EXECUTION COPY
HOME LOAN TRUST 2006-HI2
ISSUER
AND
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
INDENTURE TRUSTEE
INDENTURE
DATED AS OF MAY 25, 2006
__________________________________________
HOME LOAN-BACKED NOTES, SERIES 2006-HI2
_____________
ARTICLE I DEFINITIONS...............................................................2
Section 1.01. Definitions.......................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act.................2
Section 1.03. Rules of Construction.............................................2
ARTICLE II ORIGINAL ISSUANCE OF NOTES................................................3
Section 2.01. Form..............................................................3
Section 2.02. Execution, Authentication and Delivery............................3
ARTICLE III COVENANTS.................................................................4
Section 3.01. Collection of Payments with respect to the Home Loans.............4
Section 3.02. Maintenance of Office or Agency...................................4
Section 3.03. Money for Payments To Be Held in Trust; Paying Agent..............4
Section 3.04. Existence.........................................................5
Section 3.05. Payment of Principal and Interest; Defaulted Interest.............6
Section 3.06. Protection of Trust Estate........................................8
Section 3.07. Opinions as to Trust Estate.......................................8
Section 3.08. Performance of Obligations; Servicing Agreement...................9
Section 3.09. Negative Covenants................................................9
Section 3.10. Annual Statement as to Compliance................................10
Section 3.11. Recording of Assignments.........................................10
Section 3.12. Representations and Warranties Concerning the Home Loans.........10
Section 3.13. Assignee of Record of the Home Loans.............................10
Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee.....11
Section 3.15. Investment Company Act...........................................11
Section 3.16. Issuer May Consolidate, etc......................................11
Section 3.17. Successor or Transferee..........................................13
Section 3.18. No Other Business................................................13
Section 3.19. No Borrowing.....................................................13
Section 3.20. Guarantees, Loans, Advances and Other Liabilities................13
Section 3.21. Capital Expenditures.............................................13
Section 3.22. Owner Trustee Not Liable for the Certificate or Related
Documents........................................................13
Section 3.23. Restricted Payments..............................................14
Section 3.24. Notice of Events of Default......................................14
Section 3.25. Further Instruments and Acts.....................................14
Section 3.26. Statements to Noteholders........................................14
Section 3.27. Payments under the Credit Enhancement Instrument.................14
Section 3.28. Reserved.........................................................15
Section 3.29. Determination of Class A-1 Note Rate.............................15
Section 3.30. Liquidation on Final Insured Payment Date........................15
Section 3.31. No Recourse......................................................15
Section 3.32. Additional UCC Representations and Warranties....................15
ARTICLE IV THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE.......................16
Section 4.01. The Notes........................................................16
Section 4.02. Registration of and Limitations on Transfer and Exchange of
Notes; Appointment of Certificate Registrar......................17
Section 4.03. Xxxxxxxxx, Xxxxxxxxx, Lost or Stolen Notes.......................18
Section 4.04. Persons Deemed Owners............................................18
Section 4.05. Cancellation.....................................................19
Section 4.06. Book Entry Notes.................................................19
Section 4.07. Notices to Depository............................................20
Section 4.08. Definitive Notes.................................................20
Section 4.09. Tax Treatment....................................................20
Section 4.10. Satisfaction and Discharge of Indenture..........................21
Section 4.11. Application of Trust Money.......................................22
Section 4.12. Subrogation and Cooperation......................................22
Section 4.13. Repayment of Monies Held by Paying Agent.........................23
Section 4.14. Temporary Notes..................................................23
ARTICLE V DEFAULT AND REMEDIES.....................................................23
Section 5.01. Events of Default................................................23
Section 5.02. Acceleration of Maturity; Rescission and Annulment...............23
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee................................................24
Section 5.04. Remedies; Priorities.............................................26
Section 5.05. Optional Preservation of the Trust Estate........................28
Section 5.06. Limitation of Suits..............................................28
Section 5.07. Rights of Noteholders to Receive Principal and Interest..........29
Section 5.08. Restoration of Rights and Remedies...............................29
Section 5.09. Rights and Remedies Cumulative...................................29
Section 5.10. Delay or Omission Not a Waiver...................................30
Section 5.11. Control by the Credit Enhancer or the Noteholders................30
Section 5.12. Waiver of Past Defaults..........................................30
Section 5.13. Undertaking for Costs............................................31
Section 5.14. Waiver of Stay or Extension Laws.................................31
Section 5.15. Sale of Trust Estate.............................................31
Section 5.16. Action on Notes..................................................33
Section 5.17. Performance and Enforcement of Certain Obligations...............33
ARTICLE VI THE INDENTURE TRUSTEE....................................................34
Section 6.01. Duties of Indenture Trustee......................................34
Section 6.02. Rights of Indenture Trustee......................................35
Section 6.03. Individual Rights of Indenture Trustee...........................35
Section 6.04. Indenture Trustee's Disclaimer...................................36
Section 6.05. Notice of Event of Default.......................................36
Section 6.06. Reports by Indenture Trustee to Holders..........................36
Section 6.07. Compensation and Indemnity.......................................36
Section 6.08. Replacement of Indenture Trustee.................................36
Section 6.09. Successor Indenture Trustee by Xxxxxx............................37
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee..........................................................37
Section 6.11. Eligibility; Disqualification....................................39
Section 6.12. Preferential Collection of Claims Against Issuer.................39
Section 6.13. Representations and Warranties...................................39
Section 6.14. Directions to Indenture Trustee..................................40
Section 6.15. Indenture Trustee May Own Securities.............................40
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS...........................................41
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders......................................................41
Section 7.02. Preservation of Information; Communications to Noteholders.......41
Section 7.03. Reports by Issuer................................................41
Section 7.04. Reports by Indenture Trustee.....................................42
Section 7.05. Exchange Act Reporting...........................................42
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES.....................................42
Section 8.01. Collection of Money..............................................42
Section 8.02. Trust Accounts...................................................42
Section 8.03. Officer's Certificate............................................43
Section 8.04. Termination Upon Payment to Noteholders..........................43
Section 8.05. Release of Trust Estate..........................................43
Section 8.06. Surrender of Notes Upon Final Payment............................44
ARTICLE IX SUPPLEMENTAL INDENTURES..................................................44
Section 9.01. Supplemental Indentures Without Consent of Noteholders...........44
Section 9.02. Supplemental Indentures With Consent of Noteholders..............46
Section 9.03. Execution of Supplemental Indentures.............................47
Section 9.04. Effect of Supplemental Indenture.................................47
Section 9.05. Conformity with Trust Indenture Act..............................48
Section 9.06. Reference in Notes to Supplemental Indentures....................48
ARTICLE X MISCELLANEOUS............................................................48
Section 10.01. Compliance Certificates and Opinions, etc........................48
Section 10.02. Form of Documents Delivered to Indenture Trustee.................50
Section 10.03. Acts of Noteholders..............................................50
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Credit Enhancer
and Rating Agencies..............................................51
Section 10.05. Notices to Noteholders; Waiver...................................52
Section 10.06. Alternate Payment and Notice Provisions..........................52
Section 10.07. Conflict with Trust Indenture Act................................52
Section 10.08. Effect of Headings...............................................53
Section 10.09. Successors and Assigns...........................................53
Section 10.10. Separability.....................................................53
Section 10.11. Benefits of Indenture............................................53
Section 10.12. Legal Holidays...................................................53
Section 10.13. GOVERNING LAW....................................................53
Section 10.14. Counterparts.....................................................53
Section 10.15. Recording of Indenture...........................................53
Section 10.16. Issuer Obligation................................................54
Section 10.17. No Petition......................................................54
Section 10.18. Inspection.......................................................54
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
ACT OF 1939 AND INDENTURE PROVISIONS*
Trust Indenture
Act Section Indenture Section
310(a)(1)........................................... 6.11
(a)(2)............................................ 6.11
(a)(3)............................................ 6.10
(a)(4)............................................ Not Applicable
(a)(5)............................................ 6.11
(b)............................................... 6.08, 6.11
(c)............................................... Not Applicable
311(a)............................................. 6.12
(b).............................................. 6.12
(c).............................................. Not Applicable
312(a)............................................. 7.01, 7.02(a)
(b).............................................. 7.02(b)
(c).............................................. 7.02(c)
313(a)............................................. 7.04
(b).............................................. 7.04
(c).............................................. 7.03(a)(iii), 7.04
(d).............................................. 7.04
314(a)............................................. 3.10, 7.03(a)
(b)............................................. 3.07
(c)(1)........................................... 8.05(c), 10.01(a)
(c)(2)........................................... 8.05(c), 10.01(a)
(c)(3)........................................... Not Applicable
(d)(1)........................................... 8.05(c), 10.01(b)
(d)(2)........................................... 8.05(c), 10.01(b)
(d)(3)........................................... 8.05(c), 10.01(b)
(e).............................................. 10.01(a)
315(a)............................................. 6.01(b)
(b).............................................. 6.05
(c).............................................. 6.01(a)
(d).............................................. 6.01(c)
(d)(1)........................................... 6.01(c)
(d)(2)........................................... 6.01(c)
(d)(3)........................................... 6.01(c)
(e).............................................. 5.13
316(a)(1)(A)....................................... 5.11
316(a)(1)(B)....................................... 5.12
316(a)(2)........................................... Not Applicable
316(b).............................................. 5.07
317(a)(1)........................................... 5.04
317(a)(2)........................................... 5.03(d)
317(b).............................................. 3.03(a)
318(a).............................................. 10.07
This is the Indenture, dated as of May 25, 2006, between HOME LOAN TRUST 2006-HI2, a
Delaware statutory trust, as Issuer (the "Issuer"), and JPMorgan Chase Bank, National
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 Series 2006-HI2 Home Loan-Backed
Notes (the "Notes").
GRANTING CLAUSE
The Issuer and the Owner Trustee hereby Grant to the Indenture Trustee at the Closing
Date, as trustee for the benefit of the Holders of the Notes, all of the Issuer's and the
Owner Trustee's right, title and interest in and to whether now existing or hereafter
created (a) the Home Loans, (b) all funds on deposit from time to time in the Payment
Account and in all proceeds thereof; (c) all property securing the payment or performance of
the Home Loans and all supporting obligations for the Home Loans; and (d) all present and
future claims, demands, causes and choses in action in respect of any or all of the
foregoing and all payments on or under, and all proceeds of every kind and nature whatsoever
in respect of, any or all of the foregoing and all payments on or under, and all proceeds of
every kind and nature whatsoever in the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the foregoing
(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 foregoing Grant shall inure to the benefit of the Credit Enhancer in respect of
draws made on the Credit Enhancement Instrument and amounts owing from time to time pursuant
to the Insurance Agreement (regardless of whether such amounts relate to the Notes or the
Certificates), and such Grant shall continue in full force and effect for the benefit of the
Credit Enhancer until all such amounts owing to it have been repaid in full.
The Indenture Trustee, as trustee on behalf of the Holders of the Notes: (i)
acknowledges such Grant, (ii) accepts the trust under this Indenture in accordance with the
provisions hereof, (iii) agrees to perform its duties as Indenture Trustee as required
herein and (iv) acknowledges receipt of the Credit Enhancement Instrument and shall hold
such Credit Enhancement Instrument in accordance with the terms of this Indenture for the
benefit of the Holders of the Notes.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Indenture, except as otherwise
expressly provided herein or unless the context otherwise requires, capitalized terms not
otherwise defined herein shall have the meanings assigned to such terms in the Definitions
attached hereto as Appendix A which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture
refers to a provision of the Trust Indenture Act (the "TIA"), the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any other obligor on the
indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by Commission rule have the meaning assigned to
them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance
with generally accepted accounting principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural include the
singular; and
(vi) any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes (in the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
ARTICLE II
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 Exhibit A, with such
appropriate insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may, consistently
herewith, be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or produced by any
combination of these methods (with or without steel engraved borders), all as determined by
the Authorized Officers executing such Notes, as evidenced by their execution of such
Notes. The terms of the Notes set forth in Exhibit A 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 Notes for
original issue in an aggregate initial principal amount of $91,861,000 with respect to the
Class A-1 Notes, $29,743,000 with respect to the Class A-2 Notes, $43,353,000 with respect
to the Class A-3 Notes and $72,434,000 with respect to the Class A-4 Notes.
The Notes shall be dated the date of their authentication. The Notes shall be
issuable as registered Notes. The Notes shall be issuable in the minimum initial Note
Balances of $100,000 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.
ARTICLE III
COVENANTS
Section 3.01. Collection of Payments with respect to the Home Loans. The Indenture
Trustee shall establish and maintain with itself the Payment Account in which the Indenture
Trustee shall, subject to the terms of this paragraph, deposit, on the same day as it is
received from the Master Servicer, each remittance received by the Indenture Trustee with
respect to the Home Loans. The Payment Account shall be a segregated account and an
Eligible Account. The Indenture Trustee shall make all payments of principal of and
interest on the Notes, subject to Section 3.03, as provided in Section 3.05 herein from
monies on deposit in the Payment Account.
Section 3.02. Maintenance of Office or Agency. The Issuer will maintain in the City of
New York, an office or agency where, subject to satisfaction of conditions set forth herein,
Notes may be surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The
Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust Office, and the
Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders,
notices and demands.
Section 3.03. Money for Payments To Be Held in Trust; Paying Agent. (a) As provided in
Section 3.01, all payments of amounts due and payable with respect to any Notes that are to
be made from amounts withdrawn from the Payment Account pursuant to Section 3.01 shall be
made on behalf of the Issuer by the Indenture Trustee or by the Paying Agent, and no amounts
so withdrawn from the Payment Account for payments of Notes shall be paid over to the Issuer
except as provided in this Section 3.03. The Issuer will cause each Paying Agent other than
the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts
as Paying Agent it hereby so agrees), subject to the provisions of this Section 3.03, that
such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with respect to the Notes in
trust for the benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Indenture Trustee and the Credit Enhancer written notice of any default by
the Issuer of which it has actual knowledge in the making of any payment required to be made
with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the written request of
the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by
such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the Indenture Trustee all
sums held by it in trust for the payment of Notes if at any time it ceases to meet the
standards required to be met by a Paying Agent at the time of its appointment;
(v) comply with all requirements of the Code with respect to the withholding from any
payments made by it on any Notes of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in connection therewith; and
(vi) deliver to the Indenture Trustee a copy of the report to Noteholders prepared with
respect to each Payment Date by the Master Servicer pursuant to Section 4.01 of the
Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, by Issuer Request direct any Paying
Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums
to be held by the Indenture Trustee upon the same trusts as those upon which the sums were
held by such Paying Agent; and upon such payment by any Paying Agent to the Indenture
Trustee, such Paying Agent shall be released from all further liability with respect to such
money.
Subject to applicable laws with respect to escheat of funds, any money held by the
Indenture Trustee or any Paying Agent in trust for the payment of any amount due with
respect to any Note and remaining unclaimed for one year after such amount has become due
and payable shall be discharged from such trust and be paid to the Issuer 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 Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture Trustee or
such Paying Agent, before being required to make any such repayment, shall at the expense
and direction of the Issuer cause to be published once, in an Authorized Newspaper, notice
that such money remains unclaimed and that, after a date specified therein, which shall not
be less than 30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and
employ, at the expense and direction of the Issuer, any other reasonable means of
notification of such 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 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 statutory trust under the laws of the State of Delaware (unless it becomes,
or any successor Issuer hereunder is or becomes, organized under the laws of any other state
or of the United States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction) and will obtain
and preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Home Loans and each other instrument or agreement included in the
Trust Estate.
Section 3.05. Payment of Principal and Interest; Defaulted Interest. (a) On each Payment
Date from amounts on deposit in the Payment Account (other than amounts deposited
constituting prepayment charges), the Paying Agent shall pay to the Noteholders, the
Certificate Paying Agent on behalf of the Certificateholder and to other Persons the amounts
to which they are entitled, as set forth in the statements delivered to the Indenture
Trustee pursuant to Section 4.01 of the Servicing Agreement, as set forth below in the
following order of priority:
(i) to the Credit Enhancer, the Premium for the Credit Enhancement Instrument, plus any
unpaid Premium from any prior Payment Date (with interest thereon as provided in the
Insurance Agreement);
(ii) to the Noteholders, Accrued Note Interest for such Payment Date, on a pro rata basis,
based on the amount of Accrued Note Interest for such Payment Date, plus any Accrued
Note Interest remaining unpaid from any prior Payment Date, less any Prepayment
Interest Shortfalls and Relief Act Shortfalls allocated thereto as provided in
Section 3.05(d) below;
(iii) to the Noteholders as principal on the Notes, the Principal Collection Payment Amount
for such Payment Date, in the order described in Section 3.05(f) below, until the
Note Balances thereof have been reduced to zero;
(iv) to the Noteholders as principal on the Notes, the Liquidation Loss Payment Amount for
such Payment Date, in the order described in Section 3.05(f) below, until the Note
Balances thereof have been reduced to zero;
(v) to the Credit Enhancer, to reimburse it for prior draws made on the Credit
Enhancement Instrument (with interest thereon as provided in the Insurance Agreement);
(vi) to the Noteholders as principal on the Notes, the Reserve Increase Amount for such
Payment Date, in the order described in Section 3.05(f) below, until the Note
Balances thereof have been reduced to zero;
(vii) to the Credit Enhancer, any other amounts owed to the Credit Enhancer pursuant to the
Insurance Agreement; and
(viii) any remaining amount and any amounts constituting prepayment charges to the
Certificate Paying Agent, on behalf of the holders of the Certificates;
provided, however, in the event that on a Payment Date a Credit Enhancer Default shall have
occurred and be continuing, (a) no payments will be made to the Credit Enhancer pursuant to
clause (v) above until all Insured Payments that are due and required to be paid by the
Credit Enhancer on the Notes on such Payment Date or were due and required to be paid by the
Credit Enhancer on any prior Payment Date have been paid in full and (b) any amounts payable
to the Credit Enhancer pursuant to clause (v) shall instead be paid pursuant to clause
(vii). In addition, on the Final Insured Payment Date or other final Payment Date (including
the Payment Date following any purchase by the Master Servicer of the Home Loans pursuant to
Section 8.08 of the Servicing Agreement), the amount to be paid pursuant to clause (ii)
above shall be equal to the aggregate Note Balance of the Notes immediately prior to such
Payment Date.
(b) 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 Certificateholder.
(c) The amounts paid to Noteholders shall be paid to the Notes in accordance with the
applicable percentage as set forth in the definition of Note Rate. Interest will accrue on
the Notes (other than the Class A-1 Notes) on the basis of a 360-day year consisting of
twelve 30-day months. Interest will accrue on the Class A-1 Notes on the basis of a 360-day
year and the actual number of days in the related Interest Accrual Period.
(d) To the extent the amount available for interest distributions on the Notes is less
than the aggregate amount of Accrued Note Interest on the Notes, a draw on the Credit
Enhancement Instrument will be made; provided, however, that to the extent such shortfall is
a result of Prepayment Interest Shortfalls or Relief Act Shortfalls, whether related to the
current Collection Period or a prior Collection Period, the shortfall will not be covered by
the Credit Enhancement Instrument, and the shortfall will be allocated to the amount of
Accrued Note Interest on the Notes on a pro rata basis.
(e) 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 holds Notes of an aggregate initial Note Balance of at least $1,000,000, 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 or money order to such Noteholder mailed to
such Holder's address as it appears in the Note Register the amount required to be paid to
such Holder on such Payment Date pursuant to such Holder's Securities; 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.
(f) Any payments to the Notes pursuant to clauses 3.05(a)(iii), (iv) and (vi) above plus
amounts drawn on the Credit Enhancement Instrument in respect of principal shall be
distributed to the Class A-1, Class A-2, Class A-3 and Class A-4 Notes, in that order, in
each case until the outstanding Note Balance thereof has been reduced to zero.
(g) The Note Balance of each Note shall be due and payable in full on the Final Insured
Payment Date as provided in the form of Note set forth in Exhibit A. 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 written notice to the Indenture
Trustee by the Issuer (or by the Master Servicer on behalf of the Issuer, pursuant to
Section 8.08(c) of the Servicing Agreement) of the Final Insured Payment Date for the Notes
or other final Payment Date, the Indenture Trustee shall notify the related Noteholders of
record of the Final Insured Payment Date or other final Payment Date, by mail or facsimile,
no later than five Business Days prior to the Final Insured Payment Date or other final
Payment Date and shall specify:
(i) that the Record Date otherwise applicable to such Payment Date is not applicable;
(ii) that payment of the principal amount and any interest due with respect to such Note
at the Final Insured 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; and
(iii) the amount of any such final payment, if known.
Section 3.06. Protection of Trust Estate. (a) The Issuer will from time to time 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 Trust to enforce any of the Home Loans; and
(iv) preserve and defend title to the Trust Estate and the rights of the Indenture Trustee
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 (or from the
jurisdiction in which it was held as described in the Opinion of Counsel delivered at the
Closing Date pursuant to Section 3.07(a), if no Opinion of Counsel has yet been delivered
pursuant to Section 3.07(b)) unless the Trustee shall have first received an Opinion of
Counsel to the effect that the lien and security interest created by this Indenture with
respect to such property will continue to be maintained after giving effect to such action
or actions. The Issuer hereby designates the Indenture Trustee its agent and attorney in
fact to execute any financing statement, continuation statement or other instrument required
to be executed pursuant to this Section 3.06.
Section 3.07. Opinions as to Trust Estate. (a) On the Closing Date, the Issuer shall
furnish to the Indenture Trustee and the Owner Trustee an Opinion of Counsel at the expense
of the Issuer either stating that, in the opinion of such counsel, such action has been
taken with respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the execution
and filing of any financing statements and continuation statements, as are necessary to
perfect and make effective the lien and security interest in the Home Loans 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 security interest effective.
(b) On or before December 31st in each calendar year, beginning in 2006, the Issuer shall
furnish to the Indenture Trustee and the Credit Enhancer an Opinion of Counsel at the
expense of the Issuer either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, rerecording and 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 security interest in the Home Loans and reciting
the details of such action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re recording and 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 Home Loans until December 31
in the following calendar year.
Section 3.08. Performance of Obligations; Servicing Agreement. (a) The Issuer will
punctually perform and observe all of its obligations and agreements contained in this
Indenture, the Basic Documents and in the instruments and agreements included in the Trust
Estate.
(b) The Issuer may contract with other Persons to assist it in performing its duties
under this Indenture, and any performance of such duties by a Person identified to the
Indenture Trustee in an Officer's Certificate of the Issuer shall 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 Home 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 Home Loans or any such instrument, except such actions as the Master Servicer is
expressly permitted to take in the Servicing Agreement.
(d) The Issuer may retain an administrator and may enter into contracts with other
Persons for the performance of the Issuer's obligations hereunder, and performance of such
obligations by such Persons shall be deemed to be performance of such obligations by the
Issuer.
Section 3.09. Negative Covenants. So long as any Notes are Outstanding, the Issuer shall
not:
(i) except as expressly permitted by this Indenture, sell, transfer, exchange or
otherwise dispose of the Trust Estate, unless directed to do so by the Indenture
Trustee;
(ii) claim any credit on, or make any deduction from the principal or interest payable in
respect of, the Notes (other than amounts properly withheld from such payments under
the Code) or assert any claim against any present or former Noteholder by reason of
the payment of the taxes levied or assessed upon any part of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture to be impaired, or permit
the lien of this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or obligations
with respect to the Notes under this Indenture except as may be expressly permitted
hereby, permit any lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof or (B) 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 Home Loans, or impair or cause to
be impaired the Home Loans or the Issuer's interest in the Home Loans, the Home Loan
Purchase Agreement or in any Basic Document, if any such action would materially and
adversely affect the interests of the Noteholders.
Section 3.10. Annual Statement as to Compliance. The Issuer will deliver to the Indenture
Trustee and the Credit Enhancer, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 2006), an Officer's Certificate stating, as to the
Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and of its performance
under this Indenture and the Trust Agreement has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such review, the Issuer
has complied with all conditions and covenants under this Indenture and the
provisions of the Trust Agreement throughout such year, or, if there has been a
default in its compliance with any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status thereof.
Section 3.11. Recording of Assignments. The Issuer shall enforce the obligation of the
Seller under the Home Loan Purchase Agreement to submit or cause to be submitted for
recording all Assignments of Mortgages within 60 days of receipt of recording information by
the Master Servicer.
Section 3.12. Representations and Warranties Concerning the Home Loans. The Indenture
Trustee, as pledgee of the Home Loans, has the benefit of the representations and warranties
made by the Seller in Section 3.1(a) and Section 3.1(b) of the Home Loan Purchase Agreement
concerning the Home Loans and the right to enforce the remedies against the Seller provided
in such Section 3.1(a) or Section 3.1(b) to the same extent as though such representations
and warranties were made directly to the Indenture Trustee.
Section 3.13. Assignee of Record of the Home Loans. The Issuer hereby directs and
authorizes the Indenture Trustee to hold record title to the Home Loans by being named as
payee in the endorsements of the Mortgage Notes and assignee in the Assignments of Mortgage
to be recorded under Section 2.1 of the Home Loan Purchase Agreement. Except as expressly
provided in the Home Loan Purchase Agreement or in the Servicing Agreement with respect to
any specific Home Loan, the Indenture Trustee shall not execute any endorsement or
assignment or otherwise release or transfer such record title to any of the Home Loans until
such time as the remaining Trust Estate may be released pursuant to Section 8.05(b). The
Indenture Trustee's holding of such record title shall in all respects be subject to its
fiduciary obligations to the Noteholders hereunder.
Section 3.14. Master 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 Master
Servicer, the Issuer and the Indenture Trustee hereby acknowledge that the Master Servicer
is acting as agent and bailee of the Indenture Trustee in holding amounts on deposit in the
Custodial Account pursuant to Section 3.02 of the Servicing Agreement that are allocable to
the Home Loans, as well as its agent and bailee in holding any Related Documents released to
the Master Servicer pursuant to Section 3.06(c) of the Servicing Agreement, and any other
items constituting a part of the Trust Estate which from time to time come into the
possession of the Master Servicer. It is intended that, by the Master Servicer's acceptance
of such agency pursuant to Section 3.02 of the Servicing Agreement, the Indenture Trustee,
as a pledgee of the Home 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 Master Servicer.
Section 3.15. Investment Company Act. The Issuer shall not become an "investment company"
or "controlled by" 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.
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, the due and punctual payment
of the principal of and interest on all Notes and to the Certificate Paying Agent, on
behalf of the Certificateholder 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 Issuer receives consent of the Credit Enhancer (so long as no Credit Enhancer
Default exists) and the Rating Agencies shall have notified the Issuer (with a copy
to the Indenture Trustee) that such transaction shall not cause the rating of the
Notes, without regard to the Credit Enhancement Instrument, to be reduced, suspended
or withdrawn or to be considered by either Rating Agency to be below investment grade
without taking into account the Credit Enhancement Instrument;
(iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered copies
thereof to the Indenture Trustee and the Credit Enhancer) to the effect that such
transaction will not have any material adverse tax consequence to the Issuer, any
Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and security interest created by
this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee 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).
(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
States citizen or a Person organized and existing under the laws of the United States
of America or any state, (B) expressly assume, 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 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 agree 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 Holders of the Notes, (D) unless otherwise provided in such supplemental
indenture, expressly agree to indemnify, defend and hold harmless the Issuer against
and from any loss, liability or expense arising under or related to this Indenture
and the Notes and (E) expressly agree 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 Issuer receives consent of the Credit Enhancer (so long as no Credit Enhancer
Default exists) and the Rating Agencies shall have notified the Issuer (with a copy
to the Indenture Trustee) that such transaction shall not cause the rating of the
Notes, without regard to the Credit Enhancement Instrument, to be reduced, suspended
or withdrawn;
(iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered copies
thereof to the Indenture Trustee and the Credit Enhancer) to the effect that such
transaction will not have any material adverse tax consequence to the Issuer or any
Noteholder;
(v) any action that is necessary to maintain the lien and security interest created by
this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee 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).
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 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 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 Home Loans and the issuance of
the Notes and the Certificate 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.
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. Owner Trustee Not Liable for the Certificate or Related Documents. The
recitals contained herein shall be taken as the statements of the Depositor, and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Indenture, of any Basic Document
or of the Certificate (other than the signatures of the Owner Trustee on the Certificate) or
the Notes, or of any Related Documents, or of MERS or the MERS(R)System. The Owner Trustee
shall at no time have any responsibility or liability with respect to the sufficiency of the
Trust Estate or its ability to generate the payments to be distributed to the
Certificateholder under the Trust Agreement or the Noteholders under this Indenture,
including, the compliance by the Depositor or the Seller with any warranty or representation
made under any Basic Document or in any related document or the accuracy of any such
warranty or representation, or any action of the Certificate Paying Agent, the Certificate
Registrar or the Indenture Trustee taken in the name of the Owner Trustee.
Section 3.23. Restricted Payments. The Issuer shall not, directly or indirectly, (i) pay
any dividend or make any payment (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner Trustee or any owner of a
beneficial interest in the Issuer or otherwise with respect to any ownership or equity
interest or security in or of the Issuer, (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) payments to the Owner Trustee and the Certificateholder as
contemplated by, and to the extent funds are available for such purpose under the Trust
Agreement, and (y) payments to the Master Servicer pursuant to the terms of the Servicing
Agreement. The Issuer will not, directly or indirectly, make payments to or payments from
the Custodial Account except in accordance with this Indenture and the Basic Documents.
Section 3.24. Notice of Events of Default. The Issuer shall give the Indenture Trustee,
the Credit Enhancer and the Rating Agencies prompt written notice of each Event of Default
hereunder and any default under the Trust Agreement.
Section 3.25. Further Instruments and Acts. Upon request of the Indenture Trustee, 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. Statements to Noteholders. On each Payment Date, the Indenture Trustee and
the Certificate Registrar shall forward by mail or make available on its website initially
located at "xxx.xxxxxxxx.xxx/xxx" to the Credit Enhancer and each Noteholder and
Certificateholder, respectively, the statement delivered to it, on the Business Day
following the related Determination Date pursuant to Section 4.01 of the Servicing Agreement.
Section 3.27. Payments under the Credit Enhancement Instrument. (a) On or prior to 12:00
noon New York City time on the second Business Day before any Payment Date, including the
Final Insured Payment Date, the Indenture Trustee shall make a draw on the Credit
Enhancement Instrument in an amount, if any, equal to the Insured Payment.
(b) The Indenture Trustee shall submit, if an Insured Payment is
specified in any Servicing Certificate prepared by the Master Servicer pursuant to Section
4.01 of the Servicing Agreement, the notice (in the form attached as Exhibit A to the Credit
Enhancement Instrument) in the amount of the Insured Payment to the
Credit Enhancer 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 Insured Payment in accordance
with the terms of the Credit Enhancement Instrument, the Indenture
Trustee shall deposit such Insured Payment in the Payment Account for distribution to
Noteholders pursuant to Section 3.05.
Section 3.28. Reserved.
Section 3.29. Determination of Class A-1 Note Rate. On the second LIBOR Business Day
immediately preceding (i) the Closing Date in the case of the first Interest Accrual Period
and (ii) the first day of each succeeding Interest Accrual Period, the Indenture Trustee
shall determine LIBOR and the Note Rate for the Class A-1 Notes for such Interest Accrual
Period and shall inform the Issuer, the Master Servicer, the Credit Enhancer and the
Depositor at their respective facsimile numbers given to the Indenture Trustee in writing.
All determinations of LIBOR by the Indenture Trustee shall, in the absence of manifest
error, be conclusive for all purposes, and each holder of a Class A-1 Note, by accepting its
Class A-1 Note, agrees to be bound by such determination.
Section 3.30. Liquidation on Final Insured Payment Date. On the Final Insured Payment
Date, if the Notes are not paid in full on or prior to the Final Insured Payment Date, the
Indenture Trustee shall take full account of the assets and liabilities of the Trust, shall
liquidate the assets, in a commercially reasonable manner and on commercially reasonable
terms, as promptly as is consistent with obtaining the fair value thereof and in accordance
with Section 5.15, and shall apply and distribute the proceeds therefrom in the order of
priority described in Section 3.05(c).
Section 3.31. No Recourse. Upon the occurrence of an Event of Default under the Notes,
this Indenture or the other Basic Documents, Holders of the Notes shall have recourse only
to the Collateral and all proceeds thereof, as and to the extent provided herein, and no
recourse shall be had by such Holders against the Issuer or its other assets or properties.
Section 3.32. Additional UCC Representations and Warranties. The Issuer hereby represents
and warrants that:
(i) this Agreement creates a valid and continuing security interest (as defined in the
applicable UCC) in the Trust Estate in favor of the Indenture Trustee on behalf of
the Holders of the Notes, which security interest is prior to all other liens, and is
enforceable as such as against creditors of the Issuer.
(ii) the Issuer owns and has good and marketable title to the Trust Estate free and clear
of any lien, claim or encumbrance of any Person.
(iii) the Issuer will cause the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under applicable law within 10
days of the Closing Date in order to perfect the security interest in the Trust
Estate granted to the Indenture Trustee on behalf of the Holders of the Notes.
(iv) other than the security interest granted to the Indenture Trustee on behalf of the
Holders of the Notes pursuant to the Basic Documents, the Issuer has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed any of the
Trust Estate. The Issuer is not aware of any judgment or tax lien filings against
it. The Issuer has not authorized the filing of and is not aware of any financing
statements against the Issuer that include a description of collateral covering the
Trust Estate other than any financing statement (i) relating to the security interest
granted to Indenture Trustee on behalf of the Holders of the Notes hereunder or (ii)
that has been terminated.
The foregoing representations may not be waived and shall survive the issuance of the
Notes.
ARTICLE IV
THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
Section 4.01. The Notes. The Notes shall be registered in the name of a nominee
designated by the Depository. Beneficial Owners will hold interests in the Notes as set
forth in Section 4.06 herein. The minimum initial Note Balances with respect to the Notes
shall be $100,000 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
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, 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
Note Registrar and delivered by the Indenture Trustee to or upon the order of the Issuer.
Section 4.02. Registration of and Limitations on Transfer and Exchange of Notes;
Appointment of Certificate Registrar. The Issuer shall cause to be kept at the Indenture
Trustee's Corporate Trust Office a Note Register in which, subject to such reasonable
regulations as it may prescribe, the Note Registrar shall provide for the registration of
Notes and of transfers and exchanges of Notes as herein provided.
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 Balances
evidencing the same aggregate Percentage Interests.
Subject to the foregoing, at the option of the Noteholders, Notes may be exchanged
for other Notes of like tenor, in authorized initial Note Balances evidencing the same
aggregate Percentage Interests upon surrender of the Notes to be exchanged at the Corporate
Trust Office of the Note Registrar. Whenever any Notes are so surrendered for exchange, the
Issuer shall execute and the Note Registrar shall authenticate and deliver the Notes which
the Noteholder making the exchange is entitled to receive. Each Note presented or
surrendered for registration of transfer or exchange shall (if so required by the Note
Registrar) be duly endorsed by, or be accompanied by a written instrument of transfer in
form reasonably satisfactory to the Note Registrar duly executed by, the Holder thereof or
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 imposed for any registration of transfer or exchange of
Notes, but the Note Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of transfer or
exchange of Notes.
All Notes surrendered for registration of transfer and exchange shall be cancelled by
the Note Registrar and delivered to the Indenture Trustee for subsequent destruction without
liability on the part of either.
The Issuer hereby appoints the Indenture Trustee as 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 the Certificate and of transfers
and exchanges thereof pursuant to Section 3.05 of the Trust Agreement. The Indenture
Trustee hereby accepts such appointment.
Each purchaser and transferee of a Note, by its acceptance of the Note, shall be
deemed to have represented and warranted that either (i) it is not acquiring the Note with
the assets of an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to the provisions of Title I of ERISA, a "plan" described in Section 4975(e)(1) of
the Code, an entity whose underlying assets include "plan assets" by reason of an employee
benefit plan's or other plan's investment in such entity or any other plan that is subject
to a law that is similar to Title I of ERISA or Section 4975 of the Code or (ii) the
acquisition and holding of the Note will not give rise to a non-exempt prohibited
transaction under Section 406 of ERISA, Section 4975 of the Code or any similar applicable
law.
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
and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a bona fide
purchaser, 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 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 Credit Enhancer, the Indenture Trustee and any agent
of the Issuer 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 none of the Issuer, the Credit
Enhancer, the Indenture Trustee or any agent of the Issuer 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 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. Each Class of Notes shall initially be issued as one or
more Notes held by the Book Entry Custodian or, if appointed to hold such Notes as provided
below, the Depository Trust Company, the initial Depository, and registered in the name of
its nominee Cede & Co. Except as provided below, registration of such Notes may not be
transferred by the Indenture Trustee except to another Depository that agrees to hold such
Notes for the respective Beneficial Owners. The Indenture Trustee is hereby initially
appointed as the Book Entry Custodian and xxxxxx agrees to act as such in accordance
herewith and in accordance with the agreement that it has with the Depository authorizing it
to act as such. The Book Entry Custodian may, and, if it is no longer qualified to act as
such, the Book Entry Custodian shall, appoint, by a written instrument delivered to the
Depositor, the Master Servicer and, if the Indenture Trustee is not the Book Entry
Custodian, the Indenture Trustee, any other transfer agent (including the Depository or any
successor Depository) to act as Book Entry Custodian under such conditions as the
predecessor Book Entry Custodian and the Depository or any successor Depository may
prescribe, provided that the predecessor Book Entry Custodian shall not be relieved of any
of its duties or responsibilities by reason of any new appointment, except if the Depository
is the successor to the Book Entry Custodian. If the Indenture Trustee resigns or is
removed in accordance with the terms hereof, the successor trustee or, if it so elects, the
Depository shall immediately succeed to its predecessor's duties as Book Entry Custodian.
The Depositor shall have the right to inspect, and to obtain copies of, any Notes held as
Book Entry Notes by the Book Entry Custodian. No Beneficial Owner will receive a Definitive
Note representing such Beneficial Owner's interest in such Note, except as provided in
Section 4.08. Unless and until definitive, fully registered Notes (the "Definitive Notes")
have been issued to Beneficial Owners pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in full force and effect;
(ii) the Note Registrar 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 Owners of 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 aggregate Note Balance of the Notes, the Depository shall be deemed to represent
such percentage only to the extent that it has received instructions to such effect
from Beneficial Owners and/or Depository Participants owning or representing,
respectively, such required percentage of the beneficial interest in the Notes and
has delivered such instructions to the Indenture Trustee.
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, Owners of Notes representing
beneficial interests aggregating at least a majority of the aggregate Note Balance 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 Book Entry Custodian or the Depository, as applicable, 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 of the Issuer.
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 of the Issuer.
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 to receive payments of principal thereof and interest thereon,
(iv) Sections 3.03, 3.04, 3.06, 3.09, 3.16, 3.17, 3.18, 3.19 and 3.20, (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 satisfaction and discharge of this Indenture with respect to the
Notes, when
(A) either
(1) the Notes theretofore authenticated and delivered (other than (i) Notes that have
been destroyed, lost or stolen and that have been replaced or paid as provided in
Section 4.03 and (ii) Notes for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
(2) the 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 Insured Payment Date within one year, or
c. have been declared immediately due and payable pursuant to Section 5.02.
and the Issuer, in the case of a. or b. above, has irrevocably deposited or caused
to be irrevocably deposited with the Indenture Trustee cash or direct obligations of
or obligations guaranteed by the United States of America (which will mature prior to
the date such amounts are payable), in trust for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such Notes then
outstanding not theretofore delivered to the Indenture Trustee for cancellation when
due on the Final Insured Payment Date;
(B) the Issuer has paid or caused to be paid all other sums payable hereunder and under
the Insurance Agreement by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee and the Credit Enhancer an
Officer's Certificate and an Opinion of Counsel, each meeting the applicable requirements of
Section 10.01 and each stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied with and, if the Opinion
of Counsel relates to a deposit made in connection with Section 4.10(A)(2)b. above, such
opinion shall further be to the effect that such deposit will not have any material adverse
tax consequences to the Issuer, any Noteholders or any Certificateholder.
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 Certificate Paying Agent, as the Indenture Trustee may determine, to the
Holders of Securities, of all sums due and to become due thereon for principal and interest;
but such monies need not be segregated from other funds except to the extent required herein
or required by law.
Section 4.12. Subrogation and Cooperation. The Issuer and the Indenture Trustee
acknowledge that (i) to the extent the Credit Enhancer makes payments under the Credit
Enhancement Instrument on account of principal of or interest on the Home Loans, the Credit
Enhancer will be fully subrogated to the rights of the Noteholders to receive such principal
and interest from the Home Loans, and (ii) the Credit Enhancer 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 Credit Enhancer for action to preserve or enforce the Credit Enhancer'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 and to 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 (as defined in Section 5.15 hereof) 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 Uniform Commercial Code and take
any other appropriate action to protect and enforce the rights and remedies of the
Credit Enhancer hereunder.
Following the payment in full of the Notes, the Credit Enhancer shall continue to
have all rights and privileges provided to it under this Section and in all other provisions
of this Indenture, until all amounts owing to the Credit Enhancer have been paid in full.
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.
ARTICLE V
DEFAULT AND REMEDIES
Section 5.01. Events of Default. The Issuer shall deliver to the Indenture Trustee and
the Credit Enhancer within five calendar days after learning of the occurrence 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" written notice in the form of an
Officer's Certificate of its status and what action the Issuer is taking or proposes to take
with respect thereto.
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 or the
Holders of Notes representing not less than a majority of the aggregate Note Balance of all
Notes with the written consent of the Credit Enhancer (so long as no Credit Enhancer Default
exists), or the Credit Enhancer (so long as no Credit Enhancer Default exists) 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
principal amount of such Notes, together with accrued and unpaid interest thereon through
the date of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity with respect to an
Event of Default has been made and before a judgment or decree for payment of the money due
has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the aggregate Note Balance of all Notes, by
written notice to the Issuer and the Indenture Trustee with the written consent of the
Credit Enhancer (so long as no Credit Enhancer Default exists), or the Credit Enhancer (so
long as no Credit Enhancer Default exists) may in writing waive the related Event of Default
and rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay:
(A) all sums due and payable to the Credit Enhancer; and
(B) 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
(C) 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.
No such rescission shall affect any subsequent default or impair any right consequent
thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
(a) Subject to Section 3.31, the Issuer covenants that if default in the payment of (i) any
interest on any Note when the same becomes due and payable, and such default continues for a
period of five days, or (ii) the principal of or any installment of the principal of any
Note when the same becomes due and payable, the Issuer shall, upon demand of the Indenture
Trustee, pay to it, for the benefit of the Holders of Notes, the whole amount then due and
payable on the Notes for principal and interest, with interest upon the overdue principal,
and in addition thereto such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses, 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 10.17 hereof may institute a Proceeding for the collection of the sums
so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon the Notes and collect in the
manner provided by law out of the property of the Issuer or other obligor upon the Notes,
wherever situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee subject to the
provisions of Section 10.17 hereof may, as more particularly provided in Section 5.04, in
its discretion, proceed to protect and enforce its rights and the rights of the Noteholders,
by such appropriate Proceedings as the Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee
by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other obligor upon the
Notes or any Person having or claiming an ownership interest in the Trust Estate,
Proceedings under Title 11 of the United States Code or any other applicable federal or
state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings relative to the
Issuer or other obligor upon the Notes, or to the creditors or property of the Issuer or
such other obligor, the Indenture Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the Notes and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys and counsel,
and for reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence, willful misconduct or bad faith) and of the Noteholders allowed
in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on behalf of the 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 and of the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee or the 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, willful misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or the rights
of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim
of any Noteholder in any such proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or under any of
the Notes, may be enforced by the Indenture Trustee without the possession of any of the
Notes or the production thereof in any trial or other Proceedings relative thereto, and any
such action or proceedings instituted by the Indenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to the payment of
the expenses, disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Notes.
(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, the Indenture Trustee subject to the provisions of Section 10.17 hereof may with
the written consent of the Credit Enhancer (so long as no Credit Enhancer Default exists),
or shall at the written direction of the Credit Enhancer (so long as no Credit Enhancer
Default exists), do one or more of the following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an express trust for the
collection of all amounts then payable on the Notes or under this Indenture with
respect thereto, whether by declaration or otherwise, and all amounts payable under
the Insurance Agreement enforce any judgment obtained, and collect from the Issuer
and any other obligor upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete or partial foreclosure of
this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and take any other appropriate
action to protect and enforce the rights and remedies of the Indenture Trustee and
the Holders of the Notes;
(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 Credit Enhancer,
or if a Credit Enhancer Default has occurred and is continuing, the consent of the
Holders of 100% of the aggregate Note Balance of the Notes, (B) the proceeds of such
Sale distributable to Holders are sufficient to discharge in full all amounts then
due and unpaid upon the Notes for principal and interest and to reimburse the Credit
Enhancer for any amounts drawn under the Credit Enhancement Instrument and any other
amounts due the Credit Enhancer under the Insurance Agreement or (C) the Indenture
Trustee determines that the Home 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 Credit Enhancer (so long as no Credit Enhancer Default
exists), which consent will not be unreasonably withheld; provided further that the
Indenture Trustee shall not sell or otherwise liquidate the Trust Estate if the
proceeds of such sale or liquidation will not be sufficient to discharge in full all
amounts then due and unpaid upon the Notes for principal and interest and to
reimburse the Credit Enhancer for any amounts drawn under the Credit Enhancement
Instrument and any other amounts due the Credit Enhancer under the Insurance
Agreement unless the Indenture Trustee obtains the consent of the Holders of 66 2/3%
of the aggregate Note Balance of the Notes with the consent of the Credit Enhancer
(so long as no Credit Enhancer Default exists), or the Credit Enhancer (so long
as no Credit Enhancer Default exists). In determining such sufficiency or
insufficiency with respect to clauses (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
foregoing, so long as a Servicing Default has not occurred, any Sale of the Trust
Estate shall be made subject to the continued servicing of the Home Loans by the
Master 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:
FIRST: to the Indenture Trustee for all amounts due under Section 6.07 herein;
SECOND: to the Holders of the Notes for amounts due and unpaid on the Notes for
interest, according to the order and priority set forth in Section 3.05(a)(ii) from
amounts available in the Trust Estate for such Noteholders;
THIRD: on a pro rata basis, to Holders of the Notes for amounts due and unpaid on
the Notes for principal, from amounts available in the Trust Estate for such
Noteholders, according to the amounts due and payable on the Notes for principal,
until the related Note Balances of the Notes are reduced to zero;
FOURTH: [reserved];
FIFTH: to the payment of all amounts due and owing to the Credit Enhancer under the
Insurance Agreement;
SIXTH: to the Certificate Paying Agent for amounts due under Article VIII of the
Trust Agreement; and
SEVENTH: to the payment of the remainder, if any, to the Issuer or 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. 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 may, but
need not (but shall at the written direction of the Credit Enhancer, so long as no Credit
Enhancer Default exists) 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 payment to the Credit Enhancer 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 (at the expense of the Issuer) 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.
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 10.17 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 aggregate Note Balance of the Notes have made
written request to the Indenture Trustee to institute such Proceeding in respect of
such Event of Default in its own name as Indenture Trustee hereunder;
(iii) such 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, request and offer
of indemnity has failed to institute such Proceedings; and
(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 aggregate Note
Balance of the Notes or by the Credit Enhancer.
It is understood and intended that no one or more Holders of Notes shall have any right in
any manner whatever by virtue of, or by availing of, any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holders of Notes or to obtain or to
seek to obtain priority or preference over any other Holders or to enforce any right under
this Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or inconsistent requests
and indemnity from two or more groups of Holders of Notes, each representing less than a
majority of the aggregate Note Balance 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. Rights of Noteholders to Receive Principal and Interest. Notwithstanding
any other provisions in this Indenture, but subject to Section 3.31, 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.
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 or to such Noteholder, then and in every such case the
Issuer, the Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their respective former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee and the
Noteholders shall continue as though no such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein conferred upon or
reserved to the Indenture Trustee, the Credit Enhancer 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 Credit Enhancer 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 or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the Indenture
Trustee or by the Noteholders, as the case may be.
Section 5.11. Control by the Credit Enhancer or the Noteholders. The Holders of a
majority of the aggregate Note Balance of Notes with the consent of the Credit Enhancer (so
long as no Credit Enhancer Default exists), or the Credit Enhancer (so long as no Credit
Enhancer Default exists) shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with respect to
the Notes or exercising any trust or power conferred on the Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any rule of law or with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction to the Indenture Trustee
to sell or liquidate the Trust Estate shall be by Holders of Notes representing not
less than 100% of the aggregate Note Balance of Notes with the consent of the Credit
Enhancer (so long as no Credit Enhancer Default exists), or the Credit Enhancer (so
long as no Credit Enhancer Default exists);
(iii) if the conditions set forth in Section 5.05 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 aggregate Note Balance of Notes to sell or liquidate the Trust Estate shall be of
no force and effect; and
(iv) the Indenture Trustee may take any other action deemed proper by the Indenture
Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to Section
6.01, the Indenture Trustee need not take any action that it determines might involve it in
liability or might materially adversely affect the rights of any Noteholders not consenting
to such action unless the Indenture Trustee has received satisfactory indemnity from the
Credit Enhancer or the Noteholders.
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, the Holders of Notes of not less than
a majority of the aggregate Note Balance of the Notes with the consent of the Credit
Enhancer (so long as no Credit Enhancer Default exists), or the Credit Enhancer (so long as
no Credit Enhancer Default exists) 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. 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 Xxxxxx'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 aggregate Note Balance of the Notes or (c) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after the
respective due dates expressed in such Note and in this Indenture.
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, or plead or in any manner
whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 5.15. Sale of Trust Estate. (a) The power to effect any sale, liquidation or
other disposition (a "Sale") of any portion of the Trust Estate pursuant to Section 5.04 is
expressly subject to the provisions of Section 5.05 and this Section 5.15. The power to
effect any such Sale shall not be exhausted by any one or more Sales as to any portion of
the Trust Estate remaining unsold, but shall continue unimpaired until the entire Trust
Estate shall have been sold or all amounts payable on the Notes and under this Indenture and
under the Insurance Agreement 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 Holders of all Notes with the consent of the Credit Enhancer(so long as no Credit
Enhancer Default exists), or the Credit Enhancer (so long as no Credit Enhancer
Default exists) 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, the Certificateholder under the
Certificate and the Credit Enhancer in respect of amounts drawn under the Credit
Enhancement Instrument and any other amounts due the Indenture Trustee in connection
with expenses incurred by reason of such sale and any other amounts due the Credit
Enhancer under the Insurance Agreement, in full payment thereof in accordance with
Section 5.02, on the Payment Date next succeeding the date of such Sale, or
(3) the Indenture Trustee determines, in its sole discretion, that the conditions for
retention of the Trust Estate set forth in Section 5.05 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), and the Credit Enhancer (so long as no Credit Enhancer Default
exists) or the Holders representing at least 66-2/3% of the aggregate Note Balance
of the Notes with the consent of the Credit Enhancer (so long as no Credit Enhancer
Default exists) 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 Holders with the consent of the Credit Enhancer (so long as no Credit
Enhancer Default exists, or the Credit Enhancer (so long as no Credit Enhancer Default
exists) 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 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 and with the consent of the Credit
Enhancer (so long as no Credit Enhancer Default exists) purchase the property offered
for sale, and upon compliance with the terms of sale may hold, retain and possess and
dispose of such property, without further accountability, and may, in paying the
purchase money therefor, deliver any Notes or claims for interest thereon in lieu of
cash up to the amount which shall, upon payment of the net proceeds of such sale, be
payable thereon, and such Notes, in case the amounts so payable thereon shall be less
than the amount due thereon, shall be returned to the Holders thereof after being
appropriately stamped to show such partial payment;
(2) the Indenture Trustee may bid for and acquire the property offered for Sale in
connection with any Sale thereof, and, subject to any requirements of, and to the
extent permitted by, applicable law in connection therewith, may purchase all or any
portion of the Trust Estate in a private sale, and, in lieu of paying cash therefor,
may make settlement for the purchase price by crediting the gross Sale price against
the sum of (A) the amount which would be distributable to the Holders of the Notes
and the Holder of the Certificate and amounts owing to the Credit Enhancer as a
result of such Sale in accordance with Section 5.04(b) on the Payment Date next
succeeding the date of such Sale and (B) the expenses of the Sale and of any
Proceedings in connection therewith which are reimbursable to it, without being
required to produce the Notes in order to complete any such Sale or in order for the
net Sale price to be credited against such Notes, and any property so acquired by the
Indenture Trustee shall be held and dealt with by it in accordance with the
provisions of this Indenture;
(3) the Indenture Trustee shall execute and deliver an appropriate instrument of
conveyance transferring its interest in any portion of the Trust Estate in connection
with a Sale thereof;
(4) the Indenture Trustee is hereby irrevocably appointed the agent and attorney-in-fact
of the Issuer to transfer and convey its interest in any portion of the Trust Estate
in connection with a Sale thereof, and to take all action necessary to effect such
Sale; and
(5) no purchaser or transferee at such a Sale shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent or see
to the application of any monies.
Section 5.16. Action on Notes. The Indenture Trustee's right to seek and recover judgment
on the Notes or under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither the lien
of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders
shall be impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion of the Trust
Estate or upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.04(b).
Section 5.17. Performance and Enforcement of Certain Obligations. (a) Promptly following
a written request from the Credit Enhancer or the Indenture Trustee with the written consent
of the Credit Enhancer to do so (so long as no Credit Enhancer Default exists), the Issuer,
in its capacity as holder of the Home Loans, shall, with the written consent of the Credit
Enhancer (so long as no Credit Enhancer Default exists), take all such lawful action as the
Indenture Trustee may request to cause the Issuer to compel or secure the performance and
observance by the Seller and the Master Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Home Loan Purchase Agreement and
the Servicing Agreement, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Home Loan Purchase
Agreement and the Servicing Agreement to the extent and in the manner directed by the
Indenture Trustee, as pledgee of the Home Loans, including the transmission of notices of
default on the part of the Seller or the Master Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance by the Seller
or the Master Servicer of each of their obligations under the Home Loan Purchase Agreement
and the Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture Trustee, as
pledgee of the Home Loans, subject to the rights of the Credit Enhancer under the Servicing
Agreement may, and at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Credit Enhancer (or if a Credit Enhancer
Default has occurred and is continuing, Holders of 66-2/3% of the aggregate Note Balance of
the Notes) shall, exercise all rights, remedies, powers, privileges and claims of the Issuer
against the Seller or the Master Servicer under or in connection with the Home Loan Purchase
Agreement and the Servicing Agreement, including the right or power to take any action to
compel or secure performance or observance by the Seller or the Master Servicer, as the case
may be, of each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Home Loan Purchase
Agreement and the Servicing Agreement, as the case may be, and any right of the Issuer to
take such action shall not be suspended. In connection therewith, as determined by the
Indenture Trustee, the Issuer shall take all actions necessary to effect the transfer of the
Home Loans to the Indenture Trustee.
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 (A)
pursuant to Section 5.11 or (B) from the Credit Enhancer, which it is entitled to
give under any of the Basic Documents.
(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 funds
except to the extent required by law or the terms of this Indenture or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee to expend or risk
its own funds or otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Indenture Trustee shall be subject to the provisions of
this Section and to the provisions of the TIA.
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, and the Indenture Trustee shall not be responsible for any misconduct or negligence
on the part of, or for the supervision of, any such agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or omits to take in
good faith which it believes to be authorized or within its rights or powers; provided,
however, that 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.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall not be
(i) responsible for and makes no representation as to the validity or adequacy of this
Indenture or the Notes, (ii) accountable for the Issuer's use of the proceeds from the Notes
or (iii) responsible for any statement of the Issuer 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. If an Event of Default occurs and is continuing
and if it is known to a Responsible Officer of the Indenture Trustee, the Indenture Trustee
shall give notice thereof to the Credit Enhancer. The Indenture Trustee shall mail to each
Noteholder notice of the Event of Default within 90 days after it occurs. 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 Indenture Trustee shall be compensated and
indemnified by the Master Servicer in accordance with Section 6.06 of the Servicing
Agreement. The Indenture Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust.
Section 6.08. Replacement of Indenture Trustee. No resignation or removal of the
Indenture Trustee and no appointment of a successor Indenture Trustee shall become effective
until the acceptance of appointment by the successor Indenture Trustee pursuant to this
Section 6.08. The Indenture Trustee may resign at any time by so notifying the Issuer and
the Credit Enhancer. The Holders of a majority of the aggregate Note Balance of the Notes
or the Credit Enhancer (so long as no Credit Enhancer Default exists) may remove the
Indenture Trustee by so notifying the Indenture Trustee and the Credit Enhancer and may
appoint a successor Indenture Trustee. The Issuer shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Indenture Trustee or its
property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of the
Indenture Trustee for any reason (the Indenture Trustee in such event being referred to
herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor
Indenture Trustee with the consent of the Credit Enhancer (so long as no Credit Enhancer
Default exists), which consent will not be unreasonably withheld. In addition, the
Indenture Trustee will resign to avoid being directly or indirectly controlled by the Issuer.
A successor Indenture Trustee shall deliver a written acceptance of its appointment
to the retiring Indenture Trustee and to the Issuer. Thereupon, the resignation or removal
of the retiring Indenture Trustee shall become effective, and the successor Indenture
Trustee shall have all the rights, powers and duties of the Indenture Trustee under this
Indenture. The successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property held by it
as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after the
retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer
or the Holders of a majority of the aggregate Note Balance of the Notes may petition any
court of competent jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Indenture Trustee and
the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this Section,
the Issuer's obligations under Section 6.07 shall continue for the benefit of the retiring
Indenture Trustee.
Section 6.09. Successor Indenture Trustee by Xxxxxx. If the Indenture Trustee
consolidates with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be the
successor Indenture Trustee; provided, that such corporation or banking association shall be
otherwise qualified and eligible under Section 6.11. The Indenture Trustee shall provide
the Rating Agencies written notice of any such transaction occurring after the Closing Date.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture
any of the Notes shall have been authenticated but not delivered, any such successor to the
Indenture Trustee may adopt the certificate of authentication of any predecessor trustee,
and deliver such Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may authenticate such Notes
either in the name of any predecessor hereunder or in the name of the successor to the
Indenture Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture 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, such title to the Trust Estate, or any part thereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts as the
Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-trustee or separate
trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by law, be
appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed upon the Indenture
Trustee shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Indenture Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are to be
performed the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any act or omission of
any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of or remove any
separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as effectively as
if given to each of them. Every instrument appointing any separate trustee or co-trustee
shall refer to this Agreement and the conditions of this Article VI. Each separate trustee
and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the
estates or property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture relating to the
conduct of, affecting the liability of, or affording protection to, the Indenture Trustee.
Every such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee,
its agent or attorney in fact with full power and authority, to the extent not prohibited by
law, to do any lawful act under or in respect of this Agreement on its behalf and in its
name. If any separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and
be exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture Trustee shall at all times
satisfy the requirements of TIAss.310(a). The Indenture Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent published annual
report of condition and it or its parent shall have a long term debt rating of A or better
by Xxxxx'x. The Indenture Trustee shall comply with TIAss.310(b), including the optional
provision permitted by the second sentence of TIAss.310(b)(9); provided, however, that there
shall be excluded from the operation of TIAss.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 TIAss.310(b)(1) are met.
Within 90 days after ascertaining the occurrence of an Event of Default which shall
not have been cured or waived, unless authorized by the Securities and Exchange Commission,
the Indenture Trustee shall resign with respect to one or more Classes of Notes in
accordance with Section 6.08 of this Indenture, and the Issuer shall appoint a successor
Indenture Trustee for such Classes. In the event the Indenture Trustee fails to comply with
the terms of the preceding sentence, the Indenture Trustee shall comply with clause (ii) of
TIAss.310(b).
In the case of the appointment hereunder of a successor Indenture Trustee with
respect to any Class of Notes pursuant to this Section 6.11, the Issuer, the retiring
Indenture Trustee and the successor Indenture Trustee with respect to such Class of Notes
shall execute and deliver an indenture supplemental hereto wherein each successor Indenture
Trustee shall accept such appointment and which (i) shall contain such provisions as shall
be necessary or desirable to transfer and confirm to, and to vest in, the successor
Indenture Trustee all the rights, powers, trusts and duties of the retiring Indenture
Trustee with respect to the Notes of the Class to which the appointment of such successor
Indenture Trustee relates, (ii) if the retiring Indenture Trustee is not retiring with
respect to all Classes of Notes, shall contain such provisions as shall be deemed necessary
or desirable to confirm that all the rights, powers, trusts and duties of the retiring
Indenture Trustee with respect to the Notes of each Class as to which the retiring Indenture
Trustee is not retiring shall continue to be vested in the Indenture Trustee, and
(iii) shall add to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more than one
Indenture Trustee, it being understood that nothing herein or in such supplemental indenture
shall constitute such Indenture Trustees co-trustees of the same trust and that each such
Indenture Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Indenture Trustee; and upon the
removal of the retiring Indenture Trustee shall become effective to the extent provided
therein.
Section 6.12. Preferential Collection of Claims Against Issuer. The Indenture Trustee
shall comply with TIAss.311(a), excluding any creditor relationship listed in TIAss.311(b).
An Indenture Trustee who has resigned or been removed shall be subject to TIAss.311(a) to
the extent indicated.
Section 6.13. Representations and Warranties. The Indenture Trustee hereby represents
that:
(i) The Indenture Trustee is a banking association duly organized, validly existing and
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 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.
(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.
(v) The Indenture Trustee does not have notice of any adverse claim (as such terms are
used in Delaware UCC Section 8-302) with respect to the Home Loans.
Section 6.14. Directions to Indenture Trustee. The Indenture Trustee is hereby directed:
(a) to accept the pledge of the Home Loans and hold the assets of the Trust in trust for
the Noteholders and the Credit Enhancer;
(b) to authenticate and deliver the Notes substantially in the form prescribed by
Exhibits A-1 and A-2 in accordance with the terms of this Indenture;
(c) on the Closing Date, to enter into the Credit Enhancement Instrument for the benefit
of the Noteholders with the Credit Enhancer; and
(d) to take all other actions as shall be required to be taken by the terms of this
Indenture.
Section 6.15. Indenture Trustee May Own Securities. The Indenture Trustee, in its
individual or any other capacity may become the owner or pledgee of Securities with the same
rights it would have if it were not Indenture Trustee.
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 and, (b)
at such other times as the Indenture Trustee and the Credit Enhancer 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 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 TIAss.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
TIAss.312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer is required to file
the same with the Commission, copies of the annual reports and the information,
documents and other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations prescribe) that the
Issuer may be required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act;
(ii) file with the Indenture Trustee, and the Commission in accordance with rules and
regulations prescribed from time to time by the Commission such additional
information, documents and reports with respect to compliance by the Issuer with the
conditions and covenants of this Indenture as may be required from time to time by
such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to
all Noteholders described in TIAss.313(c)) such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) and by rules and regulations prescribed from time to
time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on
December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIAss.313(a), within 60 days
after each January 1 beginning with January 1, 2007, the Indenture Trustee shall mail to
each Noteholder as required by TIAss.313(c) and to the Credit Enhancer a brief report dated
as of such date that complies with TIAss.313(a). The Indenture Trustee also shall comply
with TIAss.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 if and when the Notes
are listed on any stock exchange.
Section 7.05. Exchange Act Reporting. In connection with the preparation and filing of
periodic reports by the Master Servicer pursuant to Section 4.04 of the Servicing Agreement,
the Indenture Trustee shall timely provide to the Master Servicer (I) a list of Holders as
shown on the Note Register or Certificate Register as of the end of each calendar year, (II)
copies of all pleadings, other legal process and any other documents relating to any claims,
charges or complaints involving the Indenture Trustee, as indenture trustee hereunder, or
the Trust Estate that are received by the Indenture Trustee, (III) notice of all matters
that, to the actual knowledge of a Responsible Officer of the Indenture Trustee, have been
submitted to a vote of the Holders, other than those matters that have been submitted to a
vote of the Holders at the request of the Depositor or the Master Servicer, and (IV) notice
of any failure of the Indenture Trustee to make any payment to the Holders as required
pursuant to this Indenture. Neither the Master Servicer nor the Indenture Trustee shall
have any liability with respect to the Master Servicer's failure to properly prepare or file
such periodic reports resulting from or relating to the Master Servicer's inability or
failure to obtain any information not resulting from the Master Servicer's own negligence or
willful misconduct.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly provided herein, the
Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly
and without intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable to or receivable by the Indenture Trustee pursuant to this
Indenture. The Indenture Trustee shall apply all such money received by it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if any default
occurs in the making of any payment or performance under any agreement or instrument that is
part of the Trust Estate, the Indenture Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed thereafter as
provided in Article V.
Section 8.02. Trust Accounts. (a) On or prior to the Closing Date, the 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 Certificate Paying Agent, on behalf of the
Certificateholder and the Credit Enhancer, the Payment Account as provided in Section 3.01
of this Indenture.
(b) All monies deposited from time to time in the Payment Account pursuant to the
Servicing Agreement and all deposits therein pursuant to this Indenture are for the benefit
of the Noteholders and the Certificate Paying Agent, on behalf of the Certificateholder and
all investments made with such monies including all income or other gain from such
investments are for the benefit of the Master Servicer as provided by the Servicing
Agreement.
On each Payment Date, the Indenture Trustee shall distribute all amounts on deposit
in the Payment Account to Noteholders in respect of the Notes and in its capacity as
Certificate Paying Agent to the Certificateholder in the order of priority set forth in
Section 3.05 (except as otherwise provided in Section 5.04(b)).
The Master Servicer shall direct the Indenture Trustee in writing to invest any funds
in the Payment Account in Permitted Investments maturing no later than the Business Day
preceding each Payment Date and shall not be sold or disposed of prior to the maturity.
Section 8.03. Officer's Certificate. The Indenture Trustee shall receive at least seven
days notice when requested by the Issuer to take any action pursuant to Section 8.05(a),
accompanied by copies of any instruments to be executed, and the Indenture Trustee shall
also require, as a condition to such action, an 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 Payment to Noteholders. This Indenture and the respective
obligations and responsibilities of the Issuer and the Indenture Trustee created hereby
shall terminate upon the payment to the Noteholders, the Certificate Paying Agent (on behalf
of the Certificateholder) and the Indenture Trustee of all amounts required to be paid
pursuant to Article III; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the survivor of the descendants
of Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the Court of St. Xxxxx,
living on the date hereof.
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 the Indenture Trustee pursuant to this Indenture and other Basic Documents have
been paid and (iii) all sums due the Credit Enhancer 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 a letter from the Credit Enhancer, stating that the Credit
Enhancer has no objection to such request from the Issuer.
(d) The Indenture Trustee shall, at the request of the Issuer or the Depositor, surrender
the Credit Enhancement Instrument to the Credit Enhancer for cancellation, upon final
payment on the Notes.
Section 8.06. Surrender of Notes Upon Final Payment. By acceptance of any Note, the
Holder thereof agrees to surrender such Note to the Indenture Trustee promptly, prior to
such Noteholder's receipt of the final payment thereon.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders. (a) Without the
consent of the Holders of any Notes but with prior notice to the Rating Agencies and the
written consent of the Credit Enhancer (which consent shall not be unreasonably withheld),
unless a Credit Enhancer Default has occurred and is continuing, the Issuer and the
Indenture Trustee, when authorized by an Issuer Request, at any time and from time to time,
may enter into one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution thereof), in
form satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time subject to the lien
of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee
any property subject or required to be subjected to the lien of this Indenture, or to
subject to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable provisions hereof, of
another person to the Issuer, and the assumption by any such successor of the
covenants of the Issuer herein and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of the Holders of the Notes or
the Credit Enhancer, 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 any error, or to correct or supplement any
provision herein or in any supplemental indenture that may be inconsistent with any
other provision herein, in any supplemental indenture or in the Prospectus Supplement;
(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 or the
Credit Enhancer;
(vii) to evidence and provide for the acceptance of the appointment hereunder by a
successor trustee with respect to the Notes and to add to or change any of the
provisions of this Indenture as shall be necessary to facilitate the administration
of the trusts hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(viii) to modify, eliminate or add to the provisions of this Indenture to such extent as
shall be necessary to effect the qualification of this Indenture under the TIA or
under any similar federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA; provided, however, that no
such indenture supplements shall be entered into unless the Indenture Trustee shall
have received an Opinion of Counsel that entering into such indenture supplement will
not have any material adverse tax consequences to the Noteholders. 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 Rating
Agencies and with the consent of the Credit Enhancer (so long as no Credit Enhancer Default
exists), 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 the
Credit Enhancer or (ii) cause the Issuer to be subject to an entity level tax.
(c) The Issuer and the Indenture Trustee shall, as directed by the Holders of
Certificates which represent not less than 100% of the Certificate Percentage Interests
thereof, enter into an indenture or indentures supplemental hereto for the purpose of
providing for the issuance of one or more additional classes of Notes entitled to payments
derived solely from all or a portion of the payments to which the Certificate issued on the
Closing Date pursuant to the Trust Agreement are entitled; 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 the Credit Enhancer or (ii) cause the
Issuer to be subject to an entity level tax. Each such class of Notes shall be a non
recourse obligation of the Issuer and shall be entitled to interest and principal in such
amounts, and to such security for the repayment thereof, as shall be specified in such
amendment or amendments. Promptly after the execution by the Issuer and the Indenture
Trustee of any amendments pursuant to this Section or the creation of a new indenture and
the issuance of the related class or classes of Notes, the Issuer shall require the
Indenture Trustee to give notice to the Holders of the Notes and the Rating Agencies setting
forth in general terms the substance of the provisions of such amendment. Any failure of
the Indenture Trustee to provide such notice as is required under this paragraph, or any
defect therein, shall not, however, in any way impair or affect the validity of such
amendment or any class of Notes issued pursuant thereto. Unless the Credit Enhancer agrees
in writing, (i) any classes of Notes issued pursuant to a supplemental indenture shall not
be entitled to the insurance provided by the Credit Enhancement Instrument and (ii) the
Holders of any such classes of Notes shall be entitled only to such distributions or a
portion of such distributions as the Holders would have received as Holder of Certificate.
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 Holders of not less than a majority of the
aggregate Note Balance of the Notes affected thereby and the Credit Enhancer (so long as no
Credit Enhancer Default exists), 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
supplemental 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 related Note Balance of any Class of 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;
(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 aggregate Note Balance 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;
(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 to be subject to an
entity level tax.
and provided, further, 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 adversely affect in any material respect the interests of the
Certificateholder or shall have received the express written consent of the
Certificateholder to the indenture supplement.
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 and the Custodian to which such amendment or supplemental indenture
relates a notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such supplemental
indenture.
Notwithstanding anything to the contrary herein, so long as there does not exist a
failure by the Credit Enhancer to make a required payment under the Credit Enhancement Instrument,
the Credit Enhancer shall have the right to exercise all rights of the Holders of the Notes
under this Indenture and the Servicing Agreement without any consent of such Holders, and such
Holders may exercise such rights only with the prior written consent of the Credit Enhancer.
Section 9.03. Execution of Supplemental Indentures. In executing, or permitting the
additional trusts created by, any supplemental indenture permitted by this Article IX or the
modification thereby of the trusts created by this Indenture, the Indenture Trustee shall be
entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture and conforms to the requirements of
the Trust Indenture Act. 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
requirements of the Trust Indenture Act as then in effect so long as this Indenture shall
then be qualified under the Trust Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes authenticated and
delivered after the execution of any supplemental indenture pursuant to this Article IX may,
and if required by the Indenture Trustee shall, bear a notation in form approved by the
Indenture Trustee as to any matter provided for in such supplemental indenture. If the
Issuer or the Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the Indenture
Trustee in exchange for Outstanding Notes.
ARTICLE X
MISCELLANEOUS
Section 10.01. Compliance Certificates and Opinions, etc. (a) Upon any application or
request by the Issuer to the Indenture Trustee to take any action under any provision of
this Indenture, the Issuer shall furnish to the Indenture Trustee and to the Credit Enhancer
(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 signer 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 an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Issuer shall also deliver to the Indenture Trustee an
Independent Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the basis of any such
withdrawal or release since the commencement of the then current fiscal year of the Issuer,
as set forth in the certificates delivered pursuant to clause (i) above and this clause
(ii), is 10% or more of the aggregate Note Balance 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 aggregate Note Balance of the Notes.
(iii) Whenever any property or securities are to be released from the lien of this
Indenture, the Issuer shall also furnish to the Indenture Trustee an Officer's Certificate
certifying or stating the opinion of each person signing such certificate as to the fair
value (within 90 days of such release) of the property or securities proposed to be released
and stating that in the opinion of such person the proposed release will not impair the
security under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of any signer thereof as to the matters
described in clause (iii) above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the property or
securities and of all other property, other than property as contemplated by clause (v)
below or securities released from the lien of this Indenture since the commencement of the
then current calendar year, as set forth in the certificates required by clause (iii) above
and this clause (iv), equals 10% or more of the aggregate Note Balance 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 aggregate Note Balance of the Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer may, without compliance
with the requirements of the other provisions of this Section 10.01, (A) collect, sell or
otherwise dispose of the Home Loans as and to the extent permitted or required by the Basic
Documents or (B) make cash payments out of the Payment Account as and to the extent
permitted or required by the Basic Documents, so long as the Issuer shall deliver to the
Indenture Trustee every six months, commencing six months after the closing date, an
Officer's Certificate of the Issuer stating that all the dispositions of Collateral described
in clauses (A) or (B) above that occurred during the preceding six calendar months were in
the ordinary course of the Issuer's business and that the proceeds thereof were applied in
accordance with the Basic Documents.
Section 10.02. Form of Documents Delivered to Indenture Trustee. In any case where several
matters are required to be certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the matters upon which
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 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) conclusive in favor of the Indenture Trustee
and the Issuer, if made in the manner provided in this Section 10.03.
(b) The fact and date of the execution by any person of any such instrument or writing
may be proved in any manner that the Indenture Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other
action by 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, Issuer, Credit Enhancer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture shall be in writing
and if such request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders is to be made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with the
Indenture Trustee at the Corporate Trust Office. The Indenture Trustee shall
promptly transmit any notice received by it from the Noteholders to the Issuer,
(ii) the Issuer by the Indenture Trustee or by any Noteholder shall be sufficient for
every purpose hereunder if in writing and mailed first class, postage prepaid to the
Issuer addressed to: Home Loan Trust 2006-HI2, in care of Wilmington Trust Company,
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, or
(iii) the Credit Enhancer by the Issuer, the Indenture Trustee or by any Noteholders shall
be sufficient for every purpose hereunder to in writing and mailed, first class
postage pre-paid, or personally delivered or telecopied to: Financial Guaranty
Insurance Company, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Structured Finance
Surveillance (Home Loan Trust 2006-HI2), telecopier number (000) 000-0000,
confirmation number (000) 000-0000. The Credit Enhancer shall promptly transmit any
notice received by it from the Issuer, the Indenture Trustee or the Noteholders to
the Issuer or Indenture Trustee, as the case may be.
Notices required to be given to the Rating Agencies by the Issuer, the Indenture
Trustee or the Owner Trustee shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, to (i) in the case of Moody's, at the following
address: Xxxxx'x Investors Service, Inc., ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 and (ii) in the case of Standard & Poor's, at the following address:
Standard & Poor's, a Division of the McGraw Hill Companies, Inc., 00 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed Surveillance Department; or as to
each of the foregoing, at such other address as shall be designated by written notice to the
other parties.
Section 10.05. Notices to Noteholders; Waiver. Where this Indenture provides for notice to
Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first class, postage prepaid to each
Noteholder affected by such event, at such Person's address as it appears on the Note
Register, not later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders, and any notice that is mailed in the manner herein provided shall conclusively
be presumed to have been duly given regardless of whether such notice is in fact actually
received.
Where this Indenture provides for notice in any manner, such notice may be waived in
writing by any Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall
be filed with the Indenture Trustee but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of a strike,
work stoppage or similar activity, it shall be impractical to mail notice of any event to
Noteholders when such notice is required to be given pursuant to any provision of this
Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture
Trustee shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to give such
notice shall not affect any other rights or obligations created hereunder, and shall not
under any circumstance constitute an Event of Default.
Section 10.06. Alternate Payment and Notice Provisions. Notwithstanding any provision of
this Indenture or any of the Notes to the contrary, the Issuer may enter into any agreement
with any Holder of a Note providing for a method of payment, or notice by the Indenture
Trustee to such Holder, that is different from the methods provided for in this Indenture
for such payments or notices. The Issuer shall furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee shall cause payments to be made and notices to
be given in accordance with such agreements.
Section 10.07. Conflict with Trust Indenture Act. If any provision hereof limits,
qualifies or conflicts with another provision hereof that is required to be included in this
Indenture by any of the provisions of the Trust Indenture Act, such required provision shall
control. The provisions of TIAss.ss.310 through 317 that impose duties on any Person
(including the provisions automatically deemed included herein unless expressly excluded by
this Indenture) are a part of and govern this Indenture, whether or not physically contained
herein.
Section 10.08. Effect of Headings. The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
Section 10.09. Successors and Assigns. All covenants and agreements in this Indenture and
the Notes by the Issuer shall bind its successors and assigns, whether so expressed or not.
All agreements of the Indenture Trustee in this Indenture shall bind its successors, co
trustees and agents.
Section 10.10. Separability. In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 10.11. Benefits of Indenture. Nothing in this Indenture or in the Notes, express
or implied, shall give to any Person, other than the parties hereto and their successors
hereunder, and the Noteholders, the Credit Enhancer and any other party secured hereunder,
and any other Person with an ownership interest in any part of the Trust Estate, any benefit
or any legal or equitable right, remedy or claim under this Indenture. The Credit Enhancer
is a third-party beneficiary of this Indenture.
Section 10.12. Legal Holidays. In any case where the date on which any payment is due
shall not be a Business Day, then (notwithstanding any other provision of the Notes or this
Indenture) payment need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the date on which nominally due,
and no interest shall accrue for the period from and after any such nominal date.
Section 10.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS (OTHER
THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 10.14. Counterparts. This Indenture may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 10.15. Recording of Indenture. If this Indenture is subject to recording in any
appropriate public recording offices, such recording is to be effected by the Issuer and at
its expense accompanied by an Opinion of Counsel (which may be counsel to the Indenture
Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect
that such recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
Section 10.16. Issuer Obligation. No recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner Trustee 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 respective individual capacities) and except
that any such partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer hereunder, the
Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions
of Articles VI, VII and VIII of the Trust Agreement.
Section 10.17. No Petition. The Indenture Trustee, by entering into this Indenture, and
each Noteholder, by its acceptance of 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.
Section 10.18. Inspection. The Issuer agrees that, on reasonable prior notice, it shall
permit any representative of the Indenture Trustee, during the Issuer's normal business
hours, to examine all the books of account, records, reports and other papers of the Issuer,
to make copies and extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees, and Independent certified public accountants, all at
such reasonable times and as often as may be reasonably requested. The Indenture Trustee
shall and shall cause its representatives to hold in confidence all such information except
to the extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the Indenture Trustee
may reasonably determine that such disclosure is consistent with its obligations hereunder.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused their names to
be signed hereto by their respective officers thereunto duly authorized, all as of the day
and year first above written.
HOME LOAN TRUST 2006-HI2
as Issuer
By: WILMINGTON TRUST COMPANY not in its
individual capacity but solely as Owner
Trustee
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Assistant Vice President
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as Indenture Trustee
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
hereby accepts the appointment as Paying Agent
pursuant to Section 3.03 hereof and as
Note Registrar pursuant to Section 4.02 hereof.
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Vice President
STATE OF TEXAS )
) ss.:
COUNTY OF XXXXXX )
On this 25th day of May, 2006, before me personally appeared Xxxxxx Xxxxxx, to me
known, who being by me duly sworn, did depose and say, that he/she resides at Houston,
Texas, that he/she is the Assistant Vice President of the Indenture Trustee, one of the
corporations described in and which executed the above instrument; and that he/she signed
his/her name thereto by like order.
/s/ Xxxxxxx X. Xxxxxx
Notary Public
STATE OF TEXAS______ )
_______ ) ss.:
COUNTY OF______HARRIS )
On this 25th day of May, 2006, before me the undersigned, Notary Public of said
State, personally appeared Xxxxx Xxxxxxx, personally known to me to be a duly authorized
officer of JPMorgan Chase Bank, National Association that executed the within instrument and
personally known to me to be the person who executed the within instrument on behalf of
JPMorgan Chase Bank, National Association therein named, and acknowledged to me such
JPMorgan Chase Bank, National Association executed the within instrument pursuant to its
by-laws.
/s/ Xxxxxxx X. Xxxxxx
Notary Public
STATE OF DELAWARE )
_______ ) ss.:
COUNTY OF NEW CASTLE )
On this 25th day of May, 2006, before me personally appeared Xxxxx X. Xxxxxx, to me
known, who being by me duly sworn, did depose and say, that he/she resides at Wilmington,
Delaware, that he/she is the Assistant Vice President of Wilmington Trust Company, as Owner
Trustee, one of the corporations described in and which executed the above instrument; and
that he/she signed his/her name thereto by like order.
/s/ Xxxxxxx X. Xxxxxx
Notary Public
NOTARIAL SEAL
EXHIBIT A
FORM OF NOTES
CLASS A __ NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER, THE
DEPOSITOR, THE MASTER SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.
EACH PURCHASER AND TRANSFEREE OF THIS NOTE, BY ITS ACCEPTANCE OF THIS NOTE, SHALL BE
DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) IT IS NOT ACQUIRING THIS NOTE WITH
THE ASSETS OF AN "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), WHICH IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, A "PLAN" DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE
"PLAN ASSETS" BY REASON OF AN EMPLOYEE BENEFIT PLAN'S OR OTHER PLAN'S INVESTMENT IN SUCH
ENTITY OR ANY OTHER PLAN THAT IS SUBJECT TO A LAW THAT IS SIMILAR TO TITLE I OF ERISA OR
SECTION 4975 OF THE CODE OR (II) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT GIVE RISE
TO A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA, SECTION 4975 OF THE CODE
OR ANY SIMILAR APPLICABLE LAW.
HOME LOAN TRUST 2006-HI2
HOME LOAN-BACKED NOTE
Registered Principal Amount: $___________
Class A __
No. __ Percentage Interest: _____%
CUSIP No. ___________ Note Rate: [___%][Adjustable Rate]
Home Loan Trust 2006-HI2, a statutory trust duly organized and existing under the
laws of the State of Delaware (herein referred to as the "Issuer"), for value received,
hereby promises to pay to Cede & Co. or registered assigns, the principal sum of
$___________, payable on each Payment Date in an amount equal to the Percentage Interest
specified above of the aggregate amount, if any, payable from the Payment Account in respect
of principal on the Class A-__ Notes pursuant to Section 3.05 of the Indenture dated as of
May 25, 2006 (the "Indenture") between the Issuer, as Issuer, and JPMorgan Chase Bank,
National Association, as Indenture Trustee (the "Indenture Trustee"); provided, however,
that the entire unpaid principal amount of this Note shall be due and payable on the Payment
Date in February 2036, to the extent not previously paid on a prior Payment Date.
Capitalized terms used but not defined herein are defined in Appendix A of the Indenture.
[Interest on the Class A-__ Notes will be paid monthly on each Payment Date at the
Note Rate. The Note Rate for the Class A-__ Notes will be _____% per annum. Interest will
be computed on the basis of a 30 day month and a 360 day year. Principal of and interest on
this Note shall be paid in the manner specified on the reverse hereof. On the Step Up Date,
the Note Rate on the Class A-__ Notes will increase by 0.50% per annum.]
[Interest on the Class A-1 Notes will be paid monthly on each Payment Date at the
Note Rate for the related Interest Accrual Period. The Note Rate for each Interest Accrual
Period will be equal to the lesser of (i) LIBOR plus___% per annum and (ii) ___% per annum.
LIBOR for each applicable Interest Accrual Period will be determined on the second LIBOR
Business Day immediately preceding (i) the Closing Date in the case of the first Interest
Accrual Period and (ii) the first day of each succeeding Interest Accrual Period by the
Indenture Trustee as set forth in the Indenture. All determinations of LIBOR by the
Indenture Trustee shall, in the absence of manifest error, be conclusive for all purposes,
and each holder of this Class A-1 Note, by accepting this Class A-1 Note, agrees to be bound
by such determination. Interest on this Class A-1 Note will accrue for each Payment Date
from the most recent Payment Date on which interest has been paid (in the case of the first
Payment Date, from the Closing Date) to but excluding such Payment Date. Interest will be
computed on the basis of the actual number of days in each Interest Accrual Period and a
year assumed to consist of 360 days. Principal of and interest on this Class A-1 Note shall
be paid in the manner specified in the Indenture.]
Principal of and interest on this Note are payable in such coin or currency of the
United States of America as at the time of payment is legal tender for payment of public and
private debts. All payments made by the Issuer with respect to this Note shall be applied
first to interest due and payable on this Note as provided above and then to the unpaid
principal of this Note.
Reference is made to the further provisions of this Note set forth on the reverse
hereof, which shall have the same effect as though fully set forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by the Indenture
Trustee whose name appears below by manual signature, this Note shall not be entitled to any
benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for
any purpose.
This Note is one of a duly authorized issue of Notes of the Issuer, designated as its
Home Loan-Backed Notes (herein called the "Notes"), all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and
the holders of the Notes. The Notes are subject to all terms of the Indenture.
The Notes are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture.
This Note is entitled to the benefits of an irrevocable and unconditional financial
guaranty insurance policy issued by Financial Guaranty Insurance Company.
Principal of and interest on this Note will be payable on each Payment Date,
commencing on June 26, 2006, as described in the Indenture. "Payment Date" means the twenty
fifth day of each month, or, if any such date is not a Business Day, then the next Business
Day.
The entire unpaid principal amount of this Note shall be due and payable in full on
the Payment Date in February 2036, pursuant to the Indenture, to the extent not previously
paid on a prior Payment Date. Notwithstanding the foregoing, if an Event of Default shall
have occurred and be continuing, then the Indenture Trustee or the holders of Notes
representing not less than a majority of the aggregate Note Balance of all Notes with the
consent of the Credit Enhancer, or the Credit Enhancer may declare the Notes to be
immediately due and payable in the manner provided in Section 5.02 of the Indenture. All
principal payments on the Notes shall be paid in the manner and priority set forth in
Section 3.05 of the Indenture.
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 holds Notes of an aggregate initial Note Balance of at least $1,000,000, 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 or money order to such Noteholder mailed to
such Holder's address as it appears in the Note Register the amount required to be paid to
such Holder on such Payment Date pursuant to such Holder's Securities; 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.
As provided in the Indenture and subject to certain limitations set forth therein,
the transfer of this Note may be registered on the Note Register upon surrender of this Note
for registration of transfer at the Corporate Trust Office, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the holder hereof or such holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in the Securities
Transfer Agent's Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended, and thereupon one or
more new Notes in authorized denominations and in the same aggregate principal amount will
be issued to the designated transferee or transferees. No service charge will be charged
for any registration of transfer or exchange of this Note, but the Note Registrar shall
require payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any registration of transfer or exchange of this Note.
Each holder or Beneficial Owner of a Note, by acceptance of a Note, or, in the case
of a Beneficial Owner of a Note, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the obligations of the
Issuer, the Owner Trustee, the Seller, the Master Servicer, the Depositor or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee
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 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.
Each holder or Beneficial Owner of a Note, by acceptance of a Note or, in the case of
a Beneficial Owner of a Note, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such holder or Beneficial Owner of a Note will
not at any time institute against the Depositor, the Seller, the Master Servicer or the
Issuer, or join in any institution against the Depositor, the Seller, the Master Servicer or
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with the intention
that, for federal, state and local income, single business and franchise tax purposes, the
Notes will qualify as indebtedness of the Issuer. Each holder of a Note, by acceptance of a
Note (and each Beneficial Owner of a Note by acceptance of a beneficial interest in a Note),
agrees to treat the Notes for federal, state and local income, single business and franchise
tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note, the Issuer,
the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the
Person in whose name this Note is registered (as of the day of determination or as of such
other date as may be specified in the Indenture) as the owner hereof for all purposes,
whether or not this Note be overdue, and none of the Issuer, the Indenture Trustee or any
such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Issuer and the Indenture
Trustee and the rights of the holders of the Notes under the Indenture at any time by the
Issuer and the Indenture Trustee with the consent of the holders of Notes representing a
majority of the aggregate Note Balance of all Notes at the time Outstanding and the Credit
Enhancer with prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the holders of Notes representing specified percentages of the aggregate Note
Balance of all Notes, on behalf of the holders of all the Notes with the consent of the
Credit Enhancer, or the Credit Enhancer (so long as no Credit Enhancer Default exists), to
waive compliance by the Issuer with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver by the
Credit Enhancer and the holder of this Note (or any one of more Predecessor Notes) shall be
conclusive and binding upon such holder and upon all future holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Issuer and the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of holders of the Notes issued
thereunder but with prior notice to the Rating Agencies and with the consent of the Credit
Enhancer.
The term "Issuer" as used in this Note includes any successor or the Issuer under the
Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to merge or
consolidate, subject to the rights of the Indenture Trustee and the holders of Notes under
the Indenture.
The Notes are issuable only in registered form in denominations as provided in the
Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws of the
State of New York, without reference to its conflict of law provisions and the obligations,
rights and remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair, the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of and interest on this Note at the times, place and
rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly provided in the
Basic Documents, none of Wilmington Trust Company in its individual capacity, JPMorgan Chase
Bank, National Association, in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The holder of this Note by its acceptance
hereof agrees that, except as expressly provided in the Basic Documents, in the case of an
Event of Default under the Indenture, the holder shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against, the assets
of the Issuer for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in its
individual capacity, has caused this Note to be duly executed.
HOME LOAN TRUST 2006-HI2
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
Dated: May 25, 2006
By
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-__ Notes referred to in the within mentioned Indenture.
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, not in
its individual capacity but solely as Indenture
Trustee
Dated: May 25, 2006
By
Authorized Signatory
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee: ___________________
______________________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto __________________
______________________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ___
______________________________________________________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof, with full power
of substitution in the premises.
Dated: __________________________________(1)
Signature Guaranteed:
*This reconciliation and tie shall not, for any purpose, be deemed to be part of the within
indenture.
(1) NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every particular, without
alteration, enlargement or any change whatever. Such signature must be guaranteed by an
"eligible guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Note Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
APPENDIX A
DEFINITIONS
Accrued Note Interest: With respect to any class of Notes and any Payment Date, an
amount equal to interest accrued for the related Interest Accrual Period on the related Note
Balance immediately prior to that Payment Date at the related Note Rate for that Payment
Date. Accrued Note Interest for the Class A Notes (other than the Class A-1 Notes) will be
calculated on the basis of a 30-day month in the related Interest Accrual Period and a
360-day year. Accrued Note Interest for the Class A-1 Notes will be calculated on the basis
of the actual number of days in the related Interest Accrual Period and a 360-day year.
Administrative Fees: The Servicing Fees and the fees payable to the Owner Trustee
and the Indenture Trustee.
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: For any Home Loan the value of the related Mortgaged Property
determined by the appraisal, sales price for such Mortgaged Property or alternative
valuation method used in the origination of such Home Loan (which may have been obtained at
an earlier time); provided that if such Home Loan was originated simultaneously with or not
more than 12 months after a senior lien on the related Mortgaged Property which was
originated in a purchase or cash-out refinance transaction, the appraised value shall be the
lesser of the appraised value at the origination of the senior lien and the sales price for
such Mortgaged Property.
Assignment of Mortgage: With respect to any Mortgage, an assignment, notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction in which the related Mortgaged Property is located to reflect the sale of the
Mortgage, which assignment, notice of transfer or equivalent instrument may be in the form
of one or more blanket assignments covering Mortgages secured by Mortgaged Properties
located in the same jurisdiction.
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
identified on the list of Authorized Officers delivered by the Owner Trustee to the
Indenture Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Basic Documents: The Trust Agreement, the Indenture, the Home Loan Purchase
Agreement, the Servicing Agreement, the Insurance Agreement, the Credit Enhancement
Instrument, the Custodial 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 Custodian: The custodian appointed pursuant to Section 4.06 of the
Indenture.
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 States of New York, California, Texas, Minnesota, Pennsylvania,
Illinois or Delaware are required or authorized by law to be closed.
Calendar Quarter: A Calendar Quarter shall consist of one of the following time
periods in any given year: January 1 through March 31, April 1 through June 30, July 1
though September 30, and October 1 through December 31.
Certificate: The certificate issued in the form of Exhibit A to the Trust Agreement
and outstanding pursuant to the terms of the Trust Agreement, evidencing a beneficial
ownership interest in the Trust.
Certificate Distribution Account: The account or accounts created and maintained by
the Certificate Paying Agent pursuant to Section 3.10(c) of the Trust Agreement. The
Certificate Paying Agent will make all distributions on the Certificate from money on
deposit in the Certificate Distribution Account. The Certificate Distribution Account shall
be an Eligible Account.
Certificate Distribution Amount: The amount payable to the Certificate Paying Agent
under Section 3.05 of the Indenture for payment to the holders of the Certificate under the
Trust Agreement.
Certificate Paying Agent: The meaning specified in Section 3.10 of the Trust
Agreement.
Certificate Percentage Interest: With respect to the Certificate and any date of
determination, the percentage interest as stated on the face of the Certificate, which
percentage may be recalculated in accordance with Section 3.03 of the Trust Agreement.
Certificate Principal Balance: As of any Payment Date, with respect to the
Certificate, an amount equal to the then applicable Certificate Percentage Interest of such
Certificate, multiplied by the Outstanding Reserve Amount immediately prior to such Payment
Date.
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 the 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 Statutory Trust Statute, including all amendments and restatements.
Certificateholder: The Person in whose name a Certificate is registered in the
Certificate Register except that, any Certificate registered in the name of the Issuer, the
Owner Trustee or the Indenture Trustee or any Affiliate of any of them shall be deemed not
to be outstanding and the registered holder will not be considered a Certificateholder or a
holder for purposes of giving any request, demand, authorization, direction, notice, consent
or waiver under the Indenture or the Trust Agreement provided that, in determining whether
the Indenture Trustee or the Owner Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Certificates that
the Indenture Trustee or the Owner Trustee knows to be so owned shall be so disregarded.
Owners of the 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 bearing the same designation.
Closing Date: May 25, 2006.
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 Period: As to any Payment Date, the calendar month preceding the month of
that Payment Date.
Combined Loan-to-Value Ratio: With respect to each Home Loan, the ratio, expressed
as a percentage, of (i) the sum of (A) the original principal balance of such Home Loan, and
(B) any outstanding principal balance, at origination of such Home Loan, of all other
mortgage loans, if any, secured by senior or subordinate liens on the related Mortgaged
Property, to (ii) the Appraised Value, or, if permitted by the Program Guide, the purchase
price of the Mortgaged Property, a statistical valuation or the Stated Value.
Commission: The Securities and Exchange Commission.
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 0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 10004, Attention:
Worldwide Securities Services/Global Debt - Home Loan Trust 2006-HI2. 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 Xxxxxx Square North, 0000 Xxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Administration.
Credit Enhancement Instrument: The Financial Guaranty Insurance Policy, Number
06030063, dated as of the Closing Date, issued by the Credit Enhancer to the Indenture
Trustee.
Credit Enhancer: Financial Guaranty Insurance Company, a New York stock insurance
corporation or any successor thereto.
Credit Enhancer Default: If the Credit Enhancer fails to make a payment required
under the Credit Enhancement Instrument in accordance with its terms.
Credit Repository: Equifax, Transunion and Experian, or their successors in interest.
Credit Scores: The figure assigned to a Home Loan that is designed to assess the
Mortgagor's credit history which is obtained from credit reports provided by various credit
reporting organizations and obtained by many lenders in connection with Home Loan
applications to help assess a Xxxxxxxxx's creditworthiness.
Custodial Account: The account or accounts created and maintained by the Master
Servicer pursuant to Section 3.02(b) of the Servicing Agreement, in which the Master
Servicer shall deposit or cause to be deposited certain amounts in respect of the Home Loans.
Custodial Agreement: Any Custodial Agreement among the Custodian, the Indenture
Trustee and the Master Servicer relating to the custody of the Home Loans and the Related
Documents.
Custodian: Xxxxx Fargo Bank, N.A., a national association, and its successors and
assigns.
Cut-off Date: May 1, 2006.
Cut-off Date Loan Balance: With respect to any Home Loan, the unpaid principal
balance thereof as of the close of business on the Business Day immediately prior to the
Cut-off Date.
Default: Any occurrence which is or with notice or the lapse of time or both would
become an Event of Default.
Deficiency Amount: With respect to any class of Notes and any Payment Date, the sum
of (i) the excess, if any, of (A) (1) the aggregate amount of Accrued Note Interest on such
Payment Date less (2) an amount equal to any Prepayment Interest Shortfalls and Relief Act
Shortfalls on the Home Loans during the related Collection Period, over (B) the amount
available for interest distributions on the Notes on that Payment Date pursuant to the
Indenture, (ii) any Liquidation Loss Amount, to the extent not distributed as part of the
Liquidation Loss Payment Amount or covered by a reduction of the Outstanding Reserve Amount
and (iii) amounts due on the Notes on the Final Insured Payment Date, if outstanding after
giving effect to all other payments of principal on such Notes on such Payment Date from all
sources other than the Credit Enhancement Instrument.
Deficient Valuation: With respect to any Home Loan, a valuation by a court of
competent jurisdiction of the Mortgaged Property in an amount less than the then outstanding
indebtedness under the Home Loan, or any reduction in the amount of principal to be paid in
connection with any scheduled 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 Loan: A Home Loan replaced or to be replaced with an Eligible Substitute
Loan.
Delinquent: As used herein, a Home Loan is considered to be "30 to 59 days" or "30
or more days" delinquent when a payment due on any due date remains unpaid as of the close
of business on the next following monthly due date. Since the determination as to whether a
Home Loan falls into these categories is made as of the close of business on the last
business day of each month, a Home Loan with a payment due on July 1 that remained unpaid as
of the close of business on July 31 would still be considered current as of July 31. If that
payment remained unpaid as of the close of business on August 31, the Home Loan would then
be considered 30-59 days delinquent. Delinquency information as of the Cut-off Date is
determined and prepared as of the close of business on the last business day immediately
prior to the Cut-off Date.
Depositor: Residential Funding Mortgage Securities II, Inc., a Delaware corporation,
or its successor in interest.
Depository or Depository Agency: The Depository Trust Company or a successor
appointed by the Indenture Trustee with the approval of the 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.
Derivative Contract: Any ISDA Master Agreement, together with the related schedule
and confirmation, entered into by the Owner Trustee and a Derivative Counterparty in
accordance with Section 5.06 of the Trust Agreement.
Derivative Counterparty: Any counterparty to a Derivative Contract as provided in
Section 5.06 of the Trust Agreement.
Determination Date: With respect to any Payment Date, the 20th day of the month in
which such Payment Date occurs or if such day is not a Business Day, the next succeeding
Business Day.
Due Date: The date on which the Monthly Payment on the related Home Loan is due in
accordance with the terms of the related Mortgage Note.
Eligible Account: An account that is any of the following: (i) maintained with a
depository institution the short-term debt obligations of which have been rated by each
Rating Agency in its highest rating category available, or (ii) an account or accounts in a
depository institution in which such accounts are fully insured to the limits established by
the FDIC, provided that any deposits not so insured shall, to the extent acceptable to each
Rating Agency, as evidenced in writing, be maintained such that (as evidenced by an Opinion
of Counsel delivered to the Indenture Trustee and each Rating Agency) the Indenture Trustee
has a claim with respect to the funds in such account or a perfected first security interest
against any collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the depository
institution with which such account is maintained, or (iii) in the case of the Custodial
Account, either (A) a trust account or accounts maintained at the corporate trust department
of the Indenture Trustee or (B) an account or accounts maintained at the corporate trust
department of the Indenture Trustee, as long as its short term debt obligations are rated
P-1 by Xxxxx'x and A-1+ by Standard & Poor's (or the equivalent) or better by each Rating
Agency and its long term debt obligations are rated A2 by Xxxxx'x and AA- by Standard &
Poor's (or the equivalent) or better, by each Rating Agency, or (iv) in the case of the
Custodial Account and the Payment Account, a trust account or accounts maintained in the
corporate trust division of the Indenture Trustee, or (v) an account or accounts of a
depository institution acceptable to each Rating Agency (as evidenced in writing by each
Rating Agency that use of any such account as the Custodial Account or the Payment Account
will not reduce the rating assigned to any of the Securities by such Rating Agency (if
determined without regard to the Credit Enhancement Instrument) below the lower of the
then-current rating or the rating assigned to such Securities (if determined without regard
to the Credit Enhancement Instrument) as of the Closing Date by such Rating Agency).
Eligible Substitute Loan: A Home Loan substituted by the Seller for a Deleted Loan
which must, on the date of such substitution, as confirmed in an Officers' 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 Home Loan for a Deleted Loan, an
aggregate outstanding principal balance, after such deduction), not in excess of the
outstanding principal balance of the Deleted Loan (the amount of any shortfall to be
deposited by the Seller in the Custodial Account in the month of substitution); (ii) comply
with each representation and warranty (other than a statistical representation or warranty)
set forth in Section 3.1(b) of the Home Loan Purchase Agreement as of the date of
substitution; (iii) have a Loan Rate no lower than and not more than 1% in excess of the
Loan Rate of such Deleted Loan; (iv) have a Combined Loan-to-Value Ratio at the time of
substitution no higher than that of the Deleted Loan at the time of substitution; (v) have,
at the time of substitution, a remaining term to stated maturity not greater than (and not
more than one year less than) that of the Deleted Loan; (vi) be ineligible for inclusion in
a real estate mortgage investment conduit ("REMIC") (a "REMIC Ineligible Loan") if the
Deleted Loan was a REMIC Ineligible Loan (because (a) the value of the real property
securing the Deleted Loan was not at least equal to eighty percent of the adjusted issue
price of such loan at the time of origination, calculated by subtracting the amount of any
liens that are senior to such Home Loan and a proportionate amount of any lien of equal
priority from the value of such property when the Deleted Loan was originated and (b)
substantially all of the proceeds of the Deleted Loan were not used to acquire, improve or
protect an interest in the real property securing such loan and such real property was the
only security for such Deleted Loan); and (vii) not be 30 or more days 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 any interest on any Note when the same becomes due
and payable, and such default shall continue for a period of five days; or
(ii) a default in the payment of the principal of or any installment of the
principal of any Note when the same becomes due and payable other than as a result of
Prepayment Interest Shortfalls or Relief Act Shortfalls, and such default shall continue for
a period of five days; 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 which has a material adverse effect on
Securityholders or the Credit Enhancer, and such default shall continue or not be cured, or
the circumstance or condition in respect of which such representation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a period of 30 days after
there shall have been given, by registered or certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25% of the
outstanding Note Balance of the Notes or the Credit Enhancer, a written notice specifying
such default or incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a notice of default hereunder; or
(iv) there occurs the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of the Trust
Estate in an involuntary case under any applicable federal or state bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or
(v) there occurs the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by the Issuer to the entry of an order for relief in an involuntary
case under any such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the assets of the Trust Estate, or the
making by the Issuer of any general assignment for the benefit of creditors, or the failure
by the Issuer generally to pay its debts as such debts become due, or the taking of any
action by the Issuer in furtherance of any of the foregoing.
Event of Servicer Termination: With respect to the Servicing Agreement, a Servicing
Default as defined in Section 7.01 of the Servicing Agreement.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
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 Insured Payment Date: The Payment Date in February 2036.
FNMA: The Federal National Mortgage Association, or any successor thereto.
Foreclosure Profit: With respect to a Liquidated Home Loan, the excess, if any, of
(x) Net Liquidation Proceeds over (y) the sum of (a) the Loan Balance of the related Home
Loan immediately prior to the date it became a Liquidated Home Loan, less any Net
Liquidation Proceeds previously received with respect to such Home Loan and applied as a
recovery of principal, and (b) accrued and unpaid interest on the related Home Loan at the
Net Loan Rate through the date of receipt of the proceeds.
Form 10-K Certification: As defined in Section 4.04(b) of the Servicing Agreement.
Xxxxx: Pledge, bargain, sell, warrant, alienate, remise, release, convey, assign,
transfer, create, and xxxxx x xxxx upon and a security interest in and right of set-off
against, deposit, set over and confirm 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.
Holder: Any of the Noteholders or Certificateholders.
Homeownership Act: The Home Ownership Protection Act of 1994.
Home Loans: At any time, the Home Loans that have been sold by the Seller under the
Home Loan Purchase Agreement, together with the Related Documents, and that remain subject
to the terms thereof.
Home Loan Purchase Agreement: The Home Loan Purchase Agreement, between the Seller,
as seller, and the Depositor, as purchaser, with respect to the Home Loans, dated as of the
Cut-off Date.
Home Loan Schedule: The initial schedule of Home Loans as of the Cut-off Date set
forth in Exhibit A of the Servicing Agreement, which schedule sets forth as to each Home
Loan, among other things:
(i) the Home Loan identifying number ("RFC LOAN #");
(ii) the state, city and zip code of the Mortgaged Property;
(iii) the maturity of the Mortgage Note ("MATURITY DATE");
(iv) the Loan Rate ("CUR RATE");
(v) the Principal Balance at origination ("ORG AMT");
(vi) the type of property securing the Mortgage Note ("PROPERTY TYPE");
(vii) the appraised value ("APPRSL");
(viii) the initial scheduled monthly payment of principal, if any, and interest
("ORIGINAL P & I");
(ix) the Cut-off Date Loan Balance ("CUT-OFF BAL");
(x) the Combined Loan-to-Value Ratio at origination ("CLTV");
(xi) the date of the Mortgage Note ("NOTE DATE");
(xii) the original term to maturity of the Home Loan ("ORIGINAL TERM");
(xiii) under the column "OCCP CODE," a code indicating whether the Home Loan is
secured by a non-owner occupied residence;
(xiv) the Principal Balance of any Home Loan senior thereto ("SR BAL");
(xv) the Credit Score ("CR SCORE");
(xvi) the debt to income ratio ("DTI");
(xvii) product code ("PRODUCT CODE");
(xviii)loan purpose ("PURPOSE");
(xix) the lien position of the related Mortgage ("LIEN");
(xx) the Subservicer loan number (SERVICER LOAN #); and
(xxi) the remaining term of the Home Loan (REMAINING TERM).
Such schedule may consist of multiple reports that collectively set forth all of the
information required.
Indemnified Party: The meaning specified in Section 7.02 of the Trust Agreement.
Indenture: The indenture dated as of the Closing Date between the Issuer, as debtor,
and the Indenture Trustee, as indenture trustee.
Indenture Trustee: JPMorgan Chase Bank, National Association, and its successors and
assigns or any successor indenture trustee appointed pursuant to the terms of the Indenture.
Indenture Trustee Information: As specified in Section 9.05(a)(i)(A) of the
Servicing Agreement.
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 or any material indirect financial interest in the Issuer, any such other obligor,
the Seller, the Issuer, the Depositor or any Affiliate of any of the foregoing Persons and
(iii) is not connected with the Issuer, any such other obligor, the Seller, the 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.
Initial Certificate: The Home Loan-Backed Certificates, Series 2006-HI2, issued on
the Closing Date, each evidencing undivided beneficial interests in the Issuer and executed
by the Owner Trustee.
Initial Note Balance: With respect to the Class A-1 Notes, $91,861,000, with respect
to the Class A-2 Notes, $29,743,000, with respect to the Class A-3 Notes, $43,353,000 and
with respect to the Class A-4 Notes, $72,434,000.
Insolvency Event: With respect to a specified Person, (a) the filing of a decree or
order for relief by a court having jurisdiction in the premises in respect of such Person or
any substantial part of its property in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person
or for any substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official
for such Person or for any substantial part of its property, or the making by such Person of
any general assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due or the admission by such Person in writing (as to
which 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.
Insurance Agreement: The Insurance and Indemnity Agreement dated as of May 25, 2006,
among the Master Servicer, the Depositor, the Issuer, the Indenture Trustee and the Credit
Enhancer, including any amendments and supplements thereto.
Insured Payment: With respect to (a) any Payment Date, the sum of (i) any Deficiency
Amount and (ii) any Preference Amount and (b) any other date, any Preference Amount.
Insurance Proceeds: Proceeds paid by any insurer (other than the Credit Enhancer)
pursuant to any insurance policy covering a Home Loan which are required to be remitted to
the Master Servicer, or amounts required to be paid by the Master Servicer pursuant to the
next to last sentence of Section 3.04 of the Servicing Agreement, net of any component
thereof (i) covering any expenses incurred by or on behalf of the Master Servicer in
connection with obtaining such proceeds, (ii) that is applied to the restoration or repair
of the related Mortgaged Property, (iii) released to the Mortgagor in accordance with the
Master Servicer's normal servicing procedures or (iv) required to be paid to any holder of a
mortgage senior to such Home Loan.
Interest Accrual Period: With respect to (i) the Class A-1 Notes (a) as to the
Payment Date in June 2006, the period commencing on the Closing Date and ending on the day
preceding the Payment Date in June 2006, and (b) as to any Payment Date after the Payment
Date in June 2006, the period commencing on the Payment Date in the month immediately
preceding the month in which that Payment Date occurs and ending on the day preceding that
Payment Date and (ii) each class of Notes, other than the Class A-1 Notes, and any Payment
Date, the calendar month preceding the month in which the related Payment Date occurs.
Interest Collections: With respect to any Payment Date, the sum of (i) the portion
allocable to interest of all scheduled monthly payments on the Home Loans received during
the related Collection Period reduced by the Administrative Fees for such Collection Period,
(ii) the portion allocable to interest of all Net Liquidation Proceeds and proceeds from
repurchases of, and some amounts received in connection with any substitutions for, the
related Home Loans, received or deemed received during the related Collection Period,
reduced by any related Administrative Fees for that Collection Period, (iii) the interest
portion of the cash purchase price paid in connection with any optional purchase of the Home
Loans by the Master Servicer and (iv) any proceeds and recoveries received during the
related Collection Period on a Home Loan after it becomes a Liquidated Home Loan allocated
to Interest Collections in accordance with the last paragraph of Section 3.07 of the
Servicing Agreement, reduced by the Administrative Fees for such Collection Period.
Issuer or Trust: The Home Loan Trust 2006-HI2, a Delaware statutory 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.
LIBOR: For any Interest Accrual Period other than the first Interest Accrual
Period, the rate for United States dollar deposits for one month which appears on the Dow
Xxxxx Telerate Screen Page 3750 as of 11:00 A.M., London, England time, on the second LIBOR
Business Day prior to the first day of such Interest Accrual Period. With respect to the
first Interest Accrual Period, the rate for United States dollar deposits for one month
which appears on the Dow Xxxxx Telerate Screen Page 3750 as of 11:00 A.M., London, England
time, two LIBOR Business Days prior to the Closing Date. If such rate does not appear on
such page (or such other page as may replace that page on that service, or if such service
is no longer offered, such other service for displaying LIBOR or comparable rates as may be
reasonably selected by the Indenture Trustee after consultation with the Master Servicer and
the Credit Enhancer), the rate will be the Reference Bank Rate. If no such quotations can be
obtained and no Reference Bank Rate is available, LIBOR will be LIBOR applicable to the
preceding Payment Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on
which banking institutions in the city of London, England 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 agreement, any financing lease having substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any assignment
pursuant to Section 6.02 of the Servicing Agreement shall not be deemed to constitute a Lien.
Limited Repurchase Right Holder: The Master Servicer.
Liquidated Home Loan: As to any Payment Date, any Home Loan which the Master Servicer
has determined, based on the servicing procedures specified in the Servicing Agreement, as
of the end of the preceding Collection Period, that all Liquidation Proceeds which it
expects to recover in connection with the disposition of the related Mortgaged Property have
been recovered. In addition, the Master Servicer will treat any Home Loan that is 180 days
or more delinquent as having been finally liquidated.
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead) which are
incurred by or on behalf of the Master Servicer in connection with the liquidation of any
Home 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 loan which is senior to such Home
Loan and amounts advanced to keep current or pay off a loan that is senior to such Home
Loan) respecting the related Home Loan and any related and unreimbursed expenditures for
real estate property taxes or for property acquisition, restoration, preservation or
disposition, or insurance against casualty loss or damage.
Liquidation Loss Amount: With respect to any Payment Date and any Home Loan that
became a Liquidated Home Loan during the related Collection Period, the unrecovered portion
of the related Loan Balance thereof at the end of such Collection Period, after giving
effect to the Net Liquidation Proceeds applied to reduce the related Loan Balance. In
addition, as to any Home Loan for which the principal balance has been reduced in connection
with bankruptcy proceedings, the amount of the reduction will be treated as a Liquidation
Loss Amount.
Liquidation Loss Payment Amount: As to any Payment Date, an amount equal to the
lesser of (i) the amount available for payment of the Liquidation Loss Payment Amount for
that Payment Date, as provided in clause (iv) of Section 3.05(a) of the Indenture and (ii)
the sum of (a) 100% of the Liquidation Loss Amounts incurred on the related Home Loans
during the related Collection Period and (b) any Liquidation Loss Amounts remaining unpaid
from any preceding Collection Period, to the extent not reflected on such preceding Payment
Date by a reduction of the Outstanding Reserve Amount.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not including
amounts drawn under the Credit Enhancement Instrument) if any received in connection with
the liquidation of any Home Loan or related REO, whether through trustee's sale, foreclosure
sale, the exercise of the power of eminent domain or condemnation or otherwise.
Loan Balance: With respect to any Home Loan, other than a Liquidated Home Loan, and
as of any day, the related Cut-off Date Loan Balance, minus all collections in respect of
principal in accordance with the related Mortgage Note and applied in reduction of the Loan
Balance thereof. For purposes of this definition, a Liquidated Home Loan shall be deemed to
have a Loan Balance equal to zero.
Loan Rate or Mortgage Rate: With respect to any Home Loan and any day, the per annum
rate of interest set forth in the related Mortgage Note.
Lost Note Affidavit: With respect to any Home Loan as to which the original Mortgage
Note has been permanently lost or destroyed and has not been replaced, an affidavit from the
Seller certifying that the original Mortgage Note has been lost, misplaced or destroyed
(together with a copy of the related Mortgage Note).
Master Servicer: Residential Funding Corporation, a Delaware corporation, and its
successors and assigns.
Master Servicer Extension Notice: The meaning specified in Section 7.04(d) of the
Servicing Agreement.
Master Servicing Fee: With respect to any Home Loan and any Collection Period, the
product of (i) the Master Servicing Fee Rate divided by 12 and (ii) the Loan Balance of such
Home Loan as of the first day of such Collection Period.
Master Servicing Fee Rate: With respect to any Home Loan, 0.08% per annum.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor thereto.
MERS(R)System: The system of recording transfers of Mortgages electronically
maintained by MERS.
MIN: The Mortgage Identification Number for Home Loans registered with MERS on the
MERS(R)System.
MOM Loan: With respect to any Home Loan, MERS acting as the mortgagee of such Home
Loan, solely as nominee for the originator of such Home Loan and its successors and assigns,
at the origination thereof.
Monthly Payment: With respect to any Home 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 or second
lien on an estate in fee simple or leasehold interest in real property securing a Home Loan.
Mortgage File: The file containing the Related Documents pertaining to a particular
Home Loan and any additional documents required to be added to the Mortgage File pursuant to
the Home Loan Purchase Agreement or the Servicing Agreement.
Mortgage Note: With respect to a Home Loan, the mortgage note pursuant to which the
related mortgagor agrees to pay the indebtedness evidenced thereby and secured by the
related Mortgage as modified or amended.
Mortgaged Property: The underlying property, including real property and
improvements thereon, securing a Home Loan.
Mortgagor: The obligor or obligors under a Mortgage Note.
Net Liquidation Proceeds: As to any Liquidated Home Loan, the proceeds, including
Insurance Proceeds but excluding amounts drawn on the Credit Enhancement Instrument,
received in connection with the liquidation of the Home Loan, whether through trustee's
sale, foreclosure sale or otherwise, reduced by related expenses, but not including the
portion, if any, of the proceeds that exceed the principal balance of the Home Loan at the
end of the Collection Period immediately preceding the Collection Period in which the Home
Loan became a Liquidated Home Loan.
Net Loan Rate: With respect to any Home Loan and any date of determination, a per
annum rate of interest equal to the then applicable Loan Rate for such Home Loan minus the
Servicing Fee Rate and the Premium Percentage.
Note Balance: With respect to any Payment Date and any Class of Notes, the Initial
Note Balance thereof reduced by all payments of the Principal Payment Amount thereon prior
to and as of such Payment Date.
Note Owner: The Beneficial Owner of a Note.
Note Rate: With respect to (i) the Class A-1 Notes, will be the lesser of (a) LIBOR
plus 0.06% per annum and (b) 9.000% per annum; and (ii) the Class A-2 Notes, Class A-3
Notes, and Class A-4 Notes and any Interest Accrual Period, 5.75%, 5.79% and 6.20% per
annum, respectively; provided, that on the Step-Up Date, the Note Rate on the Class A-4
Notes shall increase by 0.50% per annum.
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 outstanding and the
registered holder will not be considered a Noteholder or holder for purposes of giving any
request, demand, authorization, direction, notice, consent or waiver under the Indenture or
the Trust Agreement provided that, in determining whether the Indenture Trustee 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 Credit Enhancement
Instrument shall be deemed Outstanding until the Credit Enhancer has been reimbursed with
respect thereto and the Credit Enhancer shall be deemed the Noteholder thereof to the extent
of such unreimbursed payment.
Notes: Any one of the Class A-1, Class A-2, Class A-3 or Class A-4 Notes issued and
outstanding at any time pursuant to the Indenture.
Officer's Certificate: With respect to the Master Servicer, a certificate signed by
the President, Managing Director, a Director, a Vice President or an Assistant Vice
President, of the Master 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.
Opinion of Counsel: A written opinion of counsel. Any Opinion of Counsel for the
Master Servicer may be provided by in-house counsel for the Master Servicer if reasonably
acceptable to the Indenture Trustee, the Credit Enhancer and the Rating Agencies or counsel
for the Depositor, as the case may be.
Optional Redemption: The right of the Master Servicer to purchase the Home Loans on
any Payment Date on which the aggregate Principal Balance of the Home Loans as of the end of
the related Collection Period is less than 10% of the Cut-off Date Balance, pursuant to
Section 8.08 of the Servicing Agreement.
Original Trust Agreement: The Trust Agreement, dated as of May 22, 2006, between the
Owner Trustee and the Depositor.
Outstanding: With respect to the Notes, as of the date of determination, all Notes
theretofore executed, authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to the
Indenture Trustee for cancellation; and
(ii) Notes in exchange for or in lieu of which other Notes have been executed,
authenticated and delivered pursuant to the Indenture unless proof satisfactory to the
Indenture Trustee is presented that any such Notes are held by a holder in due course;
provided, however, that for purposes of effectuating the Credit Enhancer's right of
subrogation as set forth in Section 4.12 of the Indenture only, all Notes that have been
paid with funds provided under the Credit Enhancement Instrument shall be deemed to be
Outstanding until the Credit Enhancer has been reimbursed with respect thereto.
Outstanding Reserve Amount: With respect to any Payment Date, the amount, if any, by
which the Pool Balance after applying payments received in the related Collection Period
exceeds the aggregate Note Balance of the Notes on such Payment Date, after application of
Principal Collections and the Liquidation Loss Payment Amounts for that Payment Date. The
Outstanding Reserve Amount will be increased by distributions of Reserve Increase Amount, if
any, to the Notes.
Owner Trust Estate: The meaning specified in Section 2.05 of the Trust Agreement.
Owner Trustee: Wilmington Trust Company not in its individual capacity but solely as
Owner Trustee of the Trust, and its successors and assigns or any successor owner trustee
appointed pursuant to the terms of the Trust Agreement.
Owner Trustee Information: As specified in Section 11.04(a)(i)(A) of the Trust
Agreement.
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 and Section 5.01 of the Servicing Agreement. Amounts deposited
in the Payment Account will be paid by the Indenture Trustee in accordance with Section 3.05
of the Indenture.
Payment Date: The 25th day of each month, or if such day is not a Business Day, then
the next Business Day.
Percentage Interest: With respect to any Note and any date of determination, the
percentage obtained by dividing the Note Balance of such Note, by the aggregate of the Note
Balances of all Notes of the same Class.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by the United States
or any agency or instrumentality thereof when such obligations are backed by the full faith
and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i) maturing not more
than one month from the date of acquisition thereof, provided that the unsecured obligations
of the party agreeing to repurchase such obligations are at the time rated by each Rating
Agency in its highest short-term rating category available;
(iii) federal funds, certificates of deposit, demand deposits, time deposits and
bankers' acceptances (which shall each have an original maturity of not more than 90 days
and, in the case of bankers' acceptances, shall in no event have an original maturity of
more than 365 days or a remaining maturity of more than 30 days) denominated in United
States dollars of any U.S. depository institution or trust company incorporated under the
laws of the United States or any state thereof or of any domestic branch of a foreign
depository institution or trust company; provided that the debt obligations of such
depository institution or trust company (or, if the only Rating Agency is Standard & Poor's,
in the case of the principal depository institution in a depository institution holding
company, debt obligations of the depository institution holding company) at the date of
acquisition thereof have been rated by each Rating Agency in its highest short-term rating
category available; and provided further that, if the only Rating Agency is Standard &
Poor's and if the depository or trust company is a principal subsidiary of a bank holding
company and the debt obligations of such subsidiary are not separately rated, the applicable
rating shall be that of the bank holding company; and, provided further that, if the
original maturity of such short-term obligations of a domestic branch of a foreign
depository institution or trust company shall exceed 30 days, the short-term rating of such
institution shall be A-1+ in the case of Standard & Poor's if Standard & Poor's is the
Rating Agency;
(iv) commercial paper (having original maturities of not more than 365 days) of any
corporation incorporated under the laws of the United States or any state thereof which on
the date of acquisition has been rated by each Rating Agency in its highest short-term
rating category available; provided that such commercial paper shall have a remaining
maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated by each Rating Agency
in its highest long-term rating category available; and
(vi) other obligations or securities that are acceptable to each Rating Agency as
an Permitted Investment hereunder and will not reduce the rating assigned to any Securities
by such Rating Agency below the lower of the then-current rating or the rating assigned to
such Securities as of the Closing Date by such Rating Agency, and which are acceptable to
the Credit Enhancer, as evidenced in writing, provided that if the Master Servicer or any
other Person controlled by the Master Servicer is the issuer or the obligor of any
obligation or security described in this clause (vi) such obligation or security must have
an interest rate or yield that is fixed or is variable based on an objective index that is
not affected by the rate or amount of losses on the Home Loans;
provided, however, that no instrument shall be a Permitted Investment if it represents,
either (1) the right to receive only interest payments with respect to the underlying debt
instrument or (2) the right to receive both principal and interest payments derived from
obligations underlying such instrument and the principal and interest payments with respect
to such instrument provide a yield to maturity greater than 120% of the yield to maturity at
par of such underlying obligations References herein to the highest rating available on
unsecured long-term debt shall mean AAA in the case of Standard & Poor's and Aaa in the case
of Moody's, and references herein to the highest rating available on unsecured commercial
paper and short-term debt obligations shall mean A-1+ in the case of Standard & Poor's and
P-1 in the case of Moody's.
Person: Any legal 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 Loan Balances of all
Home Loans as of such date.
Predecessor Note: With respect to any particular Note, every previous Note
evidencing all or a portion of the same debt as that evidenced by such particular Note; and,
for the purpose of this definition, any Note authenticated and delivered under Section 4.03
of the Indenture in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
Preference Amount: Any amount previously paid to a Noteholder that is recoverable
and sought to be recovered as a voidable preference by a trustee in bankruptcy court
pursuant to the United States Bankruptcy Code (11 U.S.C.), as amended from time to time, in
accordance with a final non-appealable order of a court exercising proper jurisdiction in an
insolvency proceeding.
Premium: The amount of premium due to the Credit Enhancer in accordance with the
terms of the Insurance Agreement.
Premium Percentage: As set forth in the Insurance Agreement.
Prepayment Assumption: A 100% Prepayment Assumption used solely for determining the
accrual of original issue discount, market discount and premium, if any, on the Notes for
federal income tax purposes. A 100% Prepayment Assumption assumes a constant prepayment
rate of 5% per annum for the first month, increasing each month by an additional 20%/14
until the fifteenth month. Beginning in the fifteenth month and in each month thereafter
during the life of the Home Loans, a 100% Prepayment Assumption assumes a constant
prepayment rate of 25% per annum each month.
Prepayment Interest Shortfall: With respect to any Payment Date, the aggregate
shortfall, if any, in collections of interest, adjusted to the related Net Loan Rate,
resulting from borrower prepayments during the related Collection Period. These shortfalls
will not be covered by the Master Servicer, the Credit Enhancer or any other person.
Principal Collection Payment Amount: As to any Payment Date, the total Principal
Collections (reduced by any portion used to pay interest on the Notes) for such Payment
Date; provided, however, on any Payment Date as to which the Outstanding Reserve Amount that
would result without regard to this proviso exceeds the Reserve Amount Target, the Principal
Collection Payment Amount will be reduced by the amount not less than zero by the amount of
the excess until the Outstanding Reserve Amount equals the Reserve Amount Target.
Principal Collections: As to any Payment Date, an amount equal to the sum of:
(i) the principal portion of all scheduled Monthly Payments on the related Home
Loans received during the related Collection Period;
(ii) the principal portion of all proceeds of the repurchase of any Home Loans (or,
in the case of a substitution, any Substitution Adjustment Amounts) as required by the
Servicing Agreement received during the related Collection Period and the principal portion
of the cash purchase price paid in connection with any optional purchase of the Home Loans
by the Master Servicer; and
(iii) the principal portion of all other unscheduled collections received on the
Home Loans during the related Collection Period (or deemed to be received during the related
Collection Period) (including, without limitation, full and partial Principal Prepayments
made by the respective Mortgagors, Insurance Proceeds and Net Liquidation Proceeds), to the
extent not previously paid;
provided, however, that Principal Collections shall be reduced by any amounts withdrawn from
the Custodial Account pursuant to Section 3.03(ii), (v), (vi) and (vii) of the Servicing
Agreement.
Principal Prepayment: Any payment of principal made by the Mortgagor on a Home 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.
Proceeding: Any suit in equity, action at law or other judicial or administrative
proceeding.
Program Guide: Together, the Seller's Seller Guide and Servicing Guide, as in effect
from time to time.
Prospectus Supplement: The prospectus supplement, dated May 24, 2006, relating to
the issuance of the Home Loan-Backed Notes, Series 2006-HI2.
Purchase Price: The meaning specified in Section 2.2(a) of the Home Loan Purchase
Agreement.
Purchaser: Residential Funding Mortgage Securities II, Inc., a Delaware
corporation, and its successors and assigns.
Qualified Insurer: A mortgage guaranty insurance company duly qualified as such
under the laws of the state of its principal place of business and each state having
jurisdiction over such insurer in connection with the insurance policy issued by such
insurer, duly authorized and licensed in such states to transact a mortgage guaranty
insurance business in such states and to write the insurance provided by the insurance
policy issued by it, approved as an insurer by the Master Servicer and as a FNMA-approved
mortgage insurer.
Rating Agency: Any nationally recognized statistical rating organization, or its
successor, that rated the Securities at the request of the Depositor at the time of the
initial issuance of the Securities, which initially shall be Moody's 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 Depositor, 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 Moody's 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 Moody's and in the case
of any other Rating Agency, such equivalent rating.
Record Date: With respect to the Class A-1 Notes and any Payment Date, the Business
Day next preceding such Payment Date and with respect to the Notes (other than the Class A-1
Notes) and the Certificates and any Payment Date, the last Business Day of the month
preceding the month of such Payment Date.
Reference Bank Rate: With respect to any Interest Accrual Period, as follows: the
arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth of a percent)
of the offered rates for United States dollar deposits for one month which are offered by
the Reference Banks as of 11:00 A.M., London, England time, on the second LIBOR Business Day
prior to the first day of such Interest Accrual Period to prime banks in the London
interbank market for a period of one month in amounts approximately equal to the sum of the
outstanding Note Balance of the Class A-1 Notes; provided that at least two such Reference
Banks provide such rate. If fewer than two offered rates appear, the Reference Bank Rate
will be the arithmetic mean of the rates quoted by one or more major banks in New York City,
selected by the Indenture Trustee after consultation with the Master Servicer and the Credit
Enhancer, as of 11:00 a.m., New York time, on such date for loans in U.S. Dollars to leading
European Banks for a period of one month in amounts approximately equal to the aggregate
Note Balance of the Class A-1 Notes. If no such quotations can be obtained, the Reference
Bank Rate shall be LIBOR applicable to the preceding Payment Date; provided however, that
if, under the priorities indicated above, LIBOR for a Payment Date would be based on LIBOR
for the previous Payment Date for the third consecutive Payment Date, the Indenture Trustee
shall select an alternative comparable index over which the Indenture Trustee has no
control, used for determining one-month Eurodollar lending rates that is calculated and
published or otherwise made available by an independent party.
Reference Banks: Barclays Bank PLC, Credit Suisse and Abbey National PLC.
Registered Holder: The Person in whose name a Note is registered in the Note
Register on the applicable Record Date.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
ss.ss.229.1100-229.1123, as such may be amended from time to time, and subject to such
clarification and interpretation as have been provided by the Commission in the adopting
release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506,
1,531 (January 7, 2005)) or by the staff of the Commission, or as may be provided by the
Commission or its staff from time to time.
Related Documents: With respect to each Home Loan, the documents specified in
Section 2.1(c) of the Home Loan Purchase Agreement and any documents required to be added to
such documents pursuant to the Home Loan Purchase Agreement, the Trust Agreement or the
Servicing Agreement.
Release Agreement: A Release Agreement as defined in Section 3.05 of the Servicing
Agreement.
Relief Act Shortfall: With respect to any Payment Date, the aggregate shortfall, if
any, in collections of interest, as a result of the application of the Servicemembers Civil
Relief Act or similar legislation or regulations. These shortfalls will reduce the amount
of Interest Collections on the Home Loans and will not be amounts paid by the Master
Servicer, the Credit Enhancer or any other person.
REO: A Mortgaged Property that is acquired by the Issuer in foreclosure or by deed
in lieu of foreclosure.
Repurchase Event: With respect to any Home Loan, one of the following: (i) a
discovery that, as of the Closing Date, the related Mortgage was not a valid lien on the
related Mortgaged Property subject only to (A) the lien of any prior mortgage indicated on
the Home Loan Schedule, (B) the lien of real property taxes and assessments not yet due and
payable, (C) covenants, conditions, and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage and such other
permissible title exceptions as are listed in the Program Guide and (D) other matters to
which like properties are commonly subject which do not materially adversely affect the
value, use, enjoyment or marketability of the related Mortgaged Property, or (ii) with
respect to any Home Loan as to which the Seller delivers a Lost Note Affidavit, a subsequent
default on such Home Loan if the enforcement thereof or of the related Mortgage is
materially and adversely affected by the absence of the original Mortgage Note.
Repurchase Price: With respect to any Home Loan required to be repurchased on any
date pursuant to the Home Loan Purchase Agreement or purchased by the Master Servicer or the
Limited Repurchase Right Holder pursuant to the Servicing Agreement, an amount equal to the
sum of (i) 100% of the Loan Balance thereof (without reduction for any amounts charged off)
and (ii) unpaid accrued interest at the Loan Rate (or with respect to the last day of the
month in the month of repurchase, the Loan Rate will be the Loan Rate in effect as to the
second to last day in such month) on the outstanding principal balance thereof from the Due
Date to which interest was last paid by the Mortgagor to the first day of the month
following the month of purchase.
Request for Release: The form attached as Exhibit 4 to the Custodial Agreement or an
electronic request in a form acceptable to the Custodian.
Reserve Amount Floor: An amount equal to 0.50% of the Pool Balance as of the Cut-off
Date.
Reserve Amount Target: As to any Payment Date prior to the Stepdown Date, an amount
equal to 6.40% of the Cut-off Date Pool Balance. On or after the Stepdown Date, the Reserve
Amount Target will be equal to the lesser of:
(a) 12.80% of the Pool Balance after applying payments received in the related
Collection Period; and
(b) the Reserve Amount Target as of the Cut-off Date;
provided, however, that the Reserve Amount Target shall not be less than the Reserve Amount
Floor; provided further, that any scheduled reduction to the Reserve Amount Target on or
after the Stepdown Date as described above shall not be made on any Payment Date unless:
(i) either (a) the aggregate cumulative Liquidation Loss Amount on the Home
Loans from the Cut-off Date through the end of the Collection Period immediately
prior to such Payment Date is less than:
(A) 7.50% of the Pool Balance as of the Cut-off Date, if such
Payment Date is the 31st through 36th Payment Dates,
(B) 8.00% of the Pool Balance as of the Cut-off Date, if such
Payment Date is the 37th through 48th Payment Dates, or
(C) 9.00% of the Pool Balance as of the Cut-off Date, if such
Payment Date is the 49th through 60th Payment Dates, or
(D) 12.00% of the Pool Balance as of the Cut-off Date, if such
Payment Date is the 61st through 72nd Payment Dates, or
(E) 14.00% of the Pool Balance as of the Cut-off Date, if such
Payment Date is the 73rd Payment Date (or any Payment Date thereafter) or
(b) the average of the aggregate Liquidation Loss Amount on the
Home Loans that became Liquidated Home Loans during the related Collection
Period, as determined for the current and five previous Payment Dates, is less
than 50% of the average of the amount remaining in the Payment Account on such
Payment Date following distributions pursuant to clauses (i)-(v) of Section
3.05(a) of the Indenture (other than distributions made pursuant to clause
(iii) thereof), as determined for the current and five previous Payment Dates
and
(ii) there has been no draw on the Credit Enhancement Instrument on such
Payment Date that remains unreimbursed.
In addition, the Reserve Amount Target may be reduced with the prior written consent
of the Credit Enhancer (so long as no Credit Enhancer Default exists) and notice to the
Rating Agencies.
Reserve Increase Amount: As to the any Payment Date, an amount equal to the lesser
of (i) the amount available for payment of the Reserve Increase Amount for that Payment
Date, as provided in clause (vi) of Section 3.05(a) of the Indenture and (ii) the excess, if
any of (x) the Reserve Amount Target over (y) the Outstanding Reserve Amount.
Responsible Officer: With respect to the Indenture Trustee, any officer of the
Indenture Trustee, with direct responsibility for the administration of the Indenture, , as
applicable, and also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer's knowledge of and familiarity with the
particular subject.
Sale: The meaning specified in Section 5.15 of the Indenture.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
Securitization Transaction: Any transaction involving a sale or other transfer of
mortgage loans directly or indirectly to an issuing entity in connection with an issuance of
publicly offered or privately placed, rated or unrated mortgage-backed securities.
Security: Any of the Certificates or Notes.
Securityholder or Holder: Any Noteholder or a Certificateholder.
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: Residential Funding Corporation, a Delaware corporation, and its successors
and assigns.
Servicing Agreement: The Servicing Agreement dated as of the Closing Date among the
Indenture Trustee, the Issuer and the Master Servicer, as master servicer.
Servicing Certificate: A certificate prepared by a Servicing Officer on behalf of
the Master Servicer in accordance with Section 4.01 of the Servicing Agreement.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of Regulation
AB, as such may be amended from time to time.
Servicing Default: The meaning specified in Section 7.01 of the Servicing Agreement.
Servicing Fee: With respect to any Home Loan, the sum of the related Master
Servicing Fee and the related Subservicing Fee.
Servicing Fee Rate: With respect to any Home Loan, the sum of the related Master
Servicing Fee Rate and the related Subservicing Fee Rate.
Servicing Officer: Any officer of the Master Servicer involved in, or responsible
for, the administration and servicing of the Home Loans whose name and specimen signature
appear on a list of servicing officers furnished to the Indenture Trustee by the Master
Servicer, as such list may be amended from time to time.
Servicing Trigger: As of any Payment Date, for purposes of Section 7.04 of the
Servicing Agreement, "Servicing Trigger; Removal of Master Servicer," the aggregate
cumulative Liquidation Loss Amount on the Home Loans from the Cut-off Date through the end
of the Collection Period immediately prior to such Payment Date is greater than:
(A) 13.50% of the Pool Balance as of the Cut-off Date, if such Payment Date is the
31st through 36th Payment Dates,
(B) 14.00% of the Pool Balance as of the Cut-off Date, if such Payment Date is the
37th through 48th Payment Dates, or
(C) 16.00% of the Pool Balance as of the Cut-off Date, if such Payment Date is the
49th through 60th Payment Dates, or
(D) 22.00% of the Pool Balance as of the Cut-off Date, if such Payment Date is the
61st through 72nd Payment Dates, or
(E) 26.00% of the Pool Balance as of the Cut-off Date, if such Payment Date is the
73rd Payment Date (or any Payment Date thereafter).
Standard & Poor's: Standard & Poor's, a Division of The XxXxxx-Xxxx Companies, Inc.
or its successor in interest.
Stated Value: The value of the Mortgaged Property as stated by the related Mortgagor
in his or her application.
Statutory Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code
ss.ss.3801 et seq., as the same may be amended from time to time.
Step-Up Date: The second Payment Date immediately following the Payment Date on
which the Master Servicer can purchase all or some of the Home Loans from the Trust pursuant
to Section 8.08 of the Servicing Agreement.
Stepdown Date: The later of (a) the Payment Date in December 2008 and (b) the first
Payment Date on which the aggregate Pool Balance, after applying payments received in the
related Collection Period, is less than or equal to 50.00% of the aggregate Pool Balance as
of the Cut-off Date.
Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement as a Subservicer by the Master Servicer.
Subservicing Account: An Eligible Account established or maintained by a Subservicer
as provided for in Section 3.02(c) of the Servicing Agreement.
Subservicing Agreement: The written contract between the Master Servicer and any
Subservicer relating to servicing and administration of certain Home Loans as provided in
Section 3.01 of the Servicing Agreement.
Subservicing Fee: With respect to any Collection Period, the fee retained monthly by
the Subservicer (or, in the case of a nonsubserviced Home Loan, by the Master Servicer)
equal to the product of (i) the Subservicing Fee Rate divided by 12 and (ii) the Pool
Balance as of the first day of such Collection Period.
Subservicing Fee Rate: With respect to each Home Loan, the amount payable to the
related Subservicer, equal to 0.50% per annum.
Substitution Adjustment Amounts: With respect to any Eligible Substitute Loan, the
amount as defined in Section 3.1(b) of the Home Loan Purchase Agreement and any Deleted
Loan, the amount, if any, as determined by the Master Servicer, by which the aggregate
principal balance of all such Eligible Substitute Loans as of the date of substitution is
less than the aggregate principal balance of all such Deleted Loans (after application of
the principal portion of the Monthly Payments due in the month of substitution that are to
be distributed to the Payment Account in the month of substitution).
Termination Price: In the event that all of the Home Loans are purchased by the
Master Servicer, the Termination Price will be an amount equal to 100% of the unpaid Loan
Balance of each Home Loan so purchased, plus accrued and unpaid interest thereon at the
weighted average of the Loan Rates through the day preceding the Payment Date on which such
purchase occurs, plus any amounts owed by the Seller pursuant to the second paragraph of
Section 3.1(c) of the Home Loan Purchase Agreement in respect of any liability, penalty or
expense that resulted from a breach of the representation and warranty set forth in clause
(x) of Section 3.1(b) of the Home Loan Purchase Agreement, that remain unpaid on the date of
such purchase.
Transaction Party: As specified in Section 9.02(a) of the Servicing Agreement.
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 Agreement: The Amended and Restated Trust Agreement, dated as of the Closing
Date, 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.
Underwriters: Banc of America Securities LLC and Residential Funding Securities
Corporation.
United States Person: A citizen or resident of the United States, a corporation,
partnership or other entity created or organized in, or under the laws of, the United States
or any state thereof or the District of Columbia (except, in the case of a partnership, to
the extent provided in regulations), or an estate whose income is subject to United States
federal income tax regardless of its source, or a trust other than a "foreign trust" within
the meaning of Section 7701(a)(30) of the Code.
