EXECUTION COPY
HOME EQUITY LOAN TRUST 2006-HSA4
Issuer
AND
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
Indenture Trustee
INDENTURE
Dated as of July 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.
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
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
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 Merger.............................................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
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; Xxxxxx....................................................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
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
This Indenture, dated as of July 28, 2006, between HOME EQUITY LOAN TRUST 2006-HSA4, 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-HSA4 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.
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
(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 $402,118,000 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).
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;
(ii) give the Indenture Trustee and the Credit Enhancer written notice of any default by the Issuer of which it has actual
knowledge in the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment
of Notes, if at any time it ceases to meet the standards required to be met by a Paying Agent at the time of its appointment;
(v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith; and
(vi) deliver to the Indenture Trustee a copy of the report to Noteholders prepared with respect to each Payment Date by the
Master Servicer pursuant to Section 4.01 of the Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other
purpose, by Issuer Request direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such
sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon
such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Note and remaining unclaimed for one year after such amount has become
due and payable shall be discharged from such trust and be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, shall at
the expense and direction of the Issuer cause to be published once, in an Authorized Newspaper, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the
expense and direction of the Issuer, any other reasonable means of notification of such repayment (including, but not limited to,
mailing notice of such repayment to Holders whose Notes have been called but have not been surrendered for redemption or whose right
to or interest in monies due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying
Agent, at the last address of record for each such Holder).
Section 3.04. Existence. The Issuer will keep in full effect its existence, rights and franchises as a statutory trust under the
laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any
other state or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the
Notes, the Home 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;
(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.
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.
(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 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.
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.
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 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.
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.
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.
(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.
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).
(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.
(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.
(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.
(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.
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:
(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, 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
(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.
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 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:
(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.
(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.
(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 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 Trustee 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.
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.
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
(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.
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;
(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 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:
(i) this paragraph does not limit the effect of paragraph (b) of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance
with a direction received by it (A) pursuant to Section 5.11 or (B) from the Credit Enhancer, which it is entitled to give under any
of the Basic Documents.
(d) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree
in writing with the Issuer.
(e) Money held in trust by the Indenture Trustee need not be segregated from other funds except to the extent required by law or
the terms of this Indenture or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall
have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the
Indenture Trustee shall be subject to the provisions of this Section and to the provisions of the TIA.
Section 6.02. Rights of Indenture Trustee. (a) The Indenture Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of
Counsel. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an
Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or
negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers; provided, however, that the Indenture Trustee's conduct does not constitute willful
misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating
to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action
taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The Indenture Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were
not Indenture Trustee. Any Note Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Indenture
Trustee must comply with Sections 6.11 and 6.12.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall not be (i) responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, (ii) accountable for the Issuer's use of the proceeds from the Notes
or (iii) responsible for any statement of the Issuer in 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:
(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
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.
(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 TIAss.310(a).
The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition and it or its parent shall have a long-term debt rating of A or better by Xxxxx'x. The Indenture Trustee
shall comply with TIAss.310(b), including the optional provision permitted by the second sentence of TIAss.310(b)(9); provided,
however, that there shall be excluded from the operation of TIAss.310(b)(1) any indenture or indentures under which other securities
of the Issuer are outstanding if the requirements for such exclusion set forth in TIAss.310(b)(1) are met.
Within 90 days after ascertaining the occurrence of an Event of Default which shall not have been cured or waived,
unless authorized by the Securities and Exchange Commission, the Indenture Trustee shall resign with respect to one or more Classes
of Notes in accordance with Section 6.08 of this Indenture, and the Issuer shall appoint a successor Indenture Trustee for such
Classes in 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 TIAss.310(b).
In the case of the appointment hereunder of a successor Indenture Trustee with respect to any Class of Notes
pursuant to this Section 6.11, the Issuer, the retiring Indenture Trustee and the successor Indenture Trustee with respect to such
Class of Notes shall execute and deliver an indenture supplemental hereto wherein each successor Indenture Trustee shall accept such
appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest
in, the successor Indenture Trustee all the rights, powers, trusts and duties of the retiring Indenture Trustee with respect to the
Notes of the Class to which the appointment of such successor Indenture Trustee relates, (ii) if the retiring Indenture Trustee is
not retiring with respect to all Classes of Notes, shall contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Indenture Trustee with respect to the Notes of each Class as to which
the retiring Indenture Trustee is not retiring shall continue to be vested in the Indenture Trustee, and (iii) shall add to or change
any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder
by more than one Indenture Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such
Indenture Trustees co-trustees of the same trust and that each such Indenture Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other such Indenture Trustee; and upon the removal of the
retiring Indenture Trustee shall become effective to the extent provided therein.
Section 6.12. Preferential Collection of Claims Against Issuer. The Indenture Trustee shall comply with TIAss.311(a), excluding
any creditor relationship listed in TIAss.311(b). An Indenture Trustee who has resigned or been removed shall be subject to TIAss.
311(a) to the extent indicated.
Section 6.13. Representations and Warranties. The Indenture Trustee hereby represents that:
(i) The Indenture Trustee is 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.
Section 6.15. Indenture Trustee May Own Securities. The Indenture Trustee, in its individual or any other capacity may become the
owner or pledgee of Securities with the same rights it would have if it were not Indenture Trustee.
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders. The Issuer will furnish or cause to be
furnished to the Indenture Trustee (a) not more than five days after each Record Date, a list, in such form as the Indenture Trustee
may reasonably require, of the names and addresses of the Holders of Notes as of such Record Date and, (b) at such other times as the
Indenture Trustee and the Credit Enhancer may request in writing, within 30 days after receipt by the Issuer of any such request, a
list of similar form and content as of a date not more than 10 days prior to the time such list is furnished; provided, however, that
so long as the Indenture Trustee is the Note Registrar, no such list shall be required to be furnished.
Section 7.02. Preservation of Information; Communications to Noteholders. (a) The Indenture Trustee shall preserve, in as
current a form as is reasonably practicable, the names and addresses of the Holders of Notes contained in the most recent list
furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any list furnished to it as provided in such
Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIAss.312(b) with other Noteholders with respect to their rights under this
Indenture or under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the protection of TIAss.312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of
the annual reports and the information, documents and other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) that the Issuer may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee, and the Commission in accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders described in TIAss.
313(c)) such summaries of any information, documents and reports required to be filed by the Issuer pursuant to clauses (i) and (ii)
of this Section 7.03(a) and by rules and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIAss.313(a), within 60 days after each January 1, beginning with
January 1, 2007, the Indenture Trustee shall mail to each Noteholder as required by TIAss.313(c) and to the Credit Enhancer a brief
report dated as of such date that complies with TIAss.313(a). The Indenture Trustee also shall comply with TIAss.313(b).
A copy of each report at the time of its mailing to Noteholders shall be filed by the Indenture Trustee with the Commission,
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.
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 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;
(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.
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;
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.
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".
(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.
Section 10.02. Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be based, insofar as it relates to legal matters, upon
a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based
are erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or officers of the Seller or the Issuer, stating that
the information with respect to such factual matters is in the possession of the Seller or the Issuer, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is
provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the
Issuer's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application
or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall
in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such
certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee's right to rely upon the truth
and accuracy of any statement or opinion contained in any such document as provided in Article VI.
Section 10.03. Acts of Noteholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein
otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture
Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the Noteholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided
in this Section 10.03.
(b) The fact and date of the execution by any person of any such instrument or writing may be proved in any manner that the
Indenture Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any 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-HSA4, 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-HSA4. 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.
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 TIAss.ss.310 through 317 that impose duties on any Person (including the provisions automatically deemed
included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically
contained herein.
Section 10.08. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the
construction hereof.
Section 10.09. Successors and Assigns. All covenants and agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its
successors, co-trustees and agents.
Section 10.10. Separability. In case any provision in this Indenture or in the Notes shall be 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 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.
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-HSA4,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Sr. Financial Services Officer
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/Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
STATE OF DELAWARE )
) ss.:
COUNTY OF NEWCASTLE )
On this 28th day of July, 2006, before me personally appeared Xxxxxx X. Xxxxxxx, to me known, who being by me duly sworn,
did depose and say, that s/he resides at in Wilmington, DE, that s/he is the Assistant 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/Xxxxxxx X. Xxxxx
Notary Public
STATE OF TEXAS )
) ss.:
COUNTY OF XXXXXX )
On this 28th day of July, 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 _Houston, TX_ 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/Xxxx Xxx Xxxxx
Notary Public
NOTORIAL SEAL
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-HSA4
Home Equity Loan-Backed Term Note, Class A
Registered Principal Amount: $[ ]
No. 1 Note Rate: Floating
CUSIP NO.
Home Equity Loan Trust 2006-HSA4, 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 July 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 July 2036, to the extent not previously paid on a prior Payment Date. Capitalized terms used but not
defined herein are defined in Appendix A of the Indenture.
Interest on the Class A Notes will be paid monthly on each Payment Date at the Note Rate 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 August 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.
The entire unpaid principal amount of this Term Note shall be due and payable in full on the Payment Date in July
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.
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 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.
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-HSA4,
By WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as
Owner Trustee
Dated: July 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: July 28, 2006
By: __________________________________________
Authorized Signatory
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
______________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
___________________________________________________________________________________
(name and address of assignee)
the within 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.
STATEMENT OF INSURANCE
OBLIGATIONS: $402,118,000
Home Equity Loan Trust 2006-HSA4
Home Equity Loan-Backed Term Notes, Series 2006-HSA4
and Home Equity Loan- Backed Variable Funding Notes, Series 2006-HSA4, in an amount not to exceed
$113,548,512
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.
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 July 28, 2006, among the Home Equity Loan Trust 2006-HSA4, 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.
"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 July 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.
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
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-HSA4
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-HSA4, 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 July 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 July 2036 to the extent not previously paid on a prior Payment Date. Capitalized terms used but not
defined herein are defined in Appendix A of the Indenture.
Interest on the 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.
Principal of and interest on this Variable Funding Note will be payable on each Payment Date, commencing August 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 July 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" 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.
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 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.
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-HSA4,
By WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as
Owner Trustee
Dated: July 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: July 28, 2006
By: __________________________________________
Authorized Signatory
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
______________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
___________________________________________________________________________________
(name and address of assignee)
the within 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.
STATEMENT OF INSURANCE
OBLIGATIONS: $402,118,000
Home Equity Loan Trust 2006-HSA4
Home Equity Loan-Backed Term Notes, Series 2006-HSA4
and Home Equity Loan- Backed Variable Funding Notes, Series 2006-HSA4, in an amount not to exceed
$113,548,512
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.
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 July 28, 2006, among the Home Equity Loan Trust 2006-HSA4, 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.
"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 July 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.
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
SCHEDULE A
to
HOME EQUITY LOAN TRUST 2006-HSA4
Home Equity Loan-Backed Variable Funding Note
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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 July 28, 2006, between Home Equity Loan Trust 2006-HSA4, 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.
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.
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:
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.
- 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.
_______________________
** 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.
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.
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 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:
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.
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: _________________________________
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-HSA4
Ladies and Gentlemen:
__________________ (the "Purchaser") intends to purchase from _________ (the "Seller") $_______ Capped Funding Notes
of Series 2006-HSA4 (the "Notes"), issued pursuant to the Indenture (the "Indenture"), dated as of July 28, 2006 between Home Equity
Loan Trust 2006-HSA4, 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.
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:
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-HSA4
Ladies and Gentlemen:
___________________(the "Purchaser") intends to purchase from ______ (the "Seller") $_______ Capped Funding Notes of
Series 2006-HSA4 (the "Notes"), issued pursuant to the (the "Indenture"), dated as of July 28, 2006 between Home Equity Loan Trust
2006-HSA4, 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.
Very truly yours,
(Seller)
By: ____________________________________
Name:
Title:
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:
(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
(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 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.
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-HSA4, 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-HSA4, substantially in the
form of Exhibit A to the Trust Agreement.
Closing Date: July 28, 2006.
Code: The Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
Collateral: The meaning specified in the Granting Clause of the Indenture.
Collection Period: 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.
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 July 28, 2006, among the Custodian, the Indenture
Trustee, the Issuer and the Master Servicer.
Custodian: Xxxxx Fargo Bank, National Association, and its successors and assigns.
Cut-off Date: July 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.
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.
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):
(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.
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 July 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 July
2036, after giving effect to all other distributions of principal on the Notes on such Payment Date from all sources other than the
Policy.
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.
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-HSA4, 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, $402,118,000 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 July 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 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-HSA4, 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 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.
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 $113,548,512 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.
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.
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 July 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:
(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 November
2006, 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.
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
(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, of a Plan.
Policy: The financial guaranty insurance policy (Policy No. 48335) issued by the Credit Enhancer, dated as of July
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.
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.
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 July 26, 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.
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.
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, 1.65% 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) 3.30% 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.
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 July 31, 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.
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 February 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:
February 2009 to July 2009: 2.00% with respect to February 2009, plus
an additional 1/6th of 1.50% for each month thereafter.
August 2009 to July 2010: 3.50% with respect to August 2009, plus an
additional 1/12th of 2.00% for each month thereafter.
August 2010 to July 2011: 5.50% with respect to August 2010, plus an
additional 1/12th of 1.25% for each month thereafter.
August 2011 to July 2012: 6.75% with respect to August 2011, plus an
additional 1/12th of 0.75% for each month thereafter.
August 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.
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. Codess.ss.3801 et seq., as the same may
be amended from time to time.
Stepdown Date: The later of (a) the Payment Date in February 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).
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 February 2009 and before the Payment Date
in August 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 August 2009 and before the Payment Date in
August 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 August 2010 and before the Payment Date in
August 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
(iv) if the Payment Date is occurring on or after the Payment Date in August 2011 and before the Payment Date in
August 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 August 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-HSA4 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: Citigroup Global Markets Inc. and Residential Funding Securities, LLC.
Undercollateralization Amount: Initially equal to approximately $1,999,628.67. 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.
Variable Funding Notes: The Notes designated as the "Variable Funding Notes" in the Indenture, including any Capped
Funding Notes.
