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate to the following
address:
_____________________________________________________________________________________________________
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately available fund
to____________________________________________________________________________
for the account of __________________________________________________________________________
account number ______________________________________________________________________________
or, if mailed by check, to __________________________________________________________________
Applicable statements should be mailed to:___________________________________________.
This information is provided by ___________________________________, the assignee named
above, or ______________________________, as its agent.
EXHIBIT B-2
FORM OF CLASS B CERTIFICATE
[REGULATION S GLOBAL SECURITY] [RULE 144A GLOBAL CERTIFICATE] [REGULATION S CERTIFICATED SECURITY]
[DEFINITIVE]
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A CERTIFICATES AND CLASS
M CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL
PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE
OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM
THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
[FOR BOOK-ENTRY ONLY: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") COUPLED WITH A RIGHT TO RECEIVE
PAYMENTS UNDER THE APPLICABLE SWAP AGREEMENT.
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED BY VIRTUE OF ITS
PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST THEREIN) THAT EITHER (A) SUCH TRANSFEREE IS
NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE OR A PERSON (INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL
ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING
"PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION (EACH OF THE FOREGOING, A "PLAN
INVESTOR"), (B) IT HAS ACQUIRED AND IS HOLDING THIS CERTIFICATE IN RELIANCE ON U.S. DEPARTMENT OF
LABOR PROHIBITED TRANSACTION EXEMPTION ("PTE") 94-29, 59 FED. REG. 14674 (MARCH 29, 1994), AS MOST
RECENTLY AMENDED BY PTE 2002-41, 67 FED. REG. 54487 (AUGUST 22, 2002) (THE "RFC EXEMPTION"), AND
THAT [(I)] IT UNDERSTANDS THAT THERE ARE CERTAIN CONDITIONS TO THE AVAILABILITY OF THE RFC
EXEMPTION INCLUDING THAT THIS CERTIFICATE MUST BE RATED, AT THE TIME OF PURCHASE, NOT LOWER THAN
"BBB-" (OR ITS EQUIVALENT) BY STANDARD & POOR'S, FITCH OR XXXXX'X [AND (II) IT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(A)(1) OF REGULATION D OF THE SECURITIES ACT OF 1933, AS AMENDED,]
OR (C) (I) THE TRANSFEREE IS AN INSURANCE COMPANY, (II) THE SOURCE OF FUNDS USED TO PURCHASE OR
HOLD THIS CERTIFICATE IS AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS DEFINED IN U.S. DEPARTMENT OF
LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60), AND (III) THE CONDITIONS SET FORTH
IN SECTIONS I AND III OF PTCE 95-60 HAVE BEEN SATISFIED (EACH ENTITY THAT SATISFIES THIS CLAUSE
(C), A "COMPLYING INSURANCE COMPANY").
THIS CERTIFICATE IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT (THE "AGREEMENT").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS IN THE UNITED STATES OR THE
SECURITIES LAWS OF ANY OTHER JURISDICTION AND MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED STATES
PERSONS, EXCEPT AS PERMITTED BY THIS LEGEND. THE HOLDER HEREOF, BY ITS ACCEPTANCE OF THIS
CERTIFICATE, REPRESENTS, ACKNOWLEDGES AND AGREES THAT IT WILL NOT REOFFER, RESELL, PLEDGE OR
OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND [EXCEPT (A) IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN RULE 144A
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, WHOM THE
SELLER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, PROVIDED THAT SUCH PURCHASER DELIVERS ALL DOCUMENTS AND
CERTIFICATIONS AS THE TRUSTEE MAY REASONABLY REQUIRE; (B) TO A NON U.S. PERSON OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT; OR (C) TO THE
DEPOSITOR OR MASTER SERVICER OR THEIR AFFILIATES, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAW OF ANY STATE OF THE UNITED STATES AND ANY OTHER JURISDICTION. THE HOLDER HEREOF,
BY ITS ACCEPTANCE OF THIS CERTIFICATE, REPRESENTS, ACKNOWLEDGES AND AGREES THAT IT WILL NOT
REOFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT TO A NON-U.S. PERSON OUTSIDE
THE UNITED STATES IN COMPLIANCE WITH REGULATION S] [THAT IT IS AN "ACCREDITED INVESTOR" AS DEFINED
IN RULE 501(A)(1) OF REGULATION D OF THE SECURITIES ACT OF 1933, AS AMENDED.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE (OR
INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN SECTION 5.02(e)(ii) OF THE
POOLING AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE
MASTER SERVICER, ANY SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES,
CLAIMS, COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH ACQUISITION OR HOLDING.
[FOR TEMPORARY REGULATION S ONLY: THIS CERTIFICATE IS A TEMPORARY REGULATION S GLOBAL
CERTIFICATE, WITHOUT COUPONS, EXCHANGEABLE FOR A PERMANENT REGULATION S GLOBAL CERTIFICATE ONLY AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT. THE RIGHTS ATTACHING TO THIS TEMPORARY
REGULATION S GLOBAL CERTIFICATE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A
PERMANENT REGULATION S GLOBAL CERTIFICATE, ARE AS SPECIFIED IN THE POOLING AND SERVICING
AGREEMENT.]
CUSIP: [________________] Certificate No. B-1
Date of Pooling and Servicing Agreement: Adjustable Pass-Through Rate
[_______ __, __]Cut-off Date: [_______ __, __]
First Distribution Date: [_______ __, __] Aggregate Initial Certificate Principal
Balance of the Class B Certificates:
$[_______.__]
Master Servicer: Initial Certificate Principal Balance of this
Residential Funding Corporation Class B Certificate:
$[_______.__]
Final Scheduled Distribution Date:
[______ ____]
[REGULATION S GLOBAL SECURITY] [RULE 144A GLOBAL CERTIFICATE] [REGULATION S CERTIFICATED SECURITY]
[DEFINITIVE]
CLASS B CERTIFICATE
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS4
evidencing a percentage interest in the distributions allocable to
the [Regulation S Global Security] [Rule 144a Global Certificate]
[Regulation S Certificated Security] [Definitive] Class B
Certificates with respect to a Trust Fund consisting primarily of a
pool of fixed and adjustable interest rate, first and junior lien
mortgage loans on one- to four-family residential properties sold by
RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund, and does not
represent an obligation of or interest in Residential Asset Securities Corporation, the Master
Servicer, the Trustee referred to below or GMAC Mortgage Group, Inc. or any of their affiliates.
Neither this Certificate nor the underlying mortgage loans are guaranteed or insured by any
governmental agency or instrumentality or by Residential Asset Securities Corporation, the Master
Servicer, the Trustee or GMAC Mortgage Group, Inc. or any of their affiliates. None of the
Depositor, the Master Servicer, GMAC Mortgage Group, Inc. or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or payable from payments
on the Certificates.
This certifies that [_____________] is the registered owner of the Percentage Interest
evidenced by this Certificate in certain distributions with respect to the Trust Fund consisting
primarily of an interest in a pool of fixed interest rate, first and junior lien mortgage loans on
one- to four- family residential properties (the "Mortgage Loans"), sold by Residential Asset
Securities Corporation (hereinafter called the "Depositor," which term includes any successor
entity under the Agreement referred to below). The Trust Fund was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") among the Depositor, the Master
Servicer and U.S. Bank National Association, as trustee (the "Trustee"), a summary of certain of
the pertinent provisions of which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th day of each
month or, if such 25th day is not a Business Day, the Business Day immediately following (the
"Distribution Date"), commencing as described in the Agreement, to the Person in whose name this
Certificate is registered at the close of business on the Business Day immediately preceding that
Distribution Date (the "Record Date"), from the related Available Distribution Amount in an amount
equal to the product of the Percentage Interest evidenced by this Certificate and the amount of
interest and principal, if any, required to be distributed to Holders of Class B Certificates on
such Distribution Date.
[FOR TEMPORARY REGULATION S ONLY: Interests in this Temporary Regulation S Global
Certificate shall be exchanged for beneficial interests in the Permanent Regulation S Global
Certificate in the same aggregate principal amount as the principal amount of the interest in this
Temporary Regulation S Global Certificate submitted for exchange, subject to the terms of this
Temporary Regulation S Global Certificate. No holder of any interest in this Temporary Regulation
S Global Certificate will be entitled to receive any payment hereon except to the extent such
holder's interest in this Temporary Regulation S Global Certificate is exchanged for an interest
in the Permanent Regulation S Global Certificate as provided in the next succeeding paragraph.
Upon termination of the [Distribution Compliance Period], interests in this
Temporary Regulation S Global Certificate shall be exchangeable for interests in the Permanent
Regulation S Global Certificate upon presentation of a certificate substantially in the form set
out in Exhibits to the Agreement, to the effect that it has received from or in respect of a
person entitled to a Certificate (as shown by its records) a certificate from such person in or
substantially in the form as set out in the Exhibits to the Agreement. On an exchange of the
whole of this Temporary Regulation S Global Certificate, this Temporary Regulation S Global
Certificate shall be surrendered to the Trustee.]
Distributions on this Certificate will be made either by the Master Servicer acting on
behalf of the Trustee or by a Paying Agent appointed by the Trustee in immediately available funds
(by wire transfer or otherwise) for the account of the Person entitled thereto if such Person
shall have so notified the Master Servicer or such Paying Agent, or by check mailed to the address
of the Person entitled thereto, as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be made after
due notice of the pendency of such distribution and only upon presentation and surrender of, this
Certificate at the office or agency appointed by the Trustee for that purpose in St. Xxxx,
Minnesota. The Initial Certificate Principal Balance of this Certificate is set forth above. The
Certificate Principal Balance hereof will be reduced to the extent of distributions allocable to
principal and any Realized Losses allocable hereto.
Any Transferee of this Certificate will be deemed to have made representations relating to
the permissibility of such transfer under ERISA and Section 4975 of the Code, as described in
Section 5.02(e)(ii) of the Agreement. In addition, any purported Certificate Owner whose
acquisition or holding of this Certificate (or interest therein) was effected in violation of the
restrictions in Section 5.02(e)(ii) of the Agreement shall indemnify and hold harmless the
Depositor, the Trustee, the Master Servicer, any Subservicer, any underwriter and the Trust Fund
from and against any and all liabilities, claims, costs or expenses incurred by such parties as a
result of such acquisition or holding.
This Certificate is one of a duly authorized issue of Certificates issued in several
Classes designated as Home Equity Mortgage Asset-Backed Pass-Through Certificates of the Series
specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections and recoveries
respecting the Mortgage Loans, all as more specifically set forth herein and in the Agreement. In
the event Master Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement, from related
recoveries on such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account and/or the Certificate
Account created for the benefit of Certificateholders may be made by the Master Servicer from time
to time for purposes other than distributions to Certificateholders, such purposes including
without limitation reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the amendment of the
Agreement and the modification of the rights and obligations of the Depositor, the Master Servicer
and the Trustee and the rights of the Certificateholders under the Agreement from time to time by
the Depositor, the Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of each Class of
Certificates affected thereby. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of any of the
Certificates and, in certain additional circumstances, without the consent of the Holders of
certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein set forth, the
transfer of this Certificate is registrable in the Certificate Register upon surrender of this
Certificate for registration of transfer at the offices or agencies appointed by the Trustee in
St. Xxxx, Minnesota, duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and there
upon one or more new Certificates of authorized denominations evidencing the same Class and
aggregate Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in Classes
and in denominations specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same Class and aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, and the Certificate Registrar and any
agent of the Depositor, the Master Servicer, the Trustee or the Certificate Registrar may treat
the Person in whose name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Master Servicer, the Trustee or any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with the laws of the
State of New York.
The obligations created by the Agreement in respect of the Certificates and the Trust Fund
created thereby shall terminate upon the payment to Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the Agreement following the
earlier of (i) the maturity or other liquidation of the last Mortgage Loan subject thereto or the
disposition of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, and (ii) the purchase by the Master Servicer from the Trust Fund of all remaining
Mortgage Loans and all property acquired in respect of such Mortgage Loans or the Certificates, in
either case thereby effecting early retirement of the Certificates. The Agreement permits, but
does not require the Master Servicer (i) to purchase, at a price determined as provided in the
Agreement, all remaining Mortgage Loans and all property acquired in respect of any Mortgage Loan
or (ii) to purchase in whole, but not in part, all of the Certificates from the Holders thereof,
provided, that any such option may only be exercised if the Stated Principal Balance before giving
effect to the distributions to be made on such Distribution Date of the Mortgage Loans, as of the
Distribution Date upon which the proceeds of any such purchase are distributed is less than ten
percent of the Cut-off Date Balance.
Unless the certificate of authentication hereon has been executed by the Certificate
Registrar, by manual signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[_] Certificates referred to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
___________________________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of assignee) the beneficial
interest evidenced by the within Trust Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate to the following
address:
_____________________________________________________________________________________________________
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately available fund
to____________________________________________________________________________
for the account of __________________________________________________________________________
account number ______________________________________________________________________________
or, if mailed by check, to __________________________________________________________________
Applicable statements should be mailed to:___________________________________________.
This information is provided by ___________________________________, the assignee named
above, or ______________________________, as its agent.
EXHIBIT C
CLASS SB-[_] CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND CLASS M
CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") COUPLED WITH THE RIGHT TO RECEIVE
PAYMENTS UNDER THE SWAP AGREEMENT.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT (THE
"AGREEMENT").
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED BY VIRTUE OF ITS
PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST THEREIN) THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE OR A PERSON (INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL
ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING
"PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION.
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY ANY PERSON THAT DOES
NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING PARAGRAPH, THEN THE LAST PRECEDING
TRANSFEREE THAT IS NOT A PLAN INVESTOR SHALL BE RESTORED, TO THE EXTENT PERMITTED BY LAW, TO ALL
RIGHTS AND OBLIGATIONS AS CERTIFICATE OWNER THEREOF RETROACTIVE TO THE DATE OF SUCH TRANSFER OF
THIS CERTIFICATE. THE TRUSTEE SHALL BE UNDER NO LIABILITY TO ANY PERSON FOR MAKING ANY PAYMENTS
DUE ON THIS CERTIFICATE TO SUCH PRECEDING TRANSFEREE.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE (OR
INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN SECTION 5.02(E) OF THE POOLING
AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER
SERVICER, ANY SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH ACQUISITION OR HOLDING.
NO TRANSFER OF THIS CERTIFICATE OR INTEREST HEREIN MAY BE MADE BY A HOLDER OF THIS
CERTIFICATE UNLESS THAT TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT, AND EFFECTIVE REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS, OR
IS MADE IN A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION. FURTHERMORE,
THE AGREEMENT PROVIDES THAT NO TRANSFER OF THIS CERTIFICATE OR INTEREST HEREIN MAY BE MADE BY A
HOLDER OF THIS CERTIFICATE EXCEPT (I) OUTSIDE THE UNITED STATES TO ENTITIES WHICH ARE NOT U.S.
PERSONS WITHIN THE MEANING OF REGULATION S UNDER THE 1933 ACT OR (II) IN RELIANCE ON RULE 144A
UNDER THE 1933 ACT ("RULE 144A") TO A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) THAT
IS ACQUIRING THIS CERTIFICATE OR INTEREST HEREIN FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER
QUALIFIED INSTITUTIONAL BUYER.
EACH HOLDER OF THIS CERTIFICATE WILL BE DEEMED TO HAVE ACKNOWLEDGED AND AGREED THAT (I) IT
IS (A) A QUALIFIED INSTITUTIONAL BUYER AND IS ACQUIRING THIS CERTIFICATE FOR ITS OWN INSTITUTIONAL
ACCOUNT OR FOR THE ACCOUNT OR ACCOUNTS OF A QUALIFIED INSTITUTIONAL BUYER, OR (B) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS CERTIFICATE OUTSIDE THE UNITED STATES (A "REGULATION S PURCHASER");
AND (II) IT UNDERSTANDS THAT THIS CERTIFICATE IS BEING TRANSFERRED TO IT IN A TRANSACTION NOT
INVOLVING ANY PUBLIC OFFERING WITHIN THE MEANING OF THE 1933 ACT, AND THAT, IF IN THE FUTURE IT
DECIDES TO RESELL, PLEDGE OR OTHERWISE TRANSFER THIS CERTIFICATE, THIS CERTIFICATE MAY BE RESOLD,
PLEDGED OR TRANSFERRED ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AND (A) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, TO A PERSON THAT THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT (OR FOR THE ACCOUNT OR
ACCOUNTS OF A QUALIFIED INSTITUTIONAL BUYER) AND TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE
OR TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (B) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S.
THE HOLDER OF THIS CERTIFICATE DESIRING TO EFFECT ANY TRANSFER, SALE, PLEDGE OR OTHER
DISPOSITION SHALL, AND BY ACCEPTANCE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE AGREED TO,
INDEMNIFY THE TRUSTEE, THE DEPOSITOR, THE MASTER SERVICER AND THE CERTIFICATE REGISTRAR AGAINST
ANY LIABILITY THAT MAY RESULT IF THE TRANSFER, SALE, PLEDGE OR OTHER DISPOSITION IS NOT SO EXEMPT
OR IS NOT MADE IN ACCORDANCE WITH SUCH FEDERAL AND STATE LAWS AND THE AGREEMENT.
CUSIP: _____________________ Certificate No. SB-[__]-1
Date of Pooling and Servicing Agreement Percentage Interest: [__]%
and Cut-off Date: May 1, 2006
First Distribution Date: June 26, 2006 Aggregate Initial Certificate Principal
Balance
of the Class SB-[_] Certificates:
$___________________________
Master Servicer: Initial Certificate Principal Balance
Residential Funding Corporation of this Class SB-[_] Certificate:
$___________________________
Maturity Date:
__________ __, 20__
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS4
evidencing a percentage interest in the distributions allocable to
the Class SB-[_] Certificates with respect to a Trust Fund consisting
primarily of a pool of [fixed] [adjustable] interest rate, first [and
junior] lien mortgage loans on one- to four-family residential
properties sold by RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund, and does not
represent an obligation of or interest in Residential Asset Securities Corporation, the Master
Servicer, the Trustee referred to below or any of their affiliates. Neither this Certificate nor
the underlying mortgage loans are guaranteed or insured by any governmental agency or
instrumentality or by Residential Asset Securities Corporation, the Master Servicer, the Trustee
or any of their affiliates. None of the Depositor, the Master Servicer or any of their affiliates
will have any obligation with respect to any certificate or other obligation secured by or payable
from payments on the Certificates.
This certifies that [ Citigroup Global Markets Inc.] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with respect to the
Trust Fund consisting primarily of an interest in a pool of [fixed] [adjustable] interest rate,
first [and junior] lien mortgage loans on one- to four-family residential properties (the
"Mortgage Loans"), sold by Residential Asset Securities Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement referred to below). The
Trust Fund was created pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among the Depositor, the Master Servicer and U.S. Bank National Association, as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by
virtue of the acceptance hereof, assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th day of each
month or, if such 25th day is not a Business Day, the Business Day immediately following (the
"Distribution Date"), commencing as described in the Agreement, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from the Available
Distribution Amount in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount of interest and principal, if any, required to be distributed to
Holders of Class SB-[_] Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master Servicer acting on
behalf of the Trustee or by a Paying Agent appointed by the Trustee in immediately available funds
(by wire transfer or otherwise) for the account of the Person entitled thereto if such Person
shall have so notified the Master Servicer or such Paying Agent, or by check mailed to the address
of the Person entitled thereto, as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be made after
due notice of the pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose in St. Xxxx,
Minnesota. The Notional Amount of this Class SB-[_] Certificate as of any date of determination
will be calculated as described in the Agreement. This Class SB-[_] Certificate will accrue
interest at the Pass-Through Rate on the Notional Amount as indicated in the definition of Accrued
Certificate Interest in the Agreement. This Class SB-[_] Certificate will not accrue interest on
its Certificate Principal Balance.
Any Transferee of this Certificate will be deemed to have represented by virtue of its
purchase or holding of this Certificate (or interest therein) that such transferee is not an
employee benefit plan or other plan or arrangement subject to the prohibited transaction
provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code or a person (including an insurance company investing its general
account, an investment manager, a named fiduciary or a trustee of any such plan) who is using
"plan assets" of any such plan to effect such acquisition. Any purported Certificate owner whose
acquisition or holding of this Certificate (or interest therein) was effected in violation of the
restrictions in Section 5.02(e) of the Pooling and Servicing Agreement shall indemnify and hold
harmless the Depositor, the Trustee, the Master Servicer, any Subservicer, and the Trust Fund from
and against any and all liabilities, claims, costs or expenses incurred by such parties as a
result of such acquisition or holding.
This Certificate is one of a duly authorized issue of Certificates issued in several
Classes designated as Home Equity Mortgage Asset-Backed Pass-Through Certificates of the Series
specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections and recoveries
respecting the Mortgage Loans, all as more specifically set forth herein and in the Agreement. In
the event Master Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement, from related
recoveries on such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account and/or the Certificate
Account created for the benefit of Certificateholders may be made by the Master Servicer from
time to time for purposes other than distributions to Certificateholders, such purposes including
without limitation reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the amendment of the
Agreement and the modification of the rights and obligations of the Depositor, the Master Servicer
and the Trustee and the rights of the Certificateholders under the Agreement from time to time by
the Depositor, the Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of each Class of
Certificates affected thereby. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of any of the
Certificates and, in certain additional circumstances, without the consent of the Holders of
certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein set forth, the
transfer of this Certificate is registrable in the Certificate Register upon surrender of this
Certificate for registration of transfer at the offices or agencies appointed by the Trustee in
St. Xxxx, Minnesota, duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of authorized denominations evidencing the same Class and
aggregate Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in Classes
and in denominations specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same Class and aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate Registrar and any agent of
the Depositor, the Master Servicer, the Trustee or the Certificate Registrar may treat the Person
in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee or any such agent shall be affected by notice to the
contrary.
This Certificate shall be governed by and construed in accordance with the laws of the
State of New York.
The obligations created by the Agreement in respect of the Certificates and the Trust Fund
created thereby shall terminate upon the payment to Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the Agreement following the
earlier of (i) the maturity or other liquidation of the last Mortgage Loan subject thereto or the
disposition of all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, and (ii) the purchase by the Holder of the Class SB Certificates or the Master
Servicer, as described in the Agreement, from the Trust Fund of all remaining Mortgage Loans and
all property acquired in respect of such Mortgage Loans or the Certificates, in either case
thereby effecting early retirement of the Certificates. The Agreement permits, but does not
require, the Holder of the Class SB Certificates or the Master Servicer, as described in the
Agreement, (i) to purchase, at a price determined as provided in the Agreement, all remaining
Mortgage Loans and all property acquired in respect of any Mortgage Loan or (ii) to purchase in
whole, but not in part, all of the Certificates from the Holders thereof, provided, that any such
option may only be exercised if the Stated Principal Balance before giving effect to the
distributions to be made on such Distribution Date of the Mortgage Loans, as of the Distribution
Date upon which the proceeds of any such purchase are distributed is less than ten percent of the
Cut-off Date Balance.
Unless the certificate of authentication hereon has been executed by the Certificate
Registrar by manual signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[_] Certificates referred to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
___________________________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of assignee) the beneficial
interest evidenced by the within Trust Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate to the following
address:
_____________________________________________________________________________________________________
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately available fund
to____________________________________________________________________________
for the account of __________________________________________________________________________
account number ______________________________________________________________________________
or, if mailed by check, to __________________________________________________________________
Applicable statements should be mailed to:___________________________________________.
This information is provided by ___________________________________, the assignee named
above, or ______________________________, as its agent.
EXHIBIT D-1
FORM OF CLASS R-[_] CERTIFICATE
THE CLASS R-[_] CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS CONSTITUTING THE AVAILABLE
DISTRIBUTION AMOUNT UNTIL SUCH TIME AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN (THE "AGREEMENT").
THIS CLASS R-[_] CERTIFICATE IS SUBORDINATE TO THE CLASS A, CLASS M AND CLASS SB
CERTIFICATES, TO THE EXTENT DESCRIBED HEREIN AND IN THE AGREEMENT.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES PERSON OR A
DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT (THE
"AGREEMENT").
ANY TRANSFEREE OF THIS CERTIFICATE WILL BE DEEMED TO HAVE REPRESENTED BY VIRTUE OF ITS
PURCHASE OR HOLDING OF THIS CERTIFICATE (OR INTEREST THEREIN) THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN OR OTHER PLAN OR ARRANGEMENT SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE CODE OR A PERSON (INCLUDING AN INSURANCE COMPANY INVESTING ITS GENERAL
ACCOUNT, AN INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN) WHO IS USING
"PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION.
IF THIS CERTIFICATE (OR ANY INTEREST THEREIN) IS ACQUIRED OR HELD BY ANY PERSON THAT DOES
NOT SATISFY THE CONDITIONS DESCRIBED IN THE PRECEDING PARAGRAPH, THEN THE LAST PRECEDING
TRANSFEREE THAT IS NOT A PLAN INVESTOR SHALL BE RESTORED, TO THE EXTENT PERMITTED BY LAW, TO ALL
RIGHTS AND OBLIGATIONS AS CERTIFICATE OWNER THEREOF RETROACTIVE TO THE DATE OF SUCH TRANSFER OF
THIS CERTIFICATE. THE TRUSTEE SHALL BE UNDER NO LIABILITY TO ANY PERSON FOR MAKING ANY PAYMENTS
DUE ON THIS CERTIFICATE TO SUCH PRECEDING TRANSFEREE.
ANY PURPORTED CERTIFICATE OWNER WHOSE ACQUISITION OR HOLDING OF THIS CERTIFICATE (OR
INTEREST THEREIN) WAS EFFECTED IN VIOLATION OF THE RESTRICTIONS IN SECTION 5.02(E) OF THE POOLING
AND SERVICING AGREEMENT SHALL INDEMNIFY AND HOLD HARMLESS THE DEPOSITOR, THE TRUSTEE, THE MASTER
SERVICER, ANY SUBSERVICER, AND THE TRUST FUND FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
COSTS OR EXPENSES INCURRED BY SUCH PARTIES AS A RESULT OF SUCH ACQUISITION OR HOLDING.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY IF THE
PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER SERVICER AND THE TRUSTEE THAT (1)
SUCH TRANSFEREE IS NOT (A) THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
POSSESSION OF THE UNITED STATES, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER
THAN AN INSTRUMENTALITY WHICH IS A CORPORATION IF ALL OF ITS ACTIVITIES ARE SUBJECT TO TAX AND
EXCEPT FOR XXXXXXX MAC, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT SELECTED BY SUCH GOVERNMENTAL
UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY
OF EITHER OF THE FOREGOING, (C) ANY ORGANIZATION (OTHER THAN CERTAIN FARMERS' COOPERATIVES
DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE
CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE (INCLUDING
THE TAX IMPOSED BY SECTION 511 OF THE CODE ON UNRELATED BUSINESS TAXABLE INCOME), (D) RURAL
ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (E) AN
ELECTING LARGE PARTNERSHIP UNDER SECTION 775(A) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE
FOREGOING CLAUSES (A), (B), (C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED
ORGANIZATION"), OR (F) AN AGENT OF A DISQUALIFIED ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS
TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE
REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL
NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO,
THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
Certificate No. R-[__]-1 Percentage Interest: 100.00%
Date of Pooling and Servicing Agreement Master Servicer:
and Cut-off Date: May 1, 2006 Residential Funding Corporation
HOME EQUITY MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES
SERIES 2006-KS4
evidencing a percentage interest in the distributions allocable to
the Class R-[_] Certificates with respect to a Trust Fund consisting
primarily of mortgage loans on one- to four-family residential
properties sold by RESIDENTIAL ASSET SECURITIES CORPORATION
This Certificate is payable solely from the assets of the Trust Fund and does not represent
an obligation of or interest in Residential Asset Securities Corporation, the Master Servicer, the
Trustee referred to below or any of their affiliates. Neither this Certificate nor the underlying
Mortgage Loans are guaranteed or insured by any governmental agency or instrumentality or by
Residential Asset Securities Corporation, the Master Servicer, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicer or any of their affiliates will have any
obligation with respect to any certificate or other obligation secured by or payable from payments
on the Certificates.
This certifies that [Residential Funding Corporation] is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with respect to the
Trust Fund consisting primarily of a pool of adjustable rate, first [and junior] lien mortgage
loans on one- to four-family residential properties (the "Mortgage Loans"), sold by Residential
Asset Securities Corporation (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement referred to below). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as specified above (the "Agreement) among the Depositor, the
Master Servicer and U.S. Bank National Association, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th day of each
month or, if such 25th day is not a Business Day, the Business Day immediately following (the
"Distribution Date"), commencing as described in the Agreement, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from the related
Available Distribution Amount in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and, the amount of interest and principal, if any, required to be
distributed to the Holders of Class R-[_] Certificates on such Distribution Date.
Each Holder of this Certificate will be deemed to have agreed to be bound by the
restrictions set forth in the Agreement to the effect that (i) each person holding or acquiring
any Ownership Interest in this Certificate must be a United States Person and a Permitted
Transferee, (ii) the transfer of any Ownership Interest in this Certificate will be conditioned
upon the delivery to the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (ii) any attempted or purported transfer of any
Ownership Interest in this Certificate in violation of such restrictions will be absolutely null
and void and will vest no rights in the purported transferee, and (iv) if any person other than a
United States Person and a Permitted Transferee acquires any Ownership Interest in this
Certificate in violation of such restrictions, then the Master Servicer will have the right, in
its sole discretion and without notice to the Holder of this Certificate, to sell this Certificate
to a purchaser selected by the Master Servicer, which purchaser may be the Master Servicer, or any
affiliate of the Master Servicer, on such terms and conditions as the Master Servicer may choose.
Notwithstanding the above, the final distribution on this Certificate will be made after
due notice of the pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose in St. Xxxx,
Minnesota. The Holder of this Certificate may have additional obligations with respect to this
Certificate, including tax liabilities.
No transfer of this Class R-[_] Certificate will be made unless such transfer is exempt
from the registration requirements of the Securities Act of 1933, as amended, and any applicable
state securities laws or is made in accordance with said Act and laws. In the event that such a
transfer is to be made, (i) the Trustee or the Depositor may require an opinion of counsel
acceptable to and in form and substance satisfactory to the Trustee and the Depositor that such
transfer is exempt (describing the applicable exemption and the basis therefor) from or is being
made pursuant to the registration requirements of the Securities Act of 1933, as amended, and of
any applicable statute of any state and (ii) the transferee shall execute an investment letter in
the form described by the Agreement. The Holder hereof desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Depositor, the Master Servicer and the
Certificate Registrar acting on behalf of the Trustee against any liability that may result if the
transfer is not so exempt or is not made in accordance with such Federal and state laws.
Any Transferee of this Certificate will be deemed to have represented by virtue of its
purchase or holding of this Certificate (or interest therein) that such transferee is not an
employee benefit plan or other plan or arrangement subject to the prohibited transaction
provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code or a person (including an insurance company investing its general
account, an investment manager, a named fiduciary or a trustee of any such plan) who is using
"plan assets" of any such plan to effect such acquisition.
This Certificate is one of a duly authorized issue of Certificates issued in several
Classes designated as Home Equity Mortgage Asset-Backed Pass-Through Certificates of the Series
specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections and recoveries
respecting the Mortgage Loans, all as more specifically set forth herein and in the Agreement. In
the event Master Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement, from related
recoveries on such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Account and/or the Certificate
Account created for the benefit of Certificateholders may be made by the Master Servicer from
time to time for purposes other than distributions to Certificateholders, such purposes including
without limitation reimbursement to the Depositor and the Master Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the amendment of the
Agreement and the modification of the rights and obligations of the Depositor, the Master Servicer
and the Trustee and the rights of the Certificateholders under the Agreement from time to time by
the Depositor, the Master Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of each Class of
Certificates affected thereby. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon the Certificate. The Agreement also permits the
amendment thereof in certain circumstances without the consent of the Holders of any of the
Certificates and, in certain additional circumstances, without the consent of the Holders of
certain Classes of Certificates.
As provided in the Agreement and subject to certain limitations therein set forth, the
transfer of this Certificate is registrable in the Certificate Register upon surrender of this
Certificate for registration of transfer at the offices or agencies appointed by the Trustee in
St. Xxxx, Minnesota, duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of authorized denominations evidencing the same Class and
aggregate Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in Classes
and in denominations specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same Class and aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Certificate Registrar and any agent of
the Depositor, the Master Servicer, the Trustee or the Certificate Registrar may treat the Person
in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee or any such agent shall be affected by notice to the
contrary.
This Certificate shall be governed by and construed in accordance with the laws of the
State of New York.
The obligations created by the Agreement in respect of the Certificates and the Trust Fund
created thereby shall terminate upon the payment to Certificateholders of all amounts held by or
on behalf of the Trustee and required to be paid to them pursuant to the Agreement.
Unless the certificate of authentication hereon has been executed by the Certificate
Registrar, by manual signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Authorized Signatory
Dated:_____________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[_] Certificates referred to in the within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By: _______________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
___________________________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of assignee) the beneficial
interest evidenced by the within Trust Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate to the following
address:
_____________________________________________________________________________________________________
Dated:_____________________ ____________________________________
Signature by or on behalf of assignor
____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately available fund
to____________________________________________________________________________
for the account of __________________________________________________________________________
account number ______________________________________________________________________________
or, if mailed by check, to __________________________________________________________________
Applicable statements should be mailed to:___________________________________________.
This information is provided by ___________________________________, the assignee named
above, or ______________________________, as its agent.
EXHIBIT E
FORM OF CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time, the "Agreement"),
dated as of May 1, 2006, by and among U.S. BANK NATIONAL ASSOCIATION, as trustee (including its
successors under the Pooling Agreement defined below, the "Trustee"), RESIDENTIAL ASSET SECURITIES
CORPORATION (together with any successor in interest, the "Company"), RESIDENTIAL FUNDING
CORPORATION, as master servicer (together with any successor in interest or successor under the
Pooling Agreement referred to below, the "Master Servicer") and XXXXX FARGO BANK, NATIONAL
ASSOCIATION (together with any successor in interest or any successor appointed hereunder, the
"Custodian").
W I T N E S S E T H T H A T:
WHEREAS, the Company, the Master Servicer, and the Trustee have entered into a Pooling and
Servicing Agreement, dated as of May 1, 2006, relating to the issuance of Residential Asset
Securities Corporation, Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2006-KS4 (as in effect on the date of this Agreement, the "Original Pooling Agreement," and as
amended and supplemented from time to time, the "Pooling Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for the purposes of
receiving and holding certain documents and other instruments delivered by the Company and the
Master Servicer under the Pooling Agreement, all upon the terms and conditions and subject to the
limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
hereinafter set forth, the Trustee, the Company, the Master Servicer and the Custodian hereby
agree as follows:
ARTICLE I......
Definitions
Capitalized terms used in this Agreement and not defined herein shall have the meanings
assigned in the Original Pooling Agreement, unless otherwise required by the context herein.
ARTICLE II.....
Custody of Mortgage Documents
Section 2.1....Custodian to Act as Agent: Acceptance of Mortgage Files. The Company and the
Master Servicer hereby direct the Trustee to appoint Xxxxx Fargo Bank, National Association as the
Custodian hereunder. The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges receipt of the Mortgage Files relating to the Mortgage Loans identified on
the schedule attached hereto (the "Mortgage Files") and declares that it holds and will hold the
Mortgage Files as agent for the Trustee, in trust, for the use and benefit of all present and
future Certificateholders.
Section 2.2....Recordation of Assignments. If any Mortgage File includes one or more assignments
of the related Mortgages to the Trustee that have not been recorded, each such assignment shall be
delivered by the Custodian to the Company for the purpose of recording it in the appropriate
public office for real property records, and the Company, at no expense to the Custodian, shall
promptly cause to be recorded in the appropriate public office for real property records each such
assignment and, upon receipt thereof from such public office, shall return each such assignment to
the Custodian.
Section 2.3....Review of Mortgage Files.
(a) On or prior to the Closing Date, the Custodian shall deliver to the Trustee an Initial
Certification in the form annexed hereto as Exhibit One evidencing receipt of a Mortgage File for
each Mortgage Loan listed on the Schedule attached hereto (the "Mortgage Loan Schedule"). The
parties hereto acknowledge that certain documents referred to in Subsection 2.01(b)(i) of the
Pooling Agreement may be missing on or prior to the Closing Date and such missing documents shall
be listed as a Schedule to Exhibit One.
(b) Within 45 days after the Closing Date, the Custodian agrees, for the benefit of
Certificateholders, to review each Mortgage File and to deliver to the Trustee an Interim
Certification in the form annexed hereto as Exhibit Two to the effect that all documents required
to be delivered pursuant to Section 2.01 (b) of the Pooling Agreement have been executed and
received and that such documents relate to the Mortgage Loans identified on the Mortgage Loan
Schedule, except for any exceptions listed on Schedule A attached to such Interim Certification.
For purposes of such review, the Custodian shall compare the following information in each
Mortgage File to the corresponding information in the Mortgage Loan Schedule: (i) the loan number,
(ii) the borrower name and (iii) the original principal balance. In the event that any Mortgage
Note or Assignment of Mortgage has been delivered to the Custodian by the Company in blank, the
Custodian, upon the direction of the Company, shall cause each such Mortgage Note to be endorsed
to the Trustee and each such Assignment of Mortgage to be completed in the name of the Trustee
prior to the date on which such Interim Certification is delivered to the Trustee. Within 45 days
of receipt of the documents required to be delivered pursuant to Section 2.01(c) of the Pooling
Agreement, the Custodian agrees, for the benefit of the Certificateholders, to review each such
document, and upon the written request of the Trustee to deliver to the Trustee an updated
Schedule A to the Interim Certification. The Custodian shall be under no duty or obligation to
inspect, review or examine said documents, instruments, certificates or other papers to determine
that the same are genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be on their face, or
that the MIN is accurate. If in performing the review required by this Section 2.3 the Custodian
finds any document or documents constituting a part of a Mortgage File to be missing or defective
in respect of the items reviewed as described in this Section 2.3(b), the Custodian shall promptly
so notify the Company, the Master Servicer and the Trustee.
(c) Upon receipt of all documents required to be in the Mortgage Files the Custodian shall
deliver to the Trustee a Final Certification in the form annexed hereto as Exhibit Three
evidencing the completeness of the Mortgage Files.
Upon receipt of written request from the Trustee, the Company or the Master Servicer, the
Custodian shall as soon as practicable supply the Trustee with a list of all of the documents
relating to the Mortgage Loans required to be delivered pursuant to Section 2.01(b) of the Pooling
Agreement not then contained in the Mortgage Files.
Section 2.4....Notification of Breaches of Representations and Warranties. If the Custodian
discovers, in the course of performing its custodial functions, a breach of a representation or
warranty made by the Master Servicer or the Company as set forth in the Pooling Agreement with
respect to a Mortgage Loan relating to a Mortgage File, the Custodian shall give prompt written
notice to the Company, the Master Servicer and the Trustee.
Section 2.5....Custodian to Cooperate: Release of Mortgage Files. Upon the repurchase or
substitution of any Mortgage Loan pursuant to Article II of the Pooling Agreement or payment in
full of any Mortgage Loan, or the receipt by the Master Servicer of a notification that payment in
full will be escrowed in a manner customary for such purposes, the Master Servicer shall
immediately notify the Custodian by delivering to the Custodian a Request for Release (in the form
of Exhibit Four attached hereto or a mutually acceptable electronic form) and shall request
delivery to it of the Mortgage File. The Custodian agrees, upon receipt of such Request for
Release, promptly to release to the Master Servicer the related Mortgage File. Upon receipt of a
Request for Release from the Master Servicer, signed by a Servicing Officer, that (i) the Master
Servicer or a Subservicer, as the case may be, has made a deposit into the Certificate Account in
payment for the purchase of the related Mortgage Loan in an amount equal to the Purchase Price for
such Mortgage Loan or (ii) the Company has chosen to substitute a Qualified Substitute Mortgage
Loan for such Mortgage Loan, the Custodian shall release to the Master Servicer the related
Mortgage File. Upon written notification of a substitution, the Master Servicer shall deliver to
the Custodian and the Custodian agrees to accept the Mortgage Note and other documents
constituting the Mortgage File with respect to any Qualified Substitute Mortgage Loan, upon
receiving written notification from the Master Servicer of such substitution.
From time to time as is appropriate for the servicing or foreclosures of any Mortgage Loan,
including, for this purpose, collection under any Primary Insurance Policy or any Mortgage Pool
Insurance Policy, the Master Servicer shall deliver to the Custodian a Request for Release
certifying as to the reason for such release. Upon receipt of the foregoing, the Custodian shall
deliver the Mortgage File or such document to the Master Servicer. All Mortgage Files so released
to the Master Servicer shall be held by it in trust for the Trustee for the use and benefit of all
present and future Certificateholders. The Master Servicer shall cause each Mortgage File or any
document therein so released to be returned to the Custodian when the need therefor by the Master
Servicer no longer exists, unless (i) the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Custodial Account or (ii) the
Mortgage File or such document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered to the Custodian an updated Request for Release signed by a
Servicing Officer certifying as to the name and address of the Person to which such Mortgage File
or such document was delivered and the purpose or purposes of such delivery. Immediately upon
receipt of any Mortgage File returned to the Custodian by the Master Servicer, the Custodian shall
deliver a signed acknowledgement to the Master Servicer, confirming receipt of such Mortgage File.
Upon the written request of the Master Servicer, the Custodian will send to the Master
Servicer copies of any documents contained in the Mortgage File.
Section 2.6 Assumption Agreements. In the event that any assumption agreement or substitution
of liability agreement is entered into with respect to any Mortgage Loan subject to this Agreement
in accordance with the terms and provisions of the Pooling Agreement, the Master Servicer shall
notify the Custodian that such assumption or substitution agreement has been completed by
forwarding to the Custodian the original of such assumption or substitution agreement, which shall
be added to the related Mortgage File and, for all purposes, shall be considered a part of such
Mortgage File to the same extent as all other documents and instruments constituting parts thereof.
ARTICLE III
Concerning the Custodian
Section 3.1....Custodian a Bailee and Agent of the Trustee. With respect to each Mortgage Note,
Mortgage and other documents constituting each Mortgage File which are delivered to the Custodian,
the Custodian is exclusively the bailee and agent of the Trustee and has no instructions to hold
any Mortgage Note or Mortgage for the benefit of any person other than the Trustee, holds such
documents for the benefit of Certificateholders and undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. Except upon compliance with the
provisions of Section 2.5 of this Agreement, no Mortgage Note, Mortgage or other document
constituting a part of a Mortgage File shall be delivered by the Custodian to the Company or the
Master Servicer or otherwise released from the possession of the Custodian.
The Master Servicer shall promptly notify the Custodian in writing if it shall no longer be
a member of MERS, or if it otherwise shall no longer be capable of registering and recording
Mortgage Loans using MERS. In addition, the Master Servicer shall (i) promptly notify the
Custodian in writing when a MERS Mortgage Loan is no longer registered with and recorded under
MERS and (ii) concurrently with any such deregistration of a MERS Mortgage Loan, prepare, execute
and record an original assignment from MERS to the Trustee and deliver such assignment to the
Custodian.
Section 3.2 Indemnification. The Company hereby agrees to indemnify and hold the Custodian
harmless from and against all claims, liabilities, losses, actions, suits or proceedings at law or
in equity, or any other expenses, fees or charges of any character or nature, which the Custodian
may incur or with which the Custodian may be threatened by reason of its acting as custodian under
this Agreement, including indemnification of the Custodian against any and all expenses, including
attorney's fees if counsel for the Custodian has been approved by the Company, and the cost of
defending any action, suit or proceedings or resisting any claim. Notwithstanding the foregoing,
it is specifically understood and agreed that in the event any such claim, liability, loss,
action, suit or proceeding or other expense, fee or charge shall have been caused by reason of any
negligent act, negligent failure to act or willful misconduct on the part of the Custodian, or
which shall constitute a willful breach of its duties hereunder, the indemnification provisions of
this Agreement shall not apply.
Section 3.3 Custodian May Own Certificates. The Custodian in its individual or any other
capacity may become the owner or pledgee of Certificates with the same rights it would have if it
were not Custodian.
Section 3.4 Master Servicer to Pay Custodian's Fees and Expenses. The Master Servicer
covenants and agrees to pay to the Custodian from time to time, and the Custodian shall be
entitled to, reasonable compensation for all services rendered by it in the exercise and
performance of any of the powers and duties hereunder of the Custodian, and the Master Servicer
shall pay or reimburse the Custodian upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Custodian in accordance with any of the provisions of this
Agreement (including the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ), except any such expense, disbursement or advance
as may arise from its negligence or bad faith.
Section 3.5....Custodian May Resign; Trustee May Remove Custodian. The Custodian may resign from
the obligations and duties hereby imposed upon it as such obligations and duties relate to its
acting as Custodian of the Mortgage Loans. Upon receiving such notice of resignation, the Trustee
shall either take custody of the Mortgage Files itself and give prompt notice thereof to the
Company, the Master Servicer and the Custodian, or promptly appoint a successor Custodian by
written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning
Custodian and one copy to the successor Custodian. If the Trustee shall not have taken custody of
the Mortgage Files and no successor Custodian shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the resigning Custodian
may petition any court of competent jurisdiction for the appointment of a successor Custodian.
The Trustee, at the direction of the Master Servicer and the Company, may remove the
Custodian at any time. In such event, the Trustee shall appoint, or petition a court of competent
jurisdiction to appoint, a successor Custodian hereunder. Any successor Custodian shall be a
depository institution subject to supervision or examination by federal or state authority and
shall be able to satisfy the other requirements contained in Section 3.7 and shall be unaffiliated
with the Master Servicer or the Company.
Any resignation or removal of the Custodian and appointment of a successor Custodian
pursuant to any of the provisions of this Section 3.5 shall become effective upon acceptance of
appointment by the successor Custodian. The Trustee shall give prompt notice to the Company and
the Master Servicer of the appointment of any successor Custodian. No successor Custodian shall be
appointed by the Trustee without the prior approval of the Company and the Master Servicer.
Section 3.6....Merger or Consolidation of Custodian. Any Person into which the Custodian may be
merged or converted or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, or any Person succeeding to
the business of the Custodian, shall be the successor of the Custodian hereunder, without the
execution or filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided that such successor is a depository
institution subject to supervision or examination by federal or state authority and is able to
satisfy the other requirements contained in Section 3.7 and is unaffiliated with the Master
Servicer or the Company.
Section 3.7....Representations of the Custodian. The Custodian hereby represents that it is a
depository institution subject to supervision or examination by a federal or state authority, has
a combined capital and surplus of at least $15,000,000 and is qualified to do business in the
jurisdictions in which it will hold any Mortgage File.
ARTICLE IV.....
Compliance with Regulation AB
Section 4.1....Intent of the Parties; Reasonableness. The parties hereto acknowledge and agree
that the purpose of this Article IV is to facilitate compliance by the Company with the provisions
of Regulation AB and related rules and regulations of the Commission. The Company shall not
exercise its right to request delivery of information or other performance under these provisions
other than in good faith, or for purposes other than compliance with the Securities Act, the
Exchange Act and the rules and regulations of the Commission under the Securities Act and the
Exchange Act. Each of the parties hereto acknowledges that interpretations of the requirements of
Regulation AB may change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the mortgage-backed securities markets,
advice of counsel, or otherwise, and agrees to comply with requests made by the Company in good
faith for delivery of information under these provisions on the basis of evolving interpretations
of Regulation AB. The Custodian shall cooperate reasonably with the Company to deliver to the
Company (including any of its assignees or designees), any and all disclosure, statements,
reports, certifications, records and any other information necessary in the reasonable, good faith
determination of the Company to permit the Company to comply with the provisions of Regulation AB.
Section 4.2....Additional Representations and Warranties of the Custodian.
(a) The Custodian hereby represents and warrants that the information set forth under the
caption "Pooling and Servicing Agreement--Custodial Arrangements" (the "Custodian Disclosure") in
the preliminary prospectus supplement relating to the Certificates and the final prospectus
supplement relating to the Certificates does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading.
(b) The Custodian shall be deemed to represent to the Company as of the date hereof and on each
date on which information is provided to the Company under Section 4.3 that, except as disclosed
in writing to the Company prior to such date: (i) there are no aspects of its financial condition
that could have a material adverse effect on the performance by it of its Custodian obligations
under this Agreement or any other Securitization Transaction as to which it is the custodian; (ii)
there are no material legal or governmental proceedings pending (or known to be contemplated)
against it; and (iii) there are no affiliations, relationships or transactions relating to the
Custodian with respect to the Company or any sponsor, issuing entity, servicer, trustee,
originator, significant obligor, enhancement or support provider or other material transaction
party (as such terms are used in Regulation AB) relating to the Securitization Transaction
contemplated by the Agreement, as identified by the Company to the Custodian in writing as of the
Closing Date (each, a "Transaction Party").
(c) If so requested by the Company on any date following the Closing Date, the Custodian shall,
within five Business Days following such request, confirm in writing the accuracy of the
representations and warranties set forth in paragraph (a) of this Section or, if any such
representation and warranty is not accurate as of the date of such confirmation, provide
reasonably adequate disclosure of the pertinent facts, in writing, to the requesting party. Any
such request from the Company shall not be given more than once each calendar quarter, unless the
Company shall have a reasonable basis for a determination that any of the representations and
warranties may not be accurate.
Section 4.3....Additional Information to Be Provided by the Custodian. For so long as the
Certificates are outstanding, for the purpose of satisfying the Company's reporting obligation
under the Exchange Act with respect to any class of Certificates, the Custodian shall (a) notify
the Company in writing of any material litigation or governmental proceedings pending against the
Custodian that would be material to Certificateholders, and (b) provide to the Company a written
description of such proceedings. Any notices and descriptions required under this Section 4.3
shall be given no later than five Business Days prior to the Determination Date following the
month in which the Custodian has knowledge of the occurrence of the relevant event. As of the
date the Company or Master Servicer files each Report on Form 10-D or Form 10-K with respect to
the Certificates, the Custodian will be deemed to represent that any information previously
provided under this Section 4.3, if any, is materially correct and does not have any material
omissions unless the Custodian has provided an update to such information. For purposes of this
Section 4.3, "Determination Date" shall mean, with respect to any Distribution Date, the 20th day
(or if such 20th day is not a Business Day, the Business Day immediately following such 20th day)
of the month of the related Distribution Date and "Distribution Date" shall mean, the 25th day of
any month beginning in March 2006 or, if such 25th day is not a Business Day, the Business Day
immediately following such 25th day.
Section 4.4....Report on Assessment of Compliance and Attestation. On or before March 15 of each
calendar year, the Custodian shall:
(a) deliver to the Company a report (in form and substance reasonably satisfactory to the
Company) regarding the Custodian's assessment of compliance with the Servicing Criteria during the
immediately preceding calendar year, as required under Rules 13a-18 and 15d-18 of the Exchange Act
and Item 1122 of Regulation AB. Such report shall be addressed to the Company and signed by an
authorized officer of the Custodian, and shall address each of the Servicing Criteria specified on
a certification substantially in the form of Exhibit Five hereto; and
(b) deliver to the Company a report of a registered public accounting firm reasonably
acceptable to the Company that attests to, and reports on, the assessment of compliance made by
the Custodian and delivered pursuant to the preceding paragraph. Such attestation shall be in
accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act.
Section 4.5....Indemnification; Remedies.
(a) The Custodian shall indemnify the Company, each affiliate of the Company, the Master
Servicer and each broker dealer acting as underwriter, placement agent or initial purchaser of the
Certificates or each Person who controls any of such parties (within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act); and the respective present and former
directors, officers, employees and agents of each of the foregoing, and shall hold each of them
harmless from and against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses that any of them may
sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or alleged to be
contained in the Custodian Disclosure and any information, report, certification, accountants'
attestation or other material provided under this Article IV by or on behalf of the Custodian
(collectively, the "Custodian Information"), or (B) the omission or alleged omission to state in
the Custodian Information a material fact required to be stated in the Custodian Information or
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; or
(ii) any failure by the Custodian to deliver any information, report, certification,
accountants' attestation or other material when and as required under this Article IV.
(b) In the case of any failure of performance described in clause (ii) of Section 4.5(a), the
Custodian shall promptly reimburse the Company for all costs reasonably incurred by the Company in
order to obtain the information, report, certification, accountants' letter or other material not
delivered as required by the Custodian.
ARTICLE V......
Miscellaneous Provisions
Section 5.1....Notices. All notices, requests, consents and demands and other communications
required under this Agreement or pursuant to any other instrument or document delivered hereunder
shall be in writing and, unless otherwise specifically provided, may be delivered personally, by
telegram or telex, or by registered or certified mail, postage prepaid, return receipt requested,
at the addresses specified on the signature page hereof (unless changed by the particular party
whose address is stated herein by similar notice in writing); in each case the notice will be
deemed delivered when received.
Section 5.2....Amendments. No modification or amendment of or supplement to this Agreement shall
be valid or effective unless the same is in writing and signed by all parties hereto, and none of
the Company, the Master Servicer or the Trustee shall enter into any amendment of or supplement to
this Agreement except as permitted by the Pooling Agreement. The Trustee shall give prompt notice
to the Custodian of any amendment or supplement to the Pooling Agreement and furnish the Custodian
with written copies thereof.
Section 5.3....GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER
THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
Section 5.4....Recordation of Agreement. To the extent permitted by applicable law, this
Agreement is subject to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the properties subject
to the Mortgages are situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer and at its expense on direction by the
Trustee (pursuant to the request of holders of Certificates evidencing undivided interests in the
aggregate of not less than 25% of the Trust Fund), but only upon direction accompanied by an
Opinion of Counsel reasonably satisfactory to the Master Servicer to the effect that the failure
to effect such recordation is likely to materially and adversely affect the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as herein provided and
for other purposes, this Agreement may be executed simultaneously in any number of counterparts,
each of which counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 5.5....Severability of Provisions. If any one or more of the covenants, agreements,
provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates or the rights of
the holders thereof.
[Signatures begin on following page]
IN WITNESS WHEREOF, this Agreement is executed as of the date first above written.
Address: U.S. BANK NATIONAL ASSOCIATION,
as Trustee
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000
By:
Attention: Structured Finance/RASC Series Name:
2006-KS4 Title:
Address: RESIDENTIAL ASSET SECURITIES CORPORATION
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000 By:
Name: Xxxxxx Xxxxxx
Title: Vice President
Address: RESIDENTIAL FUNDING CORPORATION, as Master
Servicer
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
By:
Name: Xxxxxxxxxxx Xxxxxxxx
Title: Associate
Address: XXXXX FARGO BANK, NATIONAL ASSOCIATION, as
Custodian
Mortgage Document Custody
One Meridian Crossings - LL
Xxxxxxxxx, Xxxxxxxxx 00000
By:
Name:
Title: Assistant Vice President
STATE OF MINNESOTA )
)ss.:
COUNTY OF XXXXXX )
On the ____ day of May 2006, before me, a notary public in and for said State,
personally appeared _____________, known to me to be a _________ of U.S. BANK NATIONAL
ASSOCIATION, a national banking association that executed the within instrument, and also known to
me to be the person who executed it on behalf of said national banking association and
acknowledged to me that such national banking association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
___________________________________
Notary Public
[Notarial Seal]
STATE OF MINNESOTA )
)ss.:
COUNTY OF HENNEPIN )
On the ____ day of May 2006, before me, a notary public in and for said State,
personally appeared ___________________, known to me to be a ______________ of Residential Asset
Securities Corporation., one of the corporations that executed the within instrument, and also
known to me to be the person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
___________________________________
Notary Public
[Notarial Seal]
STATE OF MINNESOTA )
)ss.:
COUNTY OF HENNEPIN )
On the ____ day of May 2006, before me, a notary public in and for said State,
personally appeared ___________________, known to me to be a ______________ of Residential Funding
Corporation, one of the corporations that executed the within instrument, and also known to me to
be the person who executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
___________________________________
Notary Public
[Notarial Seal]
STATE OF )
)ss.:
COUNTY OF )
On the ____ day of May 2006, before me, a notary public in and for said State,
personally appeared ______________________, known to me to be a ______________________________
Xxxxx Fargo Bank, National Association, one of the entities that executed the within instrument,
and also known to me to be the person who executed it on behalf of said national banking
association, and acknowledged to me that such national banking association executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
____________________________________
Notary Public
[Notarial Seal]
EXHIBIT ONE
FORM OF CUSTODIAN
INITIAL CERTIFICATION
May ___, 2006
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Structured Finance/RASC Series 2006-KS4
Re: Custodial Agreement, dated as of May 1, 2006, by and among U.S. Bank
National Association, Residential Asset Securities Corporation, Residential
Funding Corporation and Xxxxx Fargo Bank, National Association, relating to
Home Equity Mortgage Asset-Backed Pass-Through Certificates Series 2006-KS4
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial Agreement, and
subject to Section 2.02 of the Pooling Agreement, the undersigned, as Custodian, hereby certifies
that it has received a Mortgage File (which contains an original Mortgage Note or an original Lost
Note Affidavit with a copy of the related Mortgage Note) to the extent required in Section 2.01(b)
of the Pooling Agreement with respect to each Mortgage Loan listed in the Mortgage Loan Schedule,
with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_______________________________
EXHIBIT TWO
FORM OF CUSTODIAN INTERIM CERTIFICATION
May ___, 2006
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Structured Finance, RASC Series 2006-KS4
Re: Custodial Agreement, dated as of May 1, 2006, by and among U.S. Bank
National Association, Residential Asset Securities Corporation, Residential
Funding Corporation and Xxxxx Fargo Bank, National Association, relating to
Home Equity Mortgage Asset-Backed Pass-Through Certificates Series 2006-KS4
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Mortgage File to the extent
required pursuant to Section 2.01(b) of the Pooling Agreement with respect to each Mortgage Loan
listed in the Mortgage Loan Schedule, and it has reviewed the Mortgage File and the Mortgage Loan
Schedule and has determined that: all required documents have been executed and received and that
such documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule, with any
exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_______________________________
EXHIBIT THREE
FORM OF CUSTODIAN FINAL CERTIFICATION
May ___, 2006
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Structured Finance, RASC Series 2006-KS4
Re: Custodial Agreement, dated as of May 1, 2006, by and among U.S. Bank
National Association, Residential Asset Securities Corporation, Residential
Funding Corporation and Xxxxx Fargo Bank, National Association, relating to
Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Mortgage File with respect to
each Mortgage Loan listed in the Mortgage Loan Schedule and it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that: all required documents referred to in Section
2.01(b) of the Pooling Agreement have been executed and received and that such documents relate to
the Mortgage Loans identified on the Mortgage Loan Schedule.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Custodial Agreement.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:________________________________
Name:______________________________
Title:_______________________________
EXHIBIT FOUR
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you for the referenced
pool, we request the release of the Mortgage Loan File described below.
Pooling and Servicing Agreement, Dated:
Series#:
Account#:
Pool#:
Loan#:
MIN#:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection with such payments
which are required to be deposited have been or will be so deposited as provided in the Pooling
and Servicing Agreement."
______________________________
Residential Funding Corporation
Authorized Signature
****************************************************************
TO CUSTODIAN/TRUSTEE: Please acknowledge this request, and check off documents being enclosed
with a copy of this form. You should retain this form for your files in accordance with the terms
of the Pooling and Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ________________________
___________________________
Name
___________________________
Title
___________________________
Date
EXHIBIT FIVE
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Custodian shall address, at a minimum,
the criteria identified as below as "Applicable Servicing Criteria":
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
GENERAL SERVICING CONSIDERATIONS
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
1122(d)(1)(i) Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
accordance with the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
If any material servicing activities are outsourced to
third parties, policies and procedures are instituted
to monitor the third party's performance and
1122(d)(1)(ii) compliance with such servicing activities.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Any requirements in the transaction agreements to
maintain a back-up servicer for the pool assets are
1122(d)(1)(iii) maintained.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing
function throughout the reporting period in the amount
of coverage required by and otherwise in accordance
1122(d)(1)(iv) with the terms of the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
CASH COLLECTION AND ADMINISTRATION
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Payments on pool assets are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days
following receipt, or such other number of days
1122(d)(2)(i) specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
1122(d)(2)(ii) personnel.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Advances of funds or guarantees regarding collections,
cash flows or distributions, and any interest or other
fees charged for such advances, are made, reviewed and
1122(d)(2)(iii) approved as specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained
(e.g., with respect to commingling of cash) as set
1122(d)(2)(iv) forth in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Each custodial account is maintained at a federally
insured depository institution as set forth in the
transaction agreements. For purposes of this
criterion, "federally insured depository institution"
with respect to a foreign financial institution means
a foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the Securities
1122(d)(2)(v) Exchange Act.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Unissued checks are safeguarded so as to prevent
1122(d)(2)(vi) unauthorized access.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Reconciliations are prepared on a monthly basis for
all asset-backed securities related bank accounts,
including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically
accurate; (B) prepared within 30 calendar days after
the bank statement cutoff date, or such other number
of days specified in the transaction agreements; (C)
reviewed and approved by someone other than the person
who prepared the reconciliation; and (D) contain
explanations for reconciling items. These reconciling
items are resolved within 90 calendar days of their
original identification, or such other number of days
1122(d)(2)(vii) specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
INVESTOR REMITTANCES AND REPORTING
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Reports to investors, including those to be filed with
the Commission, are maintained in accordance with the
transaction agreements and applicable Commission
requirements. Specifically, such reports (A) are
prepared in accordance with timeframes and other terms
set forth in the transaction agreements; (B) provide
information calculated in accordance with the terms
specified in the transaction agreements; (C) are filed
with the Commission as required by its rules and
regulations; and (D) agree with investors' or the
trustee's records as to the total unpaid principal
balance and number of pool assets serviced by the
1122(d)(3)(i) servicer.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and
1122(d)(3)(ii) other terms set forth in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made to an investor are posted within
two business days to the servicer's investor records,
or such other number of days specified in the
1122(d)(3)(iii) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment,
1122(d)(3)(iv) or custodial bank statements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
POOL ASSET ADMINISTRATION
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Collateral or security on pool assets is maintained as
required by the transaction agreements or related
1122(d)(4)(i) asset pool documents.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Pool assets and related documents are safeguarded as
1122(d)(4)(ii) required by the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Any additions, removals or substitutions to the asset
pool are made, reviewed and approved in accordance
with any conditions or requirements in the transaction
1122(d)(4)(iii) agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Payments on pool assets, including any payoffs, made
in accordance with the related pool asset documents
are posted to the servicer's obligor records
maintained no more than two business days after
receipt, or such other number of days specified in the
transaction agreements, and allocated to principal,
interest or other items (e.g., escrow) in accordance
1122(d)(4)(iv) with the related pool asset documents.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
The servicer's records regarding the pool assets agree
with the servicer's records with respect to an
1122(d)(4)(v) obligor's unpaid principal balance.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Changes with respect to the terms or status of an
obligor's pool asset (e.g., loan modifications or
re-agings) are made, reviewed and approved by
authorized personnel in accordance with the
transaction agreements and related pool asset
1122(d)(4)(vi) documents.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Loss mitigation or recovery actions (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with
the timeframes or other requirements established by
1122(d)(4)(vii) the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Records documenting collection efforts are maintained
during the period a pool asset is delinquent in
accordance with the transaction agreements. Such
records are maintained on at least a monthly basis, or
such other period specified in the transaction
agreements, and describe the entity's activities in
monitoring delinquent pool assets including, for
example, phone calls, letters and payment rescheduling
plans in cases where delinquency is deemed temporary
1122(d)(4)(viii) (e.g., illness or unemployment).
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Adjustments to interest rates or rates of return for
pool assets with variable rates are computed based on
1122(d)(4)(ix) the related pool asset documents.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Regarding any funds held in trust for an obligor (such
as escrow accounts): (A) such funds are analyzed, in
accordance with the obligor's pool asset documents, on
at least an annual basis, or such other period
specified in the transaction agreements; (B) interest
on such funds is paid, or credited, to obligors in
accordance with applicable pool asset documents and
state laws; and (C) such funds are returned to the
obligor within 30 calendar days of full repayment of
the related pool asset, or such other number of days
1122(d)(4)(x) specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments,
provided that such support has been received by the
servicer at least 30 calendar days prior to these
dates, or such other number of days specified in the
1122(d)(4)(xi) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Any late payment penalties in connection with any
payment to be made on behalf of an obligor are paid
from the servicer's funds and not charged to the
obligor, unless the late payment was due to the
1122(d)(4)(xii) obligor's error or omission.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of
1122(d)(4)(xiii) days specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Delinquencies, charge-offs and uncollectible accounts
are recognized and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Any external enhancement or other support, identified
in Item 1114(a)(1) through (3) or Item 1115 of
Regulation AB, is maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
EXHIBIT F
MORTGAGE LOAN SCHEDULE
[FILED HEREWITH AS EXHIBIT 99.1]
EXHIBIT G
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you for the referenced
pool, we request the release of the Mortgage Loan File described below.
Pooling and Servicing Agreement, Dated:
Series#:
Account#:
Pool#:
Loan#:
MIN#:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection with such payments
which are required to be deposited have been or will be so deposited as provided in the Pooling
and Servicing Agreement."
______________________________
Residential Funding Corporation
Authorized Signature
****************************************************************
TO CUSTODIAN/TRUSTEE: Please acknowledge this request, and check off documents being enclosed
with a copy of this form. You should retain this form for your files in accordance with the terms
of the Pooling and Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ________________________
___________________________
Name
___________________________
Title
___________________________
Date
EXHIBIT H-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
)ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or beneficial owner of the Home
Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4, Class R-__ (the
"Owner")), a [savings institution] [corporation] duly organized and existing under the laws of [the
State of ________________] [the United States], on behalf of which he makes this affidavit and
agreement.
2. That the Owner (i) is not and will not be a "disqualified organization" or an electing
large partnership as of [date of transfer] within the meaning of Section 860E(e)(5) and 775,
respectively, of the Internal Revenue Code of 1986, as amended (the "Code") or an electing large
partnership under Section 775(a) of the Code, (ii) will endeavor to remain other than a
disqualified organization for so long as it retains its ownership interest in the Class R-__
Certificates, and (iii) is acquiring the Class R-__ Certificates for its own account or for the
account of another Owner from which it has received an affidavit and agreement in substantially
the same form as this affidavit and agreement. (For this purpose, a "disqualified organization"
means an electing large partnership under Section 775 of the Code, the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the foregoing (other than
an instrumentality all of the activities of which are subject to tax and, except for the Federal
Home Loan Mortgage Corporation, a majority of whose board of directors is not selected by any such
governmental entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that is generally
exempt from federal income tax unless such organization is subject to the tax on unrelated
business taxable income).
3. That the Owner is aware (i) of the tax that would be imposed on transfers of Class R-__
Certificates to disqualified organizations or an electing large partnership under the Code, that
applies to all transfers of Class R-__ Certificates after March 31, 1988; (ii) that such tax would
be on the transferor (or, with respect to transfers to electing large partnerships, on each such
partnership), or, if such transfer is through an agent (which person includes a broker, nominee or
middleman) for a disqualified organization, on the agent; (iii) that the person (other than with
respect to transfers to electing large partnerships) otherwise liable for the tax shall be
relieved of liability for the tax if the transferee furnishes to such person an affidavit that the
transferee is not a disqualified organization and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that the Class R-__ Certificates may
be "noneconomic residual interests" within the meaning of Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest will remain liable
for any taxes due with respect to the income on such residual interest, unless no significant
purpose of the transfer was to impede the assessment or collection of tax.
4. That the Owner is aware of the tax imposed on a "pass-through entity" holding Class R-__
Certificates if either the pass-through entity is an electing large partnership under Section 775
of the Code or if at any time during the taxable year of the pass-through entity a disqualified
organization is the record holder of an interest in such entity. (For this purpose, a "pass
through entity" includes a regulated investment company, a real estate investment trust or common
trust fund, a partnership, trust or estate, and certain cooperatives.)
5. That the Owner is aware that the Trustee will not register the transfer of any Class R-__
Certificates unless the transferee, or the transferee's agent, delivers to it an affidavit and
agreement, among other things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it knows or believes that
any of the representations contained in such affidavit and agreement are false.
6. That the Owner has reviewed the restrictions set forth on the face of the Class R -__
Certificates and the provisions of Section 5.02(f) of the Pooling and Servicing Agreement under
which the Class R-__ Certificates were issued (in particular, clause (iii)(A) and (iii)(B) of
Section 5.02(f) which authorize the Trustee to deliver payments to a person other than the Owner
and negotiate a mandatory sale by the Trustee in the event the Owner holds such Certificates in
violation of Section 5.02(f)). The Owner expressly agrees to be bound by and to comply with such
restrictions and provisions.
7. That the Owner consents to any additional restrictions or arrangements that shall be deemed
necessary upon advice of counsel to constitute a reasonable arrangement to ensure that the
Class R-__ Certificates will only be owned, directly or indirectly, by an Owner that is not a
disqualified organization.
8. The Owner's Taxpayer Identification Number is ____________________.
9. This affidavit and agreement relates only to the Class R-__ Certificates held by the Owner
and not to any other holder of the Class R-__ Certificates. The Owner understands that the
liabilities described herein relate only to the Class R-__ Certificates.
10. That no purpose of the Owner relating to the transfer of any of the Class R-__ Certificates
by the Owner is or will be to impede the assessment or collection of any tax; in making this
representation, the Owner warrants that the Owner is familiar with (i) Treasury Regulation
1.860E-1(c) and recent amendments thereto, effective as of July 19, 2002, and (ii) the preamble
describing the adoption of the amendments to such regulation, which is attached hereto as Annex I.
11. That the Owner has no present knowledge or expectation that it will be unable to pay any
United States taxes owed by it so long as any of the Certificates remain outstanding. In this
regard, the Owner hereby represents to and for the benefit of the person from whom it acquired the
Class R-__ Certificate that the Owner intends to pay taxes associated with holding such Class R-__
Certificate as they become due, fully understanding that it may incur tax liabilities in excess of
any cash flows generated by the Class R-__ Certificate.
12. That the Owner has no present knowledge or expectation that it will become insolvent or
subject to a bankruptcy proceeding for so long as any of the Class R-__ Certificates remain
outstanding.
13. The Owner is either (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity treated as a corporation or a partnership for U.S. federal income tax
purposes and created or organized in, or under the laws of, the United States, any state thereof
or the District of Columbia (other than a partnership that is not treated as a United States
person under any applicable Treasury regulations), (iii) an estate that is described in Section
7701(a)(30)(D) of the Code, or (iv) a trust that is described in Section 7701(a)(30)(E) of the
Code.
14. The Owner hereby agrees that it will not cause income from the Class R-__ Certificates to
be attributable to a foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of the Owner or another United States taxpayer.
15. The Owner hereby certifies, represents and warrants to, and covenants with the Depositor,
the Trustee and the Master Servicer that the Certificates are not being acquired by, and will not
be transferred to, any employee benefit plan or other plan or arrangement subject to the
prohibited transaction provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
or any person (including an insurance company investing its general account, an investment
manager, a named fiduciary or a trustee of any such plan) who is using "plan assets" of any such
plan to effect such acquisition (each of the foregoing, a "Plan Investor").
Capitalized terms used but not defined herein shall have the meanings assigned in the
Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on its behalf,
pursuant to the authority of its Board of Directors, by its [Title of Officer] and its corporate
seal to be hereunto attached, attested by its [Assistant] Secretary, this ____ day of
______________ 200__.
[NAME OF OWNER]
By: ___________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
______________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or proved to
me to be the same person who executed the foregoing instrument and to be the [Title of Officer] of
the Owner, and acknowledged to me that he executed the same as his free act and deed and the free
act and deed of the Owner.
Subscribed and sworn before me this __________ day of __________, 200_.
__________________________________________
NOTARY PUBLIC
COUNTY OF ______________________________
STATE OF ________________________________
My Commission expires the ___ day of __________, 20__
ANNEX I TO EXHIBIT H-1
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
[TD 9004]
RIN 1545-AW98
Real Estate Mortgage Investment Conduits
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations relating to safe harbor transfers of noneconomic
residual interests in real estate mortgage investment conduits (REMICs). The final regulations
provide additional limitations on the circumstances under which transferors may claim safe harbor
treatment.
DATES: Effective Date: These regulations are effective July 19, 2002.
Applicability Date: For dates of applicability, see Sec. 1.860E-(1)(c)(10).
FOR FURTHER INFORMATION CONTACT: Xxxxxxxx Xxxxxxxxxx at (000) 000-0000 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information in this final rule has been reviewed and, pending receipt and
evaluation of public comments, approved by the Office of Management and Budget (OMB) under 44
U.S.C. 3507 and assigned control number 1545-1675.
The collection of information in this regulation is in Sec. 1.860E-1(c)(5)(ii). This
information is required to enable the IRS to verify that a taxpayer is complying with the
conditions of this regulation. The collection of information is mandatory and is required.
Otherwise, the taxpayer will not receive the benefit of safe harbor treatment as provided in the
regulation. The likely respondents are businesses and other for-profit institutions.
Comments on the collection of information should be sent to the Office of Management and
Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and
Regulatory Affairs, Xxxxxxxxxx, XX, 00000, with copies to the Internal Revenue Service, Attn: IRS
Reports Clearance Officer, W:CAR:MP:FP:S, Xxxxxxxxxx, XX 00000. Comments on the collection of
information should be received by September 17, 2002. Comments are specifically requested
concerning:
o Whether the collection of information is necessary for the proper performance of the
functions of the Internal Revenue Service, including whether the information will have
practical utility;
o The accuracy of the estimated burden associated with the collection of information (see
below);
o How the quality, utility, and clarity of the information to be collected may be enhanced;
o How the burden of complying with the collection of information may be minimized, including
through the application of automated collection techniques or other forms of
information technology; and
o Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of
service to provide information.
An agency may not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a valid control number assigned by the Office of
Management and Budget.
The estimated total annual reporting burden is 470 hours, based on an estimated number of
respondents of 470 and an estimated average annual burden hours per respondent of one hour.
Books or records relating to a collection of information must be retained as long as their
contents may become material in the administration of any internal revenue law. Generally, tax
returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Background
This document contains final regulations regarding the proposed amendments to 26 CFR part 1
under section 860E of the Internal Revenue Code (Code). The regulations provide the circumstances
under which a transferor of a noneconomic REMIC residual interest meeting the investigation and
representation requirements may avail itself of the safe harbor by satisfying either the formula
test or the asset test.
Final regulations governing REMICs, issued in 1992, contain rules governing the transfer of
noneconomic REMIC residual interests. In general, a transfer of a noneconomic residual interest is
disregarded for all tax purposes if a significant purpose of the transfer is to enable the
transferor to impede the assessment or collection of tax. A purpose to impede the assessment or
collection of tax (a wrongful purpose) exists if the transferor, at the time of the transfer,
either knew or should have known that the transferee would be unwilling or unable to pay taxes due
on its share of the REMIC's taxable income. Under a safe harbor, the transferor of a REMIC
noneconomic residual interest is presumed not to have a wrongful purpose if two requirements are
satisfied: (1) the transferor conducts a reasonable investigation of the transferee's financial
condition (the investigation requirement); and (2) the transferor secures a representation from
the transferee to the effect that the transferee understands the tax obligations associated with
holding a residual interest and intends to pay those taxes (the representation requirement).
The IRS and Treasury have been concerned that some transferors of noneconomic residual
interests claim they satisfy the safe harbor even in situations where the economics of the
transfer clearly indicate the transferee is unwilling or unable to pay the tax associated with
holding the interest. For this reason, on February 7, 2000, the IRS published in the Federal
Register (65 FR 5807) a notice of proposed rulemaking (REG-100276-97; REG-122450-98) designed to
clarify the safe harbor by adding the "formula test," an economic test. The proposed regulation
provides that the safe harbor is unavailable unless the present value of the anticipated tax
liabilities associated with holding the residual interest does not exceed the sum of: (1) The
present value of any consideration given to the transferee to acquire the interest; (2) the
present value of the expected future distributions on the interest; and (3) the present value of
the anticipated tax savings associated with holding the interest as the REMIC generates losses.
The notice of proposed rulemaking also contained rules for FASITs. Section 1.860H-6(g) of
the proposed regulations provides requirements for transfers of FASIT ownership interests and
adopts a safe harbor by reference to the safe harbor provisions of the REMIC regulations. In
February 2001, the IRS published Rev. Proc. 2001-12 (2001-3 I.R.B. 335) to set forth an
alternative safe harbor that taxpayers could use while the IRS and the Treasury considered
comments on the proposed regulations. Under the alternative safe harbor, if a transferor meets the
investigation requirement and the representation requirement but the transfer fails to meet the
formula test, the transferor may invoke the safe harbor if the transferee meets a two-prong test
(the asset test). A transferee generally meets the first prong of this test if, at the time of the
transfer, and in each of the two years preceding the year of transfer, the transferee's gross
assets exceed $100 million and its net assets exceed $10 million. A transferee generally meets the
second prong of this test if it is a domestic, taxable corporation and agrees in writing not to
transfer the interest to any person other than another domestic, taxable corporation that also
satisfies the requirements of the asset test. A transferor cannot rely on the asset test if the
transferor knows, or has reason to know, that the transferee will not comply with its written
agreement to limit the restrictions on subsequent transfers of the residual interest.
Rev. Proc. 2001-12 provides that the asset test fails to be satisfied in the case of a
transfer or assignment of a noneconomic residual interest to a foreign branch of an otherwise
eligible transferee. If such a transfer or assignment were permitted, a corporate taxpayer might
seek to claim that the provisions of an applicable income tax treaty would resource excess
inclusion income as foreign source income, and that, as a consequence, any U.S. tax liability
attributable to the excess inclusion income could be offset by foreign tax credits. Such a claim
would impede the assessment or collection of U.S. tax on excess inclusion income, contrary to the
congressional purpose of assuring that such income will be taxable in all events. See, e.g.,
sections 860E(a)(1), (b), (e) and 860G(b) of the Code.
The Treasury and the IRS have learned that certain taxpayers transferring noneconomic
residual interests to foreign branches have attempted to rely on the formula test to obtain safe
harbor treatment in an effort to impede the assessment or collection of U.S. tax on excess
inclusion income. Accordingly, the final regulations provide that if a noneconomic residual
interest is transferred to a foreign permanent establishment or fixed base of a U.S. taxpayer, the
transfer is not eligible for safe harbor treatment under either the asset test or the formula
test. The final regulations also require a transferee to represent that it will not cause income
from the noneconomic residual interest to be attributable to a foreign permanent establishment or
fixed base.
Section 1.860E-1(c)(8) provides computational rules that a taxpayer may use to qualify for
safe harbor status under the formula test. Section 1.860E-1(c)(8)(i) provides that the transferee
is presumed to pay tax at a rate equal to the highest rate of tax specified in section 11(b). Some
commentators were concerned that this presumed rate of taxation was too high because it does not
take into consideration taxpayers subject to the alternative minimum tax rate. In light of the
comments received, this provision has been amended in the final regulations to allow certain
transferees that compute their taxable income using the alternative minimum tax rate to use the
alternative minimum tax rate applicable to corporations.
Additionally, Sec. 1.860E-1(c)(8)(iii) provides that the present values in the formula test
are to be computed using a discount rate equal to the applicable Federal short-term rate
prescribed by section 1274(d). This is a change from the proposed regulation and Rev. Proc.
2001-12. In those publications the provision stated that "present values are computed using a
discount rate equal to the applicable Federal rate prescribed in section 1274(d) compounded
semiannually" and that "[a] lower discount rate may be used if the transferee can demonstrate that
it regularly borrows, in the course of its trade or business, substantial funds at such lower rate
from an unrelated third party." The IRS and the Treasury Department have learned that, based on
this provision, certain taxpayers have been attempting to use unrealistically low or zero interest
rates to satisfy the formula test, frustrating the intent of the test. Furthermore, the Treasury
Department and the IRS believe that a rule allowing for a rate other than a rate based on an
objective index would add unnecessary complexity to the safe harbor. As a result, the rule in the
proposed regulations that permits a transferee to use a lower discount rate, if the transferee can
demonstrate that it regularly borrows substantial funds at such lower rate, is not included in the
final regulations; and the Federal short-term rate has been substituted for the applicable Federal
rate. To simplify taxpayers' computations, the final regulations allow use of any of the published
short-term rates, provided that the present values are computed with a corresponding period of
compounding. With the exception of the provisions relating to transfers to foreign branches, these
changes generally have the proposed applicability date of February 4, 2000, but taxpayers may
choose to apply the interest rate formula set forth in the proposed regulation and Rev. Proc.
2001-12 for transfers occurring before November 19, 2002.
It is anticipated that when final regulations are adopted with respect to FASITs, Sec.
1.860H-6(g) of the proposed regulations will be adopted in substantially its present form, with
the result that the final regulations contained in this document will also govern transfers of
FASIT ownership interests with substantially the same applicability date as is contained in this
document.
Effect on Other Documents
Rev. Proc. 2001-12 (2001-3 I.R.B. 335) is obsolete for transfers of noneconomic residual
interests in REMICs occurring on or after November 19, 2002.
Special Analyses
It is hereby certified that these regulations will not have a significant economic impact
on a substantial number of small entities. This certification is based on the fact that it is
unlikely that a substantial number of small entities will hold REMIC residual interests.
Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory
assessment is not required. It also has been determined that sections 553(b) and 553(d) of the
Administrative Procedure Act (5 U.S.C. chapter 5) do not apply to these regulations.
Drafting Information
The principal author of these regulations is Xxxxxxxx Xxxxxxxxxx. However, other personnel
from the IRS and Treasury Department participated in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and record keeping requirements.
26 CFR Part 602
Reporting and record keeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 602 are amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
______________, 20__
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS4
Re: Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by ________________________
(the "Seller") to ______________________ (the "Purchaser") of $___________ Initial Certificate
Principal Balance of Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4, Class R-__
(the "Certificates"), pursuant to Section 5.02 of the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of May 1, 2006 among Residential Asset Securities
Corporation, as depositor (the "Depositor"), Residential Funding Corporation, as master servicer,
and U.S. Bank National Association, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and Servicing Agreement. The
Seller hereby certifies, represents and warrants to, and covenants with, the Depositor and the
Trustee that:
1. No purpose of the Seller relating to the transfer of the Certificate by the Seller to the
Purchaser is or will be to impede the assessment or collection of any tax.
2. The Seller understands that the Purchaser has delivered to the Trustee and the Master
Servicer a transfer affidavit and agreement in the form attached to the Pooling and Servicing
Agreement as Exhibit H-1. The Seller does not know or believe that any representation contained
therein is false.
3. The Seller has at the time of the transfer conducted a reasonable investigation of the
financial condition of the Purchaser as contemplated by Treasury Regulations Section
1.860E-1(c)(4)(i) and, as a result of that investigation, the Seller has determined that the
Purchaser has historically paid its debts as they become due and has found no significant evidence
to indicate that the Purchaser will not continue to pay its debts as they become due in the
future. The Seller understands that the transfer of a Class R-__ Certificate may not be respected
for United States income tax purposes (and the Seller may continue to be liable for United States
income taxes associated therewith) unless the Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed Transferee is not both a United States
Person and a Permitted Transferee.
Very truly yours,
_______________________________________
(Seller)
By: ____________________________________
Name: __________________________________
Title: ___________________________________
EXHIBIT I
FORM OF INVESTOR REPRESENTATION LETTER
______________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 0000-XX0
Xxxxxxxxxxx Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Residential Funding Corporation Series 2006-KS4
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS4, Class [B] [SB] [R-[__]]
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate Principal Balance of
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4, Class [B] [SB]
[R-[__]] (the "Certificates"), issued pursuant to the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of May 1, 2006 among Residential Asset Securities Corporation,
as depositor (the "Depositor"), Residential Funding Corporation, as master servicer (the "Master
Servicer"), and U.S. Bank National Association, as trustee (the "Trustee"). All terms used herein
and not otherwise defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Purchaser hereby certifies, represents and warrants to, and covenants with, the
Depositor, the Trustee and the Master Servicer that:
1. The Purchaser understands that (a) the Certificates have not been and will not be
registered or qualified under the Securities Act of 1933, as amended (the "Act") or
any state securities law, (b) the Depositor is not required to so register or
qualify the Certificates, (c) the Certificates may be resold only if registered and
qualified pursuant to the provisions of the Act or any state securities law, or if
an exemption from such registration and qualification is available, (d) the Pooling
and Servicing Agreement contains restrictions regarding the transfer of the
Certificates and (e) the Certificates will bear a legend to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own account for investment only and not
with a view to or for sale in connection with any distribution thereof in any
manner that would violate the Act or any applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated institutional investor having such
knowledge and experience in financial and business matters, and, in particular, in
such matters related to securities similar to the Certificates, such that it is
capable of evaluating the merits and risks of investment in the Certificates, (b)
able to bear the economic risks of such an investment and (c) an "accredited
investor" within the meaning of Rule 501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an opportunity to review (a) [a copy of
the Private Placement Memorandum, dated ___________________, 20__, relating to the
Certificates (b)] a copy of the Pooling and Servicing Agreement and [b] [c] such
other information concerning the Certificates, the Mortgage Loans and the Depositor
as has been requested by the Purchaser from the Depositor or the Seller and is
relevant to the Purchaser's decision to purchase the Certificates. The Purchaser
has had any questions arising from such review answered by the Depositor or the
Seller to the satisfaction of the Purchaser. [If the Purchaser did not purchase
the Certificates from the Seller in connection with the initial distribution of the
Certificates and was provided with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original Sale") of the
Certificates by the Depositor, the Purchaser acknowledges that such Memorandum was
provided to it by the Seller, that the Memorandum was prepared by the Depositor
solely for use in connection with the Original Sale and the Depositor did not
participate in or facilitate in any way the purchase of the Certificates by the
Purchaser from the Seller, and the Purchaser agrees that it will look solely to the
Seller and not to the Depositor with respect to any damage, liability, claim or
expense arising out of, resulting from or in connection with (a) error or omission,
or alleged error or omission, contained in the Memorandum, or (b) any information,
development or event arising after the date of the Memorandum.]
5. The Purchaser has not and will not nor has it authorized or will it authorize any person to
(a) offer, pledge, sell, dispose of or otherwise transfer any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) solicit any offer to buy or to accept a pledge, disposition of other
transfer of any Certificate, any interest in any Certificate or any other similar
security from any person in any manner, (c) otherwise approach or negotiate with
respect to any Certificate, any interest in any Certificate or any other similar
security with any person in any manner, (d) make any general solicitation by means
of general advertising or in any other manner or (e) take any other action, that
(as to any of (a) through (e) above) would constitute a distribution of any
Certificate under the Act, that would render the disposition of any Certificate a
violation of Section 5 of the Act or any state securities law, or that would
require registration or qualification pursuant thereto. The Purchaser will not
sell or otherwise transfer any of the Certificates, except in compliance with the
provisions of the Pooling and Servicing Agreement.
6. The Purchaser hereby certifies, represents and warrants to, and covenants with the
Depositor, the Trustee and the Master Servicer that the Purchaser is not an
employee benefit plan or other plan or arrangement subject to the prohibited
transaction provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any person (including an insurance company investing its general
account, an investment manager, a named fiduciary or a trustee of any such plan)
who is using "plan assets" of any such plan to effect such acquisition.
In addition, the Purchaser hereby certifies, represents and warrants to, and covenants
with, the Depositor, the Trustee and the Master Servicer that the Purchaser will not transfer such
Certificates to any Plan Investor or person unless either such Plan Investor or person meets the
requirements set forth in either (a) or (b) above.
Very truly yours,
(Purchaser)
By:........................................
Name:......................................
Title:.....................................
EXHIBIT J
FORM OF TRANSFEROR REPRESENTATION LETTER
______________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS4
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS4, Class [B] [SB] [R-[__]]
Ladies and Gentlemen:
In connection with the sale by __________ (the "Seller") to __________ (the
"Purchaser") of $__________ Initial Certificate Principal Balance of Home Equity Mortgage Asset-
Backed Pass-Through Certificates, Series 2006-KS4, Class [B] [SB] [R-[__]] (the "Certificates"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of May 1, 2006 among Residential Asset Securities Corporation, as depositor (the
"Depositor"), Residential Funding Corporation, as master servicer, and U.S. Bank National
Association, as trustee (the "Trustee"). The Seller hereby certifies, represents and warrants to,
and covenants with, the Depositor and the Trustee that:
Neither the Seller nor anyone acting on its behalf has (a) offered, pledged, sold,
disposed of or otherwise transferred any Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) has solicited any offer to buy or to accept a
pledge, disposition or other transfer of any Certificate, any interest in any Certificate or any
other similar security from any person in any manner, (c) has otherwise approached or negotiated
with respect to any Certificate, any interest in any Certificate or any other similar security
with any person in any manner, (d) has made any general solicitation by means of general
advertising or in any other manner, or (e) has taken any other action, that (as to any of (a)
through (e) above) would constitute a distribution of the Certificates under the Securities Act of
1933 (the "Act"), that would render the disposition of any Certificate a violation of Section 5 of
the Act or any state securities law, or that would require registration or qualification pursuant
thereto. The Seller will not act, in any manner set forth in the foregoing sentence with respect
to any Certificate. The Seller has not and will not sell or otherwise transfer any of the
Certificates, except in compliance with the provisions of the Pooling and Servicing Agreement.
Very truly yours,
(Purchaser)
By:........................................
Name:......................................
Title:.....................................
EXHIBIT K
TEXT OF AMENDMENT TO POOLING AND SERVICING
AGREEMENT PURSUANT TO SECTION 11.01(e) FOR A
LIMITED GUARANTY
ARTICLE XIII
Subordinate Certificate Loss Coverage; Limited Guaranty
Section 13.01. Subordinate Certificate Loss Coverage; Limited Guaranty. (a) Subject to
subsection (c) below, prior to the later of the third Business Day prior to each Distribution Date
or the related Determination Date, the Master Servicer shall determine whether it or any
Subservicer will be entitled to any reimbursement pursuant to Section 3.10 on such Distribution
Date for Advances or Subservicer Advances previously made, (which will not be Advances or
Subservicer Advances that were made with respect to delinquencies which were subsequently
determined to be Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
Extraordinary Losses) and, if so, the Master Servicer shall demand payment from Residential
Funding of an amount equal to the amount of any Advances or Subservicer Advances reimbursed
pursuant to Section 3.10, to the extent such Advances or Subservicer Advances have not been
included in the amount of the Realized Loss in the related Mortgage Loan, and shall distribute the
same to the Class SB Certificateholders in the same manner as if such amount were to be
distributed pursuant to Section 4.02.
(b) Subject to subsection (c) below, prior to the later of the third Business
Day prior to each Distribution Date or the related Determination Date, the Master Servicer shall
determine whether any Realized Losses (other than Excess Special Hazard Losses, Excess Bankruptcy
Losses, Excess Fraud Losses and Extraordinary Losses) will be allocated to the Class SB
Certificates on such Distribution Date pursuant to Section 4.05, and, if so, the Master Servicer
shall demand payment from Residential Funding of the amount of such Realized Loss and shall
distribute the same to the Class SB Certificateholders in the same manner as if such amount were
to be distributed pursuant to Section 4.02; provided, however, that the amount of such demand in
respect of any Distribution Date shall in no event be greater than the sum of (i) the additional
amount of Accrued Certificate Interest that would have been paid for the Class SB
Certificateholders on such Distribution Date had such Realized Loss or Losses not occurred plus
(ii) the amount of the reduction in the Certificate Principal Balances of the Class SB
Certificates on such Distribution Date due to such Realized Loss or Losses. Notwithstanding such
payment, such Realized Losses shall be deemed to have been borne by the Certificateholders for
purposes of Section 4.05. Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses and Extraordinary Losses allocated to the Class SB Certificates will not be covered by the
Subordinate Certificate Loss Obligation.
(c) Demands for payments pursuant to this Section shall be made prior to the
later of the third Business Day prior to each Distribution Date or the related Determination Date
by the Master Servicer with written notice thereof to the Trustee. The maximum amount that
Residential Funding shall be required to pay pursuant to this Section on any Distribution Date
(the "Amount Available") shall be equal to the lesser of (X) ________ minus the sum of (i) all
previous payments made under subsections (a) and (b) hereof and (ii) all draws under the Limited
Guaranty made in lieu of such payments as described below in subsection (d) and (Y) the then
outstanding Certificate Principal Balances of the Class SB Certificates, or such lower amount as
may be established pursuant to Section 13.02. Residential Funding's obligations as described in
this Section are referred to herein as the "Subordinate Certificate Loss Obligation."
(d) The Trustee will promptly notify General Motors Acceptance Corporation of
any failure of Residential Funding to make any payments hereunder and shall demand payment
pursuant to the limited guaranty (the "Limited Guaranty"), executed by General Motors Acceptance
Corporation, of Residential Funding's obligation to make payments pursuant to this Section, in an
amount equal to the lesser of (i) the Amount Available and (ii) such required payments, by
delivering to General Motors Acceptance Corporation a written demand for payment by wire transfer,
not later than the second Business Day prior to the Distribution Date for such month, with a copy
to the Master Servicer.
(e) All payments made by Residential Funding pursuant to this Section or amounts
paid under the Limited Guaranty shall be deposited directly in the Certificate Account, for
distribution on the Distribution Date for such month to the Class SB Certificateholders.
(f) The Depositor shall have the option, in its sole discretion, to substitute
for either or both of the Limited Guaranty or the Subordinate Certificate Loss Obligation another
instrument in the form of a corporate guaranty, an irrevocable letter of credit, a surety bond,
insurance policy or similar instrument or a reserve fund; provided that (i) the Depositor obtains
(subject to the provisions of Section 10.01(f) as if the Depositor was substituted for the Master
Servicer solely for the purposes of such provision) an Opinion of Counsel (which need not be an
opinion of independent counsel) to the effect that obtaining such substitute corporate guaranty,
irrevocable letter of credit, surety bond, insurance policy or similar instrument or reserve fund
will not cause either (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section 860(F)(a)(1) of the
Code or on "contributions after the startup date" under Section 860(G)(d)(1) of the Code or (b)
the Trust Fund to fail to qualify as a REMIC at any time that any Certificate is outstanding, and
(ii) no such substitution shall be made unless (A) the substitute Limited Guaranty or Subordinate
Certificate Loss Obligation is for an initial amount not less than the then current Amount
Available and contains provisions that are in all material respects equivalent to the original
Limited Guaranty or Subordinate Certificate Loss Obligation (including that no portion of the
fees, reimbursements or other obligations under any such instrument will be borne by the Trust
Fund), (B) the long term debt obligations of any obligor of any substitute Limited Guaranty or
Subordinate Certificate Loss Obligation (if not supported by the Limited Guaranty) shall be rated
at least the lesser of (a) the rating of the long term debt obligations of General Motors
Acceptance Corporation as of the date of issuance of the Limited Guaranty and (b) the rating of
the long term debt obligations of General Motors Acceptance Corporation at the date of such
substitution and (C) if the Class SB Certificates have been rated, the Depositor obtains written
confirmation from each Rating Agency that rated the Class SB Certificates at the request of the
Depositor that such substitution shall not lower the rating on the Class SB Certificates below the
lesser of (a) the then-current rating assigned to the Class SB Certificates by such Rating Agency
and (b) the original rating assigned to the Class SB Certificates by such Rating Agency. Any
replacement of the Limited Guaranty or Subordinate Certificate Loss Obligation pursuant to this
Section shall be accompanied by a written Opinion of Counsel to the substitute guarantor or
obligor, addressed to the Master Servicer and the Trustee, that such substitute instrument
constitutes a legal, valid and binding obligation of the substitute guarantor or obligor,
enforceable in accordance with its terms, and concerning such other matters as the Master Servicer
and the Trustee shall reasonably request. Neither the Depositor, the Master Servicer nor the
Trustee shall be obligated to substitute for or replace the Limited Guaranty or Subordinate
Certificate Loss Obligation under any circumstance.
Section 13.02. Amendments Relating to the Limited Guaranty. Notwithstanding
Sections 11.01 or 13.01: (i) the provisions of this Article XIII may be amended, superseded or
deleted, (ii) the Limited Guaranty or Subordinate Certificate Loss Obligation may be amended,
reduced or canceled, and (iii) any other provision of this Agreement which is related or
incidental to the matters described in this Article XIII may be amended in any manner; in each
case by written instrument executed or consented to by the Depositor and Residential Funding but
without the consent of any Certificateholder and without the consent of the Master Servicer or the
Trustee being required unless any such amendment would impose any additional obligation on, or
otherwise adversely affect the interests of, the Master Servicer or the Trustee, as applicable;
provided that the Depositor shall also obtain a letter from each Rating Agency that rated the
Class SB Certificates at the request of the Depositor to the effect that such amendment, reduction,
deletion or cancellation will not lower the rating on the Class SB Certificates below the lesser
of (a) the then-current rating assigned to the Class SB Certificates by such Rating Agency and (b)
the original rating assigned to the Class SB Certificates by such Rating Agency, unless (A) the
Holder of 100% of the Class SB Certificates is Residential Funding or an Affiliate of Residential
Funding, or (B) such amendment, reduction, deletion or cancellation is made in accordance with
Section 11.01(e) and, provided further that the Depositor obtains (subject to the provisions of
Section 10.01(f) as if the Depositor was substituted for the Master Servicer solely for the
purposes of such provision), in the case of a material amendment or supersession (but not a
reduction, cancellation or deletion of the Limited Guaranty or the Subordinate Certificate Loss
Obligation), an Opinion of Counsel (which need not be an opinion of independent counsel) to the
effect that any such amendment or supersession will not cause either (a) any federal tax to be
imposed on the Trust Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after the startup date"
under Section 860G(d)(1) of the Code or (b) the Trust Fund to fail to qualify as a REMIC at any
time that any Certificate is outstanding. A copy of any such instrument shall be provided to the
Trustee and the Master Servicer together with an Opinion of Counsel that such amendment complies
with this Section 13.02.
EXHIBIT L
FORM OF LIMITED GUARANTY
RESIDENTIAL ASSET SECURITIES CORPORATION
Home Equity Mortgage Asset-Backed Pass-Through Certificates
Series 2006-KS4
__________, 20__
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS4
Ladies and Gentlemen:
WHEREAS, Residential Funding Corporation, a Delaware corporation ("Residential
Funding"), an indirect wholly-owned subsidiary of General Motors Acceptance Corporation, a New
York corporation ("GMAC"), plans to incur certain obligations as described under Section 12.01 of
the Pooling and Servicing Agreement dated as of May 1, 2006 (the "Servicing Agreement"), among
Residential Asset Securities Corporation (the "Depositor"), Residential Funding and U.S. Bank
National Association (the "Trustee") as amended by Amendment No. ___ thereto, dated as of
________, with respect to the Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2006-KS4 (the "Certificates"); and
WHEREAS, pursuant to Section 12.01 of the Servicing Agreement, Residential Funding
agrees to make payments to the Holders of the Class SB Certificates with respect to certain losses
on the Mortgage Loans as described in the Servicing Agreement; and
WHEREAS, GMAC desires to provide certain assurances with respect to the ability of
Residential Funding to secure sufficient funds and faithfully to perform its Subordinate
Certificate Loss Obligation;
NOW THEREFORE, in consideration of the premises herein contained and certain other
good and valuable consideration, the receipt of which is hereby acknowledged, GMAC agrees as
follows:
2. Provision of Funds. (a) GMAC agrees to contribute and deposit in the Certificate Account
on behalf of Residential Funding (or otherwise provide to Residential Funding, or to cause to be
made available to Residential Funding), either directly or through a subsidiary, in any case prior
to the related Distribution Date, such moneys as may be required by Residential Funding to perform
its Subordinate Certificate Loss Obligation when and as the same arises from time to time upon the
demand of the Trustee in accordance with Section 12.01 of the Servicing Agreement.
(b) The agreement set forth in the preceding clause (a) shall be absolute,
irrevocable and unconditional and shall not be affected by the transfer by GMAC or any other
person of all or any part of its or their interest in Residential Funding, by any insolvency,
bankruptcy, dissolution or other proceeding affecting Residential Funding or any other person, by
any defense or right of counterclaim, set-off or recoupment that GMAC may have against Residential
Funding or any other person or by any other fact or circumstance. Notwithstanding the foregoing,
GMAC's obligations under clause (a) shall terminate upon the earlier of (x) substitution for this
Limited Guaranty pursuant to Section 12.01(f) of the Servicing Agreement, or (y) the termination
of the Trust Fund pursuant to the Servicing Agreement.
3. Waiver. GMAC hereby waives any failure or delay on the part of Residential Funding, the
Trustee or any other person in asserting or enforcing any rights or in making any claims or
demands hereunder. Any defective or partial exercise of any such rights shall not preclude any
other or further exercise of that or any other such right. GMAC further waives demand,
presentment, notice of default, protest, notice of acceptance and any other notices with respect
to this Limited Guaranty, including, without limitation, those of action or non-action on the part
of Residential Funding or the Trustee.
4. Modification, Amendment and Termination. This Limited Guaranty may be modified, amended or
terminated only by the written agreement of GMAC and the Trustee and only if such modification,
amendment or termination is permitted under Section 12.02 of the Servicing Agreement. The
obligations of GMAC under this Limited Guaranty shall continue and remain in effect so long as the
Servicing Agreement is not modified or amended in any way that might affect the obligations of
GMAC under this Limited Guaranty without the prior written consent of GMAC.
5. Successor. Except as otherwise expressly provided herein, the guarantee herein set forth
shall be binding upon GMAC and its respective successors.
6. Governing Law. This Limited Guaranty shall be governed by the laws of the State of New
York.
7. Authorization and Reliance. GMAC understands that a copy of this Limited Guaranty shall be
delivered to the Trustee in connection with the execution of Amendment No. __ to the Servicing
Agreement and GMAC hereby authorizes the Depositor and the Trustee to rely on the covenants and
agreements set forth herein.
8. Definitions. Capitalized terms used but not otherwise defined herein shall have the
meaning given them in the Servicing Agreement.
9. Counterparts. This Limited Guaranty may be executed in any number of counterparts, each of
which shall be deemed to be an original and such counterparts shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, GMAC has caused this Limited Guaranty to be executed and
delivered by its respective officers thereunto duly authorized as of the day and year first above
written.
GENERAL MOTORS ACCEPTANCE
CORPORATION
By:........................................
Name:......................................
Title:.....................................
Acknowledged by:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:.........................................
Name:.......................................
Title:......................................
RESIDENTIAL ASSET SECURITIES
CORPORATION
By:.........................................
Name:.......................................
Title:......................................
EXHIBIT M
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS4
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS4 Assignment of Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the assignment by U.S Bank National
Association (the "Trustee") to _______________________ (the "Lender") of _______________ (the
"Mortgage Loan") pursuant to Section 3.13(d) of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of May 1, 2006 among Residential Asset Securities Corporation,
as depositor (the "Depositor"), Residential Funding Corporation, as master servicer, and the
Trustee. All terms used herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement. The Lender hereby certifies, represents and warrants to, and
covenants with, the Master Servicer and the Trustee that:
(ii) the Mortgage Loan is secured by Mortgaged Property located in a jurisdiction in which an
assignment in lieu of satisfaction is required to preserve lien priority, minimize or avoid
mortgage recording taxes or otherwise comply with, or facilitate a refinancing under, the laws of
such jurisdiction;
(iii) the substance of the assignment is, and is intended to be, a refinancing of such Mortgage
Loan and the form of the transaction is solely to comply with, or facilitate the transaction
under, such local laws;
(iv) the Mortgage Loan following the proposed assignment will be modified to have a rate of
interest at least 0.25 percent below or above the rate of interest on such Mortgage Loan prior to
such proposed assignment; and
(v) such assignment is at the request of the borrower under the related Mortgage Loan.
Very truly yours,
(Lender)
By:........................................
Name:......................................
Title:.....................................
EXHIBIT N-1
FORM OF RULE 144A INVESTMENT REPRESENTATION
Description of Rule 144A Securities, including numbers:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
The undersigned seller, as registered holder (the "Seller"), intends to transfer
the Rule 144A Securities described above to the undersigned buyer (the "Buyer").
1. In connection with such transfer and in accordance with the agreements pursuant to which
the Rule 144A Securities were issued, the Seller hereby certifies the following facts: Neither
the Seller nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security from, or otherwise approached or negotiated with respect to the Rule 144A
Securities, any interest in the Rule 144A Securities or any other similar security with, any
person in any manner, or made any general solicitation by means of general advertising or in any
other manner, or taken any other action, that would constitute a distribution of the Rule 144A
Securities under the Securities Act of 1933, as amended (the "1933 Act"), or that would render the
disposition of the Rule 144A Securities a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, and that the Seller has not offered the Rule 144A Securities to any
person other than the Buyer or another "qualified institutional buyer" as defined in Rule 144A
under the 0000 Xxx.
2. The Buyer, pursuant to Section 5.02 of the Pooling and Servicing Agreement (the
"Agreement"), dated as of May 1, 2006 among Residential Funding Corporation, as master servicer
(the "Master Servicer"), Residential Asset Securities Corporation, as depositor (the "Depositor"),
and U.S. Bank National Association, as trustee (the "Trustee") warrants and represents to, and
covenants with, the Seller, the Trustee and the Master Servicer as follows:
a. The Buyer understands that the Rule 144A Securities have not been registered under the 1933
Act or the securities laws of any state.
b. The Buyer considers itself a substantial, sophisticated institutional investor having such
knowledge and experience in financial and business matters that it is capable of evaluating
the merits and risks of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information regarding the Rule 144A Securities that
it has requested from the Seller, the Trustee or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf has offered, transferred, pledged, sold
or otherwise disposed of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or negotiated with
respect to the Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security with, any person in any manner, or made any general solicitation by means
of general advertising or in any other manner, or taken any other action, that would
constitute a distribution of the Rule 144A Securities under the 1933 Act or that would
render the disposition of the Rule 144A Securities a violation of Section 5 of the 1933 Act
or require registration pursuant thereto, nor will it act, nor has it authorized or will it
authorize any person to act, in such manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that term is defined in Rule 144A under
the 1933 Act and has completed either of the forms of certification to that effect attached
hereto as Annex I or Annex II. The Buyer is aware that the sale to it is being made in
reliance on Rule 144A. The Buyer is acquiring the Rule 144A Securities for its own account
or the accounts of other qualified institutional buyers, understands that such Rule 144A
Securities may be resold, pledged or transferred only (i) to a person reasonably believed
to be a qualified institutional buyer that purchases for its own account or for the account
of a qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the 1933 Act.
3. The Buyer is not an employee benefit plan or other plan or arrangement subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code, or any person (including
an insurance company investing its general account, an investment manager, a named fiduciary or a
trustee of any such plan) who is using "plan assets" of any such plan to effect such acquisition.
4. This document may be executed in one or more counterparts and by the different parties
hereto on separate counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this document as of the date set forth
below.
______________________________ ______________________________
Print Name of Seller Print Name of Purchaser
By: .......................................... By: ..........................................
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No............................................ No............................................
Date:......................................... Date:.........................................
ANNEX I TO EXHIBIT N-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule 144A Investment
Representation to which this Certification is attached:
1.......As indicated below, the undersigned is the President, Chief Financial Officer, Senior Vice
President or other executive officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified institutional buyer"
as that term is defined in Rule 144A under the Securities Act of 1933 ("Rule 144A") because (i)
the Buyer owned and/or invested on a discretionary basis $______________________ in securities
(except for the excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii) the Buyer
satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank, savings and loan
association or similar institution), Massachusetts or similar business trust,
partnership, or charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution organized under the
laws of any State, territory or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the State or territorial
banking commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a copy of which is attached
hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan association, building and
loan association, cooperative bank, homestead association or similar institution,
which is supervised and examined by a State or Federal authority having supervision
over any such institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose primary and predominant
business activity is the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is subject to supervision by the
insurance commissioner or a similar official or agency of a State or territory or
the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and maintained by a State,
its political subdivisions, or any agency or instrumentality of the State or its
political subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the meaning of Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
___ Investment Adviser. The Buyer is an investment adviser registered under the
Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
___ Business Development Company. The Buyer is a business development company as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank or trust company and
whose participants are exclusively (a) plans established and maintained by a State,
its political subdivisions, or any agency or instrumentality of the State or its
political subdivisions, for the benefit of its employees, or (b) employee benefit
plans within the meaning of Title I of the Employee Retirement Income Security Act
of 1974, but is not a trust fund that includes as participants individual
retirement accounts or H.R. 10 plans.
3. The term "securities" as used herein does not include (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment to or subscription
by the Buyer, if the Buyer is a dealer, (iii) bank deposit notes and certificates of deposit, (iv)
loan participations, (v) repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned and/or invested on a
discretionary basis by the Buyer, the Buyer used the cost of such securities to the Buyer and did
not include any of the securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its financial statements
prepared in accordance with generally accepted accounting principles and if the investments of
such subsidiaries are managed under the Buyer's direction. However, such securities were not
included if the Buyer is a majority-owned, consolidated subsidiary of another enterprise and the
Buyer is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A and understands that the seller
to it and other parties related to the Certificates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer may be in reliance on Rule 144A.
____ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer agrees that, in connection with
any purchase of securities sold to the Buyer for the account of a third party (including any
separate account) in reliance on Rule 144A, the Buyer will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the meaning of Rule
144A. In addition, the Buyer agrees that the Buyer will not purchase securities for a third party
unless the Buyer has obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party independently meets
the definition of "qualified institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given, the Buyer's
purchase of Rule 144A Securities will constitute a reaffirmation of this certification as of the
date of such purchase.
Print Name of Buyer
By: ...........................................
Name:
Title:
Date: ...........................................
ANNEX II TO EXHIBIT N-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule 144A Investment
Representation to which this Certification is attached:
8. As indicated below, the undersigned is the President, Chief Financial Officer or Senior
Vice President of the Buyer or, if the Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933 ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the Adviser.
9. In connection with purchases by Buyer, the Buyer is a "qualified institutional buyer" as
defined in SEC Rule 144A because (i) the Buyer is an investment company registered under the
Investment Company Act of 1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family
of Investment Companies, owned at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent fiscal year. For purposes
of determining the amount of securities owned by the Buyer or the Buyer's Family of Investment
Companies, the cost of such securities was used.
____ The Buyer owned $___________________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent fiscal year
(such amount being calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which owned in the aggregate
$______________ in securities (other than the excluded securities referred to
below) as of the end of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
10. The term "Family of Investment Companies" as used herein means two or more registered
investment companies (or series thereof) that have the same investment adviser or investment
advisers that are affiliated (by virtue of being majority owned subsidiaries of the same parent or
because one investment adviser is a majority owned subsidiary of the other).
11. The term "securities" as used herein does not include (i) securities of issuers that are
affiliated with the Buyer or are part of the Buyer's Family of Investment Companies, (ii) bank
deposit notes and certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency, interest rate and
commodity swaps.
12. The Buyer is familiar with Rule 144A and understands that each of the parties to which this
certification is made are relying and will continue to rely on the statements made herein because
one or more sales to the Buyer will be in reliance on Rule 144A. In addition, the Buyer will only
purchase for the Buyer's own account.
13. The undersigned will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice, the Buyer's purchase of
Rule 144A Securities will constitute a reaffirmation of this certification by the undersigned as
of the date of such purchase.
Print Name of Buyer
By: ...........................................
Name:
Title:
IF AN ADVISER:
Print Name of Buyer
Date: ...........................................
EXHIBIT N-2
FORM OF TRANSFEROR CERTIFICATE
(144A Transferor to 144A Transferee)
_____, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS4
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS4 Assignment of Mortgage Loan
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate Principal Balance of
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4, Class B (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of May 1, 2006 among Residential Asset Securities Corporation, as depositor
(the "Depositor"), Residential Funding Corporation, as master servicer (the "Master Servicer"),
and U.S. Bank National Association, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and Servicing Agreement. The
Seller hereby certifies, represents and warrants to, and covenants with, the Depositor, the
Trustee and the Master Servicer that:
In connection with such request, and in respect of such Certificates the Seller
does hereby certify that such Certificates are being transferred in accordance with (i) the
transfer restrictions set forth in Section 5.01 of the Pooling and Servicing Agreement and the
Certificates and (ii) Rule 144A under the Securities Act to a transferee that the Seller
reasonably believes is purchasing the Certificates for its own account or an account with respect
to which the transferee exercises sole investment discretion and the transferee and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A, and such transferee
is aware that the sale to it is being made in reliance upon Rule 144A, and (iii) any applicable
securities laws of any state of the United States or any other jurisdiction.
[INSERT NAME OF TRANSFEROR]
By: _________________________
Name:
Title:
Dated: ______________, 20__
EXHIBIT N-3
FORM OF TRANSFEROR CERTIFICATE
(144A Transferor to Regulation S Transferee)
_____________________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS4
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS4 Assignment of Mortgage Loan
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate Principal Balance of
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4, Class B (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of May 1, 2006 among Residential Asset Securities Corporation, as depositor
(the "Depositor"), Residential Funding Corporation, as master servicer (the "Master Servicer"),
and U.S. Bank National Association, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and Servicing Agreement. The
Seller hereby certifies, represents and warrants to, and covenants with, the Depositor, the
Trustee and the Master Servicer that:
[The Seller has requested a transfer of a [Rule 144A Global Class B Certificate]
[Definitive Class B Certificate] for a beneficial interest in a [Temporary] Regulation S Global
Class B Certificate to be held in the name of ___________ (the "Transferee") through
[Euroclear][Clearstream], which in turn will hold through the Depository.] [The Seller has
requested an exchange of such beneficial interest in a Rule 144A Global Class B Certificate]
[Definitive Class B Certificate] for a beneficial interest in a [Temporary] Regulation S Global
Class B Certificate to be held in the name of the Holder through [Euroclear][Clearstream], which
in turn will hold through the Depository.]
In connection with such request, the Seller does hereby certify that (1) the
[transfer][exchange] of the beneficial interest in the Certificates has been made in compliance
with the transfer restrictions applicable to the Global Class B Certificates; [and] (2) the
[Seller][Purchaser] is not a U.S. person as defined in Regulation S under the Securities Act[;
and (3) such transfer has been made pursuant to and in accordance with Regulation S].
This certificate and the statements contained herein are made for your benefit.
[INSERT NAME OF TRANSFEROR]
By: _________________________
Name:
Title:
Dated: ______________, 20__
EXHIBIT N-4
FORM OF REGULATION S TRANSFEREE CERTIFICATE
_____________________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS4
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS4 Assignment of Mortgage Loan
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate Principal Balance of
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4, Class B (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of May 1, 2006 among Residential Asset Securities Corporation, as depositor
(the "Depositor"), Residential Funding Corporation, as master servicer (the "Master Servicer"),
and U.S. Bank National Association, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and Servicing Agreement. The
Seller hereby certifies, represents and warrants to, and covenants with, the Depositor, the
Trustee and the Master Servicer that:
In connection with the undersigned's purchase of the Certificates, the undersigned
hereby represents, acknowledges and agrees as follows:
It is a person that is not a "U.S. person" as defined in Regulation S under the Securities Act and
understands that the sale of the Notes to it is being made in reliance on the exemption from the
registration requirements of the Securities Act provided by Regulation S thereunder.
This certificate and the statements contained herein are made for your benefit.
[INSERT NAME OF TRANSFEREE]
By: _______________________
Name:
Title:
Dated: ______________, 20__
EXHIBIT N-5
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
___________________________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS4
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS4 Assignment of Mortgage Loan
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate Principal Balance of
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4, Class B (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of May 1, 2006 among Residential Asset Securities Corporation, as depositor
(the "Depositor"), Residential Funding Corporation, as master servicer (the "Master Servicer"),
and U.S. Bank National Association, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and Servicing Agreement. The
Seller hereby certifies, represents and warrants to, and covenants with, the Depositor, the
Trustee and the Master Servicer that:
1. It is an accredited investor ("Accredited Investor") as defined in Rule 501(c) of
Regulation D under the Securities Act purchasing for its own account and it understands the
Certificates will bear a legend set forth in the applicable exhibit attached to the Pooling and
Servicing Agreement. In addition, it represents and warrants that it will provide notice to any
subsequent transferee of the transfer restrictions provided in the legend, will hold and transfer
Certificates in an amount of not less than U.S.$250,000 for it or for each account for which it is
acting.
2. It understands that the Certificates have been offered only in a transaction not
involving any public offering in the United States within the meaning of the Securities Act, the
Notes have not been and will not be registered under the Securities Act and, if in the future it
decides to offer, resell, pledge or otherwise transfer the Certificates, the Certificates may be
offered, resold, pledged or otherwise transferred only in accordance with the provisions of the
Indenture and the legend on the Certificates. It acknowledges that no representation has been
made as to the availability of any exemption under the Securities Act or any state securities laws
for resale of the Certificates.
3. In connection with the purchase of the Certificates (provided that no such
representations are made with respect to the Servicer by any Affiliate of the Servicer or any
account advised or managed by the Servicer): (A) it is not relying (for purposes of making any
investment decision or otherwise) upon any advice, counsel or representations (whether written or
oral) of the Depositor, the Master Servicer, the Initial Purchaser or the Placement Agent or any
of their agents (in their capacities as such), other than any representations expressly set forth
in a written agreement with such party; (B) it has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisers to the extent it has deemed necessary and
has made its own investment decisions based upon its own judgment and upon any advice from such
advisers as it has deemed necessary and not upon any view expressed by the Co-Issuers, the
Servicer, the Initial Purchaser or the Placement Agent; (C) its purchase of the Certificate will
comply with all applicable laws in any jurisdiction in which it resides or is located; (D) it is
acquiring the Certificates as principal solely for its own account for investment and not with a
view to the resale, distribution or other disposition thereof in violation of the Securities Act;
(E) it has made investments prior to the date hereof and was not formed solely for the purpose of
investing in the Certificates; and (F) it is a sophisticated investor and is purchasing the
Certificates with a full understanding of all of the terms, conditions and risks thereof, and it
is capable of assuming and willing to assume those risks.
4. It agrees that it will not offer or sell, transfer, assign, or otherwise dispose of
any Certificates or any interest therein except (A) pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act and any applicable
state securities laws or the applicable laws of any other jurisdiction and (B) in accordance with
the provisions of the Pooling and Servicing Agreement, to which provisions it agrees it is subject.
This certificate and the statements contained herein are made for your benefit.
[INSERT NAME OF TRANSFEREE]
By: ________________________
Name:
Title:
Dated: ______________, 20__
EXHIBIT N-6
FORM OF TRANSFEROR CERTIFICATE
(Regulation S Transferor)
_____________________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 2006-KS4
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS4 Assignment of Mortgage Loan
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate Principal Balance of
Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4, Class B (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of May 1, 2006 among Residential Asset Securities Corporation, as depositor
(the "Depositor"), Residential Funding Corporation, as master servicer (the "Master Servicer"),
and U.S. Bank National Association, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and Servicing Agreement. The
Seller hereby certifies, represents and warrants to, and covenants with, the Depositor, the
Trustee and the Master Servicer that:
[The Seller has requested a transfer of a [Temporary] Regulation S Global Class B
Certificate for a beneficial interest in a ________________________ to be held in the name of
___________ (the "Transferee") [through ________________________, which in turn will hold through
the Depository]. [The Seller has requested an exchange of such beneficial interest in a
[Temporary] Regulation S Global Class B Certificate for a beneficial interest in a [Temporary]
Regulation S Global Class B Certificate to be held in the name of the Holder through
[Euroclear][Clearstream], which in turn will hold through the Depository.]
In connection with such request, the Seller does hereby certify that (1) the
[transfer][exchange] of the beneficial interest in the Certificates has been made in compliance
with the transfer restrictions applicable to the Class B Certificates; [and] (2) the
[Seller][Purchaser] is not a U.S. person as defined in Regulation S under the Securities Act[;
and (3) such transfer has been made pursuant to and in accordance with Regulation S].
This certificate and the statements contained herein are made for your benefit.
[INSERT NAME OF TRANSFEROR]
By:
Name:
Title:
Dated: ______________, 20__
EXHIBIT O
[RESERVED]
EXHIBIT P
FORM OF ERISA REPRESENTATION LETTER
__________, 20__
Residential Asset Securities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
U.S. Bank National Association
EP-MN-WS3D
00 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: Structured Finance/RASC Series 0000-XX0
Xxxxxxxxxxx Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Residential Asset Securities Corporation Series 2006-KS4
Re: Home Equity Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-KS4, Class SB
Ladies and Gentlemen:
[____________________________________] (the "Purchaser") intends to purchase from
[______________________________] (the "Seller") $[____________] Initial Certificate Principal
Balance of Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2006-KS4,
Class ____ (the "Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of May 1, 2006 among Residential Asset Securities
Corporation, as the depositor (the "Depositor"), Residential Funding Corporation, as master
servicer (the "Master Servicer") and U.S. Bank National Association, as trustee (the "Trustee").
All terms used herein and not otherwise defined shall have the meanings set forth in the Pooling
and Servicing Agreement. The Purchaser hereby certifies, represents and warrants to, and covenants
with, the Depositor, the Trustee and the Master Servicer that The Purchaser is not an employee
benefit plan or other plan or arrangement subject to the prohibited transaction provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any person (including an insurance
company investing its general account, an investment manager, a named fiduciary or a trustee of
any such plan) who is using "plan assets" of any such plan to effect such acquisition.
Very truly yours,
_______________________________________
(Purchaser)
By: ____________________________________
Name: __________________________________
Title: ___________________________________
EXHIBIT Q
FORM OF SB-AM SWAP AGREEMENT
DATE: May 30, 2006
TO: U.S. Bank National Association, not in its
individual capacity but solely as trustee for the
benefit of RASC Series 2006-KS4 Trust, acting on
behalf of the Class A Certificateholders, Class M
Certificateholders and Class B Certificateholders
under the Pooling and Servicing Agreement identified
below ("PARTY A")
ATTENTION: RASC Series 2006-KS4
FROM: U.S. Bank National Association, not in its
individual capacity but solely as trustee for the
benefit of RASC Series 2006-KS4 Trust, acting on
behalf of the Class SB Certificateholders under the
Pooling and Servicing Agreement identified below
("PARTY B")
SUBJECT: Payment Swap Confirmation and Agreement
REFERENCE NUMBER
The purpose of this letter agreement (the "Agreement") is to confirm the terms and conditions of
the Transaction entered into on the Trade Date specified below (the "Transaction") between Party A
and Party B. This Agreement, which evidences a complete and binding agreement between you and us
to enter into the Transaction on the terms set forth below, constitutes a "Confirmation" as
referred to in the ISDA Form Master Agreement (as defined below), as well as a "Schedule" as
referred to in the ISDA Form Master Agreement.
o This Agreement is subject to and incorporates the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives Association, Inc. ("ISDA").
You and we have agreed to enter into this Agreement in lieu of negotiating a Schedule to the 1992
ISDA Master Agreement (Multicurrency-Cross Border) form (the "ISDA Form Master Agreement") but,
rather, an ISDA Form Master Agreement shall be deemed to have been executed by you and us on the
date we entered into the Transaction. In the event of any inconsistency between the provisions of
this Agreement and the Definitions or the ISDA Form Master Agreement, this Agreement shall prevail
for purposes of the Transaction. Terms used and not otherwise defined herein, in the ISDA Form
Master Agreement or the Definitions shall have the meanings assigned to them in the Pooling and
Servicing Agreement, dated as of May 1, 2006, among Residential Asset Securities Corporation, as
depositor, Residential Funding Corporation, as master servicer, and U.S. Bank National
Association, as trustee (the "Pooling and Servicing Agreement"). Each reference to a "Section" or
to a "Section" "of this Agreement" will be construed as a reference to a Section of the 1992 ISDA
Form Master Agreement. Each capitalized term used herein that is not defined herein or in the
1992 ISDA Form Master Agreement shall have the meaning defined in the Pooling and Servicing
Agreement. Notwithstanding anything herein to the contrary, should any provision of this
Agreement conflict with any provision of the Pooling and Servicing Agreement, the provision of the
Pooling and Servicing Agreement shall apply.
o The terms of the particular Transaction to which this Confirmation relates are as follows:
Trade Date:
Effective Date:
Termination Date: [June 25, 2036] subject to adjustment in
accordance with the Business Day Convention.
Business Days: California, Minnesota, Texas, New York, Illinois.
Business Day Convention: Following.
PARTY A PAYMENTS:
Party A Payment Dates: Each Distribution Date under the Pooling and
Servicing Agreement.
Party A Payment Amounts: On each Party A Payment Date, the amount, if any,
equal to the aggregate amount of Net Swap Payments
and Swap Termination Payments owed to the Swap
Counterparty remaining unpaid after application of
the sum of (A) from the Adjusted Available
Distribution Amount that would have remained had
the Adjusted Available Distribution Amount been
applied on such Distribution Date to make the
distributions for such Distribution Date under
Section 4.02(c) clauses (i) through (x) of the
Pooling and Servicing Agreement, of (I) Accrued
Certificate Interest on the Class SB Certificates,
(II) the amount of any Overcollateralization
Reduction Amount and (III) for each Distribution
Date after the Certificate Principal Balance of
each Class of Class A Certificates and Class M
Certificates has been reduced to zero, the
Overcollateralization Amount, (B) from prepayment
charges on deposit in the Certificate Amount, any
prepayment charges received on the Mortgage Loans
during the related Prepayment Period and (C) from
the amount distributable with respect to the
REMIC III Regular Interest IO.
PARTY B PAYMENTS:
Party B Payment Dates: Each Distribution Date under the Pooling and
Servicing Agreement
Party B Payment Amounts: On each Party B Payment Date, an amount equal to
the lesser of (a) the Available Distribution
Amount remaining on such Distribution Date after
the distributions on such Distribution Date under
Section 4.02(c) clauses (i) through (vi) of the
Pooling and Servicing Agreement and (b) the
aggregate unpaid Basis Risk Shortfalls allocated
to the Class A Certificateholders and the Class M
Certificateholders for such Distribution Date.
o Additional Provisions: Each party hereto is hereby advised and acknowledges that the other
party has engaged in (or refrained from engaging in) substantial financial transactions and has
taken (or refrained from taking) other material actions in reliance upon the entry by the parties
into the Transaction being entered into on the terms and conditions set forth herein and in the
ISDA Form Master Agreement relating to such Transaction, as applicable.
o Provisions Deemed Incorporated in a Schedule to the ISDA Form Master Agreement:
o Termination Provisions. For purposes of the ISDA Form Master Agreement:
|X| "Specified Entity" is not applicable to Party A or Party B for any purpose.
|X| "Specified Transaction" is not applicable to Party A or Party B for any purpose, and,
accordingly, Section 5(a)(v) shall not apply to Party A or Party B.
|X| The "Cross Default" provisions of Section 5(a)(vi) shall not apply to Party A or Party B.
|X| The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply to Party A or
Party B.
|X| With respect to Party A and Party B, the "Bankruptcy" provision of Section 5(a)(vii)(2) of
the ISDA Form Master Agreement will be deleted in its entirety.
|X| The "Automatic Early Termination" provision of Section 6(a) will not apply to Party A or to
Party B.
|X| Payments on Early Termination. For the purpose of Section 6(e) of the ISDA Form Master
Agreement:
o Market Quotation will apply.
o The Second Method will apply.
|X| "Termination Currency" means United States Dollars.
|X| The provisions of Sections 5(a)(ii), 5(a)(iii) and 5(a)(iv) shall not apply to Party A or
Party B.
|X| Tax Event. The provisions of Section 2(d)(i)(4) and 2(d)(ii) of the ISDA Form Master
Agreement shall not apply to Party A and Party A shall not be required to pay any
additional amounts referred to therein.
o Tax Representations.
|X| Payer Representations. For the purpose of Section 3(e) of the ISDA Form Master Agreement,
each of Party A and Party B will make the following representations:
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of
any Relevant Jurisdiction to make any deduction or withholding
for or on account of any Tax from any payment (other than
interest under Section 2(e), 6(d)(ii) or 6(e) of the ISDA Form
Master Agreement) to be made by it to the other party under
this Agreement. In making this representation, it may rely on:
o the accuracy of any representations made by the other party pursuant to Section 3(f) of the
ISDA Form Master Agreement;
o the satisfaction of the agreement contained in Sections 4(a)(i) or 4(a)(iii) of the ISDA
Form Master Agreement and the accuracy and effectiveness of any document
provided by the other party pursuant to Sections 4(a)(i) or 4(a)(iii) of the
ISDA Form Master Agreement; and
o the satisfaction of the agreement of the other party contained in Section 4(d) of the ISDA
Form Master Agreement, provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) and the other party
does not deliver a form or document under Section 4(a)(iii) by reason of
material prejudice to its legal or commercial position.
|X| Payee Representations. For the purpose of Section 3(f) of the ISDA Form Master Agreement,
Party A and Party B make the following representations: None
o Documents to be Delivered. For the purpose of Section 4(a) (i) and 4(a) (iii):
o Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO
DELIVER DOCUMENT CERTIFICATE BE DELIVERED
Party A and Party B Any documents required Promptly after the earlier of
or reasonably requested (i) reasonable demand by either party
to allow the other party or (ii) learning that such form or
to make payments under document is required
this Agreement without
any deduction or
withholding for or on
the account of any Tax
or with such deduction
or withholding at a
reduced rate
o Other documents to be delivered are:
PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH TO COVERED BY
TO DELIVER CERTIFICATE BE DELIVERED SECTION 3(D)
DOCUMENT REPRESENTATION
Party A and Party B Any documents required by Upon execution Yes
the receiving party to and delivery of
evidence the authority of this Agreement
the delivering party for it and such
to execute and deliver this Confirmation
Agreement, any Confirmation
to which it is a party, and
to evidence the authority of
the delivering party to
perform its obligations
under this Agreement and
such Confirmation.
Party A and Party B A certificate of an Upon the Yes
authorized officer of the execution and
party, as to the incumbency delivery of this
and authority of the Agreement and
respective officers of the such Confirmation
party signing this Agreement
o Miscellaneous. Miscellaneous
|X| Address for Notices: For the purposes of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
Address: RASC Series 2006-KS4 Trust
c/o U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000
with a copy to: Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
(For all purposes)
Address for notices or communications to Party B:
Address: RASC Series 2006-KS4 Trust
c/o U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000
with a copy to: Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxx
Facsimile No.: (000) 000-0000
(For all purposes)
|X| Process Agent. For the purpose of Section 13(c):
Party A: Not Applicable
Party B: Not Applicable
|X| Offices. The provisions of Section 10(a) will not apply to this Agreement; neither Party A
nor Party B have any Offices other than as set forth in the Notices Section.
|X| Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master Agreement,
neither Party A nor Party B is a Multibranch. Party.
|X| Calculation Agent. The Calculation Agent is Residential Funding Corporation.
|X| Credit Support Document.
Not Applicable
|X| Credit Support Provider.
Not Applicable
|X| Governing Law. The parties to this ISDA Agreement hereby agree that the law of the State of
New York shall govern their rights and duties in whole, without regard to the
conflict of law provision thereof, other than New York General Obligations Law
Sections 5-1401 and 5-1402.
|X| Non-Petition. Party A and Party B each hereby irrevocably and unconditionally agrees that
it will not institute against, or join any other person in instituting against or
cause any other person to institute against RASC Series 2006-KS4 Trust, Mortgage
Asset-Backed Pass-Through Certificates, Series 2006-KS4, or the other party any
bankruptcy, reorganization, arrangement, insolvency, or similar proceeding under
the laws of the United States, or any other jurisdiction for the non-payment of any
amount due hereunder or any other reason until the payment in full of the
Certificates and the expiration of a period of one year plus ten days (or, if
longer, the applicable preference period) following such payment.
|X| Severability. If any term, provision, covenant, or condition of this Agreement, or the
application thereof to any party or circumstance, shall be held to be invalid or
unenforceable (in whole or in part) for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in full force and
effect as if this Agreement had been executed with the invalid or unenforceable
portion eliminated, so long as this Agreement as so modified continues to express,
without material change, the original intentions of the parties as to the subject
matter of this Agreement and the deletion of such portion of this Agreement will
not substantially impair the respective benefits or expectations of the parties.
The parties shall endeavor to engage in good faith negotiations to replace
any invalid or unenforceable term, provision, covenant or condition with a valid or
enforceable term, provision, covenant or condition, the economic effect of which
comes as close as possible to that of the invalid or unenforceable term, provision,
covenant or condition.
|X| [Intentionally Omitted].
|X| Waiver of Jury Trial. Each party to this Agreement respectively waives any right it may
have to a trial by jury in respect of any Proceedings relating to this Agreement or
any Credit Support Document.
|X| Set-Off. Notwithstanding any provision of this Agreement or any other existing or future
agreement, each party irrevocably waives any and all rights it may have to set off,
net, recoup or otherwise withhold or suspend or condition payment or performance of
any obligation between it and the other party hereunder against any obligation
between it and the other party under any other agreements. The provisions for
Set-off set forth in Section 6(e) of the ISDA Form Master Agreement shall not apply
for purposes of this Transaction.
|X| This Agreement may be executed in several counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
|X| Trustee Liability Limitations. It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by U.S. Bank National
Association, not individually or personally but solely as Trustee of Party A and
Party B, in the exercise of the powers and authority conferred and vested in it and
that U.S. Bank National Association shall perform its duties and obligations
hereunder in accordance with the standard of care set forth in Article VIII of the
Pooling and Servicing Agreement, (b) each of the representations, undertakings and
agreements herein made on the part of Party A and Party B is made and intended not
as personal representations, undertakings and agreements by U.S. Bank National
Association but is made and intended for the purpose of binding only Party A and
Party B, (c) nothing herein contained shall be construed as creating any liability
on U.S. Bank National Association, individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if any,
being expressly waived by the parties hereto and by any Person claiming by, through
or under the parties hereto; provided that nothing in this paragraph shall relieve
U.S. Bank National Association from performing its duties and obligations hereunder
and under the Pooling and Servicing Agreement in accordance with the standard of
care set forth therein, and (d) under no circumstances shall U.S. Bank National
Association be personally liable for the payment of any indebtedness or expenses of
Party A or Party B or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by Party A or Party B under
this Agreement or any other related documents; provided, that nothing in this
paragraph shall relieve U.S. Bank National Association from performing its duties
and obligations hereunder and under the Pooling and Servicing Agreement in
accordance with the standard of care set forth herein and therein.
o "Affiliate". Party A and Party B shall be deemed to not have any Affiliates for purposes of
this Agreement, including for purposes of Section 6(b)(ii).
o Section 3 of the ISDA Form Master Agreement is hereby amended by adding at the end thereof
the following subsection (g):
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it enters into a
Transaction that:--
o Nonreliance. (i) It is not relying on any statement or representation of the other party
regarding the Transaction (whether written or oral), other than the representations expressly made
in this Agreement or the Confirmation in respect of that Transaction and (ii) it has consulted
with its own legal, regulatory, tax, business, investment, financial and accounting advisors to
the extent it has deemed necessary, and it has made its own investment, hedging and trading
decisions based upon its own judgment and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the other party.
o Evaluation and Understanding.
|X| It has the capacity to evaluate (internally or through independent professional advice) the
Transaction and has made its own decision to enter into the Transaction and has been directed by
the Pooling and Servicing Agreement to enter into this Transaction; and
|X| It understands the terms, conditions and risks of the Transaction and is willing and able
to accept those terms and conditions and to assume those risks, financially and otherwise.
o Purpose. It is entering into the Transaction for the purposes of managing its borrowings or
investments, hedging its underlying assets or liabilities or in connection with a line of business.
o Status of Parties. The other party is not acting as agent, fiduciary or advisor for it in
respect of the Transaction.
o Eligible Contract Participant. It is an "eligible swap participant" as such term is defined
in Section 35.1(b)(2) of the regulations (17 C.F.R 35) promulgated under, and it constitutes an
"eligible contract participant" as such term is defined in Section 1(a)12 of the Commodity Exchange
Act, as amended."
o Account Details and Settlement Information:
PAYMENTS TO PARTY A:
Payments to Party A shall be made in the same manner as
provided for in the Pooling and Servicing Agreement with
respect to the Class A Certificateholders, Class M
Certificateholders and Class B Certificateholders.
PAYMENTS TO PARTY B:
Payments to Party B shall be made in the same manner as
provided for in the Pooling and Servicing Agreement with
respect to the Class SB Certificateholders.
Please sign and return to us a copy of this Agreement.
Very truly yours,
U.S. BANK NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee for the benefit of RASC
Series 2006-KS4 Trust, acting on behalf of the Class SB
Certificateholders
By:___________________________________________________
Name:
Title:
AGREED AND ACCEPTED AS OF THE TRADE DATE
U.S. BANK NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee for the benefit of RASC
Series 2006-KS4 Trust, acting on behalf of the Class A
Certificateholders, Class M Certificateholders and
Class B Certificateholders
By: _______________________________________________
Name:
Title:
EXHIBIT R
ASSIGNMENT AGREEMENT
[FILED HEREWITH AS EXHIBIT 10.2]
EXHIBIT S
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Trustee shall address, at a minimum,
the criteria identified as below as "Applicable Servicing Criteria":
----------------------------------------------------------------------------------- ---------------------
APPLICABLE
SERVICING CRITERIA SERVICING CRITERIA
----------------------------------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
REFERENCE CRITERIA
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
GENERAL SERVICING CONSIDERATIONS
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
1122(d)(1)(i) Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
accordance with the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
If any material servicing activities are outsourced to
third parties, policies and procedures are instituted
to monitor the third party's performance and
1122(d)(1)(ii) compliance with such servicing activities.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Any requirements in the transaction agreements to
maintain a back-up servicer for the pool assets are
1122(d)(1)(iii) maintained.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing
function throughout the reporting period in the amount
of coverage required by and otherwise in accordance
1122(d)(1)(iv) with the terms of the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
CASH COLLECTION AND ADMINISTRATION
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Payments on pool assets are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days |X| (as to accounts
following receipt, or such other number of days held by Trustee)
1122(d)(2)(i) specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized |X| (as to
1122(d)(2)(ii) personnel. investors only)
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
Advances of funds or guarantees regarding collections,
cash flows or distributions, and any interest or other
fees charged for such advances, are made, reviewed and
1122(d)(2)(iii) approved as specified in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------
The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained |X| (as to accounts
(e.g., with respect to commingling of cash) as set held by Trustee)
1122(d)(2)(iv) forth in the transaction agreements.
-------------------------- -------------------------------------------------------- ---------------------
-------------------------- -------------------------------------------------------- ---------------------