EXHIBIT 99.3
EXECUTION COPY
INDENTURE
between
HOUSEHOLD HOME EQUITY LOAN TRUST 2002-4
as Issuer
and
BANK ONE, NATIONAL ASSOCIATION,
as Indenture Trustee
Dated November 14, 2002
HOUSEHOLD HOME EQUITY LOAN TRUST 2002-4
Closed-End Home Equity Loan Asset Backed Notes, Series 2002-4
Table of Contents
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.................................................................................2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act...........................................9
SECTION 1.3 Rules of Construction......................................................................10
ARTICLE II
THE NOTES
SECTION 2.1 Form.......................................................................................11
SECTION 2.2 Execution, Authentication, Delivery and Dating.............................................11
SECTION 2.3 Registration; Registration of Transfer and Exchange........................................12
SECTION 2.4 Mutilated, Destroyed, Lost or Stolen Notes.................................................13
SECTION 2.5 Persons Deemed Owner.......................................................................13
SECTION 2.6 Payment of Principal and Interest; Defaulted Interest......................................14
SECTION 2.7 Cancellation...............................................................................14
SECTION 2.8 [Reserved].................................................................................14
SECTION 2.9 Release of Trust Estate....................................................................15
SECTION 2.10 Book-Entry Notes...........................................................................15
SECTION 2.11 Notices to Clearing Agency.................................................................16
SECTION 2.12 Definitive Notes...........................................................................16
SECTION 2.13 Tax Treatment..............................................................................16
SECTION 2.14 ERISA Representation.......................................................................16
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest..........................................................18
SECTION 3.2 Maintenance of Office or Agency............................................................18
SECTION 3.3 Money for Payments To Be Held in Trust.....................................................18
SECTION 3.4 Existence..................................................................................19
SECTION 3.5 Protection of Trust Estate.................................................................20
SECTION 3.6 Annual Opinions as to the Trust Estate.....................................................20
SECTION 3.7 Performance of Obligations; Servicing of Home Equity Loans.................................21
SECTION 3.8 Negative Covenants.........................................................................22
SECTION 3.9 Annual Statement as to Compliance..........................................................23
SECTION 3.10 Covenants of the Issuer....................................................................24
SECTION 3.11 Master Servicer's Obligations..............................................................24
SECTION 3.12 Restricted Payments........................................................................24
SECTION 3.13 Treatment of Notes as Debt for All Purposes................................................24
SECTION 3.14 Notice of Events of Default................................................................24
SECTION 3.15 Further Instruments and Acts...............................................................24
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SECTION 3.16 Issuer May Consolidate, etc................................................................25
SECTION 3.17 Successor or Transferee....................................................................26
SECTION 3.18 No Other Business..........................................................................27
SECTION 3.19 No Borrowing...............................................................................27
SECTION 3.20 Guarantees, Loans, Advances and Other Liabilities..........................................27
SECTION 3.21 Capital Expenditures.......................................................................27
SECTION 3.22 Representations and Warranties of the Issuer...............................................27
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture....................................................28
SECTION 4.2 Application of Trust Money.................................................................29
SECTION 4.3 Subrogation and Cooperation................................................................29
SECTION 4.4 Repayment of Moneys Held by Paying Agent...................................................30
SECTION 4.5 Insurer's Rights Regarding Actions, Proceedings or Investigations..........................30
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default..........................................................................32
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.........................................33
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee..................34
SECTION 5.4 Remedies; Priorities.......................................................................36
SECTION 5.5 Optional Preservation of the Trust Estate..................................................37
SECTION 5.6 Limitation of Suits........................................................................38
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and Interest......................38
SECTION 5.8 Restoration of Rights and Remedies.........................................................38
SECTION 5.9 Rights and Remedies Cumulative.............................................................39
SECTION 5.10 Delay or Omission Not a Waiver.............................................................39
SECTION 5.11 Control by Noteholders.....................................................................39
SECTION 5.12 Waiver of Past Defaults....................................................................40
SECTION 5.13 Undertaking for Costs......................................................................40
SECTION 5.14 Waiver of Stay or Extension Laws...........................................................40
SECTION 5.15 Action on Notes............................................................................40
SECTION 5.16 Performance and Enforcement of Certain Obligations.........................................41
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee................................................................42
SECTION 6.2 Rights of Indenture Trustee................................................................43
SECTION 6.3 Individual Rights of Indenture Trustee.....................................................45
SECTION 6.4 Indenture Trustee's Disclaimer.............................................................45
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SECTION 6.5 Notice of Defaults.........................................................................45
SECTION 6.6 Reports by Indenture Trustee to Holders....................................................45
SECTION 6.7 Compensation and Indemnity.................................................................46
SECTION 6.8 Replacement of Indenture Trustee...........................................................46
SECTION 6.9 Successor Indenture Trustee by Merger......................................................47
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee..........................47
SECTION 6.11 Eligibility; Disqualification..............................................................49
SECTION 6.12 Preferential Collection of Claims Against Issuer...........................................49
SECTION 6.13 Representations and Warranties.............................................................49
SECTION 6.14 Directions to Indenture Trustee............................................................49
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders.....................51
SECTION 7.2 Preservation of Information; Communications to Noteholders.................................51
SECTION 7.3 Reports by Issuer..........................................................................51
SECTION 7.4 Reports by Indenture Trustee...............................................................52
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money........................................................................53
SECTION 8.2 Accounts; Distributions....................................................................53
SECTION 8.3 [Reserved].................................................................................54
SECTION 8.4 Master Servicer's Monthly Statements.......................................................54
SECTION 8.5 [Reserved].................................................................................54
SECTION 8.6 Opinion of Counsel.........................................................................54
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of Noteholders.....................................55
SECTION 9.2 Supplemental Indentures with Consent of Noteholders........................................56
SECTION 9.3 Execution of Supplemental Indentures.......................................................57
SECTION 9.4 Effect of Supplemental Indenture...........................................................57
SECTION 9.5 Conformity with Trust Indenture Act........................................................58
SECTION 9.6 Reference in Notes to Supplemental Indentures..............................................58
ARTICLE X
TERMINATION OF TRUST
SECTION 10.1 Early Termination..........................................................................59
SECTION 10.2 Mandatory Redemption.......................................................................59
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc..................................................62
SECTION 11.2 Form of Documents Delivered to Indenture Trustee...........................................63
SECTION 11.3 Acts of Noteholders........................................................................64
SECTION 11.4 Notices....................................................................................65
SECTION 11.5 Notices to Noteholders; Waiver.............................................................65
SECTION 11.6 Rights of the Insurer to Exercise Rights of Noteholders....................................66
SECTION 11.7 Conflict with Trust Indenture Act..........................................................66
SECTION 11.8 Effect of Headings and Table of Contents...................................................67
SECTION 11.9 Successors and Assigns.....................................................................67
SECTION 11.10 Separability...............................................................................67
SECTION 11.11 Benefits of Indenture......................................................................67
SECTION 11.12 Legal Holidays.............................................................................67
SECTION 11.13 Governing Law..............................................................................67
SECTION 11.14 Counterparts...............................................................................67
SECTION 11.15 Recording of Indenture.....................................................................67
SECTION 11.16 Trust Obligation...........................................................................68
SECTION 11.17 No Petition................................................................................68
SECTION 11.18 Inspection.................................................................................68
SECTION 11.19 Inconsistencies with the Sale and Servicing Agreement......................................68
SECTION 11.20 Third-Party Beneficiaries..................................................................69
SECTION 11.21 Limited Recourse...........................................................................69
SECTION 11.22 Limitation on Voting of Preferred Stock....................................................69
SECTION 11.23 Limitation of Liability....................................................................70
SECTION 11.24 Consent of Insurer.........................................................................70
SECTION 11.25 Entire Agreement...........................................................................70
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EXHIBITS
SCHEDULE A - Perfection Representations, Warranties and Covenants
SCHEDULE B - Home Equity Loan Schedule
EXHIBIT A - Form of Notes
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INDENTURE dated November 14, 2002 between HOUSEHOLD HOME EQUITY LOAN
TRUST 2002-4, a Delaware statutory trust (the "Issuer"), and Bank One,
National Association, a national banking association, as trustee and not in
its individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the holders of the Issuer's Closed-End Home
Equity Loan Asset-Backed Notes, Series 2002-4 (the "Notes") and the Insurer:
GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants to the
Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of
the Noteholders and the Insurer, all of the Issuer's right, title and interest
in and to: (i) the Trust Estate; (ii) all right, title and interest of the
Issuer in the Sale and Servicing Agreement, the Transfer Agreement and the
Home Equity Loan Purchase Agreement with respect to the Home Equity Loans
(including the Issuer's right to cause the Depositor or the Master Servicer to
repurchase Home Equity Loans from the Issuer under certain circumstances
described therein); (iii) all present and future claims, demands, causes of
action and choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms
of obligations and receivables, instruments and other property which at any
time constitute all or part of or are included in the proceeds of any of the
foregoing; (iv) the Collection Account and all funds on deposit from time to
time in the Collection Account (exclusive of net earnings thereon); (v) all
other property of the Trust from time to time; and (vi) any and all proceeds
of the foregoing (collectively the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The foregoing Grant shall inure to the benefit of the Insurer in respect
of draws made on the Note Guaranty Insurance Policy and amounts owing from
time to time pursuant to the Insurance and Indemnity Agreement, and such Grant
shall continue in full force and effect for the benefit of the Insurer until
all such amounts owing to it have been repaid in full.
The Indenture Trustee, as Indenture Trustee on behalf of the holders of
the Notes, acknowledges the foregoing Grant, accepts the trusts hereunder in
good faith and without notice of any adverse claim or liens and agrees to
perform its duties required in this Indenture to the best of its ability to
the end that the interests of the holders of the Notes and the Insurer may be
adequately and effectively protected. The Indenture Trustee further agrees and
acknowledges that each item of Collateral that is physically delivered to the
Indenture Trustee will be held by the Indenture Trustee in Illinois.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) For all purposes of this Indenture, except as otherwise expressly
provided herein or unless the context otherwise requires, capitalized terms
not otherwise defined herein shall have the meanings assigned to such terms in
the Sale and Servicing Agreement. All other capitalized terms used herein
shall have the meanings specified herein.
"Accrual Period" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee and the
Insurer on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"Book-Entry Note" means any Note registered in the name of the Depository
or its nominee, ownership of which is reflected on the books of the Depository
or on the books of a Person maintaining an account with such Depository
(directly or as an indirect participant in accordance with the rules of such
Depository).
"Business Day" has the meaning assigned thereto in the Sale and Servicing
Agreement.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit C to the Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
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"Closing Date" means November 14, 2002.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Collection Account" means the Collection Account (as defined in the Sale
and Servicing Agreement) established by the Indenture Trustee.
"Commission" shall mean the Securities and Exchange Commission.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Indenture is located
at Xxx Xxxx Xxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 Attention: Indenture Trust
Administration, or at such other address as the Indenture Trustee may
designate from time to time by notice to the Noteholders, the Issuer and the
Insurer or the principal corporate trust office of any successor Indenture
Trustee at the address designated by such successor Indenture Trustee by
notice to the Noteholders, the Insurer, and the Issuer.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Article II.
"Delaware Trustee" shall mean The Bank of New York (Delaware), not in its
individual capacity but solely as Delaware trustee under the Trust Agreement,
its successors in interest and any successor Delaware trustee under the Trust
Agreement.
"Depositor" shall mean HFC Revolving Corporation, a Delaware corporation,
in its capacity as depositor under the Sale and Servicing Agreement, and its
successor in interest.
"Depository Institution" means any depository institution or trust
company, including the Indenture Trustee, that (i) has short-term debt
obligations and long-term debt obligations at the time of any deposit therein
and throughout the time the interest is maintained that are rated at least
"A-1" by Standard & Poor's and "Baa3" by Moody's, respectively, and that the
deposits in such account are fully insured to the maximum extent provided by
either the BIF or the SAIF and which is any of (a) a federal savings and loan
association duly organized, validly existing and in good standing under the
applicable banking laws of any state, (b) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (c) a national banking association duly organized, validly existing and
in good standing under the federal banking laws or (d) a principal subsidiary
of a bank holding company, and in each case of (a)-(d), approved in writing by
the Insurer. Such Depository Institution shall have (x) a segregated trust
account maintained with the corporate trust department of a federal or state
chartered depository or trust company, having capital and surplus of not less
than $50,000,000, acting in its fiduciary capacity or (y) an account otherwise
acceptable to each Rating Agency and
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the Insurer as evidenced by a letter from the Insurer and from each Rating
Agency to each of the Insurer, the Owner Trustee and the Indenture Trustee,
without reduction or withdrawal of the then current ratings of the Notes,
without regard to the Note Guaranty Insurance Policy.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary, the
Treasurer, or any Assistant Treasurer of such corporation; and with respect to
any partnership, any general partner thereof.
"Final Scheduled Payment Date" means, with respect to any Note, the
Payment Date occurring in October 2032.
"Fitch" shall mean Fitch, Inc., or any successor thereto.
"Grant" means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, and xxxxx x xxxx upon and a
security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral with respect to
any other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights
and options, to bring Proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party is
or may be entitled to do or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Home Equity Loan Schedule" means the listing of the Home Equity Loans
set forth in Schedule B, as supplemented as of any date on which a Defective
Home Equity Loan has been repurchased from the Trust or substituted with an
Eligible Substitute Home Equity Loan pursuant to the Sale and Servicing
Agreement.
"Indenture Trustee" means Bank One, National Association, a national
banking association, as Indenture Trustee under this Indenture, or any
successor Indenture Trustee appointed pursuant to the terms of this Indenture.
"Independent" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor on the
Notes, the Transferor and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Transferor or any
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Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Transferor or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 herein, made by an
Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"Insurance and Indemnity Agreement" shall have the meaning assigned
thereto in the Sale and Servicing Agreement.
"Insurer" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"Issuer" means Household Home Equity Loan Trust 2002-4 until a successor
replaces it in accordance with the terms of the Transaction Documents and,
thereafter, means the successor.
"Issuer Order" and "Issuer Request" mean 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" shall have the meaning assigned thereto in the Sale and Servicing
Agreement.
"LIBOR Business Day" shall have the meaning assigned thereto in the Sale
and Servicing Agreement.
"Lien" shall mean any lien, pledge, encumbrance or security interest on
or in any particular asset or property.
"Majority Noteholder" shall mean the Holder or Holders of Notes
representing at least 51% of the aggregate Note Principal Amount.
"Mandatory Redemption Price" as of any date of determination shall mean
an amount equal to the then current Note Principal Amount, together with any
unpaid Interest Carry Forward Amounts and Supplemental Interest Amounts, plus
one month's interest on such Note Principal Amount and any unpaid Interest
Carry Forward Amounts and Supplemental Interest Amounts at the Note Rate, plus
any Reimbursement Amounts due and owing to the Insurer under the Insurance and
Indemnity Agreement.
"Master Servicer" shall mean Household Finance Corporation, in its
capacity as master servicer under the Sale and Servicing Agreement, or any
Successor Master Servicer appointed in accordance with the terms of the Sale
and Servicing Agreement.
"Moody's" shall mean Xxxxx'x Investors Service, Inc., or any successor
thereto.
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"Note" means any Closed-End Home Equity Loan Asset Backed Notes, Series
2002-4, issued and executed by the Issuer and authenticated by the Indenture
Trustee substantially in the form of Exhibit A hereto.
"Note Depository Agreement" means the agreement dated November 14, 2002,
among the Issuer, the Indenture Trustee and The Depository Trust Company, as
the initial Clearing Agency, relating to the Book-Entry Notes.
"Note Guaranty Insurance Policy" shall have the meaning assigned thereto
in the Sale and Servicing Agreement.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the beneficial owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing
Agency).
"Note Rate" with respect to the Notes shall have the meaning assigned
thereto in the Sale and Servicing Agreement.
"Note Register" and "Note Registrar" have the respective meanings
specified in Article II.
"Noteholder" means a Holder of a Note.
"Obligations" shall mean the Home Equity Loans.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 herein, and
delivered to the Indenture Trustee. Unless otherwise specified, any reference
in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except with regard to tax matters, bankruptcy matters, the Trust
Indenture Act of 1939, security interest matters and as otherwise expressly
provided in this Indenture, be employees of or counsel to the Issuer and who
shall be satisfactory to the Indenture Trustee and the Insurer, and which
opinion or opinions shall be addressed to the Indenture Trustee and the
Insurer, as Indenture Trustee and the Insurer, respectively, and shall comply
with any applicable requirements of Section 11.1 herein and shall be in form
and substance reasonably satisfactory to the Indenture Trustee and the
Insurer.
"Outstanding" means, with respect to any Note and as of the date of
determination, any Note theretofore authenticated and delivered under this
Indenture except:
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(i) Notes theretofore canceled 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 theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
for such notice has been made, satisfactory to the Indenture Trustee);
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes
are held by a bona fide purchaser; and
(iv) Notes for which the Final Scheduled Payment Date has occurred;
provided, however, in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent, or waiver hereunder or under any Transaction
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Depositor, the Transferor or any Affiliate of any of the foregoing Persons
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent, or
waiver, only Notes that the Indenture Trustee knows to be so owned shall be so
disregarded and provided further that for purposes of determining the
Insurer's subrogation rights, a Note shall be deemed Outstanding to the extent
of any payment made by the Insurer. Notes so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with
respect to such Notes and that the pledgee is not the Issuer, any other
obligor upon the Notes, the Transferor or any Affiliate of any of the
foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes
Outstanding at the date of determination.
"Owner Trustee" means The Bank of New York, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest and any successor Owner Trustee under the Trust Agreement.
"Ownership Interest" shall have the meaning assigned thereto in the Sale
and Servicing Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
of this Indenture and is authorized by the Issuer to make payments to and
distributions from the Collection Account, including payment of principal of
or interest on the Notes on behalf of the Issuer.
"Payment Date" shall mean the twentieth day of each month or, if such day
is not a Business Day, then the next Business Day, beginning in December 2002.
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"Perfection Representations" shall mean the representations contained in
Schedule A hereto.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, limited liability company, limited
liability partnership, or government or any agency or political subdivision
thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Article II in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency Condition" means, with respect to certain actions
requiring prior Rating Agency consent, that each Rating Agency shall have been
given 10 days (or such shorter period as is acceptable to each Rating Agency)
prior notice thereof and that each of the Rating Agencies shall have notified
the Transferor, the Master Servicer and the Insurer that such action will not
result in a reduction or withdrawal of the then current rating of the Notes
without regard to the Note Guaranty Insurance Policy.
"Rating Agency" means any of (i) Fitch, (ii) Moody's or (iii) Standard &
Poor's. If no such organization or successor is any longer in existence,
"Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable person designated by the Depositor and the
Insurer, notice of which designation shall have been given to the Indenture
Trustee.
"Record Date" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"Redemption Date" means, in the case of a redemption of the Notes
pursuant to Section 10.1 or 10.2, the Payment Date specified by the Indenture
Trustee pursuant to Section 10.1 or 10.2, as applicable.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Responsible Officer" shall have the meaning assigned thereto in the Sale
and Servicing Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated November 14, 2002, among the Issuer, the Depositor, the Master Servicer
and the Indenture Trustee.
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"Securities Act" means the Securities Act of 1933, as amended.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc., or any successor thereto.
"State" means any one of the 00 Xxxxxx xx xxx Xxxxxx Xxxxxx xx Xxxxxxx or
the District of Columbia.
"Successor Master Servicer" has the meaning specified in Section 3.7(e)
hereof.
"Transaction Documents" has the meaning set forth in the Sale and
Servicing Agreement.
"Transferor" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"Trust" means the Issuer.
"Trust Agreement" shall mean the amended and restated trust agreement
dated November 14, 2002 among the Depositor, Household Finance Corporation,
the Owner Trustee, the Co-Trustee and the Delaware Trustee, as the same may be
amended, supplemented or otherwise modified from time to time.
"Trust Estate" shall mean the assets subject to the Sale and Servicing
Agreement, the Home Equity Loan Purchase Agreement, the Transfer Agreement,
the Trust Agreement and this Indenture, assigned to the Indenture Trustee,
which assets consist of: (i) each Home Equity Loan and each Eligible
Substitute Home Equity Loan and its related Mortgage Note and other Mortgage
File documents for each Home Equity Loan and each Eligible Substitute Home
Equity Loan, including such Home Equity Loan's, and each such Eligible
Substitute Home Equity Loan's, Principal Balance and all collections in
respect thereof received after the Cut-Off Date or Subsequent Cut-Off Date, as
applicable; (ii) such assets as shall from time to time be identified as
deposited in the Collection Account (exclusive of net earnings thereon), (iii)
the Mortgage Notes and other Mortgage File documents for the Home Equity
Loans, (iv) any property that secured a Home Equity Loan and that has become
REO, (v) the interest of the Depositor in certain hazard insurance policies
maintained by the Mortgagors or the Master Servicer in respect of the Home
Equity Loans, (vi) the Collection Account, (vii) the Note Guaranty Insurance
Policy, (viii) the proceeds of each of the foregoing and (ix) one share of
Preferred Stock of the Depositor.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from
time to time.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made
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a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.3 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural
include the singular; and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified or supplemented (as provided in such agreements) and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
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ARTICLE II
THE NOTES
SECTION 2.1 Form. The Notes shall be designated as the "Household Home
Equity Loan Trust 2002-4, Closed-End Home Equity Loan Asset Backed Notes,
Series 2002-4." Each Note shall be in substantially the form set forth in
Exhibit A with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistent herewith, be determined by the
officers executing such Notes, as evidenced by their execution thereof. Any
portion of the text of any Note may be set forth on the reverse thereof, with
an appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
The terms of the Notes are set forth in Exhibit A hereto. The terms of
the Notes are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication, Delivery and Dating. The Notes
shall be executed on behalf of the Issuer by an Authorized Officer of the
Owner Trustee. The signature of any such Authorized Officer on the Notes may
be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Owner Trustee shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon receipt of an Issuer Order, authenticate
and deliver the Notes for original issue in the principal amount equal to
$846,640,000. The aggregate principal amount of the Notes outstanding at any
time may not exceed such amount.
The Notes that are authenticated and delivered by the Indenture Trustee
to or upon the order of the Issuer on the Closing Date shall be dated November
14, 2002. All other Notes that are authenticated after the Closing Date for
any other purpose under the Indenture shall be dated the date of their
authentication. The Notes shall be issuable as registered Notes in the minimum
denomination of $25,000 and multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by
the Indenture Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
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SECTION 2.3 Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, 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 the
purpose of registering Notes and transfers of Notes as herein provided. Upon
any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties
of the Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee and the Insurer
prompt written notice of the appointment of such Note Registrar and of the
location, and any change in the location, of the Note Register, and the
Indenture Trustee and the Insurer shall have the right to inspect the Note
Register at all reasonable times and to obtain copies thereof, and the
Indenture Trustee and the Insurer shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.2 hereof, the
Owner Trustee on behalf of 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 transferee or transferees, one or more new Notes
in any authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
No service charge shall be made to a Holder 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
in connection with any registration of transfer or
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exchange of Notes, other than exchanges pursuant to Section 2.4 or Section 9.6
hereof not involving any transfer.
SECTION 2.4 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the Indenture Trustee and
the Insurer such security or indemnity as may be reasonably required by it to
hold the Issuer, the Insurer and the Indenture Trustee harmless, then, in the
absence of notice to the Issuer, the Note Registrar, the Insurer or the
Indenture Trustee that such Note has been acquired by a bona fide purchaser,
and an Authorized Officer of the Owner Trustee shall execute, and upon its
request the Indenture Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note; provided, however, that if any such destroyed, lost or
stolen Note, but not a mutilated Note, shall have become or within seven days
shall be due and payable, or shall have been called for redemption, instead of
issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen
Note when so due or payable or upon the Redemption Date without surrender
thereof. If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the
Issuer and the Indenture Trustee shall be entitled to recover such replacement
Note (or such payment) from the Person to whom it was delivered or any Person
taking such replacement Note from such Person to whom such replacement Note
was delivered or any assignee of such Person, except a bona fide purchaser,
and shall be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost or expense incurred by the
Issuer, the Insurer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 2.4, the
Issuer may require the payment by the Holder of such Note of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 2.4 in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 2.4 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.5 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Insurer, the Issuer, the Indenture
Trustee and any agent of the Insurer, the Issuer or the Indenture Trustee may
treat the Person in whose name any Note is registered (as of the day of
determination) as the owner of such Note for the purpose of receiving payments
of principal of and interest on, if any, such Note and for all other purposes
whatsoever, whether or
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not such Note be overdue, and none of the Insurer, the Issuer, the Indenture
Trustee or any agent of the Insurer, the Issuer or the Indenture Trustee shall
be affected by notice to the contrary.
SECTION 2.6 Payment of Principal and Interest; Defaulted Interest.
(a) Each Note shall accrue interest at the Note Rate and such interest
shall be payable on each Payment Date as specified in Exhibit A hereto,
subject to Section 3.1 hereof. Any installment of interest or principal, if
any, payable on any Note that is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered on the Record
Date in the manner set forth in Section 5.01(c) of the Sale and Servicing
Agreement.
(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the forms of the Notes set forth in Exhibit A
hereto. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable, if not previously paid, on the earliest of
(i) the Final Scheduled Payment Date, (ii) the Redemption Date or (iii) the
date on which an Event of Default shall have occurred and be continuing, if
the Indenture Trustee, the Insurer (so long as no Insurer Default has occurred
and is continuing) or the Holders of Notes representing not less than 66-2/3%
of the Outstanding Amount of the Notes (with the consent of the Insurer, which
consent shall not be unreasonably withheld) have declared the Notes to be
immediately due and payable in the manner provided in Section 5.2 hereof. All
principal payments on the Notes shall be in the manner set forth in the Sale
and Servicing Agreement. The Indenture Trustee shall notify the Person in
whose name a Note is registered at the close of business on the Record Date
preceding the Payment Date on which the Issuer expects that the final
installment of principal of and interest on such Note will be paid. Such
notice shall be mailed or transmitted by facsimile prior to such final Payment
Date and shall specify that such final installment will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of such installment. Notices
in connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 8.01 of the Sale and Servicing Agreement.
SECTION 2.7 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 canceled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated
and delivered hereunder which the Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange
for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it; provided, that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Indenture Trustee.
SECTION 2.8 [Reserved].
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SECTION 2.9 Release of Trust Estate.
(a) Except as otherwise provided in subsections (b) and (c) of this
Section 2.9 and Section 11.1 hereof and the terms of the Transaction
Documents, the Indenture Trustee shall release property from the lien of this
Indenture only upon consent of the Insurer and 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 such Independent Certificates to the effect that
the TIA does not require any such Independent Certificates.
(b) The Master Servicer, on behalf of the Issuer and with the consent of
the Insurer, shall be entitled to obtain a release from the lien of this
Indenture for any Home Equity Loan and the related Mortgaged Property at any
time in accordance with the provisions of Section 3.08 of the Sale and
Servicing Agreement.
(c) The Indenture Trustee shall, if requested by the Master Servicer,
temporarily release to the Master Servicer the Indenture Trustee's Mortgage
File pursuant to the provisions of Section 3.08 of the Sale and Servicing
Agreement upon compliance by the Master Servicer of the provisions thereof
provided that the Indenture Trustee's Mortgage File shall have been stamped to
signify the Issuer's pledge to the Indenture Trustee under the Indenture.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, will be
issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to The Depository Trust Company, the initial Clearing Agency or
its custodian, by, or on behalf of, the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner thereof will receive
a definitive Note representing such Note Owner's interest in such Note, except
as provided in Section 2.12 below. Unless and until definitive, fully
registered Notes (the "Definitive Notes") have been issued to such Note Owners
pursuant to Section 2.12 below:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the
giving of instructions or directions hereunder) as the sole holder of the
Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant to Section 2.12
below, the initial Clearing Agency will make book-entry transfers among
15
the Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Notes to such Clearing Agency
Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes, to the
Clearing Agency, and shall have no obligation to such Note Owners.
SECTION 2.12 Definitive Notes. If (i) the Clearing Agency or the
Depositor advises the Indenture Trustee in writing that the Clearing Agency is
no longer willing, qualified or able to properly discharge its
responsibilities with respect to the Book-Entry Notes and the Clearing Agency
or the Depositor, the Issuer or the Indenture Trustee is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Indenture
Trustee in writing that it elects to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of Default,
Owners of the Book-Entry Notes representing beneficial interests aggregating
at least 51% of the Outstanding Amount of such Notes advise the Clearing
Agency in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of such Note Owners, then
the Clearing Agency shall notify all Note Owners and the Indenture Trustee of
the occurrence of such event and of the availability of Definitive Notes to
Note Owners requesting the same. Upon surrender to the Indenture Trustee of
the typewritten Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, the Issuer shall execute and
the Indenture Trustee shall authenticate the Definitive Notes in accordance
with the instructions of the Clearing Agency. None of the Issuer, the Note
Registrar or the Indenture Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Notes, the
Indenture Trustee shall recognize the Holders of the Definitive Notes as
Noteholders.
SECTION 2.13 Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for all tax purposes,
the Notes will qualify as indebtedness secured by the Trust Estate. The
Issuer, by entering into this Indenture, and each Noteholder, by its
acceptance of a Note (and each Note Owner by its acceptance of an interest in
the applicable Book-Entry Note), agree to treat the Notes for all purposes as
indebtedness of the Issuer.
SECTION 2.14 ERISA Representation. Each Person that acquires a Note shall
be required to represent, or in the case of a Book-Entry Note, will be deemed
to represent by its acceptance of the Note, that (i) it is not, and is not
acquiring the Note on behalf of or with "plan
16
assets" (as determined under U.S. Department of Labor Regulations found at 29
C.F.R. ss.2510.3-101 or otherwise) of an employee benefit plan or other plan
that is subject to Title I of ERISA or Section 4975 of the Code, or (ii) its
acquisition and holding of the Note are eligible for relief under Prohibited
Transaction Class Exemption ("PTCE") 00-00, XXXX 00-0, XXXX 91-38, XXXX 00-00,
XXXX 96-23 or a similar exemption.
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ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly and
punctually pay (or will cause to be duly and punctually paid) the principal of
and interest, if any, on the Notes in accordance with the terms of the Notes
and this Indenture. Without limiting the foregoing, the Indenture Trustee
shall, pursuant to Section 5.01 of the Sale and Servicing Agreement, pay all
amounts on deposit in the Collection Account on each Payment Date deposited
therein pursuant to the Sale and Servicing Agreement, and held therein for
distribution to the Noteholders for the benefit of such Noteholders and the
Insurer. Amounts properly withheld under the Code by any Person from a payment
to any Noteholder of interest and/or principal shall be considered as having
been paid by the Issuer to such Noteholder for all purposes of this Indenture.
The Notes shall be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Collateral, as
provided in this Indenture. The Issuer shall not otherwise be liable for
payments on the Notes. If any other provision of this Indenture shall be
deemed to conflict with the provisions of this Section 3.1, the provisions of
this Section 3.1 shall control.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will maintain in
Illinois an office or agency where Notes may be surrendered for registration
of transfer or exchange, and where notices and demands to or upon the Issuer
in respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes and to serve as Paying Agent with respect to the Notes. If
at any time the Issuer shall fail to maintain any such office or agency or
shall fail to furnish the Indenture Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Issuer hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
SECTION 3.3 Money for Payments to Be Held in Trust. As provided in
Section 8.2(a) and (b), all payments of amounts due and payable with respect
to any Notes that are to be remitted from amounts withdrawn from the
Collection Account pursuant to Section 8.2(c) shall be made on behalf of the
Issuer by the Indenture Trustee or by the Paying Agent, and no amounts so
withdrawn from the Collection Account for payments on the Notes shall be paid
over to the Issuer.
Any Paying Agent shall be appointed by Issuer Order with written notice
thereof to the Indenture Trustee. Any Paying Agent appointed by the Issuer
shall be a Person who would be eligible to be Indenture Trustee hereunder as
provided in Section 6.11 hereof. The Issuer shall not appoint any Paying Agent
(other than the Indenture Trustee) which is not, at the time of such
appointment, a Depository Institution.
The Issuer will cause each Paying Agent to execute and deliver to the
Indenture Trustee an instrument in which such Paying Agent shall agree with
the Indenture Trustee (and if the
18
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the
provisions of this Section 3.3, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Indenture Trustee and the Insurer notice of any
default by the Issuer (or any other obligor upon the Notes) of which it
has actual knowledge in the making of any payment required to be made
with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; provided, however, that
with respect to withholding and reporting requirements applicable to
original issue discount (if any) on the Notes, the Issuer shall have
first provided the calculations pertaining thereto to the Indenture
Trustee.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order
direct any Paying Agent to pay to the Indenture Trustee all sums held in trust
by such Paying Agent, such sums to be held by the Indenture Trustee upon the
same terms as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Any termination and release of a Trust Estate shall be done in accordance
with the provisions of Section 8.01 of the Sale and Servicing Agreement.
SECTION 3.4 Existence.
(a) Subject to Section 3.4(b) below, the Issuer will keep in full effect
its existence, rights and franchises as a statutory trust under the laws of
the State of Delaware (unless it becomes, or any successor Issuer hereunder is
or becomes, organized under the laws of any other State or of the United
States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction)
and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be
19
necessary to protect the validity and enforceability of this Indenture, the
Notes and the Trust Estate.
(b) Any successor to the Owner Trustee appointed pursuant to Section 10.2
of the Trust Agreement shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the Owner
Trustee, the Person succeeding to the Owner Trustee under the Trust Agreement
may exercise every right and power of the Owner Trustee under this Indenture
with the same effect as if such Person had been named as the Owner Trustee
herein.
SECTION 3.5 Protection of Trust Estate. The Issuer will from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(i) provide further assurance with respect to a Grant of all or any
portion of the related Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to the Trust Estate; or
(v) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee, the Insurer and the Noteholders in such Trust
Estate against the claims of all persons and parties.
SECTION 3.6 Annual Opinions as to the Trust Estate.
On or before March 31 in each calendar year, beginning in 2003, the
Issuer shall furnish to the Indenture Trustee and the Insurer an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is necessary to maintain the lien
and security interest created by this Indenture and reciting the details of
such action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be
20
required to maintain the lien and security interest of this Indenture until
March 31 of the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Home Equity Loans.
(a) The Issuer will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance of
other Persons to assist it in performing its duties under this Indenture, and
any performance of such duties by a Person identified to the Indenture Trustee
and the Insurer in an Officer's Certificate of the Issuer shall be deemed to
be action taken by the Issuer.
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Transaction Documents and in
the instruments and agreements included in the Trust Estate, including but not
limited to (i) filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture,
the Home Equity Loan Purchase Agreement and the Sale and Servicing Agreement
and (ii) recording or causing to be recorded all Mortgages, Assignments of
Mortgage, all intervening Assignments of Mortgage and all assumption and
modification agreements required to be recorded by the terms of the Sale and
Servicing Agreement and the Home Equity Loan Purchase Agreement, in accordance
with and within the time periods provided for in this Indenture and/or the
Sale and Servicing Agreement, as applicable. Except as otherwise expressly
provided therein, the Issuer shall not waive, amend, modify, supplement or
terminate any Transaction Document or any provision thereof without the
consent of the Indenture Trustee, the Insurer and the Majority Noteholder or
such other percentage of Noteholders as is set forth in the applicable
Transaction Document.
(d) Subject to the terms of the Sale and Servicing Agreement, if the
Issuer shall have knowledge of the occurrence of an Master Servicer
Termination Event under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee, the Depositor, the Insurer, the Master
Servicer and the Rating Agencies thereof, and shall specify in such notice the
action, if any, the Master Servicer is taking with respect of such default. If
such a Master Servicer Termination Event shall arise from the failure of the
Master Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement with respect to the Home Equity Loans, the Issuer shall
take all reasonable steps available to it to remedy or cause to be remedied
such failure.
(e) Subject to the terms of the Sale and Servicing Agreement, as promptly
as possible after the giving of notice of termination to the Master Servicer
of the Master Servicer's rights and powers pursuant to Section 7.01 of the
Sale and Servicing Agreement, a successor master
21
servicer (the "Successor Master Servicer") shall be appointed pursuant to
Section 7.02 of the Sale and Servicing Agreement. If the Indenture Trustee
shall succeed to the Master Servicer's duties as master servicer of the Home
Equity Loans as provided herein, it shall do so in its individual capacity and
not in its capacity as Indenture Trustee and, accordingly, the provisions of
Article VI hereof shall be inapplicable to the Indenture Trustee in its duties
as successor Master Servicer and the servicing of the Home Equity Loans. In
case the Indenture Trustee shall become successor Master Servicer under the
Sale and Servicing Agreement, the Indenture Trustee shall be entitled to
appoint as Successor Master Servicer any one of its Affiliates acceptable to
the Insurer, provided that it shall be fully liable for the actions and
omissions of such Affiliate in such capacity as Successor Master Servicer.
(f) Without derogating from the absolute nature of the assignment granted
to the Indenture Trustee under this Indenture or the rights of the Indenture
Trustee hereunder, the Issuer agrees (i) that it will not, without the prior
written consent of the Indenture Trustee and the Insurer (which consent shall
not be unreasonably withheld), amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of the Trust Estate (except to the extent
otherwise provided in the Sale and Servicing Agreement or the other
Transaction Documents), or waive timely performance or observance by the
Master Servicer or the Depositor under the Sale and Servicing Agreement; and
(ii) that any such amendment not otherwise provided for in the Sale and
Servicing Agreement or any other Transaction Document shall not (A) reduce in
any manner the amount of, or delay the timing of, collections of payments on
home equity loans, (B) reduce in any manner the amount of, or delay the timing
of, payments that are required to be made on a Note without the consent of the
affected Noteholder, (C) impair the right of any Noteholder to institute suit
for the enforcement of the provisions of the Agreement, or (D) reduce the
aforesaid percentage of the Notes that is required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes. If
any such amendment, modification, supplement or waiver shall be so consented
to by the Indenture Trustee and the Insurer or the Majority Noteholder (or
such other percentage of Noteholders as required by the applicable Transaction
Document) if an Insurer Default has occurred and is continuing, the Issuer
agrees, promptly following a request by the Indenture Trustee or the Insurer
to do so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as the Indenture Trustee
or the Insurer may deem necessary or appropriate in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding, the
Issuer shall not, unless the Insurer otherwise consents in writing:
(i) except as expressly permitted by this Indenture or the Sale and
Servicing Agreement, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of the Issuer, including those included in
the Trust Estate, unless directed to do so by the Indenture Trustee and
consented to by the Insurer;
(ii) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against
any present or former Noteholder
22
by reason of the payment of the taxes levied or assessed upon any part of
the related Trust Estate;
(iii) engage in any business or activity other than as permitted by
the Trust Agreement or other than in connection with, or relating to, the
issuance of Notes pursuant to this Indenture and the Ownership Interest
pursuant to the Trust Agreement, or amend the Trust Agreement as in
effect on the Closing Date other than in accordance with Section 11.1
thereof;
(iv) issue debt obligations under any other indenture;
(v) incur or assume any indebtedness or guaranty any indebtedness of
any Person, except for such indebtedness as may be incurred by the Issuer
in connection with the issuance of the Notes pursuant to this Indenture
or as otherwise may be permitted by the Transaction Documents;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect to
the Notes under this Indenture except as may be expressly permitted
hereby, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture) to
be created on or extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds
thereof (other than tax liens, mechanics' liens and other liens that
arise by operation of law, in each case on any of the Mortgaged
Properties and arising solely as a result of an action or omission of the
related Mortgagor) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Trust Estate;
(viii) [reserved]; or
(ix) take any other action or fail to take any action which may
cause the Issuer to be treated as (a) an association pursuant to Section
7701 of the Code and the corresponding regulations, (b) a publicly traded
partnership taxable as a corporation pursuant to Section 7704 of the Code
and the corresponding regulations or (c) a taxable mortgage pool pursuant
to Section 7701(i) of the Code and the corresponding regulations.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will deliver to
the Indenture Trustee and the Insurer, within 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year 2002), an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
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(i) a review of the activities of the Issuer during such year and of
its performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in its compliance with any such condition or covenant, specifying
each such default known to such Authorized Officer and the nature and
status thereof.
SECTION 3.10 Covenants of the Issuer.
All covenants of the Issuer in this Indenture are covenants of the Issuer
and are not covenants of the Owner Trustee. The Owner Trustee is, and any
successor Owner Trustee under the Trust Agreement will be, entering into this
Indenture solely as Owner Trustee under the Trust Agreement and not in its
respective individual capacity, and in no case whatsoever shall the Owner
Trustee or any such successor Owner Trustee be personally liable on, or for
any loss in respect of, any of the statements, representations, warranties or
obligations of the Issuer hereunder, as to all of which the parties hereto
agree to look solely to the property of the Issuer.
SECTION 3.11 Master Servicer's Obligations. The Issuer shall cause the
Master Servicer to comply with its obligations under the terms of the Sale and
Servicing Agreement.
SECTION 3.12 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee, the Delaware Trustee or any owner of a
beneficial interest in the Issuer or otherwise with respect to any ownership
or equity interest or security in or of the Issuer or to the Master Servicer,
(ii) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the Issuer
may make, or cause to be made (x) payments or distributions to the Master
Servicer, the Indenture Trustee, the Owner Trustee, the Delaware Trustee, the
Ownership Interest and the Noteholders as contemplated by, and to the extent
funds are available for such purpose under, the Sale and Servicing Agreement
or the Trust Agreement. The Issuer will not, directly or indirectly, make or
cause to be made payments to or distributions from the Collection Account
except in accordance with this Indenture and the Transaction Documents.
SECTION 3.13 Treatment of Notes as Debt for All Purposes.
The Issuer shall treat the Notes as indebtedness for all purposes.
SECTION 3.14 Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Insurer and the Rating Agencies prompt written notice
of each Event of Default hereunder, each Master Servicer Termination Event
under the Sale and Servicing Agreement, each default on the part of the Master
Servicer of its obligations under the Sale and Servicing Agreement and
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each default on the part of the Depositor of its obligations under the Sale
and Servicing Agreement.
SECTION 3.15 Further Instruments and Acts. Upon request of the Indenture
Trustee or the Insurer, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purpose of this Indenture.
SECTION 3.16 Issuer May Consolidate, etc.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any state or the
District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee, in
form reasonably satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all Notes and to the
Paying Agent, on behalf of the holder of the Ownership Interest and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction, no Event
of Default shall have occurred and be continuing;
(iii) the Insurer shall have consented in writing thereto and each
Rating Agency shall have notified the Issuer and the Insurer that such
transaction will not cause a reduction or withdrawal by a Rating Agency
of its then current rating of the Notes, without regard to the Note
Guaranty Insurance Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee and the Insurer)
to the effect that such transaction will not have any material adverse
tax consequence to the Issuer, any Noteholder or the Insurer;
(v) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee and
the Insurer an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation or merger and such supplemental indenture
comply with this Article III and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in any Trust Estate, to any Person, unless:
25
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer, the conveyance or transfer of which
is hereby restricted, shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America or
any state, (B) expressly assumes, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee and the Insurer, in form
satisfactory to the Indenture Trustee and so long as no Insurer Default
has occurred and is continuing, the Insurer, the due and punctual payment
of the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the part
of the Issuer to be performed or observed, all as provided herein, (C)
expressly agrees by means of such supplemental indenture that all right,
title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes and the Insurer, (D)
unless otherwise provided in such supplemental indenture, expressly
agrees to indemnify, defend and hold harmless the Issuer and the Insurer
against and from any loss, liability or expense arising under or related
to this Indenture and the Notes and (E) expressly agrees by means of such
supplemental indenture that such Person (or if a group of Persons, then
one specified Person) shall make all filings with the Commission (and any
other appropriate Person) required by the Exchange Act in connection with
the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Insurer shall have consented thereto, and each Rating
Agency shall have notified the Issuer and the Insurer that such
transaction will not cause a reduction or withdrawal by a Rating Agency
of its then current rating of the Notes, without regard to the Note
Guaranty Insurance Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee) to the effect
that such transaction will not have any material adverse tax consequence
to the Issuer, the Insurer or any Noteholder;
(v) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee and
the Insurer an Officer's Certificate and an Opinion of Counsel each
stating that such conveyance or transfer and such supplemental indenture
comply with this Article III and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
SECTION 3.17 Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.16(a) above, the Person formed by or surviving such consolidation or
merger (if other than the Issuer)
26
shall succeed to, and be substituted for, and may exercise every right and
power of, the Issuer under this Indenture with the same effect as if such
Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.16(b) above, the Issuer shall be released from
every covenant and agreement (except such obligations that survive such
transfer) of this Indenture to be observed or performed on the part of the
Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee of such conveyance or transfer.
SECTION 3.18 No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Home Equity Loans, owning Preferred Stock of the Depositor and the issuance of
the Notes in the manner contemplated by this Indenture and the Transaction
Documents and all activities incidental thereto.
SECTION 3.19 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.20 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the other Transaction Documents, the Issuer
shall not make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation or capability of so doing or otherwise),
endorse or otherwise become contingently liable, directly or indirectly, in
connection with the obligations, stocks or dividends of, or own, purchase,
repurchase or acquire (or agree contingently to do so) any stock, obligations,
assets or securities of, or any other interest in, or make any capital
contribution to, any other Person.
SECTION 3.21 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.22 Representations and Warranties of the Issuer. The Perfection
Representations shall be a part of this Indenture.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture. Subject to and in
accordance with Section 8.01 of the Sale and Servicing Agreement, this
Indenture shall cease to be of further effect with respect to the Notes
(except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of
Noteholders to receive payments of principal thereof and interest thereon,
(iv) Sections 3.3, 3.4, 3.5, 3.8 and 3.10 hereof, (v) the rights, obligations
and immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 hereof and the obligations of the
Indenture Trustee under Section 4.2 hereof) and (vi) the rights of Noteholders
and the Insurer as beneficiaries hereof with respect to the property so
deposited with the Indenture Trustee payable to all or any of them), and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when all of the following have occurred:
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.4 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer
or discharged from such trust, as provided in Section 3.3 above)
have been delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
a. have become due and payable,
b. will become due and payable within one year prior to the
Final Scheduled Payment Date, or
c. 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 a., b. or c. above, has irrevocably deposited
or caused to be irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the Indenture
Trustee for cancellation when due to the Final Scheduled Payment Date or
Redemption Date (if Notes shall have been called for redemption pursuant to
Section 10.1 hereof) and all amounts due and owing the Insurer and the
Indenture Trustee have been paid, as the case may be;
28
(B) the latest of (a) twelve months after payment in full of all
outstanding obligations under the Notes, (b) the payment in full of all unpaid
fees and expenses of the Indenture Trustee hereunder and the other Transaction
Documents, (c) the payment of all amounts due and owing to the Insurer for
unpaid premiums and unreimbursed Insured Amounts and all other amounts owing
to the Insurer, together with interest thereon as provided under the Insurance
and Indemnity Agreement, (d) the date on which the Issuer has paid or caused
to be paid all other sums payable hereunder by the Issuer, and (e) the date on
which the final resolution of any litigation against the Issuer regarding a
preference claim under the United States Bankruptcy Code (11 U.S.C.) has
occurred; and
(C) the Issuer has delivered to the Indenture Trustee and the Insurer an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA, the
Insurer or the Indenture Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable requirements of
Section 11.1(a) hereof and, subject to Section 11.2 hereof, each stating that
all conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture with respect to the Notes have been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Sections 3.3 and 4.1 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Sale and
Servicing Agreement, to the payment, either directly or through any Paying
Agent to the Holders of the particular Notes and the Insurer for the payment
or redemption of which such moneys have been deposited with the Indenture
Trustee, of all sums due and to become due thereon for principal and interest;
but such moneys need not be segregated from other funds except to the extent
required herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.3 Subrogation and Cooperation.
(a) The Issuer and the Indenture Trustee acknowledge that (i) to the
extent the Insurer makes payments under the Note Guaranty Insurance Policy on
account of principal of or interest on the Home Equity Loans, the Insurer will
be fully subrogated to the rights of the Noteholders to receive such principal
of and interest on the Home Equity Loans of the related Trust Estate, and (ii)
the Insurer shall be paid such principal and interest only from the sources
and in the manner provided herein, in the Sale and Servicing Agreement, and in
the Insurance and Indemnity Agreement for the payment of such principal and
interest.
So long as no Insurer Default has occurred and is continuing, the
Indenture Trustee shall cooperate in all respects with any reasonable request
or direction by the Insurer for action to preserve or enforce the Insurer's
rights or interest under this Indenture or the Insurance and Indemnity
Agreement, consistent with this Indenture and without limiting the rights of
the Noteholders as otherwise set forth in the Indenture, including without
limitation upon the occurrence and continuance of an Insurer Default, a
request to take any one or more of the following actions:
(i) institute Proceedings for the collection of all amounts then
payable on the Notes or under this Indenture in respect to the Notes and
all amounts payable under the
29
Insurance and Indemnity Agreement and to enforce any judgment obtained
and collect from the Issuer monies adjudged due;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
(iii) file or record all assignments that have not previously been
recorded;
(iv) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and
remedies of the Insurer hereunder.
Following the payment in full of the Notes, the Insurer shall continue to
have all rights and privileges provided to it under this Section 4.3 and in
all other provisions of this Indenture, until all amounts owing to the Insurer
have been paid in full.
SECTION 4.4 Repayment of Moneys Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee
under the provisions of this Indenture with respect to such Notes shall, upon
demand of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.3 above and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
SECTION 4.5 Insurer's Rights Regarding Actions, Proceedings or
Investigations. Until the Notes have been paid in full, all amounts owed to
the Insurer have been paid in full, the Insurance and Indemnity Agreement has
terminated and the Note Guaranty Insurance Policy has been returned to the
Insurer for cancellation, unless an Insurer Default has occurred and is
continuing, the following provisions shall apply:
(a) notwithstanding anything contained herein or in the other Transaction
Documents to the contrary, the Insurer shall have the right on behalf of the
Trust to participate in, or to direct the enforcement or defense of, any
action, proceeding or investigation that could adversely affect the Trust to
the extent relating to the rights or obligations of the Insurer hereunder or
under the Note Guaranty Insurance Policy or the Transaction Documents,
including (without limitation) any insolvency or bankruptcy proceeding in
respect of the Trust or any affiliate thereof. All costs and expenses of the
Insurer in connection with such action, proceeding or investigation, including
(without limitation) any judgment or settlement entered into affecting the
Insurer or the Insurer's interests, shall be included in Reimbursement
Amounts;
(b) in connection with any action, proceeding or investigation that could
adversely affect the Trust, the Trust Estate or the rights or obligations of
the Insurer hereunder or under the Note Guaranty Insurance Policy or the
Transaction Documents, including (without limitation) any insolvency or
bankruptcy proceeding in respect of the Trust, the Indenture Trustee hereby
agrees to cooperate with the Noteholders, the Insurer and the Transferor.
30
(c) any judgment or settlement entered against or affecting the Trust, or
the Trust Estate, on behalf of the Noteholders or the Ownership Interest, in
connection with any action, proceeding or investigation shall be paid by the
Indenture Trustee from the Trust Estate pursuant to Section 5.01 of the Sale
and Servicing Agreement;
(d) the Indenture Trustee and the Delaware Trustee on behalf of the Trust
hereby agree to provide to the Insurer prompt written notice of any action,
proceeding or investigation that names the Trust or the Indenture Trustee as a
party or that could adversely affect the Trust and of which the Indenture
Trustee and the Delaware Trustee have actual knowledge, the Trust Estate or
the rights or obligations of the Insurer hereunder or under the Note Guaranty
Insurance Policy or the Transaction Documents including (without limitation)
any insolvency or bankruptcy proceeding in respect of the Trust; and
(e) each Noteholder, by its acceptance of a Note, and the Indenture
Trustee agree that the Insurer shall have such rights as set forth in this
Section, which are in addition to any rights of the Insurer pursuant to the
other provisions of the Transaction Documents, that the rights set forth in
this Section may be exercised by the Insurer, in its sole discretion, without
the need for the consent or approval of any Noteholder or the Indenture
Trustee, notwithstanding any other provision contained herein or in any of the
other Transaction Documents, and that nothing contained in this Section shall
be deemed to be an obligation of the Insurer to exercise any of the rights
provided for herein.
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ARTICLE V
REMEDIES
SECTION 5.1 Events of Default. "Event of Default," wherever used herein,
means with respect to the Notes any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest on any Note when the same
becomes due and payable, and continuance of such default for a period of five
(5) days; or
(b) default in the payment in full of the principal of the Note Principal
Amount on the Final Scheduled Payment Date; or
(c) default in the observance or performance of any covenant or agreement
of the Issuer made in this Indenture (other than a covenant or agreement, a
default in the observance or performance of which is elsewhere in this Section
5.1 specifically dealt with), or any representation or warranty of the Issuer
made in this Indenture, the Sale and Servicing Agreement or in any certificate
or other writing delivered pursuant hereto or in connection herewith proving
to have been incorrect in any material respect as of the time when the same
shall have been made and has a material adverse effect on Noteholders or the
Insurer, and such default shall continue or not be cured, or the circumstance
or condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a period of
60 days after there shall have been given, by registered or certified mail, to
the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee
by the Insurer (so long as no Insurer Default has occurred and is continuing)
or the Holders of at least 25% of the Outstanding Amount of the Notes, a
written notice specifying such default or incorrect representation or warranty
and requiring it to be remedied and stating that such notice is a notice of
Default hereunder; or
(d) [reserved]; or
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part
of the Trust Estate in an involuntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part of
the Trust Estate, or ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(f) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Issuer to the entry of an order for
relief in an involuntary case under any such law, or the consent by the Issuer
to the appointment or taking possession by a receiver, liquidator, assignee,
32
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or the making by the Issuer of any
general assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of any
action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, the Transferor and the
Insurer within five days after the occurrence thereof, written notice in the
form of an Officer's Certificate of any event which with the giving of notice
and the lapse of time would become an Event of Default under clause (c) above,
its status and what action the Issuer is taking or proposes to take with
respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case
the Indenture Trustee may, with the consent of the Insurer, and shall, at the
direction of the Insurer (so long as no Insurer Default has occurred and is
continuing) or upon the prior written direction of the Holders of Notes
representing not less than 66-2/3% of the Outstanding Amount of the Notes
(with the consent of the Insurer, which consent shall not be unreasonably
withheld), declare all the Notes to be immediately due and payable, by a
notice in writing to the Issuer (and to the Indenture Trustee if given by
Noteholders), and upon any such declaration the unpaid principal amount of
such Notes, together with accrued and unpaid interest thereon through the date
of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided,
the Insurer or the Majority Noteholder, with the written consent of the
Insurer (which consent shall not be unreasonably withheld), by written notice
to the Issuer and the Indenture Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had
not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel;
and
(C) any Reimbursement Amounts due and owing to the Insurer
under the Insurance and Indemnity Agreement; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12 below.
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No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if (i) default occurs in the payment of any
interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default occurs in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, and such default continues for a period of five days,
the Issuer will, upon demand of the Indenture Trustee or the Insurer if the
Insurer has made an unreimbursed payment under the Note Guaranty Insurance
Policy, pay to the Indenture Trustee or the Insurer, as applicable, for the
benefit of the Holders of the Notes, the whole amount then due and payable on
such Notes for principal and interest, with interest upon the overdue
principal and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest at the rate borne by the
Notes and in addition thereto such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee,
the Insurer (including all Reimbursement Amounts due and owing under the
Insurance and Indemnity Agreement) and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee may with the consent of the Insurer (which
consent shall not be unreasonably withheld), or if the Insurer has made an
unreimbursed payment under the Note Guaranty Insurance Policy, shall at the
direction of the Insurer or, if an Insurer Default has occurred and is
continuing, at the direction of Holders of 66-2/3% of the Outstanding Amount
of the Notes, shall institute a Proceeding for the collection of the sums so
due and unpaid, and may prosecute such Proceeding to judgment or final decree,
and may enforce the same against the Issuer or other obligor upon such Notes
and collect in the manner provided by law out of the property of the Issuer or
other obligor upon such Notes, wherever situated, the moneys adjudged or
decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, with the consent of the Insurer, and shall at the written
direction of the Insurer (so long as no Insurer Default has occurred and is
continuing) or of the Holders of 66-2/3% of the Outstanding Amount of the
Notes, with the consent of the Insurer (which consent shall not be
unreasonably withheld), as more particularly provided in Section 5.4 below,
proceed to protect and enforce its rights and the rights of the Noteholders
and the Insurer, by such appropriate Proceedings as the Insurer shall deem
most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest
in the Trust Estate, Proceedings under Title 11 of the United States Code or
any other applicable federal or state bankruptcy,
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insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the Issuer or its
property or such other obligor or Person, or in case of any other comparable
judicial Proceedings relative to the Issuer or other obligor upon the Notes,
or to the creditors or property of the Issuer or such other obligor, the
Indenture Trustee, irrespective of whether the principal of any Notes shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section 5.3, shall be entitled and
empowered by intervention in such Proceedings with the consent of or at the
direction of the Insurer (so long as no Insurer Default has occurred and is
continuing) or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim
for reasonable compensation to the Indenture Trustee, each predecessor
Indenture Trustee and its agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee
(except as a result of negligence or bad faith)), and of the Noteholders
and the Insurer allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes and the Insurer in any election of a
trustee, a standby trustee or Person performing similar functions in any
such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders, the Indenture Trustee and
the Insurer on their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the
Indenture Trustee, the Insurer or the Holders of Notes allowed in any
judicial proceedings relative to the Issuer, its creditors and its
property; and any trustee, receiver, liquidator, custodian or other
similar official in any such Proceeding is hereby authorized by each of
such Noteholders to make payments to the Indenture Trustee and, in the
event that the Indenture Trustee shall consent to the making of payments
directly to such Noteholders, to pay to the Indenture Trustee such
amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and
each predecessor Indenture Trustee except as a result of negligence or
bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder or the Insurer any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof or to authorize the Indenture Trustee to vote in respect of the claim
35
of any Noteholder or the Insurer in any such proceeding except, as aforesaid,
to vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make
any Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing of which
a Responsible Officer of the Indenture Trustee has actual knowledge, the
Indenture Trustee may with the consent of the Insurer (which consent shall not
unreasonably be withheld), or, at the direction of the Insurer, shall or, if
an Insurer Default has occurred and is continuing, at the direction of Holders
of 66-2/3% of the Outstanding Amount of the Notes shall, do one or more of the
following (subject to Section 5.5 below):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
related Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, and all amounts payable under the Insurance and
Indemnity Agreement, enforce any judgment obtained, and collect from the
Issuer and any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee or the related Noteholders or the
Insurer; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein in a commercially reasonable manner, at one or more
public or private sales called and conducted in any manner permitted by
law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Insurer and the Holders of 100%
of the Outstanding Amount of the Notes, (B) the proceeds of such sale
36
or liquidation distributable to the Noteholders are sufficient to discharge in
full all amounts then due and unpaid upon such Notes for principal and
interest and to reimburse the Insurer for any unreimbursed Insured Amounts and
any other amounts due the Insurer under the Insurance and Indemnity Agreement
or (C) the Indenture Trustee determines that the Trust Estate 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
Insurer (which consent shall not be unreasonably withheld) and the Holders of
66-2/3% of the Outstanding Amount of the Notes. In determining such
sufficiency or insufficiency with respect to clauses (B) and (C) above, the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, the Indenture Trustee and the Paying Agent shall pay out the
money or property in the following order:
FIRST: to the Indenture Trustee for any costs or expenses incurred
by it in connection with the enforcement of the remedies provided for in
this Article V;
SECOND: to the Noteholders for amounts due and unpaid on the Notes
for interest (excluding Supplemental Interest Amounts) pro rata among the
Holders of the Notes, according to the amounts due and payable on such
Notes;
THIRD: to the Noteholders for amounts due and unpaid on the Notes
for principal, pro rata, among the Holders of the Notes according to the
amounts due and payable until the Note Principal Amount is reduced to
zero;
FOURTH: to the Insurer, any other amounts owed to the Insurer under
the Insurance and Indemnity Agreement;
FIFTH: to the Noteholders for any Supplemental Interest Amounts due
and unpaid on the Notes pro rata among the Holders of the Notes,
according to the Supplemental Interest Amounts due and payable on such
Notes; and
SIXTH: to the Paying Agent for any amounts to be distributed, to the
holder of the Ownership Interest, in the manner set forth in Section 5.01
of the Sale and Servicing Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section 5.4. At least
15 days before such record date, the Indenture Trustee shall mail to each
Noteholder and the Issuer a notice that states the record date, the payment
date and the amount to be paid.
SECTION 5.5 Optional Preservation of the Trust Estate. If the Notes have
been declared to be due and payable under Section 5.2 above following an Event
of Default and such
37
declaration and its consequences have not been rescinded and annulled, the
Indenture Trustee may with the consent of the Insurer (which consent shall not
be unreasonably withheld), but need not (but shall at the written direction of
the Insurer or, if an Insurer Default has occurred and is continuing, at the
direction of Holders of 66-2/3% of the Outstanding Amount of the Notes), elect
to maintain possession of the Trust Estate. It is the desire of the parties
hereto and the Noteholders that there be at all times sufficient funds for the
payment of principal of and interest on the Notes (although the parties hereto
understand that there exists the possibility of a shortfall in collections of
the Home Equity Loans), and the Indenture Trustee shall take such desire into
account when determining whether or not to maintain possession of the
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 such proposed action and as to the sufficiency of the
Collateral for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless the Insurer has otherwise consented in writing
thereto (which consent shall not be unreasonably withheld) and:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Amount of the
Notes have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings; and
(e) no direction inconsistent with such written request has been given to
the Indenture Trustee during such 60-day period by the Majority Noteholder.
It is understood and intended that no Noteholders shall have any right in
any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Noteholders
or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in the manner
herein provided.
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due date thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) to
the extent funds are
38
available therefor out of the Trust Estate and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned
for any reason or has been determined adversely to the Indenture Trustee or to
such Noteholder, then and in every such case the Issuer, the Indenture Trustee
and the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee, the Insurer and
the Noteholders shall continue as though no such Proceeding had been
instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Insurer or any Noteholder to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such Default or Event of Default
or an acquiescence therein. Every right and remedy given by this Article V or
by law to the Indenture Trustee, the Insurer or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Insurer or by the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Insurer (so long as no Insurer
Default has occurred and is continuing), or if an Insurer Default has occurred
and is continuing, the Holders of 66-2/3% of the Outstanding Amount of the
Notes, shall have the right to direct the time, method and place of conducting
any Proceeding for any remedy available to the Indenture Trustee with respect
to the Notes or exercising any trust or power conferred on the Indenture
Trustee; provided that:
(a) such direction shall not be in conflict with any rule of law or with
this Indenture;
(b) subject to the express terms of Section 5.4 above, any direction to
the Indenture Trustee to sell or liquidate the Trust Estate shall be in
writing by the Insurer (so long as no Insurer Default has occurred and is
continuing) or the Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes with the consent of the Insurer (which consent
shall not be unreasonably withheld);
(c) if the conditions set forth in Section 5.5 above have been satisfied
and the Indenture Trustee elects to retain the Trust Estate pursuant to such
Section 5.5, then any direction to the
39
Indenture Trustee by Holders of Notes representing less than 100% of the
Outstanding Amount of the Notes to sell or liquidate the Trust Estate shall be
of no force and effect; and
(d) the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of the Noteholders set forth in this Section
5.11, subject to Section 6.1 hereof, the Indenture Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2 above,
the Insurer (so long as no Insurer Default has occurred and is continuing), or
if an Insurer Default has occurred and is continuing, the Majority Noteholder,
may waive any past Default or Event of Default and its consequences except a
Default (a) in the payment of principal of or interest on any of the Notes or
(b) in respect of a covenant or provision hereof that cannot be modified or
amended without the consent of the Holder of each Note. In the case of any
such waiver, the Issuer, the Insurer, the Indenture Trustee and the Holders of
the Notes shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by the Insurer, (c) any suit
instituted by any Noteholder, or group of Noteholders, in each case holding in
the aggregate more than 10% of the Outstanding Amount of the Notes or (d) any
suit instituted by any Noteholder for the enforcement of the payment of
principal of or interest on any Note on or after the respective due dates
expressed in such Note and in this Indenture (or, in the case of redemption,
on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever
40
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Issuer (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Indenture Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights
or remedies of the Indenture Trustee, the Insurer or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Trust Estate or upon any of the assets of the Issuer. Any money or
property collected by the Indenture Trustee shall be applied in accordance
with Section 5.4(b) above.
SECTION 5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Insurer (so long as no Insurer
Default has occurred and is continuing) or the Indenture Trustee, with the
consent of the Insurer to do so (which consent shall not be unreasonably
withheld), the Issuer shall take all such lawful action as the Indenture
Trustee or the Insurer, as applicable, may request to compel or secure the
performance and observance by the Depositor and the Master Servicer, as
applicable, of each of their obligations to the Issuer under or in connection
with the Sale and Servicing Agreement, and to exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or in
connection with the Sale and Servicing Agreement to the extent and in the
manner directed by the Indenture Trustee or the Insurer, as applicable,
including the transmission of notices of default on the part of the Depositor
or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Depositor or the Master Servicer of each of their obligations under the Sale
and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee, subject to the rights of the Insurer hereunder and under the Sale and
Servicing Agreement, may, and at the direction (which direction shall be in
writing or by telephone, confirmed in writing promptly thereafter) of the
Insurer, or, if an Insurer Default has occurred and is continuing, the Holders
of 66-2/3% of the Outstanding Amount of the Notes, shall exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Depositor or
the Master Servicer under or in connection with the Sale and Servicing
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Depositor, the Master Servicer, as the case
may be, of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension, or waiver under the
Sale and Servicing Agreement, and any right of the Issuer to take such action
shall be suspended.
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ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture. If any such amendment is
found not to conform in any material respect to the requirements of this
Indenture, the Indenture Trustee shall notify the Noteholders of such
instrument in the event that the Indenture Trustee, after so requesting,
does not receive a satisfactory corrected instrument.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 6.1;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11 above or any direction
from the Insurer that the Insurer is entitled to give under the terms of
the Transaction Documents.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section 6.1.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
42
(f) Money held in trust by the Indenture Trustee shall be segregated from
other funds except to the extent permitted by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it; and none of the provisions contained in this
Indenture shall in any event require the Indenture Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Master Servicer, the Issuer or Transferor under this Indenture except during
such time, if any, as the Indenture Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Master Servicer
in accordance with the terms of this Indenture.
(h) The Indenture Trustee shall challenge or cause to be challenged any
attempt at substantive consolidation of the assets and liabilities of the
Issuer with those of any Owner (as the term "Owner" is defined in the Trust
Agreement) in connection with any insolvency proceeding of the Issuer.
(i) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section 6.1 and to the provisions
of the TIA.
(j) Subject to the other provisions of this Indenture and without
limiting the generality of this Section 6.1, the Indenture Trustee, unless it
is acting as the Master Servicer under the Sale and Servicing Agreement, shall
have no duty (A) to see to any recording, filing, or depositing of this
Indenture or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance, (C) to see to the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust Estate other
than from funds available in the Collection Account, (D) to confirm or verify
the contents of any reports or certificates of the Issuer, Insurer or Master
Servicer delivered to the Indenture Trustee pursuant to this Indenture
believed by the Indenture Trustee to be genuine and to have been signed or
presented by the proper party or parties.
SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting on any resolution, certificate
of auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper person. The Indenture Trustee need not investigate any fact or matter
stated in the document.
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(b) Before the Indenture Trustee acts or refrains from acting, it may
require and shall be entitled to receive an Officer's Certificate or an
Opinion of Counsel. The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on an Officer's
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that such action or omission by the
Indenture Trustee does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel selected by it with due care with respect to legal matters
relating to this Indenture, the Notes and the Transaction Documents to which
it is a party, shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of the Insurer or any of the Noteholders, pursuant to the
provisions of this Indenture, unless the Insurer or such Noteholders shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Indenture Trustee of the
obligation, upon the occurrence of an Event of Default of which a Responsible
Officer of the Indenture Trustee shall have actual knowledge (which has not
been cured), to exercise such of the rights and powers vested in it by this
Indenture, and to use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
(g) The Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond
or other paper or document, unless requested in writing to do so by the
Insurer or the Majority Noteholder; provided, however, that if the payment
within a reasonable time to the Indenture Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Indenture Trustee, not reasonably assured to the
Indenture Trustee by the security afforded to it by the terms of this
Indenture, the Indenture Trustee may require reasonable indemnity against such
cost, expense or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by the Issuer or,
if paid by the Indenture Trustee, shall be repaid by the Issuer upon demand.
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(h) The right of the Indenture Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty, and the
Indenture Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
(i) The Indenture Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Fund created hereby or the
powers granted hereunder.
(j) The Indenture Trustee shall have no liability in connection with the
malfeasance or nonfeasance by the Issuer or the Master Servicer. The Indenture
Trustee shall have no liability in connection with compliance by the Issuer or
the Master Servicer with statutory or regulatory requirements related to the
Collateral or the Trust Estate. The Indenture Trustee shall not make or be
deemed to have made any representations or warranties with respect to the
Collateral or the Trust Estate or the validity or sufficiency of any
assignment of the Collateral or the Trust Estate to the Indenture Trustee.
(k) In the event that the Indenture Trustee is also acting as Paying
Agent or Registrar hereunder, the rights, protection, immunities and
indemnities afforded to the Indenture Trustee pursuant to this Article VI
shall also be afforded to such Paying Agent or Registrar.
SECTION 6.3 Individual Rights of Indenture Trustee. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of
Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12 below.
SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be (i) responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, (ii) shall not be accountable for the
Issuer's use of the proceeds from the Notes or (iii) responsible for any
statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and
if it is actually known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall give prompt notice thereof to the Insurer. The
Indenture Trustee shall not be charged with the knowledge of an Event of
Default unless a Responsible Officer has received written notice or has actual
knowledge thereof. The Indenture Trustee shall mail to each Noteholder, the
Master Servicer and the Depositor notice of the Default within 30 days after
it occurs at the expense of the Issuer. Except in the case of a Default in
payment of principal of or interest on any Note, the Indenture Trustee may
withhold the notice to the Noteholders if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is
in the interests of Noteholders.
SECTION 6.6 Reports by Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information as may be required
to enable such holder to prepare
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its federal and state income tax returns. In addition, upon Issuer Request,
the Indenture Trustee shall promptly furnish such information reasonably
requested by the Issuer that is reasonably available to the Indenture Trustee
to enable the Issuer to perform its federal and state income tax reporting
obligations.
SECTION 6.7 Compensation and Indemnity. The Issuer shall, or shall cause
the Master Servicer to, pay to the Indenture Trustee from time to time as
compensation for its services a fee previously agreed to by the Master
Servicer and the Indenture Trustee. The Indenture Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust.
The Issuer shall or shall cause the Master Servicer to reimburse the Indenture
Trustee for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Trustee's agents,
outside counsel, accountants and experts. The Issuer shall or shall cause the
Master Servicer to indemnify the Indenture Trustee, and its respective
officers, directors, employees and agents against any and all loss, liability
or expense (including attorneys' fees and expenses) incurred by each of them
in connection with the acceptance or the administration of this trust and the
performance of its duties hereunder. The Indenture Trustee shall notify the
Issuer and the Master Servicer promptly of any claim for which it may seek
indemnity. Failure by the Indenture Trustee to so notify the Issuer and the
Master Servicer shall not relieve the Issuer or the Master Servicer of its
obligations hereunder. The Issuer shall defend or shall cause the Master
Servicer to defend any claim for indemnity that may arise against the
Indenture Trustee, or the Indenture Trustee may have separate counsel and the
Issuer shall or shall cause the Master Servicer to pay the fees and expenses
of such counsel. Neither the Issuer nor the Master Servicer need reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Indenture Trustee through such Person's own willful misconduct, negligence or
bad faith. HFC's payment obligations to the Indenture Trustee pursuant to this
Section 6.7 shall survive the discharge of this Indenture.
SECTION 6.8 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 acceptable to the Insurer pursuant to this Section. The
Indenture Trustee may resign at any time by so notifying the Issuer and the
Insurer. The Insurer (so long as no Insurer Default has occurred and is
continuing) or the Majority Noteholder (with the prior written consent of the
Insurer (which consent shall not be unreasonably withheld)) may remove the
Indenture Trustee by so notifying the Indenture Trustee and the Insurer (if
given by such Noteholders) and may appoint a successor Indenture Trustee
acceptable to the Insurer. The Issuer shall (with the prior written consent of
the Insurer so long as no Insurer Default has occurred and is continuing)
remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11 below;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
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(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee with the consent of the
Insurer, which consent shall not be unreasonably withheld.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, the Insurer and to the Issuer.
Thereupon the resignation or removal of the retiring Indenture Trustee shall
become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Majority Noteholder may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee.
If the Indenture Trustee fails to comply with Section 6.11 below, any
Noteholder may (with the consent of the Insurer (which consent shall not be
unreasonably withheld)) petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section 6.8, the Issuer's obligations under Section 6.7 above shall continue
for the benefit of the retiring Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11 below.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Indenture Trustee shall
have.
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SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust Estate may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint
one or more Persons acceptable to the Insurer to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of
the Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders and the Insurer, such title to the Trust Estate, or
any part hereof, and, subject to the other provisions of this Section 6.10,
such powers, duties, obligations, rights and trusts as the Indenture Trustee
may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 6.11 below and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of
the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture
and the conditions of this Article VI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, jointly with the
Indenture Trustee, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the
conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.
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(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Indenture on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Indenture Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee. The Indenture
Trustee shall remain primarily liable for all actions of a co-trustee.
SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition. The
Indenture Trustee shall comply with TIA Section 310(b), including the optional
provision permitted by the second sentence of TIA Section 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other securities of the
Issuer are outstanding if the requirements for such exclusion set forth in TIA
Section 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
SECTION 6.13 Representations and Warranties. The Indenture Trustee hereby
represents and warrants that:
(a) The Indenture Trustee is duly organized, validly existing and in good
standing under the laws of United States of America, with power and authority
to own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted.
(b) The Indenture Trustee has the power and authority to execute and
deliver this Indenture and the other Transaction Documents to which it is a
party and to carry out its terms; and the execution, delivery and performance
of this Indenture have been duly authorized by the Indenture Trustee by all
necessary corporate action.
(c) The consummation of the transactions contemplated by this Indenture
and the fulfillment of the terms hereof do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of incorporation or
bylaws of the Indenture Trustee or any agreement or other instrument to which
the Indenture Trustee is a party or by which it is bound.
SECTION 6.14 Directions to Indenture Trustee. The Indenture Trustee is
hereby directed:
(a) to accept the pledge of the Home Equity Loans and hold the assets of
the Trust in trust for the Noteholders and the Insurer;
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(b) to authenticate and deliver the Notes substantially in the form
prescribed by Exhibit A in accordance with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken by the
terms of this Indenture.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after the earlier of (i) each Record Date
and (ii) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Noteholders as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more
than 10 days prior to the time such list is furnished; provided, however, that
so long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished.
SECTION 7.2 Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.1 above and the names and addresses of Noteholders received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.1 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 7.3 Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) that the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with the rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
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(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA Section
313(c)) such summaries of any information, documents and reports required
to be filed by the Issuer pursuant to clauses (i) and (ii) of this
Section 7.3(a) and by rules and regulations prescribed from time to time
by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
SECTION 7.4 Reports by Indenture Trustee. If required by TIA Section
313(a), within 60 days after each August 1, beginning with August 1, 2003, the
Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) and to the Insurer a brief report dated as of such 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, if any, on which the Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Notes are listed on any securities exchange.
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this
Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Trust Estate, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as provided
in Article V herein.
SECTION 8.2 Accounts; Distributions.
(a) On or prior to the Closing Date, the Indenture Trustee shall
establish and maintain or cause to be established and maintained, in the name
of the Indenture Trustee for the benefit of the Noteholders, the Transferor
and the Insurer, the Collection Account as provided in Article V of the Sale
and Servicing Agreement into which amounts shall be deposited in accordance
with the terms of the Sale and Servicing Agreement.
(b) The Indenture Trustee shall deposit any amounts representing payments
on and any collections in respect of the Home Equity Loans received by it, if
any, and any other amounts required by the terms of the Transaction Documents
to be deposited, immediately following receipt thereof. Amounts on deposit in
the Collection Account may be invested in Permitted Investments pursuant to
Section 3.02(d) of the Sale and Servicing Agreement.
(c) On each Payment Date and the Redemption Date, to the extent funds are
available in the Collection Account, the Indenture Trustee shall make the
distributions and payments in the amounts and in the priority set forth in
Section 5.01 of the Sale and Servicing Agreement (except as otherwise provided
in Section 5.4(b) herein).
(d) On each Payment Date and the Redemption Date, to the extent of the
interest of the Indenture Trustee in the Collection Account (as described in
Section 5.01 of the Sale and Servicing Agreement), the Indenture Trustee
hereby authorizes the Owner Trustee or the Paying Agent, as applicable, to
make the distributions from the Collection Account as required pursuant to
Section 5.01 of the Sale and Servicing Agreement.
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SECTION 8.3 [Reserved].
SECTION 8.4 Master Servicer's Monthly Statements.
On each Payment Date, the Indenture Trustee shall deliver the Indenture
Trustee's Statement to Noteholders (as defined in the Sale and Servicing
Agreement) with respect to such Payment Date to DTC and the Rating Agencies.
Such information shall also be made available at the Indenture Trustee's
website, which as of the date hereof is located at xxx.xxx.xxxxxxx.xxx.
SECTION 8.5 [Reserved].
SECTION 8.6 Opinion of Counsel. The Indenture Trustee shall receive at
least seven days notice when requested by the Issuer to take any action
pursuant to Section 2.9(a) herein, accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require with a copy to the
Insurer, as a condition to such action, an Opinion of Counsel, in form and
substance satisfactory to the Indenture Trustee addressed to the Indenture
Trustee and the Insurer, stating the legal effect of any such action,
outlining the steps required to complete the same, and concluding that all
conditions precedent to the taking of such action have been complied with and
such action will not materially and adversely impair the security for the
Notes or the rights of the Noteholders or the Insurer in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair market value of a
Trust Estate. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized
by an Issuer Order, at any time and from time to time and only with the prior
written consent of the Insurer, may enter into one or more indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer
herein and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Noteholders or the Insurer, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision herein
or in any supplemental indenture that may be inconsistent with any
other provision herein or in any supplemental indenture or to make
any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided, that
such action shall not adversely affect the interests of the
Noteholders or the Insurer;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add
to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by
more than one trustee, pursuant to the requirements of Article VI
herein; or
(vii) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such other provisions
as may be expressly required by the TIA.
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The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Noteholders but with prior
confirmation from the Rating Agencies and prior consent of the Insurer, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Noteholders under this Indenture; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel or satisfaction of the Rating
Agency Condition, adversely affect in any material respect the interests of
any Noteholder or the Insurer or cause the Issuer to be subject to entity
level tax.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders. The Issuer
and the Indenture Trustee, when authorized by an Issuer Order, also may, with
prior consent of the Rating Agencies and the Insurer, and with the consent of
the Majority Noteholder, by Act of such Majority Noteholder delivered to the
Issuer and the Indenture Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the amount required to be paid on the Notes following the
exercise of the option set forth in Section 8.01 of the Sale and Servicing
Agreement, change the provisions of this Indenture relating to the application
of collections on, or the proceeds of the sale of, the Trust Estate to payment
of principal of or interest on the Notes, or change any place of payment
where, or the coin or currency in which, any Note or the interest thereon is
payable, or impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V herein, to the payment of any such amount
due on the Notes on or after the respective due dates thereof (or, in the case
of redemption, on or after the Redemption Date);
(b) reduce the percentage of the Outstanding Amount of the Notes, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver
of compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definition of
the term "Outstanding";
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(d) reduce the percentage of the Outstanding Amount of the Notes required
to direct the Indenture Trustee to direct the Issuer to sell or liquidate the
Trust Estate pursuant to Section 5.4 herein;
(e) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional provisions
of this Indenture or the Transaction Documents cannot be modified or waived
without the consent of the Holder of each Outstanding Note affected thereby;
(f) modify any of the provisions of this Indenture in such manner as to
affect the calculation of the amount of any payment of interest or principal
due on any Note on any Payment Date (including the calculation of any of the
individual components of such calculation); or
(g) permit the creation of any lien ranking prior to or on a parity with
the lien of this Indenture with respect to any part of the Trust Estate or,
except as otherwise permitted or contemplated herein, terminate the lien of
this Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the lien of this Indenture
provided further, that such action shall not, as evidenced by an Opinion of
Counsel, cause the Issuer to be subject to an entity level tax.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
In connection with requesting the consent of the Noteholders pursuant to
this Section 9.2, the Indenture Trustee shall mail to the Holders of the Notes
to which such amendment or supplemental indenture relates a notice setting
forth in general terms the substance of such supplemental indenture at the
Issuer's expense. It shall not be necessary for any Act of Noteholders under
this Section 9.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2 herein, shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture and all conditions
precedent to the execution of such supplemental indenture have been met. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be deemed to be modified and amended in accordance therewith with respect to
the Notes affected thereby, and
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the respective rights, limitations of rights, obligations, duties, liabilities
and immunities under this Indenture of the Indenture Trustee, the Issuer and
the Holders of the Notes shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
SECTION 9.5 Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article
IX shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
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ARTICLE X
TERMINATION OF TRUST
SECTION 10.1 Early Termination.
The Master Servicer may effect an early termination of the Trust pursuant
to Section 8.01 of the Sale and Servicing Agreement on or after any Payment
Date on which the Note Principal Amount of the Notes declines to 20% or less
of the initial Note Principal Amount of the Notes and the purchase price for
the Home Equity Loans together with all amounts due and owing to the Insurer
for unpaid premiums and unreimbursed Insured Amounts and any other amounts
then due and owing under the Insurance and Indemnity Agreement to the Insurer,
together with interest thereon as provided under the Insurance and Indemnity
Agreement, have been paid, pursuant to the provisions of Section 8.01(b) of
the Sale and Servicing Agreement (such date, the "Redemption Date"). If the
Master Servicer does not terminate the Trust in accordance with Section
8.01(b) of the Sale and Servicing Agreement within three months of the first
Payment Date upon which such termination may be effected, then the Indenture
Trustee shall conduct an auction process for the Home Equity Loans as provided
in Section 8.01(c) of the Sale and Servicing Agreement.
The Indenture Trustee shall furnish notice of any redemption of the Notes
that occurs as a result of any of the foregoing in accordance with Section
8.01 of the Sale and Servicing Agreement.
SECTION 10.2 Mandatory Redemption.
(a) If the full amount of principal and interest then due on the Notes is
not paid by the Payment Date in November 2012, the Indenture Trustee shall
begin a process for soliciting bids in connection with an auction of the Home
Equity Loans. The Indenture Trustee shall provide the Master Servicer and the
Insurer written notice of such auction at least ten (10) Business Days prior
to the date bids must be received in such auction (the "Mandatory Auction
Date"). The auction shall be conducted as follows:
(b) The Indenture Trustee shall solicit new bids and, if more than one
bid is received, the Indenture Trustee shall solicit and resolicit new bids
from all participating bidders until only one bid remains or the remaining
bidders decline to resubmit bids. The Indenture Trustee shall accept the
highest of such remaining bids if it is equal to or in excess of the Mandatory
Redemption Price. If the highest of such remaining bids is less than the
Mandatory Redemption Price, then the Indenture Trustee shall neither accept
such bid nor consummate such sale unless the Insurer (so long as no Insurer
Default has occurred and is continuing) and Holders of 66-2/3% of the
Outstanding Amount of the Notes consent.
(c) If the first auction conducted by the Indenture Trustee does not
produce any bid at least equal to the Mandatory Redemption Price, then the
Indenture Trustee shall, beginning on the Payment Date occurring approximately
three months after the Mandatory Auction Date for the failed first auction,
commence another auction in accordance with the requirements of this
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subsection (c). If such second auction does not produce any bid at least equal
to the Mandatory Redemption Price, then the Indenture Trustee shall, beginning
on the Payment Date occurring approximately three months after the Mandatory
Auction Date for the failed second auction, commence another auction in
accordance with the requirements of this subsection (c), and shall continue to
conduct similar auctions approximately every three months thereafter until the
earliest of (i) delivery by the Master Servicer of notice of exercise of its
repurchase option pursuant to Section 8.01(b) of the Sale and Servicing
Agreement, (ii) receipt by the Indenture Trustee of a bid meeting the
conditions specified in the preceding paragraph, or (iii) the Payment Date on
which the Principal Balance of all the Home Equity Loans is reduced to zero.
(d) If the Indenture Trustee receives a bid meeting the conditions
specified in this Section 10.2, the Master Servicer and the Issuer shall
promptly arrange for the sale of the Home Equity Loans to the winning bidder,
the Indenture Trustee shall execute such agreements and termination statements
as may be reasonably required or appropriate to release the lien of this
Indenture with respect to the Home Equity Loans and Mortgage Files upon
payment to the Indenture Trustee of the bid purchase price and satisfaction of
any other terms of the auction sale. The Indenture Trustee shall cooperate
with the Master Servicer and the Issuer in the sale of the Home Equity Loans,
shall deliver to the winning bidder the related Mortgage Files in the
Indenture Trustee's possession (if any), and shall take such other actions as
the winning bidder may reasonably request to effect the transfer of the Home
Equity Loans.
(e) Notice of any termination, specifying the Payment Date (which shall
be a date that would otherwise be a Payment Date) upon which the Noteholders
may surrender their Notes to the Indenture Trustee for payment of the final
distribution and cancellation (the "Redemption Date"), shall be given promptly
by the Indenture Trustee (upon receipt of written directions from the Master
Servicer, if the Master Servicer is exercising its right to repurchase the
Home Equity Loans, given not later than the first day of the month preceding
the month of such final distribution) to the Insurer and to the Master
Servicer by letter to the Noteholders mailed not earlier than the 15th day and
not later than the 25th day of the month next preceding the month of such
final distribution specifying (i) the Payment Date upon which final
distribution of the Notes will be made upon presentation and surrender of
Notes at the office or agency of the Indenture Trustee therein designated,
(ii) the amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Payment Date is not applicable, distributions
being made only upon presentation and surrender of the Notes at the office or
agency of the Indenture Trustee therein specified. On the Redemption Date
specified pursuant to this subsection (e), the Indenture Trustee shall
distribute the proceeds of the sale of the Home Equity Loans in accordance
with the priorities listed in Section 5.01 of the Sale and Servicing
Agreement.
(f) Upon presentation and surrender of the Notes, to the extent of funds
available therefor, the Indenture Trustee shall cause to be distributed to the
Holders of the Notes on the Payment Date for such final distribution, in
proportion to the Percentage Interests of their respective Notes and to the
extent that funds are available for such purpose, an amount equal to the
amount required to be distributed to Noteholders pursuant to Section 5.01 of
the Sale and Servicing Agreement for such Payment Date. On the final Payment
Date prior to having made the distributions called for above, the Indenture
Trustee shall, based upon the information set
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forth in the Servicing Certificate for such Payment Date, withdraw from the
Collection Account and remit to the Insurer the lesser of (x) the amount
available for distribution on such final Payment Date, net of any portion
thereof necessary to pay the Noteholders pursuant to Section 5.01(a) of the
Sale and Servicing Agreement and due and unpaid Skip-A-Pay Advances and
Servicing Fees, and (y) the unpaid amounts due and owing to the Insurer
pursuant to the Insurance and Indemnity Agreement.
(g) In the event that all of the Noteholders shall not surrender their
Notes for final payment and cancellation on or before such final Payment Date,
the Indenture Trustee shall promptly following such date cause all funds in
the Collection Account not distributed in final payment to Noteholders, to be
withdrawn therefrom and credited to the remaining Noteholders by depositing
such funds in a separate escrow account for the benefit of such Noteholders,
and the Master Servicer (if the Master Servicer has exercised its right to
purchase the Home Equity Loans) or the Indenture Trustee (in any other case)
shall give a second written notice to the remaining Noteholders to surrender
their Notes for cancellation and receive the final payment with respect
thereto. If within nine months after the second notice all the Notes shall not
have been surrendered for cancellation, (i) all unclaimed funds will be paid
to the Insurer to the extent such funds represent reimbursement of a
Reimbursement Amount and (ii) the Ownership Interest will be entitled to all
remaining unclaimed funds and other assets which remain subject hereto, and
the Indenture Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Noteholders shall look to the holder of
the Ownership Interest for payment. In addition, the Insurer shall not be
liable to Noteholders for any such remaining unclaimed funds transferred to
the Ownership Interest.
(h) Upon payment of all amounts owed under the Note Guaranty Insurance
Policy and cancellation of the Notes, the Indenture Trustee shall provide the
Insurer notice of cancellation of the Notes and surrender the Note Guaranty
Insurance Policy to the Insurer.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer made to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee and to the Insurer (i) an Officer's
Certificate stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied with, (ii)
an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required
by the TIA) an Independent Certificate from a firm of certified public
accountants meeting the applicable requirements of this Section 11.1, except
that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary
to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
(4) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture
(except in the case of the release of Home Equity Loans in accordance with the
Sale and Servicing Agreement), the Issuer shall, in addition to any obligation
imposed in Section 11.1(a) herein or elsewhere in this Indenture, furnish to
the Indenture Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value (within
90 days of such deposit) to the Issuer of the Collateral or other property or
securities to be so deposited.
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(ii) Whenever the Issuer is required to furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall also
deliver to the Indenture Trustee and the Insurer an Independent Certificate as
to the same matters, if the fair value to the Issuer of the Collateral, other
property or securities to be so deposited and of all other such Collateral,
other property or securities made the basis of any such withdrawal or release
since the commencement of the then-current fiscal year of the Issuer, as set
forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the Note Principal Amount of the Notes, but
such a certificate need not be furnished with respect to any securities so
deposited, if the fair value thereof to the Issuer as set forth in the related
Officer's Certificate is less than either (A) $25,000 or (B) one percent of
the Note Principal Amount of the Notes.
(iii) Whenever any property or securities are to be released from the
lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee
and the Insurer an Officer's Certificate certifying or stating the opinion of
each person signing such certificate as to the fair value (within 90 days of
such release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will not
impair the security under this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Indenture Trustee and the Insurer
an Independent Certificate as to the same matters if the fair value of the
property or securities and of all other property or securities released from
the lien of this Indenture since the commencement of the then-current calendar
year, as set forth in the certificates required by clause (iii) above and this
clause (iv), equals 10% or more of the Note Principal Amount of the Notes, but
such certificate need not be furnished in the case of any release of property
or securities if the fair value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the then current
Note Principal Amount of the Notes.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Master Servicer, the Transferor or the Issuer,
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stating that the information with respect to such factual matters is in the
possession of the Master Servicer, the Transferor or the Issuer, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application
or at the effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application
granted or to the sufficiency of such certificate or report. The foregoing
shall not, however, be construed to affect the Indenture Trustee's right to
rely upon the truth and accuracy of any statement or opinion contained in any
such document as provided in Article VI hereof.
SECTION 11.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.1 hereof) conclusive in favor of the Indenture Trustee and the Issuer, if
made in the manner provided in this Section 11.3.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
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SECTION 11.4 Notices. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders is to
be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Indenture Trustee at its Corporate Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed first-class,
postage prepaid to the Issuer addressed to: Household Home Equity Loan Trust
2002-4, in care of the Owner Trustee at 000 Xxxxxxx Xx., Xxxxx 0X, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Asset Backed Securities, and the Delaware Trustee
at Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, Attention: Corporate
Trust Office and to the Master Servicer addressed to: 0000 Xxxxxxx Xxxx,
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, or at any other address previously furnished
in writing to the Indenture Trustee by the Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the Indenture
Trustee.
(c) the Insurer, by the Issuer, the Indenture Trustee or by any
Noteholders shall be sufficient for every purpose hereunder to in writing and
mailed, first-class postage pre-paid, or personally delivered or telecopied
to: Ambac Assurance Corporation, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Consumer Asset-Backed Securities Group, Facsimile: (212)
363-1459, Confirmation: (000) 000-0000. The Insurer shall promptly transmit
any notice received by it from the Issuer, the Indenture Trustee or the
Noteholders to the Issuer or Indenture Trustee, as the case may be.
Notices required to be given to the Rating Agencies by the Indenture
Trustee, the Owner Trustee or the Delaware Trustee shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, to
(i) in the case of Fitch, at the following address: Xxx Xxxxx Xxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, (ii) in the case of Xxxxx'x, at the following
address: 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and (iii) in the case of
Standard & Poor's, at the following address: 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
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Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder.
SECTION 11.6 Rights of the Insurer to Exercise Rights of Noteholders.
By accepting its Note, each Noteholder agrees that unless an Insurer
Default has occurred and is continuing or unless otherwise specified herein,
the Insurer shall have the right to exercise all rights of the Noteholders as
specified under this Indenture without any further consent of the Noteholders;
provided that:
(i) any direction provided by the Insurer shall not be in conflict
with any rule of law or with any of the Transaction Documents; and
(ii) the Issuer and the Indenture Trustee may take any other action
deemed proper by the Issuer or the Indenture Trustee that is not
inconsistent with any direction;
and provided further, however, that the Issuer or the Indenture Trustee need
not take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to an
action.
Notwithstanding any other provision of this Indenture, any right
conferred to the Insurer hereunder shall be suspended and shall run to the
benefit of the Noteholders during any period in which an Insurer Default shall
have occurred and is continuing, provided, however, that so long as an Insurer
Default shall have occurred and is continuing, the consent of the Insurer must
be obtained with respect to any amendments that may materially adversely
affect the Insurer.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required
to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by
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this Indenture) are a part of and govern this Indenture, whether or not
physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents.
SECTION 11.10 Separability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, the Insurer, and
any other party secured hereunder, and any other Person with an ownership
interest in any part of the Trust Estate, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 11.12 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest
shall accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders, the Insurer or any
other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
67
SECTION 11.16 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 herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may
have expressly agreed (it being understood that the Indenture Trustee and the
Owner Trustee have no such obligations in their individual capacity) and
except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity. For all purposes of this Indenture, in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Transferor (and any
wholly-owned subsidiary thereof), the Depositor, the Master Servicer or the
Issuer, or join in any institution against the Transferor (and any
wholly-owned subsidiary thereof), the Depositor, the Master Servicer or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal
or state bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture or any of the Transaction Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or the
Insurer, during the Issuer's normal business hours, to examine all the books
of account, records, reports and other papers of the Issuer, to make copies
and extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Issuer's affairs, finances
and accounts with the Issuer's officers, employees, and Independent certified
public accountants, all at such reasonable times and as often as may be
reasonably requested. The Indenture Trustee and the Insurer (to the extent
described in the Insurance and Indemnity Agreement) shall and shall cause its
representatives to hold in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
SECTION 11.19 Inconsistencies with the Sale and Servicing Agreement. In
the event certain provisions of this Indenture conflict with the provisions of
the Sale and Servicing Agreement, the parties hereto agree that the provisions
of the Sale and Servicing Agreement shall be controlling.
68
SECTION 11.20 Third-Party Beneficiaries. This Indenture will inure to the
benefit of and be binding upon the parties hereto, the Noteholders, the Note
Owners, the Insurer and their respective successors and permitted assigns. The
Insurer is an express third party beneficiary of this Indenture. Except as
otherwise provided in this Indenture, no other person will have any right or
obligation hereunder.
SECTION 11.21 Limited Recourse.
(a) Notwithstanding anything in this Indenture to the contrary, the Notes
constitute limited recourse obligations and are limited in recourse to the
assets of the Trust. The Indenture Trustee, by entering into this Indenture,
and each Noteholder, by accepting a Note, agree that recourse for the Notes is
limited to the assets of the Trust and, if the assets of the Trust shall prove
to be insufficient to pay amounts due under the Notes, the Noteholders shall
have no claim against the assets of the Depositor other than those which have
been conveyed to the Trust.
(b) If, notwithstanding paragraph (a) above, the Noteholders are deemed
to have any interest in any asset of the Depositor other than the Depositor's
interest in the assets of the Trust, including any interest in assets of the
Depositor, or any assets sold by the Depositor to another trustee pursuant to
a separate pooling and servicing agreement, sale and servicing agreement or
similar agreement, pledged to secure debt obligations of the Depositor other
than the Notes, the Indenture Trustee, by entering into this Indenture, and
each Noteholder, by accepting a Note, agree that any such interest is
subordinate to the claims of the holders of any such debt obligations, and the
Indenture Trustee and the Noteholders shall have no rights in such assets
until such debt obligations are indefeasibly paid in full. The agreement of
the Indenture Trustee and the Noteholders pursuant to this Section 11.20 is
intended to constitute a subordination agreement for the purposes of Section
510(a) of title 11 of the United States Code, 11 U.S.C. xx.xx. 101 et seq.
(the "Bankruptcy Code").
SECTION 11.22 Limitation on Voting of Preferred Stock. The Indenture
Trustee shall hold all of the Preferred Stock in trust, for the benefit of the
Noteholders and the Insurer, and shall vote such stock only pursuant to the
written instructions of the Insurer so long as no Insurer Default has occurred
and is continuing, or, if an Insurer Default has occurred and is continuing,
the Majority Noteholder; provided that:
(i) any direction provided by the Insurer shall not be in conflict
with any rule of law or with any of the Transaction Documents; and
(ii) the Trust and the Indenture Trustee may take any other action
deemed proper by the Trust or the Indenture Trustee that is not
inconsistent with any direction;
and provided further, however, that the Trust or the Indenture Trustee need
not take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to an
action.
The Indenture Trustee shall not permit a transfer of any of the Preferred
Stock to HFC or any of its Affiliates. Concurrently with any transfer of the
Home Equity Loans to the Master
69
Servicer or sale in connection with any auction pursuant to Section 8.01(b) or
8.01(c), respectively, of the Sale and Servicing Agreement, the Indenture
Trustee shall transfer to the Depositor for cancellation all shares of
Preferred Stock held by the Indenture Trustee.
SECTION 11.23 Limitation of Liability. It is understood by each party
hereto that the sole recourse of each party hereto in respect of the
obligations of the Issuer hereunder and under the other Transaction Documents
to which it is a party shall be to the Trust Estate. In addition, The Bank of
New York is entering into this Indenture and other Transaction Documents to
which the Issuer is a party solely in its capacity as Owner Trustee and
Delaware Trustee under the Trust Agreement and not in its individual capacity
and in no case shall The Bank of New York (or any Person acting as successor
Owner Trustee or Delaware Trustee under the Trust Agreement) be personally
liable for or on account of any of the statements, representations,
warranties, covenants or obligations stated to be those of the Issuer
hereunder or thereunder, all such liability, if any, being expressly waived by
the parties hereto and any person claiming by, through or under such party.
SECTION 11.24 Consent of Insurer. Unless otherwise specified, whenever in
this Indenture the taking of any action, giving of any instruction or
direction, exercise of any right or remedy or effectiveness of any amendment
is conditioned upon the approval of, acceptance by or consent of the Insurer
(whether written or otherwise), such approval, acceptance or consent
requirement shall be waived so long as an Insurer Default exists and is
continuing; provided, however, that regardless of whether an Insurer Default
has occurred and is continuing, the foregoing provision shall not be construed
so as to deny any right of the Insurer under this Indenture to receive any
Reimbursement Amounts due and owing to it under the Insurance and Indemnity
Agreement.
SECTION 11.25 Entire Agreement. This Indenture sets forth the entire
agreement between the parties with respect to the subject matter hereof and
thereof, and this Indenture supersedes and replaces any agreement or
understanding that may have existed between the parties prior to the date
hereof in respect of such subject matter.
70
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto
duly authorized and duly attested, all as of the day and year first above
written.
HOUSEHOLD HOME EQUITY LOAN TRUST
2002-4
By: THE BANK OF NEW YORK,
not in its individual capacity but
solely as Owner Trustee
By: /s/Xxxxx Xxx
----------------------------------
Name: Xxxxx Xxx
----------------------------------
Title: Assistant Treasurer
----------------------------------
BANK ONE, NATIONAL ASSOCIATION
as Indenture Trustee
By: /s/Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------
Title: Vice President
-----------------------------------
STATE OF NY )
) SS.
COUNTY OF Kings )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Xxxxx Xxx, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said The Bank of New
York, not in its individual capacity, but solely as Owner Trustee on behalf of
HOUSEHOLD HOME EQUITY LOAN TRUST 2002-4, a Delaware statutory trust, and that
such person executed the same as the act of said statutory trust for the
purpose and consideration therein expressed, and in the capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 12 day of November, 2002.
Xxxxxxx Xxxx
Notary Public in and for the State of ___NY___
(Seal)
My commission expires:
Aug. 28, 2006
-----------------------
STATE OF IL )
) SS.
COUNTY OF Xxxx )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Xxxxxx Xxxxxxx, known to me
to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of Bank One,
National Association, a national banking association, and that such person
executed the same as the act of said entity for the purpose and consideration
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 14th day of November, 2002.
Xxxxxx Xxxxxx Xxxxxx
Notary Public in and for the State of Illinois
(Seal)
My commission expires:
8/9/2005
SCHEDULE A
PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
The Issuer hereby represents, warrants, and covenants to the Indenture
Trustee and the Insurer as to itself, the Depositor and the Sellers as follows
on the Closing Date and on each Payment Date thereafter:
General
1. This Indenture creates a valid and continuing security interest (as
defined in the applicable UCC) in the Collateral in favor of the Indenture
Trustee, each of which security interest is prior to all other Liens, and is
enforceable as such as against creditors of and purchasers from the Issuer.
2. The Home Equity Loans constitute "general intangibles" or
"instruments" within the meaning of the applicable UCC.
3. The Collection Account and all subaccounts thereof constitute either a
deposit account or a securities account.
4. To the extent that payments and collections received or made with
respect to the Home Equity Loans constitute securities entitlements, such
payments and collections have been and will have been credited to the
Collection Account. The securities intermediary for the Collection Account has
agreed to treat all assets credited to the Collection Account as "financial
assets" within the meaning of the applicable UCC.
Creation
5. The Issuer owns and has good and marketable title to the Collateral
free and clear of any Lien, claim or encumbrance of any Person, excepting only
liens for taxes, assessments or similar governmental charges or levies
incurred in the ordinary course of business that are not yet due and payable
or as to which any applicable grace period shall not have expired, or that are
being contested in good faith by proper proceedings and for which adequate
reserves have been established, but only so long as foreclosure with respect
to such a lien is not imminent and the use and value of the property to which
the Lien attaches is not impaired during the pendency of such proceeding.
6. The Depositor has received all consents and approvals to the sale of
the Home Equity Loans to the Issuer required by the terms of the Home Equity
Loans that constitute instruments.
7. To the extent the Collection Account or subaccounts thereof constitute
securities entitlements, certificated securities or uncertificated securities,
the Issuer has received all consents and approvals required to transfer to the
Indenture Trustee its interest and rights in the Collection Account hereunder.
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Perfection
8. The Issuer has caused or will have caused, within ten days after the
effective date of this Indenture, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the pledge of the Collateral from the
Issuer to the Indenture Trustee and the security interest in the Collateral
granted to the Indenture Trustee under this Indenture.
9. With respect to the Collection Account and all subaccounts that
constitute deposit accounts, either:
(i) the Issuer has delivered to the Indenture Trustee a fully-executed
agreement pursuant to which the bank maintaining the deposit accounts has
agreed to comply with all instructions originated by the Indenture Trustee
directing disposition of the funds in the Collection Account without further
consent by the Issuer; or
(ii) the Issuer has taken all steps necessary to cause the Indenture
Trustee to become the account holder of the Collection Account.
10. With respect to the Collection Account or subaccounts thereof that
constitute securities accounts or securities entitlements, either:
(i) the Issuer has caused or will have caused, within ten days after the
effective date of this Agreement, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest in the Collection
Account granted by the Issuer to the Indenture Trustee; or
(ii) the Issuer has delivered to the Indenture Trustee a fully-executed
agreement pursuant to which the securities intermediary has agreed to comply
with all instructions originated by the Indenture Trustee relating to the
Collection Account without further consent by the Depositor; or
(iii) the Issuer has taken all steps necessary to cause the securities
intermediary to identify in its records the Indenture Trustee as the person
having a security entitlement against the securities intermediary in the
Collection Account.
Priority
11. Other than the transfer of the Transferred Assets to the Trust under
the Transfer Agreement, the transfer of the Home Equity Loans to the Depositor
under the Home Equity Loan Purchase Agreement, the transfer of the Home Equity
Loans to the Trust pursuant to the Sale and Servicing Agreement and the
security interest granted to the Indenture Trustee pursuant to this Indenture,
none of the Issuer, the Depositor or the Sellers has pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Home Equity
Loans. None of the Issuer, the Depositor or the Sellers has authorized the
filing of, or are aware of any financing statements against the Issuer, the
Depositor or any of the Sellers that include a description of collateral
covering the Home Equity Loans other than any financing statement relating to
the security interest granted to the Indenture Trustee hereunder or that has
been terminated.
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12. The Issuer is not aware of any judgment, ERISA or tax lien filings
against the Issuer, the Depositor or any of the Sellers.
13. The Sellers have in their possession all original copies of the
Mortgage Notes that constitute or evidence the Home Equity Loans. To the
Issuer's knowledge, none of the instruments that constitute or evidence the
Home Equity Loans has any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the Issuer.
All financing statements filed or to be filed against the Issuer, the
Depositor and the Sellers in favor of the Indenture Trustee in connection
herewith describing the Home Equity Loans contain a statement to the following
effect: "A purchase of or security interest in any collateral described in
this financing statement will violate the rights of the Indenture Trustee."
14. Neither the Collection Account nor any subaccount thereof is in the
name of any person other than the Issuer or the Indenture Trustee as trustee
under the Indenture or in the name of its nominee. The Issuer has not
consented for the securities intermediary of the Collection Account to comply
with entitlement orders of any person other than the Indenture Trustee.
15. Survival of Perfection Representations. Notwithstanding any other
provision of this Agreement or any other transaction document, the Perfection
Representations contained in this Schedule shall be continuing, and remain in
full force and effect (notwithstanding any replacement of the Master Servicer
or termination of the Master Servicer's rights to act as such) until such time
as all obligations under this Agreement have been finally and fully paid and
performed.
16. No Waiver. The parties to this Agreement (i) shall not, without
obtaining a confirmation of the then-current rating of the Notes and consent
of the Insurer (so long as no Insurer Default has occurred and is continuing),
waive any of the Perfection Representations, and (ii) shall provide the Rating
Agencies and the Insurer (so long as no Insurer Default has occurred and is
continuing) with prompt written notice of any breach of the Perfection
Representations, and shall not, without obtaining a confirmation of the
then-current rating of the Notes (as determined after any adjustment or
withdrawal of the ratings following notice of such breach) and consent of the
Insurer (so long as no Insurer Default has occurred and is continuing) waive a
breach of any of the Perfection Representations.
17. Master Servicer to Maintain Perfection and Priority. The Issuer shall
cause the Master Servicer, in order to evidence the interests of the
Depositor, the Issuer, the Insurer and the Indenture Trustee under the Sale
and Servicing Agreement, to take such action, or execute and deliver such
instruments (other than effecting a Filing (as defined below), unless such
Filing is effected in accordance with this paragraph) as may be necessary or
advisable (including, without limitation, such actions as are requested by the
Indenture Trustee) to maintain and perfect, as a first priority interest, the
Indenture Trustee's security interest in the Home Equity Loans. The Issuer
shall cause the Master Servicer to, from time to time and within the time
limits established by law, prepare and present to the Indenture Trustee for
the Indenture Trustee to authorize (based in reliance on the Opinion of
Counsel hereinafter provided for) the Master Servicer to file, all financing
statements, amendments, continuations, initial financing statements in lieu of
a continuation statement, terminations, partial terminations, releases or
partial releases, or any
A-3
other filings necessary or advisable to continue, maintain and perfect the
Indenture Trustee's security interest in the Home Equity Loans as a
first-priority interest (each a "Filing"). The Issuer shall cause the Master
Servicer to present each such Filing to the Indenture Trustee and the Insurer
together with (x) an Opinion of Counsel to the effect that such Filing is (i)
consistent with grant of the security interest to the Trust pursuant to
Section 2.01 of the Sale and Servicing Agreement and the grant of the security
interest to the Indenture Trustee pursuant to this Indenture, (ii) satisfies
all requirements and conditions to such Filing in this Agreement and (iii)
satisfies the requirements for a Filing of such type under the Uniform
Commercial Code in the applicable jurisdiction (or if the Uniform Commercial
Code does not apply, the applicable statute governing the perfection of
security interests), and (y) a form of authorization for the Indenture
Trustee's signature. Upon receipt of such Opinion of Counsel and form of
authorization, the Indenture Trustee shall promptly authorize in writing the
Master Servicer to, and the Issuer shall cause the Master Servicer to, effect
such Filing under the Uniform Commercial Code without the signature of the
Depositor or the Trust or the Indenture Trustee where allowed by applicable
law. Notwithstanding anything else in the transaction documents to the
contrary, the Master Servicer shall not have any authority to effect a Filing
without obtaining written authorization from the Indenture Trustee.
A-4
SCHEDULE B
HOME EQUITY LOAN SCHEDULE
[On file with Sidley Xxxxxx Xxxxx & Xxxx LLP]
B-1
EXHIBIT A
FORM OF NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
No. CUSIP NO. 441917 AU5
Aggregate Note Principal Amount: Denomination of this Note:
$846,640,000 $[o]
HOUSEHOLD HOME EQUITY LOAN TRUST 2002-4
CLOSED-END HOME EQUITY LOAN ASSET BACKED NOTES, SERIES 2002-4
HOUSEHOLD HOME EQUITY LOAN TRUST 2002-4, a statutory trust organized
and existing under the laws of the State of Delaware (herein referred to as
the "Trust"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of $____________ payable on each Payment
Date in an amount equal to the result obtained by multiplying (i) a fraction
the numerator of which is the initial Note Principal Amount of this Note and
the denominator of which is the Note Principal Amount of all Notes by (ii) the
aggregate amount, if any, payable from the Collection Account in respect of
principal on the Note pursuant to Section 5.01 of the Sale and Servicing
Agreement dated November 14, 2002 (the "Sale and Servicing Agreement"), among
the Trust, HFC Revolving Corporation, as Depositor (the "Depositor"),
Household Finance Corporation, as Master Servicer ("HFC"), and Bank One,
National Association, a national banking association, as Indenture Trustee
(the "Indenture Trustee"); provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the earliest to occur of (i)
the Payment Date occurring in October 2032 (the "Final Scheduled Payment
Date"), (ii) the Redemption Date or (iii) the date on which an Event of
Default under the Indenture dated November 14, 2002, between the Trust and the
Indenture Trustee shall have occurred and be continuing, if the Indenture
Trustee or the Holders of Notes representing not less than 66-2/3% of the
Outstanding Amount of the Notes with the
A-1
consent of the Insurer (so long as no Insurer Default has occurred and is
continuing) have declared the Notes to be immediately due and payable in the
manner provided in Section 5.2 of the Indenture. Capitalized terms used but
not defined herein are defined in Article I of the Indenture, which also
contains rules as to construction that shall be applicable herein.
The Trust will pay interest on this Note at the rate per annum
described in the Sale and Servicing Agreement with respect to the Note on the
Note Principal Amount of this Note outstanding on the preceding Payment Date
(after giving effect to all payments of principal made on the preceding
Payment Date) on each Payment Date until the principal of this Note is paid or
made available for payment in full. Interest on this Note will accrue for each
Payment Date during the period from and including the preceding Payment Date
to the day immediately preceding such Payment Date (or, in the case of the
first Payment Date, the period from and including the Closing Date to the day
immediately preceding the first Payment Date) (each, an "Accrual Period").
Interest will be computed on the basis of the actual number of days in each
Accrual Period and a 360-day year. Such principal of and interest on this Note
shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Trust
with respect to this Note shall be applied first to interest due and payable
on this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Trust has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date
set forth below.
Date: November 14, 2002
HOUSEHOLD HOME EQUITY LOAN TRUST 2002-4
By: THE BANK OF NEW YORK,
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement
By: _________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: November 14, 2002
BANK ONE, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee,
By: _________________________
Authorized Signatory
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(REVERSE OF NOTE)
This Note is one of a duly authorized issue of Notes of the Trust,
designated as Closed-End Home Equity Loan Asset Backed Notes, Series 2002-4,
all issued under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Trust, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of
the Indenture.
The Notes are and will be secured by the collateral pledged as security
therefor as provided in the Indenture.
Principal of the Notes will be payable on each Payment Date in an amount
described on the face hereof. "Payment Date" means the 20th day of each month,
or, if any such date is not a Business Day, the next succeeding Business Day,
commencing in December 2002.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Final Scheduled Payment Date and the
Redemption Date. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable on the date on which an Event of
Default under the Indenture shall have occurred and be continuing and the
Indenture Trustee, with the consent of the Insurer or at the direction of the
Insurer (so long as no Insurer Default has occurred and is continuing) or upon
the prior written direction of the Holders of Notes representing not less than
66-2/3% of the Outstanding Amount of the Notes (with the consent of the
Insurer, which consent shall not be unreasonably withheld), shall have
declared the Notes to be immediately due and payable in the manner provided in
Section 5.2 of the Indenture. All principal payments on the Notes shall be
made pro rata to the Holders of the Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the related installment of principal, if any, to the extent not
in full payment of this Note, shall be made by wire transfer of immediately
available funds to, or by check or money order mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
or upon written request by a Noteholder delivered to the Indenture Trustee at
least five Business Days prior to such Record Date, by wire transfer (but only
if such Noteholder is the Depository or such Noteholder owns of record one or
more Notes having principal denominations aggregating at least $1,000,000) or
by such other means of payment as the Noteholder and the Indenture Trustee
shall agree. Such checks or money orders shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Payment Date shall be binding upon all future Holders of this Note and
of any Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. If funds are expected
to be available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Payment Date, then the
Indenture Trustee, in the name of and on behalf of the Trust, will notify the
Person who was the Registered Holder hereof as of the Record Date preceding
such Payment Date by notice mailed or transmitted by facsimile prior to such
Payment Date, and the amount
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then due and payable shall be payable only upon presentation and surrender of
this Note at the Indenture Trustee's principal Corporate Trust Office or at
the office of the Indenture Trustee's agent appointed for such purposes
located in New York, New York.
As provided in the Sale and Servicing Agreement, the Notes may be
redeemed in whole, but not in part, at the option of the Master Servicer, on
any Payment Date after the Payment Date on which the Note Principal Amount of
the Notes is less than or equal to 20% of the initial Note Principal Amount of
the Notes after giving effect to all payments on such Payment Date.
As provided in the Indenture, if the full amount of principal and
interest then due on the Notes is not paid by the Payment Date in November
2012, the Indenture Trustee will begin an auction process for the sale of the
remaining Home Equity Loans. If the Indenture Trustee receives a bid meeting
the conditions specified in the Indenture, the remaining Home Equity Loans
will be sold and the Trust will use the proceeds of such sale to redeem the
Notes.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Trust pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Note
Registrar, which requirements include membership or participation in the
Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the Trust may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Trust, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Trust or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Trust, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may
have expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to pay
any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that such
Noteholder or Note Owner
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will not at any time institute against the Transferor (and any wholly-owned
subsidiary thereof), the Depositor, the Master Servicer or the Trust, or join
in any institution against the Transferor (and any wholly-owned subsidiary
thereof), the Depositor, the Master Servicer or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or
any of the Transaction Documents.
Each Person that acquires a Note shall be required to represent, or
in the case of a Book-Entry Note, will be deemed to represent by its
acceptance of the Note, that (i) it is not, and is not acquiring the Note on
behalf of or with "plan assets" (as determined under Department of Labor
Regulation ss.2510.3-101 or otherwise) of a Plan, or (ii) its acquisition and
holding of the Note are eligible for relief under Prohibited Transaction Class
Exemption ("PTCE") 00-00, XXXX 00-0, XXXX 91-38, XXXX 00-00, XXXX 96-23 or a
similar exemption.
The Trust has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Trust
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for all purposes as indebtedness of the Trust.
Prior to the due presentment for registration of transfer of this Note,
the Trust, the Indenture Trustee and any agent of the Trust or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note
be overdue, and none of the Trust, the Indenture Trustee or any such agent
shall be affected by notice to the contrary.
As provided in the Indenture and subject to certain limitations set forth
therein, by accepting its Note, each Noteholder agrees that unless an Insurer
Default exists and is continuing or unless otherwise specified in the
Indenture, the Insurer shall have the right to exercise all rights of the
Noteholders as specified under this Agreement without any further consent of
the Noteholders.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust and the rights of the Holders of the Notes under the Indenture at any
time by the Trust with the consent of the Majority Noteholder. The Indenture
also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Trust with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive certain terms
and conditions set forth in the Indenture without the consent of Holders of
the Notes issued thereunder.
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The term "Trust" as used in this Note includes any successor to the Trust
under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Trust, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Transaction Documents, none of the Trust in its individual
capacity, the Owner Trustee in its individual capacity, any owner of a
beneficial interest in the Trust, 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 covenants, obligations or indemnifications
contained in the Indenture. The Holder of this Note by its acceptance hereof
agrees that, except as expressly provided in the Transaction Documents, in the
case of an Event of Default under the Indenture, the Holder shall have no
claim against any of the foregoing for any deficiency, loss or claim
therefrom; provided, however, that nothing contained herein shall be taken to
prevent recourse to, and enforcement against, the assets of the Trust for any
and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
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ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee: __________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
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(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints , attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:_____________________
*/
--------------------------
Signature Guaranteed:
*/
---------------------------
________________
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
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