EXHIBIT 4.2
EXHIBIT 4.2
AFC TRUST SERIES ___-__
Issuer
and
[-------------------------------------]
Indenture Trustee
-----------------------------------------
INDENTURE
Dated as of [_______________]
------------------------------------------
AFC MORTGAGE LOAN ASSET BACKED NOTES
Series _____-_
TABLE OF CONTENTS
-----------------
Section Page
------- ----
ARTICLE I
DEFINITIONS
1.01. DEFINITIONS................................................................................2
1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT..........................................2
1.03. RULES OF CONSTRUCTION......................................................................2
ARTICLE II
ORIGINAL ISSUANCE OF NOTES
2.01. FORM.......................................................................................4
2.02. EXECUTION, AUTHENTICATION AND DELIVERY.....................................................4
2.03. ACCEPTANCE OF MORTGAGE LOANS BY INDENTURE TRUSTEE..........................................4
ARTICLE III
COVENANTS
3.01. COLLECTION OF PAYMENTS WITH RESPECT TO THE MORTGAGE LOANS..................................6
3.02. MAINTENANCE OF OFFICE OR AGENCY............................................................6
3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST; PAYING AGENT.......................................6
3.04. EXISTENCE..................................................................................8
3.05. PAYMENT OF PRINCIPAL AND INTEREST..........................................................8
3.06. PROTECTION OF TRUST ESTATE.................................................................9
3.07. OPINIONS AS TO TRUST ESTATE...............................................................10
3.08. PERFORMANCE OF OBLIGATIONS................................................................10
3.09. NEGATIVE COVENANTS........................................................................11
3.10. ANNUAL STATEMENT AS TO COMPLIANCE.........................................................11
3.11. [Reserved]................................................................................12
3.12. REPRESENTATIONS AND WARRANTIES CONCERNING THE MORTGAGE LOANS..............................12
3.13. AMENDMENTS TO MORTGAGE LOAN PURCHASE AGREEMENT............................................12
3.14. SERVICER AS AGENT AND BAILEE OF THE INDENTURE TRUSTEE.....................................12
3.15. INVESTMENT COMPANY ACT....................................................................12
3.16. ISSUER MAY CONSOLIDATE, ETC...............................................................13
3.17. SUCCESSOR OR TRANSFEREE...................................................................14
3.18. NO OTHER BUSINESS.........................................................................15
3.19. NO BORROWING..............................................................................15
3.20. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.........................................15
3.21. CAPITAL EXPENDITURES......................................................................15
3.22. [Reserved]................................................................................15
3.23. RESTRICTED PAYMENTS.......................................................................15
3.24. NOTICE OF EVENTS OF DEFAULT...............................................................16
3.25. FURTHER INSTRUMENTS AND ACTS..............................................................16
3.26. [RESERVED]................................................................................16
3.27. ALLOCATION OF REALIZED LOSSES.............................................................16
ARTICLE IV
THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
4.01. THE NOTES.................................................................................17
4.02. REGISTRATION OF AND LIMITATIONS ON TRANSFER AND EXCHANGE OF NOTES;
APPOINTMENT OF NOTE REGISTRAR AND CERTIFICATE REGISTRAR...................................17
4.03. MUTILATED, DESTROYED, LOST OR STOLEN NOTES................................................18
4.04. PERSONS DEEMED OWNERS.....................................................................19
4.05. CANCELLATION..............................................................................19
4.06. BOOK-ENTRY NOTES..........................................................................20
4.07. NOTICES TO DEPOSITORY.....................................................................21
4.08. DEFINITIVE NOTES..........................................................................21
4.09. TAX TREATMENT.............................................................................21
4.10. SATISFACTION AND DISCHARGE OF INDENTURE...................................................21
4.11. APPLICATION OF TRUST MONEY................................................................23
4.12. SUBROGATION AND COOPERATION...............................................................23
4.13. REPAYMENT OF MONIES HELD BY PAYING AGENT..................................................24
4.14. TEMPORARY NOTES...........................................................................24
ARTICLE V
DEFAULT AND REMEDIES
5.01. EVENTS OF DEFAULT.........................................................................25
5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT........................................25
5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY INDENTURE TRUSTEE.................26
5.04. REMEDIES; PRIORITIES......................................................................28
5.05. OPTIONAL PRESERVATION OF THE TRUST ESTATE.................................................29
5.06. LIMITATION OF SUITS.......................................................................30
5.07. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST.....................30
5.08. RESTORATION OF RIGHTS AND REMEDIES........................................................31
5.09. RIGHTS AND REMEDIES CUMULATIVE............................................................31
5.10. DELAY OR OMISSION NOT A WAIVER............................................................31
5.11. CONTROL BY [NOTE INSURER] [NOTEHOLDERS]...................................................31
5.12. WAIVER OF PAST DEFAULTS...................................................................32
5.13. UNDERTAKING FOR COSTS.....................................................................32
5.14. WAIVER OF STAY OR EXTENSION LAWS..........................................................32
5.15. SALE OF TRUST ESTATE......................................................................33
5.16. ACTION ON NOTES...........................................................................34
ARTICLE VI
THE INDENTURE TRUSTEE
6.01. DUTIES OF INDENTURE TRUSTEE...............................................................36
6.02. RIGHTS OF INDENTURE TRUSTEE...............................................................37
6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE....................................................37
6.04. INDENTURE TRUSTEE'S DISCLAIMER............................................................37
6.05. NOTICE OF EVENT OF DEFAULT................................................................38
6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS...................................................38
6.07. COMPENSATION AND INDEMNITY................................................................38
6.08. REPLACEMENT OF INDENTURE TRUSTEE..........................................................38
6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER.....................................................39
6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE INDENTURE TRUSTEE.........................40
6.11. ELIGIBILITY; DISQUALIFICATION.............................................................41
6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER..........................................41
6.13. REPRESENTATIONS AND WARRANTIES............................................................41
6.14. DIRECTIONS TO INDENTURE TRUSTEE...........................................................42
6.15. THE AGENTS................................................................................42
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES OF NOTEHOLDERS....................43
7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS................................43
7.03. REPORTS OF ISSUER.........................................................................43
7.04. REPORTS BY INDENTURE TRUSTEE..............................................................44
7.05. STATEMENTS TO NOTEHOLDERS.................................................................44
ARTICLE VIII
ACCOUNTS, DISTRIBUTIONS, DISBURSEMENTS AND RELEASES
8.01. COLLECTION OF MONEY.......................................................................47
8.02. TRUST ACCOUNTS; DISTRIBUTIONS.............................................................47
8.03. OFFICER'S CERTIFICATE.....................................................................48
8.04. TERMINATION UPON DISTRIBUTION TO NOTEHOLDERS..............................................48
8.05. RELEASE OF TRUST ESTATE...................................................................49
8.06. SURRENDER OF NOTES UPON FINAL PAYMENT.....................................................49
8.07. OPTIONAL REDEMPTION OF THE NOTES..........................................................49
8.08. PAYMENTS UNDER THE NOTE INSURANCE POLICY..................................................50
8.09. REPLACEMENT NOTE INSURANCE POLICY.........................................................50
8.10. WITHDRAWALS FROM PRE-FUNDING ACCOUNT......................................................51
8.11. WITHDRAWALS FROM THE CAPITALIZED INTEREST ACCOUNT. ......................................51
8.12. EFFECT OF PAYMENTS BY THE NOTE INSURER; SUBROGATION......................................51
ARTICLE IX
SUPPLEMENTAL INDENTURES
9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS....................................53
9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.......................................54
9.03. EXECUTION OF SUPPLEMENTAL INDENTURES......................................................55
9.04. EFFECT OF SUPPLEMENTAL INDENTURE..........................................................56
9.05. CONFORMITY WITH TRUST INDENTURE ACT.......................................................56
9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.............................................56
ARTICLE X
MISCELLANEOUS
10.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.................................................57
10.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE..........................................58
10.03. ACTS OF NOTEHOLDERS.......................................................................59
10.04. NOTICES, ETC., TO INDENTURE TRUSTEE, [NOTE INSURER,] ISSUER AND RATING AGENCIES...........59
10.05. NOTICES TO NOTEHOLDERS; WAIVER............................................................60
10.06. CONFLICT WITH TRUST INDENTURE ACT.........................................................61
10.07. EFFECT OF HEADINGS........................................................................61
10.08. SUCCESSORS AND ASSIGNS....................................................................61
10.09. SEPARABILITY..............................................................................61
10.10. BENEFITS OF INDENTURE.....................................................................61
10.11. LEGAL HOLIDAYS............................................................................61
10.12. GOVERNING LAW.............................................................................61
10.13. COUNTERPARTS..............................................................................62
10.14. RECORDING OF INDENTURE....................................................................62
10.15. ISSUER OBLIGATION.........................................................................62
10.16. NO PETITION...............................................................................62
10.17. INSPECTION................................................................................62
ADJUSTMENT DATE..........................................................................................1
ADVANCE ...........................................................................................1
AVAILABLE FUNDS..........................................................................................2
AVAILABLE FUNDS CAP CARRY-FORWARD AMOUNT.................................................................2
AVAILABLE FUNDS INTEREST RATE............................................................................2
BANKRUPTCY CODE..........................................................................................3
CASH LIQUIDATION.........................................................................................3
Converted Mortgage Loan..................................................................................5
Convertible Mortgage Loan................................................................................5
Converting Mortgage Loan.................................................................................5
CUMULATIVE LOSS PERCENTAGE:..............................................................................5
DEBT SERVICE REDUCTION...................................................................................5
DEFICIENT VALUATION......................................................................................6
DELINQUENCY PERCENTAGE...................................................................................6
PREPAYMENT INTEREST SHORTFALL...........................................................................21
PREPAYMENT PERIOD.......................................................................................21
REO ACQUISITION.........................................................................................24
REO Disposition.........................................................................................24
REO IMPUTED INTEREST....................................................................................24
REO PROCEEDS ..........................................................................................24
Required Subordination Amount...........................................................................25
ROLLING DELINQUENCY PERCENTAGE..........................................................................25
SERVICING ADVANCES......................................................................................26
STEP-DOWN CUMULATIVE LOSS TEST..........................................................................27
STEP-DOWN ROLLING DELINQUENCY TEST......................................................................27
STEP-DOWN TRIGGER.......................................................................................27
STEP-UP CUMULATIVE LOSS TEST............................................................................27
STEP-UP ROLLING DELINQUENCY TEST........................................................................27
STEP-UP TRIGGER.........................................................................................27
SUBORDINATION AMOUNT....................................................................................27
Subordination Reduction Amount..........................................................................28
Signatures and Seals ......................................................................................... 59
Acknowledgments .............................................................................................. 60
EXHIBITS
Exhibit A-1 - Form of Class ___ Notes
Exhibit A-2 - Form of Class ___ Notes
Exhibit A-3 - Form of Class ___ Notes
Exhibit B - Trustee's Initial Certification
Exhibit C - Trustee's Final Certification
Exhibit D - Mortgage Loan Schedule
Exhibit E - Certificate of Non-Foreign Status
Appendix A Definitions
This Indenture, dated as of [______________], between AFC
Trust Series ___-__, a Delaware business trust, as Issuer (the "Issuer"), and
[______________________], a [national banking association], as Indenture Trustee
(the "Indenture Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders of the Issuer's
AFC Mortgage Loan Asset Backed Notes, Series ___-___ (the "Notes") [and the Note
Insurer].
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, as trustee for the benefit of the Holders of the Notes [and the
Note Insurer], all of the Issuer's right, title and interest in and to whether
now existing or hereafter created by (a) the Initial Mortgage Loans, Substitute
Mortgage Loans, Subsequent Mortgage Loans and the proceeds thereof and all
rights under the Related Documents; (b) all funds on deposit from time to time
in the Collection Account allocable to the Mortgage Loans excluding any
investment income from such funds; (c) all funds on deposit from time to time in
the Note Distribution Account and in all proceeds thereof; (d) all rights under
the (i) Servicing Agreement and any Sub-Servicing Agreements, and (ii) any
title, hazard and primary insurance policies with respect to the Mortgaged
Property; and (e) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on or under,
and all proceeds of every kind and nature whatsoever in respect of, any or all
of the foregoing and all payments on or under, and all proceeds of every kind
and nature whatsoever in the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing (collectively, the "Trust Estate" or the
"Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, as trustee on behalf of the Holders of
the Notes, acknowledges such Grant, accepts the trust under this Indenture in
accordance with the provisions hereof and agrees to perform its duties as
Indenture Trustee as required herein.
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. For all purposes of this Indenture, except
as otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions attached hereto as Appendix A which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the Trust Indenture Act (the
"TIA"), the provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rules
and have the 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 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
2
(vi) any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instru ment or statute as
from time to time amended, modified or supplemented and includes (in
the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns.
3
ARTICLE II
ORIGINAL ISSUANCE OF NOTES
Section 2.01. FORM. The Notes, together with the Indenture Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibits [____ through ____], with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders).
The terms of the Notes set forth in Exhibits [____ through ____] are
part of the terms of this Indenture.
Section 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and
deliver the Class ___, Class ___, Class ___ and Class ___ Notes for original
issue in an aggregate initial principal amount of $[______________].
Each Class of Notes shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes and the Notes shall be issuable in
the minimum initial Note Principal Balances of $1,000 and in integral multiples
of $1 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
Section 2.03. ACCEPTANCE OF MORTGAGE LOANS BY INDENTURE TRUSTEE. (a)
The Indenture Trustee acknowledges receipt of, subject to the exceptions it
notes pursuant to the procedures described below, the documents (or certified
copies thereof) referred to in Section [2.1(e)] of the Mortgage Loan Purchase
Agreement and declares that it holds and will continue to hold those documents
and any amendments, replacements or supplements thereto and all other assets of
the Trust Estate as Indenture Trustee in trust for the use and benefit of all
present and future Holders of the Notes [and the Note Insurer]. No later than 45
days after the Closing Date (or, with respect
4
to any Eligible Substitute Mortgage Loan or Subsequent Mortgage Loan, within 45
days after the receipt by the Indenture Trustee thereof and, with respect to any
documents received beyond 45 days after the Closing Date, promptly thereafter),
the Indenture Trustee agrees, for the benefit of the Noteholders [and the Note
Insurer], to review each Mortgage File delivered to it and to execute and
deliver, or cause to be executed and delivered, to the Seller[, the Note
Insurer] and the Servicer an Initial Certification in the form annexed hereto as
Exhibit B. In conducting such review, the Trustee will ascertain whether all
required documents described in Section [2.1(e)] of the Mortgage Loan Purchase
Agreement have been executed and received and whether those documents relate,
determined on the basis of the Mortgagor name, original principal balance and
loan number, to the Mortgage Loans it has received, as identified in the related
Mortgage Loan Schedule (PROVIDED, HOWEVER, that with respect to those documents
described in subclause [(e)(vii)] of such section, the Indenture Trustee's
obligations shall extend only to documents actually delivered pursuant to such
subclause). In performing any such review, the Indenture Trustee may
conclusively rely on the purported due execution and genuineness of any such
document and on the purported genuineness of any signature thereon. If the
Indenture Trustee finds any document constituting part of the Mortgage File not
to have been executed or received, or to be unrelated to the Mortgage Loans
listed on the related Mortgage Loan Schedule or to appear to be defective on its
face, the Indenture Trustee shall promptly notify the Seller [and the Note
Insurer] of such finding and the Seller's obligation to cure such defect or
repurchase or substitute for the related Mortgage Loan.
(b) No later than 180 days after the Closing Date, the Indenture
Trustee will review, for the benefit of the Noteholders [and the Note Insurer],
the Mortgage Files and will execute and deliver or cause to be executed and
delivered to the Seller [and the Note Insurer], a Final Certification in the
form annexed hereto as Exhibit C. In conducting such review, the Indenture
Trustee will ascertain whether an original of each document described in
subclauses [(e)(ii)-(iv) of Section 2.1] of the Servicing Agreement required to
be recorded has been returned from the recording office with evidence of
recording thereon or a certified copy has been obtained from the recording
office. If the Indenture Trustee finds any document constituting part of the
Mortgage File has not been received, or to be unrelated, determined on the basis
of the Mortgagor name, original principal balance and loan number, to the
Mortgage Loans listed on the related Mortgage Loan Schedule or to appear
defective on its face, the Indenture Trustee shall promptly notify the Seller
[and the Note Insurer].
(c) Upon deposit of the Repurchase Price in the Note Distribution
Account, the Indenture Trustee shall release to the Seller the related Mortgage
File and shall execute and deliver all instruments of transfer or assignment,
without recourse, furnished to it by the Seller as are necessary to vest in the
Seller title to and rights under the related Mortgage Loan. Such purchase shall
be deemed to have occurred on the date on which certification of the deposit of
the Repurchase Price in the Note Distribution Account was received by the
Indenture Trustee. The Indenture Trustee shall amend the applicable Mortgage
Loan Schedule to reflect such repurchase and shall promptly notify the
Servicer[, the Note Insurer] and the Rating Agencies of such amendment.
5
ARTICLE III
COVENANTS
Section 3.01. COLLECTION OF PAYMENTS WITH RESPECT TO THE MORTGAGE
LOANS. The Indenture Trustee shall establish and maintain in [the corporate
trust department of itself or an affiliate depository institution], a trust
account (the "Note Distribution Account") in which the Indenture Trustee shall,
subject to the terms of this paragraph, deposit, on the same day as it is
received from the Servicer, each remittance received by the Indenture Trustee
with respect to the Mortgage Loans. The Indenture Trustee shall make all
payments of principal of and interest on the Notes, subject to Section 3.03 as
provided in Section 8.02 herein from monies on deposit in the Note Distribution
Account.
Section 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain
in [the City of Oakbrook Terrace, Illinois], an office or agency where, subject
to satisfaction of conditions set forth herein, Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. [The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes.] If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as
its agent to receive all such surrenders, notices and demands.
Section 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST; PAYING AGENT. (a)
As provided in Section 3.01, all payments of amounts due and payable with
respect to any Notes that are to be made from amounts withdrawn from the Note
Distribution Account pursuant to Section 3.01 shall be made on behalf of the
Issuer by the Indenture Trustee or by the Paying Agent, and no amounts so
withdrawn from the Note Distribution Account for payments of Notes shall be paid
over to the Issuer except as provided in this Section 3.03.
On or before the Business Day preceding each Payment Date and
Redemption Date, the Issuer shall deposit or cause to be deposited into the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due under the 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 in writing of its action or
failure so to act.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
6
(ii) give the Indenture Trustee [and the Note Insurer]
notice of any default by the Issuer of which it has actual knowledge in
the making of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee, forthwith
pay to the Indenture Trustee all sums so held in trust by such Paying
Agent;
(iv) immediately resign as Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the
payment of Notes if at any time it ceases to meet the standards
required to be met by a Paying Agent at the time of its appointment;
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on any Notes of
any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith; and
(vi) not commence a Bankruptcy proceeding against the
Issuer in connection with this Indenture.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Request direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such trust
and be repaid to the Issuer on Issuer Request; 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 Inden ture 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
an Authorized Newspaper published in the English language, 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. The Indenture
Trustee may also adopt and employ [with the consent of the Note Insurer so long
as no Note Insurer Default exists], 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 monies due and payable but not
7
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. 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 it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Mortgage Loans and each other
instrument or agreement included in the Trust Estate.
Section 3.05. PAYMENT OF PRINCIPAL AND INTEREST. [REVISE AS
APPROPRIATE] [(a) On each Payment Date from amounts on deposit in the Note
Distribution Account in accordance with Section 8.02 hereof, the Indenture
Trustee shall pay to the Noteholders and to other Persons the Interest
Remittance Amount and Principal Remittance Amount. Interest on the Notes will be
calculated on the basis of a 30-day month and a 360-day year.
(b) Each distribution with respect to a Book-Entry Note shall be paid
to the Depository, as Holder thereof, and the Depository shall be responsible
for crediting the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the Note
Owners that it represents and to each indirect participating brokerage firm (a
"brokerage firm" or "indirect participating firm") for which it acts as agent.
Each brokerage firm shall be responsible for disbursing funds to the Note Owners
that it represents. None of the Indenture Trustee, the Note Registrar, the
Depositor or the Servicer shall have any responsibility therefor except as
otherwise provided by this Agreement or applicable law.
(c) On each Payment Date, the Certificate Paying Agent shall deposit in
the Certificate Distribution Account all amounts it received pursuant to this
Section 3.05 for the purpose of distributing such funds to the
Certificateholders.
(d) Any installment of interest or principal, if any, payable on any
Note that is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall, if such Holder shall have so requested at least
five Business Days prior to the related Record Date and such Holder holds Notes
of an aggregate initial Note Principal Balance of at least $5,000,000, be paid
to each Holder of record on the preceding Record Date, by wire transfer to an
account specified in writing by such Holder reasonably satisfactory to the
Indenture Trustee as of the preceding Record Date or in all other cases or if no
such instructions have been delivered to the Indenture Trustee, by check to such
Noteholder mailed to such Holder's address as it appears in the Note Register in
the amount required to be distributed to such Holder on such Payment Date
pursuant to such Holder's Notes; PROVIDED, HOWEVER, that the Indenture Trustee
shall not pay to such Holders any amount required to be withheld from a payment
to such Holder by the Code.
8
(e) The principal of each Note shall be due and payable in full on the
Final Scheduled Payment Date for such Note as provided in the forms of Note set
forth in Exhibits [A-1 through A-3]. All principal payments on the Notes shall
be made to the Noteholders entitled thereto in accordance with the Percentage
Interests represented by such Notes. Upon notice to the Indenture Trustee by the
Issuer, the Indenture Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the Final
Scheduled Payment Date or other final Payment Date (including any final Payment
Date resulting from any redemption pursuant to Section 8.07 hereof). Such notice
shall to the extent practicable be mailed no later than five Business Days prior
to such Final Scheduled Payment Date or other final Payment Date and shall
specify that payment of the principal amount and any interest due with respect
to such Note at the Final Scheduled Payment Date or other final Payment Date
will be payable only upon presentation and surrender of such Note and shall
specify the place where such Note may be presented and surrendered for such
final payment. No interest shall accrue on the Notes on or after the Final
Scheduled Payment Date or any such other final Payment Date.]
Section 3.06. PROTECTION OF TRUST ESTATE. (a) The Issuer will from time
to time prepare, execute and deliver all such supplements and amendments hereto
and all such financing statements, continuation statements, instruments of
further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) maintain or preserve the lien and security interest
(and the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;
(ii) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture;
(iii) cause the Issuer or Servicer to enforce any of
the rights to the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and
the rights of the Indenture Trustee[, the Note Insurer] and the
Noteholders in such Trust Estate against the claims of
all persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture
Trustee shall not remove any portion of the Trust Estate that consists of money
or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.07 hereof (or from the jurisdiction in
which it was held as described in the Opinion of Counsel delivered on the
Closing Date pursuant to Section 3.07(a) hereof, or if no Opinion of Counsel has
yet been delivered pursuant to Section 3.07(b) hereof unless the Trustee shall
have first received an Opinion of Counsel to the effect that the lien and
security interest created by this Indenture with respect to such property will
continue to be maintained after giving effect to such action or actions).
9
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to sign any financing statement, continuation statement or
other instrument required to be signed pursuant to this Section 3.06 upon the
Issuer's preparation thereof and delivery to the Indenture Trustee.
Section 3.07. OPINIONS AS TO TRUST ESTATE. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee[, the Note Insurer] and the Owner
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing of
this Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continu ation statements, as are necessary to perfect and make
effective the lien and first priority security interest in the Collateral 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 and first priority
security interest effective.
(b) On or before April 15 in each calendar year, beginning in ______,
the Issuer shall furnish to the Indenture Trustee [and the Note Insurer] an
Opinion of Counsel at the expense of the Issuer either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any 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 first priority security interest in the
Collateral 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 in the
Collateral until December 31 in the following calendar year.
Section 3.08. PERFORMANCE OF OBLIGATIONS. (a) The Issuer will
punctually perform and observe all of its obligations and agreements contained
in this Indenture, the Basic Documents and in the instruments and agreements
included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer.
(c) The Issuer will not take any action or permit any action to be
taken by others which would release any Person from any of such Person's
covenants or obligations under any of the documents relating to the Mortgage
Loans or under any instrument included in the Trust Estate, or which would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any of the documents relating to
the Mortgage Loans or any such instrument, except such actions as the Servicer
is expressly permitted to take in the Servicing Agreement. The Indenture
Trustee, as pledgee of the Mortgage Loans, shall be able to exercise the rights
of the Issuer to direct the actions of the Servicer pursuant to the Servicing
Agreement.
10
(d) The Issuer may retain an administrator and may enter into contracts
with other Persons for the performance of the Issuer's obligations hereunder,
and performance of such obligations by such Persons shall be deemed to be
performance of such obligations by the Issuer.
Section 3.09. NEGATIVE COVENANTS. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture,
sell, transfer, exchange or otherwise dispose of the Trust Estate,
unless directed to do so by the Indenture Trustee
[without the consent of the Note 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 Trust
Estate;
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations with
respect to the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or other wise arise upon or
burden the Trust Estate or any part thereof or any interest therein or
the proceeds thereof or (C) permit the lien of this Indenture not to
constitute a valid first priority security interest in the Trust
Estate; or
(iv) waive or impair, or fail to assert rights under,
the Mortgage Loans, or impair or cause to be impaired the Issuer's
interest in the Mortgage Loans, the Mortgage Loan Purchase Agreement,
the Servicing Agreement or in any Basic Document, if any such action
would materially and adversely affect the interests of the Noteholders
[or the Note Insurer].
Section 3.10. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will
deliver to the Indenture Trustee [and the Note Insurer], within 120 days after
the end of each fiscal year of the Issuer (commencing with the fiscal year
_____), 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
11
covenant, specifying each such default known to such Authorized Officer
and the nature and status thereof.
Section 3.11. [Reserved].
Section 3.12. REPRESENTATIONS AND WARRANTIES CONCERNING THE MORTGAGE
LOANS. The Indenture Trustee, as pledgee of the Mortgage Loans, has the benefit
of the representations and warranties made by the Seller in the Mortgage Loan
Purchase Agreement concerning the Seller and the Mortgage Loans and the right to
enforce the remedies against the Seller provided in such Mortgage Loan Purchase
Agreement to the same extent as though such representations and warranties were
made directly to the Indenture Trustee. If the Indenture Trustee has actual
knowledge of any breach of any representation or warranty made by the Seller in
the Mortgage Loan Purchase Agreement, the Indenture Trustee shall promptly
notify the Seller [and the Note Insurer] of such finding and the Seller's
obligation to cure such defect or repurchase or substitute for the related
Mortgage Loan.
Section 3.13. AMENDMENTS TO MORTGAGE LOAN PURCHASE AGREEMENT. The
Issuer covenants with the Indenture Trustee [and the Note Insurer] that it will
not enter into any amendment or supplement to the Mortgage Loan Purchase
Agreement without the prior written consent of the Indenture Trustee. The
Indenture Trustee, as pledgee of the Mortgage Loans, may decline to enter into
or consent to any such supplement or amendment if the Noteholders' rights,
duties or immunities shall be adversely affected.
Section 3.14. SERVICER AS AGENT AND BAILEE OF THE INDENTURE TRUSTEE.
Solely for purposes of perfection under Section 9-305 of the Uniform Commercial
Code or other similar applicable law, rule or regulation of the state in which
such property is held by the Servicer, the Issuer and the Indenture Trustee
hereby acknowledge that the Servicer is acting as agent and bailee of the
Indenture Trustee in holding amounts on deposit in the Collection Account, as
well as its agent and bailee in holding any Related Documents released to the
Servicer, and any other items constituting a part of the Trust Estate which from
time to time come into the possession of the Servicer. It is intended that, by
the Servicer's acceptance of such agency, the Indenture Trustee, as a secured
party of the Mortgage Loans, will be deemed to have possession of such Related
Documents, such monies and such other items for purposes of Section 9-305 of the
Uniform Commercial Code of the state in which such property is held by the
Servicer.
Section 3.15. INVESTMENT COMPANY ACT. The Issuer shall not become an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);
provided, however, that the Issuer shall be in compliance with this Section 3.15
if it shall have obtained an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions imposed
in such order.
12
Section 3.16. ISSUER MAY CONSOLIDATE, ETC. (a) The Issuer shall not
consolidate or merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any state or
the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee,
in form reasonably satisfactory to the Indenture Trustee [and the Note
Insurer], the due and punctual payment of the principal of and interest
on all Notes and to the Certificate Paying Agent, on behalf of the
Certificateholders [and the payment of the Note Insurance Premium and
all other payments to the Note Insurer] and the performance or
observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such
transaction, no Event of Default shall have occurred and be continuing;
(iii the Rating Agencies shall have confirmed in writing
that such transaction shall not cause the downgrade, withdrawal or
qualification of the rating of the Notes;
(iv) [the Issuer [and the Note Insurer] shall have
received an Opinion of Counsel (and shall have delivered a copy thereof
to the Indenture Trustee) to the effect that such transaction will not
(A) result in a "substantial modification" of the Notes under Treasury
Regulation section 1.1001-3, or adversely affect the status of the
Notes as indebtedness for federal income tax purposes, or (B) if 100%
of the Certificates are not owned by Superior Bank FSB, cause the Trust
to be subject to an entity level tax for federal income tax purposes];
(v) any action that is necessary to maintain the lien
and security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture
Trustee [and the Note Insurer] an Officer's Certificate and an Opinion
of Counsel each stating that such consolidation or merger and such
supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction
have been complied with (including any filing required by the Exchange
Act); and
(vii) [the Note Insurer, so long as no Note Insurer
Default exists, shall have given its prior written consent.]
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer
the properties and assets of the Issuer the conveyance or transfer of
which is hereby restricted shall (A) be a United
13
States citizen or a Person organized and existing under the laws of the
United States of America or any state, (B) expressly assumes, by an
indenture supplemental hereto, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all Notes[, the
payment of the Note Insurance Premium and all other amounts payable to
the Note Insurer] and the performance or observance of every agreement
and covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agrees by
means of such supplemental indenture that all right, title and interest
so conveyed or transferred shall be subject and subordinate to the
rights of the Holders of the Notes [and the Note Insurer], (D) unless
otherwise provided in such supplemental indenture, expressly agrees to
indemnify, defend and hold harmless the Issuer [and the Note Insurer]
against and from any loss, liability or expense arising under or
related to this Indenture and the Notes and (E) expressly agrees by
means of such supplemental indenture that such Person (or if a group of
Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agencies shall have confirmed in writing
that such transaction shall not cause the downgrade, withdrawal or
qualification of the rating of the Notes;
(iv) [the Issuer [and the Note Insurer] shall have
received an Opinion of Counsel (and shall have delivered a copy thereof
to the Indenture Trustee) to the effect that such transaction will not
(A) result in a "substantial modification" of the Notes under Treasury
Regulation section 1.1001-3, or adversely affect the status of the
Notes as indebtedness for federal income tax purposes, or (B) if 100%
of the Certificates are not owned by Superior Bank FSB, cause the Trust
to be subject to an entity level tax for federal income tax purposes];
(v) any action that is necessary to maintain the lien
and security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture
Trustee [and the Note Insurer] an Officer's Certificate and an Opinion
of Counsel each stating that such conveyance or transfer and such
supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction
have been complied with (including any filing required by the Exchange
Act); and
(vii) [the Note Insurer, so long as no Note Insurer
Default exists, shall have given its prior written consent.]
Section 3.17. SUCCESSOR OR TRANSFEREE. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.16(a), the Person formed by or
surviving such consolidation
14
or merger (if other than the Issuer) shall succeed to, and be substituted for,
and may exercise every right and power of, the Issuer under this Indenture with
the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.16(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee [and the Note Insurer] of such conveyance or
transfer.
Section 3.18. NO OTHER BUSINESS. The Issuer shall not engage in any
business other than financing, purchasing, owning and selling and managing the
Mortgage Loans and the issuance of the Notes and Certificates in the manner
contemplated by this Indenture and the Basic Documents and all activities
incidental thereto.
Section 3.19. NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes [and amounts due to the Note Insurer under
this Indenture and the Insurance Agreement].
Section 3.20. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except
as contemplated by this Indenture or the Basic Documents, the Issuer shall not
make any loan or advance or credit to, or guarantee (directly or indirectly or
by an instrument having the effect of assuring another's payment or performance
on any obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or
agree contingently to do so) any stock, obligations, assets or securities of, or
any other interest in, or make any capital contribution to, any other Person.
Section 3.21. CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long- term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.22. [Reserved]
Section 3.23. RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; PROVIDED, HOWEVER, that
the Issuer may make, or cause to be made, (x) distributions to the Owner Trustee
and the Certificateholders as contemplated by, and to the extent funds are
available for such purpose under this Indenture and the Trust Agreement and (y)
payments to the Servicer pursuant to the terms of the Servicing Agreement. The
Issuer will not, directly or indirectly, make payments to or distributions from
the Collection Account except in accordance with this Indenture and the Basic
Documents.
15
Section 3.24. NOTICE OF EVENTS OF DEFAULT. The Issuer shall give the
Indenture Trustee[, the Note Insurer] and the Rating Agencies prompt written
notice of each Event of Default hereunder and under the Trust Agreement.
Section 3.25. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Indenture Trustee [or the Note 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.
Section 3.26. [RESERVED].
[Section 3.27. ALLOCATION OF REALIZED LOSSES.
(a) [REVISE AS APPROPRIATE] Prior to each Payment Date, the Servicer
shall determine the total amount of Realized Losses, if any, that resulted from
any Cash Liquidation, Debt Service Reduction, Deficient Valuation or REO
Disposition that occurred during the related Collection Period. The amount of
each Realized Loss shall be evidenced by an Officers' Certificate delivered to
the Indenture Trustee with the related Determination Date Report.
(b) On each Payment Date, the principal portion of Realized Losses will
be allocated as follows: first, to the Class ___ Certificates; second, to the
Class ___ Certificates; third to the Class ___ Certificates; fourth to the Class
___ Notes; fifth, to the Class ___ Notes; sixth, to the Class ___ Notes; and
seventh, to the Class ___ Notes, in each case in reduction of the Certificate
Principal Balance or Note Principal Balance thereof, until such Certificate
Principal Balance or Note Principal Balance has been reduced to zero. Except as
provided in the following sentence, any allocation of the principal portion of
Realized Losses (other than Debt Service Reductions) to a Class of Certificates
or Notes shall be made by reducing the Certificate Principal Balance or Note
Principal Balance thereof, as applicable, by the amount so allocated, which
allocation shall be deemed to have occurred on such Payment Date. Any allocation
of the principal portion of Realized Losses (other than Debt Service Reductions)
to the class of Class ___ Certificates then outstanding with the highest
numerical designation shall be made by operation of the definition of
"Certificate Principal Balance" and by operation of the provisions of Section
3.05. Allocations of the principal portion of Debt Service Reductions shall be
made by operation of the provisions of Section 3.05. All Realized Losses and all
other losses allocated to a class of Certificates or class of Notes hereunder
will be allocated among the Certificates or Notes of such class in proportion to
the Certificate Percentage Interests or Percentage Interests, as applicable,
evidenced thereby.]
16
ARTICLE IV
THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
Section 4.01. THE NOTES. [REVISE AS APPROPRIATE] The Notes shall be
registered in the name of a nominee designated by the Depository. Beneficial
Owners will hold interests in the Notes through the book-entry facilities of the
Depository in minimum initial Note Principal Balances of $__________ and
integral multiples of $1 in excess thereof.
The Indenture Trustee may for all purposes (including the making of
payments due on the Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Notes for the
purposes of exercising the rights of Holders of the Notes hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08
hereof, Beneficial Owners shall not be entitled to definitive certificates for
the Notes as to which they are the Beneficial Owners. Requests and directions
from, and votes of, the Depository as Holder of the Notes shall not be deemed
inconsistent if they are made with respect to different Beneficial Owners. The
Indenture Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Noteholders and give notice to the
Depository of such record date. Without the consent of the Issuer and the
Indenture Trustee, no Note may be transferred by the Depository except to a
successor Depository that agrees to hold such Note for the account of the
Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuer
by the Owner Trustee, not in its individual capacity but solely as Owner
Trustee, authenticated by the Indenture Trustee and delivered by the Indenture
Trustee to or upon the order of the Issuer.
Section 4.02. REGISTRATION OF AND LIMITATIONS ON TRANSFER AND EXCHANGE
OF NOTES; APPOINTMENT OF NOTE REGISTRAR AND CERTIFICATE REGISTRAR. The Issuer
shall cause to be kept at the Corporate Trust Office a Note Register in which,
subject to such reasonable regulations as it may prescribe, the Note Registrar
shall provide for the registration of Notes and of transfers and exchanges of
Notes as herein provided.
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note at the Corporate Trust
Office, the Issuer shall execute and the Note Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Notes in authorized initial Note Principal Balances evidencing the same
aggregate Percentage Interests.
17
Subject to the foregoing, at the option of the Noteholders, Notes may
be exchanged for other Notes of like tenor and in authorized initial Note
Principal Balances evidencing the same aggregate Percentage Interests upon
surrender of the Notes to be exchanged at the Corporate Trust Office of the Note
Registrar. Whenever any Notes are so surrendered for exchange, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver the Notes which
the Noteholder making the exchange is entitled to receive. Each Note presented
or surrendered for registration of transfer or exchange shall (if so required by
the Note Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Note Registrar
duly executed by the Holder thereof or his attorney duly authorized in writing
with such signature guaranteed by a commercial bank or trust company located or
having a correspondent located in the city of New York. Notes delivered upon any
such transfer or exchange will evidence the same obligations, and will be
entitled to the same rights and privileges, as the Notes surrendered.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Notes.
The Issuer hereby appoints the Indenture Trustee as (i) Certificate
Registrar to keep at its Corporate Trust Office a Certificate Register pursuant
to Section 3.09 of the Trust Agreement in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges thereof pursuant to
Section 3.05 of the Trust Agreement and (ii) Note Registrar under this
Indenture. The Indenture Trustee hereby accepts such appointments.
[No Person shall become a Class ___ Noteholder until it shall establish
its non-foreign status by submitting to the Note Registrar an IRS Form W-9 and
the Certificate of Non-Foreign Status in the form set forth in Exhibit E hereto,
acceptable to and in form and substance reasonably satisfactory to the Note
Registrar and the Company, which certificate shall not be an expense of the
Trust, the Owner Trustee, the Note Registrar, the Servicer or the Company. If
the Noteholder is unable to provide a Certificate of Non-Foreign Status, the
Noteholder must provide an Opinion of Counsel as to the non-foreign status of
such Person which Opinion of Counsel shall not be an expense of the Trust, the
Owner Trustee, the Indenture Trustee, the Note Registrar, the Servicer or the
Company. The Class ___ Noteholder desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trust, the Owner Trustee, the Note
Registrar, the Servicer and the Company against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws. So long as the Class ___ Notes are Book-Entry Notes, any purchaser
of a Class ___ Note will be deemed to have represented by such purchase that
such purchaser is a U.S. Person under the Code.]
Section 4.03. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer[, the Note Insurer] and
the Indenture Trustee harmless, then, in the absence of notice to the Issuer,
the Note Registrar or the
18
Indenture Trustee that such Note has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the UCC are met, the Issuer
shall execute, and upon its request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note; provided, however, that if any such destroyed,
lost or stolen Note, but not a mutilated Note, shall have become or within seven
days shall be due and payable, instead of issuing a replacement Note, the Issuer
may pay such destroyed, lost or stolen Note when so due or payable without
surrender thereof. If, after the delivery of such replacement Note or payment of
a destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a 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 Note Insurer] and the Indenture Trustee shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such Person to whom
such replacement Note was delivered or any assignee of such Person, except a
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 or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 4.03 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04. PERSONS DEEMED OWNERS. Prior to due presentment for
registration of transfer of any Note, the Issuer[, the Note Insurer], the
Indenture Trustee and any agent of the Issuer[, the Note Insurer] or the
Indenture Trustee may treat the Person in whose name any Note is registered (as
of the day of determination) as the owner of such Note for the purpose of
receiving payments of principal of and interest, if any, on such Note and for
all other purposes whatsoever, whether or not such Note be overdue, and neither
the Issuer[, the Note Insurer], the Indenture Trustee nor any agent of the
Issuer[, the Note Insurer] or the Indenture Trustee shall be affected by notice
to the contrary.
Section 4.05. CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
19
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section 4.05, except as expressly
permitted by this Indenture. All cancelled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Request that they be destroyed or returned to it; provided, however, that such
Issuer Request is timely and the Notes have not been previously disposed of by
the Indenture Trustee.
Section 4.06. BOOK-ENTRY NOTES. [REVISE AS APPROPRIATE] The Notes, upon
original issuance, will be issued in the form of typewritten Notes representing
the Book-Entry Notes, to be delivered to The Depository Trust Company, the
initial Depository, by, or on behalf of, the Issuer. The Notes shall initially
be registered on the Note Register in the name of Cede & Co., the nominee of the
initial Depository, and no Beneficial Owner will receive a Definitive Note
representing such Beneficial Owner's interest in such Note, except as provided
in Section 4.08. With respect to such Notes, unless and until definitive, fully
registered Notes (the "Definitive Notes") have been issued to Beneficial Owners
pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in
full force and effect;
(ii) the Note Registrar[, the Note Insurer] and the
Indenture Trustee shall be entitled to deal with the Depository for all
purposes of this Indenture (including the payment of principal of and
interest on the Notes and the giving of instructions or directions
hereunder) as the sole holder of the Notes, and shall have no
obligation to the Beneficial Owners of the Notes;
(iii) to the extent that the provisions of this Section
4.06 conflict with any other provisions of this Indenture, the
provisions of this Section 4.06 shall control;
(iv) the rights of Beneficial Owners shall be exercised
only through the Depository and shall be limited to those established
by law and agreements between such Owners of Notes and the Depository
and/or the Depository Participants. Unless and until Definitive Notes
are issued pursuant to Section 4.08, the initial Depository will make
book-entry transfers among the Depository Participants and receive and
transmit payments of principal of and interest on the Notes to such
Depository Participants; and
(v) whenever this Indenture requires or permits actions
to be taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Note Principal Balances of the
Notes, the Depository shall be deemed to represent such percentage with
respect to the Notes only to the extent that it has received
instructions to such effect from Beneficial Owners and/or Depository
Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered
such instructions to the Indenture Trustee.
20
Section 4.07. NOTICES TO DEPOSITORY. Whenever a notice or other
communication to the Note Holders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Beneficial Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. DEFINITIVE NOTES. If (i) the Indenture Trustee determines
that the Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Notes and the Indenture Trustee is unable
to locate a qualified successor, (ii) the Indenture Trustee elects to terminate
the book-entry system through the Depository or (iii) after the occurrence of an
Event of Default, Beneficial Owners of Notes representing beneficial interests
aggregating at least a majority of the Note Principal Balances of the Notes
advise the Depository in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Beneficial
Owners, then the Depository shall notify all Beneficial Owners and the Indenture
Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Beneficial Owners requesting the same. Upon surrender to the
Indenture Trustee of the typewritten Notes representing the Book-Entry Notes by
the Depository, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Depository. None of the Issuer, the Note
Registrar or the Indenture Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Notes, the
Indenture Trustee shall recognize the Holders of the Definitive Notes as
Noteholders.
Section 4.09. TAX TREATMENT. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will qualify as indebtedness. The Issuer, by entering into this Indenture, and
each Noteholder, by its acceptance of its Note (and each Beneficial Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat the
Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness.
Section 4.10. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders [(and the Note
Insurer, as subrogee of the Noteholders)] to receive payments of principal
thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09, 3.16, 3.18
and 3.19, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.07 and
the obligations of the Indenture Trustee under Section 4.11) and (vi) the rights
of Noteholders 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
21
satisfaction and discharge of this Indenture with respect to the Notes and shall
release and deliver the Collateral to or upon the order of the Issuer, when
(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 4.03 hereof and (ii) Notes
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.03) have
been delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
a. have become due and payable,
b. will become due and payable at the Final
Scheduled Payment Date within one year, or
c. have been called for early redemption
pursuant to Section 8.07 hereof,
and the Issuer, in the case of a. or b. above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture
Trustee cash or direct obligations of or obligations guaranteed by the
United States of America (which will mature prior to the date such
amounts are payable), in trust for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such Notes
then outstanding not theretofore delivered to the Indenture Trustee for
cancellation when due on the Final Scheduled Payment Date or other
final Payment Date and has delivered to the Indenture Trustee [and the
Note Insurer] a verification report from a nationally recognized
accounting firm certifying that the amounts deposited with the
Indenture Trustee are sufficient to pay and discharge the entire
indebtedness of such Notes, or, in the case of c. above, the Issuer
shall have complied with all requirements of Section 8.07 hereof;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder; and
(C) the Issuer has delivered to the Indenture Trustee [or the
Note Insurer] an Officer's Certificate and an Opinion of Counsel, each
meeting the applicable requirements of Section 10.01 hereof, each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied
with and, if the Opinion of Counsel relates to a deposit made in
connection with Section 4.10(A)(2)b. above, such opinion shall further
be to the effect that such deposit will constitute an "in-substance
defeasance" within the meaning of Revenue Ruling 85-42, 1985-1 C.B. 36,
and
22
in accordance therewith, the Issuer will be the owner of the assets
deposited in trust for federal income tax purposes.
Section 4.11. APPLICATION OF TRUST MONEY. All monies deposited with the
Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent or the
Issuer, Certificate Paying Agent as designee of the Issuer, as applicable, as
the Indenture Trustee may determine, to the Holders of Securities, of all sums
due and to become due thereon for principal and interest or otherwise; but such
monies need not be segregated from other funds except to the extent required
herein or required by law.
[Section 4.12. SUBROGATION AND COOPERATION. The Issuer and the
Indenture Trustee acknowledge that (i) to the extent the Note Insurer makes
payments under the Note Insurance Policy on account of principal of or interest
on the Notes, the Note Insurer will be fully subrogated to the rights of such
Holders to receive such principal and interest from the Issuer, and (ii) the
Note Insurer shall be paid such principal and interest but only from the sources
and in the manner provided herein and in the Insurance Agreement for the payment
of such principal and interest.
The Indenture Trustee shall cooperate in all respects with any
reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interest under this Indenture or the Insurance
Agreement, consistent with this Indenture and without limiting the rights of the
Noteholders as otherwise set forth in the Indenture, including, without
limitation, upon the occurrence and continuance of a default under the Insurance
Agreement, a request to take any one or more of the following actions:
(i) institute Proceedings for the collection of all
amounts then payable on the Notes, or under this Indenture in respect
to the Notes and all amounts payable under the Insurance Agreement,
enforce any judgment obtained and collect from the Issuer monies
adjudged due;
(ii) sell the Trust Estate or any portion thereof or
rights or interest therein, at one or more public or private Sales
called and conducted in any manner permitted by law;
(iii) file or record all Assignments that have not
previously been recorded;
(iv) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture; and
(v) 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 Note Insurer hereunder;
provided, however, action shall be taken pursuant to this Section 4.12 by the
Indenture Trustee to preserve the Note Insurer's rights or interest under this
Agreement or the Insurance Agreement
23
only to the extent such action is available to the Noteholders or the Note
Insurer under other provisions of this Indenture.
Notwithstanding any provision of this Indenture to the contrary, so
long as no Note Insurer Default exists, the Note Insurer shall at all times be
treated as if it were the exclusive owner of all Notes Outstanding for the
purposes of all approvals, consents, waivers and the institution of any action
and the direction of all remedies, and the Indenture Trustee shall act in
accordance with the directions of the Note Insurer so long as it is indemnified
therefor to its reasonable satisfaction.]
Section 4.13. REPAYMENT OF MONIES HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Person other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.05 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
Section 4.14. TEMPORARY NOTES. Pending the preparation of any
Definitive Notes, the Issuer may execute and upon its written direction, the
Indenture Trustee may authenticate and make available for delivery, temporary
Notes that are printed, lithographed, typewritten, photocopied or otherwise
produced, in any denomination, substantially of the tenor of the Definitive
Notes in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of the
Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes
upon surrender of the temporary Notes at the office or agency of the Indenture
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Issuer shall execute and the Indenture Trustee
shall authenticate and make available for delivery, in exchange therefor,
Definitive Notes of authorized denominations and of like tenor and aggregate
principal amount. Until so exchanged, such temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as Definitive Notes.
24
ARTICLE V
DEFAULT AND REMEDIES
Section 5.01. EVENTS OF DEFAULT. The Issuer shall deliver to the
Indenture Trustee [and the Note Insurer], within five days after learning of the
occurrence of an Event of Default, 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 clause (iii) of the definition of "Event
of Default", its status 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 should occur and be continuing, then and in every such case the
Indenture Trustee at the written direction of the [Note Insurer or, if a Note
Insurer Default exists, the] Holders of Notes representing not less than a
majority of the Note Principal Balances of all Notes may declare the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid Note Principal Balance of the Notes, together with accrued and unpaid
interest thereon through the date of acceleration, shall become immediately due
and payable.
At any time after such declaration of acceleration of maturity with
respect to an Event of Default has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article V, [Note Insurer or, if a Note Insurer Default
exists, the] Holders of Notes representing a majority of the Note Principal
Balances of all Notes, by written notice to the Issuer and the Indenture
Trustee, may waive the related Event of Default and rescind and annul such
declaration and its consequences if:
(i) the Issuer [or the Note Insurer] has paid or
deposited with the Indenture Trustee a sum sufficient to pay:
(A) all payments of principal of and interest on the
Notes and all other amounts that would then be due hereunder
or upon the Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its
agents and counsel; and
(ii) all Events of Default, other than the nonpayment of
the principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.12
[provided, however, the Note Insurer may waive an Event of Default
regardless of Section 5.02(i) above.]
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
25
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 (including the Interest Remittance Amount) 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 (including
the Principal Remittance Amount) of or any installment of the principal of any
Note when the same becomes due and payable, the Issuer shall, upon demand of the
Indenture Trustee, pay to the Indenture Trustee, for the benefit of the Holders
of Notes [and the Note Insurer], the whole amount then due and payable on the
Notes in respect of principal and interest, with interest at the Note Interest
Rate upon the overdue principal, and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, subject to the provisions of Section 10.16 hereof may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor the Notes, wherever
situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee, subject to the provisions of Section 10.16 hereof may, as more
particularly provided in Section 5.04 hereof, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders [and the Note
Insurer], by such appropriate Proceedings as the Indenture Trustee shall deem
most effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or by
law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the
Notes and to file such other papers or
26
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith)[, the Note
Insurer] and of 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 monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders[, the Note
Insurer] and of the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee[, the Note 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 to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith[,
and all amounts due to the Note Insurer].
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes [and the Note Insurer], subject to
Section 5.05 hereof.
27
(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 Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
Section 5.04. REMEDIES; PRIORITIES. (a) If an Event of Default shall
have occurred and be continuing and if an acceleration has been declared and not
rescinded pursuant to Section 5.02 hereof, the Indenture Trustee subject to the
provisions of Section 10.16 hereof 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 or under this Indenture with respect thereto,
whether by declaration or otherwise, and enforce any judgment obtained,
and collect from the Issuer and any other obligor upon such Notes
monies adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Trust Estate;
(iii) exercise any remedies of a secured party under the
UCC and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee, the Holders of the Notes
[and the Note Insurer]; and
(iv) sell the Trust Estate or any portion thereof or
rights or interest therein, at one or more public or private sales
called and conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Holders of 100% of the aggregate
Note Principal Balance, (B) the proceeds of such sale or liquidation
distributable to the Holders of the Notes are sufficient to discharge in full
all amounts then due and unpaid upon the Notes for principal and interest [and
to reimburse the Note Insurer for any amounts paid under the Note Insurance
Policy and any other amounts due to the Note Insurer under the Insurance
Agreement] or (C) the Indenture Trustee determines that the Mortgage Loans 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 the
Holders of a majority of the aggregate Note Principal Balance. In determining
such sufficiency or insufficiency with respect to clause (B) and (C), the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose. Notwithstanding the fore going, so long as an Event of
Servicer Termination has not occurred, any Sale of the Trust Estate shall be
made subject to the continued servicing of the Mortgage Loans by the Servicer as
provided in the Servicing Agreement.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order
[REVISE AS APPROPRIATE]:
28
FIRST: to the Indenture Trustee for amounts due under Section
6.07 hereof;
SECOND: to the Noteholders for amounts due and unpaid on the
Notes with respect to interest, ratably, without preference or
priority of any kind, according to the amounts due and payable
on the Notes for interest (including Interest Remittance
Amount but not any Unpaid Interest Shortfalls) from amounts
available in the Trust Estate for the Noteholders;
THIRD: to Noteholders for amounts due and unpaid on the Notes
with respect to principal (including, but not limited to, any
Note Principal Distribution Amount), from amounts available in
the Trust Estate for such Noteholders, and to each Noteholder
ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal,
until the Note Principal Balance is reduced to zero;
FOURTH: to the Noteholders for amounts due and unpaid on the
Notes with respect to any Unpaid Interest Shortfalls, ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Notes with respect thereto,
from amounts available in the Trust Estate for the
Noteholders; and
FIFTH: to the payment of the remainder, if any to the
Certificate Paying Agent on behalf of the Issuer or to any
other person legally entitled thereto.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.04. With respect to any
acceleration, the first payment date after the acceleration shall be the first
Payment Date after the acceleration. At least 15 days before such record date,
the Indenture Trustee shall mail to each Noteholder a notice that states the
record date, the payment date and the amount to be paid.
Section 5.05. OPTIONAL PRESERVATION OF THE TRUST ESTATE. If the Notes
have been declared to be due and payable under Section 5.02 following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee shall elect to take and maintain possession of
the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes and other obligations of the Issuer [including payments to
the Note Insurer], and the Indenture Trustee shall take such desire into account
when determining whether or not to take and maintain possession of the Trust
Estate. In determining whether to take and maintain possession of the Trust
Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
29
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, unless and subject to the provisions of Section 10.16 hereof:
(i) such Holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Note
Principal Balances of the Notes have made a written request to the
Indenture Trustee to institute such Proceeding in respect of such Event
of Default in its own name as Indenture Trustee hereunder;
(iii) such 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;
(iv) the Indenture Trustee for 60 days after its receipt
of such notice of request and offer of indemnity has failed to
institute such Proceedings;
(v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60-day period by
the Holders of a majority of the Note Principal Balances of the Notes;
and
[(vi) such Holder or Holders have the consent of the
Note Insurer, unless a Note Insurer Default exists.]
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.
Subject to the last paragraph of Section 4.12 herein, in the event the
Indenture Trustee shall receive conflicting or inconsistent requests and
indemnity from two or more groups of Holders of Notes, each representing less
than a majority of the Note Principal Balances of the Notes, 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 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 respective due dates thereof expressed in such Note or in this
Indenture and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder.
30
Section 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee[, the Note Insurer] or to such Noteholder, then and in every such case
the Issuer, the Indenture Trustee[, the Note 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 Note 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 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 Note Insurer] or any Holder of any Note to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee[, the Note 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 Note Insurer] or by the Noteholders, as the case may be.
Section 5.11. CONTROL BY [NOTE INSURER] [NOTEHOLDERS]. The [Note
Insurer] [Holders of a majority of the Note Principal Balances of Notes] shall
have the right (subject to the provisions of Section 5.06) to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that [REVISE AS APPROPRIATE]:
(i) such direction shall not be in conflict with any
rule of law or with this Indenture;
(ii) any direction to the Indenture Trustee to sell or
liquidate the Trust Estate shall be by Holders of Notes representing
not less than 100% of the Note Principal Balances of Notes;
(iii) if the conditions set forth in Section 5.05
hereof have been satisfied and the Indenture Trustee elects to retain
the Trust Estate pursuant to such Section, then any direction to the
Indenture Trustee by Holders of Notes representing less than 100% of
the Note Principal Balances of Notes to sell or liquidate the Trust
Estate shall be of no force and effect; and
31
(iv) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not inconsistent with
such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability or might materially adversely affect the rights of
any Noteholders not consenting to such action.
Section 5.12. WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02 hereof,
[the Note Insurer, or if a Note Insurer Default exists,] the Holders of Notes of
not less than a majority of the Note Principal Balances of the Notes may waive
any past Event of Default and its consequences except an Event of Default (a)
with respect to payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note [or (c) the waiver of which would
not materially and adversely affect the interests of the Note Insurer]. In the
case of any such waiver, the Issuer, the Indenture Trustee 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 Event
of Default or impair any right consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.
Section 5.13. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each 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 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Note
Principal Balances of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture.
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatso ever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
32
Section 5.15. SALE OF TRUST ESTATE. (a) The power to effect any sale or
other disposition (a "Sale") of any portion of the Trust Estate pursuant to
Section 5.04 hereof is expressly subject to the provisions of Section 5.05
hereof and this Section 5.15. The power to effect any such Sale shall not be
exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired until the entire Trust Estate
shall have been sold or all amounts payable on the Notes and under this
Indenture shall have been paid. The Indenture Trustee may from time to time
postpone any public Sale by public announcement made at the time and place of
such Sale. The Indenture Trustee hereby expressly waives its right to any amount
fixed by law as compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless
(1) the [Note Insurer or if a Note Insurer Default exists,
the] Holders of all Notes, consent to or direct the Indenture Trustee to make,
such Sale, or
(2) the proceeds of such Sale would not be less than the
entire amount which would be payable to the Noteholders under the Notes [and the
Note Insurer under the Insurance Agreement] on the Payment Date next succeeding
the date of such Sale; or
(3) the Indenture Trustee determines, that the conditions for
retention of the Trust Estate set forth in Section 5.05 hereof cannot be
satisfied (in making any such determination, the Indenture Trustee may rely upon
an opinion of an Independent investment banking firm obtained and delivered as
provided in Section 5.05 hereof), and the [Note Insurer or if a Note Insurer
Default exists, the] Holders of Notes representing at least 66-2/3% of the Note
Principal Balances of the Notes consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(c) Unless the [Note Insurer or if a Note Insurer Default exists, the]
Holders representing at least 66-2/3% of the Principal Balances of the Notes
have otherwise consented or directed the Indenture Trustee, at any public Sale
of all or any portion of the Trust Estate at which a minimum bid equal to or
greater than the amount described in paragraph (2) of subsection (b) of this
Section 5.15 has not been established by the Indenture Trustee and no Person
bids an amount equal to or greater than such amount, the Indenture Trustee, as
trustee for the benefit of the Holders of the Notes, shall bid an amount at
least $1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of the Trust
Estate,
(1) any Holder or Holders of Notes may bid for the property
offered for sale, and upon compliance with the terms of sale may hold, retain
and possess and dispose of such property, without further accountability, and
may, in paying the purchase money therefor, deliver any Notes or claims for
interest thereon in lieu of cash up to the amount which shall, upon distribution
of the net proceeds of such sale, be payable thereon, and such Notes, in case
the
33
amounts so payable thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after being appropriately stamped to show such
partial payment;
(2) the Indenture Trustee may bid for and acquire the property
offered for Sale in connection with any Sale thereof, and, subject to any
requirements of, and to the extent permitted by, applicable law in connection
therewith, may purchase all or any portion of the Trust Estate in a private
sale, and, in lieu of paying cash therefor, may make settlement for the purchase
price by crediting the gross Sale price against the sum of (A) the amount which
would be distributable to the Holders of the Notes and Holders of Certificates
[and the Note Insurer] as a result of such Sale in accordance with Section
5.04(b) hereof on the Payment Date next succeeding the date of such Sale and (B)
the expenses of the Sale and of any Proceedings in connection there with which
are reimbursable to it, without being required to produce the Notes in order to
complete any such Sale or in order for the net Sale price to be credited against
such Notes, and any property so acquired by the Indenture Trustee shall be held
and dealt with by it in accordance with the provisions of this Indenture;
(3) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any portion of
the Trust Estate in connection with a Sale thereof;
(4) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection with a Sale thereof, and to take
all action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any monies.
Section 5.16. ACTION ON NOTES. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee[, the Note 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 Trust Estate or upon any of the assets of the Issuer. Any money or property
collected by the Indenture Trustee shall be applied in accordance with Section
5.04(b) hereof.
Section 5.17. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS. (a)
Promptly following a request from the Indenture Trustee to do so, the Issuer in
its capacity as holder of the Mortgage Loans, shall take all such lawful action
as the Indenture Trustee [or the Note Insurer] may request to cause the Issuer
to compel or secure the performance and observance by the Seller and the
Servicer, as applicable, of each of their obligations to the Issuer under or in
connection with the Mortgage Loan Purchase Agreement and the Servicing
Agreement, as applicable, and to exercise any and all rights, remedies, powers
and privileges lawfully available to the Issuer under or in connection with the
Mortgage Loan Purchase Agreement and the Servicing Agreement, as
34
applicable, to the extent and in the manner directed by the Indenture Trustee as
pledgee of the Mortgage Loans, including the transmission of notices of default
on the part of the Seller or the Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by the Seller or the Servicer of each of their obligations under the Mortgage
Loan Purchase Agreement and the Servicing Agreement, as applicable.
(b) The Indenture Trustee, as pledgee of the Mortgage Loans, may, and
at the direction (which direction shall be in writing or by telephone (confirmed
in writing promptly thereafter)) of [the Note Insurer or, if a Note Insurer
Default exists, the] Holders of 66-2/3% of the Note Principal Balances of the
Notes, shall exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Seller or the Servicer under or in connection with the
Mortgage Loan Purchase Agreement or the Servicing Agreement, including the right
or power to take any action to compel or secure performance or observance by the
Seller or the 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 Mortgage Loan Purchase Agreement or the Servicing
Agreement, as the case may be, and any right of the Issuer to take such action
shall not be suspended.
35
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. DUTIES OF INDENTURE TRUSTEE. (a) If an Event of Default
has occurred and is continuing, the Indenture Trustee shall exercise the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into
this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; however, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer unless it
is proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 5.11 [or the Note Insurer].
(d) 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.
(e) Money held in trust by the Indenture Trustee need not be segregated
from other trust funds except to the extent required by law or the terms of this
Indenture or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties
36
hereunder or in the exercise of any of its rights or powers, if it shall have
reasonable grounds to believe that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(h) The Indenture Trustee shall act in accordance with Sections 6.03
and 6.04 of the Servicing Agreement and shall act as successor to the Servicer
in accordance with Section 6.02 of the Servicing Agreement.
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.
(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 the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
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 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, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall
37
not be 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. NOTICE OF EVENT OF DEFAULT. The Indenture Trustee shall
mail to [the Note Insurer] [each Noteholder] notice of the Event of Default
within 10 days after it is known to a Responsible Officer of the Indenture
Trustee, unless such Event of Default shall have been waived or cured. Except in
the case of an Event of Default in payment of principal of or interest on any
Note, the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
Section 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such holder to prepare its federal and state income tax returns. In
addition, upon the Issuer's written request, the Indenture Trustee shall
promptly furnish information reasonably requested by the Issuer that is
reasonably available to the Indenture Trustee to enable the Issuer to perform
its federal and state income tax reporting obligations.
Section 6.07. COMPENSATION AND INDEMNITY. The Issuer shall pay to the
Indenture Trustee on each Payment Date reasonable compensation for its services.
The Indenture Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuer shall reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to compensation for its services.
Such expenses shall include reasonable compensation and expenses, disbursements
and advances of the Indenture Trustee's agents, counsel, accountants and
experts. The Issuer shall indemnify the Indenture Trustee against any and all
loss, liability or expense (including reasonable attorneys' fees) incurred by it
in connection with the administration of this Trust and the performance of its
duties hereunder. The Indenture Trustee shall notify the Issuer promptly of any
claim for which it may seek indemnity. Failure by the Indenture Trustee to so
notify the Issuer shall not relieve the Issuer of its obligations hereunder. The
Issuer shall defend any such claim, and the Indenture Trustee may have separate
counsel and the Issuer shall pay the fees and expenses of such counsel. The
Issuer is not obligated to reimburse any expense or indemnify against any loss,
liability or expense incurred by the Indenture Trustee through the Indenture
Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section 6.07 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of an Event of Default
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or similar law.
Section 6.08. REPLACEMENT OF INDENTURE TRUSTEE. No resignation or
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.08.
38
The Indenture Trustee may resign at any time by so notifying the Issuer [and the
Note Insurer]. The [Note Insurer or, if a Note Insurer Default exists, the]
Holders of a majority of Note Principal Balances of the Notes may remove the
Indenture Trustee by so notifying the Indenture Trustee [and the Note Insurer]
and may appoint a successor Indenture Trustee. The Issuer [with the consent of
the Note Insurer] shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section
6.11 hereof;
(ii) the Indenture Trustee is adjudged a bankrupt or
insolvent;
(iii) a receiver or other public officer takes charge
of the Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable
of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of the Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall [with the consent of the Note Insurer] promptly appoint a successor
Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee[, the Note 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[, the Note Insurer] Issuer or the Holders of a majority
of Note Principal Balances of the Notes may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.
Section 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation, without any further act, shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11 hereof. The Indenture Trustee shall
provide the Rating Agencies [and the Note Insurer] with prior written notice of
any such transaction.
39
If 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 and 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 if 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 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 Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust Estate, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Noteholders [and the Note Insurer], such title to the Trust Estate, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee [and the Note
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.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed upon and exercised or performed by the Indenture Trustee and
such separate trustee or co-trustee jointly (it being understood that
such separate trustee or co-trustee is not authorized to act separately
without the Indenture Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular
act or acts are to be performed the Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Indenture
Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this
40
Agreement and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the liability
of, or affording protection to, the Indenture Trustee. Every such instrument
shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11. ELIGIBILITY; DISQUALIFICATION. The Indenture Trustee
shall at all times satisfy the requirements of TIA ss. 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition and it or its
parent shall have a long-term debt rating of [Baa3 or better by Xxxxx'x and BBB
or better by Standard & Poor's]. The Indenture Trustee shall comply with TIA ss.
310(b), including the optional provision permitted by the second sentence of TIA
ss. 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA ss. 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 ss. 310(b)(1) are met.
Section 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.13. REPRESENTATIONS AND WARRANTIES. The Indenture Trustee
hereby represents that:
(i) The Indenture Trustee is duly organized and validly
existing as an association in good standing under the laws of the
United States with power and authority to own its properties and to
conduct its business as such properties are currently owned and
such business is presently conducted;
(ii) The Indenture Trustee has the power and authority to
execute and deliver this Indenture and to carry out its terms; and the
execution, delivery and performance of this Indenture have been duly
authorized by the Indenture Trustee by all necessary corporate action;
(iii) The consummation of the transactions contemplated by
this Indenture and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the
41
terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, the articles of organization or bylaws of the
Indenture Trustee or any agreement or other instrument to which the
Indenture Trustee is a party or by which it is bound; and
(iv) To the Indenture Trustee's best knowledge, there are
no proceedings or investigations pending or threatened before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Indenture Trustee or its
properties: (A) asserting the invalidity of this Indenture (B) seeking
to prevent the consummation of any of the transactions contemplated by
this Indenture or (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Indenture
Trustee of its obligations under, or the validity or enforceability of,
this Indenture.
Section 6.14. DIRECTIONS TO INDENTURE TRUSTEE. The Indenture Trustee is
hereby directed:
(a) to accept the pledge of the Mortgage Loans and hold the assets of
the Owner Trust Estate in trust for the Noteholders [and the Note Insurer];
(b) to authenticate and deliver the Notes substantially in the form
prescribed by Exhibits [A-1 through A-3] in accordance with the terms of this
Indenture; and
(c) to take all other actions as shall be required to be taken by the
terms of this Indenture.
Section 6.15. THE AGENTS. The provisions of this Indenture relating to
the limitations of the Indenture Trustee's liability and to its indemnity shall
inure also to the Paying Agent and Note Registrar.
42
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES
OF NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five days after each Record Date, a list, in
such form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of such Record Date, (b) at such other
times as the Indenture Trustee [and the Note Insurer] may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Indenture Trustee
is the Note Registrar, no such list shall be required to be furnished.
Section 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the 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.
(b) Noteholders may communicate pursuant to TIA ss. 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 ss. 312(c).
Section 7.03. REPORTS OF ISSUER. (a)(i) The Indenture Trustee shall
file with the Commission [and the Note Insurer] on behalf of the Issuer, with a
copy to the Issuer within 15 days before the Issuer is required to file the same
with the Commission, the annual reports and the information, documents and other
reports (or such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) that the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) The Indenture Trustee shall file with the
Commission [and the Note Insurer], on behalf of the Issuer, in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii The Indenture Trustee shall supply (and the
Indenture Trustee shall transmit by mail to [the Note Insurer and] all
Noteholders described in TIA ss. 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.
43
(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 ss.
313(a), within 60 days after each January 29 beginning with January 29, 1999,
the Indenture Trustee shall mail to each Noteholder as required by TIA ss.
313(c) a brief report dated as of such date that complies with TIA ss. 313(a).
The Indenture Trustee also shall comply with TIA ss. 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 stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee [and the Note Insurer] if and when the Notes
are listed on any stock exchange.
Section 7.05. STATEMENTS TO NOTEHOLDERS. (a) With respect to each
Payment Date, the Indenture Trustee shall deliver to each Certificateholder,
Noteholder[, the Note Insurer], the Depositor, the Owner Trustee, the
Certificate Paying Agent and each Rating Agency, a statement setting forth the
following information as to each Class of Notes and Certificates, to the extent
applicable [REVISE AS APPROPRIATE]:
(i) the aggregate amount of collections with respect to the
Mortgage Loans;
(ii) the Interest Remittance Amount, Principal Remittance Amount
and Note Principal Distribution Amount payable to the Noteholders and
Certificates for such Payment Date, and the aggregate Unpaid Interest
Shortfalls for all prior Payment Dates;
(iii) (a) the amount of such distribution to the Holders of each
Class of Notes applied to reduce the Note Principal Balance thereof,
and (b) the aggregate amount included therein representing Principal
Prepayments;
(iv) (a) the amount of such distribution to the Holders of each
Class of Class C Certificates applied to reduce the Certificate
Principal Balance thereof, and (b) the aggregate amount included
therein representing Principal Prepayments;
(v) the amount of such distribution to Holders of such Class of
Notes allocable to interest;
(vi) the amount of such distribution to Holders of such Class of
Certificates allocable to interest;
(vii) if the distribution to the Holders of any Class of Notes
or Certificates is less than the full amount that would be
distributable to such Holders if there were sufficient funds available
therefor, the amount of the shortfall;
(viii) the number and the aggregate Stated Principal Balance of the
Mortgage Loans after giving effect to the distribution of principal on
such Payment Date;
44
(ix) the aggregate Note Principal Balance of each Class of the
Notes, after giving effect to the amounts distributed on such Payment
Date, separately identifying any reduction thereof due to Realized
Losses other than pursuant to an actual distribution of principal and
the aggregate Note Principal Balance of all of the Notes after giving
effect to the distribution of principal on such Payment Date;
(x) the aggregate Certificate Principal Balance of each Class of
Class ___ Certificates, after giving effect to the amounts distributed
on such Payment Date, separately identifying any reduction thereof due
to Realized Losses other than pursuant to an actual distribution of
principal and the aggregate Certificate Principal Balance of all of the
Certificates after giving effect to the distribution of principal on
such Payment Date;
(xi) the Certificate Interest Rate on each Class of
Certificates,
(xii) the Notional Amount of the Class ___ Certificates, after
giving effect to the amounts distributed on such Payment Date,
(xiii) the number and aggregate Principal Balances of Mortgage
Loans (a) as to which the Monthly Payment is delinquent for 30-59 days,
60-89 days, 90 or more days, respectively, (b) in foreclosure and (c)
that have become REO Property, in each case as of the end of the
preceding Due Period; PROVIDED, HOWEVER, that such information will not
be provided on the statements relating to the first Payment Date;
(xiv) the amount of any Advances and Compensating Interest
payments;
(xv) the aggregate Realized Losses with respect to the related
Payment Date and cumulative Realized Losses since the Closing Date;
(xvi) the number and aggregate Principal Balance of Mortgage
Loans repurchased pursuant to the Mortgage Loan Purchase Agreement for
the related Payment Date and cumulatively since the Closing Date;
(xvii) the book value of any REO Property; and
(xviii) [the aggregate Principal Balance of Mortgage Loans
purchased pursuant to [Section 3.18] of the Mortgage Loan Purchase
Agreement for the related Payment Date and cumulatively since the
Closing Date].
Items (iii), (iv), (v), (vi), (vii), (ix), (x) and (xii) above shall be
presented on the basis of a Note or Certificate, as applicable, having a $1,000
denomination. In addition, by January 31 of each calendar year following any
year during which the Notes are outstanding, the Indenture Trustee shall furnish
a report to each Noteholder of record if so requested in writing at any time
during each calendar year as to the aggregate of amounts reported pursuant to
(iii), (v), (vii) and (xiii) with respect to the Notes for such calendar year.
45
The Indenture Trustee may conclusively rely upon the Determination Date
Report provided by the Servicer pursuant to [Section 4.01] of the Servicing
Agreement in its preparation of its Statement to Noteholders.
46
ARTICLE VIII
ACCOUNTS, DISTRIBUTIONS, DISBURSEMENTS AND RELEASES
Section 8.01. COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02. TRUST ACCOUNTS; DISTRIBUTIONS. (a) On or prior to the
Closing Date, the Issuer shall cause the Indenture Trustee to establish and
maintain, in the name of the Indenture Trustee, for the benefit of the
Noteholders [and the Note Insurer], the Note Distribution Account as provided in
Section 3.01 hereof.
(b) All monies deposited from time to time in the Note Distribution
Account, the Pre- Funding Account and the Capitalized Interest Account
(collectively, the "Trust Accounts") and all investments made with such monies
including all income or other gain from such investments pursuant to the
Servicing Agreement and all deposits therein pursuant to this Indenture are for
the benefit of the Noteholders [and the Note Insurer]. The Indenture Trustee
shall invest any funds in the Trust Accounts in Eligible Investments, as
directed by the Servicer, maturing no later than the Business Day preceding each
Payment Date and such Eligible Investments shall not be sold or disposed of
prior to their maturity. In the absence of such direction, the Indenture Trustee
shall invest the funds in the Trust Account in money market funds as further
described in clause (vii) of the definition of Eligible Investments. The amount
of any losses incurred with respect to any such investments shall be deposited
in the related Trust Account by the Servicer.
(c) On each Payment Date, the Interest Remittance Amount shall be
distributed in the following order of priority, in each case to the extent of
the then remaining Interest Remittance
Amount:
(i) to the Owner Trustee and the Indenture Trustee,
the Owner Trustee Fee and Indenture Trustee Fee, respectively, and
expenses;
(ii) first, to the Noteholders, on a pro rata basis,
Accrued Note Interest thereon for such Payment Date, plus any Unpaid
Interest Shortfalls thereon remaining unpaid from any previous Payment
Date; provided, that if the Interest Remittance Amount is insufficient
to pay the Noteholders in full any Accrued Note Interest thereon, the
amount
47
of such shortfall shall be allocated first, to the Class ___ Notes,
second, to the Class ___ Notes, third, to the Class ___ Notes and
fourth, to the Class ___ Notes;
(iii) second, to the Noteholders in the following
order: first, to the Class ___ Notes, second, to the Class ___ Notes,
third, to the Class ___ Notes, and fourth, to the Class ___ Notes, in
each case in respect of the principal portion of any Realized Losses to
be allocated thereto on such Payment Date, or previously allocated
thereto on any prior Payment Date, until the amount of such losses has
been fully reimbursed;
[(iv) third, provided that no Note Insurer Default is
occurring, to the Note Insurer, the aggregate of all payments, if any,
made by the Note Insurer under the Note Insurance Policy and any other
amounts due to the Note Insurer pursuant to the Insurance Agreement, to
the extent not previously paid or reimbursed;] and
(v) fourth, to the Certificate Distribution Account
on behalf of the Certificateholders.
(d) On each Payment Date the Principal Remittance Amount shall be
distributed in the following order of priority, in each case to the extent of
the then remaining Principal Remittance Amount, as follows:
(i) first, to the Noteholders on a pro rata basis,
based on the then-current Note Principal Balances thereof, an amount
equal to the Note Principal Distribution Amount, in reduction of the
Note Principal Balance thereof, until reduced to zero; and
(ii) second, to the Certificate Distribution Account
on behalf of the Certificateholders.
Section 8.03. OFFICER'S CERTIFICATE. The Indenture Trustee shall
receive at least seven days' notice when requested by the Issuer to take any
action pursuant to Section 8.05(a) hereof, accompanied by copies of any
instruments to be executed, and the Indenture Trustee shall also require, as a
condition to such action, an Officer's Certificate, in form and substance
satisfactory to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding that
all conditions precedent to the taking of such action have been complied with.
Section 8.04. TERMINATION UPON DISTRIBUTION TO NOTEHOLDERS. This
Indenture and the respective obligations and responsibilities of the Issuer and
the Indenture Trustee created hereby shall terminate upon the distribution to
Noteholders, [the Note Insurer,] the Certificate Paying Agent on behalf of the
Certificateholders and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III; provided, however, that in no event shall
the trust created here by continue beyond the expiration of 21 years from the
death of the survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
ambassador of the United States to the Court of St. Xxxxx, living on the date
hereof.
48
Section 8.05. RELEASE OF TRUST ESTATE. (a) Subject to the payment of
its fees and expenses, the Indenture Trustee may, and when required by the
provisions of this Indenture shall, execute instruments to release property from
the lien of this Indenture, or convey the Indenture Trustee's interest in the
same, in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture. No party relying upon an instrument executed by
the Indenture Trustee as provided in Article VIII hereunder shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent, or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as (i) there are no Notes
Outstanding[, (ii) all sums due to the Note Insurer have been paid] and (iii)
all sums due to the Indenture Trustee pursuant to this Indenture have been paid,
release any remaining portion of the Trust Estate that
secured the Notes from the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.05 only upon receipt of a request from the
Issuer accompanied by an Officers' Certificate and an Opinion of Counsel stating
that all applicable requirements have been
satisfied.
Section 8.06. SURRENDER OF NOTES UPON FINAL PAYMENT. By acceptance of
any Note, the Holder thereof agrees to surrender such Note to the Indenture
Trustee promptly, prior to such Noteholder's receipt of the final payment
thereon.
Section 8.07. OPTIONAL REDEMPTION OF THE NOTES. (a) The Issuer shall
have the option to redeem the Notes in whole, but not in part, on any Payment
Date on or after the earlier of (i) the Payment Date on which the aggregate
Principal Balance of the Mortgage Loans is less than or equal to [20]% of the
aggregate Principal Balance of the Mortgage Loans as of the Cut-off Date or (ii)
the Payment Date occurring in [January 2008]. The aggregate redemption price for
the Notes will be equal to the unpaid Note Principal Balance of the Notes as of
the Payment Date on which the proposed redemption will take place in accordance
with the foregoing, together with accrued and unpaid interest thereon at the
Note Interest Rate through such Payment Date (including any Unpaid Interest
Shortfalls), plus an amount sufficient to pay in full all amounts owing to [the
Note Insurer and] the Indenture Trustee under this Indenture (which amounts
shall be specified in writing upon request of the Issuer by the [the Note
Insurer and] Indenture Trustee).
(b) In order to exercise the foregoing option, the Issuer shall, not
less than 15 days prior to the proposed Payment Date on which such redemption is
to be made, deposit the aggregate redemption price specified in (a) above with
the Indenture Trustee, and shall provide written notice of its exercise of such
option to the Indenture Trustee, [the Note Insurer,] the Owner Trustee and the
Servicer. Following receipt of the notice and the aggregate redemption price,
calculated as specified in Section 8.07(a) hereof, pursuant to the foregoing,
the Indenture Trustee shall provide notice to the Noteholders of the final
payment on the Notes and shall apply such funds to make final payments of
principal and interest on the Notes in accordance with Section 3.05(b) and
3.05(c) hereof, and this Indenture shall be discharged subject to the provisions
of Section 4.10 hereof. If for any reason the amount deposited by the Issuer is
not sufficient to make such redemption or such redemption cannot be completed
for any reason, the amount so deposited by
49
the Issuer with the Indenture Trustee shall be immediately returned to the
Issuer in full and shall not be used for any other purpose or be deemed to be
part of the Trust Estate.
[Section 8.08. PAYMENTS UNDER THE NOTE INSURANCE POLICY. (a) On the
second Business Day prior to any Payment Date the Indenture Trustee on behalf of
the Noteholders shall make a draw on the Note Insurance Policy in an amount, if
any, equal to the Deficiency Amount.
(b) If the Indenture Trustee determines that a Deficiency Amount will
exist for the following Payment Date, then the Indenture Trustee shall submit a
Notice (as defined in the Note Insurance Policy) for payment in the amount of
the Deficiency Amount to the Note Insurer no later than 12:00 Noon, New York
City time, on the second Business Day prior to the applicable Payment Date. Upon
receipt of such Deficiency Amount in accordance with the terms of the Note
Insurance Policy, the Indenture Trustee shall deposit such Deficiency Amount in
the Note Distribution Account for distribution to Noteholders pursuant to
Section 3.05 hereof or with respect to an acceleration pursuant to Section 5.04
hereof.
In addition, a draw may be made under the Note Insurance Policy in
respect of any Preference Amount (as defined in and pursuant to the terms and
conditions of the Note Insurance Policy) and the Indenture Trustee shall submit
a Notice (as defined in the Note Insurance Policy) for payment with respect
thereto together with the other documents required to be delivered to the Note
Insurer pursuant to the Note Insurance Policy in connection with a draw in
respect of any Preference Amount.
(c) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Notes from moneys
received under the Note Insurance Policy. The Note Insurer shall have the right
to inspect such records at reasonable time during normal business hours upon one
Business Day's prior notice to the Indenture Trustee at the expense of the Note
Insurer.]
[Section 8.09. REPLACEMENT NOTE INSURANCE POLICY. In the event of a
Note Insurer Default (a "Replacement Event"), the Issuer, at its expense, in
accordance with and upon satis faction of the conditions set forth in the Note
Insurance Policy, including, without limitation, payment in full of all amounts
owed to the Note Insurer, may, but shall not be required to, sub stitute a new
surety bond or surety bonds for the existing Note Insurance Policy or may
arrange for any other form of credit enhancement; PROVIDED, HOWEVER, that in
each case the Notes shall be rated no lower than the rating assigned by each
Rating Agency to the Notes immediately prior to such Replacement Event and the
timing and mechanism for drawing on such new credit enhancement shall be
reasonably acceptable to the Indenture Trustee and provided further that the
premiums under the proposed credit enhancement shall not exceed such premiums
under the existing Note Insurance Policy. It shall be a condition to
substitution of any new credit enhancement that there be delivered to the
Indenture Trustee (i) an Opinion of Counsel, acceptable in form to the Indenture
Trustee, from counsel to the provider of such new credit enhancement with
respect to the enforceability thereof and such other matters as the Indenture
Trustee may require and (ii) an Opinion of Counsel to the effect that such
substitution would not (a) result in a "substantial modification" of the Notes
under Treasury Regulation section 1.1001-3, or adversely
50
affect the status of the Notes as indebtedness for federal income tax purposes,
or (b) [if 100% of the Certificates are not owned by ________________________,
cause the Trust to be subject to an entity level tax for federal income tax
purposes.] Upon receipt of the items referred to above and payment of all
amounts owing to the Note Insurer and the taking of physical possession of the
new credit enhancement, the Indenture Trustee shall, within five Business Days
following receipt of such items and such taking of physical possession, deliver
the replaced Note Insurance Policy to the Note Insurer. In the event of any such
replacement the Issuer shall give written notice thereof to the Rating
Agencies.]
[Section 8.10. WITHDRAWALS FROM PRE-FUNDING ACCOUNT. Upon receipt of
written notice from the Seller in accordance with a Subsequent Transfer
Agreement, the Indenture Trustee shall withdraw from the Pre-Funding Account and
pay to the Seller an amount equal to the Purchase Price for each Subsequent
Mortgage Loan as set forth in such written notice. On the _____ Payment Date,
the Indenture Trustee shall withdraw the Pre-Funding Amount on such date
(exclusive of any related Pre-Funding Account Earnings still on deposit therein)
and deposit such amount in the Note Distribution Account to be applied to reduce
the Note Principal Balance of the Class ____ Notes. Any Pre-Funding Account
Earnings still on deposit therein shall promptly be paid to [the Servicer as
additional servicing compensation].]
[Section 8.11. WITHDRAWALS FROM THE CAPITALIZED INTEREST ACCOUNT. (a)
One Business Day prior to each Payment Date during the Funding Period, the
Indenture Trustee, based on the information set forth in the Servicer's Report
for such Payment Date, shall withdraw from the Capitalized Interest Account an
amount equal to the Capitalized Interest Distribution Amount and deposit such
amount into the Note Distribution Account.
(b) At the end of the Funding Period, any amounts remaining in the
Capitalized Interest Account shall be paid to the [Seller].]
[Section 8.12. EFFECT OF PAYMENTS BY THE NOTE INSURER; SUBROGATION. (a)
Anything herein to the contrary notwithstanding, any distribution of principal
of or interest on the Notes that is made with moneys received pursuant to the
terms of the Note Insurance Policy shall not be considered payment of the Notes
by the Issuer and shall not discharge the Trust assets in respect of such
distribution. The Indenture Trustee acknowledges that, without the need for any
further action on the part of the Note Insurer, the Indenture Trustee or the
Note Registrar, (i) to the extent the Note Insurer makes payments, directly or
indirectly, on account of principal of or interest on the Notes to the
Noteholders thereof, the Note Insurer will be fully subrogated to the rights of
such Noteholders to receive such principal and interest from distributions of
the assets of the Trust and will be deemed to the extent of the payments so made
to be a Noteholder and (ii) the Note Insurer shall be paid principal and
interest in its capacity as a Noteholder until all such payments by the Note
Insurer have been fully reimbursed, but only from the sources and in the manner
provided herein for the distribution of such principal and interest and in each
case only after the Noteholders have received all payments of principal and
interest due to them under this Agreement.
(b) Without limiting the rights or interests of the Noteholders as
otherwise set forth herein, so long as no Note Insurer Default exists, the
Indenture Trustee shall cooperate in all
51
respect with any reasonable request by the Note Insurer for action to preserve
or enforce the Note Insurer's rights or interests under this Agreement,
including, upon the occurrence and continuance of a Servicing Default, a request
to take any one or more of the following actions:
(i) institute proceedings for the collection of all
amounts then payable on the Notes or under this Agreement, enforce any
judgment obtained and collect moneys adjudged due; and
(ii) 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 Note Insurer hereunder.]
52
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 [consent of
the Note Insurer] [notice to the Rating Agencies], the Issuer and the Indenture
Trustee, when authorized by an Issuer Request, at any time and from time to
time, may enter into one or more indentures supplemental hereto (which shall
conform to the provisions of the TIA as in force at the date of the execution
thereof), in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any
property at any time subject to the lien of this Indenture, or better
to assure, convey and confirm unto the Indenture Trustee any property
subject or required to be subjected to the lien of this Indenture, or
to subject to the lien of this Indenture additional property;
(ii to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the 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;
(vi) to make any other provisions with respect to matters
or questions arising under this Indenture or in any supplemental
indenture; provided, that such action shall not materially and
adversely affect the interests of the Holders of the Notes;
(vii) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI hereof; or
(viii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA;
53
provided, however, that no such indenture supplements shall be entered into
unless the Indenture Trustee shall have received an Opinion of Counsel that
entering into such indenture supplement will not result in a "substantial
modification" of the Notes under Treasury Regulation Section 1.1001.3 or
adversely affect the status of the Notes as indebtedness for federal income tax
purposes.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Request, may, also without the consent of any of the Holders of the Notes but
with prior notice to [the Note Insurer] [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 an Opinion of Counsel, (i) adversely affect in any material
respect the interests of any Noteholder or (ii) if 100% of the Certificates are
not owned by ________________________, cause the Issuer to be subject to an
entity level tax for federal income tax purposes.
Section 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, also
may, with prior notice to the Rating Agencies and, with the consent of [the Note
Insurer and] the Holders of not less than a majority of the Note Principal
Balances of the Notes affected thereby, by Act (as defined in Section 10.03
hereof) 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
supple mental indenture shall, without the consent of the Holder of each Note
affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount
thereof or the interest rate thereon, change the provisions of this
Indenture relating to the application of collections on, or the
proceeds of the sale of, the Trust Estate to payment of principal of or
interest on the Notes, or change any place of payment where, or the
coin or currency in which, any Note or the interest thereon is payable,
or impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Notes on or after the respective due dates
thereof;
(ii) reduce the percentage of the Note Principal
Balances of the Notes, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of
which is required for any waiver of compliance with certain provisions
of this Indenture or certain defaults hereunder and their consequences
provided for in this Indenture;
54
(iii) modify or alter the provisions of the proviso to
the definition of the term "Outstanding" or modify or alter the
exception in the definition of the term "Holder";
(iv) reduce the percentage of the Note Principal
Balances of the Notes required to direct the Indenture Trustee to
direct the Issuer to sell or liquidate the Trust Estate pursuant to
Section 5.04 hereof;
(v) modify any provision of this Section 9.02 except to
increase any percentage specified herein or to provide that certain
additional provisions of this Indenture or the Basic Documents cannot
be modified or waived without the consent of the Holder of each Note
affected thereby;
(vi) 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
(vii) permit the creation of any lien ranking prior to or
on a parity with the lien of this Indenture with respect to any part of
the Trust Estate or, except as otherwise permitted or contemplated
herein, terminate the lien of this Indenture on any property at any
time subject hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture; and provided, further, that
such action shall not, as evidenced by an Opinion of Counsel, cause the
Issuer [(if 100% of the Certificates are not owned by _______________)]
to be subject to an entity level tax.
The Indenture Trustee may, in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
9.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture 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. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
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,
55
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Indenture Trustee may, but
shall not be obligated to, enter into any such supplemental indenture that
affects the Indenture Trustee's own rights, duties, liabilities or immunities
under this Indenture or otherwise.
Section 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance therewith
with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the 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 require ments of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
Section 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Inden ture
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.
56
ARTICLE X
MISCELLANEOUS
Section 10.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC. [REVISE AS
APPROPRIATE] (a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee [and the Note 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 and (ii) an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every 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;
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with; and
(5) if the signatory of such certificate or opinion is
required to be Independent, the statement required by the definition of
the term "Independent".
(b)(i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 10.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee [and the Note
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 and a report from a nationally recognized accounting firm verifying
such value.
57
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee [and the Note Insurer] an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters described in clause
(i) above, the Issuer shall also deliver to the Indenture Trustee an Independent
Certificate from a nationally recognized accounting firm as to the same matters,
if the fair value to the Issuer of the securities to be so deposited and of all
other such securities made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set forth in the
certificates delivered pursuant to clause (i) above and this clause (ii), is 10%
or more of the Note Principal Balances of the Notes, but such a certificate need
not be furnished with respect to any securities so deposited, if the fair value
thereof to the Issuer as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the Note Principal Balances of the
Notes.
(iii) Whenever any property or securities are to be
released from the lien of this Indenture, the Issuer shall also furnish to the
Indenture Trustee [and the Note 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.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee [and the Note Insurer] an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Indenture Trustee [and the
Note 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
property as contemplated by clause (v) below or securities released from the
lien of this Indenture since the commencement of the then-current calendar year,
as set forth in the certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Note Principal Balances of the Notes, but such
certificate need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the then Note
Principal Balances of the Notes.
Section 10.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations
58
by, an officer or officers of the Seller or the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Seller or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 10.03. ACTS OF NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee, and,
where it is hereby expressly required, to the Issuer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of 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 10.03
hereof.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by 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.
Section 10.04. NOTICES, ETC., TO INDENTURE TRUSTEE, [NOTE INSURER,]
ISSUER AND RATING AGENCIES. Any request, demand, authorization, direction,
notice, consent, waiver or Act of
59
Noteholders or other documents provided or permitted by this Indenture shall be
in writing and if such request, demand, authorization, direction, notice,
consent, waiver or act of Noteholders is to be made upon, given or furnished to
or filed with:
(i) the Indenture Trustee by any Noteholder or by the
Issuer shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at the
Corporate Trust Office. The Indenture Trustee shall promptly transmit
any notice received by it from the Noteholders to the Issuer, or
(ii) the Issuer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if in
writing and mailed first-class, postage prepaid to the Issuer addressed
to: AFC Trust Series ____-__, in care of OWNER TRUSTEE,
______________________________, Attention: ___________________, or at
any other address previously furnished in writing to the Indenture
Trustee by the Issuer. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed first-class postage pre-paid, to (i) in the case of _________________,
at the following address: _______________ and (ii) in the case of
_______________, at the following address: _________________; or as to each of
the foregoing, at such other address as shall be designated by written notice to
the other parties.
Section 10.05. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Person's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
60
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute an Event of
Default.
Section 10.06. 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 xx.xx. 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 10.07. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 10.08. 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 10.09. 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 10.10. BENEFITS OF INDENTURE. The Note Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture. To the extent that this Indenture confers upon or gives or
grants to the Note Insurer any right, remedy or claim under or by reason of this
Indenture, the Note Insurer may enforce any such right, remedy or claim
conferred, given or granted hereunder. 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, and the Noteholders [and the Note
Insurer], any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 10.11. 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 10.12. 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.
61
Section 10.13. 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 10.14. 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 its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
Section 10.15. 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 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 have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
Section 10.16. 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 Depositor or the
Issuer, or join in any institution against the Depositor or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents. This Section 10.16 will survive for one
year following the termination of this Indenture.
Section 10.17. INSPECTION. The Issuer agrees that, on reasonable prior
notice, it shall permit any representative of the Indenture Trustee [and the
Note 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
62
Independent certified public accountants, and to discuss the Issuer's affairs,
finances and accounts with the Issuer's officers, employees, and Independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Indenture Trustee [and the Note Insurer] shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
63
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
AFC Trust Series ____-__,
as Issuer
By:______________________________
OWNER TRUSTEE,
not in its individual capacity
but solely as Owner Trustee
[_________________________________]
as Indenture Trustee, as Certificate Paying Agent
and as Note Registrar
By:_____________________________
Name:
Title:
[______________________________]
hereby accepts the appointment as Certificate
Paying Agent pursuant to Section 3.03 hereof
and as Certificate Registrar pursuant to
Section 4.02 hereof.
By:___________________________
Name:
Title:
64
STATE OF ___________ )
) ss.:
COUNTY OF ____________ )
On this _____ day of _______________________, before me personally
appeared _____________________ to me known, who being by me duly sworn, did
depose and say, that she resides at ______________________, she is the
___________________________ of the Owner Trustee, one of the corporations
described in and which executed the above instrument; that she knows the seal of
said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation; and that she signed her name thereto by like order.
Notary Public
____________________________________________
NOTARY PUBLIC
My Commission expires ______________________
[NOTARIAL SEAL]
65
STATE OF )
) ss.:
COUNTY OF )
On this _____ day of ____________________, before me personally
appeared ____________________ to me known, who being by me duly sworn, did
depose and say, that she is the ____________________ of _____________________,
as Indenture Trustee, one of the corporations described in and which executed
the above instrument; that she knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation; and that she signed her
name there to by like order.
Notary Public
______________________________________
[NOTARIAL SEAL]
66
EXHIBIT A-1
FORM OF CLASS A NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON
THIS NOTE.
PRINCIPAL OF THIS NOTE IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.
AFC MORTGAGE LOAN ASSET BACKED NOTES, SERIES ___-__
CLASS A
AGGREGATE NOTE PRINCIPAL NOTE INTEREST RATE:____%
BALANCE:$
INITIAL NOTE PRINCIPAL
BALANCE OF THIS NOTE: NOTE NO.
$
PERCENTAGE INTEREST: ____% CUSIP NO.
67
AFC Trust Series ___-__ (the "Issuer"), a Delaware business trust, for
value received, hereby promises to pay to CEDE & CO. or registered assigns, the
principal sum of _______________________________________________________________
($_________________) in monthly installments on the twenty-fifth day of each
month or, if such day is not a Business Day, the next succeeding Business Day
(each a "Payment Date"), commencing in [________________] _____ and ending on or
before the Payment Date occurring in [___________________] (the "Stated
Maturity") and to pay interest on the Note Principal Balance of this Class A
Note (this "Note") outstanding from time to time as provided below.
This Note is one of a duly authorized issue of the Issuer's AFC
Mortgage Loan Asset Backed Notes, Series _____-__ (the "Notes"), issued under an
Indenture dated as of [__________________] (the "Indenture"), between the Issuer
and [__________________________________], as indenture trustee (the "Indenture
Trustee", which term includes any successor Indenture Trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights thereunder of the
Issuer, the Indenture Trustee, and the Holders of the Notes and the terms upon
which the Notes are to be authenticated and delivered. All terms used in this
Note which are defined in the Indenture shall have the meanings assigned to them
in the Indenture.
[Payments of principal and interest on this Note will be made on each
Payment Date to the Noteholder of record as of the related Record Date. On each
Payment Date, Noteholders will be entitled to receive interest payments in an
aggregate amount equal to the aggregate Accrued Note Interest for such Payment
Date, together with principal payments in an aggregate amount equal to the Note
Principal Distribution Amount, if any, for such Payment Date. The "Note
Principal Balance" of a Note as of any date of determination is equal to the
initial Note Principal Balance thereof, reduced by the aggregate of all amounts
previously paid with respect to such Note on account of principal and the
aggregate amount of cumulative Realized Losses allocated to such Note on all
prior Payment Dates.]
The principal of, and interest on, this Note are due and payable as
described in the Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. All payments made by the Issuer with respect to this Note shall
be equal to this Note's pro rata share of the aggregate payments on all Notes as
described above, and shall be applied as between interest and principal as
provided in the Indenture.
[[NOTE INSURER] (the "Note Insurer"), in consideration of the payment
of the premium and subject to the terms of the financial guaranty insurance
policy (the "Note Insurance Policy") issued thereby, has unconditionally and
irrevocably guaranteed the payment of the Insured Amount with respect to each
Payment Date. The Note Insurance Policy will not cover any Prepayment Interest
Shortfalls, Relief Act Shortfalls or Available Funds Cap Carry-Forward Amount.]
All principal and interest accrued on the Notes, if not previously
paid, will become finally due and payable at the Final Scheduled Payment Date.
68
The Notes are subject to redemption in whole, but not in part, by the
Issuer on any Payment Date on or after the earlier of (i) the Payment Date on
which the aggregate Principal Balance of the Mortgage Loans is less than or
equal to [20]% of the aggregate Principal Balance of the Mortgage Loans as of
the Cut-off Date and (ii) the Payment Date in [______________].
The Issuer shall not be liable upon the indebtedness evidenced by the
Notes except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate will be the sole source of payments on the Notes, and each Holder
hereof, by its acceptance of this Note, agrees that (i) such Note will be
limited in right of payment to amounts available from the Trust Estate as
provided in the Indenture and (ii) such Holder shall have no recourse to the
Issuer, the Depositor, the Owner Trustee, the Indenture Trustee, the Servicer or
any of their respective affiliates, or to the assets of any of the foregoing
entities, except the assets of the Issuer pledged to secure the Notes pursuant
to the Indenture and the rights conveyed to the Issuer under the Indenture.
Any payment of principal or interest payable on this Note which is
punctually paid on the applicable Payment Date shall be paid to the Person in
whose name such Note is registered at the close of business on the Record Date
for such Payment Date by check mailed to such person's address as it appears in
the Note Register on such Record Date, except for the final installment of
principal and interest payable with respect to such Note, which shall be payable
as provided below. Notwithstanding the foregoing, upon written request with
appropriate instructions by the Holder of this Note (holding an aggregate
Initial Note Principal Balance of at least $5,000,000) delivered to the
Indenture Trustee at least five Business Days prior to the Record Date, any
payment of principal or interest, other than the final installment of principal
or interest, shall be made by wire transfer to an account in the United States
designated by such Holder. All reductions in the principal amount of a Note (or
one or more Predecessor Notes) effected by payments of principal made on any
Payment Date shall be binding upon all Holders of this Note and of any Note
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Note. The final
payment of this Note shall be payable upon presentation and surrender thereof on
or after the Payment Date thereof at the Corporate Trust Office or the office or
agency of the Issuer maintained by it for such purpose pursuant to Section 3.02
of the Indenture.
Subject to the foregoing provisions, each Note delivered under the
Indenture, upon registration of transfer of or in exchange for or in lieu of any
other Note shall carry the right to unpaid principal and interest that were
carried by such other Note.
If an Event of Default as defined in the Indenture shall occur and be
continuing with respect to the Notes, the Notes may become or be declared due
and payable in the manner and with the effect provided in the Indenture. If any
such acceleration of maturity occurs prior to the payment of the entire unpaid
Note Principal Balance of the Notes, the amount payable to the Holder of this
Note will be equal to the sum of the unpaid Note Principal Balance of the Notes,
together with accrued and unpaid interest thereon as described in the Indenture.
The Indenture provides that, notwithstanding the acceleration of the maturity of
the Notes, under certain circumstances specified therein, all amounts collected
as proceeds of the Trust Estate securing the
69
Notes or otherwise shall continue to be applied to payments of principal of and
interest on the Notes as if they had not been declared due and payable.
The failure to pay any Unpaid Interest Shortfall at any time when funds
are not available to make such payment as provided in the Indenture shall not
constitute an Event of Default under the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note may be registered on the Note Register of
the Issuer. Upon surrender for registration of transfer of, or presentation of a
written instrument of transfer for, this Note at the office or agency designated
by the Issuer pursuant to the Indenture, accompanied by proper instruments of
assignment in form satisfactory to the Indenture Trustee, one or more new Notes
of any authorized denominations and of a like aggregate initial Note Principal
Balance, will be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note is registered as the owner
of such Note (i) on the applicable Record Date for the purpose of making
payments and interest of such Note, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of [the Note Insurer or] the Holders of a
majority of all Notes at the time outstanding. The Indenture also contains
provisions permitting [the Note Insurer or] the Holders of Notes representing
specified percentages of the aggregate Note Principal Balance of the Notes on
behalf of the Holders of all the Notes, to waive any past Default under the
Indenture and its consequences. Any such waiver by [the Note Insurer or] the
Holder, at the time of the giving thereof, of this Note (or any one or more
Predecessor Notes) shall bind the Holder of every Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon such Note. The Indenture
also permits the Issuer and the Indenture Trustee to amend or waive certain
terms and conditions set forth in the Indenture without the consent of the
Holders of the Notes issued thereunder.
Initially, the Notes will be registered in the name of CEDE & Co. as
nominee of DTC, acting in its capacity as the Depository for the Notes. The
Notes will be delivered by the clearing agency in denominations as provided in
the Indenture and subject to certain limitations therein set forth. The Notes
are exchangeable for a like aggregate initial Note Principal Balance of Notes of
different authorized denominations, as requested by the Holder surrendering
same.
70
Unless the Certificate of Authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for any purpose.
AS PROVIDED IN THE INDENTURE, THIS NOTE AND THE INDENTURE CREATING THIS
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
71
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by OWNER TRUSTEE, not in its individual capacity but solely as Owner
Trustee.
Dated: [____________], _____
AFC TRUST SERIES ___-__
BY: OWNER TRUSTEE, not in its individual
capacity but solely in its capacity as Owner
Trustee
By:_______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Notes referred to in the within-mentioned Indenture.
[____________________],
as Indenture Trustee
By:______________________________________
Authorized Signatory
72
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of the Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as
tenants
in common
UNIF GIFT MIN ACT -- __________________ Custodian _________________________
(Cust) (Minor)
under Uniform Gifts to Minor Act _______________________
(State)
Additional abbreviations may also be used though not in the above list.
73
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE:
_________________________________________
_________________________________________
_________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
________________________________________________________________________________
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints __________________ attorney to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated:__________________________________ ___________________________________
Signature Guaranteed by ___________________________________________________
NOTICE: The signature(s) to this assignment must correspond with the
name as it appears upon the face of the within Note in every particular, without
alteration or enlargement or any change whatsoever. Signature(s) must be
guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange or another national securities exchange. Notarized or witnessed
signatures are not acceptable.
74
EXHIBIT A-2
FORM OF CLASS ___ NOTES
[ADD AS APPROPRIATE]
75
EXHIBIT A-3
FORM OF CLASS ___ NOTES
[ADD AS APPROPRIATE]
76
EXHIBIT B
FORM OF TRUSTEE INITIAL CERTIFICATION
[Closing Date]
[Servicer]
[Depositor]
______________________
______________________
Re: Indenture, dated as of [___________], _____, between AFC Trust
Series ____-__ and [_______________], AFC Mortgage Loan Asset
Backed Notes, Series ____-__
Gentlemen:
In accordance with Section 2.03 of the above-captioned
Indenture, and Section [2.1(___)] of the Mortgage Loan Purchase Agreement, dated
as of [______________], ______ between Superior Bank FSB, _______________ and
AFC Trust Series ______-__ (the "Mortgage Loan Purchase Agreement"; and together
with the Indenture, the "Agreements"), the undersigned, as Indenture Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule annexed hereto (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it has reviewed the Mortgage File and the Mortgage Loan
Schedule and has determined that: (i) all documents required to be included in
the Mortgage File are in its possession; (ii) such documents have been reviewed
by it and appear regular on their face and relate to such Mortgage Loan; and
(iii) based on examination by it, and only as to such documents, the information
set forth in items (i) - (vi) of the definition or description of "Mortgage Loan
Schedule" is correct.
The Indenture Trustee has made no independent examination of
any documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Agreements. The Indenture Trustee makes no
representation that any documents specified in clause (v) of Section 2.1(e) of
the Mortgage Loan Purchase Agreement should be included in any Mortgage File.
The Indenture Trustee makes no representations as to and shall not be
responsible to verify: (i) the validity, legality, sufficiency, enforceability,
due authorization, recordability or genuineness of any of the documents
contained in each Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan, or (iii) the existence of any assumption,
modification, written assurance or substitution agreement with respect to any
Mortgage File if no such documents appear in the Mortgage File delivered to the
Indenture Trustee.
77
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Indenture.
[--------------------------------], as
Indenture Trustee
By:_________________________________
Name:
Title:
78
EXHIBIT C
FORM OF TRUSTEE FINAL CERTIFICATION
[date]
[Servicer]
[Depositor]
______________________
______________________
Re: Indenture, dated as of [___________], ______, between AFC
Trust Series ___-__ and [______________________], AFC
Mortgage Loan Asset Back Notes, Series ____-__
Gentlemen:
In accordance with Section 2.03 of the above-captioned
Indenture, and Section 2.1(e) of the Mortgage Loan Purchase Agreement, dated as
of [_______________], _____ between Superior Bank FSB, ________________________
and AFC Trust Series ___-__ (the "Mortgage Loan Purchase Agreement"; and
together with the Indenture, the "Agreements"), the undersigned, as Indenture
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule annexed hereto (other than any Mortgage Loan paid in full or
listed on the attachment hereto) it has received the documents set forth in
Section 2.1(e) of the Mortgage Loan Purchase Agreement.
The Indenture Trustee has made no independent examination of
any documents contained in each Mortgage File beyond the review specifically
required in the Agreements. The Indenture Trustee makes no representation that
any documents specified in clause (v) of Section 2.1(e) should be included in
any Mortgage File. The Indenture Trustee makes no representations as to and
shall not be responsible to verify: (i) the validity, legality, sufficiency,
enforceability, due authorization, recordability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) the existence of
any assumption, modification, written assurance or substitution agreement with
respect to any Mortgage File if no such documents appear in the Mortgage File
delivered to the Indenture Trustee.
79
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Indenture.
[_______________________________], as
Indenture Trustee
By:__________________________________
Name:
Title:
80
EXHIBIT D
MORTGAGE LOAN SCHEDULE
81
[EXHIBIT E
CERTIFICATE OF NON-FOREIGN STATUS
This Certificate of Non-Foreign Status ("Certificate") is delivered
pursuant to Section 4.02 of the Indenture (the "Indenture"), dated as of
[_________________], ___, between AFC Trust Series ____-__ and
[________________________________], in connection with the acquisition of,
transfer to or possession by the undersigned, whether as beneficial owner (the
"Beneficial Owner"), or nominee on behalf of the Beneficial Owner of the AFC
Mortgage Loan Asset Backed Notes, Series _____-__ Class ___ Note (the "Note").
Capitalized terms used but not defined in this certificate have the respective
meanings given them in the Indenture.
Each holder must complete Part I, Part II (if the holder is a nominee), and in
all cases sign and otherwise complete Part III.
In addition, each holder shall submit with the Certificate an IRS Form W-9
relating to such holder.
To confirm to the Indenture Trustee that the provisions of Sections 871, 881 or
1446 of the Internal Revenue Code (relating to withholding tax on foreign
partners) do not apply in respect of the Note held by the undersigned, the
undersigned hereby certifies:
PART I - COMPLETE EITHER A OR B
-------------------------------------------------
A. Individual as Beneficial Owner
1. [I am ][The Beneficial Owner is] not a
non-resident alien for purposes of U.S.
income taxation;
2. [My][The Beneficial Owner's] name and home
address are:
; and
3. [My][The Beneficial Owner's] [U.S. taxpayer
identification number][Social Security
Number] is .
B. Corporate, Partnership or Other Entity as Beneficial
Owner
1. [Name of the Beneficial Owner] is not a
foreign corporation, foreign partnership,
foreign trust or foreign estate (as those
terms are defined in the Code and Treasury
Regulations);
2. The Beneficial Owner's office address and
place of incorporation (if applicable) is ;
and
82
3. The Beneficial Owner's U.S. employer
identification number is .
PART II - NOMINEES
-----------------------------------
If the undersigned is the nominee for the Beneficial Owner, the
undersigned certifies that this certificate has been made in reliance upon
information contained in:
an IRS Form W-9
a form such as this or substantially similar
provided to the undersigned by an appropriate person and (i) the undersigned
agrees to notify the Indenture Trustee at least (30) days prior to the date that
the form relied upon becomes obsolete, and (ii) in connection with change in
Beneficial Owners, the undersigned agrees to submit a new Certificate of
Non-Foreign Status to the Indenture Trustee promptly after such change.
PART III - DECLARATION
-----------------------------
The undersigned, as the Beneficial Owner or a nominee thereof, agrees
to notify the Indenture Trustee within sixty (60) days of the date that the
Beneficial Owner becomes a foreign person. The undersigned understands that this
certificate may be disclosed to the Internal Revenue Service by the Indenture
Trustee and any false statement contained therein could be punishable by fines,
imprisonment or both.
83
Under penalties of perjury, I declare that I have examined this
certificate and to the best of my knowledge and belief it is true, correct and
complete and will further declare that I will inform the Indenture Trustee of
any change in the information provided above, and, if applicable, I further
declare that I have the authority* to sign this document.
Name
Title (if applicable)
Signature and Date
*Note: If signed pursuant to a power of attorney, the power of attorney must
accompany this certificate.]
84
APPENDIX A
DEFINITIONS
ACCRUED NOTE INTEREST: With respect to each Payment Date, one
month's interest accrued at the related Note Interest Rate on the Note Principal
Balance thereof immediately prior to such Payment Date. Accrued Note Interest
for the Notes shall be calculated on the basis of the actual number of days in
the related Interest Period and a 360-day year.
ADDITION NOTICE: With respect to the transfer of Subsequent
Mortgage Loans to the Issuer pursuant to Section 2.1(b) of the Mortgage Loan
Purchase Agreement, notice substantially in the form of Exhibit B thereto, which
shall be given not later than two (2) Business Days prior to the related
Subsequent Transfer Date of the Seller's designation of Subsequent Mortgage
Loans to be sold to the Issuer and the aggregate principal balance of such
Subsequent Mortgage Loans.
ADJUSTMENT DATE: As to each Mortgage Loan, each date set forth
in the related Mortgage Note on which an adjustment to the interest rate on such
Mortgage Loan becomes effective.
ADMINISTRATIVE FEE: The amount of the fee payable to the Owner
Trustee together with the amount of the premium payable to the Note Insurer,
which will accrue at ___% per annum based on the Note Principal Balance of the
Notes.
ADVANCE: As to any Mortgage Loan, any advance made by the
Servicer, pursuant to Section 4.04 of the Servicing Agreement.
AFFILIATE: With respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise and "controlling" and "controlled"
shall have meanings correlative to the foregoing.
APPRAISED VALUE: The appraised value of a Mortgaged Property
based upon the lowest of (i) the appraisal made at the time of the origination
of the related Mortgage Loan, (ii) the sales price of such Mortgaged Property at
such time of origination, and (iii) a review appraisal.
ASSIGNMENT OF MORTGAGE: An assignment of Mortgage, notice of
transfer or equivalent instrument, in recordable form, which is sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to reflect of record the sale of the Mortgage, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering Mortgages secured by Mortgaged Properties located in the
same county, if permitted by law.
1
AUTHORIZED NEWSPAPER: A newspaper of general circulation in
the Borough of Manhattan, The City of New York, printed in the English language
and customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays.
AUTHORIZED OFFICER: With respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identi fied 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).
AVAILABLE FUNDS: As to any Payment Date, an amount equal to
the amount on deposit in the Payment Account on such Payment Date and available
for distribution by the Indenture Trustee (minus, if the Notes have been
declared due and payable following an Event of Default on such Payment Date, any
amounts owed to the Indenture Trustee by the Issuer pursuant to Section 6.07 of
the Indenture and any amounts owed to the Note Insurer by the Issuer pursuant to
Section 5.04(b) of the Indenture).
AVAILABLE FUNDS CAP CARRY-FORWARD AMOUNT: With respect to the
Notes and any Payment Date, an amount equal to the sum of (x) the amount, if
any, by which (a) the lesser of (1) the amount payable if clause (i) of the
definition of Note Interest Rate is used to calculate interest and (2) the
amount payable if the Maximum Note Interest Rate is used to calculate interest
exceeds (b) the amount payable if clause (ii) of the definition of Note Interest
Rate is used to calculate interest and (y) the interest accrued during the prior
Interest Period on the amount of any Available Funds Cap Carry-Forward Amount
immediately prior to such Payment Date, calculated on the basis of a 360-day
year and the actual number of days elapsed and using the Note Interest Rate
applicable to such Payment Date minus (z) the aggregate of all amounts
distributed to the Noteholders on all prior Payment Dates pursuant to Section
3.05(v) of the Indenture.
AVAILABLE FUNDS INTEREST RATE: As to any Payment Date, a per
annum rate equal to the lesser of (x) the fraction, expressed as a percentage,
the numerator of which is (i) an amount equal to (A) 1/12 of the aggregate
Principal Balance of the then outstanding Mortgage Loans times the weighted
average of the Expense Adjusted Mortgage Rates on the then outstanding Mortgage
Loans minus (B) the Administrative Fee for such Payment Date, and the
denominator of which is (ii) an amount equal to (A) the then outstanding
aggregate Note Principal Balance of the Notes multiplied by (B) the actual
number of days elapsed in the related Interest Period divided by 360 and (y) the
Maximum Note Interest Rate.
AVAILABLE DISTRIBUTION AMOUNT: With respect to any Payment
Date, the sum of all amounts described in clauses (i) through (vi) of Section
3.06 of the Servicing Agreement received by the Servicer (including any amounts
paid or advanced by the Servicer or the Seller and excluding (a) any amounts not
required to be deposited in the Collection Account pursuant to Section 3.06 of
the Servicing Agreement and (b) any amounts paid to the Indenture Trustee, the
Owner Trustee or the Servicer pursuant to Sections 3.07(ii) through (ix) of the
Servicing Agreement. No amount included in this definition by virtue of being
described by any component of the definition thereof shall be included twice by
virtue of also being described by any other component or otherwise.
2
BANKRUPTCY CODE: The Bankruptcy Code of 1978, as amended.
BASIC DOCUMENTS: The Trust Agreement, the Certificate of
Trust, the Indenture, the Mortgage Loan Purchase Agreement, the Insurance
Agreement, the Servicing Agreement and the other documents and certificates
delivered in connection with any of the above.
BENEFICIAL OWNER: With respect to any Note, the Person who is
the beneficial owner of such Note as reflected on the books of the Depository or
on the books of a Person maintaining an account with such Depository (directly
as a Depository Participant or indirectly through a Depository Participant, in
accordance with the rules of such Depository).
BOOK-ENTRY NOTES: Beneficial interests in the Notes, ownership
and transfers of which shall be made through book entries by the Depository as
described in Section 4.06 of the Indenture.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the City of New York, Delaware or
Illinois or in the city in which the corporate trust offices of the Indenture
Trustee or the principal office of the Note Insurer are
located, are required or authorized by law to be closed.
BUSINESS TRUST STATUTE: Chapter 38 of Title 12 of the Delaware
Code, 12 DEL. Code ss.ss.3801 ET SEQ., as the same may be amended from time to
time.
CAPITALIZED INTEREST ACCOUNT: The account or accounts created
and maintained pursuant to Section 2.4 of the Mortgage Loan Purchase Agreement.
The Capitalized Interest Account shall be an Eligible Account.
CAPITALIZED INTEREST DEPOSIT: $_____________.
CASH LIQUIDATION: As to any defaulted Mortgage Loan other than
a Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Servicer that it has received all Insurance Proceeds, Liquidation Proceeds and
other payments or cash recoveries which the Servicer reasonably and in good
faith expects to be finally recoverable with respect to such Mortgage Loan.
CERTIFICATE DISTRIBUTION ACCOUNT: The account or accounts
created and maintained pursuant to Section 3.10(c) of the Trust Agreement. The
Certificate Distribution Account shall be an Eligible Account.
CERTIFICATE PAYING AGENT: The meaning specified in Section
3.10 of the Trust Agreement.
CERTIFICATE PERCENTAGE INTEREST: With respect to each
Certificate, the Certificate Percentage Interest on the face thereof.
3
CERTIFICATE REGISTER: The register maintained by the
Certificate Registrar in which the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates.
CERTIFICATE REGISTRAR: Initially, the Indenture Trustee, in
its capacity as Certificate Registrar, or any successor to the Indenture Trustee
in such capacity.
CERTIFICATE OF TRUST: The Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute.
CERTIFICATES OR TRUST CERTIFICATES: The AFC Trust
Certificates, Series _____-__, evidencing the beneficial ownership interest in
the Issuer and executed by the Owner Trustee in substantially the form set forth
in Exhibit A to the Trust Agreement.
CERTIFICATEHOLDER: The Person in whose name a Certificate is
registered in the Certificate Register. Owners of Certificates that have been
pledged in good faith may be regarded as Holders if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Owner Trustee, as the case may
be, the pledgee's right so to act with respect to such Certificates and that the
pledgee is not the Issuer, any other obligor upon the Certificates or any
Affiliate of any of the foregoing Persons.
CLASS: Collectively, all of the Notes or Certificates bearing
the same designation.
CLASS A NOTES OR SENIOR NOTES: Any one of the Class A Notes.
CLOSING DATE: ______________.
CODE: The Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
COLLATERAL: The meaning specified in the Granting Clause of
the Indenture.
COLLECTION ACCOUNT: The account or accounts created and
maintained pursuant to Section 3.06(d) of the Servicing Agreement. The
Collection Account shall be an Eligible Account.
COLLECTION PERIOD: With respect to any Payment Date, the
calendar month immediately preceding the month in which such Payment Date
occurs.
[COMBINED LOAN-TO-VALUE RATIO: With respect to any Mortgage
Loan and any date, the percentage equivalent of a fraction, the numerator of
which is the Cut-Off Date Principal Balance of such Mortgage Loan and of any
mortgage loan or mortgage loans that are secured by liens on the Mortgaged
Property that are subordinate to the Mortgage and the denominator of which is
the Appraised Value of the related Mortgaged Property.]
4
COMPENSATING INTEREST: With respect to any Determination Date,
an amount equal to the lesser of (i) the aggregate amount of Prepayment Interest
Shortfall for the related Prepayment Period and (ii) the Servicing Fee for such
Determination Date.
[CONVERTED MORTGAGE LOAN: Any Convertible Mortgage Loan with
respect to which the interest rate borne by such Mortgage Loan has been
converted from an adjustable interest rate to a fixed interest rate.]
[CONVERTIBLE MORTGAGE LOAN: Any Mortgage Loan which by its
terms grants to the related Mortgagor the option to convert the interest rate
borne by such Mortgage Loan from an adjustable interest rate to a fixed interest
rate.]
[CONVERTING MORTGAGE LOAN: Any Convertible Mortgage Loan with
respect to which the related Mortgagor has given notice of his intent to convert
from an adjustable interest rate to a fixed interest rate and prior to the
conversion of such Mortgage Loan.]
CORPORATE TRUST OFFICE: With respect to the Indenture Trustee,
Certificate Registrar, Certificate Paying Agent and Paying Agent, the principal
corporate trust office of the Indenture Trustee and Note Registrar at which at
any particular time its corporate trust business shall be administered, which
office at the date of the execution of this instrument is located at
____________________, Attention: AFC Trust Series ____-__, except that for
purposes of Section 4.02 of the Indenture and Section 3.09 of the Trust
Agreement, such term shall include the Indenture Trustee's office or agency at
______________, New York, New York ______, Attention: Certificate Transfers.
With respect to the Owner Trustee, the principal corporate trust office of the
Owner Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this Trust
Agreement is located at __________________________, Attention: AFC Trust Series
____-__.
[CUMULATIVE LOSS PERCENTAGE: As to any Payment Date and the
Mortgage Loans, the percentage equivalent of the fraction obtained by dividing
(i) the aggregate of Realized Losses on the Mortgage Loans from the Cut-Off Date
through such Payment Date by (ii) the aggregate Principal Balance of the
Mortgage Loans as of the Cut-off Date.]
CUT-OFF DATE PRINCIPAL BALANCE: With respect to any Initial
Mortgage Loan, the unpaid principal balance thereof as of the related Initial
Cut-off Date.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation or any reduction that results in a
permanent forgiveness of principal.
DEFAULT: Any occurrence which is or with notice or the lapse
of time or both would become an Event of Default.
DEFICIENCY AMOUNT: The meaning provided in the Note Insurance
Policy.
5
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Mortgage Loan, or
any reduction in the amount of principal to be paid in connection with any
scheduled Monthly Payment that constitutes a permanent forgiveness of principal,
which valuation or reduction results from a proceeding under the Bankruptcy
Code.
DEFINITIVE NOTES: The meaning specified in Section 4.06 of the
Indenture.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be
replaced with an Eligible Substitute Mortgage Loan.
[DELINQUENCY PERCENTAGE: As of the last day of any Collection
Period and with respect to the Mortgage Loans, the percentage equivalent of a
fraction, the numerator of which equals the aggregate Principal Balance of the
Mortgage Loans that are 60 or more days delinquent, in foreclosure or converted
to REO Properties as of such last day of such Collection Period, and the
denominator of which is the aggregate Principal Balance of the Mortgage Loans as
of the last day of such Collection Period.]
DEPOSITOR: Superior Bank FSB, or its successor in interest.
DEPOSITORY OR DEPOSITORY AGENCY: The Depository Trust Company
or a successor appointed by the Indenture Trustee with the approval of the
Depositor. Any successor to the Depository shall be an organization registered
as a "clearing agency" pursuant to Section 17A of the Exchange Act and the
regulations of the Securities and Exchange Commission thereunder.
DEPOSITORY PARTICIPANT: A Person for whom, from time to time,
the Depository effects book-entry transfers and pledges of securities deposited
with the Depository.
DETERMINATION DATE: With respect to any Payment Date, the
second Business Day preceding such Payment Date.
DUE DATE: The date on which the Monthly Payment on the related
Mortgage Loan is due in accordance with the terms of the related Mortgage Note.
DUE PERIOD: With respect to any Payment Date, the period
commencing on and including the second day of the month preceding the month of
such Payment Date (or, with respect to the first Due Period, the day following
the Initial Cut-off Date) and ending on and including the first day of the month
of such Payment Date.
ELIGIBLE ACCOUNT: An account that is any of the following: (i)
maintained with a depository institution the short term deposits of which have
been rated by each Rating Agency in its highest rating available, or (ii) an
account or accounts in a depository institution in which such accounts are fully
insured to the limits established by the FDIC, PROVIDED that any deposits not so
insured shall, to the extent acceptable to the Note Insurer and each Rating
Agency, as evidenced in writing, be maintained such that (as evidenced by an
Opinion of Counsel delivered to the
6
Indenture Trustee, the Note Insurer and each Rating Agency) the Indenture
Trustee have a claim with respect to the funds in such account or a perfected
first security interest against any collateral (which shall be limited to
Eligible Investments) securing such funds that is superior to claims of any
other depositors or creditors of the depository institution with which such
account is main tained, or (iii) either (A) a trust account or accounts
maintained by the trust department of the Indenture Trustee or other federal or
state chartered depository institution acting in its fiduciary capacity or (B)
an account or accounts maintained by the Indenture Trustee or other federal or
state chartered depository institution, as long as its short term debt
obligations are rated P-1 by Moody's, F-1 by Fitch and A-1 by Standard & Poor's
or better and its long term debt obligations are rated A2 by Moody's, A by Fitch
and A by Standard & Poor's or better, or (iv) an account or accounts of a
depository institution acceptable to each Rating Agency as evidenced in writing
by each Rating Agency that use of any such account as the Collection Account or
the Payment Account will not reduce the rating assigned to any of the Securities
by such Rating Agency below investment grade without taking into account the
Note Insurance Policy and acceptable to the Note Insurer as evidenced in
writing.
ELIGIBLE INVESTMENTS: One or more of the following:
(i) direct obligations of, and obligations fully
guaranteed by, the United States of America, the Federal Home Mortgage
Corporation, the Federal National Mortgage Association, the Federal
Home Loan Banks or any agency or instrumentality of the United States
of America the obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of
deposit of, banker's acceptances issued by or federal funds sold by any
depository institution or trust company (including the Indenture
Trustee or its agent acting in their respective commercial capacities)
incorporated under the laws of the United States of America or any
State thereof and subject to supervision and examination by federal
and/or state authorities, so long as at the time of such investment or
contractual commitment providing for such investment, such depository
institution or trust company has a short term unsecured debt rating in
the highest available rating category of each of the Rating Agencies
and provided that each such investment has an original maturity of no
more than 365 days, and (B) any other demand or time deposit or deposit
which is fully insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with a term not to exceed 30
days with respect to any security described in clause (i) above and
entered into with a depository institution or trust company (acting as
a principal) rated "A" or higher by S&P and Fitch and A2 or higher by
Moody's; provided, however, that collateral transferred pursuant to
such repurchase obligation must (A) be valued weekly at current market
price plus accrued interest, (B) pursuant to such valuation, equal, at
all times, 105% of the cash transferred by the Indenture Trustee in
exchange for such collateral and (C) be delivered to the Indenture
Trustee or, if the Indenture Trustee is supplying the collateral, an
agent for the
7
Indenture Trustee, in such a manner as to accomplish perfection of a
security interest in the collateral by possession of certificated
securities.
(iv) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United
States of America or any State thereof which has a long term unsecured
debt rating in the highest available rating category of each of the
Rating Agencies at the time of such investment;
(v) commercial paper having an original maturity of
less than 365 days and issued by an institution having a short term
unsecured debt rating in the highest available rating category of each
of the Rating Agencies at the time of such investment;
(vi) a guaranteed investment contract approved by each
of the Rating Agencies and the Note Insurer and issued by an insurance
company or other corporation having a long term unsecured debt rating
in the highest available rating category of each
of the Rating Agencies at the time of such investment;
(vii) money market funds having ratings in the highest
available long-term rating category of each of the Rating Agencies at
the time of such investment; any such money market funds which provide
for demand withdrawals being conclusively deemed to satisfy any
maturity requirement for Eligible Investments set forth in the
Indenture; and
(viii) any investment approved in writing by each of the
Rating Agencies and the Note Insurer.
The Indenture Trustee may purchase from or sell to itself or an affiliate, as
principal or agent, the Eligible Investments listed above.
PROVIDED, HOWEVER, that each such instrument shall be acquired in an arm's
length transaction and no such instrument shall be an Eligible Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations; PROVIDED FURTHER, HOWEVER, that each such instrument acquired shall
not be acquired at a price in excess of par.
ELIGIBLE SUBSTITUTE MORTGAGE LOAN: A Mortgage Loan substituted
by the Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officer's Certificate delivered to the
Indenture Trustee, (i) have an outstanding principal balance, after deduction of
the principal portion of the monthly payment due in the month of substitution
(or in the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate outstanding principal balance, after such
deduction), not in excess of the outstanding principal balance of the Deleted
Mortgage Loan (the amount of any shortfall to be deposited by the Seller in the
Collection Account in the month of substitution); (ii) comply with each
representa tion and warranty set forth in clauses (ii) through (xlv) of Section
3.1(b) of the Mortgage Loan
8
Purchase Agreement; (iii) have a Mortgage Rate and Gross Margin no lower than
the Mortgage Rate and Gross Margin, respectively, of the Deleted Mortgage Loan
as of the date of substitution; (iv) have a Loan-to-Value Ratio [and a Combined
Loan-to-Value Ratio] at the time of substitution no higher than that of the
Deleted Mortgage Loan at the time of substitution; (v) have a remaining term to
stated maturity not longer than (and not more than one year shorter than) that
of the Deleted Mortgage Loan, and (vi) not be 30 days or more delinquent.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
EVENT OF DEFAULT: With respect to the Indenture, any one of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) a default in the payment of (a) the Interest
Payment Amount or the Principal Payment Amount with respect to a Payment Date on
such Payment Date or (b) the Subordination Increase Amount or the Available
Funds Cap Carry-Forward Amount, but only, with respect to clause (b), to the
extent funds are available to make such payment as provided in the Indenture; or
(ii) the failure by the Issuer on the Final Scheduled
Payment Date to reduce the Note Principal Balance to zero; or
(iii) there occurs a default in the observance or
performance of any covenant or agreement of the Issuer made in the Indenture, or
any representation or warranty of the Issuer made in the Indenture or in any
certificate 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 representation or
warranty was incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture
Trustee by the Note Insurer, or if a Note Insurer Default exists the Holders of
at least 25% of the Outstanding Amount of the Notes, a written notice specifying
such default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a notice of default hereunder; or
(iv) there occurs the filing of a decree or order for
relief by a court having jurisdiction in the premises in respect of the Issuer
or any substantial part of the Trust Estate in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer or for any substantial
part of the Trust Estate, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
9
(v) there occurs the commencement by the Issuer of a
voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by the Issuer to
the entry of an order for relief in an involuntary case under any such law, or
the consent by the Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Issuer or for any substantial part of the assets of the Trust Estate, or the
making by the Issuer of any general assignment for the benefit of creditors, or
the failure by the Issuer generally to pay its debts as such debts become due,
or the taking of any action by the Issuer in furtherance of any of the
foregoing.
EVENT OF SERVICER TERMINATION: With respect to the Servicing
Agreement, a Servicing Default as defined in Section 6.01 of the Servicing
Agreement.
EXCESS SUBORDINATION AMOUNT: With respect to any Payment Date,
the excess, if any, of (a) the Subordination Amount that would apply on such
Payment Date after taking into account all distributions to be made on such
Payment Date (exclusive of any reductions thereto attributable to Subordination
Reduction Amounts on such Payment Date) over (b) the Required Subordination
Amount for such Payment Date.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
EXPENSE ADJUSTED MORTGAGE RATE: For any Mortgage Loan, the
rate equal to the then applicable Mortgage Rate thereon minus the sum of (i) the
Minimum Spread and (ii) the Servicing Fee Rate and (iii) the Indenture Trustee
Fee Rate.
EXPENSES: The meaning specified in Section 7.02 of the Trust
Agreement.
FDIC: The Federal Deposit Insurance Corporation or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
FINAL SCHEDULED PAYMENT DATE: The Payment Date occurring in
_________.
FITCH: Fitch IBCA, Inc.
FNMA: The Federal National Mortgage Association, or any
successor thereto.
FORECLOSURE PROFIT: With respect to a Liquidated Mortgage
Loan, the amount, if any, by which (i) the aggregate of its Net Liquidation
Proceeds exceeds (ii) the related Principal Balance (plus accrued and unpaid
interest thereon at the applicable Mortgage Rate from the date interest was last
paid through the date of receipt of the final Liquidation Proceeds) of such
Liquidated Mortgage Loan immediately prior to the final recovery of its
Liquidation Proceeds.
10
FUNDING PERIOD: The period commencing on the Closing Date and
ending on the earliest to occur of (i) the date on which the amount on deposit
in the Pre-Funding Account (exclusive of any investment earnings) is less than
$100,000, (ii) the date of occurrence of a Servicing Default under the Servicing
Agreement or an Event of Default under the Indenture and (iii) ______,____.
GRANT: Pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and xxxxx x xxxx upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to the 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 such collateral or other agreement or
instrument and all other moneys payable thereunder, to give and receive notices
and other communications, to make waivers or other agreements, to exercise all
rights and options, to bring proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party is
or may be entitled to do or receive thereunder or with respect thereto.
GROSS MARGIN: With respect to any Mortgage Loan, the
percentage set forth as the "Gross Margin" for such Mortgage Loan on the
Mortgage Loan Schedule, as adjusted from time to time in accordance with the
terms of the Servicing Agreement.
HOLDER: A Noteholders of Certificateholder, as applicable.
INDEMNIFIED PARTY: The meaning specified in Section 7.02 of
the Trust Agreement.
INDENTURE: The indenture dated as of ___________, between the
Issuer, as debtor, and the Indenture Trustee, as Indenture Trustee.
INDENTURE TRUSTEE: _________________________________________,
a national banking association, and its successors and assigns or any successor
indenture trustee appointed pursuant to the terms of the Indenture.
INDENTURE TRUSTEE FEE: The fee payable to the Indenture
Trustee monthly on each Payment Date equal to the product of (i) the Indenture
Trustee Fee Rate divided by 12 and (ii) the sum of the aggregate Principal
Balance of the Mortgage Loans and the Pre-Funded Amount, if any as of the first
day of the related Due Period.
INDENTURE TRUSTEE FEE RATE: ____% per annum.
INDEPENDENT: When used with respect to any specified Person,
the Person (i) is in fact independent of the Issuer, any other obligor on the
Notes, the Seller, the Issuer, the Depositor and any Affiliate of any of the
foregoing Persons, (ii) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor, the
Seller, the Issuer, the Depositor or any Affiliate of any of the foregoing
Persons and (iii) is not connected
11
with the Issuer, any such other obligor, the Seller, the Issuer, the Depositor
or any Affiliate of any of the foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
INDEPENDENT CERTIFICATE: A certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 10.01 of the
Indenture, made by an Independent appraiser or other expert appointed by an
Issuer Request 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.
INDEX: With respect to any Mortgage Loan, the index for the
adjustment of the Mortgage Rate set forth as such on the related Mortgage Note.
INITIAL CUT-OFF DATE: With respect to any Initial Mortgage
Loan, the close of business on _______________.
INITIAL MORTGAGE LOAN: A Mortgage Loan conveyed to the
Depositor by the Seller and by the Depositor to the Issuer on the Closing Date.
INITIAL NOTE PRINCIPAL BALANCE: With respect to the Notes,
$_________.
INITIAL POOL BALANCE: An amount equal to the sum of (i) the
aggregate principal balance of the Initial Mortgage Loans as of the Initial
Cut-off Date and (ii) the aggregate principal balances of all Subsequent
Mortgage Loans as of their Subsequent Cut-off Date.
INSOLVENCY EVENT: With respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person in writing (as to which the Indenture Trustee shall have notice)
of its inability to pay its debts generally, or the adoption by the Board of
Directors or managing member of such Person of a resolution which authorizes
action by such Person in furtherance of any of the foregoing.
12
INSURANCE AGREEMENT: The Insurance and Indemnity Agreement
dated as of __________, among the Servicer, the Seller, the Depositor, the
Issuer, the Indenture Trustee and the Note Insurer, including any amendments and
supplements thereto.
INSURED AMOUNT: Shall have the meaning set forth in the Note
Insurance Policy.
INTEREST DETERMINATION DATE: With respect to any Interest
Period, the second London Business Day preceding the commencement of such
Interest Period.
INTEREST PAYMENT AMOUNT: With respect to any Payment Date, an
amount equal to the Accrued Note Interest, minus any Prepayment Interest
Shortfalls and Relief Act Shortfalls to the extent not covered by the Servicer
by Compensating Interest for such Payment Date.
INTEREST PERIOD: With respect to any Payment Date other than
the first Payment Date, the period beginning on the preceding Payment Date and
ending on the day preceding such Payment Date, and in the case of the first
Payment Date, the period beginning on the Closing Date
and ending on the day preceding the first Payment Date.
INTEREST RATE ADJUSTMENT DATE: With respect to each Mortgage
Loan, the date or dates on which the Mortgage Rate is adjusted in accordance
with the related Mortgage Note.
INVESTMENT COMPANY ACT: The Investment Company Act of 1940, as
amended, and any amendments thereto.
ISSUER: AFC Trust Series ____-__, a Delaware business trust,
or its successor in interest.
ISSUER REQUEST: A written order or request signed in the name
of the Issuer by any one of its Authorized Officers and delivered to the
Indenture Trustee and the Note Insurer.
LIBOR BUSINESS DAY: Any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in the State of New York or
in the city of London, England are required or authorized by law to be closed.
LIEN: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agree ment, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing;
PROVIDED, HOWEVER, that any assignment pursuant to Section 6.02 of the Servicing
Agreement shall not be deemed to constitute a Lien.
13
LIFETIME RATE CAP: With respect to each Mortgage Loan with
respect to which the related Mortgage Note provides for a lifetime rate cap, the
maximum Mortgage Rate permitted over the life of such Mortgage Loan under the
terms of such Mortgage Note, as set forth on the Mortgage Loan Schedule and
initially as set forth on Exhibit A to the Servicing Agreement.
LIQUIDATED MORTGAGE LOAN: With respect to any Payment Date,
any Mortgage Loan in respect of which the Servicer has determined, in accordance
with the servicing procedures specified in the Servicing Agreement, as of the
end of the related Prepayment Period that substantially all Liquidation Proceeds
which it reasonably expects to recover with respect to the disposition of the
related Mortgaged Property or REO Property have been recovered.
LIQUIDATION EXPENSES: Out-of-pocket expenses (exclusive of
overhead) which are incurred by or on behalf of the Servicer in connection with
the liquidation of any Mortgage Loan and not recovered under any insurance
policy, such expenses including, without limitation, legal fees and expenses,
any unreimbursed amount expended (including, without limitation, amounts
advanced to correct defaults on any mortgage loan which is senior to such
Mortgage Loan and amounts advanced to keep current or pay off a mortgage loan
that is senior to such Mortgage Loan) respecting the related Mortgage Loan and
any related and unreimbursed expenditures for real estate property taxes or for
property restoration, preservation or insurance against casualty loss or damage.
LIQUIDATION PROCEEDS: Proceeds (including Insurance Proceeds
but not including amounts drawn under the Note Insurance Policy) received in
connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or
otherwise.
LOAN-TO-VALUE RATIO: With respect to any Mortgage Loan, as of
any date of determination, a fraction expressed as a percentage, the numerator
of which is the then current principal amount of the Mortgage Loan, and the
denominator of which is the Appraised Value of the related Mortgaged Property.
LOAN YEAR: With respect to any Mortgage Loan, the one year
period commencing on the day succeeding the origination of such Mortgage Loan
and ending on the anniversary date of such Mortgage Loan, and each annual period
thereafter.
LONDON BUSINESS DAY: Any day on which banks in the City of
London, England are open and conducting transactions in United States dollars.
LOST NOTE AFFIDAVIT: With respect to any Mortgage Loan as to
which the original Mortgage Note has been lost, misplaced or destroyed and has
not been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost, misplaced or destroyed
(together with a copy of the related Mortgage Note).
MAXIMUM NOTE INTEREST RATE: _____% per annum.
14
MAXIMUM MORTGAGE RATE: With respect to each Mortgage Loan, the
maximum Mortgage Rate.
MINIMUM MORTGAGE RATE: With respect to each Mortgage Loan, the
minimum Mortgage Rate.
MINIMUM SPREAD: ____% per annum.
MONTHLY PAYMENT: With respect to any Mortgage Loan (including
any REO Property) and any Due Date, the payment of principal and interest due
thereon in accordance with the amortization schedule at the time applicable
thereto (after adjustment, if any, for partial Prepayments and for Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than a Deficient
Valuation, or similar proceeding or any moratorium or similar waiver or grace
period).
MOODY'S: Xxxxx'x Investors Service, Inc. or its successor in
interest.
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
MORTGAGE FILE: The file containing the Related Documents
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to the Mortgage Loan Purchase
Agreement or the Servicing Agreement.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase
Agreement, dated as of the Initial Cut-off Date, among the Seller, as seller,
and Superior Bank FSB, as Depositor and AFC Trust Series ____-__, as Issuer,
with respect to the Mortgage Loans, dated as of __________.
MORTGAGE LOAN SCHEDULE: With respect to any date, the schedule
of Mortgage Loans held by the Issuer on such date. The initial schedule of
Initial Mortgage Loans as of the Initial Cut-off Date is the schedule set forth
in Exhibit A of the Servicing Agreement and such schedule, as amended by the
Seller to reflect (i) Eligible Substitute Mortgage Loans and Deleted Mortgage
Loans, and (ii) as of each Subsequent Transfer Date, any Subsequent Mortgage
Loans, which schedule sets forth as to each Mortgage Loan:
(i) the loan number and name of the Mortgagor;
(ii) xxx xxxxxx xxxxxxx, xxxx, xxxxx and zip code of the
Mortgaged Property;
(iii) the Mortgage Rate;
(iv) the maturity date;
(v) the original principal balance;
15
(vi) the first payment date;
(vii) the type of Mortgaged Property;
(viii) the Monthly Payment in effect as of the Initial
Cut-off Date (with respect to an Initial Mortgage
Loan) or Subsequent Cut-off Date (with respect to a
Subsequent Mortgage Loan);
(ix) the Initial Cut-off Date Principal Balance (with
respect to an Initial Mortgage Loan) or Subsequent
Cut-off Date (with respect to a Subsequent Mortgage
Loan);
(x) the occupancy status;
(xi) the purpose of the Mortgage Loan;
(xii) the Appraised Value of the Mortgaged Property;
(xiii) the original term to maturity;
(xiv) the paid-through date of the Mortgage Loan;
(xv) the Loan-to-Value Ratio;
(xvi) whether the Mortgage Loan is secured by a first lien
or second lien;
(xvii) the credit score of the related borrower;
(xviii) whether the Mortgage Loan was originated by Preferred
Credit Corporation; and
(xix) whether or not the Mortgage Loan was underwritten
pursuant to a limited documentation program.
The Mortgage Loan Schedule shall also set forth the total of the
amounts described under (ix) above for all of the Mortgage Loans.
MORTGAGE LOANS: At any time, collectively, all the Mortgage
Loans that have been sold to the Depositor under the Mortgage Loan Purchase
Agreement or substituted for pursuant to Section 2.1 and 3.1 of the Mortgage
Loan Purchase Agreement and transferred and conveyed to the Issuer and
contributed to the Trust, in each case together with the Related Documents, and
that remain subject to the terms thereof. As applicable, Mortgage Loan shall be
deemed to refer to the related REO Property and to Initial Mortgage Loans,
Eligible Substitute Mortgage Loans, and Subsequent Mortgage Loans.
16
MORTGAGE NOTE: The note or other evidence of the indebtedness
of a Mortgagor under a Mortgage Loan.
MORTGAGE RATE: With respect to any Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan.
MORTGAGED PROPERTY: The underlying property, including real
property and improvements thereon, securing a Mortgage Loan.
MORTGAGOR: The obligor or obligors under a Mortgage Note.
NET LIQUIDATION PROCEEDS: With respect to any Liquidated
Mortgage Loan, Liquidation Proceeds net of Liquidation Expenses.
NET MONTHLY EXCESS CASHFLOW: For any Payment Date, the amount
of Available Funds and any Insured Amount remaining after distributions pursuant
to clauses (i) through (iii) of Section 3.05 of the Indenture (excluding any
Insured Amount and any Subordination Reduction
Amount).
NET MORTGAGE RATE: With respect to any Mortgage Loan and any
day, the related Mortgage Rate less the sum of the related Servicing Fee Rate,
the Administrative Fee Rate and the Indenture Trustee Fee Rate.
NONRECOVERABLE ADVANCE: Any Advance or Servicing Advance (i)
which was previously made or is proposed to be made by the Servicer; and (ii)
which, in the good faith judgment of the Servicer, will not or, in the case of a
proposed advance, would not, be ultimately recoverable by the Servicer from
Liquidation Proceeds, Insurance Proceeds or future payments
on any Mortgage Loan.
NOTE INSURANCE POLICY: The note guaranty insurance policy
number ________, issued by the Note Insurer to the Indenture Trustee for the
benefit of the Noteholders.
NOTE INSURANCE PREMIUM: The premium payable to the Note
Insurer, as specified in the Insurance Agreement.
NOTE INSURER: _______________________, any successor thereto
or any replacement note insurer substituted pursuant to Section 8.10 of the
Indenture.
NOTE INSURER DEFAULT: The existence and continuance of any of
the following: (a) a failure by the Note Insurer to make a payment required
under the Note Insurance Policy in accordance with its terms; or (b)(i) the Note
Insurer (A) files any petition or commences any case or proceeding under any
provision or chapter of the Bankruptcy Code or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (B) makes a general assignment for the benefit of its creditors,
or (C) has an order for relief entered against it under the Bankruptcy Code or
any other similar federal or state law relating to
17
insolvency, bankruptcy, rehabilitation, liquidation or reorganization which is
final and nonappealable; or (ii) a court of competent jurisdiction, the New York
or _______ Department of Insurance or other competent regulatory authority
enters a final and nonappealable order, judgment or decree (A) appointing a
custodian, trustee, agent or receiver for the Note Insurer or for all or any
material portion of its property or (B) authorizing the taking of possession by
a custodian, trustee, agent or receiver of the Note Insurer (or the taking of
possession of all or any material portion of the property of the Note Insurer).
NOTE INTEREST RATE: With respect to each Payment Date after
the first Payment Date, a floating rate equal to the lesser of (i) with respect
to each Payment Date up to and including the earlier of (a) the Payment Date in
_________ and (b) the Payment Date on which the aggregate Principal Balance of
the Mortgage Loans is less than __% of the aggregate Cut-off Date Principal
Balance of the Mortgage Loans, One-Month LIBOR plus ____%, and with respect to
each Payment Date thereafter, One-Month LIBOR plus ____% and (ii) the Available
Funds Interest Rate with respect to such Payment Date. The Note Interest Rate
for the first Payment Date will equal ______% per annum.
NOTE OWNER: The Beneficial Owner of a Note.
NOTE PRINCIPAL BALANCE: With respect to any Note, the initial
Note Principal Balance thereof minus all amounts distributed in respect of
principal with respect to such Note.
NOTE REGISTER: The register maintained by the Note Registrar
in which the Note Registrar shall provide for the registration of Notes and of
transfers and exchanges of Notes.
NOTE REGISTRAR: The Indenture Trustee, in its capacity as Note
Registrar.
NOTEHOLDER: The Person in whose name a Note is registered in
the Note Register, except that, any Note registered in the name of the
Depositor, the Issuer or the Indenture Trustee or any Affiliate of any of them
shall be deemed not to be a Noteholder or Holder, nor shall any Note so owned be
considered outstanding, for purposes of giving any request, demand,
authorization, direction, notice, consent or waiver under the Indenture or the
Trust Agreement, provided that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that the Indenture Trustee or
the Owner Trustee knows to be so owned shall be so disregarded. Owners of Notes
that have been pledged in good faith may be regarded as Holders if the pledgee
establishes to the satisfaction of the Indenture Trustee or the Owner Trustee
the pledgee's right so to act with respect to such Notes and that the pledgee is
not the Issuer, any other obligor upon the Notes or any Affiliate of any of the
foregoing Persons. Any Notes on which payments are made under the Note Insurance
Policy shall be deemed Outstanding until the Note Insurer has been reimbursed
with respect thereto and the Note Insurer shall be deemed the Noteholder thereof
to the extent of such unreimbursed payment.
NOTES: The Notes designated as the "Notes" in the Indenture.
18
OFFICER'S CERTIFICATE: With respect to the Servicer, a
certificate signed by the President, Managing Director, a Director, a Vice
President or an Assistant Vice President, of the Servicer and delivered to the
Indenture Trustee. With respect to the Issuer, a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 10.01 of the
Indenture, and delivered to the Indenture Trustee. Unless otherwise specified,
any reference in the Indenture to an Officer's Certificate shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.
ONE-MONTH LIBOR: With respect to any Interest Period, the rate
determined by the Indenture Trustee on the related Interest Determination Date
on the basis of the offered rates of the Reference Banks for one-month United
States dollar deposits, as such rates appear on the Reuters Screen LIBO Page, as
of 11:00 a.m. (London time) on such Interest Determination Date. On each
Interest Determination Date, One-Month LIBOR for the related Interest Period
will be established by the Indenture Trustee as follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations,
One-Month LIBOR for the related Interest Period shall
be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole
multiple of 1/16%).
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations,
One-Month LIBOR for the related Interest Period shall
be the higher of (i) One-Month LIBOR as determined on
the previous Interest Determination Date and (ii) the
Reserve Interest Rate.
OPINION OF COUNSEL: A written opinion of counsel who may be
in-house counsel for the Person rendering such opinion.
OUTSTANDING: With respect to the Notes, as of the date of
determination, all Notes previously executed, authenticated and delivered under
this Indenture except:
(i) Notes previously cancelled by the Note Registrar or
delivered to the Indenture Trustee for cancellation; and
(ii) Notes in exchange for or in lieu of which other
Notes have been executed, authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Indenture Trustee is
presented that any such Notes are held by a holder in due
course.
All Notes that have been paid with funds provided under the Note Insurance
Policy shall be deemed to be Outstanding until the Note Insurer has been
reimbursed with respect thereto.
OUTSTANDING MORTGAGE LOAN: As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in Full, Cash Liquidation or
19
REO Disposition and which was not purchased, deleted or substituted for prior to
such Due Date pursuant to the Servicing Agreement.
OWNER TRUST ESTATE: The corpus of the Issuer created by the
Trust Agreement which consists of items referred to in Section 2.01 of the Trust
Agreement.
OWNER TRUSTEE: Wilmington Trust Company and its successors and
assigns or any successor owner trustee appointed pursuant to the terms of the
Trust Agreement.
OWNER TRUSTEE FEE: With respect to any Payment Date the
product of (i) the Owner Trustee Fee Rate divided by 12 and (ii) the aggregate
Note Principal Balance of the Notes as of such date.
OWNER TRUSTEE FEE RATE: ____% per annum.
PAYING AGENT: Any paying agent or co-paying agent appointed
pursuant to Section 3.03 of the Indenture, which initially shall be the
Indenture Trustee.
PAYMENT ACCOUNT: The account established by the Indenture
Trustee pursuant to Section 8.02 of the Indenture. The Payment Account shall be
an Eligible Account.
PAYMENT DATE: The ____ day of each month, or if such day is
not a Business Day, then the next Business Day.
PERCENTAGE INTEREST: With respect to any Note, the percentage
obtained by dividing the Note Principal Balance of such Note by the aggregate of
the Note Principal Balances of all Notes. With respect to any Certificate, the
percentage on the face thereof.
PERIODIC RATE CAP: With respect to any Mortgage Loan, the
maximum rate, if any, by which the Mortgage Rate on such Mortgage Loan can
adjust on any Adjustment Date, as stated in the related Mortgage Note or
Mortgage.
PERSON: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
POOL BALANCE: With respect to any date, the aggregate of the
Principal Balances of all Mortgage Loans as of such date.
PREFERENCE AMOUNT: Any amount previously distributed in
respect of the Notes that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
20
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in
accordance with Section 2.3 of the Mortgage Loan Purchase Agreement. The
Pre-Funding Account shall be an Eligible Account.
PRE-FUNDING ACCOUNT EARNINGS: With respect to the _________
Payment Date, the actual investment earnings earned during the period from the
Closing Date through __________ (inclusive) on the portion of the Pre-Funded
Amount remaining during such period.
PRE-FUNDED AMOUNT: With respect to any Determination Date, the
amount remaining on deposit in the Pre-Funding Account.
PREMIUM AMOUNT: The amount of the [monthly] premium due to the
Note Insurer in accordance with the terms of the Insurance Agreement.
PREPAYMENT INTEREST SHORTFALL: As to any Payment Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of a Principal Prepayment in Full during the related Prepayment
Period, an amount equal to the excess of interest accrued during the related
Prepayment Period at the Net Mortgage Rate on the Principal Balance of such
Mortgage Loan over the amount of interest (adjusted to the Net Mortgage Rate)
paid by the Mortgagor for such Prepayment Period to the date of such Principal
Prepayment in Full.
PREPAYMENT PERIOD: As to any Payment Date, the calendar month
preceding the month of such Payment Date
PRINCIPAL BALANCE: With respect to any Mortgage Loan or
related REO Property, as of any date of determination, (i) the Initial Cut-off
Date Principal Balance or Subsequent Cut-off Date Principal Balance, as
applicable, of the Mortgage Loan minus, (ii) the sum of (a) the principal
portion of the Monthly Payments due with respect to such Mortgage Loan or REO
Property during each Due Period ending prior to the most recent Payment Date
which were received, and (b) all Principal Prepayments with respect to such
Mortgage Loan or REO Property, and all Insurance Proceeds, Liquidation Proceeds
and REO Proceed with respect to such Mortgage Loan or REO Property, to the
extent applied by the Servicer as recoveries of principal in accordance with the
Servicing Agreement, and (c) any Realized Loss with respect thereto for any
previous Payment Date.
PRINCIPAL PAYMENT AMOUNT: With respect to any Payment Date (a)
other than the Final Scheduled Payment Date, and the first Payment Date
following any acceleration of the Notes following an Event of Default, the
lesser of (a) the sum of (x) the Available Funds remaining after distributions
pursuant to clause (i) of Section 3.05 of the Indenture and (y) any portion of
any Insured Amount for such Payment Date representing a Subordination Deficit
and (b) the sum of:
(1) the principal portion of all Monthly Payments
received during the related Due Period on each
Mortgage Loan;
21
(2) the Principal Balance of any Mortgage Loan
repurchased during the related Prepayment Period (or
deemed to have been so repurchased) pursuant to the
Mortgage Loan Purchase Agreement or Section 3.18 of
the Servicing Agreement and the amount of any
Substitution Adjustment Amounts during the related
Prepayment Period;
(3) the principal portion of all other unscheduled
collections received during the related Prepayment
Period (or deemed to be received during the related
Prepayment Period) (including, without limitation,
Principal Prepayments in Full, partial Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds
and REO Proceeds) to the extent applied by the
Servicer as payments or recoveries of principal of
the related Mortgage Loan, and to the extent not
distributed in the preceding month;
(4) any Insured Amount paid with respect to any
Subordination Deficit; and
minus
-----
(5) the amount of any Subordination Reduction Amount
for such Payment Date;
and (b) with respect to the Final Scheduled Payment Date, and the first Payment
Date following any acceleration of the Notes following an Event of Default, the
amount necessary to reduce the Note Principal Balance to zero.
PRINCIPAL PREPAYMENT: Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing
scheduled interest due on any date or dates in any month or months subsequent to
the month of prepayment.
PRINCIPAL PREPAYMENT IN FULL: Any Principal Prepayment made by
a Mortgagor of the entire principal balance of a Mortgage Loan.
PROCEEDING: Any suit in equity, action at law or other
judicial or administrative proceeding.
PROSPECTUS: The Prospectus Supplement, dated ____________,
together with the attached Prospectus, dated ______________, with respect to the
Notes.
PURCHASE PRICE: The meaning specified in Section 2.2(a) of the
Mortgage Loan Purchase Agreement.
PURCHASER: Superior Bank FSB, and its successors and assigns.
22
RATING AGENCY: Any nationally recognized statistical rating
organization, or its successor, that rated the Notes at the request of the
Depositor at the time of the initial issuance of the Notes. Initially, [Xxxxx'x,
Fitch or Standard & Poor's]. If such organization or a successor is no longer in
existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, designated by the Note Insurer
so long as no Note Insurer Default exists, notice of which designation shall be
given to the Indenture Trustee. References herein to the highest short term
unsecured rating category of a Rating Agency shall mean A-1 or better in the
case of [Standard & Poor's] and P-1 or better in the case of [Xxxxx'x] and in
the case of any other Rating Agency shall mean such equivalent ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean "AAA" in the case of [Standard & Poor's] and "Aaa" in the case of
[Xxxxx'x] and in the case of any other Rating Agency, such equivalent rating.
REALIZED LOSS: With respect to each Mortgage Loan (or REO
Property) as to which a Cash Liquidation or REO Disposition has occurred, an
amount (not less than zero) equal to (i) the Principal Balance of the Mortgage
Loan (or REO Property) as of the date of Cash Liquidation or REO Disposition,
plus (ii) interest (and REO Imputed Interest, if any) at the Net Mortgage Rate
from the Due Date as to which interest was last paid or advanced to Noteholders
up to the last day of the month in which the Cash Liquidation (or REO
Disposition) occurred on the Principal Balance of such Mortgage Loan (or REO
Property) outstanding during each Due Period that such interest was not paid or
advanced, minus (iii) the proceeds, if any, received during the month in which
such Cash Liquidation (or REO Disposition) occurred, to the extent applied as
recoveries of interest at the Net Mortgage Rate and to principal of the Mortgage
Loan, net of the portion thereof reimbursable to the Servicer or any Subservicer
with respect to related Advances or expenses as to which the Servicer or
Subservicer is entitled to reimbursement thereunder but which have not been
previously reimbursed. With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation. With respect to each Mortgage Loan which has become the object of a
Debt Service Reduction, the amount of such Debt Service Reduction.
RECORD DATE: With respect to the Notes and any Payment Date,
the last day of the calendar month preceding such Payment Date.
REFERENCE BANKS: Bankers Trust Company, Xxxxxxx'x Bank PLC,
The Bank of Tokyo and National Westminster Bank PLC and their successors in
interest; PROVIDED that if any of the foregoing banks are not suitable to serve
as a Reference Bank, then any leading banks selected by the Indenture Trustee
which are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
not controlling, under the control of or under common control with the Company
or any Affiliate thereof, (iii) whose quotations appear on the Reuters Screen
LIBO Page on the relevant Interest Determination Date and (iv) which have been
designated as such by the Indenture Trustee.
REGISTERED HOLDER: The Person in whose name a Note is
registered in the Note Register on the applicable Record Date.
23
RELATED DOCUMENTS: With respect to each Mortgage Loan, the
documents specified in Section 2.1(e) of the Mortgage Loan Purchase Agreement
and any documents required to be added to such documents pursuant to the
Mortgage Loan Purchase Agreement, the Trust Agree
ment, Indenture or the Servicing Agreement.
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
RELIEF ACT SHORTFALL: As to any Payment Date and any Mortgage
Loan (other than a Mortgage Loan relating to an REO Property), any shortfalls
relating to the Relief Act or similar legislation or regulations.
REO ACQUISITION: The acquisition by the Servicer on behalf of
the Indenture Trustee for the benefit of the Noteholders of any REO Property
pursuant to Section 3.13 of the Servicing Agreement.
REO DISPOSITION: As to any REO Property, a determination by
the Servicer that it has received substantially all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which the Servicer expects to be finally recoverable
from the sale or other disposition of the REO Property.
REO IMPUTED INTEREST: As to any REO Property, for any period,
an amount equivalent to interest (at the Net Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof for
such period as such balance is reduced pursuant to Section 3.13 of the Servicing
Agreement by any income from the REO Property treated as a recovery of
principal.
REO PROCEEDS: Proceeds, net of expenses, received in respect
of any REO Property (including, without limitation, proceeds from the rental of
the related Mortgaged Property) which proceeds are required to be deposited into
the Collection Account only upon the
related REO Disposition.
REO PROPERTY: A Mortgaged Property that is acquired by the
Issuer by foreclosure or by deed in lieu of foreclosure.
REPURCHASE PRICE: With respect to any Mortgage Loan required
to be repurchased on any date pursuant to the Mortgage Loan Purchase Agreement
or purchased by the Servicer pursuant to the Servicing Agreement, an amount
equal to the sum, without duplication, of (i) 100% of the Principal Balance
thereof (without reduction for any amounts charged off) and (ii) unpaid accrued
interest at the Mortgage Rate on the Principal Balance thereof from the Due Date
to which interest was last paid by the Mortgagor to the first day of the month
following the month of purchase plus (iii) the amount of Advances and any
unreimbursed Servicing Advances or unreimbursed Advances made with respect to
such Mortgage Loan plus (iv) any other amounts owed to the Servicer or the
Subservicer pursuant to Section 3.07 of the Servicing Agreement and not included
in clause (iii) of this definition.
24
[REQUIRED SUBORDINATION AMOUNT: With respect to any Payment
Date, an amount equal to (i) ___% of the aggregate Principal Balance of the
Mortgage Loans as of the Initial Cutoff Date, or (ii) if the Step-Up Trigger has
occurred and is continuing, an amount equal to the greater of (A) the greater of
(x) ___% of the aggregate Principal Balance of the Mortgage Loans as of the
Initial Cut-off Date and (y) ___% of the aggregate Principal Balance of the
Mortgage Loans as of the close of business on the last day of the related Due
Period and (B) ___% of the aggregate Principal Balance of the Mortgage Loans
that are 90 or more days delinquent or in foreclosure (including REO Properties)
as of the close of business on the last day of the related Collection Period, or
(iii) if the Step-Up Trigger has not occurred, but the Step-Down Trigger has
occurred and is continuing, an amount equal to the greater of (A) ___% of the
aggregate Principal Balance of the Mortgage Loans as of the Initial Cut-off Date
and (B) the lesser of (x) ___% of the aggregate Principal Balance of the
Mortgage Loans as of the Initial Cut-off Date and (y) ___% of the aggregate
Principal Balance of the Mortgage Loans as of the close of business on the last
day of the related Due Period; PROVIDED, HOWEVER, that if a claim has been made
on the Note Insurance Policy by the Indenture Trustee, the Required
Subordination Amount shall not decrease on any Payment Date.]
RESERVE INTEREST RATE: With respect to any Interest
Determination Date, the rate per annum that the Indenture Trustee determines to
be either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/16%) of the three-month United States dollar lending rates
which New York City banks selected by the Indenture Trustee are quoting on the
relevant Interest Determination Date to the principal London offices of leading
banks in the London interbank market or (ii) in the event that the Indenture
Trustee can determine no such arithmetic mean, the lowest three-month United
States dollar lending rate which New York City banks selected by the Indenture
Trustee are quoting on such Interest Determination Date to leading European
banks.
RESPONSIBLE OFFICER: With respect to the Indenture Trustee,
any officer of the Indenture Trustee with direct responsibility for the
administration of the Trust Agreement and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
ROLLING DELINQUENCY PERCENTAGE: For any Payment Date, the
average of the Delinquency Percentages for the Mortgage Loans as of the last day
of each of the six (or 1, 2, 3, 4, and 5 in the case of the first five Payment
Dates, as applicable) most recently ended Collection Periods.
SECURITIES ACT: The Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
SECURITY: Any of the Certificates or Notes.
SECURITYHOLDER or HOLDER: Any Noteholder or a
Certificateholder.
25
SECURITY INSTRUMENT: A written instrument creating a valid
first lien on a Mortgaged Property securing a Mortgage Note, which may be any
applicable form of mortgage, deed of trust, deed to secure debt or security
deed, including any riders or addenda thereto.
SELLER: ______________, and its successors and assigns.
SERVICER: ________________, and its successors and assigns.
SERVICER'S REPORT: The report delivered by the Servicer to the
Indenture Trustee pursuant to Section 4.01 of the Servicing Agreement.
SERVICING ACCOUNT: The separate trust account created and
maintained by the Servicer or each Subservicer with respect to the Mortgage
Loans or REO Property, which shall be an Eligible Account, for collection of
taxes, assessments, insurance premiums and comparable
items as described in Section 3.08 of the Servicing Agreement.
SERVICING ADVANCES: All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in connection with a default,
delinquency or other unanticipated event in the performance by the Servicer of
its servicing obligations, including, without duplication, but not limited to,
the cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of any REO Property and (iv) compliance
with the obligations under Sections 3.08, 3.10, 3.11, 3.13 of the Servicing
Agreement.
SERVICING AGREEMENT: The Servicing Agreement dated as of
_________, between the Servicer and the Issuer.
SERVICING CERTIFICATE: A certificate completed and executed by
a Servicing Officer on behalf of the Servicer in accordance with Section 4.01 of
the Servicing Agreement.
SERVICING DEFAULT: The meaning assigned in Section 6.01 of the
Servicing Agreement.
SERVICING FEE: With respect to each Mortgage Loan and any
Payment Date the product of (i) the Servicing Fee Rate divided by 12 and (ii)
the Principal Balance of such Mortgage Loans as of such date.
SERVICING FEE RATE: With respect to any Mortgage Loan, ____%
per annum.
SERVICING OFFICER: Any employee of the Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee (with a copy to the Note Insurer) by the Servicer, as such
list may be amended from time to time.
SINGLE NOTE: A Note in the amount of $1,000.
26
SIXTY-DAY DELINQUENT LOAN: Any Mortgage Loan which was sixty
days (two payments) or more delinquent as of the last day of the related
Collection Period.
STANDARD & POOR'S: Standard & Poor's Ratings Service, or its
successor in interest.
STEP-DOWN CUMULATIVE LOSS TEST: The Step-Down Cumulative Loss
Test will be met with respect to a Payment Date as follows: (i) for the 30th
through the 47th Payment Dates, if the Cumulative Loss Percentage for such
Payment Date is ___% or less, (ii) for the 48th through the 59th Payment Dates,
if the Cumulative Loss Percentage for such Payment Date is ___% or less and
(iii) for the 60th Payment Date and any Payment Date thereafter, if the
Cumulative Loss Percentage for such Payment Date is ___% or less.
STEP-DOWN ROLLING DELINQUENCY TEST: The Step-Down Rolling
Delinquency Test will be met, with respect to a Payment Date, if the Rolling
Delinquency Percentage for such Payment Date is less than ___%.
STEP-DOWN TRIGGER: For any Payment Date after the 30th Payment
Date, the StepDown Trigger will have occurred if each of the Step-Down
Cumulative Loss Test and the StepDown Rolling Delinquency Test is met at such
Payment Date.
STEP-UP CUMULATIVE LOSS TEST: The Step-Up Cumulative Loss Test
will be met with respect to a Payment Date as follows: (i) for the 1st through
the 12th Payment Dates, if the Cumulative Loss Percentage for such Payment Date
is more than ___%, (ii) for the 13th through the 24th Payment Dates, if the
Cumulative Loss Percentage for such Payment Date is more than ___%, (iii) for
the 25th through the 36th Payment Dates, if the Cumulative Loss Percentage for
such Payment Date is more than ___%, (iv) for the 37th through the 48th Payment
Dates, if the Cumulative Loss Percentage for such Payment Date is more than ___%
and (v) for the 49th Payment Date and any Payment Date thereafter, if the
Cumulative Loss Percentage for such Payment Date is more than ___%.
STEP-UP ROLLING DELINQUENCY TEST: The Step-Up Rolling
Delinquency Test will be met with respect to a Payment Date if the Rolling
Delinquency Percentage for such Payment Date is more than ___%.
STEP-UP TRIGGER: For any Payment Date, the Step-Up Trigger
will have occurred if either the Step-Up Cumulative Loss Test or the Step-Up
Rolling Delinquency Test is met at such Payment Date.
SUBORDINATION AMOUNT: As of any Payment Date, the excess, if
any, of (x) the sum of (i) the aggregate Principal Balances of the Mortgage
Loans as of the close of business on the last day of the related Due Period and
(ii) the Pre-Funded Amount over (y) the Note Principal Balance of the Notes as
of such Payment Date (and following the making of all distributions on
such Payment Date).
27
SUBORDINATION DEFICIT: With respect to any Payment Date, the
amount, if any, by which (x) the aggregate Note Principal Balance of the Notes
as of such Payment Date, and following the making of all distributions to be
made on such Payment Date (except for any payment to be made as to principal
from proceeds of the Note Insurance Policy), exceeds (y) the sum of (i) the
aggregate Principal Balances of the Mortgage Loans as of the close of business
on the last day of the related Due Period and (ii) the Pre-Funded Amount.
SUBORDINATION INCREASE AMOUNT: With respect to any Payment
Date, the amount of any Net Monthly Excess Cashflow (including any Subordination
Reduction Amount) available in the Payment Account to increase the Subordination
Amount up to the Required Subordination Amount.
SUBORDINATION REDUCTION AMOUNT: With respect to any Payment
Date, an amount equal to the lesser of (a) the Excess Subordination Amount and
(b) the principal collections received by the Servicer with respect to the prior
Due Period.
SUBSEQUENT CUT-OFF DATE: Each date specified in the Subsequent
Transfer Agreement with respect to those Subsequent Mortgage Loans which are
sold, transferred and assigned by the Seller to the Issuer pursuant to the
related Subsequent Transfer Agreement.
SUBSEQUENT MORTGAGE LOAN: Each Mortgage Loan sold and assigned
by the Seller to the Indenture Trustee pursuant to a Subsequent Transfer
Agreement.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the Indenture
Trustee and the Seller substantially in the form of Exhibit C to the Mortgage
Loan Purchase Agreement, by which Subsequent Mortgage Loans are sold and
assigned by the Seller to the Indenture Trustee.
SUBSEQUENT TRANSFER DATE: The date specified in each
Subsequent Transfer Agreement as the date on which Subsequent Mortgage Loans are
to be sold, transferred and assigned to the Indenture Trustee.
SUBSERVICER: Any Person with whom the Servicer has entered
into a Subservicing Agreement as a Subservicer.
SUBSERVICING AGREEMENT: The written contract between the
Servicer and any Subservicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02 of the Servicing Agreement.
SUBSTITUTION ADJUSTMENT AMOUNT: With respect to any Eligible
Substitute Mortgage Loan, the amount as defined in Section 2.03 of the Servicing
Agreement.
TELERATE SCREEN PAGE 3750: The display designated as page 3750
on the Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks). If such rate does not appear on such page (or
28
such other page as may replace that page on that service, or if such service is
no longer offered, such other service for displaying One-Month LIBOR or
comparable rates as may be selected by the Issuer after consultation with the
Indenture Trustee), the rate will be the Reference Bank
Rate.
TERMINATION PRICE: As defined in Section 7.08(b) of the
Servicing Agreement.
THIRTY-DAY DELINQUENT LOAN: Any Mortgage Loan which was thirty
days or more delinquent, but less than sixty days delinquent, as of the last day
of the related Collection Period.
TREASURY REGULATIONS: Regulations, including proposed or
temporary Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
TRUST: The AFC Trust Series ___-_ to be created pursuant to
the Trust Agreement.
TRUST ACCOUNT: As defined in Section 8.02 of the Indenture.
TRUST AGREEMENT: The Trust Agreement dated as of ___________
between the Owner Trustee and the Depositor.
TRUST ESTATE: The meaning specified in the Granting Clause of
the Indenture.
TRUST INDENTURE ACT OR TIA: The Trust Indenture Act of 1939,
as amended from time to time, as in effect on any relevant date.
UCC: The Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.
UNPAID INTEREST SHORTFALL: With respect to each Payment Date,
any Accrued Note Interest remaining unpaid as a result of the insufficiency of
amounts available therefor in the Payment Account, plus any such shortfall for
all prior Payment Dates, and plus interest thereon at the related Note Interest
Rate immediately prior to such Payment Date.
WEIGHTED AVERAGE NET MORTGAGE RATE: With respect to the
Mortgage Loans in the aggregate, and any Due Date, the average of the Net
Mortgage Rate for each Mortgage Loan as of the last day of the related Due
Period weighted on the basis of the related Principal Balances outstanding as of
the last day of the related Due Period for each Mortgage Loan as determined by
the Servicer in accordance with the Servicer's normal servicing procedures.
