EXHIBIT 99.6
EXECUTION COPY
==============================================================================
CWABS MASTER TRUST
Issuer
and
BANK ONE, NATIONAL ASSOCIATION
------------------------------
INDENTURE
Dated as of March 4, 2002
------------------------------
==============================================================================
Table of Contents
Page
----
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions...................................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act.............................2
Section 1.03. Other Terms...................................................................2
Section 1.04. Rules of Construction.........................................................3
ARTICLE II
THE NOTES
Section 2.01. Form..........................................................................4
Section 2.02. Execution, Authentication, and Delivery.......................................4
Section 2.03. Registration; Registration of Transfer and Exchange...........................5
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes...................................6
Section 2.05. Persons Considered Owner......................................................7
Section 2.06. Payment of Principal and Interest; Defaulted Interest.........................7
Section 2.07. Cancellation..................................................................8
Section 2.08. Book-Entry Notes..............................................................9
Section 2.09. Notices To Depository.........................................................9
Section 2.10. Definitive Notes.............................................................10
Section 2.11. Tax Treatment................................................................10
Section 2.12. Transfer Restrictions; Restrictive Legends...................................10
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest............................................12
Section 3.02. Maintenance of Office or Agency..............................................12
Section 3.03. Money For Payments To Be Held in Trust.......................................13
Section 3.04. Existence....................................................................14
Section 3.05. Protection of the Collateral.................................................14
Section 3.06. Opinions About Collateral....................................................15
Section 3.07. Performance of Obligations...................................................16
Section 3.08. Negative Covenants...........................................................17
Section 3.09. Annual Compliance Statement..................................................18
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms..........................19
Section 3.11. Successor or Transferee......................................................19
Section 3.12. Further Instruments and Acts.................................................19
Section 3.13. Compliance with Laws.........................................................20
Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee.................20
Section 3.15. Investment Company Act.......................................................20
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture......................................20
Section 4.02. Application of Trust Money...................................................21
i
Section 4.03. Subrogation and Cooperation..................................................22
Section 4.04. Release of Collateral........................................................22
ARTICLE V
REMEDIES
Section 5.01. Events of Default............................................................23
Section 5.02. Acceleration of Maturity; Rescission and Annulment...........................24
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee......................................................................25
Section 5.04. Indenture Trustee May File Proofs of Claim...................................26
Section 5.05. Remedies; Priorities.........................................................27
Section 5.06. Optional Preservation of the Collateral......................................28
Section 5.07. Limitation of Suits..........................................................29
Section 5.08. Unconditional Right to Receive Principal and Interest........................29
Section 5.09. Restoration of Rights and Remedies...........................................29
Section 5.10. Rights and Remedies Cumulative...............................................30
Section 5.11. Delay or Omission Not a Waiver...............................................30
Section 5.12. Control by Credit Enhancer or Noteholders....................................30
Section 5.13. Waiver of Past Defaults......................................................30
Section 5.14. Undertaking For Costs........................................................31
Section 5.15. Waiver of Stay or Extension Laws.............................................31
Section 5.16. Rapid Amortization Events....................................................31
Section 5.17. Sale of Collateral...........................................................33
Section 5.18. Performance and Enforcement of Certain Obligations...........................33
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee..................................................34
Section 6.02. Notice of Defaults...........................................................35
Section 6.03. Rights of Indenture Trustee..................................................35
Section 6.04. Indenture Trustee Not Responsible for Certain Things.........................36
Section 6.05. Individual Rights of Indenture Trustee.......................................37
Section 6.06. Money Held in Trust..........................................................37
Section 6.07. Compensation.................................................................37
Section 6.08. Eligibility..................................................................38
Section 6.09. Preferential Collection of Claims Against Issuer.............................38
Section 6.10. Replacement of Indenture Trustee.............................................38
Section 6.11. Acceptance of Appointment by Successor.......................................39
Section 6.12. Successor Indenture Trustee by Merger........................................39
Section 6.13. Appointment of Co-Indenture Trustee or Separate Indenture Trustee............40
Section 6.14. Representations and Warranties of Indenture Trustee..........................41
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders.........................41
Section 7.02. Preservation of Information; Communications..................................42
Section 7.03. Reports of Issuer............................................................42
Section 7.04. Reports by Indenture Trustee.................................................42
ii
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS, AND RELEASES
Section 8.01. Accounts.....................................................................44
Section 8.02. Withdrawals from the Collection Account......................................44
Section 8.03. Payments.....................................................................46
Section 8.04. Calculation of the Note Rate.................................................48
Section 8.05. Claims on the Policy; Policy Payments Account................................48
Section 8.06. Replacement Policy...........................................................49
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.......................50
Section 9.02. Supplemental Indentures with Consent of Noteholders..........................51
Section 9.03. Execution of Supplemental Indentures.........................................52
Section 9.04. Effect of Supplemental Indenture.............................................52
Section 9.05. Reference in Notes to Supplemental Indentures................................52
Section 9.06. Tax Opinion..................................................................53
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption...................................................................53
Section 10.02. Form of Redemption Notice....................................................54
Section 10.03. Notes Payable on Redemption Date.............................................54
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc....................................55
Section 11.02. Form of Documents Delivered to Indenture Trustee.............................56
Section 11.03. Acts of Noteholders..........................................................57
Section 11.04. Notices, etc.................................................................58
Section 11.05. Notices to Noteholders; Waiver...............................................59
Section 11.06. Alternate Payment and Notice Provisions......................................59
Section 11.07. Conflict with Trust Indenture Act............................................59
Section 11.08. Effect of Headings and Table of Contents.....................................60
Section 11.09. Successors and Assigns.......................................................60
Section 11.10. Separability.................................................................60
Section 11.11. Benefits of Indenture........................................................60
Section 11.12. Legal Holidays...............................................................60
Section 11.13. Governing Law................................................................60
Section 11.14. Counterparts.................................................................60
Section 11.15. Recording of Indenture.......................................................61
Section 11.16. No Petition..................................................................61
Section 11.17. Act on Instructions from Credit Enhancer.....................................61
Section 11.18. Trust Obligation.............................................................61
iii
EXHIBITS
Exhibit A - FORM OF NOTE.............................................................A-1
ANNEX 1 - DEFINITIONS................................................................XXX-1-1
ANNEX 2 - ADOPTION ANNEX.............................................................XXX-2-1
iv
THIS INDENTURE, dated as of March 4, 2002, between CWABS MASTER TRUST, a
Delaware business trust, and THE INDENTURE TRUSTEE, as indenture trustee,
WITNESSETH THAT
Each party agrees for the benefit of the other party and for the benefit
of the Noteholders and the Credit Enhancer as follows.
GRANTING CLAUSE
The Issuer Grants to the Indenture Trustee for the series referred to in
the Adoption Annex at the Closing Date, as Indenture Trustee for the benefit
of the Noteholders and the Credit Enhancer, all of the Issuer's interest
existing now or in the future in:
o Mortgage Loans and the related Mortgage Files and all property that
secures the Mortgage Loans and all property that is acquired by
foreclosure or deed in lieu of foreclosure, and all collections
received on each Mortgage Loan after the Cut-off Date (excluding
payments due by the Cut-off Date);
o the Issuer's rights under hazard insurance policies;
o the interest of the Issuer in the Sale and Servicing Agreement and the
Purchase Agreement (including the Issuer's right to cause Mortgage
Loans to be repurchased);
o the segregated account maintained to hold collections and its
contents; and
o all present and future claims, demands, causes of action, and choses
in action regarding any of the foregoing and all payments on and all
proceeds from any of the foregoing, including all proceeds of their
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of every kind, and other forms
of obligations, instruments, and other property that at any time
constitute any part of or are included in the proceeds of any of the
foregoing (collectively, the "Collateral").
This Grant is made in trust to secure the payment of principal and
interest on, and any other amounts owing on, the Notes, 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 to
the extent of draws made on the Policy and amounts owing under the Insurance
Agreement, and shall continue for the benefit of the Credit Enhancer until all
amounts owed the Credit Enhancer have been repaid in full.
The Indenture Trustee, as Indenture Trustee on behalf of the Noteholders
and the Credit Enhancer, acknowledges the Grant, accepts the trusts under this
Indenture in
1
accordance with this Indenture, and agrees to perform its duties required in
this Indenture in accordance with its terms and the terms of the Transaction
Documents.
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Indenture as defined in Annex 1.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference into this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute, or defined by Commission rule
have the meanings so assigned to them.
Section 1.03. Other Terms.
Defined terms that are used only in one section or only in another
definition may be omitted from the list of defined terms in Annex 1. Defined
terms used in this Indenture are sometimes defined after their first use
without a reference such as "(as hereinafter defined)." Defined terms include,
as appropriate, all genders and the plural as well as the singular.
Section 1.04. Rules of Construction.
Except as otherwise expressly provided in this Indenture or unless the
context otherwise clearly requires:
(a) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Indenture, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Indenture as a whole and to all
2
subdivisions of the designated article, section, subsection, exhibit, or other
subdivision. The words "herein," "hereof," "hereto," "hereunder," and other
words of similar import refer to this Indenture as a whole and not to any
particular article, section, exhibit, or other subdivision of this Indenture.
(b) Any term that relates to a document or a statute, rule, or regulation
includes any amendments, modifications, supplements, or any other changes that
may have occurred since the document, statute, rule, or regulation came into
being, including changes that occur after the date of this Indenture except in
the case of the TIA.
(c) Any party may execute any of the requirements under this Indenture
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under
this Indenture. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Indenture are implicitly available and
things may happen from time to time.
(d) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or
B or both," not "either A or B but not both").
(e) A reference to "a thing" or "any of a thing" does not imply the
existence or occurrence of the thing referred to even though not followed by
"if any," and "any of a thing" is any and all of it. A reference to the plural
of anything as to which there could be either one or more than one does not
imply the existence of more than one (for instance, the phrase "the obligors
on a note" means "the obligor or obligors on a note"). "Until something
occurs" does not imply that it must occur, and will not be modified by the
word "unless." The word "due" and the word "payable" are each used in the
sense that the stated time for payment has past. The word indemnify is used to
include its dictionary sense of hold harmless. The word "accrued" is used in
its accounting sense, i.e., an amount paid is no longer accrued. In the
calculation of amounts of things, differences and sums may generally result in
negative numbers, but when the calculation of the excess of one thing over
another results in zero or a negative number, the calculation is disregarded
and an "excess" does not exist. Portions of things may be expressed as
fractions or percentages interchangeably.
(f) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Indenture, to the extent
not completely defined, shall be construed in accordance with generally
accepted accounting principles. To the extent that the definitions of
accounting terms in this Indenture are inconsistent with their meanings under
generally accepted accounting principles, the definitions contained in this
Indenture shall control. Capitalized terms used in this Indenture without
definition that are defined in the UCC are used in this Indenture as defined
in the UCC.
3
(g) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the word "from" or "beginning"
means "from and including," the words "to" or "until" mean "to but excluding,"
and the word "through" means "to and including." Likewise, in setting
deadlines or other periods, "by" means "on or before." The words "preceding,"
"following," and words of similar import, mean immediately preceding or
following. References to a month or a year refer to calendar months and
calendar years.
(h) Any reference to the enforceability of any agreement against a party
means that it is enforceable, subject as to enforcement against the party, to
applicable bankruptcy, insolvency, reorganization, and other similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
ARTICLE II
THE NOTES
Section 2.01. Form.
The Notes, together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form of Exhibit A, with any
appropriate insertions, omissions, substitutions, and other variations
required or permitted by this Indenture. The Notes may have any letters,
numbers, or other marks of identification and any legends or endorsements
placed on them that the officers executing them determine appropriate and that
are consistent with this Indenture, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be on its reverse.
The Notes may 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 officers executing them, as evidenced by
their execution of them.
The terms of the Notes are part of the terms of this Indenture.
Section 2.02. Execution, Authentication, and Delivery.
(a) The Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any 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 they may have ceased to hold their offices
before the authentication and delivery of the Notes or did not hold their
offices at the date of the Notes.
(b) The Indenture Trustee shall upon Issuer Order authenticate and
deliver for original issue the Notes in the amounts reflected in the Adoption
Annex. The aggregate principal amount of Notes outstanding at any time may not
exceed those amounts except as provided in Section 2.04. Each Note shall be
dated the date of its authentication. The Notes
4
shall be issuable as registered Notes in the minimum denomination of $25,000
and in integral multiples of $1,000 above that.
(c) No Note shall be entitled to any benefit under this Indenture or be a
valid obligation of the Issuer for any purpose, unless a certificate of
authentication appears on it executed by the Indenture Trustee by the manual
signature of one of its authorized signatories. A certificate of
authentication on any Note shall be conclusive evidence, and the only
evidence, that it has been duly authenticated and delivered under this
Indenture.
Section 2.03. Registration; Registration of Transfer and Exchange.
(a) The Issuer shall cause a register (the "Note Register") to be kept in
which the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. The Indenture Trustee initially shall be
the "Note Registrar" for registering Notes and transfers of Notes. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to, it shall assume the duties of Note
Registrar.
If the Issuer appoints a person other than the Indenture Trustee to be
Note Registrar, the Issuer will give the Indenture Trustee prompt notice of
the appointment of the Note Registrar and of the location, and any change in
the location, of the Note Register. The Indenture Trustee may inspect the Note
Register at all reasonable times and obtain copies of it. The Indenture
Trustee may rely on a certificate executed on behalf of the Note Registrar by
one of its Authorized Officers as to the names and addresses of the
Noteholders and the principal amounts and number of the Notes.
(b) Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained pursuant to Section 3.02, if the
requirements of this Indenture and Section 8-401(a) of the UCC are met, the
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferees, new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
(c) At the option of the Holder, Notes may be exchanged for other Notes
of the same Class in any authorized denominations, of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at the office or
agency of the Issuer maintained pursuant to Section 3.02. Whenever any Notes
are so surrendered for exchange, if the requirements of Section 8-401(a) of
the UCC are met the Issuer shall execute, and the Indenture Trustee shall
authenticate and the Noteholder shall obtain from the Indenture Trustee, the
Notes that the Noteholder making the exchange is entitled to receive.
(d) All Notes issued on any registration of transfer or exchange of Notes
shall be valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
for registration of transfer or exchange.
5
(e) Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
its Holder or any attorney for its Holder duly authorized in writing. The
endorsement signature shall be 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 any other "signature guarantee program"
chosen by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Exchange Act.
(f) No Holder shall incur a service charge for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
on any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 2.04 or 9.05 not involving any transfer.
(g) The preceding provisions of this Section notwithstanding, the Note
Registrar need not register and the Issuer need not make transfers or
exchanges of Notes selected for redemption or transfers or exchanges of any
Note during the 15 days preceding the due date for any payment on it.
Section 2.04. Mutilated, Destroyed, Lost, or Stolen Notes.
If (i) the Indenture Trustee receives evidence to its satisfaction of the
destruction, loss, or theft of any Note and the Indenture Trustee receives the
security or indemnity it requires to hold the Issuer and the Indenture Trustee
harmless, or (ii) any mutilated Note is surrendered to the Indenture Trustee,
then, in the absence of notice to the Issuer, the Note Registrar, or the
Indenture Trustee that the Note has been acquired by a Protected Purchaser,
and if the requirements of Section 8-406 of the UCC are met and subject to
Section 8-405 of the UCC, the Issuer shall execute, and on its request the
Indenture Trustee shall authenticate and deliver, in exchange for the Note, a
replacement Note of like tenor and principal amount. If the mutilated,
destroyed, lost, or stolen Note is, or within seven days becomes, payable, or
is called for redemption, instead of issuing a replacement Note the Issuer may
pay the mutilated, destroyed, lost, or stolen Note when payable or on its
redemption date. If, after the delivery of the replacement Note or payment of
a destroyed, lost, or stolen Note pursuant to the preceding sentence, a
Protected Purchaser of the original Note in lieu of which the replacement Note
was issued presents it for payment, the Issuer and the Indenture Trustee may
recover the replacement Note (or the payment) from the person to whom it was
delivered or any person taking the replacement Note from the person to whom
the replacement Note was delivered or any assignee of that person, except a
Protected Purchaser, and may recover on the security or indemnity provided for
it to the extent of any expense incurred by the Issuer or the Indenture
Trustee in connection with it.
6
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Holder of the Note of a sum sufficient to cover
any tax or other governmental charge that may be imposed on it and any other
reasonable expenses (including the fees and expenses of the Indenture Trustee)
in connection with it.
Every replacement Note issued pursuant to this Section 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 is enforceable by anyone at any time, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any other Notes duly issued under this Indenture.
The provisions of this Section are exclusive and shall preclude all other
rights and remedies with respect to the replacement or payment of mutilated,
destroyed, lost, or stolen Notes.
Section 2.05. Persons Considered Owner.
Before due presentment for registration of transfer of any Note, the
Issuer, the Indenture Trustee, and any agent of the Issuer or the Indenture
Trustee may treat the person in whose name any Note is registered (as of the
day of determination) as the owner of the Note for the purpose of receiving
payments of principal and interest on the Note and for all other purposes
whatsoever, whether or not the Note is overdue. None of the Issuer, the
Indenture Trustee, or any agent of the Issuer or the Indenture Trustee shall
be affected by notice to the contrary.
Section 2.06. Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest on their Outstanding balance at their
Note Rate before and after maturity. Interest shall be payable on each Payment
Date as specified in Section 8.03 or 5.05, subject to Section 3.01. Any
installment of interest or principal payable on a Note that is punctually paid
or duly provided for by the Issuer on the applicable Payment Date shall be
paid to the person in whose name the Note (or its predecessor Note) is
registered on the Record Date by wire transfer of immediately available funds
to the account designated by the Holder at a bank or other entity having
appropriate facilities, if the Holder has so notified the Indenture Trustee in
writing at least five Business Days before the Record Date and is either the
Depository or owner of record of Notes having an aggregate principal amount of
at least $1,000,000, and otherwise by check mailed first-class postage prepaid
to the Holder's address as it appears on the Note Register on the Record Date,
or by any other means the Noteholder and the Indenture Trustee agree to,
except for the final installment of principal payable on the Note on a Payment
Date, a redemption date, or the Scheduled Maturity Date (and except for the
redemption price for any Note called for redemption pursuant to Section 10.01)
which shall be payable as provided below.
7
(b) The principal of each Note shall be payable, if not previously paid,
on the related Scheduled Maturity Date in the manner specified in Section
8.03. All principal payments on the Notes shall be made pro rata to the
Noteholders. The Indenture Trustee shall send a notice to each person in whose
name a Note is registered at the close of business on the Record Date
preceding the Scheduled Maturity Date. The notice shall be sent by first-class
mail, postage prepaid, or by facsimile (promptly confirmed by mail) not later
than ten days before the Scheduled Maturity Date to each Holder of Notes as of
the close of business on the Record Date preceding the Scheduled Maturity
Date, at the Holder's address or facsimile number appearing in the Note
Register, and shall specify that the principal of the Note will be payable
only on presentation and surrender of the Note and shall specify the place
where the Note may be presented and surrendered for payment. Notices in
connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 10.02.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on the defaulted interest
to the extent lawful) at the applicable Note Rate in any lawful manner. The
Issuer may pay the defaulted interest to the persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business
Days before the payment date. The Issuer shall fix the special record date and
payment date, and, at least 15 days before the special record date, the Issuer
shall mail to each Noteholder a notice that states the special record date,
the payment date, and the amount of defaulted interest to be paid.
Section 2.07. 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
under this Indenture that 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 instead of or in exchange
for any Notes cancelled as provided in this Section, 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 before their disposal the Issuer
directs by an Issuer Order that they be returned to it.
Section 2.08. Book-Entry Notes.
(a) The Notes, on original issuance, will be issued by the Issuer in the
form of typewritten Notes representing the book-entry Notes, to the Depository
Trust Company, the initial Depository. The book-entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Depository, and no Note Owner will receive a definitive
Note representing its interest in a Note, except as provided in Section
8
2.10. Until definitive, fully registered Notes have been issued to the Note
Owners pursuant to Section 2.10:
(i) the provisions of this Section shall be in full force;
(ii) the Note Registrar and the Indenture Trustee may deal with the
Depository for all purposes of this Indenture (including the payment of
principal and interest on the Notes and accepting instructions under this
Indenture) as the sole holder of the Notes, and shall have no obligation
to the Note Owners;
(iii) to the extent that this Section conflicts with any other
provisions of this Indenture, this Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and
agreements between the Note Owners and the Depository;
(v) until definitive Notes are issued pursuant to Section 2.10, the
Depository will make book-entry transfers among the Depository's
participants and receive and transmit payments of principal and interest
on the Notes to the Depository's participants;
(vi) whenever this Indenture requires or permits actions to be taken
based on instructions from Holders of Notes evidencing a specified
percentage of the Outstanding Amount, the Depository shall be treated as
representing that percentage only to the extent that it has received
instructions to that effect from Note Owners owning the required
percentage of the beneficial interest in the Notes and has delivered the
instructions to the Indenture Trustee; and
(vii) the Indenture Trustee may conclusively rely on information
furnished by the Depository about its participants and furnished by the
participants about indirect participating firms and persons shown on the
books of the indirect participating firms as direct or indirect Note
Owners.
(b) The book-entry Notes may not be transferred except as a whole and
then only by the Depository to its nominee or by its nominee to the Depository
or another nominee of the Depository, or by the Depository or its nominee to a
successor to the Depository or the successor's nominee.
Section 2.09. Notices To Depository.
Whenever a communication to the Noteholders is required under this
Indenture, until definitive Notes have been issued to the Note Owners pursuant
to Section 2.10, the Indenture Trustee shall communicate with the Depository
as Holder of the Notes, and shall have no obligation to the Note Owners.
9
Section 2.10. Definitive Notes.
If
(i) the Issuer advises the Indenture Trustee in writing that the
Depository is no longer willing or able to discharge its responsibilities
properly with respect to the book-entry Notes and the Issuer is unable to
locate a qualified successor,
(ii) the Issuer at its option advises the Indenture Trustee in
writing that it elects to terminate the book-entry system through the
Depository, or
(iii) after the occurrence of an Event of Default, Note Owners of
not less than 51% of the aggregate Outstanding Amount 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 Note
Owners,
then the Depository shall notify all Note Owners and the Indenture Trustee of
the occurrence of the event and of the availability of definitive Notes to
Note Owners requesting them. Upon surrender to the Indenture Trustee of the
book-entry Notes by the Depository, accompanied by registration instructions,
the Issuer shall execute and the Indenture Trustee shall authenticate and
deliver the definitive 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 the instructions and may
conclusively rely on, and shall be protected in relying on, the instructions.
On the issuance of definitive Notes, the Indenture Trustee shall recognize the
Holders of the definitive Notes as Noteholders.
Section 2.11. Tax Treatment.
The Issuer has entered into this Indenture, and the Notes will be issued,
with the intention that, for all purposes including federal, State, and local
income, single business, and franchise tax purposes, the Notes will qualify as
indebtedness secured by the Collateral. The Issuer, by entering into this
Indenture, and each Noteholder, by its acquisition of a Note (and each Note
Owner by its acquisition of an interest in a book-entry Note), agree to treat
the Notes for all purposes including federal, State, and local income, single
business, and franchise tax purposes as indebtedness.
Section 2.12. Transfer Restrictions; Restrictive Legends.
(a) [Deleted]
(b) No Note may be purchased with plan assets of a plan if the issuer,
the master servicer, a servicer, the indenture trustee, the underwriter, or
any of their respective affiliates (i) has investment or administrative
discretion with respect to those plan assets; (ii) 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 the advice will serve as a primary basis of investment decisions with
respect to those plan assets, and will be based on the particular investment
needs for the employee plan; or (iii) unless Prohibited Transaction Class
Exemption ("PTCE") 00-0, XXXX 00-00, xx XXXX 95-60 applies to the
10
investment, is an employer maintaining or contributing to the employee plan.
Each transferee or purchaser of a Note that is a plan or is investing plan
assets shall represent (or, in the case of a book-entry Note, shall be deemed
to represent) that the investment and holding of the Note satisfy the
conditions for exemptive relief under XXXX 00-00, XXXX 00-0, XXXX 00-00, XXXX
00-00, XXXX 96-23, or a similar exemption. A "plan" is an employee benefit
plan (as defined in section 3(3) of ERISA) that is subject to Title I of
ERISA, a plan (as defined in section 4975(e)(1) of the Code) and any entity
whose underlying assets include plan assets by reason of a plan's investment
in the entity or otherwise.
(c) Unless the Indenture Trustee receives an Opinion of Counsel to the
effect that it is no longer appropriate, each definitive Note shall bear the
following legend on its face:
THIS NOTE MAY NOT BE PURCHASED WITH PLAN ASSETS OF A PLAN IF THE ISSUER,
THE MASTER SERVICER, A SERVICER, THE INDENTURE TRUSTEE, THE UNDERWRITER, OR
ANY OF THEIR RESPECTIVE AFFILIATES (I) HAS INVESTMENT OR ADMINISTRATIVE
DISCRETION WITH RESPECT TO THOSE PLAN ASSETS; (II) 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 THE ADVICE WILL SERVE AS A PRIMARY BASIS OF INVESTMENT DECISIONS WITH
RESPECT TO THOSE PLAN ASSETS, AND WILL BE BASED ON THE PARTICULAR INVESTMENT
NEEDS FOR THE EMPLOYEE PLAN; OR (III) UNLESS PROHIBITED TRANSACTION ("PTCE")
00-0, XXXX 00-00, XX XXXX 95-60 APPLIES TO THE INVESTMENT, IS AN EMPLOYER
MAINTAINING OR CONTRIBUTING TO THE EMPLOYEE PLAN. EACH TRANSFEREE OR PURCHASER
OF THIS NOTE THAT IS A PLAN OR IS INVESTING PLAN ASSETS, BY ACCEPTANCE OF THIS
NOTE OR AN INTEREST IN THIS NOTE, REPRESENTS THAT THE INVESTMENT AND HOLDING
OF THIS NOTE SATISFY THE CONDITIONS FOR EXEMPTIVE RELIEF UNDER XXXX 00-00,
XXXX 00-0, XXXX 00-00, XXXX 00-00, XXXX 96-23, OR A SIMILAR EXEMPTION. A
"PLAN" IS AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF ERISA) THAT
IS SUBJECT TO TITLE I OF ERISA, A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF
THE CODE) AND ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON
OF A PLAN'S INVESTMENT IN THE ENTITY OR OTHERWISE.
ANY TRANSFER IN VIOLATION OF EITHER OF THE FOREGOING WILL BE VOID AB
INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY.
(d) Each book-entry Note shall bear the following legend on its face:
"UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE,
OR PAYMENT, AND ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE IS REGISTERED IN THE
NAME OF THE DEPOSITORY OR IN ANOTHER NAME REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT ON THIS NOTE IS MADE TO THE
DEPOSITORY OR TO ANOTHER ENTITY REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE OF THIS NOTE FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
11
INASMUCH AS THE REGISTERED OWNER OF THIS NOTE, THE DEPOSITORY, HAS AN INTEREST
IN THIS NOTE."
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest.
The Issuer will duly and punctually pay the principal and interest and
other amounts payable on the Notes in accordance with the terms of the Notes
and this Indenture. Amounts properly withheld under the Code or other
applicable tax laws by any person from a payment to any Noteholder of interest
or principal or other amounts shall be considered to have been paid by the
Issuer to the Noteholder for all purposes of this Indenture.
The Notes are non-recourse obligations of the Issuer and are limited in
right of payment to amounts available from the related subtrust of the Trust.
The Issuer shall not otherwise be liable for payments on the Notes.
Section 3.02. Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Notes may be surrendered for registration of
transfer or exchange, and where notices to and demands on the Issuer regarding
the Notes and this Indenture may be served. The Issuer initially appoints the
Indenture Trustee to serve as its agent for these purposes. The Indenture
Trustee will give prompt notice to the Issuer of the location, and of any
change in the location, where the Indenture Trustee maintains this office or
agency. If the Issuer ever fails to maintain the required office or agency,
then surrenders, notices, and demands may be made or served at the Corporate
Trust Office.
Section 3.03. Money For Payments To Be Held in Trust.
All payments of amounts payable on any Notes that are to be made from
amounts withdrawn from the Collection Account pursuant to Section 8.03 shall
be made on behalf of the Issuer by the Indenture Trustee or by another Paying
Agent, and no amounts so withdrawn from the Collection Account for payments of
Notes shall be paid over to the Issuer except as provided in this Section.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which the
Paying Agent agrees with the Indenture Trustee that it will, and the Indenture
Trustee hereby agrees in its capacity as Paying Agent that it will:
(i) hold all sums held by it for the payment of amounts due on the
Notes in trust for the benefit of the persons entitled to them until they
are paid to the persons
12
entitled to them or otherwise disposed of as provided in this Indenture,
and pay them to the persons entitled to them as provided in this Indenture;
(ii) give the Indenture Trustee and the Credit Enhancer notice of
any payment default by the Issuer on the Notes of which it has actual
knowledge;
(iii) at any time during the continuance of any payment default on
the Notes, at the request of the Indenture Trustee, immediately pay to
the Indenture Trustee all sums held in trust by it for the payment of the
Notes;
(iv) immediately resign as a Paying Agent and immediately 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) be bound by Section 11.16; and
(vi) comply with all requirements of the Code to withhold from any
payments made by it on any Notes any applicable withholding taxes imposed
on them and comply with any applicable reporting requirements.
To obtain the satisfaction and discharge of this Indenture or for any
other purpose, the Issuer may at any time by Issuer Order direct any Paying
Agent to pay to the Indenture Trustee all sums held by it in trust. Those sums
shall be held by the Indenture Trustee on the same trusts as those on which
the sums were held by the Paying Agent. On payment by a Paying Agent to the
Indenture Trustee, it shall be released from all further liability with
respect to that money.
Subject to applicable laws on abandoned property, any money held in trust
by the Indenture Trustee or any Paying Agent for the payment of any amount due
on any Note remaining unclaimed for two years after it has become payable
shall be discharged from the trust and be paid to the Issuer on Issuer
Request. After that the Holder of the unpaid Note shall look only to the
Issuer for its payment as an unsecured general creditor (but only to the
extent of the amounts paid to the Issuer). On its payment to the Issuer all
liability of the Indenture Trustee or the Paying Agent with respect to that
trust money shall cease. The Indenture Trustee or the Paying Agent, before
being required to make the payment to the Issuer, shall at the expense and
direction of the Issuer cause to be published once a notice that the money
remains unclaimed and that, after a date specified in the notice not less than
30 days from the date of the publication, any unclaimed balance of the money
then remaining will be repaid to the Issuer. The notice shall be published in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York. The Indenture
Trustee may also adopt and employ, at the expense and direction of the Issuer,
any other reasonable means of notification of the repayment (including mailing
notice of the repayment to their last address of record to Holders whose Notes
have been called but have not been surrendered for
13
redemption or whose right to or interest in moneys payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying
Agent).
Section 3.04. Existence.
The Issuer will preserve its existence, rights, and franchises as a
Delaware business trust (unless it or any successor becomes organized under
the laws of any other State or of the United States, in which case the Issuer
will preserve its existence, rights, and franchises under the laws of that
other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which qualification to do business is
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral, and each other material agreement of the Issuer.
Section 3.05. Protection of the Collateral.
(a) The Issuer intends the Security Interest Granted pursuant to this
Indenture in favor of the Indenture Trustee on behalf of the Noteholders and
the Credit Enhancer to be before all other liens on the Collateral (except as
otherwise provided in the Transaction Documents). The Issuer shall take all
actions necessary to obtain and maintain, for the benefit of the Indenture
Trustee on behalf of the Noteholders and the Credit Enhancer, a first priority
perfected Security Interest in the Collateral (except as otherwise provided in
the Transaction Documents). The Issuer will execute and deliver any
supplements and amendments to this Indenture and any Financing Statements,
Continuation Statements, instruments of further assurance, and other
instruments and will take any other action appropriate to:
(i) Grant more effectively any portion of the Collateral;
(ii) preserve the Security Interest (and its priority) created by
this Indenture or carry out more effectively the purposes of this
Indenture;
(iii) perfect, publish notice of, or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to any of the Collateral;
(v) preserve and defend title to the Collateral and the rights of
the Indenture Trustee, the Credit Enhancer, and the Noteholders in the
Collateral against all adverse claims; or
(vi) pay all taxes or assessments levied or assessed on the
Collateral when due.
(b) Except as otherwise provided in this Indenture or the other
Transaction Documents, the Indenture Trustee shall not remove any portion of
the Collateral 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
3.06 unless the Indenture Trustee receives an Opinion of Counsel to the effect
that
14
the lien and Security Interest created by this Indenture will continue to be
maintained on any removed property after giving effect to its removal.
(c) The Issuer 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. The
Issuer authorizes the Indenture Trustee to file Financing Statements or
Continuation Statements, and amendments to them, relating to any part of the
Collateral without the signature of the Issuer where permitted by law. A
carbon, photographic, or other reproduction of this Indenture or any filed
Financing Statement covering the Collateral or any part of it shall be
sufficient as a Financing Statement where permitted by law. The Indenture
Trustee will promptly send to the Issuer any Financing Statements or
Continuation Statements that it files without the signature of the Issuer. Any
Financing Statement filed relating to any part of the Collateral will state in
bold-faced type that a purchase of the Mortgage Loans included in the
collateral covered by the Financing Statement from the debtor will violate the
rights of the secured party and its assignee.
Section 3.06. Opinions About Collateral.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee an Opinion of Counsel either stating that, in its opinion, all action
has been taken
(i) with respect to the recording and filing of this Indenture, any
indentures supplemental to this Indenture, and any other requisite
documents and
(ii) with respect to the execution and filing of any Financing
Statements and Continuation Statements
necessary to perfect the Security Interest of this Indenture in the
Collateral, and reciting the details of the action, or stating that, in its
opinion, no action is necessary to perfect the Security Interest of this
Indenture in the Collateral.
(b) By the date specified in the Adoption Annex in each calendar year
beginning in the year specified in the Adoption Annex, the Issuer shall
furnish to the Indenture Trustee an Opinion of Counsel either stating that, in
its opinion, all action has been taken
(i) with respect to the recording, filing, re-recording, and
refiling of this Indenture, any indentures supplemental to this
Indenture, and any other requisite documents and
(ii) with respect to the execution and filing of any Financing
Statements and Continuation Statements
necessary to maintain the perfected Security Interest created by this
Indenture in the Collateral and reciting the details of the action, or stating
that, in its opinion, no action is necessary to maintain the perfected
Security Interest of this Indenture in the Collateral. The Opinion of Counsel
shall also describe the recording, filing, re-recording, and refiling of this
Indenture, any indentures supplemental to this Indenture, and any other
requisite documents and the execution and filing of any Financing Statements
and Continuation Statements that
15
will, in counsel's opinion, be required to maintain the perfected Security
Interest of this Indenture in the Collateral until the date specified in the
Adoption Annex in the following calendar year.
Section 3.07. Performance of Obligations.
(a) The Issuer will not take any action (and will not permit others to
take any action) that would release any person from any of their material
obligations under any of the Transaction Documents, that would create any
Security Interests that are not provided for in the Transaction Documents, or
that would change or impair the validity or effectiveness of the Transaction
Documents or any Security Interest granted under them, except as expressly
provided in the Transaction Documents. The Indenture Trustee, as pledgee of
the Mortgage Loans and an assignee of the Issuer's rights under the Sale and
Servicing Agreement may exercise all of the rights of the Issuer to direct the
actions of the Master Servicer pursuant to the Sale and Servicing Agreement.
Unless granted or permitted by the Credit Enhancer, the Issuer may not waive
any default by the Master Servicer under the Sale and Servicing Agreement or
terminate the Master Servicer under the Sale and Servicing Agreement.
(b) The Issuer may contract with other persons to assist it in performing
its duties under this Indenture, and the performance of those duties by a
person identified to the Indenture Trustee in an Officer's Certificate shall
be considered to be action taken by the Issuer.
(c) The Issuer will punctually perform all of its obligations under the
Transaction Documents, including properly filing all Financing Statements and
Continuation Statements required to be filed by the Transaction Documents. The
Issuer shall not amend, terminate, or otherwise change any Transaction
Document without the consent of the Indenture Trustee and the Credit Enhancer.
The consent of the Indenture Trustee will not be required if the Rating Agency
Condition is satisfied with respect to the proposed action.
(d) Without derogating from the Grant to the Indenture Trustee under this
Indenture or the rights of the Indenture Trustee under this Indenture, the
Issuer agrees
(i) that it will not, without the prior consent of the Credit
Enhancer and either the Indenture Trustee or the Holders of not less than
51% of the aggregate Outstanding Amount, change or waive, or agree to or
otherwise permit any change to or waiver of, the terms of any Collateral
(except to the extent otherwise provided in the Sale and Servicing
Agreement); and
(iii) that any change in the terms of any Collateral shall not (A)
increase or reduce the amount of, or accelerate or delay the timing of,
distributions that are required to be made for the benefit of the
Noteholders (except as may be incidental to changes or waivers allowed
under (d)(i)) or (B) reduce the percentage of the Notes that is required
to consent to any change in the terms of any Collateral without the
consent of the Holders of all the Outstanding Notes.
16
If the Credit Enhancer and either the Indenture Trustee or the requisite
percentage of Holders consent to any change in the terms of any Collateral,
the Issuer agrees, promptly following a request by the Indenture Trustee to do
so, to execute and deliver, in its own name and at its own expense, any
documents the Indenture Trustee deems appropriate under the circumstances.
Section 3.08. Negative Covenants.
So long as any Notes are Outstanding, the Issuer shall not:
(a) dispose of any of the Collateral or other properties or assets of the
Issuer in the same subtrust with the Collateral, except as expressly permitted
by this Indenture or the Sale and Servicing Agreement, unless directed to do
so by the Indenture Trustee with the consent of the Credit Enhancer;
(b) claim any credit on, or make any deduction from the principal or
interest or other amounts payable on, the Notes (other than amounts properly
withheld from payments under the Code or applicable State law) or assert any
claim against any present or former Noteholder for the payment of the taxes
levied or assessed on any part of the Collateral;
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be changed (except as
otherwise provided in the Sale and Servicing Agreement), or permit any person
to be released from any obligations on the Notes or under this Indenture
except as expressly permitted by this Indenture, (ii) permit any lien, charge,
excise, claim, Security Interest, mortgage, or other encumbrance (other than
the lien of this Indenture and as otherwise provided in the Sale and Servicing
Agreement) to affect any part of the Collateral, or any interest in it or its
proceeds, or (iii) permit the lien of this Indenture not to constitute a valid
first priority Security Interest in the Collateral; or
(d) dissolve or liquidate in whole or in part;
(e) make any distributions on any ownership interest in the Issuer
relating to the subtrust containing the Collateral (except as expressly
provided for in the Transaction Documents), redeem, purchase, or otherwise
retire or acquire for value any ownership interest in the Issuer relating to
the subtrust containing the Collateral (except as expressly provided for in
the Transaction Documents), or set aside any amounts for any of these
purposes;
(f) engage in any business other than financing, purchasing, owning,
selling, and managing the Collateral; issuing the Notes; and activities
incidental to those contemplated businesses, in each case, in the manner
contemplated by the Transaction Documents;
(g) issue, incur, assume, guarantee, or otherwise have the subtrust
containing the Collateral become liable, directly or indirectly, for any
indebtedness except for its liabilities under the Transaction Documents and
other expenses for which the Issuer is entitled to reimbursement under this
Indenture or the Sale and Servicing Agreement;
17
(h) make any loan or advance of credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation), endorse (except for endorsement of
instruments for collection in the ordinary course of business), 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 out of the subtrust containing the Collateral;
(i) make any expenditure (by long-term or operating lease or otherwise)
for capital assets; or
(j) subject to the Master Servicer's servicing the Mortgage Loans in
accordance with the Sale and Servicing Agreement, waive or impair, or fail to
assert rights under, the Mortgage Loans, or effect impairment of the Issuer's
interest in the Mortgage Loans, the Sale and Servicing Agreement, or any other
Transaction Document, if the action would materially and adversely affect the
interests of the Noteholders or the Credit Enhancer.
Section 3.09. Annual Compliance Statement.
Within 120 days after the end of each year (commencing with the year
specified in the Adoption Annex) the Issuer will deliver to the Indenture
Trustee and the Credit Enhancer an Officer's Certificate stating, as to the
Authorized Officer signing the Officer's Certificate, that:
(i) a review of the activities of the Issuer during the year and of
its performance under this Indenture and the Trust Agreement has been
made under the Authorized Officer's supervision; and
(ii) to the best of the Authorized Officer's knowledge, based on
that review, the Issuer has complied with all its obligations under this
Indenture and the Trust Agreement throughout that year or, if there has
been a default in its compliance with any obligation, specifying each
default known to the Authorized Officer and its nature and status.
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
The Issuer shall not consolidate or merge with or into or transfer all or
substantially all of its properties or assets to any other person, unless:
(i) the person (if other than the Issuer) formed by or surviving the
consolidation or merger or to which the transfer is made is organized and
existing under the laws of the United States or any State and expressly
assumes the due and punctual payment of the principal and interest on the
Notes and the performance of every obligation under each Transaction
Document on the part of the Issuer to be performed by an indenture
supplemental to this Indenture, executed and delivered to
18
the Indenture Trustee, in form satisfactory to the Indenture Trustee and
the Credit Enhancer;
(ii) immediately after giving effect to the transaction, no
Incipient Default has occurred and is continuing;
(iii) the Rating Agency Condition has been satisfied with respect to
the transaction;
(iv) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Opinion of Counsel to the effect that the transaction
will not have any material adverse tax consequence to the Issuer or any
Noteholder, with a copy to the Credit Enhancer;
(v) any action that is necessary to maintain the Security Interest
created by this Indenture has been taken; and
(vi) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate and an Opinion of Counsel each
stating that the consolidation or merger and the supplemental indenture
comply with this Article and that all conditions precedent in this
Indenture relating to the transaction have been complied with (including
any filing required by the Exchange Act).
Section 3.11. Successor or Transferee.
Upon any consolidation or merger of the Issuer or transfer all or
substantially all of its properties or assets in accordance with Section 3.10,
the person formed by or surviving the consolidation or merger (if other than
the Issuer) or to which the transfer is made shall succeed to, and be
substituted for, and may exercise every right of, the Issuer under this
Indenture with the same effect as if it had been named as the Issuer in this
Indenture.
Section 3.12. Further Instruments and Acts.
On request of the Indenture Trustee or the Credit Enhancer, the Issuer
will execute and deliver any further instruments and do any further acts that
may be appropriate to carry out more effectively the purpose of this
Indenture.
Section 3.13. Compliance with Laws.
The Issuer shall comply with the requirements of all laws the
non-compliance with which would, individually or in the aggregate, materially
and adversely affect the ability of the Issuer to perform its obligations
under the Notes or any Transaction Document.
Section 3.14. Master Servicer as Agent and Bailee of the Indenture
Trustee.
Solely for the purposes of perfection under Section 9-313(c) of the
Uniform Commercial Code or other similar applicable law, rule, or regulation
of the state in which property is held by the Master Servicer, the Master
Servicer is acting as agent and bailee of the Indenture Trustee in holding
amounts subject to deposit to the Collection Account, as well as its agent and
bailee in holding any Mortgage File released to the Master Servicer, and
19
any other items of Collateral that come into the possession of the Master
Servicer. By the Master Servicer's execution of the Sale and Servicing
Agreement, the Indenture Trustee, as a secured party of the Mortgage Loans,
has possession of these items for the purposes of Section 9-313(c) of the
Uniform Commercial Code of the state in which the Issuer is organized.
Section 3.15. Investment Company Act.
The Issuer shall not become an "investment company" or under the
"control" of an "investment company" as those terms are defined in the
Investment Company Act of 1940 and the rules and regulations under it (taking
into account not only the general definition of the term "investment company"
but also any available exceptions to the general definition). The Issuer shall
be in compliance with this Section 3.15 if it obtains an order exempting it
from regulation as an "investment company" so long as it is in compliance with
the conditions imposed in the order.
Section 3.16. Representations.
(a) The Issuer represents and warrants to the Indenture Trustee and the
Credit Enhancer that as of the Closing Date, unless specifically stated
otherwise:
(i) This Indenture creates a valid and continuing Security Interest
in the Collateral in favor of the Indenture Trustee. The Security
Interest created by this Indenture is a first priority perfected Security
Interest and it is enforceable as such against creditors of, and
purchasers from, the Issuer.
(ii) The Mortgage Notes are "instruments" as defined in the UCC.
(iii) Prior to the Grant of the Security Interest pursuant to the
Granting Clause of this Indenture, the Issuer owns, and has good and
marketable title to, the Mortgage Loans free and clear of any lien,
claim, or encumbrance of any person.
(iv) By the Closing Date with respect to the Mortgage Loans and
within 10 days of the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, the Issuer will file Financing
Statements in the proper filing office in Delaware to perfect the
Security Interest in the Collateral Granted hereunder.
(v) The Issuer has received a written acknowledgement from the
Custodian that is acting solely as agent of the Indenture Trustee.
(vi) 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 Collateral other than any financing statement (A)
relating to the Security Interests granted to the Indenture Trustee
pursuant to this Indenture, (B) that has been terminated, or (C) that
names the Indenture Trustee as secured party.
(vii) The Mortgage Notes that constitute or evidence the Collateral
do not have any marks or notations indicating that they have been
pledged, assigned, or
20
otherwise conveyed to any person other than the Indenture Trustee. All
Financing Statements filed or to be filed against the Issuer in favor of
the Indenture Trustee in connection with this Indenture describing the
Collateral contain a statement to the following effect: "A purchase of
the Mortgage Loans included in the collateral covered by this financing
statement will violate the rights of the Indenture Trustee."
(b) The representations and warranties in this Section 3.16 shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the Sale and Servicing Agreement.
(c) The Indenture Trustee and the Credit Enhancer shall not, without the
prior written consent of the Rating Agencies, waive any of the representations
and warranties in Section 3.16(a).
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
Except for rights of conversion or transfer or exchange of Notes
expressly provided for, the rights of the Indenture Trustee under Section
6.07, the rights of Noteholders as beneficiaries of this Indenture with
respect to property deposited with the Indenture Trustee payable to any of
them, and the rights of the Credit Enhancer as subrogee of the Noteholders,
this Indenture shall cease to be of further effect, 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, when:
(i) either:
(A) all Notes previously authenticated and delivered have been
delivered to the Indenture Trustee for cancellation (other than (1)
Notes that have been destroyed, lost, or stolen and that have been
replaced or paid as provided in Section 2.04 and (2) Notes for whose
payment money has been deposited in trust or segregated and held in
trust by the Issuer and later repaid to the Issuer or discharged
from the trust, as provided in Section 3.03); or
(B) all Notes not previously delivered to the Indenture Trustee
for cancellation:
(1) have become payable,
(2) will become payable at their Scheduled Maturity Date
within one year, or
21
(3) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the
giving of notice of redemption by the Indenture Trustee in the
name, and at the expense, of the Issuer,
and the Issuer, in the case of (1), (2), or (3) above, has
irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the United
States (which will mature before the date the amounts are
payable), in trust for these purposes, in an amount
sufficient to pay the entire indebtedness when due on the
Notes not previously delivered to the Indenture Trustee for
cancellation to the applicable Scheduled Maturity Date or
redemption date (if Notes have been called for redemption
pursuant to Section 10.01), as the case may be;
(ii) the Issuer has paid all other sums payable under this Indenture
by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel, and (if required by the TIA, the
Indenture Trustee, or the Credit Enhancer) an Independent Certificate
from a firm of certified public accountants, each meeting the applicable
requirements of Section 11.01, each stating that all conditions precedent
provided for in this Indenture relating to the satisfaction and discharge
of this Indenture have been complied with.
Section 4.02. Application of Trust Money.
All money deposited with the Indenture Trustee pursuant to Section 4.01
shall be held in trust and applied by it, in accordance with the Notes and
this Indenture, to the payment to the Holders of the particular Notes for the
payment or redemption of which the money has been deposited with the Indenture
Trustee, of all sums due and to become due on them for principal and interest.
That money need not be segregated from other funds except to the extent
required in this Indenture or required by law.
Section 8.05. Subrogation and Cooperation.
(a) To the extent the Credit Enhancer makes payments of principal or
interest on the Notes under the Policy, the Credit Enhancer will be fully
subrogated to the rights of the Noteholders to receive that principal and
interest from the Mortgage Loans and any other Collateral, and the Credit
Enhancer shall be paid that principal and interest, but only from the sources
and in the manner provided in this Indenture and the Sale and Servicing
Agreement for the payment of that principal and interest. Any payment of
principal or interest on the Notes made with moneys received under the Policy
shall not be considered payment of the Notes from the Trust and shall not
result in the payment of or the provision for the payment of the principal or
interest on the Notes under Section 4.01. The Credit
22
Enhancer shall be paid principal and interest from Mortgage Loans only from
the sources and in the manner provided in this Indenture and in the Insurance
Agreement.
The Indenture Trustee shall cooperate in all respects with any reasonable
request or direction by the Credit Enhancer to take any of the following
actions to preserve or enforce the Credit Enhancer's interest under this
Indenture or the Sale and Servicing Agreement, consistent with this Indenture
and without limiting the rights of the Noteholders under this Indenture,
including upon the occurrence and continuance of a Credit Enhancer Default:
(i) institute Proceedings for the collection of all amounts then
payable on the Notes or under this Indenture with respect to 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 any part of Collateral or interests in it at one or more
public or private sales called and conducted in any manner permitted by
law;
(iii) file or record all Assignments of Mortgage that have not
previously been recorded; (vi) (vii) institute Proceedings from time to
time for the complete or partial foreclosure of this Indenture; and
(iv) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the interests of the
Credit Enhancer under this Indenture.
Following the payment in full of the Notes, the Credit Enhancer shall
continue to have all the rights given 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 4.04. Release of Collateral.
(a) Upon satisfaction and discharge of this Indenture pursuant to Section
4.01 and otherwise as permitted by this Indenture, the Indenture Trustee shall
execute instruments to release property from the lien of this Indenture, or
convey the Indenture Trustee's interest in the property, in a manner and under
circumstances that are not inconsistent with this Indenture. No party relying
on an instrument executed by the Indenture Trustee as provided in this Section
shall be bound to ascertain the Indenture Trustee's authority, inquire into
the satisfaction of any conditions precedent, or see to the application of any
moneys.
(b) When no Notes are Outstanding, the Indenture Trustee shall release
any remaining Collateral that secured the Notes from the lien of this
Indenture and release to the Issuer any funds then on deposit in any account
other than funds held in trust for the satisfaction of Notes that have not
been surrendered for payment. The Indenture Trustee shall release property
from the lien of this Indenture pursuant to this Section only on receipt of an
Issuer Request accompanied by an Officer's Certificate.
23
(c) Whenever a Mortgage Loan has been substituted for in accordance with
Section 2.01(f) or 2.02(b) of the Sale and Servicing Agreement, purchased in
accordance with Section 3.06 of the Sale and Servicing Agreement, or
designated for transfer in accordance with Section 2.06 of the Sale and
Servicing Agreement, the Indenture Trustee shall execute appropriate documents
to release the Mortgage Loan from the lien of this Indenture and deliver the
Mortgage File to the appropriate party.
(d) The Indenture Trustee shall release property from the lien of this
Indenture only on receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel, and Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of
Independent Certificates to the effect that the TIA does not require any
Independent Certificates.
ARTICLE V
REMEDIES
Section 5.01. Events of Default.
Any one of the following events is an "Event of Default" whatever the
reason:
(i) default by the Issuer in the payment of any interest on any Note
when it becomes payable, and the default continues for five days; or
(ii) default by the Issuer in the payment of the principal of any
Note when it becomes payable and the default continues for five days; or
(iii) default in the performance of any obligation of the Issuer
under this Indenture (other than an obligation specifically dealt with
elsewhere in this Section), or any representation or warranty of the
Issuer made in this Indenture or in any certificate or other writing
delivered in connection with this Indenture proves to have been
materially incorrect as of the time when it was made, and the default or
the circumstance making the representation or warranty incorrect has not
been cured within 60 days after notice to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Credit Enhancer
(or, if a Credit Enhancer Default exists, by the Holders of at least 25%
of the Outstanding Amount of the Notes) by registered or certified mail
specifying the default or incorrect representation or warranty and
requiring it to be remedied and stating that the notice is a notice of
default under this Indenture; or
(iv) an Insolvency Event occurs with respect to the Issuer.
The Issuer shall deliver to the Indenture Trustee and the Credit Enhancer,
within five days after its occurrence, notice in the form of an Officer's
Certificate of any Incipient Default under clause (iii), its status, and what
action the Issuer is taking or proposes to take with respect to the event.
24
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then the Indenture
Trustee or the Holders of not less than 51% of the aggregate Outstanding
Amount, in either case with the consent of the Credit Enhancer, or the Credit
Enhancer may declare all the Notes to be immediately payable, by a notice in
writing to the Issuer (and to the Indenture Trustee if given by Noteholders),
and upon that declaration the unpaid principal amount of the Notes, together
with accrued interest on them through the date of acceleration, shall become
immediately payable.
At any time after the declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee, the Holders of not less than 51% of the
aggregate Outstanding Amount, with the consent of the Credit Enhancer, or the
Credit Enhancer, by notice to the Issuer and the Indenture Trustee, may
rescind the 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 and interest on the Notes and all
other amounts that would then be due under this Indenture or on the
Notes if the Event of Default giving rise to the acceleration had
not occurred; and
(B) all sums paid or advanced by the Indenture Trustee under
this Indenture 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 or interest of the Notes that have become due solely by the
acceleration, have been cured or waived as provided in Section 5.13.
No rescission shall affect any subsequent default or impair any right
consequent to it.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if the Notes are accelerated following an
Event of Default, then the Issuer will pay to the Indenture Trustee on demand,
for the benefit of the Noteholders or the Credit Enhancer if the Credit
Enhancer has made a payment on the Notes under the Policy, the whole amount
then payable on the Notes and, in addition, any further amount needed to cover
the expenses of collection, including the reasonable compensation and expenses
of the Indenture Trustee and its agents and counsel.
(b) If the Issuer fails to pay those amounts immediately on demand, the
Indenture Trustee, in its own name and as trustee of an express trust, subject
to Section 11.16 may, and at the direction of the Credit Enhancer shall,
institute a Proceeding for the collection of the sums due, and may prosecute
the Proceeding to final decree, and may enforce the judgment against the
Issuer (or other obligor on the Notes) and collect in the manner provided by
law
25
out of the property of the Issuer (or other obligor on the Notes) wherever
situated, the moneys determined to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee subject to Section 11.16 may in its discretion with the consent of the
Credit Enhancer (subject to Section 5.04), and at the direction of the Credit
Enhancer shall, proceed to protect and enforce its rights and the rights of
the Noteholders and the Credit Enhancer, by Proceedings the Indenture Trustee
deems most effective to protect and enforce those rights, whether for the
specific enforcement of any agreement in this Indenture or in aid of the
exercise of any power granted in this Indenture, 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 any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of this Indenture to which the
Indenture Trustee is a party), the Indenture Trustee shall be held to
represent all the Noteholders and the Credit Enhancer, and it shall not be
necessary to make any Noteholder or the Credit Enhancer a party to the
Proceedings.
(e) All rights of action and assertion of claims under this Indenture,
the Sale and Servicing Agreement, or any of the Notes may be enforced by the
Indenture Trustee without the possession of any of the Notes or their
production in any Proceedings regarding them. Any Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an
express trust. Any recovery of judgment, subject to the payment of the
expenses, disbursements, and compensation of the Indenture Trustee, each
predecessor Indenture Trustee, and their agents and counsel, shall be for the
ratable benefit of the Noteholders and the Credit Enhancer.
Section 5.04. Indenture Trustee May File Proofs of Claim.
(a) If
(1) Proceedings under Title 11 of the United States Code or any
other applicable federal or State bankruptcy, insolvency, or other
similar law are pending relating to the Issuer or any other obligor on
the Notes or any person having or claiming an ownership interest in the
Collateral, or
(2) a receiver, assignee, or trustee in bankruptcy or
reorganization, or liquidator, sequestrator, or similar official has been
appointed for or taken possession of the Issuer or its property or the
other obligor or person, or
(3) any other comparable judicial Proceedings are pending relating
to the Issuer or other obligor on the Notes, or to the creditors or
property of the Issuer or the other obligor,
then, irrespective of whether the principal of any Notes is then payable as
expressed in them or by declaration or otherwise and irrespective of whether
the Indenture Trustee has made
26
any demand pursuant to this Section, with the consent of the Credit Enhancer
the Indenture Trustee is authorized by intervention in the Proceedings or
otherwise:
(i) to file and prove claims for the entire amount of principal and
interest and other amounts owing on the Notes and to file any other
documents appropriate to have the claims of the Indenture Trustee, the
Credit Enhancer, and of the Noteholders allowed in the Proceedings
(including any claim for reasonable compensation to the Indenture Trustee
and each predecessor Indenture Trustee, and their respective agents and
counsel, and for reimbursement of all expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee, except as a result of negligence or bad faith);
(ii) to vote on behalf of the Holders of Notes in any election of a
trustee, a standby trustee, or person performing similar functions in the
Proceedings; and
(iii) to collect and receive any moneys or other property payable on
any claims and to distribute all amounts received on the claims of the
Noteholders, the Credit Enhancer, and of the Indenture Trustee on their
behalf;
and any trustee, receiver, liquidator, custodian, or other similar official in
any Proceeding is hereby authorized by each of the Noteholders to make
payments to the Indenture Trustee and, if the Indenture Trustee consents to
the Noteholders receiving payments directly, to pay to the Indenture Trustee
amounts sufficient to cover reasonable compensation to the Indenture Trustee,
each predecessor Indenture Trustee, and their respective agents and counsel,
and all other expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee except as a result of
negligence or bad faith, and to pay all amounts due to the Credit Enhancer.
(b) Nothing contained in this Indenture authorizes the Indenture Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder or the Credit Enhancer any plan of reorganization, arrangement,
adjustment, or composition affecting the Notes or the rights of any Noteholder
or the Credit Enhancer or authorizes the Indenture Trustee to vote on the
claim of any Noteholder or the Credit Enhancer in any such proceeding except
to vote for the election of a trustee in bankruptcy or similar person.
Section 5.05. Remedies; Priorities.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee subject to Section 11.16 may with the consent of the Credit Enhancer,
and at the direction of the Credit Enhancer shall, do any of the following
(subject to Section 5.11):
(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, whether by declaration or otherwise, and all
amounts payable under the Sale and Servicing Agreement, and enforce any
judgment obtained, and collect from the Issuer and any other obligor on
the Notes moneys adjudged due;
27
(ii) institute Proceedings for the complete or partial foreclosure
of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights of
the Indenture Trustee, the Credit Enhancer, and the Noteholders;
(iv) exercise all rights of the Issuer in connection with the
Purchase Agreement and the Sale and Servicing Agreement against the
Sponsor, the Depositor, or the Master Servicer or otherwise; and
(v) sell any portion of the Collateral or interests in it as
directed by the Credit Enhancer, at one or more public or private sales
called and conducted in any manner permitted by law.
However, the Indenture Trustee may not sell or otherwise liquidate Collateral
following an Event of Default unless (A) the Indenture Trustee obtains the
consent of the Credit Enhancer and the Holders of 100% of the aggregate
Outstanding Amount of the Notes, (B) the proceeds of the sale or liquidation
distributable to the Noteholders and the Credit Enhancer are sufficient to
discharge in full all amounts then due on the Notes and to reimburse the
Credit Enhancer for any unreimbursed Credit Enhancer Draw Amounts and any
other amounts due the Credit Enhancer under the Insurance Agreement, or (C)
the Indenture Trustee determines that the Collateral 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
and the Holders of a majority of the aggregate Outstanding Amount of the
Notes. In determining the sufficiency or insufficiency under 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 the proposed action and as to the sufficiency of the
Collateral for the purpose. If a Credit Enhancer Defaults exists at the time
any consent is required or direction may be given under this Section 5.05(a),
the consent or direction shall be by Holders representing at least 662/3% of
the Outstanding Amount instead of by the Credit Enhancer.
(b) If the Indenture Trustee collects any money or property under this
Article, it shall pay out the money or property in the following order:
FIRST: to the Indenture Trustee for the fee of the Indenture Trustee
(separately agreed to between the Master Servicer and the Indenture
Trustee) then due and any expenses incurred by it in connection with the
enforcement of the remedies under this Article and to the Owner Trustee
for the fee of the Owner Trustee (separately agreed to between the Master
Servicer and the Owner Trustee) then due and any expenses due to the
Owner Trustee under any of the Transaction Documents;
SECOND: any premium owing to the Credit Enhancer;
28
THIRD: to the Noteholders for interest due on the Notes, pro rata
according to the amounts due on the Notes for interest;
FOURTH: to the Noteholders for amounts due on the Notes for
principal, pro rata according to the principal due on the Notes until the
Note Principal Balance of the Notes is reduced to zero;
FIFTH: to the Credit Enhancer, any other amounts owed to the Credit
Enhancer under the Insurance Agreement; and
SIXTH: to the Issuer for distribution in accordance with the Trust
Agreement.
Section 5.06. Optional Preservation of the Collateral.
If the Notes have been declared to be due under Section 5.02 following an
Event of Default and the declaration and its consequences have not been
annulled, the Indenture Trustee may with the consent of the Credit Enhancer,
but need not unless so directed by the Credit Enhancer, elect to maintain
possession of the Collateral. The parties and the Noteholders want sufficient
funds to exist at all times for the payment of principal of and interest on
the Notes and other obligations of the Issuer including payments to the Credit
Enhancer, and the Indenture Trustee shall take that into account when
determining whether or not to maintain possession of any Collateral. In
determining whether to maintain possession of the Collateral, the Indenture
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of the proposed action and as to the sufficiency of the Collateral
for the purpose.
Section 5.07. Limitation of Suits.
No Noteholder may institute any Proceeding with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy under this Indenture, unless the Credit Enhancer has consented and
subject to Section 11.16:
(i) the Holder has previously given notice to the Indenture Trustee
of a continuing Event of Default;
(ii) the Holders of not less than 51% of the aggregate Outstanding
Amount have requested the Indenture Trustee in writing to institute a
Proceeding with respect to the Event of Default in its own name as
Indenture Trustee under this Indenture;
(iii) the Holders have offered the Indenture Trustee reasonable
indemnity against the costs and liabilities to be incurred in complying
with the request;
(iv) the Indenture Trustee for 60 days after its receipt of the
request and offer of indemnity has failed to institute Proceedings;
29
(v) no direction inconsistent with the request has been given to the
Indenture Trustee during the 60-day period by the Holders of not less
than 51% of the aggregate Outstanding Amount; and
(vi) the Holders have obtained the consent of the Credit Enhancer.
No Holders of Notes shall have any right in any manner whatever because of
this Indenture to affect 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 provided in this
Indenture.
If the Indenture Trustee receives inconsistent requests and indemnity
from two or more groups of Holders of Notes, each representing less than 51%
of the aggregate Outstanding Amount, the Indenture Trustee in its sole
discretion may determine what action shall be taken.
Section 5.08. Unconditional Right to Receive Principal and Interest.
Notwithstanding any other provisions in this Indenture, every Noteholder
has an absolute and unconditional right to receive payment of the principal
and interest and other amounts payable on its Note after their due dates (or,
in the case of redemption, after the redemption date) and to institute suit
for the enforcement of any payment, and this right shall not be impaired
without the consent of the Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any Proceeding
to enforce any right under this Indenture and the Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to
the Indenture Trustee or to the Noteholder, then the Issuer, the Indenture
Trustee, the Credit Enhancer, and the Noteholders shall, subject to any
determination in the Proceeding, be restored severally and respectively to
their former positions under this Indenture, and all rights of the Indenture
Trustee and the Noteholders shall continue as though no Proceeding had been
instituted.
Section 5.10. Rights and Remedies Cumulative.
No right given to the Indenture Trustee, the Credit Enhancer, or to the
Noteholders in this Indenture is intended to be exclusive of any other right,
and every right shall, to the extent permitted by law, be cumulative to every
other right given under this Indenture or existing at law or in equity or
otherwise. The assertion of any right under this Indenture, or otherwise,
shall not prevent the concurrent assertion of any other appropriate right.
Section 5.11. Delay or Omission Not a Waiver.
No delay in exercising or failure to exercise any right accruing on any
Incipient Default shall impair the right or constitute a waiver of the
Incipient Default or an acquiescence in it. Every right given by this Article
or by law to the Indenture Trustee, to the
30
Credit Enhancer, or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee, by the Credit
Enhancer, or by the Noteholders.
Section 5.12. Control by Credit Enhancer or Noteholders.
If no Credit Enhancer Default exists, then the Credit Enhancer, otherwise
the Holders of not less than 51% of the aggregate Outstanding Amount, may
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
right conferred on the Indenture Trustee. No direction shall be binding
unless:
(i) it does not conflict with any rule of law or with this
Indenture; and
(ii) if no Credit Enhancer Default exists, it is by the Credit
Enhancer, otherwise by the Holders of Notes representing not less than
100% of the aggregate Outstanding Amount if the direction to the
Indenture Trustee is to sell or liquidate the Collateral.
The Indenture Trustee may take any other action it deems proper that is not
inconsistent with the direction, Section 5.04, or Section 5.05.
Section 5.13. Waiver of Past Defaults.
Before the declaration of the acceleration of the maturity of the Notes
as provided in Section 5.02, the Credit Enhancer or, if a Credit Enhancer
Default exists, the Holders of not less than 51% of the aggregate Outstanding
Amount may waive any past default and its consequences except a default
(i) in payment of principal or interest on any of the Notes or
(ii) regarding a provision of this Indenture that cannot be changed
without the consent of the Holder of each affected Note.
After any such waiver, the Incipient Default shall cease to exist and be
considered to have been cured and not to have occurred, and any Event of
Default arising from it shall be considered to have been cured and not to have
occurred, for every purpose of this Indenture. No waiver shall extend to any
subsequent or other default or impair any right consequent to it.
Section 5.14. Undertaking For Costs.
All parties to this Indenture agree, and each Holder of a Note by its
acceptance of its Note agrees, that in any suit for the enforcement of any
right under this Indenture, or in any suit against the Indenture Trustee for
any action taken, suffered, or omitted by it as Indenture Trustee, any court
may in its discretion require the filing by any party litigant in the suit of
an undertaking to pay the costs of the suit, and that the court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit,
31
having due regard to the merits and good faith of the claims or defenses made
by the party litigant. The provisions of this Section shall not apply to
(i) any suit instituted by the Indenture Trustee or the Credit
Enhancer,
(ii) any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than 25% of the aggregate Outstanding
Amount, or
(iii) any suit instituted by any Noteholder for the enforcement of
the payment of principal or interest on any Note after the due dates
expressed in the Note and in this Indenture (or, in the case of
redemption, after the redemption date).
Section 5.15. Waiver of Stay or Extension Laws.
To the extent that it may lawfully do so, the Issuer covenants that it
will not at any time insist on, 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 after this in force, that may affect the covenants or the
performance of this Indenture. To the extent that it may lawfully do so, the
Issuer expressly waives all benefit of any such law, and covenants that it
will not hinder, delay, or impede the execution of any power granted in this
Indenture to the Indenture Trustee, but will permit the execution of every
power as though the law had not been enacted.
Section 5.16. Rapid Amortization Events.
If any one of the following events occurs during the Managed Amortization
Period:
(a) The failure of the Sponsor or the Master Servicer to make any payment
or deposit required by the Sale and Servicing Agreement within three Business
Days after the payment or deposit was required to be made.
(b) The failure of the Sponsor or the Master Servicer to cause the
Depositor to observe or perform in any material respect the covenants of the
Depositor in Section 2.01(h) or 2.05 of the Sale and Servicing Agreement.
(c) The failure of the Sponsor or the Master Servicer to observe or
perform in any material respect any other covenants of the Sponsor in the Sale
and Servicing Agreement that materially and adversely affects the interests of
the Noteholders or the Credit Enhancer and that continues unremedied and
continues to affect materially and adversely the interests of the Noteholders
or the Credit Enhancer for 60 days (five days in the case of any failure to
take the action specified in the second sentence of Section 2.01(f) of the
Sale and Servicing Agreement or Section 2.04(b)(2) of the Sale and Servicing
Agreement) after the date on which notice of the failure, requiring it to be
remedied, shall have been given to the Sponsor by the Indenture Trustee, or to
the Sponsor and the Indenture Trustee by the Credit Enhancer or the Holders of
not less than 51% of the aggregate Outstanding Amount.
(d) Any representation or warranty made by the Sponsor or the Depositor
in the Sale and Servicing Agreement proves to have been incorrect in any
material respect when
32
made, as a result of which the interests of the Noteholders or the Credit
Enhancer are materially and adversely affected and that continues to be
incorrect in any material respect and continues to affect materially and
adversely the interests of the Noteholders or the Credit Enhancer for 60 days
after the date on which notice of the failure, requiring it to be remedied,
shall have been given to the Sponsor or the Depositor, as the case may be, by
the Indenture Trustee, or to the Sponsor, the Depositor, and the Indenture
Trustee by either the Credit Enhancer or the Holders of not less than 51% of
the aggregate Outstanding Amount. A Rapid Amortization Event pursuant to this
subparagraph (b) shall not occur if the Sponsor has accepted retransfer of the
related Mortgage Loans or substituted for them during the 60-day period (or
such longer period (not to exceed an additional 60 days) as the Indenture
Trustee may specify) in accordance with the Sale and Servicing Agreement.
(e) An Insolvency Event occurs with respect to the Transferor or the
Depositor, but for this purpose the 60-day periods in the definition of
Insolvency Event shall be 30 days.
(f) The Trust becomes subject to registration as an "investment company"
under the Investment Company Act of 1940.
(g) The aggregate of all draws under the Policy exceeds the percentage of
the Original Note Principal Balance specified in the Adoption Annex.
Then, when any event described in subparagraph (a), (b), (c), or (d)
occurs, either the Indenture Trustee, the Credit Enhancer, or the Holders of
not less than 51% of the aggregate Outstanding Amount, by notice given in
writing to the Transferor, the Depositor, and the Master Servicer (and to the
Indenture Trustee if given by either the Credit Enhancer or the Noteholders)
may declare that an early amortization event (a "Rapid Amortization Event")
has occurred as of the date of the notice, and in the case of any event
described in subparagraph (e), (f), or (g), a Rapid Amortization Event shall
occur without any notice or other action on the part of the Indenture Trustee,
the Credit Enhancer, or the Noteholders, immediately upon its occurrence.
Section 5.17. Sale of Collateral.
(a) The power to effect any sale or other disposition (a "Sale") of any
portion of the Collateral pursuant to Section 5.05 is subject to this Section
5.17. The Indenture Trustee waives its right to any amount fixed by law as
compensation for any Sale.
(b) In connection with a Sale of any of the Collateral,
(i) any Holder of Notes may bid for the property offered for sale,
and on compliance with the terms of sale may own the property without
further accountability, and may, in paying its purchase price, deliver
any Notes or claims for interest on them rather than cash up to the
amount that would be payable on them from the distribution of the net
proceeds of the sale, and the Notes shall be returned to the Holders
after being appropriately stamped to show partial payment if the amount
payable for the property is less than the amount due on the Notes;
33
(ii) the Indenture Trustee may bid for and acquire the property
offered for Sale, and may purchase any portion of the Collateral in a
private sale, and rather than paying cash, may settle the purchase price
by crediting the gross Sale price against the amount that would be
distributable as a result of the Sale in accordance with Section 5.05(b)
on the next Payment Date after the Sale without being required to produce
the Notes to complete the Sale or for the net Sale price to be credited
against the Notes, and any property so acquired by the Indenture Trustee
shall be held and dealt with by it in accordance with this Indenture;
(iii) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Collateral in connection with its Sale;
(iv) the Indenture Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Issuer to transfer its interest in any
portion of the Collateral in connection with its Sale, and to take all
action necessary to effect the Sale; and
(v) no purchaser or transferee at a Sale need ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any
conditions precedent, or see to the application of any monies.
Section 5.18. Performance and Enforcement of Certain Obligations.
The Indenture Trustee, as pledgee of the Mortgage Loans, may, and at the
direction of the Credit Enhancer (or the Holders of 662/3% of the Outstanding
Amount if a Credit Enhancer Default exists) shall exercise all rights of the
Issuer against the Sponsor or the Master Servicer in connection with the Sale
and Servicing Agreement, including the right to take any action to obtain
performance by the Seller or the Master Servicer, as the case may be, of each
of their obligations to the Issuer under the Sale and Servicing Agreement and
to give any consent, request, notice, direction, approval, extension, or
waiver under the Sale and Servicing Agreement, and any right of the Issuer to
take such action shall not be suspended. Any direction by the Credit Enhancer
under this Section may be by telephone, promptly confirmed in writing.
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 use under the circumstances in the conduct of its own affairs,
except when this Indenture or the Sale and Servicing Agreement requires it to
follow the directions of the Credit Enhancer.
34
(b) Except during the continuance of an Event of Default:
(i) obligations of the Indenture Trustee shall be determined solely
by the express provisions of this Indenture and the Sale and Servicing
Agreement, the Indenture Trustee undertakes to perform only the duties
specifically stated in this Indenture and the Sale and Servicing
Agreement, 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 in them, on certificates, opinions,
or other documents furnished to the Indenture Trustee and conforming to
the requirements of this Indenture and the Sale and Servicing Agreement,
and the Indenture Trustee need not investigate into any of the matters
expressed in them; but in the case of certificates or opinions
specifically required to be furnished to the Indenture Trustee, the
Indenture Trustee must examine them to determine whether or not they
conform to the requirements of this Indenture and the Sale and Servicing
Agreement. If any instrument is found not to conform to the requirements
of this Indenture or the Sale and Servicing Agreement and is not timely
corrected to the Indenture Trustee's satisfaction, the Indenture Trustee
shall notify the Credit Enhancer and request written instructions as to
the action the Credit Enhancer deems appropriate to have the instrument
corrected, and if the instrument is not so corrected, the Indenture
Trustee will so notify the Credit Enhancer, who may then direct the
Indenture Trustee as to any action to be taken.
(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 subsection does not limit the effect of Section 6.01(b);
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with the
direction of the Credit Enhancer or in accordance with a direction
received by it from the Holders of not less than 51% of the aggregate
Outstanding Amount relating to the method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect
to the Notes or exercising any right conferred on the Indenture Trustee
under this Indenture or the Sale and Servicing Agreement;
(iv) the Indenture Trustee shall not be charged with knowledge of
the occurrence of an Incipient Default, a Rapid Amortization Event, or of
any failure by the Master Servicer to comply with its obligations under
Section 6.01(i) or (ii) of the Sale and Servicing Agreement unless a
Responsible Officer at the Corporate Trust Office obtains actual
knowledge of the failure or the Indenture Trustee receives notice of the
failure; and
35
(v) 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 under this Indenture or
in the exercise of any of its rights, if it has reasonable grounds to
believe that repayment of the funds or adequate indemnity against the
risk is not reasonably assured to it.
(d) Every provision of this Indenture relating to the conduct or
affecting the liability of the Indenture Trustee shall be subject to the
provisions of this Section and the TIA.
(e) The limitations on the obligations of the Indenture Trustee under
this Indenture shall not affect any obligations of the Indenture Trustee
acting as Master Servicer under the Sale and Servicing whenever it may be so
acting.
Section 6.02. Notice of Defaults.
If an Incipient Default or Rapid Amortization Event occurs and is
continuing and if a Responsible Officer knows of it, the Indenture Trustee
shall notify the Credit Enhancer and mail to each Noteholder notice of the
Incipient Default or Rapid Amortization Event within 90 days after it occurs.
Except in the case of an Incipient Default in payment of principal or interest
on any Note, the Indenture Trustee may withhold the notice to Noteholders so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
Section 6.03. 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.
(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 unless
other evidence is specifically required.
(c) The Indenture Trustee may execute any of the trusts or powers under
this Indenture or perform any duties under this Indenture either directly or
through agents or counsel 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 agent, counsel, custodian, or nominee appointed
with due care by it under this Indenture.
(d) The Indenture Trustee may consult with counsel, and the written
advice of counsel with respect to legal matters relating to this Indenture,
the Transaction Documents, and the Notes and any Opinion of Counsel shall be
full authorization and protection from liability for any action taken,
omitted, or suffered by it under this Indenture in good faith and in
accordance with the advice of counsel or any Opinion of Counsel.
36
(e) The Indenture Trustee may enter into any amendment of the Sale and
Servicing Agreement as to which the Rating Agency Condition is satisfied, and
when so requested by an Issuer Request and the Rating Agency Condition is
satisfied, the Indenture Trustee shall enter into any amendment of the Sale
and Servicing Agreement
(i) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is satisfied or
Holders of not less than 662/3% of the aggregate Outstanding Amount of
Notes and the Credit Enhancer have consented.
(f) With the consent of the Master Servicer and the Credit Enhancer, the
Indenture Trustee may appoint Custodians to hold any portion of the Collateral
as agent for the Indenture Trustee, by entering into a Custodial Agreement
substantially in the form of Exhibit B. Subject to this Article, the Indenture
Trustee agrees to comply with each Custodial Agreement and to enforce each
Custodial Agreement against the custodian for the benefit of the Noteholders
and the Credit Enhancer. Each custodian shall be a depository institution (or
an affiliate of a depository institution) subject to supervision by federal or
state authority and shall be qualified to do business in the jurisdiction in
which it holds any Collateral. Each Custodial Agreement may be amended only
with the consent of the Credit Enhancer, which shall not be unreasonably
withheld.
Section 6.04. Indenture Trustee Not Responsible for Certain Things.
The Indenture Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of the Collateral or any
Transaction Document (other than the signature and authentication of the
Indenture Trustee on the Notes). It shall not be responsible for any statement
in this Indenture other than Section 6.14 or in any document issued in the
sale of the Notes or in the Notes other than the Indenture Trustee's
certificate of authentication.
The Indenture Trustee is not accountable for the use or application by
the Issuer of any of the Notes or of the proceeds of the Notes, or for the use
or application of any funds paid to the Depositor or the Master Servicer on
the Mortgage Loans or deposited in or withdrawn from the Collection Account by
the Master Servicer. The Indenture Trustee shall not be responsible for the
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any Mortgage or the maintenance of its perfection
and priority, or for the sufficiency of the Trust or its ability to generate
the payments to be distributed to Noteholders under this Indenture, or the
sufficiency or validity of MERS or the MERS(R) System, including the
existence, condition, and ownership of any Mortgaged Property; the existence
and enforceability of any hazard insurance on any Mortgaged Property; the
validity of the assignment of any Mortgage Loan to the Indenture Trustee or of
any intervening assignment; the completeness of any Mortgage Loan; the
performance or enforcement of any Mortgage Loan; any investment of monies by
or at the direction of the
37
Master Servicer or any resulting loss; the acts or omissions of any of the
Depositor, the Master Servicer, any subservicer, or any mortgagor under a
Mortgage; any action of the Master Servicer or any subservicer taken in the
name of the Indenture Trustee; or the failure of the Master Servicer or any
subservicer to act or perform any duties required of it as agent of the
Indenture Trustee. The Indenture Trustee shall have no responsibility for
filing any Financing or Continuation Statement in any public office at any
time or otherwise to perfect or maintain the perfection of any Security
Interest or lien granted to it under this Indenture or to prepare or file any
Commission filing for the Trust or to record this Indenture.
Section 6.05. 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, the
Sponsor, and their affiliates with the same rights it would have if it were
not Indenture Trustee. Any co-trustee, Paying Agent, Note Registrar,
co-registrar, or co-paying agent may do the same with like rights.
Section 6.06. Money Held in Trust.
Money held in trust by the Indenture Trustee need not be segregated from
other funds except to the extent required by law or the Transaction Documents.
The Indenture Trustee shall not be liable for interest on any money received
by it except as the Indenture Trustee may agree in writing.
Section 6.07. Compensation.
The compensation of the Indenture Trustee will be separately agreed to
between the Master Servicer and the Indenture Trustee and, to the extent not
paid otherwise, will be payable after an Event of Default as provided in
Section 5.05(b). To the extent funds available under Section 5.05(b) are
insufficient to pay the full amount of the fees, they will be paid by the
Master Servicer. Except for amounts available for the purpose as provided in
Section 5.05(b), the Indenture Trustee shall have no claim against the Issuer
or any of the Collateral for the payment of any of its fees and expenses. The
Indenture Trustee shall not fail to perform its duties under the Transaction
Documents if its fees and expenses are not paid.
Section 6.08. Eligibility.
The Indenture Trustee shall be a corporation organized and doing business
under the laws of the United States or any State, authorized under those laws
to exercise trust powers, and shall satisfy the requirements of Rule
3a-7(a)(4)(i) of the Investment Company Act of 1940. The Indenture Trustee
shall satisfy the requirements of TIA Section 310(a) at all times. The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as shown in its most recent published annual report of condition.
The Indenture Trustee shall comply with TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9).
However, any indentures under which other
38
securities of the Issuer are outstanding shall be excluded from the operation
of TIA Section 310(b)(1) if the requirements for the exclusion in TIA Section
310(b)(1) are met. The principal office of any successor Indenture Trustee
shall be in a state for which an Opinion of Counsel has been delivered to the
successor Indenture Trustee at the time it is appointed to the effect that the
Trust will not be a taxable entity under the laws of the state of its
principal office. Whenever an Indenture Trustee ceases to be eligible in
accordance with the provisions of this Section, the Indenture Trustee shall
resign immediately in accordance with Section 6.10.
Section 6.09. Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.10. 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. The Indenture Trustee may
resign at any time by so notifying the Issuer, the Transferor, the Depositor,
the Master Servicer, and the Credit Enhancer. The Credit Enhancer or the
Holders of not less than 51% of the aggregate Outstanding Amount may remove
the Indenture Trustee at any time and the Issuer shall then appoint a
successor Indenture Trustee reasonably acceptable to the Credit Enhancer by so
notifying the Indenture Trustee, the Transferor, the Depositor, the Master
Servicer, and the Credit Enhancer. The Issuer (and if the Issuer fails to do
so, the Transferor) shall remove the Indenture Trustee and appoint a successor
reasonably acceptable to the Credit Enhancer if:
(i) the Indenture Trustee fails to satisfy Section 6.08;
(ii) an Insolvency Event occurs with respect to the Indenture
Trustee; or
(iii) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee fails to satisfy Section 6.08, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a 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, the Transferor, the Depositor, the Master Servicer, the
Credit Enhancer, or the Holders of not less than 51% of the aggregate
Outstanding Amount may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee. If the Indenture Trustee resigns
or is removed or if a vacancy exists in the office of Indenture Trustee for
any reason, the Issuer, with the approval of the Transferor and the Credit
Enhancer, shall promptly appoint a successor Indenture Trustee for the
retiring Indenture Trustee.
39
Section 6.11. Acceptance of Appointment by Successor.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer, the
Transferor, the Depositor, the Master Servicer, and the Credit Enhancer. The
resignation or removal of the retiring Indenture Trustee shall become
effective on receipt of the written acceptance, and the successor Indenture
Trustee shall have all the rights and obligations, and automatically succeed
to the estate, of the Indenture Trustee under this Indenture without any
further act or transfer. The successor Indenture Trustee shall mail a notice
of its succession to the Noteholders. The retiring Indenture Trustee shall
promptly deliver any instruments of transfer with respect to the trust estate
requested by the Issuer or the successor Indenture Trustee and deliver all
property held by it as Indenture Trustee to the successor Indenture Trustee.
No proposed successor Indenture Trustee shall accept its appointment unless at
the time of its acceptance it is eligible under Section 6.08.
Section 6.12. Successor Indenture Trustee by Merger.
If the Indenture Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving, or
transferee corporation shall be the successor Indenture Trustee if it is
otherwise eligible under Section 6.08 without any further act on the part of
anyone. The Indenture Trustee shall provide the Credit Enhancer and each
Rating Agency notice of any such transaction.
If any of the Notes have been authenticated but not delivered when the
successor Indenture Trustee takes over, it may adopt the certificate of
authentication of any predecessor Indenture Trustee and deliver the
authenticated Notes with the same effect as if it had authenticated the Notes.
Section 6.13. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Indenture Trustee
and the Issuer, acting jointly, may execute and deliver instruments to appoint
one or more persons approved by the Master Servicer and the Credit Enhancer to
act as a co-trustee or co-trustees, or separate trustee or separate trustees,
of any part of the Collateral, and to vest in them, in that capacity and for
the benefit of the Noteholders and the Credit Enhancer, title to any part of
the Collateral and any rights and obligations the Indenture Trustee considers
appropriate, subject to the other provisions of this Section. No co-trustee or
separate trustee under this Indenture need satisfy the requirements for a
successor trustee under Section 6.08, and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.09.
40
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following:
(i) all rights and obligations of the Indenture Trustee shall be
performed by the Indenture Trustee and any separate trustee or co-trustee
jointly (the separate trustee or co-trustee is not authorized to act
without the Indenture Trustee joining in the act), except to the extent
that under any law of any jurisdiction in which any particular acts are
to be performed the Indenture Trustee is unable to perform the acts, in
which case the rights and obligations (including holding title to any
part of the Collateral) shall be performed singly by the separate trustee
or co-trustee, but solely at the direction of the Indenture Trustee;
(ii) no trustee under this Indenture shall be personally liable for
any act or omission of any other trustee under this Indenture; and
(iii) the Indenture Trustee, the Master Servicer, and the Issuer 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 considered 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. Each separate trustee and co-trustee, on
its acceptance of the trusts conferred, shall be subject to this Indenture and
vested with the estates specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided in the
instrument of appointment. Every instrument of appointment shall be filed with
the Indenture Trustee and a copy of it given to the Issuer.
(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
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee dies, becomes incapable of acting, resigns or is removed, all of
its estates, rights, and obligations shall vest in the Indenture Trustee, to
the extent permitted by law, without the appointment of a new trustee.
Section 6.14. Representations and Warranties of Indenture Trustee.
The Indenture Trustee represents and warrants that on the Closing Date:
(i) it is a corporation duly organized, validly existing, and in
good standing under the laws of its place of incorporation;
(ii) it has full power and authority to execute, deliver, and
perform this Indenture and the Sale and Servicing Agreement, and has
taken all necessary action to authorize the execution, delivery, and
performance by it of this Indenture and the Sale and Servicing Agreement;
(iii) the consummation of the transactions contemplated by this
Indenture and the fulfillment of its terms do not conflict with, result
in any breach of, or
41
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or bylaws of the Indenture Trustee or any
agreement or other instrument to which it is a party or by which it is
bound;
(iv) it does not have notice of any adverse claim (as used in
Section 8-302 of the UCC in effect in Delaware) with respect to the
Mortgage Loans;
(v) it satisfies the requirements of Section 6.08; and
(vi) to the Indenture Trustee's best knowledge, no proceedings or
investigations concerning the Indenture Trustee are pending or threatened
before any court, regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over 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 that might affect its performance
of its obligations under this Indenture or the validity or enforceability
of this Indenture.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Names and Addresses of Noteholders.
The Issuer will furnish to the Indenture Trustee not more than five days
after each Record Date a list of the names and addresses of the Holders of
Notes as of the Record Date in the form the Indenture Trustee reasonably
requires, and at any other times the Indenture Trustee or Credit Enhancer
requests in writing, within 30 days after the Issuer receives the request, a
list of similar form and content as of a date not more than ten days before
the time the list is furnished. So long as the Indenture Trustee is the Note
Registrar, the Issuer need not furnish these lists.
Section 7.02. Preservation of Information; Communications.
(a) The Indenture Trustee shall preserve 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 in
as current a form as is reasonably practicable. The Indenture Trustee may
destroy any list furnished to it under Section 7.01 on receipt of a new list
so furnished.
(b) Noteholders may communicate with other Noteholders with respect to
their rights under this Indenture or under the Notes in the manner provided
under TIA Section 312(b).
42
(c) The Issuer, the Indenture Trustee, and the Note Registrar shall have
the protections provided under TIA Section 312(c).
Section 7.03. Reports of Issuer.
(a) The Issuer shall:
(i) file with the Commission, the Indenture Trustee, and the Credit
Enhancer copies of the annual reports and of the information, documents,
and other reports (or copies of the portions of any of these the
Commission prescribes in its rules and regulations) that the Issuer may
be required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act, within 15 days after the Issuer is required to file
the same with the Commission;
(ii) file with the Indenture Trustee, the Credit Enhancer, and the
Commission in accordance with the Commission's rules and regulations any
additional information, documents, and reports with respect to compliance
by the Issuer with the conditions and covenants of this Indenture the
rules and regulations require; and
(iii) supply to the Indenture Trustee and the Credit Enhancer
summaries of any information, documents, and reports required to be filed
by the Issuer pursuant to clauses (i) and (ii) of this Section and by the
rules and regulations of the Commission (and the Indenture Trustee shall
transmit them by mail to all Noteholders described in TIA Section
313(c)).
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee.
If required by TIA Section 313(a), within 60 days after the date in each
year specified in the Adoption Annex, beginning with the date specified in the
Adoption Annex, the Indenture Trustee shall mail to each Noteholder as
required by TIA Section 313(c) and to the Credit Enhancer a brief report dated
that date that complies with TIA Section 313(a). The Indenture Trustee also
shall comply with TIA Section 313(b). A copy of each report at the time of its
mailing to Noteholders shall be filed by the Indenture Trustee with the
Commission and each securities exchange on which the Notes are listed. The
Issuer shall notify the Indenture Trustee and the Credit Enhancer before the
Notes are listed on any securities exchange.
The Indenture Trustee shall deliver to each Noteholder the information
necessary for the Holder to prepare its federal and State income tax returns.
On each Payment Date, the Indenture Trustee shall make available to each
Noteholder, the Master Servicer, the Credit Enhancer, and each Rating Agency
on its Internet website the statement for Noteholders prepared by the Master
Servicer and delivered to it pursuant to Section 4.04 of the Sale and
Servicing Agreement for the Payment Date.
43
If the statement for Noteholders is not accessible to any of the
Noteholders, the Master Servicer, the Credit Enhancer, or either Rating Agency
on the Indenture Trustee's internet website, the Indenture Trustee shall
forward a hard copy of it to each Noteholder, the Master Servicer, the Credit
Enhancer, and each Rating Agency immediately after the Indenture Trustee
becomes aware that it is not accessible to any of them via its website. The
address of the Indenture Trustee's internet website where the statement for
Noteholders will be accessible is xxxxx://xxx.xxx.xxxxxxx.xxx. Assistance in
using the Indenture Trustee's internet website may be obtained by calling the
Indenture Trustee's customer service desk at (000) 000-0000. The Indenture
Trustee shall notify each Noteholder, the Master Servicer, the Credit
Enhancer, and each Rating Agency in writing of any change in the address or
means of access to the internet website where the statement for Noteholders is
accessible.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, Internal Revenue
Service Form 1099 (or any successor form) and any other tax forms required to
be filed or furnished to Noteholders covering payments by the Indenture
Trustee (or the Paying Agent) on the Notes and shall file and distribute them
as required by law. In addition, the Indenture Trustee shall promptly furnish
any 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.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS, AND RELEASES
Section 8.01. Accounts.
(a) Pursuant to the Sale and Servicing Agreement, the Master Servicer has
established the Collection Account. The Sale and Servicing Agreement requires
the Master Servicer to deposit specified collections on the Mortgage Loans
into the Collection Account no later than two Business Days before each
Payment Date. The Indenture Trustee shall hold amounts deposited in the
Collection Account as Indenture Trustee for the benefit of the Noteholders and
the Credit Enhancer. The Indenture Trustee shall invest amounts on deposit in
the Collection Account at the direction of the Master Servicer in Eligible
Investments payable on demand or maturing no later than the day before the
next Payment Date. All income realized from investment of funds in the
Collection Account shall be for the benefit of the Master Servicer. If on a
Determination Date the Master Servicer notifies the Indenture Trustee and the
Credit Enhancer of the amount in the Collection Account allocable to Interest
Collections and Principal Collections for the Mortgage Loans for the related
Payment Date, then the Master Servicer may withdraw from the Collection
Account and retain any amounts that constitute income and gain realized from
the investment of the collections. The Sale and Servicing Agreement requires
the Master Servicer to pay into the
44
Collection Account out of its own funds immediately as realized any losses of
principal on any investments of amounts in the Collection Account.
(b) Reserved.
Section 8.02. Withdrawals from the Collection Account.
(a) Upon delivery of an Officer's Certificate to the Indenture Trustee,
the Master Servicer may withdraw funds from the Collection Account for the
following purposes:
(i) to pay to the Master Servicer its Servicing Fee to the extent
that it has not been retained pursuant to Section 3.02(b) of the Sale and
Servicing Agreement;
(ii) to pay to the Master Servicer net earnings on amounts on
deposit in the Collection Account as provided in Section 8.01(a); and
(iii) to pay from Principal Collections the amounts provided for the
purchase of Additional Balances pursuant to Section 2.01 of the Sale and
Servicing Agreement.
If the Master Servicer deposits in the Collection Account any amount not
required to be deposited or any amount representing payments by mortgagors
made by checks subsequently returned uncollected, it may at any time withdraw
that amount from the Collection Account upon delivery of an Officer's
Certificate to the Indenture Trustee.
(b) Reserved.
(c) Reserved.
Section 8.03. Payments.
(a) Payments of Investor Interest Collections and Investment Proceeds. On
each Payment Date, the Indenture Trustee shall distribute out of the
Collection Account to the extent of Investor Interest Collections collected
during the related Collection Period and the deposit in lieu of capitalized
interest by the Master Servicer pursuant to Section 3.02(b)(ii)(A) of the Sale
and Servicing Agreement, the following amounts and in the following order of
priority to the following persons (based on the information in the Servicing
Certificate):
(i) the premium pursuant to the Insurance Agreement to the Credit
Enhancer;
(ii) the Aggregate Investor Interest for the Notes for the Payment
Date to the Noteholders;
(iii) the Investor Loss Amount for the Notes for the Payment Date to
the Noteholders as principal in reduction of the Note Principal Balance;
(iv) the aggregate amount of the Investor Loss Reduction Amounts
for previous Payment Dates that have not been previously reimbursed to
the Noteholders pursuant to this clause (iv) to the Noteholders as
principal in reduction of the Note Principal Balance;
45
(v) to reimburse the Credit Enhancer for previously unreimbursed
Credit Enhancement Draw Amounts together with interest on them at the
applicable rate in the Insurance Agreement;
(vi) the Accelerated Principal Payment Amount to the Noteholders as
principal in reduction of the Note Principal Balance;
(vii) any amounts owed to the Credit Enhancer pursuant to the
Insurance Agreement to the Credit Enhancer;
(viii) any amounts required to be paid to the Master Servicer with
respect to the Notes pursuant to Sections 3.08 and 5.03 of the Sale and
Servicing Agreement that have not been previously paid to the Master
Servicer;
(ix) any Basis Risk Carryforward to the Noteholders; and
(x) any remaining amount to the Issuer for distribution in
accordance with the Trust Agreement.
(b) Payment of Principal Collections. Except on the Payment Date in the
month specified in the Adoption Annex, on each Payment Date, the Indenture
Trustee shall distribute out of the Collection Account to the Holders of the
Notes the Principal Collections up to the Scheduled Principal Collections
Payment Amount but not in excess of the Note Principal Balance. On the Payment
Date in the month specified in the Adoption Annex, the Indenture Trustee shall
distribute to the Holders of the Notes the Principal Collections up to the
Note Principal Balance.
(c) Application of Subordinated Transferor Collections. If, after
applying Investor Interest Collections as provided in Section 8.03(a), any
Required Amount remains unpaid, the Indenture Trustee shall, based on
information in the Servicing Certificate for the Payment Date, apply
Subordinated Transferor Collections, to pay the unpaid Required Amounts. If,
after making those payments the Required Amount remains unpaid, then the
remaining Investor Loss Amount shall be allocated to the Transferor Principal
Balance to the extent of the Available Transferor Subordinated Amount and not
to the Notes. However, no allocation of Investor Loss Amounts shall reduce
Transferor Principal Balance below zero.
(d) Payment of the Credit Enhancement Draw Amount and Release of
Overcollateralization Step-Down Amounts. The Indenture Trustee will make
payments to the Noteholders from the Credit Enhancement Draw Amount (but not
including any portion of it representing a Preference Claim) drawn under the
Policy for any Payment Date pursuant to Section 8.05 on the Payment Date as
follows:
FIRST, as an addition to the amount distributed pursuant to Section
8.03(a)(ii); and
SECOND, the portion of the Credit Enhancement Draw Amount remaining
after the application of the amounts referred to in First above, as an
addition to the amounts distributed pursuant to Section 8.03(b).
46
The aggregate amount of principal distributed to the Noteholders under
this Indenture shall not exceed the Original Note Principal Balance.
The dollar amount of any Overcollateralization Step-Down Amount will be
deducted from the Scheduled Principal Collections Payment Amount and paid to
the Transferor.
(e) Distributions to Holders of Transferor Certificates. On each Payment
Date, based on the information in the Servicing Certificate for the Payment
Date and subject to Section 8.03(c), the Indenture Trustee shall distribute to
the Issuer (i) the Interest Collections that are not Investor Interest
Collections on the Payment Date for the related Collection Period and (ii) the
portion of Transferor Principal Collections for the related Collection Period
in excess of Additional Balances created on the Mortgage Loans during the
Collection Period. Collections allocable to the Transferor Certificates will
be distributed to the Issuer only to the extent that the distribution will not
reduce the Transferor Interest as of the related Payment Date below the
Minimum Transferor Interest. Amounts not distributed to the Issuer because of
this limitation will be retained in the Collection Account until the
Transferor Interest exceeds the Minimum Transferor Interest, at which time the
excess shall be released to the Issuer. If any such amounts are still retained
in the Collection Account at the commencement of the Rapid Amortization
Period, they will be paid to the Noteholders as a reduction of the Note
Principal Balance.
Section 8.04. Calculation of the Note Rate.
On the second LIBOR Business Day preceding each Payment Date, the
Indenture Trustee shall determine LIBOR for the Interest Period commencing on
the Payment Date and inform the Master Servicer (at the facsimile number given
to the Indenture Trustee in writing) of the rate. On each Determination Date,
the Indenture Trustee shall determine the applicable Note Rate on the related
Payment Date.
Section 8.05. Claims on the Policy; Policy Payments Account.
(a) If the Credit Enhancement Draw Amount from the Servicing Certificate
for a Payment Date is more than zero (determined as of the close of business
on the third Business Day before the Payment Date), then the Indenture Trustee
shall notify the Credit Enhancer by telephone or telecopy of the Credit
Enhancement Draw Amount. The notice shall be confirmed to the Credit Enhancer
in writing in the form of the Notice of Nonpayment and Demand for Payment of
Insured Amounts in Exhibit A to the Policy, by 10:00 A.M., New York City time,
on the second Business Day before the Payment Date. Following receipt by the
Credit Enhancer of the notice in that form, the Credit Enhancer will pay any
amount payable under the Policy in the form on the later to occur of (i) 12:00
NOON, New York City time, on the second Business Day following the receipt and
(ii) 12:00 NOON, New York City time, on the Payment Date to which the
deficiency relates.
47
(b) The Indenture Trustee shall establish the Policy Payments Account.
The Indenture Trustee shall deposit any amount paid under the Policy in the
Policy Payments Account and distribute the amount only to pay Holders of the
Notes the Guaranteed Payment for which a claim was made. No Policy payments
may be used to pay any costs, expenses, or liabilities of the Master Servicer,
the Indenture Trustee, or the Trust (other than payments of principal and
interest on the Notes). Amounts paid under the Policy shall be transferred to
the Collection Account in accordance with the next paragraph and disbursed by
the Indenture Trustee to Holders of the Notes in accordance with Section 8.03.
Payments from draws on the Policy need not be made by checks or wire transfers
separate from the checks or wire transfers used to pay other funds paid to
Noteholders on the Payment Date. However, the portion of any payment of
principal of or interest on the Notes paid from funds transferred from the
Policy Payments Account shall be noted in the statement to be furnished to
Holders of the Notes pursuant to Section 7.04. Funds held in the Policy
Payments Account shall not be invested.
On any Payment Date (or the day on which a payment on the Policy is
received, if later) for which a claim has been made under the Policy, the
amount of any funds received by the Indenture Trustee as a result of any claim
under the Policy, to the extent required to make the Guaranteed Payment on the
Notes on the Payment Date, shall be withdrawn from the Policy Payments Account
and deposited in the Collection Account and applied by the Indenture Trustee,
together with the other funds to be withdrawn from the Collection Account
pursuant to Section 8.03, directly to the payment in full of the Guaranteed
Payment. Any funds remaining in the Policy Payments Account on the first
Business Day following the later of the Payment Date and the Business Day
after the day on which a payment on the Policy has been paid to the Holders of
the Notes shall be remitted to the Credit Enhancer, pursuant to the
instructions of the Credit Enhancer, by the end of the Business Day.
(c) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid on any Note from moneys received
under the Policy. The Credit Enhancer may inspect the records at reasonable
times during normal business hours on one Business Day's notice to the
Indenture Trustee.
(d) The Indenture Trustee shall promptly notify the Credit Enhancer of
any Preference Claim of which a Responsible Officer has actual knowledge. Each
Noteholder by its purchase of Notes, the Master Servicer, and the Indenture
Trustee agree that the Credit Enhancer may at any time during the continuation
of any proceeding relating to a Preference Claim direct all matters relating
to the Preference Claim, including (i) the direction of any appeal of any
order relating to the Preference Claim and (ii) the posting of any surety,
supersedeas, or performance bond pending any appeal. In addition and without
limiting the foregoing, the Credit Enhancer shall be subrogated to the rights
of the Master Servicer, the Indenture Trustee, and each Noteholder in the
conduct of any the Preference Claim,
48
including all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any the Preference Claim.
Section 8.06. Replacement Policy.
If a Credit Enhancer Default occurs or if the claims-paying ability
rating of the Credit Enhancer is downgraded, the Depositor may substitute new
surety bonds for the existing Policy so long as the new rating of the Notes
would be an improvement over their then current rating and that the new surety
bond will qualify as a "similar commercially available credit enhancement
contract" within the meaning of Treas. Reg. Section 1.1001-3(e)(4)(iv)(B).
However, no new credit enhancement may be substituted unless the Indenture
Trustee receives a legal opinion, acceptable in form and substance to the
Indenture Trustee, from counsel to the provider of the new credit enhancement
with respect to its enforceability and any other matters the Indenture Trustee
reasonably requires. Within five Business Days after the Indenture Trustee
takes physical possession of the new credit enhancement and the opinion of
counsel, it will deliver the replaced Policy to the Credit Enhancer. Any other
form of credit enhancement may also be substituted for the Policy after a
Credit Enhancer Default or downgrade if the new rating of the Notes would be
an improvement over their then current rating and the Indenture Trustee
receives an Opinion of Counsel to the effect that the substitution will not be
treated as a significant modification within the meaning of Treas. Reg. Section
1.1001-3.
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 the consent
of the Credit Enhancer (which shall not be unreasonably withheld) and with
prior notice to each Rating Agency, subject to Section 9.06, the Issuer and
the Indenture Trustee may enter into indentures supplemental to this
Indenture, in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property subject to
the lien of this Indenture, or to confirm unto the Indenture Trustee any
property subject or required to be subjected to the lien of this
Indenture, or to subject additional property to the lien of this
Indenture;
(ii) to evidence the succession of another person to the Issuer
pursuant to this Indenture, and the assumption by the successor of the
covenants of the Issuer in this Indenture and the Notes in compliance
with the applicable provisions of this Indenture;
49
(iii) to add to the covenants of the Issuer, for the benefit of the
Noteholders or the Credit Enhancer, or to surrender any right conferred
on the Issuer in this Indenture;
(iv) to convey, transfer, assign, mortgage, or pledge any property
to or with the Indenture Trustee; ) (v) to cure any ambiguity, to correct
or supplement any provision in this Indenture or in any supplemental
indenture that may be inconsistent with any other provision in this
Indenture or in any supplemental indenture or the other Transaction
Documents;
(vi) to modify, eliminate, or add to the provisions of this
Indenture as required by any Rating Agency or any other nationally
recognized statistical rating organization to maintain or improve any
rating of the Notes;
(vii) to modify, eliminate, or add to the provisions of this
Indenture to comply with any requirement imposed by the Code;
(viii) to modify, eliminate, or add to the provisions of this
Indenture to the extent 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 other provisions expressly required
by the TIA; or
(ix) to provide for the acceptance of the appointment of a successor
trustee under this Indenture and to add to or change any of the
provisions of this Indenture necessary to facilitate the administration
of the trusts under this Indenture by more than one trustee, pursuant to
the requirements of Article VI.
The Indenture Trustee is authorized to join in the execution of any
supplemental indenture and to make any further appropriate agreements and
stipulations that may be contained in it. No amendment that satisfies the
Rating Agency Condition shall, for purposes of this Section, be considered to
adversely affect in any material respect the interests of any Noteholder.
(b) Without the consent of any of the Noteholders but with satisfaction
of the Rating Agency Condition (in connection with which the consent of the
Credit Enhancer shall not be unreasonably withheld), subject to Section 9.06,
the Issuer and the Indenture Trustee may enter into indentures supplemental to
this Indenture to change this Indenture in any manner or to modify the rights
of the Noteholders or the Credit Enhancer under this Indenture except
amendments that pursuant to Section 9.02 require the consent of each affected
Noteholder.
Section 9.02. Supplemental Indentures with Consent of Noteholders.
No supplemental indenture shall, without the consent of each affected
Noteholder by an Act of the applicable Noteholders delivered to the Issuer and
the Indenture Trustee and without the consent of the Credit Enhancer and
subject to Section 9.06:
(i) change the date of payment of any installment of principal or
interest on any Note, or reduce its principal amount, its interest rate,
or its redemption price, or
50
change any place of payment where, or the coin or currency in which, any
Note or its interest is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of available funds
to the payment of any amount due on the Notes after their due dates (or,
in the case of redemption, after the redemption date), as provided in
Article V;
(iii) reduce the percentage of the Outstanding Amount the consent of
the Holders of which is required for any 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 under this
Indenture and their consequences or to direct the liquidation of the
Collateral;
(iv) modify any provision of this Section except to increase any
percentage specified in this Indenture or provide that certain additional
provisions of this Indenture or the Transaction Documents cannot be
modified or waived without the consent of the Holder of each Note
affected by it; modify any of the provisions of this Indenture in a
manner affecting 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 the calculation) or
affect the rights of the Holders of Notes to the benefit of any
provisions for the mandatory redemption of the Notes contained in this
Indenture; or
(v) permit the creation of any lien ranking before or on a parity
with the lien of this Indenture with respect to any part of the
Collateral (except any change in any mortgage's lien status in accordance
with the Sale and Servicing Agreement) or, except as otherwise permitted
or contemplated in this Indenture, terminate the lien of this Indenture
on any property at any time subject to this Indenture or deprive the
Holder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and that determination
shall be conclusive on the Holders of all Notes, whether authenticated and
delivered under this Indenture before or after that. The Indenture Trustee
shall not be liable for any determination made in good faith.
An Act of Noteholders under this Section need not approve the particular
form of any proposed supplemental indenture, but is sufficient if it approves
the substance of the supplemental indenture.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Noteholders to which the supplemental indenture relates a
notice stating in general terms the substance of the supplemental indenture.
Any failure of the Indenture Trustee to mail a
51
notice, or any defect in it, shall not, however, in any way impair or affect
the validity of the supplemental indenture.
Section 9.03. Execution of Supplemental Indentures.
In executing any supplemental indenture permitted by this Article, the
Indenture Trustee may require and, subject to Sections 6.01 and 6.03, shall be
fully protected in relying on an Opinion of Counsel stating that the execution
of the supplemental indenture is authorized or permitted by this Indenture.
The Indenture Trustee may, but need not, enter into any supplemental indenture
that affects the Indenture Trustee's own rights or obligations under this
Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to this
Indenture, this Indenture shall be changed in accordance with the supplemental
indenture, and the Indenture Trustee, the Issuer, and the Noteholders shall
bound by the supplemental indenture.
Section 9.05. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article 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 the supplemental indenture. If the Issuer so
determines, new Notes so modified as to conform, in the opinion of the
Indenture Trustee and the Issuer, to the supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
Section 9.06. Tax Opinion.
This Indenture may not be amended under this Article or otherwise unless,
in connection with the amendment, an Opinion of Counsel is furnished to the
Indenture Trustee that the amendment will not (i) adversely affect the status
of the Notes as debt; (ii) result in the Trust being taxable at the entity
level; or (iii) result in the Trust being classified as a taxable mortgage
pool (as defined in Section 7701(i) of the Code).
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) The Notes are subject to optional redemption by the Issuer with the
consent of the Credit Enhancer in whole on any Payment Date from the Payment
Date immediately before which the aggregate Note Principal Balance is less
than or equal to 10% of the aggregate Original Note Principal Balance. The
redemption price for the Notes shall be the
52
Note Principal Balance plus accrued aggregate Note Interest through the day
before the redemption date plus interest accrued on the aggregate Unpaid
Investor Interest Shortfall, to the extent legally permissible. No premium or
penalty will be payable by the Issuer in any redemption of the Notes.
(b) The Issuer shall notify the Indenture Trustee of its election to
redeem the Notes not later than the first day of the month preceding the month
of the redemption. The Indenture Trustee shall first notify the Credit
Enhancer and the Master Servicer and then notify the Noteholders by letter
mailed or sent by facsimile transmission not earlier than the 15th day and not
later than the 25th day of the month before the month of the redemption.
Payment on the Notes will only be made on presentation and surrender of
the Notes at the office or agency of the Indenture Trustee specified in the
redemption notice. By the redemption date, the Issuer shall deposit in the
Collection Account in immediately available funds an amount that, when added
to the funds on deposit in the Collection Account that are payable to the
Noteholders, equals the redemption price for the Notes, whereupon all the
Notes called for redemption shall be payable on the redemption date.
(c) On presentation and surrender of the Notes, the Indenture Trustee
shall pay to the Holders of Notes on the redemption date an amount equal to
their redemption price. On the redemption date, the Indenture Trustee shall,
based on the information in the Servicing Certificate for the relevant Payment
Date, withdraw from the Collection Account and remit to the Credit Enhancer
the lesser of (x) the amount available for distribution on the redemption
date, net of the amount needed to pay the redemption price and (y) the unpaid
amounts due to the Credit Enhancer for unpaid premiums and unreimbursed draws
on the Policy (together with interest on them as provided under the Insurance
Agreement).
If all of the Noteholders do not surrender their Notes for final payment
and cancellation by the redemption date, the Indenture Trustee shall on that
date cause the remaining amounts representing the redemption price in the
Collection Account not distributed in redemption to Noteholders to be
withdrawn and credited to the remaining Noteholders by depositing the funds in
a separate escrow account for the benefit of the Noteholders and the Issuer.
(d) Any election to redeem Notes pursuant to Section 10.01(a) shall be
evidenced by an Issuer Order. The Issuer Order shall specify the items
required in the notice of redemption to be mailed to Noteholders. The Issuer
shall notify each Rating Agency of the redemption.
Section 10.02. Form of Redemption Notice.
Notice of redemption under Section 10.01 shall be given by the Indenture
Trustee by first-class mail, postage prepaid, or by facsimile or other
reliable electronic means (promptly confirmed by mail) to each Holder of Notes
and to the Credit Enhancer as of the close of
53
business on the Record Date preceding the redemption date, at the Holder's
address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) the amount of interest accrued to the redemption date;
(iv) the place where Notes are to be surrendered for payment of the
redemption price (which shall be the office or agency of the Issuer
maintained pursuant to Section 3.02); and
(v) that on the redemption date, the redemption price will become
payable on each Note and that interest on the Notes shall cease to accrue
beginning on the redemption date.
Notice of redemption of the Notes shall be given by the Indenture Trustee in
the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect in it, to any Holder of any Note shall not affect
the validity of the redemption of any other Note.
Section 10.03. Notes Payable on Redemption Date.
Following notice of redemption as required by Section 10.02, on the
redemption date the Notes shall become payable at the redemption price and
(unless the Issuer defaults in the payment of the redemption price) no
interest shall accrue on the redemption price for any period after the date to
which accrued interest is calculated for purposes of calculating the
redemption price.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Whenever the Issuer requests the Indenture Trustee to take any action
under this Indenture, the Issuer shall furnish to the Indenture Trustee and
the Credit Enhancer (i) an Officer's Certificate stating that any conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and (ii) an Opinion of Counsel stating that in its opinion
any conditions precedent have been complied with.
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 the certificate or opinion
has read the covenant or condition and the definitions in this Indenture
relating to it;
(ii) a brief statement as to the nature and scope of the examination
or investigation on which the statements or opinions contained in the
certificate or opinion are based;
54
(iii) a statement that, in the opinion of each signatory, the
signatory has made any examination or investigation necessary for the
signatory to express an informed opinion about whether or not the
covenant or condition has been complied with;
(iv) a statement as to whether, in the opinion of each signatory,
the condition or covenant has been complied with; and
(v) if the signer of the certificate is required to be Independent,
the statement required by the definition of Independent.
(b)
(i) Before the deposit of any Collateral or other property with the
Indenture Trustee that is to be made the basis for the release of any
property subject to the lien of this Indenture, the Issuer shall, in
addition to any obligation imposed in Section 11.01(a) or elsewhere in
this Indenture, furnish to the Indenture Trustee and the Credit Enhancer
an Officer's Certificate stating the opinion of each person signing the
certificate as to the fair value (within 90 days of the deposit) to the
Issuer of the Collateral or other property to be deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate stating the opinion of any signer as to
the matters described in clause (b)(i), the Issuer shall also deliver to
the Indenture Trustee and the Credit Enhancer an Independent Certificate
as to the same matters, if the fair value to the Issuer of the property
to be deposited as the basis of any release and of all other property
made the basis of any release since the commencement of the then-current
calendar year as described in the certificates delivered pursuant to
clause (b)(i) is 10% or more of the aggregate Outstanding Amount of the
Notes, but the certificate need not be furnished for any securities
deposited, if their fair value to the Issuer as described in the related
Officer's Certificate is less than $25,000 or less than 1% of the then
aggregate Outstanding Amount of the Notes.
(iii) Whenever any property is to be released from the lien of this
Indenture, the Issuer shall also furnish to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate stating the opinion of each
person signing the certificate as to the fair value (within 90 days of
the release) of the property proposed to be released and stating that in
the opinion of that person the proposed release will not impair the
security under this Indenture in contravention of the provisions of this
Indenture.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate stating the opinion of any signer as to
the matters described in clause (b)(iii), the Issuer shall also furnish
to the Indenture Trustee and the Credit Enhancer an Independent
Certificate as to the same matters if the fair value of the property and
of all other property released from the lien of this Indenture since the
commencement of the then-current calendar year, as described in the
certificates required by clause (b)(iii) and this clause (b)(iv), equals
10% or more of the
55
aggregate Outstanding Amount of the Notes, but the certificate need not
be furnished for any release of property if its fair value as described
in the related Officer's Certificate is less than $25,000 or less than 1%
of the then aggregate Outstanding Amount of the Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer may,
without compliance with the other requirements of this Section, (A)
collect, liquidate, sell, or otherwise dispose of Collateral as and to
the extent permitted by the Transaction Documents, and (B) make cash
payments out of the Collection Account as and to the extent permitted by
the Transaction Documents, so long as the Issuer delivers to the
Indenture Trustee and the Credit Enhancer every six months, beginning six
months after the date of this Indenture, an Officer's Certificate of the
Issuer stating that all the dispositions of Collateral described in
clauses (A) and (B) that occurred during the preceding six months were in
the ordinary course of the Issuer's business and that their proceeds were
applied in accordance with the Transaction Documents.
Section 11.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified person, all the matters need not be
certified by, or covered by the opinion of, only one person, or be certified
or covered by only one document. One person may certify or give an opinion
with respect to some matters and one or more other persons as to other
matters, and any person may certify or give an opinion as to one matter in one
or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based on a certificate or opinion of counsel insofar as it relates to legal
matters, unless the officer knows, or in the exercise of reasonable care
should know, that with respect to the matters on which the officer's
certificate or opinion is based the certificate or opinion is erroneous. Any
certificate of an Authorized Officer or Opinion of Counsel may be based on a
certificate or opinion of officers of any appropriate party to any of the
Transaction Documents insofar as it relates to factual matters, stating that
the information with respect to the factual matters is in the possession of
the party, unless the person signing knows, or in the exercise of reasonable
care should know, that the certificate or opinion is erroneous.
Where any person is required to deliver two or more documents under this
Indenture, they may, but need not, be consolidated into one document.
If the Issuer is required to deliver any document as a condition of the
granting of any request, or as evidence of its compliance with this Indenture,
the request may be denied or the certification of compliance will be
unacceptable if the document is inaccurate. This provision shall not, however,
affect the Indenture Trustee's right to rely on accuracy of any statement or
opinion in any document as provided in Article VI.
56
Section 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver, or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by Noteholders in person or by agents duly
appointed in writing. Except as otherwise expressly provided in this Indenture
the action shall become effective when the instruments are delivered to the
Indenture Trustee and, if expressly required, to the Issuer. The instruments
(and the action embodied in them) are referred to as the "Act" of the
Noteholders signing the instruments. Proof of execution of any instrument or
of a writing appointing an agent for a Noteholder 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.
(b) The fact and date of the execution by any person of any instrument
may be proved by an affidavit of a witness to the execution or the certificate
of any notary public or other person authorized by law to acknowledge the
execution of deeds. Any certificate on behalf of a jural entity executed by a
person purporting to have authority to act on behalf of the jural entity shall
itself be sufficient proof of the authority of the person executing it to act.
The fact and date of the execution by any person of any instrument may also be
proved in any other manner that the Indenture Trustee deems sufficient.
(c) The Note Register shall prove the ownership of Notes.
(d) Any Act by the Holder of a Note shall bind every Holder of the same
Note and every Note issued on its transfer or in exchange for it or in lieu of
it, in respect of anything done, omitted, or suffered to be done by the
Indenture Trustee or the Issuer in reliance on the Act, whether or not
notation of the action is made on the Note.
Section 11.04. Notices.
Any request, demand, authorization, direction, notice, consent, waiver,
Act, or other action or other documents provided or permitted by this
Indenture to be given to:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose under this Indenture if given in writing
and delivered by first-class mail, postage prepaid, overnight courier,
personally delivered, or facsimile (followed by the original by any other
means authorized by this Section) to the Indenture Trustee at its
Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose under this Indenture if given in writing
and delivered by first-class mail, postage prepaid, overnight courier,
personally delivered, or facsimile (followed by the original by any other
means authorized by this Section) to the Issuer addressed as provided in
the Adoption Annex or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer; or
57
(iii) the Credit Enhancer by the Issuer, the Indenture Trustee, or
by any Noteholder shall be sufficient for every purpose under this
Indenture if given in writing and delivered by first-class mail, postage
prepaid, overnight courier, personally delivered, or facsimile (followed
by the original by any other means authorized by this Section) (unless
otherwise specifically provided) to the Credit Enhancer addressed as
provided in the Adoption Annex or at any other address previously
furnished in writing to the Indenture Trustee by the Credit Enhancer,
except that whenever a notice or other communication to the Credit
Enhancer refers to an Event of Default, Event of Servicing Termination, a
claim under the Policy, or with respect to which failure on the part of
the Credit Enhancer to respond would constitute consent or acceptance,
then a copy of the notice or other communication shall also be sent to
the attention of the General Counsel of the Credit Enhancer and shall be
marked to indicate "URGENT MATERIAL ENCLOSED"; or
(iv) to each Rating Agency by the Issuer or the Indenture Trustee
shall be sufficient for every purpose under this Indenture if given in
writing and delivered by first-class mail, postage prepaid, overnight
courier, personally delivered, or facsimile (followed by the original by
any other means authorized by this Section) to the parties at the
addresses as provided in the Adoption Annex or at any other address
previously furnished in writing to the Indenture Trustee and the Issuer.
Any consent or waiver under this Indenture or any other Transaction
Document by the Credit Enhancer must be in writing and signed by the Credit
Enhancer to be effective.
Section 11.05. Notices to Noteholders; Waiver.
Where this Indenture provides for notice to Noteholders of any event, the
notice shall be sufficiently given (unless otherwise expressly provided in
this Indenture) if in writing and mailed, first-class, postage prepaid to each
Noteholder affected by the event, at the Holder'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 the notice. Whenever notice to
Noteholders is given by mail, neither the failure to mail the notice nor any
defect in a notice mailed to any particular Noteholder shall affect the
sufficiency of the notice with respect to other Noteholders. Any notice that
is mailed in the manner provided in this Indenture shall conclusively be
presumed to have been duly given.
Where this Indenture provides for notice in any manner, any person
entitled to receive it may waive the notice in writing, either before or after
the event, and the waiver shall be the equivalent of notice. Waivers of notice
by Noteholders shall be filed with the Indenture Trustee but the filing shall
not be a condition precedent to the validity of any action taken in reliance
on a waiver.
If it is impractical to mail notice of any event to Noteholders when the
notice is required to be given pursuant to this Indenture because of the
suspension of regular mail
58
service as a result of a strike, work stoppage, or similar activity, then any
manner of giving the notice satisfactory to the Indenture Trustee shall be
considered to be a sufficient giving of the notice.
Where this Indenture provides for notice to each Rating Agency, failure
to give the notice shall not affect any other rights or obligations created
under this Indenture, and shall not under any circumstance constitute an
Incipient Default.
Section 11.06. 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 or
any Paying Agent to the Holder, that is different from the methods provided
for in this Indenture. The agreement may not accelerate the timing or increase
the amount of any payments to the Noteholder; cause any release of or other
change in any Collateral; or affect the timing, amount, or method of any
payments by the Credit Enhancer under the Policy. The Issuer will furnish to
the Indenture Trustee and the Credit Enhancer a copy of each such agreement
and the Indenture Trustee will cause payments to be made and notices to be
given in accordance with them.
Section 11.07. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision of this Indenture that is required to be included in this
Indenture by the Trust Indenture Act, the required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically included in this Indenture
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained in this Indenture.
Section 11.08. Effect of Headings and Table of Contents.
The Article and Section headings and the Table of Contents are for
convenience only and shall not affect the construction of this Indenture.
Section 11.09. Successors and Assigns.
All 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, assigns,
co-trustees, and agents.
Section 11.10. Separability.
If any provision in this Indenture or in the Notes is invalid, illegal,
or unenforceable, the validity, legality, and enforceability of the remaining
provisions of this Indenture and the Notes shall not be affected in any way.
59
Section 11.11. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any person, other than the parties to this Indenture and their successors
under this Indenture, the Master Servicer (under Article VIII), the Credit
Enhancer, any person with an ownership interest in the Trust, and the
Noteholders, any benefit or any legal or equitable right under this Indenture.
The Credit Enhancer is a third party beneficiary of this Indenture.
Section 11.12. Legal Holidays.
If the date on which any payment is due is not a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
need not be made on that date, but may be made on the next Business Day with
the same force as if made on the date on which nominally due, and no interest
shall accrue for the period after the nominal due date.
Section 11.13. Governing Law.
THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 11.14. Counterparts.
This Indenture may be executed in any number of counterparts, each of
which so executed shall be considered an original, but all the counterparts
shall together constitute a single instrument.
Section 11.15. Recording of Indenture.
This Indenture is a Security Agreement under the UCC. If this Indenture
is subject to recording in any appropriate public recording offices, the
recording is to be effected by the Issuer but only at the request and expense
of Noteholders 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 the recording materially and
beneficially affects the interests of the Noteholders or any other person
secured under this Indenture or the enforcement of any right granted to the
Indenture Trustee under this Indenture.
Section 11.16. No Petition.
The Indenture Trustee, by entering into this Indenture, any Paying Agent,
by accepting its appointment as such, the Issuer, and each Noteholder, by
accepting a Note, hereby covenant that they will not at any time institute
against the Issuer or the Depositor, or join in any institution against 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,
60
this Indenture, or any of the other Transaction Documents. This Section shall
survive the termination of this Indenture.
Section 11.17. Act on Instructions from Credit Enhancer.
Notwithstanding any provision of this Indenture to the contrary, so long
as no Credit Enhancer Default exists, the Credit Enhancer shall at all times
be treated as if it were the exclusive owner of all Notes Outstanding for the
purposes of all approvals, consents, waivers, and the institution of any
action and the direction of all remedies, and the Indenture Trustee shall act
in accordance with the directions of the Credit Enhancer so long as it is
indemnified therefor to its reasonable satisfaction.
Section 11.18. Series Trust; Non-recourse and Subordination.
(a) The Trust is a series trust pursuant to Sections 3804 and 3806(b)(2)
of the Business Trust Statute, and each series shall be a separate series of
the Trust within the meaning of Section 3806(b)(2) of the Business Trust
Statute. As such, this Indenture is entered into only with respect to the
series of the Trust referred to in the Adoption Annex and the debts,
liabilities, obligations, and expenses incurred, contracted for, or otherwise
existing with respect to the series referred to in the Adoption Annex shall be
enforceable against the assets of the series referred to in the Adoption Annex
only, and not against the assets of the Trust generally, or the assets of any
other series.
(b) The Issuer and each Noteholder, by its acceptance of its Note, agree
that the indebtedness represented by the Notes is non-recourse to the Issuer,
and is payable solely from the assets of the series referred to in the
Adoption Annex and their proceeds. If any other assets of the Issuer are for
any reason made subject to any claim on account of the indebtedness
represented by the Notes notwithstanding Section 11.18(a), then solely as to
those claims against assets of the Issuer that are not the assets of the
series referred to in the Adoption Annex, the Issuer and each Noteholder, by
its acceptance of its Note, agree that the indebtedness represented by the
Notes and the payment of the principal and/or interest on the Notes as they
relate to those other assets is subordinated in right of payment to the prior
payment in full of any other indebtedness of the Issuer.
Section 11.19. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection this Indenture, 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
61
individual capacity. For all purposes of this Indenture, in the performance of
any obligations of the Issuer under this Indenture, the Owner Trustee shall be
subject to, and entitled to the benefits of, Article VI, VII, and VIII of the
Trust Agreement.
62
IN WITNESS WHEREOF, the parties to this Indenture have caused this
Indenture to be duly executed by their officers, thereunto duly authorized,
all as of the day and year first above written.
CWABS MASTER TRUST
BY: WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee
BY: /s/ Xxxxxx X. XxxXxxxxx
-----------------------
Name: Xxxxxx X. XxxXxxxxx
Title: Vice President
BANK ONE NATIONAL ASSOCIATION
not in its individual capacity but
solely as Indenture Trustee,
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
63
EXHIBIT A
FORM OF NOTES
CWABS MASTER TRUST
REVOLVING HOME EQUITY LOAN ASSET BACKED NOTE
SERIES 2002-B
----------------------------------------------------- --------------------------------------------------
Registered Principal Amount: $[___________]
----------------------------------------------------- --------------------------------------------------
No. [____] Percentage Interest: [__]%
----------------------------------------------------- --------------------------------------------------
CUSIP No. [_______] Initial Payment Date: [___________]
----------------------------------------------------- --------------------------------------------------
Note Rate: [___]%
----------------------------------------------------- --------------------------------------------------
The Issuer, CWABS Master Trust, for the Series 2002-B Subtrust, promises
to pay to CEDE & CO. or registered assigns the Principal Amount, payable on
each Payment Date in an amount equal to the Percentage Interest of the
aggregate amount payable from the Collection Account as principal on the Notes
pursuant to Section 8.03 of the Indenture, dated as of March 4, 2002 (the
"Indenture"), between the Issuer and Bank One, National Association, as
Indenture Trustee. The entire remaining outstanding principal balance of this
Note is payable on the Payment Date in April 2028. Capitalized terms used in
this Note that are not otherwise defined have the meanings given to them in
the Indenture, and if not defined there, in the Sale and Servicing Agreement,
and if not defined there, in the Master Trust Agreement (the "Master Trust
Agreement") or the Series 2002-B Trust Supplement (the "Series Supplement" and
together with the Master Trust Agreement, the "Agreement"), each between the
Issuer and Wilmington Trust Company, as Owner Trustee.
Interest will be paid on the 15th day of each month or if that is not a
Business Day, then on the next Business Day (the "Payment Date"), commencing
on the first Payment Date specified above, to the person in whose name this
Note is registered at the close of business on the last day preceding the
Payment Date (the "Record Date") at the Note Rate. Interest will be computed
on the basis of the actual number of days in the Interest Period and a 360-day
year. The "Note Rate" is a per annum rate equal to [ ]% for the first Interest
Period, and for any subsequent Interest Period, a per annum rate equal to the
least of: (i) the sum of (a) LIBOR as of the second LIBOR Business Day before
the first day of the Interest Period and (b) 0.25%, (ii) the Maximum Rate for
the Notes for the Interest Period, and (iii) 16.00%. The "Maximum Rate" for
any Interest Period is the Weighted Average Net Loan Rate for the Mortgage
Loans for the Collection Period during which the Interest Period begins
(adjusted to an effective rate reflecting accrued interest calculated on the
basis of the actual number of days in the Collection Period commencing in the
month in which the Interest Period commences and a year assumed to consist of
360 days). "LIBOR" for any
A-1
day means the rate for United States dollar deposits for one month that
appears on the Telerate Screen Page 3750 as of 11:00 A.M., London time that
day. If LIBOR does not appear on that page (or a page replacing that page on
that service or, if that service is no longer offered, any other service for
displaying LIBOR or comparable rates reasonably selected by the Depositor
after consultation with the Indenture Trustee), the rate will be the reference
bank rate. The reference bank rate for an Interest Period means the arithmetic
mean (rounded upwards to the nearest one sixteenth of a percent) of the
offered rates for United States dollar deposits offered by three major banks
engaged in transactions in the London interbank market, selected by the
Depositor after consultation with the Indenture Trustee, as of 11:00 A.M.,
London time, on the second LIBOR Business Day before the first day of the
Interest Period, to prime banks in the London interbank market for a period of
one month in amounts approximately equal to the outstanding Note Principal
Balance if at least two of the banks provide an offered rate. If fewer than
two offered rates are quoted, 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 Depositor after consultation with the Indenture Trustee, as of 11:00
A.M., New York City time, on the second LIBOR Business Day before the first
day of the Interest Period, for loans in U.S. dollars to leading European
banks for a period of one month in amounts approximately equal to the
outstanding Note Principal Balance. If no such quotations can be obtained, the
reference bank rate shall be LIBOR for the preceding Interest Period. "LIBOR
Business Day" means any day other than of a Saturday, a Sunday, or a day on
which banking institutions in the State of New York or in the City of London,
England are required or authorized by law to be closed.
This Note is one of the Notes from a duly authorized issue of Notes
issued by CWABS Master Trust, for the Series 2002-B Subtrust, designated as
Revolving Home Equity Loan Asset Backed Notes, Series 2002-B.
Payments on this Note will be made by the Indenture Trustee, or by the
Paying Agent appointed pursuant to the Indenture, by check mailed to the
person entitled thereto as its name and address appears on the Note Register
or, upon written request by the person delivered to the Indenture Trustee at
least five Business Days before the related Record Date, by wire transfer (but
only if the person owns of record Notes having principal denominations
aggregating at least $1,000,000), or by any other means of payment the person
and the Indenture Trustee agree to. Notwithstanding the above, the final
payment on this Note will be made after due notice by the Indenture Trustee or
the Paying Agent, and only upon presentation and surrender of this Note at the
office or agency appointed by the Indenture Trustee for that purpose.
This Note does not purport to summarize the Indenture and reference is
made to the Indenture for the rights and obligations under it.
The Transferor, the Depositor, and the Noteholders intend that the Notes
will be indebtedness for federal, State, and local income and franchise tax
purposes and for purposes
A-2
of any other tax imposed on or measured by income. The Depositor, the
Indenture Trustee, and the Holder (or beneficial owner) of this Note by
acceptance of this Note (or by acquiring its beneficial interest in this Note)
agrees to treat the Notes, for purposes of federal, State, and local income or
franchise taxes and any other tax imposed on or measured by income, as
indebtedness secured by the Trust Assets and to report the transactions
contemplated by the Indenture on all applicable tax returns in a manner
consistent with that treatment. Each Holder of this Note agrees that it will
cause any beneficial owner acquiring an interest in this Note through it to
comply with the Indenture as to treatment as indebtedness for federal, State,
and local income and franchise tax purposes and for purposes of any other tax
imposed on or measured by income.
Without the consent of the Holders of any Notes but with the consent of
the Credit Enhancer, the Issuer and the Indenture Trustee may amend the
Indenture in certain limited ways. Without the consent of any of the
Noteholders but with satisfaction of the Rating Agency Condition, the Issuer
and the Indenture Trustee may amend the Indenture to change the Indenture in
any manner or to modify the rights of the Noteholders or the Credit Enhancer
under the Indenture except amendments that require the consent of each
affected Noteholder. No supplemental indenture may, without the consent of
each affected Noteholder:
(i) change the date of payment of any installment of principal or
interest on any Note, or reduce its principal amount, its interest rate,
or its redemption price, or change any place of payment where, or the
coin or currency in which, any Note or its interest is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of the Indenture requiring the application of available funds
to the payment of any amount due on the Notes after their due dates (or,
in the case of redemption, after the redemption date);
(iii) reduce the percentage of the Outstanding Amount the consent of
the Holders of which is required for any supplemental indenture, or the
consent of the Holders of which is required for any waiver of compliance
with certain provisions of the Indenture or certain defaults under the
Indenture and their consequences or to direct the liquidation of the
Collateral;
(iv) modify any provision of the Section of the Indenture covering
indenture supplements only with the consent of affected Noteholders
except to increase any percentage specified in the Indenture or provide
that certain additional provisions of the Indenture or the Transaction
Documents cannot be modified or waived without the consent of the Holder
of each Note affected by it; modify any of the provisions of the
Indenture in a manner affecting 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 the
calculation) or affect the
A-3
rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes contained in the Indenture; or
(v) permit the creation of any lien ranking before or on a parity
with the lien of the Indenture with respect to any part of the Collateral
(except any change in any mortgage's lien status in accordance with the
Sale and Servicing Agreement) or, except as otherwise permitted or
contemplated in the Indenture, terminate the lien of the Indenture on any
property at any time subject to the Indenture or deprive the Holder of
any Note of the security provided by the lien of the Indenture.
As provided in the Indenture, the transfer of this Note is registrable in
the Note Register of the Note Registrar on surrender of this Note for
registration of transfer at the office or agency maintained by the Note
Registrar for that purpose, accompanied by a written instrument of transfer in
form satisfactory to the Master Servicer, the Indenture Trustee, and the Note
Registrar duly executed by its Holder or the Holder's attorney duly authorized
in writing, and thereupon new Notes of authorized denominations and evidencing
the same aggregate Percentage Interest of the Notes will be issued to the
designated transferees. The Notes are issuable only as registered Notes
without coupons in denominations specified in the Indenture. As provided in
the Indenture, Notes are exchangeable for new Notes of like tenor in
authorized denominations and evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for any registration of transfer or
exchange, but the Indenture Trustee or the Note Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Before due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, and any agent of the Issuer or the Indenture
Trustee may treat the person in whose name this Note is registered as its
owner for all purposes, whether or not this Note is overdue, and none of the
Issuer, the Indenture Trustee, or any such agent shall be affected by notice
to the contrary.
The Transferor may effect an early retirement of the Notes by paying the
retransfer price and accepting retransfer of the Trust Assets on any Payment
Date after the Note Principal Balance of the Notes is less than or equal to
10% of the Original Note Principal Balance.
Each Holder or beneficial owner of a Note, by acceptance of a Note or, in
the case of a beneficial owner of a Note, a beneficial interest in a Note,
agrees by accepting the benefits of the Indenture that will not at any time
institute against the Depositor, the Seller, the Master Servicer, or the
Issuer, or join in any institution against any of them of, any bankruptcy,
reorganization, arrangement, insolvency , or liquidation proceedings under any
United Stated federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture, or the Transaction
Documents.
A-4
Anything in this Note to the contrary notwithstanding, none of Wilmington
Trust Company in its individual capacity, Bank One, National Association, 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 Note or performance of, or omission to perform, any of the obligations
under the Indenture. The holder of this Note by its acceptance of this Note
agrees that the holder shall have no claim against any of the foregoing for
any deficiency, loss, or claim. Nothing contained in this Note shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer in
the Series 2002-B Subtrust for any obligations under the Indenture or in this
Note.
The Issuer is a series trust pursuant to Sections 3804 and 3806(b)(2) of
the Business Trust Statute, and each series shall be a separate series of the
Issuer within the meaning of Section 3806(b)(2) of the Business Trust Statute.
As such, the Indenture and this Note are entered into only with respect to
Series 2002-B and the debts, liabilities, obligations, and expenses incurred,
contracted for, or otherwise existing with respect to Series 2002-B shall be
enforceable against the assets of Series 2002-B only, and not against the
assets of the Issuer generally, or the assets of any other series.
The Issuer and each Noteholder, by its acceptance of its Note, agree that
the indebtedness represented by the Notes is non-recourse to the Issuer, and
is payable solely from the assets of Series 2002-B and their proceeds. If any
other assets of the Issuer are for any reason made subject to any claim on
account of the indebtedness represented by the Notes notwithstanding this
paragraph, then solely as to those claims against assets of the Issuer that
are not the assets of Series 2002-B, the Issuer and each Noteholder, by its
acceptance of its Note, agree that the indebtedness represented by the Notes
and the payment of the principal and interest on the Notes as they relate to
those other assets is subordinated in right of payment to the prior payment in
full of any other indebtedness of the Issuer.
THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Unless the certificate of authentication on this Note has been executed
by or on behalf of the Indenture Trustee, by manual or facsimile signature,
this Note shall not be entitled to any benefit under the Indenture, or be
valid for any purpose.
A-5
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.
Dated:
WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee on behalf of the Trust
By: ____________________________
Certificate of Authentication:
This is one of the Notes referenced
in the within-mentioned Indenture.
BANK ONE, NATIONAL ASSOCIATION
By: ________________________
Authorized Officer
A-6
ANNEX 1
DEFINITIONS
"Accelerated Principal Payment Amount" for any Payment Date means the
amount of Investor Interest Collections applied on that Payment Date as a
payment of principal to decrease the Note Principal Balance until the
difference between the Note Principal Balance and the Loan Balance is an
amount equal to the Required Transferor Subordinated Amount for the Payment
Date.
"Act" has the meaning specified in Section 11.03(a).
"Additional Balance" as to any Mortgage Loan means the aggregate amount
of all additional borrowings by the mortgagor under the relevant Credit Line
Agreement after the Cut-off Date for the Mortgage Loan.
"Adjustment Date" for any Interest Period, the second LIBOR Business Day
preceding the first day of the Interest Period.
"Administration Agreement" means the Administration Agreement specified
in the Adoption Annex.
"Administrator" means the person acting as such under the Administration
Agreement.
"Adoption Annex" means Annex 2 to this Indenture.
"Aggregate Investor Interest" for any Payment Date means the Note
Interest for the Payment Date and the Unpaid Investor Interest Shortfall
(other than any Basis Risk Carryforward) for the Payment Date plus, to the
extent legally permissible, interest at the related Note Rate.
"Alternative Principal Payment" for any Payment Date means the excess of
the Principal Collections for the Payment Date over the aggregate of
Additional Balances created during the related Collection Period.
"Asset Balance" on any day for any Mortgage Loan other than a liquidated
mortgage loan means its Cut-off Date Asset Balance, plus (i) any Additional
Balance for the Mortgage Loan, minus (ii) all collections credited as
principal against the Asset Balance of the Mortgage Loan in accordance with
the related Credit Line Agreement. A liquidated mortgage loan is any Mortgage
Loan that as of the end of the related Collection Period the Master Servicer
has determined in accordance with the servicing standards in the Sale and
Servicing Agreement that all liquidation proceeds that it expects to recover
on the Mortgage Loan or the related Mortgaged Property have been recovered.
"Assignment of Mortgage" for any mortgage means an assignment, notice of
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the
Xxx-1-1
jurisdiction in which the related Mortgaged Property is located to reflect
the sale of the mortgage to the Trust, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the
same jurisdiction.
"Authorized Officer" means, for any corporation or other entity
establishing such designations, the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, President, Executive Vice President, any
Vice President, the Secretary, or the Treasurer of the corporation, for any
partnership, any of its general partners, and for any person, any person who
is identified on a list of Authorized Officers delivered by the person to the
Indenture Trustee on the Closing Date. These lists may be updated from time to
time.
"Available Investor Interest" for any Payment Date means the sum of the
following amounts, but in each case only to the extent they will be available
to be applied to make payments pursuant to Section 8.03(a)(iii) on the Payment
Date:
(i) the amount of Investor Interest Collections on deposit in the
Collection Account as of the close of business on the third Business Day
preceding the Payment Date,
(ii) the funds to be deposited into the Collection Account as a
single deposit on the Business Day preceding the Payment Date in
accordance with Section 3.02(b) of the Sale and Servicing Agreement, as
reported by the Master Servicer to the Credit Enhancer in the Servicing
Certificate delivered on the preceding Determination Date, and
(iii) the amount on deposit in the Collection Account for the
Payment Date as of the close of business on the preceding Determination
Date for optional advances by the Master Servicer made pursuant to
Section 4.03 of the Sale and Servicing Agreement,
"Available Transferor Subordinated Amount" for any Payment Date means the
lesser of the Transferor Principal Balance and the Required Transferor
Subordinated Amount for the Payment Date.
"Basis Risk Carryforward" for any Payment Date and Interest Period for
which the related Note Rate has been determined pursuant to the Weighted
Average Net Loan Rate means the excess of (a) the amount of interest that
would have accrued on the Notes during the related Interest Period had
interest been determined pursuant to the Interest Formula Rate over (b) the
interest actually accrued at the related Note Rate on the Notes during the
Interest Period. Basis Risk Carryforward will not be included in interest
payments on the Notes for the Payment Date and will accrue interest at the
Interest Formula Rate (as adjusted from time to time) and will be paid on
future Payment Dates only to the extent funds are available therefor under
Section 8.03(a)(ix).
Xxx-1-2
"Billing Cycle" for any Mortgage Loan and Collection Period means the
billing period specified in the related Credit Line Agreement and with respect
to which amounts billed are received during the Collection Period.
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in New York, California, or Illinois are authorized
or obligated by law, regulation, or executive order to remain closed.
"Closing Date" means the Closing Date stated in the Adoption Annex.
"Code" means the Internal Revenue Code of 1986 and Treasury regulations
promulgated under the Code.
"Collateral" has the meaning given to it in the Granting Clause.
"Collection Account" means the account so designated established by the
Master Servicer pursuant to the Sale and Servicing Agreement.
"Collection Period" for any Payment Date and any Mortgage Loan means the
calendar month preceding the month of the Payment Date (or, in the case of the
first Collection Period, the period from the Cut-off Date through the date
specified in the Adoption Annex).
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business is
administered specified in the Adoption Annex, or at any other address the
Indenture Trustee designates by notice to the Noteholders and the Issuer, or
the principal corporate trust office of any successor Indenture Trustee at the
address designated by the successor Indenture Trustee by notice to the
Noteholders and the Issuer.
"Credit Enhancement Draw Amount" for any Payment Date means an amount
equal to the sum of:
(x) the excess of the Aggregate Investor Interest over the Available
Investor Interest, plus
(y) the Guaranteed Principal Payment Amount, plus
(z) any Preference Amount (as defined in the Policy) to be paid pursuant
to the terms of the Policy on the Payment Date.
"Credit Enhancer" means the Credit Enhancer identified in the Adoption
Annex.
"Credit Enhancer Default" means the failure by the Credit Enhancer to
make a payment required under the Policy in accordance with its terms.
"Credit Limit" means the maximum Asset Balance for each Mortgage Loan
permitted under the terms of the related Credit Line Agreement.
Xxx-1-3
"Credit Line Agreement" means the related credit line account
agreement for a Mortgage Loan executed by the related mortgagor and any
amendment or modification of it.
"Custodial Agreement" means the Custodial Agreement specified in the
Adoption Annex.
"Cut-off Date" means the Cut-off Date specified in the Adoption Annex.
"Cut-off Date Asset Balance" for any Mortgage Loan acquired by the Trust
on the Closing Date means its unpaid principal balance as of the Cut-off Date.
"Cut-off Date Loan Balance" means the Loan Balance calculated as of the
Cut-off Date.
"Depositor" means CWABS, Inc., a Delaware corporation, or its successor
in interest.
"Depository" means a financial institution or other person maintaining
ownership records and effecting book-entry transfers and pledges of the Notes
deposited with it pursuant to an agreement with the Issuer. The Depository
shall at all times be a "clearing corporation" as defined in Section
8-102(a)(5) of the UCC of the State of New York.
"Determination Date" for any Payment Date means the third Business Day
before the Payment Date.
"Eligible Account" means
(a) an account that is maintained with a depository institution whose
debt obligations throughout the time of any deposit with it are rated in the
highest short-term debt rating category by the Rating Agencies,
(b) an account with a depository institution having a minimum long-term
unsecured debt rating of "BBB" by Standard & Poor's and "Baa3" by Xxxxx'x,
that is fully insured by either Savings Association Insurance Fund or Bank
Insurance Fund,
(c) a segregated trust account maintained with the Indenture Trustee or
an affiliate of the Indenture Trustee in its fiduciary capacity, or
(d) an account otherwise acceptable to each Rating Agency and the Credit
Enhancer, as evidenced at closing by delivery of a rating letter by each
Rating Agency and thereafter by delivery of a letter from
(i) each Rating Agency to the Indenture Trustee, within 30 days of
receipt of notice of the deposit, to the effect that the deposit will not
cause the Rating Agency to reduce or withdraw its then-current rating of
the Notes (without regard to the Policy) and
(ii) from the Credit Enhancer to the Indenture Trustee, within 30
days of receipt of notice of the deposit, to the effect that the account
is acceptable to it.
"Eligible Investments" means
Xxx-1-4
(a) obligations of, or guaranteed as to principal and interest by, the
United States or any U.S. agency or instrumentality that is backed by the full
faith and credit of the United States;
(b) general obligations of or obligations guaranteed by any State
receiving the highest long-term debt rating of each Rating Agency, or any
lower rating that will not result in a downgrade or withdrawal of the rating
then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(c) commercial paper issued by Countrywide Home Loans, Inc. or any of its
affiliates if it is rated no lower than A-1 by Standard & Poor's and P-2 by
Xxxxx'x, and the long-term debt of Countrywide Home Loans, Inc. is rated at
least A3 by Xxxxx'x, or any lower ratings that will not result in a downgrade
or withdrawal of the rating then assigned to the Notes by any Rating Agency
(without regard to the Policy);
(d) commercial or finance company paper that is then receiving the
highest commercial or finance company paper rating of each Rating Agency, or
any lower ratings that will not result in a downgrade or withdrawal of the
rating then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(e) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States or any State and subject to supervision
and examination by federal or State banking authorities, if the commercial
paper or long term unsecured debt obligations of the depository institution or
trust company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of the holding company, but only if Xxxxx'x is not a Rating
Agency) are then rated in one of the two highest long-term and the highest
short-term ratings of each Rating Agency for the securities, or any lower
ratings that will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy);
(f) demand or time deposits or certificates of deposit issued by any bank
or trust company or savings institution to the extent that the deposits are
fully insured by the FDIC;
(g) guaranteed reinvestment agreements issued by any bank, insurance
company, or other corporation that, at the time of the issuance of the
agreements, will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy);
(h) repurchase obligations with respect to any security described in
clauses (a) and (b) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (e)
above;
(i) securities (other than stripped bonds, stripped coupons, or
instruments sold at a purchase price in excess of 115% of its face amount)
bearing interest or sold at a discount issued by any corporation incorporated
under the laws of the United States or any State that, at the time of the
investment, have one of the two highest ratings of each Rating Agency
Xxx-1-5
(except if the Rating Agency is Moody's, the rating must be the highest
commercial paper rating of Moody's for the securities), or any lower ratings
that will not result in a downgrade or withdrawal of the rating then assigned
to the Notes by any Rating Agency (without regard to the Policy) as evidenced
by a signed writing delivered by each Rating Agency;
(j) interests in any money market fund that, at the date of acquisition
of the interests in the fund and throughout the time the interests are held in
the fund, have the highest applicable rating by each Rating Agency, or any
lower ratings that will not result in a downgrade or withdrawal of the rating
then assigned to the Notes by any Rating Agency (without regard to the
Policy);
(k) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United States
or any State that ,on the date of acquisition, have been rated by each Rating
Agency in their respective highest applicable rating category, or any lower
ratings that will not result in a downgrade or withdrawal of the rating then
assigned to the Notes by any Rating Agency (without regard to the Policy); and
(l) any other investments having a specified stated maturity and bearing
interest or sold at a discount acceptable to each Rating Agency that will not
result in a downgrade or withdrawal of the rating then assigned to the Notes
by any Rating Agency (without regard to the Policy), as evidenced by a signed
writing delivered by each Rating Agency.
No Eligible Investment may evidence either the right to receive (a) only
interest on the obligations underlying these instruments or (b) both principal
and interest payments from obligations underlying these instruments where the
interest and principal payments on the instruments provide a yield to maturity
at par greater than 120% of the yield to maturity at par of the underlying
obligations. No Eligible Investment may be purchased at a price greater than
par if that instrument may be prepaid or called at a price less than its
purchase price before stated maturity.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934.
"Grant" means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, and xxxxx x xxxx on and a Security
Interest in and a 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 includes all rights (but none of the obligations) of the
granting party under the agreement or instrument, including the immediate and
continuing right after an Event of Default to claim for, collect, receive, and
give receipt for principal and interest payments on the Collateral and all
other moneys payable on the Collateral, to require the repurchase of Mortgage
Loans, to give and receive notices and other communications, to make waivers
or other agreements, to exercise all
Xxx-1-6
rights, 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 regarding the Collateral.
"Guaranteed Payment" for any Payment Date means the sum of (i) the
Guaranteed Principal Payment Amount plus (ii) the amount to be distributed to
the Holders of the Notes pursuant to Section 8.03(a)(iii) for the Payment
Date.
"Guaranteed Principal Payment Amount"
o for the Notes
o on their Scheduled Maturity Date
o means the excess of the outstanding Note Principal Balance
(after giving effect to Interest Collections allocable and
distributable as principal on the Notes on the Payment Date)
over the sum of the amounts on deposit in the Collection
Account available to be distributed to the Holders pursuant to
Section 8.03(b);
o for the Notes
o on any Payment Date if the Transferor Principal Balance has been
reduced to or below zero
o means the excess of the Note Principal Balance (after giving
effect to the distributions of Interest Collections and
Principal Collections that are allocable to principal on the
Notes on the Payment Date) over the Loan Balance (at the
end of the related Collection Period); and
o for the Notes on any other Payment Date means zero.
"Holder" or "Noteholder" means the person in whose name a Note is
registered in the Note Register.
"Incipient Default" means any occurrence that is, or with notice or lapse
of time or both would become, an Event of Default.
"Indenture" means this Indenture.
"Indenture Trustee" means the Indenture Trustee identified in the
Adoption Annex, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee under this Indenture.
"Independent" means that a person (a) is in fact independent of the
Issuer, any other obligor on the Notes, the Transferor, and any affiliate of
any of them, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any other obligor on the Notes, the
Transferor, or any affiliate of any of them, and (c) is not connected with the
Issuer, any other obligor on the Notes, the Transferor, or any affiliate of
any of them
Xxx-1-7
as an officer, employee, promoter, underwriter, trustee, partner, director, or
person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered
to the Indenture Trustee 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 the opinion or certificate states that the
Issuer has read the definition of "Independent" in this Indenture and that the
signer is Independent.
"Insolvency Event" regarding a specified person means
(a) the person generally fails to pay its debts as they become due or
admits in writing its inability to pay its debts generally as they become due;
(b) the person has a decree or order for relief by a court having
jurisdiction in the premises entered against it or any substantial part of its
property in an involuntary case under any applicable bankruptcy, insolvency,
or other similar law and the decree or order remains unstayed and in effect
for a period of 60 days;
(c) the person has a conservator, receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official appointed for it or for
all or any substantial part of its property and the decree or order remains
unstayed and in effect for a period of 60 days;
(d) the person's business is ordered to be wound-up or liquidated and the
decree or order remains unstayed and in effect for a period of 60 days; or
(e) the person commences a voluntary case under any applicable
bankruptcy, insolvency, or other similar law, or consents to the entry of an
order for relief in an involuntary case under any such law, or consents to the
entry of an order for relief in an involuntary case under any such law, or
consents to the appointment of or taking possession by a conservator,
receiver, liquidator, assignee for the benefit of creditors, a custodian,
trustee, sequestrator, or similar official for the person or for all or any
substantial part of its property, or the person makes any general assignment
for the benefit of creditors.
"Insurance Agreement" means the insurance and indemnity agreement
identified in the Adoption Annex.
"Interest Collections" for any Payment Date means the sum of all payments
effected by mortgagors of Mortgage Loans and any other amounts constituting
interest collected by the Master Servicer under the Mortgage Loans during the
related Collection Period plus any optional advance made by the Master
Servicer pursuant to Section 4.03 of the Sale and Servicing Agreement for
which the Master Servicer has not been reimbursed minus the Servicing Fee for
the related Collection Period. These amounts include any net liquidation
proceeds and net proceeds from any insurer pursuant to any insurance policy
covering a Mortgage Loan allocable to interest on the applicable Mortgage
Loan. These amounts exclude any fees (including annual fees) or late charges
or similar administrative fees paid
Xxx-1-8
by the mortgagors. The related Credit Line Agreement shall determine the
portion of each payment on the Mortgage Loan that constitutes principal or
interest. Net liquidation proceeds are liquidation proceeds net of insurance
policy recoveries and out-of-pocket expenses (exclusive of overhead) that are
incurred by the Master Servicer in connection with the liquidation of any
Mortgage Loan.
"Interest Formula Rate" means the lesser of the rates in clauses (i) and
(iii) of the definition of Note Rate.
"Interest Period" for the first Payment Date means the period beginning
on the Closing Date and ending on the day preceding the first Payment Date and
for any other Payment Date means the period beginning on the preceding Payment
Date and ending on the day before the Payment Date.
"Investor Fixed Allocation Percentage" is calculated as provided in the
Adoption Annex.
"Investor Floating Allocation Percentage" for any Payment Date means the
lesser of 100% and a fraction whose numerator is the Note Principal Balance
and whose denominator is the Loan Balance, calculated as of the beginning of
the related Collection Period.
"Investor Interest Collections" for any Payment Date means the product of
(i) the Interest Collections received during the related Collection Period and
(ii) the Investor Floating Allocation Percentage for the Payment Date.
"Investor Loss Amount" for any Payment Date means the product of (i) the
Investor Floating Allocation Percentage for the Payment Date and (ii) the
aggregate of the liquidation loss amounts on the Mortgage Loans for the
Payment Date. Liquidation loss amounts for any Payment Date and any Mortgage
Loan that becomes a liquidated Mortgage Loan during the related Collection
Period are the unrecovered Asset Balance of the Mortgage Loan at the end of
the Collection Period after reducing the Asset Balance for the net liquidation
proceeds. Net liquidation proceeds are liquidation proceeds net of insurance
policy recoveries and out-of-pocket expenses (exclusive of overhead) that are
incurred by the Master Servicer in connection with the liquidation of any
Mortgage Loan.
"Investor Loss Reduction Amount" for any Payment Date means the portion
of the Investor Loss Amount for all prior Payment Dates that has not been paid
to the Holders of the Notes on the Payment Date pursuant to Section
8.03(a)(iv) or 8.03(a)(v) or by a Credit Enhancement Draw Amount.
"Investor Principal Collections" for any Payment Date means the related
Investor Fixed Allocation Percentage of Principal Collections on the Mortgage
Loans for the Payment Date.
Xxx-1-9
"Issuer" means CWABS Master Trust on for the series subtrust
designated in the Adoption Annex until a successor replaces it and, after
that, means its successor.
"Issuer Order" or "Issuer Request" means 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 day means the rate for United States dollar deposits for
one month that appears on the Telerate Screen Page 3750 as of 11:00 A.M.,
London time that day. If LIBOR does not appear on that page (or a page
replacing that page on that service or, if that service is no longer offered,
any other service for displaying LIBOR or comparable rates reasonably selected
by the Depositor after consultation with the Indenture Trustee), the rate will
be the Reference Bank Rate.
"LIBOR Business Day" means any day other than of a Saturday, a Sunday, or
a day on which banking institutions in the State of New York or in the City of
London, England are required or authorized by law to be closed.
"Loan Balance" for any date means the aggregate of the Asset Balances of
all Mortgage Loans as of the date.
"Loan Rate" for any Mortgage Loan and on any day means the per annum rate
of interest applicable under the related Credit Line Agreement to the
calculation of interest for the day on the Asset Balance of the Mortgage Loan.
"Managed Amortization Period" means the period from the Closing Date to
the Rapid Amortization Commencement Date.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor.
"Maximum Principal Payment" for any Payment Date means the Investor Fixed
Allocation Percentage of the Principal Collections from the Mortgage Loans for
the Payment Date.
"MERS" means Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor to it.
"MERS(R) System" means the system of recording transfers of mortgages
electronically maintained by MERS.
"MIN" means the Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"MOM Loan" means any Mortgage Loan as to which MERS is acting as
mortgagee, solely as nominee for the originator of the Mortgage Loan and its
successors and assigns.
"Moody's" means Xxxxx'x Investors Service, Inc. or its successor in
interest.
Xxx-1-10
A "mortgage" is any conveyance to secure the performance of an obligation
including a deed of trust to secure debt and other comparable security
instruments.
"Mortgage File" for each of the Mortgage Loans means the following
documents:
(i) the original Mortgage Note endorsed in blank or, if the original
Mortgage Note has been lost or destroyed and not replaced, an original
lost note affidavit from the Sponsor stating that the original Mortgage
Note was lost, misplaced, or destroyed, together with a copy of the
Mortgage Note;
(ii) unless the Mortgage Loan is registered on the MERS(R) System,
an original Assignment of Mortgage for the Mortgage Loan in blank in
recordable form;
(iii) the original recorded mortgage with evidence of recording on
it (noting the presence of the MIN of the Mortgage Loan and language
indicating that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a
MOM Loan) or, if the original recorded mortgage with evidence of
recording on it cannot be delivered by the Closing Date because of a
delay caused by the public recording office where the original mortgage
has been delivered for recordation or because the original mortgage has
been lost, a true copy of the mortgage, together with (i) in the case of
a delay caused by the public recording office, an Officer's Certificate
of the Sponsor or the Depositor, which may be a blanket certificate
covering more than one mortgage, stating that the original mortgage has
been dispatched to the appropriate public recording official for
recordation or (ii) in the case of an original mortgage that has been
lost, a certificate by the appropriate county recording office where the
mortgage is recorded;
(iv) if applicable, the original of each intervening assignment
needed for a complete chain of title for the mortgage from its original
mortgagee or beneficiary to the Trust (or, if the Mortgage Loan is
registered on the MERS(R)System, to MERS and noting the presence of a
MIN) with evidence of recording on them, or, if any original intervening
assignment has not been returned from the applicable recording office or
has been lost, a true copy of it, together with (i) in the case of a
delay caused by the public recording office, an Officer's Certificate of
the Sponsor or the Depositor, which may be a blanket certificate covering
more than one intervening assignment, stating that the original
intervening assignment has been dispatched to the appropriate public
recording official for recordation or (ii) in the case of an original
intervening assignment that has been lost, a certificate by the
appropriate county recording office where the mortgage is recorded;
(v) a title policy for each Mortgage Loan with a Credit Limit in
excess of $100,000;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
Xxx-1-11
(vii) the original of each assumption, modification, consolidation,
or substitution agreement relating to the Mortgage Loan; and
(viii) any security agreement, chattel mortgage, or equivalent
instrument executed in connection with the Mortgage Loan;
An optical image or other representation of a document specified in
clauses (iii) through (viii) above for a Mortgage Loan may be held by the
Indenture Trustee or assignee in lieu of the physical documents specified if
(a) as evidenced by an Opinion of Counsel delivered to and in form and
substance satisfactory to the Indenture Trustee and the Credit Enhancer,
(x) an optical image or other representation of the related
documents specified in clauses (iii) through (viii) above are enforceable
in the relevant jurisdictions to the same extent as the original of the
document and
(y) the optical image or other representation does not impair the
ability of an owner of the Mortgage Loan to transfer its interest in the
Mortgage Loan, and
(b) written confirmation that the retention of the documents in that
format will not result in a reduction in the then current rating of the Notes,
without regard to the Policy. A copy of any Opinion of Counsel shall in each
case be addressed and delivered to the Credit Enhancer.
"Mortgage Loan" means each of the mortgage loans, including Additional
Balances for it, that are transferred to the Trust pursuant to Section 2.01(a)
and (b) of the Sale and Servicing Agreement, together with all related
Mortgage Files, exclusive of Mortgage Loans that are retransferred to the
Depositor, the Master Servicer, or the Sponsor or purchased by the Master
Servicer pursuant to Section 2.02, 2.04, 2.06, or 3.06 of the Sale and
Servicing Agreement, held as a part of the Trust. The Mortgage Loans
originally so held are identified in the Mortgage Loan Schedule delivered on
the Closing Date. The Mortgage Loans shall also include any Eligible
Substitute Mortgage Loan (as defined in the Sale and Servicing Agreement)
substituted by the Sponsor for a defective Mortgage Loan pursuant to Sections
2.02 and 2.04 of the Sale and Servicing Agreement.
"Mortgage Loan Schedule" on any date means the schedule of Mortgage Loans
included in the Trust on the date identifying each Mortgage Loan and
specifying the items identified in the Adoption Annex. The initial schedule of
Mortgage Loans as of the Cut-off Date is Exhibit A of the Sale and Servicing
Agreement. The Mortgage Loan Schedule will automatically include any
Additional Balances. The Indenture Trustee is not responsible for preparing
the Mortgage Loan Schedule.
"Mortgage Note" means the Credit Line Agreement for a Mortgage Loan
pursuant to which the related mortgagor agrees to pay the indebtedness
evidenced by it and secured by the related mortgage.
"Mortgaged Property" means the underlying property securing a Mortgage
Loan.
Xxx-1-12
"Note" means any note executed by the Issuer and authenticated by the
Indenture Trustee substantially in the form of Exhibit A.
"Note Interest" for any Payment Date means interest for the related
Interest Period at the applicable Note Rate on the Note Principal Balance as
of the first day of the Interest Period (after giving effect to the
distributions made on the first day of the Interest Period).
"Note Owner" means the beneficial owner of a book-entry Note, as
reflected on the books of the Indenture Trustee as agent for the Depository.
"Note Principal Balance" for any Payment Date means (a) the Original Note
Principal Balance less (b) the aggregate of amounts actually distributed as
principal on the Notes before the Payment Date.
"Note Rate" means the rate specified in the Adoption Annex.
"Note Register" and "Note Registrar" have the meanings specified in
Section 2.03.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer or other specified party under the circumstances
described in, and otherwise complying with, the applicable requirements of
Section 11.01 and delivered to the Indenture Trustee.
"Opinion of Counsel" means written opinions of counsel who may, except as
otherwise expressly provided in this Indenture, be an employee of or counsel
to the Issuer, the Depositor, the Sponsor, the Master Servicer, or the
Transferor (except that any opinion pursuant to Section 8.06 or relating to
taxation must be an opinion of independent outside counsel) and who is
reasonably acceptable to the parties to whom it is to be delivered. The
opinions shall be addressed to the Indenture Trustee as Indenture Trustee, any
other designated party, shall comply with any applicable requirements of
Section 11.01, and shall be in form and substance reasonably satisfactory to
the parties to whom it is to be delivered.
"Original Note Principal Balance" means the amount reflected in the
Adoption Annex.
"Outstanding" means, as of the date of determination, all Notes that have
been authenticated and delivered under this Indenture except:
(i) Notes that have been cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been deposited with the Indenture Trustee or any
Paying Agent in trust for the Noteholders, and if the Notes are to be
redeemed, notice of the redemption has been duly given pursuant to this
Indenture or notice has been provided for in a manner satisfactory to the
Indenture Trustee; and
Xxx-1-13
(iii) Notes in exchange for or instead of which other Notes have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that those Notes are
held by a Protected Purchaser.
In determining whether the Holders of the requisite Outstanding Amount of
the Notes have Acted under this Indenture or under any Transaction Document,
Notes owned by the Issuer, the Depositor, or the Transferor, or any of their
affiliates shall be disregarded and treated as not being Outstanding, except
that, in determining whether the Indenture Trustee shall, if the Notes have
first been transferred to a non-affiliate, be protected in relying on any Act,
only Notes that a Responsible Officer knows to be so owned shall be
disregarded. Notes so owned that have been pledged in good faith, or for whose
owner the Issuer, the Depositor, or the Transferor, or any of their affiliates
is acting as trustee or nominee, may be regarded as Outstanding if the pledgee
or other person establishes to the satisfaction of the Indenture Trustee the
pledgee's or other person's right to Act for the Notes and that the pledgee or
other person is not the Issuer, the Depositor, or the Transferor, or any of
their affiliates.
To effectuate the Credit Enhancer's right of subrogation under Section
4.03, all Notes that have been paid with funds provided under the Policy shall
be Outstanding until the Credit Enhancer has been paid all amounts due to it
pursuant to the Insurance Agreement with respect to those Notes.
"Outstanding Amount" means the aggregate principal amount of all Notes
that are Outstanding at the date of determination.
"Overcollateralization Step Down Amount" for any Payment Date means the
lesser of (i) the Scheduled Principal Collections Payment Amount without the
reduction for the current Overcollateralization Step Down Amount and (ii) the
excess of the Available Transferor Subordinated Amount over the Required
Transferor Subordinated Amount for the Payment Date.
"Paying Agent" means the Indenture Trustee or any other person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.08
and is authorized by the Issuer to make payments to and distributions from the
Collection Account, including payments of principal or interest on the Notes
on behalf of the Issuer.
"Payment Date" means the day of each month specified in the Adoption
Annex, or if that is not a Business Day, then the next Business Day.
"Policy" means the note guaranty insurance policy identified in the
Adoption Annex and all its endorsements, dated as of the Closing Date, issued
by the Credit Enhancer to the Indenture Trustee for the benefit of the
Noteholders.
"Policy Payments Account" means a separate special purpose trust account
that is an Eligible Account, for the benefit of Holders of the Notes and the
Credit Enhancer over which the Indenture Trustee has exclusive control and
sole right of withdrawal.
Xxx-1-14
"Preference Claim" means any proceeding or the institution of any action
seeking the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership, or similar law of any distribution made with respect
to the Notes (other than Basis Risk Carryforward).
"Principal Collections" for any Payment Date means the sum of all
payments effected by the mortgagors and any other amounts constituting
principal collected by the Master Servicer under the Mortgage Loans during the
related Collection Period. These amounts include any net liquidation proceeds
and net proceeds from any insurer pursuant to any insurance policy covering a
Mortgage Loan allocable to principal of the applicable Mortgage Loan and
Transfer Deposit Amounts (as defined in the Sale and Servicing Agreement), but
exclude foreclosure profits. The terms of the related Credit Line Agreement
shall determine the portion of each payment on a Mortgage Loan that
constitutes principal or interest. Net liquidation proceeds are liquidation
proceeds net of out-of-pocket expenses (exclusive of overhead) that are
incurred by the Master Servicer in connection with the liquidation of any
Mortgage Loan. Foreclosure profits on a liquidated Mortgage Loan are the
excess of its net liquidation proceeds over the Asset Balance of the Mortgage
Loan before the final recovery on it (plus accrued and unpaid interest thereon
at the applicable Loan Rate from the date interest was last paid to the end of
the Collection Period during which the Mortgage Loan became a liquidated
Mortgage Loan).
"Proceeding" means any suit in equity, action at law, or other judicial
or administrative proceeding.
"Purchase Agreement" means the Purchase Agreement of even date with this
Indenture between Countrywide Home Loans, Inc., as seller, and the Depositor,
as purchaser, with respect to the Mortgage Loans.
"Rapid Amortization Commencement Date" means the earlier of (i) the
Payment Date in the month specified in the Adoption Annex and (ii) the Payment
Date after the Collection Period in which a Rapid Amortization Event occurs.
"Rapid Amortization Event" has the meaning given to it in Section 5.16.
"Rapid Amortization Period" means the period beginning on the Rapid
Amortization Commencement Date until the termination of the Indenture.
"Rating Agency" means any statistical credit rating agency, or its
successor, that rated the Notes at the request of the Depositor at the time of
the initial issuance of the Notes. If a Rating Agency is no longer in
existence, "Rating Agency" will means a statistical credit rating agency, or
other comparable person, designated by the Depositor and the Credit Enhancer.
The Indenture Trustee will be notified of any such designation. References to
the highest short-term unsecured rating category of a Rating Agency mean A-1+
or better in the case of Standard & Poor's and P-1 or better in the case of
Moody's and in the case of any
Xxx-1-15
other Rating Agency mean the ratings it deems equivalent to these. References
to the highest long-term rating category of a Rating Agency mean "AAA" in the
case of Standard & Poor's and "Aaa" in the case of Moody's and in the case of
any other Rating Agency, the rating it deems equivalent to these.
"Rating Agency Condition" for any action means that each Rating Agency
has been given 10 days (or any shorter period acceptable to each Rating
Agency) notice of the action and that each of the Rating Agencies has notified
the Issuer in writing that the action will not result in a reduction or
withdrawal of its then current rating of the Notes and the Credit Enhancer
consented to the action.
"Record Date" for a Payment Date or redemption date means the close of
business on the day before the Payment Date or redemption date or, if
definitive Notes have been issued, the last day of the preceding month.
"Reference Bank Rate" for an Interest Period means the arithmetic mean
(rounded upwards to the nearest one sixteenth of a percent) of the offered
rates for United States dollar deposits offered by three major banks engaged
in transactions in the London interbank market, selected by the Depositor
after consultation with the Indenture Trustee, as of 11:00 A.M., London time,
on the second LIBOR Business Day before the first day of the Interest Period,
to prime banks in the London interbank market for a period of one month in
amounts approximately equal to the outstanding Note Principal Balance if at
least two of the banks provide an offered rate. If fewer than two offered
rates are quoted, 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
Depositor after consultation with the Indenture Trustee, as of 11:00 A.M., New
York City time, on the second LIBOR Business Day before the first day of the
Interest Period, for loans in U.S. dollars to leading European banks for a
period of one month in amounts approximately equal to the outstanding Note
Principal Balance. If no such quotations can be obtained, the Reference Bank
Rate shall be LIBOR for the preceding Interest Period.
"Registered Holder" means the person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Required Amount" for any Payment Date means the amount by which the sum
of the amounts distributable pursuant to Sections 8.03(a)(i) through
8.03(a)(iv) on the Payment Date exceed Investor Interest Collections for the
Payment Date.
"Responsible Officer" any officer of the Indenture Trustee with direct
responsibility for the administration of this Indenture and also, with respect
to a particular matter, any other officer to whom a matter is referred because
of the officer's knowledge of and familiarity with the particular subject.
Xxx-1-16
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
specified in the Adoption Agreement.
"Scheduled Maturity Date" means the date specified in the Adoption
Agreement.
"Scheduled Principal Collections Payment Amount" for any Payment Date
during the Managed Amortization Period means an amount equal to the lesser of
(i) the Maximum Principal Payment and (ii) the Alternative Principal Payment.
For any Payment Date in the Rapid Amortization Period the Scheduled Principal
Collections Payment Amount means the Maximum Principal Payment.
"Securities Act" means the Securities Act of 1933.
"Servicing Certificate" means the certificate delivered each month
pursuant to the Sale and Servicing Agreement to the Indenture Trustee
completed and executed by any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished
to the Indenture Trustee (with a copy to the Credit Enhancer) by the Master
Servicer on the Closing Date, as it may be amended from time to time.
"Servicing Fee" for any Payment Date means the product of (i) the
Servicing Fee Rate specified in the Adoption Annex divided by 12 and (ii) the
Loan Balance as of the first day of the Collection Period preceding the
Payment Date (or as of the close of business on the Cut-off Date for the first
Payment Date).
"Sponsor" means Countrywide Home Loans, Inc., a New York corporation and
any successor.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc., or its successor in interest.
"State" means any one of the 00 xxxxxx xx xxx Xxxxxx Xxxxxx or the
District of Columbia.
"Subordinated Transferor Collections" means interest collections from the
Mortgage Loans and principal collections allocable to the Transferor Interest
(but not in excess of the Available Transferor Subordinated Amount).
"Telerate Screen Page 3750" means the display designated as page 3750 on
the Telerate Information Services, Inc. (or any page replacing that page on
that service for the purpose of displaying London inter-bank offered rates of
major banks).
"Transaction Documents" means this Indenture, the Notes, the Sale and
Servicing Agreement, the Purchase Agreement, the Custodial Agreement, the
Administration Agreement, the Trust Agreement, the Policy, and the Insurance
Agreement.
"Transfer Document" means a document substantially in the form of Exhibit
E to the Sale and Servicing Agreement.
Xxx-1-17
"Transferor" means the Holders of the Transferor Certificates.
"Transferor Certificates" means the certificates executed and
authenticated by the Owner Trustee under the Trust Agreement for the subtrust
created by the Trust Supplement under which the Notes are issued.
"Transferor Interest" for any Payment Date means the aggregate undivided
beneficial interest represented by the Transferor Certificate in the subtrust
created by the Trust Supplement under which the Notes are issued, calculated
as the excess of (i) the Loan Balance as of the close of business on the day
before the date of determination over (ii) the Note Principal Balance on the
date of determination (after giving effect to the distribution of all amounts
actually distributed on the Notes on the date of determination).
"Transferor Principal Balance" as of any date of determination means the
amount equal to (i) the Loan Balance as of the close of business on the day
before the date of determination minus (ii) the Note Principal Balance reduced
by the aggregate of amounts actually distributed as principal on the Notes
through the close of business on the date of determination.
"Transferor Principal Collections" for any Payment Date means Principal
Collections received during the related Collection Period minus the amount of
Principal Collections required to be distributed to Holders of the Notes
pursuant to Section 8.03(b).
"Trust" means the trust specified in the Adoption Annex.
"Trust Agreement" means the Master Trust Agreement between Countrywide
Home Loans, Inc., the Depositor and the Owner Trustee together with the Trust
Supplement between them establishing the subtrust for the Collateral.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date of this Indenture, unless otherwise specifically
provided.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the relevant jurisdiction, unless the context otherwise requires.
"Unpaid Investor Interest Shortfall" for any Payment Date means the
aggregate amount of Note Interest that was accrued for a prior Payment Date
and has not been distributed to Holders of the Notes.
"Weighted Average Net Loan Rate" for any Collection Period means the
average of the daily Net Loan Rate (specified in the Adoption Annex) for each
Mortgage Loan (assuming that each Mortgage Loan is fully indexed) for each day
during the related Billing Cycle, weighted on the basis of the daily average
of the Asset Balances outstanding for each day in the Billing Cycle for each
Mortgage Loan as determined by the Master Servicer in accordance with the
Master Servicer's normal servicing procedures.
Xxx-0-00
XXXXX 0
XXXXXXXX XXXXX
The series referred to in the Granting Clause is the Series 2002-B
Subtrust.
The Indenture Trustee shall issue under Section 2.02(b):
Notes in an aggregate principal amount of $1,717,300,000
The "Administration Agreement" is the Administration Agreement of even
date with this Indenture among the Issuer, the Master Servicer, and the
Indenture Trustee.
The "Closing Date" is March 4, 2002.
The last day of the first "Collection Period" is the last day of March
2002.
The "Corporate Trust Office" of the Indenture Trustee at the date of
execution of this Indenture is located at 0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000,
Xxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust Services Division.
The "Credit Enhancer" is Financial Guaranty Insurance Company and any
successor or replacement for the Credit Enhancer.
"Custodial Agreement" is the Custodial Agreement of even date with this
Indenture between the Indenture Trustee, the Issuer, the Depositor, and
Treasury Bank, National Association, as custodian.
The "Cut-off Date" is February 22, 2002.
The "Indenture Trustee" is Bank One National Association, a national
banking association.
The "Insurance Agreement" is the insurance and indemnity agreement of
even date with this Indenture among the Sponsor, the Indenture Trustee, and
the Credit Enhancer.
The "Investor Fixed Allocation Percentage" for any Payment Date will be
calculated as follows: (i) on any date on which the Transferor Principal
Balance is less than or equal to 0%, 100%; (ii) on any date on which the
Transferor Principal Balance is greater than 0%, but less than the Required
Transferor Subordinated Amount, 100% minus the percentage obtained by dividing
the amount of the Transferor Principal Balance at the beginning of the
relevant Collection Period by the Loan Balance at the beginning of the
Collection Period; and (iii) on any date on which the Transferor Principal
Balance equals or exceeds the Required Transferor Subordinated Amount, 99.25%.
The "Minimum Transferor Interest" is an amount equal to the lesser of (a)
1.50%of the Loan Balance at the beginning of the immediately preceding
Collection Period and (b) 0.75% of the Loan Balance as of the Cut-off Date.
The "Mortgage Loan Schedule" shall specify for each Mortgage Loan its (i)
account number, (ii) Credit Limit, (iii) gross margin, (iv) lifetime rate cap,
(v) Cut-off
Xxx-2-1
Date Asset Balance, (vi) current Loan Rate, (vii) combined loan-to-value
ratio, (viii) code specifying the property type, (ix) code specifying
documentation type, (x) code specifying lien position, and (xi) code
specifying whether the Mortgage Loan is a MOM Loan.
The "Net Loan Rate" for any Mortgage Loan on any day is the Loan Rate
less (i) the Servicing Fee Rate, (ii) the Premium Percentage defined in the
Insurance Agreement, and (iii) commencing with the Payment Date in April 2003,
0.50% per annum.
The "Note Rate" is a per annum rate equal to 1.878750% for the first
Interest Period, and for any subsequent Interest Period, a per annum rate
equal to the least of: (i) the sum of (a) LIBOR as of the second LIBOR
Business Day before the first day of the Interest Period and (b) 0.25%, (ii)
the Maximum Rate for the Notes for the Interest Period, and (iii) 16.00%.
The "Maximum Rate" for any Interest Period is the Weighted Average Net
Loan Rate for the Mortgage Loans for the Collection Period during which the
Interest Period begins (adjusted to an effective rate reflecting accrued
interest calculated on the basis of the actual number of days in the
Collection Period commencing in the month in which the Interest Period
commences and a year assumed to consist of 360 days).
Notwithstanding the definition of LIBOR in Annex 1, "LIBOR" for the first
Interest Period will be determined by interpolating the rate for one month
deposits and the rate for two month deposits appearing on the Telerate Screen
Page 3750 as of 11:00 A.M. on the relevant day.
The "Original Note Principal Balance" of the Notes is $1,717,300,000.
The "Owner Trustee" is Wilmington Trust Company, or any successor owner
trustee under the Trust Agreement.
The "Payment Date" is the fifteenth day of each calendar month, or, if
that day is not a Business Day, the next Business Day commencing in April
2002.
The "Policy" is the note guaranty insurance policy number 02030004 issued
by the Credit Enhancer.
The Payment Date referred to in the definition of "Rapid Amortization
Commencement Date" is the Payment Date in March 2007.
The percentage of the aggregate of the Original Note Principal Balance
that the aggregate of all draws under the Policy would exceed to result in a
"Rapid Amortization Event" under Section 5.16(g) is 1%.
The "Required Transferor Subordinated Amount" has the meaning in the
Insurance Agreement.
The "Sale and Servicing Agreement" is the Sale and Servicing Agreement of
even date with this Indenture among the Sponsor, the Depositor, the Trust, and
the Indenture Trustee.
Xxx-2-2
The "Scheduled Maturity Date" is the Payment Date in April 2028.
The "Servicing Fee Rate" is 0.50% per annum.
The "Trust" is the CWABS Master Trust, a Delaware business trust
established pursuant to the Master Trust Agreement, dated as of August 28,
2000, between Countrywide Home Loans, Inc., the Depositor and Wilmington Trust
Company.
The date in each year by which the Issuer will furnish an Opinion of
Counsel pursuant to Section 3.06(b) is September 30 beginning in 2003.
The first year after which an annual compliance statement pursuant to
Section 3.09 is due is 2003.
The date in each year by which the Indenture Trustee will furnish reports
pursuant to Section 7.04 is May 15 beginning in 2003.
The Payment Date referred to in Section 8.03(b) is the Payment Date in
April 2028.
Addresses for notices under Section 11.04 are:
For the Issuer at:
CWABS Master Trust
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration;
For the Credit Enhancer at:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Research and Risk Management, CWABS, Inc. Series 2002-B
For the Rating Agencies at:
in the case of Standard & Poor's:
Standard & Poor's Ratings Services,
a division of The McGraw Hill Companies, Inc.
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
and in the case of Moody's,
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Xxx-2-3
The series referred to in Section 11.18 is the Series 2002-B
Subtrust.
Xxx-2-4
