EXECUTION COPY
HOME EQUITY LOAN TRUST 2006-HSA5
Issuer
AND
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
Indenture Trustee
INDENTURE
Dated as of September 28, 2006
________________________________________________________________________________
HOME EQUITY LOAN-BACKED TERM NOTES
HOME EQUITY LOAN-BACKED VARIABLE FUNDING NOTES
________________________________________________________________________________
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
ACT OF 1939 AND INDENTURE PROVISIONS*
Trust Indenture
Act Section Indenture Section
310(a)(1)............................. 6.11
(a)(2).............................. 6.11
(a)(3).............................. 6.10
(a)(4).............................. Not Applicable
(a)(5).............................. 6.11
(b)................................. 6.08, 6.11
(c)................................. Not Applicable
311(a)................................ 6.12
(b)................................. 6.12
(c)................................. Not Applicable
312(a)................................ 7.01, 7.02(a)
(b)................................. 7.02(b)
(c)................................. 7.02(c)
313(a)................................ 7.04
(b)................................. 7.04
(c)................................. 7.03(a)(iii), 7.04
(d)................................. 7.04
314(a)................................ 3.10, 7.03(a)
(b)................................ 3.07
(c)(1).............................. 8.05(c), 10.01(a)
(c)(2).............................. 8.05(c), 10.01(a)
(c)(3).............................. Not Applicable
(d)(1).............................. 8.05(c), 10.01(b)
(d)(2).............................. 8.05(c), 10.01(b)
(d)(3).............................. 8.05(c), 10.01(b)
(e)................................. 10.01(a)
315(a)................................ 6.01(b)
(b)................................. 6.05
(c)................................. 6.01(a)
(d)................................. 6.01(c)
(d)(1).............................. 6.01(c)
(d)(2).............................. 6.01(c)
(d)(3).............................. 6.01(c)
(e)................................. 5.13
316(a)(1)(A).......................... 5.11
316(a)(1)(B).......................... 5.12
316(a)(2)............................. Not Applicable
316(b)................................ 5.07
317(a)(1)............................. 5.04
317(a)(2)............................. 5.03(d)
317(b)................................ 3.03(a)
318(a)................................ 10.07
___________________________
*This reconciliation and tie shall not, for any purpose, be deemed to be part of
the within indenture.
This Indenture, dated as of September 28, 2006, between HOME
EQUITY LOAN TRUST 2006-HSA5, a Delaware statutory trust, as Issuer (the
"Issuer"), and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Indenture Trustee
(the "Indenture Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's
Series 2006-HSA5 Home Equity Loan-Backed Term Notes and Home Equity Loan-Backed
Variable Funding Notes (together, the "Notes") and the Credit Enhancer.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as trustee for the benefit of the Holders of the Notes, all of the
Issuer's right, title and interest in and to the Home Equity Loans and to all
accounts, chattel paper, general intangibles, payment intangibles, contract
rights, certificates of deposit, deposit accounts, instruments, documents,
letters of credit, money, advices of credit, investment property, goods and
other property consisting of, arising under or related to whether now existing
or hereafter created in (a) the Home Equity Loans, including, without
limitation, the benefit of the representations and warranties made by the Seller
in Section 3.1(a) and Section 3.1(b) of the Purchase Agreement concerning the
Home Equity Loans and the right to enforce the remedies against the Seller
provided in such Section 3.1 to the same extent as though such representations
and warranties were made directly to the Indenture Trustee, (b) the Payment
Account, all funds on deposit or credited thereto from time to time and all
proceeds thereof and (c) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing and all payments on
or under, and all proceeds of every kind and nature whatsoever in respect of,
any or all of the foregoing and all payments on or under, and all proceeds of
every kind and nature whatsoever in the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables, instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing (collectively,
the "Trust Estate" or the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The foregoing Grant shall inure to the benefit of the Credit
Enhancer in respect of draws made on the Policy and amounts owing to the Credit
Enhancer from time to time pursuant to the Insurance Agreement and payable to
the Credit Enhancer pursuant to this Indenture, and such Grant shall continue in
full force and effect for the benefit of the Credit Enhancer until all such
amounts owing to it have been repaid in full.
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The Indenture Trustee, as trustee on behalf of the Holders of the
Notes, (i) acknowledges such Grant, (ii) accepts the trust under this Indenture
in accordance with the provisions hereof, (iii) agrees to perform its duties as
Indenture Trustee as required herein and (iv) acknowledges receipt of the Policy
and shall hold such Policy in accordance with the terms of this Indenture for
the benefit of the Holders of the Notes.
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Indenture,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Definitions attached hereto as Appendix A which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act (the
"TIA"), the provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by
Commission rule have the meaning assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
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(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
Original Issuance of Notes
Section 2.01. Form. The Term Notes and the Variable Funding
Notes, in each case together with the Indenture Trustee's certificate of
authentication, shall be in substantially the forms set forth in Exhibits A-1
and A-2, respectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the Authorized Officers executing such Notes, as
evidenced by their execution of such Notes.
The terms of the Notes set forth in Exhibits A-1 and A-2 are part of the
terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and deliver
Term Notes for original issue in an aggregate initial principal amount of
$295,648,000 and Variable Funding Notes for original issue in an aggregate
initial principal amount of $0. The Security Balance of the Variable Funding
Notes in the aggregate may not exceed the Maximum Variable Funding Balance.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes and the Class A Notes shall be issuable in the
minimum initial Security Balances of $100,000 and in integral multiples of $1 in
excess thereof.
Each Variable Funding Note shall be initially issued with a Security
Balance of $0 or, if applicable, with a Security Balance in the amount equal to
the Additional Balance Differential for the Collection Period related to the
Payment Date following the date of issuance of such Variable Funding Note
pursuant to Section 4.01(b).
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No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
ARTICLE III
Covenants
Section 3.01. Collection of Payments with Respect to the Home
Equity Loans. The Indenture Trustee shall establish and maintain with itself the
Payment Account in which the Indenture Trustee shall, subject to the terms of
this paragraph, deposit, on the same day as it is received from the Master
Servicer, each remittance received by the Indenture Trustee with respect to the
Home Equity Loans. The Indenture Trustee shall make all payments of principal of
and interest on the Notes, subject to Section 3.03, as provided in Section 3.05
herein from monies on deposit in the Payment Account.
Section 3.02. Maintenance of Office or Agency. The Issuer will
maintain in the City of New York, an office or agency where, subject to
satisfaction of conditions set forth herein, Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as
its agent to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments to Be Held in Trust; Paying
Agent. (a) As provided in Section 3.01, all payments of amounts due and payable
with respect to any Notes that are to be made from amounts withdrawn from the
Payment Account pursuant to Section 3.01 shall be made on behalf of the Issuer
by the Indenture Trustee or by the Paying Agent, and no amounts so withdrawn
from the Payment Account for payments of Notes shall be paid over to the Issuer
except as provided in this Section 3.03.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;
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(ii) give the Indenture Trustee and the Credit Enhancer written
notice of any default by the Issuer of which it has actual knowledge in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes, if at
any time it ceases to meet the standards required to be met by a Paying Agent at
the time of its appointment;
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith; and
(vi) deliver to the Indenture Trustee a copy of the report to
Noteholders prepared with respect to each Payment Date by the Master Servicer
pursuant to Section 4.01 of the Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Request direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
an Authorized Newspaper, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee may also adopt and employ,
at the expense and direction of the Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in monies due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
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Section 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a statutory trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuer will keep in full effect its existence, rights
and franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Home Equity Loans and each
other instrument or agreement included in the Trust Estate.
Section 3.05. Payment of Principal and Interest; Defaulted
Interest. (a) On each Payment Date from amounts on deposit in the Payment
Account (other than amounts deposited in the nature of prepayment charges), the
Paying Agent shall pay to the Noteholders, the Certificate Paying Agent, on
behalf of the Certificateholders, and to other Persons the amounts to which they
are entitled, as set forth in the statements delivered to the Indenture Trustee
pursuant to Section 4.01 of the Servicing Agreement, as set forth below in the
following order of priority:
(i) first, to the Class A Noteholders and the Variable Funding
Noteholders, the Interest Distribution Amount for the Class A Notes and the
Variable Funding Notes for such Payment Date, on a pro rata basis in accordance
with their respective Interest Distribution Amounts;
(ii) second, to the Class A Noteholders and the Variable Funding
Noteholders, as principal on the Class A Notes and Variable Funding Notes, the
Principal Collection Distribution Amount with respect to the Class A Notes and
the Variable Funding Notes for such Payment Date, on a pro rata basis in
accordance with the outstanding Security Balances thereof;
(iii) third, to the Class A Noteholders and the Variable Funding
Noteholders, as principal on the Class A Notes and Variable Funding Notes, on a
pro rata basis in accordance with the outstanding Security Balances thereof, the
Liquidation Loss Distribution Amount for such Payment Date;
(iv) fourth, to the Credit Enhancer, the amount of the premium
for the Policy and any previously unpaid premiums for the Policy, with interest
thereon as provided in the Insurance Agreement;
(v) fifth, to the Credit Enhancer, to reimburse it for prior
draws made on the Policy related to payments of principal and interest on the
Class A Notes and the Variable Funding Notes with interest thereon as provided
in the Insurance Agreement;
(vi) sixth, to the Class A Noteholders and the Variable Funding
Noteholders, as principal on the Class A Notes and the Variable Funding Notes,
on a pro rata basis in accordance with the outstanding Security Balances
thereof, the Overcollateralization Increase Amount, if any, for such Payment
Date;
(vii) seventh, to the Credit Enhancer, any other amounts owed to
the Credit Enhancer pursuant to the Insurance Agreement;
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(viii) eighth, to the Class A Noteholders and the Variable
Funding Noteholders, any Net WAC Cap Shortfalls for that Payment Date and any
Net WAC Cap Shortfalls for previous Payment Dates and not previously paid
(together with interest thereon at the Note Rate (as adjusted from time to
time)), on a pro rata basis in accordance with the respective amounts of Net WAC
Cap Shortfalls allocated to each such Class for such Payment Date and any
previous Payment Dates not previously paid (with interest thereon);
(ix) ninth, to pay to the holders of the Class A Notes and the
Variable Funding Notes, pro rata, any Relief Act Shortfalls incurred during the
related Collection Period; and
(x) tenth, any remaining amount (other than amounts in the nature
of prepayment charges) to the Certificate Paying Agent on behalf of the holders
of the Class SB Certificates and any amounts in the nature of prepayment charges
to the Certificate Paying Agent, on behalf of the holders of the Class SB
Certificates;
provided, however, in the event that on a Payment Date a Credit Enhancer Default
shall have occurred and be continuing, then the priorities of distributions
described above will be adjusted such that payments of any required payments of
principal on the Notes on each Payment Date pursuant to clause 3.05(a)(iii)
above will include all Liquidation Loss Amounts for such Payment Date and for
all previous Collection Periods until paid or covered in full, to the extent not
otherwise covered by a Liquidation Loss Distribution Amount, a reduction of the
Overcollateralization Amount on such Payment Date or a draw on the Policy (up to
the outstanding Security Balance thereof).
On the Final Scheduled Payment Date or other final Payment Date for the
Notes, the amount to be paid pursuant to clause (iii) above shall be equal to
the Security Balances of the Notes immediately prior to such Payment Date.
Notwithstanding anything herein to the contrary, if the final Payment Date is a
date on which the Master Servicer has exercised its right to purchase all of the
Home Equity Loans pursuant to Section 8.08 of the Servicing Agreement, the
priorities set forth in clauses (i) through (iii) above shall be disregarded,
and amounts on deposit in the Payment Account with respect to the Home Equity
Loans will be applied first, to pay the Interest Distribution Amount for the
Class A Notes and Variable Funding Notes, on a pro rata basis in accordance with
their respective Interest Distribution Amounts; and second, to pay principal on
the Class A Notes and Variable Funding Notes on a pro rata basis in accordance
with their respective Security Balances, until the Security Balances thereof
have been reduced to zero and then in accordance with the priorities set forth
in clauses (iv) through (x) above.
(b) Relief Act Shortfalls on the Home Equity Loans will be
allocated to the Class A Notes and Variable Funding Notes on a pro rata basis in
accordance with the amount of accrued interest payable on that Class for such
Payment Date, absent such reductions.
(c) On each Payment Date, the Certificate Paying Agent shall
deposit in the Certificate Distribution Account all amounts it received pursuant
to this Section 3.05 for the purpose of distributing such funds to the
Certificateholders.
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The amounts paid to Noteholders shall be paid in respect of the
Term Notes or Variable Funding Notes, as the case may be, in accordance with the
applicable percentage as set forth in paragraph (d) below. Interest will accrue
on the Notes during an Interest Period, on the basis of the actual number of
days in such Interest Period and a year assumed to consist of 360 days.
Any installment of interest or principal, if any, payable on any
Note that is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall, if such Holder holds Notes of an aggregate
initial Security Balance or notional amount of at least $1,000,000, be paid to
each Holder of record on the preceding Record Date, by wire transfer to an
account specified in writing by such Holder reasonably satisfactory to the
Indenture Trustee as of the preceding Record Date or in all other cases or if no
such instructions have been delivered to the Indenture Trustee, by check to such
Noteholder mailed to such Holder's address as it appears in the Note Register
the amount required to be distributed to such Holder on such Payment Date
pursuant to such Holder's Securities; provided, however, that the Indenture
Trustee shall not pay to such Holders any amount required to be withheld from a
payment to such Holder by the Code.
(d) Principal of each Note shall be due and payable in full on
the Final Scheduled Payment Date for such Note as provided in the related form
of Note set forth in Exhibits A-1 and A-2. All principal payments on each of the
Term Notes and Variable Funding Notes shall be made in accordance with the
priorities set forth in paragraphs (a) and (b) above to the Noteholders entitled
thereto in accordance with the related Percentage Interests represented thereby.
Upon written notice to the Indenture Trustee by the Issuer, the Indenture
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Final Scheduled Payment Date or
other final Payment Date. Such notice shall be mailed no later than five
Business Days prior to such Final Scheduled Payment Date or other final Payment
Date and shall specify that payment of the principal amount and any interest due
with respect to such Note at the Final Scheduled Payment Date or other final
Payment Date will be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered for
such final payment.
Section 3.06. Protection of Trust Estate. (a) The Issuer will
from time to time execute and deliver all such supplements and amendments hereto
and all such financing statements, continuation statements, instruments of
further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the purposes
hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) cause the Trust to enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee and the Noteholders and the Credit Enhancer in such
Trust Estate against the claims of all persons and parties.
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(b) Except as otherwise provided in this Indenture, the Indenture
Trustee shall not remove any portion of the Trust Estate that consists of money
or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.07 (or from the jurisdiction in which it
was held as described in the Opinion of Counsel delivered at the Closing Date
pursuant to Section 3.07(a), if no Opinion of Counsel has yet been delivered
pursuant to Section 3.07(b)) unless the Indenture Trustee shall have first
received an Opinion of Counsel to the effect that the lien and security interest
created by this Indenture with respect to such property will continue to be
maintained after giving effect to such action or actions.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.06.
Section 3.07. Opinions as to Trust Estate. (a) On the Closing
Date, the Issuer shall furnish to the Indenture Trustee, the Credit Enhancer and
the Owner Trustee an Opinion of Counsel at the expense of the Issuer stating
that, upon delivery of the Loan Agreements relating to the Initial Home Equity
Loans to the Indenture Trustee or the Custodian, the Indenture Trustee will have
a perfected, first priority security interest in the Home Equity Loans.
(b) On or before December 31st in each calendar year, beginning
in 2006, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
at the expense of the Issuer either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as is necessary to
maintain the lien and security interest in the Home Equity Loans and reciting
the details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest in the Home Equity Loans until
December 31 in the following calendar year.
Section 3.08. Performance of Obligations; Servicing Agreement.
(a) The Issuer will punctually perform and observe all of its obligations and
agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer.
(c) The Issuer will not take any action or permit any action to
be taken by others which would release any Person from any of such Person's
covenants or obligations under any of the documents relating to the Home Equity
Loans or under any instrument included in the Trust Estate, or which would
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result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any of the documents relating to
the Home Equity Loans or any such instrument, except such actions as the Master
Servicer is expressly permitted to take in the Servicing Agreement.
(d) The Issuer may retain an administrator and may enter into
contracts with other Persons for the performance of the Issuer's obligations
hereunder, and performance of such obligations by such Persons shall be deemed
to be performance of such obligations by the Issuer.
Section 3.09. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(a) except as expressly permitted by this Indenture, sell,
transfer, exchange or otherwise dispose of the Trust Estate, unless directed to
do so by the Indenture Trustee;
(b) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Trust Estate;
(c) (i) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (ii) permit any lien, charge,
excise, claim, security interest, mortgage or other encumbrance (other than the
lien of this Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or the
proceeds thereof or (iii) permit the lien of this Indenture not to constitute a
valid first priority security interest in the Trust Estate; or
(d) impair or cause to be impaired the Issuer's interest in the
Home Equity Loans, the Purchase Agreement or in any Basic Document, if any such
action would materially and adversely affect the interests of the Noteholders or
the Credit Enhancer.
Section 3.10. Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee, within 120 days after the end of each fiscal
year of the Issuer (commencing with the fiscal year 2006), an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
(a) a review of the activities of the Issuer during such year and
of its performance under this Indenture and the Trust Agreement has been made
under such Authorized Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants under
this Indenture and the provisions of the Trust Agreement throughout such year,
or, if there has been a default in its compliance with any such condition or
covenant, specifying each such default known to such Authorized Officer and the
nature and status thereof.
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Section 3.11. Recording of Assignments. The Issuer shall enforce
the obligation of the Seller under the Purchase Agreement to submit or cause to
be submitted for recordation all Assignments of Mortgages within 60 days of
receipt of recording information by the Master Servicer.
Section 3.12. Representations and Warranties Concerning the Home
Equity Loans. The Indenture Trustee, as pledgee of the Home Equity Loans, has
the benefit of the representations and warranties made by the Seller in Section
3.1(a) and Section 3.1(b) of the Purchase Agreement concerning the Home Equity
Loans and the right to enforce the remedies against the Seller provided in such
Section 3.1 to the same extent as though such representations and warranties
were made directly to the Indenture Trustee.
Section 3.13. Assignee of Record of the Home Equity Loans. As
pledgee of the Home Equity Loans, the Indenture Trustee shall hold record title
to the Home Equity Loans by being named as payee in the endorsements or
assignments of the Loan Agreements and assignee in the Assignments of Mortgage
to be recorded under Section 2.1 of the Purchase Agreement. Except as expressly
provided in the Purchase Agreement or in the Servicing Agreement with respect to
any specific Home Equity Loan, the Indenture Trustee shall not execute any
endorsement or assignment or otherwise release or transfer such record title to
any of the Home Equity Loans until such time as the remaining Trust Estate may
be released pursuant to Section 8.05(b).
Section 3.14. Master Servicer as Agent and Bailee of the
Indenture Trustee. Solely for purposes of perfection under Section 9-313 or
9-314 of the Uniform Commercial Code or other similar applicable law, rule or
regulation of the state in which such property is held by the Master Servicer,
the Issuer and the Indenture Trustee hereby acknowledge that the Master Servicer
is acting as agent and bailee of the Indenture Trustee in holding amounts on
deposit in the Custodial Account pursuant to Section 3.02 of the Servicing
Agreement that are allocable to the Home Equity Loans, as well as the agent and
bailee of the Indenture Trustee in holding any Related Documents released to the
Master Servicer pursuant to Section 3.06(c) of the Servicing Agreement, and any
other items constituting a part of the Trust Estate which from time to time come
into the possession of the Master Servicer. It is intended that, by the Master
Servicer's acceptance of such agency pursuant to Section 3.02 of the Servicing
Agreement, the Indenture Trustee, as a pledgee of the Home Equity Loans, will be
deemed to have possession of such Related Documents, such monies and such other
items for purposes of Section 9-305 of the Uniform Commercial Code of the state
in which such property is held by the Master Servicer.
Section 3.15. Investment Company Act. The Issuer shall not become
an "investment company" or under the "control" of an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);
provided, however, that the Issuer shall be in compliance with this Section 3.15
if it shall have obtained an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions imposed
in such order.
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Section 3.16. Issuer May Consolidate, etc. (a) The Issuer shall
not consolidate or merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any state or the District of Columbia
and shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form reasonably satisfactory to the
Indenture Trustee, the due and punctual payment of the principal of and interest
on all Notes and to the Certificate Paying Agent, on behalf of the
Certificateholders and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Event of Default shall have occurred and be continuing;
(iii) the Issuer receives the prior written consent of the Credit
Enhancer and the Rating Agencies shall have notified the Issuer that such
transaction shall not cause the rating of the Notes to be reduced, suspended or
withdrawn or to be considered by either Rating Agency to be below investment
grade without taking into account the Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee and the Credit
Enhancer) to the effect that such transaction will not have any material adverse
tax consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this Article
III and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties
or assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted shall (i) be a United States citizen or a Person organized and
existing under the laws of the United States of America or any state, (ii)
expressly assumes, by an indenture supplemental hereto, executed and delivered
to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture on
the part of the Issuer to be performed or observed, all as provided herein,
(iii) expressly agrees by means of such supplemental indenture that all right,
title and interest so conveyed or transferred shall be subject and subordinate
to the rights of Holders of the Notes, (iv) unless otherwise provided in such
supplemental indenture, expressly agrees to indemnify, defend and hold harmless
the Issuer against and from any loss, liability or expense arising under or
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related to this Indenture and the Notes and (v) expressly agrees by means of
such supplemental indenture that such Person (or if a group of Persons, then one
specified Person) shall make all filings with the Commission (and any other
appropriate Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Issuer receives the prior written consent of the Credit
Enhancer and the Rating Agencies shall have notified the Issuer that such
transaction shall not cause the rating of the Notes to be reduced, suspended or
withdrawn, if determined without regard to the Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee and the Credit
Enhancer) to the effect that such transaction will not have any material adverse
tax consequence to the Issuer or any Noteholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this Article
III and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act).
Section 3.17. Successor or Transferee. (a) Upon any consolidation
or merger of the Issuer in accordance with Section 3.16(a), the Person formed by
or surviving such consolidation or merger (if other than the Issuer) shall
succeed to, and be substituted for, and may exercise every right and power of,
the Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and
properties of the Issuer pursuant to Section 3.16(b), the Issuer will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery of written notice to the Indenture Trustee of such conveyance or
transfer.
Section 3.18. No Other Business. The Issuer shall not engage in
any business other than financing, purchasing, owning and selling and managing
the Home Equity Loans and the issuance of the Notes and Certificates in the
manner contemplated by this Indenture and the Basic Documents and all activities
incidental thereto.
Section 3.19. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
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Section 3.20. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by this Indenture or the other Basic Documents, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
Section 3.21. Capital Expenditures. The Issuer shall not make any
expenditure (by long- term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.22. Owner Trustee Not Liable for Certificates or
Related Documents. The recitals contained herein shall be taken as the
statements of the Depositor, and the Owner Trustee assumes no responsibility for
the correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Indenture, of any Basic Document or of the
Certificates (other than the signatures of the Owner Trustee on the
Certificates) or the Notes, or of any Related Documents. The Owner Trustee shall
at no time have any responsibility or liability with respect to the sufficiency
of the Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under the Trust Agreement or the Noteholders under this
Indenture, including, the compliance by the Depositor or the Seller with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation, or any action
of the Certificate Paying Agent, the Certificate Registrar or the Indenture
Trustee taken in the name of the Owner Trustee.
Section 3.23. Restricted Payments. The Issuer shall not, directly
or indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (x) distributions to the Owner Trustee
and the Certificateholders as contemplated by, and to the extent funds are
available for such purpose under the Trust Agreement and (y) payments to the
Master Servicer pursuant to the terms of the Servicing Agreement. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Custodial Account except in accordance with this Indenture and the other Basic
Documents.
Section 3.24. Notice of Events of Default. The Issuer shall give
the Indenture Trustee, the Credit Enhancer and the Rating Agencies prompt
written notice of each Event of Default hereunder and under the Trust Agreement.
Section 3.25. Further Instruments and Acts. Upon request of the
Indenture Trustee or the Credit Enhancer, 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.
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Section 3.26. Statements to Noteholders. On each Payment Date,
the Indenture Trustee and the Certificate Registrar shall forward by mail to
each Noteholder or make available on its website initially located at
"xxx.xxxxxxxx.xxx/xxx" and Certificateholder, respectively, the statement
delivered to it, on the Business Day following the related Determination Date
pursuant to Section 4.01 of the Servicing Agreement.
Section 3.27. Determination of Note Rates. On the second LIBOR
Business Day immediately preceding (i) the Closing Date in the case of the first
Interest Period and (ii) the first day of each succeeding Interest Period, the
Indenture Trustee shall determine LIBOR and the Note Rate for such Interest
Period and shall inform the Issuer, the Master Servicer and the Depositor at
their respective facsimile numbers given to the Indenture Trustee in writing.
Section 3.28. Payments under the Policy. (a) On or prior to 12:00
noon New York City time on the second Business Day before any Payment Date, the
Indenture Trustee shall make a draw on the Policy, in an amount, if any, equal
to the Deficiency Amount with respect to the Notes. For purposes of the
foregoing, amounts in the Payment Account available for interest distributions
on the Notes on any Payment Date shall be deemed to include all amounts
distributed on the Home Equity Loans for such Payment Date, other than the
Principal Collection Distribution Amount distributed thereon. In addition, on
the Final Scheduled Payment Date, the Indenture Trustee shall make a draw on the
Policy in the amount by which the Security Balances on the Notes exceeds the
payments otherwise available to be made to the Holders thereof on the Final
Scheduled Payment Date.
(b) The Indenture Trustee shall submit, if any Deficiency Amount
is specified in any statement to Holders of the Notes prepared by the Master
Servicer pursuant to Section 4.01 of the Servicing Agreement and timely
delivered to the Indenture Trustee, the notice (in the form attached as Exhibit
A to the Policy) in the amount of the Deficiency Amount to the Credit Enhancer
no later than 12:00 noon, New York City time, on the second Business Day prior
to the applicable Payment Date. Upon receipt of such Deficiency Amount in
accordance with the terms of the Policy, the Indenture Trustee shall deposit
such Deficiency Amount in the Payment Account for distribution to the
Noteholders pursuant to Section 3.05.
Section 3.29. Additional Representations of the Issuer.
The Issuer represents and warrants to the Indenture Trustee and
the Credit Enhancer that as of the Closing Date, unless specifically stated
otherwise:
(a) This Indenture creates a valid and continuing security
interest (as defined in the New York UCC) in the Mortgage Notes in favor of the
Indenture Trustee, which security interest is prior to all other Liens (except
as expressly permitted otherwise in this Indenture), and is enforceable as such
as against creditors of and purchasers from the Issuer.
(b) The Mortgage Notes constitute "instruments" within the
meaning of the New York UCC and the Delaware UCC.
(c) The Issuer owns and has good and marketable title to the
Mortgage Notes free and clear of any Lien of any Person.
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(d) The original executed copy of each mortgage Note (except for
any Mortgage Note with respect to which a Lost Note Affidavit has been delivered
to the Custodian) has been delivered to the Custodian.
(e) The Issuer has received a written acknowledgment from the
Custodian that the Custodian is acting solely as agent of the Indenture Trustee
for the benefit of the Noteholders and the Credit Enhancer.
(f) 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 Mortgage Notes.
The Issuer has not authorized the filing of and is not aware of any financing
statements against the Issuer that include a description of collateral covering
the Mortgage Notes other than any financing statement relating to the security
interest granted to the Indenture Trustee hereunder or any security interest
that has been terminated. The Issuer is not aware of any judgment or tax lien
filings against the Issuer.
(g) None of the Mortgage Notes has any marks or notations
indicating that they have been pledged, assigned or otherwise conveyed to any
Person other than the Indenture Trustee, except for (i) any endorsements that
are part of a complete chain of endorsements from the originator of the Mortgage
Note to the Indenture Trustee, and (ii) any marks or notations pertaining to
Liens that have been terminated or released.
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ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture.
Section 4.01. The Notes; Increase of Maximum Variable Funding
Balance; Variable Funding Notes. (a) The Term Notes shall be registered in the
name of a nominee designated by the Depository. Beneficial Owners will hold
interests in the Class A Notes as set forth in Section 4.06 herein in minimum
initial Security Balances of $100,000 and integral multiples of $1 in excess
thereof. The Capped Funding Notes will be issued as definitive notes in fully
registered form in minimum initial Security Balances of $10,000 and integral
multiples of $1 in excess thereof, together with any additional amount necessary
to cover (i) the aggregate initial Security Balance of the Capped Funding Notes
surrendered at the time of the initial denominational exchange thereof (with
such initial Security Balance in each case being deemed to be the Security
Balance of the Capped Funding Notes at the time of such initial denominational
exchange thereof) or (ii) the aggregate initial Security Balance of any Capped
Funding Notes issued in an exchange described in subsection (d) below.
The Indenture Trustee may for all purposes (including the making of
payments due on the Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Term Notes for the
purposes of exercising the rights of Holders of Term Notes hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Term Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08,
Beneficial Owners shall not be entitled to definitive certificates for the Term
Notes as to which they are the Beneficial Owners. Requests and directions from,
and votes of, the Depository as Holder of the Term Notes shall not be deemed
inconsistent if they are made with respect to different Beneficial Owners. The
Indenture Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Noteholders and give notice to the
Depository of such record date. Without the consent of the Issuer and the
Indenture Trustee, no Term Note may be transferred by the Depository except to a
successor Depository that agrees to hold such Note for the account of the
Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuer
by the Owner Trustee, not in its individual capacity but solely as Owner
Trustee, authenticated by the Note Registrar and delivered by the Indenture
Trustee to or upon the order of the Issuer.
(b) On each Payment Date, the aggregate Security Balance of the
Variable Funding Notes shall be increased by an amount equal to the Additional
Balance Differential for such Payment Date, subject to the Maximum Variable
Funding Balance and the terms and conditions set forth below. The Maximum
Variable Funding Balance may be increased as provided in Section 9.01(a)(viii).
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(c) The Variable Funding Notes issued on the Closing Date shall
bear the Designation "VFN-1" and each new Variable Funding Note for such Class
of Variable Funding Note will bear sequential numerical designations in the
order of their issuance.
(d) Subject to the following conditions, the Variable Funding
Notes may be exchanged pursuant to Section 4.02 for one or more Capped Funding
Notes. Prior to any such exchange, the party requesting the exchange must
provide an Opinion of Counsel, addressed to the Credit Enhancer, the Issuer and
the Indenture Trustee, to the effect that the Capped Funding Notes shall qualify
for federal income tax purposes as indebtedness of the Issuer and the Issuer
will not be characterized as an association (or a publicly traded partnership)
taxable as a corporation or a taxable mortgage pool within the meaning of
Section 7701(i) of the Code. If required by the Opinion of Counsel, the Capped
Funding Notes may be issued concurrently with a reduction in the Security
Balance of the Variable Funding Notes and an equivalent increase in the Security
Balance of the Certificates, pursuant to Section 3.12 of the Trust Agreement.
Upon receipt of the Opinion of Counsel, the Indenture Trustee shall issue the
Capped Funding Notes with a Security Balance equal to the Security Balance
permitted under such Opinion of Counsel, in minimum denominations as set forth
in subsection (a) above. The Capped Funding Notes shall bear the designation
"Capped" in addition to any other applicable designation. In connection with
such exchange, any Security Balance not represented by either a Capped Funding
Note or an increase in the Security Balance of the Certificates referred to
above shall result in the issuance of a new Variable Funding Note having an
initial Security Balance equal to the excess of the outstanding Security Balance
of the Variable Funding Note so surrendered over the initial Security Balances
of the related Capped Funding Notes and an increase in the Security Balance of
the Certificates referred to above. The Indenture Trustee and the Issuer agree
to cooperate with each other and the party requesting the exchange of Variable
Funding Notes for Capped Funding Notes, the Credit Enhancer, the Depositor, the
Seller and the Owner Trustee and to cause no unreasonable delay in issuing
Capped Funding Notes in connection with this Section and Section 3.12 of the
Trust Agreement.
Section 4.02. Registration of and Limitations on Transfer and
Exchange of Notes; Appointment of Certificate Registrar. (a) The Issuer shall
cause to be kept at the Indenture Trustee's Corporate Trust Office a Note
Register in which, subject to such reasonable regulations as it may prescribe,
the Note Registrar shall provide for the registration of Notes and of transfers
and exchanges of Notes as herein provided.
(b) Subject to the restrictions and limitations set forth below,
upon surrender for registration of transfer of any Note at the Corporate Trust
Office, the Issuer shall execute and the Note Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Notes in authorized initial Security Balances evidencing the same aggregate
Percentage Interests.
(c) No Variable Funding Note, other than any Capped Funding
Notes, may be transferred. Subject to the provisions set forth below, Capped
Funding Notes may be transferred, provided that with respect to the initial
transfer thereof by the Seller, prior written notification of such transfer
shall have been given to the Rating Agencies and to the Credit Enhancer by the
Seller.
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(d) No transfer, sale, pledge or other disposition of a Capped
Funding Note shall be made unless such transfer, sale, pledge or other
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. In the event of any such transfer, the
Indenture Trustee or the Issuer shall require the transferee to execute either
(i)(a) an investment letter in substantially the form attached hereto as Exhibit
B (or in such form and substance reasonably satisfactory to the Indenture
Trustee and the Issuer) which investment letters shall not be an expense of the
Trust, the Owner Trustee, the Indenture Trustee, the Master Servicer, the
Depositor or the Issuer and which investment letter states that, among other
things, such transferee (a) is a "qualified institutional buyer" as defined
under Rule 144A, acting for its own account or the accounts of other "qualified
institutional buyers" as defined under Rule 144A, and (b) is aware that the
proposed transferor intends to rely on the exemption from registration
requirements under the Securities Act of 1933, as amended, provided by Rule 144A
or (ii)(a) a written Opinion of Counsel (which may be in-house counsel)
acceptable to and in form and substance reasonably satisfactory to the Indenture
Trustee and the Issuer that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from said Act and
laws or is being made pursuant to said Act and laws, which Opinion of Counsel
shall not be an expense of the Indenture Trustee or the Issuer and (b) the
Indenture Trustee shall require the transferee executes an investment letter in
substantially the form of Exhibit C hereto and the transferor executes a
representation letter, substantially in the form of Exhibit D hereto acceptable
to and in form and substance reasonably satisfactory to the Issuer and the
Indenture Trustee certifying to the Issuer and the Indenture Trustee the facts
surrounding such transfer, which investment letter shall not be an expense of
the Indenture Trustee or the Issuer. The Holder of a Capped Funding Note
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Indenture Trustee, the Credit Enhancer and the Issuer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws. In addition, any Noteholder of a Capped Funding
Note desiring to effect any such transfer shall deliver, if any private
placement memorandum or other offering document prepared in connection with the
offering of such Capped Funding Notes specifies that such delivery will be
required, to the Indenture Trustee and the Master Servicer, either (i) a
certificate substantially to the effect of the certification set forth in
Exhibit G to the Trust Agreement or (ii) an Opinion of Counsel that establishes
to the satisfaction of the Indenture Trustee, the Credit Enhancer and the Master
Servicer that the purchase of Certificates is permissible under applicable law,
will not constitute or result in any non-exempt prohibited transaction under
ERISA or Section 4975 of the Code and will not subject the Indenture Trustee or
the Master Servicer to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in this Indenture, which Opinion of Counsel shall not be an expense
of the Indenture Trustee or the Master Servicer. Notwithstanding the foregoing,
the restrictions on transfer specified in this paragraph are not applicable to
any Capped Funding Notes that have been registered under the Securities Act of
1933 pursuant to Section 2.4 of the Purchase Agreement.
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(e)(i) In the case of any Class A Note (each such Note, a
"Book-Entry Non-Restricted Note") presented for registration in the name of any
Person, such Person shall be deemed to have represented to the Indenture
Trustee, the Depositor and the Master Servicer that (A) the Person is not a Plan
Investor, or (B) the acquisition of the Note by that Person does not constitute
or give rise to a prohibited transaction under Section 406 of ERISA or Section
4975 of the Code for which no statutory, regulatory or administrative exemption
is available.
(ii) (A) If any Class A Note (or any interest therein) is
acquired or held in violation of the provisions of clause (e)(i) above, then the
last preceding Transferee that is not in violation of the provisions of clause
(e)(i) above shall be restored, to the extent permitted by law, to all rights
and obligations as Note Owner thereof retroactive to the date of such Transfer
of such Book-Entry Non-Restricted Note. The Indenture Trustee shall be under no
liability to any Person for making any payments due on such Note to such
preceding Transferee.
(iii) Any Person investing assets of a Plan may not acquire any
Note or any interest therein if the Depositor, the Master Servicer, the
Indenture Trustee, the Owner Trustee or any affiliates of any such person (A)
has investment or administrative discretion with respect to those plan assets of
such Plan; (B) has authority or responsibility to give or regularly gives
investment advice with respect to those plan assets for a fee and pursuant to an
agreement or understanding that such advice will serve as a primary basis for
investment decisions with respect to those plan assets and will be based on the
particular investment needs for the Plan; or (C) unless United States Department
of Labor Prohibited Transaction Class Exemption 90-1, 91-38 or 95-60 applies, is
an employer maintaining or contributing to the Plan.
(iv) Any purported Beneficial Owner whose acquisition or holding
of any Book-Entry Non-Restricted Note (or interest therein) was effected in
violation of the restrictions in this Section 4.02(e) shall indemnify and hold
harmless the Depositor, the Indenture Trustee, the Underwriter, the Master
Servicer, any Subservicer, and the Trust from and against any and all
liabilities, claims, costs or expenses incurred by such parties as a result of
such acquisition or holding.
(f) Subject to the foregoing, at the option of the Noteholders,
Notes may be exchanged for other Notes of like tenor, in each case in authorized
initial Security Balances evidencing the same aggregate Percentage Interests
upon surrender of the Notes to be exchanged at the Corporate Trust Office of the
Note Registrar. With respect to any surrender of Capped Funding Notes for
exchange the new Notes delivered in exchange therefor will bear the designation
"Capped" in addition to any other applicable designations. Whenever any Notes
are so surrendered for exchange, the Indenture Trustee shall execute and the
Note Registrar shall authenticate and deliver the Notes which the Noteholder
making the exchange is entitled to receive. Each Note presented or surrendered
for registration of transfer or exchange shall (if so required by the Note
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer in form reasonably satisfactory to the Note Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing with such
signature guaranteed by a commercial bank or trust company located or having a
correspondent located in the city of New York. Notes delivered upon any such
transfer or exchange will evidence the same obligations, and will be entitled to
the same rights and privileges, as the Notes surrendered.
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(g) No service charge shall be imposed for any registration of
transfer or exchange of Notes, but the Note Registrar shall require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
(h) All Notes surrendered for registration of transfer and
exchange shall be cancelled by the Note Registrar and delivered to the Indenture
Trustee for subsequent destruction without liability on the part of either.
(i) The Issuer hereby appoints the Indenture Trustee as
Certificate Registrar to keep at its Corporate Trust Office a Certificate
Register pursuant to Section 3.09 of the Trust Agreement in which, subject to
such reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of Certificates and of transfers and exchanges
thereof pursuant to Section 3.05 of the Trust Agreement. The Indenture Trustee
hereby accepts such appointment.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes. If (i)
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Indenture Trustee such security
or indemnity as may be required by it to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a bona
fide purchaser, and provided that the requirements of Section 8-405 of the UCC
are met, the Issuer shall execute, and upon its request the Indenture Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note of the same class;
provided, however, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become or within seven days shall be due and payable,
instead of issuing a replacement Note, the Issuer may pay such destroyed, lost
or stolen Note when so due or payable without surrender thereof. If, after the
delivery of such replacement Note or payment of a destroyed, lost or stolen Note
pursuant to the proviso to the preceding sentence, a bona fide purchaser of the
original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section 4.03, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
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The provisions of this Section 4.03 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Credit Enhancer and any agent of the Issuer or the Indenture Trustee may treat
the Person in whose name any Note is registered (as of the day of determination)
as the owner of such Note for the purpose of receiving payments of principal of
and interest, if any, on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and none of the Issuer, the Indenture
Trustee or any agent of the Issuer or the Indenture Trustee shall be affected by
notice to the contrary.
Section 4.05. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section 4.05, except as expressly
permitted by this Indenture. All cancelled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Request that they be destroyed or returned to it; provided however, that such
Issuer Request is timely and the Notes have not been previously disposed of by
the Indenture Trustee.
Section 4.06. Book-Entry Notes. The Term Notes shall initially be
issued as one or more Term Notes held by the Book-Entry Custodian or, if
appointed to hold such Term Notes as provided below, the Depository Trust
Company, the initial Depository, and registered in the name of its nominee Cede
& Co. Except as provided below, registration of such Term Notes may not be
transferred by the Indenture Trustee except to another Depository that agrees to
hold such Term Notes for the respective Beneficial Owners. The Indenture Trustee
is hereby initially appointed as the Book-Entry Custodian and hereby agrees to
act as such in accordance herewith and in accordance with the agreement that it
has with the Depository authorizing it to act as such. The Book-Entry Custodian
may, and, if it is no longer qualified to act as such, the Book-Entry Custodian
shall, appoint, by a written instrument delivered to the Depositor, the Master
Servicer and, if the Indenture Trustee is not the Book-Entry Custodian, the
Indenture Trustee, any other transfer agent (including the Depository or any
successor Depository) to act as Book-Entry Custodian under such conditions as
the predecessor Book-Entry Custodian and the Depository or any successor
Depository may prescribe, provided that the predecessor Book-Entry Custodian
shall not be relieved of any of its duties or responsibilities by reason of any
new appointment, except if the Depository is the successor to the Book-Entry
Custodian. If the Indenture Trustee resigns or is removed in accordance with the
terms hereof, the successor trustee or, if it so elects, the Depository shall
immediately succeed to its predecessor's duties as Book-Entry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any Term
Notes held as Book-Entry Notes by the Book-Entry Custodian. No Beneficial Owner
will receive a Definitive Note representing such Beneficial Owner's interest in
such Note, except as provided in Section 4.08. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to Beneficial
Owners pursuant to Section 4.08:
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(i) the provisions of this Section 4.06 shall be in full force
and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Depository for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole holder of the Term Notes,
and shall have no obligation to the Owners of Term Notes;
(iii) to the extent that the provisions of this Section 4.06
conflict with any other provisions of this Indenture, the provisions of this
Section 4.06 shall control;
(iv) the rights of Beneficial Owners shall be exercised only
through the Depository and shall be limited to those established by law and
agreements between such Owners of Term Notes and the Depository and/or the
Depository Participants. Unless and until Definitive Term Notes are issued
pursuant to Section 4.08, the initial Depository will make book-entry transfers
among the Depository Participants and receive and transmit payments of principal
of and interest on the Notes to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Term Notes evidencing
a specified percentage of the Security Balances of the Term Notes, the
Depository shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Beneficial Owners and/or
Depository Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Term Notes and has delivered such
instructions to the Indenture Trustee.
Section 4.07. Notices to Depository. Whenever a notice or other
communication to the Term Note Holders is required under this Indenture, unless
and until Definitive Term Notes shall have been issued to Beneficial Owners
pursuant to Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Term Notes to the
Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. Definitive Notes. If (i) the Depositor advises the
Indenture Trustee in writing that the Depository is no longer willing or able to
properly discharge its responsibilities with respect to the Term Notes and the
Depositor is unable to locate a qualified successor, (ii) the Depositor notifies
the Depository of its intent to terminate the book-entry system and, upon
receipt of a notice of intent from the Depository, the participants holding
beneficial interest in the book-entry notes agree to initiate a termination or
(iii) after the occurrence of an Event of Default, Owners of Term Notes
representing beneficial interests aggregating at least a majority of the
Security Balances of the Term Notes advise the Depository in writing that the
continuation of a book-entry system through the Depository is no longer in the
best interests of the Beneficial Owners, then the Depository shall notify all
Beneficial Owners and the Indenture Trustee of the occurrence of any such event
and of the availability of Definitive Term Notes to Beneficial Owners requesting
the same. Upon surrender to the Indenture Trustee of the typewritten Term Notes
representing the Book-Entry Notes by the Book-Entry Custodian or the Depository,
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as applicable, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Term Notes
in accordance with the instructions of the Depository. None of the Issuer, the
Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes
as Noteholders.
In addition, if an Event of Default has occurred and is continuing, each
Beneficial Owner materially adversely affected thereby may at its option request
a Definitive Note evidencing such Beneficial Owner's Percentage Interest in the
related Class of Notes. In order to make such request, such Beneficial Owner
shall, subject to the rules and procedures of the Depository, provide the
Depository or the related Depository Participant with directions for the Note
Registrar to exchange or cause the exchange of the Beneficial Owner's interest
in such Class of Notes for an equivalent Percentage Interest in fully registered
definitive form. Upon receipt by the Note Registrar of instructions from the
Depository directing the Note Registrar to effect such exchange (such
instructions to contain information regarding the Class of Notes and the
Security Balance being exchanged, the Depository Participant account to be
debited with the decrease, the registered holder of and delivery instructions
for the Definitive Note, and any other information reasonably required by the
Note Registrar), (i) the Note Registrar shall instruct the Depository to reduce
the related Depository Participant's account by the aggregate Security Balance
of the Definitive Note, (ii) the Issuer shall execute and the Note Registrar
shall authenticate and deliver, in accordance with the registration and delivery
instructions provided by the Depository, a Definitive Note evidencing such
Beneficial Owner's Percentage Interest in such Class of Notes and (iii) the
Issuer shall execute and the Note Registrar shall authenticate a new Book-Entry
Note reflecting the reduction in the aggregate Security Balance of such Class of
Notes by the amount of the Definitive Notes.
Section 4.09. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will be treated as indebtedness for purposes of such taxes. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
(and each Beneficial Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness for purposes of such
taxes.
Section 4.10. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections 3.03,
3.04, 3.06, 3.09, 3.16, 3.18 and 3.19, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.11) and (vi) the rights of Noteholders and the Credit
Enhancer as beneficiaries hereof with respect to the property so deposited with
the Indenture Trustee payable to all or any of them, and the Indenture Trustee,
on demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when
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(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 4.03 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. will become due and payable at the Final Scheduled
Payment Date within one year, or
c. have been declared immediately due and payable pursuant
to Section 5.02.
and the Issuer, in the case of a. or b. above, has irrevocably deposited or
caused to be irrevocably deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and discharge the entire indebtedness on
such Notes and Certificates then outstanding not theretofore delivered to the
Indenture Trustee for cancellation when due on the Final Scheduled Payment Date;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder and under the Insurance Agreement by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate and an Opinion of Counsel, each
meeting the applicable requirements of Section 10.01 and each stating
that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with
and, if the Opinion of Counsel relates to a deposit made in connection
with Section 4.10(A)(2)b. above, such opinion shall further be to the
effect that such deposit will not have any material adverse tax
consequences to the Issuer, any Noteholders or any Certificateholders.
Section 4.11. Application of Trust Money. All
monies deposited with the Indenture Trustee pursuant to Section
4.10 hereof shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture,
to the payment, either directly or through any Paying Agent or
Certificate Paying Agent, as the Indenture Trustee may determine,
to the Holders of Securities, of all sums due and to become due
thereon for principal and interest; but such monies need not be
segregated from other funds except to the extent required herein
or required by law.
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Section 4.12. Subrogation and Cooperation. The Issuer and the
Indenture Trustee acknowledge that (i) to the extent the Credit Enhancer makes
payments under the Policy on account of principal of or interest on the Home
Equity Loans, the Credit Enhancer will be fully subrogated to the rights of the
Noteholders to receive such principal and interest from the Home Equity Loans
and any other Collateral and (ii) the Credit Enhancer shall be paid such
principal and interest but only from the sources and in the manner provided
herein and in the Insurance Agreement for the payment of such principal and
interest.
The Indenture Trustee shall cooperate in all respects with any
reasonable request or direction by the Credit Enhancer for action to preserve or
enforce the Credit Enhancer's rights or interest under this Indenture or the
Insurance Agreement, consistent with this Indenture and without limiting the
rights of the Noteholders as otherwise set forth in the Indenture, including,
without limitation, upon the occurrence and continuance of a default under the
Insurance Agreement, a request to take any one or more of the following actions:
(i) institute Proceedings for the collection of all amounts then
payable on the Notes or under this Indenture in respect of the Notes and all
amounts payable under the Insurance Agreement and to enforce any judgment
obtained and collect from the Issuer monies adjudged due;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private Sales (as defined in Section
5.15 hereof) called and conducted in any manner permitted by law;
(iii) file or record all assignments that have not previously
been recorded;
(iv) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and enforce the
rights and remedies of the Credit Enhancer hereunder.
Following the payment in full of the Notes, the Credit Enhancer shall
continue to have all rights and privileges provided to it under this Section and
in all other provisions of this Indenture, until all amounts owing to the Credit
Enhancer have been paid in full.
Section 4.13. Repayment of Monies Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all monies then held by any Person other than the Indenture Trustee
under the provisions of this Indenture with respect to such Notes shall, upon
demand of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.05 and thereupon such Paying Agent shall be released from
all further liability with respect to such monies.
Section 4.14. Temporary Notes. Pending the preparation of any
Definitive Notes, the Issuer may execute and upon its written direction, the
Indenture Trustee may authenticate and make available for delivery, temporary
Notes that are printed, lithographed, typewritten, photocopied or otherwise
produced, in any denomination, substantially of the tenor of the Definitive
26
Notes in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of the Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Indenture
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Issuer shall execute and the Indenture Trustee
shall authenticate and make available for delivery, in exchange therefor,
Definitive Notes of authorized denominations and of like tenor and aggregate
principal amount. Until so exchanged, such temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as Definitive Notes.
ARTICLE V
Default and Remedies
Section 5.01. Events of Default. The Issuer shall deliver to the
Indenture Trustee and the Credit Enhancer, within five days after learning of
the occurrence any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (iii) of the definition of "Event
of Default" written notice in the form of an Officer's Certificate of its status
and what action the Issuer is taking or proposes to take with respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default should occur and be continuing or if the Master Servicer
shall purchase all of the Home Equity Loans pursuant to Section 8.08 of the
Servicing Agreement, then and in every such case the Indenture Trustee or the
Holders of Notes representing not less than a majority of the Security Balances
of all Notes, in each case, with the written consent of the Credit Enhancer, or
the Credit Enhancer may declare the Notes to be immediately due and payable, by
a notice in writing to the Issuer (and to the Indenture Trustee if given by
Noteholders), and upon any such declaration the unpaid principal amount of such
class of Notes, together with accrued and unpaid interest thereon through the
date of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity with
respect to an Event of Default has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter provided in this Article V, the Holders of Notes representing a
majority of the Security Balances of all Notes, by written notice to the Issuer
and the Indenture Trustee with the written consent of the Credit Enhancer, or
the Credit Enhancer, may in writing waive the related Event of Default and
rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
27
(A) all payments of principal of and interest on the Notes
and all other amounts that would then be due hereunder or upon
the Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its
agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration, have
been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. (a) The Issuer covenants that if default in
the payment of (i) any interest on any Note when the same becomes due and
payable, and such default continues for a period of five days, or (ii) the
principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer shall, upon demand of the Indenture Trustee,
pay to it, for the benefit of the Holders of Notes or the Credit Enhancer to the
extent the Credit Enhancer has made a payment on the Policy, the whole amount
then due and payable on the Notes for principal and interest, with interest upon
the overdue principal, and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, subject to the provisions of Section 10.17 hereof may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor upon the Notes, wherever
situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default shall occur and be continuing, the
Indenture Trustee subject to the provisions of Section 10.17 hereof may, as more
particularly provided in Section 5.04, in its discretion, proceed to protect and
enforce its rights and the rights of the Noteholders and the Credit Enhancer, by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
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(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire amount of
principal and interest owing and unpaid in respect of the Notes and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Indenture Trustee (including any claim for reasonable compensation
to the Indenture Trustee and each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Indenture Trustee and
each predecessor Indenture Trustee, except as a result of negligence, willful
misconduct or bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable
or deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings relative to
the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence, willful
misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
29
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders of the Term Notes or the Variable
Funding Notes, as applicable.
(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
Section 5.04. Remedies; Priorities. (a) If an Event of Default
shall have occurred and be continuing, the Indenture Trustee subject to the
provisions of Section 10.17 hereof may with the written consent of the Credit
Enhancer, or shall at the written direction of the Credit Enhancer do one or
more of the following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes or
under this Indenture with respect thereto, whether by declaration or otherwise,
and all amounts payable under the Insurance Agreement, enforce any judgment
obtained, and collect from the Issuer and any other obligor upon such Notes
monies adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee and the Holders of the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and conducted in
any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Credit Enhancer, which consent will
not be unreasonably withheld, or, if a Credit Enhancer Default has occurred and
is continuing, the consent of the Holders of 100% of the aggregate Security
Balances of the Notes, (B) the proceeds of such sale or liquidation
distributable to Holders are sufficient to discharge in full all amounts then
due and unpaid upon the Notes for principal and interest and to reimburse the
Credit Enhancer for any amounts drawn under the Policy and any other amounts due
the Credit Enhancer under the Insurance Agreement or (C) the Indenture Trustee
determines that the Home Equity Loans will not continue to provide sufficient
funds for the payment of principal of and interest on the Notes as they would
have become due if the Notes had not been declared due and payable, and the
Indenture Trustee obtains the consent of the Credit Enhancer, which consent will
30
not be unreasonably withheld; provided further that the Indenture Trustee shall
not sell or otherwise liquidate the Trust Estate if the proceeds of such sale or
liquidation together with amounts drawn under the Policy will not be sufficient
to discharge in full all amounts then due and unpaid upon the Notes for
principal and interest and to reimburse the Credit Enhancer for any amounts
drawn under the Policy and any other amounts due the Credit Enhancer under the
Insurance Agreement unless the Indenture Trustee obtains the consent of the
Holders of 66-2/3% of the aggregate Security Balances of the Notes. In
determining such sufficiency or insufficiency with respect to clause (B) and
(C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose. Notwithstanding the foregoing, so long as a
Servicing Default has not occurred, any Sale of the Trust Estate shall be made
subject to the continued servicing of the Home Equity Loans by the Master
Servicer as provided in the Servicing Agreement.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out the money or property in the
following order:
FIRST: to the Indenture Truste for amounts due under Section
6.07;
SECOND:to Holders of the Class A Notes and Variable Funding Notes
for amounts due and unpaid on the related Notes for interest, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Notes for interest from amounts available in the
Trust Estate for such Noteholders;
THIRD: to Holders of the Class A Notes and Variable Funding Notes
for amounts due and unpaid on the related Notes for principal, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Notes for principal, from amounts available in the
Trust Estate for such Noteholders, until the Security Balances of such
Notes have been reduced to zero;
FOURTH:to the payment of all amounts due and owing to the Credit
Enhancer under the Insurance Agreement;
FIFTH: to the Certificate Paying Agent for amounts due under
Article VIII of the Trust Agreement; and
SIXTH: to the payment of the remainder, if any, to the Issuer or
any other person legally entitled thereto.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.04. At least 15 days before
such record date, the Indenture Trustee shall mail to each Noteholder a notice
that states the record date, the payment date and the amount to be paid.
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Section 5.05. Optional Preservation of the Trust Estate. If the
Notes have been declared to be due and payable under Section 5.02 following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may, but need not, (but shall at
the written direction of the Credit Enhancer) elect to take and maintain
possession of the Trust Estate. It is the desire of the parties hereto and the
Noteholders that there be at all times sufficient funds for the payment of
principal of and interest on the Notes and other obligations of the Issuer
including payment to the Credit Enhancer, and the Indenture Trustee shall take
such desire into account when determining whether or not to take and maintain
possession of the Trust Estate. In determining whether to take and maintain
possession of the Trust Estate, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Trust Estate for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Note shall
have any right to institute any Proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless and subject to the provisions of Section 10.17
hereof:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Security Balances of
the Notes have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such Proceedings;
and
(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of a
majority of the Security Balances of the Notes or by the Credit Enhancer.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Security Balances of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
Section 5.07. Unconditional Rights of Noteholders to Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the respective due dates thereof expressed in such Note or
in this Indenture and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
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Section 5.08. Restoration of Rights and Remedies. If the
Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been discontinued
or abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Indenture Trustee, the Credit Enhancer
or to the Noteholders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee, the Credit Enhancer or any Holder of any Note
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article V or by
law to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
Section 5.11. Control by the Credit Enhancer or Noteholders. The
Holders of a majority of the Security Balances of Notes with the consent of the
Credit Enhancer, or the Credit Enhancer (so long as no Credit Enhancer Default
exists) shall have the right to direct the time, method and place of conducting
any Proceeding for any remedy available to the Indenture Trustee with respect to
the Notes or exercising any trust or power conferred on the Indenture Trustee;
provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall be by
Holders of Notes representing not less than 100% of the Security Balances of
Notes with the consent of the Credit Enhancer, or the Credit Enhancer (so long
as no Credit Enhancer Default exists);
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant
to such Section, then any direction to the Indenture Trustee by Holders of Notes
representing less than 100% of the Security Balances of Notes to sell or
liquidate the Trust Estate shall be of no force and effect; and
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(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability or might materially adversely affect the rights of
any Noteholders not consenting to such action unless the Indenture Trustee has
received satisfactory indemnity from the Credit Enhancer or the Noteholders.
Section 5.12. Waiver of Past Default. Prior to the declaration of
the acceleration of the maturity of the Notes as provided in Section 5.02, the
Holders of Notes of not less than a majority of the Security Balances of the
Notes with the consent of the Credit Enhancer, or the Credit Enhancer (so long
as no Credit Enhancer Default exists) may waive any past Event of Default and
its consequences except an Event of Default (i) with respect to payment of
principal of or interest on any of the Notes or (ii) in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver, the Issuer, the Indenture
Trustee and the Holders of the Notes shall be restored to their respective
former positions and rights hereunder; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by such Xxxxxx's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or omitted
by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Security
Balances of the Notes or (c) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates expressed in such Note and in this Indenture.
Section 5.14. Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
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Section 5.15. Sale of Trust Estate. (a) The power to effect any
sale or other disposition (a "Sale") of any portion of the Trust Estate pursuant
to Section 5.04 is expressly subject to the provisions of Section 5.05 and this
Section 5.15. The power to effect any such Sale shall not be exhausted by any
one or more Sales as to any portion of the Trust Estate remaining unsold, but
shall continue unimpaired until the entire Trust Estate shall have been sold or
all amounts payable on the Notes and under this Indenture and under the
Insurance Agreement shall have been paid. The Indenture Trustee may from time to
time postpone any public Sale by public announcement made at the time and place
of such Sale. The Indenture Trustee hereby expressly waives its right to any
amount fixed by law as compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the
Trust Estate, or any portion thereof, unless:
(1) the Holders of all Notes and the Credit Enhancer consent to,
or direct the Indenture Trustee to make, such Sale, or
(2) the proceeds of such Sale would be not less than the entire
amount which would be payable to the Noteholders under the Notes, the
Certificateholders under the Certificates and the Credit Enhancer in
respect of amounts drawn under the Policy and any other amounts due the
Credit Enhancer under the Insurance Agreement, in full payment thereof
in accordance with Section 5.02, on the Payment Date next succeeding the
date of such Sale, or
(3) the Indenture Trustee determines, in its sole discretion,
that the conditions for retention of the Trust Estate set forth in
Section 5.05 cannot be satisfied (in making any such determination, the
Indenture Trustee may rely upon an opinion of an Independent investment
banking firm obtained and delivered as provided in Section 5.05), and
the Credit Enhancer consents to such Sale, which consent will not be
unreasonably withheld and the Holders representing at least 66-2/3% of
the Security Balances of the Notes consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(c) Unless the Holders and the Credit Enhancer have otherwise
consented or directed the Indenture Trustee, at any public Sale of all or any
portion of the Trust Estate at which a minimum bid equal to or greater than the
amount described in paragraph (2) of subsection (b) of this Section 5.15 has not
been established by the Indenture Trustee and no Person bids an amount equal to
or greater than such amount, the Indenture Trustee shall bid an amount at least
$1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of the Trust
Estate:
(1) any Holder or Holders of Notes may bid for and with the
consent of the Credit Enhancer purchase the property offered for sale,
and upon compliance with the terms of sale may hold, retain and possess
and dispose of such property, without further accountability, and may,
in paying the purchase money therefor, deliver any Notes or claims for
interest thereon in lieu of cash up to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and
such Notes, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the Holders thereof after
being appropriately stamped to show such partial payment;
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(2) the Indenture Trustee may bid for and acquire the property
offered for Sale in connection with any Sale thereof, and, subject to
any requirements of, and to the extent permitted by, applicable law in
connection therewith, may purchase all or any portion of the Trust
Estate in a private sale, and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting the gross Sale price
against the sum of (A) the amount which would be distributable to the
Holders of the Notes and Holders of Certificates and amounts owing to
the Credit Enhancer as a result of such Sale in accordance with Section
5.04(b) on the Payment Date next succeeding the date of such Sale and
(B) the expenses of the Sale and of any Proceedings in connection
therewith which are reimbursable to it, without being required to
produce the Notes in order to complete any such Sale or in order for the
net Sale price to be credited against such Notes, and any property so
acquired by the Indenture Trustee shall be held and dealt with by it in
accordance with the provisions of this Indenture;
(3) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate in connection with a Sale thereof;
(4) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney- in-fact of the Issuer to transfer and convey its
interest in any portion of the Trust Estate in connection with a Sale
thereof, and to take all action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any monies.
Section 5.16. Action on Notes. The Indenture Trustee's right to
seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall be impaired
by the recovery of any judgment by the Indenture Trustee against the Issuer or
by the levy of any execution under such judgment upon any portion of the Trust
Estate or upon any of the assets of the Issuer. Any money or property collected
by the Indenture Trustee shall be applied in accordance with Section 5.04(b).
Section 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a written request from the Credit Enhancer or the
Indenture Trustee with the written consent of the Credit Enhancer to do so, the
Issuer, in its capacity as holder of the Home Equity Loans, shall, with the
written consent of the Credit Enhancer, take all such lawful action as the
Indenture Trustee may request to cause the Issuer to compel or secure the
performance and observance by the Seller and the Master Servicer, as applicable,
of each of their obligations to the Issuer under or in connection with the
Purchase Agreement and the Servicing Agreement, and to exercise any and all
36
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Purchase Agreement and the Servicing Agreement to the
extent and in the manner directed by the Indenture Trustee, as pledgee of the
Home Equity Loans, including the transmission of notices of default on the part
of the Seller or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Master Servicer of each of their obligations under the Purchase
Agreement and the Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee, as pledgee of the Home Equity Loans, subject to the rights of
the Credit Enhancer under the Servicing Agreement may, and at the direction
(which direction shall be in writing or by telephone (confirmed in writing
promptly thereafter)) of the Credit Enhancer (or if a Credit Enhancer Default
has occurred which is continuing, Holders of 66-2/3% of the Security Balances of
the Notes) shall, exercise all rights, remedies, powers, privileges and claims
of the Issuer against the Seller or the Master Servicer under or in connection
with the Purchase Agreement and the Servicing Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Seller or the Master Servicer, as the case may be, of each of their obligations
to the Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Purchase Agreement and the Servicing
Agreement, as the case may be, and any right of the Issuer to take such action
shall not be suspended. In connection therewith, as determined by the Indenture
Trustee, the Issuer shall take all actions necessary to effect the transfer of
the Home Equity Loans to the Indenture Trustee.
ARTICLE VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee. (a) If an Event of
Default has occurred and is continuing, the Indenture Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. (b) Except during the
continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the Indenture
Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Indenture Trustee and conforming to the requirements of this
Indenture; provided, however, the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
37
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved that
the Indenture Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it (A) pursuant to Section 5.11 or (B) from the Credit
Enhancer, which it is entitled to give under any of the Basic Documents.
(d) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(e) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
Section 6.02. Rights of Indenture Trustee. (a) The Indenture
Trustee may rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. The Indenture Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
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(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
Section 6.03. Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be (i) responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, (ii) accountable for the
Issuer's use of the proceeds from the Notes or (iii) responsible for any
statement of the Issuer in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
Section 6.05. Notice of Event of Default. If an Event of Default
occurs and is continuing and if it is known to a Responsible Officer of the
Indenture Trustee, the Indenture Trustee shall give notice thereof to the Credit
Enhancer. The Indenture Trustee shall mail to each Noteholder notice of the
Event of Default within 90 days after it occurs. Except in the case of an Event
of Default in payment of principal of or interest on any Note, the Indenture
Trustee may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders.
Section 6.06. Reports by Indenture Trustee to Holders. The
Indenture Trustee shall deliver to each Noteholder such information as may be
required to enable such holder to prepare its federal and state income tax
returns. In addition, upon the Issuer's written request, the Indenture Trustee
shall promptly furnish information reasonably requested by the Issuer that is
reasonably available to the Indenture Trustee to enable the Issuer to perform
its federal and state income tax reporting obligations.
Section 6.07. Compensation and Indemnity. The Indenture Trustee
shall be compensated and indemnified by the Master Servicer in accordance with
Section 6.06 of the Servicing Agreement. The Indenture Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust.
Section 6.08. Replacement of Indenture Trustee. No resignation or
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee
may resign at any time by so notifying the Issuer and the Credit Enhancer. The
Holders of a majority of Security Balances of the Notes or the Credit Enhancer
may remove the Indenture Trustee by so notifying the Indenture Trustee and the
Credit Enhancer and may appoint a successor Indenture Trustee. The Issuer shall
remove the Indenture Trustee if:
39
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee with the consent of
the Credit Enhancer which consent will not be unreasonably withheld. In
addition, the Indenture Trustee will resign to avoid being directly or
indirectly controlled by the Issuer.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority of Security Balances
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.
Section 6.09. Successor Indenture Trustee by Xxxxxx. If the
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall provide
the Rating Agencies written notice of any such transaction occurring after the
Closing Date.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
40
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. (a) Notwithstanding any other provisions of this Indenture,
at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Trust Estate may at the time be located,
the Indenture Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust Estate, and to vest in such Person or Persons, in such capacity and for
the benefit of the Noteholders, such title to the Trust Estate, or any part
thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.11 and no notice to Noteholders of the appointment of any co-trustee or
separate trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Indenture Trustee joining in
such act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Estate or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at the
direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this 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.
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(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, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture
Trustee shall at all times satisfy the requirements of TIA ss. 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of condition
and it or its parent shall have a long-term debt rating of A or better by
Xxxxx'x. The Indenture Trustee shall comply with TIA ss. 310(b), including the
optional provision permitted by the second sentence of TIA ss. 310(b)(9);
provided, however, that there shall be excluded from the operation of TIA ss.
310(b)(1) any indenture or indentures under which other securities of the Issuer
are outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
Within 90 days after ascertaining the occurrence of an Event of
Default which shall not have been cured or waived, unless authorized by the
Securities and Exchange Commission, the Indenture Trustee shall resign with
respect to one or more Classes of Notes in accordance with Section 6.08 of this
Indenture, and the Issuer shall appoint a successor Indenture Trustee for such
Classes in accordance with Section 6.08 of this Indenture. In the event the
Indenture Trustee fails to comply with the terms of the preceding sentence, the
Indenture Trustee shall comply with clause (ii) of TIA ss. 310(b).
In the case of the appointment hereunder of a successor Indenture
Trustee with respect to any Class of Notes pursuant to this Section 6.11, the
Issuer, the retiring Indenture Trustee and the successor Indenture Trustee with
respect to such Class of Notes shall execute and deliver an indenture
supplemental hereto wherein each successor Indenture Trustee shall accept such
appointment and which (i) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, the successor Indenture
Trustee all the rights, powers, trusts and duties of the retiring Indenture
Trustee with respect to the Notes of the Class to which the appointment of such
successor Indenture Trustee relates, (ii) if the retiring Indenture Trustee is
not retiring with respect to all Classes of Notes, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Indenture Trustee with respect to the
Notes of each Class as to which the retiring Indenture Trustee is not retiring
shall continue to be vested in the Indenture Trustee, and (iii) shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Indenture Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Indenture Trustees co-trustees of
the same trust and that each such Indenture Trustee shall be trustee of a trust
or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Indenture Trustee; and upon the removal of the
retiring Indenture Trustee shall become effective to the extent provided
therein.
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Section 6.12. Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.13. Representations and Warranties. The Indenture
Trustee hereby represents that:
(i) The Indenture Trustee is duly organized, validly existing and
in good standing under the laws of the United States with power and authority to
own its properties and to conduct its business as such properties are currently
owned and such business is presently conducted.
(ii) The Indenture Trustee has the power and authority to execute
and deliver this Indenture and to carry out its terms; and the execution,
delivery and performance of this Indenture have been duly authorized by the
Indenture Trustee by all necessary corporate action.
(iii) The consummation of the transactions contemplated by this
Indenture and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of organization
or bylaws of the Indenture Trustee or any agreement or other instrument to which
the Indenture Trustee is a party or by which it is bound.
(iv) To the Indenture Trustee's best knowledge, there are no
proceedings or investigations pending or threatened before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Indenture Trustee or its properties: (A) asserting the
invalidity of this Indenture (B) seeking to prevent the consummation of any of
the transactions contemplated by this Indenture or (C) seeking any determination
or ruling that might materially and adversely affect the performance by the
Indenture Trustee of its obligations under, or the validity or enforceability
of, this Indenture.
(v) The Indenture Trustee does not have notice of any adverse
claim (as such terms are used in Delaware UCC Section 8-302) with respect to the
Home Equity Loans.
Section 6.14. Directions to Indenture Trustee. The Indenture
Trustee is hereby directed:
(a) to accept the pledge of the Home Equity Loans and hold the
assets of the Trust in trust for the Noteholders and the Credit Enhancer;
(b) to authenticate and deliver the Notes substantially in the
form prescribed by Exhibit A in accordance with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken by
the terms of this Indenture.
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Section 6.15. Indenture Trustee May Own Securities. The Indenture
Trustee, in its individual or any other capacity may become the owner or pledgee
of Securities with the same rights it would have if it were not Indenture
Trustee.
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders. The Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) not more than five days after each Record Date, a
list, in such form as the Indenture Trustee may reasonably require, of the names
and addresses of the Holders of Notes as of such Record Date and, (b) at such
other times as the Indenture Trustee and the Credit Enhancer may request in
writing, within 30 days after receipt by the Issuer of any such request, a list
of similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Indenture Trustee
is the Note Registrar, no such list shall be required to be furnished.
Section 7.02. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA ss. 312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the annual
reports and the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) that the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee, and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as
may be required from time to time by such rules and regulations; and
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(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA ss. 313(c)) such
summaries of any information, documents and reports required to be filed by the
Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) and by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIA
ss. 313(a), within 60 days after each January 1, beginning with January 1, 2007,
the Indenture Trustee shall mail to each Noteholder as required by TIA ss.
313(c) and to the Credit Enhancer a brief report dated as of such date that
complies with TIA ss. 313(a). The Indenture Trustee also shall comply with TIA
ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission, if required, and each stock
exchange, if any, on which the Term Notes are listed. The Issuer shall notify
the Indenture Trustee if and when the Term Notes are listed on any stock
exchange.
Section 7.05. Exchange Act Reporting In connection with the
preparation and filing of periodic reports by the Master Servicer pursuant to
Section 4.01 of the Servicing Agreement, the Indenture Trustee shall timely
provide to the Master Servicer (I) a list of Holders as shown on the Note
Register or Certificate Register as of the end of each calendar year, (II)
copies of all pleadings, other legal process and any other documents relating to
any claims, charges or complaints involving the Indenture Trustee, as indenture
trustee hereunder, or the Trust Estate that are received by the Indenture
Trustee, (III) notice of all matters that, to the actual knowledge of a
Responsible Officer of the Indenture Trustee, have been submitted to a vote of
the Holders, other than those matters that have been submitted to a vote of the
Holders at the request of the Depositor or the Master Servicer, and (IV) notice
of any failure of the Indenture Trustee to make any payment to the Holders as
required pursuant to this Indenture. Neither the Master Servicer nor the
Indenture Trustee shall have any liability with respect to the Master Servicer's
failure to properly prepare or file such periodic reports resulting from or
relating to the Master Servicer's inability or failure to obtain any information
not resulting from the Master Servicer's own negligence or willful misconduct.
ARTICLE VIII
Accounts, Disbursements and Releases
Section 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
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Section 8.02. Trust Accounts. (a) On or prior to the Closing
Date, the Issuer shall cause the Indenture Trustee to establish and maintain, in
the name of the Indenture Trustee, for the benefit of the Noteholders and the
Certificate Paying Agent, on behalf of the Certificateholders and the Credit
Enhancer, the Payment Account as provided in Section 3.01 of this Indenture.
(b) All monies deposited from time to time in the Payment Account
pursuant to the Servicing Agreement and all deposits therein pursuant to this
Indenture are for the benefit of the Noteholders and the Credit Enhancer and the
Certificate Paying Agent, on behalf of the Certificateholders and all
investments made with such monies including all income or other gain from such
investments are for the benefit of the Master Servicer as provided in Section
5.01 of the Servicing Agreement.
On each Payment Date, the Indenture Trustee shall distribute all amounts
on deposit in the Payment Account to Noteholders in respect of the Notes and in
its capacity as Certificate Paying Agent to Certificateholders in the order of
priority set forth in Section 3.05 (except as otherwise provided in Section
5.04(b).
The Master Servicer shall direct the Indenture Trustee in writing to
invest any funds in the Payment Account in Permitted Investments maturing no
later than the Business Day preceding each Payment Date and shall not be sold or
disposed of prior to the maturity.
Section 8.03. Officer's Certificate. The Indenture Trustee shall
receive at least seven days notice when requested by the Issuer to take any
action pursuant to Section 8.05(a), accompanied by copies of any instruments to
be executed, and the Indenture Trustee shall also require, as a condition to
such action, an Officer's Certificate, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with.
Section 8.04. Termination Upon Distribution to Noteholders. This
Indenture and the respective obligations and responsibilities of the Issuer and
the Indenture Trustee created hereby shall terminate upon the distribution to
the Noteholders, the Certificate Paying Agent (on behalf of the
Certificateholders) and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III and the Insurance Agreement; provided,
however, that in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the Court of St.
James's, living on the date hereof.
Section 8.05. Release of Trust Estate. (a) Subject to the payment
of its fees and expenses, the Indenture Trustee may, and when required by the
provisions of this Indenture or the Servicing Agreement shall, execute
instruments to release property from the lien of this Indenture, or convey the
Indenture Trustee's interest in the same, in a manner and under circumstances
that are not inconsistent with the provisions of this Indenture. No party
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relying upon an instrument executed by the Indenture Trustee as provided in
Article VIII hereunder shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent, or see to
the application of any monies.
(b) The Indenture Trustee shall, at such time as (i) there are no
Notes Outstanding, (ii) all sums due the Indenture Trustee pursuant to this
Indenture have been paid, and (iii) all sums due the Credit Enhancer have been
paid, release any remaining portion of the Trust Estate that secured the Notes
from the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of
this Indenture pursuant to this Section 8.05 only upon receipt of a request from
the Issuer accompanied by an Officers' Certificate and a letter from the Credit
Enhancer, stating that the Credit Enhancer has no objection to such request from
the Issuer.
(d) The Indenture Trustee shall, at the request of the Issuer or
the Depositor, surrender the Policy to the Credit Enhancer for cancellation,
upon final payment of principal of and interest on the Notes.
Section 8.06. Surrender of Notes Upon Final Payment. By
acceptance of any Note, the Holder thereof agrees to surrender such Note to the
Indenture Trustee promptly, prior to such Noteholder's receipt of the final
payment thereon.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies and with the written consent of the Credit
Enhancer (which consent shall not be unreasonably withheld), unless a Credit
Enhancer Default shall have occurred and is continuing, the Issuer and the
Indenture Trustee, when authorized by an Issuer Request, at any time and from
time to time, may enter into one or more indentures supplemental hereto (which
shall conform to the provisions of the TIA as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in
the Notes contained;
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(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes or the Credit Enhancer, or to surrender any right or
power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct any error or to correct or
supplement any provision herein or in any supplemental indenture that may be
inconsistent with any other provision herein or in any supplemental indenture;
(vi) to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental indenture;
provided, that such action shall not materially and adversely affect the
interests of the Holders of the Notes or the Credit Enhancer;
(vii) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes and to
add to or change any of the provisions of this Indenture as shall be necessary
to facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI;
(viii) to increase the Maximum Variable Funding Balance with the
written consent of the Credit Enhancer; or
(ix) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be expressly
required by the TIA;
provided, however, that no such supplemental indenture shall be entered into
unless the Indenture Trustee and the Credit Enhancer shall have received an
Opinion of Counsel to the effect that the execution of such supplemental
indenture will not give rise to any material adverse tax consequence to the
Noteholders.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Request, may, also without the consent of any of the Holders of the Notes
but with prior notice to the Rating Agencies and with the consent of the Credit
Enhancer, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, (i) adversely
affect in any material respect the interests of any Noteholder or the Credit
Enhancer or (ii) cause the Issuer to be subject to an entity level tax.
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Section 9.02. Supplemental Indentures With Consent of
Noteholders. The Issuer and the Indenture Trustee, when authorized by an Issuer
Request, also may, with prior notice to the Rating Agencies and with the consent
of the Holders of not less than a majority of the Security Balances of the Notes
affected thereby and the Credit Enhancer, by Act (as defined in Section 10.03
hereof) of such Holders delivered to the Issuer and the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each Note
affected thereby and the Credit Enhancer:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof or the Note Rate
thereon, change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Notes on or after the
respective due dates thereof;
(ii) reduce the percentage of the Security Balances of any Class
of Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required for
any waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding" or modify or alter the exception in the
definition of the term "Noteholder";
(iv) modify or alter the provisions of this Indenture regarding
the voting of Notes held by the Issuer, the Depositor or any of them;
(v) reduce the percentage of the Security Balances of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
(vi) modify any provision of this Section 9.02 except to increase
any percentage specified herein or to provide that certain additional provisions
of this Indenture or the other Basic Documents cannot be modified or waived
without the consent of the Holder of each Note 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 Note 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
Estate or, except as otherwise permitted or contemplated herein, terminate the
lien of this Indenture on any property at any time subject hereto or deprive the
Holder of any Note or the Credit Enhancer of the security provided by the lien
of this Indenture;
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and provided, further, that any action listed in clauses (i) through (viii)
above shall not, as evidenced by an Opinion of Counsel, cause the Issuer to be
subject to an entity level tax.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act (as defined in Section 10.03
hereof) of Noteholders under this Section 9.02 to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
So long as there does not exist a failure by the Credit Enhancer to make
a required payment under the Policy, the Credit Enhancer shall have the right to
exercise all rights of the Holders of the Notes under this Indenture without any
consent of such Holders, and such Holders may exercise such rights only with the
prior written consent of the Credit Enhancer, except as provided herein.
Section 9.03. Execution of Supplemental Indentures. In executing,
or permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and shall be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
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Section 9.05. Conformity with Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the TIA as then in
effect so long as this Indenture shall then be qualified under the TIA.
Section 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
MISCELLANEOUS
Section 10.01. Compliance Certificates and Opinions, etc. (a)
Upon any application or request by the Issuer to the Indenture Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Indenture Trustee and to the Credit Enhancer (i) an Officer's Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(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;
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with; and
(v) if the signer of such certificate or Opinion is required to
be Independent, the statement required by the definition of the term
"Independent".
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(b) (i) Prior to the deposit of any Collateral or other property
or securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 10.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall also
deliver to the Indenture Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be so deposited
and of all other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of the Issuer, as
set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the Security Balances of the Notes, but such a
certificate need not be furnished with respect to any securities so deposited,
if the fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Security
Balances of the Notes.
(iii) Whenever any property or securities are to be released from
the lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and stating that
in the opinion of such person the proposed release will not impair the security
under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer shall also
furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property, other than property as contemplated by clause (v) below or securities
released from the lien of this Indenture since the commencement of the
then-current calendar year, as set forth in the certificates required by clause
(iii) above and this clause (iv), equals 10% or more of the Security Balances of
the Notes, but such certificate need not be furnished in the case of any release
of property or securities if the fair value thereof as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of the then
Security Balances of the Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer
may, without compliance with the requirements of the other provisions of this
Section 10.01, (A) collect upon, sell or otherwise dispose of the Home Equity
Loans as and to the extent permitted or required by the Basic Documents or (B)
make cash payments out of the Payment Account as and to the extent permitted or
required by the Basic Documents, so long as the Issuer shall deliver to the
Indenture Trustee every six months, commencing December 31, 2006, an Officer's
Certificate of the Issuer stating that all the dispositions of Collateral
described in clauses (A) or (B) above that occurred during the preceding six
calendar months were in the ordinary course of the Issuer's business and that
the proceeds thereof were applied in accordance with the Basic Documents.
52
Section 10.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Seller or the
Issuer, stating that the information with respect to such factual matters is in
the possession of the Seller or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 10.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section 10.03.
53
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 10.04. Notices, etc., to Indenture Trustee, Issuer,
Credit Enhancer and Rating Agencies. Any request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders or other documents
provided or permitted by this Indenture shall be in writing and if such request,
demand, authorization, direction, notice, consent, waiver or Act of Noteholders
is to be made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Indenture Trustee at the Corporate Trust Office.
The Indenture Trustee shall promptly transmit any notice received by it from the
Noteholders to the Issuer, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and mailed
first-class, postage prepaid to the Issuer addressed to: Home Equity Loan Trust
2006-HSA5, in care of Wilmington Trust Company, or at any other address
previously furnished in writing to the Indenture Trustee by the Issuer. The
Issuer shall promptly transmit any notice received by it from the Noteholders to
the Indenture Trustee, or
(iii) the Credit Enhancer by the Issuer, the Indenture Trustee or
by any Noteholders shall be sufficient for every purpose hereunder to in writing
and mailed, first-class postage pre-paid, or personally delivered or telecopied
to: MBIA Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000,
Attention: IPM-SF, Re: Home Equity Loan Trust 2006-HSA5. The Credit Enhancer
shall promptly transmit any notice received by it from the Issuer, the Indenture
Trustee or the Noteholders to the Issuer or Indenture Trustee, as the case may
be.
Any consent or waiver under this Indenture or any Basic Document by the
Credit Enhancer must be in writing and signed by the Credit Enhancer to be
effective.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
Standard & Poor's, at the following address: Standard & Poor's Ratings Services,
00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed
Surveillance Department and (ii) in the case of Moody's, at the following
address: Xxxxx'x Investors Service, Inc., ABS Monitoring Department, 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
54
Section 10.05. Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Person's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of Default.
Section 10.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee to such
Holder, that is different from the methods provided for in this Indenture for
such payments or notices. The Issuer shall furnish to the Indenture Trustee a
copy of each such agreement and the Indenture Trustee shall cause payments to be
made and notices to be given in accordance with such agreements.
Section 10.07. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this Indenture by any of the provisions of
the TIA, such required provision shall control.
The provisions of TIA xx.xx. 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 10.08. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.
Section 10.09. Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors, co-trustees and
agents.
55
Section 10.10. Separability. In case any provision in this
Indenture or in the Notes shall be held invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby.
Section 10.11. Benefits of Indenture. Nothing in this Indenture
or in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, the Credit
Enhancer, and any other party secured hereunder, and any other Person with an
ownership interest in any part of the Trust Estate, any benefit or any legal or
equitable right, remedy or claim under this Indenture. The Credit Enhancer is a
third-party beneficiary of this Indenture.
Section 10.12. Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 10.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.14. Counterparts. This Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 10.15. Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
Section 10.16. Issuer Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Indenture Trustee or the Owner Trustee in its individual capacity, any holder of
a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee
or of any successor or assign of the Indenture Trustee or the Owner Trustee in
56
its individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their respective individual capacities) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
Section 10.17. No Petition. The Indenture Trustee, by entering
into this Indenture, and each Noteholder, by its acceptance of a Note, hereby
covenant and agree that they will not at any time institute against the
Depositor or the Issuer, or join in any institution against the Depositor or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of other the Basic Documents.
Section 10.18. Inspection. The Issuer agrees that, on reasonable
prior notice, it shall permit any representative of the Indenture Trustee,
during the Issuer's normal business hours, to examine all the books of account,
records, reports and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by Independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with the
Issuer's officers, employees, and Independent certified public accountants, all
at such reasonable times and as often as may be reasonably requested. The
Indenture Trustee shall and shall cause its representatives to hold in
confidence all such information except to the extent disclosure may be required
by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
57
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
HOME EQUITY LOAN TRUST 2006-HSA5,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/Xxxxxxxx X. Xxxxx
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION,
as Indenture Trustee
By: /s/Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
hereby accepts the appointment as
Paying Agent pursuant to Section 3.03
hereof and as Note Registrar pursuant to
Section 4.02 hereof.
By: /s/Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Vice President
58
STATE OF DELAWARE )
) ss.:
COUNTY OF NEWCASTLE )
On this 28th day of September, 2006, before me personally appeared
Xxxxxxxx X. Xxxxx, to me known, who being by me duly sworn, did depose and say,
that s/he resides at in Delaware, that s/he is the Vice President of the Owner
Trustee, one of the corporations described in and which executed the above
instrument; that s/he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation; and that s/he signed her/his name
thereto by like order.
/s/Xxxxxx X. Xxxxxxx
Notary Public
/s/Xxxxxx X. Xxxxxx
Notary Public
59
STATE OF TEXAS )
) ss.:
COUNTY OF XXXXXX )
On this 28th day of September, 2006, before me personally appeared
Xxxxxx Xxxxxx, to me known, who being by me duly sworn, did depose and say, that
s/he resides at __600 Travis__ that s/he is the Assistant Vice President of
JPMorgan Chase Bank, N.A., as Indenture Trustee, one of the corporations
described in and which executed the above instrument; that s/he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation; and that s/he signed her/his name thereto by like order.
/s/Xxxxxxx X. Xxxxxx
Notary Public
NOTORIAL SEAL
60
EXHIBIT A-1
FORM OF CLASS A NOTES
UNLESS THIS TERM NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY TERM NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS TERM NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TERM NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS TERM NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
THE SELLER, THE DEPOSITOR, THE MASTER SERVICER, THE INDENTURE TRUSTEE, THE
TRUSTEE OR GMAC MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.
HOME EQUITY LOAN TRUST 2006-HSA5
Home Equity Loan-Backed Term Note, Class A
Registered Principal Amount: $[ ]
No. 1 Note Rate: Floating
CUSIP NO.
Home Equity Loan Trust 2006-HSA5, a statutory trust duly
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of $[ ], payable on each Payment Date in
an amount equal to the Percentage Interest evidenced by this Term Note of the
aggregate amount, if any, payable from the Payment Account in respect of
principal on the Term Notes pursuant to Section 3.05 of the Indenture dated as
of September 28, 2006 (the "Indenture") between the Issuer, as Issuer, and
JPMorgan Chase Bank, N.A., as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Term Note
shall be due and payable on the Payment Date in August 2036, to the extent not
previously paid on a prior Payment Date. Capitalized terms used but not defined
herein are defined in Appendix A of the Indenture.
A-1-1
Interest on the Class A Notes will be paid monthly on each
Payment Date at the Note Rate for the related Interest Period subject to
limitations which may result in Net WAC Cap Shortfalls (as further described in
the Indenture). The Note Rate for each Interest Period will be a floating rate
equal to the least of (i) LIBOR plus 0.14% per annum, (ii) 17.25% per annum and
(iii) the Net WAC Rate. LIBOR for each applicable Interest Period will be
determined on the second LIBOR Business Day immediately preceding (i) the
Closing Date in the case of the first Interest Period and (ii) the first day of
each succeeding Interest Period by the Indenture Trustee as set forth in the
Indenture. All determinations of LIBOR by the Indenture Trustee shall, in the
absence of manifest error, be conclusive for all purposes, and each holder of
this Term Note, by accepting this Term Note, agrees to be bound by such
determination. Interest on this Term Note will accrue for each Payment Date from
the most recent Payment Date on which interest has been paid (in the case of the
first Payment Date, from the Closing Date) to but excluding such Payment Date.
Interest will be computed on the basis of the actual number of days in each
Interest Period and a year assumed to consist of 360 days. Principal of and
interest on this Term Note shall be paid in the manner specified on the reverse
hereof.
Principal of and interest on this Term Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Term Note shall be applied first to interest due and
payable on this Term Note as provided above and then to the unpaid principal of
this Term Note.
Reference is made to the further provisions of this Term Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Term Note.
Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this Term
Note shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
This Term Note is one of a duly authorized issue of Term Notes of
the Issuer, designated as its Home Equity Loan-Backed Term Notes, all issued
under the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the holders of
the Term Notes. The Term Notes are subject to all terms of the Indenture.
The Term Notes and the Variable Funding Notes (collectively, the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
This Term Note is entitled to the benefits of an irrevocable and
unconditional financial guaranty insurance policy issued by MBIA Insurance
Corporation.
Principal of and interest on this Term Note will be payable on
each Payment Date, commencing October 25, 2006, as described in the Indenture.
"Payment Date" means the twenty-fifth day of each month, or, if any such date is
not a Business Day, then the next Business Day.
A-1-2
The entire unpaid principal amount of this Term Note shall be due
and payable in full on the Payment Date in August 2036 pursuant to the
Indenture, to the extent not previously paid on a prior Payment Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing, then the Indenture Trustee or the holders of Notes representing not
less than a majority of the Security Balances of all Notes with the consent of
the Credit Enhancer, or the Credit Enhancer may declare the Notes to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Term Notes shall be made pro rata to
the holders of Term Notes entitled thereto.
Payments of interest on this Term Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Term Note, shall be made by check mailed to the
Person whose name appears as the Registered Holder of this Term Note (or one or
more Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Term Notes registered on the Record
Date in the name of the nominee of the Depository Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Term Note be submitted for notation of payment. Any reduction in the
principal amount of this Term Note (or any one or more Predecessor Notes)
effected by any payments made on any Payment Date shall be binding upon all
future holders of this Term Note and of any Term Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Term Note 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 Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and
payable shall be payable only upon presentation and surrender of this Term Note
at the address specified in such notice of final payment.
As provided in the Indenture and subject to certain limitations
set forth therein, the transfer of this Term Note may be registered on the Note
Register upon surrender of this Term Note for registration of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by, the
holder hereof or such holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended, and thereupon one or more new
Term Notes in authorized denominations and in the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this Term
Note, but the Note Registrar shall require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
registration of transfer or exchange of this Term Note.
A-1-3
Each holder or Beneficial Owner of a Term Note, by acceptance of
a Term Note, or, in the case of a Beneficial Owner of a Term Note, a beneficial
interest in a Term Note, covenants and agrees that no recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee, the Seller, the Master Servicer, the Depositor or the Indenture Trustee
on the Term Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director or employee of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each holder or Beneficial Owner of a Term Note, by acceptance of
a Term Note or, in the case of a Beneficial Owner of a Term Note, a beneficial
interest in a Term Note, covenants and agrees by accepting the benefits of the
Indenture that such holder or Beneficial Owner of a Term Note will not at any
time institute against the Depositor or the Issuer, or join in any institution
against the Depositor, the Seller, the Master Servicer, GMAC Mortgage Group,
Inc. or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States federal or state bankruptcy
or similar law in connection with any obligations relating to the Term Notes,
the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Term Note is
issued with the intention that, for federal, state and local income, single
business and franchise tax purposes, the Term Notes will qualify as indebtedness
of the Issuer. Each holder of a Term Note, by acceptance of a Term Note (and
each Beneficial Owner of a Term Note by acceptance of a beneficial interest in a
Term Note), agrees to treat the Term Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Term Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Term Note is
registered (as of the day of determination or as of such other date as may be
specified in the Indenture) as the owner hereof for all purposes, whether or not
this Term Note be overdue, and none of the Issuer, the Indenture Trustee or any
such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the Indenture Trustee and the rights of the
holders of the Term Notes under the Indenture at any time by the Issuer and the
Indenture Trustee with the consent of the holders of Notes representing a
majority of the Security Balances of all Notes at the time Outstanding and the
Credit Enhancer and with prior notice to the Rating Agencies. The Indenture also
contains provisions permitting the holders of Notes representing specified
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percentages of the Security Balances of all Notes, on behalf of the holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the holder of this Term Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such holder and upon all
future holders of this Term Note and of any Term Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Term Note. The
Indenture also permits the Issuer and the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
holders of the Term Notes issued thereunder but with prior notice to the Rating
Agencies and the Credit Enhancer.
The term "Issuer" as used in this Term Note includes any
successor or the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the holders of Term Notes under the Indenture.
The Term Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Term Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Term Note or of the Indenture shall alter or impair, the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Term Note at the times, place and rate, and in the coin or
currency herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Wilmington Trust Company in
its individual capacity, JPMorgan Chase Bank, N.A., in its individual capacity,
any owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Term Note or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The holder of this Term Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Term Note.
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IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not
in its individual capacity, has caused this Term Note to be duly executed.
HOME EQUITY LOAN TRUST 2006-HSA5,
By WILMINGTON TRUST COMPANY, not
in its individual capacity but solely
as Owner Trustee
Dated: September 28, 2006
By:_______________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Term Notes referred to in the within mentioned Indenture.
JPMORGAN CHASE BANK, N.A., not in
its individual capacity but solely as
Indenture Trustee
Dated: September 28, 2006
By:_______________________________________
Authorized Signatory
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ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfer unto
________________________________________________________________________________
________________________________________________________________________________
(name and address of assignee)
the within Term Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________________________________________,
attorney, to transfer said Term Note on the books kept for registration thereof,
with full power of substitution in the premises.
Dated:___________________ ________________________________*/
Signature Guaranteed:
________________________________*/
_________________________
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Term Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
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STATEMENT OF INSURANCE
OBLIGATIONS: $295,648,000
Home Equity Loan Trust 2006-HSA5 Home Equity Loan-Backed
Term Notes, Series 2006-HSA5 and Home Equity Loan- Backed
Variable Funding Notes, Series 2006-HSA5, in an amount not
to exceed $40,194,616
MBIA Insurance Corporation (the "Insurer") has issued a Note Guaranty
Insurance Policy (the "Policy") relating to the Obligations containing the
following provisions, the Policy being on file at the Corporate Trust Office of
the Indenture Trustee.
The Insurer, in consideration of the payment of the premium and
subject to the terms of the Policy, thereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Amount will be received from the Insurer by JPMorgan Chase Bank, National
Association, or its successors, as indenture trustee for the Owners (the
"Indenture Trustee"), on behalf of the Owners, for distribution by the Indenture
Trustee to each Owner of each Owner's proportionate share of the Insured Amount.
The Insurer's obligations under the Policy with respect to a particular Insured
Amount shall be discharged to the extent funds equal to the applicable Insured
Amount are received by the Indenture Trustee, whether or not those funds are
properly applied by the Indenture Trustee. Insured Amounts will be made only at
the time set forth in the Policy, and no accelerated Insured Amounts will be
made regardless of any acceleration of the Obligations, unless the acceleration
is at the sole option of the Insurer.
Notwithstanding the foregoing, the Policy does not cover
shortfalls, if any, attributable to the liability of the Issuer or the Indenture
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Amount that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (a) a certified copy of the order requiring the
return of a preference payment, (b) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (c) an assignment in
such form as is reasonably required by the Insurer, irrevocably assigning to the
Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment and (d) appropriate instruments to
effect the appointment of the Insurer as agent for such Owner in any legal
proceeding related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon, New York City time, on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
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The Insurer will pay any other amount payable under the Policy no
later than 12:00 noon, New York City time, on the later of the Payment Date on
which the related Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by U.S. Bank Trust National
Association, as Fiscal Agent for the Insurer, or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent"), of a Notice (as described below),
provided that if such Notice is received after 12:00 noon, New York City time,
on such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making claim under the Policy, it
shall be deemed not to have been received by the Fiscal Agent for purposes of
this paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Indenture Trustee and the Indenture Trustee may submit an
amended Notice.
Insured Amounts due under the Policy, unless otherwise stated in
the Policy, will be disbursed by the Fiscal Agent to the Indenture Trustee on
behalf of the Owners by wire transfer of immediately available funds in the
amount of the Insured Amount less, in respect of Insured Amounts related to
Preference Amounts, any amount held by the Indenture Trustee for the payment of
such Insured Amount and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal
Agent shall in no event be liable to Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under the Policy.
Subject to the terms of the Agreement, the Insurer shall be
subrogated to the rights of each Owner to receive payments under the Obligations
to the extent of any payment by the Insurer under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Indenture dated as of September 28, 2006,
among the Home Equity Loan Trust 2006-HSA5, as Issuer, and the Indenture
Trustee, as indenture trustee, without regard to any amendment or supplement
thereto, unless such amendment or supplement has been approved in writing by the
Insurer.
"Business Day" means any day other than (a) a Saturday or a
Sunday (b) a day on which banking institutions in the States of New York,
California, Minnesota, Illinois or Delaware are required or authorized by law or
executive order to be closed.
"Deficiency Amount" means, for any Payment Date, an amount equal to the
excess, if any, of: (a) Scheduled Payments over (b) amounts on deposit in the
Payment Account available to pay such Scheduled Payments and any other amounts
available to the Indenture Trustee for payment of such Scheduled Payments.
"Insured Amount" means (a) as of any Payment Date, any
Deficiency Amount and (b) any Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by facsimile substantially in the form of Exhibit A
attached to the Policy, the original of which is subsequently delivered by
registered or certified mail, from the Indenture Trustee specifying the Insured
Amount which shall be due and owing on the applicable Payment Date.
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"Owner" means each Noteholder (as defined in the Agreement) who,
on the applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder.
"Preference Amount" means any amount previously distributed to an
Owner on the Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time in accordance with a
final nonappealable order of a court having competent jurisdiction.
"Scheduled Payments" means, with respect to each payment date,
the payment to be made to Owners in an aggregate amount equal to (i) the
Interest Distribution Amount due on the Obligations, (ii) for the Payment Date
occurring in August 2036, the Guaranteed Payment Amount, (iii) for any other
Payment Date, the principal portion of any Liquidation Loss Amount to the extent
not covered by the Overcollateralization Amount and after application of any
excess interest, in each case in accordance with the original terms of the
Indenture and the Obligations when issued and without regard to any amendment or
modification of the Indenture or the Obligations except amendments or
modifications to which the Insurer has given its prior written consent.
Scheduled Payments will not include, nor shall coverage be
provided under the Policy in respect of, any Relief Act Shortfalls or any Net
WAC Cap Shortfalls that may be incurred or that may be distributable to the
Obligations. Scheduled Payments shall not include payments that become due on an
accelerated basis as a result of a default by the Issuer, an election by the
Issuer to pay principal on an accelerated basis, the occurrence of an Event of
Default under the Indenture or any other cause, unless the Insurer elects, in
its sole discretion, to pay in whole or in part such principal due upon
acceleration, together with any accrued interest to the date of acceleration. In
the event the Insurer does not so elect, the Policy will continue to guarantee
payment on the Obligations in accordance with their original terms. Scheduled
Payments shall not include any amounts due in respect of the Obligations
attributable to any increase in interest rate, penalty or other sum payable by
the Issuer by reason of any default or event of default in respect of the
Obligations, or by reason of any deterioration of the creditworthiness of the
Issuer, nor shall Scheduled Payments include, nor shall coverage be provided
under the Policy in respect of, any taxes, withholding or other charge imposed
by any governmental authority due in connection with the payment of any
Scheduled Payment to an Owner.
Capitalized terms used in the Policy and not otherwise defined in
the Policy shall have the respective meanings set forth in the Agreement as of
the date of execution of the Policy, without giving effect to any subsequent
amendment to or modification of the Agreement unless such amendment or
modification has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the Fiscal
Agent may be made at the address listed below for the Fiscal Agent or such other
address as the Insurer shall specify in writing to the Indenture Trustee.
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The notice address of the Fiscal Agent is 15th Floor, 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Municipal Registrar and Paying
Agency, or such other address as the Fiscal Agent shall specify to the Indenture
Trustee in writing.
THE POLICY IS BEING ISSUED UNDER AND PURSUANT TO, AND SHALL BE
CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the
Policy is not refundable for any reason, including payment, or provision being
made for payment, prior to maturity of the Obligations.
MBIA INSURANCE CORPORATION
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EXHIBIT A-2
FORM OF VARIABLE FUNDING NOTES
THIS VARIABLE FUNDING NOTE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH
ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND
IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE
INDENTURE REFERRED TO HEREIN.
THE PRINCIPAL OF THIS VARIABLE FUNDING NOTE IS PAYABLE IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS VARIABLE FUNDING NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON
THE FACE HEREOF.
THIS VARIABLE FUNDING NOTE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF THE SELLER, THE DEPOSITOR, THE MASTER SERVICER, THE INDENTURE
TRUSTEE, THE TRUSTEE OR GMAC MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE
AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC
DOCUMENTS.
HOME EQUITY LOAN TRUST 2006-HSA5
Home Equity Loan-Backed Variable Funding Note
Registered Initial Maximum Variable
Funding Note Balance: $0.00
No.VFN-1 Note Rate: Floating
Home Equity Loan Trust 2006-HSA5, a statutory trust duly
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to Residential
Funding Corporation or registered assigns, the principal amount set forth on
Schedule A attached hereto (or otherwise owing hereunder as determined pursuant
to the Indenture as defined below), payable on each Payment Date in an amount
equal to the pro rata portion allocable hereto (based on the Security Balances
of all Variable Funding Notes immediately prior to such Payment Date) of the
aggregate amount, if any, payable from the Payment Account in respect of
principal on the Variable Funding Notes pursuant to Section 3.05 of the
Indenture dated as of September 28, 2006 (the "Indenture") between the Issuer,
as Issuer, and JPMorgan Chase Bank, N.A., as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Variable Funding Note shall be due and payable on the Payment Date in August
2036 to the extent not previously paid on a prior Payment Date. Capitalized
terms used but not defined herein are defined in Appendix A of the Indenture.
A-2-1
Interest on the Variable Funding Notes will be paid monthly on
each Payment Date at the Note Rate for the related Interest Period subject to
limitations which may result in Net WAC Cap Shortfalls (as further described in
the Indenture). The Note Rate for each Interest Period will be a floating rate
equal to the least of (i) LIBOR plus 0.14% per annum, (ii) 17.25% per annum and
(iii) the Net WAC Rate. LIBOR for each applicable Interest Period will be
determined on the second LIBOR Business Day immediately preceding (i) the
Closing Date in the case of the first Interest Period and (ii) the first day of
each succeeding Interest Period by the Indenture Trustee as set forth in the
Indenture. All determinations of LIBOR by the Indenture Trustee shall, in the
absence of manifest error, be conclusive for all purposes, and each holder of
this Variable Funding Note, by accepting this Variable Funding Note, agrees to
be bound by such determination. Interest on this Variable Funding Note will
accrue for each Payment Date from the most recent Payment Date on which interest
has been paid (in the case of the First Payment Date, from the Closing Date) to
but excluding such Payment Date. Interest will be computed on the basis of the
actual number of days in each Interest Period and a year assumed to consist of
360 days. Principal of and interest on this Variable Funding Note shall be paid
in the manner specified on the reverse hereof.
Principal of and interest on this Variable Funding Note are
payable in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts. All payments
made by the Issuer with respect to this Variable Funding Note shall be applied
first to interest due and payable on this Variable Funding Note as provided
above and then to the unpaid principal of this Variable Funding Note.
Reference is made to the further provisions of this Variable
Funding Note set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Variable Funding Note.
Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this
Variable Funding Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.
This Variable Funding Note is one of a duly authorized issue of
Variable Funding Notes of the Issuer, designated as its Home Equity Loan-Backed
Variable Funding Notes (herein called the "Variable Funding Notes"), all issued
under the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the holders of
the Variable Funding Notes. The Variable Funding Notes are subject to all terms
of the Indenture.
The Variable Funding Notes and the Term Notes (collectively, the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
This Variable Funding Note is entitled to the benefits of an
irrevocable and unconditional financial guaranty insurance policy issued by MBIA
Insurance Corporation.
A-2-2
Principal of and interest on this Variable Funding Note will be
payable on each Payment Date, commencing October 25, 2006, as described in the
Indenture. "Payment Date" means the twenty-fifth day of each month, or, if any
such day is not a Business Day, then the next Business Day.
The entire unpaid principal amount of this Variable Funding Note
shall be due and payable in full on the Payment Date in August 2036 pursuant to
the Indenture, to the extent not previously paid on a prior Payment Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing, then the Indenture Trustee or the holders of Notes representing not
less than a majority of the Security Balances of all Notes with the consent of
the Credit Enhancer, or the Credit Enhancer may declare the Notes to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Variable Funding Notes shall be made
pro rata to the holders of Variable Funding Notes entitle thereto.
Payments of interest on this Variable Funding Note due and
payable on each Payment Date, together with the installment of principal, if
any, to the extent not in full payment of this Variable Funding Note, shall be
made by check mailed to the Person whose name appears as the Registered Holder
of this Variable Funding Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Variable Funding Notes registered on the Record Date in the name of
the nominee of the Depository Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Variable
Funding Note be submitted for notation of payment. Any reduction in the
principal amount of this Variable Funding Note (or any one or more Predecessor
Variable Funding Notes) effected by any payments made on any Payment Date shall
be binding upon all future holders of this Variable Funding Note and of any
Variable Funding Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Variable Funding Note 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 Registered Holder hereof as of the
Record Date preceding such Payment Date by notice mailed or transmitted by
facsimile prior to such Payment Date and the amount then due and payable shall
be payable only upon presentation and surrender of this Variable Funding Note at
the address specified in such notice of final payment.
As provided in the Indenture and subject to certain limitations
set forth therein, the transfer of this Variable Funding Note may be registered
on the Note Register upon surrender of this Variable Funding Note for
registration of transfer at the Corporate Trust Office, duly endorsed by, and
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the holder hereof or such holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
A-2-3
as may be determined by the Note Registrar in addition to or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Variable Funding Notes in authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Variable Funding Note, but the Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of this Variable Funding Note.
Each holder or Beneficial Owner of a Variable Funding Note, by
acceptance of a Variable Funding Note or, in the case of a Beneficial Owner of a
Variable Funding Note, a beneficial interest in a Variable Funding Note,
covenants and agrees that no recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner Trustee, the Seller, the
Master Servicer, the Depositor or the Indenture Trustee on the Variable Funding
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each holder or Beneficial Owner of a Variable Funding Note, by
acceptance of a Variable Funding Note or, in the case of a Beneficial Owner of a
Variable Funding Note, a beneficial interest in a Variable Funding Note,
covenants and agrees by accepting the benefits of the Indenture that such holder
or Beneficial Owner of a Variable Funding Note will not at any time institute
against the Depositor or the Issuer, or join in any institution against the
Depositor, the Seller, the Master Servicer, GMAC Mortgage Group, Inc. or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Variable Funding
Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Variable
Funding Note is issued with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Variable Funding Notes
will qualify as indebtedness of the Issuer. Each holder of a Variable Funding
Note, by acceptance of a Variable Funding Note (and each Beneficial Owner of a
Variable Funding Note, by acceptance of a beneficial interest in a Variable
Funding Note), agrees to treat the Variable Funding Notes for federal, state and
local income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of this
Variable Funding Note, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name this Variable
Funding Note (as of the day of determination or as of such other date as may be
specified in the Indenture) is registered as the owner hereof for all purposes,
whether or not this Variable Funding Note be overdue, and none of the Issuer,
the Indenture Trustee or any such agent shall be affected by notice to the
contrary.
A-2-4
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the Indenture Trustee and the rights of the
holders of the Variable Funding Notes under the Indenture at any time by the
Issuer and the Indenture Trustee with the consent of the holders of Notes
representing a majority of the Security Balances of all Notes at the time
Outstanding and the Credit Enhancer and with prior notice to the Rating
Agencies. The Indenture also contains provisions permitting the holders of Notes
representing specified percentages of the Security Balances of all Notes, on
behalf of the holders of all the Notes, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the holder of
this Variable Funding Note (or any one of more Predecessor Variable Funding
Notes) shall be conclusive and binding upon such holder and upon all future
holders of this Variable Funding Note and of any Variable Funding Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Variable
Funding Note. The Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
holders of the Variable Funding Notes issued thereunder but with prior notice to
the Rating Agencies and the Credit Enhancer.
The term "Issuer" as used in this Variable Funding Note includes
any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the holders of Variable Funding Notes under the Indenture.
The Variable Funding Notes are issuable only in registered form
in denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Variable Funding Note and the Indenture shall be construed
in accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this
Variable Funding Note or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Variable Funding Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Wilmington Trust Company in
its individual capacity, JPMorgan Chase Bank, N.A., in its individual capacity,
any owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Variable Funding Note or
performance of, or omission to perform, any of the covenants, obligations or
A-2-5
indemnifications contained in the Indenture. The holder of this Variable Funding
Note by its acceptance hereof agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Variable Funding Note.
A-2-6
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not
in its individual capacity, has caused this Term Note to be duly executed.
HOME EQUITY LOAN TRUST 2006-HSA5,
By WILMINGTON TRUST COMPANY, not
in its individual capacity but solely
as Owner Trustee
Dated: September 28, 2006
By:_______________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Variable Funding Note referred to in the within mentioned
Indenture.
JPMORGAN CHASE BANK, N.A., not in
its individual capacity but solely as
Indenture Trustee
Dated: September 28, 2006
By:_______________________________________
Authorized Signatory
A-2-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfer unto
________________________________________________________________________________
________________________________________________________________________________
(name and address of assignee)
the within Term Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________________________________________,
attorney, to transfer said Term Note on the books kept for registration thereof,
with full power of substitution in the premises.
Dated:___________________ ________________________________*/
Signature Guaranteed:
________________________________*/
_________________________
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Term Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-2-8
STATEMENT OF INSURANCE
OBLIGATIONS: $295,648,000
Home Equity Loan Trust 2006-HSA5 Home Equity Loan-Backed
Term Notes, Series 2006-HSA5 and Home Equity Loan- Backed
Variable Funding Notes, Series 2006-HSA5, in an amount not
to exceed $40,194,616
MBIA Insurance Corporation (the "Insurer") has issued a Note Guaranty
Insurance Policy (the "Policy") relating to the Obligations containing the
following provisions, the Policy being on file at the Corporate Trust Office of
the Indenture Trustee.
The Insurer, in consideration of the payment of the premium and
subject to the terms of the Policy, thereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Amount will be received from the Insurer by JPMorgan Chase Bank, National
Association, or its successors, as indenture trustee for the Owners (the
"Indenture Trustee"), on behalf of the Owners, for distribution by the Indenture
Trustee to each Owner of each Owner's proportionate share of the Insured Amount.
The Insurer's obligations under the Policy with respect to a particular Insured
Amount shall be discharged to the extent funds equal to the applicable Insured
Amount are received by the Indenture Trustee, whether or not those funds are
properly applied by the Indenture Trustee. Insured Amounts will be made only at
the time set forth in the Policy, and no accelerated Insured Amounts will be
made regardless of any acceleration of the Obligations, unless the acceleration
is at the sole option of the Insurer.
Notwithstanding the foregoing, the Policy does not cover
shortfalls, if any, attributable to the liability of the Issuer or the Indenture
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Amount that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (a) a certified copy of the order requiring the
return of a preference payment, (b) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (c) an assignment in
such form as is reasonably required by the Insurer, irrevocably assigning to the
Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment and (d) appropriate instruments to
effect the appointment of the Insurer as agent for such Owner in any legal
proceeding related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon, New York City time, on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
A-2-9
The Insurer will pay any other amount payable under the Policy no
later than 12:00 noon, New York City time, on the later of the Payment Date on
which the related Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by U.S. Bank Trust National
Association, as Fiscal Agent for the Insurer, or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent"), of a Notice (as described below),
provided that if such Notice is received after 12:00 noon, New York City time,
on such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making claim under the Policy, it
shall be deemed not to have been received by the Fiscal Agent for purposes of
this paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Indenture Trustee and the Indenture Trustee may submit an
amended Notice.
Insured Amounts due under the Policy, unless otherwise stated in
the Policy, will be disbursed by the Fiscal Agent to the Indenture Trustee on
behalf of the Owners by wire transfer of immediately available funds in the
amount of the Insured Amount less, in respect of Insured Amounts related to
Preference Amounts, any amount held by the Indenture Trustee for the payment of
such Insured Amount and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal
Agent shall in no event be liable to Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under the Policy.
Subject to the terms of the Agreement, the Insurer shall be
subrogated to the rights of each Owner to receive payments under the Obligations
to the extent of any payment by the Insurer under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Indenture dated as of September 28, 2006,
among the Home Equity Loan Trust 2006-HSA5, as Issuer, and the Indenture
Trustee, as indenture trustee, without regard to any amendment or supplement
thereto, unless such amendment or supplement has been approved in writing by the
Insurer.
"Business Day" means any day other than (a) a Saturday or a
Sunday (b) a day on which banking institutions in the States of New York,
California, Minnesota, Illinois or Delaware are required or authorized by law or
executive order to be closed.
"Deficiency Amount" means, for any Payment Date, an amount equal to the
excess, if any, of: (a) Scheduled Payments over (b) amounts on deposit in the
Payment Account available to pay such Scheduled Payments and any other amounts
available to the Indenture Trustee for payment of such Scheduled Payments.
"Insured Amount" means (a) as of any Payment Date, any
Deficiency Amount and (b) any Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by facsimile substantially in the form of Exhibit A
attached to the Policy, the original of which is subsequently delivered by
registered or certified mail, from the Indenture Trustee specifying the Insured
Amount which shall be due and owing on the applicable Payment Date.
A-2-10
"Owner" means each Noteholder (as defined in the Agreement) who,
on the applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder.
"Preference Amount" means any amount previously distributed to an
Owner on the Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time in accordance with a
final nonappealable order of a court having competent jurisdiction.
"Scheduled Payments" means, with respect to each payment date,
the payment to be made to Owners in an aggregate amount equal to (i) the
Interest Distribution Amount due on the Obligations, (ii) for the Payment Date
occurring in August 2036, the Guaranteed Payment Amount, (iii) for any other
Payment Date, the principal portion of any Liquidation Loss Amount to the extent
not covered by the Overcollateralization Amount and after application of any
excess interest, in each case in accordance with the original terms of the
Indenture and the Obligations when issued and without regard to any amendment or
modification of the Indenture or the Obligations except amendments or
modifications to which the Insurer has given its prior written consent.
Scheduled Payments will not include, nor shall coverage be
provided under the Policy in respect of, any Relief Act Shortfalls or any Net
WAC Cap Shortfalls that may be incurred or that may be distributable to the
Obligations. Scheduled Payments shall not include payments that become due on an
accelerated basis as a result of a default by the Issuer, an election by the
Issuer to pay principal on an accelerated basis, the occurrence of an Event of
Default under the Indenture or any other cause, unless the Insurer elects, in
its sole discretion, to pay in whole or in part such principal due upon
acceleration, together with any accrued interest to the date of acceleration. In
the event the Insurer does not so elect, the Policy will continue to guarantee
payment on the Obligations in accordance with their original terms. Scheduled
Payments shall not include any amounts due in respect of the Obligations
attributable to any increase in interest rate, penalty or other sum payable by
the Issuer by reason of any default or event of default in respect of the
Obligations, or by reason of any deterioration of the creditworthiness of the
Issuer, nor shall Scheduled Payments include, nor shall coverage be provided
under the Policy in respect of, any taxes, withholding or other charge imposed
by any governmental authority due in connection with the payment of any
Scheduled Payment to an Owner.
Capitalized terms used in the Policy and not otherwise defined in
the Policy shall have the respective meanings set forth in the Agreement as of
the date of execution of the Policy, without giving effect to any subsequent
amendment to or modification of the Agreement unless such amendment or
modification has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the Fiscal
Agent may be made at the address listed below for the Fiscal Agent or such other
address as the Insurer shall specify in writing to the Indenture Trustee.
A-2-11
The notice address of the Fiscal Agent is 15th Floor, 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Municipal Registrar and Paying
Agency, or such other address as the Fiscal Agent shall specify to the Indenture
Trustee in writing.
THE POLICY IS BEING ISSUED UNDER AND PURSUANT TO, AND SHALL BE
CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the
Policy is not refundable for any reason, including payment, or provision being
made for payment, prior to maturity of the Obligations.
MBIA INSURANCE CORPORATION
A-2-12
SCHEDULE A
to
HOME EQUITY LOAN TRUST 2006-HSA5
Home Equity Loan-Backed Variable Funding Note
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DATE PERCENTAGE INTEREST PRINCIPAL SECURITY BALANCE AUTHORIZED SIGNATURE
PAYMENTS OUTSTANDING OF INDENTURE TRUSTEE
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A-2-13
EXHIBIT B
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the Seller
hereby certifies the following facts: Neither the Seller nor anyone acting on
its behalf has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or
negotiated with respect to the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security with, any person in any manner, or
made any general solicitation by means of general advertising or in any other
manner, or taken any other action, that would constitute a distribution of the
Rule 144A Securities under the Securities Act of 1933, as amended (the "1933
Act"), or that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or another "qualified institutional buyer" as defined in Rule
144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with, the
Indenture Trustee and the Issuer (as defined in the Indenture (the "Indenture"),
dated as of September 28, 2006, between Home Equity Loan Trust 2006-HSA5, as
Issuer, and JPMorgan Chase Bank, N.A., as Indenture Trustee, pursuant to Section
4.02 of the Indenture, as follows:
a. The Buyer understands that the Rule 144A Securities
have not been registered under the 1933 Act or the securities laws of
any state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and
risks of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the
Seller, the Indenture Trustee, the Owner Trustee or the Master Servicer.
B-1
d. Neither the Buyer nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Rule
144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Rule 144A Securities, any interest in
the Rule 144A Securities or any other similar security from, or
otherwise approached or negotiated with respect to the Rule 144A
Securities, any interest in the Rule 144A Securities or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Rule
144A Securities under the 1933 Act or that would render the disposition
of the Rule 144A Securities a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor has it
authorized or will it authorize any person to act, in such manner with
respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that
term is defined in Rule 144A under the 1933 Act and has completed either
of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. The Buyer is aware that the sale to it is being made in
reliance on Rule 144A. The Buyer is acquiring the Rule 144A Securities
for its own account or the accounts of other qualified institutional
buyers, understands that such Rule 144A Securities may be resold,
pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for
the account of a qualified institutional buyer to whom notice is given
that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the
1933 Act.
3. This document may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
B-2
IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
Print Name of Seller Print Name of Buyer
By:_______________________________ By:_______________________________
Name: Name:
Title: Title:
Tax Payer Identification: Tax Payer Identification:
No._______________________________ No._______________________________
Date:_____________________________ Date:_____________________________
B-3
ANNEX 1 TO EXHIBIT B
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis $______________________** in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
- Corporation, etc. The Buyer is a corporation (other than a bank, savings
and loan association or similar institution), Massachusetts or similar
business trust, partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code.
- Bank. The Buyer (a) is a national bank or banking institution organized
under the laws of any State, territory or the District of Columbia, the
business of which is substantially confined to banking and is supervised
by the State or territorial banking commission or similar official or is
a foreign bank or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached hereto.
- Savings and Loan. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association
or similar institution, which is supervised and examined by a State or
Federal authority having supervision over any such institutions or is a
foreign savings and loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements.
- Broker-Dealer. The Buyer is a dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934.
_________________________
** Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
B-4
- Insurance Company. The Buyer is an insurance company whose primary and
predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a similar
official or agency of a State or territory or the District of Columbia.
- State or Local Plan. The Buyer is a plan established and maintained by a
State, its political subdivisions, or any agency or instrumentality of
the State or its political subdivisions, for the benefit of its
employees.
- ERISA Plan. The Buyer is an employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974.
- Investment Adviser. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
- SBIC. The Buyer is a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958.
- Business Development Company. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisers Act
of 1940.
- Trust Fund. The Buyer is a trust fund whose trustee is a bank or trust
company and whose participants are exclusively (a) plans established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees, or (b) employee benefit plans within the
meaning of Title I of the Employee Retirement Income Security Act of
1974, but is not a trust fund that includes as participants individual
retirement accounts or H.R. 10 plans.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934.
B-5
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Rule 144A
Securities are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
____ ____ Will the Buyer be purchasing the Rule 144A Yes No Securities
Yes No only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
____________________________________
Print Name of Buyer
By:_________________________________
Name:
Title:
Date:_______________________________
B-6
ANNEX 2 TO EXHIBIT B
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used.
__ - The Buyer owned $__________________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule
144A).
__ - The Buyer is part of a Family of Investment Companies which owned in
the aggregate $__________________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
B-7
5. The Buyer is familiar with Rule 144A and understands that each
of the parties to which this certification is made are relying and will continue
to rely on the statements made herein because one or more sales to the Buyer
will be in reliance on Rule 144A. In addition, the Buyer will only purchase for
the Buyer's own account.
6. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
____________________________________
Print Name of Buyer
By:_________________________________
Name:____________________________
Title:___________________________
IF AN ADVISER:
____________________________________
Print Name of Buyer
Date:_______________________________
B-8
EXHIBIT C
FORM OF INVESTOR REPRESENTATION LETTER
_______________ , 20__
Residential Funding Mortgage Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
JPMorgan Chase Bank, N.A.
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Corporate Trust Administration
Re: Home Equity Loan-Backed Capped Funding Notes
Series 2006-HSA5
Ladies and Gentlemen:
__________________ (the "Purchaser") intends to purchase from
_________ (the "Seller") $_______ Capped Funding Notes of Series 2006-HSA5 (the
"Notes"), issued pursuant to the Indenture (the "Indenture"), dated as of
September 28, 2006 between Home Equity Loan Trust 2006-HSA5, as issuer (the
"Issuer"), and JPMorgan Chase Bank, N.A., as indenture trustee (the "Indenture
Trustee"). All terms used herein and not otherwise defined shall have the
meanings set forth in the Indenture. The Purchaser hereby certifies, represents
and warrants to, and covenants with, the Issuer and the Indenture Trustee that:
1. The Purchaser understands that (a) the Notes have not been and
will not be registered or qualified under the Securities Act of 1933, as
amended (the "Act") or any state securities law, (b) the Depositor is
not required to so register or qualify the Notes, (c) the Notes may be
resold only if registered and qualified pursuant to the provisions of
the Act or any state securities law, or if an exemption from such
registration and qualification is available, (d) the Indenture contains
restrictions regarding the transfer of the Notes and (e) the Notes will
bear a legend to the foregoing effect.
2. The Purchaser is acquiring the Notes for its own account for
investment only and not with a view to or for sale in connection with
any distribution thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters, and, in particular, in such matters related to
securities similar to the Notes, such that it is capable of evaluating
the merits and risks of investment in the Notes, (b) able to bear the
economic risks of such an investment and (c) an "accredited investor"
within the meaning of Rule 501(a) promulgated pursuant to the Act.
C-1
4. The Purchaser has been furnished with, and has had an
opportunity to review (a) [a copy of the Private Placement Memorandum,
dated relating to the Notes (b)] a copy of the Indenture and [b] [c]
such other information concerning the Notes, the Home Equity Loans and
the Depositor as has been requested by the Purchaser from the Depositor
or the Seller and is relevant to the Purchaser's decision to purchase
the Notes. The Purchaser has had any questions arising from such review
answered by the Depositor or the Seller to the satisfaction of the
Purchaser. [If the Purchaser did not purchase the Notes from the Seller
in connection with the initial distribution of the Notes and was
provided with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original Sale") of the
Notes by the Depositor, the Purchaser acknowledges that such Memorandum
was provided to it by the Seller, that the Memorandum was prepared by
the Depositor solely for use in connection with the Original Sale and
the Depositor did not participate in or facilitate in any way the
purchase of the Notes by the Purchaser from the Seller, and the
Purchaser agrees that it will look solely to the Seller and not to the
Depositor with respect to any damage, liability, claim or expense
arising out of, resulting from or in connection with (a) error or
omission, or alleged error or omission, contained in the Memorandum, or
(b) any information, development or event arising after the date of the
Memorandum.]
5. The Purchaser has not and will not nor has it authorized or
will it authorize any person to (a) offer, pledge, sell, dispose of or
otherwise transfer any Note, any interest in any Note or any other
similar security to any person in any manner, (b) solicit any offer to
buy or to accept a pledge, disposition of other transfer of any Note,
any interest in any Note or any other similar security from any person
in any manner, (c) otherwise approach or negotiate with respect to any
Note, any interest in any Note or any other similar security with any
person in any manner, (d) make any general solicitation by means of
general advertising or in any other manner or (e) take any other action,
that (as to any of (a) through (e) above) would constitute a
distribution of any Note under the Act, that would render the
disposition of any Note a violation of Section 5 of the Act or any state
securities law, or that would require registration or qualification
pursuant thereto. The Purchaser will not sell or otherwise transfer any
of the Notes, except in compliance with the provisions of the Indenture.
6. The Purchaser is not a non-United States person.
Very truly yours,
By:_________________________________
Name:
Title:
C-2
EXHIBIT D
FORM OF TRANSFEROR REPRESENTATION LETTER
__________________, 20___
Residential Funding Mortgage Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
JPMorgan Chase Bank, N.A.
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Corporate Trust Administration
Re: Home Equity Loan-Backed Capped Funding Notes
Series 2006-HSA5
Ladies and Gentlemen:
___________________(the "Purchaser") intends to purchase from
______ (the "Seller") $_______ Capped Funding Notes of Series 2006-HSA5 (the
"Notes"), issued pursuant to the (the "Indenture"), dated as of September 28,
2006 between Home Equity Loan Trust 2006-HSA5, as issuer (the "Issuer"), and
JPMorgan Chase Bank, N.A., as indenture trustee (the "Indenture Trustee"). All
terms used herein and not otherwise defined shall have the meanings set forth in
the Indenture. The Seller hereby certifies, represents and warrants to, and
covenants with, the Issuer and the Indenture Trustee that:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Note, any
interest in any Note or any other similar security to any person in any manner,
(b) has solicited any offer to buy or to accept a pledge, disposition or other
transfer of any Note, any interest in any Note or any other similar security
from any person in any manner, (c) has otherwise approached or negotiated with
respect to any Note, any interest in any Note or any other similar security with
any person in any manner, (d) has made any general solicitation by means of
general advertising or in any other manner, or (e) has taken any other action,
that (as to any of (a) through (e) above) would constitute a distribution of the
Notes under the Securities Act of 1933 (the "Act"), that would render the
disposition of any Note a violation of Section 5 of the Act or any state
securities law, or that would require registration or qualification pursuant
thereto. The Seller will not act, in any manner set forth in the foregoing
sentence with respect to any Note. The Seller has not and will not sell or
otherwise transfer any of the Notes, except in compliance with the provisions of
the Indenture.
D-1
Very truly yours,
________________________________________
(Seller)
By:_____________________________________
Name:___________________________________
Title:__________________________________
D-2
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions...............................................................2
Section 1.01. Definitions........................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act..................2
Section 1.03. Rules of Construction..............................................2
ARTICLE II Original Issuance of Notes................................................3
Section 2.01. Form...............................................................3
Section 2.02. Execution, Authentication and Delivery.............................3
ARTICLE III Covenants.................................................................4
Section 3.01. Collection of Payments with Respect to the Home Equity Loans.......4
Section 3.02. Maintenance of Office or Agency....................................4
Section 3.03. Money for Payments to Be Held in Trust; Paying Agent...............4
Section 3.04. Existence..........................................................6
Section 3.05. Payment of Principal and Interest; Defaulted Interest..............6
Section 3.06. Protection of Trust Estate.........................................8
Section 3.07. Opinions as to Trust Estate........................................9
Section 3.08. Performance of Obligations; Servicing Agreement....................9
Section 3.09. Negative Covenants................................................10
Section 3.10. Annual Statement as to Compliance.................................10
Section 3.11. Recording of Assignments..........................................11
Section 3.12. Representations and Warranties Concerning the Home Equity
Loans.............................................................11
Section 3.13. Assignee of Record of the Home Equity Loans.......................11
Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee......11
Section 3.15. Investment Company Act............................................11
Section 3.16. Issuer May Consolidate, etc.......................................12
Section 3.17. Successor or Transferee...........................................13
Section 3.18. No Other Business.................................................13
Section 3.19. No Borrowing......................................................13
Section 3.20. Guarantees, Loans, Advances and Other Liabilities.................13
Section 3.21. Capital Expenditures..............................................14
Section 3.22. Owner Trustee Not Liable for Certificates or Related
Documents.........................................................14
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(CONTINUED)
PAGE
Section 3.23. Restricted Payments...............................................14
Section 3.24. Notice of Events of Default.......................................14
Section 3.25. Further Instruments and Act.......................................14
Section 3.26. Statements to Noteholders.........................................15
Section 3.27. Determination of Note Rates.......................................15
Section 3.28. Payments under the Policy.........................................15
Section 3.29. Additional Representations of the Issuer..........................15
ARTICLE IV The Notes; Satisfaction and Discharge of Indenture.......................17
Section 4.01. The Notes; Increase of Maximum Variable Funding Balance;
Variable Funding Notes............................................17
Section 4.02. Registration of and Limitations on Transfer and Exchange of
Notes; Appointment of Certificate Registrar.......................18
Section 4.03. Xxxxxxxxx, Xxxxxxxxx, Lost or Stolen Notes........................21
Section 4.04. Persons Deemed Owners.............................................22
Section 4.05. Cancellation......................................................22
Section 4.06. Book-Entry Notes..................................................22
Section 4.07. Notices to Depository.............................................23
Section 4.08. Definitive Notes..................................................23
Section 4.09. Tax Treatment.....................................................24
Section 4.10. Satisfaction and Discharge of Indenture...........................24
Section 4.11. Application of Trust Money........................................25
Section 4.12. Subrogation and Cooperation.......................................26
Section 4.13. Repayment of Monies Held by Paying Agent..........................26
Section 4.14. Temporary Notes...................................................27
ARTICLE V Default and Remedies.....................................................27
Section 5.01. Events of Default.................................................27
Section 5.02. Acceleration of Maturity; Rescission and Annulment................27
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.................................................28
Section 5.04. Remedies; Priorities..............................................30
Section 5.05. Optional Preservation of the Trust Estate.........................32
Section 5.06. Limitation of Suits...............................................32
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(CONTINUED)
PAGE
Section 5.07. Unconditional Rights of Noteholders to Receive Principal and
Interest..........................................................33
Section 5.08. Restoration of Rights and Remedies................................33
Section 5.09. Rights and Remedies Cumulative....................................33
Section 5.10. Delay or Omission Not a Waiver....................................33
Section 5.11. Control by the Credit Enhancer or Noteholders.....................33
Section 5.12. Waiver of Past Default............................................34
Section 5.13. Undertaking for Costs.............................................34
Section 5.14. Waiver of Stay or Extension Laws..................................34
Section 5.15. Sale of Trust Estate..............................................35
Section 5.16. Action on Notes...................................................36
Section 5.17. Performance and Enforcement of Certain Obligations................37
ARTICLE VI The Indenture Trustee....................................................37
Section 6.01. Duties of Indenture Trustee.......................................37
Section 6.02. Rights of Indenture Trustee.......................................38
Section 6.03. Individual Rights of Indenture Trustee............................39
Section 6.04. Indenture Trustee's Disclaimer....................................39
Section 6.05. Notice of Event of Default........................................39
Section 6.06. Reports by Indenture Trustee to Holders...........................39
Section 6.07. Compensation and Indemnity........................................39
Section 6.08. Replacement of Indenture Trustee..................................40
Section 6.09. Successor Indenture Trustee by Xxxxxx.............................41
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee...........................................................41
Section 6.11. Eligibility; Disqualification.....................................42
Section 6.12. Preferential Collection of Claims Against Issuer..................43
Section 6.13. Representations and Warranties....................................43
Section 6.14. Directions to Indenture Trustee...................................43
Section 6.15. Indenture Trustee May Own Securities..............................44
ARTICLE VII Noteholders' Lists and Reports...........................................44
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders.......................................................44
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 7.02. Preservation of Information; Communications to Noteholders........44
Section 7.03. Reports by Issuer.................................................44
Section 7.04. Reports by Indenture Trustee......................................45
Section 7.05. Exchange Act Reporting............................................45
ARTICLE VIII Accounts, Disbursements and Releases.....................................45
Section 8.01. Collection of Money...............................................45
Section 8.02. Trust Accounts....................................................46
Section 8.03. Officer's Certificate.............................................46
Section 8.04. Termination Upon Distribution to Noteholders......................46
Section 8.05. Release of Trust Estate...........................................47
Section 8.06. Surrender of Notes Upon Final Payment.............................47
ARTICLE IX SUPPLEMENTAL INDENTURES..................................................47
Section 9.01. Supplemental Indentures Without Consent of Noteholders............47
Section 9.02. Supplemental Indentures With Consent of Noteholders...............49
Section 9.03. Execution of Supplemental Indentures..............................50
Section 9.04. Effect of Supplemental Indenture..................................50
Section 9.05. Conformity with Trust Indenture Act...............................51
Section 9.06. Reference in Notes to Supplemental Indentures.....................51
ARTICLE X MISCELLANEOUS............................................................51
Section 10.01. Compliance Certificates and Opinions, etc.........................51
Section 10.02. Form of Documents Delivered to Indenture Trustee..................53
Section 10.03. Acts of Noteholders...............................................53
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Credit Enhancer
and Rating Agencies...............................................54
Section 10.05. Notices to Noteholders; Waiver....................................55
Section 10.06. Alternate Payment and Notice Provisions...........................55
Section 10.07. Conflict with Trust Indenture Act.................................55
Section 10.08. Effect of Headings................................................56
Section 10.09. Successors and Assigns............................................56
Section 10.10. Separability......................................................56
Section 10.11. Benefits of Indenture.............................................56
Section 10.12. Legal Holidays....................................................56
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 10.13. GOVERNING LAW.....................................................56
Section 10.14. Counterparts......................................................56
Section 10.15. Recording of Indenture............................................56
Section 10.16. Issuer Obligation.................................................57
Section 10.17. No Petition.......................................................57
Section 10.18. Inspection........................................................57
EXHIBIT
Exhibit A-1 ..Form of Class A Notes A-1
Exhibit A-2 ...Form of Variable Funding Notes A-2
Exhibit B .....Form of Rule 144A Investment Representation B-1
Exhibit C .....Form of Investor Representation Letter C-1
Exhibit D .....Form of Transferor Representation Letter D-1
-v-
APPENDIX A
DEFINITIONS
Additional Balance: With respect to any Home Equity Loan, any
future Draw made by the related Mortgagor pursuant to the related Loan Agreement
on and after the Cut-off Date; provided, however, that if an Amortization Event
occurs, then any Draw after such Amortization Event shall not be acquired by the
Trust and shall not be an Additional Balance.
Additional Balance Differential: With respect to any Payment
Date, unless and until an Amortization Event occurs, (x) up to and including the
Payment Date occurring in the calendar month during which the Revolving Period
ends, the amount, if any, by which Additional Balances resulting from Draws
under the Home Equity Loans during the related Collection Period exceed
Principal Collections during such Collection Period and (y) after the Payment
Date occurring in the calendar month during which the Revolving Period ends, the
aggregate amount of Additional Balances conveyed to the Trust during the related
Collection Period.
Additional Certificate Security Balance: With respect to the
issuance of Capped Funding Notes pursuant to Section 4.01(d) of the Indenture,
the amount, if any, required in accordance with the Opinion of Counsel in
connection therewith to be added to the Security Balances of the Certificates in
accordance with Section 3.12 of the Trust Agreement. In addition, with respect
to any Payment Date described in the second sentence of Section 3.12(a) of the
Trust Agreement, the "Additional Certificate Security Balance" shall include the
amount of the excess described in such sentence.
Adjusted Mortgage Rate: With respect to any Home Equity Loan and
any date of determination, the Loan Rate borne by the related Home Equity Loan,
less the rate at which the related Subservicing Fee accrues.
Affiliate: With respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise and "controlling" and "controlled"
shall have meanings correlative to the foregoing.
Aggregate Additional Balance Differential: With respect to any
Payment Date and the Variable Funding Notes, the sum of Additional Balance
Differentials that have been added to the Security Balance of Variable Funding
Notes prior to such Payment Date.
Aggregate Security Balance: With respect to any Payment Date, the
aggregate of the Security Balances of all Securities or specified Classes of
Securities as of such date.
Amortization Event: Any one of the following events:
1
(a) the failure on the part of the Seller (i) to make any payment
or deposit required to be made under the Purchase Agreement within five
Business Days after the date such payment or deposit is required to be
made; or (ii) to observe or perform in any material respect any other
covenants or agreements of the Seller set forth in the Purchase
Agreement, which failure continues unremedied for a period of 60 days
after written notice and such failure materially and adversely affects
the interests of the Securityholders or the Credit Enhancer;
(b) if any representation or warranty made by the Seller in the
Purchase Agreement proves to have been incorrect in any material respect
when made and which continues to be incorrect in any material respect
for a period of 45 days with respect to any representation or warranty
of the Seller made in Section 3.1(a) of the Purchase Agreement or 90
days with respect to any representation or warranty made in Section
3.1(b) of the Purchase Agreement after written notice and as a result of
which the interests of the Securityholders or the Credit Enhancer are
materially and adversely affected; provided, however, that an
Amortization Event shall not be deemed to occur if the Seller has
repurchased or caused to be repurchased or substituted for the related
Home Equity Loan or all Home Equity Loans, if applicable, during such
period (or within an additional 60 days with the consent of the
Indenture Trustee and the Credit Enhancer) in accordance with the
provisions of the Indenture;
(c) the entry against the Seller or the Issuer of a decree or
order by a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a trustee, conservator, receiver
or liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days;
(d) the Seller or the Issuer shall voluntarily go into
liquidation, consent to the appointment of a conservator, receiver,
liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Seller or the Issuer or of or relating to all or
substantially all of its property, or a decree or order of a court,
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 Seller or the Issuer
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 60 days; or the Seller or the
Issuer 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;
(e) the Issuer becomes subject to regulation by the Commission as
an investment company within the meaning of the Investment Company Act
of 1940, as amended;
(f) a Servicing Default relating to the Master Servicer occurs
under the Servicing Agreement and the Master Servicer is the Seller;
(g) the occurrence of a draw on the Policy and the failure of the
Credit Enhancer to be reimbursed for such draw, which failure continues
unremedied for a period of 90 days after written notice to the Master
Servicer; or
2
(h) the Issuer is determined to be an association taxable as a
corporation for federal income tax purposes.
In the case of any event described in (a), (b), (f) or (g), an
Amortization Event will be deemed to have occurred only if, after any applicable
grace period described in such clauses, any of the Indenture Trustee, the Credit
Enhancer or, with the consent of the Credit Enhancer, Securityholders evidencing
not less than 51% of the Security Balance of each of the Term Notes and the
Certificates, by written notice to the Seller, the Master Servicer, the
Depositor and the Owner Trustee (and to the Indenture Trustee, if given by the
Credit Enhancer or the Securityholders), declare that an Amortization Event has
occurred as of the date of such notice. In the case of any event described in
clauses (c), (d), (e) or (h), an Amortization Event will be deemed to have
occurred without any notice or other action on the part of the Indenture
Trustee, the Noteholders or the Credit Enhancer immediately upon the occurrence
of such event; provided, that any Amortization Event may be waived and deemed of
no effect with the written consent of the Credit Enhancer and each Rating
Agency, subject to the satisfaction of any conditions to such waiver.
Appraised Value: With respect to any Mortgaged Property, the
lesser of (i) the appraised value of such Mortgaged Property based upon the
appraisal made at the time of the origination of the related Home Equity Loan,
and (ii) the sales price of the Mortgaged Property at such time of origination,
except in the case of a Mortgaged Property securing a refinanced or modified
Home Equity Loan as to which it is either the appraised value based upon the
appraisal made at the time of origination of the loan which was refinanced or
modified or the appraised value determined in an appraisal at the time of
refinancing or modification, as the case may be.
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 conveyance of the Mortgage, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering Mortgages secured by Mortgaged Properties located
in the same jurisdiction.
Authorized Newspaper: A newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays.
Authorized Officer: With respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter).
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Bankruptcy Loss: With respect to any Home Equity Loan, a
Deficient Valuation or a Debt Service Reduction; provided, however, that neither
a Deficient Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy
Loss hereunder so long as the Master Servicer has notified the Indenture Trustee
and the Credit Enhancer in writing that the Master Servicer is diligently
pursuing any remedies that may exist in connection with the representations and
warranties made regarding the related Home Equity Loan and either (A) the
3
related Home Equity Loan is not in default with regard to payments due
thereunder or (B) delinquent payments of principal and interest under the
related Home Equity Loan and any premiums on any applicable primary hazard
insurance policy and any related escrow payments in respect of such Home Equity
Loan are being advanced on a current basis by the Master Servicer or a
Subservicer, in either case without giving effect to any Debt Service Reduction.
Basic Documents: The Trust Agreement, the Indenture, the Purchase
Agreement, the Insurance Agreement, the Policy, the Servicing Agreement, the
Custodial Agreement, the Insurance Agreement, the Indemnification Agreement and
the other documents and certificates delivered in connection with any of the
above.
Beneficial Owner: With respect to any Term Note, the Person who
is the beneficial owner of such Note as reflected on the books of the Depository
or on the books of a Person maintaining an account with such Depository
(directly as a Depository Participant or indirectly through a Depository
Participant, in accordance with the rules of such Depository).
Billing Cycle: With respect to any Home Equity Loan and Due Date,
the calendar month preceding such Due Date.
Book-Entry Custodian: The custodian appointed pursuant to Section
4.06 of the Indenture.
Book-Entry Notes: Beneficial interests in the Notes, ownership
and transfers of which shall be made through book entries by the Depository as
described in Section 4.06 of the Indenture.
Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the States of New York, California,
Minnesota, Illinois or Delaware are required or authorized by law or executive
order to be closed.
Capped Funding Note: Any Capped Funding Note issued in connection
with an exchange pursuant to Section 4.01(d) of the Indenture.
Cash Liquidation: As to any defaulted Home Equity Loan other than
a Home Equity Loan as to which an REO Acquisition occurred, a determination by
the Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Home Equity Loan.
Certificate Distribution Account: The account or accounts created
and maintained by the Certificate Paying Agent pursuant to Section 3.10(c) of
the Trust Agreement. The Certificate Paying Agent will make all distributions on
the Certificates from money on deposit in the Certificate Distribution Account.
Certificate Distribution Amount: For any Payment Date, the amount
remaining in the Payment Account following distributions pursuant to clauses (i)
through (ix) of Section 3.05(a) of the Indenture.
Certificate of Trust: The Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Statutory Trust Statute.
4
Certificate Paying Agent: The meaning specified in Section 3.10
of the Trust Agreement.
Certificate Percentage Interest: With respect to any Payment
Date, the Certificate Percentage Interest as stated on the face of such
Certificate, which percentage may be recalculated in accordance with Section
3.12 of the Trust Agreement.
Certificate Principal Balance: As of any Payment Date, with
respect to any Certificate, an amount equal to the then applicable Certificate
Percentage Interest of such Certificate multiplied by the Overcollateralization
Amount.
Certificate Register: The register maintained by the Certificate
Registrar in which the Certificate Registrar shall provide for the registration
of Certificates and of transfers and exchanges of Certificates.
Certificate Registrar: Initially, the Indenture Trustee, in
its capacity as Certificate Registrar.
Certificateholder: The Person in whose name a Certificate is
registered in the Certificate Register except that, any Certificate registered
in the name of the Issuer, the Owner Trustee or the Indenture Trustee or any
Affiliate of any of them shall be deemed not to be outstanding and the
registered holder will not be considered a Certificateholder or a holder for
purposes of giving any request, demand, authorization, direction, notice,
consent or waiver under the Indenture or the Trust Agreement provided that, in
determining whether the Indenture Trustee or the Owner Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that the Indenture Trustee or the
Owner Trustee knows to be so owned shall be so disregarded. Owners of
Certificates that have been pledged in good faith may be regarded as Holders if
the pledgee establishes to the satisfaction of the Indenture Trustee or the
Owner Trustee, as the case may be, the pledgee's right so to act with respect to
such Certificates and that the pledgee is not the Issuer, any other obligor upon
the Certificates or any Affiliate of any of the foregoing Persons.
Certificates: The Class SB Certificates.
Class: Collectively, all of the Notes or Certificates bearing
the same designation.
Class A Notes: The Class A Home Equity Loan-Backed Term Notes,
Series 2006-HSA5, in substantially the form set forth in Exhibit A-1 to the
Indenture.
Class Principal Balance: For each Class of Notes, the initial
Security Balance thereof as reduced on each successive Payment Date by principal
distributed in respect thereof on such Payment Date pursuant to Section 3.05 of
the Indenture.
Class SB Certificates: The Class SB Home Equity Loan-Backed
Certificates, Series 2006-HSA5, substantially in the form of Exhibit A to the
Trust Agreement.
Closing Date: September 28, 2006.
Code: The Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
5
Collateral: The meaning specified in the Granting Clause of the
Indenture.
Collection Period: With respect to any Home Equity Loan and any
Payment Date, the calendar month preceding any such Payment Date.
Combined Loan-to-Value Ratio: With respect to any Home Equity
Loan and any date, the percentage equivalent of a fraction, the numerator of
which is the sum of (i) the Credit Limit and (ii) the outstanding principal
balance as of the date of the origination of such Home Equity Loan (or any
subsequent date as of which such outstanding principal balance may be determined
in connection with an increase or decrease in the Credit Limit, to reduce the
amount of primary insurance for such Home Equity Loan or to approve a
subordinate lien) and of all other mortgage loans, if any, that are secured by
liens on the Mortgaged Property that are senior or subordinate to the Mortgage
and the denominator of which is the Appraised Value of the related Mortgaged
Property.
Commission: The Securities and Exchange Commission.
Corporate Trust Office: With respect to the Indenture Trustee,
Certificate Registrar, Certificate Paying Agent and Paying Agent, the principal
corporate trust office of the Indenture Trustee and Note Registrar at which at
any particular time its corporate trust business shall be administered, which
office at the date of the execution of this instrument is located at 000 Xxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention: Worldwide Securities
Services/Structured Finance Services. For purposes of Section 4.15 of the
Indenture, however, such term shall mean the Indenture Trustee's agent, Chase
Manhattan Trust Company, National Association, located at 0000 Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, or such other office as the
Indenture Trustee shall designate. With respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee at which at any particular
time its corporate trust business shall be administered, which office at the
date of the execution of this Trust Agreement is located at Xxxxxx Square North,
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration.
Credit Enhancer: MBIA Insurance Corporation, or any successor
thereto.
Credit Enhancer Default: If the Credit Enhancer fails to make
a payment required under the Policy in accordance with its terms.
Credit Enhancer Premium Rate: The rate at which the Premium (as defined
in the Insurance Agreement) is calculated with respect to the Policy.
Credit Limit: With respect to any Home Equity Loan, the maximum
Loan Balance permitted under the terms of the related Loan Agreement.
Credit Limit Increase: As defined in Section 3.01 of the
Servicing Agreement.
Credit Repository: Equifax, Transunion and Experian, or their
successors in interest.
6
Credit Score: With respect to any Home Equity Loan, the numerical
designation obtained from credit reports provided by any credit reporting
organization used to assess a borrower's credit-worthiness and the relative
degree of risk a borrower represents to a lender, as determined in accordance
with the applicable underwriting criteria.
Curtailment: Any Principal Prepayment made by a Mortgagor which
is not a Principal Prepayment in full.
Custodial Account: The account or accounts created and maintained
by the Master Servicer pursuant to Section 3.02(b) of the Servicing Agreement,
in which the Master Servicer shall deposit or cause to be deposited certain
amounts in respect of the Home Equity Loans.
Custodial Agreement: The Custodial Agreement, dated as of
September 28, 2006, among the Custodian, the Indenture Trustee, the Issuer and
the Master Servicer.
Custodial File: Any mortgage loan document in the Mortgage File
that is required to be delivered to the Custodian pursuant to Section 2.1(c) of
the Purchase Agreement.
Custodian: Xxxxx Fargo Bank, National Association, and its
successors and assigns.
Cut-off Date: September 1, 2006.
Cut-off Date Loan Balance: With respect to any Home Equity Loan,
the unpaid principal balance thereof as of the close of business on the last day
of the Billing Cycle immediately prior to the Cut-off Date.
Debt Service Reduction: With respect to any Home Equity Loan, a
reduction in the scheduled payment for such Home Equity Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code that becomes
final and non-appealable, except such a reduction constituting a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
Default: Any occurrence which is or with notice or the lapse of
time or both would become an Event of Default.
Deficiency Amount: As defined in the Policy.
Deficient Valuation: With respect to any Home Equity Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Home Equity Loan
and any senior lien on the Mortgaged Property, or any reduction in the amount of
principal to be paid in connection with any scheduled payment that constitutes a
permanent forgiveness of principal, which valuation or reduction results from a
proceeding under the Bankruptcy Code that becomes final and non-appealable.
Definitive Notes: The meaning specified in Section 4.06 of the
Indenture.
Deleted Loan: A Home Equity Loan replaced or to be replaced with
an Eligible Substitute Loan.
7
Delinquency Percentage: With respect to any Payment Date, the
percentage equivalent of a fraction (A) the numerator of which is the Loan
Balance of the Home Equity Loans that are Delinquent for 60 days or more as of
such Payment Date and (B) the denominator of which is the Pool Balance, in each
case as of the beginning of the related Collection Period, expressed as a
percentage.
Delinquent: As used herein, a Home Equity Loan is considered to
be: "30 to 59 days" or "30 or more days" delinquent when a payment due on any
scheduled due date remains unpaid as of the close of business on the next
following monthly due date. Since the determination as to whether a Home Equity
Loan falls into these categories is made as of the close of business on the last
business day of each month, a Home Equity Loan with a payment due on July 1 that
remained unpaid as of the close of business on July 31 would still be considered
current as of July 31. If that payment remained unpaid as of the close of
business on August 31, the Home Equity Loan would then be considered 30-59 days
delinquent. Delinquency information as of the Cut-off Date is determined and
prepared as of the close of business on the last business day immediately prior
to the Cut-off Date.
Depositor: Residential Funding Mortgage Securities II, Inc., a
Delaware corporation, or its successor in interest.
Depository or Depository Agency: The Depository Trust Company or
a successor appointed by the Indenture Trustee with the approval of the
Depositor. Any successor to the Depository shall be an organization registered
as a "clearing agency" pursuant to Section 17A of the Exchange Act and the
regulations of the Securities and Exchange Commission thereunder.
Depository Participant: A Person for whom, from time to time, the
Depository effects book-entry transfers and pledges of securities deposited with
the Depository.
Derivative Contract: Any ISDA Master Agreement, together with the
related Schedule and Confirmation, entered into by the Owner Trustee and a
Derivative Counterparty in accordance with Section 5.07 of the Trust Agreement.
Derivative Counterparty: Any counterparty to a Derivative
Contract as provided in Section 5.07 of the Trust Agreement.
Determination Date: With respect to any Payment Date, the 20th
day of the month in which such Payment Date occurs or if such day is not a
Business Day, the next succeeding Business Day.
Draw: With respect to any Home Equity Loan, a borrowing by the
related Mortgagor under the related Loan Agreement.
Draw Period: With respect to each Home Equity Loan, the period
consisting of either the first five, ten or fifteen years after the date of
origination of such Home Equity Loan, during which the related Mortgagor is
permitted to make Draws.
Due Date: With respect to any Home Equity Loan, the day of the
month the Minimum Monthly Payment or fixed monthly payment is due as set forth
in the related Mortgage Note.
8
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the short-term debt obligations of
which have been rated by each Rating Agency in its highest rating category
available, or (ii) an account or accounts in a depository institution in which
such accounts are fully insured to the limits established by the FDIC, provided
that any deposits not so insured shall, to the extent acceptable to each Rating
Agency, as evidenced in writing, be maintained such that (as evidenced by an
Opinion of Counsel delivered to the Indenture Trustee and each Rating Agency)
the Indenture Trustee has a claim with respect to the funds in such account or a
perfected first security interest against any collateral (which shall be limited
to Permitted Investments) securing such funds that is superior to claims of any
other depositors or creditors of the depository institution with which such
account is maintained, or (iii) in the case of the Custodial Account, either (A)
a trust account or accounts maintained at the corporate trust department of the
Indenture Trustee or (B) an account or accounts maintained at the corporate
trust department of the Indenture Trustee, as long as its short term debt
obligations are rated P-1 by Xxxxx'x and A-1 by Standard & Poor's (or the
equivalent) or better by each Rating Agency and its long term debt obligations
are rated A by Standard & Poor's (or the equivalent) or better by each Rating
Agency, or (iv) in the case of the Custodial Account and the Payment Account, a
trust account or accounts maintained in the corporate trust division of the
Indenture Trustee, or (v) an account or accounts of a depository institution
acceptable to each Rating Agency (as evidenced in writing by each Rating Agency
that use of any such account as the Custodial Account or the Payment Account
will not reduce the rating assigned to any of the Securities by such Rating
Agency (if determined without regard to the Policy) below the lower of the
then-current rating or the rating assigned to such Securities (if determined
without regard to the Policy) as of the Closing Date by such Rating Agency).
Eligible Substitute Loan: A Home Equity Loan substituted by the
Seller for a Deleted Loan which must, on the date of such substitution, as
confirmed in an Officer's Certificate delivered to the Indenture Trustee, (i)
have an outstanding principal balance, after deduction of the principal portion
of the monthly payment due in the month of substitution (or in the case of a
substitution of more than one Home Equity Loan for a Deleted Home Equity Loan,
an aggregate outstanding principal balance, after such deduction), not in excess
of the outstanding principal balance of the Deleted Loan (the amount of any
shortfall to be deposited by the Seller in the Custodial Account in the month of
substitution); (ii) comply with each representation and warranty set forth in
Section 3.1(b) of the Purchase Agreement (other than clauses (xiii), (xxiv)(B),
(xxv)(B), (xxvi), (xxvii), (xxxiv) and (xxxvi) thereof) as of the date of
substitution; (iii) have a Loan Rate, Net Loan Rate and Gross Margin no lower
than and not more than 1% per annum higher than the Loan Rate, Net Loan Rate and
Gross Margin, respectively, of the Deleted Loan as of the date of substitution;
(iv) have a Combined Loan-to-Value Ratio at the time of substitution no higher
than that of the Deleted Loan at the time of substitution; (v) have a remaining
term to stated maturity not greater than (and not more than one year less than)
that of the Deleted Loan and (vi) not be 30 days or more delinquent.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Event of Default: With respect to the Indenture, any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
9
(i) a default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a
period of five days; or
(ii) a default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable, and such default shall continue for a period of five days; or
(iii) there occurs a default in the observance or performance of
any covenant or agreement of the Issuer made in the Indenture, or any
representation or warranty of the Issuer made in the Indenture or in any
certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of
the time when the same shall have been made which has a material adverse
effect on Securityholders or the Credit Enhancer, and such default shall
continue or not be cured, or the circumstance or condition in respect of
which such representation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days after there shall
have been given, by registered or certified mail, to the Issuer by the
Indenture Trustee or to the Issuer and the Indenture Trustee by the
Holders of at least 25% of the outstanding Security Balance of the Notes
or the Credit Enhancer, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a notice of default hereunder; or
(iv) there occurs the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of the Issuer or
any substantial part of the Trust Estate in an involuntary case under
any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(v) there occurs the commencement by the Issuer of a voluntary
case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by the
Issuer to the entry of an order for relief in an involuntary case under
any such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the assets of the Trust Estate, or the making by the Issuer of
any general assignment for the benefit of creditors, or the failure by
the Issuer generally to pay its debts as such debts become due, or the
taking of any action by the Issuer in furtherance of any of the
foregoing.
Event of Liquidation: Following the occurrence of an Event of
Default under the Indenture, the determination by the Indenture Trustee, as
evidenced by a written notice provided to the Owner Trustee, the Depositor and
the Credit Enhancer, that all conditions precedent to the sale or liquidation of
the Trust Estate pursuant to Section 5.04 of the Indenture have been satisfied.
Event of Servicer Termination: With respect to the Servicing
Agreement, a Servicing Default as defined in Section 7.01 of the Servicing
Agreement.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
10
Excluded Amount: For any Payment Date on or after the occurrence
of an Amortization Event, the portion of the balance with respect to each Home
Equity Loan attributable to all Draws not transferred to the Trust, and the
portion of the Principal Collections (other than Net Liquidation Proceeds to the
extent that the Excluded Amount of Liquidation Proceeds is not included in Net
Liquidation Proceeds) and Interest Collections thereon for each Collection
Period allocated to such Excluded Amount based on a pro rata allocation between
the related Excluded Amount and the Loan Balance in proportion to the respective
amounts outstanding as of the end of the calendar month preceding such
Collection Period.
Expenses: The meaning specified in Section 7.02 of the Trust
Agreement.
Xxxxxx Xxx: Xxxxxx Xxx, formerly the Federal National Mortgage
Association, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Final Scheduled Payment Date: The Payment Date in August 2036.
Foreclosure Profit: With respect to a Liquidated Home Equity
Loan, the amount, if any, by which (i) the aggregate of Liquidation Proceeds net
of Liquidation Expenses exceeds (ii) the related Loan Balance (plus accrued and
unpaid interest thereon at the applicable Loan Rate from the date interest was
last paid through the date of receipt of the final Liquidation Proceeds) of such
Liquidated Home Equity Loan immediately prior to the final recovery of its
Liquidation Proceeds.
Form 10-K Certification: As defined in Section 4.04(b) of the
Servicing Agreement.
Freddie Mac: Freddie Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.
Xxxxx: Pledge, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, create, and xxxxx x xxxx upon and a security interest
in and right of set-off against, deposit, set over and confirm pursuant to the
Indenture. A Grant of the Collateral or of any other agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of such collateral or other agreement or instrument and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the granting party or otherwise, and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.
Gross Margin: With respect to any Home Equity Loan, the
percentage set forth as the "Margin" for such Home Equity Loan on the Home
Equity Loan Schedule.
Guaranteed Payment Amount: The aggregate outstanding Security
Balance of the Notes on the Payment Date in August 2036, after giving effect to
all other distributions of principal on the Notes on such Payment Date from all
sources other than the Policy.
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Holder: Any of the Noteholders or Certificateholders.
Home Equity Loan: Each adjustable-rate, home equity revolving
line of credit loan, including Additional Balances, if any, together with the
Related Documents, included in the Trust Estate.
Home Equity Loan Schedule: The initial schedule of Home Equity
Loans as of the Cut-off Date set forth in Exhibit A of the Servicing Agreement,
which schedule sets forth as to each Home Equity Loan (as applicable) (i) the
Cut-off Date Loan Balance ("Principal Bal"), (ii) the Credit Limit, (iii) the
Gross Margin ("Margin"), (iv) the Maximum Rate ("Ceiling"), if any, (v) the lien
position of the related Mortgaged Property, (vi) the Depositor's Home Equity
Loan identifying number, (vii) the Subservicer's Home Equity Loan identifying
number (viii) the city, state and zip code of the Mortgaged Property, (ix) a
code indicating whether the Mortgaged Property is owner-occupied, (x) the type
of residential dwelling constituting the Mortgaged Property, (xi) the original
number of months to maturity, (xii) the remaining number of months to maturity
from the Cut-off Date, (xiii) as to any first lien Home Equity Loan, the
Loan-to-Value Ratio at origination and as to any second lien Home Equity Loan,
the Combined Loan-to-Value Ratio at origination of such second lien Home Equity
Loan, (xiv) the Loan Rate in effect as of the Cut-off Date, (xv) the stated
maturity date, (xvi) the prior encumbrance principal balance (denoted as "Senior
Lien" on the Home Equity Loan Schedule), if any, (xvii) the Credit Score,
(xviii) the Mortgagor's debt-to-income ratio, (xix) a code indicating the
product type, (xx) a code indicating the purpose of the Home Equity Loan, (xxi)
the Mortgage Note date, (xxii) the teaser expiration date, and (xxiii) the
Appraised Value.
Indemnified Party: The meaning specified in Section 7.02 of the
Trust Agreement.
Indenture: The indenture, dated as of the Closing Date, between
the Issuer, as debtor, and the Indenture Trustee, as indenture trustee.
Indenture Trustee: JPMorgan Chase Bank, National Association and
its successors and assigns or any successor indenture trustee appointed
pursuant to the terms of the Indenture.
Indenture Trustee Information: As specified in Section
9.05(a)(i)(A) of the Servicing Agreement.
Independent: When used with respect to any specified Person, the
Person (i) is in fact independent of the Issuer, any other obligor on the Notes,
the Seller, the Depositor and any Affiliate of any of the foregoing Persons,
(ii) does not have any direct financial interest or any material indirect
financial interest in the Issuer, any such other obligor, the Seller, the
Depositor or any Affiliate of any of the foregoing Persons and (iii) is not
connected with the Issuer, any such other obligor, the Seller, the Depositor or
any Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Independent Certificate: A certificate or opinion to be delivered
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.01 of the Indenture,
made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
12
Index: With respect to any Home Equity Loan, the prime rate from
time to time for the adjustment of the Loan Rate set forth as such on the
related Loan Agreement.
Initial Certificates: The Home Equity Loan-Backed Certificates,
Series 2006-HSA5, issued on the Closing Date, each evidencing undivided
beneficial interests in the Issuer and executed by the Owner Trustee.
Initial Security Balance: With respect to the Initial
Certificates, $0.00, the Term Notes, $295,648,000 and the Variable Funding
Notes, $0.00.
Insolvency Event: With respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person in writing (as to which the Indenture Trustee shall have notice)
of its inability to pay its debts generally, or the adoption by the Board of
Directors or managing member of such Person of a resolution which authorizes
action by such Person in furtherance of any of the foregoing.
Insurance Agreement: The Insurance and Indemnity Agreement, dated
as of September 28, 2006, among the Master Servicer, the Seller, the Depositor,
the Issuer and the Credit Enhancer, including any amendments and supplements
thereto.
Insurance Proceeds: Proceeds paid in respect of the Home Equity
Loans pursuant to any insurance policy covering a Home Equity Loan or amounts
required to be paid by the Master Servicer pursuant to the next to last sentence
of Section 3.04(a) of the Servicing Agreement, to the extent such proceeds are
payable to the mortgagee, any Subservicer, the Master Servicer or the Indenture
Trustee and are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account or
required to be paid to any holder of a mortgage senior to such Home Equity Loan.
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 without limitation such portion of principal prepayments,
Insurance Proceeds, Net Liquidation Proceeds and Repurchase Prices as is
allocable to interest on the applicable Home Equity Loans) as is paid by the
Seller or the Master Servicer or is collected by the Master Servicer under the
Home Equity Loans (exclusive of the pro rata portion thereof attributable to any
13
Excluded Amounts not conveyed to the Trust following an Amortization Event),
reduced by the Servicing Fees for the related Collection Period and by any fees
(including annual fees) or late charges or similar administrative fees paid by
Mortgagors during the related Collection Period with respect to the Home Equity
Loans. The terms of the related Loan Agreement shall determine the portion of
each payment in respect of such Home Equity Loan that constitutes principal or
interest.
Interest Distribution Amount: With respect to any Payment Date,
an amount equal to interest accrued during the related Interest Period on the
Notes on their respective Security Balance immediately prior to that Payment
Date, at the related Note Rate, minus the amount of any Relief Act Shortfalls on
the Home Equity Loans during the related Collection Period.
Interest Period: With respect to any Payment Date other than the
first Payment Date, the period beginning on the preceding Payment Date and
ending on the day preceding such Payment Date, and in the case of the first
Payment Date, the period beginning on the Closing Date and ending on the day
preceding the first Payment Date.
Interest Rate Adjustment Date: With respect to each Home Equity
Loan, the date or dates on which the Loan Rate is adjusted in accordance with
the related Loan Agreement.
Interim Certification: The meaning specified in Section 2.1(c)
of the Purchase Agreement.
Issuer or Trust: The Home Equity Loan Trust 2006-HSA5, a
Delaware statutory trust, or its successor in interest.
Issuer Request: A written order or request signed in the name
of the Issuer by any one of its Authorized Officers and delivered to the
Indenture Trustee.
LIBOR: For any Interest Period other than the first Interest
Period, the rate for United States dollar deposits for one month which appears
on the Telerate Screen Page 3750 as of 11:00 A.M., London, England time, on the
second LIBOR Business Day prior to the first day of such Interest Period. With
respect to the first Interest Period, the rate for United States dollar deposits
for one month which appears on the Telerate Screen Page 3750 as of 11:00 A.M.,
London, England time, two LIBOR Business Days prior to the Closing Date. If such
rate does not appear on such page (or such other page as may replace that page
on that service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be reasonably selected by the
Indenture Trustee after consultation with the Master Servicer and the Credit
Enhancer), the rate will be the Reference Bank Rate. If no such quotations can
be obtained and no Reference Bank Rate is available, LIBOR will be LIBOR
applicable to the preceding Payment Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the city of London, England are
required or authorized by law to be closed.
Lien: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
14
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing;
provided, however, that any assignment pursuant to Section 6.02 of the Servicing
Agreement shall not be deemed to constitute a Lien.
Limited Repurchase Right Holder: RFC Asset Holdings II, Inc. or
it successor.
Liquidated Home Equity Loan: With respect to any Payment Date,
any Home Equity Loan in respect of which the Master Servicer has determined, in
accordance with the servicing procedures specified in the Servicing Agreement,
as of the end of the related Collection Period that substantially all
Liquidation Proceeds which it reasonably expects to recover, if any, with
respect to the disposition of the related Home Equity Loan have been recovered.
The Master Servicer will treat any Home Equity Loan that is 180 days or more
Delinquent as having been finally liquidated.
Liquidation Expenses: Out-of-pocket expenses (exclusive of
overhead) which are incurred by or on behalf of the Master Servicer in
connection with the liquidation of any Home Equity Loan and not recovered under
any insurance policy, such expenses including, without limitation, legal fees
and expenses, any unreimbursed amount expended (including, without limitation,
amounts advanced to correct defaults on any mortgage loan which is senior to
such Home Equity Loan and amounts advanced to keep current or pay off a mortgage
loan that is senior to such Home Equity Loan) respecting the related Home Equity
Loan and any related and unreimbursed expenditures for real estate property
taxes or for property restoration, preservation or insurance against casualty
loss or damage.
Liquidation Loss Amounts: With respect to any Payment Date and
any Home Equity Loan that became a Liquidated Home Equity Loan during the
related Collection Period, the unrecovered portion of the related Loan Balance
thereof at the end of such Collection Period, after giving effect to the Net
Liquidation Proceeds applied in reduction of the Loan Balance. If a Bankruptcy
Loss has occurred with respect to any Home Equity Loan, the amount of the
Bankruptcy Loss will be treated as a Liquidation Loss Amount.
Liquidation Loss Distribution Amount: With respect to any Payment
Date, the aggregate of (A) 100% of the Liquidation Loss Amounts during the
related Collection Period, plus (B) any such Liquidation Loss Amounts remaining
undistributed from any preceding Payment Date, provided that any Liquidation
Loss Amount shall not be distributed to the extent that the Liquidation Loss
Amount was previously paid on the Class A Notes and the Variable Funding Notes
by means of a draw on the Policy, from collections on the Home Equity Loans, or
was reflected in the reduction of the Overcollateralization Amount; provided,
that nothing in the foregoing proviso shall limit the Credit Enhancer's right to
be reimbursed for any Liquidation Loss Amounts to the extent paid by a draw on
the Policy.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but
not including amounts drawn under the Policy) if any received in connection with
the liquidation of any Home Equity Loan or related REO, whether through
trustee's sale, foreclosure sale or otherwise or any Subsequent Recoveries with
respect to a Liquidated Home Equity Loan.
Loan Agreement: With respect to any Home Equity Loan, the credit
line account agreement, executed by the related Mortgagor and any amendment or
modification thereof.
15
Loan Balance: With respect to any Home Equity Loan, other than a
Home Equity Loan which has become a Liquidated Home Equity Loan, and as of any
day, the related Cut-off Date Loan Balance, plus (i) any Additional Balances in
respect of such Home Equity Loan conveyed to the Trust, minus (ii) all
collections credited as principal in respect of any such Home Equity Loan in
accordance with the related Loan Agreement (except for any such collections that
are allocable to any Excluded Amount) and applied in reduction of the Loan
Balance thereof. For purposes of this definition, a Liquidated Home Equity Loan
shall be deemed to have a Loan Balance equal to the Loan Balance of the related
Home Equity Loan immediately prior to the final recovery of substantially all
related Liquidation Proceeds and a Loan Balance of zero thereafter.
Loan Rate: With respect to any Home Equity Loan and any day, the
per annum rate of interest applicable under the related Loan Agreement.
Lost Note Affidavit: With respect to any Home Equity Loan as to
which the original Loan Agreement has been permanently lost or destroyed and has
not been replaced, an affidavit from the Seller or the related Program Seller
certifying that the original Loan Agreement has been lost, misplaced or
destroyed (together with a copy of the related Loan Agreement).
Master Servicer: Residential Funding Corporation, a Delaware
corporation, and its successors
and assigns.
Master Servicing Fee: With respect to any Home Equity Loan and
any Collection Period, the product of (i) the Master Servicing Fee Rate divided
by 12 and (ii) the related Loan Balance as of the first day of such Collection
Period.
Master Servicing Fee Rate: With respect to any Home Equity Loan,
0.08% per annum.
Maximum Rate: With respect to each Home Equity Loan with respect
to which the related Loan Agreement provides for a lifetime rate cap, the
maximum Loan Rate permitted over the life of such Home Equity Loan under the
terms of such Loan Agreement, as set forth on the Home Equity Loan Schedule and
initially as set forth on Exhibit A to the Servicing Agreement.
Maximum Variable Funding Balance: The maximum Security Balance of
the Variable Funding Notes, which shall be an amount equal to $40,194,616 or
such greater amount as may be permitted pursuant to Section 9.01 of the
Indenture.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Home Equity Loans
registered with MERS on the MERS(R) System.
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Minimum Monthly Payment: With respect to any Home Equity Loan
and any month, the minimum amount required to be paid by the related Mortgagor
in such month.
MOM Loan: With respect to any Home Equity Loan, MERS acting as
the mortgagee of such Home Equity Loan, solely as nominee for the originator of
such Home Equity Loan and its successors and assigns, at the origination
thereof.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument
creating a first or second lien on an estate in fee simple interest in real
property securing a Home Equity Loan.
Mortgage File: The file containing the Related Documents
pertaining to a particular Home Equity Loan and any additional documents
required to be added to the Mortgage File pursuant to the Purchase Agreement or
the Servicing Agreement.
Mortgage Note: With respect to a Home Equity Loan, the mortgage
note pursuant to which the related Xxxxxxxxx agrees to pay the indebtedness
evidenced thereby and secured by a Mortgage on a related Mortgaged Property, as
modified or amended.
Mortgaged Property: The underlying property, including real
property and improvements thereon, securing a Home Equity Loan.
Mortgagor: The obligor or obligors under a Loan Agreement.
Net Liquidation Proceeds: With respect to any Liquidated Home
Equity Loan, Liquidation Proceeds (excluding any draws under the Policy) net of
Liquidation Expenses (but not including the portion, if any, of such net amount
that exceeds the Loan Balance of the Home Equity Loan at the end of the
Collection Period immediately preceding the Collection Period in which such Home
Equity Loan became a Liquidated Home Equity Loan, plus accrued and unpaid
interest on such Loan Balance from the date last paid to the date of receipt of
final Liquidation Proceeds).
Net Loan Rate: With respect to any Home Equity Loan and any day,
the related Loan Rate less: (1) 0.58% per annum and (2) the Credit Enhancer
Premium Rate.
Net Principal Collections: With respect to any Payment Date, the
excess, if any, of Principal Collections for the related Collection Period over
the amount of Additional Balances created during the related Collection Period
and conveyed to the Trust Estate.
Net WAC Cap Shortfall: On any Payment Date, an amount by which
interest that would have accrued on the Notes at the applicable Note Rate during
the related Interest Period (without application of the Net WAC Rate) exceeds
interest accrued thereon at the Net WAC Rate.
Net WAC Rate: With respect to any Payment Date, a per annum rate
equal to the weighted average of the Net Loan Rates of the Home Equity Loans as
of the beginning of the related Collection Period, weighted by the outstanding
Loan Balances thereof, adjusted by multiplying the Net WAC Rate by a fraction,
the numerator of which is 30 and the denominator of which is the actual number
of days in the related Interest Period.
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Non-United States Person: Any Person other than a United States
Person.
Note Owner: The Beneficial Owner of a Note.
Note Rate: With respect to the Class A Notes and the Variable
Funding Notes, the least of (x) a per annum rate equal to LIBOR plus 0.14%, (y)
17.25% per annum and (z) the Net WAC Rate.
Note Register: The register maintained by the Note Registrar in
which the Note Registrar shall provide for the registration of Notes and of
transfers and exchanges of Notes.
Note Registrar: The Indenture Trustee, in its capacity as Note
Registrar.
Noteholder: The Person in whose name a Note is registered in the
Note Register, except that, any Note registered in the name of the Depositor,
the Issuer or the Indenture Trustee or any Affiliate of any of them shall be
deemed not to be outstanding and the registered holder will not be considered a
Noteholder or holder for purposes of giving any request, demand, authorization,
direction, notice, consent or waiver under the Indenture or the Trust Agreement
provided that, in determining whether the Indenture Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that the Indenture Trustee or the Owner Trustee
knows to be so owned shall be so disregarded. Owners of Notes that have been
pledged in good faith may be regarded as Holders if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Owner Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes or any Affiliate of any of the
foregoing Persons.
Notes: Collectively, the Term Notes and the Variable Funding
Notes issued and outstanding at any time pursuant to the Indenture.
Officer's Certificate: With respect to the Master Servicer, a
certificate signed by the President, Managing Director, a Director, a Vice
President or an Assistant Vice President, of the Master Servicer and delivered
to the Indenture Trustee. With respect to the Issuer, a certificate signed by
any Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 10.01 of the
Indenture, and delivered to the Indenture Trustee. Unless otherwise specified,
any reference in the Indenture to an Officer's Certificate shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.
Opinion of Counsel: A written opinion of counsel. Any Opinion of
Counsel for the Master Servicer may be provided by in-house counsel for the
Master Servicer if reasonably acceptable to the Indenture Trustee, the Credit
Enhancer and the Rating Agencies or counsel for the Depositor, as the case may
be.
Original Trust Agreement: The Trust Agreement, dated as of
September 26, 2006, between the Owner Trustee and the Depositor.
Outstanding: With respect to the Notes, as of the date of
determination, all Notes theretofore executed, authenticated and delivered under
this Indenture except:
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(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Indenture Trustee for cancellation; and
(ii) Notes in exchange for or in lieu of which other Notes
have been executed, authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Indenture Trustee is
presented that any such Notes are held by a holder in due course;
provided, however, that for purposes of effectuating the Credit Enhancer's right
of subrogation as set forth in Section 4.12 of the Indenture only, all Notes
that have been paid with funds provided under the Policy shall be deemed to be
Outstanding until the Credit Enhancer has been reimbursed with respect thereto.
Overcollateralization Amount: With respect to any Payment Date,
the amount by which the Pool Balance after applying payments received in the
related Collection Period exceeds the aggregate Security Balance of the Notes on
such Payment Date (in each case, after application of Net Principal Collections
or Principal Collections, as the case may be, for such date and acquisition by
the Trust of Additional Balances on such Payment Date and any payments in
respect of Liquidation Loss Amounts). On each Payment Date, the
Overcollateralization Amount available to cover Liquidation Loss Amounts on such
Payment Date, if any, shall be deemed to be reduced by an amount equal to any
Liquidation Loss Amounts for such Payment Date on the Home Equity Loans, except
to the extent that such Liquidation Loss Amounts were covered on such Payment
Date by P&I Collections on the Home Equity Loans pursuant to Section 3.05(a) of
the Indenture.
Overcollateralization Floor: An amount equal to 0.50% of the
aggregate Cut-off Date Loan Balances of the Home Equity Loans.
Overcollateralization Increase Amount: With respect to any
Payment Date beginning on the Payment Date in April 2007, an amount equal to the
lesser of (i) P&I Collections on the Home Equity Loans remaining after
application of clauses (i) through (v) of Section 3.05(a) of the Indenture and
(ii) the excess, if any, of (x) the Required Overcollateralization Amount for
that Payment Date over (y) the Overcollateralization Amount for that Payment
Date.
Ownership Interest: As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Certificateholder thereof and any other interest therein,
whether direct or indirect, legal or beneficial, as owner or as pledgee.
Owner Trust Estate: The corpus of the Issuer created by the Trust
Agreement which consists of the Home Equity Loans.
Owner Trustee: Wilmington Trust Company not in its individual
capacity but solely as Owner Trustee of the Trust, and its successors and
assigns or any successor owner trustee appointed pursuant to the terms of the
Trust Agreement.
Paying Agent: Any paying agent or co-paying agent appointed
pursuant to Section 3.03 of the Indenture, which initially shall be the
Indenture Trustee.
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Payment Account: The account established by the Indenture Trustee
pursuant to Section 8.02 of the Indenture and Section 5.01 of the Servicing
Agreement. Amounts deposited in the Payment Account will be distributed by the
Indenture Trustee in accordance with Section 3.05 of the Indenture.
Payment Date: The 25th day of each month, or if such day is not a
Business Day, then the next Business Day.
Percentage Interest: With respect to any Note and any Payment
Date, the percentage obtained by dividing the Security Balance of such Note by
the aggregate of the Security Balances of all Notes (including the Term Notes
and the Variable Funding Notes) or all Notes of the same Class, as applicable,
prior to such Payment Date. With respect to any Certificate and any Payment
Date, the Percentage Interest stated on the face of such Certificate.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to timely payment of
principal and interest by the United States or any agency or
instrumentality thereof when such obligations are backed by the full
faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than one month from the date of acquisition
thereof, provided that the unsecured short-term 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 available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days or a remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof or of any domestic branch of a foreign depository institution or
trust company; provided that the debt obligations of such depository
institution or trust company at the date of acquisition thereof have
been rated by each Rating Agency in its highest short-term rating
available; and, provided further that, if the original maturity of such
short-term obligations of a domestic branch of a foreign depository
institution or trust company shall exceed 30 days, the short-term rating
of such institution shall be A-1+ in the case of Standard & Poor's if
Standard & Poor's is a Rating Agency;
(iv) commercial paper and demand notes (having original
maturities of not more than 365 days) of any corporation incorporated
under the laws of the United States or any state thereof which on the
date of acquisition has been rated by each Rating Agency in its highest
short-term rating available; provided that such commercial paper shall
have a remaining maturity of not more than 30 days;
(v) any mutual fund, money market fund, common trust fund or
other pooled investment vehicle, the assets of which are limited to
instruments that otherwise would constitute Permitted Investments
hereunder and have been rated by each Rating Agency in its highest
short-term rating available (in the case of Standard & Poor's such
rating shall be either AAAm or AAAm-G), including any such fund that is
managed by the Indenture Trustee or any affiliate of the Indenture
Trustee or for which the Indenture Trustee or any of its affiliates acts
as an adviser; and
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(vi) other obligations or securities that are acceptable to each
Rating Agency as a Permitted Investment hereunder and will not reduce
the rating assigned to any Class of Notes by such Rating Agency (without
giving effect to any Policy (if any) in the case of Insured Notes (if
any)) below the then-current rating assigned to such Notes by such
Rating Agency, as evidenced in writing;
provided, however, that no instrument shall be a Permitted
Investment if it represents, either (1) the right to receive only interest
payments with respect to the underlying debt instrument or (2) the right to
receive both principal and interest payments derived from obligations underlying
such instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity greater than 120% of the yield to
maturity at par of such underlying obligations. References herein to the highest
rating available on unsecured long-term debt shall mean AAA in the case of
Standard & Poor's and Fitch and Aaa in the case of Xxxxx'x, and for purposes of
this Agreement, any references herein to the highest rating available on
unsecured commercial paper and short-term debt obligations shall mean the
following: A-1 in the case of Standard & Poor's, P-1 in the case of Xxxxx'x and
F-1 in the case of Fitch; provided, however, that any Permitted Investment that
is a short-term debt obligation rated A-1 by Standard & Poor's must satisfy the
following additional conditions: (i) the total amount of debt from A-1 issuers
must be limited to the investment of monthly principal and interest payments
(assuming fully amortizing collateral); (ii) the total amount of A-1 investments
must not represent more than 20% of the aggregate outstanding Security Balance
of the Notes and each investment must not mature beyond 30 days; (iii) the terms
of the debt must have a predetermined fixed dollar amount of principal due at
maturity that cannot vary; and (iv) if the investments may be liquidated prior
to their maturity or are being relied on to meet a certain yield, interest must
be tied to a single interest rate index plus a single fixed spread (if any) and
must move proportionately with that index.
Person: Any legal individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Plan: An employee benefit or other plan subject to the prohibited
transaction restrictions or the fiduciary responsibility requirements of ERISA
or Section 4975 of the Code.
Plan Investor: A Plan, any Person acting, directly or indirectly,
on behalf of any such Plan or any Person using the "plan assets," within the
meaning of the Department of Labor regulations at 29 C.F.R. ss.2510.3-101, as
modified by Section 3(42) of ERISA, of a Plan.
Policy: The financial guaranty insurance policy (Policy No.
48572) issued by the Credit Enhancer, dated as of September 28, 2006, with
respect to the Notes.
Pool Balance: With respect to any date, the aggregate of the
Loan Balances of all Home Equity Loans as of such date.
Predecessor Note: With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 4.03 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
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Principal Collection Distribution Amount: For any Payment Date,
(i) at any time during the Revolving Period, so long as an Amortization Event
has not occurred, the Net Principal Collections and (ii) following an
Amortization Event or at any time after the end of the Revolving Period, the
Principal Collections; provided, however, on any Payment Date with respect to
which the Overcollateralization Amount that would result if determined without
application of this proviso exceeds the Required Overcollateralization Amount,
the Principal Collection Distribution Amount will be reduced by the amount of
such excess to an amount not less than zero.
Principal Collections: With respect to any Payment Date and any
Home Equity Loan, the aggregate of the following amounts:
(i) the total amount of payments made by or on behalf of the
Mortgagor, received and applied as payments of principal on the Home
Equity Loan during the related Collection Period, as reported by the
related Subservicer;
(ii) any Net Liquidation Proceeds, allocable as a recovery of
principal, received in connection with the Home Equity Loan during the
related Collection Period;
(iii) if the Home Equity Loan was purchased by the Master
Servicer pursuant to Section 3.15 of the Servicing Agreement or was
repurchased by the Seller pursuant to the Purchase Agreement during the
related Collection Period, 100% of the Loan Balance of the Home Equity
Loan as of the date of such purchase or repurchase and if a Home Equity
Loan was substituted for a Deleted Loan, the amount deposited by the
Seller as a Substitution Adjustment Amount; and
(iv) any other amounts received as payments on or proceeds of the
Home Equity Loan during the Collection Period to the extent applied in
reduction of the principal amount thereof;
provided that Principal Collections shall not include any Foreclosure Profits,
and shall be reduced by any amounts withdrawn from the Custodial Account
pursuant to clauses (c), (d) and (j) of Section 3.03 of the Servicing Agreement,
and provided further that Principal Collections shall not include any portion of
such amounts that are allocable to any Excluded Amount.
Principal Prepayment: Any payment of principal by a Mortgagor,
which is received in advance of its scheduled Due Date and is not accompanied by
an amount as to interest representing scheduled interest on such payment due on
any date or dates in any month or months subsequent to the month of prepayment.
Proceeding: Any suit in equity, action at law or other judicial
or administrative proceeding.
Program Guide: Together, the Seller's Seller Guide and Servicing
Guide, as in effect from time to time.
22
Program Seller: With respect to any Home Equity Loan, the Person
that sold such Home Equity Loan to the Seller.
Prospectus Supplement: The prospectus supplement dated September
25, 2006, relating to the Term Notes.
Purchase Agreement: The Home Equity Loan Purchase Agreement,
dated as of the Closing Date, between the Seller, as seller, and the Depositor,
as purchaser, with respect to the Home Equity Loans.
Purchase Price: The meaning specified in Section 2.2(a) of the
Purchase Agreement.
Purchaser: Residential Funding Mortgage Securities II, Inc., a
Delaware corporation, and its successors and assigns.
P&I Collections: On any Payment Date, the sum of the Interest
Collections for that Payment Date and so long as an Amortization Event has not
occurred and if during the Revolving Period, the Net Principal Collections for
that Payment Date, or if an Amortization Event has occurred or the Revolving
Period has ended, the Principal Collections for the applicable Payment Date.
Rating Agency: Any nationally recognized statistical rating
organization, or its successor, that rated the Securities at the request of the
Depositor at the time of the initial issuance of the Securities. Initially,
Xxxxx'x and Standard & Poor's. If such organization or a successor is no longer
in existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, designated by the Depositor,
notice of which designation shall be given to the Indenture Trustee. References
herein to the highest short term unsecured rating category of a Rating Agency
shall mean A-1 or better in the case of Standard & Poor's or P-1 or better in
the case of Xxxxx'x and in the case of any other Rating Agency shall mean such
equivalent ratings. References herein to the highest long-term rating category
of a Rating Agency shall mean "AAA" in the case of Standard & Poor's and "Aaa"
in the case of Xxxxx'x and in the case of any other Rating Agency, such
equivalent rating.
Record Date: With respect to the Notes and any Payment Date, the
close of business on the Business Day next preceding such Payment Date.
Reference Bank Rate: With respect to any Interest Period, as
follows: the arithmetic mean (rounded upwards, if necessary, to the nearest one
sixteenth of a percent) of the offered rates for United States dollar deposits
for one month which are offered by the Reference Banks as of 11:00 A.M., London,
England time, on the second LIBOR Business Day prior to the first day of such
Interest Period to prime banks in the London interbank market for a period of
one month in amounts approximately equal to the sum of the outstanding Security
Balance of the Notes; provided that at least two such Reference Banks provide
such rate. If fewer than two offered rates appear, the Reference Bank Rate will
be the arithmetic mean of the rates quoted by one or more major banks in New
York City, selected by the Indenture Trustee after consultation with the Master
Servicer and the Credit Enhancer, as of 11:00 a.m., New York time, on such date
for loans in U.S. Dollars to leading European Banks for a period of one month in
amounts approximately equal to the aggregate Security Balance of the Notes. If
no such quotations can be obtained, the Reference Bank Rate shall be the
Reference Bank Rate applicable to the preceding Interest Period.
23
Reference Banks: Three major banks which are engaged in
transactions in the London interbank markets selected by the Indenture Trustee,
after consultation with the Master Servicer and the Credit Enhancer.
Registered Holder: The Person in whose name a Note is registered
in the Note Register on the applicable Record Date.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have been
provided by the Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (January 7, 2005))
or by the staff of the Commission, or as may be provided by the Commission or
its staff from time to time.
Related Documents: With respect to each Home Equity Loan, the
documents specified in Section 2.1(c) of the Purchase Agreement and any
documents required to be added to such documents pursuant to the Purchase
Agreement, the Trust Agreement or the Servicing Agreement.
Relief Act Shortfalls: With respect to any Payment Date, for any
Home Equity Loan as to which there has been a reduction in the amount of
interest collectible thereon for the related Collection Period as a result of
the application of the Servicemembers Civil Relief Act or any other similar
federal or state law, the shortfall, if any, equal to (i) one month's interest
on the Loan Balance of such Home Equity Loan at the applicable Loan Rate,
without application of such Act, over (ii) the interest collectible on such Home
Equity Loan during such Collection Period.
REO: A Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
REO Acquisition: The acquisition by the Master Servicer on behalf
of the Indenture Trustee for the benefit of the Noteholders and the Credit
Enhancer of any REO Property pursuant to Section 3.07 of the Servicing
Agreement.
REO Disposition: As to any REO Property, a determination by the
Master Servicer that it has received substantially all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which the Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
REO Proceeds: Proceeds, net of expenses, received in respect of
any REO Property (including, without limitation, proceeds from the rental of the
related Mortgaged Property) which proceeds are required to be deposited into the
Custodial Account only upon the related REO Disposition.
REO Property: A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed in lieu of foreclosure in connection with a
defaulted Home Equity Loan.
24
Repurchase Event: With respect to any Home Equity Loan, either
(i) a discovery that, as of the Closing Date, the related Mortgage was not a
valid lien on the related Mortgaged Property subject only to (A) the lien of any
prior mortgage indicated on the Home Equity Loan Schedule, (B) the lien of real
property taxes and assessments not yet due and payable, (C) covenants,
conditions, and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage and such other
permissible title exceptions as are listed in the Program Guide and (D) other
matters to which like properties are commonly subject which do not materially
adversely affect the value, use, enjoyment or marketability of the related
Mortgaged Property or (ii) with respect to any Home Equity Loan as to which the
Seller delivers a Lost Note Affidavit, a subsequent default on such Home Equity
Loan if the enforcement thereof or of the related Mortgage is materially and
adversely affected by the absence of such original Loan Agreement.
Repurchase Price: With respect to any Home Equity Loan required
to be repurchased on any date pursuant to the Purchase Agreement or purchased by
the Master Servicer or the Limited Repurchase Right Holder pursuant to the
Servicing Agreement, an amount equal to the sum of (i) 100% of the Loan Balance
thereof (without reduction for any amounts charged off) (or, in the case of a
purchase by the Limited Repurchase Right Holder pursuant to Section 5.07 of the
Trust Agreement, the fair market value thereof, if greater) and (ii) unpaid
accrued interest at the Loan Rate (or with respect to the last day of the month
in the month of repurchase, the Loan Rate will be the Loan Rate in effect as to
the second to last day in such month) on the outstanding principal balance
thereof from the Due Date to which interest was last paid by the Mortgagor to
the first day of the month following the month of purchase. No portion of any
Repurchase Price shall be included in any Excluded Amount for any Payment Date.
Request for Release: The form attached as Exhibit 4 to the
Custodial Agreement or an electronic request in a form acceptable to the
Custodian.
Required Insurance Policy: With respect to any Home Equity Loan,
any insurance policy which is required to be maintained from time to time under
the Servicing Agreement, the Program Guide or the related Subservicing Agreement
in respect of such Home Equity Loan.
Required Overcollateralization Amount: With respect to any
Payment Date prior to the Stepdown Date, 1.45% of the aggregate Cut-off Date
Loan Balances of the Home Equity Loans. With respect to any Payment Date on or
after the Stepdown Date, the lesser of (a) the initial Required
Overcollateralization Amount and (b) 2.90% of the Pool Balance for the Home
Equity Loans after application of Interest Collections and Principal Collections
received during the related Collection Period but not less than the
Overcollateralization Floor; provided that, if a Trigger Event has occurred and
is continuing on such Payment Date, the Required Overcollateralization Amount
will equal the Required Overcollateralization Amount for the immediately
preceding Payment Date.
The Required Overcollateralization Amount may be reduced with the
prior written consent of the Credit Enhancer, but without the consent of the
Holders of the Notes so long as written confirmation is obtained from each
Rating Agency that the reduction will not reduce the rating assigned to any
Class of Notes by that Rating Agency below the lower of the then-current rating
or the rating assigned to those Notes as of the Closing Date by that Rating
Agency without taking into account the Policy.
25
Responsible Officer: With respect to the Indenture Trustee, 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.
Revolving Period: The period commencing on the Closing Date and
ending on September 30, 2011.
Rolling Three Month Delinquency Percentage: With respect to any
Payment Date and the Home Equity Loans, the arithmetic average of the
Delinquency Percentages determined for such Payment Date and for each of the two
preceding Payment Dates.
Scheduled Payments: As defined in the Policy.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Securitization Transaction: Any transaction involving a sale or
other transfer of mortgage loans directly or indirectly to an issuing entity in
connection with an issuance of publicly offered or privately placed, rated or
unrated mortgage-backed securities.
Security: Any of the Certificates or Notes.
Security Balance: With respect to any Payment Date and the Term
Notes, the Initial Security Balance thereof prior to such Payment Date reduced
by all payments of principal thereon prior to such Payment Date. With respect to
any Payment Date and the Variable Funding Notes, the Initial Security Balance
thereof prior to such Payment Date (i) increased by the Aggregate Additional
Balance Differential immediately prior to such Payment Date and (ii) reduced by
all payments of principal thereon and Liquidation Loss Amounts allocated thereto
prior to such Payment Date. With respect to any Payment Date and the
Certificates, the Certificate Principal Balance thereof.
Securityholder or Holder: Any Noteholder or a Certificateholder.
Seller: Residential Funding Corporation, a Delaware corporation,
and its successors and assigns.
Seller's Agreement: The agreement between the Seller, as
purchaser, and the related Program Seller, as seller.
Servicing Agreement: The Servicing Agreement, dated as of the
Closing Date, between the Indenture Trustee, the Issuer and the Master
Servicer.
Servicing Certificate: A certificate prepared by a Servicing
Officer on behalf of the Master Servicer in accordance with Section 4.01 of the
Servicing Agreement.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of Regulation AB, as such may be amended from time to time.
26
Servicing Default: The meaning specified in Section 7.01 of the
Servicing Agreement.
Servicing Fee: With respect to any Home Equity Loan, the sum of
the related Master Servicing Fee and the related Subservicing Fee.
Servicing Fee Rate: With respect to any Home Equity Loan, the
sum of the related Master Servicing Fee Rate and the related Subservicing
Fee Rate.
Servicing Officer: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Home Equity
Loans whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Credit Enhancer) by the
Master Servicer, as such list may be amended from time to time.
Servicing Trigger: As of any Payment Date, for purposes of
Section 7.04 of the Servicing Agreement, the occurrence of any of the following
scenarios:
(a) the Sixty-Plus Delinquency Percentage is greater than 27.00%
for the then-current Payment Date; or
(b) on or after the Payment Date in April 2009, the aggregate
amount of Liquidation Loss Amounts on the Home Equity Loans as a percentage of
the Cut-Off Date Loan Balance exceeds the applicable amount set forth below:
April 2009 to September 2009: 2.00% with respect to April
2009, plus an additional 1/6th
of 1.50% for each month
thereafter.
October 2009 to September 2010: 3.50% with respect to October
2009, plus an additional 1/12th
of 2.00% for each month
thereafter.
October 2010 to September 2011: 5.50% with respect to October
2010, plus an additional 1/12th
of 1.25% for each month
thereafter.
October 2011 to September 2012: 6.75% with respect to October
2011, plus an additional 1/12th
of 0.75% for each month
thereafter.
October 2012 and thereafter: 7.50%.
Single Certificate: A Certificate in the denomination of a
Certificate Percentage Interest of 10.0000%.
Sixty-Plus Delinquency Percentage: With respect to any Payment
Date and the Home Equity Loans, the arithmetic average, for each of the three
Payment Dates ending with such Payment Date, of the fraction, expressed as a
percentage, equal to (x) the aggregate Loan Balance of the Home Equity Loans
that are 60 or more days delinquent in payment of principal and interest for
that Payment Date, including Home Equity Loans in foreclosure and REO, over (y)
the aggregate Loan Balance of all of the Home Equity Loans immediately preceding
that Payment Date.
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Standard & Poor's: Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc. or its successor in interest.
Stated Value: With respect to any Home Equity Loan, the value
of the Mortgaged Property as stated by the related Mortgagor in his or her
application.
Statutory Trust Statute: Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss.ss.3801 et seq., as the same may be amended from time to
time.
Stepdown Date: The later of (a) the Payment Date in April 2009
and (b) the Payment Date on which the Pool Balance of the Home Equity Loans
after applying payments received in the related Collection Period is less than
50% of the aggregate Cut-off Date Loan Balances of the Home Equity Loans.
Subsequent Recoveries: As of any Payment Date, amounts received
by the Master Servicer (net of any related expenses permitted to be reimbursed
pursuant to the Servicing Agreement) specifically related to a Home Equity Loan
that was treated as a Liquidated Home Equity Loan prior to the related
Collection Period, and that resulted in a Liquidated Loss Amount.
Subservicer: Any Person with whom the Master Servicer has entered
into a Subservicing Agreement as a Subservicer by the Master Servicer.
Subservicing Account: An Eligible Account established or
maintained by a Subservicer as provided for in Section 3.02(c) of the Servicing
Agreement.
Subservicing Agreement: The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of certain
Home Equity Loans as provided in Section 3.01 of the Servicing Agreement.
Subservicing Fee: With respect to any Collection Period, the fee
retained monthly by the Subservicer (or, in the case of a nonsubserviced Home
Equity Loan, by the Master Servicer) equal to the product of (i) the
Subservicing Fee Rate divided by 12 and (ii) the Pool Balance as of the first
day of such Collection Period.
Subservicing Fee Rate: With respect to each Home Equity Loan,
0.50% per annum.
Substitution Adjustment Amounts: With respect to any Eligible
Substitute Loan and any Deleted Loan, the amount, if any, as determined by the
Master Servicer, by which the aggregate principal balance of all such Eligible
Substitute Loans as of the date of substitution is less than the aggregate
principal balance of all such Deleted Loans (after application of the principal
portion of the monthly payments due in the month of substitution that are to be
distributed to the Payment Account in the month of substitution).
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Teaser Loan: Any Home Equity Loan which, as of the Cut-off Date,
has a Loan Rate that is less than the sum of the Index at the time of
origination plus the applicable Gross Margin.
Telerate Screen Page 3750: The display designated as page 3750 on
the Moneyline Telerate Capital Markets Reports (or (i) such other page as may
replace page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks) or (ii) if such service is no longer offered, such
other service for displaying LIBOR or comparable rates as may be selected by the
Indenture Trustee after consultation with the Master Servicer and the Credit
Enhancer.
Term Notes: The Class A Notes.
Transfer: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
Transfer Date: As defined in Section 3.15(c) of the Servicing
Agreement.
Transfer Notice Date: As defined in Section 3.15(c) of the
Servicing Agreement.
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Transferor: Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
Treasury Regulations: Regulations, including proposed or
temporary Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
Trigger Event: A Trigger Event is in effect with respect to any
Payment Date and the Notes if any of the following conditions are met:
(i) if the Payment Date is occurring on or after the Payment Date
in April 2009 and before the Payment Date in October 2009, the aggregate amount
of Liquidation Loss Amounts on the Home Equity Loans since the Cut-off Date
exceeds 1.50% plus 1/6th of 0.50% for each Payment Date within such period of
the aggregate Cut-off Date Loan Balances of the Home Equity Loans; or
(ii) if the Payment Date is occurring on or after the Payment
Date in October 2009 and before the Payment Date in October 2010, the aggregate
amount of Liquidation Loss Amounts on the Home Equity Loans since the Cut-off
Date exceeds 2.00% plus 1/12th of 0.50% for each Payment Date within such period
of the aggregate Cut-off Date Loan Balances of the Home Equity Loans; or
(iii) if the Payment Date is occurring on or after the Payment
Date in October 2010 and before the Payment Date in October 2011 the aggregate
amount of Liquidation Loss Amounts on the Home Equity Loans since the Cut-off
Date exceeds 2.50% plus 1/12th of 0.50% for each Payment Date within such period
of the aggregate Cut-off Date Loan Balances of the Home Equity Loans; or
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(iv) if the Payment Date is occurring on or after the Payment
Date in October 2011 and before the Payment Date in October 2012, the aggregate
amount of Liquidation Loss Amounts on the Home Equity Loans since the Cut-off
Date exceeds 3.00% plus 1/12th of 0.50% for each Payment Date within such period
of the aggregate Cut-off Date Loan Balances of the Home Equity Loans; or
(v) if the Payment Date is occurring on or after the Payment Date
in October 2012, the aggregate amount of Liquidation Loss Amounts on the Home
Equity Loans since the Cut-off Date exceeds 3.50% of the aggregate Cut-off Date
Loan Balances of the Home Equity Loans; or
(vi) if on any Payment Date on or after the Stepdown Date, the
Rolling Three Month Delinquency Percentage is equal to or in excess of 3.50%.
Trust: The Home Equity Loan Trust 2006-HSA5 to be created
pursuant to the Trust Agreement.
Trust Agreement: The Amended and Restated Trust Agreement,
dated as of the Closing Date, between the Owner Trustee and the Depositor.
Trust Estate: The meaning specified in the Granting Clause of
the Indenture.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939, as
amended from time to time, as in effect on any relevant date.
UCC: The Uniform Commercial Code, as amended from time to time,
as in effect in the States of New York, Delaware or Minnesota, as applicable.
Underwriters: Xxxxxxx, Xxxxx & Co. and Residential Funding
Securities, LLC.
Undercollateralization Amount: Initially equal to approximately
$1,470,311.42. With respect to any Payment Date, the amount, if any, by which
the aggregate Security Balance of the Notes on such Payment Date exceeds the
Pool Balance as of the last day of the related Collection Period (after
application of Net Principal Collections or Principal Collections, as the case
may be, for such date).
Uninsured Cause: Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies.
United States Person: A citizen or resident of the United States,
a corporation, partnership or other entity created or organized in, or under the
laws of, the United States, any state thereof, or the District of Columbia
(except in the case of a partnership, to the extent provided in Treasury
regulations) or any political subdivision thereof, or an estate that is
described in Section 7701(a)(30)(D) of the Code, or a trust that is described in
Section 7701(a)(30)(E) of the Code.
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Variable Funding Notes: The Notes designated as the "Variable
Funding Notes" in the Indenture, including any Capped Funding Notes.
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