EXHIBIT 4.2
FORM OF INDENTURE
INDENTURE
dated as of _____________
by and between
____________________________________,
as Issuer
and
____________________________,
as Indenture Trustee
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS .........................................................2
Section 1.01. General Definitions......................................2
ARTICLE II THE NOTES; PLEDGE OF SUBSEQUENT MORTGAGE LOANS......................2
Section 2.01. Forms Generally..........................................2
Section 2.02. Form of Certificate of Authentication....................2
Section 2.03. General Provisions With Respect to Principal and
Interest Payment.......................................3
Section 2.04. Denominations............................................3
Section 2.05. Execution, Authentication, Delivery and Dating...........3
Section 2.06. Registration, Registration of Transfer and Exchange......4
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes...............5
Section 2.08. Payments of Principal and Interest.......................5
Section 2.09. Persons Deemed Owner.....................................7
Section 2.10. Cancellation.............................................8
Section 2.11. Authentication and Delivery of Notes.....................8
Section 2.12. Book-Entry Note..........................................9
Section 2.13. Termination of Book Entry System........................10
Section 2.14. Pledge of Subsequent Mortgage Loans.....................11
ARTICLE III COVENANTS ........................................................13
Section 3.01. Payment of Notes........................................13
Section 3.02. Maintenance of Office or Agency.........................13
Section 3.03. Money for Note Payments to Be Held In Trust.............13
Section 3.04. Existence of Trust......................................15
Section 3.05. Protection of Trust Estate..............................15
Section 3.06. Opinions as to the Trust Estate.........................16
Section 3.07. Performance of Obligations..............................16
Section 3.08. Investment Company Act..................................17
Section 3.09. Negative Covenants......................................17
Section 3.10. Annual Statement as to Compliance.......................18
Section 3.11. Restricted Payments.....................................18
Section 3.12. Treatment of Notes as Debt for Tax Purposes.............18
Section 3.13. Notice of Events of Default.............................19
Section 3.14. Further Instruments and Acts............................19
ARTICLE IV SATISFACTION AND DISCHARGE.........................................19
Section 4.01. Satisfaction and Discharge of Indenture.................19
Section 4.02. Application of Trust Money..............................20
ARTICLE V DEFAULTS AND REMEDIES...............................................20
Section 5.01. Event of Default........................................20
Section 5.02. Acceleration of Maturity; Rescission and Annulment......22
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee......................22
Section 5.04. Remedies................................................23
Section 5.05. Indenture Trustee May File Proofs of Claim..............23
Section 5.06. Indenture Trustee May Enforce Claims Without
Possession of Notes...................................24
Section 5.07. Application of Money Collected..........................24
Section 5.08. Limitation on Suits.....................................25
Section 5.09. Unconditional Rights of Noteholders to Receive
Principal and Interest................................26
Section 5.10. Restoration of Rights and Remedies......................26
Section 5.11. Rights and Remedies Cumulative..........................26
Section 5.12. Delay or Omission Not Waiver............................27
Section 5.13. Control by Noteholders..................................27
Section 5.14. Waiver of Past Defaults.................................27
Section 5.15. Undertaking for Costs...................................28
Section 5.16. Waiver of Stay or Extension Laws........................28
Section 5.17. Sale of Trust Estate....................................28
Section 5.18. Action on Notes.........................................30
Section 5.19. No Recourse to Other Trust Estates or Other
Assets of the Trust...................................30
Section 5.20. Application of the Trust Indenture Act..................30
Section 5.21. Note Insurer Default....................................30
ARTICLE VI THE INDENTURE TRUSTEE..............................................30
Section 6.01. Duties of Indenture Trustee.............................30
Section 6.02. Notice of Default.......................................32
Section 6.03. Rights of Indenture Trustee.............................32
Section 6.04. Not Responsible for Recitals or Issuance of Notes.......33
Section 6.05. May Hold Notes..........................................34
Section 6.06. Money Held in Trust.....................................34
Section 6.07. Eligibility, Disqualification...........................34
Section 6.08. Indenture Trustee's Capital and Surplus.................34
Section 6.09. Resignation and Removal; Appointment of Successor.......34
Section 6.10. Acceptance of Appointment by Successor
Indenture Trustee.....................................36
Section 6.11. Merger, Conversion, Consolidation or Succession
to Business of Indenture Trustee......................36
Section 6.12. Preferential Collection of Claims Against Trust.........36
Section 6.13. Co-Indenture Trustees and Separate
Indenture Trustees....................................36
Section 6.14. Authenticating Agents...................................38
Section 6.15. Review of Mortgage Files................................39
Section 6.16. Indenture Trustee Fees and Expenses.....................40
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS....................................40
Section 7.01. Note Registrar to Furnish Indenture Trustee
Names and Addresses of Noteholders....................40
Section 7.02. Preservation of Information; Communications
to Noteholders........................................40
Section 7.03. Reports by Indenture Trustee............................41
Section 7.04. Reports by Trust........................................41
ARTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES.......41
Section 8.01. Accounts; Investment; Collection of Moneys..............41
Section 8.02. Distributions; Statements...............................45
Section 8.03. Claims against the Note Insurance Policy................45
Section 8.04. General Provisions Regarding the Distribution
Accounts and Mortgage Loans...........................48
Section 8.05. Releases of Deleted Mortgage Loans......................48
Section 8.06. Reports by Indenture Trustee to Noteholders;
Access to Certain Information.........................49
Section 8.07. Release of Trust Estate.................................49
Section 8.08. Amendment to Sale and Servicing Agreement...............49
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale
and Servicing Agreement...............................49
Section 8.10. Servicer as Agent.......................................50
Section 8.11. Termination of Servicer.................................50
Section 8.12. Opinion of Counsel......................................50
Section 8.13. Appointment of Collateral Agents........................50
Section 8.14. Rights of the Note Insurer to Exercise Rights
of Noteholders........................................50
Section 8.15. Trust Estate and Accounts Held for Benefit
of the Note Insurer...................................51
ARTICLE IX SUPPLEMENTAL INDENTURES............................................51
Section 9.01. Supplemental Indentures Without
Consent of Noteholders................................51
Section 9.02. Supplemental Indentures With Consent
of Noteholders........................................52
Section 9.03. Execution of Supplemental Indentures....................53
Section 9.04. Effect of Supplemental Indentures.......................54
Section 9.05. Conformity With Trust Indenture Act.....................54
Section 9.06. Reference in Notes to Supplemental Indentures...........54
Section 9.07. Amendments to Governing Documents.......................54
ARTICLE X REDEMPTION OF NOTES.................................................55
Section 10.01. Redemption..............................................55
Section 10.02. Form of Redemption Notice...............................56
Section 10.03. Notes Payable on Optional Redemption....................56
ARTICLE XI MISCELLANEOUS......................................................56
Section 11.01. Compliance Certificates and Opinions....................56
Section 11.02. Form of Documents Delivered to Indenture Trustee........57
Section 11.03. Acts of Noteholders.....................................58
Section 11.04. Notices, etc., to Indenture Trustee,
the Note Insurer and Trust............................58
Section 11.05. Notices and Reports to Noteholders;
Waiver of Notices.....................................60
Section 11.06. Rules by Indenture Trustee..............................60
Section 11.07. Conflict With Trust Indenture Act.......................60
Section 11.08. Effect of Headings and Table of Contents................60
Section 11.09. Successors and Assigns..................................60
Section 11.10. Separability............................................60
Section 11.11. Benefits of Indenture...................................60
Section 11.12. Legal Holidays..........................................61
Section 11.13. Governing Law...........................................61
Section 11.14. Counterparts............................................61
Section 11.15. Recording of Indenture..................................61
Section 11.16. Trust Obligation........................................61
Section 11.17. No Petition.............................................62
Section 11.18. Inspection..............................................62
Section 11.19. Usury...................................................62
Section 11.20. Note Insurer Default....................................62
Section 11.21. Third-Party Beneficiary.................................63
APPENDICES, SCHEDULES AND EXHIBITS
Appendix I Defined Terms
Schedule l Mortgage Loan Schedule
Exhibit A Form of Note
Exhibit B Form of Subsequent Pledge Agreement
Exhibit C Form of Note Insurer Consent for Subsequent Mortgage Loans
CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of
the provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.1
Trust Indenture Act of 1939 Indenture Section
--------------------------- -------------------
Section 310
(a) (1)......................................... 6.07
(a) (2)......................................... 6.07, 6.08
(a) (3)......................................... 6.13
(a) (4)......................................... Not Applicable
(a) (5)......................................... 6.07
(b)............................................. 6.07, 6.09
(c)............................................. Not Applicable
Section 311
(a)............................................. 6.12
(b)............................................. 6.12
(c)............................................. Not Applicable
Section 312
(a)............................................. 7.01(a), 7.02(a)
(b)............................................. 7.02(b)
(c)............................................. 7.02(c)
Section 313
(a)............................................. 7.03(a)
(b)............................................. 7.03(a)
(c)............................................. 11.05
(d)............................................. 7.03(b)
Section 314
(a)(1).......................................... 7.04
(a)(2).......................................... 7.04
(a)(3).......................................... 7.04
(a)(4).......................................... 7.04
(b)(1).......................................... 2.11(c), 11.01
(b)(2).......................................... 3.06
(c)(1).......................................... 2.11(d), 4.01,
8.02(d), 11.01
(c)(2).......................................... 2.11(c), 4.01,
8.02(d), 11.01
(c)(3).......................................... 8.02(d)
(d)(1).......................................... 11.01(a)
(d)(2).......................................... 11.01(a)
(d)(3).......................................... 11.01(a)
(e)............................................. 11.0 1(b)
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* This Cross-Reference Table is not part of the Indenture.
Section 315
(a).............................................6.01(b), 6.01(c)(1)
(b)............................................. 6.02, 11.05
(c)............................................. 6.01(a)
(d)(1).......................................... 6.01(b), 6.01(c)
(d)(2).......................................... 6.01(c)(2)
(d)(3).......................................... 6.01(c)(3)
(e)............................................. 5.15
Section 316
(a)............................................. 5.20
(b)............................................. 5.09
(c)............................................. 5.20
Section 317
(a)(1).......................................... 5.03
(a)(2).......................................... 5.05
(b)............................................. 3.01
Section 318
(a)............................................. 11.07
This INDENTURE, dated as of _________, _____ (as amended or
supplemented from time to time as permitted hereby, this "Indenture"), is
between _________________________, a ____________business trust (together with
its permitted successors and assigns, the "Trust"), and ______________________,
a __________banking corporation, as indenture trustee (together with its
permitted successors in the trusts hereunder, the "Indenture Trustee").
Preliminary Statement
The Trust has duly authorized the execution and delivery of
this Indenture to provide for its Mortgage Backed Notes, Series ___________ (the
"Notes"), issuable as provided in this Indenture. All covenants and agreements
made by the Trust herein are for the benefit and security of the Holders of the
Notes and the Note Insurer. The Trust is entering into this Indenture, and the
Indenture Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement
of the Trust in accordance with its terms have been done.
Granting Clause
The Trust hereby Grants to the Indenture Trustee, for the
exclusive benefit of the Holders of the Notes and the Note Insurer, all of the
Trust's right, title and interest in and to (a) the Mortgage Loans in both Pool
I and Pool II listed in the Mortgage Loan Schedule attached as Schedule I to
this Indenture (including property that secures a Mortgage Loan that becomes an
REO Property), including the related Mortgage Files delivered or to be delivered
to the Collateral Agent, on behalf of the Indenture Trustee, pursuant to the
Sale and Servicing Agreement, including all payments of principal received,
collected or otherwise recovered after the Cut-Off Date for each Mortgage Loan,
all payments of interest due on each Mortgage Loan after the Cut-Off Date
therefor whenever received and all other proceeds received in respect of such
Mortgage Loans, any Subsequent Mortgage Loans and any Qualified Substitute
Mortgage Loan, (b) the Loan Sale Agreement and the Sale and Servicing Agreement,
(c) the Insurance Policies, (d) all cash, instruments or other property held or
required to be deposited in the Collection Account, the Distribution Accounts,
the Note Insurance Payment Account, the Pre-Funding Accounts, the Capitalized
Interest Accounts and the Cross-collateralization Reserve Accounts, including
all investments made with funds in such Accounts (but not including any income
on funds deposited in, or investments made with funds deposited in, such
Accounts other than the Pre-Funding Accounts, which income shall belong to and
be for the account of the Servicer), and (e) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
assets, including, without limitation, all insurance proceeds and condemnation
awards. Such Grants are made, however, in trust, to secure the Notes equally and
ratably without prejudice, priority or distinction between any Note and any
other Note by reason of difference in time of issuance or otherwise, and for the
benefit of the Note Insurer to secure (x) the payment of all amounts due on the
Notes in accordance with their terms, (y) the payment of all other sums payable
under this Indenture and (z) compliance with the provisions of this Indenture,
all as provided in this Indenture. All terms used in the foregoing granting
clauses that are defined in Appendix I are used with the meanings given in said
Appendix I.
The Indenture Trustee acknowledges such Grant, accepts the
trusts hereunder in accordance with the provisions of this Indenture and agrees
to perform the duties herein required to the end that the interests of the
Holders of the Notes may be adequately and effectively protected. The Indenture
Trustee agrees that it will hold the Note Insurance Policy in trust and that it
will hold any proceeds of any claim upon the Note Insurance Policy, solely for
the use and benefit of the Noteholders in accordance with the terms hereof and
the Note Insurance Policy. In addition, the Indenture Trustee agrees that it
will acknowledge the Grant on each Subsequent Transfer Date of the related
Subsequent Mortgage Loans pursuant to the terms of the related Subsequent Pledge
Agreement, provided that the conditions precedent to the pledge of such
Subsequent Mortgage Loans contained in this Indenture and in the Sale and
Servicing Agreement are satisfied on or prior to such Subsequent Transfer Date.
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions. Except as otherwise
specified or as the context may otherwise require, the following terms have the
respective meanings set forth in Appendix I for all purposes of this Indenture,
and the definitions of such terms are applicable to the singular as well as to
the plural forms of such terms and to the masculine as well as to the feminine
genders of such terms. Whenever reference is made herein to an Event of Default
or a Default known to the Indenture Trustee or of which the Indenture Trustee
has notice or knowledge, such reference shall be construed to refer only to an
Event of Default or Default of which the Indenture Trustee is deemed to have
notice or knowledge pursuant to Section 6.01(d). All other terms used herein
that are defined in the Trust Indenture Act (as hereinafter defined), either
directly or by reference therein, have the meanings assigned to them therein.
ARTICLE II
THE NOTES; PLEDGE OF SUBSEQUENT MORTGAGE LOANS
Section 2.01. Forms Generally. The Notes shall be
substantially in the form set forth as Exhibit A attached hereto. Each Note may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange on which the Notes may be listed, or as may, consistently
herewith, be determined by the Trust, as evidenced by its execution thereof. Any
portion of the text of any Note may be set forth on the reverse thereof with an
appropriate reference on the face of the Note.
The Definitive Notes may be produced in any manner determined
by the Trust, as evidenced by its execution thereof.
Section 2.02. Form of Certificate of Authentication. The form
of the Authenticating Agent's certificate of authentication is as set forth on
the signature page of the form of the Note attached hereto as Exhibit A.
2
Section 2.03. General Provisions With Respect to Principal and
Interest Payment. The Notes shall be designated generally as the
"_____________________, Mortgage Backed Notes, Series _________".
The Notes shall be issued in the form specified in Section
2.01 hereof. The Notes shall be issued in two Classes, the Class A-1 Notes and
the Class A-2 Notes. The aggregate Original Note Principal Balance of Notes that
may be authenticated and delivered under the Indenture is limited to
$____________ of Class A-1 Notes and $_____________ of Class A-2 Notes, except
for the Notes authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Notes pursuant to Sections 2.06, 2.07, or
9.06 of this Indenture.
Subject to the provisions of Sections 3.01, 5.07, 5.09 and
8.02(a) of this Indenture, the principal of each Class of Notes shall be payable
in installments ending no later than the related Final Stated Maturity Date,
unless the unpaid principal of such Notes become due and payable at an earlier
date by declaration of acceleration or call for redemption or otherwise.
All payments made with respect to any Note shall be applied
first to the interest then due and payable on such Note and then to the
principal thereof. All computations of interest accrued on any Note shall be
made on the basis of a year of 360 days and twelve 30-day months.
Notwithstanding any of the foregoing provisions with respect
to payments of principal of and interest on the Notes, if the Notes have become
or been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on the Notes shall be made
in accordance with Section 5.07 hereof.
Section 2.04. Denominations. The Notes shall be issuable only
as registered Notes in the denominations equal to the Authorized Denominations.
Section 2.05. Execution, Authentication, Delivery and Dating.
The Notes shall be executed on behalf of the Trust by an Authorized Officer of
the Owner Trustee. The signature of such Authorized Officer of the Owner Trustee
on the Notes may be manual or by facsimile.
Notes bearing the manual or facsimile signature of an
individual who was at any time an Authorized Officer of the Owner Trustee shall
bind the Trust, notwithstanding that such individual has ceased to be an
Authorized Officer of the Owner Trustee prior to the authentication and delivery
of such Notes or was not an Authorized Officer of the Owner Trustee at the date
of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Trust may deliver Notes executed on behalf of
the Trust to the Authenticating Agent for authentication, and the Authenticating
Agent shall authenticate and deliver such Notes as provided in this Indenture
and not otherwise.
Each Note authenticated on the Closing Date shall be dated the
Closing Date. All other Notes that are authenticated after the Closing Date for
any other purpose hereunder shall be dated the date of their authentication.
3
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 in Section
2.02 hereof, executed by the Authenticating Agent by the manual signature of one
of its Authorized Officers or employees, and such certificate of authentication
upon any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder.
Section 2.06. Registration, Registration of Transfer and
Exchange. The Trust shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Trust
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee is hereby initially appointed "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided. The
Indenture Trustee shall remain the Note Registrar throughout the term hereof.
Upon any resignation of the Indenture Trustee, the Servicer, on behalf of the
Trust, shall promptly appoint a successor, with the approval of the Note
Insurer, or, in the absence of such appointment, the Servicer, on behalf of the
Trust, shall assume the duties of Note Registrar.
Upon surrender for registration of transfer of any Note at the
office or agency of the Trust to be maintained as provided in Section 3.02
hereof, the Owner Trustee on behalf of the Trust, shall execute, and the
Authenticating Agent shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate initial Note Principal Balance.
At the option of the Holder, Notes may be exchanged for other
Notes of any authorized denominations, and of a like aggregate Note Principal
Balance, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Owner Trustee shall
execute, and the Authenticating Agent shall authenticate and deliver, the Notes
that 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 Trust, 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, or be accompanied by a written
instrument of transfer in the form included in Exhibit A attached hereto, duly
executed by the Holder thereof or its attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Notes, but the Note Registrar, on behalf of the Trust,
may require payment of a sum sufficient to cover any tax or other governmental
charge as may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.07 hereof not
involving any transfer or any exchange made by the Note Insurer.
No transfer of a Note shall be made to the or, to the actual
knowledge of a Responsible Officer of the Indenture Trustee, to any of the 's
Affiliates, successors or assigns.
4
The Note Registrar shall not register the transfer of a Note
unless the Note Registrar has received a representation letter from the
transferee to the effect that either (i) the transferee is not, and is not
acquiring the Note on behalf of or with the assets of, an employee benefit plan
or other retirement plan or arrangement that is subject to Title I of the
Employee Retirement Income Security Act or 1974, as amended, or Section 4975 of
the Code or (ii) the acquisition and holding of the Note by the transferee
qualifies for exemptive relief under a Department of Labor Prohibited
Transaction Class Exemption. Each Beneficial Owner of a Note which is a
Book-Entry Note shall be deemed to make one of the foregoing representations.
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes. If
(1) any mutilated Note is surrendered to the Note Registrar or the Note
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (2) there is delivered to the Note Registrar such
security or indemnity as may be required by the Note Registrar to save each of
the Trust, the Note Insurer and the Note Registrar harmless, then, in the
absence of notice to the Note Registrar that such Note has been acquired by a
bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute and
upon its request the Note Registrar shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note
or Notes of the same tenor and aggregate initial principal amount bearing a
number not contemporaneously outstanding. If, after the delivery of such new
Note, a bona fide purchaser of the original Note in lieu of which such new Note
was issued presents for payment such original Note, the Note Registrar, shall be
entitled to recover such new Note from the person to whom it was delivered or
any person taking therefrom, 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 expenses incurred by the Trust or the Note Registrar in
connection therewith. If any such mutilated, destroyed, lost or stolen Note
shall have become or shall be about to become due and payable, or shall have
become subject to redemption in full, instead of issuing a new Note, the Trust
may pay such Note without surrender thereof, except that any mutilated Note
shall be surrendered.
Upon the issuance of any new Note under this Section 2.07, the
Note Registrar, may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trust, the Indenture
Trustee or the Note Registrar) connected therewith.
Every new Note issued pursuant to this Section 2.07 in lieu of
any destroyed, lost or stolen Note shall constitute an original contractual
obligation of the Trust, whether or not the 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 2.07 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 2.08. Payments of Principal and Interest. (a) Payments
on Notes issued as Book-Entry Notes will be made by or on behalf of the
Indenture Trustee to the Clearing Agency or its nominee. Any installment of
interest or principal payable on any Definitive Notes
5
that is punctually paid or duly provided for by the Trust on the applicable
Distribution Date shall be paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered at the close of business on the Record
Date for such Class of Notes and such Distribution Date by either (i) check
mailed to such Person's address as it appears in the Note Register on such
Record Date, or (ii) by wire transfer of immediately available funds to the
account of a Noteholder, if such Noteholder (A) is the registered holder of
Definitive Notes having an initial principal amount of at least $1,000,000 and
(B) has provided the Indenture Trustee with wiring instructions in writing by
five (5) Business Days prior to the related Record Date or has provided the
Indenture Trustee with such instructions for any previous Distribution Date,
except for the final installment of principal payable with respect to such Note
(or the Redemption Price for any Note called for redemption, if such redemption
will result in payment of the then entire unpaid Note Principal Balance of such
Note), which shall be payable as provided in subsection (b) of this Section
2.08. A fee may be charged by the Indenture Trustee to a Holder of Definitive
Notes for any payment made by wire transfer. Any installment of interest or
principal not punctually paid or duly provided for shall be payable as soon as
funds are available to the Indenture Trustee for payment thereof, or if Section
5.07 applies, pursuant to Section 5.07.
(b) All reductions in the Note Principal Balance of a Note (or
one or more Predecessor Notes) effected by payments of installments of principal
made on any Distribution Date shall be binding upon all Holders of such Note and
of any Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, whether or not such payment is noted on such Note.
The final installment of principal of each Note (including the Redemption Price
of any Note called for optional redemption, if such optional redemption will
result in payment of the entire unpaid Note Principal Balance of such Note)
shall be payable only upon presentation and surrender thereof on or after the
Distribution Date therefor at the Corporate Trust Office of the Indenture
Trustee located within the United States of America pursuant to Section 3.02.
Whenever the Indenture Trustee expects that the entire unpaid
Note Principal Balance of any Note will become due and payable on the next
Distribution Date, other than pursuant to a redemption pursuant to Article X, it
shall, no later than two (2) Business Days prior to such Distribution Date,
telecopy or hand deliver to each Person in whose name a Note to be so retired is
registered at the close of business on such otherwise applicable Record Date a
notice to the effect that:
(i) the Indenture Trustee expects that funds sufficient to pay
such final installment will be available in the related Distribution
Account on such Distribution Date; and
(ii) if such funds are available, (A) such final installment
will be payable on such Distribution Date, but only upon presentation
and surrender of such Note at the office or agency of the Note
Registrar maintained for such purpose pursuant to Section 3.02 (the
address of which shall be set forth in such notice) and (B) no interest
shall accrue on such Note after such Distribution Date.
A copy of such form of notice shall be sent to the Note
Insurer by the Indenture Trustee.
6
Notices in connection with redemptions of Notes shall be
mailed to Noteholders in accordance with Section 10.02 hereof.
(c) Subject to the foregoing provisions of this Section 2.08,
each Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to unpaid
principal and interest that were carried by such other Note. Any checks mailed
pursuant to subsection (a) of this Section 2.08 and returned undelivered shall
be held in accordance with Section 3.03 hereof.
(d) Each (i) Indenture Trustee's Remittance Report, prepared
by the Indenture Trustee, based solely on the Servicer Remittance Report
delivered to the Indenture Trustee pursuant to the Sale and Servicing Agreement,
and (ii) each report regarding the Mortgage Loans delivered to the Indenture
Trustee by the Servicer pursuant to Section 5.16(b) of the Sale and Servicing
Agreement, shall be delivered by the Indenture Trustee to the Note Insurer, the
Rating Agencies, the Servicer, the Owner Trustee, the Depositor and each
Noteholder as the statements required pursuant to Section 8.06 hereof. Neither
the Indenture Trustee nor the Collateral Agent shall have any responsibility to
recalculate, verify or recompute information contained in any such tape,
electronic data file or disk or any such Servicer Remittance Report except to
the extent necessary to satisfy all obligations under this Section 2.08(d).
Within ninety (90) days after the end of each calendar year,
the Indenture Trustee will be required to furnish to each Person who at any time
during the calendar year was a Noteholder, if requested in writing by such
person, a statement containing the information set forth in subclauses (a), (b)
and (c) in the definition of "Indenture Trustee's Remittance Report," aggregated
for such calendar year or the applicable portion thereof during which such
person was a Noteholder. Such obligation will be deemed to have been satisfied
to the extent that substantially comparable information is provided pursuant to
any requirements of the Code as are from time to time in force.
From time to time (but no more than once per calendar month),
upon the written request of the Depositor, the Servicer or the Note Insurer, the
Indenture Trustee shall report to the Depositor, the Servicer and the Note
Insurer the amount then held in each Account (including investment earnings
accrued) held by the Indenture Trustee and the identity of the investments
included therein. From time to time, at the request of the Note Insurer, the
Indenture Trustee shall report to the Note Insurer with respect to the actual
knowledge of a Responsible Officer, without independent investigation, of any
breach of any of the representations or warranties relating to individual
Mortgage Loans set forth in Section 3.03 of the Loan Sale Agreement. The
Indenture Trustee shall also provide the Note Insurer such other information
within its control as may be reasonably requested by it.
Section 2.09. Persons Deemed Owner. Prior to due presentment
for registration of transfer of any Note, any agent on behalf of the Trust
including but not limited to the Indenture Trustee, or the Note Insurer, may
treat the Person in whose name any Note is registered as the owner of such Note
(a) on the applicable Record Date for the purpose of receiving payments of the
principal of and interest on such Note and (b) on any other date for all other
purposes whatsoever, and none of the Trust, the Indenture Trustee or any other
agent of the Trust, or the Note Insurer shall be affected by notice to the
contrary.
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Section 2.10. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Note Registrar, be delivered to the Note Registrar and
shall be promptly canceled by it. The Owner Trustee, on behalf of the Trust, may
at any time deliver to the Note Registrar for cancellation any Note previously
authenticated and delivered hereunder which the Owner Trustee, on behalf of the
Trust may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Note Registrar. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section 2.10, except as expressly permitted by this Indenture. All
cancelled Notes held by the Note Registrar shall be held by the Note Registrar
in accordance with its standard retention policy, unless the Owner Trustee, on
behalf of the Trust shall direct by a Trust Order that they be destroyed or
returned to it.
Section 2.11. Authentication and Delivery of Notes. The Notes
shall be executed by an Authorized Officer of the Owner Trustee, on behalf of
the Trust, and delivered to the Authenticating Agent for authentication, and
thereupon the same shall be authenticated and delivered by the Authenticating
Agent, upon a Trust Request and upon receipt by the Authenticating Agent of all
of the following:
(a) A Trust Order authorizing the execution, authentication
and delivery of the Notes and specifying the Note Principal Balance and
the Percentage Interest of such Notes to be authenticated and
delivered.
(b) A Trust Order authorizing the execution and delivery of
this Indenture and the Sale and Servicing Agreement.
(c) One or more Opinions of Counsel (which opinion shall not
be at the expense of the Indenture Trustee or the Trust) addressed to
the Authenticating Agent and the Note Insurer or upon which the
Authenticating Agent and the Note Insurer are expressly permitted to
rely, complying with the requirements of Section 11.01, reasonably
satisfactory in form and substance to the Authenticating Agent and the
Note Insurer.
In rendering the opinions set forth above, such counsel may
rely upon Officer's Certificates of the Trust, the Owner Trustee, the ,
the Originators, the Depositor, the Servicer and the Indenture Trustee,
without independent confirmation or verification with respect to
factual matters relevant to such opinions. In rendering the opinions
set forth above, such counsel need express no opinion as to (A) the
existence of, or the priority of the security interest created by the
Indenture against, any liens or other interests that arise by operation
of law and that do not require any filing or similar action in order to
take priority over a perfected security interest or (B) the priority of
the security interest created by this Indenture with respect to any
claim or lien in favor of the United States or any agency or
instrumentality thereof (including federal tax liens and liens arising
under Title IV of ERISA).
The acceptability to the Note Insurer of the Opinion of
Counsel delivered to the Authenticating Agent and the Note Insurer at
the Closing Date shall be conclusively evidenced by the delivery on the
Closing Date of the Note Insurance Policy.
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(d) An Officer's Certificate of the Trust complying with the
requirements of Section 11.01 and stating that:
(i) the Trust is not in Default under this Indenture and the
issuance of the Notes will not result in any breach of any of
the terms, conditions or provisions of, or constitute a
default under, the Trust's Certificate of Trust or any
indenture, mortgage, deed of trust or other agreement or
instrument to which the Trust is a party or by which it is
bound, or any order of any court or administrative agency
entered in any proceeding to which the Trust is a party or by
which it may be bound or to which it may be subject, and that
all conditions precedent provided in this Indenture relating
to the authentication and delivery of the Notes have been
complied with;
(ii) the Trust is the owner of each Mortgage Loan, free and
clear of any lien, security interest or charge, has not
assigned any interest or participation in any such Mortgage
Loan (or, if any such interest or participation has been
assigned, it has been released) and has the right to Grant
each such Mortgage Loan to the Indenture Trustee;
(iii) the information set forth in the Mortgage Loan Schedule
attached as Schedule I to this Indenture is correct;
(iv) the Trust has Granted to the Indenture Trustee all of its
right, title and interest in each Mortgage Loan; and
(v) as of the Closing Date, no lien in favor of the United
States described in Section 6321 of the Code, or lien in favor
of the Pension Benefit Guaranty Corporation described in
Section 4068(a) of the ERISA, has been filed as described in
subsections 6323(f) and 6323(g) of the Code upon any property
belonging to the Trust.
(e) An executed counterpart of the Sale and Servicing
Agreement.
(f) An executed counterpart of the Loan Sale Agreement.
(g) An executed counterpart of the Trust Agreement.
(h) An executed copy of the Insurance Agreement.
(i) An original executed copy of the Note Insurance Policy.
(j) A copy of a letter from Xxxxx'x that is has assigned a
rating of "Aaa" to the Notes and a copy of a letter from S&P
that it has assigned a rating of "AAA" to the Notes.
Section 2.12. Book-Entry Note. The Notes will be issued
initially as one or more certificates in the name of Cede & Co., as nominee for
the Clearing Agency maintaining book-entry records with respect to ownership and
transfer of such Notes, and registration of the
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Notes may not be transferred by the Note Registrar except upon Book-Entry
Termination. In such case, the Note Registrar shall deal with the Clearing
Agency as representative of the Beneficial Owners of such Notes for purposes of
exercising the rights of Noteholders hereunder. Each payment of principal of and
interest on a Book-Entry Note shall be paid to the Clearing Agency, which shall
credit the amount of such payments to the accounts of its Clearing Agency
Participants in accordance with its normal procedures. Each Clearing Agency
Participant shall be responsible for disbursing such payments to the Beneficial
Owners of the Book-Entry Notes that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Beneficial Owners of the Book-Entry Notes that it
represents. All such credits and disbursements are to be made by the Clearing
Agency and the Clearing Agency Participants in accordance with the provisions of
the Notes. None of the Indenture Trustee, the Note Registrar, if any, the Trust
or the Note Insurer shall have any responsibility therefor except as otherwise
provided by applicable law. Requests and directions from, and votes of, such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Beneficial Owners.
Section 2.13. Termination of Book Entry System. (a) The
book-entry system through the Clearing Agency with respect to the Book-Entry
Notes may be terminated upon the happening of any of the following:
(i) The Clearing Agency advises the Indenture Trustee that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities as nominee and depositary with respect to the Notes
and the Indenture Trustee is unable to locate a qualified successor
Clearing Agency satisfactory to the Servicer, on behalf of the Trust;
(ii) The Majority Certificateholders, on behalf of the Trust,
in their sole discretion, elects to terminate the book-entry system by
notice to the Clearing Agency and the Indenture Trustee; or
(iii) After the occurrence of an Event of Default (at which
time the Indenture Trustee shall use all reasonable efforts to promptly
notify each Beneficial Owner through the Clearing Agency of such Event
of Default), the Beneficial Owners of no less than 51% of the Note
Principal Balance of the Book-Entry Notes advise the Indenture Trustee
in writing, through the related Clearing Agency Participants and the
Clearing Agency, that the continuation of a book-entry system through
the Clearing Agency to the exclusion of any Definitive Notes being
issued to any person other than the Clearing Agency or its nominee is
no longer in the best interests of the Beneficial Owners.
(b) Upon the occurrence of any event described in subsection
(a) of this Section 2.13, the Indenture Trustee shall use all reasonable efforts
to notify all Beneficial Owners, through the Clearing Agency, of the occurrence
of such event and of the availability of Definitive Notes to Beneficial Owners
requesting the same, in an aggregate outstanding Note Principal Balance
representing the interest of each, making such adjustments and allowances as it
may find necessary or appropriate as to accrued interest and previous calls for
redemption. Definitive Notes shall be issued only upon surrender to the
Indenture Trustee of the global Note
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by the Clearing Agency, accompanied by registration instructions for the
Definitive Notes. Neither the Trust nor 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 issuance of the
Definitive Notes, all references herein to obligations imposed upon or to be
performed by the Clearing Agency shall cease to be applicable and the provisions
relating to Definitive Notes shall be applicable.
Section 2.14. Pledge of Subsequent Mortgage Loans. (a) Subject
to the satisfaction of the conditions set forth in paragraph (b) of this Section
2.14, in consideration of the Indenture Trustee's delivery on the related
Subsequent Transfer Dates to or upon the order of the Servicer, on behalf of the
Trust, of all or a portion of the balance of funds in either Pre-Funding
Account, the Trust shall on any Subsequent Transfer Date pledge, without
recourse, to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, all right, title and interest of the Trust in and to the related
Subsequent Mortgage Loans, including the outstanding principal of, and interest
due on, such Subsequent Mortgage Loans, and all other assets in the Trust Estate
relating to the Subsequent Mortgage Loans. In connection with such pledge, and
pursuant to Section 2.07 of the Loan Sale Agreement and Section 2.09 of the Sale
and Servicing Agreement, the Trust does hereby also irrevocably pledge to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, all
of its rights under the Sale and Servicing Agreement, the Loan Sale Agreement,
the related Subsequent Contribution Agreement and the related Subsequent
Transfer Agreement, including, without limitation, its right to exercise the
remedies created by Sections 2.06 and 3.05 of the Loan Sale Agreement for
defective documentation and for breaches of representations and warranties,
agreement and covenants contained in Section 3.01 and 3.03 of the Loan Sale
Agreement.
The amount released from either Pre-Funding Account with
respect to a transfer of Subsequent Mortgage Loans shall be one-hundred percent
(100%) of the Aggregate Principal Balances of the Subsequent Mortgage Loans so
pledged, as of the related Subsequent Cut-Off Date.
(b) The Subsequent Mortgage Loans and the other property and
rights related thereto described in paragraph (a) of this Section 2.14 shall be
pledged by the Trust to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer, only upon the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the shall have provided the Trust, the Depositor, the
Indenture Trustee, the Collateral Agent, the Rating Agencies and the
Note Insurer with an Addition Notice at least two (2) Business Days
prior to the Subsequent Transfer Date, which shall include a Mortgage
Loan Schedule listing the Subsequent Mortgage Loans, and shall have
provided any other information reasonably requested by any of the
foregoing parties with respect to the Subsequent Mortgage Loans;
(ii) the shall have caused the Servicer to deposit in the
Collection Account all collections of (x) principal in respect of the
Subsequent Mortgage Loans received after the related Subsequent Cut-Off
Date and (y) interest due on the Subsequent Mortgage Loans after the
related Subsequent Cut-Off Date;
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(iii) as of each Subsequent Transfer Date, the Depositor shall
not be insolvent, neither shall be made insolvent by such transfer and
neither shall be aware of any pending insolvency;
(iv) such Subsequent Transfer shall not result in a material
adverse tax consequence to the Trust or the Holders of the Notes;
(v) the related Pre-Funding Period shall not have terminated;
(vi) the Depositor shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and each complies
with the terms of the Loan Sale Agreement, including each of the
representations and warranties made with respect thereto in Section
3.03 of the Loan Sale Agreement; provided, that each representation in
Section 3.03(tt) (other than clause (v)) may be waived or modified with
the prior written consent of the Note Insurer;
(vii) there shall have been delivered to the Note Insurer, the
Trust, the Collateral Agent, the Rating Agencies and the Indenture
Trustee, Independent Opinions of Counsel with respect to the transfer
of the Subsequent Mortgage Loans substantially in the form of the
Opinions of Counsel delivered to the Depositor, the Note Insurer, the
Trust, the Collateral Agent, the Rating Agencies and the Indenture
Trustee on the Closing Date (i.e. bankruptcy, corporate and tax
opinions);
(viii) the Indenture Trustee shall have received a written
consent from the Note Insurer in the form of Exhibit C hereto;
(ix) the Originators and the Depositor shall have delivered to
the Indenture Trustee an executed copy of a Subsequent Transfer
Agreement, substantially in the form of Exhibit A to the Loan Sale
Agreement;
(x) the Depositor and the Trust shall have delivered to the
Indenture Trustee an executed copy of a Subsequent Contribution
Agreement, substantially in the form of Exhibit G to the Sale and
Servicing Agreement, and
(xi) the Trust and the Indenture Trustee shall have executed a
Subsequent Pledge Agreement, substantially in the form of Exhibit B
hereto.
(c) In connection with the transfer, assignment and pledge of
the Subsequent Mortgage Loans, the Depositor shall satisfy the document delivery
requirements set forth in Section 2.05 of the Sale and Servicing Agreement.
(d) On each Subsequent Transfer Date upon written instruction
from the Depositor, the Indenture Trustee shall withdraw from the related
Capitalized Interest Account and pay to the Depositor on such Subsequent
Transfer Date the Overfunded Interest Amount for such Subsequent Transfer Date,
as calculated by the Indenture Trustee and subject to the approval of the Note
Insurer.
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ARTICLE III
COVENANTS
Section 3.01. Payment of Notes. The Trust will pay or cause to
be duly and punctually paid the principal of, and interest on, the Notes in
accordance with the terms of the Notes and this Indenture. The Notes shall be
non-recourse obligations of the Trust and shall be limited in right of payment
to amounts available from the Trust Estate as provided in this Indenture and the
Trust shall not otherwise be liable for payments on the Notes. No person shall
be personally liable for any amounts payable under the Notes. If any other
provision of this Indenture conflicts or is deemed to conflict with the
provisions of this Section 3.01, the provisions of this Section 3.01 shall
control.
Section 3.01. Maintenance of Office or Agency. The Indenture
Trustee will always maintain its corporate trust office at a location in the
United States of America where Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Trust in
respect of the Notes and this Indenture may be served. Such location shall be
the Corporate Trust Office of the Indenture Trustee.
The Owner Trustee, at the direction of the Majority
Certificateholder, on behalf of the Trust may also from time to time, at the
expense of the Majority Certificateholders, designate one or more other offices
or agencies within the United States of America where the Notes may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, any designation of an office or agency for
payment of Notes shall be subject to Section 3.03 hereof. The Owner Trustee, at
the direction of the Majority Certificateholder, on behalf of the Trust will
give prompt written notice to the Indenture Trustee and the Note Insurer of any
such designation or rescission and of any change in the location of any such
other office or agency.
Section 3.03. Money for Note Payments to Be Held In Trust. All
payments of amounts due and payable with respect to any Notes that are to be
made from amounts withdrawn from the related Distribution Account pursuant to
Sections 8.02(a) or 5.07 hereof shall be made on behalf of the Trust by the
Indenture Trustee, and no amounts so withdrawn from the related Distribution
Account for payments on the Notes shall be paid over to the Trust under any
circumstances except as provided in this Section 3.03 or in Sections 5.07 or
8.02 hereof.
With respect to Definitive Notes, if the Trust shall have a
Note Registrar that is not also the Indenture Trustee, such Note Registrar shall
furnish, no later than the fifth (5th) calendar day after each Record Date, a
list, in such form as such Indenture Trustee may reasonably require, of the
names and addresses of the Holders of Notes and of the number of Individual
Notes held by each such Holder.
Whenever the Trust shall have a Paying Agent other than the
Indenture Trustee, the Servicer, on behalf of the Trust, will, on or before the
Business Day next preceding each Distribution Date, direct the Indenture Trustee
to deposit with such Paying Agent an aggregate sum sufficient to pay the amounts
then becoming due (to the extent funds are then available for such purpose in
the related Distribution Account), such sum to be held in trust for the benefit
of
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the Persons entitled thereto. Any moneys deposited with a Paying Agent in excess
of an amount sufficient to pay the amounts then becoming due on the Notes with
respect to which such deposit was made shall, upon Trust Order, be paid over by
such Paying Agent to the Indenture Trustee for application in accordance with
Article VIII hereof.
Subject to the prior written consent of the Note Insurer, any
Paying Agent other than the Indenture Trustee may be appointed by Trust Order
and at the expense of the Trust. The Trust shall not appoint any Paying Agent
(other than the Indenture Trustee) that is not, at the time of such appointment,
a depository institution or trust company whose obligations would be Permitted
Investments pursuant to clause (b) of the definition of the term "Permitted
Investments". The Servicer, on behalf of the Trust, will cause each Paying Agent
other than the Indenture Trustee to execute and deliver to the Indenture Trustee
and the Owner Trustee, on behalf of the Trust, an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(a) allocate all sums received for payment to the Holders of
Notes on each Distribution Date among such Holders in the proportion
specified in the applicable Indenture Trustee's Remittance Report, in
each case to the extent permitted by applicable law;
(b) 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;
(c) if such Paying Agent is not the Indenture Trustee,
immediately resign as a Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for the payment of the Notes if at
any time the Paying Agent ceases to meet the standards set forth above
required to be met by a Paying Agent at the time of its appointment;
(d) if such Paying Agent is not the Indenture Trustee, give
the Indenture Trustee notice of any Default by the Trust (or any other
obligor upon the Notes) in the making of any payment required to be
made with respect to any Notes for which it is acting as Paying Agent;
(e) if such Paying Agent is not the Indenture Trustee, 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; and
(f) comply with all requirements of the Code, and all
regulations thereunder, with respect to 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 any of the Notes, the Servicer, on behalf of the
Trust, has provided the calculations pertaining thereto to the
Indenture Trustee and the Paying Agent.
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The Trust may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Trust
Order direct any Paying Agent, if other than the Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Indenture Trustee upon the same trusts as those upon which such
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 money held by the Indenture Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Note and remaining
unclaimed for two and one-half years after such amount has become due and
payable to the Holder of such Note (or if earlier, three months before the date
on which such amount would escheat to a governmental entity under applicable
law) shall be discharged from such trust and paid to the Trust; and the Holder
of such Note shall thereafter, as an unsecured general creditor, look only to
the Trust for payment thereof (but only to the extent of the amounts so paid to
the Trust), and all liability of the Indenture Trustee or such Paying Agent with
respect to such trust money shall thereupon cease. The Indenture Trustee may
adopt and employ, at the expense of the Trust, any reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or any Paying Agent, at the last address of record for each such
Holder).
Section 3.04. Existence of Trust. (a) Subject to clauses (b)
and (c) of this Section 3.04, the Trust will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware or under the laws of any other state of the United States of America,
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 other Basic
Documents.
(b) Subject to Section 3.09(g) hereof, and with the prior
written consent of the Note Insurer, any entity into which the Trust may be
merged or with which it may be consolidated, or any entity resulting from any
merger or consolidation to which the Trust shall be a party, shall be the
successor issuer under this Indenture without the execution or filing of any
paper, instrument or further act to be done on the part of the parties hereto,
anything in any agreement relating to such merger or consolidation, by which any
such Trust may seek to retain certain powers, rights and privileges therefore
obtaining for any period of time following such merger or consolidation to the
contrary notwithstanding (other than Section 3.09(g)).
(c) Upon any consolidation or merger of or other succession to
the Trust in accordance with this Section 3.04, the Person formed by or
surviving such consolidation or merger (if other than the Trust) may exercise
every right and power of, and shall have all of the obligations of, the Trust
under this Indenture with the same effect as if such Person had been named as
the issuer herein.
Section 3.05. Protection of Trust Estate. (a) The Trust will,
from time to time, execute and deliver all such supplements and amendments
hereto and all such financing
15
statements, continuation statements, instruments of further assurance and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Estate as made by this Indenture;
(ii) maintain or preserve the lien 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 of the Mortgage Loans, the Sale and Servicing
Agreement, or the Loan Sale Agreement; or
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee, the Noteholders and the Note Insurer
in the Mortgage Loans and the other property held as part of the Trust
Estate against the claims of all Persons and parties.
(b) The Indenture Trustee shall not, and shall not permit the
Collateral Agent to, remove any portion of the Trust Estate that consists of
money or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the Closing Date or cause or permit
ownership or the pledge of any portion of the Trust Estate that consists of
book-entry securities to be recorded on the books of a Person located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such time unless the Indenture Trustee shall have first received
an Opinion of Counsel to the effect that the lien and security interest created
by this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
Section 3.06. Opinions as to the Trust Estate. On or before
April 30th in each calendar year, beginning in ____, the Servicer, on behalf of
the Trust, shall furnish to the Indenture Trustee and the Note Insurer an
Opinion of Counsel reasonably satisfactory in form and substance to the
Indenture Trustee and the Note Insurer either stating that, in the opinion of
such counsel, such action has been taken 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 all such action, if any, that will, in the opinion of such
counsel, be required to be taken to maintain the lien and security interest of
this Indenture with respect to the Trust Estate until May 1st in the following
calendar year.
Section 3.07. Performance of Obligations. (a) The Trust shall
punctually perform and observe all of its obligations under this Indenture and
the other Basic Documents.
(b) The Trust shall 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 covenants or obligations under any of the
Mortgage Files or under any instrument included in the Trust Estate, or that
would result in the amendment, hypothecation, subordination, termination or
16
discharge of, or impair the validity or effectiveness of, any of the documents
or instruments contained in the Mortgage Files, except as expressly permitted in
this Indenture, the other Basic Documents or such document included in the
Mortgage File or other instrument or unless such action will not adversely
affect the interests of the Noteholders and the Note Insurer.
(c) If the Servicer or the Owner Trustee, on behalf of the
Trust, shall have knowledge of the occurrence of a default under the Sale and
Servicing Agreement or the Loan Sale Agreement, the Servicer or the Owner
Trustee, as applicable, shall promptly notify the Indenture Trustee, the Note
Insurer and the Rating Agencies thereof, and, in the case of the Servicer, shall
specify in such notice the action, if any, the Servicer is taking with respect
to such default.
(d) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Indenture Trustee shall
promptly notify the Note Insurer and the Rating Agencies. As soon as any
successor Servicer is appointed, the Indenture Trustee shall notify the Note
Insurer and the Rating Agencies, specifying in such notice the name and address
of such successor Servicer.
Section 3.08. Investment Company Act. The Trust shall at all
times conduct its operations so as not to be subject to, or shall comply with,
the requirements of the Investment Company Act of 1940, as amended (or any
successor statute), and the rules and regulations thereunder.
Section 3.09. Negative Covenants. The Trust shall not:
(a) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate, except as expressly permitted by this
Indenture and the other Basic Documents;
(b) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Notes by reason of the payment
of any taxes levied or assessed upon any portion of the Trust Estate;
(c) 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 the Notes pursuant to this Indenture, or amend the
Trust Agreement, as in effect on the Closing Date, other than in
accordance with Section 11.01 of the Trust Agreement;
(d) incur, issue, assume or otherwise become liable for an
indebtedness other than the Notes;
(e) incur, assume, guaranty or agree to indemnify any Person
with respect to any indebtedness of any Person, except for such
indebtedness as may be incurred by the Trust in connection with the
issuance of the Notes pursuant to this Indenture;
(f) subject to Article IX of the Trust Agreement, dissolve or
liquidate in whole or in part (until the Notes are paid in full);
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(g) (i) permit the validity or effectiveness of this Indenture
or any Grant to be impaired, or permit the lien of this Indenture to be
impaired, amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations under this Indenture, except as may be expressly permitted
hereby, (ii) permit any lien, charge, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created
on or extend to or otherwise arise upon or burden the Trust Estate or
any part thereof or any interest therein or the proceeds thereof, or
(iii) permit the lien of this Indenture not to constitute a valid
perfected first priority security interest in the Trust Estate; or
(h) take any other action that should reasonably be expected
to, or fail to take any action if such failure should reasonably be
expected to, cause the Trust to be taxable as (x) an association
pursuant to Section 7701 of the Code or (y) a taxable mortgage pool
pursuant to Section 7701(i) of the Code.
Section 3.10. Annual Statement as to Compliance. On or before
April 30, 2000, and each April 30 thereafter, the Servicer, on behalf of the
Trust, shall deliver to the Indenture Trustee, the Note Insurer and the
Depositor a written statement, signed by an Authorized Officer of the Servicer,
on behalf of the Trust, stating that:
(a) a review of the fulfillment by the Trust during such year
of its obligations under this Indenture has been made under such
Authorized Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based
on such review, the Trust has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a Default in the fulfillment of any such covenant or condition,
specifying each such Default known to such Authorized Officer and the
nature and status thereof.
Section 3.11. Restricted Payments. The Trust 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 Trust or otherwise with respect to any ownership or equity interest or
security in or of the Trust or to the 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 Trust may make, or cause to be made, distributions
to the Servicer, the Indenture Trustee, the Owner Trustee, the Note Insurer and
the Certificateholders as contemplated by, and to the extent funds are available
for such purpose under this Indenture and the other Basic Documents and the
Trust will not, directly or indirectly, make or cause to be made payments to or
distributions from any Distribution Account except in accordance with this
Indenture.
Section 3.12. Treatment of Notes as Debt for Tax Purposes. For
purposes of federal, state and local income, franchise and any other income
taxes, the Trust will treat the Notes as indebtedness, and hereby instructs the
Indenture Trustee, Payee Agent and the Servicer, on behalf of the Trust to treat
the Notes as indebtedness for all applicable tax reporting purposes.
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Section 3.13. Notice of Events of Default. The Servicer, on
behalf of the Trust, shall give the Indenture Trustee, the Note Insurer, the
Rating Agencies and the Depositor prompt written notice of each Event of Default
hereunder, each default on the part of the Servicer of its obligations under the
Sale and Servicing Agreement and each default on the part of the Depositor of
its obligations under the Loan Sale Agreement.
Section 3.14. Further Instruments and Acts. Upon written
request of the Indenture Trustee or the Note Insurer, the Owner Trustee, on
behalf of the Trust, 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.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
Whenever the following conditions shall have been satisfied:
(a) either
(i) all Notes theretofore authenticated and delivered (other
than (x) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.07
hereof, and (y) Notes for whose payment money has theretofore
been deposited in trust and thereafter repaid to the Trust, as
provided in Section 3.03 hereof) have been delivered to the
Note Registrar for cancellation; or
(ii) all Notes not theretofore delivered to the Note Registrar
for cancellation,
(A) have become due and payable, or
(B) will become due and payable at the Final Stated
Maturity Date within one (1) year, or
(C) are to be called for redemption pursuant to
Section 10.01 hereof within one (1) year under
irrevocable 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 Servicer,
and the Servicer, in the case of clauses (ii)(A), (ii)(B) or
(ii)(C) above, has irrevocably deposited or caused to be
deposited with the Indenture Trustee, in trust for such
purpose, an amount sufficient to pay and discharge the entire
unpaid Note Principal Balance such Notes not theretofore
delivered to the Indenture Trustee for cancellation, for
principal and interest to the Final Stated Maturity Date or to
the applicable Redemption Date, as the case may be, and in the
case of Notes that were not paid at the Final Stated Maturity
Date of their entire unpaid
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Note Principal Balance, for all overdue principal and all
interest payable on such Notes to the next succeeding
Distribution Date therefor;
(b) the Servicer, on behalf of the Trust, has paid or caused
to be paid all other sums payable hereunder by the Trust (including,
without limitation, amounts due the Note Insurer); and
(c) the Servicer, on behalf of the Trust, has delivered to the
Indenture Trustee and the Note Insurer an Officers' Certificate and an
Opinion of Counsel satisfactory in form and substance to the Indenture
Trustee and the Note Insurer each stating that all conditions precedent
herein providing for the satisfaction and discharge of this Indenture
have been complied with;
then, upon a Trust Request, this Indenture and the lien, rights and interests
created hereby and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Trust (or of the Servicer in the
case of a redemption by the Servicer pursuant to Section 10.01 hereof), execute
and deliver all such instruments as may be necessary to acknowledge the
satisfaction and discharge of this Indenture and shall pay, or assign or
transfer and deliver, to the Trust or upon Trust Order all cash, securities and
other property held by it as part of the Trust Estate remaining after
satisfaction of the conditions set forth in clauses (a) and (b) above.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Indenture Trustee and any Paying Agent to the
Trust and the Holders of Notes under Section 3.03 hereof, the obligations of the
Indenture Trustee to the Holders of Notes under Section 4.02 hereof and the
provisions of Section 2.07 hereof with respect to lost, stolen, destroyed or
mutilated Notes, registration of transfers of Notes and rights to receive
payments of principal of and interest on the Notes shall survive.
Section 4.02. Application of Trust Money. All money deposited
with the Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying Agent,
as the Indenture Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with the
Indenture Trustee.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Event of Default. "Event of Default", wherever
used herein, means, with respect to Notes issued hereunder, any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
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(a)if the Trust shall fail to distribute or cause to be distributed to
the Indenture Trustee, for the benefit of the holders of the Notes, on any
Distribution Date, any Interest Distribution Amount and any Net Mortgage Loan
Interest Shortfalls due on the Notes on such Distribution Date;
(b) if the Trust shall fail to distribute or cause to be distributed to
the Indenture Trustee, for the benefit of the holders of the Notes, (x) on any
Distribution Date, an amount equal to the Principal Distribution Amount due on
the Notes on such Distribution Date, to the extent that sufficient funds are on
deposit in the Collection Account or (y) on the Final Stated Maturity Date for
any Class of Notes, the aggregate outstanding Note Principal Balance of such
Class of Notes;
(c) if the Trust shall breach or default in the due observance of any
one or more of the covenants set forth in clauses (a) through (h) of Section
3.09 hereof;
(d) if the Trust shall consent to the appointment of a custodian,
receiver, trustee or liquidator (or other similar official) of itself, or of a
substantial part of its property, or shall admit in writing its inability to pay
its debts generally as they come due, or a court of competent jurisdiction shall
determine that the Trust is generally not paying its debts as they come due, or
the Trust shall make a general assignment for the benefit of creditors;
(e) if the Trust shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization in a proceeding under any
bankruptcy laws (as now or hereafter in effect) or an answer admitting the
material allegation of a petition filed against the Trust in any such
proceeding, or the Trust shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy or other
similar law providing for the reorganization or winding-up of debtors, or
providing for an agreement, composition, extension or adjustment with its
creditors;
(f) if an order, judgment or decree shall be entered in any proceeding
by any court of competent jurisdiction appointing, without the consent (express
or legally implied) of the Trust, a custodian, receiver, trustee or liquidator
(or other similar official) of the Trust or any substantial part of its
property, or sequestering any substantial part of its respective property, and
any such order, judgment or decree or appointment or sequestration shall remain
in force undismissed, unstayed or unvacated for a period of ninety (90) days
after the date of entry thereof; or
(g) if a petition against the Trust in a proceeding under applicable
bankruptcy laws or other insolvency laws, as now or hereafter in effect, shall
be filed and shall not be stayed, withdrawn or dismissed within ninety (90) days
thereafter, or if, under the provisions of any law providing for reorganization
or winding-up of debtors which may apply to the Trust, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Trust or any
substantial part of its property, and such jurisdiction, custody or control
shall remain in force unrelinquished, unstayed or unterminated for a period of
ninety (90) days.
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Section 5.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default occurs and is continuing, then and in every
such case, but with the consent of the Note Insurer in the absence of a Note
Insurer Default, the Indenture Trustee may, and on request of the Note Insurer,
in the absence of a Note Insurer Default, or, with the prior written consent of
the Note Insurer, the Holders of Notes representing not less than 50% of the
Note Principal Balance of the Outstanding Notes of both Classes, shall, declare
all the Notes to be immediately due and payable by a notice in writing to the
Trust (and to the Indenture Trustee if given by Noteholders), and upon any such
declaration such Notes, in an amount equal to the entire unpaid Note Principal
Balance of such Notes, together with accrued and unpaid interest thereon to the
date of such acceleration, shall become immediately due and payable, all subject
to the prior written consent of the Note Insurer in the absence of a Note
Insurer Default.
At any time after such a declaration of acceleration of
maturity of the Notes has been made and before a judgment or decree for payment
of the money due has been obtained by the Indenture Trustee as hereinafter
provided in this Article V, the Note Insurer, in the absence of a Note Insurer
Default, or the Holders of Notes representing more than 50% of the Note
Principal Balance of the Outstanding Notes of both Classes, with the prior
written consent of the Note Insurer, by written notice to the Trust and the
Indenture Trustee, may rescind and annul such declaration and its consequences
if:
(a) the Trust has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all payments of principal of, and interest on, all Outstanding
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
(ii) all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee, its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the principal
of Notes that have become due solely by such acceleration, have been cured
or waived as provided in Section 5.14 hereof.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. Subject to the provisions of Section 3.01
hereof and the following sentence, if an Event of Default occurs and is
continuing, the Indenture Trustee may, with the prior written consent of the
Note Insurer, proceed to protect and enforce its rights and the rights of the
Noteholders and the Note Insurer by any Proceedings the Indenture Trustee deems
appropriate to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or enforce any other proper remedy. Any
Proceedings brought by the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, or any Noteholder against the Trust shall be limited to the
preservation,
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enforcement and foreclosure of the liens, assignments, rights and security
interests under the Indenture and no attachment, execution or other unit or
process shall be sought, issued or levied upon any assets, properties or funds
of the Trust, other than the Trust Estate relative to the Notes in respect of
which such Event of Default has occurred. If there is a foreclosure of any such
liens, assignments, rights and security interests under this Indenture, by
private power of sale or otherwise, no judgment for any deficiency upon the
indebtedness represented by the Notes may be sought or obtained by the Indenture
Trustee or any Noteholder against the Trust. The Indenture Trustee shall be
entitled to recover the costs and expenses expended by it pursuant to this
Article V including reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel.
Section 5.04. Remedies. If an Event of Default shall have
occurred and be continuing and the Notes been declared due and payable and such
declaration and its consequences have not been rescinded and annulled, the
Indenture Trustee, at the direction of the Note Insurer (subject to Section 5.17
hereof, to the extent applicable) may, for the benefit of the Noteholders and
the Note Insurer, do one or more of the following:
(a) institute Proceedings for the collection of all amounts then
payable on the Notes, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Trust
moneys adjudged due, subject in all cases to the provisions of Sections
3.01 and 5.03 hereof;
(b) in accordance with Section 5.17 hereof, sell the Trust Estate or
any portion thereof or rights or interest therein, at one or more public
or private Sales called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Trust Estate;
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Holders of
the Notes and the Note Insurer hereunder; and
(e) refrain from selling the Trust Estate and apply all funds on
deposit in each of the Accounts pursuant to Section 5.07 hereof.
Section 5.05. Indenture Trustee May File Proofs of Claim. In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other judicial Proceeding relative
to the Trust or any other obligor upon any of the Notes or the property of the
Trust or of such other obligor or their creditors, the Indenture Trustee
(irrespective of whether the 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 on the Trust for the payment of any
overdue principal or interest) shall, with the prior written consent of the Note
Insurer, be entitled and empowered, by intervention in such Proceeding or
otherwise to:
(a) file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and file such other
papers or documents as may be
23
necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and
counsel), the Noteholders and the Note Insurer allowed in such Proceeding,
and
(b) collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, or sequestrator (or other similar
official) in any such Proceeding is hereby authorized by each Noteholder
and the Note Insurer to make such payments to the Indenture Trustee and,
in the event that the Indenture Trustee shall consent to the making of
such payments directly to the Noteholders and the Note Insurer, to pay to
the Indenture Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder or the Note Insurer in any such
Proceeding.
Section 5.06. Indenture Trustee May Enforce Claims Without
Possession of Notes. All rights of action and claims under this Indenture or any
of the Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceeding instituted by the Indenture Trustee,
at the direction of the Note Insurer, shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall be for the
ratable benefit of the Holders of the Notes and the Note Insurer in respect of
which such judgment has been recovered after payment of amounts required to be
paid pursuant to clause (a) of Section 5.07 hereof.
Section 5.07. Application of Money Collected. If the Notes
have been declared due and payable following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, any money
collected by the Indenture Trustee with respect to each Class of Notes pursuant
to this Article V or otherwise and any other monies that may then be held or
thereafter received by the Indenture Trustee as security for such Class of Notes
shall be applied in the following order, at the date or dates fixed by the
Indenture Trustee and, in case of the payment of the entire amount due on
account of principal of, and interest on, such Class of Notes, upon presentation
and surrender thereof:
(a) first, to the Indenture Trustee, any unpaid Indenture Trustee Fees
with respect to such Class then due and any other amounts payable and due
to the Indenture Trustee with respect to such Class under this Indenture,
including any costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article V;
(b) second, to the Servicer, any amounts required to pay the Servicer
for any unpaid Servicing Fees with respect to such Class then due and to
reimburse the Servicer for Periodic Advances with respect to such Class
previously made by, and not previously reimbursed to or retained by, the
Servicer and, upon the final liquidation of the related
24
Mortgage Loan or the final liquidation of the Trust Estate, Servicing
Advances with respect to such Class previously made by, and not previously
reimbursed to or retained by, the Servicer;
(c) third, to the payment of Interest Distribution Amounts then due and
unpaid upon the Outstanding Notes of such Class through the day preceding
the date on which such payment is made;
(d) fourth, to the payment of the Note Principal Balance of each of the
Outstanding Notes of such Class, up to the amount of their respective
unpaid Note Principal Balance, ratably, without preference or priority of
any kind;
(e) fifth, to the Note Insurer, as subrogee to the rights of the
Noteholders, (x) the aggregate amount -------------- necessary to
reimburse the Note Insurer for any unreimbursed Reimbursement Amounts for
such Class paid by the Note Insurer on prior Distribution Dates, together
with interest thereon at the "Late Payment Rate" specified in the
Insurance Agreement from the date such Reimbursement Amounts were due to
the Note Insurer to such Distribution Date, (y) the amount of any unpaid
Premium Amount for such Class then due, together with interest thereon at
the "Late Payment Rate" specified in the Insurance Agreement from the date
such amounts were due to such Distribution Date and (z) any other amounts
due and owing to the Note Insurer for such Class under the Insurance
Agreement;
(f) sixth, to the payment of any Net Mortgage Loan Interest Shortfalls
of such Class through the day preceding the date on which such payment is
made;
(g) seventh, for payment in respect of the other Class of Notes, in the
priority set forth in this Section 5.07, to the extent of any shortfall in
the payment of the amounts described in clauses (a) through (f) with
respect to such other Class;
(h) eighth, the remainder to the Holder of Trust Certificate relating
to such Class.
Section 5.08. Limitation on Suits. No Holder of a Note shall
have any right to institute any Proceedings, 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 and the Note Insurer of a continuing Event of Default;
(b) the Holders of Notes representing not less than 25% of the Note
Principal Balance of the Outstanding Notes of both Classes shall have made
written request to the Indenture Trustee to institute Proceedings 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
indemnity in full against the costs, expenses and liabilities to be
incurred in compliance with such request;
25
(d) the Indenture Trustee, for sixty (60) days after its receipt of
such notice, request and offer of indemnity, has failed to institute any
such Proceeding;
(e) no direction inconsistent with such written request has been given
to the Indenture Trustee during such sixty (60) day period by the Holders
of Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes of both Classes; and
(f) the consent of the Note Insurer shall have been obtained; it being
understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and
ratable benefit of all the Holders of Notes.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Holders of
Notes, each representing less than 50% of the Note Principal Balances of the
Outstanding Notes of both Classes, the Indenture Trustee shall take the action
prescribed by the group representing a greater percentage of the Note Principal
Balances of the Outstanding Notes of both Classes.
Section 5.09. Unconditional Rights of Noteholders to Receive
Principal and Interest. Subject to the provisions in this Indenture (including
Sections 3.01 and 5.03 hereof) limiting the right to recover amounts due on a
Note to recovery from amounts in the portion of the Trust Estate relating to
such Note, the Holder of any Note shall have the right, to the extent permitted
by applicable law, which right is absolute and unconditional, to receive payment
of each installment of interest on such Note on the respective Distribution Date
for such installments of interest, to receive payment of each installment of
principal of such Note when due (or, in the case of any Note called for
redemption, on the date fixed for such redemption) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
Section 5.10. Restoration of Rights and Remedies. If the
Indenture Trustee, the Note Insurer or any Noteholder has instituted any
Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason, or has been
determined to be adverse to the Indenture Trustee, the Note Insurer or to such
Noteholder, then and in every such case the Indenture Trustee, the Note Insurer
and the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee, the Note Insurer
and the Noteholders shall continue as though no such Proceeding had been
instituted.
Section 5.11. Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Indenture Trustee, the Note
Insurer or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
26
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 5.12. Delay or Omission Not Waiver. No delay or
omission of the Indenture Trustee, the Note Insurer or of any Holder of any Note
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article V or by
law to the Indenture Trustee, the Note Insurer or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Note Insurer or by the Noteholders with the prior consent
of the Note Insurer, as the case may be.
Section 5.13. Control by Noteholders. The Holders of Notes
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of both Classes on the applicable Record Date shall, with the consent of
the Note Insurer, have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee 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) any direction to the Indenture Trustee to undertake a Sale of the
Trust Estate shall be by the Holders of Notes representing the percentage
of the Note Principal Balance of the Outstanding Notes specified in
Section 5.17(b)(i) hereof, unless Section 5.17(b)(ii) hereof is
applicable; and
(c) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01 hereof, the Indenture
Trustee need not take any action that it determines might involve it in
liability or be unjustly prejudicial to the Noteholders not consenting.
Section 5.14. Waiver of Past Defaults. The Holders of Notes
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of both Classes on the applicable Record Date may on behalf of the Holders
of all the Notes, and with the consent of the Note Insurer, waive any past
Default hereunder and its consequences, except a Default:
(a) in the payment of principal or any installment of interest on any
Note; or
(b) in respect of a covenant or provision hereof that under Section
9.02 hereof cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
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Section 5.15. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.15 shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate Notes representing more than 10% of the
Note Principal Balance of the Outstanding Notes of both Classes, or to any suit
instituted by any Noteholder for the enforcement of the payment of any Interest
Distribution Amount or Principal Distribution Amount on any Note on or after the
related Distribution Date or for the enforcement of the payment of principal of
any Note on or after the Final Stated Maturity Date (or, in the case of any Note
called for redemption, on or after the applicable Redemption Date).
Section 5.16. Waiver of Stay or Extension Laws. The Trust
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 of law wherever enacted, now or
at any time hereafter in force, that may affect the covenants in, or the
performance of, this Indenture; and the Trust (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 5.17. Sale of Trust Estate (a) The power to effect any
sale (a "Sale") of any portion of the Trust Estate pursuant to Section 5.04
hereof shall not be exhausted by any one or more Sales as to any portion of the
Trust Estate remaining unsold, but shall continue unimpaired until the entire
Trust Estate shall have been sold or all amounts payable on the Notes and under
this Indenture with respect thereto shall have been paid. The Indenture Trustee
may from time to time postpone any public Sale by public announcement made at
the time and place of such Sale.
(b) To the extent permitted by law, the Indenture Trustee
shall not in any private Sale sell or otherwise dispose of the Trust Estate, or
any portion thereof, unless:
(i) the Holders of Notes representing not less than 50% of
the Note Principal Balance of the Notes of both Classes then
Outstanding consent to or direct the Indenture Trustee to make such
Sale; or
(ii) the proceeds of such Sale would be not less than the
entire amount that would be payable to the Holders of the Notes, in
full payment thereof in accordance with Section 5.07 hereof, on the
Distribution Date next succeeding the date of such Sale.
The purchase by the Indenture Trustee of all or any portion of
the Trust Estate at a private Sale shall not be deemed a Sale or disposition
thereof for purposes of this Section
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5.17(b). In the absence of a Note Insurer Default, no Sale hereunder shall be
effective without the consent of the Note Insurer.
(c) Unless the Holders of all Outstanding Notes have otherwise
consented or directed the Indenture Trustee, at any public Sale of all or any
portion of the Trust Estate at which a minimum bid equal to or greater than the
amount described in paragraph (ii) of subsection (b) of this Section 5.17 has
not been established by the Indenture Trustee and no Person bids an amount equal
to or greater than such amount, the Indenture Trustee, acting in its capacity as
Indenture Trustee (i) on behalf of the Noteholders and the Note Insurer, shall
prevent such Sale and bid an amount (which shall include the Indenture Trustee's
right, in its capacity as Indenture Trustee, to credit bid) at least $1.00 more
than the highest other bid in order to preserve the Trust Estate on behalf of
the Noteholders and the Note Insurer.
(d) In connection with a Sale of all or any portion of the
Trust Estate:
(i) any Holder or Holders of Notes may bid for and purchase
the property offered for Sale, and upon compliance with the terms of
sale may hold, retain and possess and dispose of such property, without
further accountability, and may, in paying the purchase money therefor,
deliver any Outstanding Notes or claims for interest thereon in lieu of
cash up to the amount that shall, upon distribution of the net proceeds
of such Sale, be payable thereon, and such Notes, in case the amounts
so payable thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after being appropriately stamped to
show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any public Sale thereof,
and, in lieu of paying cash therefor, may make settlement for the
purchase price by crediting the gross Sale price against the sum of (A)
the amount that would be payable to the Holders of the Notes as a
result of such Sale in accordance with Section 5.07 hereof on the
Distribution Date next succeeding the date of such Sale and (B) the
expenses of the Sale and of any Proceedings in connection therewith
which are reimbursable to it, without being required to produce the
Notes in order to complete any such Sale or in order for the net Sale
price to be credited against such Notes, and any property so acquired
by the Indenture Trustee shall be held and dealt with by it in
accordance with the provisions of this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate in connection with a Sale thereof,
(iv) the Indenture Trustee is hereby irrevocably appointed
the agent and attorney-in-fact of the Trust to transfer and convey its
interest in any portion of the Trust Estate in connection with a Sale
thereof, and to take all action necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys.
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Section 5.18. Action on Notes. The Indenture Trustee's right
to seek and recover judgment under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Indenture Trustee, the Note Insurer or the Holders of Notes shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Trust or by the levy of any execution under such judgment upon any portion of
the Trust Estate.
Section 5.19. No Recourse to Other Trust Estates or Other
Assets of the Trust. The Trust Estate Granted to the Indenture Trustee as
security for the Notes serves as security only for the Notes. Holders of the
Notes shall have no recourse against the trust estate granted as security for
any other series of Notes issued by the Trust, and no judgment against the Trust
for any amount due with respect to the Notes may be enforced against either the
trust estate securing any other series or any other assets of the Trust, nor may
any prejudgment lien or other attachment be sought against any such other trust
estate or any other assets of the Trust. The Noteholders shall have no recourse
against the Owner Trustee, the Indenture Trustee, Note Registrar, Authenticating
Agent, Collateral Agent, the Depositor, the Servicer or any of their respective
Affiliates, or to the assets of any of the foregoing entities.
Section 5.20. Application of the Trust Indenture Act. Pursuant
to Section 316(a) of the TIA, all provisions automatically provided for in
Section 316(a) are hereby expressly excluded.
Section 5.21. Note Insurer Default. Notwithstanding anything
elsewhere in this Indenture or in the Notes to the contrary, if a Note Insurer
Default exists, the provisions of this Article V and all other provisions of
this Indenture which (a) permit the Note Insurer to exercise rights of the
Noteholders, (b) restrict the ability of the Noteholders or the Indenture
Trustee to act without the consent or approval of the Note Insurer, (c) provide
that a particular act or thing must be acceptable to the Note Insurer, (d)
permit the Note Insurer to direct (or otherwise to require) the actions of the
Indenture Trustee or the Noteholders, (e) provide that any action or omission
taken with the consent, approval or authorization of the Note Insurer shall be
authorized hereunder or shall not subject the party taking or omitting to take
such action to any liability hereunder or (f) which have a similar effect, shall
be of no further force and effect and the Indenture Trustee shall administer the
Trust Estate and perform its obligations hereunder solely for the benefit of the
Holders of the Notes. Nothing in the foregoing sentence, nor any action taken
pursuant thereto or in compliance therewith, shall be deemed to have released
the Note Insurer from any obligation or liability it may have to any party or to
the Noteholders hereunder, under any other agreement, instrument or document
(including, without limitation, the Note Insurance Policy) or under applicable
law.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee. (a) If an Event of
Default has occurred and is continuing, the Indenture Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a
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prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee need perform only those duties that are
specifically set forth in this Indenture and no others 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
request and 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. The Indenture Trustee shall, however,
examine such certificates and opinions to determine whether they conform
on their face to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of subsection
(b) of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Sections 5.13 or 5.17
hereof or exercising any trust or power or remedy conferred upon the
Indenture Trustee under this Indenture.
(d) Except with respect to duties of the Indenture Trustee
prescribed by the TIA, as to which this Section 6.01(d) shall not apply, for all
purposes under this Indenture, the Indenture Trustee shall not be deemed to have
notice or knowledge of any Event of Default described in Sections 5.01(e) or
5.01(f) hereof or any Default described in Sections 5.01(c) or 5.01(d) hereof or
of any event described in Section 3.05 hereof unless a Responsible Officer
assigned to and working in the Indenture Trustee's corporate trust department
and having direct responsibility for this Indenture has actual knowledge thereof
or unless written notice of any event that is in fact such an Event of Default
or Default is received by the Indenture Trustee at the Corporate Trust Office,
and such notice references the Notes generally, the Trust, the Trust Estate or
this Indenture.
(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any 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 for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it under this Indenture or the other
Basic Documents.
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(f) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to the provisions of this Section 6.01.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Trust in and to the Trust Estate following an Event of Default
and a consequent declaration of acceleration of the maturity of the Notes,
whether such extinguishment occurs through a Sale of the Trust Estate to another
Person, the acquisition of the Trust Estate by the Indenture Trustee or
otherwise, the rights, powers and duties of the Indenture Trustee with respect
to the Trust Estate (or the proceeds thereof), the Noteholders and the Note
Insurer and the rights of Noteholders and the Note Insurer shall continue to be
governed by the terms of this Indenture.
(h) The Indenture Trustee, the Collateral Agent or any
successor Collateral Agent appointed pursuant to Section 9.08 of the Sale and
Servicing Agreement shall at all times retain possession of the Indenture
Trustee's Mortgage Files in the State of Delaware or the State of New York (or,
with respect to, as initial Collateral Agent, in the State of _____), except for
those Indenture Trustee's Mortgage Files or portions thereof released to the
Servicer or the Note Insurer pursuant to this Indenture, the Loan Sale Agreement
or the Sale and Servicing Agreement.
(i) Subject to the other provisions of this Indenture and
without limiting the generality of this Section 6.01, 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, 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 from funds available in the Distribution
Accounts or (D) to confirm or verify the contents of any reports or certificates
of the 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.
Section 6.02. Notice of Default. Immediately after the
occurrence of any Default known to the Indenture Trustee, the Indenture Trustee
shall transmit by mail to the Note Insurer and the Depositor notice of each such
Default and, within ninety (90) days after the occurrence of any Default known
to the Indenture Trustee, the Indenture Trustee shall transmit by mail to all
Holders of Notes notice of each such Default, unless such Default shall have
been cured or waived; provided, however, that in no event shall the Indenture
Trustee provide notice, or fail to provide notice of a Default known to the
Indenture Trustee in a manner contrary to the requirements of the Trust
Indenture Act. Concurrently with the mailing of any such notice to the Holders
of the Notes, the Indenture Trustee shall transmit by mail a copy of such notice
to the Rating Agencies.
Section 6.03. Rights of Indenture Trustee. (a) Except as
otherwise provided in Section 6.01 hereof, the Indenture Trustee may rely on,
and be protected in acting or refraining to act upon any document believed by it
to be genuine and to have been signed or presented by
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the proper Person. The Indenture Trustee need not investigate any fact or matter
stated in any such document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officer's Certificate or an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on any such Officer's Certificate or Opinion of Counsel.
(c) With the consent of the Note Insurer, which consent shall
not be unreasonably withheld, the Indenture Trustee may act through agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes to be authorized or
within its rights or powers.
(e) 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 or the Note Insurer,
pursuant to the provisions of this Indenture, unless such Noteholders or the
Note Insurer shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(f) 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 Noteholders or the Note Insurer; 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.
(g) 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 anything other than its
negligence or willful misconduct in the performance of such act.
Section 6.04. Not Responsible for Recitals or Issuance of
Notes. The recitals contained herein and in the Notes, except, with respect to
the Indenture Trustee, the certificates of authentication on the Notes, shall be
taken as the statements of the Trust, and the Owner Trustee, the Indenture
Trustee and the Authenticating Agent assume no responsibility for their
correctness. The Owner Trustee and Indenture Trustee make no representations
with respect to the Trust Estate or as to the validity or sufficiency of this
Indenture or of the Notes. Neither the Indenture Trustee nor the Owner Trustee
shall be accountable for the use or application by the Trust of the Notes or the
proceeds thereof or any money paid to the Trust or upon a Trust Order pursuant
to the provisions hereof.
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Section 6.05. May Hold Notes. The Indenture Trustee, any
Agent, or any other agent of the Trust, in its individual or any other capacity,
may become the owner or pledgee of Notes and, subject to Sections 6.07 and 6.13
hereof, may otherwise deal with the Trust or any Affiliate of the Trust with the
same rights it would have if it were not Indenture Trustee, Agent or such other
agent.
Section 6.06. Money Held in Trust. Money held by the Indenture
Trustee in trust hereunder need not be segregated from other funds except to the
extent required by this Indenture or by law. The Indenture Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Trust and except to the extent of income or other gain
on investments that are obligations of the Indenture Trustee, in its commercial
capacity, and income or other gain actually received by the Indenture Trustee on
investments, which are obligations of others.
Section 6.07. Eligibility, Disqualification. Irrespective of
whether this Indenture is qualified under the TIA, this Indenture shall always
have an indenture trustee who satisfies the requirements of TIA Sections
310(a)(1) and 310(a)(5). The Indenture Trustee shall always have a combined
capital and surplus as stated in Section 6.08 hereof. The Indenture Trustee
shall be subject to TIA Section 310(b).
Section 6.08. Indenture Trustee's Capital and Surplus. The
Indenture Trustee shall at all times (a)(i) have a combined capital and surplus
of at least $50,000,000, or (ii) be a member of a bank holding company system,
the aggregate combined capital and surplus of which is at least $100,000,000 and
(b) be rated (or have long-term debt rated) "BBB" or better by S&P and "Baa2" by
Xxxxx'x; provided, however, that the Indenture Trustee's separate capital and
surplus shall at all times be at least the amount required by TIA Section
310(a)(2). If the Indenture Trustee publishes annual reports of condition of the
type described in TIA Section 310(a)(1), its combined capital and surplus for
purposes of this Section 6.08 shall be as set forth in the latest such report.
If at any time the Indenture Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.08 and TIA Section 310(a)(2), it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article VI.
Section 6.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article VI shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 6.10 hereof.
(b) The Indenture Trustee may resign at any time by giving
written notice thereof to the Trust, the Note Insurer and each Rating Agency. If
an instrument of acceptance by a successor Indenture Trustee shall not have been
delivered to the Indenture Trustee within thirty (30) days after the giving of
such notice of resignation, the resigning Indenture Trustee may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee.
(c) The Indenture Trustee may be removed at any time by the
Note Insurer or, with the consent of the Note Insurer, by Act of the Holders
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of both Classes, by written notice delivered to the Indenture Trustee and
to the Trust.
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(d) If at any time:
(i) the Indenture Trustee shall have a conflicting interest
prohibited by Section 6.07 hereof and shall fail to resign or eliminate
such conflicting interest in accordance with Section 6.07 hereof after
written request therefor by the Trust or by any Noteholder; or
(ii) the Indenture Trustee shall cease to be eligible under
Section 6.08 hereof or shall become incapable of acting or shall be
adjudged bankrupt or insolvent, or a receiver of the Indenture Trustee
or of its property shall be appointed, or any public officer shall take
charge or control of the Indenture Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation;
then, in any such case, (x) the Owner Trustee, on behalf of the Trust, by a
Trust Order, with the consent of the Note Insurer, may remove the Indenture
Trustee, and the Owner Trustee, on behalf of the Trust by a Trust Order, shall
join with the Indenture Trustee in the execution, delivery and performance of
all instruments and agreements necessary or proper to appoint a successor
Indenture Trustee acceptable to the Note Insurer and to vest in such successor
Indenture Trustee any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Indenture; provided, however,
if the Owner Trustee, on behalf of the Trust and the Note Insurer do not join in
such appointment within fifteen (15) days after the receipt by it of a request
to do so, or in case an Event of Default has occurred and is continuing, the
Indenture Trustee may petition a court of competent jurisdiction to make such
appointment, or (y) subject to Section 5.15 hereof, and, in the case of a
conflicting interest as described in clause (i) above, unless the Indenture
Trustee's duty to resign has been stayed as provided in TIA Section 310(b), the
Note Insurer or any Noteholder who has been a bona fide Holder of a Note for at
least six (6) months may, on behalf of himself and all others similarly
situated, with the consent of the Note Insurer, petition any court of competent
jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of the
Indenture Trustee for any cause, the Owner Trustee, on behalf of the Trust, by a
Trust Order shall promptly appoint a successor Indenture Trustee acceptable to
the Note Insurer. If within one (1) year after such resignation, removal or
incapability or the occurrence of such vacancy a successor Indenture Trustee
shall be appointed by the Note Insurer or, with the consent of the Note Insurer,
by Act of the Holders of Notes representing more than 50% of the Note Principal
Balance of the Outstanding Notes of both Classes delivered to the Trust and the
retiring Indenture Trustee, the successor Indenture Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor
Indenture Trustee and supersede the predecessor Indenture Trustee appointed by
the Trust. If no successor Indenture Trustee shall have been so appointed by the
Trust, the Note Insurer or Noteholders and shall have accepted appointment in
the manner hereinafter provided, any Noteholder who has been a bona fide Holder
of a Note for at least six (6) months may, on behalf of himself and all others
similarly situated, with the consent of the Note Insurer, petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee.
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(f) The Servicer, on behalf of the Trust, shall give notice of
each resignation and each removal of the Indenture Trustee and each appointment
of a successor Indenture Trustee to the Holders of Notes and the Note Insurer.
Each notice shall include the name of the successor Indenture Trustee and the
address of its Corporate Trust Office.
Section 6.10. Acceptance of Appointment by Successor Indenture
Trustee. Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Trust, the Note Insurer and the retiring
Indenture Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective
and such successor Indenture Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Indenture Trustee. Notwithstanding the foregoing, on request of
the Owner Trustee, on behalf of the Trust, or the successor Indenture Trustee,
such retiring Indenture Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Indenture Trustee all the
rights, powers and trusts of the retiring Indenture Trustee, and shall duly
assign, transfer and deliver to such successor Indenture Trustee all property
and money held by such retiring Indenture Trustee hereunder. Upon request of any
such successor Indenture Trustee, the Owner Trustee, on behalf of the Trust,
shall, with the written consent of the Note Insurer, execute and deliver any and
all instruments for more fully and certainly vesting in and confirming to such
successor Indenture Trustee all such rights, powers and trusts.
No successor Indenture Trustee shall accept its appointment
unless at the time of such acceptance such successor Indenture Trustee shall be
qualified and eligible under this Article VI.
Section 6.11. Merger, Conversion, Consolidation or Succession
to Business of Indenture Trustee. Any corporation or banking association into
which the Indenture Trustee may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from any
merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any corporation or banking association succeeding to all or
substantially all of the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee hereunder; provided, that such
corporation or banking association shall be otherwise qualified and eligible
under this Article VI, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes have
been authenticated, but not delivered, by the Indenture Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Indenture Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Indenture Trustee had
authenticated such Notes.
Section 6.12. Preferential Collection of Claims Against Trust.
The Indenture Trustee (and any co-trustee or separate trustee) shall be subject
to TIA Section 311(a), excluding any creditor relationship listed in TIA Section
31l(b), and an Indenture Trustee (and any co-trustee or separate trustee) who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.13. Co-Indenture Trustees and Separate Indenture
Trustees. At any time or times, for the purpose of meeting the legal
requirements of the TIA or of any jurisdiction
36
in which any of the Trust Estate may at the time be located, the Indenture
Trustee shall have power to appoint, and, upon the written request of the
Indenture Trustee, the Note Insurer or of the Holders of Notes representing more
than 50% of the Note Principal Balance of the Outstanding Notes of both Classes
with respect to which a co-trustee or separate trustee is being appointed, with
the written consent of the Note Insurer, the Owner Trustee, on behalf of the
Trust, shall for such purpose join with the Indenture Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Indenture Trustee either to act
as co-trustee, jointly with the Indenture Trustee, of all or any part of the
Trust Estate, or to act as separate trustee of any such property, in either case
with such powers as may be provided in the instrument of appointment, and to
vest in such Person or Persons in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the other provisions of
this Section 6.13. If the Owner Trustee, on behalf of the Trust, does not join
in such appointment within fifteen (15) days after the receipt by it of a
request to do so, or in case an Event of Default has occurred and is continuing,
the Indenture Trustee alone shall have power to make such appointment. All fees
and expenses of any co-trustee or separate trustee shall be payable by the
Trust.
Should any written instrument from the Trust be required by
any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right or power, any
and all such instruments shall, on request, be executed, acknowledged and
delivered by the Owner Trustee, on behalf of the Trust, with the written consent
of the Note Insurer.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
terms:
(a) The Notes shall be authenticated and delivered and all
rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Indenture Trustee
hereunder, shall be exercised, solely by the Indenture Trustee.
(b) The rights, powers, duties and obligations hereby
conferred or imposed upon the Indenture Trustee in respect of any
property covered by such appointment shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee or by the Indenture
Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Indenture Trustee
shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee.
(c) The Indenture Trustee at any time, by an instrument in
writing, executed by it, with the concurrence of the Owner Trustee, on
behalf of the Trust, evidenced by a Trust Order, may accept the
resignation of or remove any co-trustee or separate trustee appointed
under this Section 6.13, and, in case an Event of Default has occurred
and is continuing, the Indenture Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Trust, but
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upon the written request of the Indenture Trustee, the Owner Trustee,
on behalf of the Trust, shall join with the Indenture Trustee in the
execution, delivery and performance of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee so resigned or removed
may be appointed in the manner provided in this Section 6.13.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture
Trustee, or any other such trustee hereunder.
(e) Any Act of Noteholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
Section 6.14. Authenticating Agents. The Owner Trustee, acting
at the direction of the Majority Certificateholders, shall appoint an
Authenticating Agent with power to act on the Trust's behalf and subject to the
direction of the Majority Certificateholders in the authentication and delivery
of the Notes designated for such authentication and, containing provisions
therein for such authentication (or with respect to which the Owner Trustee
acting at the direction of the Majority Certificateholders, has made other
arrangements, satisfactory to the Indenture Trustee and such Authenticating
Agent, for notation on the Notes of the authority of an Authenticating Agent
appointed after the initial authentication and delivery of such Notes) in
connection with transfers and exchanges under Section 2.06 hereof, as fully to
all intents and purposes as though the Authenticating Agent had been expressly
authorized by Section 2.06 hereof to authenticate and deliver Notes. For all
purposes of this Indenture (other than in connection with the authentication and
delivery of Notes pursuant to Sections 2.05 and 2.11 hereof in connection with
their initial issuance), the authentication and delivery of Notes by the
Authenticating Agent pursuant to this Section 6.14 shall be deemed to be the
authentication and delivery of Notes "by the Indenture Trustee." Such
Authenticating Agent shall at all times be a Person that both meets the
requirements of Section 6.07 hereof for the Indenture Trustee hereunder and has
an office for presentation of Notes in the United States of America. The
Indenture Trustee shall initially be the Authenticating Agent and shall be the
Note Registrar as provided in Section 2.06 hereof. The office from which the
Indenture Trustee shall perform its duties as Note Registrar and Authenticating
Agent shall be its Corporate Trust Office. Any Authenticating Agent appointed
pursuant to the terms of this Section 6.14 or pursuant to the terms of any
supplemental indenture shall deliver to the Indenture Trustee as a condition
precedent to the effectiveness of such appointment an instrument accepting the
trusts, duties and responsibilities of Authenticating Agent and of Note
Registrar or co-Note Registrar and indemnifying the Indenture Trustee for and
holding the Indenture Trustee harmless against, any loss, liability or expense
(including reasonable attorneys' fees) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance, administration
of the trust or exercise of authority by such Authenticating Agent, Note
Registrar or co-Note Registrar.
Any corporation or banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from any
merger, consolidation or conversion to which any Authenticating Agent shall be a
party, or any corporation or banking association succeeding to the corporate
trust business of any Authenticating Agent, shall be the successor of the
Authenticating Agent
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hereunder, if such successor corporation is otherwise eligible under this
Section 6.14, without the execution or filing of any further act on the part of
the parties hereto or the Authenticating Agent or such successor corporation or
banking association.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trust. The Owner Trustee, acting at the
direction of the Majority Certificateholders, may at any time terminate the
agency of any Authenticating Agent by giving written notice of termination to
such Authenticating Agent and the Indenture Trustee. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section 6.14, the
Owner Trustee, acting at the direction of the Majority Certificateholders, shall
promptly appoint a successor Authenticating Agent, shall give written notice of
such appointment to the Indenture Trustee, and shall mail notice of such
appointment to all Holders of Notes.
The Indenture Trustee agrees, subject to Section 6.01(e)
hereof, to pay to any Authenticating Agent from time to time reasonable
compensation for its services and the Indenture Trustee shall be entitled to be
reimbursed for such payments pursuant to Section 6.16 hereof. The provisions of
Sections 2.09, 6.04 and 6.05 hereof shall be applicable to any Authenticating
Agent.
Section 6.15. Review of Mortgage Files. (a) The Indenture
Trustee shall, on or prior to the Closing Date, execute and deliver the
acknowledgement of receipt of the Note Insurance Policy required by Section
2.06(a) of the Sale and Servicing Agreement.
(b) The Indenture Trustee shall cause the Collateral Agent to
(i) on or prior to the Closing Date, execute and deliver the acknowledgement of
receipt of the Mortgage Loans required by Section 2.06(b)(i) of the Sale and
Servicing Agreement, (ii) on or prior to thirty (30) days following the Closing
Date, execute and deliver the Initial Certificate required by Section
2.06(b)(ii) of the Sale and Servicing Agreement, and (iii) on or prior to ninety
(90) days following the Closing Date, execute and deliver the Final
Certification required by Section 2.06(b)(iii) of the Sale and Servicing
Agreement.
(c) In giving each of the acknowledgements, the Initial
Certification and the Final Certification referred to in clauses (a) and (b) of
this Section 6.15, neither the Indenture Trustee nor the Collateral Agent shall
be under any duty or obligation (i) to inspect, review or examine any such
documents, instruments, securities or other papers to determine that they or the
signatures thereto are genuine, enforceable, or appropriate for the represented
purpose or that they have actually been recorded or that they are other than
what they purport to be on their face or (ii) to determine whether any Mortgage
File should include a flood insurance policy, any rider, addenda, surety or
guaranty agreement, power of attorney, buy down agreement, assumption agreement,
modification agreement, written assurance or substitution agreement.
(d) In the event that the Mortgage Loans are required to be
recorded in accordance with the provisions of Article II of the Sale and
Servicing Agreement, no later than the fifth Business Day of each third month,
commencing in ________, the Indenture Trustee shall cause the Collateral Agent
to deliver to the Servicer and the Note Insurer a recordation report dated as of
the first day of such month, identifying those Mortgage Loans for which it has
39
not yet received (i) an original recorded Mortgage or a copy thereof certified
to be true and correct by the public recording office in possession of such
Mortgage or (ii) an original recorded Assignment of Mortgage to the Indenture
Trustee and any required intervening Assignments of Mortgage or a copy thereof
certified to be a true and correct copy by the public recording office in
possession of such Assignment of Mortgage.
Section 6.16. Indenture Trustee Fees and Expenses. The
Indenture Trustee shall be entitled to receive the Indenture Trustee Fee on each
Distribution Date as provided herein. The Indenture Trustee also shall be
entitled to (i) payment of or reimbursement for expenses, disbursements and
advances incurred or made by the Indenture Trustee in accordance with any of the
provisions of this Indenture (including, but not limited to, the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ), and (ii) indemnification against losses,
liability and expenses, including reasonable attorney's fees, incurred, arising
out of or in connection with this Indenture, the Notes and the Sale and
Servicing Agreement. The Indenture Trustee and any director, officer, employee
or agent of the Indenture Trustee shall be indemnified by the Trust and held
harmless against any loss, liability or reasonable expense incurred in
connection with this Indenture or the Notes, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance by the Indenture Trustee of its duties hereunder. The
obligations of the Servicer and the Trust under this Section 6.16 shall survive
termination of the Trust and payment of the Notes, and shall extend to any
co-Indenture Trustee or separate-Indenture Trustee appointed pursuant to this
Article VI.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Note Registrar to Furnish Indenture Trustee
Names and Addresses of Noteholders. (a) The Note Registrar shall furnish or
cause to be furnished to the Indenture Trustee (i) semiannually, not less than
forty-five (45) days nor more than sixty (60) days after the Distribution Date
occurring closest to six (6) months after the Closing Date and each Distribution
Date occurring at six (6) month intervals thereafter, all information in the
possession or control of the Note Registrar, in such form as the Indenture
Trustee may reasonably require, as to names and addresses of the Holders of
Notes, and (ii) at such other times, as the Indenture Trustee may request in
writing, within thirty (30) days after receipt by the Note Registrar of any such
request, a list of similar form and content as of a date not more than ten (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.
(b) In addition to furnishing to the Indenture Trustee the
Noteholder lists, if any, required under clause (a) of this Section 7.01, the
Note Registrar shall also furnish all Noteholder lists, if any, required under
Section 3.03 hereof at the times required by such Section 3.03.
Section 7.02. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list, if any, furnished to the Indenture Trustee as
provided in Section 7.01 hereof and the names and addresses of the Holders
40
of Notes received by the Indenture Trustee in its capacity as Note Registrar.
The Indenture Trustee may destroy any list furnished to it as provided in
Section 7.01 hereof 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 Trust, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
Section 7.03. Reports by Indenture Trustee. (a) Within sixty
(60) days after December 31 of each year (the "reporting date"), commencing with
the year after the issuance of the Notes, (i) the Indenture Trustee shall, if
required by TIA Section 313(a), mail to all Holders a brief report dated as of
such reporting date that complies with TIA Section 313(a); (ii) the Indenture
Trustee shall, to the extent not set forth in the Indenture Trustee's Remittance
Report pursuant to Section 2.08(d) hereof, also mail to Holders of Notes and the
Note Insurer with respect to which it has made advances, any reports with
respect to such advances that are required by TIA Section 313(b)(2); and, the
Indenture Trustee shall also mail to Holders of Notes and the Note Insurer any
reports required by TIA Section 313(b)(1). For purposes of the information
required to be included in any such reports pursuant to TIA Sections 313(a)(2),
313(b)(1) (if applicable), or 313(b)(2), the principal amount of indenture
securities outstanding on the date as of which such information is provided
shall be the Note Principal Balance of the then Outstanding Notes covered by the
report.
(b) A copy of each report required under this Section 7.03
shall, at the time of such transmission to Holders of Notes and the Note Insurer
be filed by the Indenture Trustee with the Commission and with each securities
exchange upon which the Notes are listed. The Servicer, on behalf of the Trust,
will notify the Indenture Trustee when the Notes are listed on any securities
exchange.
Section 7.04. Reports by Trust. The Servicer, on behalf of the
Trust, (a) shall deliver to the Indenture Trustee within fifteen (15) days after
the Trust 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 by rules and regulations
prescribe) that the Trust is required to file with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and (b)
shall also comply with the other provisions of TIA Section 314(a).
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. Accounts; Investment; Collection of Moneys. (a)
The Trust hereby directs the Indenture Trustee to establish, on or before the
Closing Date, for each Class of Notes, at its Corporate Trust Office, one or
more Eligible Accounts that shall collectively be the "Distribution Account" for
such Class. The Indenture Trustee shall promptly deposit in the related
Distribution Account (i) the Servicer Remittance Amount for the related Pool
received by
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it from the Servicer on the Servicer Distribution Date pursuant to the Sale and
Servicing Agreement, (ii) any other funds from any deposits for such Pool to be
made by the Servicer pursuant to the Sale and Servicing Agreement, (iii) any
amount for such Pool required to be deposited in such Distribution Account
pursuant to this Section 8.01, (iv) all amounts for such Pool received pursuant
to Section 8.03 hereof, (v) any amount for such Pool required to be deposited
pursuant to Section 8.05 hereof, (vi) on each Distribution Date, in accordance
with the Servicer Remittance Report, the Shortfall Amount for the related Class,
until paid in full, first, from the Distribution Account relating to the other
Class of Notes, to the extent of the Net Monthly Excess Cashflow from the other
Pool of Mortgage Loans remaining after payment of any Net Mortgage Loan Interest
Shortfalls for such other Pool, second, from the Cross-collateralization Reserve
Account relating to this Class of Notes, and third, from the
Cross-collateralization Reserve Account relating to the other Class of Notes,
and (vii) all other amounts for such Pool received for deposit in such
Distribution Account, including the payment of any Loan Repurchase Price for a
Mortgage Loan in such Pool received by the Indenture Trustee. All amounts that
are deposited from time to time in a Distribution Account are subject to
withdrawal by the Indenture Trustee for the purposes set forth in Sections 8.02
hereof. All funds withdrawn from a Distribution Account pursuant to Section 8.02
hereof for the purpose of making payments to the Holders of Notes shall be
applied in accordance with Sections 3.03 and 8.02 hereof.
(b) The Trust hereby directs the Indenture Trustee to
establish for each Class of Notes, at its Corporate Trust Office, an Eligible
Account which shall be the "Pre-Funding Account" for such Class of Notes. On the
Closing Date, the Indenture Trustee shall deposit the Original Pre-Funded Amount
for each Class of Notes in the related Pre-Funding Account from the proceeds of
the sale of the related Class of Notes. The Indenture Trustee shall withdraw and
distribute or cause to be distributed funds on deposit therein only at the times
specified below, based on written instructions provided by the Servicer or other
party as indicated:
(i) on any Subsequent Transfer Date, the Depositor shall
instruct in writing the Indenture Trustee to withdraw from the related
Pre-Funding Account an amount equal to 100% of the aggregate Principal
Balances as of the related Subsequent Cut-Off Date of the Subsequent
Mortgage Loans sold to the Trust in respect of the related Pool and
pledged to the Indenture Trustee, for the benefit of the Noteholders
and the Note Insurer, on such Subsequent Transfer Date and pay such
amount to or upon the order of the Depositor upon satisfaction of the
conditions set forth in Section 2.14 hereof with respect to such
transfer; the Indenture Trustee may conclusively rely on such written
instructions from the Depositor;
(ii) if the Pre-Funding Amount for a Class of Notes (exclusive
of Pre-Funding Earnings for such Class) has been reduced to $100,000 or
less by the _________ Distribution Date, then, on such Distribution
Date, after giving effect to any reductions in the related Pre-Funding
Account on such date, the Indenture Trustee shall withdraw, from the
related Pre-Funding Account on such date and deposit in the
Distribution Account relating to such Class, the amount on deposit in
such Pre-Funding Account, other than any Pre-Funding Earnings, for
payment to the related Noteholders as a prepayment of principal on such
Distribution Date;
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(iii) if any amounts remain on deposit in either Pre-Funding
Account at the close of business on ________, the Indenture Trustee
shall withdraw, from such Pre-Funding Account on the following
Distribution Date and deposit in the Distribution Account relating to
the related Class, the amount on deposit in such Pre-Funding Account,
other than any Pre-Funding Earnings, for payment to the related
Noteholders as a prepayment of principal on such Distribution Date; and
(iv) on the _________ and _________ Distribution Dates, the
Indenture Trustee shall transfer from each Pre-Funding Account to the
related Distribution Account, the Pre-Funding Earnings, if any,
applicable to such Distribution Date.
(c) The Trust hereby directs the Indenture Trustee to
establish for each Class of Notes, at its Corporate Trust Office, an Eligible
Account which shall be the "Capitalized Interest Account" for such Class of
Notes. On the Closing Date, the Indenture Trustee shall deposit the Original
Capitalized Interest Amount for each Class of Notes in the related Capitalized
Interest Account from the proceeds of the sale of the related Class of Notes.
The Indenture Trustee shall withdraw and distribute or cause to be distributed
funds on deposit therein only at the times specified below, based on written
instructions provided by the Servicer or other party as indicated:
(i) on the ________ and the _________ Distribution Dates, the
Indenture Trustee shall transfer from each Capitalized Interest Account
to the related Distribution Account, the applicable Capitalized
Interest Requirement, if any, for such Class and such Distribution
Date; and
(ii) on the Distribution Date immediately following, or on
which, the amount on deposit in the related Pre-Funding Account is
reduced to zero, any amounts remaining in either Capitalized Interest
Account, after taking into account the transfers in respect of the
Distribution Date described in clause (i) above, shall be paid to the
Depositor.
(d) The Trust hereby directs the Indenture Trustee to
establish, on or before the Closing Date, for each Class of Notes, at its
Corporate Trust Office, an Eligible Account that shall be the
"Cross-collateralization Reserve Account" for such Class. The Indenture Trustee
shall deposit and withdraw funds in each Cross-collateralization Reserve Account
in accordance with the provisions of Sections 8.01(a) and 8.02(a) hereof.
(e) So long as no Default or Event of Default shall have
occurred and be continuing, amounts held in the Accounts, other than the Note
Insurance Payment Account, shall be invested in Permitted Investments, which
Permitted Investments shall mature no later than the Business Day preceding the
immediately following Distribution Date.
All income or other gains, if any, from investment of moneys
deposited in the Distribution and Collection Accounts shall be for the benefit
of the Servicer and on each Distribution Date, any such amounts may be released
from the Accounts and paid to the Servicer as part of its compensation for
acting as Servicer. Any loss resulting from such investment of moneys deposited
in an Account shall be reimbursed immediately as incurred to the related
43
Account by the Servicer. Subject to Section 6.01 hereof and the preceding
sentence, neither the Indenture Trustee nor the Servicer shall in any way be
held liable by reason of any insufficiency in the Accounts.
The Indenture Trustee shall not in any way be held liable by
reason of any insufficiency in any Account held by the Indenture Trustee
resulting from any investment loss on any Permitted Investment included therein
(except to the extent that the Indenture Trustee is the obligor and has
defaulted thereon).
(f) 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 hold
all such money and property received by it as part of the Trust Estate and shall
apply it as provided in this Indenture.
If the Indenture Trustee shall not have received the Servicer
Remittance Amount by close of business on any related Servicer Distribution
Date, the Indenture Trustee shall, unless the Servicer shall have made
provisions satisfactory to the Indenture Trustee for delivery to the Indenture
Trustee of an amount equal to such Servicer Remittance Amount, deliver a notice,
with a copy to the Note Insurer, to the Servicer of its failure to remit such
Servicer Remittance Amount and that such failure, if not remedied by the close
of business on the Business Day after the date upon which such notice is
delivered to the Servicer, shall constitute a Servicer Event of Default under
the Sale and Servicing Agreement. If the Indenture Trustee shall subsequently
receive any such Servicer Remittance Amount by the close of business on such
Business Day, such Servicer Event of Default shall not be deemed to have
occurred. Notwithstanding any other provision hereof, the Indenture Trustee
shall deliver to the Servicer, or its designee or assignee, any Servicer
Remittance Amount received with respect to a Mortgage Loan after the related
Servicer Distribution Date to the extent that the Servicer previously made
payment or provision for payment with respect to such Servicer Remittance Amount
in accordance with this Section 8.01, and any such Servicer Remittance Amount
shall not be deemed part of the Trust Estate.
Except as otherwise expressly provided in this Indenture and
the Sale and Servicing Agreement, if, following delivery by the Indenture
Trustee of the notice described above, the Servicer shall fail to remit the
Servicer Remittance Amount on any Servicer Distribution Date, the Indenture
Trustee shall deliver a second notice to the Servicer, the Trust and the Note
Insurer by the close of business on the third Business Day prior to the related
Distribution Date indicating that a Servicer Event of Default occurred and is
continuing under the Sale and Servicing Agreement. Thereupon, the Indenture
Trustee shall take such actions as are required of the Indenture Trustee under
Article VII of the Sale and Servicing Agreement. In addition, if a default
occurs in any other performance required under the Sale and Servicing Agreement,
the Indenture Trustee may, and upon the request of the Note Insurer or, with the
consent of the Note Insurer, the Holders of Notes representing more than 50% of
the Note Principal Balance of the Outstanding Notes of both Classes shall, 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
44
Default or Event of Default under this Indenture and to proceed thereafter as
provided in Article V hereof.
Section 8.02. Distributions; Statements. On each Distribution
Date, unless the Notes have been declared due and payable pursuant to Section
5.02 hereof and moneys collected by the Indenture Trustee are being applied in
accordance with Section 5.07 hereof, Available Funds on deposit in each
Distribution Account on any Distribution Date or Redemption Date shall be
withdrawn from such Distribution Account, in the amounts required (based solely
on the Servicer's Remittance Report delivered to the Indenture Trustee on or
before such Distribution Date), for application on such Distribution Date in
respect of payments relating to the applicable Pool of Mortgage Loans and the
related Class of Notes as follows:
(i) to the Indenture Trustee, an amount equal to the Indenture
Trustee Fees then due to it with respect to the related Class of Notes;
(ii) from amounts then on deposit in the related Distribution
Account (excluding any Insured Payments), to the Note Insurer, the
lesser of (x) the excess of (i) the amount then on deposit in such
Distribution Account over (ii) the Insured Distribution Amount for such
Pool on such Distribution Date and (y) the sum of the amount of all
Reimbursement Amounts relating to such Class of Notes which have not
been previously paid as of such Distribution Date and any other amounts
relating to such Class then due to the Note Insurer pursuant to the
Insurance Agreement;
(iii) from amounts then on deposit in the related Distribution
Account, to the Holders of the related Class of Notes, the Distribution
Amount for such Class;
(iv) from amounts then on deposit in the related Distribution
Account, to the Holders of the related Class of Notes, the amount of
any Net Mortgage Loan Interest Shortfalls for such Class;
(v) from amounts then on deposit in the related Distribution
Account, to the Cross-collateralization Reserve Account relating to the
other Class of Notes, the Reserve Payment Amount for such Class;
(vi) following the making by the Indenture Trustee of all
allocations, transfers and disbursements described above, from amounts
then on deposit in the related Distribution Account, the Indenture
Trustee shall distribute to the Holders of the related Trust
Certificates, the amount remaining on such Distribution Date, if any.
Section 8.03. Claims against the Note Insurance Policy. (a)
Within two (2) Business Days of receipt of each Servicer Remittance Report, the
Indenture Trustee shall determine with respect to the immediately following
Distribution Date, the amount to be on deposit in each Distribution Account on
such Distribution Date as a result of the (i) Servicer's remittance of the
Servicer Remittance Amount on the related Servicer Distribution Date, and (ii)
any transfers to each Distribution Account made from the related Capitalized
Interest Account and/or the related Pre-Funding Account relating to such
Distribution Date pursuant to Section 8.01 hereof, excluding the amount of any
Insured Payment and prior to the application of the
45
amounts described in clauses (i) through (vi) of Section 8.02 hereof for the
related Distribution Date.
(b) If on any Distribution Date there is an Available Funds
Shortfall for either Pool, the Indenture Trustee shall complete a Notice in the
form of Exhibit A to the Note Insurance Policy and submit such notice to the
Note Insurer no later than 12:00 noon New York City time on the second Business
Day preceding such Distribution Date as a claim for an Insured Payment in an
amount equal to such Available Funds Shortfall for such Pool.
(c) The Indenture Trustee shall establish a separate Eligible
Account for the benefit of Holders of the Notes and the Note Insurer referred to
herein as the "Note Insurance Payment Account" over which the Indenture Trustee
shall have exclusive control and sole right of withdrawal. The Indenture Trustee
shall deposit upon receipt any amount paid under the Note Insurance Policy in
the Note Insurance Payment Account and distribute such amount only for purposes
of payment to the Noteholders of the related Pool of the Insured Distribution
Amount for such Pool for which a claim was made and such amount may not be
applied to satisfy any costs, expenses or liabilities of the Servicer, the
Indenture Trustee or the Trust. Amounts paid under the Note Insurance Policy, to
the extent needed to pay the Insured Distribution Amount shall be transferred to
the related Distribution Account on the related Distribution Date and disbursed
by the Indenture Trustee to the Noteholders in accordance with Section 8.02. It
shall not be necessary for such payments to be made by checks or wire transfers
separate from the checks or wire transfers used to pay the Insured Distribution
Amount with other funds available to make such payment. However, the amount of
any payment of principal or of interest on the Notes to be paid from funds
transferred from the Note Insurance Payment Account shall be noted as provided
in subsection (d) of this Section 8.03 in the Note Register and in the Indenture
Trustee's Remittance Report. Funds held in the Note Insurance Payment Account
shall not be invested. Any funds remaining in the Note Insurance Payment Account
on the first Business Day following a Distribution Date shall be returned to the
Note Insurer pursuant to the written instructions of the Note Insurer by the end
of such Business Day.
(d) The Indenture Trustee shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any Note from
moneys received under the Note Insurance Policy. The Note Insurer shall have the
right to inspect such records at reasonable times during normal business hours
upon one (1) Business Day's prior notice to the Indenture Trustee.
(e) In the event that the Indenture Trustee has received a
certified copy of an order of the appropriate court that any Insured Payment has
been voided in whole or in part as a preference payment under applicable
bankruptcy law, the Indenture Trustee shall so notify the Note Insurer, shall
comply with the provisions of the Note Insurance Policy to obtain payment by the
Note Insurer of such voided Insured Payment, and shall, at the time it provides
notice to the Note Insurer, notify, by mail to the Noteholders of the affected
Notes that, in the event any Noteholder's Insured Payment is so recovered, such
Noteholder will be entitled to payment pursuant to the Note Insurance Policy, a
copy of which shall be made available through the Indenture Trustee, the Note
Insurer or the Note Insurer's fiscal agent, if any, and the Indenture Trustee
shall furnish to the Note Insurer or its fiscal agent, if any, its records
evidencing the
46
payments which have been made by the Indenture Trustee and subsequently
recovered from the Noteholders, and dates on which such payments were made.
(f) The Indenture Trustee shall promptly notify the Note
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Indenture Trustee has actual knowledge, seeking the
avoidance as a preferential transfer under applicable bankruptcy, insolvency,
receivership or similar law (a "Preference Claim") of any distribution made with
respect to the Notes. Each Noteholder, by its purchase of Notes, the Servicer
and the Indenture Trustee agree that, the Note Insurer (so long as no Note
Insurer Default exists) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including, without limitation, (i) the direction of any appeal
of any order relating to such Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Note Insurer shall be subrogated to,
and each Noteholder, the Servicer and the Indenture Trustee hereby delegate and
assign to the Note Insurer, to the fullest extent permitted by law, the rights
of the Servicer, the Indenture Trustee and each Noteholder in the conduct of any
such Preference Claim, including, without limitation, all rights of any party to
any adversary proceeding or action with respect to any court order issued in
connection with any such Preference Claim.
(g) The Indenture Trustee shall, upon retirement of the Notes,
furnish to the Note Insurer a notice of such retirement, and, upon retirement of
the Notes and the expiration of the term of the Note Insurance Policy, surrender
the Note Insurance Policy to the Note Insurer for cancellation.
(h) Unless a Note Insurer Default exists and is continuing,
the Indenture Trustee and the Trust shall cooperate in all respects with any
reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interests hereunder without limiting the rights or
affecting the interests of the Noteholders as otherwise set forth herein.
(i) Each Noteholder, by its purchase of Notes, and the
Indenture Trustee hereby agree that, unless a Note Insurer Default exists and is
continuing, the Note Insurer shall have the right to direct all matters relating
to the Notes in any proceeding in a bankruptcy of the Trust, including without
limitation any proceeding relating to a Preference Amount and the posting of any
surety or Note pending any such appeal.
(j) Anything herein to the contrary notwithstanding, any
payment with respect to principal of or interest on the Notes which is made with
moneys received pursuant to the terms of the Note Insurance Policy shall not be
considered payment of the Notes from the Trust. The Trust and the Indenture
Trustee acknowledge, and each Holder by its acceptance of a Note agrees, that
without the need for any further action on the part of the Note Insurer, the
Trust, the Indenture Trustee or the Note Registrar (x) to the extent the Note
Insurer makes payments, directly or indirectly, on account of principal of or
interest on the Notes to the Holders of such Notes, the Note Insurer will be
fully subrogated to, and each Noteholder, the Trust and the Indenture Trustee
hereby delegate and assign to the Note Insurer, to the fullest extent permitted
by law, the rights of such Holders to receive such principal and interest from
the Trust, including, without limitation, any amounts due to the Noteholders in
respect of securities law
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violations arising from the offer and sale of the Notes, and (y) the Note
Insurer shall be paid such amounts from the sources and in the manner provided
herein for the payment of such amounts.
Section 8.04. General Provisions Regarding the Distribution
Accounts and Mortgage Loans. (a) Each Distribution Account shall relate solely
to the Notes of the related Class and to the Mortgage Loans in the related Pool,
Permitted Investments and other property securing the related Notes. Funds and
other property in each Distribution Account shall not be commingled with the
other Distribution Account or any other moneys or property of the Trust or any
Affiliate thereof. Notwithstanding the foregoing, the Indenture Trustee may hold
any funds or other property received or held by it as part of a Distribution
Account in collective accounts maintained by it in the normal course of its
business and containing funds or property held by it for other Persons (which
may include the Trust or an Affiliate); provided, that such accounts are under
the sole control of the Indenture Trustee and the Indenture Trustee maintains
adequate records indicating the ownership of all such funds or property and the
portions thereof held for credit to the related Distribution Account.
(b) If any amounts are needed for payment from a Distribution
Account and sufficient uninvested funds are not available therein to make such
payment, the Indenture Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Distribution Account.
(c) The Indenture Trustee shall, at all times while any Notes
are Outstanding, maintain in its possession, or in the possession of an agent
whose actions with respect to such items are under the sole control of the
Indenture Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Distribution Accounts. The Indenture Trustee shall
relinquish possession of such items, or direct its agent to do so, only for
purposes of collecting the final payment receivable on such investment or
certificate or, in connection with the sale of any investment held in the
Distribution Accounts, against delivery of the amount receivable in connection
with any sale.
(d) The Indenture Trustee shall not invest any part of the
Trust Estate in Permitted Investments that constitute uncertificated securities
(as defined in Section 8-102 of the Uniform Commercial Code, as enacted in the
relevant jurisdiction) or in any other book-entry securities unless it has
received an Opinion of Counsel reasonably satisfactory in form and substance to
the Indenture Trustee setting forth, with respect to each type of security for
which authority to invest is being sought, the procedures that must be followed
to maintain the lien and security interest created by this Indenture with
respect to the Trust Estate.
Section 8.05. Releases of Deleted Mortgage Loans. Upon notice
or discovery by a Responsible Officer of the Indenture Trustee that any of the
representations or warranties of the Depositor set forth in Section 3.03 of the
Loan Sale Agreement was materially incorrect or otherwise misleading with
respect to any Mortgage Loan as of the time made, the Indenture Trustee shall
direct the Depositor to either cure, repurchase or substitute for such Mortgage
Loan as provided in Section 3.05 of the Loan Sale Agreement. Upon any purchase
of or substitution for a Deleted Mortgage Loan by the in accordance with Section
3.05 of the Loan Sale Agreement, the Indenture Trustee shall cause the
Collateral Agent to deliver the Indenture Trustee's Mortgage File relating to
such Deleted Mortgage Loan to the Depositor, and the Trust,
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the Collateral Agent and the Indenture Trustee shall execute such instruments of
transfer as are necessary to convey title to such Deleted Mortgage Loan to the
Depositor from the lien of this Indenture.
Section 8.06. Reports by Indenture Trustee to Noteholders;
Access to Certain Information. On each Distribution Date, the Indenture Trustee
shall deliver the written reports required by Section 2.08(d) to Noteholders of
record as of the related Record Date (including the Clearing Agency, if any).
The Indenture Trustee shall make available at its Corporate
Trust Office, during normal business hours, for review by any Noteholder or any
person identified to the Indenture Trustee as a prospective Noteholder,
originals or copies of the following items: (a) the Indenture and any amendments
thereto, (b) all Indenture Trustee's Remittance Reports and other reports
delivered since the Closing Date pursuant to Section 2.08(d) hereof, (c) any
Officers' Certificates delivered to the Indenture Trustee since the Closing Date
as described in the Indenture and (d) any Accountants' reports delivered to the
Indenture Trustee since the Closing Date as required under the Sale and
Servicing Agreement. Copies of any and all of the foregoing items will be
available from the Indenture Trustee upon request; however, the Indenture
Trustee will be permitted to require payment of a sum sufficient to cover the
reasonable costs and expenses of providing such copies and shall not be required
to provide such copies without reasonable assurances that such sum will be paid.
Section 8.07. Release of Trust Estate. The Indenture Trustee
shall, at such time as there are no Notes Outstanding, release all of the Trust
Estate to the Trust (other than any cash held for the payment of the Notes
pursuant to Section 3.03 or 4.02 hereof).
Section 8.08. Amendment to Sale and Servicing Agreement. The
Indenture Trustee may, without the consent of any Holder, enter into or consent
to any amendment or supplement to the Sale and Servicing Agreement for the
purpose of increasing the obligations or duties of any party other than the
Indenture Trustee or the Holders of the Notes. The Indenture Trustee may, in its
discretion, decline to enter into or consent to any such supplement or
amendment: (i) unless the Indenture Trustee receives an Opinion of Counsel that
the position of the Holders would not be materially adversely affected or
written confirmation of satisfaction of the Rating Agency Condition or (ii) if
its own rights, duties or immunities would be adversely affected.
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale
and Servicing Agreement. As is appropriate for the servicing or foreclosure of
any Mortgage Loan, the Indenture Trustee shall cause the Collateral Agent to
deliver to the Servicer the Mortgage Files for such Mortgage Loan upon receipt
by the Indenture Trustee and the Collateral Agent on or prior to the date such
release is to be made of:
(a) such Officer's Certificates, if any, as are required by
the Sale and Servicing Agreement; and
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(b) a Request for Release, executed by the Servicer, providing
that the Servicer will hold or retain the Indenture Trustee's Mortgage
Files in trust for the benefit of the Indenture Trustee, the Note
Insurer and the Holders of Notes.
Section 8.10. Servicer as Agent. In order to facilitate the
servicing of the Mortgage Loans by the Servicer of such Mortgage Loans, the
Servicer of the Mortgage Loans has been appointed by the Trust to retain, in
accordance with the provisions of the Sale and Servicing Agreement and this
Indenture, all Servicer Remittance Amounts on such Mortgage Loans prior to their
deposit into the related Distribution Account on or prior to the related
Servicer Distribution Date.
Section 8.11. Termination of Servicer. In the event of an
event of the occurrence of a Servicer Event of Default specified in Section 7.01
of the Sale and Servicing Agreement, the Indenture Trustee may, with the consent
of the Note Insurer or, with the prior written consent of the Note Insurer, the
Holder of Notes representing not less than 50% of the Note Principal Balance of
the Outstanding Notes of both Classes, and shall, upon the direction of the Note
Insurer (or as otherwise provided in the Sale and Servicing Agreement),
terminate the Servicer as provided in Section 7.01 of the Sale and Servicing
Agreement. If the Indenture Trustee terminates the Servicer, the Indenture
Trustee shall, pursuant to Section 7.02 of the Sale and Servicing Agreement,
assume the duties of the Servicer or appoint a successor Servicer acceptable to
the Trust, the Note Insurer and the Rating Agencies and meeting the requirements
set forth in the Sale and Servicing Agreement.
Section 8.12. Opinion of Counsel. The Indenture Trustee shall
be entitled to receive at least five (5) Business Days' notice of any action to
be taken pursuant to Sections 8.08 and 8.09 hereof (other than in connection
with releases of Mortgage Loans that were subject to a prepayment in full),
accompanied by copies of any instruments involved, and the Indenture Trustee
shall be entitled to receive an Opinion of Counsel, in form and substance
reasonably 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. 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.
Section 8.13. Appointment of Collateral Agents. The Indenture
Trustee may, at no additional cost to the Trust or to the Indenture Trustee,
with the consent of the Note Insurer, appoint one or more Collateral Agents to
hold all or a portion of the Indenture Trustee Mortgage Files, as Agent for the
Indenture Trustee. Such Collateral Agent shall meet the requirements of Article
IX of the Sale and Servicing Agreement. Matters concerning the Collateral Agents
shall be governed by said Article IX. _________ is hereby appointed as the
initial Collateral Agent hereunder.
Section 8.14. Rights of the Note Insurer to Exercise Rights of
Noteholders. By accepting its Notes, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall have the right to exercise all
rights of the Noteholders under this Indenture, without any further consent of
the Noteholders, including, without limitation:
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(a) the right to require the Servicer to effect foreclosures
upon Mortgage Loans upon failure of the Servicer to do so;
(b) the right to require the to repurchase or substitute for
Deleted Mortgage Loans pursuant to Section 8.05;
(c) the right to direct the actions of the Indenture Trustee
during the continuance of an Event of Default; and
(d) the right to vote on proposed amendments to this
Indenture.
In addition, each Noteholder agrees that, unless a Note
Insurer Default exists, the rights specifically set forth above may be exercised
by the Noteholders only with the prior written consent of the Note Insurer.
Except as otherwise provided in Section 8.03 hereof and
notwithstanding any provision in this Indenture to the contrary, so long as a
Note Insurer Default has occurred and is continuing, the Note Insurer shall have
no rights to exercise any voting rights of the Noteholders hereunder, nor shall
the Indenture Trustee be required to obtain the consent of, or act at the
direction of, the Note Insurer.
All notices, statements, reports, certificates or opinions
required by this Indenture to be sent to any other party hereto or to the
Noteholders shall also be sent to the Note Insurer.
Section 8.15. Trust Estate and Accounts Held for Benefit of
the Note Insurer. The Collateral Agent, on behalf of the Indenture Trustee,
shall hold the Trust Estate and the Indenture Trustee's Mortgage Files, for the
benefit of the Noteholders and the Note Insurer, and all references in this
Indenture and in the Notes to the benefit of Holders of the Notes shall be
deemed to include the Note Insurer (provided there does not exist a Note Insurer
Default).
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of
Noteholders. With the consent of the Note Insurer and without the consent of the
Holders of any Notes, the Trust and the Indenture Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(a) 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;
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(b) to add to the conditions, limitations and restrictions on
the authorized amount, terms and purposes of the issuance,
authentication and delivery of any Notes, as herein set forth,
additional conditions, limitations and restrictions thereafter to be
observed;
(c) to evidence the succession of another Person to the Trust
to the extent permitted herein, and the assumption by any such
successor of the covenants of the Trust herein and in the Notes
contained;
(d) to add to the covenants of the Trust, for the benefit of
the Holders of all Notes and the Note Insurer, or to surrender any
right or power herein conferred upon the Trust;
(e) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any other
provision herein, or to amend any other provisions with respect to
matters or questions arising under this Indenture, which shall not be
inconsistent with the provisions of this Indenture, provided that such
action shall not adversely affect in any material respect the interests
of the Holders of the Notes or the Holders of the Trust Certificates;
provided, that the amendment shall not be deemed to adversely affect in
any material respect the interests of the Holders of the Notes and the
Note Insurer if the Person requesting the amendment obtains written
confirmation of the satisfaction of the Rating Agency Condition; or
(f) 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.
Section 9.02. Supplemental Indentures With Consent of
Noteholders. With the consent of the Note Insurer and with the consent of
Holders of Notes representing not less than a majority of the Note Principal
Balance of all Outstanding Notes of both Classes by Act of said Holders
delivered to the Trust and the Indenture Trustee, the Trust and the Indenture
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(a) change any Distribution Date or the Final Stated Maturity
Date of the Notes or, with respect to the Notes, reduce the Note
Principal Balance thereof, the Note Rate thereon or the Redemption
Price with respect thereto, change the earliest date on which any Note
may be redeemed at the option of the Servicer, change any place of
payment where, or the coin or currency in which, any Note or any
interest thereon is payable, or impair the right to institute suit for
the enforcement of the payment of any installment of interest due on
any Note on or after the Final Stated Maturity Date thereof or for the
enforcement of the payment of the entire remaining unpaid principal
amount of any Note on or after the Final Stated Maturity Date (or, in
the case of redemption, on or after the applicable Redemption Date);
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(b) reduce the percentage of the Note Principal Balance of the
Outstanding Notes, the consent of the Holders of which is required for
any such supplemental indenture, or the consent of the Holders of which
is required for any waiver of compliance with provisions of this
Indenture or Defaults hereunder and their consequences provided for in
this Indenture;
(c) modify any of the provisions of this Section 9.02 or
Sections 5.13 or 5.17(b) hereof, except to increase any percentage
specified therein or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Note affected thereby;
(d) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(e) permit the creation of any lien other than the lien of
this Indenture with respect to any part of the Trust Estate or
terminate the lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security
afforded by the lien of this Indenture;
(f) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the Interest Distribution Amount
or Principal Distribution Amount for any Distribution Date and any
Class (including the calculation of any of the individual components of
such amounts) or to affect rights of the Holders of the Notes to the
benefits of any provisions for the mandatory redemption of Notes
contained herein; or
(g) incur any indebtedness, other than the Notes, that would
cause the Trust or the Trust Estate to be treated as a "taxable
mortgage pool" within the meaning of Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether
or not any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Trust and the Indenture
Trustee of any supplemental indenture pursuant to this Section 9.02, the
Indenture Trustee shall mail to the Holders of the Notes to which such
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the
53
modifications thereby of the trusts created by this Indenture, the Indenture
Trustee shall be entitled to receive, and (subject to Section 6.01 hereof) shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Indenture Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Indenture Trustee's own rights,
duties or immunities under this Indenture or otherwise. The Servicer, on behalf
of the Trust, shall cause executed copies of any supplemental indentures to be
delivered to the Note Insurer and the Rating Agencies.
Section 9.04. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article IX, this Indenture
shall be modified in accordance therewith, and such supplemental indenture shall
form a part of this Indenture for all purposes; and every Holder of Notes to
which such supplemental indenture relates that have theretofore been or
thereafter are authenticated and delivered hereunder shall be bound thereby.
Section 9.05. Conformity With Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article IX shall conform to the
requirements of the TIA as then in effect so long as this Indenture shall then
be qualified under the TIA.
Section 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Owner Trustee,
acting at the direction of the Majority Certificateholders, shall so determine,
new Notes so modified as to conform, in the opinion of the Indenture Trustee and
the Owner Trustee, acting at the direction of the Majority Certificateholders,
to any such supplemental indenture may be prepared by the Servicer and executed
by the Owner Trustee, acting at the direction of the Majority
Certificateholders, on behalf of the Trust, and authenticated and delivered by
the Indenture Trustee in exchange for Outstanding Notes.
Section 9.07. Amendments to Governing Documents. The Indenture
Trustee shall, upon a Trust Request, consent to any proposed amendment to the
Trust's governing documents, or an amendment to or waiver of any provision of
any other document relating to the Trust's governing documents, such consent to
be given without the necessity of obtaining the consent of the Holders of any
Notes upon receipt by the Indenture Trustee of:
(a) an Officer's Certificate, to which such proposed amendment
or waiver shall be attached, stating that such attached copy is a true
copy of the proposed amendment or waiver and that all conditions
precedent to such consent specified in this Section 9.07 have been
satisfied; and
(b) written confirmation of the satisfaction of the Rating
Agency Condition with respect to such proposed amendment.
Notwithstanding the foregoing, the Indenture Trustee may
decline to consent to a proposed waiver or amendment that adversely affects its
own rights, duties or immunities under this Indenture or otherwise.
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Nothing in this Section 9.07 shall be construed to require
that any Person obtain the consent of the Indenture Trustee to any amendment or
waiver or any provision of any document where the making of such amendment or
the giving of such waiver without obtaining the consent of the Indenture Trustee
is not prohibited by this Indenture or by the terms of the document that is the
subject of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption. (a) At the option of the Servicer,
and at its sole cost and expense, (x) this Indenture may be terminated and all
the Notes may be redeemed in whole, but not in part, on any Redemption Date
after the Clean-Up Call Date by purchase of all of the outstanding Mortgage
Loans and REO Properties at a price equal the Termination Price or (y) the Class
A-1 Notes or the Class A-2 Notes may be redeemed in whole, but not in part, on
any Redemption Date after the related Note Clean-Up Call Date at the applicable
Note Termination Price.
(b) Any such purchase or redemption shall be accomplished by
deposit into the related Distribution Account or Accounts of the applicable
Redemption Price on the Servicer Distribution Date preceding the Redemption
Date. The amounts on deposit therein shall be distributed by the Indenture
Trustee on such Redemption Date in accordance with the priority set forth in
Section 8.02 hereof. No termination or redemption is permitted without the prior
written consent of the Note Insurer if it would result in a draw on the Note
Insurance Policy.
(c) Notice of the election to redeem any Notes pursuant to
subsection (a) of this Section 10.01 shall be furnished to the Indenture Trustee
not later than thirty (30) days prior to the Distribution Date selected for such
redemption. Upon receiving such notice, the Indenture Trustee shall notify each
Holder of such Notes and Note Insurer of such election pursuant to Section 10.02
hereof. Any expenses associated with the compliance of the provisions hereof in
connection with a redemption of the Notes shall be paid by the Servicer.
(d) Upon the redemption of all of the Notes, the Mortgage
Loans in the Trust Estate shall be released and delivered to the Servicer. In
the case of a redemption of the Class A-2 Notes only, the Mortgage Loans in Pool
II will not be released from the lien of the Indenture until such time as the
Class A-1 Notes are either redeemed or terminated. In such case, the Pool II
Mortgage Loans will continue to be pledged to the Indenture Trustee, on behalf
of the Noteholders and the Note Insurer, to secure the obligations of the Trust
with respect to the Class A-1 Notes. In the case of a redemption of the Class
A-1 Notes only, the Mortgage Loans in Pool I will not be released from the lien
of the Indenture until such time as the Class A-2 Notes are either redeemed or
terminated. In such case, the Pool I Mortgage Loans will continue to be pledged
to the Indenture Trustee, on behalf of the Noteholders and the Note Insurer, to
secure the obligations of the Trust with respect to the Class A-2 Notes.
(e) Upon receipt of the notice from the Servicer of its
election to redeem any Notes pursuant to Section 10.01(a) hereof, the Indenture
Trustee shall prepare and deliver to the Trust, the Servicer and the Note
Insurer, no later than the related Redemption Date, an Indenture
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Trustee's Remittance Report stating therein that it has determined that the
conditions to redemption at the option of the Servicer have been satisfied and
setting forth the amount, if any, to be withdrawn from each Distribution Account
and paid to the Servicer as reimbursement for Nonrecoverable Advances in respect
of the related Mortgage Loans and such other information as may be required to
accomplish such redemption.
Section 10.02. Form of Redemption Notice. Notice of redemption
shall be given by the Indenture Trustee in the name of and at the expense of the
Trust by first class mail, postage prepaid, mailed not less than ten days prior
to the Redemption Date to each Holder of Notes to be redeemed, such Holders
being determined as of the Record Date for such Distribution Date, and to the
Note Insurer.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price at which the Notes of such Class will
be redeemed; and
(c) the fact of payment in full on such Notes, the place where
such Notes are to be surrendered for payment of the Redemption Price
(which shall be the office or agency of the Trust to be maintained as
provided in Section 3.02 hereof), and that no interest shall accrue on
such Note for any period after the date fixed for redemption.
Failure to give notice of redemption, or any defect therein,
to any Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.
Section 10.03. Notes Payable on Optional Redemption. Notice of
redemption having been given as provided in Section 10.02 hereof, the Notes to
be redeemed shall, on the applicable Redemption Date, become due and payable at
the Redemption Price and (unless the Trust shall default in the payment of the
Redemption Price) no interest shall accrue on such Redemption Price for any
period after such Redemption Date; provided, however, that if such Redemption
Price is not paid on the Redemption Date, the Note Principal Balance shall,
until paid, bear interest from the Redemption Date at the applicable Note Rate.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions. (a) Upon
any application or request by any Person to the Indenture Trustee to take any
action under any provision of this Indenture, such Person shall furnish to the
Indenture Trustee an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel, if requested by the
Indenture Trustee, stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the
56
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
(b) Every certificate, opinion or letter with respect to
compliance with a condition or covenant provided for in this Indenture,
including one furnished pursuant to specific requirements of this Indenture
relating to a particular application or request (other than certificates
provided pursuant to TIA Section 314(a)(4)) shall include and shall be deemed to
include (regardless of whether specifically stated therein) the following:
(i) a statement that each individual signing such certificate,
opinion or letter has read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate, opinion or letter are based;
(iii) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02. Form of Documents Delivered to Indenture
Trustee. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of the Trust may be based, insofar
as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any Opinion of Counsel may be based on the written opinion of other
counsel, in which event such Opinion of Counsel shall be accompanied by a copy
of such other counsel's opinion and shall include a statement to the effect that
such counsel believes that such counsel and the Indenture Trustee may reasonably
rely upon the opinion of such other counsel.
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.
Wherever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the Trust
shall deliver any document as a condition of the granting of such application,
or as evidence of the Trust's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such
57
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 Trust 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 Section 6.01(b)(ii) hereof.
Whenever in this Indenture it is provided that the absence of
the occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request or
direction of the Trust, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Trust's right to make such request or
direction, the Indenture Trustee shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.01(d)
hereof.
Section 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent 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 Trust. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Indenture
Trustee and the Trust, if made in the manner provided in this Section 11.03.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(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 of transfer 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 Trust in reliance thereon, whether or
not notation of such action is made upon such Notes.
Section 11.04. Notices, etc., to Indenture Trustee, the Note
Insurer and Trust. Any request, demand, authorization, direction, notice,
consent, waiver or Act of Noteholders or
58
other documents provided or permitted by this Indenture to be made upon, given
or furnished to, or filed with:
(a) the Indenture Trustee by any Noteholder or by the Trust
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with and received by the Indenture
Trustee at its Corporate Trust Office; or
(b) the Trust by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder (except as provided in
Section 5.01(c) and (d)) hereof if in writing and mailed, first-class
postage prepaid, to the Trust addressed to it at _____________, in care
of ______________________________, Attention: Corporate Trust
Administration, or at any other address previously furnished in writing
to the Indenture Trustee by the Trust.
(c) the Note Insurer 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 _________________
addressed to it at _________________________, Attention: Surveillance
Department (in each case in which notice or other communication to the
Note Insurer refers to an Event of Default, a claim on the Note
Insurance Policy or with respect to which failure on the part of the
Note Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should
also be sent to the attention of each of the General Counsel and the
Head--Financial Guaranty Group and shall be marked to indicate "URGENT
MATERIAL ENCLOSED"), or at any other address previously furnished in
writing to the Indenture Trustee by the Note Insurer; or
(d) the Depositor or the Servicer by the Indenture Trustee or
by any Noteholder shall be sufficient for every purpose hereunder if in
writing and mailed, first-class, postage paid, to such party, in care
of ___________________________________, Attention: General Counsel or
at any other address previously furnished in writing to the Indenture
Trustee by the or the Servicer; or
(e) the Underwriter by any party or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to Prudential Securities Incorporated,
Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Managing
Director - Asset-Backed Finance, or at any other address previously
furnished in writing to the Indenture Trustee by the Underwriter.
Notices required to be given to the Rating Agencies by the
Trust or the Indenture Trustee shall be in writing, personally delivered or
mailed first-class postage pre-paid, to (i) in the case of Moody's, at the
following address: Xxxxx'x Investors Service, Inc., Residential Mortgage
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (ii) in
the case of S&P, at the following address: Standard & Poor's Ratings Services,
00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Asset-Backed
Surveillance Department; or as to each of the foregoing, at such other address
as shall be designed by written notice to the other parties.
59
Section 11.05. Notices and Reports to Noteholders; Waiver of
Notices. Where this Indenture provides for notice to Noteholders of any event or
the mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder 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 or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Noteholder
shall affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
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 waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Section 11.06. Rules by Indenture Trustee. The Indenture
Trustee may make reasonable rules for any meeting of Noteholders.
Section 11.07. Conflict With Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this Indenture by any of the provisions of
the TIA, such required provision shall control.
Section 11.08. 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 11.09. Successors and Assigns. All covenants and
agreements in this Indenture by the Trust shall bind its successors and assigns,
whether so expressed or not.
Section 11.10. Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 11.11. Benefits of Indenture. Nothing in this
Indenture or in the Notes, expressed or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, any separate trustee or
co-trustee appointed under Section 6.14 hereof and the Noteholders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
60
Section 11.12. Legal Holidays. In any case where the date of
any Distribution Date, Redemption Date or any other date on which principal of
or interest on any Note is proposed to be paid 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 nominal date of any such
Distribution Date, Redemption Date or other date for the payment of principal of
or interest on any Note and no interest shall accrue for the period from and
after any such nominal date, provided such payment is made in full on such next
succeeding Business Day.
Section 11.13. Governing Law. IN VIEW OF THE FACT THAT
NOTEHOLDERS ARE EXPECTED TO RESIDE IN MANY STATES AND OUTSIDE THE UNITED STATES
AND THE DESIRE TO ESTABLISH WITH CERTAINTY THAT THIS INDENTURE WILL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF A STATE HAVING A
WELL-DEVELOPED BODY OF COMMERCIAL AND FINANCIAL LAW RELEVANT TO TRANSACTIONS OF
THE TYPE CONTEMPLATED HEREIN, THIS INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
Section 11.14. Counterparts. This instrument 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 11.15. Recording of Indenture. This Indenture is
subject to recording in any appropriate public recording offices, such recording
to be effected by the Servicer, on behalf of the Trust, and at its expense in
compliance with any Opinion of Counsel delivered pursuant to Sections 2.11(c) or
3.06 hereof.
Section 11.16. Trust Obligation. 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 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 Trust 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 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 (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 Trust
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of the Trust Agreement.
61
Section 11.17. No Petition. The Indenture Trustee, by entering
into this Indenture, and each Noteholder and Beneficial Owner, by accepting a
Note, hereby covenant and agree that they will not at any time institute against
the or the Trust, or join in any institution against the or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents. In addition, the Indenture Trustee will
on behalf of the Holders of the Notes, (a) file a written objection to any
motion or other proceeding seeking the substantive consolidation of any
Originator with the or the Trust, (b) file an appropriate memorandum of points
and authorities or other brief in support of such objection, or (c) endeavor to
establish at the hearing on such objection that the substantive consolidation of
such entity would be materially prejudicial to the Noteholders.
This Section 11.17 will survive for one year and one day
following the termination of this Indenture.
Section 11.18. Inspection. The Trust agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee and the Note Insurer, during the Trust's normal business hours, to
examine all of books of account, records, reports and other papers of the Trust,
to make copies and extracts therefrom, to cause such books to be audited by
Independent Accountants selected by the Indenture Trustee or the Note Insurer,
as the case may be, and to discuss its affairs, finances and accounts with its
officers, employees and Independent Accountants (and by this provision the Trust
hereby authorizes its Accountants to discuss with such representatives such
affairs, finances and accounts), all at such reasonable times and as often as
may be reasonably requested. Any expense incident to the exercise by the
Indenture Trustee of any right under this Section 11.18 shall be borne by the
Trust.
Section 11.19. Usury. The amount of interest payable or paid
on any Note under the terms of this Indenture shall be limited to an amount that
shall not exceed the maximum nonusurious rate of interest allowed by the
applicable laws of the United States or the State of New York (whichever shall
permit the higher rate), that could lawfully be contracted for, charged or
received (the "Highest Lawful Rate"). In the event any payment of interest on
any Note exceeds the Highest Lawful Rate, the Trust stipulates that such excess
amount will be deemed to have been paid as a result of an error on the part of
both the Indenture Trustee, acting on behalf of the Holder of such Note, and the
Trust, and the Holder receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Trust or the Indenture
Trustee, refund the amount of such excess or, at the option of the Indenture
Trustee, apply the excess to the payment of principal of such Note, if any,
remaining unpaid. In addition, all sums paid or agreed to be paid to the
Indenture Trustee for the benefit of Holders of Notes for the use, forbearance
or detention of money shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
Notes.
Section 11.20. Note Insurer Default. Any right conferred to
the Note Insurer shall be suspended during any period in which a Note Insurer
Default exists. At such time as the Notes are no longer Outstanding under this
Indenture, and no amounts owed to the Note Insurer under the Basic Documents
remain unpaid, the Note Insurer's rights under this Indenture shall terminate.
62
Section 11.21. Third-Party Beneficiary. The Note Insurer is
intended as a third- party beneficiary of this Indenture which shall be binding
upon and inure to the benefit of the Note Insurer; provided, that,
notwithstanding the foregoing, for so long as a Note Insurer Default is
continuing with respect to its obligations under the Note Insurance Policy, the
Noteholders shall succeed to the Note Insurer's rights hereunder. Without
limiting the generality of the foregoing, all covenants and agreements in this
Indenture that expressly confer rights upon the Note Insurer shall be for the
benefit of and run directly to the Note Insurer, and the Note Insurer shall be
entitled to rely on and enforce such covenants to the same extent as if it were
a party to this Indenture.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Trust and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
___________________________________
By: _______________________________,
_________________________, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________________
Name:
Title:
_______________________________________,
as Indenture Trustee
By:_____________________________________
Name:
Title:
SCHEDULE I
MORTGAGE LOAN SCHEDULE
[See Schedule 1 to Loan Sale Agreement.]
EXHIBIT A
FORM OF NOTE
__________________________________
CLASS A-[1][2] NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST 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 NOTE IS A NON-RECOURSE OBLIGATION OF THE TRUST, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AND THE NOTE INSURANCE POLICY
AS PROVIDED IN THE INDENTURE REFERRED TO BELOW. THE TRUST IS NOT OTHERWISE
PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE.
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.
__________________________________
Note No.: CUSIP No.:
A-[1][2]-
Class A-1 Original Note Principal Balance: Percentage Interest:
$__________ 100%
Date of Indenture: First Distribution Date:
As of _____________ _______________
__________________________________
A-1
__________________________________
MORTGAGE BACKED NOTES, SERIES __________, CLASS A-[1][2]
_________________________, a business trust organized and
existing under the laws of the State of ___________ (herein referred to as the
"Trust"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of $__________ (_________________________
Dollars) payable on each Distribution Date in an amount equal to the result
obtained by multiplying (x) the Percentage Interest of this Note set forth on
the cover page hereof, by (y) the aggregate amount, if any, payable from the
related Distribution Account in respect of principal on the Class A-[1][2]
Notes, pursuant to the Indenture, dated as of ______________, between the Trust
and __________________, a ____________ banking corporation, as Indenture Trustee
(the "Indenture Trustee"); provided, however, that the entire unpaid Note
Principal Balance of this Note shall be due and payable on the earlier of (i)
the Distribution Date occurring in __________ (this Note's "Final Stated
Maturity Date"), (ii) the Redemption Date, if any, applicable to this Notes
pursuant to Article X of the Indenture or (iii) the date on which an Event of
Default shall have occurred and be continuing, if the Notes have been declared
to be immediately due and payable in the manner provided in Section 5.02 of the
Indenture. Capitalized terms used but not defined herein are defined in Appendix
I to the Indenture.
Pursuant to the terms of the Indenture, payments will be made
on the 25th day of each month or, if such day is not a Business Day, on the
Business Day immediately following such 25th day (each a "Distribution Date"),
commencing on the first Distribution Date specified on the cover page hereof, to
the Person in whose name this Note is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Note and (b) the sum of the amounts to be paid on the
Class A-[1][2] Notes with respect to such Distribution Date, all as more
specifically set forth in the Indenture.
Notwithstanding the foregoing, in the case of Definitive
Notes, upon written request at least five (5) days prior to the related Record
Date with appropriate instructions by the Holder of this Note (holding an
aggregate initial Note Principal Balance of at least $1,000,000), any payment of
principal or interest, other than the final installment of principal or
interest, shall be made by wire transfer to an account in the United States of
America designated by such Holder reasonably satisfactory to the Indenture
Trustee.
On each Distribution Date, Noteholders will be entitled to
receive interest payments in an aggregate amount equal to the Current Interest
for such Class for such Distribution Date, together with principal payments in
an aggregate amount equal to the Principal Distribution Amount for such Class
for such Distribution Date, plus, until the Over-collateralization Amount for
the related Pool and such Distribution Date is equal to the Specified
Over-collateralization Amount for such Pool and such Distribution Date, the Net
Monthly Excess Cashflow, if any, for such Pool and such Distribution Date. The
"Note Principal Balance" of a Note as of any date of determination is equal to
the initial Note Principal Balance thereof as of the Closing Date, reduced by
the aggregate of all amounts previously paid with respect to such Note on
account of principal.
A-2
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.
This Note is one of a duly authorized issue of Notes of the
Trust, designated as the "________________________, Mortgage Backed Notes,
Series _______, Class A-[1][2]," 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. Also issued under the Indenture are the
"________________________, Mortgage Backed Notes, Series _______, Class
A[1][2]." To the extent that any provision of this Note contradicts or is
inconsistent with the provisions of the Indenture, the provisions of the
Indenture shall control and supersede such contradictory or inconsistent
provision herein. The Notes are subject to all terms of the Indenture.
The Class A-[1][2] Notes are and will be equally and ratably
secured by the Mortgage Loans in the Pool [I][II], the other collateral related
thereto pledged as security therefor as provided in the Indenture, and, to the
extent provided in the Indenture, by the Mortgage Loans in Pool [I][II].
As described above, the entire unpaid Note Principal Balance
of this Note shall be due and payable on the earlier of the Final Stated
Maturity Date and any Redemption Date applicable to such Class, pursuant to
Article X of the Indenture. Notwithstanding the foregoing, the entire unpaid
Note Principal Balance of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing if the Indenture
Trustee, at the direction or upon the prior written consent of
______________________ (the "Note Insurer") in the absence of a Note Insurer
Default, or the Holders of the Notes representing not less than 50% of the Note
Principal Balance of the Outstanding Notes (with the prior written consent of
the Note Insurer in the absence of a Note Insurer Default) of both Classes,
shall have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. All principal payments on the Notes
shall be made pro rata to the Noteholders entitled thereto.
The Note Insurer, in consideration of the payment of the
premium and subject to the terms of the Note Guaranty Insurance Policy (the
"Note Insurance Policy") thereby has unconditionally and irrevocably guaranteed
the payment of the Insured Payments.
Pursuant to the Indenture, unless a Note Insurer Default
exists (i) the Note Insurer shall be deemed to be the holder of the Notes for
certain purposes specified in the Indenture and will be entitled to exercise all
rights of the Noteholders thereunder, including the rights of Noteholders
relating to the occurrence of, and the remedies with respect to, an Event of
Default, without the consent of such Noteholders, and (ii) the Indenture Trustee
may take actions which would otherwise be at its option or within its
discretion, including actions relating to the occurrence of, and the remedies
with respect to, an Event of Default, only at the direction of the Note Insurer.
In addition, on each Distribution Date, after the Noteholders have been paid all
amounts to which they are entitled, the Note Insurer will be entitled to be
reimbursed for any
A-3
unreimbursed Insured Payments, unreimbursed Premium Amounts (each with interest
thereon at the "Late Payment Rate" specified in the Insurance Agreement) and any
other amounts owed under the Note Insurance Policy.
The Trust shall not be liable upon the indebtedness evidenced
by the Notes except to the extent of amounts available from the Trust Estate
which constitutes security for the payment of the Notes. The assets included in
the Trust Estate and payments under the Note Insurance Policy will be sole
source of payments on the Notes, and each Holder hereof, by its acceptance of
this Note, agrees that (i) such Note will be limited in right of payment to
amounts available from the Trust Estate and the Note Insurance Policy as
provided in the Indenture and (ii) such Holder shall have no recourse to the
Trust, the Owner Trustee, the Indenture Trustee, the Depositor, the Servicer or
any of their respective affiliates, or to the assets of any of the foregoing
entities, except the assets of the Trust pledged to secure the Notes pursuant to
the Indenture.
Payments of interest on this Note due and payable on each
Distribution Date, together with the installment of principal, if any, to the
extent not in full payment of this Note, shall be made by check mailed to the
Person whose name appears as the Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks 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. Notwithstanding the foregoing, in the case of
Definitive Notes, upon written request at least five days prior to the related
Record Date with appropriate instructions by the Holder of this Note (holding an
aggregate initial Note Principal Balance of at least $1,000,000), any payment of
principal or interest, other than the final installment of principal or
interest, shall be made by wire transfer to an account in the United States of
America designated by such Holder reasonably satisfactory to the Indenture
Trustee. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Distribution 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 Distribution Date, then the Indenture Trustee, in the name of and
on behalf of the Trust, will notify the Person who was the Holder hereof as of
the Record Date preceding such Distribution Date by notice mailed or transmitted
by facsimile prior to such Distribution Date, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes.
As provided in the Indenture, the Indenture may be terminated
and the Notes redeemed in whole, but not in part, at the option of the Servicer,
on any Distribution Date on and after the date on which the Aggregate Principal
Balance of all of the Mortgage Loans is less than 10% of the Maximum Collateral
Amount for Pool I and Pool II. As provided in the Indenture, either Class of
Notes may be redeemed in whole, but not in part, at the option of the Servicer,
on
A-4
any Distribution Date on and after the date on which the unpaid Note Principal
Balance of such Class of Notes is less than or equal to 10% of the Original Note
Principal Balance for such Class of Notes.
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
transferor may be required to pay 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.
In the case of a transfer of a Class A-[1][2] Note, the Note
Registrar shall not register the transfer of this Note unless the Note Registrar
has received a representation letter from the transferee to the effect that
either (i) the transferee is not, and is not acquiring the Note on behalf of or
with the assets of, an employee benefit plan or other retirement plan or
arrangement that is subject to Title I of the Employee Retirement Income
Security Act or 1974, as amended, or Section 4975 of the Code or (ii) the
acquisition and holding of this Note by the transferee qualifies for exemptive
relief under a Department of Labor Prohibited Transaction Class Exemption. Each
Beneficial Owner, by acceptance of a beneficial interest herein, shall be deemed
to make one of the foregoing representations.
Each Noteholder or Beneficial Owner, by acceptance of a Note
or, in the case of a Beneficial 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 Beneficial Owner, by acceptance of a Note
or, in the case of a Beneficial Owner, a beneficial interest in a Note,
covenants and agrees by accepting the benefits of the Indenture that such
Noteholder or Beneficial Owner will not at any time institute against
A-5
_______________________ or the Trust, or join in any institution against
_______________________ 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, the Trust Agreement, the Loan Sale
Agreement, the Sale and Servicing Agreement, the Insurance Agreement and the
Indemnification Agreement (the "Basic Documents").
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 Beneficial 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 Note Insurer and the
Holders of Notes representing a majority of the Note Principal Balance of all
Outstanding Notes. The Indenture also contains provisions permitting the (i)
Note Insurer or (ii) if a Note Insurer Default exists, the Holders of Notes
representing specified percentages of the Note Principal Balance of Outstanding
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 Note
Insurer or 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 amendment thereof,
in certain limited circumstances, or the waiver of 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.
Initially, each Class of Notes will be represented by one Note
registered in the name of Cede & Co. as nominees of the Clearing Agency. The
Notes will be delivered in denominations as provided in the Indenture and
subject to certain limitations therein set forth. The Notes are exchangeable for
a like aggregate initial Note Principal Balance of Notes of different authorized
denominations, as requested by the Holder surrendering the same.
A-6
THIS NOTE AND THE INDENTURE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the 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.
Unless the certificate of authentication hereon has been
executed by the Authenticating Agent whose name appears below by manual
signature, this Note shall not be entitled to any benefit under the Indenture
referred to herein, or be valid or obligatory for any purpose.
A-7
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.
Dated:
_____________________________________
By: ___________________________,
__________________________, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By:____________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[1][2] Notes designated above and
referred to in the within-mentioned Indenture.
Dated:
______________________,
as Authenticating Agent
By:_____________________
Authorized Signatory
A-8
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-9
EXHIBIT B
FORM OF SUBSEQUENT PLEDGE AGREEMENT
This SUBSEQUENT PLEDGE AGREEMENT, dated as of __________, ______ (the
"Subsequent Transfer Date"), is entered into by and between
_________________________, as issuer (the "Trust"), and ______________________,
as indenture trustee (the "Indenture Trustee").
W I T N E S S E T H:
Reference is hereby made to that certain Indenture, dated as of __________
(the "Indenture"), by and between the Trust and the Indenture Trustee. Pursuant
to the Indenture, the Trust agreed to pledge, and the Indenture Trustee agreed
to accept, from time to time, a security interest in Subsequent Mortgage Loans
(as defined below). The Indenture provides that each such pledge of Subsequent
Mortgage Loans be evidenced by the execution and delivery of a Subsequent Pledge
Agreement such as this Subsequent Pledge Agreement.
The assets pledged to the Indenture Trustee pursuant to this Subsequent
Pledge Agreement consist of (a) the Subsequent Mortgage Loans in Pool I and Pool
II listed in the Mortgage Loan Schedule attached hereto (including property that
secures a Subsequent Mortgage Loan that becomes an REO Property), including the
related Mortgage Files delivered or to be delivered to the Collateral Agent, on
behalf of the Indenture Trustee, including all payments of principal received,
collected or otherwise recovered after the Subsequent Cut-Off Date for each
Subsequent Mortgage Loan, all payments of interest accruing on each Subsequent
Mortgage Loan after the Subsequent Cut-Off Date therefor whenever received and
all other proceeds received in respect of such Subsequent Mortgage Loans, (b)
the Insurance Policies relating to the Subsequent Mortgage Loans, and (c) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid assets, including, without limitation, all insurance
proceeds and condemnation awards.
The "Subsequent Mortgage Loans" are those listed on the Schedule of
Mortgage Loans attached hereto. The Aggregate Principal Balance of such
subsequent Mortgage Loans as of the Subsequent Cut-Off Date is $__________ in
Pool I and $_________ in Pool II.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Subsequent
Pledge Agreement, capitalized terms used herein but not otherwise defined shall
have the respective meanings assigned to such terms in Appendix I to the
Indenture.
Section 2. Pledge. In consideration of $__________ (such
amount being approximately 100% of the Aggregate Principal Balance of the
Subsequent Mortgage Loans) from the Indenture Trustee, the Trust hereby pledges
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, without recourse, all of the Trust's right, title and interest
B-1
in, to, and under the Subsequent Mortgage Loans and related assets described
above, whether now existing or hereafter arising.
In connection with such pledge, the Originators shall satisfy
the document delivery requirements set forth in Section 2.05 of the Sale and
Servicing Agreement with respect to each Subsequent Mortgage Loan.
In connection with such pledge, the Servicer shall make a
Special Advance of $________ as set forth in Section 5.18(b) of the Sale and
Servicing Agreement.
Section 3. Representations and Warranties Concerning the
Subsequent Mortgage Loans. With respect to each Subsequent Mortgage Loan, the
Trust hereby assigns each of the representations and warranties made by the
Originators in Section 3 of the Subsequent Transfer Agreement, for the benefit
of the Indenture Trustee, the Note Insurer and the Noteholders, on which the
Indenture Trustee relies in accepting the pledge of the Subsequent Mortgage
Loans and the Note Insurer relies in connection with the Note Insurance Policy.
Such representations and warranties speak as of the Subsequent Transfer Date
unless otherwise indicated, and shall survive each pledge, assignment, transfer
and conveyance of the respective Subsequent Mortgage Loans to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer.
Section 4. Repurchase of Subsequent Mortgage Loans. Upon
discovery by any of the Depositor, an Originator, the Indenture Trustee, the
Servicer (on behalf of the Trust), the Note Insurer or any Noteholder of a
breach of any of the representations and warranties made by the Originators and
the pursuant to Section 3.03 of the Loan Sale Agreement or Section 3 of any
Subsequent Transfer Agreement, the party discovering such breach shall give
prompt written notice to such other Person; provided, that the Indenture Trustee
shall have no duty to inquire or to investigate the breach of any such
representations and warranties. The Originators and the will be obligated to
repurchase a Subsequent Mortgage Loan which breaches a representation or
warranty in accordance with the provisions of Section 4.02 of the Sale and
Servicing Agreement or to indemnify as described in Section 3.05(g) of the Loan
Sale Agreement. Such repurchase and indemnification obligation of the
Originators shall constitute the sole remedy against the Originators, and the
Trust for such breach available to the Servicer, the Trust, the Indenture
Trustee, the Note Insurer and the Noteholders.
Section 5. Amendment. This Subsequent Pledge Agreement may be
amended from time to time by the Trust and the Indenture Trustee only with the
prior written consent of the Note Insurer (or, in the event of a Note Insurer
Default, the Majority Holders).
Section 6. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS
SUBSEQUENT PLEDGE AGREEMENT AND ANY AMENDMENT HEREOF PURSUANT TO SECTION 5 SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSEQUENT PLEDGE
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM
THEREIN.
B-2
Section 7. Counterparts. This Subsequent Pledge Agreement may
be executed in counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 8. Binding Effect; Third-Party Beneficiaries. This
Subsequent Pledge Agreement will inure to the benefit of and be binding upon the
parties hereto, the Note Insurer, the Noteholders, and their respective
successors and permitted assigns.
Section 9. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 10. Exhibits. The exhibits attached hereto and
referred to herein shall constitute a part of this Subsequent Pledge Agreement
and are incorporated into this Subsequent Pledge Agreement for all purposes.
[Remainder of Page Intentionally Left Blank]
B-3
IN WITNESS WHEREOF, the Trust and the Indenture Trustee have caused this
Subsequent Pledge Agreement to be duly executed by their respective officers as
of the day and year first above written.
_______________________________________________
_____, as Issuer
By: ______________________________,
_______________________, not in its
individual capacity but solely as Owner
Trustee
By:___________________________________
Name:
Title:
________________________________,
as Indenture Trustee
By:___________________________________
Name:
Title:
[Signature Page to Subsequent Pledge Agreement]
B-4
EXHIBIT C
FORM OF NOTE INSURER CONSENT TO
SUBSEQUENT MORTGAGE LOANS
___________, _____
___________________,
as Indenture Trustee
___________________
_____________________
Re: __________________________;
Mortgage Backed Notes, Series
_____________________________
Ladies and Gentlemen:
Reference is made to the Indenture, dated as of __________
(the "Indenture"), by and between ______________________, as issuer (the
"Trust"), and you, as indenture trustee (the "Indenture Trustee"). Pursuant to
Section 2.14(b)(viii) of the Indenture, the undersigned hereby approves and
consents to the acquisition of the Subsequent Mortgage Loans listed on Schedule
I attached hereto aggregating $____________ in Aggregate Principal Balance by
the Trust and the subsequent pledge of such Subsequent Mortgage Loans by the
Trust to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer.
___________________________________
By:__________________________
Name:
Title:
C-1
APPENDIX I
DEFINED TERMS
"Accepted Servicing Practices": The Servicer's normal
servicing practices, which in general will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service, for their own
account, mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located.
"Account": Any of the Collection Account, the Distribution
Accounts, the Cross-collateralization Reserve Accounts, the Note Insurance
Payment Account, the Pre-Funding Accounts or the Capitalized Interest Accounts.
"Accountant": A Person engaged in the practice of accounting
who (except when the Indenture provides that an Accountant must be Independent)
may be employed by or affiliated with the Trust or an Affiliate of the Trust.
"Accrual Period": With respect to the Notes and any
Distribution Date, the prior calendar month.
"Act": With respect to any Noteholder, as defined in Section
11.03 of the Indenture.
"Addition Notice": A written notice from the to the Depositor,
the Trust, the Indenture Trustee, the Collateral Agent, the Rating Agencies and
the Note Insurer that the desires to make a Subsequent Transfer.
"Adjusted Note Rate": With respect to any Distribution Date
for the Class A-1 Notes, the percentage equal to (i) the Class A-1 Note Rate
plus (ii) the Premium Percentage for such Class; with respect to any
Distribution Date for the Class A-2 Notes, the percentage equal to (i) the Class
A-2 Note Rate plus (ii) the Premium Percentage for such Class.
"Administrative Costs": With respect to each Class of Notes
and any Distribution Date, the sum of the Indenture Trustee Fee, the Premium
Amount and the Servicing Fee for such Distribution Date and such Class of Notes.
"Affiliate": With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified 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.
"Agent": Any Note Registrar, Collateral Agent, or
Authenticating Agent.
"Aggregate Principal Balance": With respect to any Mortgage
Loans and any date of determination, the aggregate of the Principal Balances of
such Mortgage Loans as of such date of determination.
App.A-1
"Appraised Value": As to any Mortgaged Property, the appraised
value of the Mortgaged Property based upon the appraisal made by or on behalf of
the related Originator at the time referred to in the related Basic Documents
or, in the case of a Mortgage Loan that is a purchase money mortgage loan, the
sales price of the Mortgaged Property, if such sales price is less than such
appraised value.
"Assignment of Mortgage": With respect to each Mortgage Loan,
an assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
"Authenticating Agent": The Person, if any, appointed as
Authenticating Agent by the Owner Trustee, acting at the direction of the
Majority Certificateholders, pursuant to Section 6.14 of the Indenture, until
any successor Authenticating Agent for the Notes is named, and thereafter
"Authenticating Agent" shall mean such successor. The initial Authenticating
Agent shall be the Indenture Trustee. Any Authenticating Agent other than the
Indenture Trustee shall sign an instrument under which it agrees to be bound by
all of the terms of this Indenture applicable to the Authenticating Agent.
"Authorized Denominations": Each Class of Notes is issuable
only in the minimum Percentage Interest corresponding to a minimum denomination
of $1,000 or integral multiples of $1,000 in excess thereof; provided, however,
that one Note of each Class is issuable in a denomination equal to any such
multiple plus an additional amount such that the aggregate denomination of all
Notes of such Class shall be equal to the Original Note Principal Balance of
such Class.
"Authorized Officer": With respect to (i) the Indenture
Trustee, any Responsible Officer, (ii) the Owner Trustee or the Collateral
Agent, the president, any vice president, any assistant vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, any
trust officer, any financial services officer or any other officer of the Owner
Trustee or the Collateral Agent customarily performing functions similar to
those performed by the above officers and (iii) any other Person, the chairman,
chief operating officer, president or any vice president of such Person.
"Available Funds": With respect to any Distribution Date and
any Distribution Account, the amount to be on deposit in such Distribution
Account on such Distribution Date (excluding the amount of any Insured Payment
and prior to the application of such amounts as described in Section 8.02 of the
Indenture for such Distribution Date) as a result of (a) the Servicer's
remittance of the Servicer Remittance Amount on the related Servicer
Distribution Date, (b) any transfers to such Distribution Account made from the
related Capitalized Interest Account and/or the related Pre-Funding Account and
relating to such Distribution Date pursuant to Section 8.01 of the Indenture,
and (c) any transfers to such Distribution Account in respect of the Shortfall
Amount for such Class and such Distribution Date pursuant to Section 8.01 of the
Indenture, until such Shortfall Amount is paid in full, made first, to the
extent of the Net Monthly Excess Cashflow for the other Pool of Mortgage Loans
remaining after payment of any Net Mortgage Loan Interest Shortfalls for such
other Pool, from the Distribution Account relating to such other Pool, second,
from the Cross-collateralization Reserve Account relating to this Pool,
App.A-2
and third, from the Cross-collateralization Reserve Account relating to the
other Pool. For purposes of calculating the Available Funds, any Loan Repurchase
Price or Substitution Adjustment that is paid shall be deemed deposited in the
Distribution Account in the Due Period preceding such Servicer Distribution
Date.
"Available Funds Shortfall": With respect to any Distribution
Date and any Class, an amount equal to the excess of the Insured Distribution
Amount for such Distribution Date and for such Class over the Available Funds
for such Distribution Date and such Class available for distribution in respect
of such Insured Distribution Amount.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"Basic Documents": The Indenture, the Trust Agreement, the
Sale and Servicing Agreement, the Loan Sale Agreement, the Insurance Agreement
and the Indemnification Agreement.
"Beneficial Owner": With respect to a Book-Entry Note, the
Person who is the beneficial owner of such Note as reflected on the books of the
Clearing Agency for the Notes or on the books of a Person maintaining an account
with such Clearing Agency (as either a Direct Participant or an Indirect
Participant, in accordance with the rules of such Clearing Agency).
"Best Efforts": Efforts determined to be in good faith and
reasonably diligent by the Person performing such efforts, specifically the
Trust or the Servicer or any other agent of the Trust, as the case may be, in
its reasonable discretion. Such efforts do not require the Trust or the Servicer
or any other agent of the Trust, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Trust or the Servicer or any other agent of the Trust, as the case
may be, to advance or expend fees or sums of money in addition to those
specifically set forth in this Indenture and the Sale and Servicing Agreement.
"Book-Entry Notes": Any Notes registered in the name of the
Clearing Agency or its nominee, ownership of which is reflected on the books of
the Clearing Agency or on the books of a person maintaining an account with such
Clearing Agency (as either a Direct Participant or an Indirect Participant in
accordance with the rules of such Clearing Agency).
"Book-Entry Termination": The time at which the book-entry
registration of the Book-Entry Notes shall terminate, as specified in Section
2.13 of the Indenture.
"Business Day": Any day other than (i) a Saturday or Sunday or
(ii) a day that is either a legal holiday or a day on which the Note Insurer or
banking institutions in the State of New York, the State of Delaware, the State
of New Jersey, the State of North Carolina, or the state in which the Indenture
Trustee's office from which payments will be made to Certificateholders, are
authorized or obligated by law, regulation or executive order to be closed.
"Business Purpose Property": Any mixed-use property,
commercial property, or four or more unit multifamily property.
App.A-3
"Capitalized Interest Account": Each of the Capitalized
Interest Accounts established in accordance with Section 8.01(c) of the
Indenture and maintained by the Indenture Trustee.
"Capitalized Interest Requirement": With respect to each Class
of Notes and the Distribution Date occurring in ________ and _________, (A) the
product of (i) one-twelfth of the related Adjusted Note Rate as calculated as of
such Distribution Date and (ii) the related Pre-Funded Amount as of the first
day of the related Due Period, minus (B) thirty (30) days' interest, at the
related Mortgage Interest Rate, on the Subsequent Mortgage Loans for the related
Pool transferred to the Trust during the related Due Period which had a Due Date
after the related Subsequent Cut-Off Date during the related Due Period, minus
(C) the amount of any Pre-Funding Earnings for the related Pool earned from the
last Distribution Date (or the Closing Date with respect to the ________
Distribution Date). In no event will the Capitalized Interest Requirement for
either Pool be less than zero.
"CERCLA": The Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
"Civil Relief Act Interest Shortfall": With respect to any
Distribution Date, for any Mortgage Loan as to which there has been a reduction
in the amount of interest collectible thereon for the most recently ended Due
Period as a result of the application of the Civil Relief Act, the amount, if
any, by which (a) interest collectible on such Mortgage Loan during the most
recently ended calendar month is less than (b) the sum of one month's interest
on the Principal Balance of such Mortgage Loan, calculated at a rate equal to
the related Mortgage Interest Rate.
"Class": Each class of Notes designated as the Class A-1 Notes
and the Class A-2 Notes.
"Class A-1 Current Interest": With respect to the Class A-1
Notes for any Distribution Date, the interest accrued during the related Accrual
Period at the Class A-1 Note Rate applicable to such Distribution Date on the
Class A-1 Note Principal Balance as of such Distribution Date (and prior to
making any distributions on such Distribution Date).
"Class A-1 Distribution Amount": With respect to the Class A-1
Notes for any Distribution Date, the amount to be distributed to the Holders of
the Class A-1 Notes on such Distribution Date, applied first to interest and
then to principal, which amount shall be the sum of (i) any moneys released from
the Pre-Funding Account as a prepayment of principal on the Class A-1 Notes
pursuant to Section 8.01(b) of the Indenture, and (ii) the lesser of (x) the
Class A-1 Formula Distribution Amount for such Distribution Date and (y) the
amount (including any applicable portion of any Insured Payment) available for
distribution on account of the Class A-1 Notes for such Distribution Date.
"Class A-1 Formula Distribution Amount": With respect to the
Class A-1 Notes for any Distribution Date, the sum of the Class A-1 Interest
Distribution Amount and the Class A-1 Principal Distribution Amount.
App.A-4
"Class A-1 Interest Distribution Amount": With respect to the
Class A-1 Notes for any Distribution Date, an amount equal to the Class A-1
Current Interest less the Class A-1 Mortgage Loan Interest Shortfall Amount.
"Class A-1 Mortgage Loan Interest Shortfall Amount": With
respect to the Mortgage Loans in Pool I and any Distribution Date, the sum of
(x) the excess, if any, of the aggregate Prepayment Interest Shortfalls for the
related Due Period over the aggregate amount of Compensating Interest paid by
the Servicer in respect thereto and (y) the aggregate amount of Civil Relief Act
Interest Shortfalls in respect of which the Servicer did not make a Servicer
Advance.
"Class A-1 Note": Any Note designated as a "Class A-1 Note" on
the face thereof, in the form of Exhibit A to the Indenture. The Class A-1 Notes
shall be issued with an initial aggregate Note Principal Balance equal to the
Original Note Principal Balance therefor.
"Class A-1 Note Principal Balance": As of any date of
determination, the Original Note Principal Balance of the Class A-1 Notes less
any amounts actually distributed with respect to principal thereon on all prior
Distribution Dates.
"Class A-1 Note Rate": With respect to any Distribution Date,
the per annum rate equal to _____%; provided, that, on any Distribution Date
after the Note Clean-Up Call Date for the Class A-1 Notes, the Class A-1 Note
Rate will be _____%.
"Class A-1 Principal Distribution Amount": With respect to the
Class A-1 Notes for any Distribution Date, the lesser of (x) the Principal
Distribution Amount for Pool I for such Distribution Date, and (y) the Class A-1
Note Principal Balance as of such Distribution Date.
"Class A-2 Current Interest": With respect to the Class A-2
Notes for any Distribution Date, the interest accrued during the related Accrual
Period at the Class A-2 Note Rate applicable to such Distribution Date on the
Class A-2 Note Principal Balance as of such Distribution Date (and prior to
making any distributions on such Distribution Date).
"Class A-2 Distribution Amount": With respect to the Class A-2
Notes for any Distribution Date, the amount to be distributed to the Holders of
the Class A-2 Notes on such Distribution Date, applied first to interest and
then to principal, which amount shall be the lesser of (x) the Class A-2 Formula
Distribution Amount for such Distribution Date and (y) the amount (including any
applicable portion of any Insured Payment) available for distribution on account
of the Class A-2 Notes for such Distribution Date.
"Class A-2 Formula Distribution Amount": With respect to the
Class A-2 Notes for any Distribution Date, the sum of the Class A-2 Interest
Distribution Amount and the Class A-2 Principal Distribution Amount.
"Class A-2 Interest Distribution Amount": With respect to the
Class A-2 Notes for any Distribution Date, an amount equal to (a) the related
Class A-2 Current Interest, less the Class A-2 Mortgage Loan Interest Shortfall
Amount.
App.A-5
"Class A-2 Mortgage Loan Interest Shortfall Amount": With
respect to the Mortgage Loans in Pool II and any Distribution Date, the sum of
(x) the excess, if any, of the aggregate Prepayment Interest Shortfalls for the
related Due Period over the aggregate amount of Compensating Interest paid by
the Servicer in respect thereto and (y) the aggregate amount of Civil Relief Act
Interest Shortfalls in respect of which the Servicer did not make a Servicer
Advance.
"Class A-2 Note": Any Note designated as a "Class A-2 Note" on
the face thereof, in the form of Exhibit A to the Indenture. The Class A-2 Notes
shall be issued with an initial aggregate Note Principal Balance equal to the
Original Note Principal Balance therefor.
"Class A-2 Note Principal Balance": As of any date of
determination, the Original Note Principal Balance of the Class A-2 Notes less
any amounts actually distributed with respect to principal thereon on all prior
Distribution Dates.
"Class A-2 Note Rate": With respect to any Distribution Date,
the per annum rate equal to ______%; provided that, on any Distribution Date
after the Note Clean-up Call Date for the Class A-2 Notes, the Class A-2 Note
Rate will be ______%.
"Class A-2 Principal Distribution Amount": With respect to the
Class A-2 Notes for any Distribution Date, the lesser of (x) the Principal
Distribution Amount for Pool II for such Distribution Date and (y) the Class A-2
Note Principal Balance as of such Distribution Date.
"Clean-Up Call Date": The first Distribution Date after the
sum of the Aggregate Principal Balances of the Mortgage Loans in Pool I and Pool
II is less than 10% of the sum of the Maximum Collateral Amount for Pool I and
Pool II.
"Clearing Agency": An organization registered as a "clearing
agency" pursuant to Section 17A of the Securities and Exchange Act of 1934, as
amended, and the regulations of the Commission thereunder and shall initially be
The Depository Trust Company of New York, the nominee for which is Cede & Co.
"Clearing Agency Participants": The entities for whom the
Clearing Agency will maintain book-entry records of ownership and transfer of
Book-Entry Notes, which may include securities brokers and dealers, banks and
trust companies and clearing corporations and certain other organizations.
"Closing Date": ____________.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral Agent": _________________, a national banking
association, or its successor-in-interest, or any successor Collateral Agent
appointed as provided in Section 9.08 of the Sale and Servicing Agreement.
"Collection Account": The Eligible Account established and
maintained by the Servicer pursuant to Section 5.02(b) of the Sale and Servicing
Agreement.
App.A-6
"Combined Loan-to-Value Ratio" or "CLTV": As to any Mortgage
Loan at any time, the fraction, expressed as a percentage, the numerator of
which is the sum of (i) the Principal Balance thereof at such time and (ii) if
such Mortgage Loan is subject to a second mortgage, the unpaid principal balance
of any related first mortgage loan or loans, if any, as of such time, and the
denominator of which is the Appraised Value of any related Mortgaged Property or
Properties as of the date of the appraisal used by or on behalf of the to
underwrite such Mortgage Loan.
"Commission": The United States Securities and Exchange
Commission.
"Compensating Interest": As defined in Section 6.05 of the
Sale and Servicing Agreement.
"Corporate Trust Office": With respect to (x) the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of the Basic Documents is located at
______________________, Attention: ____________________; (y) the Owner Trustee,
the principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be principally administered, which office at the
date of the execution of the Basic Documents is located at
_____________________________, Attention: Corporate Trust Administration; and
(z) the Collateral Agent, the principal office of the Collateral Agent at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of the Basic Documents
is located at ______________________, Attention: Custody Manager.
"Cross-collateralization Reserve Accounts": With respect to
each Class of Notes, the segregated trust account, which shall be an Eligible
Account, established and maintained pursuant to Section 8.01(d) of the Indenture
and entitled "____________, as Indenture Trustee for _____________________
Mortgage Backed Notes, Series _____, Class A-[1][2], Cross-collateralization
Reserve Account," as the case may be, on behalf of the related Noteholders and
the Note Insurer.
"Cumulative Loan Loss": With respect to any period, the sum of
all Liquidated Loan Losses which occurred during such period.
"Cumulative Loss Percentage": As of any date of determination
thereof, the aggregate of all Liquidated Loan Losses since the Closing Date as a
percentage of the sum of (i) the aggregate Principal Balance of the Initial
Mortgage Loans as of the Initial Cut-Off Date and (ii) the aggregate Principal
Balance of any Subsequent Mortgage Loans transferred to the Trust as of the
related Subsequent Cut-Off Date.
"Cumulative Loss Test": The Cumulative Loss Test for each
period indicated below is satisfied if the Cumulative Loss Percentage for such
period does not exceed the percentage set out for such period below:
Period Cumulative Loss Percentage
------ __________________________
1st - 24th Distribution Date _____%
App.A-7
25th - 36th Distribution Date _____%
37th - 48th Distribution Date _____%
49th - 60th Distribution Date
and thereafter _____%
"Curtailment": With respect to a Mortgage Loan, any payment of
principal received during a Due Period as part of a payment that is in excess of
the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
Delinquency.
"Cut-Off Date": With respect to the Initial Mortgage Loans,
the Initial Cut-Off Date, and with respect to the Subsequent Mortgage Loans, the
Subsequent Cut-Off Date.
"Cut-Off Date Aggregate Principal Balance": Means the
aggregate unpaid principal balance of the Initial Mortgage Loans as of the
Initial Cut-Off Date (or, with respect to Initial Mortgage Loans which were
originated after the Initial Cut-Off Date, as of the date of origination). The
Cut-Off Date Aggregate Principal Balance for the Trust is $___________. The
Cut-Off Date Aggregate Principal Balance for Pool I and Pool II is $___________
and $____________, respectively.
"Cut-Off Date Principal Balance": Means as to each Initial
Mortgage Loan, its unpaid principal balance as of the Initial Cut-Off Date (or,
with respect to Initial Mortgage Loans which were originated after the Initial
Cut-Off Date, as of the date of origination).
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the Bankruptcy Code, except such a
reduction that constitutes a Deficient Valuation or a permanent forgiveness of
principal.
"Default": Any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding Principal Balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"Definitive Notes": Notes other than Book-Entry Notes.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Ratio": With respect to any Distribution Date,
the percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are sixty (60) or more
days Delinquent, in foreclosure or converted to REO Property as of the last day
of such Due Period and (b) the denominator of which is the aggregate Principal
Balance of the Mortgage Loans as of the last day of such Due Period.
App.A-8
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Depositor": ____________________, a __________ corporation.
"Direct Participant": Any broker-dealer, bank or other
financial institution for which the Clearing Agency holds Notes from time to
time as a securities depositary.
"Distribution Account": With respect to each Class of Notes,
the segregated trust account, which shall be an Eligible Account, established
and maintained pursuant to Section 8.01(a) of the Indenture and entitled
"____________, as Indenture Trustee for ___________________ Mortgage Backed
Notes, Series _____, Class A-[1][2], Distribution Account," as the case may be,
on behalf of the related Noteholders and the Note Insurer.
"Distribution Amount": The Class A-1 Distribution Amount or
the Class A-2 Distribution Amount, as applicable.
"Distribution Date": The ____ day of any month or if such ___
day is not a Business Day, the first Business Day immediately following,
commencing on _________.
"Due Date": With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar month preceding the calendar month in
which such Distribution Date occurs on which the Monthly Payment for such
Mortgage Loan was due.
"Due Period": With respect to each Distribution Date, the
calendar month preceding the related Distribution Date.
"Eligible Account": Either (A) an account or accounts
maintained with an institution (which may include the Indenture Trustee;
provided, that the Indenture Trustee otherwise meets these requirements) whose
deposits are insured by the FDIC, the unsecured and uncollateralized debt
obligations of which institution shall be rated "AA" or better by S&P and "Aa2"
or better by Xxxxx'x and in the highest short term rating category by S&P and
Xxxxx'x, and which is (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution (including the Indenture Trustee) duly organized, validly existing
and in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, (iv) a principal subsidiary of a bank
holding company, or (v) approved in writing by the Note Insurer and the Rating
Agencies or (B) a trust account or accounts maintained with the trust department
of a federal or state chartered depository institution or trust company (which
may include the Indenture Trustee; provided, that the Indenture Trustee
otherwise meets these requirements), having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity.
App.A-9
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Excess Over-collateralized Amount": With respect to a Pool of
Mortgage Loans and any Distribution Date, the excess, if any, of (x) the
Over-collateralized Amount for such Pool that would apply on such Distribution
Date after taking into account the payment of the Class A-1 Distribution Amount
or the Class A-2 Distribution Amount, as applicable, on such Distribution Date
(except for any distributions of Over-collateralization Reduction Amounts for
such Pool on such Distribution Date) over (y) the related Specified
Over-collateralized Amount for such Pool for such Distribution Date; provided,
however, that the Excess Over-collateralized Amount for the period beginning
with the Distribution Date as to which clause (b)(i)(y)(A) of "Specified
Over-collateralized Amount" applies (the "Trigger Date") and ending on the
Distribution Date occurring in the month six months subsequent to the Trigger
Date (inclusive) shall be limited to the amount obtained using the following
formula.
n
--- x E.S.A.
6
Where "n" is equal to the number of Distribution Dates that
have occurred since the Trigger Date and "E.S.A." is equal to the amount of
Excess Over-collateralized Amount that would otherwise be obtained for such
Distribution Date without regard to the provisions of this proviso.
"Exchange Act": Means the Securities Exchange Act of 1934, as
amended.
"Event of Default": As defined in Section 5.01 of the
Indenture.
"FDIC": The Federal Deposit Insurance Corporation, and any
successor thereto.
"Final Certification": A certification as to the completeness
of each Indenture Trustee's Mortgage File prepared by the Collateral Agent, on
behalf of the Indenture Trustee, and provided by the Collateral Agent within
ninety (90) of the Closing Date pursuant to Section 2.06(a)(iii) of the Sale and
Servicing Agreement.
"Final Stated Maturity Date": With respect to both the Class
A-1 Notes and the Class A-2 Notes, the ________ Distribution Date.
"Foreclosure Profits": As to any Distribution Date, the
excess, if any, of (i) Net Liquidation Proceeds in respect of each Mortgage Loan
that became a Liquidated Mortgage Loan during the related Due Period over (ii)
the sum of the unpaid Principal Balance of each such Liquidated Mortgage Loan
plus accrued and unpaid interest at the applicable Mortgage Interest Rate on the
unpaid Principal Balance thereof from the Due Date on which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Mortgage Loan that had
been an REO Mortgage Loan, from the Due Date on which interest was last deemed
to have been paid pursuant to Section 5.06 of the Sale and Servicing Agreement)
to the next succeeding Due Date following the date such Loan became a Liquidated
Mortgage Loan.
"GAAP": Generally accepted accounting principles, consistently
applied.
App.A-10
"Grant": To assign, transfer, mortgage, pledge, create and
grant a security interest in, deposit, set-over and confirm. A Grant of a
Mortgage Loan and the related Mortgage Files, a Permitted Investment, the Sale
and Servicing Agreement, the Loan Sale Agreement, or any other instrument shall
include all rights, powers and options (but none of the obligations) of the
Granting party thereunder, including without limitation the immediate and
continuing right to claim for, collect, receive and give receipts for principal
and interest payments thereunder, Insurance Proceeds, Loan Purchase Prices and
all other moneys payable thereunder and all proceeds thereof, 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.
"Highest Lawful Rate": As defined in Section 11.19 of the
Indenture.
"I&I Payments": Payments due and owing under the Insurance
Agreement other than pursuant to Section 3.02(b) of such Insurance Agreement.
"Indemnification Agreement": As defined in the Insurance
Agreement.
"Indenture": The Indenture, dated as of __________, between
the Trust and the Indenture Trustee, relating to the issuance of the Notes.
"Indenture Trustee": _________________, a __________banking
corporation, or its successor-in-interest, or any successor Indenture Trustee
appointed as provided for in Section 6.09 of the Indenture.
"Indenture Trustee Fee": As to any Distribution Date, the fee
payable to the Indenture Trustee in respect of its services as Indenture Trustee
pursuant to Section 6.16 of the Indenture that accrues at a monthly rate equal
to one-twelfth of _____% on the Principal Balance of each Mortgage Loan, as of
the immediately preceding Due Date.
"Indenture Trustee's Mortgage File": The documents delivered
to the Collateral Agent, on behalf of the Indenture Trustee, pursuant to Section
2.05 of the Sale and Servicing Agreement.
"Indenture Trustee's Remittance Report": The statement
prepared pursuant to Section 2.08(d) of the Indenture, containing the following
information with respect to each Class:
(a) the amount of the distribution with respect to the each
Class of Notes and the Trust Certificates;
(b) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments or other
unscheduled recoveries of principal included therein and separately identifying
any Over-collateralization Increase Amounts for each Pool;
(c) the amount of such distributions allocable to interest and
the calculation thereof;
App.A-11
(d) the Note Principal Balance of each Class of Notes as of
such Distribution Date, together with the Note Principal Balance of each Class
of Notes (based on a Note in an original Note Principal Balance of $1,000) then
outstanding, in each case after giving effect to any payment of principal on
such Distribution Date;
(e) the amount of any Insured Payment included in the amounts
distributed to the Noteholders on such Distribution Date;
(f) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such distribution;
(g) the amounts, if any, of any Liquidated Loan Losses for
consumer purpose loans and for business purpose loans for the related Due Period
and cumulative Liquidated Loan Losses since the Closing Date for consumer
purpose loans and for business purpose loans; and
(h) the Pre-Funding Amount for each Class on such Distribution
Date.
Items (a), (b) and (c) above shall, with respect to each Class
of Notes, be presented on the basis of a Note having a $1,000 denomination. In
addition, by January 31 of each calendar year following any year during which
the Notes are outstanding, the Indenture Trustee shall furnish a report to each
Holder of record if so requested in writing at any time during each calendar
year as to the aggregate of amounts reported pursuant to (a), (b) and (c) with
respect to the Notes for such calendar year.
"Independent": When used with respect to any specified Person,
means such a Person who (i) is in fact independent of the Trust and any other
obligor upon the Notes, (ii) does not have any direct financial interest or any
material indirect financial interest in the Trust or in any such other obligor
or in an Affiliate of the Trust or such other obligor, and (iii) is not
connected with the Trust or any such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by a Trust Order and such opinion or certificate shall state that the
signer has read this definition and that the signer is Independent within the
meaning hereof.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Note.
"Individual Note": A Note of an Original Note Principal
Balance of $1,000; a Note of an Original Note Principal Balance in excess of
$1,000 shall be deemed to be a number of Individual Notes equal to the quotient
obtained by dividing such Original Note Principal Balance amount by $1,000.
"Initial Certification": A certification as to the
completeness of each Mortgage File prepared by the Collateral Agent, on behalf
of the Indenture Trustee, and provided by the Collateral Agent within thirty
(30) of the Closing Date pursuant to Section 2.06(a)(ii) of the Sale and
Servicing Agreement.
App.A-12
"Initial Cut-Off Date": The close of business on _____________
(or with respect to any Initial Mortgage Loan originated or otherwise acquired
by an Originator after _____________, the date of origination or acquisition of
such Initial Mortgage Loan).
"Initial Mortgage Loans": The Mortgage Loans delivered by the
Trust on the Closing Date.
"Initial Over-collateralized Amount": With respect to any
Pool, an amount equal to _____% of the Maximum Collateral Amount for such Pool.
"Insurance Agreement": The Insurance and Indemnity Agreement
dated as of ___________ among the Note Insurer, the Depositor, the Trust, the
Servicer, the , and the Originators as such agreement may be amended or
supplemented in accordance with the provisions thereof.
"Insurance Policies": All insurance policies insuring any
Mortgage Loan or Mortgaged Property, to the extent the Trust or the Indenture
Trustee has any interest therein.
"Insurance Proceeds": Proceeds paid by any insurer pursuant to
any insurance policy covering a Mortgage Loan to the extent such proceeds are
not applied to the restoration of the related Mortgaged Property or released to
the related Mortgagor in accordance with Accepted Servicing Practices.
"Insurance Proceeds" do not include "Insured Payments."
"Insured Distribution Amount": With respect to any
Distribution Date and for any Pool, is the sum of (i) the Interest Distribution
Amount for such Pool, (ii) the amount of the Over-collateralization Deficit
applicable to such Pool, if any, with respect to such Distribution Date, and
(iii) with respect to the Distribution Date which is a Final Stated Maturity
Date, the outstanding Note Principal Balance for the related Class of Notes.
"Insured Payment": With respect to any Distribution Date and
any Class of Notes, the Available Funds Shortfall for such Class.
"Interest Distribution Amount": The Class A-1 Interest
Distribution Amount or the Class A-2 Interest Distribution Amount, as
applicable.
"Late Payment Rate": Has the meaning ascribed thereto in the
Insurance Agreement.
"Letter Agreement": The Letter of Representations to the
Clearing Agency from the Indenture Trustee and the Trust dated __________.
"Liquidated Loan Loss": With respect to any Distribution Date,
the aggregate of the amount of losses with respect to each Mortgage Loan which
became a Liquidated Mortgage Loan prior to the Due Date preceding such
Distribution Date, equal to the excess of (i) the unpaid Principal Balance of
each such Liquidated Mortgage Loan, plus accrued interest thereon in accordance
with the amortization schedule at the time applicable thereto at the applicable
Mortgage Interest Rate from the Due Date as to which interest was last paid with
respect thereto through the next succeeding Due Date following the date such
Loan became a Liquidated
App.A-13
Mortgage Loan, over (ii) Net Liquidation Proceeds with respect to such
Liquidated Mortgage Loan.
"Liquidated Mortgage Loan": A Mortgage Loan with respect to
which the related Mortgaged Property has been acquired, liquidated or foreclosed
and with respect to which the Servicer determines that all Liquidation Proceeds
which it expects to recover have been recovered.
"Liquidation Expenses": Expenses incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan or property
acquired in respect thereof (including, without limitation, legal fees and
expenses, committee or referee fees, and, if applicable, brokerage commissions
and conveyance taxes), any unreimbursed amount expended by the Servicer pursuant
to Sections 5.04 and 5.06 of the Sale and Servicing Agreement respecting the
related Mortgage Loan and any unreimbursed expenditures for real property taxes
or for property restoration or preservation of the related Mortgaged Property.
Liquidation Expenses shall not include any previously incurred expenses in
respect of an REO Mortgage Loan which have been netted against related REO
Proceeds.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds) received by the Servicer in connection with (i) the taking of all or a
part of Mortgaged Property by exercise of the power of eminent domain or
condemnation, (ii) the liquidation of a defaulted Mortgage Loan through a
Indenture Trustee's sale, foreclosure sale, REO Disposition or otherwise or
(iii) the liquidation of any other security for such Mortgage Loan, including,
without limitation, pledged equipment, inventory and working capital and
assignments of rights and interests made by the related Mortgagor.
"Loan Repurchase Price": With respect to any Mortgage Loan,
the Principal Balance of such Mortgage Loan as of the date of purchase, plus all
accrued and unpaid interest on such Principal Balance computed, as of the next
succeeding Due Date for such repurchased Mortgage Loan, at the Mortgage Interest
Rate, net of the Servicing Fee if the or any of its Affiliates is the Servicer,
plus the amount of any unreimbursed Servicing Advances made by the Servicer with
respect to such Mortgage Loan, which purchase price shall be deposited in the
Collection Account on the next succeeding Servicer Distribution Date, after
deducting therefrom any amounts received in respect of such repurchased Mortgage
Loan or Loans and being held in the Collection Account for future distribution
to the extent such amounts have not yet been applied to principal or interest on
such Mortgage Loan.
"Loan Sale Agreement": The Loan Sale Agreement, dated as of
___________, among the Originators and the Depositor relating to the sale of the
Mortgage Loans from the Originators to the Depositor.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage
Loan as of its date of origination, the ratio on such date borne by the
outstanding Principal Balance of the Mortgage Loan to the Appraised Value of the
related Mortgaged Property.
"Majority Certificateholders": The Holder or Holders of Trust
Certificates evidencing Percentage Interests in excess of 51% in the aggregate.
App.A-14
"Majority Noteholders": The Holder or Holders of Notes
evidencing Percentage Interests in excess of 51% in the aggregate.
"Maximum Collateral Amount": The sum of the Original Pool
Principal Balance and the Original Pre-Funded Amount for each Class of Notes.
"Monthly Payment": As to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the payment of principal and interest due
thereon as specified for such Due Date in the related amortization schedule at
the time applicable thereto (after adjustment for any Curtailments and Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than Deficient
Valuations, or similar proceeding or any moratorium or similar waiver or grace
period).
"Monthly Servicing Fee": As defined in Section 5.08 of the
Sale and Servicing Agreement.
"Moody's": Xxxxx'x Investors Service, Inc., a corporation
organized and existing under Delaware law, or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized rating agency designated by the Note Insurer.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on the Mortgaged Property.
"Mortgage File": As described in Exhibit A to the Sale and
Servicing Agreement.
"Mortgage Interest Rate": As to any Mortgage Loan, the per
annum fixed rate at which interest accrues on the unpaid Principal Balance
thereof.
"Mortgage Loan Interest Shortfall": With respect to any
Distribution Date, as to any Mortgage Loan, the sum of (a) the excess, if any,
of the Prepayment Interest Shortfall for such Mortgage Loan for the related Due
Period over the Compensating Interest for such Mortgage Loan paid by the
Servicer in respect thereto and (b) any Civil Relief Act Interest Shortfall in
respect of which the Servicer did not make a Servicer Advance.
"Mortgage Loan Schedule": The schedule of Initial Mortgage
Loans as of the Initial Cut-Off Date attached as Schedule I to the Indenture,
which will be deemed to be modified automatically to reflect any replacement,
sale, substitution, liquidation, transfer or addition of any Mortgage Loan,
including the addition of a Subsequent Mortgage Loan, pursuant to the terms
hereof. The initial Mortgage Loan Schedule sets forth as to each Initial
Mortgage Loan, and any subsequent Mortgage Loan Schedule provided in connection
with the Subsequent Mortgage Loans will set forth as to each Subsequent Mortgage
Loan: (i) its identifying number and the name of the related Mortgagor; (ii) the
billing address for the related Mortgaged Property including the state and zip
code; (iii) its date of origination; (iv) the original number of months to
stated maturity; (v) the original stated maturity; (vi) the original Principal
Balance; (vii) its Principal Balance as of the applicable Cut-Off Date; (viii)
the Mortgage Interest Rate; (ix) the scheduled monthly payment of principal and
interest and (x) a Pool designation.
App.A-15
"Mortgage Loans": The Initial Mortgage Loans and the
Subsequent Mortgage Loans, together with any Qualified Substitute Mortgage Loans
substituted therefor in accordance with the Basic Documents, as from time to
time are held as a part of the Trust, the Initial Mortgage Loans originally so
held being identified in the initial Mortgage Loan Schedule. When used in
respect of any Distribution Date, the term Mortgage Loans shall mean all
Mortgage Loans (including those in respect of which the Indenture Trustee has
acquired the related Mortgaged Property) which have not been repaid in full
prior to the related Due Period, did not become Liquidated Mortgage Loans prior
to such related Due Period or were not repurchased or replaced by the prior to
such related Due Period.
"Mortgage Note": The original, executed note or other evidence
of any indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Portfolio Performance Test": The Mortgage Portfolio
Performance Test is satisfied for any date of determination thereof if either
(a) (i) the Rolling Six Month Delinquency Rate is less than or equal to ____%,
(ii) the Over-collateralization Loss Test is satisfied and (iii) if the Twelve
Month Loss Amount is not greater than or equal to ____% of the Principal Balance
of the Mortgage Loans in each Pool as of the first day of the twelfth preceding
calendar month or (b) the Note Insurer, by notice to the Trust, the Servicer,
the Indenture Trustee and the Collateral Agent, expressly waives in writing
compliance with the foregoing tests for such Distribution Date.
"Mortgaged Property": The underlying property or properties
securing a Mortgage Loan, consisting of a fee simple interest in one or more
parcels of land.
"Mortgagor": The obligor on a Mortgage Note.
"Net Foreclosure Profits": As to any Distribution Date, the
excess, if any, of (i) the aggregate Foreclosure Profits with respect to such
Distribution Date over (ii) Liquidated Loan Losses with respect to such
Distribution Date.
"Net Liquidation Proceeds": As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses and net of any
unreimbursed Periodic Advances and Servicing Advances made by the Servicer. For
all purposes of the Basic Documents, Net Liquidation Proceeds shall be allocated
first to accrued and unpaid interest on the related Mortgage Loan and then to
the unpaid Principal Balance thereof.
"Net Monthly Excess Cashflow": With respect to any
Distribution Date and any Pool, the excess of (x) the Available Funds for such
Pool then on deposit in the related Distribution Account over (y) the sum of (i)
the Interest Distribution Amount for such Pool and such Distribution Date, (ii)
the Principal Distribution Amount for such Pool and such Distribution Date,
calculated for this purpose without regard to any Over-collateralization
Increase Amount (or portion thereof included therein) for such Pool and such
Distribution Date, (iii) the amounts due to the Note Insurer for such Pool on
such Distribution Date pursuant to Section 8.02(ii) of the Indenture, and (iv)
the Indenture Trustee Fees allocable to such Pool for such Distribution Date.
App.A-16
"Net Mortgage Loan Interest Shortfall Amount": The Class A-1
Mortgage Loan Interest Shortfall or the Class A-2 Mortgage Loan Interest
Shortfall Amount, as applicable.
"Net REO Proceeds": As to any REO Mortgage Loan, REO Proceeds
net of any related expenses of the Servicer.
"Net Weighted Average Mortgage Interest Rate": With respect to
any Due Period, the weighted average Mortgage Interest Rates (weighted by
Principal Balances) of the Mortgage Loans, calculated at the opening of business
on the first day of such Due Period, less the Servicing Fee Rate, and less the
Premium Percentage.
"Nonrecoverable Advances": With respect to any Mortgage Loan,
(a) any Periodic Advance previously made and not reimbursed from late
collections pursuant to Section 5.03 of the Sale and Servicing Agreement, or (b)
a Periodic Advance proposed to be made in respect of a Mortgage Loan or REO
Property either of which, in the good faith business judgment of the Servicer,
as evidenced by an Officer's Certificate delivered to the Note Insurer and the
Indenture Trustee no later than the Business Day following such determination,
would not ultimately be recoverable pursuant to Section 5.03 of the Sale and
Servicing Agreement.
"Note": Any Class A-1 Note or Class A-2 Note executed by the
Owner Trustee on behalf of the Trust and authenticated by the Indenture Trustee.
"Noteholder" or "Holder": Each Person in whose name a Note is
registered in the Note Register, except that, solely for the purposes of giving
any consent, waiver, request or demand pursuant to the Indenture, any Note
registered in the name of the Servicer or any Subservicer or the , or any
Affiliate of any of them, shall be deemed not to be outstanding and the
undivided Percentage Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Notes necessary to effect any
such consent, waiver, request or demand has been obtained. For purposes of any
consent, waiver, request or demand of Noteholders pursuant to the Indenture,
upon the Indenture Trustee's request, the Servicer and the shall provide to the
Indenture Trustee a notice identifying any of their respective Affiliates or the
Affiliates of any Subservicer that is a Noteholder as of the date(s) specified
by the Indenture Trustee in such request. Any Notes on which payments are made
under the Note Insurance Policy shall be deemed to be Outstanding and held by
the Note Insurer to the extent of such payment.
"Note Clean-Up Call Date": With respect to the Class A-1
Notes, the first Distribution Date after the Class A-1 Note Principal Balance is
less than or equal to 10% of the Original Note Principal Balance of the Class
A-1 Notes; with respect to the Class A-2 Notes, the first Distribution Date
after the Class A-2 Note Principal Balance is less than or equal to 10% of the
Original Note Principal Balance of the Class A-2 Notes.
"Note Insurance Payment Account": The Note Insurance Payment
Account established in accordance with Section 8.03(c) of the Indenture and
maintained by the Indenture Trustee.
App.A-17
"Note Insurance Policy": The Financial Guaranty Insurance
Policy No. _______, all endorsements thereto dated the Closing Date, issued by
the Note Insurer for the benefit of the Noteholders.
"Note Insurer": _______________________, a monoline stock
insurance company organized and created under the laws of the State of ________,
and any successors thereto.
"Note Insurer Default": The existence and continuance of any
of the following:
(i) the Note Insurer shall have failed to make a required
payment when due under the Note Insurance Policy;
(j) the Note Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
Bankruptcy Code, the New York State Insurance Law or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization, (ii) made a general assignment for the benefit of its creditors
or (iii) had an order for relief entered against it under the Bankruptcy Code,
the New York State Insurance Law or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization that is final and nonappealable; or
(k) a court of competent jurisdiction, the New York Department
of Insurance or any other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a custodian,
indenture trustee, agent, or receiver for the Note Insurer or for all or any
material portion of its property or (ii) authorizing the taking of possession by
a custodian, indenture trustee, agent, or receiver of the Note Insurer or of all
or any material portion of its property.
"Note Principal Balance": As to any particular Note and date
of determination, the product of the Percentage Interest evidenced thereby and
the aggregate principal balance of all Notes of the same Class as of such date
of determination. The Trust Certificates do not have a "Note Principal Balance".
"Note Rate": The Class A-1 Note Rate or the Class A-2 Note
Rate, as applicable.
"Note Register": As defined in Section 2.06 of the Indenture.
"Note Registrar": As defined in Section 2.06 of the Indenture.
"Note Termination Price": With respect to either Class, an
amount equal to the sum of (i) 100% of the aggregate Note Principal Balance of
such Class, plus accrued and unpaid interest thereon, and (ii) any unreimbursed
amounts due to the Note Insurer under the Basic Documents and any I&I Payments.
"Notes": The Class A-1 Notes and the Class A-2 Notes.
"Officer's Certificate": A certificate signed by the chairman
of the board, the president or a vice president and the treasurer, the secretary
or one of the assistant treasurers or
App.A-18
assistant secretaries of the , the Servicer, or the Depositor, or, with respect
to the Trust, a certificate signed by a Responsible Officer of the Owner
Trustee, at the direction of the related Majority Certificateholders as required
by any Basic Document.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be counsel for the , the Servicer, the Depositor, the
Indenture Trustee, the Owner Trustee, a Noteholder or a Noteholder's prospective
transferee or the Note Insurer (including except as otherwise provided herein,
in-house counsel) reasonably acceptable to each addressee of such opinion and
experienced in matters relating to the subject of such opinion.
"Original Note Principal Balance": As of the Closing Date and
as to the Class A-1 Notes, $____________ and as to the Class A-2 Notes,
$____________. The Trust Certificates do not have an "Original Note Principal
Balance."
"Original Pool Principal Balance": The aggregate Principal
Balance of the Mortgage Loans, as of the Initial Cut-Off Date, which amount for
the Trust is equal to $_____________. The Original Pool Principal Balance for
Pool I and Pool II is $_____________ and $__________, respectively.
"Original Capitalized Interest Amount": With respect to the
Class A-1 Notes, $__________ and with respect to the Class A-2 Notes,
$___________.
"Original Pre-Funded Amount": With respect to the Class A-1
Notes, $___________ and with respect to the Class A-2 Notes, $____________.
"Originators": ___________________.
"Outstanding": As of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
(l) Definitive Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for cancellation;
(m) Notes or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with the Indenture
Trustee 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 therefor, satisfactory to the Indenture Trustee,
has been made;
(n) 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 (as defined by the Uniform Commercial Code of the
applicable jurisdiction); and
(o) Notes alleged to have been destroyed, lost or stolen that
have been paid as provided for in Section 2.07 of the Indenture;
App.A-19
provided, however, that in determining whether the Holders of the requisite
percentage of the Note Principal Balance of the Outstanding Notes have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Notes owned by the Trust, any other obligor upon the Notes or any Affiliate of
the Trust, the , the Servicer or the Depositor or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
that the Indenture Trustee knows to be 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 Trust, any other obligor upon the Notes or any Affiliate of the Trust, the ,
the Servicer or the Depositor or such other obligor; provided, further, however,
that Notes that have been paid with the proceeds of the Note Insurance Policy
shall be deemed to be Outstanding for the purposes of this Indenture, such
payment to be evidenced by written notice from the Note Insurer to the Indenture
Trustee, and the Note Insurer shall be deemed to be the Holder thereof to the
extent of any payments thereon made by the Note Insurer which have not been
reimbursed.
"Over-collateralization Deficit": As of any Distribution Date,
the amount, if any, by which (a) the aggregate Note Principal Balance of the
Notes, after taking into account the payment of the Principal Distribution
Amount for each Pool (except for any amount in respect of the
Over-collateralization Deficit) on such date exceeds (b) the sum of (i) the
Aggregate Principal Balances of the Mortgage Loans in such Pool determined as of
the end of the immediately preceding Due Period, (ii) the amount, if any, on
deposit in the Pre-Funding Accounts as of the close of business on the last day
of the immediately preceding Due Period, and (iii) the amount on deposit in the
Cross-collateralization Reserve Accounts on such Distribution Date, after
application of all amounts due on such Distribution Date.
"Over-collateralization Deficiency Amount": With respect to
any Distribution Date and any Pool, the difference, if greater than zero,
between (a) the Specified Over-collateralized Amount for such Pool applicable to
such Distribution Date and (b) the Over-collateralized Amount for such Pool
applicable to such Distribution Date prior to taking into account the payment of
any related Over-collateralization Increase Amount for such Pool on such
Distribution Date.
"Over-collateralization Increase Amount": With respect to any
Distribution Date and any Pool, the lesser of:
(p) the Over-collateralization Deficiency Amount for such Pool
as of such Distribution Date (after taking into account the payment of the
Principal Distribution Amount for such Pool on such Distribution Date (except
for any Over-collateralization Increase Amount for such Pool)); and
(b) (i) with respect to the first Distribution Date, zero, and
(ii) with respect to any other Distribution Date, 100% of the
amount of Net Monthly Excess Cashflow on such Distribution Date.
App.A-20
"Over-collateralization Loss Test": The Over-collateralization
Loss Test for any period set out below is satisfied if the Cumulative Loss
Percentage for such period does not exceed the percentage set out for such
period below:
Period Cumulative Loss Percentage
------ --------------------------
1st - 12th Distribution Date _____%
13th - 24th Distribution Date _____%
25th - 36th Distribution Date _____%
37th - 48th Distribution Date _____%
49th - 60th Distribution Date
and thereafter _____%
"Over-collateralization Reduction Amount": With respect to any
Pool and Distribution Date, is the positive difference, if any, between (a) the
Over-collateralized Amount for such pool that would apply on such Distribution
Date after taking into account all distributions to be made on such Distribution
Date (except for any distributions of related Over-collateralization Reduction
Amounts as described in this sentence) and (b) the Specified Over-collateralized
Amount for such Pool to the extent of principal available for distribution.
"Over-collateralized Amount": As of any Distribution Date and
any Pool, the difference, if any, between (a) the sum of (i) the aggregate
Principal Balances of the Mortgage Loans in such Pool as of the close of
business on the last day of the related Due Period and (ii) the amount on
deposit in the related Pre-Funding Account as of the close of business on the
last day of the immediately preceding Due Period and (b) the aggregate Note
Principal Balance of the related Class as of such Distribution Date (after
taking into account the payment of the Principal Distribution Amount for such
Pool on such Distribution Date, except for any portion thereof related to an
Insured Payment); provided, however, that such amount shall not be less than
zero.
"Overfunded Interest Amount": With respect to each Pool and
each Subsequent Transfer Date occurring in __________, the excess of (i) the
amount on deposit in the related Capitalized Interest Account, over (ii)
two-months' interest calculated at the related Adjusted Note Rate on the amount
on deposit in the related Pre-Funding Account (net of any Pre-Funding Earnings
for such Pre-Funding Account) immediately following such Subsequent Transfer
Date (disregarding any amount applied from such Pre-Funding Account to a
Subsequent Mortgage Loan that does not have a Due Date in __________).
With respect to each Pool and each Subsequent Transfer Date
occurring in __________, the excess of (i) the amount on deposit in the related
Capitalized Interest Account, over (ii) one-month's interest calculated at the
related Adjusted Note Rate on the amount on deposit in the related Pre-Funding
Account (net of any Pre-Funding Earnings for such Pre-Funding Account)
immediately following such Subsequent Transfer Date (disregarding any amount
applied from the such Pre-Funding Account to a Subsequent Mortgage Loan that
does not have a Due Date in ___________).
"Owner-Occupied Mortgaged Property": A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary residence at
App.A-21
the origination of the Mortgage Loan, and (b) the has no actual knowledge that
such Residential Dwelling is not so occupied.
"Ownership Interest": As to any Note, any ownership or
security interest in such Note, including any interest in such Note as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Owner Trustee": First Union Trust Company, National
Association, a national banking association, not in its individual capacity, but
solely as owner trustee under the Trust Agreement, and any successor owner
trustee thereunder.
"Owner Trustee Fee": As defined in Section 8.01 of the Trust
Agreement.
"Paying Agent": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Trust pursuant to Section
3.03 of the Indenture to pay the principal of, or interest on, any Notes on
behalf of the Trust, which agent, if not the Indenture Trustee, shall have
signed an instrument agreeing to be bound by the terms of the Indenture
applicable to such Paying Agent.
"Percentage Interest": With respect to a Note of any Class,
the portion evidenced by such Note, expressed as a percentage rounded to four
decimal places, equal to a fraction the numerator of which is the denomination
represented by original principal balance of such Note and the denominator of
which is the Original Note Principal Balance of such Class. With respect to a
Trust Certificate, the portion evidenced thereby as stated on the face of such
Trust Certificate.
"Periodic Advance": The aggregate of the advances required to
be made by the Servicer on any Servicer Distribution Date pursuant to Section
5.18 of the Sale and Servicing Agreement, the amount of any such advances being
equal to the sum of:
(q) with respect to each Mortgage Loan that was Delinquent as
of the close of business on the last day of the Due Period preceding
the related Servicer Distribution Date, the product of (i) the
Principal Balance of such Mortgage Loan and (ii) one-twelfth of the
Mortgage Interest Rate for such Mortgage Loan net of the Servicing Fee,
and
(r) with respect to each REO Property which was acquired
during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount
equal to the excess, if any, of (i) interest on the Principal Balance
of such REO Mortgage Loan at the Mortgage Interest Rate for such REO
Mortgage Loan net of the Servicing Fee, for the most recently ended Due
Period over (ii) the net proceeds from the REO Property transferred to
the Distribution Account for such Distribution Date;
provided, however, that in each such case such advance has not been determined
by the Servicer to be a Nonrecoverable Advance.
App.A-22
"Permitted Investments": As used herein, Permitted Investments
shall include the following:
(a) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof when
such obligations are backed by the full faith and credit of the United
States;
(b) repurchase agreements on obligations specified in clause
(a) maturing not more than three months from the date of acquisition
thereof, provided that the unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated in one of the two
highest rating categories by the Rating Agencies;
(c) certificates of deposit, time deposits and bankers'
acceptances (which, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days) of any U.S.
depository institution or trust company, incorporated under the laws of
the United States or any state; provided, that the debt obligations of
such depository institution or trust company at the date of acquisition
thereof have been rated in one of the two highest rating categories by
the Rating Agencies;
(d) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated in the highest short-term rating category by the Rating
Agencies;
(e) the VISTA U.S. Government Money Market Fund, the VISTA
Prime Money Market Fund and the VISTA Treasury Plus Fund, so long as
any such fund is rated in the highest rating category by Moody's or
S&P;
provided, that no instrument described hereunder shall evidence either the right
to receive (x) only interest with respect to the obligations underlying such
instrument or (y) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": A pension or benefit plan or individual retirement
arrangement that is subject to ERISA or Section 4975 of the Code.
"Pool": Pool I or Pool II, as the case may be.
"Pool I": The pool of Mortgage Loans held by the Trust, as a
separate sub-trust, which secure the obligations of the Trust with respect to
the Class A-1 Notes, as reflected on the Mortgage Loan Schedule.
App.A-23
"Pool I Trust Certificate": A certificate evidencing the
beneficial interest of a Trust Certificateholder in the sub-trust of the Trust
consisting of the Mortgage Loans in Pool I, substantially in the form of Exhibit
A to the Trust Agreement.
"Pool II": The pool of Mortgage Loans held by the Trust, as a
separate sub-trust, which secure the obligations of the Trust with respect to
the Class A-2 Notes, as reflected on the Mortgage Loan Schedule.
"Pool II Trust Certificate": A certificate evidencing the
beneficial interest of a Trust Certificateholder in the sub-trust of the Trust
consisting of the Mortgage Loans in Pool II, substantially in the form of
Exhibit A to the Trust Agreement.
"Predecessor Notes": With respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.07 of the Indenture in lieu of
a lost, destroyed or stolen Note shall be deemed to evidence the same debt as
the lost, destroyed or stolen Note.
"Preference Amount": Any amounts distributed in respect of the
Notes which are recovered from any Holder of a Note as a voidable preference by
a trustee in bankruptcy pursuant to the Bankruptcy Code or other similar law in
accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Holder.
"Preference Claim": As defined in Section 8.03(f) of the
Indenture.
"Pre-Funding Account": Each of the Pre-Funding Accounts
established in accordance with Section 8.01(b) of the Indenture and maintained
by the Indenture Trustee.
"Pre-Funding Amount": With respect to either Pool and any date
of determination, the amount on deposit in the related Pre-Funding Account.
"Pre-Funding Earnings": With respect to either Pool and any
date of determination, the actual investment earnings realized on amounts
deposited in the related Pre-Funding Account.
"Pre-Funding Period": With respect to either Pre-Funding
Account, the period commencing on the Closing Date and ending on the earliest to
occur of (i) the date on which the amount on deposit in such Pre-Funding Account
(exclusive of any investment earnings) is less than $100,000, (ii) the date on
which any Event of Default or Servicer Event Default occurs and (iii) the close
of business on _________.
"Premium Amount": The product of the Premium Percentage and
the aggregate outstanding Note Principal Balance for the related Class on the
related Distribution Date, but prior to any distributions on such Distribution
Date.
"Premium Percentage": The rate at which the "Premium" is
determined, as described in the letter dated ___________ between the Servicer
and the Note Insurer.
App.A-24
"Premium Supplement Event": Means any Event of Default,
Servicer Event of Default or an "Event of Default" as defined in the Insurance
Agreement.
"Prepayment Assumption": A constant prepayment rate of ____%
HEP, used solely for determining the accrual of original issue discount and
market discount on the Notes for federal income tax purposes.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject during the
related Due Period of a Principal Prepayment, an amount equal to the excess, if
any, of (a) 30 days' interest on the Principal Balance of such Mortgage Loan at
a per annum rate equal to (i) the Mortgage Interest Rate (or at such lower rate
as may be in effect for such Mortgage Loan pursuant to application of the Civil
Relief Act, any Deficient Valuation and/or any Debt Service Reduction) minus
(ii) the Servicing Fee Rate over (b) the amount of interest actually remitted by
the Mortgagor in connection with such Principal Prepayment less the Servicing
Fee for such Mortgage Loan in such month.
"Principal Balance": As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect to prepayments received prior to
the end of the related Due Period and Deficient Valuations incurred prior to
such date of determination. The Principal Balance of a Mortgage Loan which
becomes a Liquidated Mortgage Loan on or prior to such date of determination
shall be zero.
"Principal Distribution Amount": For any Distribution Date and
any Pool of Mortgage Loans will be the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date,
of (A) the Available Funds for such Pool and (B) any Insured Payment
with respect to the related Class of Notes plus, if the Note Insurer
shall so elect in its sole discretion, an amount of principal
(including Liquidated Loan Losses) that would have been payable
pursuant to clauses (b)(i) through (ix) below if sufficient funds were
made available to the Indenture Trustee, in accordance with the terms
of the Note Insurance Policy, over (ii) the sum of (w) the Interest
Distribution Amount for such Pool, (x) the Indenture Trustee Fee
allocable to such Pool and (y) the amount due the Note Insurer on such
Distribution Date pursuant to Section 8.02(ii) of the Indenture in
respect to the related Class of Notes; and
(b) the sum, without duplication, of:
(i) all principal in respect of the Mortgage Loans in such
Pool actually collected during the related Due Period;
(ii) the principal balance of each Mortgage Loan that either
was repurchased by the or purchased by the Servicer on the
related Servicer Distribution Date from such Pool, to the
extent such principal balance is actually received by the
Indenture Trustee;
(iii) any Substitution Adjustments delivered by the on the
related Servicer Distribution Date in connection with a
substitution of a Mortgage Loan
App.A-25
in such Pool, to the extent such Substitution Adjustments
are actually received by the Indenture Trustee;
(iv) the Net Liquidation Proceeds actually collected by the
Servicer with respect to Mortgage Loans in such Pool during
the related Due Period (to the extent such Net Liquidation
Proceeds relate to principal);
(v) with respect to the _________ or __________ Distribution
Dates, moneys released from the related Pre-Funding Account,
if any;
(vi) the proceeds received by the Indenture Trustee upon the
exercise by the Servicer of the optional redemption of the
related Class of Notes pursuant to Section 10.01 of the
Indenture (to the extent such proceeds relate to principal);
(vii) the amount of any Over-collateralization Deficit with
respect to such Pool for such Distribution Date;
(viii) the proceeds received by the Indenture Trustee on any
termination of the Trust pursuant to Section 10.01 of the
Indenture (to the extent such proceeds relate to principal)
allocable to such Pool;
(ix) the amount of any Over-collateralization Increase
Amount with respect to such Pool for such Distribution Date,
to the extent of any Remaining Excess Cashflow for such Pool
available for such purpose;
(x) if the Note Insurer shall so elect in its sole
discretion, an amount of principal (including Liquidated Loan
Losses) that would have been payable pursuant to clauses (i)
through (ix) above if sufficient funds were made available to
the Indenture Trustee in accordance with the terms of the Note
Insurance Policy;
minus
_____
(xi) the amount of any Over-collateralization Reduction
Amount for such Pool for such Distribution Date.
In no event will the Principal Distribution Amount for a Pool
with respect to any Distribution Date be (x) less than zero or (y) greater than
the then aggregate outstanding Note Principal Balance of the related Class of
Notes.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date.
"Proceeding": Any suit in equity, action at law or other
judicial or administrative proceeding.
App.A-26
"Prospectus Supplement": The Prospectus Supplement dated
_________ relating to the Notes filed with the Commission in connection with the
Registration Statement heretofore filed or to be filed with the Commission
pursuant to Rule 424(b)(2) or 424(b)(5).
"Qualified Appraiser": An appraiser, duly appointed by the ,
who had no interest, direct or indirect, in the Mortgaged Property or in any
loan made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
"Qualified Substitute Mortgage Loan": A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section
2.06(b) or 4.02(b) of the Sale and Servicing Agreement, which (a) has or have an
interest rate at least equal to those applicable to the Deleted Mortgage Loan,
(b) relates or relate to a detached one-family residence or to the same type of
Residential Dwelling or Business Purpose Property, or any combination thereof,
as the Deleted Mortgage Loan and in each case has or have the same or a better
lien priority as the Deleted Mortgage Loan and has or have the same occupancy
status as the Deleted Mortgage Loan or is or are Owner-Occupied Mortgaged
Property(ies), (c) matures or mature no later than (and not more than one year
earlier than) the Deleted Mortgage Loan, (d) has or have a Loan-to-Value Ratio
or Loan-to-Value Ratios at the time of such substitution no higher than the
Loan-to-Value of the Deleted Mortgage Loan, (e) has or have a Combined
Loan-to-Value Ratio or Combined Loan-to-Value Ratios at the time of such
substitution no higher than the Combined Loan-to-Value Ratio of the Deleted
Mortgage Loan, (f) has or have a Principal Balance or Principal Balances (after
application of all payments received on or prior to the date of substitution)
not substantially less and not more than the Principal Balance of the Deleted
Mortgage Loan as of such date, and (g) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01
and 3.02 of the Loan Sale Agreement.
"Rating Agency": S&P or Xxxxx'x.
"Rating Agency Condition": Means, with respect to any action
to which a Rating Agency Condition applies, that each Rating Agency shall have
been given ten (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 Indenture Trustee, the Servicer, the Depositor, the Note Insurer
and the Trust in writing that such action will not result in a reduction or
withdrawal of the then current "implied" rating of the Notes that it maintains
without taking into account the Note Insurance Policy.
"Record Date": With respect to the Notes, the last Business
Day of the month immediately preceding a month in which a Distribution Date
occurs.
"Redemption Price": The Termination Price or the Note
Termination Price, as applicable.
"Redemption Date": The Distribution Date, if any, on which (i)
the Indenture is terminated and all of the Notes are redeemed pursuant to
Article X of the Indenture, which date
App.A-27
may occur on or after the Clean-Up Call Date, or (ii) a Class of Notes is
redeemed pursuant to Article X of the Indenture, which date may occur on or
after the related Note Clean-Up Call Date.
"Reimbursement Amount": With respect to any Distribution Date
and any Pool of Mortgage Loans, equals the sum of (a)(i) all Insured Payments
previously received by the Indenture Trustee and all Preference Amounts
previously paid by the Note Insurer and in each case not previously repaid to
the Note Insurer pursuant to Section 8.02(ii) of the Indenture, plus (ii)
interest accrued on each such Insured Payment and Preference Amounts not
previously repaid calculated at the Late Payment Rate from the date the
Indenture Trustee received the related Insured Payment or Preference Amounts
paid by the Note Insurer, and (b)(i) any amounts then due and owing to the Note
Insurer under the Insurance Agreement (excluding the Premium Amount due on such
Distribution Date), as certified to the Indenture Trustee by the Note Insurer
plus (ii) interest on such amounts at the rate specified in the Insurance
Agreement. The Note Insurer shall notify the Indenture Trustee and the Servicer
of the amount of any Reimbursement Amount.
"Remaining Excess Cashflow": For a Distribution Date and a
Pool of Mortgage Loans, the Net Monthly Excess Cashflow with respect to such
Pool remaining, if any, after payment of (i) any Net Mortgage Loan Interest
Shortfall Amounts for such Pool and such Distribution Date, and (ii) the
Shortfall Amount with respect to the other Pool of Mortgage Loans.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REO Disposition": The final sale by the Servicer of a
Mortgaged Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure.
"REO Mortgage Loan": Any Mortgage Loan which is not a
Liquidated Mortgage Loan and as to which the indebtedness evidenced by the
related Mortgage Note is discharged and the related Mortgaged Property is held
as part of the Trust.
"REO Proceeds": Proceeds received in respect of any REO
Mortgage Loan (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
"REO Property": A Mortgaged Property acquired by the Servicer
in the name of the Indenture Trustee on behalf of the Noteholders through
foreclosure or deed-in-lieu of foreclosure.
"Request for Release": A request for release in substantially
the form attached as Exhibit F of the Sale and Servicing Agreement.
"Reserve Payment Amount": With respect to any Distribution
Date and any Class of Notes, the amount necessary for the funds on deposit in
the related Cross-collateralization Reserve Account to equal the Specified
Reserve Amount.
App.A-28
"Residential Dwelling": A one- to four-family dwelling, a unit
in a planned unit development, a unit in a condominium development or a
townhouse.
"Responsible Officer": When used with respect to the Indenture
Trustee or the Owner Trustee, any officer assigned to the Corporate Trust
Division (or any successor thereto), including any Vice President, Second Vice
President, Senior Trust Officer, Trust Officer, Assistant Trust Officer, any
Assistant Secretary, any trust officer or any other officer of the Indenture
Trustee or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and to whom, with respect to a
particular matter, such matter is referred because of such officer's knowledge
of and familiarity with the particular subject. When used with respect to the or
the Servicer, the president or any vice president, assistant vice president, or
any secretary or assistant secretary.
"Rolling Six Month Delinquency Rate": For any Distribution
Date, the fraction, expressed as a percentage, equal to the average of the
Delinquency Ratio for each of the six (1, 2, 3, 4 or 5 in the case of the first
six (6) Distribution Dates, as the case may be) immediately preceding Due
Periods.
"Sale": The meaning specified in Section 5.17 of the
Indenture.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement, dated as of ____________, among the Trust, the Servicer, the
Depositor, the Collateral Agent and the Indenture Trustee, providing for, among
other things, the sale of the Mortgage Loans from the Depositor to the Trust and
the servicing of the Mortgage Loans.
"Securities Act": Means the Securities Act of 1933, as
amended.
"Servicer": __________________, a __________ corporation, or
any successor appointed as herein provided.
"Servicer Distribution Date": With respect to any Distribution
Date, the ____ day of the month in which such Distribution Date occurs, or if
such ____ day is not a Business Day, the Business Day preceding such ____ day.
"Servicer Event of Default": As defined in Section 7.01 of the
Sale and Servicing Agreement.
"Servicer Extension Notice": Has the meaning set forth in
Section 8.04 of the Sale and Servicing Agreement.
"Servicer Remittance Amount": With respect to any Servicer
Distribution Date, an amount equal to the sum of (i) all collections of
principal and interest on the Mortgage Loans (including Principal Prepayments,
Net REO Proceeds and Net Liquidation Proceeds, if any) collected by the Servicer
during the related Due Period, (ii) all Periodic Advances made by the Servicer
with respect to interest payments due to be received on the Mortgage Loans on
the related Due Date and (iii) any other amounts required to be placed in the
Collection Account by the Servicer pursuant to the Sale and Servicing Agreement
but excluding the following:
App.A-29
(f) amounts received on particular Mortgage Loans as late
payments of interest and respecting which the Servicer has previously
made an unreimbursed Periodic Advance;
(g) amounts received on a particular Mortgage Loan with
respect to which the Servicer has previously made an unreimbursed
Servicing Advance, to the extent of such unreimbursed Servicing
Advance;
(h) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(i) that portion of Liquidation Proceeds and REO Proceeds to
the extent of any unpaid Servicing Fee;
(j) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(k) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(l) certain other amounts which are reimbursable to the
Servicer, as provided in this Sale and Servicing Agreement; and
(m) Net Foreclosure Profits.
"Servicer Remittance Report": The monthly report prepared by
the Servicer and delivered to the parties specified in Section 5.16(a) of the
Sale and Servicing Agreement.
"Servicing Advances": All reasonable and customary
"out-of-pocket" costs and expenses incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (d) compliance with the
obligations under Section 5.06 of the Sale and Servicing Agreement, all of which
reasonable and customary out-of-pocket costs and expenses are reimbursable to
the Servicer to the extent provided in Sections 5.03 and 5.06 of the Sale and
Servicing Agreement.
"Servicing Compensation": The Servicing Fee and other amounts
to which the Servicer is entitled pursuant to Section 5.08 of the Sale and
Servicing Agreement.
"Servicing Fee": As to each Mortgage Loan, the annual fee
payable to the Servicer, which is calculated as an amount equal to the product
of (a) Servicing Fee Rate, and (b) the Principal Balance thereof. Such fee shall
be calculated and payable monthly only from the amounts received in respect of
interest on such Mortgage Loan and shall be computed on the basis of the same
Principal Balance and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer.
App.A-30
"Servicing Fee Rate": _____% per annum
"Servicing Officer": Any officer of the Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee, the Collateral Agent and the Note Insurer by the
Servicer, as such list may from time to time be amended.
"Shortfall Amount": With respect to any Distribution Date and
any Class of Notes, an amount, not less than zero, equal to the excess, if any,
of (A) the sum of (x) the amounts specified in clause (a)(ii) of the definition
of the Principal Distribution Amount for such Class and (y) the amount specified
in clause (b)(vii) of the definition of the Principal Distribution Amount for
such Class and (z) any shortfall in the amount distributed to the Holders of
such Class in respect of the Net Mortgage Loan Interest Shortfall Amount for
such Class and such Distribution Date over (B) the Available Funds for such
Class and such Distribution Date, without taking into effect any Insured Payment
or Shortfall Amount and prior to the application of the amounts described in
Section 8.02 of the Indenture.
"Special Advance": As defined in Section 5.18(b) of the Sale
and Servicing Agreement.
"Specified Over-collateralized Amount": Means with respect to
any Distribution Date and any Pool:
(a) With respect to a Distribution Date occurring on or prior
to the Stepdown Date and after the Stepdown Date, if the has given five days
written notice of its election not to "step down" as described in clause (b)
below to the Indenture Trustee and the Note Insurer, the amount which is equal
to ____% of the Maximum Collateral Amount for such Pool;
(b) With respect to a Distribution Date after the Stepdown
Date unless the has given five (5) days written notice of its election not to
"step down" as described in this clause to the Indenture Trustee and the Note
Insurer, (i) if the Stepdown Requirement is satisfied, the lesser of (x) the
amount equal to _____% of the Maximum Collateral Amount for such Pool and (y)
the greater of (A) the amount equal to _____% of the then outstanding aggregate
Principal Balance of the Mortgage Loans in the related Pool of Mortgage Loans or
(B) ____% of the Maximum Collateral Amount for such Pool or (ii) if the Stepdown
Requirement is not satisfied, the amount which is equal to _____% of the Maximum
Collateral Amount for such Pool;
provided, however, that if on any Distribution Date, the Mortgage Portfolio
Performance Test is not satisfied, then the Specified Over-collateralized Amount
will be unlimited during the period that such Mortgage Portfolio Performance
Test is not satisfied.
"Specified Reserve Amount": Means, with respect to any Pool
and any Distribution Date, the excess, if any, of (x) the Specified
Over-collateralized Amount for such Pool and such Distribution Date, over (y)
the Over-collateralized Amount for such Pool and such Distribution Date.
"Standard & Poor's" or "S&P": Standard & Poor's Ratings
Services, a division of The XxXxxx-Xxxx Companies, Inc. or any successor thereto
and if such corporation no longer for
App.A-31
any reason performs the services of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized statistical rating
organization designated by the Note Insurer.
"Startup Day": The day designated as such pursuant to Section
2.07(a) of the Trust Agreement.
"Step Down Date": The Distribution Date occurring in ________.
"Step Down Requirement": The Stepdown Requirement is satisfied
for any date of determination thereof if as of such date of determination either
(i) (x) the Rolling Six Month Delinquency Rate is less than _____%, (y) the
Cumulative Loss Test is satisfied and (z) the Twelve Month Loss Amount is not
greater than or equal to _____% of the Pool Principal Balance as of the first
day of the twelfth preceding calendar month or (ii) the Note Insurer, by notice
to each of the parties hereto in accordance with Section 10.06 of the Sale and
Servicing Agreement, expressly waives in writing compliance with the foregoing
tests for such Distribution Date.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loans, the close of business on the last day of the calendar month
preceding the month in which the Subsequent Transfer Date for such Subsequent
Mortgage Loans occurred.
"Subsequent Contribution Agreement": Any Subsequent
Contribution Agreement, between the Depositor and the Trust, in the form of
Exhibit G to the Sale and Servicing Agreement, relating to the contribution to
the Trust of Subsequent Mortgage Loans.
"Subsequent Mortgage Loans": The Mortgage Loans hereafter
purchased by the Trust and pledged to the Indenture Trustee with funds on
deposit in either Pre-Funding Account pursuant to Section 2.14 of the Indenture.
"Subsequent Pledge Agreement": Any Subsequent Pledge
Agreement, between the Trust and the Indenture Trustee, in the form of Exhibit B
to the Indenture, relating to the pledge to the Indenture Trustee, on behalf of
the Noteholders and the Note Insurer, of Subsequent Mortgage Loans.
"Subsequent Transfer": The purchase by the Trust and pledge to
the Indenture Trustee of the Subsequent Mortgage Loans.
"Subsequent Transfer Agreement": Any Subsequent Transfer
Agreement, among the Originators, the and the Depositor, in the form of the
Exhibit A to the Loan Sale Agreement, relating to the transfer to the Depositor
of any Subsequent Mortgage Loans.
"Subsequent Transfer Date": The date on which Subsequent
Mortgage Loans are purchased by the Trust with funds in either Pre-Funding
Account, such date occurring before the end of either Pre-Funding Period.
"Subservicers": _______________________, a ____________
corporation, or its successor in interest and _______________, a ________
corporation, or its successor in interest.
App.A-32
"Subservicing Agreement": The agreement between the Servicer
and the Subservicers relating to subservicing and/or administration of certain
Mortgage Loans as provided in Section 5.13 of the Sale and Servicing Agreement,
a copy of which shall be delivered, along with any modifications thereto, to the
Indenture Trustee and the Note Insurer.
"Substitution Adjustment": As to any date on which a
substitution occurs pursuant to Sections 2.06(b) or 4.02(b) of the Sale and
Servicing Agreement, the amount (if any) by which the aggregate principal
balances (after application of principal payments received on or before the date
of substitution) of any Qualified Substitute Mortgage Loans as of the date of
substitution, are less than the aggregate of the Principal Balances of the
related Deleted Mortgage Loans together with 30-days' interest thereon at the
Mortgage Interest Rate.
"Termination Price": The sum of (i) 100% of the Aggregate
Principal Balance of each outstanding Mortgage Loan and (ii) the greater of (A)
the aggregate amount of accrued and unpaid interest on the Mortgage Loans
through the related Due Period and (B) thirty (30) days' interest thereon,
computed at a rate equal to the related Mortgage Interest Rate, in each case net
of the Servicing Fee, and (iii) any unpaid amount due the Note Insurer.
"Trust": _________________, a _________ statutory business
trust.
"Trust Agreement": The Trust Agreement, dated as of
___________, among the , the Depositor and the Owner Trustee, relating to the
establishment of the Trust.
"Trust Certificate": Any one of the Pool I Trust Certificates
or the Pool II Trust Certificates.
"Trust Certificateholder" or "Holder": A Person in whose name
a Trust Certificate is registered.
"Trust Estate": All money, instruments and other property
subject or intended to be subject to the lien of the Indenture, for the benefit
of the Noteholders and the Note Insurer, as of any particular time, including,
without limitation, all property and interests, including all proceeds thereof,
Granted to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, pursuant to the Granting Clauses of the Indenture. The Trust
Estate shall consist of two separate sub-trusts comprised of Pool I and Pool II.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of
1939, as it may be amended from time to time.
"Trust Order" and "Trust Request": A written order or request
of the Trust signed on behalf of the Trust by an Authorized Officer of the Owner
Trustee, at the direction of the related Majority Certificateholders and
delivered to the Indenture Trustee or the Authenticating Agent, as applicable.
"Twelve Month Loss Amount": With respect to any Distribution
Date, an amount equal to the aggregate of all Liquidated Loan Losses on the
Mortgage Loans which became Liquidated Mortgage Loans during the twelve (12)
preceding Due Periods.
App.A-33
"Underwriter": Prudential Securities Incorporated.
"Underwriting Guidelines": The underwriting guidelines of the
Originators as approved by the Note Insurer and the Depositor.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States or a trust if a court within the United States can exercise
primary jurisdiction over its administration and at least one United States
fiduciary has the authority to control all substantial decisions of the trust.
App.A-34
