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INDENTURE
between
FREMONT HOME LOAN OWNER TRUST 1999-2,
as Issuer
and
FIRST UNION NATIONAL BANK,
as Indenture Trustee
Dated as of June 1, 1999
FREMONT HOME LOAN OWNER TRUST 1999-2
Home Loan Asset Backed Notes,
Series 1999-2
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS........................................................................................ 2
Section 1.01. Definitions.......................................................................... 2
Section 1.02. Incorporation by Reference of Trust Indenture Act.................................... 9
Section 1.03. Rules of Construction................................................................ 10
ARTICLE II THE NOTES......................................................................................... 10
Section 2.01. Form................................................................................. 10
Section 2.02. Execution, Authentication, Delivery and Dating....................................... 11
Section 2.03. Registration; Registration of Transfer and Exchange.................................. 12
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes........................................... 13
Section 2.05. Persons Deemed Note Owners........................................................... 14
Section 2.06. Payment of Principal and/or Interest; Defaulted Interest............................. 14
Section 2.07. Cancellation......................................................................... 15
Section 2.08. Conditions Precedent to the Authentication of the Notes.............................. 15
Section 2.09. Release of Collateral................................................................ 17
Section 2.10. Book-Entry Notes..................................................................... 18
Section 2.11. Notices to Clearing Agency........................................................... 19
Section 2.12. Definitive Notes..................................................................... 19
Section 2.13. Tax Treatment........................................................................ 19
ARTICLE III COVENANTS........................................................................................ 20
Section 3.01. Payment of Principal and/or Interest................................................. 20
Section 3.02. Maintenance of Office or Agency...................................................... 20
Section 3.03. Money for Payments to Be Held in Trust............................................... 21
Section 3.04. Existence............................................................................ 22
Section 3.05. Protection of Collateral............................................................. 23
Section 3.06. Annual Opinions as to Collateral..................................................... 23
Section 3.07. Performance of Obligations........................................................... 24
Section 3.08. Negative Covenants................................................................... 25
Section 3.09. Annual Statement as to Compliance.................................................... 26
Section 3.10. Covenants of the Issuer.............................................................. 27
Section 3.11. Restricted Payments.................................................................. 27
Section 3.12. Treatment of Notes as Debt for Tax Purposes.......................................... 27
Section 3.13. Notice of Events of Default.......................................................... 27
Section 3.14. Further Instruments and Acts......................................................... 27
ARTICLE IV SATISFACTION AND DISCHARGE........................................................................ 28
Section 4.01. Satisfaction and Discharge of Indenture.............................................. 28
Section 4.02. Application of Trust Money........................................................... 29
Section 4.03. Repayment of Moneys Held by Paying Agent............................................. 29
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ARTICLE V REMEDIES........................................................................................... 29
Section 5.01. Events of Default.................................................................... 29
Section 5.02. Acceleration of Maturity; Rescission and Annulment................................... 31
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee............ 32
Section 5.04. Remedies; Priorities................................................................. 35
Section 5.05. Optional Preservation of the Collateral.............................................. 37
Section 5.06. Limitation of Suits.................................................................. 37
Section 5.07. Unconditional Rights of Noteholders to Receive Principal and/or Interest............. 38
Section 5.08. Restoration of Rights and Remedies................................................... 38
Section 5.09. Rights and Remedies Cumulative....................................................... 38
Section 5.10. Delay or Omission Not a Waiver....................................................... 38
Section 5.11. Control by Noteholders............................................................... 39
Section 5.12. Waiver of Past Defaults.............................................................. 39
Section 5.13. Undertaking for Costs................................................................ 40
Section 5.14. Waiver of Stay or Extension Laws..................................................... 40
Section 5.15. Action on Notes...................................................................... 40
Section 5.16. Performance and Enforcement of Certain Obligations................................... 40
Section 5.17. Rights in Respect of Insolvency Proceedings.......................................... 41
Section 5.18. Effect of Payments by The Securities Insurer; Subrogation............................ 42
ARTICLE VI THE INDENTURE TRUSTEE............................................................................. 42
Section 6.01. Duties of Indenture Trustee.......................................................... 42
Section 6.02. Rights of Indenture Trustee.......................................................... 44
Section 6.03. Individual Rights of Indenture Trustee............................................... 45
Section 6.04. Indenture Trustee's Disclaimer....................................................... 45
Section 6.05. Notices of Default................................................................... 45
Section 6.06. Reports by Indenture Trustee to Holders.............................................. 45
Section 6.07. Compensation and Indemnity........................................................... 45
Section 6.08. Replacement of Indenture Trustee..................................................... 46
Section 6.09. Successor Indenture Trustee by Merger................................................ 47
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.................... 47
Section 6.11. Eligibility; Disqualification........................................................ 49
Section 6.12. Preferential Collection of Claims Against Issuer..................................... 49
Section 6.13. Waiver of Setoff..................................................................... 49
Section 6.14. Conflict of Interest................................................................. 49
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS................................................................... 50
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders............... 50
Section 7.02. Preservation of Information; Communications to Noteholders........................... 50
Section 7.03. Reports by Issuer.................................................................... 50
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Section 7.04. Reports by Indenture Trustee......................................................... 51
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES............................................................ 51
Section 8.01. Collection of Money and Claims Under the Guaranty Policy............................. 51
Section 8.02. Trust Accounts; Payments............................................................. 52
Section 8.03. General Provisions Regarding Accounts................................................ 53
Section 8.04. Servicer's Monthly Statements........................................................ 53
Section 8.05. Release of Collateral................................................................ 53
Section 8.06. Opinion of Counsel................................................................... 54
ARTICLE IX SUPPLEMENTAL INDENTURES........................................................................... 54
Section 9.01. Supplemental Indentures Without Consent of Noteholders............................... 54
Section 9.02. Supplemental Indentures with Consent of Noteholders.................................. 56
Section 9.03. Execution of Supplemental Indentures................................................. 57
Section 9.04. Effect of Supplemental Indentures.................................................... 57
Section 9.05. Conformity with Trust Indenture Act.................................................. 57
Section 9.06. Reference in Notes to Supplemental Indentures........................................ 58
Section 9.07. Amendments to Owner Trust Agreement.................................................. 58
ARTICLE X REDEMPTION OF NOTES................................................................................ 58
Section 10.01. Redemption.......................................................................... 58
Section 10.02. Form of Redemption Notice........................................................... 59
Section 10.03. Notes Payable on Redemption Date; Provision for Payment of Indenture Trustee and
Securities Insurer................................................................. 59
ARTICLE XI MISCELLANEOUS..................................................................................... 60
Section 11.01. Compliance Certificates and Opinions, etc........................................... 60
Section 11.02. Form of Documents Delivered to Indenture Trustee.................................... 61
Section 11.03. Acts of Noteholders................................................................. 62
Section 11.04. Notices, etc., to Indenture Trustee, Issuer, Rating Agencies and Securities Insurer. 63
Section 11.05. Notices to Noteholders; Waiver...................................................... 64
Section 11.06. Conflict with Trust Indenture Act................................................... 64
Section 11.07. Effect of Headings and Table of Contents............................................ 64
Section 11.08. Successors and Assigns.............................................................. 65
Section 11.09. Separability........................................................................ 65
Section 11.10. Benefits of Indenture............................................................... 65
Section 11.11. Legal Holidays...................................................................... 65
Section 11.12. GOVERNING LAW....................................................................... 65
Section 11.13. Counterparts........................................................................ 65
Section 11.14. Recording of Indenture.............................................................. 65
Section 11.15. Issuer Obligation................................................................... 66
Section 11.16. No Petition......................................................................... 66
Section 11.17. Inspection.......................................................................... 66
Section 11.18. Grant of Noteholder Rights to Securities Insurer.................................... 67
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Section 11.19. Third Party Beneficiary............................................................. 67
Section 11.20. Suspension and Termination of Securities Insurer's Rights........................... 67
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EXHIBITS
EXHIBIT A-1 - Form of Class A-1 Notes
EXHIBIT A-2 - Form of Class A-2 Notes
EXHIBIT A-3 - Form of Class A-3 Notes
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This Indenture is entered into effective ("Indenture"), between
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FREMONT HOME LOAN OWNER TRUST 1999-2, a Delaware business trust, as Issuer (the
"Issuer"), and FIRST UNION NATIONAL BANK, as Indenture Trustee (the "Indenture
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Trustee"),
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W I T N E S S E T H T H A T:
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In consideration of the mutual covenants herein contained, the Issuer
and the Indenture Trustee hereby agree as follows for the benefit of each of
them and for the equal and ratable benefit of the holders of the Issuer's Class
A-1 Home Loan Asset Backed Notes (the "Class A-1 Notes"), Class A-2 Home Loan
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Asset Backed Notes (the "Class A-2 Notes"), and Class A-3 Home Loan Asset Backed
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Notes (the "Class A-3 Notes" and together with the Class A-1 Notes and the Class
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A-2 Notes, the "Notes") and Financial Security Assurance Inc. (the "Securities
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Insurer").
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GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants on
the Closing Date, to the Indenture Trustee, as Indenture Trustee for the benefit
of the Holders of the Notes and the Securities Insurer, all of the Issuer's
right, title and interest in and to: (i) the Trust Estate (as defined in the
Sale and Servicing Agreement); (ii) the Sale and Servicing Agreement (including
the Issuer's right to cause the Transferor to repurchase the Home Loans from the
Issuer under certain circumstances described therein); (iii) all present and
future claims, demands, causes of action and choses in action in respect of any
or all of the foregoing and all payments on or under and all proceeds of every
kind and nature whatsoever in respect of any or all of the foregoing, including
all proceeds of the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, property insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing; (iv) all funds on deposit from time to time in the Trust Accounts
(including the Certificate Distribution Account); and (v) all other property of
the Issuer from time to time (collectively, the "Collateral").
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The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders
of the Notes and the Securities Insurer, acknowledges such Grant, accepts the
trusts hereunder and agrees to perform its duties required in this Indenture to
the best of its ability to the end that the interests of the Holders of the
Notes may adequately and effectively be protected. The Indenture Trustee agrees
and acknowledges that possession of the Indenture Trustee's Home Loan Files will
be held by the Custodian for the benefit of the Indenture Trustee in Maryland.
The Indenture Trustee further agrees and acknowledges that each other item of
Collateral that is physically
delivered to the Indenture Trustee will be held on behalf of the Indenture
Trustee in North Carolina.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
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Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture. Except as otherwise specified herein or as the
context may otherwise require, capitalized terms used but not otherwise defined
herein have the respective meanings set forth in the Sale and Servicing
Agreement for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.03(a) hereof.
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"Administration Agreement" means the Administration Agreement, dated as
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of June 1, 1999, among the Administrator, the Issuer and the Company.
"Administrator" means First Union National Bank, a national banking
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association, or any successor Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other Person
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controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
Person 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.
"Authorized Officer" means, with respect to the Issuer, any officer of the
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Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter) and, so long as
the Administration Agreement is in effect, any Vice President or more senior
officer of the Administrator who is authorized to act for the Administrator in
matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement and who is identified on the list of
Authorized Officers delivered by the Administrator to the Indenture Trustee if
the Administrator is not the Indenture Trustee (as such list may be modified or
supplemented from time to time thereafter).
"Basic Documents" means the Certificate of Owner Trust, the Owner Trust
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Agreement, this Indenture, the Sale and Servicing Agreement, the Servicing
Agreement, the Home Loan Purchase Agreement, the Administration Agreement, the
Insurance Agreement, the Indemnification Agreement, the Custodial Agreement, the
Note Depository Agreement, the Notes and other documents and certificates
delivered in connection herewith or therewith.
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"Book-Entry Notes" means a beneficial interest in the any Class of
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Notes, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10 hereof.
"Business Day" means any day other than (a) a Saturday or Sunday, or
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(b) a day on which banking institutions are authorized or obligated by law or
executive order to be closed in a city at any of the following locations: (i)
The City of New York, (ii) where the corporate trust office of the Indenture
Trustee is located, (iv) where the servicing operations of the Servicer are
primarily located or (v) where the master servicing operations of the Master
Servicer are primarily located.
"Certificate of Owner Trust" means the certificate of trust of the
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Issuer substantially in the form of Exhibit B to the Owner Trust Agreement.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes and the
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Class A-3 Notes.
"Clearing Agency" means an organization registered as a "clearing
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agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
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financial institution or other Person for which from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means June 24, 1999.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
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time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
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Indenture.
"Commission" means the Securities and Exchange Commission.
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"Company" means Fremont Investment & Loan, a California industrial loan
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company, or any successor in interest thereto.
"Corporate Trust Office" means the principal office of the Indenture
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Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located at
000 Xxxxx Xxxxx Xxxxxx, XX 1179, 0xx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000-0000; Attention: Structured Finance Trust Group, or at such other address
as the Indenture Trustee may designate from time to time by notice to the
Noteholders and the Issuer, or the principal corporate trust office of any
successor Indenture Trustee at the address designated by such successor
Indenture Trustee by notice to the Noteholders and the Issuer.
"Default" means any occurrence that is, or with notice or the lapse of
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time or both would become, an Event of Default.
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"Definitive Notes" means any Class of Notes as set forth in Section
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2.12 hereof.
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"Depositor" shall mean PaineWebber Mortgage Acceptance Corporation IV,
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a Delaware corporation, in its capacity as depositor under the Sale and
Servicing Agreement, or any successor in interest thereto.
"Depository Institution" means any depository institution or trust
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company, including the Indenture Trustee, that (a) is incorporated under the
laws of the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated A-1 by S&P (or comparable ratings if S&P is not the
Rating Agency).
"DTC" means The Depository Trust Company, a New York corporation, or
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any successor thereto.
"Due Period" means, with respect to any Payment Date and any Class of
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Notes, the period commencing on the 2/nd/ day of the calendar month immediately
preceding the month of such Payment Date and ending on the 1/st/ day of the
month in which such Payment Date occurs.
"Event of Default" has the meaning specified in Section 5.01 hereof.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Executive Officer" means, with respect to any corporation, the Chief
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Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
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remise, release, convey, assign, transfer, create and xxxxx x xxxx upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
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registered on the Note Register.
"Indenture Trustee" means First Union National Bank, a national banking
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association, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee hereunder.
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"Independent" means, when used with respect to any specified Person,
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that the Person (a) is in fact independent of the Issuer, any other obligor on
the Notes, the Transferor, the Securities Insurer and any Affiliate of any of
the foregoing Persons, (b) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor, the
Transferor, the Securities Insurer or any Affiliate of any of the foregoing
Persons and (c) is not connected with the Issuer, any such other obligor, the
Transferor, the Securities Insurer or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
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delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 hereof,
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made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"Insurance Agreement" means the Insurance and Indemnification
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Agreement, dated as of June 1, 1999, among the Securities Insurer, Fremont
Investment & Loan, as Transferor and Master Servicer, the Depositor and the
Issuer.
"Issuer" means Fremont Home Loan Owner Trust 1999-2 until a successor
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replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" mean a written order or request
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signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Majority Noteholders" means until such time as the aggregate Note
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Principal Balance of all Classes of Notes has been reduced to zero, the holder
or holders of in excess of 50% of the aggregate Note Principal Balance of all
Classes of Notes then Outstanding.
"Master Servicer" means Fremont Investment & Loan, a California
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industrial loan company.
"Maturity Date" means with respect to each Class of Notes, the Payment
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Date occurring in the following month and year:
Class A-1: June 2029
Class A-2: June 2029
Class A-3: June 2029
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor
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thereto.
"Note" means a Class A-1 Note, Class A-2 Note, or Class A-3 Note, as
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applicable.
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"Note Depository Agreement" means the agreement to be entered into
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among the Issuer, the Indenture Trustee and The Depository Trust Company, as the
initial Clearing Agency, relating to the Book-Entry Notes.
"Note Owner" means, with respect to a Book-Entry Note, the Person that
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is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Note Percentage Interest" means, with respect to any Note of any
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Class, an amount equal to the initial denomination of such Note divided by the
Original Note Principal Balance of the related Class of Notes.
"Note Register" and "Note Registrar" have the respective meanings
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specified in Section 2.03 hereof.
"Officer's Certificate" means a certificate signed by any Authorized
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Officer of the Issuer or, if authorized under the Administration Agreement, the
Administrator or the Master Servicer on behalf of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.01 hereof, and delivered to the Indenture Trustee.
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Unless otherwise specified, any reference in this Indenture to an Officer's
Certificate shall be to an Officer's Certificate of any Authorized Officer of
the Issuer or, if authorized under the Administration Agreement, the
Administrator.
"Opinion of Counsel" means one or more written opinions of counsel who
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may, except as otherwise expressly provided in this Indenture, be an employee of
or counsel to the party required to provide such opinion or opinions and, in
each such case, who shall be satisfactory to the Indenture Trustee and the
Securities Insurer, and which opinion or opinions shall be addressed to the
Indenture Trustee, as Indenture Trustee, and the Securities Insurer and shall
comply with any applicable requirements of Section 11.01 hereof and shall be in
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form and substance satisfactory to the Indenture Trustee and the Securities
Insurer.
"Outstanding" means, with respect to any Note and as of the date of
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determination, any Note theretofore authenticated and delivered under this
Indenture except:
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(i) Notes theretofore cancelled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has theretofore been deposited with the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision for such notice
satisfactory to the Indenture Trustee has been made);
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser; provided, however, that in determining
whether the Holders of the requisite percentage of Outstanding Notes have
given any request, demand, authorization, direction, notice, consent or
waiver hereunder or under any Basic Document, Notes owned by the Issuer,
any other obligor upon the Notes, the Transferor or any Affiliate of any of
the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that the Indenture Trustee
knows to be owned in such manner shall be disregarded. Notes owned in such
manner that have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Indenture Trustee
that the pledgee has the right so to act with respect to such Notes and
that the pledgee is not the Issuer, any other obligor upon the Notes, the
Transferor or any Affiliate of any of the foregoing Persons; and
(iv) Notes for which the related Maturity Date has occurred;
provided, that Notes that have been paid with funds provided under the Guaranty
Policy shall be deemed to be Outstanding until the Securities Insurer has been
reimbursed with respect thereto as evidenced by a written notice from the
Securities Insurer delivered to the Indenture Trustee, and the Securities
Insurer shall be deemed to the Holder thereof to the extent of any payments made
by the Securities Insurer.
"Outstanding Amount" means the aggregate principal amount of all Notes
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or each Class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trust Agreement" means the Owner Trust Agreement, dated as of
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June 1, 1999, among PaineWebber Mortgage Acceptance Corporation IV, as
Depositor, the Company, Wilmington Trust Company, as Owner Trustee, and First
Union National Bank, as Paying Agent.
"Owner Trustee" means Wilmington Trust Company, not in its individual
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capacity but solely as Owner Trustee under the Owner Trust Agreement, or any
successor Owner Trustee under the Owner Trust Agreement.
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"Paying Agent" means the Indenture Trustee or any other Person that
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meets the eligibility standards for the Indenture Trustee specified in Section
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6.11 hereof and is authorized by the Issuer to make payments to and payments
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from the Note Payment Account, including payment of principal of or interest on
the Notes on behalf of the Issuer.
"Payment Date" means the 25th day of any month or if such 25th day is
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not a Business Day, the first Business Day immediately following such day,
commencing in July 1999.
"Person" means any individual, corporation, estate, partnership, joint
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venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, limited liability company, limited
liability partnership or government or any agency or political subdivision
thereof.
"Predecessor Note" means, with respect to any particular Note, every
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previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.04 hereof in lieu of a mutilated,
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lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other
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judicial or administrative proceeding.
"Rating Agency" means either or both of (i) Moody's or (ii) S&P. If no
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such organization or successor thereto is any longer in existence, "Rating
Agency" shall be a nationally recognized statistical rating organization or
other comparable Person designated by the Master Servicer and approved by the
Securities Insurer, notice of which designation shall have been given to the
Indenture Trustee, the Securities Insurer, the Servicer and the Issuer.
"Rating Agency Condition" means, with respect to any action to which a
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Rating Agency Condition applies, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Depositor, the Servicer, the Master
Servicer, the Securities Insurer, the Owner Trustee and the Issuer shall have
been notified by the Rating Agencies in writing that such action will not result
in a reduction, withdrawal or qualification of the then current internal ratings
assigned to the Notes by each of the Rating Agencies without respect to the
Securities Insurer.
"Record Date" means, as to each Payment Date, the last Business Day of
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the month immediately preceding the month in which such Payment Date occurs.
"Redemption Date" means in the case of a redemption of the Notes
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pursuant to Section 10.01 hereof, the Payment Date specified by the Master
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Servicer or the Issuer pursuant to such Section 10.01.
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"Registered Holder" means the Person in the name of which a Note is
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registered on the Note Register on the applicable Record Date.
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"Residual Interest Certificate" has the meaning assigned to such term
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in Section 1.1 of the Owner Trust Agreement.
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"Responsible Officer" means, with respect to the Indenture Trustee, any
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officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"S&P" means Standard and Poor's Ratings Services, a division of The
---
XxXxxx-Xxxx Companies, Inc. or any successor thereto.
"Sale and Servicing Agreement" means the Sale and Master Servicing
----------------------------
Agreement dated as of June 1, 1999, among the Issuer, the Depositor, the
Transferor and Master Servicer and First Union National Bank, as Indenture
Trustee.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Securities Insurer" means Financial Security Assurance Inc., a New
------------------
York monoline insurance company.
"Servicer" shall mean Fairbanks Capital Corp., a Utah corporation, in
--------
its capacity as servicer under the Servicing Agreement, and any successor
Servicer thereunder.
"Servicing Agreement" shall mean the Servicing Agreement which
-------------------
incorporates by reference the Agreement Regarding Standard Servicing Terms, each
dated as of June 1, 1999, between Fremont Investment & Loan and the Servicer.
"State" means any one of the States of the United States of America or
-----
the District of Columbia.
"Transferor" means Fremont Investment & Loan, a California industrial
----------
loan company.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
-------------------- ---
as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
---
Commercial Code as in effect in the relevant jurisdiction, as amended from time
to time.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
(a) Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
--------------------
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"indenture security holder" means a Noteholder.
-------------------------
"indenture to be qualified" means this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" means the Indenture
----------------- ---------------------
Trustee.
"obligor" on the indenture securities means the Issuer and any other
-------
obligor on the indenture securities.
(b) All other TIA terms used in this Indenture that are defined in the
TIA, defined by TIA reference to another statute or defined by rule of the
Securities and Exchange Commission have the respective meanings assigned to them
by such definitions.
Section 1.03. Rules of Construction.
---------------------
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect in the United States from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented (as provided in such agreements) and includes (in
the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person are
also to its permitted successors and assigns.
ARTICLE II
THE NOTES
Section 2.01. Form.
----
The Notes shall be designated as the "Fremont Home Loan Owner Trust
1999-2 Home Loan Asset Backed Notes, Series 1999-2". Each Class of Notes shall
be in substantially the form set forth in Exhibits X-0, X-0 and A-3 hereto, with
-------------------------
such appropriate insertions, omissions,
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substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution thereof. Any portion of the text of any Note may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication. The terms of each
Class of Notes are set forth in Exhibits X-0, X-0 and A-3 hereto. The terms of
-------------------------
each Class of Notes are part of the terms of this Indenture.
Section 2.02. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Notes shall be executed on behalf of the Issuer by an Authorized
Officer of the Owner Trustee or the Administrator. The signature of any such
Authorized Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Owner Trustee or the Administrator shall
bind the Issuer, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Notes or did not hold such offices at the date of such Notes.
Subject to the satisfaction of the conditions set forth in Section 2.08
------------
hereof, the Indenture Trustee shall upon Issuer Order authenticate and deliver
the Classes of Notes for original issue in the following principal amounts:
Class A-1, $79,823,236, Class A-2, $342,523,735, and Class A-3, $73,145,197. The
aggregate principal amount of such Classes of Notes Outstanding at any time may
not exceed such respective amounts.
The Notes that are authenticated and delivered by the Indenture Trustee
to or upon the order of the Issuer on the Closing Date shall be dated June 24,
1999. All other Notes that are authenticated after the Closing Date for any
other purpose under the Indenture shall be dated the date of their
authentication. Each Class of Notes shall be issuable as registered Notes in the
minimum denomination of $25,000 initial principal amount and integral multiples
of $1,000 in excess thereof; provided however, that any Note may be issued in
such denominations as may be necessary to represent the remainder of the
aggregate principal amount of the Notes.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
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Section 2.03. Registration; Registration of Transfer and Exchange.
---------------------------------------------------
The Issuer shall cause to be kept a register (the "Note Register") in
-------------
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee initially shall be the "Note Registrar" for the
--------------
purpose of registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee and the Securities
Insurer prompt written notice of the appointment of such Note Registrar and of
the location, and any change in the location, of the Note Register, and the
Indenture Trustee and the Securities Insurer shall have the right to inspect the
Note Register at all reasonable times and to obtain copies thereof, and the
Indenture Trustee and the Securities Insurer shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02 hereof, the
------------
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes of the same Class in
any authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, the Notes which the Noteholder making the exchange
is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agents' Medallion Program ("STAMP") or
-----
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Exchange Act.
No service charge shall be made to a Holder or the Securities Insurer
for any registration of transfer or exchange of Notes, but the Issuer may
require payment of a sum sufficient to cover
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any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Notes, other than exchanges pursuant to
Section 9.06 hereof not involving any transfer.
------------
The preceding provisions of this Section 2.03 notwithstanding, the
------------
Issuer shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to such
Note.
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes.
------------------------------------------
If (i) any mutilated Note is surrendered to the Indenture Trustee, or the
Indenture Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, and (ii) there is delivered to the Indenture Trustee and
the Securities Insurer such security or indemnity as may reasonably be required
by them to hold the Issuer, the Securities Insurer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
an Authorized Officer of the Owner Trustee or the Administrator on behalf of the
Issuer shall execute, and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same Class; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer, the Securities Insurer and the Indenture Trustee
shall be entitled to recover such replacement Note (or such payment) from the
Person to which it was delivered or any Person taking such replacement Note from
such Person to which such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer, the Securities Insurer or the Indenture
Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 2.04, the
------------
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 2.04 in replacement
------------
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
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The provisions of this Section 2.04 are exclusive and shall preclude (to
------------
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.05. Persons Deemed Note Owners.
--------------------------
Prior to due presentment for registration of transfer of any Note, the
Issuer, the Securities Insurer, the Indenture Trustee and any agent of the
Issuer, the Securities Insurer or the Indenture Trustee may treat the Person in
the name of which any Note is registered (as of the day of determination) as the
Note Owner for the purpose of receiving payments of principal of and interest,
if any, on such Note and for all other purposes whatsoever, whether or not such
Note be overdue, and none of the Issuer, the Securities Insurer, the Indenture
Trustee or any agent of the Issuer, the Securities Insurer or the Indenture
Trustee shall be affected by notice to the contrary.
Section 2.06. Payment of Principal and/or Interest; Defaulted Interest.
--------------------------------------------------------
(a) Each Class of Notes shall accrue interest at the related Note
Interest Rate for such Class, and such interest shall be payable on each Payment
Date as specified in Exhibits X-0, X-0 xxx X-0 hereto, subject to Section 3.01
------------------------- ------------
hereof. With respect to the Class A-2 and the Class A-3 Notes and each Payment
Date other than the first Payment Date, the Indenture Trustee shall determine
LIBOR for each applicable Accrual Period on the LIBOR Determination Date. Any
installment of interest or principal, if any, payable on any Note that is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in the name of which such Note (or one or more
Predecessor Notes) is registered on the Record Date by check mailed first-class
postage prepaid to such Person's address as it appears on the Note Register on
such Record Date, except that, unless Definitive Notes have been issued pursuant
to Section 2.12 hereof, with respect to Notes registered on the Record Date in
------------
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payment will be made by wire transfer in immediately available
funds to the account designated by such nominee and except for the final
installment of principal payable with respect to such Note on a Payment Date or
on the applicable Maturity Date for such Class of Notes (and except for the
Termination Price for any Note called for redemption pursuant to Section 10.01
-------------
hereof), which shall be payable as provided in Section 2.06(b) below. The funds
--------------
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03 hereof.
------------
(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the forms of the Notes set forth in Exhibits A-1,
------------
A-2 and A-3 hereto. Notwithstanding the foregoing, the entire unpaid principal
-----------
amount of the Notes shall be due and payable, if not previously paid, on the
earlier of (i) the applicable Maturity Date of such Class, (ii) the Redemption
Date or (iii) the date on which an Event of Default shall have occurred and be
continuing, if the Indenture Trustee or the Majority Noteholders or the
Securities Insurer shall have declared the Notes to be immediately due and
payable in the manner provided; however, that if on the date any such Event of
Default occurs, no Securities Insurer Default exists and is continuing, the
Securities Insurer, in its sole discretion, may determine whether or not to
accelerate payment on the Notes.
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All principal payments on each Class of Notes entitled thereto on each
Payment Date shall be made on a pro rata basis among the Noteholders of record
of such Class of Notes on the next preceding Record Date based on the Note
Percentage Interest represented by their respective Notes. The Indenture Trustee
shall notify the Person in the name of which a Note is registered at the close
of business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Notes
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Notes and shall specify the
place where such Notes may be presented and surrendered for payment of such
installment. A copy of such form of notice shall be sent to the Securities
Insurer by the Indenture Trustee. Notices in connection with redemptions of
Notes shall be mailed to Noteholders as provided in Section 10.02 hereof.
-------------
Promptly following the date on which all principal of and interest on the Notes
has been paid in full and the Notes have been surrendered to the Indenture
Trustee, the Indenture Trustee shall, if the Securities Insurer has paid any
amount in respect of the Notes under the Guaranty Policy that has not been
reimbursed to the Securities Insurer, deliver such surrendered Notes to the
Securities Insurer.
Section 2.07. Cancellation.
------------
All Notes surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any Person other than the Indenture Trustee,
be delivered to the Indenture Trustee and shall promptly be cancelled by the
Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee
for cancellation any Notes previously authenticated and delivered hereunder
which the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall promptly be cancelled by the Indenture Trustee. No Notes shall
be authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 2.07, except as expressly permitted by this Indenture. All canceled
------------
Notes may be held or disposed of by the Indenture Trustee in accordance with its
standard retention or disposal policy as in effect at the time unless the Issuer
shall direct by an Issuer Order that they be destroyed or returned to it;
provided, however, that such Issuer Order is timely and the Notes have not been
previously disposed of by the Indenture Trustee.
Section 2.08. Conditions Precedent to the Authentication of the Notes.
-------------------------------------------------------
The Notes may be authenticated by the Indenture Trustee, upon Issuer
Request and upon receipt by the Indenture Trustee of the following:
(a) An Issuer Order authorizing the execution and authentication of such
Notes by the Issuer.
(b) All of the items of Collateral which shall be delivered to the
Indenture Trustee or its designee.
(c) An executed counterpart of the Owner Trust Agreement.
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(d) An Opinion of Counsel addressed to the Indenture Trustee and the
Securities Insurer to the effect that:
(i) the Owner Trustee has the power and authority to execute,
deliver and perform the Trust Agreement;
(ii) the Issuer has been duly formed, is validly existing as a
business trust under the Business Trust Statute and has power and authority
to execute, deliver and perform its obligations, as applicable, under this
Indenture, the Administration Agreement, the Sale and Servicing Agreement,
the Insurance Agreement, the Indemnification Agreement, the Custodial
Agreement and the Note Depository Agreement;
(iii) assuming due authorization, execution and delivery hereof
by each party thereto, Indenture is the valid, legal and binding agreement
of the Issuer, enforceable against the Issuer in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, receivership or other laws relating to the
creditors' rights generally and to general principles of equity including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding in equity or
at law) and except that the enforcement of rights with respect to
indemnification and contribution obligations may be limited by applicable
law;
(iv) upon due authorization, execution and delivery of this
Indenture by each party hereto, and due execution, authentication, and
delivery of the Notes, such Notes will be legally, validly issued
obligations of the Issuer, enforceable against the Issuer in accordance
with their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, receivership or other laws relating
to creditors' rights generally, and to general principles of equity
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law
or in equity), and except that the enforcement of rights with respect to
indemnification and contribution obligations may be limited by applicable
law, and the Holders of the Notes will be entitled to the benefits of the
Indenture;
(v) the conditions precedent to the authentication and
delivery of the Notes as set forth in this Indenture have been complied
with;
(vi) on the Closing Date, the Issuer shall cause to be
furnished to the Indenture Trustee and the Securities Insurer an Opinion of
Counsel either stating that, in the opinion of such counsel, this Indenture
has been properly recorded and filed so as to make effective the lien
intended to be created thereby, and reciting the details of such action, or
stating that, in the opinion of such counsel, no such action is necessary
to make such lien effective; and
(vii) any other matters as the Indenture Trustee may reasonably
request;
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(e) An Officer's Certificate complying with the requirements of Section
-------
11.01 hereof and stating that:
-----
(i) the Issuer is not in Default under this Indenture and the issuance
of the Notes applied for will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, the Owner Trust
Agreement, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Issuer is a party or by which it is bound, or any
order of any court or administrative agency entered in any Proceeding to
which the Issuer is a party or by which it may be bound or to which it may
be subject, and that all conditions precedent provided in this Indenture
relating to the authentication and delivery of the Notes applied for have
been complied with;
(ii) the Issuer is the owner of the all of the Home Loans, has not
assigned any interest or participation in the Home Loans (or, if any such
interest or participation has been assigned, it has been released) and has
the right to Grant all of the Home Loans to the Indenture Trustee;
(iii) the Issuer has Granted to the Indenture Trustee all of its
right, title and interest in and to the Collateral, and has delivered or
caused the same to be delivered to the Indenture Trustee;
(iv) letters signed by the Rating Agencies confirming that the Class
A-1, Class A-2 and Class A-3 Notes have been rated "Aaa" by Moody's and
"AAA " by S&P have been delivered to the Indenture Trustee;
(v) all conditions precedent provided for in this Indenture relating
to the authentication of the Notes have been complied with; and
(f) A fair value certificate from Xxxxx Real Estate Industries Group,
Inc. with respect to the Home Loans.
Section 2.09. Release of Collateral.
---------------------
(a) Except as otherwise provided in subsections (b) and (c) of this Section
-------
2.09, Section 11.01 hereof and the terms of the Basic Documents, the Indenture
---- -------------
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
(b) The Servicer, on behalf of the Issuer, shall be entitled to obtain a
release from the lien of this Indenture for any Home Loan and the related
Mortgaged Property at any time (i) after a payment by the Transferor or the
Issuer of the Purchase Price of the Home Loan, (ii) after a Qualified Substitute
Home Loan is substituted for such Home Loan and payment of the Substitution
Adjustment, if any, (iii) after liquidation of the Home Loan and the deposit of
all recoveries thereon in the Collection Account, or (iv) upon the termination
of a Home Loan (due
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to, among other causes, a prepayment in full of the Home Loan and sale or other
disposition of the related Mortgaged Property), if the Issuer delivers to the
Indenture Trustee an Issuer Request (A) identifying the Home Loan and the
related Mortgaged Property to be released, (B) requesting the release thereof,
(C) setting forth the amount deposited in the Collection Account with respect
thereto, and (D) certifying that the amount deposited in the Collection Account
(x) equals the Purchase Price of the Home Loan, in the event a Home Loan and the
related Mortgaged Property are being released from the lien of this Indenture
pursuant to item (i) above, (y) equals the Substitution Adjustment related to
the Qualified Substitute Home Loan and the Deleted Home Loan released from the
lien of the Indenture pursuant to item (ii) above, or (z) equals the entire
amount of Recoveries received with respect to such Home Loan and the related
Mortgaged Property in the event of a release from the lien of this Indenture
pursuant to items (iii) or (iv) above.
(c) The Indenture Trustee shall, if requested by the Servicer, temporarily
release or cause the Custodian temporarily to release to the Servicer the
Indenture Trustee's Home Loan File pursuant to the provisions of Section 7.02 of
------------
the Sale and Servicing Agreement upon compliance by the Servicer with the
provisions thereof; provided, however, that the Indenture Trustee's Home Loan
File shall have been stamped to signify the Issuer's pledge to the Indenture
Trustee under the Indenture.
Section 2.10. Book-Entry Notes.
----------------
The Notes, when authorized by an Issuer Order, will be issued in the form
of typewritten Notes representing the Book-Entry Notes, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by or on behalf of the
Issuer. The Book-Entry Notes shall be registered initially on the Note Register
in the name of Cede & Co., the nominee of the initial Clearing Agency, and no
Note Owner will receive a definitive Note representing such Note Owner's
interest in such Note, except as provided in Section 2.12 hereof. Unless and
------------
until definitive, fully registered Notes (the "Definitive Notes") have been
----------------
issued to such Note Owners pursuant to Section 2.12 hereof:
------------
(i) the provisions of this Section 2.10 shall be in full force and
------------
effect;
(ii) the Note Registrar, the Indenture Trustee and the Securities
Insurer shall be entitled to deal with the Clearing Agency for all purposes
of this Indenture (including the payment of principal of and interest on
the Notes and the giving of instructions or directions hereunder) as the
sole Holder of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section 2.10 conflict
------------
with any other provisions of this Indenture, the provisions of this Section
-------
2.10 shall control;
----
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant
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to Section 2.12 hereof, the initial Clearing Agency will make book-entry
------------
transfers among the Clearing Agency Participants and receive and transmit
payments of principal of and interest on the Notes to such Clearing Agency
Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Notes, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
Section 2.11. Notices to Clearing Agency.
--------------------------
Whenever a notice or other communication to the Noteholders is required
under this Indenture, unless and until Definitive Notes shall have been issued
to such Note Owners pursuant to Section 2.12 hereof, the Indenture Trustee shall
------------
give all such notices and communications specified herein to be given to Holders
of the Notes to the Clearing Agency and shall have no obligation to such Note
Owners.
Section 2.12. Definitive Notes.
----------------
If (i) the Administrator advises the Indenture Trustee in writing that
the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book-Entry Notes and the Administrator is
unable to locate a qualified successor, (ii) the Administrator at its option
advises the Indenture Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, Owners of the Book-Entry Notes representing beneficial
interests aggregating at least a majority of the Outstanding Notes advise the
Clearing Agency in writing that the continuation of a book-entry system through
the Clearing Agency is no longer in the best interests of such Note Owners, then
the Clearing Agency shall notify all Note Owners, the Securities Insurer and the
Indenture Trustee of the occurrence of such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Indenture Trustee of the typewritten Notes representing the Book-Entry Notes by
the Clearing Agency, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the Issuer, the
Note Registrar, the Securities Insurer or the Indenture Trustee shall be liable
for any delay in delivery of such instructions and each of them may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders
of the Definitive Notes as Noteholders.
Section 2.13. Tax Treatment.
-------------
The Issuer has entered into this Indenture, and the Notes will be issued,
with the intention that for all purposes, including federal, state and local
income, single business and franchise tax purposes, the Notes will qualify as
indebtedness of the Issuer secured by the Collateral. The
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Issuer, by entering into this Indenture, and each Noteholder, by its acceptance
of a Note (and each Note Owner by its acceptance of an interest in the
applicable Book-Entry Note), agree to treat the Notes for all purposes,
including federal, state and local income, single business and franchise tax
purposes, as indebtedness of the Issuer.
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and/or Interest.
------------------------------------
The Issuer will duly and punctually pay (or will cause to be paid duly
and punctually) the principal of and interest on the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing,
subject to and in accordance with Section 8.02(c) hereof, the Issuer will cause
--------------
to be paid to the Noteholders all amounts on deposit in the Note Payment Account
on each Payment Date deposited therein pursuant to the Sale and Servicing
Agreement (less any amounts representing income from Permitted Investments) for
the benefit of the Notes. Amounts properly withheld under the Code by any Person
from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer or the Securities Insurer, as
applicable, to such Noteholder for all purposes of this Indenture. The Notes
shall be non-recourse obligations of the Issuer and shall be limited in right of
payment to amounts available from the Collateral and any amounts received by the
Indenture Trustee under the Guaranty Policy in respect of the Notes, as provided
in this Indenture. The Issuer shall not otherwise be liable for payments on the
Notes. If any other provision of this Indenture shall be deemed to conflict with
the provisions of this Section 3.01, the provisions of this Section 3.01 shall
------------ ------------
control.
Section 3.02. Maintenance of Office or Agency.
-------------------------------
The Issuer will or will cause the Administrator to maintain in the
Borough of Manhattan in The City of New York or in Charlotte, North Carolina an
office or agency where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Issuer in respect of the
Notes and this Indenture may be served. The Issuer hereby initially appoints the
Administrator to serve as its agent for the foregoing purposes and to serve as
Paying Agent with respect to the Notes and the Certificates. The Issuer will
give prompt written notice to the Indenture Trustee and the Securities Insurer
of the location, and of any change in the location, of any such office or
agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
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Section 3.03. Money for Payments to Be Held in Trust.
--------------------------------------
As provided in Section 8.02(a) and (b) hereof, all payments of amounts
--------------- ---
due and payable with respect to any Notes that are to be made from amounts
withdrawn from the Note Payment Account pursuant to Section 8.02(c) hereof shall
---------------
be made on behalf of the Issuer by the Indenture Trustee or by the Paying Agent,
and no amounts so withdrawn from the Note Payment Account for payments of Notes
shall be paid over to the Issuer except as provided in this Section 3.03.
------------
On or before the seventh Business Day preceding each Payment Date and
the Redemption Date, the Paying Agent shall deposit or cause to be deposited in
the Note Payment Account an aggregate sum sufficient to pay the amounts due on
such Payment Date or the Redemption Date under all Classes of Notes, such sum to
be held in trust for the benefit of the Persons entitled thereto, and (unless
the Paying Agent is the Indenture Trustee) shall promptly notify the Indenture
Trustee and the Securities Insurer of its action or failure so to act.
Any Paying Agent shall be appointed by Issuer Order with written notice
thereof to the Indenture Trustee and the Securities Insurer. Any Paying Agent
appointed by the Issuer shall be a Person which would be eligible to be
Indenture Trustee hereunder as provided in Section 6.11 hereof. The Issuer shall
------------
not appoint any Paying Agent (other than the Indenture Trustee) which is not, at
the time of such appointment, a Depository Institution.
The Issuer will cause each Paying Agent other than the Administrator or
the Indenture Trustee to execute and deliver to the Indenture Trustee and the
Securities Insurer an instrument in which such Paying Agent shall agree with the
Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee and the Securities Insurer
notice of any default by the Issuer (or any other obligor upon the
Notes) of which it has actual knowledge in the making of any payment
required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay
to the Indenture Trustee all sums held by it in trust for the payment
of Notes if at any time it ceases to meet the standards required to be
met by a Paying Agent at the time of its appointment; and
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(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith; provided,
however, that with respect to withholding and reporting requirements
applicable to original issue discount (if any) on the Notes, the Issuer
shall have first provided the calculations pertaining thereto to the
Indenture Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds or
abandoned property, any money held by the Indenture Trustee or any Paying Agent
in trust for the payment of any amount due with respect to any Note and
remaining unclaimed for two years after such amount has become due and payable
shall be discharged from such trust and be paid to either (i) the Issuer on
Issuer Request and with the prior written consent of the Securities Insurer as
long as no Securities Insurer Default has occurred and is continuing or (ii) if
such money or a portion thereof was paid by the Securities Insurer to the
Indenture Trustee for the payment of principal of or interest on such Note, to
the Securities Insurer in lieu of the Issuer to the extent of such unreimbursed
amount; and the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment thereof (but only to the extent of
the amounts so paid to the Issuer), and all liability of the Indenture Trustee
or such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee or such Paying Agent, before being
required to make any such repayment, shall at the expense and direction of the
Issuer cause to be published, once in a newspaper of general circulation in The
City of New York customarily published in the English language on each Business
Day, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the Issuer
or the Securities Insurer, as applicable. The Indenture Trustee shall also adopt
and employ, at the expense and direction of the Issuer, any other reasonable
means of notification of such repayment (including, but not limited to, mailing
notice of such repayment to Holders whose Notes have been called but have not
been surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
Section 3.04. Existence.
---------
(a) Subject to subparagraph (b) of this Section 3.04, the Issuer will
------------
keep in full effect its existence, rights and franchises as a business trust
under the laws of the State of Delaware (unless, subject to the prior written
consent of the Securities Insurer, it becomes, or any successor Issuer hereunder
is or becomes, organized under the laws of any other State or of the United
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States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction) and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes and the Collateral.
(b) Any successor to the Owner Trustee appointed pursuant to
Section 10.2 of the Owner Trust Agreement shall be the successor Owner
------------
Trustee under this Indenture without the execution or filing of any paper,
instrument or further act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the
Owner Trustee, the Person succeeding to the Owner Trustee under the Owner Trust
Agreement may exercise every right and power of the Owner Trustee under this
Indenture with the same effect as if such Person had been named as the Owner
Trustee herein.
Section 3.05. Protection of Collateral.
------------------------
The Issuer will from time to time and upon the direction of the
Securities Insurer execute and deliver all such reasonable supplements and
amendments hereto and all such financing statements, continuation statements,
instruments of further assurance and other instruments, and will take such other
action necessary or advisable to:
(i) provide further assurance with respect to the Grant of
all or any portion of the Collateral;
(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
(ii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iii) enforce any rights with respect to the Collateral; or
(iv) preserve and defend title to the Collateral and the
rights of the Indenture Trustee, the Noteholders and the Securities
Insurer in such Collateral against the claims of all persons and
parties.
The Issuer hereby designates the Administrator, its agent and attorney-
in-fact to execute any financing statement, continuation statement or other
instrument required to be executed pursuant to this Section 3.05.
------------
Section 3.06. Annual Opinions as to Collateral.
--------------------------------
On or before [____] __th in each calendar year, beginning in [____],the
Issuer shall furnish to the Indenture Trustee and the Securities Insurer an
Opinion of Counsel either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any
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other requisite documents and with respect to the execution and filing of any
financing statements and continuation statements as is necessary to maintain the
lien and security interest created by this Indenture and reciting the details of
such action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the lien and security interest of this Indenture until July 15th of the
following calendar year.
Section 3.07. Performance of Obligations.
--------------------------
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Collateral or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance of
other Persons (including, without limitation, the Master Servicer and the
Administrator under the Administration Agreement) to assist it in performing its
duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee and the Securities Insurer in an Officer's
Certificate of the Issuer shall be deemed to be action taken by the Issuer.
Initially, the Issuer has contracted with the Master Servicer and the
Administrator to assist the Issuer in performing its duties under this
Indenture. The Administrator must at all times be the same Person as the
Indenture Trustee.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, in the Basic Documents
and in the instruments and agreements included in the Collateral, including but
not limited to (i) filing or causing to be filed all UCC financing statements
and continuation statements required to be filed by the terms of this Indenture
and the Sale and Servicing Agreement and (ii) recording or causing to be
recorded all Mortgages, Assignments of Mortgage, all intervening Assignments of
Mortgage and all assumption and modification agreements required to be recorded
by the terms of the Sale and Servicing Agreement, in accordance with and within
the time periods provided for in this Indenture and/or the Sale and Servicing
Agreement, as applicable. Except as otherwise expressly provided therein, the
Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Indenture Trustee,
the Securities Insurer and the Holders of at least a majority of the Outstanding
Notes.
(d) If the Issuer shall have knowledge of the occurrence of a Master
Servicer Event of Default under the Sale and Servicing Agreement, the Issuer
shall promptly notify the Indenture Trustee, the Securities Insurer, the
Servicer and the Rating Agencies thereof, and shall specify in
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such notice the action, if any, the Issuer is taking with respect to such Master
Servicer Event of Default. If such a Master Servicer Event of Default shall
arise from the failure of the Master Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the Home
Loans, the Issuer shall take all reasonable steps available to it to enforce the
obligations of the Master Servicer thereunder.
(e) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without the
prior written consent of the Indenture Trustee and, if a Securities Insurer
Default has not occurred and is not continuing, the Securities Insurer, amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any
Collateral (except to the extent otherwise provided in the Sale and Servicing
Agreement) or the Basic Documents, or waive timely performance or observance by
the Servicer, the Master Servicer or the Depositor under the Sale and Servicing
Agreement; and (ii) that any such amendment shall not (A) increase or reduce in
any manner the amount of, or accelerate or delay the timing of, payments that
are required to be made for the benefit of the Noteholders or (B) reduce the
aforesaid percentage of the Outstanding Notes that is required to consent to any
such amendment, without the consent of the Holders of all Outstanding Notes. If
any such amendment, modification, supplement or waiver shall so be consented to
by the Indenture Trustee and, if a Securities Insurer Default has not occurred
and is not continuing, the Securities Insurer, the Issuer agrees, promptly
following a request by the Indenture Trustee or the Securities Insurer to do so,
to execute and deliver, in its own name and at its own expense, such agreements,
instruments, consents and other documents as the Indenture Trustee may deem
necessary or appropriate in the circumstances.
Section 3.08. Negative Covenants.
------------------
So long as any Notes are Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Sale and Servicing Agreement, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer, including
those included in the Collateral, unless directed to do so by the
Indenture Trustee acting at the direction of the Securities Insurer,
unless a Securities Insurer Default has occurred and is continuing, or
the Securities Insurer;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the
Collateral;
(iii) engage in any business or activity other than as
permitted by the Owner Trust Agreement or other than in connection
with, or relating to, the issuance of Notes pursuant to this Indenture,
or amend the Owner Trust Agreement as in effect on the Closing Date
other than in accordance with Section 11.1 thereof;
------------
(iv) issue debt obligations under any other indenture;
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(v) incur or assume any indebtedness or guaranty any
indebtedness of any Person, except for such indebtedness as may be
incurred by the Issuer in connection with the issuance of the Notes
pursuant to this Indenture;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations with
respect to the Notes under this Indenture except as may expressly be
permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or
burden the Collateral or any part thereof or any interest therein or
the proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on any of the
Mortgaged Properties and arising solely as a result of an action or
omission of the related Obligors or (C) permit the lien of this
Indenture not to constitute a valid first priority (other than with
respect to such tax, mechanics' or other lien) security interest in the
Collateral;
(viii) remove the Administrator without cause unless the
Rating Agency Condition shall have been satisfied in connection with
such removal; or
(ix) take any other action or fail to take any action which
may cause the Issuer to be taxable as (a) an association pursuant to
Section 7701 of the Code and the corresponding regulations or (b) as a
taxable mortgage pool pursuant to Section 7701(i) of the Code and the
corresponding regulations.
Section 3.09. Annual Statement as to Compliance.
---------------------------------
The Issuer will deliver to the Indenture Trustee and the Securities
Insurer, within 120 days after the end of each fiscal year of the Issuer
(commencing in the fiscal year 2000), an Officer's Certificate stating, as to
the Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year
and of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
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Section 3.10. Covenants of the Issuer.
-----------------------
All covenants of the Issuer in this Indenture are covenants of the
Issuer and are not covenants of the Owner Trustee. The Owner Trustee is, and any
successor Owner Trustee under the Owner Trust Agreement will be, entering into
this Indenture solely as Owner Trustee under the Owner Trust Agreement and not
in its respective individual capacity, and in no case whatsoever shall the Owner
Trustee or any such successor Owner Trustee be personally liable on, or for any
loss in respect of, any of the statements, representations, warranties or
obligations of the Issuer hereunder, as to all of which the parties hereto agree
to look solely to the property of the Issuer.
Section 3.11. Restricted Payments.
-------------------
The Issuer shall not, directly or indirectly, (i) pay any dividend or
make any payment (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner Trustee or any owner
of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer or to the Servicer
or Master Servicer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, payments to the Servicer, the Master
Servicer, the Indenture Trustee, the Owner Trustee, the Securities Insurer, the
Noteholders and the holders of the Residual Interest Certificate as contemplated
by Section 8.02(c) hereof, and to the extent funds are available for such
---------------
purpose under, the Sale and Servicing Agreement or the Owner Trust Agreement.
The Issuer will not, directly or indirectly, make or cause to be made payments
to or distributions from the Collection Account except in accordance with this
Indenture and the Basic Documents.
Section 3.12. Treatment of Notes as Debt for Tax Purposes.
-------------------------------------------
The Issuer shall, and shall cause the Administrator to, treat the Notes
as indebtedness for all purposes.
Section 3.13. Notice of Events of Default.
---------------------------
The Issuer shall give the Indenture Trustee, the Securities Insurer,
the Master Servicer, the Depositor and the Rating Agencies prompt written notice
of each Event of Default hereunder, each default on the part of the Master
Servicer, the Servicer or the Transferor of its obligations under the Sale and
Servicing Agreement and each default on the part of the Transferor of its
obligations under the Home Loan Purchase Agreement.
Section 3.14. Further Instruments and Acts.
----------------------------
Upon request of the Indenture Trustee or the Securities Insurer, the
Issuer will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
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ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect with respect to the
Notes (except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of
Noteholders to receive payments of principal thereof and interest thereon
including any such right of the Securities Insurer pursuant to Section 2.06(b)
---------------
or the proviso to the definition of "Outstanding", (iv) Sections 3.03, 3.04,
-------------------
3.05, 3.08 and 3.10 hereof, (v) the rights, obligations and immunities of the
---------- ----
Indenture Trustee hereunder (including the rights of the Indenture Trustee under
Section 6.07 hereof and the obligations of the Indenture Trustee under Section
------------ -------
4.02 hereof) and (vi) the rights of Noteholders as beneficiaries hereof with
----
respect to the property so deposited with the Indenture Trustee payable to all
or any of them), and the Indenture Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when all of the following
have occurred:
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i) Notes
that have been destroyed, lost or stolen and that have been replaced or
paid as provided in Section 2.04 hereof and (ii) Notes for the payment
of which money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03 hereof) shall
have been delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
a. shall have become due and payable, or
b. will become due and payable within one year following the
Maturity Date, or
c. are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the
giving of notice of redemption by the Indenture Trustee in the
name, and at the expense, of the Issuer,
d. and the Issuer, in the case of clause a., b. or c. above, has
irrevocably deposited or caused irrevocably to be deposited
with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for
cancellation when due to the applicable Maturity Date of such
Class of Notes or the Redemption Date (if
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Notes shall have been called for redemption pursuant to
Section 10.01 hereof), as the case may be; and
-------------
(B) the latest of (a) 18 months after payment in full of all
outstanding obligations under the Notes, (b) the payment in full of all
unpaid Trust Fees and Expenses and all sums owing to the Securities
Insurer under the Insurance Agreement as confirmed in writing by the
Securities Insurer, (c) the Guaranty Policy is surrendered to the
Securities Insurer and (d) the date on which the Issuer has paid or
caused to be paid all other sums payable hereunder by the Issuer; and
(C) the Issuer shall have delivered to the Indenture Trustee
and the Securities Insurer an Officer's Certificate, an Opinion of
Counsel and (if required by the TIA or the Indenture Trustee) an
Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.01(a) hereof
----------------
and, subject to Section 11.02 hereof, each stating that all conditions
-------------
precedent herein provided for, relating to the satisfaction and
discharge of this Indenture with respect to the Notes, have been
complied with.
Section 4.02. Application of Trust Money.
--------------------------
All moneys deposited with the Indenture Trustee pursuant to Sections
--------
3.03 and 4.01 hereof shall be held in trust and applied by it, in accordance
---- ----
with the provisions of the Notes, the Insurance Agreement and this Indenture, to
the payment, either directly or through any Paying Agent, as the Indenture
Trustee may determine, to the Securities Insurer and to the Holders of the
particular Notes for the payment or redemption of which such moneys have been
deposited with the Indenture Trustee, of all sums due and to become due thereon;
but such moneys need not be segregated from other funds except to the extent
required herein or in the Sale and Servicing Agreement or required by law.
Section 4.03. Repayment of Moneys Held by Paying Agent.
----------------------------------------
In connection with the satisfaction and discharge of this Indenture
with respect to the Notes, all moneys then held by any Paying Agent other than
the Indenture Trustee under the provisions of this Indenture with respect to
such Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to
be held and applied according to Section 3.03 hereof and thereupon such Paying
------------
Agent shall be released from all further liability with respect to such moneys.
ARTICLE V
REMEDIES
Section 5.01. Events of Default.
-----------------
(a) "Event of Default," wherever used herein, means any one of the
----------------
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary
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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) Notwithstanding that there may be insufficient sums in
the Note Payment Account for payment thereof on the related Payment
Date, default in the payment of any interest on any Note when the same
becomes due and payable, and continuance of such default for a period
of five (5) days; or
(ii) Notwithstanding that there may be insufficient sums in
the Note Payment Account for payment thereof on the related Payment
Date, default in the payment of the principal of or any installment of
the principal of any Note on the related Maturity Date; or
(iii) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of
which is elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture, the
Insurance Agreement, the Sale and Servicing Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of
the time when the same shall have been made, and such default shall
continue or not be cured, or the circumstance or condition in respect
of which such misrepresentation or warranty was incorrect shall not
have been eliminated or otherwise cured, for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Issuer by the Indenture Trustee at the direction of the Securities
Insurer, or to the Issuer and the Indenture Trustee by the Holders of
at least 25% of the Outstanding Notes and with the prior written
consent of the Securities Insurer (so long as no Securities Insurer
Default has occurred and is continuing), a written notice specifying
such default or incorrect representation or warranty and requiring it
to be remedied and stating that such notice is a notice of Default
hereunder; or
(iv) an Event of Default under Section 5.01 (other than
Section 5.01(e))of the Insurance Agreement or in any certificate or
other writing delivered pursuant to the Insurance Agreement or in
connection therewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee at the direction
of the Securities Insurer, or to the Issuer and the Indenture Trustee
by the Holders of at least 25% of the Outstanding Notes and with the
prior written consent of the Securities Insurer (so long as no
Securities Insurer Default has occurred and is continuing), a written
notice specifying such default or incorrect representation or warranty
and requiring it to be remedied and stating that such notice is a
notice of Default hereunder; or
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(v) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Collateral in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Collateral, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60
consecutive days;
(vi) the commencement by the Issuer of a voluntary case under
any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under any such law,
or the consent by the Issuer to the appointment or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the
Collateral, or the making by the Issuer of any general assignment for
the benefit of creditors, or the failure by the Issuer generally to pay
its debts as such debts become due, or the taking of any action by the
Issuer in furtherance of any of the foregoing; or
(vii) the failure of the Securities Insurer to make an Insured
Payment pursuant to the Guaranty Policy.
The Issuer shall promptly deliver to the Indenture Trustee and the
Securities Insurer written notice in the form of an Officer's Certificate of any
event which with the giving of notice and the lapse of time would become an
Event of Default under clauses (iii) and (iv) above, the status of such event
and what action the Issuer is taking or proposes to take with respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default shall occur and a Securities Insurer Default has
occurred and is continuing then and in every such case the Indenture Trustee may
or the Indenture Trustee as directed in writing by the Majority Noteholders
shall declare all the Notes to be then immediately due and payable, by a notice
in writing to the Issuer (and to the Indenture Trustee if given by Noteholders),
and upon any such declaration the Outstanding Amount of such Notes, together
with accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable; provided, however, that if on the date any
such Event of Default occurs or is continuing, and no Securities Insurer Default
exists and is continuing, then the Securities Insurer, in its sole discretion,
may determine whether or not to accelerate payment on the Notes. In the event of
any acceleration of the Notes by operation of this Section 5.02, the Indenture
------------
Trustee shall continue to be entitled to make claims under the Guaranty Policy
pursuant to Section 5.01A of the Sale and Servicing Agreement. Payments under
-------------
the Guaranty Policy following acceleration of the Notes shall be applied by the
Indenture Trustee:
-31-
FIRST: to the payment of amounts due and unpaid on the Notes
in respect of interest, ratably, without preference or priority of any
kind; and
SECOND: to the payment of amounts due and unpaid on the Notes
in respect of principal, ratably, without preference or priority of any
kind, until the Notes are paid in full.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the moneys due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided,
---------
either the Securities Insurer (so long as a Securities Insurer Default has not
occurred and is continuing) or the Majority Noteholders (if a Securities Insurer
Default has occurred and is continuing), by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration and its consequences
if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
1. all payments of principal of and/or interest on all Notes and all
other amounts that would then be due hereunder or upon such Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
2. all sums paid or advanced by the Indenture Trustee or the
Securities Insurer hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee or
the Securities Insurer and their respective agents and counsel;
and
(b) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.12 hereof. No such rescission shall affect any
------------
subsequent default or impair any right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Indenture Trustee.
-----------------
(a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Indenture Trustee
made at the direction of the Securities Insurer, pay to the Indenture Trustee,
for the benefit of the Holders of the Notes and the Securities Insurer, the
whole amount then due and payable on such Notes for principal and/or interest,
with interest upon the overdue principal and, to the extent payment at such rate
of interest shall be legally enforceable, upon overdue installments of interest
at the rate borne by the Notes and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and the Securities Insurer and their respective agents and counsel.
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(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee may, with the prior written consent of the
Securities Insurer (so long as no Securities Insurer Default has occurred and is
continuing) and shall at the direction of the Securities Insurer (so long as no
Securities Insurer Default has occurred and is continuing) or the Majority
Noteholders (if a Securities Insurer Default has occurred and is continuing)
institute a Proceeding for the collection of the sums so due and unpaid, and may
prosecute such Proceeding to judgment or final decree, and may enforce the same
against the Issuer or other obligor upon such Notes and collect in the manner
provided by law out of the property of the Issuer or other obligor upon such
Notes, wherever situated, the moneys adjudged or decreed to be payable. At any
time, so long as no Securities Insurer Default has occurred and is continuing,
if the Securities Insurer is the holder of any Note pursuant to Section 2.06(b)
---------------
hereof or all amounts due to all other Holders of the Notes pursuant to the
Notes and this Indenture have been paid in full, then the Securities Insurer
may, in its own name, institute any Proceedings or take any action permitted
under this Section 5.03 to collect amounts due hereunder from the Issuer or any
------------
other obligor of the Notes.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee shall, at the direction of the Securities Insurer, and if a Securities
Insurer Default has occurred and is continuing, the Indenture Trustee may, in
its discretion, and shall at the direction of the majority of the Holders of the
Outstanding Notes, as more particularly provided in Section 5.04 hereof, proceed
------------
to protect and enforce its rights and the rights of the Securities Insurer and
the Noteholders by such appropriate Proceedings as the Indenture Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy
or legal or equitable right vested in the Indenture Trustee by this Indenture or
by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Collateral, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, upon the direction of the Securities Insurer, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and/or interest owing and unpaid in respect of the Notes
and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and the Securities Insurer,
and their respective agents,
-33-
attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Indenture Trustee
and each predecessor Indenture Trustee, except as a result of
negligence or bad faith), the Securities Insurer and the Noteholders
allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders, the Securities
Insurer and the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee, the Securities Insurer or the Holders of
Notes allowed in any judicial proceedings relative to the Issuer, its
creditors and its property; and any trustee, receiver, liquidator,
custodian or other similar official in any such Proceeding is hereby
authorized by each of such Noteholders and the Securities Insurer to
make payments to the Indenture Trustee and, in the event that the
Indenture Trustee shall consent to the making of payments directly to
such Noteholders and the Securities Insurer, to pay to the Indenture
Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred and all advances made by the
Indenture Trustee and each predecessor Indenture Trustee except as a
result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder or the Securities Insurer any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof or the Securities Insurer or to authorize the Indenture Trustee
to vote in respect of the claim of any Noteholder in any such proceeding except,
as aforesaid, to vote for the election of a trustee in bankruptcy or similar
Person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents, attorneys and counsel, shall be
for the ratable benefit of the Holders of the Notes and the Securities Insurer.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
-34-
Section 5.04. Remedies; Priorities.
--------------------
(a) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall, at the direction of the Securities Insurer, and if a
Securities Insurer Default has occurred and is continuing, the Indenture Trustee
may, and at the direction of a majority of the Holders of the Outstanding Notes
shall, do one or more of the following (subject to Section 5.05 hereof):
------------
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on the
Notes and amounts due to the Securities Insurer or under this Indenture
with respect thereto, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Issuer and any other obligor
upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Indenture Trustee, the Securities Insurer or the
Noteholders; and
(iv) sell the Collateral or any portion thereof or rights or
interest therein in a commercially reasonable manner, at one or more
public or private sales called and conducted in any manner permitted by
law; provided, however, (x) if a Securities Insurer Default has
occurred and is continuing, the Indenture Trustee may not sell or
otherwise liquidate the Collateral following an Event of Default,
unless (A) the Holders of 100% of the Outstanding Notes consent
thereto, (B) the proceeds of such sale or liquidation distributable to
the Noteholders are sufficient to discharge in full all amounts then
due and unpaid upon such Notes for principal and/or interest or (C) the
Indenture Trustee determines that the Collateral will not continue to
provide sufficient funds for the payment of principal of and interest
on the Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains the consent
of Holders of 66-2/3% of the Outstanding Notes, and (y) if no
Securities Insurer Default has occurred and is continuing, the
Securities Insurer may direct the Indenture Trustee and the Indenture
Trustee shall comply with any such direction, to sell or otherwise
liquidate the Collateral following an Event of Default if (1) the
conditions under either A, B or C in clause (x) above are met or (2)
the Securities Insurer has paid the Notes in full under the Guaranty
Policy. In determining such sufficiency or insufficiency with respect
to clause (B) and (C) of this subsection (a)(iv), the Indenture Trustee
may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose.
(b) If the Indenture Trustee collects any money or property with
respect to any Pool pursuant to this Article V, it shall pay out the money or
---------
property in the following order:
-35-
FIRST: the following amounts, to be allocated pro rata with
respect to each Class of Notes, on the basis of the respective
aggregate Principal Balance of the Loans in the related Pools, except
for the Guaranty Insurance Premium which shall be allocated on the
basis of the respective Note Principal Balances of the Classes of
Notes, in the following order of priority: (1) to the Indenture
Trustee, any Indenture Trustee Fees due and payable, for any costs or
expenses incurred by it in connection with the enforcement of the
remedies provided for in this Article V and any other amounts payable
---------
to the Indenture Trustee pursuant to Section 6.07 hereof; (2) to the
------------
Servicer, an amount equal to any Servicing Compensation due and unpaid;
(3) to the Master Servicer, an amount equal to any Master Servicer
Compensation due and unpaid, which unpaid amounts were payable pursuant
to this "FIRST" priority or pursuant to Section 5.01(c)(i) of the Sale
------------------
and Servicing Agreement; provided, however, that if there exists an OC
Trigger Increase Event, such Master Servicer Compensation shall be
payable pursuant to priority "NINTH" below; and (4) to the Securities
Insurer, an amount equal to any Guaranty Insurance Premium due and
unpaid;
SECOND: to the Class of Notes related to such Pool, for
amounts due and unpaid on such Class in respect of the Noteholders'
Interest Payment Amount for such Class, pro rata among the Noteholders
of such Class;
THIRD: to the Class of Notes related to such Pool, for
amounts due and unpaid on such Class in respect of principal, pro rata
among such Class, until the Note Principal Balance of such Class is
reduced to zero;
FOURTH: to the Securities Insurer for any amounts then due
and unpaid to the Securities Insurer and unpaid under the Insurance
Agreement;
FIFTH: to the Class of Notes related to such Pool, for
amounts unpaid on such Class in respect of the Noteholders' Interest
Carry-Forward Amount for such Class;
SIXTH: to the Classes of Notes not related to such Pool, for
amounts due and unpaid on such Classes in respect of the Noteholders'
Interest Payment Amounts for such Classes, pro rata among such Classes,
based on the Noteholders' Interest Payment Amounts for such Classes;
SEVENTH: to the Classes of Notes not related to such Pool, for
amounts due and unpaid on such Classes in respect of principal, pro
rata among such Classes, based on the unpaid Principal Balances of such
Classes, until the Note Principal Balance of such Classes is reduced to
zero;
EIGHTH: to the Classes of Notes not related to such Pool, for
amounts unpaid on such Classes in respect of the Noteholders' Interest
Carry-Forward Amounts for such Classes, pro rata among such Classes,
based on the unpaid Noteholders' Interest Carry-Forward Amounts for
such Classes; and
-36-
NINTH: (i) first, to the Master Servicer, an amount equal to
any Master Servicer Compensation required to be paid pursuant to this
priority "NINTH" as set forth in priority "FIRST" above, and (ii)
second, to the holders of the Residual Interest Certificates.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section. At least 15 days
before such record date, the Indenture Trustee shall mail to each Noteholder,
the Securities Insurer and the Issuer a notice that states the record date, the
payment date and the amount to be paid.
Section 5.05. Optional Preservation of the Collateral.
---------------------------------------
If the Notes have been declared to be due and payable under Section
-------
5.02 hereof following an Event of Default and such declaration and its
----
consequences have not been rescinded and annulled, the Indenture Trustee may,
but need not, elect to maintain possession of the Collateral. It is the desire
of the parties hereto and the Noteholders that there be at all times sufficient
funds for the payment of principal of and interest on the Notes, and the
Indenture Trustee shall take such desire into account when determining whether
or not to maintain possession of the Collateral. In determining whether to
maintain possession of the Collateral, the Indenture Trustee may, but need not,
obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Collateral for such purpose.
Section 5.06. Limitation of Suits.
-------------------
No Holder of any Note shall have any right to institute any Proceeding,
judicial or otherwise, with respect to this Indenture or for the appointment of
a receiver or trustee, or for any other remedy hereunder for as long as a
Securities Insurer Default has not occurred or is not continuing and, if a
Securities Insurer Default has occurred and is continuing, unless:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Notes have made
written request to the Indenture Trustee to institute such Proceeding in respect
of such Event of Default in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in complying with such request;
(d) the Indenture Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceeding; and
(e) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 30-day period by the Majority Noteholders.
-37-
It is understood and intended that no one or more Holders of Notes
shall have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each group representing less than a Majority Noteholders, the Indenture Trustee
in its sole discretion may determine what action, if any, shall be taken,
notwithstanding any other provisions of this Indenture.
Section 5.07. Unconditional Rights of Noteholders to Receive Principal
--------------------------------------------------------
and/or Interest.
---------------
Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
applicable Maturity Date thereof expressed in such Note or in this Indenture
(or, in the case of redemption, on or after the Redemption Date) and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
Section 5.08. Restoration of Rights and Remedies.
----------------------------------
If the Indenture Trustee, the Securities Insurer or any Noteholder has
instituted any Proceeding to enforce any right or remedy under this Indenture
and such Proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Indenture Trustee, the Securities Insurer or to
such Noteholder, then and in every such case the Issuer, the Indenture Trustee,
the Securities Insurer and the Noteholders shall, subject to any determination
in such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee, the Securities Insurer and the Noteholders shall continue as though no
such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative.
------------------------------
No right or remedy herein conferred upon or reserved to the Indenture
Trustee, the Securities Insurer or to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver.
------------------------------
No delay or omission of the Indenture Trustee, the Securities Insurer
or any Holder of any Note to exercise any right or remedy accruing upon any
Default or Event of Default shall impair any such right or remedy or constitute
a waiver of any such Default or Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Indenture
---------
-38-
Trustee, the Securities Insurer or to the Noteholders may be exercised from time
to time, and as often as may be deemed expedient, by the Indenture Trustee, the
Securities Insurer or by the Noteholders, as the case may be, subject, in each
case, however, to the right of the Securities Insurer to control any such right
and remedy, except as provided in Section 11.20.
-------------
Section 5.11. Control by Noteholders.
----------------------
Subject to the rights of the Securities Insurer under Section 11.18
-------------
hereof, the Majority Noteholders shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee; provided, however, that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.04 hereof, any direction
------------
to the Indenture Trustee to sell or liquidate the Collateral shall be by Holders
of Notes representing not less than 100% of the Notes Outstanding;
(c) if the conditions set forth in Section 5.05 hereof have been
------------
satisfied and the Indenture Trustee elects to retain the Collateral pursuant to
such Section, then any direction to the Indenture Trustee by Holders of Notes
representing less than 100% of the Notes Outstanding to sell or liquidate the
Collateral shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of the Noteholders set forth in this Section
-------
5.11, subject to Section 6.01 hereof, the Indenture Trustee need not take any
---- ------------
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
Section 5.12. Waiver of Past Defaults.
-----------------------
The Securities Insurer may, or at any time when a Securities Insurer
Default has occurred and is continuing, the Majority Noteholders may waive any
past Default or Event of Default and its consequences, except a Default (a) in
the payment of principal of or interest on any of the Notes or (b) in respect of
a covenant or provision hereof that cannot be modified or amended without the
consent of the Securities Insurer (so long as no Securities Insurer Default has
occurred and is continuing) or the Holder of each Note. In the case of any such
waiver, the Issuer, the Indenture Trustee, the Securities Insurer and the
Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such
-39-
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereto.
Section 5.13. Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Note by
such Holder's acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Indenture Trustee for
any action taken, suffered or omitted by it as Indenture Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to (a) any suit
instituted by the Indenture Trustee or the Securities Insurer, (b) any suit
instituted by any Noteholder, or group of Noteholders, in each case holding in
the aggregate more than 10% of the Notes or (c) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest on any
Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
Section 5.14. Waiver of Stay or Extension Laws.
--------------------------------
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead or in any manner whatsoever, claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee or the Securities Insurer, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 5.15. Action on Notes.
---------------
The Indenture Trustee's right to seek and recover judgment on the Notes
or under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Indenture Trustee,
the Securities Insurer or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Collateral or upon any of
the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.04(b) hereof.
---------------
Section 5.16. Performance and Enforcement of Certain Obligations.
--------------------------------------------------
(a) Promptly following a request from the Indenture Trustee or the
Securities Insurer to do so and at the Master Servicer's expense, the Issuer
shall take all such lawful action as the Indenture Trustee or the Securities
Insurer may request to compel or secure the performance and
-40-
observance by the Transferor, the Servicer and the Master Servicer, as
applicable, of each of their obligations to the Issuer under or in connection
with the Sale and Servicing Agreement, and to exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer, under or in
connection with the Sale and Servicing Agreement to the extent and in the manner
directed by the Indenture Trustee or the Securities Insurer, including the
transmission of notices of default on the part of the Transferor or the Master
Servicer thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by the Transferor, the Master
Servicer or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall, at the direction of the Securities Insurer, and at the direction
(which direction shall be in writing or by telephone, confirmed in writing
promptly thereafter) of the Holders of 66-2/3% of the Notes Outstanding shall,
with the prior written consent of the Securities Insurer (so long as no
Securities Insurer Default has occurred and is continuing), exercise all rights,
remedies, powers, privileges and claims of the Issuer, as Securityholder,
against the Transferor, the Servicer or the Master Servicer under or in
connection with the Sale and Servicing Agreement, including the right or power
to take any action to compel or secure performance or observance by the
Transferor, the Servicer or the Master Servicer, as the case may be, of each of
their obligations to the Issuer thereunder and to give any consent, request,
notice, direction, approval, extension, or waiver under the Sale and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.
Section 5.17. Rights in Respect of Insolvency Proceedings.
-------------------------------------------
(a) In the event that the Indenture Trustee has received a certified copy
of an order of the appropriate court that any scheduled payment of principal of
or interest on a Note has been voided in whole or in part as a preference
payment under applicable bankruptcy law, the Indenture Trustee shall so notify
the Securities Insurer, shall comply with the provisions of the Guaranty Policy
to obtain payment by the Securities Insurer of such voided scheduled payment,
and shall, at the time it provides notice to the Securities Insurer, notify, by
mail to Holders of the Notes that, in the event that any Holder's scheduled
payment is so recovered, such Holder will be entitled to payment pursuant to the
terms of the Policy, a copy of which shall be made available through the
Indenture Trustee, the Securities Insurer or the Fiscal Agent, if any, and the
Indenture Trustee shall furnish to the Securities Insurer or its Fiscal Agent,
if any, its records evidencing the payments of principal of and interest on the
Notes, if any, which have been made by the Indenture Trustee and subsequently
recovered from Holders, and the dates on which such payments were made.
(b) The Indenture Trustee shall promptly notify the Securities Insurer of
either of the following as to which it has actual knowledge: (i) the
commencement of any proceeding by or against the Issuer commenced under the
United States Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding") and
---------------------
(ii) the making of any claim in connection with any Insolvency Proceeding
seeking the avoidance as a preferential transfer (a "Preference Claim") of any
----------------
payment of principal of, or
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interest on, the Notes. Each Holder, by its purchase of Notes, and the Indenture
Trustee hereby agree that, so long as a the Securities Insurer Default shall not
have occurred and be continuing, the Securities Insurer may at any time during
the continuation of an Insolvency Proceeding direct all matters relating to such
Insolvency Proceeding, including, without limitation, (i) all matters relating
to any Preference Claim, (ii) the direction of any appeal of any order relating
to any Preference Claim at the expense of the Securities Insurer but subject to
reimbursement as provided in the Insurance Agreement and (iii) the posting of
any surety, supersedes or performance Note pending any such appeal. In addition,
and without limitation of the foregoing, as set forth in Section 5.18, the
------------
Securities Insurer shall be subrogated to, and each Holder and the Indenture
Trustee hereby delegate and assign, to the fullest extent permitted by law the
rights of the Indenture Trustee and each Holder in the conduct of any Insolvency
Proceeding, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Insolvency Proceeding.
(c) The Indenture Trustee shall furnish to the Securities Insurer or its
Fiscal Agent its records evidencing the payments of principal of and interest on
the Notes which have been made by the Indenture Trustee and subsequently
recovered from Noteholders, and the dates on which such payments were made.
Section 5.18. Effect of Payments by The Securities Insurer; Subrogation.
---------------------------------------------------------
(a) Anything herein to the contrary notwithstanding, any payment with
respect to the principal of or interest on any Class of Notes which is made with
moneys received pursuant to the terms of the Policy shall not be considered
payment by the Issuer of the Notes, shall not discharge the Issuer in respect of
its obligation to make such payment and shall not result in the payment of or
the provision for the payment of the principal of or interest on the Notes
within the meaning of Section 4.01 hereof. The Issuer and the Indenture Trustee
------------
acknowledge that without the need for any further action on the part of the
Securities Insurer, the Issuer, the Indenture Trustee or the Note Registrar (i)
to the extent the Securities Insurer makes payments, directly or indirectly, on
account of principal of or interest on any Class of Notes to the Holders of such
Notes, the Securities Insurer will be fully subrogated to the rights of such
Holders to receive such principal and interest from the Issuer, and (ii) the
Securities Insurer shall be paid such principal and interest in its capacity as
a Holder of Notes but only from the sources and in the manner provided herein
for the payment of such principal and interest in each case only after the
Holders of the Notes have received payment of all scheduled payments of
principal and interest due thereon.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.
---------------------------
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and
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skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(ii) in the absence of bad faith or gross negligence on its part,
the Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and conforming
to the requirements of this Indenture; provided, however, that the
Indenture Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 6.01;
------------
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11 hereof.
------------
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section
-------------------------------- -------
6.01.
----
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) Money held in trust by the Indenture Trustee shall be segregated from
other funds held by the Indenture Trustee except to the extent permitted by law
or the terms of this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it; provided, however, that the Indenture Trustee shall
not refuse or fail to perform any of its duties hereunder solely as a result of
nonpayment of its normal fees and expenses and provided, further, that nothing
in this Section 6.01(g) shall be construed to limit the exercise by
---------------
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the Indenture Trustee of any right or remedy permitted under this Indenture or
otherwise in the event of the Issuer's failure to pay the Indenture Trustee's
fees and expenses pursuant to Section 6.07 hereof. In determining that such
------------
repayment or indemnity is not reasonably assured to it, the Indenture Trustee
must consider not only the likelihood of repayment or indemnity by or on behalf
of the Issuer but also the likelihood of repayment or indemnity from amounts
payable to it from the Collateral pursuant to Section 6.07 hereof.
------------
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section.
(i) The Indenture Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any Event of Default (other than an Event
of Default pursuant to Section 5.01(a)(i) or (ii) hereof) unless a Responsible
------------------ ----
Officer of the Indenture Trustee shall have received written notice thereof or
otherwise shall have actual knowledge thereof. In the absence of receipt of
notice or such knowledge, the Indenture Trustee may conclusively assume that
there is no Event of Default.
(j) The Indenture Trustee shall, and hereby agrees, that it will hold the
Guaranty Policy in trust and will hold any proceeds of any claim on the Guaranty
Policy in trust solely for the use and benefit of the Noteholders. The Indenture
Trustee will deliver to the Rating Agencies notice of any change made to the
Guaranty Policy.
Section 6.02. Rights of Indenture Trustee.
---------------------------
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee so long as the Indenture Trustee remains
liable to the Issuer, the Noteholders and the Securities Insurer for the
performance of its duties hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that such action or omission by the
Indenture Trustee does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may, at the expense of the Transferor as
provided under Section 6.07, consult with counsel, and the advice or opinion of
------------
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and
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protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
Section 6.03. Individual Rights of Indenture Trustee.
--------------------------------------
The Indenture Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Issuer or its
Affiliates with the same rights it would have if it were not Indenture Trustee.
Any Paying Agent, Note Registrar, co-registrar or co-paying agent may do the
same with like rights. However, the Indenture Trustee must comply with Sections
--------
6.11 and 6.12 hereof.
---- ----
Section 6.04. Indenture Trustee's Disclaimer.
------------------------------
The Indenture Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes,
shall not be accountable for the Issuer's use of the proceeds from the Notes, or
responsible for any statement of the Issuer in the Indenture or in any document
issued in connection with the sale of the Notes or in the Notes other than the
Indenture Trustee's certificate of authentication.
Section 6.05. Notices of Default.
------------------
If a Default occurs and is continuing and if it is known to a Responsible
Officer of the Indenture Trustee, the Indenture Trustee shall mail to each
Noteholder notice of the Default within 90 days after it occurs and to the
Securities Insurer notice of such Default promptly after it occurs. Except in
the case of a Default in payment of principal of or interest on any Note
(including payments pursuant to the mandatory redemption provisions of such
Note), the Indenture Trustee may withhold the notice to Noteholders if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
Section 6.06. Reports by Indenture Trustee to Holders.
---------------------------------------
The Indenture Trustee shall deliver to each Noteholder such information
reasonably available to the Indenture Trustee as may be required to enable such
Holder to prepare its federal and state income tax returns.
Section 6.07. Compensation and Indemnity.
--------------------------
As compensation for its services hereunder, the Indenture Trustee shall be
entitled to receive, on each Payment Date, the Indenture Trustee's Fee pursuant
to Section 8.02(c) hereof (which compensation shall not be limited by any law on
---------------
compensation of a trustee of an express trust) and shall be entitled to
reimbursement by the Master Servicer for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture Trustee's
agents, counsel, accountants and experts and Opinions of Counsel hereunder. The
Issuer agrees to cause the Master Servicer,
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at its expense, to indemnify the Indenture Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Indenture Trustee shall notify the Issuer, the Servicer and the
Master Servicer promptly of any claim for which it may seek indemnity. Failure
by the Indenture Trustee so to notify the Issuer, the Servicer and the Master
Servicer shall not relieve the Issuer of its obligations hereunder. The Issuer
shall or shall cause the Master Servicer to defend any such claim, and the
Indenture Trustee may have separate counsel reasonably acceptable to the Master
Servicer and the Issuer shall or shall cause the Master Servicer to pay the
reasonable fees and expenses of such counsel. Neither the Issuer, the Servicer
nor the Master Servicer need reimburse any expense or indemnify against any
loss, liability or expense incurred by the Indenture Trustee through the
Indenture Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section 6.07 shall survive the discharge of this Indenture. When the Indenture
------------
Trustee incurs expenses after the occurrence of a Default specified in Section
-------
5.01(a)(v) hereof with respect to the Issuer, the expenses are intended to
----------
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee.
--------------------------------
No resignation or removal of the Indenture Trustee and no appointment of a
successor Indenture Trustee shall become effective until the acceptance of
appointment by the successor Indenture Trustee pursuant to this Section 6.08.
------------
The Indenture Trustee may resign at any time by so notifying the Issuer and the
Securities Insurer. The Securities Insurer or the Holders of a majority of the
Outstanding Notes with the consent of the Securities Insurer (so long as no
Securities Insurer Default has occurred and is continuing) may remove the
Indenture Trustee by so notifying the Indenture Trustee and may appoint a
successor Indenture Trustee subject to Section 6.11. The Issuer shall remove the
------------
Indenture Trustee upon the prior written consent of the Securities Insurer if:
(a) the Indenture Trustee fails to comply with Section 6.11 hereof;
------------
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee acceptable to the
Securities Insurer.
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A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, the Securities Insurer and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Securities Insurer, the Issuer or the Holders of a majority of the
Outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11 hereof, any
------------
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee
acceptable to the Securities Insurer.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section 6.08, the Issuer's and the Master Servicer's obligations under Section
------------ -------
6.07 hereof shall continue for the benefit of the retiring Indenture Trustee
----
acceptable to the Securities Insurer.
Section 6.09. Successor Indenture Trustee by Merger.
-------------------------------------
If the Indenture Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor Indenture
Trustee; provided, however, that such corporation or banking association shall
otherwise be qualified and eligible under Section 6.11 hereof. The Indenture
------------
Trustee shall provide the Securities Insurer and the Rating Agencies prior
written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
---------------------------------------------------------
Trustee.
-------
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Indenture
Trustee shall have the power, with the prior written consent of
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the Securities Insurer (so long as no Securities Insurer Default has occurred
and is continuing), and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Noteholders, such title
to the Collateral, or any part hereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Indenture Trustee or the Securities Insurer may consider necessary or desirable.
No co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 6.11 hereof and no notice to
------------
Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.08 hereof; provided that the Indenture Trustee shall
------------
deliver notice of any such co-trustee or separate trustee to the Securities
Insurer.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or co-
trustee jointly (it being understood that such separate trustee or co-
trustee is not authorized to act separately without the Indenture Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Collateral or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
----------
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, jointly with the Indenture
Trustee, subject to all the provisions of this Indenture, specifically including
every provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates,
-48-
properties, rights, remedies and trusts shall vest in and be exercised by the
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.
Section 6.11. Eligibility; Disqualification.
-----------------------------
The Indenture Trustee shall at all times satisfy the requirements of
TIA Section 310(a). The Indenture Trustee shall be acceptable to the Securities
Insurer and shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition. The Indenture
Trustee shall comply with TIA Section 310(b); provided, however, that there
shall be excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against Issuer.
------------------------------------------------
The Indenture Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). An Indenture Trustee
which has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.13. Waiver of Setoff.
----------------
The Indenture Trustee hereby expressly waives any and all rights of setoff
that the Indenture Trustee may otherwise at any time have under the applicable
law with respect to any Trust Account and agrees that amounts in the Trust
Accounts shall at all times be held and applied solely in accordance with the
Basic Documents.
Section 6.14. Conflict of Interest.
--------------------
(a) If the Indenture Trustee has or shall acquire a conflicting interest as
defined in the TIA, the Indenture Trustee shall either eliminate such interest
or resign, to the extent and in the manner provided by the TIA and this
Indenture.
(b) The Issuer covenants that if (i) an Event of Default is declared in
accordance with the provisions of Article V and is continuing, (ii) a Securities
---------
Insurer Default has occurred and is continuing, and (iii) there are more than
one Class of Notes Outstanding, then, within 60 days of such Event of Default,
the Issuer will appoint a separate indenture trustee (one of which may be the
Indenture Trustee) for each such Class, meeting the requirements of and in
accordance with this Article VI, for the benefit of the Holders of each such
----------
Class. If the Issuer shall fail to appoint the separate trustee in accordance
with this Section 6.14(b), the Indenture Trustee shall petition a court of
---------------
competent jurisdiction to appoint such separate trustee.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
----------------------------------------------------------
Noteholders.
-----------
The Issuer will furnish or cause to be furnished to the Indenture Trustee
(a) not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as the Indenture
Trustee may reasonably require, of the names and addresses of the Holders of
Notes as of such Record Date, (b) at such other times as the Indenture Trustee
may request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be required to be
furnished. The Indenture Trustee, or if the Indenture Trustee is not the Note
Register, the Issuer, shall furnish to the Securities Insurer in writing on an
annual basis, and at such other times as the Securities Insurer may request, a
copy of the list of Noteholders.
Section 7.02. Preservation of Information; Communications to Noteholders.
----------------------------------------------------------
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 hereof and the names and addresses of Holders of Notes received
------------
by the Indenture Trustee in its capacity as Note Registrar. The Indenture
Trustee may destroy any list furnished to it as provided in such Section 7.01
------------
upon receipt of a new list so furnished. The Indenture Trustee shall make such
list available to the Securities Insurer on request.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
Section 7.03. Reports by Issuer.
-----------------
(a) The Issuer shall:
(i) file with the Indenture Trustee and the Securities Insurer,
within 15 days after the Issuer is required to file the same with the
Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations prescribe)
that the Issuer may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
-------------------
-50-
(ii) file with the Indenture Trustee, the Securities Insurer and the
Commission in accordance with the rules and regulations prescribed from
time to time by the Commission such additional information, documents and
reports with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time by such
rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA Section 313(c))
such summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section
-------
7.03(a) and by rules and regulations prescribed from time to time by the
-------
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee.
----------------------------
If required by TIA Section 313(a), within 60 days after each June 1,
beginning with June 1, 2000, the Indenture Trustee shall mail to the Securities
Insurer and to each Noteholder as required by TIA Section 313(c) a brief report
dated as of such date that complies with TIA Section 313(a). The Indenture
Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each securities exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any securities exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money and Claims Under the Guaranty Policy.
--------------------------------------------------------
(a) Except as otherwise expressly provided herein, the Indenture Trustee
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Collateral,
the Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V hereof.
---------
-51-
(b) The Notes will be insured by the Guaranty Policy pursuant to the terms
set forth therein, notwithstanding any provisions to the contrary contained in
this Indenture or the Sale and Servicing Agreement. All amounts received under
the Guaranty Policy shall be used solely for the payment to Noteholders of
principal and interest on the Notes.
Section 8.02. Trust Accounts; Payments.
------------------------
(a) On or prior to the Closing Date, the Issuer shall cause the Master
Servicer to establish and maintain, in the name of the Indenture Trustee for the
benefit of the Noteholders and the Securities Insurer, or on behalf of the Owner
Trustee for the benefit of the Securityholders, the Collection Account as
provided in Article V of the Sale and Servicing Agreement. The Indenture Trustee
---------
shall establish and maintain, in the name of the Indenture Trustee on behalf of
the holders of the Notes, the Note Payment Account as provided in Article V of
---------
the Sale and Servicing Agreement. The Indenture Trustee shall establish and
maintain, in the name of the Indenture Trustee on behalf of the holders of the
Notes, the Policy Payments Account as provided in Article V of the Sale and
---------
Servicing Agreement. The Indenture Trustee shall establish and maintain a
segregated trust account (the "Reserve Account") for the benefit of the holders
---------------
of each class of Notes and the Securities Insurer. The Indenture Trustee shall
also establish and maintain an account (the "Certificate Distribution Account")
--------------------------------
in the name of the Owner Trustee on behalf of the holders of the Residual
Interest Certificates. The Indenture Trustee shall deposit amounts into each of
the accounts in accordance with the terms hereof, the Sale and Servicing
Agreement and the Servicer's Monthly Remittance Report.
(b) On the fourth Business Day prior to each Payment Date, the Servicer
will remit to the Indenture Trustee for deposit into the Note Payment Account,
the applicable portions of the Available Collection Amount for each Class of
Notes from the Collection Account, pursuant to Section 5.01(b)(2) of the Sale
------------------
and Servicing Agreement and the Indenture Trustee will deposit such amount in
the Note Payment Account. On each Payment Date, to the extent funds are
available in the Note Payment Account, the Indenture Trustee shall either retain
funds in the Note Payment Account for payment on such day or make the
withdrawals from the Note Payment Account and deposits into the Certificate
Distribution Account for distribution on such Payment Date as required pursuant
to Section 5.01(c) of the Sale and Servicing Agreement.
---------------
(c) On each Payment Date and Redemption Date, to the extent funds are
available in the Note Payment Account, the Indenture Trustee shall make payments
from the amounts on deposit in the Note Payment Account in the order of priority
(except as otherwise provided in Section 5.04(b) hereof) set forth in Section
--------------- -------
5.01(d) of the Sale and Servicing Agreement.
-------
(d) On each Payment Date and each Redemption Date, to the extent of the
interest of the Indenture Trustee in the Certificate Distribution Account (as
described in Section 5.03(a) of the Sale and Servicing Agreement), the Indenture
---------------
Trustee hereby authorizes the Owner Trustee or the Paying Agent, as applicable,
to make the distributions from the Certificate Distribution Account as required
pursuant to Section 5.02(b) of the Sale and Servicing Agreement.
---------------
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Section 8.03. General Provisions Regarding Accounts.
-------------------------------------
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Trust Accounts shall be
invested in Permitted Investments and reinvested by the Indenture Trustee at the
direction of the Master Servicer in accordance with the provisions of Article V
---------
of the Sale and Servicing Agreement. All income or other gain from investments
of moneys deposited in the Trust Accounts shall be deposited by the Indenture
Trustee into the Note Payment Account, and any loss resulting from such
investments shall be charged to such account.
(b) Subject to Section 6.01(c) hereof, the Indenture Trustee shall not in
---------------
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Permitted Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Permitted Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with
their terms.
(c) If (i) the Issuer shall have failed to give investment directions for
any funds on deposit in the Trust Accounts to the Indenture Trustee by 11:00
a.m. Eastern Time (or such other time as may be agreed by the Issuer and
Indenture Trustee) on any Business Day or (ii) a Default or Event of Default
shall have occurred and be continuing with respect to the Notes but the Notes
shall not have been declared due and payable pursuant to Section 5.02 hereof or
------------
(iii) if such Notes shall have been declared due and payable following an Event
of Default, amounts collected or receivable from the Collateral are being
applied in accordance with Section 5.04(b) hereof as if there had not been such
---------------
a declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in one or more
Permitted Investments.
Section 8.04. Servicer's Monthly Statements.
-----------------------------
On each Payment Date, the Indenture Trustee shall deliver the Servicer's
Monthly Remittance Report (as defined in the Sale and Servicing Agreement) with
respect to such Payment Date to DTC, the Master Servicer, the Rating Agencies
and the Securities Insurer.
Section 8.05. Release of Collateral.
---------------------
(a) Subject to Section 11.01 and the terms of the Basic Documents, the
-------------
Indenture Trustee may, and when required by the provisions of this Indenture
shall, execute instruments to release property from the lien of this Indenture,
or convey the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Indenture Trustee as
provided in this Article VIII shall be bound to ascertain the Indenture
------------
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys. The Indenture Trustee shall surrender
the Guaranty Policy to the Securities Insurer upon the conditions in Section
-------
4.01 hereof.
-----------
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(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due to the Certificateholders pursuant to Section
5.02(b) of the Sale and Servicing Agreement, to the Servicer pursuant to Section
-------
5.01(c)(i)(2) of the Sale and Servicing Agreement, to the Master Servicer
-------------
pursuant to Section 5.01(c)(i)(3) of the Sale and Servicing Agreement, to the
---------------------
Securities Insurer pursuant to Section 5.01(c)(i)(4) of the Sale and Servicing
---------------------
Agreement and to the Indenture Trustee pursuant to Section 5.01(c)(i)(1) of the
---------------------
Sale and Servicing Agreement have been paid, release any remaining portion of
the Collateral that secured the Notes from the lien of this Indenture and
release to the Issuer or any other Person entitled thereto any funds then on
deposit in the Trust Accounts. The Indenture Trustee shall release property from
the lien of this Indenture pursuant to this Subsection (b) only upon receipt by
--------------
it and the Securities Insurer of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.01 hereof.
-------------
Section 8.06. Opinion of Counsel.
------------------
The Indenture Trustee and the Securities Insurer shall receive at least
seven days' prior notice when requested by the Issuer to take any action
pursuant to Section 8.05(a) hereof, accompanied by copies of any instruments
---------------
involved, and the Indenture Trustee and the Securities Insurer may also require,
as a condition to such action, an Opinion of Counsel, in form and substance
satisfactory to the Indenture Trustee and the Securities Insurer, stating the
legal effect of any such action, outlining the steps required to complete the
same, and concluding that all conditions precedent to the taking of such action
have been complied with and such action will not materially and adversely impair
the security for the Notes or the rights of the Noteholders in contravention of
the provisions of this Indenture; provided, however, that such Opinion of
Counsel shall not be required to express an opinion as to the fair value of the
Collateral. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
------------------------------------------------------
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies and with the prior written consent of the Securities
Insurer (so long as no Securities Insurer Default has occurred and is
continuing), the Issuer and the Indenture Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
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(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided, however, that such
action shall not adversely affect the interests of the Holders of the
Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI hereof; or
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, with the prior written consent of
the Securities Insurer (so long as no Securities Insurer Default has occurred
and is continuing), when authorized by an Issuer Order, may, also without the
consent of any of the Holders of the Notes but with prior consent of the Rating
Agencies, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however, that
such action shall not, as evidenced by (i) an Opinion of Counsel or (ii)
satisfaction of the Rating Agency Condition, adversely affect in any material
respect the interests of any Noteholder including the interests of the
Securities Insurer to
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the extent it is, or will become, upon payment in full of all amounts due to any
Noteholder hereunder or pursuant to a Note, a Noteholder pursuant to Section
2.06(b) hereof.
Section 9.02. Supplemental Indentures with Consent of Noteholders.
---------------------------------------------------
The Issuer and the Indenture Trustee, when authorized by an Issuer Order,
also may, with prior consent of the Rating Agencies, the Securities Insurer (so
long as no Securities Insurer Default has occurred and is continuing) and with
the consent of the Holders of not less than a majority of the Outstanding Notes,
by Act of such Holders delivered to the Issuer and the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby and the Securities Insurer:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the Note Principal Balance thereof, the interest
rate thereon or the Termination Price with respect thereto, change the
provisions of this Indenture relating to the application of collections on, or
the proceeds of the sale of, the Collateral to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair the
right to institute suit for the enforcement of the provisions of this Indenture
requiring the application of funds available therefor, as provided in Article V
---------
hereof, to the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or after the
Redemption Date);
(b) reduce the percentage of the Outstanding Notes, the consent of the
Holders of which is required for any such supplemental indenture, or the consent
of the Holders of which is required for any waiver of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definition of the
term "Outstanding" or "Voting Rights";
(d) reduce the percentage of the Outstanding Notes required to direct the
Indenture Trustee to direct the Issuer to sell or liquidate the Collateral
pursuant to Section 5.04 hereof;
------------
(e) modify any provision of this Section except to increase any percentage
specified herein or to provide that certain additional provisions of this
Indenture or the Basic Documents cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby;
(f) modify any of the provisions of this Indenture in such manner as to
affect the calculation of the amount of any payment of interest or principal due
on any Note on any Payment Date (including the calculation of any of the
individual components of such calculation) or to affect the rights of the
Holders of Notes to the benefit of any provisions for the mandatory redemption
of the Notes contained herein; or
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(g) permit the creation of any lien ranking prior to or on a parity with
the lien of this Indenture with respect to any part of the Collateral or, except
as otherwise permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the Holder of
any Note of the security provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
In connection with requesting the consent of the Noteholders pursuant to
this Section 9.02, the Indenture Trustee shall mail to the Holders of the Notes
------------
to which such amendment or supplemental indenture relates a notice setting forth
in general terms the substance of such supplemental indenture. It shall not be
necessary for any Act of Noteholders under this Section 9.02 to approve the
------------
particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 9.03. Execution of Supplemental Indentures.
------------------------------------
In executing, or permitting the additional trusts created by, any
supplemental indenture permitted by this Article IX or the modification thereby
of the trusts created by this Indenture, the Indenture Trustee shall be entitled
to receive, and subject to Sections 6.01 and 6.02 hereof, shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture pursuant to the provisions
hereof, this Indenture shall be and shall be deemed to be modified and amended
in accordance therewith with respect to the Notes affected thereby, and the
respective rights, limitations of rights, obligations, duties, liabilities and
immunities under this Indenture of the Indenture Trustee, the Issuer and the
Holders of the Notes shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
Section 9.05. Conformity with Trust Indenture Act.
-----------------------------------
Every amendment of this Indenture and every supplemental indenture executed
pursuant to this Article IX shall conform to the requirements of the Trust
Indenture Act as then in effect so long as this Indenture shall then be
qualified under the Trust Indenture Act.
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Section 9.06. Reference in Notes to Supplemental Indentures.
---------------------------------------------
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
----------
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
Section 9.07. Amendments to Owner Trust Agreement.
-----------------------------------
Subject to Section 11.1 of the Owner Trust Agreement, the Indenture Trustee
------------
shall, upon Issuer Order, consent to any proposed amendment to the Owner Trust
Agreement or an amendment to or waiver of any provision of any other document
relating to the Owner Trust Agreement, such consent to be given without the
necessity of obtaining the consent of the Holders of any Notes upon satisfaction
of the requirements under Section 11.1 of the Owner Trust Agreement. Nothing in
------------
this Section shall be construed to require that any Person obtain the consent of
the Indenture Trustee to any amendment or waiver or any provision of any
document where the making of such amendment or the giving of such waiver without
obtaining the consent of the Indenture Trustee is not prohibited by this
Indenture or by the terms of the document that is the subject of the proposed
amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
----------
The Majority Residual Interestholders may, at their option, effect an early
redemption of the Notes on any Payment Date on or after the Payment Date on
which the aggregate of the Pool Principal Balances for all the Loans declines to
10% or less of the Cut-Off Date Aggregate Pool Principal Balance. The Securities
Insurer may, at its option, effect an early termination of the Notes on any
Payment Date on which the aggregate of the Pool Principal Balances of all the
Loans declines to 5% or less of the Cut-Off Date Aggregate Pool Principal
Balance. If the Securities Insurer does not exercise this option, then the
Servicer may do so, at its option. The Majority Residual Interestholders, the
Servicer or the Securities Insurer, as applicable, shall effect such early
termination in the manner specified in and subject to the provisions of Section
-------
11.02 of the Sale and Servicing Agreement.
-----
The Master Servicer or the Issuer shall furnish the Rating Agencies, the
Servicer and, if redemption is effected by the Majority Residual
Interestholders, the Securities Insurer notice of any such redemption in
accordance with Section 10.02 hereof.
-------------
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Section 10.02. Form of Redemption Notice.
-------------------------
Notice of redemption under Section 10.01 hereof shall be given by the
Indenture Trustee by first-class mail, postage prepaid, or by facsimile mailed
or transmitted not later than 10 days prior to the applicable Redemption Date to
the Securities Insurer and each Holder of Notes, as of the close of business on
the Record Date preceding the applicable Redemption Date, at such Holder's
address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) that on the Redemption Date Noteholders shall receive the Note
Redemption Amount; and
(iii) the place where such Notes are to be surrendered for payment of
the Termination Price (which shall be the office or agency of the Issuer to
be maintained as provided in Section 3.02 hereof).
------------
Notice of redemption of the Notes shall be given by the Indenture Trustee
in the name of the Issuer and at the expense of the Master Servicer. Failure to
give to any Holder of any Note notice of redemption, or any defect therein,
shall not impair or affect the validity of the redemption of any other Note.
Section 10.03. Notes Payable on Redemption Date; Provision for Payment of
----------------------------------------------------------
Indenture Trustee and Securities Insurer.
----------------------------------------
The Notes to be redeemed shall, following notice of redemption as required
by Section 10.02 hereof (in the case of redemption pursuant to Section 10.01)
------------- -------------
hereof, on the Redemption Date become due and payable at the Note Redemption
Amount and (unless the Issuer shall default in the payment of the Note
Redemption Amount) no interest shall accrue thereon for any period after the
date to which accrued interest is calculated for purposes of calculating the
Note Redemption Amount. The Issuer may not redeem the Notes unless (i) all
outstanding obligations under the Notes have been paid in full and (ii) the
Indenture Trustee has been paid all amounts to which it is entitled hereunder
and the Securities Insurer has been paid all Securities Insurer Reimbursement
Amounts to which it is entitled as of the applicable Redemption Date.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc..
-------------------------------------------
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture (except with respect to
the Master Servicer's servicing activity in the ordinary course of its
business), the Issuer shall furnish to the Indenture Trustee and the Securities
Insurer (i) an Officer's Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) Prior to the deposit of any Collateral or other property or securities
with the Indenture Trustee that is to be made the basis for the release of any
property or securities subject to the lien of this Indenture, the Issuer shall,
in addition to any obligation imposed in Section 11.01(a) hereof or elsewhere in
----------------
this Indenture, furnish to the Indenture Trustee and the Securities Insurer an
Officer's Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of such deposit) to the
Issuer of the Collateral or other property or securities to be so deposited.
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(c) Whenever the Issuer is required to furnish to the Indenture Trustee
and the Securities Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in subsection (b)
--------------
above, the Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the basis of
any such withdrawal or release since the commencement of the then-current fiscal
year of the Issuer, as set forth in the certificates delivered pursuant to
subsection (b) above and this subsection (c), is 10% or more of the Outstanding
-------------- --------------
Amount of the Notes, but such a certificate need not be furnished with respect
to any securities so deposited, if the fair value thereof to the Issuer as set
forth in the related Officer's Certificate is less than $25,000 or less than one
percent of the Outstanding Amount of the Notes.
(d) Whenever any property or securities are to be released from the lien
of this Indenture, the Issuer shall also furnish to the Indenture Trustee and
the Securities Insurer an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value (within 90
days of such release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will not impair
the security under this Indenture in contravention of the provisions hereof.
(e) Whenever the Issuer is required to furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of any signer thereof as
to the matters described in subsection (d) above, the Issuer shall also furnish
--------------
to the Indenture Trustee and the Securities Insurer an Independent Certificate
as to the same matters if the fair value of the property or securities and of
all other property, other than securities released from the lien of this
Indenture since the commencement of the then-current calendar year, as set forth
in the certificates required by subsection (d) above and this subsection (e),
-------------- --------------
equals 10% or more of the Outstanding Amount of the Notes, but such certificate
need not be furnished in the case of any release of property or securities if
the fair value thereof as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the then Outstanding Amount of the
Notes.
Section 11.02. Form of Documents Delivered to Indenture Trustee.
------------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate of an Authorized Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or
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representations by, an officer or officers of the Servicer, the Master Servicer,
the Transferor, the Issuer or the Administrator, stating that the information
with respect to such factual matters is in the possession of the Servicer, the
Master Servicer, the Transferor, the Issuer or the Administrator, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI hereof.
----------
Section 11.03. Acts of Noteholders.
-------------------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by agents duly appointed
in writing; and except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee, and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
---
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01 hereof) conclusive in
------------
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section 11.03.
-------------
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
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Section 11.04. Notices, etc., to Indenture Trustee, Issuer, Rating Agencies
------------------------------------------------------------
and Securities Insurer.
----------------------
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders or other documents provided or permitted by this Indenture
shall be in writing and if such request, demand, authorization, direction,
notice, consent, waiver or act of Noteholders is to be made upon, given or
furnished to or filed with:
(i) the Indenture Trustee by any Noteholder, the Securities Insurer
or by the Issuer shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with the Indenture Trustee at
its Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee, the Securities Insurer or by
any Noteholder shall be sufficient for every purpose hereunder if in
writing and made, given, furnished or filed with the Issuer addressed to:
Fremont Home Loan Owner Trust 1999-2, in care of Wilmington Trust Company,
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxx X. Xxxxx, or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer or the Administrator. The
Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee, the Securities Insurer or the Owner Trustee shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, to (i) in the case of Moody's, at the following address: 00 Xxxxxx
Xxxxxx, Xxxxxxxxx Department - 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Residential Mortgage Monitoring Department and (ii) in the case of S&P, 00 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Residential Mortgage
Group.
Notices required to be given to the Securities Insurer by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to the following address:
Financial Security Assurance, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Transaction Oversight Re: Fremont Home Loan Owner Trust 1999-2,
Telephone No.: (000) 000-0000, 000-000-0000, or at such other address as shall
be designated by written notice to the other parties.
Notices required to be given to the Master Servicer by the Issuer, the
Indenture Trustee, the Securities Insurer or the Owner Trustee shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested to the following address: Fremont Investment & Loan, 000 Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx Xxxxxx; or to such
other address as shall be designated by written notice to the other parties.
Notices required to be given to the Depositor by the Issuer, the Indenture
Trustee, the Securities Insurer or the Owner Trustee shall be in writing,
personally delivered or mailed by certified mail, return receipt requested to
the following address: PaineWebber Mortgage Acceptance Corporation IV, 1285
Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx
Xxxxxx, Esq., or to such other address as shall be designated by written notice
to the other parties.
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Section 11.05. Notices to Noteholders; Waiver.
------------------------------
Where this Indenture provides for notice to Noteholders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class, postage prepaid to each Noteholder
affected by such event, at his address as it appears on the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such notice
with respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have duly been given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
Section 11.06. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Indenture by any of the
provisions of the Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 11.07. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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Section 11.08. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture and the Notes by the Issuer
shall bind its successors and assigns, whether so expressed or not. All
agreements of the Indenture Trustee in this Indenture shall bind its successors,
co-trustees and agents.
Section 11.09. Separability.
------------
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 11.10. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Notes, express or implied, shall give
to any Person (other than the parties hereto and their successors hereunder, the
Noteholders, any other party secured hereunder, any other Person with an
ownership interest in any part of the Collateral) any benefit or any legal or
equitable right, remedy or claim under this Indenture, except that the
Securities Insurer is an express third party beneficiary to this Indenture as
provided in Section 11.19.
-------------
Section 11.11. Legal Holidays.
--------------
In any case where the date on which any payment is due shall not be a
Business Day, then (notwithstanding any other provision of the Notes or this
Indenture) payment need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date on
which nominally due, and no interest shall accrue for the period from and after
any such nominal date.
Section 11.12. GOVERNING LAW.
-------------
THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 11.13. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 11.14. Recording of Indenture.
----------------------
If this Indenture is subject to recording in any appropriate public
recording offices, such recording is to be effected by the Issuer and at the
expense of the Master Servicer accompanied by an Opinion of Counsel (which may
be counsel to the Indenture Trustee or any other counsel
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reasonably acceptable to the Indenture Trustee and the Securities Insurer) to
the effect that such recording is necessary either for the protection of the
Noteholders or any other Person secured hereunder or for the enforcement of any
right or remedy granted to the Indenture Trustee under this Indenture.
Section 11.15. Issuer Obligation.
-----------------
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or, except as expressly provided for in Article VI hereof, under this
----------
Indenture or any certificate or other writing delivered in connection herewith
or therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Indenture Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may
expressly have agreed (it being understood that the Indenture Trustee and the
Owner Trustee have no such obligations in their individual capacity) and except
that any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity. For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles VI, VII and
----------- ---
VIII of the Owner Trust Agreement.
----
Section 11.16. No Petition.
-----------
The Indenture Trustee, by entering into this Indenture, and each
Noteholder, by accepting a Note, hereby covenant and agree that they will not at
any time institute against the Transferor, the Servicer, the Master Servicer or
the Issuer, or join in any institution against the Transferor, the Servicer, the
Master Servicer or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law, in connection with any
obligations relating to the Notes, this Indenture or any of the Basic Documents.
Section 11.17. Inspection.
----------
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee or the Securities Insurer, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may reasonably be requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing)
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and except to the extent that the Indenture Trustee may reasonably determine
that such disclosure is consistent with its obligations hereunder.
Section 11.18. Grant of Noteholder Rights to Securities Insurer.
------------------------------------------------
In consideration for the guarantee of the Notes by the Securities Insurer
pursuant to the Guaranty Policy, the Noteholders hereby grant to the Securities
Insurer the right to act as the holder of 100% of the outstanding Notes for the
purpose of exercising the rights of the Holders of the Notes hereunder,
including the voting rights of such Holders, but excluding those rights
requiring the consent of all such Holders under Section 9.02 and any rights of
------------
such Holders to payments under Section 8.02 hereof; provided that the preceding
------------
grant of rights to the Securities Insurer by the Noteholders shall be subject to
Section 11.20 hereof. The rights of the Securities Insurer to direct certain
-------------
actions and consent to certain actions of the Noteholders hereunder will
terminate at such time as the Note Principal Balance of each Class of Notes has
been reduced to zero and the Securities Insurer has been reimbursed for all
Insured Payments and any other amounts owed under the Guaranty Policy and the
Insurance Agreement, the Securities Insurer has no further obligation under the
Guaranty Policy and the Guaranty Policy has been surrendered to the Securities
Insurer.
Section 11.19. Third Party Beneficiary.
-----------------------
The parties hereto acknowledge that the Securities Insurer is an express
third party beneficiary hereof entitled to enforce any rights reserved to it
hereunder as if it were actually a party hereto.
Section 11.20. Suspension and Termination of Securities Insurer's Rights.
----------------------------------------------------------
(a) During the continuation of a Securities Insurer Default, rights
granted or reserved to the Securities Insurer hereunder shall vest instead in
the Noteholders; provided that the Securities Insurer shall be entitled to any
payments in reimbursement of the Securities Insurer Reimbursement Amount, and
the Securities Insurer shall retain those rights under Sections 9.01 and 9.02
----------------------
hereof to consent to any supplement to this Indenture.
(b) At such time as the Note Principal Balance of each Class of Notes has
been reduced to zero and the Securities Insurer has been reimbursed for all
Insured Payments and any other amounts owed under the Guaranty Policy and the
Insurance Agreement (and the Securities Insurer no longer has any obligation
under the Guaranty Policy, except for breach thereof by the Securities Insurer),
then the rights and benefits granted or reserved to the Securities Insurer
hereunder (including the rights to direct certain actions and receive certain
notices) shall terminate and the Noteholders shall be entitled to the exercise
of such rights and to receive such benefits of the Securities Insurer following
such termination to the extent that such rights and benefits are applicable to
the Noteholders.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto has caused to be executed in
its name and on its behalf by a duly authorized officer, as of the day and year
first above written, this INDENTURE.
FREMONT HOME LOAN OWNER TRUST 1999-2, as Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
By:______________________________________________
Name:
Title:
FIRST UNION NATIONAL BANK,
not in its individual capacity but solely as
Indenture Trustee
By:_______________________________________________
Name:
Title:
THE STATE OF ______________________ )
)
COUNTY OF _________________________ )
BEFORE ME, the undersigned authority, a Notary Public, on this _____ day of
____________ 1999, personally appeared __________________, known to me to be a
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said WILMINGTON TRUST
COMPANY, solely in its capacity as Owner Trustee for FREMONT HOME LOAN OWNER
TRUST 1999-2, and that he/she executed the same as the act of such corporation
for the purpose and consideration therein expressed, and in the capacity therein
stated.
GIVEN UNDER MY HAND AND SEAL OF WILMINGTON TRUST COMPANY, this the ____ day
of ______________, 1999.
Notary Public, State of ______________
THE STATE OF ____________ )
)
COUNTY OF _______________ )
BEFORE ME, the undersigned authority, a Notary Public, on this _____ day of
____________ 1999, personally appeared ______________, known to me to be a
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRST UNION NATIONAL
BANK, as the Indenture Trustee, and that he/she executed the same as the act of
such corporation for the purpose and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF FIRST UNION NATIONAL BANK, this the ____
day of ______________, 1999.
Notary Public, State of ________________
EXHIBIT A
FORM OF NOTES
