EXHIBIT 4.1.3
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SEQUOIA MORTGAGE TRUST 200_-_
Collateralized Mortgage Bonds
INDENTURE
Dated as of _______, 200_
[INDENTURE TRUSTEE]
Indenture Trustee
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions and Incorporation by Reference............................................................. 2
SECTION 1.1. Definitions................................................................................ 2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act...................................... 2
SECTION 1.3. Rules of Construction...................................................................... 3
SECTION 1.4. Action by or Consent of Bondholders and Residual Certificateholders........................ 3
SECTION 1.5. Conflict with TIA.......................................................................... 3
ARTICLE II The Bonds............................................................................................. 4
SECTION 2.1. Form....................................................................................... 4
SECTION 2.2. Execution, Authentication and Delivery..................................................... 4
SECTION 2.3. Registration; Registration of Transfer and Exchange........................................ 4
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Bonds................................................. 6
SECTION 2.5. Persons Deemed Owners...................................................................... 7
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest...................................... 7
SECTION 2.7. Cancellation............................................................................... 8
SECTION 2.8. Release of Collateral...................................................................... 8
SECTION 2.9. Book-Entry Bonds........................................................................... 8
SECTION 2.10. Notices to Clearing Agency................................................................. 9
SECTION 2.11. Definitive Bonds........................................................................... 9
ARTICLE III Covenants; Representations and Warranties of the Issuer.............................................. 10
SECTION 3.1. Payment of Principal and Interest.......................................................... 10
SECTION 3.2. Maintenance of Office or Agency............................................................ 10
SECTION 3.3. Money for Payments to be Held in Trust..................................................... 10
SECTION 3.4. Existence.................................................................................. 11
SECTION 3.5. Protection of Trust Property............................................................... 11
SECTION 3.6. Opinions as to Trust Property.............................................................. 12
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans.................................... 13
SECTION 3.8. Negative Covenants......................................................................... 14
SECTION 3.9. Annual Statement as to Compliance.......................................................... 14
SECTION 3.10. Issuer May Not Consolidate or Transfer Assets.............................................. 15
SECTION 3.11. No Other Business.......................................................................... 15
SECTION 3.12. No Borrowing............................................................................... 15
SECTION 3.13. Servicer's Obligations..................................................................... 15
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities.......................................... 15
SECTION 3.15. Capital Expenditures....................................................................... 15
SECTION 3.16. Compliance with Laws....................................................................... 15
SECTION 3.17. Restricted Payments........................................................................ 16
SECTION 3.18. Notice of Rapid Amortization Events and Events of Servicing Termination.................... 16
SECTION 3.19. Further Instruments and Acts............................................................... 16
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SECTION 3.20. Amendments of Sale and Servicing Agreement and Trust Agreement............................. 16
SECTION 3.21. Income Tax Characterization................................................................ 16
SECTION 3.22. Representations and Warranties of the Issuer Regarding the Lien of the Indenture Trustee... 16
ARTICLE IV Satisfaction and Discharge............................................................................ 17
SECTION 4.1. Satisfaction and Discharge of Indenture.................................................... 17
SECTION 4.2. Application of Trust Money................................................................. 18
SECTION 4.3. Repayment of Monies Held by Bond Paying Agent.............................................. 18
ARTICLE V Remedies............................................................................................... 18
SECTION 5.1. Remedies................................................................................... 18
SECTION 5.2. Limitation of Suits........................................................................ 19
SECTION 5.3. Unconditional Rights of Bondholders To Receive Principal and Interest...................... 19
SECTION 5.4. Restoration of Rights and Remedies......................................................... 20
SECTION 5.5. Rights and Remedies Cumulative............................................................. 20
SECTION 5.6. Delay or Omission Not a Waiver............................................................. 20
SECTION 5.7. Control by Insurer and Bondholders......................................................... 20
SECTION 5.8. Undertaking for Costs...................................................................... 20
SECTION 5.9. Waiver of Stay or Extension Laws........................................................... 21
SECTION 5.10. Action on Bonds............................................................................ 21
SECTION 5.11. Performance and Enforcement of Certain Obligations......................................... 21
SECTION 5.12. Subrogation................................................................................ 22
SECTION 5.13. Preference Claims.......................................................................... 22
SECTION 5.14. Bondholder Rights.......................................................................... 23
SECTION 5.15. Insurer's Rights Regarding Actions, Proceedings or Investigations.......................... 23
ARTICLE VI The Indenture Trustee................................................................................. 24
SECTION 6.1. Duties of Indenture Trustee................................................................ 24
SECTION 6.2. Rights of Indenture Trustee................................................................ 26
SECTION 6.3. Individual Rights of Indenture Trustee..................................................... 27
SECTION 6.4. Indenture Trustee's Disclaimer............................................................. 27
SECTION 6.5. Notice of Rapid Amortization Events and Events of Servicing Termination.................... 27
SECTION 6.6. Reports by Indenture Trustee to Holders.................................................... 27
SECTION 6.7. Compensation and Indemnity................................................................. 28
SECTION 6.8. Replacement of Indenture Trustee........................................................... 28
SECTION 6.9. Successor Indenture Trustee by Merger...................................................... 30
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.......................... 30
SECTION 6.11. Eligibility; Disqualification.............................................................. 32
SECTION 6.12. Preferential Collection of Claims Against Issuer........................................... 32
SECTION 6.13. Appointment and Powers..................................................................... 32
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SECTION 6.14. Performance of Duties...................................................................... 32
SECTION 6.15. Limitation on Liability.................................................................... 32
SECTION 6.16. Reliance Upon Documents.................................................................... 33
SECTION 6.17. Representations and Warranties of the Indenture Trustee.................................... 33
SECTION 6.18. Waiver of Setoffs.......................................................................... 33
SECTION 6.19. Control by the Controlling Party........................................................... 33
SECTION 6.20. Indenture Trustee May Enforce Claims Without Possession of Bonds........................... 34
SECTION 6.21. Suits for Enforcement...................................................................... 34
SECTION 6.22. Mortgagor Claims........................................................................... 34
ARTICLE VII Bondholders' Lists and Reports....................................................................... 35
SECTION 7.1. Issuer To Furnish To Indenture Trustee Names and Addresses of Bondholders.................. 35
SECTION 7.2. Preservation of Information; Communications to Bondholders................................. 35
SECTION 7.3. Reports by Issuer.......................................................................... 35
SECTION 7.4. Reports by Indenture Trustee............................................................... 36
ARTICLE VIII Payments and Statements to Bondholders and Residual Bondholders; Accounts, Disbursements
and Releases............................................................................... 36
SECTION 8.1. Collection of Money........................................................................ 36
SECTION 8.2. Release of Trust Property.................................................................. 37
SECTION 8.3. Establishment of Accounts.................................................................. 37
SECTION 8.4. The Policy................................................................................. 37
SECTION 8.5. [Reserved]................................................................................. 38
SECTION 8.6. [Reserved]................................................................................. 38
SECTION 8.7. Priority of Distributions.................................................................. 38
SECTION 8.8. Statements to Bondholders.................................................................. 40
SECTION 8.9. Indenture Trustee Annual Certification..................................................... 42
SECTION 8.10. Rights of Bondholders and Residual Certificateholders...................................... 42
SECTION 8.11. Opinion of Counsel......................................................................... 42
ARTICLE IX Supplemental Indentures............................................................................... 43
SECTION 9.1. Supplemental Indentures Without Consent of Bondholders..................................... 43
SECTION 9.2. Supplemental Indentures with Consent of Bondholders........................................ 44
SECTION 9.3. Execution of Supplemental Indentures....................................................... 45
SECTION 9.4. Effect of Supplemental Indenture........................................................... 45
SECTION 9.5. Reference in Bonds to Conformity With Trust Indenture Act.................................. 46
SECTION 9.6. Reference in Bonds to Supplemental Indentures.............................................. 46
ARTICLE X Redemption of Bonds.................................................................................... 46
SECTION 10.1. Redemption................................................................................. 46
SECTION 10.2. Surrender of Bonds......................................................................... 46
SECTION 10.3. Form of Redemption Notice.................................................................. 47
SECTION 10.4. Bonds Payable on Redemption Date........................................................... 48
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ARTICLE XI Miscellaneous......................................................................................... 48
SECTION 11.1. Compliance Certificates and Opinions, etc.................................................. 48
SECTION 11.2. Form of Documents Delivered to Indenture Trustee........................................... 49
SECTION 11.3. Acts of Bondholders........................................................................ 50
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer, Insurer and Rating Agencies................... 50
SECTION 11.5. Notices to Bondholders; Waiver............................................................. 51
SECTION 11.6. Alternate Payment and Notice Provisions.................................................... 52
SECTION 11.7. Conflict with Trust Indenture Act.......................................................... 52
SECTION 11.8. Effect of Headings and Table of Contents................................................... 52
SECTION 11.9. Successors and Assigns..................................................................... 52
SECTION 11.10. Separability............................................................................... 52
SECTION 11.11. Benefits of Indenture...................................................................... 52
SECTION 11.12. Legal Holidays............................................................................. 53
SECTION 11.13. GOVERNING LAW.............................................................................. 53
SECTION 11.14. Counterparts............................................................................... 53
SECTION 11.15. Recording of Indenture..................................................................... 53
SECTION 11.16. Trust Obligation........................................................................... 53
SECTION 11.17. No Petition................................................................................ 53
SECTION 11.18. Inspection................................................................................. 54
SECTION 11.19. Limitation of Liability.................................................................... 54
ARTICLE XII Rapid Amortization Events............................................................................ 54
SECTION 12.1. Rapid Amortization Events.................................................................. 54
ANNEX A - Defined Terms
EXHIBIT A - Form of Class A Bond
EXHIBIT B - Form of Opinion of Counsel
EXHIBIT C - Form of Certification to be Provided by the Manager to the Indenture
Trustee
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INDENTURE, dated as of _______, 200_ (the "Indenture"), between
SEQUOIA MORTGAGE TRUST 200_-_, a Delaware statutory trust (the "Issuer"), and
[INDENTURE TRUSTEE], as trustee (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Issuer's Collateralized
Mortgage Bonds (the "Bonds")
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Bonds, the Issuer has agreed to assign
the Collateral (as defined below) to the Indenture Trustee on behalf of the
Bondholders and the Insurer.
[Insurer] (the "Insurer") has issued and delivered a financial
guaranty insurance policy for the Bonds, dated the Closing Date (the "Policy"),
pursuant to which the Insurer guarantees the Insured Amounts and Preference
Amount (as defined in the Policy).
As an inducement to the Insurer to issue and deliver the Policy, the
Issuer and the Insurer have executed and delivered the Insurance and Indemnity
Agreement, dated as of _______, 200_ (as amended from time to time, the
"Insurance Agreement"), among the Insurer, the Issuer, [________________],
[______________] and the Indenture Trustee.
As an additional inducement to the Insurer to issue the Policy, and
as security for the performance by the Issuer of the Insurer Issuer Secured
Obligations and as security for the performance by the Issuer of the Indenture
Trustee Issuer Secured Obligations, the Issuer has agreed to grant and assign
the Collateral (as defined below) to the Indenture Trustee for the benefit of
the Issuer Secured Parties, as their respective interests may appear.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, for the
benefit of the Issuer Secured Parties all of the Issuer's right, title and
interest in and to: (i) a pool (the "Pool") of certain adjustable rate home
equity revolving credit line loans ("HELOC Mortgage Loans") (including any
Additional Balances related thereto) and second lien closed-end loans ("Closed
End Mortgage Loans") (the "Mortgage Loans") in each case as set forth in Exhibit
A to the Sale and Servicing Agreement; (ii) the collections in respect of the
Mortgage Loans after the Cut-Off Date; (iii) property that secured a Mortgage
Loan that has been acquired by foreclosure or deed in lieu of foreclosure; (iv)
rights of the Depositor under hazard insurance policies covering the Mortgaged
Properties; (v) amounts on deposit from time to time in the Collection Account;
(vi) all rights under the Purchase Agreement assigned to the Issuer (including
all representations and warranties of the Seller contained therein) and all
rights of the Issuer under the Sale and Servicing Agreement; (vii) the Policy
(solely for the benefit of the Bondholders); and (viii) any and all proceeds of
the foregoing (the items set forth in (i) through (vii) above, the
"Collateral").
The foregoing Grant is made in trust to the Indenture Trustee, for the benefit
first, of the Holders of the Bonds, and second, for the benefit of the Insurer.
The Indenture Trustee hereby acknowledges such Grant, accepts the trusts under
this Indenture in accordance with the provisions of this Indenture and agrees to
perform its duties required in this Indenture to the best of its ability to the
end that the interests of such parties, recognizing the priorities of their
respective interests may be adequately and effectively protected.
The Indenture Trustee hereby agrees that it will hold the Policy in
trust and that it will hold any proceeds of any claim made upon the Policy
solely for the use and the benefit of the Bondholders in accordance with the
terms hereof and the terms of the Policy.
Neither the Indenture Trustee nor the Issuer assumes or shall assume
any obligation under any Credit Line Agreement that provides for the funding of
future Draws to the Mortgagor thereunder, and neither the Indenture Trustee nor
the Issuer shall be obligated or permitted to fund any such future Draws.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth in Annex A to this
Indenture.
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act
("TIA"), the provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
"Commission" means the Securities and Exchange Commission.
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"indenture securities" means the Bonds.
"indenture security holder" means a Holder of a Bond.
"indenture to be qualified" means this Indenture.
"Indenture Trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by the
TIA, or defined by Commission rule have the meaning assigned to them by such
definitions.
SECTION 1.3. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
SECTION 1.4. Action by or Consent of Bondholders and Residual
Certificateholders. Whenever any provision of this Indenture refers to action to
be taken, or consented to, by Bondholders or Residual Certificateholders, such
provision shall be deemed to refer to the Bondholder or Residual
Certificateholder, as the case may be, of record as of the Record Date
immediately preceding the date on which such action is to be taken, or consent
given, by Bondholders or Residual Certificateholders. Solely for the purposes of
any action to be taken, or consented to, by Bondholders or Residual
Certificateholders, any Bond or Residual Certificate registered in the name of
[Servicer] or any Affiliate thereof shall be deemed not to be outstanding;
provided, however, that, solely for the purpose of determining whether the
Indenture Trustee or the Owner Trustee is entitled to rely upon any such action
or consent, only Bonds or Residual Certificates which the Owner Trustee or the
Indenture Trustee, respectively, knows to be so owned shall be so disregarded.
SECTION 1.5. Conflict with TIA. If any provision hereof limits,
qualifies or conflicts with a provision of the TIA that is required under the
TIA to be part of and govern this Indenture, the latter provision shall control
and all provisions required by the TIA are hereby incorporated by reference. If
any provision of this Indenture modifies or excludes any provision of the TIA
that may be so modified or excluded, the latter provisions shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
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ARTICLE II
The Bonds
SECTION 2.1. Form. The Class A Bonds, together with the Indenture
Trustee's certificate of authentication, shall be in substantially the form set
forth in Exhibit A hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Bonds, as evidenced by their
execution of the Bonds. Any portion of the text of any Bonds may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Bond.
Each Bond shall be dated the date of its authentication. The terms
of the Bonds set forth in Exhibit A are part of the terms of this Indenture.
SECTION 2.2. Execution, Authentication and Delivery. The Bonds shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Bonds may be original or
facsimile.
Bonds bearing the original or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Bonds or did not hold
such offices at the date of such Bonds.
The Indenture Trustee shall authenticate and deliver Class A Bonds
for original issue in the aggregate principal amount of $_____________. The
Class A Bonds outstanding at any time may not exceed such amounts.
Each Bond shall be dated the date of its authentication. The Bonds
shall be issuable as registered Bonds in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof.
No Bond shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears attached to such Bond
a certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate attached to any Bonds shall be
conclusive evidence, and the only evidence, that such Bonds have been duly
authenticated and delivered hereunder. Subject to Section 2.11, the Bonds shall
be Book Entry Bonds.
SECTION 2.3. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Bond Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Bonds and the registration of transfers of
Bonds. The Indenture Trustee shall be "Bond Registrar" for the purpose of
registering Bonds and transfers of Bonds as herein provided. Upon any
resignation of any Bond Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Bond
Registrar.
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If a Person other than the Indenture Trustee is appointed by the
Issuer as Bond Registrar, the Issuer will give the Indenture Trustee and the
Insurer prompt written notice of the appointment of such Bond Registrar and of
the location, and any change in the location, of the Bond Register, and the
Indenture Trustee and the Insurer shall have the right to inspect the Bond
Register at all reasonable times and to obtain copies thereof. The Indenture
Trustee shall have the right to rely upon a certificate executed on behalf of
the Bond Registrar by an Authorized Officer thereof as to the names and
addresses of the Holders of the Bonds and the principal amounts and number of
such Bonds.
Upon surrender for registration or transfer of any Bond at the
office or agency of the Issuer to be maintained as provided in Section 3.2, and
if the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute or cause the Indenture Trustee to authenticate one or more new Bonds, in
any authorized denominations, of the same class and a like aggregate principal
amount. A Bondholder may also obtain from the Indenture Trustee, in the name of
the designated transferee or transferees one or more new Bonds, in any
authorized denominations, of the same class and a like aggregate principal
amount. Such requirements shall not be deemed to create a duty in the Indenture
Trustee to monitor the compliance by the Issuer with Section 8-401 of the UCC.
At the option of the Holder, Bonds may be exchanged for other Bonds
in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Bonds to be exchanged at such office or
agency. Whenever any Bonds are so surrendered for exchange, and if the
requirements of Section 8-401(1) of the UCC are met, the Issuer shall execute
and upon its request the Indenture Trustee shall authenticate the Bonds which
the Bondholder making the exchange is entitled to receive. Such requirements
shall not be deemed to create a duty in the Indenture Trustee to monitor the
compliance by the Issuer with Section 8-401 of the UCC.
All Bonds issued upon any registration of transfer or exchange of
Bonds shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Bonds surrendered
upon such registration of transfer or exchange.
Every Bond presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in the form attached to Exhibit A, duly executed by the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Bond Registrar all in accordance with the Exchange Act, and
(ii) accompanied by such other documents as the Bond Registrar may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Bonds, but the Bond Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Bonds, other than
exchanges pursuant to Section 2.4 or 9.6 not involving any transfer.
The Bond Registrar shall not register the transfer of a Definitive
Bond unless the Indenture Trustee has received a representation letter (in form
and substance satisfactory to the
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Indenture Trustee) from the prospective transferee to the effect that either (a)
such transferee is not an employee benefit plan (as defined in Section 3(3) of
ERISA) that is subject to the provisions of Title I of ERISA or a plan (as
defined in Section 4975(e)(1) of the Code) that is subject to Section 4975 of
the Code (each, a "Benefit Plan") and is not acting on behalf of or investing
the assets of a Benefit Plan or (b) the acquisition and continued holding of
such Bond by the transferee will be covered by a U.S. Department of Labor
prohibited transaction class exemption. Each Bond Owner, by acceptance of a
beneficial interest in a Book-Entry Bond, will be deemed to make one of the
foregoing representations.
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Bonds. If (i) any
mutilated Bond is surrendered to the Bond Registrar, or the Bond Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Bond, and (ii) there is delivered to the Indenture Trustee and the Insurer such
security or indemnity as may be required by it to hold the Issuer, the Indenture
Trustee and the Insurer harmless, then, in the absence of notice to the Issuer,
the Bond Registrar or the Indenture Trustee that such Bond has been acquired by
a bona fide purchaser, and provided that the requirements of Section 8-405 of
the UCC are met, the Issuer shall execute and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Bond, a replacement Bond (such requirement
shall not be deemed to create a duty in the Indenture Trustee to monitor the
compliance by the Issuer with Section 8-405); provided, however, that if any
such destroyed, lost or stolen Bond, but not a mutilated Bond, shall have become
or within seven days shall be due and payable, or shall have been called for
redemption, the Issuer may, instead of issuing a replacement Bond, direct the
Indenture Trustee, in writing, to pay such destroyed, lost or stolen Bond when
so due or payable or upon the Redemption Date without surrender thereof. If,
after the delivery of such replacement Bond or payment of a destroyed, lost or
stolen Bond pursuant to the proviso to the preceding sentence, a bona fide
purchaser of the original Bond in lieu of which such replacement Bond was issued
presents for payment such original Bond, the Issuer, the Indenture Trustee and
the Insurer shall be entitled to recover such replacement Bond (or such payment)
from the Person to whom it was delivered or any Person taking such replacement
Bond from such Person to whom such replacement Bond was delivered or any
assignee of such Person, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer, the Indenture Trustee or
the Insurer in connection therewith.
Upon the issuance of any replacement Bond under this Section, the
Issuer may require the payment by the Holder of such Bond of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Bond issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Bond shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Bond 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 Bonds duly issued hereunder.
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The provisions of this Section 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 Bonds.
SECTION 2.5. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Bond, the Issuer, the Indenture Trustee and the
Insurer and any agent of the Issuer, the Indenture Trustee and the Insurer may
treat the Person in whose name any Bond is registered (as of the Record Date) as
the owner of such Bond for the purpose of receiving payments of principal of and
interest, if any, on such Bond and for all other purposes whatsoever, whether or
not such Bond be overdue, and none of the Issuer, the Insurer, the Indenture
Trustee nor any agent of the Issuer, the Insurer or the Indenture Trustee shall
be affected by notice to the contrary.
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest.
(a) The Bonds shall accrue interest as provided herein, and such
amount shall be payable on each Payment Date as specified herein. Any
installment of interest or principal, if any, payable on any Bond which is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Bond (or one or more
Predecessor Bonds) is registered on the Record Date, by check mailed
first-class, postage prepaid, to such Person's address as it appears on the Bond
Register on such Record Date, except that, unless Definitive Bonds have been
issued pursuant to Section 2.11, with respect to Bonds registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Bond on a Payment
Date or on the Final Scheduled Payment Date (and except for the Redemption Price
for any Bond called for redemption pursuant to Section 10.1) which shall be
payable as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.3.
(b) Upon written notice from the Issuer, the Indenture Trustee
shall notify the Person in whose name a Bond is registered at the close of
business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Bond
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Bond and shall specify the
place where such Bond may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Bonds shall be mailed to
Bondholders as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Bonds,
the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Bond Rate to the extent lawful.
The Issuer may pay such defaulted interest to the Persons who are Bondholders on
a subsequent special Record Date, which date shall be at least five Business
Days prior to the Payment Date. The Issuer shall fix or cause to be fixed any
such special Record Date and Payment Date, and, at least 15 days before any such
special Record Date, the Issuer shall mail to each Bondholder, the Insurer and
the Indenture Trustee a notice that states the special Record Date, the Payment
Date and the amount of defaulted interest to be paid.
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(d) Promptly following the date on which all principal of and
interest on the Bonds has been paid in full and the Bonds have been surrendered
to the Indenture Trustee, the Indenture Trustee shall, upon written notice from
the Servicer of the amounts, if any, that the Insurer has paid in respect of the
Bonds under the Policy or otherwise which has not been reimbursed to the
Insurer, deliver such surrendered Bonds to the Insurer to the extent not
previously canceled or destroyed.
SECTION 2.7. Cancellation. Subject to Section 2.6(d), all Bonds
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Indenture Trustee, be delivered to
the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.
Subject to Section 2.6(d), the Issuer may at any time deliver to the Indenture
Trustee for cancellation any Bonds previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and all
Bonds so delivered shall be promptly canceled by the Indenture Trustee. No Bonds
shall be authenticated in lieu of or in exchange for any Bonds canceled as
provided in this Section, except as expressly permitted by this Indenture.
Subject to Section 2.6(d), all canceled Bonds may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Issuer shall direct by an Issuer Order that
they be returned to it; provided that such Issuer Order is timely and the Bonds
have not been previously disposed of by the Indenture Trustee.
SECTION 2.8. Release of Collateral. The Indenture Trustee shall, on
or after the Termination Date, release any remaining portion of the Trust
Property from the lien created by this Indenture and deposit in the Collection
Account any funds then on deposit in any other Account. The Indenture Trustee
shall release property from the lien created by this Indenture pursuant to this
Section 2.8 only upon receipt of an Issuer Request by it accompanied by an
Officer's Certificate and an Opinion of Counsel (which shall also be addressed
to the Insurer) and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.1.
SECTION 2.9. Book-Entry Bonds. The Bonds, upon original issuance,
will be issued in the form of typewritten Bonds representing the Book-Entry
Bonds, to be delivered to The Depository Trust Company or its custodian, the
initial Clearing Agency, by, or on behalf of, the Issuer. Such Bonds shall
initially be registered on the Bond Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Bond Owner will receive a
Definitive Bond representing such Bond Owner's interest in such Bond, except as
provided in Section 2.11. Unless and until definitive, fully registered Bonds
(the "Definitive Bonds") have been issued to Bond Owners pursuant to Section
2.11:
(i) the provisions of this Section shall be in full force
and effect;
(ii) the Bond Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the Bonds
and the giving of instructions or directions hereunder) as the sole Holder
of the Bonds, and shall have no obligation to the Bond Owners;
8
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Bond Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Bond Owners and the Clearing Agency and/or
the Clearing Agency Participants. Unless and until Definitive Bonds are
issued pursuant to Section 2.11, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments of principal of and interest on the Bonds to such
Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to
be taken based upon instructions or directions of Holders of Bonds
evidencing a specified percentage of the Outstanding Amount of the Bonds,
the Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from Bond
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Bonds and has delivered such instructions to the Indenture Trustee; and
(vi) Bond Owners may receive copies of any reports sent to
Bondholders pursuant to this Indenture, upon written request, together
with a certification that they are Bond Owners and payment of reproduction
and postage expenses associated with the distribution of such reports,
from the Indenture Trustee at the Corporate Trust Office.
SECTION 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Bondholders is required under this Indenture, unless and
until Definitive Bonds shall have been issued to Bond Owners pursuant to Section
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Holders of the Bonds to the Clearing Agency, and
shall have no obligation to the Bond Owners.
SECTION 2.11. Definitive Bonds. If (i) the Servicer advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Bonds, and
the Servicer is unable to locate a qualified successor, (ii) the Servicer at its
option advises the Indenture Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of a
Rapid Amortization Event, Bond Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Bonds advise
the Indenture Trustee through the Clearing Agency in writing that the
continuation of a book entry system through the Clearing Agency is no longer in
the best interests of the Bond Owners, then the Clearing Agency shall notify all
Bond Owners and the Indenture Trustee of the occurrence of any such event and of
the availability of Definitive Bonds to Bond Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Bond or Bonds representing
the Book-Entry Bonds by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Bonds in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Bond Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be
9
protected in relying on, such instructions. Upon the issuance of Definitive
Bonds, the Indenture Trustee shall recognize the Holders of the Definitive Bonds
as Bondholders.
ARTICLE III
Covenants; Representations and Warranties of the Issuer
SECTION 3.1. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest on the Bonds in accordance with
the terms of the Bonds and this Indenture. The Bonds shall be debt obligations
of the Trust and shall be limited in right of payment to amounts available from
the Trust as provided in this Indenture and the Trust shall not otherwise be
liable for payments on the Bonds. No person shall be personally liable for any
amounts payable under the Bonds. Amounts properly withheld under the Code by any
Person from a payment to any Bondholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Bondholder for all purposes
of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer will
maintain in [___________], an office or agency where Bonds may be surrendered
for registration, transfer or exchange of the Bonds, and where notices and
demands to or upon the Issuer in respect of the Bonds and this Indenture may be
served. The Issuer hereby initially appoints the Indenture Trustee to serve as
its agent for the foregoing purposes. The Issuer will give prompt written notice
to the Indenture Trustee of the location, and of any change in the location, of
any such office or agency. If at any time the Issuer shall fail to maintain any
such office or agency or shall fail to furnish the Indenture Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee
as its agent to receive all such surrenders, notices and demands.
SECTION 3.3. Money for Payments to be Held in Trust. The Issuer will
cause each Bond Paying Agent other than the Indenture Trustee to execute and
deliver to the Indenture Trustee and the Insurer an instrument in which such
Bond Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Bond Paying Agent, it hereby so agrees), subject to the
provisions of this Section, that such Bond Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Bonds in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
(ii) give the Indenture Trustee and the Insurer written
notice of any default by the Issuer (or any other obligor upon the Bonds)
of which it has actual knowledge in the making of any payment required to
be made with respect to the Bonds;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee with the consent of the
Insurer, if the Insurer is the Controlling Party, forthwith pay to the
Indenture Trustee all sums so held in trust by such Bond Paying Agent;
10
(iv) immediately resign as a Bond Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the payment
of Bonds if at any time it ceases to meet the standards required to be met
by a Bond Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Bonds of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Bond Paying Agent to pay to the Indenture Trustee all sums held
in trust by such Bond Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such Bond
Paying Agent; and upon such a payment by any Bond Paying Agent to the Indenture
Trustee, such Bond Paying Agent shall be released from all further liability
with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by the Indenture Trustee or any Bond Paying Agent in trust for the
payment of any amount due with respect to any Bond and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and be paid to the Issuer, with the prior consent of the Insurer, on
Issuer Request, and shall be deposited by the Indenture Trustee in the
Collection Account; and the Holder of such Bond shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof (but
only to the extent of the amounts so paid to the Issuer), and all liability of
the Indenture Trustee, the Insurer or such Bond Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that if such money or
any portion thereof had been previously deposited by the Insurer with the
Indenture Trustee for the payment of principal or interest on the Bonds, to the
extent any amounts are owing to the Insurer, such amounts shall be paid promptly
to the Insurer upon receipt of a written request by the Insurer to such effect.
SECTION 3.4. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a statutory trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuer will keep in full effect its existence, rights
and franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Trust Property, the Bonds, and each other
instrument or agreement included in the Trust Property.
SECTION 3.5. Protection of Trust Property. The Issuer intends the
security interest granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Property
and the Issuer shall take all actions necessary to obtain and maintain, in favor
of the Indenture Trustee, for the benefit of the Issuer Secured Parties, a first
lien on and a first priority, perfected security interest in the Trust Property.
The Issuer will from time to time prepare (or shall cause to be prepared),
execute and deliver all such
11
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust
Property;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) in favor of the Indenture Trustee for the benefit of
the Issuer Secured Parties created by 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 Collateral;
(v) preserve and defend title to the Trust Property and the
rights of the Indenture Trustee in such Trust Property against the claims
of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the
Trust Property when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required pursuant to this Section; provided that, such
designation shall not be deemed to create a duty in the Indenture Trustee to
monitor the compliance of the Issuer with respect to its duties under this
Section 3.5 or the adequacy of any financing statement, continuation statement
or other instrument prepared by the Issuer.
SECTION 3.6. Opinions as to Trust Property.
(a) On the Closing Date, the Issuer shall furnish to the
Indenture Trustee and the Insurer an Opinion of Counsel in the form of Exhibit B
hereto, stating that, in the opinion of such counsel, such actions have been
taken with respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as
are necessary to perfect and make effective the first priority lien and security
interest in favor of the Indenture Trustee, for the benefit of the Issuer
Secured Parties, created by this Indenture, subject to the exceptions and
qualifications set forth in such Opinion of Counsel.
(b) Within 90 days after the beginning of each calendar year,
beginning in 200_, the Issuer shall furnish to the Indenture Trustee and the
Insurer, an Opinion of Counsel either stating that, in the opinion of such
counsel, such actions have been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as are 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
12
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the lien and security interest of this
Indenture.
SECTION 3.7. Performance of Obligations; Servicing of Mortgage
Loans.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Property or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as ordered by any bankruptcy or other court or as expressly provided in
this Indenture, the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the
Insurer to assist it in performing its duties under this Indenture, and any
performance of such duties by a Person identified to the Indenture Trustee and
the Insurer in an Officer's Certificate of the Issuer shall be deemed to be
action taken by the Issuer. Initially, the Issuer has contracted with the
Servicer to assist the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Property, including, but
not limited to, preparing (or causing to be prepared) and filing (or causing to
be filed) all UCC financing statements and continuation statements required to
be filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Indenture Trustee and the Insurer.
(d) If a Responsible Officer of the Owner Trustee shall have
actual knowledge of the occurrence of an Event of Servicing Termination under
the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee, the Insurer and the Rating Agencies thereof in accordance with Section
11.4, and shall specify in such notice the action, if any, the Issuer is taking
at the direction of the Controlling Party in respect of such default. If an
Event of Servicing Termination shall arise from the failure of the Servicer to
perform any of its duties or obligations under the Sale and Servicing Agreement
with respect to the Mortgage Loans, the Issuer shall take all reasonable steps
available to it to remedy such failure.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Depositor of their respective duties under the
Basic Documents (x) without the prior consent of the Insurer or (y) if the
effect thereof would adversely affect the Holders of the Bonds.
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SECTION 3.8. Negative Covenants. So long as any Bonds are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Basic Documents, sell, transfer, exchange or otherwise dispose of any of
the properties or assets of the Issuer, including those included in the
Trust Property (but excluding any Mortgage Loans removed from the Pool
pursuant to Section 2.07 of the Sale and Servicing Agreement), without the
consent of the Insurer (which consent may not be unreasonably withheld)
provided, that if an Insurer Default has occurred and is continuing the
Bondholders representing 66-2/3% of the Outstanding Amount may direct the
Indenture Trustee to sell or dispose of the Trust Property.
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Bonds (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Bondholder by reason of the payment of the
taxes levied or assessed upon any part of the Trust Property; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Indenture
Trustee created by this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Bonds under
this Indenture except as may be expressly permitted hereby, (B) permit any
lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) to be created on or
extend to or otherwise arise upon or burden the Trust Property or any part
thereof or any interest therein or the proceeds thereof (other than tax
liens, mechanics' liens and other liens that arise by operation of law, in
each case on a Mortgaged Property and arising solely as a result of an
action or omission of the related obligor), (C) permit the lien of this
Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien) security interest in
the Trust Property or (D) amend, modify or fail to comply with the
provisions of the Basic Documents without the prior written consent of the
Insurer, which consent may not be unreasonably withheld.
SECTION 3.9. Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee and the Insurer, within 90 days after the end
of each fiscal year of the Issuer (commencing with the fiscal year ended
_______, 200_) and otherwise in compliance with the requirements of TIA Section
314(a)(4), an Officer's Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such
year and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has been
a default in the compliance of any such
14
condition or covenant, specifying each such default known to such
Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Not Consolidate or Transfer Assets.
(a) The Issuer may not consolidate or merge with or into any other
Person.
(b) Except as otherwise provided in the Sale and Servicing
Agreement, the Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Property, to any
Person.
SECTION 3.11. No Other Business. The Issuer shall not engage in any
business other than purchasing, owning, selling and managing the Mortgage Loans
and other assets in the manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto.
SECTION 3.12. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness or any certificates of beneficial interest except for (i) the
Residual Certificates, (ii) the Bonds, (iii) obligations owing from time to time
to the Insurer under the Insurance Agreement and (iv) any other indebtedness
permitted by or arising under the Basic Documents, except that the Issuer shall
not incur any indebtedness that would cause it, or any portion thereof, to be
treated as a "taxable mortgage pool" under Section 7701 of the Code. The
proceeds of the Bonds and the Residual Certificates shall be used exclusively to
fund the Issuer's purchase of the Mortgage Loans and the other assets specified
in the Sale and Servicing Agreement and to pay the Issuer's organizational,
transactional and start-up expenses.
SECTION 3.13. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 3.09, 3.10 and 4.01 of the Sale and Servicing
Agreement and Section 8.6 herein.
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this Indenture,
the Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.15. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.16. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Bonds, this Indenture or any
Basic Document.
15
SECTION 3.17. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Insurer, the Indenture Trustee and the
Bondholders as permitted by, and to the extent funds are available for such
purpose under, the Sale and Servicing Agreement, this Indenture, or Trust
Agreement. The Issuer will not, directly or indirectly, make payments to or
distributions from the Collection Account except in accordance with this
Indenture and the Basic Documents.
SECTION 3.18. Notice of Rapid Amortization Events and Events of
Servicing Termination. Upon a Responsible Officer of the Owner Trustee having
actual knowledge thereof, the Issuer agrees to give the Indenture Trustee, the
Insurer and the Rating Agencies prompt written notice of each Rapid Amortization
Event hereunder or Event of Servicing Termination under the Sale and Servicing
Agreement.
SECTION 3.19. Further Instruments and Acts. Upon request of the
Indenture Trustee or the Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
SECTION 3.20. Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 9.01 of the
Sale and Servicing Agreement or Section 12.1 of the Trust Agreement to eliminate
the requirements thereunder that the Indenture Trustee, the Insurer or the
Holders of the Bonds consent to amendments thereto as provided therein.
SECTION 3.21. Income Tax Characterization. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Issuer and the Bondholders will treat the Bonds as indebtedness of the Depositor
and hereby instruct the Indenture Trustee to treat the Bonds as indebtedness of
the Depositor for federal and state tax reporting purposes.
SECTION 3.22. Representations and Warranties of the Issuer Regarding
the Lien of the Indenture Trustee. With respect to the Collateral, the Issuer
represents and warrants that, as of the Closing Date:
(i) This Indenture creates a valid and continuing security
interest (as such term is defined in the UCC) in the Collateral in favor
of the Indenture Trustee, which security interest is prior to all other
liens, and is enforceable as such against creditors of and purchasers from
the Issuer;
(ii) The Mortgage Notes constitute "instruments" within the
meaning of the UCC;
16
(iii) The Issuer owns or will own and has or will have good
title to the Collateral free and clear of any lien, claim or encumbrance
of any Person;
(iv) The Issuer has or will have received all consents and
approvals required by the terms of the Mortgage Loans to the pledge of the
Mortgage Loans hereunder to the Indenture Trustee;
(v) All original executed copies of each Mortgage Loan have
been or will be delivered to the Custodian or the Indenture Trustee;
(vi) The Issuer has or will have received a written
acknowledgement from the Custodian or the Indenture Trustee that the
Custodian or Indenture Trustee is holding the Mortgage Loans solely on
behalf and for the benefit of the Indenture Trustee on behalf of the
Bondholders;
(vii) Other than the security interest granted to the
Indenture Trustee pursuant to this Indenture, the Issuer has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed any
of the Collateral. The Issuer has not authorized the filing of and is not
aware of any financing statement against the Issuer that includes a
description of any of the Collateral other than a financing statement
relating to the security interest granted to the Indenture Trustee
hereunder or that has been terminated. The Issuer is not aware of any
judgment or tax lien filings against the Issuer; and
(viii) None of the Mortgage Notes has or will have any marks
or notations indicating that it has been pledged, assigned or otherwise
conveyed to any Person other than the Indenture Trustee.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture. Upon payment
in full to the Insurer of amounts due to the Insurer and on the Bonds, this
Indenture shall cease to be of further effect with respect to the Bonds except
as to (i) the rights of registration of transfer and exchange, (ii) substitution
of mutilated, destroyed, lost or stolen Bonds, (iii) the rights of Bondholders
to receive payments of principal thereof and interest thereon, (iv) Sections
3.3, 3.4, 3.5, 3.8, 3.10, 3.12, 3.13, 3.20 and 3.21, (v) the rights, obligations
and immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee
under Section 4.2) and (vi) the rights of Bondholders and the Insurer as
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them, and the Indenture Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Bonds, when
either
(1) all Bonds theretofore authenticated and delivered (other than
(i) Bonds that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 4.5 of the Trust Agreement and (ii) Bonds for
which payment money has theretofore
17
been deposited in trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust, as provided in
Section 3.3) have been delivered to the Indenture Trustee for cancellation and
the Policy has terminated and been returned to the Insurer for cancellation and
all amounts owing to the Insurer have been paid in full; or
(2) all Bonds not theretofore delivered to the Indenture Trustee
for cancellation have become due and payable, and
(A) the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Indenture Trustee cash or direct obligations of
or obligations guaranteed by the United States of America (which will mature
prior to the date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on the Bonds, in
each case to the extent not theretofore delivered to the Indenture Trustee for
cancellation when due on the Final Scheduled Payment Date or Redemption Date (if
Bonds shall have been called for redemption pursuant to Section 10.1), as the
case may be;
(B) the Issuer has paid or caused to be paid all Insurer Issuer
Secured Obligations and all Indenture Trustee Issuer Secured Obligations; and
(C) the Issuer has delivered to the Indenture Trustee and the
Insurer an Officer's Certificate, an Opinion of Counsel and, if required by the
TIA, the Indenture Trustee or the Insurer, an Independent Certificate from a
firm of certified public accountants, each meeting the applicable requirements
of Section 11.1(a) and each stating that all conditions precedent herein
provided relating to the satisfaction and discharge of this Indenture have been
complied with.
SECTION 4.2. Application of Trust Money. All monies deposited with
the Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Bonds and this
Indenture, to the payment, either directly or through any Bond Paying Agent, as
the Indenture Trustee may determine, to the Holders of the particular Bonds for
the payment or redemption of which such monies have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest and to the Insurer for the payment of any amounts due to it under the
Basic Documents.
SECTION 4.3. Repayment of Monies Held by Bond Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Bonds, all monies then held by any Bond Paying Agent other than the
Indenture Trustee under the provisions of this Indenture with respect to such
Bonds shall, upon demand of the Issuer, be paid to the Indenture Trustee to be
held and applied according to Section 3.3 and thereupon such Bond Paying Agent
shall be released from all further liability with respect to such monies.
ARTICLE V
Remedies
SECTION 5.1. Remedies. If a Rapid Amortization Event as described in
Article XII shall have occurred and be continuing, the Bondholders shall be
entitled on each Payment Date to an amount equal to the Maximum Principal
Payment payable during such Rapid
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Amortization Period. The rights contained in this Article V are in addition to
any rights which the Bondholders possess pursuant to Article XII.
SECTION 5.2. Limitation of Suits. No Holder of any Bond shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Rapid Amortization Event;
(ii) the Holders of not less than 50% of the Outstanding
Amount of the related Bonds have made written request to the Indenture
Trustee to institute such proceeding with respect to the Bonds in respect
of such Rapid Amortization Event in its own name as Indenture Trustee
hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute such
proceedings;
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the Bonds; and
(vi) an Insurer Default shall have occurred and be
continuing;
it being understood and intended that no Holders of Bonds shall have any right
in any manner whatsoever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders of
Bonds or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in the manner
herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Bonds,
each representing less than a majority of the Outstanding Amount of the Bonds,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.3. Unconditional Rights of Bondholders To Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Bond shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Bond on or after the respective due dates thereof expressed in such Bond or
in this Indenture (or, in the case of redemption, on or after the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.
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SECTION 5.4. Restoration of Rights and Remedies. If the Indenture
Trustee or any Bondholder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, then and in every such case the Issuer, the Insurer,
the Indenture Trustee and the Bondholders 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 Insurer and the Bondholders shall continue as though no such
proceeding had been instituted.
SECTION 5.5. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Controlling Party or to the related
Bondholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.6. Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee, the Insurer or any Holder of any Bond to exercise any
right or remedy accruing upon any Rapid Amortization Event shall impair any such
right or remedy or constitute a waiver of any such Rapid Amortization Event or
an acquiescence therein. Every right and remedy given by this Article V or by
law to the Indenture Trustee, the Insurer or to the Bondholders may be exercised
from time to time, and as often as may be deemed expedient, by the Indenture
Trustee, the Insurer or by the Bondholders, as the case may be.
SECTION 5.7. Control by Insurer and Bondholders. The Insurer (or, if
an Insurer Default shall have occurred and is continuing, Holders of a majority
of the Outstanding Amount of the related Bonds) shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustee pursuant to Section 12.1 hereof with respect to the
Bonds or exercising any trust or power conferred on the Indenture Trustee;
provided that:
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) 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 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Bondholders not consenting to such
action.
SECTION 5.8. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Bond by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess
20
reasonable costs, including reasonable attorneys' fees and expenses, against any
party litigant in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to (a) any suit instituted by the Indenture Trustee, (b)
any suit instituted by the Insurer, any Bondholder, or group of Bondholders with
the prior written consent of the Insurer (so long as no Insurer Default has
occurred), in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Bonds or (c) any suit instituted by any Bondholder for
the enforcement of the payment of principal of or interest on any Bond on or
after the respective due dates expressed in such Bond and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.9. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.10. Action on Bonds. The Indenture Trustee's right to seek
and recover judgment on the Bonds or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee, the Insurer or the Bondholders shall be
impaired by the recovery of any judgment by the Indenture Trustee or the Insurer
against the Issuer or by the levy of any execution under such judgment upon any
portion of the Trust Property or upon any of the assets of the Issuer.
SECTION 5.11. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee (at
the direction of the Insurer) to do so and at the Servicer's expense, the Issuer
agrees to take all such lawful action as the Indenture Trustee may request to
compel or secure the performance and observance by the Depositor and the
Servicer, as applicable, of each of their obligations to the Issuer under or in
connection with the Sale and Servicing Agreement in accordance with the terms
thereof, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Sale and
Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Depositor or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Depositor or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If a Rapid Amortization Event has occurred and is continuing,
the Indenture Trustee, with the consent of the Insurer, may, and, at the written
direction of the Insurer (or, if (i) an Insurer Default has occurred and is
continuing or (ii) a Rapid Amortization Event described in clause (g) of Section
12.1 has occurred and is continuing, the Holders of 66-2/3% of the Outstanding
Amount of the Bonds) shall, exercise all rights, remedies, powers, privileges
and claims of the Issuer against the Depositor or the Servicer under or in
connection
21
with the Sale and Servicing Agreement, including the right or power to take any
action to compel or secure performance or observance by the Depositor or the
Servicer of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under the
Sale and Servicing Agreement, and any right of the Issuer to take such action
shall be suspended.
SECTION 5.12. Subrogation. The Indenture Trustee shall receive as
attorney-in-fact of each Bondholder any Insured Amounts or Preference Amounts
from the Insurer pursuant to the Policy. Any and all Insured Amounts and
Preference Amounts disbursed by the Indenture Trustee from claims made under the
Policy shall not be considered payment by the Issuer, and shall not discharge
the obligations of the Issuer with respect thereto. The Insurer shall, to the
extent it makes any payment with respect to the Bonds, become subrogated to the
rights of the recipient of such payments to the extent of such payments. Subject
to and conditioned upon any payment with respect to the Bonds by or on behalf of
the Insurer, the Indenture Trustee shall assign to the Insurer all rights to the
payment of interest or principal with respect to the Bonds which are then due
for payment to the extent of all payments made by the Insurer.
SECTION 5.13. Preference Claims.
(a) In the event that the Indenture Trustee has received a
certified copy of an order of the appropriate court that any Insured Amount on a
Bond has been avoided in whole or in part as a preference payment under
applicable bankruptcy law, the Indenture Trustee shall so notify the Insurer,
shall comply with the provisions of the Policy to obtain payment by the Insurer
of such avoided payment, and shall, at the time it provides notice to the
Insurer, notify Holders of the Bonds by mail that, in the event that any
Bondholder's payment is so recoverable, such Bondholder will be entitled to
payment pursuant to the terms of the Policy. The Indenture Trustee shall furnish
to the Insurer at its written request, the requested records it holds in its
possession evidencing the payments of principal of and interest on Bonds, if
any, which have been made by the Indenture Trustee and subsequently recovered
from Bondholders and the dates on which such payments were made. Pursuant to the
terms of the Policy, the Insurer will make such payment on behalf of the related
Bondholder to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Bondholders and not to the Indenture Trustee, any Bondholder
directly (unless such Bondholder has returned principal or interest paid on the
Bonds to such receiver or trustee in bankruptcy, in which case the Insurer shall
make such payment to the Indenture Trustee for payment to such Bondholder in
accordance with the terms of the Policy).
(b) The Indenture Trustee shall promptly notify the Insurer of any
proceeding or the institution of any action (of which the Indenture Trustee has
actual knowledge) seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership, rehabilitation or similar law
(a "Preference Claim") of any distribution made with respect to the Bonds. Each
Holder, by its purchase of Bonds, and the Indenture Trustee hereby agree that so
long as an Insurer Default shall not have occurred and be continuing, the
Insurer 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 any Preference Claim and (ii) the posting of any surety, supersedes
or
22
performance bond pending any such appeal at the expense of the Insurer, but
subject to reimbursement as provided in the Insurance Agreement. In addition,
and without limitation of the foregoing, as set forth in Section 5.12, the
Insurer shall be subrogated to, and each Bondholder and the Indenture Trustee
hereby delegate and assign, to the fullest extent permitted by law, the rights
of the Indenture Trustee and each Bondholder in the conduct of any proceeding
with respect to a Preference Claim, including, without limitation, all rights of
any party to an adversary proceeding action with respect to any court order
issued in connection with any such Preference Claim. All actions taken under
this Section 5.13(b) by the Indenture Trustee shall be taken in accordance with
the terms of the Policy.
SECTION 5.14. Bondholder Rights. Each Bondholder by the acceptance
of its Bond agrees that, so long as no Insurer Default has occurred and is
continuing, the Insurer shall be treated by the Issuer, the Seller, the
Depositor, the Servicer, the Owner Trustee and the Indenture Trustee as if the
Insurer were the Holder of the Bond for the purpose of the giving of any
consent, the making of any direction or the exercise of any voting or other
control rights otherwise given to the Bondholder hereunder without any further
consent of the Bondholder. So long as no Insurer Default has occurred and is
continuing, the Bondholders may only exercise such rights with the consent of
the Insurer.
SECTION 5.15. Insurer's Rights Regarding Actions, Proceedings or
Investigations. Until all Bonds have been paid in full, all amounts owed to the
Insurer have been paid in full, the Insurance Agreement has terminated and the
Policy has been returned to the Insurer for cancellation, the following
provisions shall apply:
(a) Notwithstanding anything contained herein or in the other
Basic Documents to the contrary, the Insurer shall have the right to participate
in, to direct the enforcement or defense of, and, at the Insurer's sole option,
to institute or assume the defense of, any action, proceeding or investigation
that could adversely affect the Issuer, the Collateral, the Trust Property or
the rights or obligations of the Insurer hereunder or under the Policy or the
Basic Documents, including (without limitation) any insolvency or bankruptcy
proceeding in respect of the Servicer, the Seller, the Depositor, the Issuer or
any affiliate thereof. Following notice to the Indenture Trustee, the Insurer
shall have exclusive right to determine, in its sole discretion, the actions
necessary to preserve and protect the Issuer, the Collateral, and the Trust
Property. All costs and expenses of the Insurer in connection with such action,
proceeding or investigation, including (without limitation) any judgment or
settlement entered into affecting the Insurer or the Insurer's interests, shall
be included in the Reimbursement Amount.
(b) In connection with any action, proceeding or investigation
that could adversely affect the Issuer, the Collateral, the Trust Property or
the rights or obligations of the Insurer hereunder or under the Policy or the
Basic Documents, including (without limitation) any insolvency or bankruptcy
proceeding in respect of the Servicer, the Seller, the Depositor, the Issuer or
any affiliate thereof, the Indenture Trustee hereby agrees to cooperate with,
and to take such action as directed by, the Insurer, including (without
limitation) entering into such agreements and settlements as the Insurer shall
direct, in its sole discretion, without the consent of any Bondholder.
23
(c) The Indenture Trustee hereby agrees to provide to the Insurer
prompt written notice of any action, proceeding or investigation that names the
Issuer or the Indenture Trustee as a party or that could adversely affect the
Issuer, the Collateral, the Trust Property or the rights or obligations of the
Insurer hereunder or under the Policy or the Basic Documents, including (without
limitation) any insolvency or bankruptcy proceeding in respect of the Servicer,
the Seller, the Depositor, the Trust or any affiliate thereof.
(d) Notwithstanding anything contained herein or in any of the
other Basic Documents to the contrary, the Indenture Trustee shall not, without
the Insurer's prior written consent or unless directed by the Insurer, undertake
or join any litigation or agree to any settlement of any action, proceeding or
investigation affecting the Issuer, the Collateral, the Trust Property or the
rights or obligations of the Insurer hereunder or under the Policy or the Basic
Documents.
(e) Each Bondholder, by acceptance of its Bond, and the Indenture
Trustee agree that the Insurer shall have such rights as set forth in this
Section, which are in addition to any rights of the Insurer pursuant to the
other provisions of the Basic Documents, that the rights set forth in this
Section may be exercised by the Insurer, in its sole discretion, without the
need for the consent or approval of any Bondholder or the Indenture Trustee,
notwithstanding any other provision contained herein or in any of the other
Basic Documents, and that nothing contained in this Section shall be deemed to
be an obligation of the Insurer to exercise any of the rights provided for
herein.
ARTICLE VI
The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee.
(a) If a Rapid Amortization Event has occurred and is continuing,
the Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and the Basic Documents and use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs; provided, however, that if the
Indenture Trustee is acting as Servicer, it shall use the same degree of care
and skill as is required of the Servicer under the Sale and Servicing Agreement.
(b) Except during the continuance of a Rapid Amortization Event
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform on their face to the requirements of this Indenture.
24
(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(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;
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.12; and
(iv) the Indenture Trustee shall not be charged with
knowledge of any failure by the Servicer to comply with the obligations of
the Servicer referred to in clause (ii) of Section 6.01 of the Sale and
Servicing Agreement unless a Responsible Officer of the Indenture Trustee
at the Corporate Trust Office obtains actual knowledge of such failure or
occurrence or the Indenture Trustee receives written notice of such
failure or occurrence from the Servicer, the Insurer or the Holders of
Bonds evidencing more than 50% of the Outstanding Amount.
(d) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or indemnity reasonably satisfactory to it against such
risk or liability is not reasonably assured to it.
(f) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(g) The Indenture Trustee shall, upon three Business Days' prior
written notice to the Indenture Trustee, permit any representative of the
Insurer, during the Indenture Trustee's normal business hours, to examine all
books of account, records, reports and other papers of the Indenture Trustee
relating to the Bonds, to make copies and extracts (at the expense of the party
requesting such copies or extracts) therefrom and to discuss the Indenture
Trustee's affairs and actions, as such affairs and actions relate to the
Indenture Trustee's duties with respect to the Bonds, with the Indenture
Trustee's officers and employees responsible for carrying out the Indenture
Trustee's duties with respect to the Bonds.
(h) The Indenture Trustee shall, and hereby agrees that it will,
perform all of the obligations and duties required of it under the Sale and
Servicing Agreement.
25
(i) The Indenture Trustee shall, and hereby agrees that it will,
hold the Policy in trust, and will hold any proceeds of any claim on the Policy
in trust solely for the use and benefit of the Bondholders.
(j) In no event shall [Indenture Trustee], in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Business Trust Statute, common law, or the Trust Agreement.
SECTION 6.2. Rights of Indenture Trustee.
(a) The Indenture Trustee may conclusively rely on any document
reasonably believed by it to be genuine and to have been signed or presented by
the proper person. The Indenture Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee and the Indenture Trustee shall
not be liable for the negligence of such agents, attorneys, custodians or
nominees appointed (i) with due care and (ii) with the consent of the Insurer.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel of its
selection, and the advice or opinion of counsel with respect to legal matters
relating to this Indenture and the Bonds shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Indenture or in relation
to this Indenture, at the request, order or direction of any of the Holders of
Bonds or the Controlling Party, pursuant to the provisions of this Indenture,
unless such Holders of Bonds or the Controlling Party shall have offered to the
Indenture Trustee security or indemnity reasonably satisfactory to it against
the costs, expenses and liabilities that may be incurred therein or thereby;
provided, however, that the Indenture Trustee shall, upon the occurrence of a
Rapid Amortization Event or Event of Servicing Termination as defined in the
Sale and Servicing Agreement (that has not been cured or waived), exercise the
rights and powers vested in it by this Indenture or the Sale and Servicing
Agreement with reasonable care and skill.
26
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Insurer or by the Holders of Bonds evidencing not less than 25% of the
Outstanding Amount thereof; 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 or the
Sale and Servicing Agreement, the Indenture Trustee may require indemnity
reasonably satisfactory to it against such cost, expense or liability as a
condition to so proceeding; the reasonable expense of every such examination
shall be paid by the Person making such request, or, if paid by the Indenture
Trustee shall be reimbursed by the Person making such request upon demand.
(h) The Indenture Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions hereunder of
the Servicer until such time as the Indenture Trustee may be required to act as
Servicer.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Bonds and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Bond Paying Agent,
Bond Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Trust Property or the Bonds, it shall not be
accountable for the Issuer's use of the proceeds from the Bonds, and it shall
not be responsible for any statement of the Issuer in the Indenture or in any
document issued in connection with the sale of the Bonds or in the Bonds other
than the Indenture Trustee's certificate of authentication.
SECTION 6.5. Notice of Rapid Amortization Events and Events of
Servicing Termination. If a Rapid Amortization Period or an Event of Servicing
Termination occurs and is continuing and if it is either known by, or written
notice of the existence thereof has been delivered to, a Responsible Officer of
the Indenture Trustee, the Indenture Trustee shall (i) promptly mail to the
Insurer notice of such event, and (ii) within 90 days after such knowledge or
notice occurs, mail to each Bondholder notice of such event. Except in the case
of a default in payment of principal of or interest on any Bond, the Indenture
Trustee may withhold the notice to the Bondholders if and so long as one of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of Bondholders; provided that the Indenture Trustee shall not
withhold any such notice to the Insurer.
SECTION 6.6. Reports by Indenture Trustee to Holders. Upon written
request, the Bond Paying Agent or the Servicer shall on behalf of the Issuer
deliver to each Bondholder such information as may be reasonably required to
enable such Holder to prepare its federal and state income tax returns required
by law.
27
SECTION 6.7. Compensation and Indemnity.
(a) Pursuant to Section 8.7 and subject to Section 6.10 herein,
the Issuer shall, or shall cause the Servicer to, pay to the Indenture Trustee
from time to time compensation as agreed to in writing between the Servicer and
the Indenture Trustee for its services. The Indenture Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuer shall or shall cause the Servicer to reimburse the Indenture
Trustee for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall or shall cause the Servicer to
indemnify the Indenture Trustee and its respective officers, directors,
employees and agents against any and all loss, liability or expense (including
attorneys' fees and expenses) incurred by each of them in connection with the
acceptance or the administration of this trust and the performance of its duties
hereunder or under any other Basic Document. The Indenture Trustee shall notify
the Issuer and the Servicer promptly of any claim for which it may seek
indemnity. Failure by the Indenture Trustee to so notify the Issuer and the
Servicer shall not relieve the Issuer of its obligations hereunder or the
Servicer of its obligations under Article VIII of the Sale and Servicing
Agreement. The Issuer shall or shall cause the Servicer to defend the claim, the
Indenture Trustee may have separate counsel and the Issuer shall or shall cause
the Servicer to pay the fees and expenses of such counsel. Neither the Issuer
nor the Servicer need reimburse any expense or indemnify against any loss,
liability or expense incurred by the Indenture Trustee through the Indenture
Trustee's own willful misconduct, negligence or bad faith.
(b) The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section shall survive the discharge of this Indenture.
Notwithstanding anything else set forth in this Indenture or the Basic
Documents, the Indenture Trustee agrees that the obligations of the Issuer (but
not the Servicer) to the Indenture Trustee hereunder and under the Basic
Documents shall be recourse to the Trust Property only and specifically shall
not be recourse to the assets of the Issuer or any Bondholder. In addition, the
Indenture Trustee agrees that its recourse to the Issuer, the Trust Property and
the Depositor shall be limited to the right to receive the distributions
referred to in Section 8.7 herein.
SECTION 6.8. Replacement of Indenture Trustee. The Indenture Trustee
may resign at any time by so notifying the Issuer and the Insurer by written
notice. Upon receiving such notice of resignation, the Issuer shall promptly
appoint a successor Indenture Trustee (approved in writing by the Insurer, so
long as such approval is not unreasonably withheld) by written instrument, in
duplicate, one copy of such instrument shall be delivered to the resigning
Indenture Trustee (who shall deliver a copy to the Servicer and the Insurer) and
one copy to the successor Indenture Trustee; provided, however, that any such
successor Indenture Trustee shall be subject to the prior written approval of
the Servicer. The Issuer may, and at the request of the Insurer shall, remove
the Indenture Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect
of the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or
28
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, shall have
entered a decree or order granting relief or appointing a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator (or
similar official) for the Indenture Trustee or for any substantial part of
the Indenture Trustee's property, or ordering the winding-up or liquidation
of the Indenture Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws,
as now or hereafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law is commenced with respect to
the Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) for the Indenture
Trustee or for any substantial part of the Indenture Trustee's property,
or makes any assignment for the benefit of creditors or fails generally to
pay its debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing;
(v) the Indenture Trustee otherwise becomes incapable of
acting; or
(vi) the Indenture Trustee materially breaches any covenant
or obligation under the Basic Documents.
Additionally, the Issuer shall remove the Indenture Trustee at the
request of the Insurer.
If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee acceptable to the
Insurer. If the Issuer fails to appoint such a successor Indenture Trustee, the
Insurer may appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee, to the Insurer and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the retiring Indenture Trustee under this
Indenture. The successor Indenture Trustee shall mail a notice of its succession
to Bondholders. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer, the Insurer, or the Holders of a majority in
Outstanding Amount of the Bonds may, at the expense of the Servicer, petition
any court of competent jurisdiction for the appointment of a successor Indenture
Trustee acceptable to the Insurer.
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If the Indenture Trustee fails to comply with Section 6.11, any
Bondholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee
acceptable to the Insurer.
Any resignation or removal of the Indenture Trustee and appointment
of a successor Indenture Trustee pursuant to any of the provisions of this
Section shall not become effective until acceptance of appointment by the
successor Indenture Trustee pursuant to Section 6.8 and payment of all fees and
expenses owed to the outgoing Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Servicer's indemnity obligations under
Section 6.7 shall continue for the benefit of the retiring Indenture Trustee and
the Servicer shall pay any amounts owing to the Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee,
provided that such entity meets the requirements of Section 6.11 hereunder and
is otherwise acceptable to the Insurer (unless an Insurer Default has occurred
and is continuing). The Indenture Trustee shall provide Insurer and the Servicer
with at least 30 days notice of any such transaction.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Bonds shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Bonds so
authenticated; and in case at that time any of the Bonds shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Bonds either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Bonds or in this
Indenture.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust may at the time be located, the Indenture Trustee,
with the consent of the Insurer, shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Bondholders, such title to the Trust, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable.
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(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder, including
acts or omissions of predecessor or successor trustees; and
(iii) the Indenture Trustee and the Servicer acting jointly
may at any time accept the resignation of or remove any separate trustee
or co-trustee except that following the occurrence of an Event of
Servicing Termination, the Indenture Trustee acting alone may accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Indenture on its behalf and in its name. If any separate trustee
or co-trustee shall die, dissolve, become insolvent, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Indenture Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
(e) The Servicer shall be responsible for the fees of any
co-trustee or separate trustee appointed hereunder.
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SECTION 6.11. Eligibility; Disqualification. The Indenture Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition. The Indenture
Trustee shall provide copies of such reports to the Insurer upon request. The
Indenture Trustee shall comply with TIA Section 310(b), including the optional
provision permitted by the second sentence of TIA Section 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other securities of the Issuer
are outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13. Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints [Indenture
Trustee] as the Indenture Trustee with respect to the Collateral, and [Indenture
Trustee] hereby accepts such appointment and agrees to act as Indenture Trustee
with respect to the Trust Property for the Issuer Secured Parties, to maintain
custody and possession of such Trust Property (except as otherwise provided
hereunder) and to perform the other duties of the Indenture Trustee in
accordance with the provisions of this Indenture and the other Basic Documents.
Each Issuer Secured Party hereby authorizes the Indenture Trustee to take such
action on its behalf, and to exercise such rights, remedies, powers and
privileges hereunder, as the Controlling Party may direct and as are
specifically authorized to be exercised by the Indenture Trustee by the terms
hereof, together with such actions, rights, remedies, powers and privileges as
are reasonably incidental thereto. The Indenture Trustee shall act upon and in
compliance with the written instructions delivered to it pursuant to this
Indenture promptly following receipt of such written instructions; provided that
the Indenture Trustee shall not act in accordance with any instructions (i)
which are not authorized by, or in violation of the provisions of, this
Indenture or (ii) for which the Indenture Trustee has not received reasonable
indemnity. Receipt of such instructions shall not be a condition to the exercise
by the Indenture Trustee of its express duties hereunder, except where this
Indenture provides that the Indenture Trustee is permitted to act only following
and in accordance with such instructions.
SECTION 6.14. Performance of Duties. The Indenture Trustee shall
have no duties or responsibilities except those expressly set forth in this
Indenture and the other Basic Documents to which the Indenture Trustee is a
party or as directed by the Controlling Party in accordance with this Indenture.
The Indenture Trustee shall not be required to take any discretionary actions
hereunder except at the written direction and with the indemnification of the
Controlling Party. The Indenture Trustee shall, and hereby agrees that it will,
perform all of the duties and obligations required of it under the Sale and
Servicing Agreement.
SECTION 6.15. Limitation on Liability. Neither the Indenture Trustee
nor any of its directors, officers, employees and agents shall be liable for any
action taken or omitted to be taken by it or them hereunder, or in connection
herewith, except that the Indenture Trustee shall be liable for its negligence,
bad faith or willful misconduct; nor shall the Indenture Trustee
32
be responsible for the validity, effectiveness, value, sufficiency or
enforceability against the Issuer of this Indenture or any of the Trust Property
(or any part thereof).
SECTION 6.16. Reliance Upon Documents. In the absence of negligence,
bad faith or willful misconduct on its part, the Indenture Trustee shall be
entitled to conclusively rely on any communication, instrument, paper or other
document reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons and shall have no liability in
acting, or omitting to act, where such action or omission to act is in
reasonable reliance upon any statement or opinion contained in any such document
or instrument.
SECTION 6.17. Representations and Warranties of the Indenture
Trustee. The Indenture Trustee represents and warrants to the Issuer and to each
Issuer Secured Party as follows:
(a) Due Organization. The Indenture Trustee is a __________
banking corporation, duly organized, validly existing and in good standing under
the laws of the State of __________ and is duly authorized and licensed under
applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Indenture Trustee has all requisite
right, power and authority to execute and deliver this Indenture and to perform
all of its duties as the Indenture Trustee hereunder.
(c) Due Authorization. The execution and delivery by the Indenture
Trustee of this Indenture and the other Basic Documents to which it is a party,
and the performance by the Indenture Trustee of its duties hereunder and
thereunder, have been duly authorized by all necessary corporate proceedings,
are required for the valid execution and delivery by the Indenture Trustee, or
the performance by the Indenture Trustee, of this Indenture and such other Basic
Documents.
(d) Valid and Binding Indenture. The Indenture Trustee has duly
executed and delivered this Indenture and each other Basic Document to which it
is a party, and each of this Indenture and each such other Basic Document
constitutes the legal, valid and binding obligation of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with its terms, except
as (i) such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability.
SECTION 6.18. Waiver of Setoffs. The Indenture Trustee hereby
expressly waives any and all rights of setoff that the Indenture Trustee may
otherwise at any time have under applicable law with respect to any Account and
agrees that amounts in the Accounts shall at all times be held and applied
solely in accordance with the provisions hereof.
SECTION 6.19. Control by the Controlling Party. The Indenture
Trustee shall comply with notices and instructions given by the Issuer only if
accompanied by the written
33
consent of the Controlling Party. The Indenture Trustee shall act upon and
comply with notices and instructions given by the Controlling Party alone.
SECTION 6.20. Indenture Trustee May Enforce Claims Without
Possession of Bonds. All rights of action and claims under this Indenture or the
Bonds may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Bonds or the production thereof in any proceeding
relating thereto, and such proceeding instituted by the Indenture Trustee shall
be brought in its own name or in its capacity as Indenture Trustee. Any recovery
of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Indenture Trustee, its
agents and counsel, be for the ratable benefit of the Bondholders in respect of
which such judgment has been recovered.
SECTION 6.21. Suits for Enforcement. In case an Event of Servicing
Termination or other default by the Servicer or the Depositor hereunder shall
occur and be continuing, the Controlling Party may proceed to protect and
enforce its rights and the rights of the Bondholders under this Indenture by a
suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Indenture or
in aid of the execution of any power granted in this Indenture or for the
enforcement of any other legal, equitable or other remedy, as the Indenture
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Indenture Trustee and the Bondholders.
SECTION 6.22. Mortgagor Claims. In connection with any offset
defenses, or affirmative claim for recovery, asserted in legal actions brought
by Mortgagors under one or more Mortgage Loans based upon provisions therein or
upon other rights or remedies arising from any requirements of law applicable to
the Mortgage Loans:
(a) The Indenture Trustee is the holder of the Mortgage Loans only
as trustee on behalf of the holders of the Bonds and the Insurer, and not as a
principal or in any individual or personal capacity.
(b) The Indenture Trustee shall not be personally liable for, or
obligated to pay Mortgagors, any affirmative claims asserted thereby, or
responsible to holders of the Bonds for any offset defense amounts applied
against Mortgage Loan payments, pursuant to such legal actions.
(c) The Indenture Trustee will pay, solely from the Trust Estate,
affirmative claims for recovery by Mortgagors only pursuant to final judicial
orders or judgments, or judicially-approved settlement agreements, resulting
from such legal actions.
(d) The Indenture Trustee will comply with judicial orders and
judgments which require its actions or cooperation in connection with
Mortgagors' legal actions to recover affirmative claims against holders of the
Bonds.
(e) The Indenture Trustee will cooperate with and assist the
Servicer, the Insurer, the Issuer, the Depositor, or holders of the Bonds in
their defense of legal actions by Mortgagors to recover affirmative claims if
such cooperation and assistance is not contrary to the interests of the
Indenture Trustee as a party to such legal actions and if the Indenture Trustee
is
34
satisfactorily indemnified for all liability, costs and expenses (including
attorneys' fees and expenses) arising therefrom.
(f) The Issuer and Servicer hereby agree to indemnify, hold
harmless and defend the Indenture Trustee from and against any and all
liability, loss, costs and expenses (including attorneys' fees and expenses) of
the Indenture Trustee resulting from any affirmative claims for recovery
asserted or collected by Mortgagors under the Mortgage Loans.
ARTICLE VII
Bondholders' Lists and Reports
SECTION 7.1. Issuer To Furnish To Indenture Trustee Names and
Addresses of Bondholders. The Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Holders as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Bond Registrar, no such list shall be
required to be furnished. The Indenture Trustee or, if the Indenture Trustee is
not the Bond Registrar, the Issuer shall furnish to the Insurer or the Issuer in
writing upon their written request and at such other times as the Insurer or the
Issuer may request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to
Bondholders.
(a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.1 and the names and addresses of Holders received by the Indenture Trustee in
its capacity as Bond Registrar. The Indenture Trustee may destroy any list
furnished to it as provided in such Section 7.1 upon receipt of a new list so
furnished.
(b) Bondholders may communicate with other Bondholders with
respect to their rights under this Indenture or under the Bonds.
(c) The Issuer, the Indenture Trustee and the Bond Registrar shall
have the protection of TIA ss. 312(c).
SECTION 7.3. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee (with a copy to the
Insurer), within 15 days after the Issuer is required to file the same
with the Commission, copies of the annual reports and copies of the
information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules
35
and regulations prescribe) which the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Bondholders described in TIA Section
313(c)) (with a copy to the Insurer) such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to
clauses (i) and (ii) of this Section 7.3(a) as may be required by rules
and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA
Section 313(a), within 60 days after each _______, beginning with _______, 200_,
the Indenture Trustee shall mail to each Bondholder (with a copy to the Insurer)
as required by TIA Section 313(c) a brief report dated as of such date that
complies with TIA ss. 313(a). The Indenture Trustee also shall comply with TIA
Section 313(b).
A copy of each report at the time of its mailing to Bondholders
shall be filed by the Indenture Trustee with the Commission and each stock
exchange, if any, on which the Bonds are listed. The Issuer shall notify the
Indenture Trustee if and when the Bonds are listed on any stock exchange or the
delisting thereof.
ARTICLE VIII
Payments and Statements to Bondholders and Residual Bondholders;
Accounts, Disbursements and Releases
SECTION 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture and the Sale
and Servicing Agreement. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture and the Sale and Servicing
Agreement. Except as otherwise expressly provided in this Indenture or in the
Sale and Servicing Agreement, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Trust
Property, the Indenture Trustee may, with the consent of the Insurer (so long as
no Insurer Default has occurred and is continuing), or shall at the direction of
the Insurer (so long as no Insurer Default has occurred and is continuing), take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate proceedings.
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SECTION 8.2. Release of Trust Property.
(a) Subject to Section 8.10 and the payment of its fees and
expenses pursuant to Section 6.7, the Indenture Trustee may, and when required
by the Issuer and the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture or
the Sale and Servicing Agreement. In the event that the fair value of property
to be released from the lien of this Indenture on any date, together with the
fair value of property previously released during the then-current calendar
year, equals or exceeds 10% of the Bond Principal Balance, in addition to all
other actions required to be taken pursuant to this Indenture, the Sale and
Servicing Agreement or otherwise in connection with such release, an Independent
Certificate in accordance with TIA Sections 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.1 shall also be delivered to the Indenture
Trustee. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no
Bonds outstanding and all sums due the Indenture Trustee pursuant to Section
6.7, and to the Insurer pursuant to the Insurance Agreement have been paid and
the Policy has been cancelled and returned to the Insurer, release any remaining
portion of the Trust Property that secured the Bonds from the lien of this
Indenture and release to the Issuer or any other Person entitled thereto any
funds then on deposit in the Accounts. The Indenture Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.2(b) only
upon receipt by the Indenture Trustee and the Insurer of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.3. Establishment of Accounts. The Depositor shall cause to
be established, and the Indenture Trustee shall maintain, at the Corporate Trust
Office of the Indenture Trustee, a Collection Account and a Policy Payment
Account (which account maybe a sub-account of the Collection Account) to be held
by the Indenture Trustee in the name of the Trust for the benefit of the
Bondholders and the Insurer, as their interests may appear. Each account shall
be an Eligible Account. In addition, the Depositor shall be permitted to
withdraw amounts from the Collection Account from time to time as described in
Section 3.03 of the Sale and Servicing Agreement.
SECTION 8.4. The Policy.
(a) By the close of business on the Business Day preceding each
Determination Date the Indenture Trustee shall determine from the Servicing
Certificate with respect to the immediately following Payment Date, the
Deficiency Amount, if any.
(b) If the Indenture Trustee determines pursuant to paragraph (a)
above that a Deficiency Amount would exist, the Indenture Trustee shall complete
a Notice in the form of Exhibit A to the Policy and submit such notice to the
Insurer no later than 12:00 noon New York
37
City time on the related Determination Date preceding such Payment Date as a
claim for the payment of an Insured Amount in an amount equal to the Deficiency
Amount.
(c) The Indenture Trustee shall establish an Eligible Account
(which may be a sub-account of the Collection Account) for the benefit of the
Bondholders and the Insurer referred to herein as the "Policy 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 Policy into the Policy Payment Account and distribute such amount only
for purposes of payment to the Bondholders of the Insured Amount for which a
claim was made and such amount may not be applied to satisfy any costs, expenses
or liabilities of the Depositor, the Servicer, the Indenture Trustee or the
Trust. Amounts paid under the Policy, to the extent needed to pay the Insured
Amount, shall be disbursed by the Indenture Trustee to the Bondholders in
accordance with Section 8.7(b). It shall not be necessary for such payments to
be made by check or wire transfers separate from checks or wire transfers used
to pay the Insured Amount with other funds available to make such payment.
However, the amount of any payment of principal or interest on the Bonds to be
paid from funds transferred from the Policy Payment Account shall be noted as
provided in subsection (d) of this Section 8.4 in the Bond Register and in the
Indenture Trustee's Statement to Bondholders. Funds held in the Policy Payment
Account shall not be invested. Any funds remaining in the Policy Payment Account
on the first Business Day following a Payment Date shall be returned to the
Insurer pursuant to the written instructions of the 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 Bond from
moneys received under the Policy. The Insurer shall have the right to inspect
such records at reasonable times during normal business hours upon one (1)
Business Day's prior written notice to the Indenture Trustee.
(e) The Indenture Trustee shall, upon retirement of the Bonds,
furnish to the Insurer a notice of such retirement, and, upon retirement of the
Bonds, and, upon retirement of the Bonds and the expiration of the term of the
Policy surrender the Policy to the Insurer for cancellation.
SECTION 8.5. [Reserved]
SECTION 8.6. [Reserved]
SECTION 8.7. Priority of Distributions.
(a) The Indenture Trustee shall deposit to the Collection Account,
without duplication, upon receipt, (i) any payments related to the Class A Bonds
made pursuant to the Policy, (ii) the proceeds of any liquidation of the assets
of the Trust and (iii) Interest Collections and Principal Collections remitted
by the Servicer, together with any Substitution Amounts, and any Loan Purchase
Price amounts received by the Indenture Trustee.
(b) With respect to the Collection Account, on each Payment Date,
the Indenture Trustee shall make the following allocations, disbursements and
transfers in the following order of priority, and each such allocation, transfer
and disbursement shall be treated
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as having occurred only after all preceding allocations, transfers and
disbursements have occurred:
(i) to the Indenture Trustee, the Trustee Fee then due;
(ii) from amounts on deposit therein, the Premium Amount with
respect to the Class A Bonds to the Insurer for such Payment Date
(iii) from amounts then on deposit therein, to the Class A
Bondholders, the Interest Payment Amount for such Payment;
(iv) on each Payment Date during the Managed Amortization
Period, from amounts then on deposit therein, to the Depositor, the
portion of Additional Balance Contributed Amount for such Payment Date
related to HELOC Mortgage Loans;
(v) from amounts then on deposit therein, to the Class A
Bondholders as a distribution of principal, the Principal Payment Amount
for such Payment Date;
(vi) from amounts then on deposit therein, to the Class A
Bondholders, as a distribution of principal, the Overcollateralization
Deficit for such Payment Date;
(vii) from amounts then on deposit therein, to the Insurer,
the Reimbursement Amount, if any, then due to it;
(viii) from amounts then on deposit therein, the Excess
Cashflow with respect to the Class A Bonds shall be applied to the extent
necessary to fund the full amount of the Accelerated Principal Payment;
(ix) from amounts then on deposit, pari passu (a) to the
Servicer, reimbursement for amounts reimbursable to the Servicer pursuant
to Section 3.03 and Section 5.03 of the Sale and Servicing Agreement to
the extent not previously reimbursed and (b) to the Indenture Trustee, up
to a maximum of $5,000 on any Payment Date to pay certain amounts that may
be required to be paid to the Indenture Trustee with respect to its or the
Custodian's preparation and recording of assignments of mortgages (which
amounts were not previously paid pursuant to clause (i) or reimbursed
pursuant to the Sale and Servicing Agreement);
(x) from amounts then on deposit therein, the current
Deferred Interest with respect to the Class A Bonds and any unpaid
Deferred Interest from prior Payment Dates with interest thereon at the
Formula Bond Rate;
(xi) to the Indenture Trustee, all remaining amounts due and
owing to the Indenture Trustee pursuant to the Basic Documents and not
otherwise paid pursuant to clause (i) or (ix);
(xii) to the Manager of the Trust, the Management Fee then due
and any amount due and owing to the Manager pursuant to Section 5(b) of
the Management Agreement; and
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(xiii) to the Residual Certificateholders, any amounts
remaining on deposit in the Collection Account.
SECTION 8.8. Statements to Bondholders. The Indenture Trustee (based
upon information received from the Servicer) will make available via its
internet website on each Payment Date concurrently with each distribution to the
Bondholders, to the Servicer, the Bondholders and the Insurer a statement
setting forth among other items with respect to the Bonds:
(i) the amount being distributed to the Bonds;
(ii) the amount of interest included in such distribution and
the Bond Rate;
(iii) the amount, if any, of overdue accrued interest included
in such distribution (and the amount of interest thereon);
(iv) the amount, if any, of the remaining overdue accrued
interest after giving effect to such distribution;
(v) the amount, if any, of principal included in such
distribution;
(vi) the Servicing Fee for such Payment Date;
(vii) the related principal balance, after giving effect to
such distribution;
(viii) the related initial Pool Balance and the related Pool
Balance as of the end of the preceding Collection Period;
(ix) the number and aggregate Principal Balance of Mortgage
Loans that were (A) delinquent (exclusive of Mortgage Loans in bankruptcy
or foreclosure or properties acquired by the Trust by deed in lieu of
foreclosure) (1) 30 to 59 days, (2) 60 to 89 days, (3) 90 to 119 days, (4)
120 to 149 days, (5) 150 to 179 days, (6) 180 to 269 days and (7) 270 or
more days, (B) in foreclosure, (C) in bankruptcy and (D) properties
acquired by the Trust by deed in lieu of foreclosure;
(x) (A) cumulative losses as a percentage of original Pool
Balance, (B) cumulative losses as a percentage of current Pool Balance and
(C) the twelve-month rolling average of cumulative losses as a percentage
of original Pool Balance;
(xi) the three-month rolling average of Mortgage Loans that
are 60 days or more delinquent;
(xii) the book value of any real estate which is acquired by
the Trust through foreclosure or grant of deed in lieu of foreclosure;
(xiii) the amount of any draws on the Policy;;
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(xiv) whether the related Payment Date will fall during the
Managed Amortization Period or the Rapid Amortization Period;
(xv) whether a Rapid Amortization Event has occurred during
the related Collection Period;
(xvi) the amount, if any, of any Relief Act Shortfalls
incurred during the related Collection Period;
(xvii) the outstanding principal balance of the three Mortgage
Loans in with the largest outstanding principal balance;
(xviii) whether an Event of Servicing Termination or an
Insurer Default has occurred;
(xix) the amount, if any, of Additional Balances created
during the related Collection Period;
(xx) whether the Managed Amortization Period has ended and
the Rapid Amortization Period has begun;
(xxi) the Specified Overcollateralization Amount;
(xxii) the Overcollateralization Amount, after giving effect
to payments on such Payment Date;
(xxiii) the amount of any servicing advances made by the
Servicer during the related Collection Period; and
(xxiv) the amount, if any, of interest shortfalls relating to
prepayments during the related Collection Period.
In the case of information furnished pursuant to clauses (ii),
(iii), (iv) and (v) above, the amounts shall be expressed as a dollar amount per
Class A Bond with a $1,000 denomination.
The Indenture Trustee will make the reports referred to above (and,
at its option, any additional files containing the same information in an
alternative format) available each month to Bondholders, the Insurer, the
Depositor and the Servicer via the Indenture Trustee's internet website, which
is presently located at xxx.xxxxxxxxxxxx.xxx. Any such persons that are unable
to use this website are entitled to have a paper copy of such information sent
to them via facsimile by faxing a request to the Indenture Trustee at (212)
815-3986. If the Insurer requests a paper copy of such information, a paper copy
shall be sent to the Insurer each month without the need for any additional
request. The Indenture Trustee shall have the right to change the manner in
which the reports referred to in this section are distributed in order to make
such distribution more convenient and/or more accessible to the Bondholders, the
Insurer, the Depositor and the Servicer. The Indenture Trustee will provide
timely and adequate notification to all such parties regarding any such change
to the method of distribution of the reports.
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Each report provided to the Insurer (either via the Indenture
Trustee's website or a paper copy) pursuant to this Section 8.8 shall
additionally report: (a) the total amount of funds received as Insured Amounts
or Preference Amounts for such Payment Date, separately stating the portions
used to pay principal and interest components of the Deficiency Amount; (b) the
cumulative amount of Insured Amounts or Preference Amounts paid by the Insurer
through such Payment Date; and (c) other information as the Insurer may
reasonably request from time to time.
Within 60 days after the end of each calendar year, the Servicer
shall prepare or cause to be prepared and shall forward to the Indenture Trustee
the information set forth in clauses (i) and (ii) above aggregated for such
calendar year. Such obligation of the Servicer shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Servicer or a Bond Paying Agent pursuant to any requirements of
the Code.
SECTION 8.9. Indenture Trustee Annual Certification. On or before
January 31 of each year, the Manager, on behalf of the Trust, shall provide the
Indenture Trustee with a written notice listing all Payment Date reports to
Bondholders with respect to Payment Dates occurring in the prior calendar year
that were included in a Form 8-K filing pursuant to Section 3.14 of the Sale and
Servicing Agreement; provided that if no Form 10-K is required to be filed for
such prior calendar year, no written notice shall be required. No later than
March 15 of each year in which such written notice is provided by the Manager to
the Indenture Trustee, the Indenture Trustee shall sign a certification (in the
form attached hereto as Exhibit C) for the benefit of the Person(s) signing the
Form 10-K Certification, regarding certain aspects of the Form 10-K
Certification.
SECTION 8.10. Rights of Bondholders and Residual Certificateholders.
The Bonds shall represent obligations of the Trust, each representing interests
in or secured by the Trust Property, including the Collection Account and the
right to receive Interest Collections, Principal Collections, if any, and other
amounts at the times and in the amounts specified in this Indenture and the
Residual Certificates shall represent a beneficial interest in the Trust (other
than the Policy).
SECTION 8.11. Opinion of Counsel. The Indenture Trustee and the
Insurer shall receive at least seven days' notice when requested by the Issuer
to take any action pursuant to Section 8.2(a), accompanied by copies of any
instruments involved, and the Indenture Trustee shall also require as a
condition to such action, an Opinion of Counsel (addressed to the Indenture
Trustee and to the Insurer), stating the legal effect of any such action,
outlining the steps required to complete the same, and concluding that all
conditions precedent to the taking of such action have been complied with and
such action will not materially and adversely impair the security for the Bonds
or the rights of the Bondholders or the Insurer in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Property. 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.
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ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Bondholders.
(a) Without the consent of the Holders of any Bonds but with the
consent of the Insurer, as evidenced to the Indenture Trustee, the parties
hereto, when authorized by an Issuer Order, at any time and from time to time,
may enter into one or more indentures supplemental hereto (which shall conform
to the provisions of the TIA as in force at the date of the execution thereof),
in form satisfactory to the Indenture Trustee and the Insurer, for any of the
following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject to
the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and
in the Bonds contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Bonds, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental indenture;
provided that such action shall not adversely affect the interests of the
Holders of the Bonds; or
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Bonds and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one trustee, pursuant to the requirements of Article VI.
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of the Indenture under the TIA or under any similar federal statue
hereafter enacted and to add to this Indenture such other provisions as
may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
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(b) The parties hereto, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Bonds but with the
prior written consent of the Insurer and with prior notice to the Rating
Agencies by the Issuer, as evidenced to the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Bonds under this Indenture; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Bondholder.
SECTION 9.2. Supplemental Indentures with Consent of Bondholders.
The parties hereto, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies, with the consent of the Insurer and with the
consent of the Holders of not less than a majority of the Outstanding Amount of
the Bonds, by Act of such Holders delivered to the parties hereto, 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 Bonds under this Indenture; provided, however, that, subject to the express
rights of the Insurer under the Basic Documents, no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Bonds affected
thereby:
(i) change the date of payment of any installment of
principal of or interest on any Bond, or reduce the principal amount
thereof, the interest rate thereon or the Redemption Price with respect
thereto, change the provision of this Indenture relating to the
application of collections on, or the proceeds of the sale of, the Trust
Property to payment of principal of or interest on the Bonds, or change
any place of payment where, or the coin or currency in which, any Bond or
the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement
of the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any such
amount due on the Bonds on or after the respective due dates thereof (or,
in the case of redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the
Bonds, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the
Bonds required to direct the Indenture Trustee to direct the Issuer to
sell or liquidate the Trust Property pursuant to Section 5.4;
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(vi) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Bond affected
thereby;
(vii) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Bond on any Payment Date (including the
calculation of any of the individual components of such calculation); or
(viii) permit the creation of any lien ranking prior to or on
a parity with the lien of this Indenture with respect to any part of the
Trust Property or, except as otherwise permitted or contemplated herein or
in any of the Basic Documents, terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Bond of
the security provided by the lien of this Indenture.
The Indenture Trustee may conclusively rely as to whether or not any
Bonds would be adversely affected by any supplemental indenture upon receipt of
an Opinion of Counsel addressed and delivered to the Indenture Trustee and the
Insurer to that effect and any such determination shall be conclusive upon the
Holders of all Bonds, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for relying on
such Opinion of Counsel in good faith.
It shall not be necessary for any Act of Bondholders under this
Section 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 parties hereto of any
supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Bonds to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee and the Insurer shall be entitled to
receive, and subject to Sections 6.1 and 6.2, shall be fully protected in
relying upon, an Opinion of Counsel (and, if requested, an Officer's Bond)
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Bonds affected thereby,
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and the respective rights, limitations of rights, obligations, duties,
liabilities and immunities under this Indenture of the Indenture Trustee, the
Issuer and the Holders of the Bonds shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
SECTION 9.5. Reference in Bonds to Conformity With Trust Indenture
Act. Every amendment of this Indenture and every supplemental indenture executed
pursuant to this Article IX shall conform to the requirements of the TIA as then
in effect so long as this Indenture shall then be qualified under the TIA.
SECTION 9.6. Reference in Bonds to Supplemental Indentures. Bonds
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Bonds so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Bonds.
ARTICLE X
Redemption of Bonds
SECTION 10.1. Redemption. The Bonds are subject to redemption in
whole, but not in part, at the direction of the Depositor pursuant to Section
7.01(b) of the Sale and Servicing Agreement, on any Payment Date on which the
Depositor exercises its option to transfer the Trust Property pursuant to said
Section 7.01(b), for a purchase price equal to the Redemption Price. The
Servicer or the Issuer shall furnish the Insurer notice of such redemption not
later than 35 days prior to the Redemption Date. If the Bonds are to be redeemed
pursuant to this Section 10.1, the Servicer or the Issuer shall furnish notice
of such election to the Indenture Trustee not later than 35 days prior to the
Redemption Date and the Issuer shall deposit or undertake to deposit on or prior
to the Redemption Date with the Indenture Trustee in the Collection Account the
Redemption Price of such Bonds whereupon all such Bonds shall be due and payable
on the Redemption Date upon the furnishing of a notice complying with Section
10.2 (unless the Issuer shall default in the deposit of the Redemption Price).
SECTION 10.2. Surrender of Bonds.
(a) Notice of any termination, specifying the Payment Date (which
shall be a date that would otherwise be a Payment Date) upon which the
Bondholders may surrender their Bonds to the Indenture Trustee for payment of
the final distribution and cancellation, shall be given promptly by the
Indenture Trustee (upon receipt of written directions from the Depositor, if the
Depositor is exercising its right to transfer of the Mortgage Loans, given not
later than the first day of the month preceding the month of such final
distribution) to the Insurer and to the Servicer and by letter to Bondholders
mailed not earlier than the 15th day and not later than the
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25th day of the month next preceding the month of such final distribution
specifying (i) the Payment Date upon which final distribution of the Bonds will
be made upon presentation and surrender of Bonds at the office or agency of the
Indenture Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such Payment
Date is not applicable, distributions being made only upon presentation and
surrender of the Bonds at the office or agency of the Indenture Trustee therein
specified. In the event written directions are delivered by the Depositor to the
Indenture Trustee as described in the preceding sentence, the Depositor shall
deposit in the Collection Account on or before the Payment Date for such final
distribution in immediately available funds an amount which, when added to the
funds on deposit in the Collection Account that are payable to the Bondholders,
will be equal to the retransfer amount for the Mortgage Loans computed as above
provided, together with all amounts due and owing to the Insurer for unpaid
premiums and unreimbursed draws on the Policy and all other amounts due and
owing to the Insurer pursuant to the Insurance Agreement, together with interest
thereon as provided under the Insurance Agreement.
(b) Upon presentation and surrender of the Bonds, the Indenture
Trustee shall cause to be distributed to the Holders of Bonds on the Payment
Date for such final distribution, in proportion to the Percentage Interests of
their respective Bonds and to the extent that funds are available for such
purpose, the amount required to be distributed to Bondholders pursuant to
Section 10.1 of this Indenture for such Payment Date. The distribution on such
final Payment Date pursuant to a retransfer pursuant to Section 7.01(a)(B)(i) of
the Sale and Servicing Agreement shall be in lieu of the distribution otherwise
required to be made on such Payment Date in respect of the Bonds. On the final
Payment Date prior to having made the distributions called for above, the
Indenture Trustee shall, based upon the information set forth in the Servicing
Certificate for such Payment Date, withdraw from the Collection Account and
remit to the Insurer the lesser of (x) the amount available for distribution on
such final Payment Date, net of any portion thereof necessary to pay the amounts
described in clauses (i) and (ii) above and (y) the unpaid amounts due and owing
to the Insurer for unpaid premiums and unreimbursed draws on the Policy and all
other amounts due and owing to the Insurer pursuant to the Insurance Agreement,
together with interest thereon as provided under the Insurance Agreement.
(c) In the event that all of the Bondholders shall not surrender
their Bonds for final payment and cancellation on or before such final Payment
Date, the Indenture Trustee shall on such date cause all funds in the Collection
Account not distributed in final distribution to Bondholders to be withdrawn
therefrom and credited to the remaining Bondholders by depositing such funds in
a separate escrow account for the benefit of such Bondholders and the Depositor
(if the Depositor has exercised its right to transfer the Mortgage Loans) or the
Indenture Trustee (in any other case) and shall give a second written notice to
the remaining Bondholders to surrender their Bonds for cancellation and receive
the final distribution with respect thereto. If within one year after the second
notice all the Bonds shall not have been surrendered for cancellation, the
Indenture Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Bondholders concerning surrender of
their Bonds, and the cost thereof shall be paid out of the funds on deposit in
such escrow account.
SECTION 10.3. Form of Redemption Notice. Notice of redemption
supplied to the Indenture Trustee by the Depositor under Section 10.1 shall be
given by the Indenture
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Trustee by facsimile or by first-class mail, postage prepaid, transmitted or
mailed prior to the applicable Redemption Date to each Holder of Bonds of
record, as of the close of business on the date which is not less than 5 days
prior to the applicable Redemption Date, at such Holder's address appearing in
the Bond Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be made only
upon presentation and surrender of such Bonds at the place where such
Bonds are to be surrendered for payment of the Redemption Price (which
shall be the office or agency of the Issuer to be maintained as provided
in Section 3.2); and
(iv) that interest on the Bonds shall cease to accrue on the
Redemption Date.
Notice of redemption of the Bonds shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Bond shall not impair or
affect the validity of the redemption of any other Bond.
SECTION 10.4. Bonds Payable on Redemption Date. The Bonds to be
redeemed shall, following notice of redemption as required by Section 10.2, on
the Redemption Date become due and payable at the Redemption Price and (unless
the Issuer shall default in the payment of the Redemption Price) no interest
shall accrue on the Redemption Price for any period after the date to which
accrued interest is calculated for purposes of calculating the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc. Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Insurer if the application or request is made to the
Indenture Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA or any provision of this
Agreement) an Independent Certificate from a firm of certified public
accountants meeting the applicable requirements of this Section, except that, in
the case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture, no
additional certificate or opinion need be furnished.
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Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
(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 or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary
to enable such signatory to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
SECTION 11.2. Form of Documents Delivered to Indenture Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Depositor or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Depositor or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts
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and opinions stated in such document shall in such case be conditions precedent
to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to conclusively rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3. Acts of Bondholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Bondholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Bondholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Bondholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Indenture
Trustee.
(c) The ownership of Bonds shall be proved by the Bond Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Bonds shall bind the Holder
of every Bond issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Bond.
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer, Insurer
and Rating Agencies. Any request, demand, authorization, direction, notice,
consent, waiver or Act of Bondholders or 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 Bondholder or by the Issuer shall
be sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed first-class and shall be deemed to have been duly
given upon receipt to the Indenture Trustee at its Corporate Trust Office and
any notice delivered by facsimile shall be addressed to the Corporate Trust
Office, telecopy number (____) ____-____, or
(b) The Issuer by the Indenture Trustee or by any Bondholder shall
be sufficient for every purpose hereunder if personally delivered, delivered by
facsimile or overnight courier or mailed first class, and shall deemed to have
been duly given upon receipt to the Issuer addressed to: Sequoia Mortgage Trust
200_-_, in care of [Owner Trustee], [Owner Trustee's Address], or at any other
address previously furnished in writing to the Indenture
50
Trustee by Issuer. The Issuer shall promptly transmit any notice received by it
from the Bondholders to the Indenture Trustee.
(c) The Insurer by the Issuer or the Indenture Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by first-class
mail personally delivered or telecopied to the recipient as follows:
To the Insurer: [Insurer]
[Insurer's Address]
Telecopy: (____) ____-_____
Notices required to be given to the Rating Agencies by the Issuer,
the Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, delivered by overnight courier or first class or via facsimile to (i)
in the case of [First Rating Agency], at the following address: [First Rating
Agency's Address], Fax No: (___) ____-_____ and (ii) in the case of [Second
Rating Agency], at the following address: [Second Rating Agency's Address], Fax
No: (___) ____-_____; or as to each of the foregoing, at such other address as
shall be designated by written notice to the other parties.
SECTION 11.5. Notices to Bondholders; Waiver. Where this Indenture
provides for notice to Bondholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Bondholder affected by such
event (and in all cases, the Insurer shall receive notice), at his address as it
appears on the Bond Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice. In any case
where notice to Bondholders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular Bondholder shall
affect the sufficiency of such notice with respect to other Bondholders, and any
notice that is mailed in the manner herein provided shall conclusively be
presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Bondholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Bondholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder.
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SECTION 11.6. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Bonds to the
contrary, the Issuer may enter into any agreement with any Holder of a Bond
providing for a method of payment, or notice by the Indenture Trustee or any
Bond Paying Agent to such Holder, that is different from the methods provided
for in this Indenture for such payments or notices, provided that such methods
are reasonable and consented to by the Indenture Trustee (which consent shall
not be unreasonably withheld). The Issuer will furnish to the Indenture Trustee
a copy of each such agreement and the Indenture Trustee will cause payments to
be made and notices to be given in accordance with such agreements.
SECTION 11.7. 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.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8. 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.
Notwithstanding anything to the contrary contained in this Indenture
or any document delivered herewith, all persons may disclose to any and all
persons, without limitation of any kind, the federal income tax treatment of the
Bonds, any fact relevant to understanding the federal tax treatment of the
Bonds, and all materials of any kind (including opinions or other tax analyses)
relating to such federal tax treatment.
SECTION 11.9. Successors and Assigns. All covenants and agreements
in this Indenture and the Bonds by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors.
SECTION 11.10. Separability. In case any provision in this Indenture
or in the Bonds 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. The Insurer and its successors
and assigns shall be third-party beneficiaries to the provisions of this
Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture. Nothing in this Indenture or in the Bonds, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the Insurer, and the Bondholders, and any other party
secured hereunder, and any other person with an ownership interest in any part
of the Trust Property, any benefit or any legal or equitable right, remedy or
claim under this Indenture. The Insurer may disclaim any of its rights and
powers under this Indenture (in which case the Indenture Trustee may exercise
such rights or powers hereunder), but not its duties and obligations under the
Policy upon delivery of a written notice to the Indenture Trustee.
52
SECTION 11.12. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Bonds or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS .
SECTION 11.14. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Trust or any other counsel reasonably
acceptable to the Indenture Trustee and the Insurer) to the effect that such
recording is necessary either for the protection of the Bondholders or any other
person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Depositor, the
Servicer, the Owner Trustee or the Indenture Trustee on the Bonds or under this
Indenture or any Bond or other writing delivered in connection herewith or
therewith, against (i) the Depositor, the Servicer, the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Depositor, the Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Depositor, the Servicer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the Depositor,
the Servicer, 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 owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
SECTION 11.17. No Petition. The Indenture Trustee, by entering into
this Indenture, and each Bondholder, by accepting a Bond, hereby covenant and
agree that they will not at any time institute against the Depositor, or the
Issuer, or join in any institution against the Depositor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or
53
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Bonds, this Indenture or any of the Basic Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee or of
the Insurer, during the Issuer's normal business hours, to examine all the books
of account, records, reports, and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees, and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its Obligations hereunder.
SECTION 11.19. Limitation of Liability. It is expressly understood
and agreed by the parties hereto that (a) this Indenture is executed and
delivered by [Owner Trustee], not individually or personally but solely as Owner
Trustee of the Issuer under the Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by [Owner
Trustee] but is made and intended for the purpose for binding only the Issuer,
(c) nothing herein contained shall be construed as creating any liability on
[Owner Trustee] individually or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties to this Indenture and by any person claiming by,
through or under them and (d) under no circumstances shall [Owner Trustee] be
personally liable for the payment of any indebtedness or expenses of the Issuer
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaking by the Issuer under this Indenture or
any related documents.
ARTICLE XII
Rapid Amortization Events
SECTION 12.1. Rapid Amortization Events. The following shall
constitute Rapid Amortization Events with respect to the Bonds:
(a) failure on the part of the Issuer, the Depositor or the
Servicer, as the case may be, (i) to make any payment or deposit required by the
terms of this Indenture, the Sale and Servicing Agreement or the Insurance
Agreement, within two Business Days after notification that such payment or
deposit is required to be made, or (ii) to observe or perform in any material
respect the covenants or agreements of the Issuer, the Depositor or the
Servicer, as the case may be, set forth in the Sale and Servicing Agreement or
the Insurance Agreement or this Indenture, as the case may be, and which, in the
case of clause (ii), continues unremedied for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Issuer, the Depositor or the Servicer, as the case
may be, by the
54
Indenture Trustee, or to the Issuer, the Depositor or the Servicer, as the case
may be, and the Indenture Trustee by the Insurer or Holders of Bonds evidencing
more than 50% of the Outstanding Amount;
(b) any representation or warranty made by the Issuer, the
Depositor or the Servicer, as the case may be, in this Indenture, the Sale and
Servicing Agreement or the Insurance Agreement shall prove to have been
incorrect in any material respect when made, as a result of which the interests
of the Bondholders or the Insurer are materially and adversely affected and
which continues to be incorrect in any material respect and continues to affect
materially and adversely the interests of the Bondholders or the Insurer for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Issuer, the
Depositor or the Servicer, as the case may be, by the Indenture Trustee, or to
the Issuer, the Depositor or the Servicer, as the case may be, and the Indenture
Trustee by either the Insurer or the Holders of Bonds evidencing more than 50%
of the Outstanding Amount; provided, however, that with respect to any such
representation or warranty made with respect to the related Mortgage Loans, a
Rapid Amortization Event pursuant to this subparagraph (b) shall not be deemed
to have occurred hereunder if the Servicer or the Depositor has accepted
retransfer of such related Mortgage Loan or related Mortgage Loans during such
period (or such longer period not to exceed an additional 60 days as the
Indenture Trustee may specify with the consent of the Insurer) in accordance
with the provisions hereof;
(c) the Servicer, the Depositor or the Issuer or any of their
Subsidiaries o r Affiliates shall voluntarily go into liquidation, consent to
the appointment of a conservator or receiver or liquidator or similar person in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer, the Depositor or the Trust
or of or relating to all or substantially all of such Person's property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver,
liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer, the Depositor of the Trust and such decree or order shall have
remained in force undischarged or unstayed for a period of 30 days; or the
Servicer, the Depositor or the Trust shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;
(d) the Issuer becomes subject to regulation by the Securities and
Exchange Commission as an investment company within the meaning of the
Investment Company Act of 1940, as amended;
(e) any draw is made under the Policy with respect to any Class;
(f) an Event of Servicing Termination has occurred;
(g) a default in the payment of any Deferred Interest on the Class
A Bonds on the Final Maturity Date; and
55
(h) default in the payment of any interest, principal or any
installment of principal on the Bonds when the same becomes due and payable, and
such default continues for a period of five Business Days.
In the case of any event described in clauses (a) through (h) above,
a Rapid Amortization Event will be deemed to have occurred only if, after the
applicable grace period, if any, described in the Indenture or Sale and
Servicing Agreement, any of the Indenture Trustee or Holders holding Class A
Bonds evidencing more than 50% of the outstanding principal balance of the Class
A Bonds, in each case with the prior written consent of the Insurer (so long as
no Insurer Default has occurred and is continuing or unless a Rapid Amortization
Event described in clause (g) above has occurred) or the Insurer (so long as no
Insurer Default has occurred and is continuing), by written notice to the Trust,
the Insurer, the Depositor, and the Servicer (and to the Indenture Trustee, if
given by the Bondholders or the Insurer) declare that a Rapid Amortization Event
has occurred as of the date of such notice.
If so directed by the Insurer, so long as no Insurer Default has
occurred and is continuing, the Indenture Trustee will and the Insurer (so long
as no Insurer Default has occurred and is continuing) or Holders holding Class A
Bonds evidencing more than 50% of the outstanding principal balance of the Class
A Bonds (if a Rapid Amortization Event described in clause (g) above has
occurred) shall have the right to direct the Indenture Trustee to sell, dispose
of or otherwise liquidate the Trust Property with respect to the Mortgage Loans
in a commercially reasonable manner and on commercially reasonable terms. So
long as no Event of Servicing Termination has occurred and is continuing, any
such sale, disposal or liquidation will be "servicing retained" by the Servicer.
With respect to the Bonds, the net proceeds of such sale will be paid (i) first,
to the Holders of the Bonds insofar as may be necessary to reduce the principal
balance of such Class, together with all accrued and unpaid interest due
thereon, to zero, (ii) second, to reimburse the Insurer to the extent of
unreimbursed draws under the Policy and other amounts owing to the Insurer, and
(iii) third, to the Residual Certificateholder.
In addition to the consequences of a Rapid Amortization Event
discussed above, if the Depositor voluntarily files a bankruptcy petition or
goes into liquidation or any person is appointed a receiver or bankruptcy
trustee of the Depositor, on the day of any such filing or appointment no
further Additional Balances will be transferred to the Trust and the Depositor
will promptly give notice to the Indenture Trustee and the Insurer of any such
filing or appointment. Within 15 days, the Indenture Trustee notify the Holders
of the Bonds of the occurrence of such event.
56
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, hereunto duly
authorized, all as of the day and year first above written.
SEQUOIA MORTGAGE TRUST 200_-_
By: [OWNER TRUSTEE],
not in its individual capacity but
solely as Owner Trustee
By: _______________________________________
Name:
Title:
[INDENTURE TRUSTEE],
not in its individual capacity but
solely as Indenture Trustee
By: _______________________________________
Name:
Title:
[ANNEX A - Defined Terms]
EXHIBIT A
[Form of Bond]
SEQUOIA MORTGAGE TRUST 200_-_ CLASS A BOND
REGISTERED $____________
No. A-1 CUSIP NO. ____________
Unless this Class A Bond is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange or payment,
and any Class A Bond issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS CLASS A BOND IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A BOND
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
SEQUOIA MORTGAGE TRUST 200_-_
COLLATERALIZED MORTGAGE BONDS
Sequoia Mortgage Trust 200_-_, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of ________________________ MILLION
DOLLARS ($____________), such amount payable on each Payment Date in an amount
equal to the result obtained by multiplying (i) a fraction the numerator of
which is $_____________ and the denominator of which is $_____________ by (ii)
the aggregate amount, if any, payable from the Collection Account in respect of
principal on the Class A Bonds pursuant to Section 8.7 of the Indenture;
provided, however, that the entire unpaid principal amount of this Class A Bond
shall be due and payable on the Payment Date in _______ 20__ (the "Final
Scheduled Payment Date"). The Issuer will pay interest on this Bond at the rate
per annum provided in the Indenture on each Payment Date on the principal amount
of this Class A Bond outstanding on the preceding Payment Date (after giving
effect to all payments of principal made on the preceding Payment Date).
Interest on this Class A Bond will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid to but excluding such
Payment Date or, if no interest has yet been paid, from ______, 200_. Interest
will be computed on the basis of the actual number of days elapsed in a 360-day
year. Such principal of and interest on this Class A Bond shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Class A Bond are payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Class A Bond shall be applied first to interest
due and payable on this Class A Bond as provided above and then to the unpaid
principal of this Class A Bond.
The Bonds are entitled to the benefits of a financial guaranty
insurance policy (the "Policy") issued by [Insurer] (the "Insurer"), pursuant to
which the Insurer has unconditionally guaranteed payments of the Insured Amounts
with respect to the Class A Bonds on each Payment Date and Preference Amounts,
all as more fully set forth in the Policy.
For purposes of federal income, state and local income and franchise
and any other income taxes, the Issuer will treat the Bonds as indebtedness of
the Depositor and hereby instructs the Indenture Trustee to treat the Bonds as
indebtedness of the Depositor for federal and state tax reporting purposes. Each
Bondholder by acceptance of a Bond (and each owner of a beneficial interest in a
Bond by acceptance of such beneficial interest) agrees to treat the Bonds for
federal income, state and local income and franchise and any other income taxes
as indebtedness of the Depositor.
Each Bondholder or Bond Owner, by acceptance of this Class A Bond
or, in the case of a Bond Owner, a beneficial interest in a Bond, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Class A Bonds or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Depositor, the Servicer, the
Indenture
A-1-2
Trustee, or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any owner, beneficiary, agent,
officer, director or employee of the Depositor, the Servicer, the Indenture
Trustee, or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Depositor, the Servicer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the Depositor,
the Servicer, 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 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.
Reference is made to the further provisions of this Class A Bond set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Class A Bond.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Class A
Bond shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
This Class A Bond is one of a duly authorized issue of Bonds of the
Issuer, designated as its Collateralized Mortgage Bonds (herein called the
"Class A Bonds"), all issued under an Indenture dated as of _______, 200_ (such
agreement, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and [Indenture Trustee], as Indenture Trustee (the "Indenture
Trustee"), which term includes any successor Indenture Trustee under the
Indenture.
All terms used in this Class A Bond that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture, as so supplemented or amended. If any such
terms are not defined in the Indenture, as supplemented or amended, then such
terms shall have the meanings assigned to them in or pursuant to the Trust
Agreement dated as of _______, 200_ (such trust agreement, as supplemented or
amended is herein called the "Trust Agreement"), between Sequoia Mortgage
Funding Corporation, as Depositor, and [Owner Trustee], as Owner Trustee (the
"Owner Trustee," which term includes any successor Owner Trustee under the Trust
Agreement), as so supplemented or amended.
The Class A Bonds are and will be secured by the collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A Bonds will be payable on each Payment Date
in an amount described in the Indenture. "Payment Date" means the fifteenth day
of each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing _____, 200_. The term "Payment Date," shall be deemed
to include the Final Scheduled Payment Date.
As described above, the entire unpaid principal amount of this Class
A Bond shall be due and payable on the earlier of the Final Scheduled Payment
Date and the Redemption
A-1-3
Date, if any, pursuant to Section 10.1 of the Indenture. Notwithstanding the
foregoing, on the date on which a Rapid Amortization Period as described in
Section 5.1(a) shall have occurred and be continuing and, in the limited
instances specified in the Indenture, the Holders representing more than 50% of
the Outstanding Amount of the Class A Bonds, with the prior written consent of
the Insurer (so long as there is no continuing Insurer Default) shall have the
right among others to direct the Indenture Trustee to sell or liquidate the
Mortgage Loans as provided in Section 12.1 of the Indenture and pay such amounts
to the Holders of the Class A Bonds. All principal payments on the Class A Bonds
shall be made pro rata to the Holders of the Class A Bonds entitled thereto.
Payments of interest on this Class A Bond due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Class A Bond, shall be made by check mailed to the
Person whose name appears as the Holder of this Class A Bond (or one or more
Predecessor Bonds) on the Bond Register as of the close of business on each
Record Date, except that with respect to Class A Bond 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 Bond Register as of the applicable Record Date without requiring
that this Bond be submitted for notation of payment. Any reduction in the
principal amount of this Bond (or any one or more Predecessor Bonds) effected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Class A Bond and of any Class A Bond 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 Class A
Bond on a Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Holder hereof as of the Record
Date preceding such Payment Date by notice mailed prior to such Payment Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Class A Bond at the office designated by the Indenture Trustee
for such purposes located in The City of ________.
The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Interest Rate to the extent lawful.
As provided in the Indenture, the Class A Bonds may be redeemed
pursuant to Section 10.1 of the Indenture, in whole, but not in part, at the
option of the Depositor (with the consent of the Insurer under certain
circumstances), on any Payment Date after the Payment Date on which the Bond
Principal Balance is less than or equal to 10% of the Pool Balance, after taking
into account all distributions made on such Payment Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class A Bond may be registered on the Bond
Register upon surrender of this Class A Bond for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, (i) 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 his
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Bond Registrar
which requirements include membership or
A-1-4
participation in Bonds Transfer Agents Medallion Program ("Stamp") or such other
"signature guarantee program" as may be determined by the Registrar in addition
to, or in substitution for, Stamp, all in accordance with the Exchange Act, and
(ii) accompanied by such other documents as the Indenture Trustee may require,
and thereupon one or more new Bonds 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 Class A Bond, 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.
Each Bondholder or Bond Owner, by acceptance of a Bond or, in the
case of a Bond Owner, a beneficial interest in a Bond covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Bonds or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Depositor, the Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any owner, beneficiary, agent,
officer, director or employee of the Depositor, the Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Depositor, the Servicer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the Depositor,
the Servicer, 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 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 Bondholder or Bond Owner, by acceptance of a Bond or, in the
case of a Bond Owner, a beneficial interest in a Bond covenants and agrees that
by accepting the benefits of the Indenture and the Trust Agreement that such
Bondholder will not at any time institute against the Depositor, or the Issuer
or join in any institution against the Depositor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings, under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Bonds, the Trust
Agreement, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this
Bond, the Issuer, the Indenture Trustee and the Insurer and any agent of the
Issuer, the Indenture Trustee or the Insurer may treat the Person in whose name
this Bond (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 Bond be overdue, and neither the Issuer, the Indenture
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bond under the Indenture at any time
by the Issuer with the consent of the Insurer and of the Holders of Bonds
representing a majority of the Outstanding Amount of all Bonds at the time
Outstanding. Any such consent or waiver by the Holder of this Bond (or any
A-1-5
one of more Predecessor Bonds) shall be conclusive and binding upon such Holder
and upon all future Holders of this Bond and of any Bond 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 Bond. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Bonds issued thereunder but with the consent of the Insurer.
The term "Issuer" as used in this Bond includes any successor to the
Issuer under the Indenture or the Trust Agreement.
The Class A Bonds are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Bond, the Trust Agreement 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 Trust Agreement or the Indenture and no
provision of this Bond, the Trust Agreement or of the Indenture shall alter or
impair the obligation of the Issuer, which is absolute and unconditional, to pay
the principal of and interest on this Bond at the times, place, and rate, and in
the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Trust Agreement, the Indenture or the Basic Documents, neither
[Owner Trustee] in its individual capacity, any owner of a beneficial interest
in the Issuer, nor any of their respective beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Bond or the Indenture, it
being expressly understood that said covenants, obligations and indemnifications
have been made by the Issuer for the sole purposes of binding the interests of
the Issuer in the assets of the Issuer. The Holder of this Bond by the
acceptance hereof agrees that except as expressly provided in the Indenture or
the Basic Documents in the case of a Rapid Amortization Event with respect to
the Class A Bonds under the Indenture, the Holder shall have no claim against
any of the foregoing for any deficiency, loss or claim therefrom; provided,
however, that nothing contained herein shall be taken to prevent recourse to,
and enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Bond.
A-1-6
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: _______, 200_ SEQUOIA MORTGAGE TRUST 200_-_
By: [Owner Trustee], not in its
individual capacity but solely as
Owner Trustee
By: ____________________________________
Name:
Title:
A-1-7
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds designated above and referred to in the
within-mentioned Indenture.
Date: ________, 200_ [Indenture Trustee], not in its
individual capacity but solely as
Indenture Trustee
By: ____________________________________
Authorized Signatory
A-1-8
EXHIBIT B
FORM OF OPINION OF COUNSEL
B-1
EXHIBIT C
FORM OF CERTIFICATION TO BE PROVIDED TO
SEQUOIA MORTGAGE TRUST 200_-_ BY THE INDENTURE TRUSTEE
Sequoia Mortgage Trust 200_-_ (the "Trust")
Collateralized Mortgage Bonds
I, ______________________, a _____________________ of [Indenture Trustee], as
Indenture Trustee for the Trust, hereby certify to Sequoia Mortgage Funding
Corporation (the "Depositor"), and its offices, directions and affiliates, and
with the knowledge and intent that they will rely upon this certification that:
1. The Depositor has caused it to be provided to the Indenture Trustee
a written notice listing all of the monthly distribution reports that were
prepared by the Indenture Trustee and that will be included in the Depositor's
Form 10-K for the Trust's fiscal year ending on ___________. I have reviewed
each of such distribution reports.
2. Based on my knowledge, the information in these distribution reports
prepared by the Indenture Trustee, taken as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading as of the last day of the period covered by that
annual report.
3. Based on my knowledge, the distribution information required to be
provided by the Indenture Trustee under the Indenture, dated as of _______,
200_, the Trust and the Indenture Trustee is included in these reports.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
C-1
[INDENTURE TRUSTEE]
as Indenture Trustee
Dated:________________ By: ___________________________________
Name:
Title:
C-2
ANNEX A - DEFINED TERMS
Accelerated Principal Payment: With respect to any Payment Date a
payment received as a payment of principal by the Bondholders, for the purpose
of increasing the related Overcollateralization Amount, and to be paid from the
Excess Cashflow, and equal to for any Payment Date the lesser of (x) the amount
of the Excess Cashflow and (y) the Overcollateralization Deficiency Amount.
Act: As defined in Section 11.3(a) of the Indenture.
Additional Balance: As to the HELOC Mortgage Loans and any date of
determination, the aggregate amount of all Draws conveyed to the Issuer with
respect to such Pool pursuant to Section 2.01 of the Sale and Servicing
Agreement.
Additional Balance Contributed Amount: As to any Payment Date, the
difference, if any, between (a) the aggregate excess, if any, for all prior
Payment Dates of (i) the aggregate principal amount of all Additional Balances
created during the Collection Period relating to each such Payment Date over
(ii) Principal Collections relating to such Payment Date, and (b) the aggregate
Additional Balance Contributed Amounts paid to the Depositor on all prior
Payment Dates pursuant to Section 8.7(d)(iv) of the Indenture.
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Appraised Value: As to any Mortgaged Property, the value established
by either a full appraisal or a drive by inspection of such Mortgaged Property
made to establish compliance with the underwriting criteria then in effect in
connection with the application for the Mortgage Loan secured by such Mortgaged
Property.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Indenture Trustee, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering the Mortgage Loans secured by Mortgaged
Properties located in the same jurisdiction, to the extent permitted by
applicable law.
Authorized Newspaper: A newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
Authorized Officer: With respect to the Issuer and the Servicer, any
officer or agent acting pursuant to a power of attorney of the Owner Trustee or
the Servicer, respectively, who is authorized to act for the Owner Trustee or
the Servicer, respectively, in matters relating to the Issuer and the Servicer,
respectively, and who is identified on the list of Authorized Officers delivered
by each of the Owner Trustee and the Servicer, respectively, to the Indenture
Trustee
on the Closing Date (as such lists may be modified or supplemented from time to
time thereafter).
Available Funds: With respect to any Payment Date, the amount then
on deposit in the Collection Account, after taking into account the deposits
thereto made pursuant to Section 8.7(a) of the Indenture, if any (exclusive of
the amount of any related Insured Amount or Preference Amount then on deposit in
the Policy Payment Account).
Basic Documents: The Indenture, the Bonds, the Residual Certificate,
the Certificate of Trust, the Trust Agreement, the Sale and Servicing Agreement,
the Purchase Agreement, the Indemnification Agreement, the Management Agreement,
the Insurance Agreement, and the Policy.
BBA: The British Bankers' Association.
BIF: The Bank Insurance Fund, as from time to time constituted,
created under the Financial Institutions Reform, Recovery and Enhancement Act of
1989, or if at any time after the execution of this instrument the Bank
Insurance Fund is not existing and performing duties now assigned to it, the
body performing such duties on such date.
Billing Cycle: With respect to any Mortgage Loan and Collection
Period, the billing period specified in the related Loan Agreement and with
respect to which amounts billed are received during such Collection Period.
Bond: A Class A Bond, but not any Residual Certificate.
Bondholder or Holder: Any Holder of a Class A Bond whose name is
registered on the Bond Register.
Bondholders: Any Holder of a Class A Bond.
Bond Owner: With respect to a Book-Entry Bond, the Person who is the
owner of such Book-Entry Bond, with respect to a Definitive Bond, the registered
owner of such Definitive Bond.
Bond Paying Agent: The Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 of the Indenture and is authorized by the Issuer to make payments to and
distributions from the Collection Account, including payment of principal of or
interest on the Bonds on behalf of the Issuer.
Bond Principal Balance: With respect to the Class A Bonds and as of
any time of determination, the Original Bond Principal Balance, less any amounts
actually distributed as principal to the Class A Bonds on all prior Payment
Dates.
Bond Register: As defined in Section 2.3 of the Indenture.
Bond Registrar: As defined in Section 2.3 of the Indenture.
2
Book-Entry Bonds: A beneficial interest in the Bonds, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.9 of the Indenture.
Business Day: Any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the state of New York, the state of
California or the state in which the Corporate Trust Office is located are
required or authorized by law or executive order to be closed or (iii) a day on
which the Insurer is closed.
Certificate of Trust: The certificate of trust of the Issuer
substantially in the form of Exhibit C to the Trust Agreement.
Class A Bond: Any Bond designated as a "Class A Collateralized
Mortgage Bond" on the face thereof in substantially the form of Exhibit A-1 to
the Indenture.
Class A Bond Rate: (A) For the first Interest Accrual Period,
______% and (B) for any Interest Accrual Period thereafter, the lesser of the
Class A Formula Bond Rate and the Maximum Rate.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Closed-End Mortgage Loans: Mortgage Loans consisting solely of
fixed-rate closed-end second lien residential mortgage loans under the Mortgage
Notes.
Closed-End Principal Balance: As to any Closed-End Mortgage Loan,
other than a Liquidated Mortgage Loan, and as of any date, the Cut-Off Date
Principal Balance minus all collections credited as principal against the
Closed-End Principal Balance of such Closed-End Mortgage Loan in accordance with
the related Mortgage Note prior to such day.
Closing Date: ________, 200_.
Code: The Internal Revenue Code of 1986, as amended from time to
time.
Collateral: As defined in the Granting Clause of the Indenture.
Collection Account: That account designated as the "Collection
Account" and established pursuant to Section 8.3 of the Indenture.
Collection Period: With respect to any Payment Date and any Mortgage
Loans, the calendar month preceding such Payment Date.
Combined Loan-to-Value Ratio: (i) With respect to any HELOC Mortgage
Loan as of any date, the percentage equivalent of a fraction, the numerator of
which is the sum of (A)
3
the Credit Limit and (B) the outstanding principal balance as of the date of
application for the related credit line (or as of any subsequent date, if any,
as of which such outstanding principal balance may be determined in connection
with an increase in the Credit Limit for such HELOC Mortgage Loan) of any
mortgage loan or mortgage loans that are senior in priority to the HELOC
Mortgage Loan and which are secured by the same Mortgaged Property and the
denominator of which is (C) the Appraised Value of the related Mortgaged
Property as set forth in the Mortgage File as of the date of the appraisal or on
such subsequent date, if any, or (D) in the case of a Mortgaged Property
purchased within one year of the date of execution of the related Credit Line
Agreement, the lesser of (x) the Appraised Value of the related Mortgaged
Property as set forth in the loan files as of the date of the appraisal and (y)
the purchase price of such Mortgaged Property and (ii) with respect to any
Closed-End Mortgage Loan as of any date, the percentage equivalent of a
fraction, the numerator of which is the sum of (A) the original principal
balance of the Closed-End Mortgage Loan and (B) any outstanding principal
balances of mortgage loans senior to such Closed-End Mortgage Loan (calculated
at the date of application for the Closed-End Mortgage Loan) and the denominator
of which is (C) the Appraised Value of the related Mortgaged Property as set
forth in the Mortgage File as of the date of the appraisal or (D) in the case of
a Mortgaged Property purchased within one year of the origination of the related
Closed-End Mortgage Loan, the lesser of (x) the Appraised Value of the related
Mortgaged Property as set forth in the Mortgage Files as of the date of the
appraisal and (y) the purchase price of such Mortgaged Property.
Company: [________________] or any successor thereto.
Controlling Party: The Insurer, so long as no Insurer Default shall
have occurred and be continuing, and the Indenture Trustee, for so long as an
Insurer Default shall have occurred and is continuing.
Corporate Trust Office: With respect to (i) the Indenture Trustee,
the principal corporate trust office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
at date of the execution of the Indenture is located at c/o [Indenture Trustee's
Address] and (ii) the Owner Trustee, the principal corporate trust office of the
Owner Trustee located at [Owner Trustee's Address], or at such other address as
the Owner Trustee may designate by notice to the Bondholders and the Depositor,
or the principal corporate trust office of any successor Owner Trustee (the
address of which the successor owner trustee will notify the Bondholders and the
Depositor).
Credit Limit: As to any HELOC Mortgage Loan, the maximum principal
balance permitted under the terms of the related Credit Line Agreement.
Credit Limit Utilization Rate: As to any HELOC Mortgage Loan, the
percentage equivalent of a fraction the numerator of which is the related HELOC
Principal Balance and the denominator of which is the related Credit Limit.
Credit Line Agreement: With respect to any HELOC Mortgage Loan, the
related home equity line of credit agreement and promissory note executed by the
related Mortgagor and any amendment or modification thereof.
4
Credit Scores: With respect to the Mortgage Loans, statistical
credit scores obtained by mortgage lenders in connection with the loan
application to help assess a borrower's creditworthiness.
Custodian: [Custodian], or any replacement Custodian named by the
Indenture Trustee and approved by the Insurer on prior written notice to the
Servicer, the Depositor, the Issuer and the Insurer.
Cut-Off Date: __________, 200_.
Cut-Off Date Principal Balance: With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-Off Date.
Default: Any occurrence that is, or with notice or the lapse of time
or both would become, a Rapid Amortization Event.
Defective Mortgage Loan: A Mortgage Loan subject to retransfer
pursuant to Section 2.03 or 2.05 of the Sale and Servicing Agreement.
Deferred Interest: With respect to the Class A Bonds and any Payment
Date, the excess, if any, of interest due at the Class A Formula Bond Rate over
interest due at the Class A Bond Rate.
Deficiency Amount: With respect to the Class A Bonds and (1) any
Payment Date, the excess, if any, of (a) the sum of (i) the Interest Payment
Amount (excluding any Relief Act Shortfalls, any interest shortfalls resulting
from prepayments on the Mortgage Loans, and any Deferred Interest) and (ii) the
Overcollateralization Deficit (which prior to the twenty-fourth Payment Date
shall be deemed to be zero for purposes of the Policy) over (b) the Total
Available Funds and (2) on the Final Scheduled Payment Date, the outstanding
principal balance of the Class A Bonds then outstanding, after taking into
account all payments to be made to such Class A Bonds on that date.
Definitive Bonds: As defined in Section 2.11 of the Indenture.
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.
5
Depositor: Sequoia Mortgage Funding Corporation, a Delaware
corporation, or its successors-in-interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of Class A
Bonds evidencing $______________ in initial aggregate principal amount of the
Class A Bonds. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(5) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Telerate Page: The Dow Xxxxx Telerate Service page 3750,
or such other page as may replace page 3750 on that service or such other
service as may be nominated by the BBA as the information vendor for the purpose
of displaying the BBA's "Interest Settlement Rates" for deposits in U.S.
dollars.
Determination Date: With respect to any Payment Date, the fourth
Business Day prior to such Payment Date or such earlier day as shall be
designated by the Insurer and the Indenture Trustee.
Draw: With respect to any HELOC Mortgage Loan, an additional
borrowing by the Mortgagor subsequent to the Cut-Off Date in accordance with the
related Credit Line Agreement.
Draw Period: With respect to any HELOC Mortgage Loan, the period of
time specified in the related Credit Line Agreement whereby a Mortgagor may make
a Draw under the related Credit Line Agreement, not to exceed five or fifteen
years (as applicable) unless extended pursuant to such Credit Line Agreement and
the Sale and Servicing Agreement, such extension to be limited by the provisions
set forth in Section 2.04 of the Sale and Servicing Agreement.
6
Eligible Account: A segregated account that is (i) maintained with a
depository institution whose short-term debt obligations at the time of any
deposit therein have the highest short-term debt rating by the Rating Agencies,
(ii) one or more accounts maintained with a depository institution whose
long-term unsecured debt rating by the Rating Agencies is at least AA- and whose
accounts are fully insured by either the Savings Association Insurance Fund or
the Bank Insurance Fund of the Federal Deposit Insurance Corporation established
by such fund, (iii) a segregated trust account maintained with the Indenture
Trustee in its fiduciary capacity, or (iv) otherwise acceptable to each Rating
Agency and the Insurer as evidenced by a letter from each Rating Agency and the
Insurer to the Indenture Trustee, without reduction or withdrawal of their then
current ratings of the Class A Bonds without regard to the Policy.
Eligible Investments: One or more of the following (excluding any
callable investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed
as to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided that such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than 30 days from the date of acquisition thereof,
provided that (a) the short-term unsecured debt obligations of the party
agreeing to repurchase such obligations are at the time rated by each
Rating Agency in its highest short-term rating category (which is A-1+ for
Standard and Poor's and P-1 for Moody's), (b) the obligations must be
valued daily at current market price plus accrued interest, (c) the
obligations, pursuant to such evaluation, must be equal, at all times, to
____% of the cash transferred to the Indenture Trustee in exchange for the
obligations and (d) the obligations must be delivered to the Indenture
Trustee or, if the Indenture Trustee is supplying the obligations, to an
agent for the Indenture Trustee, in such a manner as to accomplish
perfection of a security interest in the obligations by possession of
certificated securities;
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if Xxxxx'x is a Rating Agency, shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than 365
days) of any U.S. depository institution or trust company incorporated
under the laws of the United States or any state thereof and subject to
supervision and examination by federal and/or state banking authorities,
provided that the unsecured short-term debt obligations of such depository
institution or trust company at the date of acquisition thereof have been
rated by each of Standard & Poor's and Moody's in its highest unsecured
short-term debt rating category;
(iv) 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 by Standard & Poor's and Moody's in their highest short-term
debt rating categories;
7
(v) short-term investment funds ("STIFS") sponsored by any
trust company or national banking association incorporated under the laws
of the United States or any state thereof which on the date of acquisition
has been rated by Standard & Poor's and Moody's in their respective
highest applicable rating category;
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has a rating of Aaa by Moody's and either
AAAm AAAm-G by Standard & Poor's or such lower rating as will not result
in the qualification, downgrading or withdrawal of the then-current rating
assigned to the Bonds by each Rating Agency without regard to the Policy;
and
(vii) other obligations or securities that are acceptable to
each Rating Agency and the Insurer as an Eligible Investment hereunder and
will not result in a reduction in the then current rating of the Bonds
without regard to the Policy, as evidenced by a letter to such effect from
such Rating Agency and the Insurer and with respect to which the Servicer
has received confirmation that, for tax purposes, the investment complies
with the last clause of this definition;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) 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 ____% of the
yield to maturity at par of the underlying obligations; and provided, further,
that (x) 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 its stated maturity and (y) all Eligible Investments
shall mature no later than the next Payment Date.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by
the Depositor, with the consent of the Insurer, for a Defective Mortgage Loan
which must, on the date of such substitution, (i) have an outstanding Principal
Balance (or, in the case of a substitution of more than one Mortgage Loan for a
Defective Mortgage Loan, an aggregate Principal Balance), equal to or less than
the Principal Balance of the Defective Mortgage Loan as of the applicable
Cut-Off Date; (ii) except for HELOC Mortgage Loans still in their teaser period,
have a Loan Rate not less than the Loan Rate of the Defective Mortgage Loan and
not more than ____% in excess of the Loan Rate of such Defective HELOC Mortgage
Loan; (iii) for HELOC Mortgage Loans, have a Loan Rate based on the same Index
as the Defective Mortgage Loan with adjustments to such Loan Rate made on the
same date on which the Defective HELOC Mortgage Loan's interest rate adjusts;
(iv) for HELOC Mortgage Loans, have a Margin that is not less than the Margin of
the Defective HELOC Mortgage Loan and not more than 100 basis points higher than
the Margin for the Defective HELOC Mortgage Loan; (v) have a mortgage of the
same or higher level of priority as the Defective Mortgage Loan at the time such
Mortgage Loan was transferred to the Trust; (vi) have a remaining term to
maturity not more than ____ months earlier and not more than ____ months later
than the remaining term to maturity of the Defective Mortgage Loan; (vii) comply
with each representation and warranty as to the Mortgage Loans set forth in the
Sale and Servicing Agreement (deemed to be made as of the date of substitution);
(viii) have an original Combined Loan-to-Value Ratio not greater than
8
that of the Defective Mortgage Loan; and (ix) have a Credit Score greater than
or equal to the Credit Score of the Defective Mortgage Loan at the time such
Mortgage Loan was transferred to the Trust; (x) the related Mortgaged Property
is not an investment property (unless the Mortgaged Property related to the
Defective Mortgage Loan was an investment property); (xi) the related Mortgaged
Property is not a second home (unless the Mortgaged Property related to the
Defective Mortgage Loan was a second home); (xii) the Combined Loan-to-Value
Ratio is not greater than 100%; and (xiii) in the case of HELOC Mortgage Loans,
are no longer in its teaser period.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
Event of Servicing Termination: As defined in Section 6.01 of the
Sale and Servicing Agreement.
Event of Termination: As defined in Article IX of the Purchase
Agreement.
Excess Cashflow: With respect to any Payment Date, the Available
Funds for such Payment Date which remain on deposit in the Collection Account
after taking into account the distributions listed in clauses (i) through (vii)
of Section 8.7(b) of the Indenture on such Payment Date.
Excess Spread Amount: With respect to any Payment Date, the
fraction, expressed as a percentage, equal to (x) (i) 12 multiplied by (ii) the
sum of the Available Funds for the related Payment Date which remain on deposit
in the Collection Account after taking into account the distributions listed in
clauses (i) through (vii) of Section 8.7(d) of the Indenture with respect to
such Payment Date divided by (y) the Pool Balance as of such Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Final Scheduled Payment Date: For the Class A Bonds, the Payment
Date in _______ 20__, in each case whereby the related Bondholders shall be
entitled to receive a payment of principal in an amount equal to the respective
outstanding Bond Principal Balance and any accrued and unpaid interest thereon.
Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid through
the last day in the related Collection Period) of such Liquidated Mortgage Loan
immediately prior to the final recovery of its Liquidation Proceeds.
Formula Bond Rate: For any Interest Accrual Period, (x) with respect
to any Payment Date which occurs on or prior to the Optional Redemption Date,
LIBOR plus ____% per annum and (y) for any Payment Date thereafter, LIBOR plus
____% per annum.
GAAP: Generally accepted accounting principles, consistently
applied.
9
Grant: Mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, xxxxx x xxxx upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to the Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other monies payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
Gross Margin: As to any HELOC Mortgage Loans, the percentage set
forth as the "Gross Margin" for such HELOC Mortgage Loans on Exhibit A to the
Sale and Servicing Agreement.
HELOC Mortgage Loans: Mortgage Loans consisting solely of
adjustable-rate home equity revolving credit line loans under the Credit Line
Agreements.
HELOC Principal Balance: As to any HELOC Mortgage Loan, other than a
Liquidated Mortgage Loan, and as of any date, the related Cut-Off Date Principal
Balance, plus (i) any Additional Balance in respect of such HELOC Mortgage Loan,
minus (ii) all collections credited as principal against the HELOC Principal
Balance of any such HELOC Mortgage Loan in accordance with the related Credit
Line Agreement prior to such day.
Holder or Bondholder: The Person in whose name a Bond is registered
on the Bond Register.
Indebtedness: With respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of funding
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
Indemnification Agreement: The Indemnification Agreement, dated as
of _______, 200_, by and among the Insurer and [Underwriter] as underwriter.
Indenture: The Indenture, dated as of ________, 200_, by and between
the Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time.
10
Indenture Trustee: [Indenture Trustee], not in its individual
capacity but as indenture trustee under the Indenture, or any successor
indenture trustee under the Indenture.
Indenture Trustee Issuer Secured Obligations: All amounts and
obligations which the Issuer may at any time owe to the Indenture Trustee for
the benefit of the Bondholders under the Indenture or the Bonds.
Independent: When used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor upon the
Bonds, the Depositor and any Affiliate of any of the foregoing Persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Depositor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Depositor or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.
Independent Certificate: A certificate, verification report or
opinion to be delivered to the Indenture Trustee and the Insurer under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture, prepared by an Independent
appraiser or other expert appointed pursuant to an Issuer Order and approved by
the Indenture Trustee and the Insurer in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in the Indenture and that the signer is Independent within the
meaning thereof.
Index: With respect to each Interest Rate Adjustment Date for a
HELOC Mortgage Loan, the highest "prime rate" as published in the "Money Rates"
table of The Wall Street Journal as of the last business day of the previous
Billing Cycle.
Initial Pool Balance: $_______________.
Insurance Agreement: The Insurance Agreement, dated as of ________,
200_, by and among the Insurer, the Seller, the Servicer, the Depositor and the
Indenture Trustee.
Insurance Policy: Any hazard, title or primary mortgage insurance
policy relating to a Mortgage Loan, but shall not include the Policy.
Insurance Proceeds: Proceeds paid by any insurer (other than the
Insurer) pursuant to any Insurance Policy covering a Mortgage Loan, or amounts
required to be paid by the Servicer pursuant to the last sentence of Section
3.04 of the Sale and Servicing Agreement, net of any component thereof (i)
covering any expenses incurred by or on behalf of the Servicer in connection
with obtaining such proceeds, (ii) that is applied to the restoration or repair
of the related Mortgaged Property, (iii) released to the Mortgagor in accordance
with the Servicer's normal servicing procedures or (iv) required to be paid to
any holder of a mortgage senior to such Mortgage Loan.
Insured Amount: As defined in the Policy with respect to the Class A
Bonds and as of any Payment Date
Insured Payment: As defined in the Policy with respect to the Class
A Bonds.
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Insurer: [Insurer], and any successor thereto.
Insurer Default: Any of (i) the failure by the Insurer to make a
payment required under the Policy in accordance with the terms thereof, (ii) the
voluntary or involuntary filing of a petition or other invocation of the process
of any court or government authority for the purpose of commencing or sustaining
a case under any federal or state bankruptcy, insolvency or similar law against
the Insurer or (iii) the appointing of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Insurer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Insurer.
Insurer Issuer Secured Obligations: All amounts and obligations
which the Issuer may at any time owe to or on behalf of the Insurer under the
Indenture, the Insurance Agreement or any other Basic Document.
Interest Accrual Period: With respect to any Payment Date, the
period from and including the prior Payment Date (or, in the case of the
________ 200_ Payment Date, from and including the Closing Date) to, but
excluding, the current Payment Date, with interest being computed on the basis
of the actual number of days in such Interest Accrual Period and a 360-day year.
Interest Collections: With respect to any Payment Date, the sum of
all payments by or on behalf of Mortgagors and any other amounts constituting
interest, including the portion of Net Liquidation Proceeds and Insurance
Proceeds allocated to interest pursuant to the terms of the related Loan
Agreement (net of the applicable servicing fees and excluding the fees or late
charges or similar administrative fees paid by Mortgagors), less the related
Servicing Fee for the related Collection Period. The terms of the related Loan
Agreement shall determine the portion of each payment in respect of such
Mortgage Loan that constitutes principal or interest.
Interest Determination Date: (i) With respect to any Interest
Accrual Period (other than the initial Interest Accrual Period), the second
LIBOR Business Day preceding the first day of such Interest Accrual Period and
(ii) with respect to the initial Interest Accrual Period, the second LIBOR
Business Day preceding the Closing Date.
Interest Payment Amount: With respect to the Class A Bonds and any
Payment Date, (x) the Class A Bond Rate applicable to such Payment Date
multiplied by (y) the Bond Principal Balance immediately prior to such Payment
Date multiplied by (z) a fraction, the numerator of which is the actual number
of days in the related Interest Accrual Period and the denominator of which is
360.
Interest Rate Adjustment Date: With respect to each HELOC Mortgage
Loan, any date on which the Loan Rate is adjusted in accordance with the related
Credit Line Agreement.
Interest Settlement Rates: Those rates which are displayed on the
Designated Telerate Page.
Issuer or Trust: Sequoia Mortgage Trust 200_-_, a Delaware statutory
trust, until a successor replaces it and, thereafter, such successor.
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Issuer Order and Issuer Request: A written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
Issuer Secured Obligations: The Insurer Issuer Secured Obligations
and the Indenture Trustee Issuer Secured Obligations.
Issuer Secured Parties: Each of the Indenture Trustee in respect of
the Indenture Trustee Issuer Secured Obligations and the Insurer in respect of
the Insurer Issuer Secured Obligations.
Late Payment Rate: For any Payment Date, the lesser of (a) the
greater of (i) the per annum rate of interest publicly announced from time to
time by Citibank, N.A. as its prime lending rate (any change in such rate of
interest to be effective on the date such change is announced by Citibank,
N.A.), plus __% per annum and (ii) the then applicable highest rate of interest
on the Class A Bonds and (b) the maximum rate permissible under applicable usury
or similar laws limiting interest rates. The Late Payment Rate shall be computed
on the basis of the actual number of days elapsed over a year of 360 days.
LIBOR: With respect to any Interest Accrual Period, the rate
determined by the Indenture Trustee on the related Interest Determination Date
appearing on the Designated Telerate Page on that Interest Determination Date
based on the Interest Settlement Rate for U.S. dollar deposits of one-month
maturity set by the BBA as of the Interest Determination Date. If the BBA's
Interest Settlement Rate does not appear on the Designated Telerate Page as of
11:00 a.m. (London time) on such date, or if the Designated Telerate Page is not
available on such date, the Indenture Trustee will obtain such rate from the
Reuters Monitor Money Rates Service page "LIBOR01" or the Bloomberg L.P. page
"BBAM." If such rate is not published for such Interest Determination Date,
LIBOR for such date will be the most recently published Interest Settlement
Rate. In the event that the BBA no longer sets an Interest Settlement Rate, the
Indenture Trustee, with the prior written consent of the Insurer (but only if an
Insurer Default shall not have occurred and be continuing), will designate an
alternative index that has performed in a manner substantially similar to the
BBA's Interest Settlement Rate.
LIBOR Business Day: Any day on which banks in London and New York
are open for conducting transactions in foreign currency and exchange.
Lien: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing;
provided, however, that any assignment pursuant to Section 5.02 of the Sale and
Servicing Agreement shall not be deemed to constitute a Lien.
Lifetime Rate Cap: With respect to each HELOC Mortgage Loan with
respect to which the related Mortgage Note provides for a lifetime rate cap, the
maximum Loan Rate
13
permitted over the life of such HELOC Mortgage Loan under the terms of the
related Credit Line Agreement previously delivered to the Indenture Trustee.
Liquidated Mortgage Loan: As to any Payment Date, any Mortgage Loan
in respect of which the Servicer has determined, in accordance with the
servicing procedures specified in the Sale and Servicing Agreement, as of the
end of the related Collection Period, that all Liquidation Proceeds which it
expects to recover with respect to the disposition of such Mortgage Loan or the
related REO have been recovered.
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead)
which are incurred by the Servicer in connection with the liquidation of any
Mortgage Loan and not recovered under any Insurance Policy, including, without
limitation, legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 of the Sale and Servicing Agreement (including, without
limitation, amounts advanced to correct defaults on any mortgage loan which is
senior to such Mortgage Loan and amounts advanced to keep current or pay off a
mortgage loan that is senior to such Mortgage Loan) respecting the related
Mortgage Loan and any related and unreimbursed expenditures with respect to real
estate property taxes, water or sewer taxes, condominium association dues,
property restoration or preservation or insurance against casualty, loss or
damage.
Liquidation Loss Amounts: With respect to any Payment Date and
Mortgage Loan that became a Liquidated Mortgage Loan during the related
Collection Period, the unrecovered portion of the related Principal Balance
thereof at the end of such Collection Period, after giving effect to the Net
Liquidation Proceeds applied in reduction of such Principal Balance.
Liquidation Proceeds: Proceeds (including Insurance Proceeds)
received in connection with the liquidation of any Mortgage Loan or related REO,
whether through trustee's sale, condemnation, foreclosure sale or otherwise.
Loan Agreement: Any Credit Line Agreement or Mortgage Note.
Loan Purchase Price: With respect to any Mortgage Loan purchased
from the Trust pursuant to Section 2.03 or 2.05 of the Sale and Servicing
Agreement, an amount equal to the Principal Balance of such Mortgage Loan as of
the date of purchase, plus one month's interest on the outstanding Principal
Balance thereof as of the beginning of the preceding Collection Period computed
at the Loan Rate less the Servicing Fee plus any costs and damages incurred by
the Trust in connection with any violation by such Mortgage Loan of any
predatory or abusive lending law, together with, without duplication, the
aggregate amount of (i) all delinquent interest, all advances made by the
Servicer and not subsequently recovered from the related Mortgage Loan and (ii)
any Reimbursement Amount related to such Mortgage Loan.
Loan Rate: With respect to any HELOC Mortgage Loan and as of any
day, the per annum rate of interest applicable under the related Credit Line
Agreement to the calculation of interest for such day on the Principal Balance
of such HELOC Mortgage Loan. With respect to any Closed-End Mortgage Loan and as
of any day, the per annum rate of interest applicable under the related Mortgage
Note to the calculation of interest for such day on the Principal Balance of
such Closed-End Mortgage Loan.
14
Loan Rate Cap: With respect to each Mortgage Loan, the lesser of (i)
the Lifetime Rate Cap, if any, or (ii) the applicable state usury ceiling, if
any.
Losses: Any and all out-of-pocket losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and disbursements)
directly incurred by any Person specified in the Purchase Agreement, resulting
from transactions entered into under the Purchase Agreement (other than
liability for taxes). Losses must be accounted for and presented for
reimbursement documented in reasonable detail and within a reasonable time.
Managed Amortization Period: With respect to the Class A Bonds, the
period commencing on the Closing Date and ending on the earlier to occur of (x)
the _______ 200_ Payment Date and (y) the Payment Date which immediately
precedes the occurrence of a Rapid Amortization Event with respect to the Class
A Bonds.
Management Agreement: The Management Agreement, dated as of
________, 200_, by and between the Company and the Issuer.
Management Fee: $____ per month.
Manager: The Person acting in such capacity pursuant to the
Management Agreement or its successors or assigns, which shall initially be the
Company.
Margin: With respect to each HELOC Mortgage Loan, the fixed
percentage amount set forth in the related Loan Agreement which amount is added
to the Prime Rate in accordance with the terms of the related Loan Agreement to
determine the Loan Rate for such HELOC Mortgage Loan, subject to any maximum.
Material Adverse Change: A material adverse change in (i) the
business, results of operations or properties of the Servicer or (ii) the
ability of the Servicer to perform its obligations under the Sale and Servicing
Agreement.
Maximum Principal Payment: With respect to the Class A Bonds and (i)
any Payment Date during the Managed Amortization Period, the Net Principal
Collections and (ii) any Payment Date during the Rapid Amortization Period, 100%
of the Principal Collections relating to such Payment Date.
Maximum Rate: With respect to the Class A Bonds and as to any
Interest Accrual Period, the Weighted Average Net Loan Rate of the Mortgage
Loans for the Collection Period during which such Interest Accrual Period begins
(adjusted to an effective rate reflecting accrued interest calculated on the
basis of the actual number of days in the Interest Accrual Period and a year
assumed to consist of 360 days).
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the
MERS System.
15
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.
Minimum Monthly Payment: With respect to any Mortgage Loan and any
month, the minimum amount required to be paid by the related Mortgagor in that
month.
Moody's: Xxxxx'x Investors Service, Inc., or its successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or junior lien on an estate in fee simple interest in real property
securing a Mortgage Note or Credit Line Agreement.
Mortgage File: The mortgage documents listed in Section 2.01(c) to
the Sale and Servicing Agreement pertaining to a particular Mortgage Loan and
any additional documents required to be added to the Mortgage File pursuant to
the Sale and Servicing Agreement.
Mortgage Loan Schedule: With respect to any date, the schedule of
Mortgage Loans included in the Trust on such date. The schedule of Mortgage
Loans as of the Cut-Off Date is the schedule set forth in Exhibit A to the Sale
and Servicing Agreement, which schedule sets forth as to each such Mortgage
Loan, to the extent applicable, (i) the Cut-Off Date Principal Balance, (ii) the
Credit Limit, (iii) the Gross Margin, (iv) the Lifetime Rate Cap, (v) the
account number, (vi) the current Loan Rate, (vii) the Combined Loan-to-Value
Ratio, (viii) a code specifying the property type, (ix) a code specifying
documentation type and (x) a code specifying lien position. The Mortgage Loan
Schedule will be deemed to be amended from time to time to reflect Additional
Balances and Eligible Substitute Mortgage Loans.
Mortgage Loans: Any HELOC Mortgage Loans, including any Additional
Balances with respect thereto, as well as any Closed-End Mortgage Loans, that
are transferred to the Trust and assigned to the Indenture Trustee pursuant to
Sections 2.01 of the Sale and Servicing Agreement, together with the Related
Documents, exclusive of mortgage loans that are retransferred to the Depositor
or the Servicer from time to time pursuant to Sections 2.03, 2.05 or 2.07 of the
Sale and Servicing Agreement as from time to time are held as a part of the
Trust. The Mortgage Loans originally so held are identified in the Mortgage Loan
Schedule delivered on the Closing Date. The Mortgage Loans shall also include
any Eligible Substitute Mortgage Loans substituted by the Depositor for a
Defective Mortgage Loan pursuant to Sections 2.03 and 2.05 of the Sale and
Servicing Agreement. The term "Mortgage Loan" includes the terms "HELOC Mortgage
Loans" and "Closed-End Mortgage Loans."
Mortgage Note: The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Closed-End Mortgage Loan.
Mortgaged Property: The underlying property, including any real
property and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note or Credit Line Agreement.
16
Net Liquidation Proceeds: With respect to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses; provided, that Net
Liquidation Proceeds shall not be an amount less than zero.
Net Loan Rate: With respect to any Mortgage Loan and as to any day,
the Loan Rate (assuming each HELOC Mortgage Loan is fully indexed) less the
Servicing Fee Rate, the Premium Percentage and the Trustee Fee Rate.
Net Principal Collections: The excess of (x) Principal Collections
over (y) the sum of (A) the aggregate amount of all Additional Balances arising
during the related Collection Period plus (B) the Additional Balance Contributed
Amounts outstanding as of the opening of business on the related Payment Date;
provided, however, that in no event will Net Principal Collections be less than
zero with respect to any Payment Date.
Officer's Certificate: A certificate signed by any Authorized
Officer of a Person that complies with the applicable requirements of Section
11.1 of the Indenture.
Opinion of Counsel: One or more opinions of counsel who may, except
as otherwise expressly provided in the Indenture, be employees of or counsel to
the Issuer and, if addressed to the Insurer, satisfactory to such party, and
which shall comply with any applicable requirements of Section 11.1 of the
Indenture, and if addressed to the Insurer, shall be satisfactory to such party;
provided, that any opinion relating to matters of federal, state or local
taxation must be provided by independent, outside counsel.
Optional Redemption Date: The date on which the Depositor is first
able to exercise its right of optional redemption of the Class A Bonds pursuant
to Section 10.1 of the Indenture or Section 7.01(b)(i) of the Sale and Servicing
Agreement.
Original Bond Principal Balance: $_____________.
Original Pool Balance: $____________.
Outstanding: As of the date of determination, all Bonds theretofore
authenticated and delivered under the Indenture except:
(i) Bonds theretofore canceled by the Bond Registrar or
delivered to the Bond Registrar for cancellation;
(ii) Bonds or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Bond Paying Agent in trust for the Holders of such Bonds
(provided, however, that if such Bonds are to be redeemed, notice of such
redemption has been duly given pursuant to the Indenture or provision
therefor, satisfactory to the Indenture Trustee); and
(iii) Bonds in exchange for or in lieu of other Bonds which
have been authenticated and delivered pursuant to the Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Bonds are held by a bona fide purchaser;
17
provided, however, that Bonds which have been paid with proceeds of the Policy
shall continue to remain Outstanding for purposes of the Indenture until the
Insurer has been paid as subrogee under the Insurance Agreement or the Insurer
has been reimbursed pursuant to the Insurance Agreement, as evidenced by a
written notice from the Insurer delivered to the Indenture Trustee, and the
Insurer shall be deemed to be the Holder thereof to the extent of any payments
thereon made by the Insurer; provided, further, that in determining whether the
Holders of the requisite Outstanding Amount of the Bonds have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or under
any Basic Document, Bonds owned by the Issuer, any other obligor upon the Bonds,
the Depositor or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Bonds
that a Responsible Officer of the Indenture Trustee either actually knows to be
so owned or has received written notice thereof shall be so disregarded. Bonds
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 Bonds and that the pledgee is not
the Issuer, any other obligor upon the Bonds, the Depositor or any Affiliate of
any of the foregoing Persons.
Outstanding Amount: With respect to any date of determination, the
aggregate Bond Principal Balance of all the Bonds Outstanding as of such date of
determination.
Overcollateralization Amount: With respect to the Class A Bonds and
as of any Payment Date, the excess, if any, of (x) the Pool Balance as of such
Payment Date over (y) the Bond Principal Balance as of such Payment Date (after
taking into account any reductions to such Bond Principal Balance resulting from
payments made pursuant to clauses (v) and (vi) of Section 8.7(b) of the
Indenture on such Payment Date).
Overcollateralization Deficiency Amount: With respect to the Class A
Bonds and any Payment Date, the excess, if any, of (i) the Specified
Overcollateralization Amount applicable to such Payment Date over (ii) the
Overcollateralization Amount applicable to such Payment Date.
Overcollateralization Deficit: With respect to the Class A Bonds and
any Payment Date, the amount, if any, by which (i) the aggregate Bond Principal
Balance, after taking into account the payment to the Bondholders of all
principal from sources other than the Policy on such Payment Date, exceeds (ii)
the Pool Balance as of such Payment Date.
Overcollateralization Reduction Amount: With respect to the Class A
Bonds and any Payment Date, the excess, if any, of (x) the Overcollateralization
Amount over (y) the Specified Overcollateralization Amount assuming that the
Maximum Principal Payment had been distributed to the Bondholders on such
Payment Date.
18
Owner Trustee: [Owner Trustee], not in its individual capacity, but
solely as owner trustee under the Trust Agreement, and any successor Owner
Trustee thereunder.
Owner Trustee Fee: A fee which is separately agreed to between the
Servicer and the Owner Trustee and is payable to the Owner Trustee .
Owner Trustee Fee Rate: The per annum rate at which the Owner
Trustee Fee is calculated.
Payment Date: The fifteenth day of each month, or if such day is not
a Business Day, then the next Business Day, beginning in the month immediately
following the Closing Date.
Percentage Interest: As to any Bond, the percentage obtained by
dividing the principal denomination of such Bond by the aggregate of the
principal denominations of all Bonds. As to any Residual Certificate, the
percentage set forth on the face of such Residual Certificate.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy: The financial guaranty insurance policy No. ___________ and
any endorsement thereto, with respect to the Class A Bonds, dated ________,
200_, issued by the Insurer to the Indenture Trustee for the benefit of the
Bondholders.
Policy Payment Account: As defined in Section 8.4(c) of the
Indenture.
Pool: The pool of Mortgage Loans held by the Issuer including any
Eligible Substitute Mortgage Loan delivered in the replacement thereof.
Pool Balance: With respect to any date, the aggregate of the
Principal Balances of all of the Mortgage Loans as of such date.
Pool Delinquency Rate: With respect to any Collection Period, the
fraction, expressed as a percentage, equal to (x) the aggregate Principal
Balances of all Mortgage Loans that are 90 or more days delinquent (including
all foreclosures and REO properties) as of the close of business on the last day
of such Collection Period over (y) the Pool Balance as of the close of business
on the last day of such Collection Period.
Pool Factor: A seven-digit decimal which the Servicer shall compute
monthly expressing the related Bond Principal Balance as of each Payment Date
(after giving effect to any distribution of principal on such Payment Date) as a
proportion of the Original Bond Principal Balance. On the Closing Date, the Pool
Factor will be 1.0000000. Thereafter, the Pool Factor shall decline to reflect
reductions in the Bond Principal Balance resulting from distributions of
principal to the Bonds.
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Predecessor Bond: With respect to any particular Bond, every
previous Bond evidencing all or a portion of the same interest as that evidenced
by such particular Bond; and, for the purpose of this definition, any Bond
authenticated and delivered under Section 2.4 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Bond shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Bond.
Preference Amount: As defined in the Policy.
Preference Claim: As defined in Section 5.13(b) of the Indenture.
Premium Amount: With respect to the Bonds and as to any Payment
Date, the product of (x) the Premium Percentage, (y) the Bond Principal Balance
immediately prior to such Payment Date and (z) the fraction, expressed as a
percentage, the numerator of which is the number of days elapsed from the last
Payment Date to the related Payment Date and the denominator of which is 360.
Premium Percentage: As defined in the Insurance Agreement.
Prime Rate: The interest rate entitled "Prime Rate" in the published
Money Rates table of The Wall Street Journal.
Principal Balance: As of any date and with respect to any Mortgage
Loan, the HELOC Principal Balance or the Closed-End Principal Balance, as
applicable. For purposes of this definition, a Liquidated Mortgage Loan shall be
deemed to have a Principal Balance equal to the Principal Balance of the related
Mortgage Loan immediately prior to the final recovery of related Liquidation
Proceeds and a Principal Balance of zero thereafter.
Principal Collections: With respect to any Payment Date, the sum of
all payments by or on behalf of Mortgagors and any other amounts constituting
principal (including, but not limited to, Substitution Amounts and any portion
of Insurance Proceeds, Net Liquidation Proceeds or amounts to be deposited to
the Collection Account pursuant to Section 7.01 of the Sale and Servicing
Agreement that are applicable to principal, in each case as allocable to
principal of the applicable Mortgage Loan, but excluding Foreclosure Profits)
collected by the Servicer under the related Mortgage Loans during the related
Collection Period. The terms of the related Loan Agreements shall determine the
portion of each payment in respect of a Mortgage Loan that constitutes principal
or interest.
Principal Payment Amount: With respect to the Class A Bonds on any
Payment Date, the excess, if any, of (x) the Maximum Principal Payment over (y)
the Overcollateralization Reduction Amount.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Purchase Agreement: The Mortgage Loan Purchase Agreement, dated as
of ________, 200_, by and between the Company and the Depositor with respect to
the Mortgage Loans.
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Purchased Assets: As defined in Section 2.01 of the Purchase
Agreement.
Purchase Price: With respect to the Mortgage Loans as of the Cut-Off
Date (and any Eligible Substitute Mortgage Loan as of the date delivered), at
least 100% of the Principal Balance; with respect to all Additional Balances, at
least 100% of the Principal Balance (as such term is used in Section 2.01 of the
Purchase Agreement).
Purchaser Bond: As defined in Section 10.02 of the Purchase
Agreement.
Rapid Amortization Event: Any of those "Rapid Amortization Events"
described in Section 12.1 of the Indenture.
Rapid Amortization Period: With respect to the Class A Bonds, the
period which immediately follows the end of the Managed Amortization Period.
Rating Agency: [Each of Moody's and Standard & Poor's]. If such
agency or a successor is no longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable Person, designated by the
Depositor and the Insurer, notice of which designation shall be given to the
Indenture Trustee. References in any Basic Document to the highest short term
unsecured rating category of a Rating Agency shall means "A-1+" or better in the
case of Standard & Poor's and "P-1" or better in the case of Moody's, and in the
case of any other Rating Agency shall mean the ratings such other Rating Agency
deems equivalent to the foregoing ratings. References in any Basic Document to
the highest long-term rating category of a Rating Agency shall mean "AAA" in the
case of Standard & Poor's and "Aaa" in the case of Moody's, and in the case of
any other Rating Agency, the rating such other Rating Agency deems equivalent to
the foregoing ratings.
Realized Losses: For any Payment Date will equal the positive
difference between (i) the Principal Balances of all Mortgage Loans that were
liquidated during the related Collection Period and (ii) the principal portion
of Net Liquidation Proceeds of such Mortgage Loans.
Recordation Event: Any of (i) the resignation of [____________], as
Servicer, (ii) the occurrence of an Event of Servicing Termination, (iii) the
occurrence of a bankruptcy, insolvency or foreclosure relating to the Issuer;
provided, that any Recordation Event may be waived by the Insurer by its
providing written notice of such waiver to the Servicer and the Indenture
Trustee; and (iv) at the written request of the Insurer to the Indenture Trustee
to record Assignments of Mortgages because the Insurer has determined, in the
exercise of its reasonable judgment, that such recordation is necessary to
protect the Insurer's interest with respect to such Mortgage Loans because (a) a
Material Adverse Change with respect to the Servicer has occurred, (b) the
Insurer has been so advised by counsel as a result of a change that occurred
after the Closing Date in applicable law or the interpretation thereof or (c)
with respect to a particular Mortgage Loan, the insolvency of the related
Mortgagor.
Record Date: The Business Day immediately preceding the related
Payment Date; provided, however, that following the date on which Definitive
Bonds are available, the Record Date for the Bonds shall be the last Business
Day of the calendar month preceding the month in which the related Payment Date
occurs.
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Redemption Date: In the case of a redemption of any Bonds pursuant
to Section 10.1 of the Indenture, the Payment Date specified by the Depositor
pursuant to Section 7.01(b) of the Sale and Servicing Agreement.
Redemption Price: In the case of a redemption of any Bonds pursuant
to Section 10.1 of the Indenture, an amount equal to the unpaid principal amount
of the then outstanding principal amount of the Bonds being redeemed, plus
accrued and unpaid interest thereon to but excluding the Redemption Date, plus
any outstanding, Reimbursement Amount.
Reimbursement Amount: As of any Payment Date with respect to the
Class A Bonds, the sum of (x)(i) all Insured Payments made pursuant to the
Policy by the Insurer and in each case not previously repaid to the Insurer
pursuant to Section 8.7(d)(vii) of the Indenture, plus (ii) interest accrued on
each such payment made pursuant to the Policy not previously repaid calculated
at the Late Payment Rate from the date the Indenture Trustee received the
related Insured Payments and (y)(i) any other amounts then due and owing to the
Insurer under the Insurance Agreement, plus (ii) interest on such amounts at the
Late Payment Rate.
Related Documents: As defined in Section 2.01(c) of the Sale and
Servicing Agreement.
Relief Act Shortfall: Shortfalls in interest collections resulting
from the application of the Servicemembers Civil Relief Act, as amended or
similar state laws.
Removal Date: As defined in Section 2.07 of the Sale and Servicing
Agreement.
Removal Notice Date: As defined in Section 2.07 of the Sale and
Servicing Agreement.
REO: A Mortgaged Property acquired by the Servicer or any
sub-servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
Repurchase Price: The sum of (a) the outstanding principal balance
of the related Mortgage Loan as of such date of repurchase plus (b) any accrued
interest as of such date.
Residual Certificate: As defined in Section 1.1 of the Trust
Agreement.
Residual Certificateholder: Holder of the Residual Certificate.
Responsible Officer: With respect to the Indenture Trustee or any
officer of the Indenture Trustee with direct responsibility for the
administration of the Indenture and, also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of the Indenture,
the Savings Association Insurance Fund is not existing and performing duties now
assigned to it, the body performing such duties on such date.
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Sale and Servicing Agreement: The Sale and Servicing Agreement,
dated as of _________, 200_, by and among the Issuer, the Depositor, the
Servicer and the Indenture Trustee, as the same may be amended or supplemented
from time to time.
SEC: The Securities and Exchange Commission and any successor
thereto.
Seller: RWT Holdings, Inc., a Delaware corporation, in its capacity
as Seller pursuant to the Purchase Agreement.
Servicer: [______________], a [_________], any successor thereto
and, after its termination or resignation as Servicer, any successor.
Servicing Certificate: A certificate completed and executed by a
Servicing Officer in accordance with Section 4.01 of the Sale and Servicing
Agreement.
Servicing Fee: With respect to any Payment Date, the product of (i)
one-twelfth of the Servicing Fee Rate and (ii) the aggregate Principal Balance
of the Mortgage Loans on the first day of the Collection Period preceding such
Payment Date (or at the Cut-Off Date with respect to the first Payment Date).
Servicing Fee Rate: ____% per annum.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loan whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee (with a copy to the Insurer) by the Servicer on the
Closing Date, as such list may be amended from time to time.
Specified Overcollateralization Amount: With respect to any Payment
Date, the amount equal to the greater of: (I) the sum of (a) the related Spread
Squeeze Amount plus (b) ___% of the Principal Balance of Mortgage Loans which
are 180 or more days Delinquent as of the close of business of the last day of
the related Collection Period plus (c)(i) prior to the 31st Payment Date, the
greater of (x) ____% of the Original Bond Principal Balance and (y) the Step-Up
Overcollateralization Amount and (ii) on or after the 31st Payment Date the
greater of (x) the lesser of (A) ____% of the Original Bond Principal Balance
and (B) ____% of the Pool Balance as of the current Payment Date and (y) the
Step-Up Overcollateralization Amount; and (II) the sum of the related Spread
Squeeze Amount and ____% of the Original Bond Principal Balance; provided,
however, that no reduction in clause (c)(ii) shall occur unless (i) aggregate
cumulative Liquidation Loss Amounts with respect to the Pool as a percentage of
the Initial Pool Balance are less than ____% and (ii) the Three Month Rolling
Delinquency Rate for is less than ____%.
Spread Squeeze Amount: As of any Payment Date (A) on or prior to the
twelfth Payment Date, $0 and (B) after the twelfth Payment Date, a number equal
to the product of (I) two times the positive difference, if any of (x) ____% and
(y) the related Spread Squeeze Percentage and (II) the Pool Balance as of such
Payment Date.
Spread Squeeze Percentage: As of any Payment Date after the twelfth
Payment Date, a fraction (expressed as a percentage), the numerator of which is
the product of ___ and the related Available Funds for such Payment Date which
remain on deposit in the Collection
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Account after taking into account the distributions listed in clauses (i)
through (vii) of Section 8.7(b) of the Indenture with respect to such Payment
Date and the denominator of which is the related Pool Balance as of such Payment
Date.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., or its successor in interest.
Stepdown Date: With respect to the Class A Bonds, the later to occur
of (a) the 31st Payment Date and (b) the first Payment Date on which the Pool
Balance has been reduced to 50% or less of the Pool Balance as of the Cut-Off
Date.
Step-Up Overcollateralization Amount: If aggregate cumulative
Liquidation Loss Amounts as a percentage of the Original Bond Principal Balance
exceed the following percentages on the specified Payment Dates,
Payment Dates Percentage
-------------- ----------
1st - ___th ____%
___th - ___th ____%
___th - ___th ____%
___th - ___th ____%
___th + ____%
the Step-Up Overcollateralization Amount will equal (a) ____% of the Original
Bond Principal Balance, prior to the 31st Payment Date and (b) on or after the
31st Payment Date, the lesser of (x) ____% of the Original Bond Principal
Balance and (y) ____% of the Pool Balance as of current Payment Date. Otherwise,
the Step-Up Overcollateralization Amount is zero.
Substitute Cut-Off Date: With respect to any Eligible Substitute
Mortgage Loan, the opening of business on the first day of the calendar month in
which such Eligible Substitute Mortgage Loan is conveyed to the Trust.
Substitution Amounts: In connection with the delivery of any
Eligible Substitute Mortgage Loan, if the outstanding principal amount of such
Eligible Substitute Mortgage Loan as of the applicable Substitute Cut-Off Date
is less than the related Principal Balance of the Mortgage Loan being replaced
as of such Substitute Cut-Off Date, an amount equal to such difference together
with accrued and unpaid interest on such amount calculated at the Loan Rate net
of the Servicing Fee, if any, of the Mortgage Loan being replaced.
Termination Date: The latest of (i) the termination of the Policy
and the return of the Policy to the Insurer for cancellation, (ii) the date on
which the Insurer shall have received all amounts due and owing to the Insurer
under the Insurance Agreement and (iii) the date on which the Indenture Trustee
shall have received payment and performance of all Indenture Trustee Issuer
Secured Obligations.
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Three Month Rolling Delinquency Rate: As of any Payment Date
beginning with the third Payment Date, a number equal to the average of the
related Pool Delinquency Rates for each of the three immediately preceding
Collection Periods.
Total Available Funds: With respect to any Payment Date, Available
Funds (after taking into account the distributions pursuant to clauses (i) and
(ii) of Section 8.7(d) of the Indenture for such Payment Date).
Transfer Date: With respect to each Eligible Substitute Mortgage
Loan, the date on which such Eligible Substitute Mortgage Loan shall have been
transferred to the Trust.
Trust Agreement: The Trust Agreement, dated as of ________, 200_, by
and between the Depositor and the Owner Trustee, as the same may be amended and
supplemented from time to time.
Trust Property: All property and proceeds conveyed pursuant to
Section 2.01 of the Sale and Servicing Agreement, and certain other rights under
that Agreement.
Trustee Fee: A fee which is separately agreed to between the
Servicer and the Indenture Trustee.
Trustee Fee Rate: The per annum rate at which the Trustee Fee is
calculated.
UCC: Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
Weighted Average Net Loan Rate: As to any Collection Period, the
average of the daily Net Loan Rate for each Mortgage Loan i for each day during
the related Billing Cycle, weighted on the basis of the daily average of the
related Principal Balances for each day in such Billing Cycle for each Mortgage
Loan as determined by the Servicer in accordance with the Servicer's normal
servicing procedures.
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