EXECUTION COPY
================================================================================
INDENTURE
between
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1
as Issuer
and
JPMORGAN CHASE BANK,
as Indenture Trustee
Dated as of July 3, 2002
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1
Closed-End Mortgage Loan Asset Backed Notes,
Series 2002-HC1
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS...............................................................................2
Section 1.1. Definitions...........................................................................2
Section 1.2. Incorporation by Reference of Trust Indenture Act.....................................9
Section 1.3. Rules of Construction.................................................................9
ARTICLE II THE NOTES................................................................................10
Section 2.1. Form.................................................................................10
Section 2.2. Execution, Authentication, Delivery and Dating.......................................10
Section 2.3. Registration; Registration of Transfer and Exchange..................................11
Section 2.4. Mutilated, Destroyed, Lost or Stolen Notes...........................................12
Section 2.5. Persons Deemed Owner.................................................................12
Section 2.6. Payment of Principal and Interest; Defaulted Interest................................13
Section 2.7. Cancellation.........................................................................13
Section 2.8. [Reserved]...........................................................................13
Section 2.9. Release of Trust Estate..............................................................14
Section 2.10. Book-Entry Notes.....................................................................14
Section 2.11. Notices to Clearing Agency...........................................................15
Section 2.12. Definitive Notes.....................................................................15
Section 2.13. Tax Treatment........................................................................15
Section 2.14. ERISA Representation.................................................................15
ARTICLE III COVENANTS................................................................................16
Section 3.1. Payment of Principal and Interest....................................................16
Section 3.2. Maintenance of Office or Agency......................................................16
Section 3.3. Money for Payments To Be Held in Trust...............................................16
Section 3.4. Existence............................................................................17
Section 3.5. Protection of Trust Estate...........................................................18
Section 3.6. Annual Opinions as to the Trust Estate...............................................18
Section 3.7. Performance of Obligations; Servicing of Mortgage Loans..............................18
Section 3.8. Negative Covenants...................................................................20
Section 3.9. Annual Statement as to Compliance....................................................21
Section 3.10. Covenants of the Issuer..............................................................21
Section 3.11. Master Servicer's Obligations........................................................22
Section 3.12. Restricted Payments..................................................................22
Section 3.13. Treatment of Notes as Debt for All Purposes..........................................22
Section 3.14. Notice of Events of Default..........................................................22
Section 3.15. Further Instruments and Acts.........................................................22
Section 3.16. Issuer May Consolidate, etc..........................................................22
Section 3.17. Successor or Transferee..............................................................24
Section 3.18. No Other Business....................................................................24
Section 3.19. Guarantees, Loans, Advances and Other Liabilities....................................24
Section 3.20. Capital Expenditures.................................................................25
Section 3.21. Representations and Warranties of the Issuer.........................................25
i
ARTICLE IV SATISFACTION AND DISCHARGE...............................................................25
Section 4.1. Satisfaction and Discharge of Indenture..............................................25
Section 4.2. Application of Trust Money...........................................................26
Section 4.3. Repayment of Moneys Held by Paying Agent.............................................26
ARTICLE V REMEDIES.................................................................................26
Section 5.1. Events of Default....................................................................26
Section 5.2. Acceleration of Maturity; Rescission and Annulment...................................28
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee............28
Section 5.4. Remedies; Priorities.................................................................30
Section 5.5. Optional Preservation of the Trust Estate............................................32
Section 5.6. Limitation of Suits..................................................................32
Section 5.7. Unconditional Rights of Noteholders To Receive Principal and Interest................32
Section 5.8. Restoration of Rights and Remedies...................................................33
Section 5.9. Rights and Remedies Cumulative.......................................................33
Section 5.10. Delay or Omission Not a Waiver.......................................................33
Section 5.11. Control by Noteholders...............................................................33
Section 5.12. Waiver of Past Defaults..............................................................34
Section 5.13. Undertaking for Costs................................................................34
Section 5.14. Waiver of Stay or Extension Laws.....................................................34
Section 5.15. Action on Notes......................................................................34
Section 5.16. Performance and Enforcement of Certain Obligations...................................35
ARTICLE VI THE INDENTURE TRUSTEE....................................................................35
Section 6.1. Duties of Indenture Trustee..........................................................35
Section 6.2. Rights of Indenture Trustee..........................................................37
Section 6.3. Individual Rights of Indenture Trustee...............................................38
Section 6.4. Indenture Trustee's Disclaimer.......................................................39
Section 6.5. Notice of Defaults...................................................................39
Section 6.6. Reports by Indenture Trustee to Holders..............................................39
Section 6.7. Reserved.............................................................................39
Section 6.8. Replacement of Indenture Trustee.....................................................39
Section 6.9. Successor Indenture Trustee by Merger................................................40
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee....................40
Section 6.11. Eligibility; Disqualification........................................................41
Section 6.12. Preferential Collection of Claims Against Issuer.....................................42
Section 6.13. Representations and Warranties.......................................................42
Section 6.14. Directions to Indenture Trustee......................................................42
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS...........................................................42
Section 7.1. Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders...............42
Section 7.2. Preservation of Information; Communications to Noteholders...........................43
Section 7.3. Reports by Issuer....................................................................43
ii
Section 7.4. Reports by Indenture Trustee.........................................................44
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES.....................................................44
Section 8.1. Collection of Money..................................................................44
Section 8.2. Accounts; Distributions..............................................................44
Section 8.3. [Reserved]...........................................................................45
Section 8.4. Master Servicer's Monthly Statements.................................................45
Section 8.5. [Reserved]...........................................................................45
Section 8.6. Opinion of Counsel...................................................................45
ARTICLE IX SUPPLEMENTAL INDENTURES..................................................................45
Section 9.1. Supplemental Indentures Without Consent of Noteholders...............................45
Section 9.2. Supplemental Indentures with Consent of Noteholders..................................46
Section 9.3. Execution of Supplemental Indentures.................................................48
Section 9.4. Effect of Supplemental Indenture.....................................................48
Section 9.5. Conformity with Trust Indenture Act..................................................48
Section 9.6. Reference in Notes to Supplemental Indentures........................................48
ARTICLE X REDEMPTION OF NOTES......................................................................48
Section 10.1. Early Termination....................................................................48
Section 10.2. Mandatory Redemption.................................................................49
ARTICLE XI MISCELLANEOUS............................................................................51
Section 11.1. Compliance Certificates and Opinions, etc............................................51
Section 11.2. Form of Documents Delivered to Indenture Trustee.....................................52
Section 11.3. Acts of Noteholders..................................................................53
Section 11.4. Notices..............................................................................54
Section 11.5. Notices to Noteholders; Waiver.......................................................54
Section 11.6. Conflict with Trust Indenture Act....................................................55
Section 11.7. Effect of Headings and Table of Contents.............................................55
Section 11.8. Successors and Assigns...............................................................55
Section 11.9. Separability.........................................................................55
Section 11.10. Benefits of Indenture................................................................55
Section 11.11. Legal Holidays.......................................................................55
Section 11.12. GOVERNING LAW........................................................................55
Section 11.13. Counterparts.........................................................................56
Section 11.14. Recording of Indenture...............................................................56
Section 11.15. Trust Obligation.....................................................................56
Section 11.16. No Petition..........................................................................56
Section 11.17. Inspection...........................................................................56
Section 11.18. Inconsistencies With the Sale and Servicing Agreement................................57
Section 11.19. Third-Party Beneficiaries............................................................57
Section 11.20. Limited Recourse.....................................................................57
Section 11.21. Limitation on Voting of Preferred Stock..............................................57
Section 11.22. Limitation of Liability..............................................................58
iii
EXHIBITS
SCHEDULE 1 - Perfection Representations, Warranties and Covenants
SCHEDULE A - Mortgage Loan Schedule
EXHIBIT A - Form of Class A Notes
EXHIBIT B - Form of Class M Notes
iv
INDENTURE dated as of July 3, 2002 between HOUSEHOLD MORTGAGE LOAN TRUST
2002-HC1, a Delaware business trust (the "Issuer"), and JPMorgan Chase Bank, a
New York banking corporation, as trustee and not in its individual capacity (the
"Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the holders of the Issuer's Closed-End Mortgage
Loan Asset Backed Notes, Series 2002-HC1:
GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants to the
Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of
the holders of the Notes, all of the Issuer's right, title and interest in and
to: (i) the Trust Estate; (ii) all right, title and interest of the Issuer in
the Sale and Servicing Agreement, the Transfer Agreement and the Mortgage Loan
Purchase Agreement with respect to the Mortgage Loans (including the Issuer's
right to cause the Depositor or the Master Servicer to repurchase Mortgage Loans
from the Issuer under certain circumstances described therein); (iii) all
present and future claims, demands, causes of action and choses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing; (iv) the Collection Account and all funds on
deposit from time to time in the Collection Account (exclusive of net earnings
thereon); (v) the Preferred Stock; (vi) all other property of the Trust from
time to time; and (vii) any and all proceeds of the foregoing (collectively the
"Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the holders of the
Notes, acknowledges the foregoing Grant, accepts the trusts hereunder in good
faith and without notice of any adverse claim or liens and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the holders of the Notes may be adequately and effectively
protected. The Indenture Trustee further agrees and acknowledges that each item
of Collateral that is physically delivered to the Indenture Trustee will be held
by the Indenture Trustee in
New York state or upon notice to the Issuer in such
other state in which its Corporate Trust Office may be maintained.
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS.
(a) 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 Sale and Servicing Agreement. All other capitalized terms used
herein shall have the meanings specified herein.
"ACCRUAL PERIOD" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"ACT" has the meaning specified in Section 11.3(a).
"AFFILIATE" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"AUTHORIZED OFFICER" means, with respect to the Issuer and the Master
Servicer, any officer of the Owner Trustee or the Master Servicer, as
applicable, who is authorized to act for the Owner Trustee or the Master
Servicer, as applicable, in matters relating to the Issuer and who is identified
on the list of Authorized Officers delivered by the Owner Trustee and the Master
Servicer to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter).
"BOOK-ENTRY NOTE" means any Note registered in the name of the Depository
or its nominee, ownership of which is reflected on the books of the Depository
or on the books of a Person maintaining an account with such Depository
(directly or as an indirect participant in accordance with the rules of such
Depository).
"BUSINESS DAY" has the meaning assigned thereto in the Sale and Servicing
Agreement.
"CERTIFICATE OF TRUST" means the certificate of trust of the Issuer
substantially in the form of EXHIBIT A to the Trust Agreement.
"CLEARING AGENCY" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"CLOSING DATE" means July 3, 2002.
2
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in the Granting Clause of this
Indenture.
"COLLECTION ACCOUNT" means the Collection Account (as defined in the Sale
and Servicing Agreement) established by the Indenture Trustee.
"COMMISSION" shall mean the Securities and Exchange Commission.
"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located at
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, Attention: Institutional Trust
Services/Structured Finance Services- Household Loan Trust Series 2002 - HC1
Administration, or at such other address as the Indenture Trustee may designate
from time to time by notice to the Noteholders and the Issuer or the principal
corporate trust office of any successor Indenture Trustee at the address
designated by such successor Indenture Trustee by notice to the Noteholders and
the Issuer.
"DEFAULT" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"DEFINITIVE NOTES" has the meaning specified in Article II.
"DEPOSITOR" shall mean Household Mortgage Funding Corporation III, a
Delaware corporation, in its capacity as depositor under the Sale and Servicing
Agreement, and its successor in interest.
"DEPOSITORY INSTITUTION" means any depository institution or trust company,
including the Indenture Trustee, that (i) has short-term debt obligations and
long-term debt obligations at the time of any deposit therein and throughout the
time the interest is maintained that are rated at least "Baa3" by Moody's and
"A-1" by Standard & Poor's, and that the deposits in such account are fully
insured to the maximum extent provided by either the BIF or the SAIF and which
is any of (a) a federal savings and loan association duly organized, validly
existing and in good standing under the applicable banking laws of any state,
(b) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (c) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws or (d) a principal subsidiary of a bank holding company. Such Depository
Institution shall have (x) a segregated trust account maintained with the
corporate trust department of a federal or state chartered depository or trust
company, having capital and surplus of not less than $50,000,000, acting in its
fiduciary capacity or (y) an account otherwise acceptable to each Rating Agency
as evidenced by a letter from each Rating Agency to the Owner Trustee and the
Indenture Trustee, without reduction or withdrawal of the then current ratings
of the Notes.
"EVENT OF DEFAULT" has the meaning specified in Section 5.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
3
"EXECUTIVE OFFICER" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"FINAL PAYMENT DATE" means, with respect to any Note, the Payment Date
occurring in May 2032.
"FITCH" means Fitch, Inc., or any successor thereto.
"GRANT" means mortgage, pledge, bargain, 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 this Indenture. A Grant of the Collateral with respect to any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Note Register.
"INDENTURE TRUSTEE" means JPMorgan Chase Bank, a
New York banking
corporation, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee appointed pursuant to the terms of this Indenture.
"INDEPENDENT" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor on the
Notes, the Transferor and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Transferor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Transferor or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 herein, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"ISSUER" means Household Mortgage Loan Trust 2002-HC1 until a successor
replaces it in accordance with the terms of the Transaction Documents and,
thereafter, means the successor.
4
"ISSUER ORDER" and "Issuer Request" mean 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" shall have the meaning assigned thereto in the Sale and Servicing
Agreement.
"LIBOR BUSINESS DAY" shall have the meaning assigned thereto in the Sale
and Servicing Agreement.
"LIEN" shall mean any lien, pledge, encumbrance or security interest on or
in any particular asset or property.
"MAJORITY NOTEHOLDER" shall mean the Holder or Holders of Notes
representing at least 51% of the aggregate Note Principal Amount.
"MANDATORY REDEMPTION PRICE" as of any date of determination shall mean an
amount equal to the then current Note Principal Amount, together with any unpaid
Interest Carry Forward Amounts and Supplemental Interest Amounts, plus one
month's interest on such Note Principal Amount and any unpaid Interest Carry
Forward Amounts and Supplemental Interest Amounts at the Formula Rate.
"MASTER SERVICER" shall mean Household Finance Corporation, in its capacity
as master servicer under the Sale and Servicing Agreement, or any Successor
Master Servicer appointed in accordance with the terms of the Sale and Servicing
Agreement.
"MOODY'S" shall mean Xxxxx'x Investors Service, Inc., or any successor
thereto.
"MORTGAGE LOAN" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"MORTGAGE LOAN SCHEDULE" means the listing of the Mortgage Loans set forth
in Schedule A, as supplemented as of any date on which a Defective Mortgage Loan
has been repurchased from the Trust or substituted with an Eligible Substitute
Mortgage Loan pursuant to the Sale and Servicing Agreement.
"NOTE" means any of the Notes.
"NOTE DEPOSITORY AGREEMENT" means the agreement dated July 3, 2002, among
the Issuer, the Indenture Trustee and The Depository Trust Company, as the
initial Clearing Agency, relating to the Book-Entry Notes.
"NOTE OWNER" means, with respect to a Book-Entry Note, the Person who is
the beneficial owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"NOTE RATE" with respect to the Notes shall have the meaning assigned
thereto in the Sale and Servicing Agreement.
5
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings specified
in Article II.
"NOTEHOLDER" means a Holder of a Note.
"NOTES" means any Closed-End Mortgage Loan Asset Backed Notes, Series
2002-HC1, Class A or Class M, issued and executed by the Issuer and
authenticated by the Indenture Trustee substantially in the form of EXHIBIT A or
EXHIBIT B hereto, as applicable.
"OBLIGATIONS" shall mean the Mortgage Loans.
"OFFICER'S CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 herein, and
delivered to the Indenture Trustee. Unless otherwise specified, any reference in
this Indenture to an Officer's Certificate shall be to an Officer's Certificate
of any Authorized Officer of the Issuer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and who shall be satisfactory to the Indenture Trustee,
and which opinion or opinions shall be addressed to the Indenture Trustee, as
Indenture Trustee, and shall comply with any applicable requirements of Section
11.1 herein and shall be in form and substance satisfactory to the Indenture
Trustee.
"OUTSTANDING" means, with respect to any Note and as of the date of
determination, any Note theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision for such notice
has been made, satisfactory to the Indenture Trustee);
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser; and
(iv) Notes for which the Final Payment Date has occurred;
provided, however, in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent, or waiver hereunder or under any Transaction
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Depositor, the Transferor or any Affiliate of any of the foregoing Persons shall
be disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization,
6
direction, notice, consent, or waiver, only Notes that the Indenture Trustee
knows to be so owned shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Indenture 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, the Transferor or any Affiliate of any of the foregoing Persons.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes
Outstanding at the date of determination.
"OWNER TRUSTEE" means U.S. Bank Trust National Association, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, its
successors in interest and any successor Owner Trustee under the Trust
Agreement.
"OWNERSHIP INTEREST" shall have the meaning assigned thereto in the Trust
Agreement.
"PAYING AGENT" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11 of
this Agreement and is authorized by the Issuer to make payments to and
distributions from the Collection Account, including payment of principal of or
interest on the Notes on behalf of the Issuer.
"PAYMENT DATE" shall mean the twentieth day of each month or, if such day
is not a Business Day, then the next Business Day, beginning in August 2002.
"PERFECTION REPRESENTATIONS" shall mean the representations contained in
Schedule 1 hereto.
"PERSON" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, limited liability company, limited
liability partnership, or government or any agency or political subdivision
thereof.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
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 Article II 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.
"PROCEEDING" means any suit in equity, action at law or other judicial or
administrative proceeding.
"RATING AGENCY CONDITION" means, with respect to certain actions requiring
prior Rating Agency consent, that each Rating Agency shall have been given 10
days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Transferor and the Master Servicer in writing that such action will not result
in a reduction or withdrawal of the then current rating of the Notes.
"RATING AGENCY" means any of (i) Moody's or (ii) Standard & Poor's or (iii)
Fitch. If no such organization or successor is any longer in existence, "Rating
Agency" shall be a nationally
7
recognized statistical rating organization or other comparable person designated
by the Depositor, notice of which designation shall have been given to the
Indenture Trustee.
"RECORD DATE" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"REDEMPTION DATE" means, in the case of a redemption of the Notes pursuant
to Section 10.1 or 10.2, the Payment Date specified by the Indenture Trustee
pursuant to Section 10.1 or 10.2, as applicable.
"REGISTERED HOLDER" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"RESPONSIBLE OFFICER" shall have the meaning assigned thereto in the Sale
and Servicing Agreement.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement dated
as of July 3, 2002, among the Issuer, the Depositor, the Master Servicer and the
Indenture Trustee.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., or any successor thereto.
"STATE" means any one of the 00 Xxxxxx xx xxx Xxxxxx Xxxxxx xx Xxxxxxx or
the District of Columbia.
"SUCCESSOR MASTER SERVICER" has the meaning specified in Section 3.7(e)
hereof.
"TRANSACTION DOCUMENTS" has the meaning set forth in the Sale and Servicing
Agreement.
"TRANSFEROR" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"TRUST" means the Issuer.
"TRUST AGREEMENT" shall mean the Amended and Restated Trust Agreement dated
as of July 3, 2002 among Household Finance Corporation, the Depositor and the
Owner Trustee, as the same may be amended, supplemented or otherwise modified
from time to time.
"TRUST ESTATE" shall mean the assets subject to the Sale and Servicing
Agreement, the Mortgage Loan Purchase Agreement, the Transfer Agreement, the
Trust Agreement and this Indenture, assigned to the Indenture Trustee, which
assets consist of: (i) each Mortgage Loan and each Eligible Substitute Mortgage
Loan and its related Mortgage Note and other Mortgage File documents for each
Mortgage Loan and each Eligible Substitute Mortgage Loan, including such
Mortgage Loan's and such Eligible Substitute Mortgage Loan's Principal Balance
and all collections in respect thereof received after the Cut-Off Date or
Subsequent Cut-off Date, as applicable, (ii) such assets as shall from time to
time to be identified as deposited in the
8
Collection Account (exclusive of net earnings thereon), (iii) the Mortgage Notes
and other Mortgage File documents for the Mortgage Loans, (iv) any property that
secured a Mortgage Loan and that has become REO, (v) the interest of the
Depositor in certain hazard insurance policies maintained by the Mortgagors or
the Master Servicer in respect of the Mortgage Loans, (vi) the proceeds of each
of the foregoing and (vii) one share of Preferred Stock of the Depositor.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
Section 1.2. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"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 in the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.3. 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
9
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented (as provided in such agreements) and includes (in
the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person are
also to its permitted successors and assigns.
ARTICLE II
THE NOTES
Section 2.1. FORM. The Notes shall be designated as the "HOUSEHOLD
MORTGAGE LOAN TRUST 2002-HC1, Closed-End Mortgage Loan Asset Backed Notes,
Series 2002-HC1". Each Note shall be in substantially the form set forth in
EXHIBIT A or EXHIBIT B, as applicable, 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,
consistent herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof. Any portion of the text of any Note may be
set forth on the reverse thereof, with an appropriate reference thereto on the
face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
The terms of the Notes are set forth in EXHIBIT A or EXHIBIT B hereto, as
applicable. The terms of the Notes are part of the terms of this Indenture.
Section 2.2. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Notes
shall be executed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee. The signature of any such Authorized Officer on the Notes may be manual
or facsimile.
Notes bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Owner Trustee shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
Subject to the satisfaction of the conditions set forth in Section 2.8, the
Indenture Trustee shall upon receipt of an Issuer Order, authenticate and
deliver the Notes for original issue in the principal amount equal to
$1,051,007,000, with $892,791,000 for the Class A Notes and $158,216,000 for the
Class M Notes. The aggregate principal amount of the Notes outstanding at any
time may not exceed such amounts.
The Notes that are authenticated and delivered by the Indenture Trustee to
or upon the order of the Issuer on the Closing Date shall be dated July 3, 2002.
All other Notes that are authenticated after the Closing Date for any other
purpose under the Indenture shall be dated the date of their authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$25,000 and multiples of $1,000 in excess thereof.
10
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
Section 2.3. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee initially shall be the "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of the Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and the Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.2 hereof, the
Owner Trustee on behalf of the Issuer shall execute, and the Indenture Trustee
shall authenticate and the Noteholder shall obtain from the Indenture Trustee,
in the name of the designated transferee or transferees, one or more new Notes
in any authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Issuer shall execute, and the Indenture Trustee
shall authenticate and the Noteholder shall obtain from the Indenture Trustee,
the Notes which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer 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 Exchange Act.
11
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.4 or Section 9.6 hereof not involving any
transfer.
Section 2.4. 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 reasonably 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, an Authorized Officer of the Owner Trustee 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, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer 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 2.4, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 2.4 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 2.4 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.5. PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Issuer, 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
12
determination) as the owner of such Note for the purpose of receiving payments
of principal of and interest on, if any, such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and none of the Issuer, the
Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall be
affected by notice to the contrary.
Section 2.6. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST.
(a) Each Note shall accrue interest at the Note Rate and such
interest shall be payable on each Payment Date as specified in EXHIBIT A or
EXHIBIT B hereto, as applicable, subject to Section 3.1 hereof. Any installment
of interest or principal, if any, payable on any Note that is punctually paid or
duly provided for by the Issuer on the applicable Payment Date shall be paid to
the Person in whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date in the manner set forth in Section 5.01(c) of the
Sale and Servicing Agreement.
(b) The principal of each Note shall be payable in installments
on each Payment Date as provided in the forms of the Notes set forth in
EXHIBIT A or EXHIBIT B hereto, as applicable. Notwithstanding the foregoing, the
entire unpaid principal amount of the Notes shall be due and payable, if not
previously paid, on the earliest of (i) the Final Payment Date, (ii) the
Redemption Date or (iii) the date on which an Event of Default shall have
occurred and be continuing, if the Indenture Trustee or the Holders of Notes
representing not less than 66 2/3% of the Outstanding Amount of the Notes have
declared the Notes to be immediately due and payable in the manner provided in
Section 5.2 hereof. All principal payments on the Notes shall be in the manner
set forth in the Sale and Servicing Agreement. The Indenture Trustee shall
notify the Person in whose name a Note is registered at the close of business on
the Record Date preceding the Payment Date on which the Issuer expects that the
final installment of principal of and interest on such Note will be paid. Such
notice shall be mailed or transmitted by facsimile prior to such final Payment
Date and shall specify that such final installment will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of such installment. Notices
in connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 8.01 of the Sale and Servicing Agreement.
Section 2.7. 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 canceled 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 canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes canceled as provided in this Section, except as expressly permitted by
this Indenture. All canceled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it; provided, that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
Section 2.8. [Reserved].
13
Section 2.9. RELEASE OF TRUST ESTATE.
(a) Except as otherwise provided in subsections (b) and (c) of
this Section 2.9 and Section 11.1 hereof and the terms of the Transaction
Documents, the Indenture Trustee shall release property from the lien of this
Indenture only upon receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of such
Independent Certificates to the effect that the TIA does not require any such
Independent Certificates.
(b) The Master Servicer, on behalf of the Issuer, shall be
entitled to obtain a release from the lien of this Indenture for any Mortgage
Loan and the related Mortgaged Property at any time in accordance with the
provisions of Section 3.08 of the Sale and Servicing Agreement.
(c) The Indenture Trustee shall, if requested by the Master
Servicer, temporarily release to the Master Servicer the Indenture Trustee's
Mortgage File pursuant to the provisions of Section 3.08 of the Sale and
Servicing Agreement upon compliance by the Master Servicer of the provisions
thereof provided that the Indenture Trustee's Mortgage File shall have been
stamped to signify the Issuer's pledge to the Indenture Trustee under the
Indenture.
Section 2.10. BOOK-ENTRY NOTES. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to The Depository Trust Company, the initial Clearing Agency or its
custodian, by, or on behalf of, the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no Note Owner thereof will receive a
definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.12 below. Unless and until definitive, fully registered
Notes (the "Definitive Notes") have been issued to such Note Owners pursuant to
Section 2.12 below:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the Notes
and the giving of instructions or directions hereunder) as the sole holder
of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant to Section 2.12
below, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of principal
of and interest on the Notes to such Clearing Agency Participants; and
14
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes evidencing
a specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
Section 2.11. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes, to the
Clearing Agency, and shall have no obligation to such Note Owners.
Section 2.12. DEFINITIVE NOTES. If (i) the Clearing Agency or the
Depositor advises the Indenture Trustee in writing that the Clearing Agency is
no longer willing, qualified or able to properly discharge its responsibilities
with respect to the Book-Entry Notes and the Clearing Agency or the Depositor,
Issuer or Indenture Trustee is unable to locate a qualified successor, (ii) the
Depositor at its option advises the Indenture Trustee in writing that it elects
to terminate the book-entry system through the Clearing Agency or (iii) after
the occurrence of an Event of Default, Owners of the Book-Entry Notes
representing beneficial interests aggregating at least 51% of the Outstanding
Amount of such Notes advise the Clearing Agency in writing that the continuation
of a book-entry system through the Clearing Agency is no longer in the best
interests of such Note Owners, then the Clearing Agency shall notify all Note
Owners and the Indenture Trustee of the occurrence of such event and of the
availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Notes representing the
Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar 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 2.13. TAX TREATMENT. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for all tax purposes, the
Notes will qualify as indebtedness secured by the Trust Estate. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of a Note
(and each Note Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for all purposes as indebtedness of
the Issuer.
Section 2.14. ERISA REPRESENTATION. Each Person that acquires a Note shall
be required to represent, or in the case of a Book-Entry Note, will be deemed to
represent by its acceptance of the Note, that (i) it is not, and is not
acquiring the Note on behalf of or with "plan assets" (as determined under U.S.
Department of Labor Regulations found at 29 C.F.R. Section 2510.3-101 or
otherwise) of a Plan, or (ii) its acquisition and holding of the Note are
eligible for relief under Prohibited Transaction Class Exemption ("PTCE") 00-00,
XXXX 00-0, XXXX 91-38, XXXX 00-00, XXXX 96-23 or a similar exemption.
15
ARTICLE III
COVENANTS
Section 3.1. PAYMENT OF PRINCIPAL AND INTEREST. The Issuer will duly and
punctually pay (or will cause to be duly and punctually paid) the principal of
and interest, if any, on the Notes in accordance with the terms of the Notes and
this Indenture. Without limiting the foregoing, the Indenture Trustee shall,
pursuant to Section 5.01 of the Sale and Servicing Agreement, pay all amounts on
deposit in the Collection Account on each Payment Date to the Noteholders.
Amounts properly withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered as having been paid
by the Issuer to such Noteholder for all purposes of this Indenture.
The Notes shall be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Collateral, as
provided in this Indenture. The Issuer shall not otherwise be liable for
payments on the Notes. If any other provision of this Indenture shall be deemed
to conflict with the provisions of this Section 3.1, the provisions of this
Section 3.1 shall control.
Section 3.2. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain
in
New York an office or agency where Notes may be surrendered for registration
of transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the 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 3.3. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Section 8.2(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be remitted from amounts withdrawn from the Collection
Account pursuant to Section 8.2(c) shall be made on behalf of the Issuer by the
Indenture Trustee or by the Paying Agent, and no amounts so withdrawn from the
Collection Account for payments on the Notes shall be paid over to the Issuer.
The Issuer hereby initially appoints the Indenture Trustee to serve as Paying
Agent with respect to the Notes and in accordance with Section 3.9 of the Trust
Agreement, and the Indenture Trustee hereby accepts and acknowledges such
appointment.
Any Paying Agent other than the Indenture Trustee shall be appointed by
Issuer Order with written notice thereof to the Indenture Trustee. Any Paying
Agent appointed by the Issuer shall be a Person who would be eligible to be
Indenture Trustee hereunder as provided in Section 6.11 hereof. The Issuer shall
not appoint any Paying Agent (other than the Indenture Trustee) which is not, at
the time of such appointment, reasonably satisfactory to the Depositor.
The Issuer will cause each Paying Agent 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 3.3, that such Paying
Agent will:
16
(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 notice of any default by the
Issuer (or any other obligor upon the Notes) of which a Responsible Officer
has actual knowledge in the making of any payment required to be made with
respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; provided, however, that
with respect to withholding and reporting requirements applicable to
original issue discount (if any) on the Notes, the Issuer shall have first
provided the calculations pertaining thereto to the Indenture Trustee.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same terms
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.
Any termination and release of a Trust Estate shall be done in accordance
with the provisions of Section 8.01 of the Sale and Servicing Agreement.
Section 3.4. EXISTENCE.
(a) Subject to Section 3.4(b) below, the Issuer will keep in
full effect its existence, rights and franchises as a business trust under the
laws of the State of Delaware (unless it becomes, or any successor Issuer
hereunder is or becomes, organized under the laws of any other State or of the
United States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction) and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes and the Trust Estate.
(b) Any successor to the Owner Trustee appointed pursuant to
Section 10.2 of the Trust Agreement shall be the successor Owner Trustee under
this Indenture without the
17
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to
the Owner Trustee, the Person succeeding to the Owner Trustee under the Trust
Agreement may exercise every right and power of the Owner Trustee under this
Indenture with the same effect as if such Person had been named as the Owner
Trustee herein.
Section 3.5. PROTECTION OF TRUST ESTATE. 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) provide further assurance with respect to a Grant of all or
any portion of the related Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to the Trust Estate; or
(v) 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.
Section 3.6. ANNUAL OPINIONS AS TO THE TRUST ESTATE.
On or before March 31 in each calendar year, beginning in 2003, the Issuer
shall furnish to the Indenture Trustee an Opinion of Counsel either stating
that, in the opinion of such counsel, such action has been taken with respect to
the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security interest created by
this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain such lien and
security interest. Such Opinion of Counsel shall also describe the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the lien and security interest of this
Indenture until March 31 of the following calendar year.
Section 3.7. PERFORMANCE OF OBLIGATIONS; SERVICING OF MORTGAGE LOANS.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate
18
or that would result in the amendment, hypothecation, subordination, termination
or discharge of, or impair the validity or effectiveness of, any such instrument
or agreement, except as expressly provided in this Indenture, the Sale and
Servicing Agreement or such other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the
assistance of other Persons 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 punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Transaction
Documents and in the instruments and agreements included in the Trust Estate,
including but not limited to (i) filing or causing to be filed all UCC financing
statements and continuation statements required to be filed by the terms of this
Indenture, the Mortgage Loan Purchase Agreement and the Sale and Servicing
Agreement and (ii) recording or causing to be recorded all Mortgages,
Assignments of Mortgage, all intervening Assignments of Mortgage and all
assumption and modification agreements required to be recorded by the terms of
the Sale and Servicing Agreement and the Mortgage Loan Purchase Agreement, in
accordance with and within the time periods provided for in this Indenture
and/or the Sale and Servicing Agreement, as applicable. Except as otherwise
expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Transaction Document or any provision thereof
without the consent of the Indenture Trustee and the Majority Noteholder or such
other percentage of Noteholders as is set forth in the applicable Transaction
Document.
(d) Subject to the terms of the Sale and Servicing Agreement, if
the Issuer shall have knowledge of the occurrence of an Master Servicer
Termination Event under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee, the Depositor, the Master Servicer and
the Rating Agencies thereof, and shall specify in such notice the action, if
any, the Master Servicer is taking with respect of such default. If such a
Master Servicer Termination Event shall arise from the failure of the Master
Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement with respect to the Mortgage Loans, the Issuer shall take
all reasonable steps available to it to remedy or cause to be remedied such
failure.
(e) Subject to the terms of the Sale and Servicing Agreement, as
promptly as possible after the giving of notice of termination to the Master
Servicer of the Master Servicer's rights and powers pursuant to Section 7.01 of
the Sale and Servicing Agreement, a successor master servicer (the "Successor
Master Servicer") shall be appointed pursuant to Section 7.02 of the Sale and
Servicing Agreement. If the Indenture Trustee shall succeed to the Master
Servicer's duties as master servicer of the Mortgage Loans as provided herein,
it shall do so in its individual capacity and not in its capacity as Indenture
Trustee and, accordingly, the provisions of Article VI hereof shall be
inapplicable to the Indenture Trustee in its duties as successor Master Servicer
and the servicing of the Mortgage Loans. In case the Indenture Trustee shall
become successor Master Servicer under the Sale and Servicing Agreement, the
Indenture Trustee shall be entitled to appoint as Successor Master Servicer any
one of its Affiliates,
19
provided that it shall be fully liable for the actions and omissions of such
Affiliate in such capacity as Successor Master Servicer.
(f) Without derogating from the absolute nature of the
assignment granted to the Indenture Trustee under this Indenture or the rights
of the Indenture Trustee hereunder, the Issuer agrees (i) that it will not,
without the prior written consent of the Indenture Trustee (which consent shall
not be unreasonably withheld), amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of the Trust Estate (except to the extent
otherwise provided in the Sale and Servicing Agreement or the other Transaction
Documents), or waive timely performance or observance by the Master Servicer or
the Depositor under the Sale and Servicing Agreement; and (ii) that any such
amendment (not otherwise provided in the Sale and Servicing Agreement or the
other Transaction Documents) shall not (A) reduce in any manner the amount of,
or delay the timing of, collections of payments on mortgage loans, (B) reduce in
any manner the amount of, or delay the timing of, payments that are required to
be made on a Note without the consent of the affected Noteholder, (C) impair the
right of any Noteholder to institute suit for the enforcement of the provisions
of the Agreement, or (D) reduce the aforesaid percentage of the Notes that is
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes. If any such amendment, modification, supplement or
waiver shall be so consented to by the Indenture Trustee and the Noteholders,
the Issuer agrees, promptly following a request by the Indenture Trustee to do
so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as the Indenture Trustee
may deem necessary or appropriate in the circumstances.
Section 3.8. NEGATIVE COVENANTS. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Sale
and Servicing Agreement, sell, transfer, exchange or otherwise dispose of
any of the properties or assets of the Issuer, including those included in
the 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 related Trust Estate;
(iii) engage in any business or activity other than as permitted
by the Trust Agreement or other than in connection with, or relating to,
the issuance of Notes pursuant to this Indenture and the Ownership Interest
pursuant to the Trust Agreement, or amend the Trust Agreement as in effect
on the Closing Date other than in accordance with Section 11.1 thereof;
(iv) issue debt obligations under any other indenture;
20
(v) incur or assume any indebtedness or guaranty any
indebtedness of any Person, except for such indebtedness as may be incurred
by the Issuer in connection with the issuance of the Notes pursuant to this
Indenture or as otherwise may be permitted by the Transaction Documents;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Trust Estate or any part
thereof or any interest therein or the proceeds thereof (other than tax
liens, mechanics' liens and other liens that arise by operation of law, in
each case on any of the Mortgaged Properties and arising solely as a result
of an action or omission of the related Mortgagor) or (C) permit the lien
of this Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien) security interest in the
Trust Estate;
(viii) [reserved]; or
(ix) take any other action or fail to take any action which may
cause the Issuer to be treated as (a) an association pursuant to Section
7701 of the Code and the corresponding regulations, (b) a publicly traded
partnership taxable as a corporation pursuant to Section 7704 of the Code
and the corresponding regulations or (c) a taxable mortgage pool pursuant
to Section 7701(i) of the Code and the corresponding regulations.
Section 3.9. ANNUAL STATEMENT AS TO COMPLIANCE. The Master Servicer,
on behalf of the Issuer, will deliver to the Indenture Trustee, within 120 days
after the end of each fiscal year of the Issuer (commencing with the fiscal year
2002), an Officer's Certificate stating, as to the Authorized Officer signing
such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year
and of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a default
in its compliance with any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status thereof.
Section 3.10. COVENANTS OF THE ISSUER.
All covenants of the Issuer in this Indenture are covenants of the Issuer
and are not covenants of the Owner Trustee. The Owner Trustee is, and any
successor Owner Trustee under
21
the Trust Agreement will be, entering into this Indenture solely as Owner
Trustee under the Trust Agreement and not in its respective individual capacity,
and in no case whatsoever shall the Owner Trustee or any such successor Owner
Trustee be personally liable on, or for any loss in respect of, any of the
statements, representations, warranties or obligations of the Issuer hereunder,
as to all of which the parties hereto agree to look solely to the property of
the Issuer.
Section 3.11. MASTER SERVICER'S OBLIGATIONS. The Issuer shall cause the
Master Servicer to comply with its obligations under the terms of the Sale and
Servicing Agreement.
Section 3.12. RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Master Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made (x) payments or
distributions to the Master Servicer, the Indenture Trustee, the Owner Trustee,
the Ownership Interest and the Noteholders as contemplated by, and to the extent
funds are available for such purpose under, the Sale and Servicing Agreement or
the Trust Agreement. The Issuer will not, directly or indirectly, make or cause
to be made payments to or distributions from the Collection Account except in
accordance with this Indenture and the Transaction Documents.
Section 3.13. TREATMENT OF NOTES AS DEBT FOR ALL PURPOSES.
The Issuer shall treat the Notes as indebtedness for all purposes.
Section 3.14. NOTICE OF EVENTS OF DEFAULT. The Issuer shall give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder, each default on the part of the Master Servicer of its
obligations under the Sale and Servicing Agreement and each default on the part
of the Depositor of its obligations under the Sale and Servicing Agreement.
Section 3.15. 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 3.16. 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
22
the Paying Agent, on behalf of the holder of the Ownership Interest
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) each Rating Agency shall have notified the Issuer
that such transaction will not cause a reduction or withdrawal by a
Rating Agency of its then current rating of the Notes;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee)
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 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 any 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 assumes, by an
indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee,
the due and punctual payment of the principal of and interest on all
Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed
or observed, all as provided herein, (C) expressly agrees by means
of such supplemental indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to the
rights of Holders of the Notes, (D) unless otherwise provided in
such supplemental indenture, expressly agrees 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 agrees by means of such supplemental indenture that
such Person (or if a group of Persons, then one specified Person)
shall make all filings with the Commission (and any other
appropriate Person) required by the Exchange Act in connection with
the Notes;
23
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be
continuing;
(iii) each Rating Agency shall have notified the Issuer
that such transaction will not cause a reduction or withdrawal by a
Rating Agency of its then current rating of the Notes;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee)
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) above, 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) above, the Issuer shall be
released from every covenant and agreement (except such obligations that survive
such transfer) 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, selling and managing the
Mortgage Loans, owning Preferred Stock of the Depositor and the issuance of the
Notes in the manner contemplated by this Indenture and the Transaction Documents
and all activities incidental thereto.
Section 3.19. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except
as contemplated by this Indenture or the other Transaction 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.
24
Section 3.20. CAPITAL EXPENDITURES. Except as permitted by the Transaction
Documents, the Issuer shall not make any expenditure (by long-term or operating
lease or otherwise) for capital assets (either realty or personalty).
Section 3.21. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Perfection
Representations shall be part of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. SATISFACTION AND DISCHARGE OF INDENTURE. Subject to and in
accordance with Section 8.01 of the Sale and Servicing Agreement, 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 3.3, 3.4, 3.5, 3.8 and
3.10 hereof, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.7
hereof and the obligations of the Indenture Trustee under Section 4.2 hereof)
and (vi) the rights of Noteholders as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee payable to all or any of them),
and the Indenture Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when all of the following have occurred:
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.4 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 3.3 above) have been delivered to the Indenture Trustee for
cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
a. have become due and payable,
b. will become due and payable within one year
prior to the Final Payment Date, or
c. are to be called for redemption within one
year under arrangements satisfactory to the Indenture
Trustee for the giving of notice of redemption by the
Indenture Trustee in the name, and at the expense, of the
Issuer,
25
and the Issuer, in the case of a., b. or c. 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 not theretofore delivered to the Indenture Trustee for cancellation
when due to the Final Payment Date or Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.1 hereof) and all amounts due and
owing the Indenture Trustee have been paid, as the case may be;
(B) the later of (a) twelve months after payment in full of all
outstanding obligations under the Notes, (b) the payment in full of all
unpaid fees and expenses of the Indenture Trustee hereunder and the other
Transaction Documents, (c) the date on which the Issuer has paid or caused
to be paid all other sums payable hereunder by the Issuer and (d) the date
on which the final resolution of any litigation against the Issuer
regarding a preference claim under the United States Bankruptcy Code
(11 U.S.C.) has occurred; and
(C) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA or
the Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section
11.1(a) hereof and, subject to Section 11.2 hereof, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture with respect to the Notes have been complied
with.
Section 4.2. APPLICATION OF TRUST MONEY. All moneys deposited with the
Indenture Trustee pursuant to Sections 3.3 and 4.1 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Sale and Servicing
Agreement, to the payment, either directly or through any Paying Agent to the
Holders of the particular Notes for the payment or redemption of which such
moneys have been deposited with the Indenture Trustee, of all sums due and to
become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
Section 4.3. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.3 above and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
ARTICLE V
REMEDIES
Section 5.1. EVENTS OF DEFAULT. "Event of Default," wherever used herein,
means with respect to the Notes 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
26
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest on any Note when the
same becomes due and payable, and continuance of such default for a period of
five (5) days; or
(b) default in the payment in full of the principal of the Note
Principal Amount on the Final Payment Date which default continues for a period
of five (5) days; or
(c) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section 5.1 specifically dealt with) that has a material adverse effect on
the Noteholders, or any representation or warranty of the Issuer made in this
Indenture, the Sale and Servicing Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same shall have been
made, and such default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was incorrect
shall not have been eliminated or otherwise cured, for a period of 60 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 51% of the Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or warranty and requiring it
to be remedied and stating that such notice is a notice of Default hereunder; or
(d) [reserved]; or
(e) 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
(f) 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 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.
The Issuer shall deliver to the Indenture Trustee and the Transferor within
five days after the occurrence thereof, written notice in the form of an
Officer's Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clause (c) above, its status and
what action the Issuer is taking or proposes to take with respect thereto.
27
Section 5.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default should occur and be continuing of which a Responsible Officer
of the Indenture Trustee has knowledge, then and in every such case the
Indenture Trustee, upon the prior written direction of the Holders of Notes
representing not less than 66 2/3% of the Outstanding Amount of the Notes, may
declare all 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 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
Majority Noteholder, by written notice to the Issuer and the Indenture Trustee,
may 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 payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder or upon
such Notes if the Event of Default giving rise to such acceleration
had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel;
and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12 below.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
Section 5.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE.
(a) The Issuer covenants that if (i) default occurs in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default occurs in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable, and such default continues for a period of
five days, the Issuer will, upon demand of the Indenture Trustee, pay to the
Indenture Trustee for the benefit of the Holders of the Notes, the whole amount
then due and payable on such Notes for principal and interest, with interest
upon the overdue principal and, to the extent payment at such rate of interest
shall be legally enforceable, upon overdue installments of interest at the rate
borne by the Notes and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee.
28
(b) In case the Issuer shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee shall at the direction of Holders of
66 2/3% of the Outstanding Amount of the Notes institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding to
judgment or final decree, and may enforce the same against the Issuer or other
obligor upon such Notes and collect in the manner provided by law out of the
property of the Issuer or other obligor upon such Notes, wherever situated, the
moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the
Indenture Trustee may, and shall at the written direction of the Holders of
66 2/3% of the Outstanding Amount of the Notes, as more particularly provided in
Section 5.4 below, proceed to protect and enforce its rights and the rights of
the Noteholders 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 5.3, shall be entitled and empowered by intervention in such
Proceedings:
(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, each predecessor Indenture Trustee and its agents,
attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee (except as a result
of negligence or bad faith)), 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 moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Noteholders and
the Indenture Trustee on their behalf; and
29
(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 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 Noteholders, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
Section 5.4. REMEDIES; PRIORITIES.
(a) If an Event of Default shall have occurred and be continuing
of which a Responsible Officer of the Indenture Trustee has actual knowledge,
the Indenture Trustee at the direction of Holders of 66 2/3% of the Outstanding
Amount of the Notes shall do one or more of the following (subject to Section
5.5 below):
(i) institute Proceedings in its own name and as trustee
of an express trust for the collection of all amounts then payable
on the related Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce
30
any judgment obtained, and collect from the Issuer and any other
obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure 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 or the related
Noteholders; and
(iv) sell the Trust Estate or any portion thereof or
rights or interest therein in a commercially reasonable manner, at
one or more public or private sales called and conducted in any
manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Holders of 100% of the Outstanding
Amount of the Notes, (B) the proceeds of such sale or liquidation distributable
to the Noteholders are sufficient to discharge in full all amounts then due and
unpaid upon such Notes for principal and interest or (C) the Indenture Trustee
determines that the Trust Estate will not continue to provide sufficient funds
for the payment of principal of and interest on the Notes as they would have
become due if the Notes had not been declared due and payable, and the Indenture
Trustee obtains the consent of the Holders of 66 2/3% of the Outstanding Amount
of the Notes. In determining such sufficiency or insufficiency with respect to
clauses (B) and (C) above, 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.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, the Indenture Trustee and the Paying Agent shall pay
out the money or property in the following order:
FIRST: to the Indenture Trustee for any costs or expenses
incurred by it in connection with the enforcement of the remedies
provided for in this Article V;
SECOND: to the Noteholders for amounts due and unpaid on the
Notes for interest (including Supplemental Interest Amounts) and
principal, according to the priority set forth in Section 5.01 of
the Sale and Servicing Agreement and the amounts due and payable on
such Notes;
THIRD: to the Paying Agent, as applicable, for any amounts
to be distributed, to the holder of the Ownership Interest, in the
manner set forth in Section 5.01 of the Sale and Servicing
Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section 5.4. At least 15
days before such record date, the Indenture Trustee shall mail to each
Noteholder and the Issuer a notice that states the record date, the payment date
and the amount to be paid.
31
Section 5.5. OPTIONAL PRESERVATION OF THE TRUST ESTATE. If the Notes
have been declared to be due and payable under Section 5.2 above 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 Holders of 66 2/3% of the Outstanding Amount of the
Notes), elect to 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 (although the
parties hereto understand that there exists the possibility of a shortfall in
collections of the Mortgage Loans), and the Indenture Trustee shall take such
desire into account when determining whether or not to maintain possession of
the Trust Estate. In determining whether to maintain possession of the
Collateral, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
Section 5.6. 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:
(a) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Amount
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;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such Proceedings;
and
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Majority
Noteholder.
It is understood and intended that no Noteholders 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 Noteholders 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.
Section 5.7. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND
INTEREST. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due date thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) to the extent funds are
available therefor out of the Trust Estate and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
32
Section 5.8. 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 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 5.9. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or omission of the
Indenture Trustee or any Noteholder to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture 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 NOTEHOLDERS. The Holders of 66 2/3% of the
Outstanding Amount of the Notes 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:
(a) such direction shall not be in conflict with any rule of law
or with this Indenture;
(b) subject to the express terms of Section 5.4 above, any
direction to the Indenture Trustee to sell or liquidate the Trust Estate shall
be in writing by the Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(c) if the conditions set forth in Section 5.5 above have been
satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant
to such Section 5.5, then any direction to the Indenture Trustee by Holders of
Notes representing less than 100% of the Outstanding Amount of the Notes to sell
or liquidate the Trust Estate shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of the Noteholders set forth in this Section
5.11, subject to Section 6.1 hereof, the Indenture Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
33
Section 5.12. WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2 above, the
Majority Noteholder may waive any past Default or Event of Default and its
consequences except a Default (a) in the payment of principal of or interest on
any of the Notes or (b) in respect of a covenant or provision hereof that cannot
be modified or amended without the consent of the 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 Default
or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
Section 5.13. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
Section 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 5.15. ACTION ON NOTES. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee 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 5.4(b) above.
34
Section 5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee, the
Issuer shall take all such lawful action as the Indenture Trustee may request to
compel or secure the performance and observance by the Depositor and the Master
Servicer, as applicable, of each of their obligations to the Issuer under or in
connection with the Sale and Servicing Agreement, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Sale and Servicing Agreement to the extent and in the
manner directed by the Indenture Trustee, including the transmission of notices
of default on the part of the Depositor or the Master Servicer thereunder and
the institution of legal or administrative actions or proceedings to compel or
secure performance by the Depositor or the Master Servicer of each of their
obligations under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing) of the Holders of 66 2/3% of the Outstanding Amount shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the
Depositor or the Master Servicer under or in connection with the Sale and
Servicing Agreement, including the right or power to take any action to compel
or secure performance or observance by the Depositor, the Master Servicer, as
the case may be, of each of their obligations to the Issuer thereunder and to
give any consent, request, notice, direction, approval, extension, or waiver
under the Sale and Servicing Agreement, and any right of the Issuer to take such
action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.1. 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. If any such instrument is found not to conform in any
material respect to the requirements of this Agreement, the
Indenture Trustee shall notify the Noteholders of such
35
instrument in the event that the Indenture Trustee, after so
requesting, does not receive a satisfactory corrected instrument.
(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 6.1;
(ii) the Indenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer unless
it is proved that the Indenture Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 5.11
above.
(d) Every provision of this Indenture that in any way relates to
the Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section 6.1.
(e) The Indenture Trustee shall not be liable for interest on
any money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
(f) Money held in trust by the Indenture Trustee shall be
segregated from other funds except to the extent permitted by law or the terms
of this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it; and none of the provisions contained in this
Indenture shall in any event require the Indenture Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Master Servicer, the Issuer or Transferor under this Indenture except during
such time, if any, as the Indenture Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Master Servicer in
accordance with the terms of this Indenture.
(h) The Indenture Trustee shall challenge or cause to be
challenged any attempt at substantive consolidation of the assets and
liabilities of the Issuer with those of any Owner (as the term "Owner" is
defined in the Trust Agreement) in connection with any insolvency proceeding of
the Issuer.
(i) 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 6.1 and to the provisions of
the TIA.
36
(j) Subject to the other provisions of this Indenture and
without limiting the generality of this Section 6.1, the Indenture Trustee shall
have no duty (A) to see to any recording, filing, or depositing of this
Indenture or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (B) to see to any insurance, (C) to see
to the payment or discharge of any tax, assessment, or other governmental charge
or any lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Estate other than from funds available in the
Collection Account, (D) to confirm or verify the contents of any reports or
certificates of the Issuer or Master Servicer delivered to the Indenture Trustee
pursuant to this Indenture believed by the Indenture Trustee to be genuine and
to have been signed or presented by the proper party or parties.
(k) The Indenture Trustee shall not be required to take notice
or be deemed to have notice or knowledge of any default (except an event of
nonpayment) or Event of Default unless a Responsible Officer of the Indenture
Trustee shall have received written notice or obtained actual knowledge thereof.
In the absence of receipt of such notice or actual knowledge, the Indenture
Trustee may conclusively assume that there is no default or Event of Default.
Section 6.2. RIGHTS OF INDENTURE TRUSTEE.
(a) The Indenture Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting on any resolution,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper 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 and shall be entitled to receive an Officer's Certificate or an
Opinion of Counsel. The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on an Officer's Certificate or
Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that such action or omission by
the Indenture Trustee does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel selected by it with due care with respect to legal
matters relating to this Indenture, the Notes and the Transaction Documents to
which it is a party, 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.
37
(f) The Indenture Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Indenture or to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the Noteholders, pursuant to the
provisions of this Indenture, unless such Noteholders shall have offered to the
Indenture Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Indenture Trustee of the obligation, upon the
occurrence of an Event of Default of which a Responsible Officer of the
Indenture Trustee shall have actual knowledge (which has not been cured), to
exercise such of the rights and powers vested in it by this Indenture, and to
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.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Majority Noteholder; provided, however, that if the payment within a
reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to taking any such action. The reasonable expense of
every such examination shall be paid by the Issuer or, if paid by the Indenture
Trustee, shall be repaid by the Issuer upon demand.
(h) The right of the Indenture Trustee to perform any
discretionary act enumerated in this Indenture shall not be construed as a duty,
and the Indenture Trustee shall not be answerable for other than its negligence
or willful misconduct in the performance of such act.
(i) The Indenture Trustee shall not be required to give any bond
or surety in respect of the execution of the Trust Fund created hereby or the
powers granted hereunder.
(j) The Indenture Trustee shall have no liability in connection
with the malfeasance or nonfeasance by the Issuer or the Master Servicer. The
Indenture Trustee shall have no liability in connection with compliance by the
Issuer or the Master Servicer with statutory or regulatory requirements related
to the Collateral or the Trust Estate. The Indenture Trustee shall not make or
be deemed to have made any representations or warranties with respect to the
Collateral or the Trust Estate or the validity or sufficiency of any assignment
of the Collateral or the Trust Estate to the Indenture Trustee.
(k) In the event that the Indenture Trustee is also acting as
Paying Agent or Registrar hereunder, the rights, protection, immunities and
indemnities afforded to the Indenture Trustee pursuant to this Article VI shall
also be afforded to such Paying Agent or Registrar.
Section 6.3. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same
38
with like rights. However, the Indenture Trustee must comply with Sections 6.11
and 6.12 below.
Section 6.4. 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) shall not be 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 6.5. NOTICE OF DEFAULTS. If a Default occurs and is continuing
and if it is actually known to a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall mail to each Noteholder, the Master Servicer, the
Issuer and the Depositor notice of the Default within 30 days after it occurs at
the expense of the Issuer. Except in the case of a Default in payment of
principal of or interest on any Note, the Indenture Trustee may withhold the
notice to the Noteholders if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders. The Indenture Trustee shall not be charged with the
knowledge of an Event of Default unless a Responsible Officer has received
written notice or has actual knowledge thereof.
Section 6.6. 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 Issuer Request, the Indenture Trustee shall promptly furnish such
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 6.7. RESERVED.
Section 6.8. 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. The Indenture Trustee may
resign at any time by so notifying the Issuer. The Majority Noteholder may
remove the Indenture Trustee by so notifying the Indenture Trustee and the
Depositor and may appoint a successor Indenture Trustee. The Issuer shall remove
the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11
below;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
39
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
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 30 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer or the Majority Noteholder 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 below, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Section 6.9. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11 below.
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, 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 hereof, and, subject to the other
provisions of this Section 6.10, such powers, duties, obligations, rights and
trusts as the Indenture Trustee may consider necessary or desirable. No
40
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 6.11 below and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.8 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, jointly with the Indenture
Trustee, subject to all the provisions of this Indenture, specifically including
every provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee, its agent or attorney-in-fact with full power
and authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, 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. The Indenture Trustee
shall remain primarily liable for all actions of a co-trustee.
Section 6.11. ELIGIBILITY; DISQUALIFICATION. The Indenture Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition. The Indenture
Trustee shall comply with TIA Section 310(b), including the
41
optional provision permitted by the second sentence of TIA Section 310(b)(9);
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities of
the Issuer are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
Section 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
Section 6.13. REPRESENTATIONS AND WARRANTIES. The Indenture Trustee hereby
represents and warrants that:
(a) The Indenture Trustee is duly organized, validly existing
and in good standing under the laws of the State of
New York, with power and
authority to own its properties and to conduct its business as such properties
are currently owned and such business is currently conducted.
(b) 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.
(c) 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 certificate of
incorporation 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.
Section 6.14. DIRECTIONS TO INDENTURE TRUSTEE. The Indenture Trustee is
hereby directed:
(a) to accept the pledge of the Mortgage Loans and hold the
assets of the Trust in trust for the Noteholders;
(b) to authenticate and deliver the Notes substantially in the
form prescribed by EXHIBIT A or EXHIBIT B hereto, as applicable, in accordance
with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken
by the terms of this Indenture.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.1. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES OF
NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after the earlier of (i) each Record Date
and (ii) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of
42
the Noteholders as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished.
Section 7.2. 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 Noteholders
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.1 above and the names and addresses of Noteholders 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 7.1 upon receipt of
a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
Section 7.3. 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 of the information, documents and
other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) that the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission
in accordance with the rules and regulations prescribed from time to
time by the Commission such additional information, documents and
reports with respect to compliance by the Issuer with the conditions
and covenants of this Indenture as may be required from time to time
by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i)
and (ii) of this Section 7.3(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.
43
Section 7.4. REPORTS BY INDENTURE TRUSTEE. If required by TIA Section
313(a), within 60 days after each August 1, beginning with August 1, 2003, the
Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each securities exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any securities exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.1. 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 herein.
Section 8.2. ACCOUNTS; DISTRIBUTIONS.
(a) On or prior to the Closing Date, the Indenture Trustee shall
establish and maintain or cause to be established and maintained, in the name of
the Indenture Trustee for the benefit of the Noteholders and the Transferor, the
Collection Account as provided in Article V of the Sale and Servicing Agreement
into which amounts shall be deposited in accordance with the terms of the Sale
and Servicing Agreement.
(b) The Indenture Trustee shall deposit any amounts representing
payments on and any collections in respect of the Mortgage Loans received by it,
if any, and any other amounts required by the terms of the Transaction Documents
to be deposited, immediately following receipt thereof. Amounts on deposit in
the Collection Account may be invested in Permitted Investments pursuant to
Section 3.02(d) of the Sale and Servicing Agreement.
(c) On each Payment Date and the Redemption Date, to the extent
funds are available in the Collection Account, the Indenture Trustee shall make
the distributions and payments in the amounts and in the priority set forth in
Section 5.01 of the Sale and Servicing Agreement (except as otherwise provided
in Section 5.4(b) herein).
(d) On each Payment Date and the Redemption Date, to the extent
of the interest of the Indenture Trustee in the Collection Account (as described
in Section 5.01 of the
44
Sale and Servicing Agreement), the Indenture Trustee hereby authorizes the Owner
Trustee or the Paying Agent, as applicable, to make the distributions from the
Collection Account as required pursuant to Section 5.01 of the Sale and
Servicing Agreement.
Section 8.3. [Reserved].
Section 8.4. MASTER SERVICER'S MONTHLY STATEMENTS.
On each Payment Date, the Indenture Trustee shall deliver the Indenture
Trustee's statement to Noteholders with respect to such Payment Date to DTC and
the Rating Agencies. Such information shall also be made available at the
Indenture Trustee's website currently located at http\\xxx.xxxxxxxx.xxx/xxxxxx.
Section 8.5. [Reserved].
Section 8.6. OPINION OF COUNSEL. The Indenture Trustee shall receive
at least seven days notice when requested by the Issuer to take any action
pursuant to Section 2.9(a) herein, accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, as a condition to such
action, an Opinion of Counsel, 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 and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair market value of a Trust Estate. Counsel rendering any
such opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with
prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof), in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(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;
45
(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 Noteholders, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided, that such action shall not adversely affect the
interests of the Noteholders;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the
Notes and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration of
the trusts hereunder by more than one trustee, pursuant to the
requirements of Article VI herein; or
(vii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Noteholders but with
prior confirmation from the Rating Agencies, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Noteholders under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel or satisfaction of the Rating Agency Condition, adversely
affect in any material respect the interests of any Noteholder or cause the
Issuer to be subject to entity level tax.
Section 9.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior consent of the Rating Agencies, and with the consent of the Majority
Noteholder, by Act of such Majority Noteholder 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
46
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the amount required to be paid on the Notes following the
exercise of the option set forth in Section 8.01 of the Sale and Servicing
Agreement, 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 herein, to the payment of any such amount due on the Notes
on or after the respective due dates thereof (or, in the case of redemption, on
or after the Redemption Date);
(b) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(d) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.4 herein;
(e) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional provisions of
this Indenture or the Transaction Documents cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected thereby;
(f) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation of any
of the individual components of such calculation); or
(g) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the 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
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.
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.
47
In connection with requesting the consent of the Noteholders pursuant to
this Section 9.2, the Indenture Trustee shall mail to the Holders of the Notes
to which such amendment or supplemental indenture relates a notice setting forth
in general terms the substance of such supplemental indenture at the Issuer's
expense. It shall not be necessary for any Act of Noteholders under this Section
9.2 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Section 9.3. 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 6.1 and 6.2 herein, 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 all conditions
precedent to the execution of such supplemental indenture have been met. 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 9.4. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture 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 9.5. 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 9.6. 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
REDEMPTION OF NOTES
Section 10.1. EARLY TERMINATION.
48
The Master Servicer may effect an early termination of the Trust pursuant
to Section 8.01 of the Sale and Servicing Agreement on or after any Payment Date
on which the Note Principal Amount of the Notes declines to 15% or less of the
Initial Note Principal Amount of the Notes and the purchase price for the
Mortgage Loans has been paid, pursuant to the provisions of Section 8.01(b) of
the Sale and Servicing Agreement (such date, the "Redemption Date"). If the
Master Servicer does not terminate the Trust in accordance with Section 8.01(b)
of the Sale and Servicing Agreement within three months of the first Payment
Date upon which such termination may be effected, then the Indenture Trustee
shall conduct an auction process for the Mortgage Loans as provided in Section
8.01(c) of the Sale and Servicing Agreement.
The Indenture Trustee shall furnish notice of any redemption of the Notes
that occurs as a result of any of the foregoing in accordance with Section 8.01
of the Sale and Servicing Agreement.
Section 10.2. MANDATORY REDEMPTION.
(a) If the full amount of principal and interest then due on the
Notes is not paid by the Payment Date in July 2012, the Indenture Trustee shall
begin a process for soliciting bids in connection with an auction of the
Mortgage Loans. The Indenture Trustee shall provide the Master Servicer written
notice of such auction at least ten (10) Business Days prior to the date bids
must be received in such auction (the "Mandatory Auction Date"). The auction
shall be conducted as follows and in accordance with the Auction Procedures set
forth in Exhibit F to the Sale and Servicing Agreement:
(b) If more than one bid is received, the Indenture Trustee
shall solicit and resolicit new bids from all participating bidders until only
one bid remains or the remaining bidders decline to resubmit bids. The Indenture
Trustee shall accept the highest of such remaining bids if it is equal to or in
excess of the Mandatory Redemption Price. If the highest of such remaining bids
is less than the Mandatory Redemption Price, then the Indenture Trustee shall
neither accept such bid nor consummate such sale unless Holders of 66 2/3% of
the Outstanding Amount of the Notes consent.
(c) If the first auction conducted by the Indenture Trustee does
not produce any bid at least equal to the Mandatory Redemption Price, then the
Indenture Trustee shall, beginning on the Payment Date occurring approximately
three months after the Mandatory Auction Date for the failed auction, commence
another auction in accordance with the requirements of this subsection (c). If
such second auction does not produce any bid at least equal to the Mandatory
Redemption Price, then the Indenture Trustee shall, beginning on the Payment
Date occurring approximately three months after the Mandatory Auction Date for
the failed second auction, commence another auction in accordance with the
requirements of this subsection (c), and shall continue to conduct similar
auctions approximately every three months thereafter until the earliest of (i)
delivery by the Master Servicer of notice of exercise of its repurchase option
pursuant to Section 8.01(b) of the Sale and Servicing Agreement, (ii) receipt by
the Indenture Trustee of a bid meeting the conditions specified in the preceding
paragraph, or (iii) the Payment Date on which the Principal Balance of all the
Mortgage Loans is reduced to zero.
49
(d) If the Indenture Trustee receives a bid meeting the
conditions specified in this Section 10.2, the Master Servicer and the Trust
shall promptly arrange for the sale of the Mortgage Loans to the winning bidder,
the Indenture Trustee shall execute such agreements and termination statements
as may be reasonably required or appropriate to release its lien with respect to
the Mortgage Loans and Mortgage Files upon payment to it of the bid purchase
price and satisfaction of any other terms and conditions of the auction sale.
The Indenture Trustee shall cooperate with the Master Servicer and the Trust in
their sale of the Mortgage Loans, shall deliver to the winning bidder the
related Mortgage Files in the Indenture Trustee's possession (if any), and shall
take such other actions as the winning bidder may reasonably request to effect
the transfer of the Mortgage Loans.
(e) Notice of any termination, specifying the Payment Date
(which shall be a date that would otherwise be a Payment Date) upon which the
Noteholders may surrender their Notes to the Indenture Trustee for payment of
the final distribution and cancellation (the "Redemption Date"), shall be given
promptly by the Indenture Trustee (upon receipt of written directions from the
Master Servicer, if the Master Servicer is exercising its right to repurchase of
the Mortgage Loans, given not later than the first day of the month preceding
the month of such final distribution) by letter to the Noteholders mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (i) the Payment Date
upon which final distribution of the Notes will be made upon presentation and
surrender of Notes at the office or agency of the Indenture Trustee therein
designated, (ii) the amount of any such final distribution and (iii) that the
Record Date otherwise applicable to such Payment Date is not applicable,
distributions being made only upon presentation and surrender of the Notes at
the office or agency of the Indenture Trustee therein specified. On the
Redemption Date specified pursuant to this subsection (e), the Indenture Trustee
shall distribute the proceeds of the sale of the Mortgage Loans in accordance
with the priorities listed in Section 5.4(b) of this Indenture.
(f) Upon presentation and surrender of the Notes, to the extent
of funds available therefor, the Indenture Trustee shall cause to be distributed
to the Holders of the Notes on the Payment Date for such final distribution, in
proportion to the Percentage Interests of their respective Notes and to the
extent that funds are available for such purpose, an amount equal to the amount
required to be distributed to Noteholders pursuant to Section 5.4(b) for such
Payment Date.
(g) In the event that all of the Noteholders shall not surrender
their Notes for final payment and cancellation on or before such final Payment
Date, the Indenture Trustee shall promptly following such date cause all funds
in the Collection Account not distributed in final payment to Noteholders, to be
withdrawn therefrom and credited to the remaining Noteholders by depositing such
funds in a separate escrow account for the benefit of such Noteholders, and the
Master Servicer (if the Master Servicer has exercised its right to purchase the
Mortgage Loans) or the Indenture Trustee (in any other case) shall give a second
written notice to the remaining Noteholders to surrender their Notes for
cancellation and receive the final payment with respect thereto. If within nine
months after the second notice all the Notes shall not have been surrendered for
cancellation, the Ownership Interest will be entitled to all remaining unclaimed
funds and other assets which remain subject hereto, and the Indenture Trustee
upon
50
transfer of such funds shall be discharged of any responsibility for such funds
and the Noteholders shall look to the holder of the Ownership Interest for
payment.
ARTICLE XI
MISCELLANEOUS
Section 11.1. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Issuer made to the
Indenture Trustee to take any action under any provision of this Indenture, the
Issuer shall furnish to the Indenture Trustee (i) an Officer's Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants meeting the
applicable requirements of this Section 11.1, except that, in the case of any
such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary
to enable such signatory to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (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
(except in the case of the release of Mortgage Loans in accordance with the Sale
and Servicing Agreement), the Issuer shall, in addition to any obligation
imposed in Section 11.1(a) herein 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.
51
(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 Collateral, other property or securities to be so
deposited and of all other such Collateral, other property or
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 Principal
Amount of the Notes, but such a certificate need not be furnished
with respect to any securities so deposited, if the fair value
thereof to the Issuer as set forth in the related Officer's
Certificate is less than either (A) $25,000 or (B) one percent of
the aggregate Note Principal Amount 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 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 Principal Amount of the
Notes, but such certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set
forth in the related Officer's Certificate is less than $25,000 or
less than one percent of the then aggregate Note Principal Amount of
the Notes.
Section 11.2. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or
52
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 Master Servicer, the Transferor or the Issuer, stating that the information
with respect to such factual matters is in the possession of the Master
Servicer, the Transferor 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 hereof.
Section 11.3. 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 6.1 hereof) conclusive
in favor of the Indenture Trustee and the Issuer, if made in the manner provided
in this Section 11.3.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
53
Section 11.4. NOTICES. 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:
(a) 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 its Corporate Trust Office,
or
(b) 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: Household Mortgage Loan
Trust 2002-HC1, in care of the Owner Trustee and its Corporate Trust Office,
Attention: Corporate Trust Services, with copies to 000 Xxxxx Xxxxxxxx Xxxxxx,
0xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Services and to
the Master Servicer addressed to: 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx
00000, or at any other address previously furnished in writing to the Indenture
Trustee by the Issuer. The Issuer shall promptly transmit any notice received by
it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the 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: 00 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000; (ii) in the case of
S&P, at the following address: 00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 and (iii) in
the case of Fitch, at the following address: Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx,
XX 00000; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
Section 11.5. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any
54
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.
Section 11.6. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 11.7. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.8. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
Section 11.9. SEPARABILITY. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.10. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders 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.
Section 11.11. LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.12. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
55
Section 11.13. COUNTERPARTS. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 11.14. RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at 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 11.15. TRUST OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
Section 11.16. NO PETITION. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Transferor (and any
wholly-owned subsidiary thereof), the Depositor, the Master Servicer or the
Issuer, or join in any institution against the Transferor (and any wholly-owned
subsidiary thereof), the Depositor, the Master Servicer or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Transaction Documents.
Section 11.17. INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will 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
56
except to the extent that the Indenture Trustee may reasonably determine that
such disclosure is consistent with its obligations hereunder.
Section 11.18. INCONSISTENCIES WITH THE SALE AND SERVICING AGREEMENT. In
the event certain provisions of this Agreement conflict with the provisions of
the Sale and Servicing Agreement, the parties hereto agree that the provisions
of the Sale and Servicing Agreement shall be controlling.
Section 11.19. THIRD-PARTY BENEFICIARIES. This Indenture will inure to the
benefit of and be binding upon the parties hereto, the Noteholders, the Note
Owners and their respective successors and permitted assigns. Except as
otherwise provided in this Indenture, no other person will have any right or
obligation hereunder.
Section 11.20. LIMITED RECOURSE.
(a) Notwithstanding anything in this Agreement to the contrary,
the Notes constitute limited recourse obligations and are limited in recourse to
the assets of the Trust. The Indenture Trustee, by entering into this Agreement,
and each Noteholder, by accepting a Note, agree that recourse for the Notes is
limited to the assets of the Trust and, if the assets of the Trust shall prove
to be insufficient to pay amounts due under the Notes, the Noteholders shall
have no claim against the assets of the Depositor other than those which have
been conveyed to the Trust.
(b) If, notwithstanding paragraph (a) above, the Noteholders are
deemed to have any interest in any asset of the Depositor other than the
Depositor's interest in the assets of the Trust, including any interest in
assets of the Depositor, or any assets sold by the Depositor to another trustee
pursuant to a separate pooling and servicing agreement, sale and servicing
agreement or similar agreement, pledged to secure debt obligations of the
Depositor other than the Notes, the Indenture Trustee, by entering into this
Agreement, and each Noteholder, by accepting a Note, agree that any such
interest is subordinate to the claims of the holders of any such debt
obligations, and the Indenture Trustee and Noteholders shall have no rights in
such assets until such debt obligations are indefeasibly paid in full. The
agreement of the Indenture Trustee and the Noteholders pursuant to this Section
11.20 is intended to constitute a subordination agreement for the purposes of
Section 510(a) of title 11 of the United States Code, 11 U.S.C. Sections 101
ET SEQ. (the "BANKRUPTCY CODE").
Section 11.21. LIMITATION ON VOTING OF PREFERRED STOCK. The Indenture
Trustee shall hold all of the Preferred Stock in trust, for the benefit of the
Noteholders, and, during the continuance of a Master Servicer Termination Event,
shall vote such stock only pursuant to the written instructions of the Majority
Noteholder; provided that:
(i) any direction provided by the Majority Noteholder
shall not be in conflict with any rule of law or with any of the
Transaction Documents; and
(ii) the Trust and Indenture Trustee may take any other
action deemed proper by the Trust or the Indenture Trustee that is
not inconsistent with any direction;
57
and provided further, however, that the Trust or 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 an
action.
The Indenture Trustee shall not permit a transfer of any of the Preferred
Stock to HFC or any of its Affiliates. Concurrently with any transfer of the
Mortgage Loans to the Master Servicer pursuant to Section 8.01(b) or sale in
connection with any auction pursuant to 8.01(c) of the Sale and Servicing
Agreement, the Indenture Trustee shall transfer to the Depositor for
cancellation all shares of Preferred Stock held by the Indenture Trustee.
Section 11.22. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by the Owner Trustee, not individually or personally but solely as Owner Trustee
of the Issuer under the Trust Agreement, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by the
Owner Trustee but is made and intended for the purpose of binding only the
Issuer, (c) nothing herein contained shall be construed as creating any
liability on the Owner Trustee individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties to this Indenture and by any person
claiming by, through or under them and (d) under no circumstances shall the
Owner Trustee be personally liable for the payment of any indebtedness or
expenses of the Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaking by the Issuer under
this Indenture or any related documents.
58
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1
By: U.S. Bank Trust National Association,
not in its individual capacity but solely
as Owner Trustee
By: /s/ Xxxxxxxx X. Child
--------------------------------------
Name: Xxxxxxxx X. Child
Title: Vice President
JPMORGAN CHASE BANK, as Indenture Trustee
By: /s/ Xxxxxx X. Xxxx
--------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Assistant Vice President
STATE OF ILLINOIS
COUNTY OF XXXX
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Xxxxxxxx X. Child, known to
me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said U.S.
BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity, but solely as
Owner Trustee on behalf of HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1, a Delaware
business trust, and that such person executed the same as the act of said
business trust for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 2nd day of July, 2002.
/s/ Xxxxx Xxxxxxxxx
------------------------------------------------------
Notary Public in and for the State of Illinois
-----------------
(Seal)
My commission expires:
10-26-03
------------------------------
STATE OF
New York
COUNTY OF
New York
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Xxxxxx X. Xxxx, known to
me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of JPMorgan Chase
Bank,
New York banking corporation, and that such person executed the same as
the act of said corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 3rd day of July, 2002.
/s/ Xxxxxxxx X. Xxxxx
------------------------------------------------------
Notary Public in and for the State of
New York
-----------------
(Seal)
My commission expires:
April 22, 2003
------------------------------
SCHEDULE 1
PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
The Issuer hereby represents, warrants, and covenants to the Indenture
Trustee as to itself, the Depositor and the Sellers as follows on the Closing
Date and on each Payment Date thereafter:
GENERAL
1. This Agreement creates a valid and continuing security interest (as
defined in the applicable UCC) in the Collateral in favor of the Indenture
Trustee, each of which security interest is prior to all other Liens, and is
enforceable as such as against creditors of and purchasers from the Issuer.
2. The Mortgage Loans constitute "general intangibles" or "instruments"
within the meaning of the applicable UCC.
3. The Collection Account and all subaccounts thereof constitute either
a deposit account or a securities account.
4. To the extent that payments and collections received or made with
respect to the Mortgage Loans constitute securities entitlements, such payments
and collections have been and will have been credited to the Collection Account.
The securities intermediary for the Collection Account has agreed to treat all
assets credited to the Collection Account as "financial assets" within the
meaning of the applicable UCC.
CREATION
5. The Issuer owns and has good and marketable title to the Collateral
free and clear of any Lien, claim or encumbrance of any Person, excepting only
liens for taxes, assessments or similar governmental charges or levies incurred
in the ordinary course of business that are not yet due and payable or as to
which any applicable grace period shall not have expired, or that are being
contested in good faith by proper proceedings and for which adequate reserves
have been established, but only so long as foreclosure with respect to such a
lien is not imminent and the use and value of the property to which the Lien
attaches is not impaired during the pendency of such proceeding.
6. The Depositor has received all consents and approvals to the sale of
the Mortgage Loans to the Issuer required by the terms of the Mortgage Loans
that constitute instruments.
7. To the extent the Collection Account or subaccounts thereof
constitute securities entitlements, certificated securities or uncertificated
securities, the Issuer has received all consents and approvals required to
transfer to the Indenture Trustee its interest and rights in the Collection
Account hereunder.
PERFECTION
8. The Issuer has caused or will have caused, within ten days after the
effective date of this Agreement, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the pledge of the Collateral from the Issuer
to the Indenture Trustee and the security interest in the Collateral granted to
the Indenture Trustee under this Agreement.
9. With respect to the Collection Account and all subaccounts that
constitute deposit accounts, either:
(i) the Issuer has delivered to the Indenture Trustee a fully-executed
agreement pursuant to which the bank maintaining the deposit accounts has agreed
to comply with all instructions originated by the Indenture Trustee directing
disposition of the funds in the Collection Account without further consent by
the Issuer; or
(ii) the Issuer has taken all steps necessary to cause the Indenture
Trustee to become the account holder of the Collection Account.
10. With respect to the Collection Account or subaccounts thereof that
constitute securities accounts or securities entitlements, either:
(i) the Issuer has caused or will have caused, within ten days after the
effective date of this Agreement, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest in the Collection
Account granted by the Issuer to the Indenture Trustee; or
(ii) the Issuer has delivered to the Indenture Trustee a fully-executed
agreement pursuant to which the securities intermediary has agreed to comply
with all instructions originated by the Indenture Trustee relating to the
Collection Account without further consent by the Depositor; or
(iii) the Issuer has taken all steps necessary to cause the securities
intermediary to identify in its records the Indenture Trustee as the person
having a security entitlement against the securities intermediary in the
Collection Account.
PRIORITY
11. Other than the transfer of the Transferred Assets to the Trust under
the Transfer Agreement, the transfer of the Mortgage Loans to the Depositor
under the Mortgage Loan Purchase Agreement, the transfer of the Mortgage Loans
to the Trust pursuant to the Sale and Servicing Agreement and the security
interest granted to the Indenture Trustee pursuant to the this Agreement, none
of the Issuer, the Depositor or the Sellers have pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Mortgage Loans.
None of the Issuer, the Depositor or the Sellers have authorized the filing of,
or are aware of any financing statements against the Issuer, the Depositor or
any of the Sellers that include a description of
2
collateral covering the Mortgage Loans other than any financing statement
relating to the security interest granted to the Indenture Trustee hereunder or
that has been terminated.
12. The Issuer is not aware of any judgement, ERISA or tax lien filings
against the Issuer, the Depositor or any of the Sellers.
13. The Sellers have in their possession all original copies of the
Mortgage Notes that constitute or evidence the Mortgage Loans. To the Issuer's
knowledge, none of the instruments that constitute or evidence the Mortgage
Loans has any marks or notations indicating that they have been pledged,
assigned or otherwise conveyed to any Person other than the Issuer. All
financing statements filed or to be filed against the Issuer, the Depositor and
the Sellers in favor of the Indenture Trustee in connection herewith describing
the Mortgage Loans contain a statement to the following effect: "A purchase of
or security interest in any collateral described in this financing statement
will violate the rights of the Indenture Trustee."
14. Neither the Collection Account nor any subaccount thereof is in the
name of any person other than the Issuer or the Indenture Trustee as trustee
under the Indenture or in the name of its nominee. The Issuer has not consented
for the securities intermediary of the Collection Account to comply with
entitlement orders of any person other than the Indenture Trustee.
15. SURVIVAL OF PERFECTION REPRESENTATIONS. Notwithstanding any other
provision of this Agreement or any other transaction document, the Perfection
Representations contained in this Schedule shall be continuing, and remain in
full force and effect (notwithstanding any replacement of the Master Servicer or
termination of the Master Servicer's rights to act as such) until such time as
all obligations under this Agreement have been finally and fully paid and
performed.
16. NO WAIVER. The parties to this Agreement (i) shall not, without
obtaining a confirmation of the then-current rating of the Notes, waive any of
the Perfection Representations, and (ii) shall provide the Rating Agencies with
prompt written notice of any breach of the Perfection Representations, and shall
not, without obtaining a confirmation of the then-current rating of the Notes
(as determined after any adjustment or withdrawal of the ratings following
notice of such breach) waive a breach of any of the Perfection Representations.
17. MASTER SERVICER TO MAINTAIN PERFECTION AND PRIORITY. The Issuer
shall cause the Master Servicer, in order to evidence the interests of the
Depositor, the Issuer and the Indenture Trustee under the Sale and Servicing
Agreement, to take such action, or execute and deliver such instruments (other
than effecting a Filing (as defined below), unless such Filing is effected in
accordance with this paragraph) as may be necessary or advisable (including,
without limitation, such actions as are requested by the Indenture Trustee) to
maintain and perfect, as a first priority interest, the Indenture Trustee's
security interest in the Mortgage Loans. The Issuer shall cause the Master
Servicer to, from time to time and within the time limits established by law,
prepare and present to the Indenture Trustee for the Indenture Trustee to
authorize (based in reliance on the Opinion of Counsel hereinafter provided for)
the Master Service to file, all financing statements, amendments, continuations,
initial financing statements in lieu of a continuation
3
statement, terminations, partial terminations, releases or partial releases, or
any other filings necessary or advisable to continue, maintain and perfect the
Indenture Trustee's security interest in the Mortgage Loans as a first-priority
interest (each a "Filing"). The Issuer shall cause the Master Servicer to
present each such Filing to the Indenture Trustee together with (x) an Opinion
of Counsel to the effect that such Filing is (i) consistent with grant of the
security interest to the Trust pursuant to Section 2.01 of the Sale and
Servicing Agreement and the grant of the security interest to the Indenture
Trustee pursuant to this Indenture, (ii) satisfies all requirements and
conditions to such Filing in this Agreement and (iii) satisfies the requirements
for a Filing of such type under the Uniform Commercial Code in the applicable
jurisdiction (or if the Uniform Commercial Code does not apply, the applicable
statute governing the perfection of security interests), and (y) a form of
authorization for the Indenture Trustee's signature. Upon receipt of such
Opinion of Counsel and form of authorization, the Indenture Trustee shall
promptly authorize in writing the Master Servicer to, and the Issuer shall cause
the Master Servicer to, effect such Filing under the Uniform Commercial Code
without the signature of the Depositor or the Trust or the Indenture Trustee
where allowed by applicable law. Notwithstanding anything else in the
transaction documents to the contrary, the Master Servicer shall not have any
authority to effect a Filing without obtaining written authorization from the
Indenture Trustee.
4
SCHEDULE A
MORTGAGE LOAN SCHEDULE
EXHIBIT A
FORM OF CLASS A NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE 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.
No. CUSIP NO.
Aggregate Class Note Principal Amount: Denomination of this Class A
Note:
$ $
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1
CLOSED-END MORTGAGE LOAN ASSET BACKED NOTES,
SERIES 2002-HC1, CLASS A
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Trust"), 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 result obtained by multiplying (i) a fraction the
numerator of which is the initial principal amount of this Class A Note and the
denominator of which is the aggregate principal amount of all Class A Notes by
(ii) the aggregate amount, if any, payable from the Collection Account in
respect of principal on the Class A Note pursuant to Section 5.01 of the Sale
and Servicing Agreement dated as of July 3, 2002 (the "Sale and Servicing
Agreement"), among the Trust, Household Mortgage Funding Corporation III, as
Depositor (the "Depositor"), Household Finance Corporation, as Master Servicer
("HFC"), and JPMorgan Chase Bank, a banking corporation organized under the laws
of the State of New York, as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earliest to occur of (i) the Payment Date occurring in
May 2032 (the "Final Maturity Date"), (ii) the Redemption Date or (iii) the date
on which an Event of Default under the Indenture dated as of July 3, 2002,
between the Trust and the Indenture Trustee shall have occurred and be
continuing, if the Indenture Trustee or the Holders of Notes representing not
less than a 66 2/3% of the
A-1
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2 of the Indenture. Capitalized
terms used but not defined herein are defined in Article I of the Indenture,
which also contains rules as to construction that shall be applicable herein.
The Trust will pay interest on this Note at the rate per annum described in
the Sale and Servicing Agreement with respect to the Class A Note on the
principal amount of this Note outstanding on the preceding Payment Date (after
giving effect to all payments of principal made on the preceding Payment Date)
on each Payment Date until the principal of this Note is paid or made available
for payment in full. Interest on this Note will accrue for each Payment Date
during the period from and including the preceding Payment Date to the day
immediately preceding such Payment Date (or, in the case of the first Payment
Date, the period from and including the Closing Date to the day immediately
preceding the First Payment Date) (each, an "Accrual Period"). Interest will be
computed on the basis of the actual number of days in each Accrual Period and a
360-day year. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The 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 Trust
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.
A-2
IN WITNESS WHEREOF, the Trust has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: _________________, 2002
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1
By: U.S. Bank Trust National Association, not
in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:
--------------------------------------------
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: _________________, 2002
JPMORGAN CHASE BANK, not in its individual
capacity but solely as Indenture Trustee,
By:
-------------------------------------------
Authorized Signatory
A-3
(REVERSE OF NOTE)
This Note is one of a duly authorized issue of Notes of the Trust,
designated as its Closed-End Mortgage Loan Asset Backed Notes, Series 2002-HC1
Class A, 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 Trust, the Indenture Trustee and the
Holders of the Notes. The Class A Notes are subject to all terms of the
Indenture.
The Class A Notes are and will be secured by the collateral pledged as
security therefor as provided in the Indenture.
Principal of the Class A Notes will be payable on each Payment Date in an
amount described on the face hereof. "Payment Date" means the 20th day of each
month, or, if any such date is not a Business Day, the next succeeding Business
Day, commencing in August 2002.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Final Payment Date and the Redemption
Date. Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable on the date on which an Event of Default under
the Indenture shall have occurred and be continuing and the Indenture Trustee,
at the direction or upon the prior written consent of the Holders of the Notes
representing not less than 66 2/3% of the Outstanding Amount of the Notes, shall
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class A Notes
shall be made pro rata to the Holders of the Class A Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the related installment of principal, if any, to the extent not in
full payment of this Note, shall be made by wire transfer of immediately
available funds to, or by check or money order mailed to, the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, or upon
written request by a Noteholder delivered to the Indenture Trustee at least five
Business Days prior to such Record Date, by wire transfer (but only if such
Noteholder is the Depository or such Noteholder owns of record one or more Notes
having principal denominations aggregating at least $5,000,000) or by such other
means of payment as the Noteholder and the Indenture Trustee shall agree. Such
checks or money orders shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Note Register as of the applicable
Record Date without requiring that this Note be submitted for notation of
payment. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Payment Date shall be
binding 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 noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Trust, will notify the Person who was the Registered Holder hereof
as of the Record Date preceding such Payment Date by notice mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the
A-4
Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in New York, New
York.
As provided in the Sale and Servicing Agreement, the Class A Notes may be
redeemed in whole, but not in part, at the option of the Master Servicer, on any
Payment Date on and after the date on which the Note Principal Amount is less
than or equal to 15% of the Note Principal Amount on the Closing Date.
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 office or agency
designated by the Trust pursuant to the Indenture, 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 of 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 Trust may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, 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 Trust, the Owner Trustee 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 Trust 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 Trust, 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 Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that such
Noteholder or Note Owner will not at any time institute against the Transferor
(and any wholly-owned subsidiary thereof), the Depositor, the Master Servicer or
the Trust, or join in any institution against the Transferor (and any
wholly-owned subsidiary thereof), the Depositor, the Master Servicer or the
Trust 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
Transaction Documents.
A-5
Each Person that acquires a Note shall be required to represent, or in the
case of a Book-Entry Note, will be deemed to represent by its acceptance of the
Note, that (i) it is not, and is not acquiring the Note on behalf of or with
"plan assets" (as determined under Department of Labor Regulation Section
2510.3-101 or otherwise) of a Plan, or (ii) its acquisition and holding of the
Note are eligible for relief under Prohibited Transaction Class Exemption
("PTCE") 00-00, XXXX 00-0, XXXX 95-60, PTCE 96-23 or a similar exemption.
The Trust 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 Trust
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner 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 Trust.
Prior to the due presentment for registration of transfer of this Note, the
Trust, the Indenture Trustee and any agent of the Trust or the Indenture Trustee
may treat the Person in whose name this Note (as of the day of determination or
as of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and none of
the Trust, 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
Trust and the rights of the Holders of the Notes under the Indenture at any time
by the Trust with the consent of the Holders of Notes representing 51% of the
Outstanding Amount of all Notes at the time Outstanding. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Trust with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one or 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
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.
The term "Trust" as used in this Note includes any successor to the Trust
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.
A-6
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Trust, 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 Transaction Documents, none of the Trust in its individual
capacity, the Owner Trustee in its individual capacity, any owner of a
beneficial interest in the Trust, 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 Transaction 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 Trust for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
A-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:_______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
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:
------------------
*/
-----------------------------
Signature Guaranteed:
*/
-----------------------------
----------
*/ 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.
A-8
EXHIBIT B
FORM OF CLASS M 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.
No. CUSIP NO.
Aggregate Class Note Principal Amount: Denomination of this Class
Note:
$ $
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1
CLOSED-END MORTGAGE LOAN ASSET BACKED NOTES,
SERIES 2002-HC1, CLASS M
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Trust"), 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 result obtained by multiplying (i) a fraction the
numerator of which is the initial principal amount of this Class M Note and the
denominator of which is the aggregate principal amount of all Class M Notes by
(ii) the aggregate amount, if any, payable from the Collection Account in
respect of principal on the Class M Note pursuant to Section 5.01 of the Sale
and Servicing Agreement dated as of July 3, 2002 (the "Sale and Servicing
Agreement"), among the Trust, Household Mortgage Funding Corporation III, as
Depositor (the "Depositor"), Household Finance Corporation, as Master Servicer
("HFC"), and JPMorgan Chase Bank, a banking corporation organized under the laws
of the State of New York, as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earliest to occur of (i) the Payment Date occurring in
May 2032 (the "Final Maturity Date"), (ii) the Redemption Date or (iii) the date
on which an Event of Default under the Indenture dated as of July 3, 2002,
between the Trust and the Indenture Trustee shall have occurred and be
continuing, if the Indenture Trustee or the Holders of Notes representing not
less than 66 2/3% of the
B-1
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2 of the Indenture. Capitalized
terms used but not defined herein are defined in Article I of the Indenture,
which also contains rules as to construction that shall be applicable herein.
The Trust will pay interest on this Note at the rate per annum described in
the Sale and Servicing Agreement with respect to the Class M Note on the
principal amount of this Note outstanding on the preceding Payment Date (after
giving effect to all payments of principal made on the preceding Payment Date)
on each Payment Date until the principal of this Note is paid or made available
for payment in full. Interest on this Note will accrue for each Payment Date
during the period from and including the preceding Payment Date to the day
immediately preceding such Payment Date (or, in the case of the first Payment
Date, the period from and including the Closing Date to the day immediately
preceding the First Payment Date) (each, an "Accrual Period"). Interest will be
computed on the basis of the actual number of days in each Accrual Period and a
360-day year. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The 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 Trust
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.
B-2
IN WITNESS WHEREOF, the Trust has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: _________________, 2002
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1
By: U.S. Bank Trust National Association, not
in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:
--------------------------------------------
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: _________________, 2002
JPMORGAN CHASE BANK, not in its individual
capacity but solely as Indenture Trustee,
By:
--------------------------------------------
Authorized Signatory
B-3
(REVERSE OF NOTE)
This Note is one of a duly authorized issue of Notes of the Trust,
designated as its Closed-End Mortgage Loan Asset Backed Notes, Series 2002-HC1
Class M, 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 Trust, the Indenture Trustee and the
Holders of the Notes. The Class M Notes are subject to all terms of the
Indenture.
The Class M Notes are and will be secured by the collateral pledged as
security therefor as provided in the Indenture.
Principal of the Class M Notes will be payable on each Payment Date in an
amount described on the face hereof. "Payment Date" means the 20th day of each
month, or, if any such date is not a Business Day, the next succeeding Business
Day, commencing in August 2002.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Final Payment Date and the Redemption
Date. Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable on the date on which an Event of Default under
the Indenture shall have occurred and be continuing and the Indenture Trustee,
at the direction or upon the prior written consent of the Holders of the Notes
representing not less than 66 2/3% of the Outstanding Amount of the Notes, shall
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class M Notes
shall be made pro rata to the Holders of the Class M Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the related installment of principal, if any, to the extent not in
full payment of this Note, shall be made by wire transfer of immediately
available funds to, or by check or money order mailed to, the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date or upon
written request by a Noteholder delivered to the Indenture Trustee at least five
Business Days prior to such Record Date, by wire transfer (but only if such
Noteholder is the Depository or such Noteholder owns of record one or more Notes
having principal denominations aggregating at least $5,000,000) or by such other
means of payment as the Noteholder and the Indenture Trustee shall agree. Such
checks or money orders shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Note Register as of the applicable
Record Date without requiring that this Note be submitted for notation of
payment. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Payment Date shall be
binding 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 noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Trust, will notify the Person who was the Registered Holder hereof
as of the Record Date preceding such Payment Date by notice mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture
B-4
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in New York, New York.
As provided in the Sale and Servicing Agreement, the Class M Notes may be
redeemed in whole, but not in part, at the option of the Master Servicer, on any
Payment Date on and after the date on which the Note Principal Amount is less
than or equal to 15% of the Note Principal Amount on the Closing Date.
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 office or agency
designated by the Trust pursuant to the Indenture, 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 of 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 Trust may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, 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 Trust, the Owner Trustee 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 Trust 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 Trust, 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 Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that such
Noteholder or Note Owner will not at any time institute against the Transferor
(and any wholly-owned subsidiary thereof), the Depositor, the Master Servicer or
the Trust, or join in any institution against the Depositor, the Master Servicer
or the Trust 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 Transaction Documents.
B-5
Each Person that acquires a Note shall be required to represent, or in the
case of a Book-Entry Note, will be deemed to represent by its acceptance of the
Note, that (i) it is not, and is not acquiring the Note on behalf of or with
"plan assets" (as determined under Department of Labor Regulation Section
2510.3-101 or otherwise) of a Plan, or (ii) its acquisition and holding of the
Note are eligible for relief under Prohibited Transaction Class Exemption
("PTCE") 00-00, XXXX 00-0, XXXX 95-60, PTCE 96-23 or a similar exemption.
The Trust 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 Trust
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner 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 Trust.
Prior to the due presentment for registration of transfer of this Note, the
Trust, the Indenture Trustee and any agent of the Trust or the Indenture Trustee
may treat the Person in whose name this Note (as of the day of determination or
as of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and none of
the Trust, 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
Trust and the rights of the Holders of the Notes under the Indenture at any time
by the Trust with the consent of the Holders of Notes representing 51% of the
Outstanding Amount of all Notes at the time Outstanding. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Trust with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one or 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
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.
The term "Trust" as used in this Note includes any successor to the Trust
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.
B-6
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Trust, 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 Transaction Documents, none of the Trust in its individual
capacity, the Owner Trustee in its individual capacity, any owner of a
beneficial interest in the Trust, 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 Transaction 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 Trust for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
B-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
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:
---------------------
*/
-----------------------------
Signature Guaranteed:
*/
-----------------------------
----------
*/ 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.
B-8
