EXHIBIT 4.5
EXECUTION COPY
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PACIFICAMERICA HOME EQUITY LOAN TRUST SERIES 1997-1
Issuer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Indenture Trustee
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INDENTURE
Dated as of December 1, 1997
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PACIFICAMERICA HOME EQUITY LOAN ASSET-BACKED NOTES,
SERIES 1997-1
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TABLE OF CONTENTS
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Section Page
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ARTICLE I
Definitions
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1.01. Definitions.....................................................2
1.02. Incorporation by Reference of Trust Indenture Act...............2
1.03. Rules of Construction...........................................3
ARTICLE II
Original Issuance of Notes
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2.01. Form............................................................3
2.02. Execution, Authentication and Delivery..........................4
2.03. Acceptance of Mortgage Loans by Indenture Trustee...............4
ARTICLE III
Covenants
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3.01. Collection of Payments with respect to the Mortgage Loans.......5
3.02. Maintenance of Office or Agency.................................6
3.03. Money for Payments To Be Held in Trust; Paying Agent............6
3.04. Existence.......................................................7
3.05. Payment of Principal and Interest...............................8
3.06. Protection of Trust Estate.....................................10
3.07. Opinions as to Trust Estate....................................10
3.08. Performance of Obligations.....................................11
3.09. Negative Covenants.............................................11
3.10. Annual Statement as to Compliance..............................12
3.11. [Reserved].....................................................13
3.12. Representations and Warranties Concerning the Mortgage Loans...13
3.13. Amendments to Servicing Agreement..............................13
3.14. Servicer as Agent and Bailee of the Indenture Trustee..........13
3.15. Investment Company Act.........................................13
3.16. Issuer May Consolidate, etc....................................14
3.17. Successor or Transferee........................................16
3.18. No Other Business..............................................16
3.19. No Borrowing...................................................16
3.20. Guarantees, Loans, Advances and Other Liabilities..............16
3.21. Capital Expenditures...........................................16
3.22. Treatment of Notes as Debt for Tax Purposes....................16
3.23. Restricted Payments............................................16
3.24. Notice of Events of Default....................................17
3.25. Further Instruments and Acts...................................17
3.26. Statements to Noteholders......................................17
3.27. Determination of Note Interest Rate............................17
3.28. Claims Upon the Policy; Policy Payments Account................17
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
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4.01. The Notes......................................................19
4.02. Registration of and Limitations on Transfer and Exchange
of Notes; Appointment of Certificate Registrar.............19
4.03. Mutilated, Destroyed, Lost or Stolen Notes.....................20
4.04. Persons Deemed Owners..........................................21
4.05. Cancellation...................................................21
4.06. Book-Entry Notes...............................................22
4.07. Notices to Depository..........................................22
4.08. Definitive Notes...............................................22
4.09. Tax Treatment..................................................23
4.10. Satisfaction and Discharge of Indenture........................23
4.11. Application of Trust Money.....................................24
4.12. Subrogation and Cooperation....................................25
4.13. Repayment of Monies Held by Paying Agent.......................26
4.14. Temporary Notes................................................26
ARTICLE V
Default and Remedies
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5.01. Events of Default..............................................26
5.02. Acceleration of Maturity; Rescission and Annulment.............27
5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee.......................................27
5.04. Remedies; Priorities...........................................30
5.05. Optional Preservation of the Trust Estate......................32
5.06. Limitation of Suits............................................32
5.07. Unconditional Rights of Noteholders To Receive Principal
and Interest................................................33
5.08. Restoration of Rights and Remedies.............................33
5.09. Rights and Remedies Cumulative.................................33
5.10. Delay or Omission Not a Waiver.................................33
5.11. Control by Note Insurer........................................33
5.12. Waiver of Past Defaults........................................34
5.13. Undertaking for Costs..........................................34
5.14. Waiver of Stay or Extension Laws...............................35
5.15. Sale of Trust Estate...........................................35
5.16. Action on Notes................................................37
5.17. Performance and Enforcement of Certain Obligations.............37
ARTICLE VI
The Indenture Trustee
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6.01. Duties of Indenture Trustee....................................38
6.02. Rights of Indenture Trustee....................................39
6.03. Individual Rights of Indenture Trustee.........................40
6.04. Indenture Trustee's Disclaimer.................................40
6.05. Notice of Event of Default.....................................40
6.06. Tax Administration of the Issuer...............................40
6.07. Compensation and Indemnity.....................................40
6.08. Replacement of Indenture Trustee...............................41
6.09. Successor Indenture Trustee by Merger..........................42
6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee....................................................42
6.11. Eligibility; Disqualification..................................44
6.12. Preferential Collection of Claims Against Issuer...............44
6.13. Representations and Warranties.................................44
6.14. Directions to Indenture Trustee................................45
6.15. The Agents.....................................................45
ARTICLE VII
Noteholders' Lists and Reports
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7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders.................................................45
7.02. Preservation of Information; Communications to Noteholders.....45
7.03. Reports by the Indenture Trustee...............................46
7.04. Reports by Indenture Trustee...................................47
7.05. Statements to Noteholders......................................47
7.06. Books and Records..............................................49
ARTICLE VIII
Accounts, Disbursements and Releases
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8.01. Collection of Money............................................49
8.02. Trust Accounts.................................................49
8.03. Officer's Certificate..........................................50
8.04. Termination Upon Distribution to Noteholders...................50
8.05. Release of Trust Estate........................................50
8.06. Surrender of Notes Upon Final Payment..........................51
8.07. Optional Redemption of the Notes...............................51
ARTICLE IX
Supplemental Indentures
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9.01. Supplemental Indentures Without Consent of Noteholders.........52
9.02. Supplemental Indentures With Consent of Noteholders............53
9.03. Execution of Supplemental Indentures...........................55
9.04. Effect of Supplemental Indenture...............................55
9.05. Conformity with Trust Indenture Act............................55
9.06. Reference in Notes to Supplemental Indentures..................55
ARTICLE X
Miscellaneous
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10.01. Compliance Certificates and Opinions, etc......................56
10.02. Form of Documents Delivered to Indenture Trustee...............57
10.03. Acts of Noteholders............................................58
10.04. Notices, etc., to Indenture Trustee, Issuer, Note
Insurer and Rating Agencies.................................59
10.05. Notices to Noteholders; Waiver.................................60
10.06. Conflict with Trust Indenture Act..............................61
10.07. Effect of Headings.............................................61
10.08. Successors and Assigns.........................................61
10.09. Separability...................................................61
10.10. Benefits of Indenture..........................................61
10.11. Legal Holidays.................................................61
10.12. GOVERNING LAW..................................................61
10.13. Counterparts...................................................61
10.14. Recording of Indenture.........................................62
10.15. Issuer Obligation..............................................62
10.16. No Petition....................................................62
10.17. Inspection.....................................................62
ARTICLE XI
Certain Matters Regarding the Note Insurer
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11.01. Certain Rights of the Note Insurer.............................63
11.02. Indenture Trustee To Act Solely with Consent of the
Note Insurer...............................................63
11.03. Trust Estate and Accounts Held for Benefit of the
Note Insurer and the Noteholders...........................64
11.04. Effect of Payments by the Note Insurer; Subrogation............64
11.05. Insolvency Proceedings.........................................64
11.06. Notices to the Note Insurer....................................65
Signatures and Seals ......................................................59
Acknowledgments ...........................................................60
EXHIBITS
Exhibit A - Form of Notes
Exhibit B - Trustee's Initial Certification
Exhibit C - Trustee's Final Certification
Exhibit D - Mortgage Loan Schedule
Appendix A Definitions
This Indenture, dated as of December 1, 1997, between
PacificAmerica Home Equity Loan Trust Series 1997-1, a Delaware business trust,
as Issuer (the "Issuer"), and Bankers Trust Company of California, N.A., a
national banking association, as Indenture Trustee (the "Indenture Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the PacificAmerica
Home Equity Loan Asset-Backed Notes, Series 1997-1 (the "Notes") and the Note
Insurer.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as Indenture Trustee for the benefit of the Holders of the Notes and the
Note Insurer, all of the Issuer's right, title and interest in and to whether
now existing or hereafter created by (a) the Initial Mortgage Loans, the
Subsequent Mortgage Loans, the Eligible Substitute Mortgage Loans and the
proceeds thereof and all rights under the Related Documents (including the
related Mortgage Files); (b) all funds on deposit from time to time in the
Collection Account allocable to the Mortgage Loans excluding any investment
income from such funds; (c) all funds on deposit from time to time in the
Payment Account and in all proceeds thereof, including any income on funds
deposited in, or investments made with funds deposited in, the Payment Account,
which income shall belong to, and be for the account of, the Indenture Trustee;
(d) all funds on deposit from time to time in the Interest Coverage Account
(other than any income thereon) and the Pre-Funding Account; (e) all rights
under the (i) Home Equity Loan Purchase Agreement as assigned to the Issuer,
(ii) the Servicing Agreement and any Subservicing Agreements and (iii) any title
and hazard insurance policies with respect to the Mortgaged Properties; and (f)
all present and future claims, demands, causes and choses in action in respect
of any or all of the foregoing and all payments on or under, and all proceeds of
every kind and nature whatsoever in respect of, any or all of the foregoing and
all payments on or under, and all proceeds of every kind and nature whatsoever
in the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, checks, deposit accounts, rights to payment of any and every kind,
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (collectively, the "Trust Estate" or the "Collateral").
The foregoing Grant is made in trust to secure (i) 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, (ii) the
payment of all other amounts payable under this Indenture and (iii) compliance
with the provisions of this Indenture, all as provided in this Inden ture.
The Indenture Trustee, as trustee on behalf of the Holders of the
Notes and the Note Insurer, acknowledges such Grant, accepts the trust under
this Indenture in accordance with the provisions hereof and agrees to perform
its duties as Indenture Trustee as required herein. The Indenture Trustee agrees
that it will hold the Note Insurance Policy in trust and that it will hold
any proceeds of any claim made upon the Note Insurance Policy solely for the use
and benefit of the Holders of the Notes in accordance with the terms hereof and
the terms of the Note Insurance Policy.
The Indenture Trustee further acknowledges that in the event the
conveyance of the Mortgage Loans by the Company to the Issuer pursuant to the
Trust Agreement is determined to constitute a financing, the Indenture Trustee
holds the Mortgage Loans as the designee of the Issuer, subject, however, to a
prior lien in favor of the Noteholders and the Note Insurer.
The Indenture Trustee further acknowledges that in the event (i)
the transfer of the Initial Mortgage Loans from the Seller to the Company
pursuant to the Home Equity Loan Purchase Agreement is determined to be a
financing; (ii) the transfer of the Initial Mortgage Loans from the Company to
the Issuer pursuant to the Trust Agreement is determined to be a financing,
and/or (iii) the conveyance of the Subsequent Mortgage Loans by the Seller to
the Issuer pursuant to the Home Equity Loan Purchase Agreement is determined to
constitute a financing, then in each case the Indenture Trustee holds the
Mortgage Loans as the designee and bailee of the Company and the Issuer,
respectively, subject however, in each case, to a prior lien in favor of the
Noteholders and the Note Insurer pursuant to the terms of this Indenture.
ARTICLE I
Definitions
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Section 1.01. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions attached hereto as Appendix A, which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the Trust Indenture Act (the "TIA"), the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
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"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA by reference to another statute or defined by Commission
rules, and have the meanings assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instru ment or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
Original Issuance of Notes
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Section 2.01. Form. The Notes, together with the Indenture Trustee's
certificate of authentication, 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.
The Notes shall be typewritten, printed, lithographed or engraved
or produced by any combination of these methods (with or without steel engraved
borders).
The terms of the Notes set forth in Exhibit A are part of the
terms of this Indenture.
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Section 2.02. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and
deliver Notes for original issue in an aggregate initial principal amount of
$100,000,000.
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
December 18, 1997. All other Notes that are authenticated after the Closing Date
shall be dated the date of its authentication. The Notes shall be issuable as
registered Notes and the Notes shall be issuable in the minimum initial Note
Principal Balances of $25,000 and in integral 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.
Section 2.03. Acceptance of Mortgage Loans by Indenture Trustee. (a) The
Indenture Trustee acknowledges receipt of, subject to the review described below
and any exceptions it notes pursuant to the procedures described below, the
documents (or certified copies thereof) referred to in Section 2.2 of the Home
Equity Loan Purchase Agreement and declares that it holds and will continue to
hold those documents and any amendments, replacements or supplements thereto and
all other assets of the Trust Estate as Indenture Trustee in trust for the use
and benefit of all present and future Holders of the Notes and the Note Insurer.
No later than 45 days after the Closing Date and each Subsequent Transfer Date
(or, with respect to any Eligible Substitute Mortgage Loan, within 5 Business
Days after the receipt by the Indenture Trustee thereof and, with respect to any
documents received beyond 45 days after the Closing Date, promptly thereafter),
the Indenture Trustee agrees, for the benefit of the Noteholders and the Note
Insurer, to review each Mortgage File delivered to it and to execute and
deliver, or cause to be executed and delivered, to the Seller and the Note
Insurer an initial certification in the form annexed hereto as Exhibit B. In
conducting such review, the Indenture Trustee will ascertain whether all
required documents described in Section 2.2 of the Home Equity Loan Purchase
Agreement have been executed and received and whether those documents relate,
determined on the basis of the Mortgagor name, original principal balance and
loan number, to the Mortgage Loans it has received, as identified in Exhibit D
to this Indenture, as supplemented (provided, however, that with respect to
those documents described in subclause (vi) of such section, the Indenture
Trustee's obligations shall extend only to documents actually delivered pursuant
to such
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subclause). In performing any such review, the Indenture Trustee may
conclusively rely on the purported due execution and genuineness of any such
document and on the purported genuineness of any signature thereon. If the
Indenture Trustee finds that any document constituting part of the Mortgage File
not to have been executed or received, or to be unrelated to the Mortgage Loans
identified in Exhibit D or to Attachment B to Exhibit 2 of the Home Equity Loan
Purchase Agreement, the Indenture Trustee shall promptly notify the Seller and
the Note Insurer of such finding and the Seller's obligation to cure such defect
or repurchase or substitute for the related Mortgage Loan.
(b) No later than 180 days after the Closing Date, the Indenture
Trustee will review, for the benefit of the Noteholders and the Note Insurer,
the Mortgage Files and will execute and deliver or cause to be executed and
delivered to the Seller and the Note Insurer, a final certification in the form
annexed hereto as Exhibit C. In conducting such review, the Indenture Trustee
will ascertain whether an original of each document described in subclauses (ii)
and (iv) of Section 2.2 of the Home Equity Loan Purchase Agreement required to
be recorded has been returned from the recording office with evidence of
recording thereon or a certified copy has been obtained from the recording
office. If the Indenture Trustee finds any document constituting part of the
Mortgage File has not been received, or to be unrelated, determined on the basis
of the Mortgagor name, original principal balance and loan number, to the
Mortgage Loans identified in Exhibit D or to Attachment B to Exhibit 2 of the
Home Equity Loan Purchase Agreement, the Indenture Trustee shall promptly notify
the Seller and the Note Insurer of such finding and the Seller's obligation to
cure such defect or repurchase or substitute for the related Mortgage Loan.
(c) Upon deposit of the Repurchase Price in the Payment Account
and receipt of a Request for Release in the form of Exhibit B to the Servicing
Agreement, the Indenture Trustee shall release to the Seller the related
Mortgage File and shall execute and deliver all instruments of transfer or
assignment, without recourse, furnished to it by the Seller as are necessary to
vest in the Seller title to and rights under the related Mortgage Loan. Such
purchase shall be deemed to have occurred on the date on which certification of
the deposit of the Repurchase Price in the Payment Account was received by the
Indenture Trustee. The Indenture Trustee shall amend the applicable Mortgage
Loan Schedule to reflect such repurchase and shall promptly notify the Master
Servicer, the related Sub-Servicer, the Note Insurer and the Rating Agencies of
such amendment.
ARTICLE III
Covenants
Section 3.01. Collection of Payments with respect to the Mortgage Loans.
The Indenture Trustee shall establish and maintain an Eligible Account (the
"Payment Account"), held in trust for the benefit of the Noteholders and the
Note Insurer. The Indenture Trustee shall, subject to the terms of this
paragraph, deposit in the Payment Account, (i) on the date of receipt (if
received prior to 3:00 p.m. Eastern Standard Time, and if not, then on the
Business Day following receipt) from the Master Servicer or any Sub-Servicer,
each remittance received by the Indenture Trustee
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with respect to the Mortgage Loans and (ii) amounts transferred from the
Pre-Funding Account and the Interest Coverage Account. The Indenture Trustee
shall make all payments of principal of and interest on the Notes, subject to
Section 3.03, as provided in Section 3.05 from monies on deposit in the Payment
Account.
Section 3.02. Maintenance of Office or Agency. The Issuer will maintain
within the United States of America, an office or agency where, subject to
satisfaction of conditions set forth herein, Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. The Issuer will give notice to the Indenture Trustee and the
Note Insurer of any change in the location of such office. 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 of the Indenture
Trustee, and the Issuer hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
Section 3.03. Money for Payments To Be Held in Trust; Paying Agent. (a) As
provided in Section 3.01, all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Payment Account
pursuant to Section 3.01 shall be made on behalf of the Issuer by the Indenture
Trustee or by the Paying Agent, and no amounts so withdrawn from the Payment
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.03.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee and the Note Insurer notice of any
default by the Issuer of which it has actual knowledge in the making of any
payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment;
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(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; and
(vi) not commence a bankruptcy proceeding against the Issuer in
connection with this Indenture.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Request direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any
money held by the Indenture Trustee or any Paying Agent in trust for the payment
of any amount due with respect to any Note (other than amounts paid under the
Note Insurance Policy) and remaining unclaimed for one year after such amount
has become due and payable shall be discharged from such trust and be paid to
the Issuer; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment thereof (but only to the
extent of the amounts so paid to the Issuer), and all liability of the Indenture
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Indenture Trustee or such Paying Agent,
before being required to make any such repayment, shall at the expense and
direction of the Issuer cause to be published once, in an Authorized Newspaper,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be paid to the Issuer.
The Indenture Trustee with the consent of the Note Insurer, so long as no Note
Insurer Default exists, may also adopt and employ, at the expense and direction
of the Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in monies due and payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying Agent,
at the last address of record for each such Holder).
Section 3.04. Existence. (a) The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Mortgage Loans and each other
instrument or agreement included in the Trust Estate.
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(b) Any successor to the Owner Trustee appointed pursuant to
Section 9.03 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 3.05. Payment of Principal and Interest. (a) On each Payment Date
from amounts on deposit in the Payment Account in accordance with Section 8.02
hereof, the Indenture Trustee shall pay to the Noteholders and to other Persons
the amounts to which they are entitled as set forth below; provided, however,
that any amounts representing payments from the Note Insurer shall be used only
to pay interest and principal to the Noteholders pursuant to clauses (iii) and
(iv):
(i) to the Indenture Trustee, the Indenture Trustee Fee and,
payable on the Payment Date occurring each January commencing in January
1998, to the Owner Trustee, the Owner Trustee Fee;
(ii) to the Note Insurer, the Note Insurance Premium;
(iii) to the Noteholders, the Interest Payment Amount with respect
to such Payment Date;
(iv) to the Noteholders, as principal on the Notes, the Principal
Payment Amount with respect to such Payment Date;
(v) to the Note Insurer, the sum of (a) all payments previously
paid by the Note Insurer under the Note Insurance Policy which have not
previously been reimbursed, (b) any other amounts due to the Note Insurer
pursuant to the Insurance Agreement, to the extent not previously paid or
reimbursed and (c) interest on the foregoing as set forth in the Insurance
Agreement from the date such amounts become due until paid in full;
(vi) to the Noteholders, as principal on the Notes, the
Subordination Increase Amount for such Payment Date;
(vii) to the Noteholders, any Carry-Forward Amount for such
Payment Date;
(viii) to the Indenture Trustee, any amounts owing to the
Indenture Trustee under any Basic Documents remaining unpaid;
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(ix) to the Master Servicer, any amounts owing to the Master
Servicer pursuant to Section 5.03 of the Servicing Agreement in connection
with the indemnity by the Issuer thereunder; and
(x) any remaining amount, to the Certificate Paying Agent, on
behalf of the Certificateholders.
The Indenture Trustee shall make claims under the Note Insurance
Policy pursuant to Section 3.28 of this Indenture and in accordance with the
Note Insurance Policy. The Indenture Trustee shall deposit any Scheduled Payment
received from the Note Insurer in the Policy Payment Account. All amounts
received under the Note Insurance Policy shall be used solely for the payment to
Holders of principal and interest on the Notes pursuant to Section 3.05 of the
Indenture.
On each Payment Date, the Certificate Paying Agent shall deposit
in the Certificate Distribution Account all amounts it received pursuant to this
Section 3.05 for the purpose of distributing such funds to the
Certificateholders after payment of trust expenses to the Owner Trustee or the
Indenture Trustee pursuant to the Trust Agreement.
Interest will accrue on the Notes during an Interest Period on the
basis of the actual number of days in such Interest Period and a year assumed to
consist of 360 days.
Any installment of interest or principal, if any, payable on any
Note that is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall, so long as the Notes are Book-Entry Notes
registered in the name of the Depository or its nominee, be paid by wire
transfer to the Depository or its nominee; otherwise if such Holder shall have
so requested of the Indenture Trustee in writing at least five Business Days
prior to the related Record Date and such Holder holds Notes of an aggregate
initial Note Principal Balance of at least $5,000,000, such installment shall be
paid by wire transfer to an account specified by such Holder, and in all other
cases or if no such instructions have been delivered to the Indenture Trustee,
by check to such Noteholder mailed to such Holder's address as it appears in the
Note Register in the amount required to be distributed to such Holder on such
Payment Date; provided, however, that the Indenture Trustee shall not pay to
such Holders any amount required to be withheld from a payment to such Holder by
the Code. The Indenture Trustee may deduct a reasonable wire transfer fee from
any payment made by wire transfer.
(b) The principal of each Note shall be due and payable in full on
the Final Scheduled Payment Date as provided in the form of Note set forth in
Exhibit A. All principal payments on the Notes shall be made to the Noteholders
entitled thereto in accordance with the Percentage Interests represented by such
Notes. Upon notice to the Indenture Trustee by the Issuer, the Indenture Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Final Scheduled Payment Date or other
final Payment Date (including any final Payment Date resulting from any
redemption pursuant to Section 8.07 hereof). Such notice shall to the extent
practicable be mailed no later than five
9
Business Days prior to such Final Scheduled Payment Date or other final Payment
Date and shall specify that payment of the principal amount and any interest due
with respect to such Note at the Final Scheduled Payment Date or other final
Payment Date will be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered for
such final payment. No interest shall accrue on the Notes on or after the Final
Scheduled Payment Date or any such other final Payment Date.
Section 3.06. Protection of Trust Estate. (a) The Issuer will from time to
time prepare, execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) cause the Issuer or the Master Servicer to enforce any of
their rights with respect to the Mortgage Loans; and
(iv) preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee, the Note Insurer and the Noteholders in such
Trust Estate against the claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture
Trustee shall not remove any portion of the Trust Estate that consists of money
or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.07 hereof, unless the Indenture Trustee
shall have first received an Opinion of Counsel to the effect that the lien and
security interest created by this Indenture with respect to such property will
continue to be maintained after giving effect to such action or actions.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to sign any financing statement, continuation statement or
other instrument required to be signed pursuant to this Section 3.06 upon the
Issuer's preparation thereof and delivery to the Indenture Trustee.
Section 3.07. Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee, the Note Insurer and the Owner
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing of
this Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continu ation statements, as are necessary to perfect and make
effective the lien and first priority security interest in the Collateral and
reciting the details of such action, or stating that, in the opinion of
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such counsel, no such action is necessary to make such lien and first priority
security interest effective.
(b) On or before December 1 in each calendar year, beginning in
1998, the Issuer shall furnish to the Indenture Trustee and the Note Insurer an
Opinion of Counsel at the expense of the Issuer either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation statements as
is necessary to maintain the lien and security interest in the Collateral and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security interest.
Such Opinion of Counsel shall also describe the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest in the Collateral until December 31
in the following calendar year.
Section 3.08. Performance of Obligations. (a) The Issuer will punctually
perform and observe all of its obligations and agreements contained in this
Indenture, the Basic Documents and in the instruments and agreements included in
the Trust Estate.
(b) The Issuer, with the consent of the Note Insurer so long as no
Note Insurer Default exists, may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer.
(c) The Issuer will not take any action or permit any action to be
taken by others which would release any Person from any of such Person's
covenants or obligations under any of the documents relating to the Mortgage
Loans or under any instrument included in the Trust Estate, or which would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any of the documents relating to
the Mortgage Loans or any such instrument, except such actions as the Master
Servicer is expressly permitted to take in the Servicing Agreement. The
Indenture Trustee, as pledgee of the Mortgage Loans, shall with the consent of,
or direction of, the Note Insurer, so long as no Note Insurer Default exists, be
able to exercise the rights of the Issuer to direct the actions of the Master
Servicer pursuant to the Servicing Agreement.
Section 3.09. Negative Covenants. So long as any Notes are Outstanding, the
Issuer shall not:
(i) except as expressly permitted by this Indenture, sell,
transfer, exchange or otherwise dispose of the Trust Estate, unless
directed to do so by the Note Insurer or the Indenture Trustee with the
consent of the Note Insurer, so long as no Note Insurer Default exists;
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(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 by reason of the payment of the taxes levied
or assessed upon any part of the Trust Estate;
(iii) (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 other wise arise upon or burden the Trust Estate or any
part thereof or any interest therein or the proceeds thereof or (C) permit
the lien of this Indenture not to constitute a valid first priority
security interest in the Trust Estate;
(iv) waive or impair, or fail to assert rights under, the Mortgage
Loans, or impair or cause to be impaired the Issuer's interest in the
Mortgage Loans, the Home Equity Loan Purchase Agreement or any other Basic
Document, if any such action would materially and adversely affect the
interests of the Noteholders or the Note Insurer; or
(v) issue debt obligations under any other indenture;
(vi 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;
(vii) dissolve or liquidate in whole, or subject to Section 3.16,
in part or merge or consolidate with any other Person; or
(viii) take any other action or fail to take any action which may
cause the Issuer to be taxable as (a) an association pursuant to Section
7701 of the Code and the corresponding regulations or (b) as a taxable
mortgage pool pursuant to Section 7701(i) of the Code and the corresponding
regulations.
Section 3.10. Annual Statement as to Compliance. The Issuer will deliver to
the Indenture Trustee and the Note Insurer, within 120 days after the end of
each fiscal year of the Issuer (commencing with the fiscal year 1998), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and
of 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
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such year, or, if there has been a default in its compliance with any such
condition or covenant, specifying each such default known to such
Authorized Officer and the nature and status thereof.
Section 3.11. [Reserved].
Section 3.12. Representations and Warranties Concerning the Mortgage Loans.
The Indenture Trustee, as pledgee of the Mortgage Loans, has the benefit of the
representations and warranties made by the Seller in the Home Equity Loan
Purchase Agreement concerning the Seller and the Mortgage Loans and the right to
enforce the remedies against the Seller provided in such Home Equity Loan
Purchase Agreement to the same extent as though such representations and
warranties were made directly to the Indenture Trustee. If the Indenture Trustee
has actual knowledge of any breach of any representation or warranty made by the
Seller in the Home Equity Loan Purchase Agreement, the Indenture Trustee shall
promptly notify the Seller and the Note Insurer of such finding and the Seller's
obligation to cure such breach or repurchase or substitute for the related
Mortgage Loan.
Section 3.13. Amendments to Servicing Agreement. The Issuer covenants with
the Inden ture Trustee and the Note Insurer that it will not enter into any
amendment or supplement to the Servicing Agreement without the prior written
consent of the Master Servicer, the Sub-Servicer (provided, that the consent of
the Sub-Servicer shall not be unreasonably withheld), the Indenture Trustee and
the Note Insurer. The Indenture Trustee, as pledgee of the Mortgage Loans, may,
with the consent of the Note Insurer so long as no Note Insurer Default exists,
decline to enter into or consent to any such supplement or amendment if the Note
Insurer's or Noteholders' rights, duties or immunities would be materially and
adversely affected thereby. The Indenture Trustee may, but shall not be
obligated to, enter into any amendment or supplement to the Servicing Agreement
that affects the Indenture Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise.
Section 3.14. Servicer as Agent and Bailee of the Indenture Trustee. Solely
for purposes of perfection under Section 9-305 of the Uniform Commercial Code or
other similar applicable law, rule or regulation of the state in which such
property is held by the Master Servicer, the Issuer and the Indenture Trustee
hereby acknowledge that the Master Servicer is acting as agent and bailee of the
Indenture Trustee in holding amounts on deposit in the Collection Account, as
well as its agent and bailee in holding any Related Documents released to the
Master Servicer, and any other items constituting a part of the Trust Estate
which from time to time come into the possession of the Master Servicer. It is
intended that, by the Master Servicer's acceptance of such agency, the Indenture
Trustee, as a secured party of the Mortgage Loans, will be deemed to have
possession of such Related Documents, such monies and such other items for
purposes of Section 9-305 of the Uniform Commercial Code of the state in which
such property is held by the Master Servicer.
Section 3.15. Investment Company Act. The Issuer shall not become an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the
13
rules and regulations thereunder (taking into account not only the general
definition of the term "investment company" but also any available exceptions to
such general definition); provided, however, that the Issuer shall be in
compliance with this Section 3.15 if it shall have obtained an order exempting
it from regulation as an "investment company" so long as it is in compliance
with the conditions imposed in such order.
Section 3.16. Issuer May Consolidate, etc. (a) The Issuer shall not
consolidate or merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing under
the laws of the United States of America or any state or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form reasonably
satisfactory to the Indenture Trustee and the Note Insurer, the due and
punctual payment of the principal of and interest on all Notes and to the
Certificate Paying Agent, on behalf of the Certificateholders, and the
payment of the Note Insurance Premium and all other amounts payable to the
Note Insurer 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 Rating Agencies shall have notified the Issuer that such
transaction shall not cause the rating of the Notes, without taking into
account the Note Insurance Policy, to be reduced, suspended or withdrawn or
to be considered by either Rating Agency to be below investment grade;
(iv) the Issuer and the Note Insurer shall have received an
Opinion of Counsel (and shall have delivered a copy thereof to the
Indenture Trustee) to the effect that such transaction will not (A)
adversely affect the status of the Notes as indebtedness for federal income
tax purposes, or (B) cause the Trust to be subject to an entity level tax
for federal income tax purposes;
(v) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee and
the Note 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); and
(vii) the Note Insurer, so long as no Note Insurer Default exists,
shall have given its prior written consent.
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(b) The Issuer shall not convey or transfer any of its properties
or assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted shall (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 assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form satisfactory to
the Indenture Trustee, the due and punctual payment of the principal of and
interest on all Notes and to the Certificate Paying Agent, on behalf of the
Certificateholders, and the payment of the Note Insurance Premium and all
other amounts payable to the Note Insurer 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 agree 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
the Holders of the Notes and the Note Insurer, (D) unless otherwise
provided in such supplemental indenture, expressly agree to indemnify,
defend and hold harmless the Issuer, the Indenture Trustee and the Note
Insurer against and from any loss, liability or expense arising under or
related to this Indenture and the Notes and (E) expressly agree 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 Rating Agencies shall have notified the Issuer that such
transaction shall not cause the rating of the Notes or the rating of the
Notes without taking into account the Note Insurance Policy to be reduced,
suspended or withdrawn;
(iv) the Issuer and the Note Insurer shall have received an
Opinion of Counsel (and shall have delivered a copy thereof to the
Indenture Trustee) to the effect that such transaction will not (A)
adversely affect the status of the Notes as indebtedness for federal income
tax purposes, or (B) cause the Trust to be subject to an entity level tax
for federal income tax purposes;
(v) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee and
the Note 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); and
15
(vii) the Note Insurer, so long as no Note Insurer Default exists,
shall have given its prior written consent.
Section 3.17. Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.16(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties
of the Issuer pursuant to Section 3.16(b), the Issuer will be released from
every covenant and agreement of this Indenture to be observed or performed on
the part of the Issuer with respect to the Notes immediately upon the delivery
of written notice to the Indenture Trustee and the Note Insurer of such
conveyance or transfer and approval of such transaction given by the Note
Insurer to the Indenture Trustee.
Section 3.18. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Mortgage Loans and the issuance of the Notes and Certificates in the manner
contemplated by this Indenture and the Basic Documents and all activities
incidental thereto.
Section 3.19. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes and amounts due to the Note Insurer under this
Indenture and the Insurance Agreement.
Section 3.20. Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the Basic Documents, the Issuer shall not make
any loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.
Section 3.21. Capital Expenditures. The Issuer shall not make any
expenditure (by long- term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.22. Treatment of Notes as Debt for Tax Purposes. The Issuer shall
treat the Notes as indebtedness for all federal, state and local income and
franchise tax purposes.
Section 3.23. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership
16
or equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Issuer may make, or
cause to be made, (x) distributions to the Owner Trustee and the
Certificateholders as contemplated by, and to the extent funds are available for
such purpose under, this Indenture and the Trust Agreement and (y) payments to
the Master Servicer pursuant to the terms of the Servicing Agreement. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the Basic
Documents.
Section 3.24. Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Note Insurer and the Rating Agencies prompt written
notice of each Event of Default hereunder and under the Trust Agreement.
Section 3.25. Further Instruments and Acts. Upon request of the Indenture
Trustee or the Note 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 3.26. Statements to Noteholders. On each Payment Date, the
Indenture Trustee and the Certificate Registrar shall forward by mail to each
Noteholder and Certificateholder, respectively, the statement prepared pursuant
to Section 7.05 of this Indenture. The Indenture Trustee shall have no
responsibility to (i) verify information provided by the Master Servicer to be
included in such statement or (ii) include any information required to be
included in such statement if the Master Servicer has failed to timely produce
such information to the Indenture Trustee as required pursuant to the Servicing
Agreement.
Section 3.27. Determination of Note Interest Rate. On the second LIBOR
Business Day immediately preceding each Payment Date, the Indenture Trustee
shall determine One-Month LIBOR and the Note Interest Rate for the following
Interest Period and shall inform the Issuer, the Master Servicer and the Company
at their respective facsimile numbers given to the Indenture Trustee in writing
thereof.
Section 3.28. Claims Upon the Policy; Policy Payments Account.
(a) If, by the close of business on the third Business Day prior
to a Payment Date, the Indenture Trustee determines that a Deficiency Amount for
any Payment Date is greater than zero, then the Indenture Trustee shall give
notice to the Note Insurer by telephone or telecopy of the amount of such
Deficiency Amount. Such notice of such Deficiency Amount shall be confirmed in
writing in the form set forth as Exhibit A to the Endorsement of the Policy, to
the Note Insurer and the Fiscal Agent (as defined in the Policy), if any, at or
before 10:00 a.m. New York time on the second Business Day prior to such Payment
Date. Following Receipt (as defined in the Policy) by the Note Insurer of such
notice in such form, the Note Insurer or the Fiscal Agent will pay any amount
payable under the Policy on the later to occur of (i) 12:00 noon New York time
on the second Business Day following such receipt, and (ii) 12:00 noon New York
time on the Payment Date to which such deficiency relates, as provided in the
Endorsement to the Policy.
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(b) The Indenture Trustee shall establish a separate special
purpose trust account for the benefit of Noteholders and the Note Insurer
referred to herein as the "Policy Payments Account" over which the Indenture
Trustee shall have exclusive control and sole right of withdrawal. The Indenture
Trustee shall deposit any amount paid under the Policy in the Policy Payments
Account and distribute such amount only for purposes of payment to the
Noteholders of the Scheduled Payment for which a claim was made, and such amount
may not be applied to satisfy any costs, expenses or liabilities of the Master
Servicer, the Indenture Trustee or the Trust Estate. Amounts paid under the
Policy shall be transferred to the Payment Account in accordance with the next
succeeding paragraph and disbursed by the Indenture Trustee to the Noteholder in
accordance with Section 3.05. It shall not be necessary for such payments to be
made by checks or wire transfers separate from the checks or wire transfers used
to pay the Scheduled Payment with other funds available to make such payment.
However, the amount of any payment of principal of or interest on the Notes to
be paid from funds transferred from the Policy Payments Account shall be noted
as provided in paragraph (c) below in the Note Register and in the statement to
be furnished to Noteholder pursuant to Section 7.05. Funds held in the Policy
Payments Account shall not be invested.
On any Payment Date with respect to which a claim has been made
under the Policy, the amount of any funds received by the Indenture Trustee as a
result of any claim under the Policy, to the extent required to make Scheduled
Payment on such Payment Date, shall be withdrawn from the Policy Payments
Account and deposited in the Payment Account and applied by the Indenture
Trustee, together with the other funds to be withdrawn from the Payment Account
pursuant to Section 3.05 directly to the payment in full of the Scheduled
Payment due on the Notes. Funds received by the Indenture Trustee as a result of
any claim under the Policy shall be deposited by the Indenture Trustee in the
Policy Payments Account and used solely for payment to the Noteholder and may
not be applied to satisfy any costs, expenses or liabilities of the Master
Servicer, the Indenture Trustee or the Trust Estate. Any funds remaining in the
Policy Payments Account on the first Business Day following a Payment Date shall
be remitted to the Note Insurer, pursuant to the instructions of the Note
Insurer, by the end of such Business Day.
(c) The Indenture Trustee shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any Note from
moneys received under the Policy. The Note Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon one
Business Day's prior notice to the Indenture Trustee.
(d) The Indenture Trustee shall promptly notify the Note Insurer
and Fiscal Agent of any proceeding or the institution of any action, of which a
Responsible Officer of the Indenture Trustee has actual knowledge, seeking the
avoidance as a preferential transfer under applicable bankruptcy, insolvency,
receivership or similar law (a "Preference Claim") of any Scheduled Payment made
with respect to the Notes. Each Noteholder, by its purchase of Notes, the Master
Servicer and the Indenture Trustee hereby agree that the Note Insurer (so long
as no Note Insurer Default under clause (a) of the definition thereof has
occurred and is continuing) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including, without limitation, (i) the direction of any appeal
of any order relating to such Preference Claims and (ii) the posting of any
surety, supersedes or
18
performance bond pending any such appeal. In addition and without limitation of
the foregoing, the Note Insurer shall be subrogated to the rights of the Master
Servicer, the Indenture Trustee and each Noteholder in the conduct of any such
Preference Claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Preference Claim.
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
--------------------------------------------------
Section 4.01. The Notes. The Notes shall be registered in the name of a
nominee desig nated by the Depository. Beneficial Owners will hold interests in
the Notes through the book-entry facilities of the Depository in minimum initial
Note Principal Balances of $25,000 and inte gral multiples of $1,000 in excess
thereof.
Subject to the last sentence of Section 4.12 , the Indenture
Trustee may for all purposes (including the making of payments due on the Notes)
deal with the Depository as the authorized representative of the Beneficial
Owners with respect to the Notes for the purposes of exercising the rights of
Holders of Notes hereunder. In addition, subject to the last sentence of Section
4.12, except as provided in the next succeeding paragraph of this Section 4.01,
the rights of Beneficial Owners with respect to the Notes shall be limited to
those established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08
hereof, Beneficial Owners shall not be entitled to definitive certificates for
the Notes as to which they are the Beneficial Owners. Requests and directions
from, and votes of, the Depository as Holder of the Notes shall not be deemed
inconsistent if they are made with respect to different Beneficial Owners. The
Indenture Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Noteholders and give notice to the
Depository of such record date. Without the consent of the Issuer and the
Indenture Trustee, no Note may be transferred by the Depository except to a
successor Depository that agrees to hold such Note for the account of the
Beneficial Owners.
In the event The Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
Section 4.02. Registration of and Limitations on Transfer and Exchange of
Notes; Appointment of Certificate Registrar and Note Registrar. The Issuer shall
cause the Indenture Trustee, as Note Registrar, to keep at the Corporate Trust
Office a Note Register in which, subject to such reasonable regulations as it
may prescribe, the Note Registrar shall provide for the registration of Notes
and of transfers and exchanges of Notes as herein provided.
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note at the Corporate Trust
Office, the Issuer shall execute and the
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Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes in authorized initial Note
Principal Balances evidencing the same aggregate Percentage Interests.
Subject to the foregoing, at the option of the Noteholders, Notes
may be exchanged for other Notes of like tenor and in authorized initial Note
Principal Balances evidencing the same aggregate Percentage Interests upon
surrender of the Notes to be exchanged at the Corporate Trust Office of the Note
Registrar. Whenever any Notes are so surrendered for exchange, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver the Notes which
the Note holder making the exchange is entitled to receive. Each Note presented
or surrendered for registration of transfer or exchange shall (if so required by
the Note Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Note Registrar
duly executed by the Holder thereof or his attorney duly authorized in writing
with such signature guaranteed by a commercial bank or trust company located or
having a correspondent located in the City of New York or the city in which any
Corporate Trust Office is located. Notes delivered upon any such transfer or
exchange will evidence the same obligations, and will be entitled to the same
rights and privileges, as the Notes surrendered.
No service charge shall be made for any registration of transfer
or exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
The Issuer hereby appoints the Indenture Trustee as Certificate
Registrar to keep at its Corporate Trust Office a Certificate Register pursuant
to Section 3.09 of the Trust Agreement in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges thereof pursuant to
Section 3.05 of the Trust Agreement. The Indenture Trustee hereby accepts such
appointment. The Issuer hereby appoints the Indenture Trustee as Note Registrar.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer, the Note Insurer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of the
UCC are met, the Issuer shall execute, and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, instead
of issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen
Note when so due or payable without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer, the Note Insurer
20
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 Note Insurer or the
Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03,
the Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 4.03 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Note Insurer, the
Indenture Trustee and any agent of the Issuer, the Note Insurer, or the
Indenture Trustee may treat the Person in whose name any Note is registered (as
of the day of determination) as the owner of such Note for the purpose of
receiving payments of principal of and interest, if any, on such Note and for
all other purposes whatsoever, whether or not such Note be overdue, and neither
the Issuer, the Note Insurer, the Indenture Trustee nor any agent of the Issuer,
the Note Insurer or the Indenture Trustee shall be affected by notice to the
contrary.
Section 4.05. Cancellation. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly 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 4.05, 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 Request that they
be destroyed or returned to it; provided, however, that such Issuer Request is
timely and the Notes have not been previously disposed of by the Indenture
Trustee.
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Section 4.06. Book-Entry Notes. The Notes, upon original issuance, will be
issued in the form of definitive Notes representing the Book-Entry Notes, to be
delivered to The Depository Trust Company, the initial Depository, by, or on
behalf of, the Issuer. Such Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Depository, and
no Beneficial Owner will receive a Definitive Note representing such Beneficial
Owner's interest in such Note, except as provided in Section 4.08. Unless and
until definitive, fully registered Notes (the "Definitive Notes") have been
issued to Beneficial Owners pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in full force and
effect;
(ii) the Note Registrar, the Note Insurer and the Indenture
Trustee shall be entitled to deal with the Depository for all purposes of
this Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the sole
holder of the Notes, and shall have no obligation to the Beneficial Owners
of Notes;
(iii) to the extent that the provisions of this Section 4.06
conflict with any other provisions of this Indenture, the provisions of
this Section 4.06 shall control;
(iv) subject to the last sentence of Section 4.12, the rights of
Beneficial Owners shall be exercised only through the Depository and shall
be limited to those established by law and agreements between such
Beneficial Owners of Notes and the Depository and/or the Depository
Participants. Unless and until Definitive Notes are issued pursuant to
Section 4.08, the initial Depository will make book-entry transfers among
the Depository Participants and receive and transmit payments of principal
of and interest on the Notes to such Depository Participants; and
(v) subject to the last sentence of Section 4.12, 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
Note Principal Balances of the Notes, the Depository shall be deemed to
represent such percentage only to the extent that it has received
instructions to such effect from Beneficial Owners and/or Depository
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
Section 4.07. Notices to Depository. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Beneficial Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. Definitive Notes. If (i) the Indenture Trustee determines
that the Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Notes and the Indenture Trustee is unable
to locate a qualified successor, (ii) the Indenture Trustee elects to
22
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, Beneficial Owners of Notes representing
beneficial interests aggregating at least a majority of the Note Principal
Balances of the Notes advise the Depository in writing that the continuation of
a book-entry system through the Depository is no longer in the best interests of
the Beneficial Owners, then the Depository shall notify all Beneficial Owners
and the Indenture Trustee of the occurrence of any such event and of the
availability of Definitive Notes to Beneficial Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Notes representing the
Book-Entry Notes by the Depository, accompanied by registration instructions,
the Issuer shall execute and the Indenture Trustee shall authenticate the
Definitive Notes in accordance with the instructions of the Depository. None of
the Issuer, the Note Registrar or the Indenture Trustee shall be liable for any
delay in delivery of 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. The Indenture Trustee shall notify the Note Insurer upon the
issuance of Definitive Notes.
Section 4.09. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness. The Issuer, by entering into this Indenture, and each
Noteholder, by its acceptance of its Note (and each Beneficial Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat the
Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness.
Section 4.10. Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes, except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders (and the Note
Insurer, as subrogee of the Noteholders) to receive payments of principal
thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09, 3.16, 3.18
and 3.19, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.07 and
the obligations of the Indenture Trustee under Section 4.11) and (vi) the rights
of Noteholders 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 and shall release and deliver the Collateral to or upon the
order of the Issuer, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 4.03 hereof and (ii) Notes for
whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
23
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. will become due and payable at the Final Scheduled
Payment Date within one year, or
c. have been declared immediately due and payable pursuant
to Section 5.02 hereof,
and the Issuer, in the case of a. or b. above, has irrevocably deposited or
caused to be irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on such Notes then outstanding not theretofore
delivered to the Indenture Trustee for cancellation when due on the Final
Scheduled Payment Date or other final Payment Date and has delivered
(pursuant to ss.10.01(b)) to the Indenture Trustee and the Note Insurer a
verification report from a nationally recognized accounting firm certifying
that the amounts deposited with the Indenture Trustee are sufficient to pay
and discharge the entire indebtedness of such Notes, or, in the case of c.
above, the Issuer shall have complied with all requirements of Section 8.07
hereof;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder and under the Insurance Agreement by the Issuer as
evidenced by the notice of the Note Insurer; and
(C) the Issuer has delivered to the Indenture Trustee and the Note
Insurer an Officer's Certificate and an Opinion of Counsel, each meeting
the applicable requirements of Section 10.01 hereof, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with and, if the Opinion of
Counsel relates to a deposit made in connection with Section 4.10(A)(2)b.
above, such opinion shall further be to the effect that such deposit will
constitute an "in-substance defeasance" within the meaning of Revenue
Ruling 85-42, 1985-1 C.B. 36, and in accordance therewith, the Issuer will
be the owner of the assets deposited in trust for federal income tax
purposes.
Section 4.11. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent or the
Issuer, Certificate Paying Agent as designee of the Issuer or the Note Insurer,
as applicable, as the Indenture Trustee may determine, to the Holders of Notes,
of all sums due and to become due thereon for principal and interest or
otherwise; but such monies need not be segregated from other funds except to the
extent required herein or required by law.
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Section 4.12. Subrogation and Cooperation. (a) The Issuer and the Indenture
Trustee acknowledge (and each Noteholder by acceptance of its Note hereby
agrees) that (i) to the extent the Note Insurer makes payments under the Note
Insurance Policy on account of principal of or interest on the Notes, the Note
Insurer will be fully subrogated to the rights of such Holders to receive such
principal and interest from the Issuer, and (ii) the Note Insurer shall be paid
such principal and interest but only from the sources and in the manner provided
herein and in the Insurance Agreement for the payment of such principal and
interest.
Scheduled Payments disbursed by the Indenture Trustee from
proceeds of the Note Insurance Policy shall not be considered payment by the
Issuer with respect to the Notes, nor shall such disbursement of such Scheduled
Payments discharge the obligations of the Issuer with respect to the amounts
thereof, and the Note Insurer shall become the owner of such amounts as the
deemed subrogee of such Noteholders.
The Indenture Trustee shall cooperate in all respects with any
reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interest under this Indenture or the Insurance
Agreement, consistent with this Indenture and without limiting the rights of the
Noteholders as otherwise set forth in the Indenture, including, without
limitation, upon the occurrence and continuance of a default under the Insurance
Agreement, a request to take any one or more of the following actions:
(i) institute Proceedings for the collection of all amounts then
payable on the Notes, or under this Indenture in respect to the Notes and
all amounts payable under the Insurance Agreement, 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 of Mortgage 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 Note Insurer hereunder;
provided, however, action shall be taken pursuant to this Section 4.12 by the
Indenture Trustee to preserve the Note Insurer's rights or interest under this
Agreement or the Insurance Agreement only to the extent such action is available
to the Noteholders or the Note Insurer under other provisions of this Indenture.
25
Notwithstanding any provision of this Indenture to the contrary,
so long as no Note Insurer Default exists, the Note Insurer shall at all times
be treated as if it were the exclusive Noteholder for the purposes of all
approvals, consents, waivers and the institution of any action and the direction
of all remedies hereunder, and the Indenture Trustee shall act in accordance
with the directions of the Note Insurer so long as it is indemnified therefor to
its reasonable satisfaction; provided, however, that the provisions of the first
paragraph of Section 5.06 shall not apply to the Note Insurer when the Note
Insurer is exercising the rights of the Noteholders pursuant to this paragraph.
Section 4.13. Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Person other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.05 and thereupon such Person shall be released from all further
liability with respect to such monies.
Section 4.14. Temporary Notes. Pending the preparation of any Definitive
Notes, the Issuer may execute and upon its written direction, the Indenture
Trustee may authenticate and make available for delivery, temporary Notes that
are printed, lithographed, typewritten, photocopied or otherwise produced, in
any denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
reasonably determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of the
Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes
upon surrender of the temporary Notes at the office or agency of the Indenture
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Issuer shall execute and the Indenture Trustee
shall authenticate and make available for delivery, in exchange therefor,
Definitive Notes of authorized denominations and of like tenor and aggregate
principal amount. Until so exchanged, such temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as Definitive Notes.
ARTICLE V
Default and Remedies
--------------------
Section 5.01. Events of Default. The Issuer shall deliver to the Indenture
Trustee and the Note Insurer, within five days after learning of the occurrence
of a Default or an Event of Default, written notice in the form of an Officer's
Certificate of the occurrence of such Default or Event of Default, its status
and what action the Issuer is taking or proposes to take with respect thereto.
26
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing or if the Seller shall purchase
all of the Mortgage Loans pursuant to Section 7.2 of the Home Equity Loan
Purchase Agreement, then and in every such case the Indenture Trustee may (with
the prior written consent of the Note Insurer), and, at the written direction of
the Note Insurer, or if a Note Insurer Default exists, the Holders of Notes
representing not less than a majority of the Note Principal Balances of all
Notes, shall, declare the Notes to be immediately due and payable, by a notice
in writing to the Issuer (and to the Indenture Trustee if given by Noteholders),
and upon any such declaration the unpaid Note Principal Balance of the Notes,
together with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity
with respect to an Event of Default has been made and before a judgment or
decree for payment of the money due has been obtained by the Indenture Trustee
as hereinafter in this Article V provided, the Note Insurer or, if a Note
Insurer Default exists, the Holders of Notes representing a majority of the Note
Principal Balances of all Notes, by written notice to the Issuer and the
Indenture Trustee, may waive the related Event of Default and rescind and annul
such declaration and its consequences if:
(i) the Issuer or the Note Insurer has paid or deposited with the
Indenture Trustee a sum sufficient to pay:
(A) all payments of principal of and interest on the Notes
and all other amounts that would then be due hereunder or upon the
Notes if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums reasonably paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and
counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
provided, however, the Note Insurer, so long as no Note Insurer Default exists,
may waive an Event of Default regardless of Section 5.02(i) or (ii) above.
No such rescission shall affect any subsequent default or impair
any right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in the
payment of any interest (including the Interest Payment Amount) on any Note when
the same becomes due and payable, and such default continues for a period of
five days, or (ii) default is made in the payment of the principal (including
the Principal Payment Amount and the Subordination Increase Amount) of or any
27
installment of the principal of any Note when the same becomes due and payable,
the Issuer shall, immediately upon demand of the Indenture Trustee, at the
direction of the Note Insurer, so long as no Note Insurer Default exists, pay to
the Indenture Trustee, for the benefit of the Holders of Notes and of the Note
Insurer, the whole amount then due and payable on the Notes for principal and
interest, with interest at the Note Interest Rate upon the overdue principal,
and in addition thereto such further amount as shall be sufficient to cover the
reasonable costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee and
its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, and at the direction of the Note Insurer, so long as no Note
Insurer Default exists, subject to the provisions of Section 10.16 hereof, may
institute a Proceeding for the collection of the sums so due and unpaid, and may
prosecute such Proceeding to judgment or final decree, and may enforce the same
against the Issuer or other obligor upon the Notes and collect in the manner
provided by law out of the property of the Issuer or other obligor the Notes,
wherever situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee, at the direction of the Note Insurer, so long as no Note Insurer
Default exists, subject to the provisions of Section 10.16 hereof may, as more
particularly provided in Section 5.04 hereof, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders and the Note
Insurer, by such appropriate Proceedings as the Indenture Trustee, at the
direction of the Note Insurer, so long as no Note Insurer Default exists, shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy
or legal or equitable right vested in the Indenture Trustee by this Indenture or
by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee, at the
direction of the Note Insurer, so long as no Note Insurer Default exists,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the 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
28
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all reasonable
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), the Note Insurer and of the Noteholders allowed
in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable
or deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders, the Note Insurer and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee, the Note 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,
with the consent of the Note Insurer, so long as no Note Insurer Default exists,
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, all other reasonable expenses
and liabilities incurred, all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence or bad faith,
and all amounts due to the Note Insurer.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any Note
holder 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
reasonable 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 and the Note
Insurer, subject to Section 5.05 hereof.
29
(g) In any Proceedings brought by the Indenture Trustee with the
consent of the Note Insurer, so long as no Note Insurer Default exists (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
Section 5.04. Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing and if an acceleration has been declared and not
rescinded pursuant to Section 5.02 hereof, the Indenture Trustee, subject to the
provisions of Section 10.16 hereof and with the consent of the Note Insurer so
long as no Note Insurer Default exists, may and, at the direction of the Note
Insurer so long as no Note Insurer Default exists, shall, do one or more of the
following (subject to Section 5.05 hereof):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, and all amounts payable under the Insurance Agreement, enforce
any judgment obtained, and collect from the Issuer and any other obligor
upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee, the Holders of the Notes and the Note
Insurer; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that so long as a Note Insurer Default exists, 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 Holders
of 100% of the aggregate Note Principal Balance, (B) the proceeds of such sale
or liquidation distributable to the Holders of the Notes are sufficient to
discharge in full all amounts then due and unpaid upon the Notes for principal
and interest and to reimburse the Note Insurer for any amounts drawn under the
Note Insurance Policy and any other amounts due to the Note Insurer under the
Insurance Agreement or (C) the Indenture Trustee determines that the Mortgage
Loans will not continue to provide sufficient funds for the payment of principal
of and interest on the Notes as they would have become due if the Notes had not
been declared due and payable, and the Indenture Trustee obtains the consent of
the Holders of a majority of the aggregate Note Principal Balance. In
determining such sufficiency or insufficiency with respect to clause (B) and
(C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
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(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out the money or property in the
following order; provided, however, that any amounts representing payments from
the Note Insurer shall be used only to pay interest and principal to the
Noteholders pursuant to clauses THIRD and FOURTH below:
FIRST: to the Indenture Trustee for amounts due under Section 6.07
hereof;
SECOND: to the Note Insurer, provided no Note Insurer Default
exists, with respect to any Premium Amount then due;
THIRD: to the Noteholders for amounts due and unpaid on the Notes
with respect to interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes
for interest (including the Interest Payment Amount but not
including the Carry-Forward Amount) from amounts available in the
Trust Estate for the Noteholders;
FOURTH: to Noteholders for amounts due and unpaid on the Notes
with respect to principal (including, but not limited to, any
Principal Payment Amount), from amounts available in the Trust
Estate for the Noteholders, and to each Noteholder ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, until the Note
Principal Balance is reduced to zero;
FIFTH: to the Note Insurer, the sum of (a) all payments previously
paid by the Note Insurer under the Note Insurance Policy which
have not previously been reimbursed, (b) any other amounts due to
the Note Insurer pursuant to the Insurance Agreement, to the
extent not previously paid or reimbursed and (c) interest on the
foregoing as set forth in the Insurance Agreement from the date
such amounts become due until paid in full (including any Premium
Amount not paid pursuant to clause SECOND above);
SIXTH: to the Noteholders for amounts due and unpaid on the Notes
with respect to the Carry-Forward Amount, ratably, without
preference or priority of any kind, according to the amounts due
and payable on the Notes with respect thereto, from amounts
available in the Trust Estate for the Noteholders; and
SEVENTH: to the payment of the remainder, if any, to the
Certificate Paying Agent to be distributed to the
Certificateholders or any other person legally entitled thereto.
The Indenture Trustee may fix a Record Date and payment date for
any payment to Noteholders pursuant to this Section 5.04. With respect to any
acceleration at the direction of the Note Insurer, the first payment date after
the acceleration shall be the first Payment Date after the acceleration.
Promptly after the Indenture Trustee receives such direction, the Indenture
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Trustee shall mail to each Noteholder a notice that states the Record Date, the
payment date and the amount to be paid.
Section 5.05. Optional Preservation of the Trust Estate. If the Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, with the consent of the Note Insurer, and
shall, at the direction of the Note Insurer, so long as no Note Insurer Default
exists, elect to take and maintain possession of the Trust Estate. It is the
desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest on the Notes and
other obligations of the Issuer including payment to the Note Insurer, and the
Indenture Trustee shall take such desire into account when determining whether
or not to take and maintain possession of the Trust Estate. In determining
whether to take and maintain possession of the Trust Estate, the Indenture
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless subject to the provisions of Section 10.16 hereof:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Note Principal
Balances of the Notes have made a written request to the Indenture Trustee
to institute such Proceeding in respect of such Event of Default in its own
name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice of request and offer of indemnity has failed to institute such
Proceedings;
(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of
a majority of the Note Principal Balances of the Notes; and
(vi) such Holder or Holders have the consent of the Note Insurer,
unless a Note Insurer Default exists.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb
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or prejudice the rights of any other Holders of Notes or to obtain or to seek to
obtain priority or preference over any other Holders or to enforce any right
under this Indenture, except in the manner herein provided.
Subject to the last paragraph of Section 4.12 herein, in the event
the Indenture Trustee shall receive conflicting or inconsistent requests and
indemnity from two or more groups of Holders of Notes, each representing less
than a majority of the Note Principal Balances of the Notes, the Indenture
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
Section 5.07. Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee, the Note
Insurer or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee, the Note Insurer 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 Note Insurer and the Noteholders shall continue as though
no such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, to the Note 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 Note Insurer or any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee, the Note 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 Note Insurer or by the Noteholders, as the case may be.
Section 5.11. Control by Note Insurer. The Note Insurer, or if a Note
Insurer Default exists, the Holders of a majority of the Note Principal Balances
of Notes (subject to the provisions of Section 5.06) shall have the right to
direct the time, method and place of conducting any
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Proceeding for any remedy available to the Indenture Trustee with respect to the
Notes or exer cising any trust or power conferred on the Indenture Trustee;
provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) if a Note Insurer Default exists, subject to the express
terms of Section 5.04, any direction to the Indenture Trustee to sell or
liquidate the Trust Estate shall be by Holders of Notes representing 100%
of the Note Principal Balances of the Notes;
(iii) if the conditions set forth in Section 5.05 hereof have been
satisfied and the Indenture Trustee, with the consent of the Note Insurer,
so long as no Note Insurer Default exists, elects to retain the Trust
Estate pursuant to such Section, then any direction to the Indenture
Trustee by Holders of Notes (other than with respect to the Note Insurer
exercising the rights of Noteholders pursuant to the last sentence of
Section 4.12) to sell or liquidate the Trust Estate shall be of no force
and effect; and
(iv) if a Note Insurer Default exists, the Indenture Trustee may
take any other action deemed proper by the Indenture Trustee that is not
inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability or, if a Note Insurer Default exists, 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 5.02 hereof,
the Note Insurer, or if a Note Insurer Default exists, the Holders of Notes of
not less than a majority of the Note Principal Balances of the Notes, may waive
any past Event of Default and its consequences except an Event of Default (a)
with respect to payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note or (c) the waiver of which would
materially and adversely affect the interests of the Note Insurer or modify its
obligation under the Note Insurance Policy. In the case of any such waiver, any
Event of Default arising therefrom shall be deemed to have been cured and not to
have occurred, for every purpose of this Indenture and the Issuer, 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 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
34
costs of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 5.13 shall not
apply to (a) any suit instituted by the Indenture Trustee or the Note Insurer,
(b) any suit instituted by any Noteholder, or group of Noteholders, in each case
holding in the aggregate more than 10% of the Note Principal Balances of the
Notes or (c) any suit instituted by any Noteholder for the enforcement of the
payment of principal of or interest on any Note on or after the respective due
dates expressed in such Note and in this Indenture.
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatso ever, claim or take the benefit or advantage
of, any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
Section 5.15. Sale of Trust Estate. (a) The power to effect any sale or
other disposition (a "Sale") of any portion of the Trust Estate pursuant to
Section 5.04 hereof is expressly subject to the provisions of Section 5.05
hereof and this Section 5.15. The power to effect any such Sale shall not be
exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired until the entire Trust Estate
shall have been sold or all amounts payable on the Notes and under this
Indenture and under the Insurance Agreement shall have been paid. The Indenture
Trustee with the consent of the Note Insurer, so long as no Note Insurer Default
exists, may from time to time postpone any public Sale by public announcement
made at the time and place of such Sale. The Indenture Trustee hereby expressly
waives its right to any amount fixed by law as compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the
Trust Estate, or any portion thereof, unless
(1) the Note Insurer or, if a Note Insurer Default exists, the
Holders of all Notes, consent to or direct the Indenture Trustee to make, such
Sale, or
(2) unless the Note Insurer otherwise consents, the proceeds of
such Sale would be not less than the entire amount which would be payable to the
Noteholders under the Notes and the Note Insurer in respect of amounts drawn
under the Note Insurance Policy and any other amounts due to the Note Insurer
under the Insurance Agreement, in full payment thereof in accordance with
Section 5.02 hereof, on the Payment Date next succeeding the date of such Sale,
or
(3) The Indenture Trustee determines with the consent of the Note
Insurer, so long as no Note Insurer Default exists, that the conditions for
retention of the Trust Estate set forth in Section 5.05 hereof cannot be
satisfied (in making any such determination, the Indenture
35
Trustee may rely upon an opinion of an Independent investment banking firm
obtained and delivered as provided in Section 5.05 hereof), and the Note Insurer
consents to such Sale, or if a Note Insurer Default exists, the Holders of Notes
representing at least 66-2/3% of the Note Principal Balances of the Notes
consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(c) Unless the Note Insurer or, if a Note Insurer Default exists,
the Holders of Notes representing at least 66-2/3% of the Note Principal
Balances of the Notes have otherwise consented or directed the Indenture
Trustee, at any public Sale of all or any portion of the Trust Estate at which a
minimum bid equal to or greater than the amount described in paragraph (2) of
subsection (b) of this Section 5.15 and no Person bids an amount equal to or
greater than such amount, the Indenture Trustee on behalf of the Trust shall
reject all bids.
(d) In connection with a Sale of all or any portion of the Trust
Estate,
(1) any Holder or Holders of Notes may bid for and with the
consent of the Note Insurer purchase the property offered for Sale, and upon
compliance with the terms of sale may hold, retain and possess and dispose of
such property, without further accountability, and may, in paying the purchase
money therefor, deliver any Notes or claims for interest thereon in lieu of cash
up to the amount which shall, upon distribution of the net proceeds of such
sale, be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Holders
thereof after being appropriately stamped to show such partial payment;
(2) the Indenture Trustee, with the consent of the Note Insurer,
so long as no Note Insurer Default exists, may bid for and acquire the property
offered for Sale in connection with any Sale thereof, and, subject to any
requirements of, and to the extent permitted by, applicable law in connection
therewith, may purchase all or any portion of the Trust Estate in a private
sale, and, in lieu of paying cash therefor, may make settlement for the purchase
price by crediting the gross Sale price against the sum of (A) the amount which
would be distributable to the Holders of the Notes and Holders of Certificates
and amounts owing to the Note Insurer as a result of such Sale in accordance
with Section 5.04(b) hereof on the Payment Date next succeeding the date of such
Sale and (B) the reasonable expenses of the Sale and of any Proceedings in
connection therewith which are reimbursable to it, without being required to
produce the Notes in order to complete any such Sale or in order for the net
Sale price to be credited against such Notes, and any property so acquired by
the Indenture Trustee shall be held and dealt with by it in accordance with the
provisions of this Indenture;
(3) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the Trust
Estate in connection with a Sale thereof;
36
(4) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection with a Sale thereof, and to take
all action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any monies.
Section 5.16. Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee, the Note 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 5.04(b)
hereof.
Section 5.17. Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee or the Note Insurer to
do so, the Issuer, in its capacity as holder of the Mortgage Loans, shall take
all such lawful action as the Indenture Trustee or the Note Insurer may request
to cause the Issuer to compel or secure the performance and observance by the
Seller and the Master Servicer, as applicable, of each of their obligations to
the Issuer under or in connection with the Home Equity Loan Purchase Agreement
and the Servicing Agreement, and by Pacific of each of its obligations to the
Issuer under or in connection with the Amended and Restated Purchase Agreement,
and to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Home Equity Loan
Purchase Agreement, the Servicing Agreement and the Amended and Restated
Purchase Agreement to the extent and in the manner directed by the Indenture
Trustee, with the consent of the Note Insurer, so long as no Note Insurer
Default exists, as pledgee of the Mortgage Loans, or by the Note Insurer,
including the transmission of notices of default on the part of the Seller, the
Master Servicer or Pacific thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Master Servicer of each of their obligations under the Home Equity
Loan Purchase Agreement and the Servicing Agreement and by Pacific of each of
its obligations to the Issuer under or in connection with the Amended and
Restated Loan Sale Agreement. So long as no Note Insurer Default exists, the
Note Insurer shall have the right to approve or reject any proposed successor to
the Master Servicer (other than the Indenture Trustee) under the Servicing
Agreement.
(b) The Indenture Trustee, as pledgee of the Mortgage Loans,
subject to the rights of the Note Insurer under this Agreement and the Servicing
Agreement may, and at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Note Insurer or, if
a Note Insurer Default exists, the Holders of 66-2/3% of the Note Principal
Balances of the Notes, shall exercise all rights, remedies, powers, privileges
and claims of the Issuer against the Seller or the Master Servicer under or in
connection with the Home Equity Loan Purchase Agreement and the Servicing
Agreement or against Pacific under or in
37
connection with the Amended and Restated Loan Sale Agreement, including the
right or power to take any action to compel or secure performance or observance
by the Seller, the Master Servicer or Pacific, 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 Home Equity Loan
Purchase Agreement, or the Amended and Restated Loan Sale Agreement, the
Servicing Agreement or the Amended and Restated Loan Sale Agreement, as the case
may be, and any right of the Issuer to take such action shall not be suspended.
ARTICLE VI
The Indenture Trustee
---------------------
Section 6.01. Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it (A) pursuant to Sections 5.11 or 5.15 or (B) from
the Note Insurer, which it is entitled to give under any of the Basic
Documents.
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(d) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(e) Money held in trust by the Indenture Trustee need not be
segregated from other trust funds except to the extent required by law or the
terms of this Indenture or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(h) The Indenture Trustee shall act in accordance with Sections
6.03 and 6.04 of the Servicing Agreement and shall act as successor to the
Master Servicer in accordance with Section 6.02 of the Servicing Agreement.
(i) For all purposes under this Indenture, the Indenture Trustee
shall not be deemed to have notice or knowledge of any Default or Event of
Default unless a Responsible Officer assigned to and working in the Indenture
Trustee's corporate trust department has actual knowledge thereof or unless
written notice of any event which is in fact such an Event of Default or Default
is received by the Indenture Trustee at the Corporate Trust Office, and such
notice references the Notes generally, the Issuer, the Trust Estate or this
Indenture.
Section 6.02. Rights of Indenture Trustee. (a) The Indenture Trustee may
rely on any document reasonably believed by it to be genuine and to have been
signed or presented by the proper person. The Indenture Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may reasonably require an Officer's Certificate or an Opinion of Counsel
reasonably satisfactory in form and substance to the Indenture Trustee, which
Officer's Certificate or Opinion of Counsel shall not be at the expense of the
Indenture Trustee or the Trust Estate. 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.
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(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers; provided, however, that the Indenture
Trustee's conduct does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may consult with counsel chosen by it
with due care, and advice or Opinion of Counsel with respect to legal matters
relating to this Indenture and the Notes shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Note Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Indenture Trustee
must comply with Section 6.11 hereof.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
Section 6.05. Notice of Event of Default. If an Event of Default occurs and
is continuing and if it is known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall promptly give notice thereof to the Note
Insurer. The Trustee shall mail to each Noteholder notice of the Event of
Default within 10 days after a Responsible Officer has actual knowledge thereof
unless such Event of Default shall have been waived or cured. Except in the case
of an Event of Default in payment of principal of or interest on any Note, the
Indenture Trustee may withhold the notice to 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 6.06. Tax Administration of the Issuer. The Indenture Trustee,
based solely on information timely provided by the Master Servicer, shall
prepare and file (or cause to be prepared and filed), on behalf of the Owner
Trustee, all tax returns and information reports, tax elections and such annual
or other reports of the Issuer as are necessary for preparation of tax returns
and information reports as provided in Section 5.03 of the Trust Agreement,
including without limitation Form 1099. All tax returns and information reports
shall be signed by the Owner Trustee as provided in Section 5.03 of the Trust
Agreement.
Section 6.07. Compensation and Indemnity. The Indenture Trustee shall
receive on each Payment Date the Indenture Trustee Fee as reasonable
compensation for its services. The amount of the Indenture Trustee Fee shall be
paid to the Indenture Trustee on each Payment Date pursuant to Section
3.05(a)(i) of this Indenture, and all amounts owing to the Indenture Trustee
hereunder
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in excess of such amount shall be paid solely as provided in Section
3.05(a)(viii) hereof. The Indenture Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Indenture
Trustee shall be reimbursed for all reasonable out-of-pocket expenses incurred
or made by it, including costs of collection, in addition to compensation for
its services, subject to the priorities established by Sections 3.05(a)(viii)
and 5.04(b) of this Indenture. Such expenses shall include reasonable
compensation and expenses, disbursements and advances of the Indenture Trustee's
agents, counsel, accountants and experts. The Indenture Trustee shall be
indemnified by the Master Servicer as set forth in Section 5.06(a) of the
Servicing Agreement against any and all loss, liability or expense (including
reasonable attorneys' fees) incurred by it in connection with the administration
of this Trust Estate and the performance of its duties hereunder. The Indenture
Trustee shall notify the Master Servicer and the Note Insurer promptly of any
claim for which it may seek indemnity. Failure by the Indenture Trustee to so
notify the Master Servicer shall not relieve the Master Servicer of its
obligations hereunder. The Master Servicer shall defend any such claim, and the
Indenture Trustee may have separate counsel and the Master Servicer shall pay
the reasonable fees and expenses of such counsel. The Master Servicer is not
obligated to reimburse any expense or indemnify against any loss, liability or
expense incurred by the Indenture Trustee through the Indenture Trustee's own
willful misconduct, negligence or bad faith. The indemnification provided by
this Section 6.07 shall survive the termination, satisfaction, discharge,
redemption or assignment of this Indenture or the resignation or removal of the
Indenture Trustee hereunder.
The Issuer's payment obligations to the Indenture Trustee pursuant
to this Section 6.07 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of an Event of Default
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee may
resign at any time by so notifying the Issuer and the Note Insurer. The Note
Insurer or, if a Note Insurer Default exists, the Holders of a majority of Note
Principal Balances of the Notes may remove the Indenture Trustee by so notifying
the Issuer and the Indenture Trustee and the Note Insurer and may appoint a
successor Indenture Trustee. The Issuer shall, with the consent of the Note
Insurer, so long as no Note Insurer Default exists, remove the Indenture Trustee
if:
(i) the Indenture Trustee fails to comply with Section 6.11
hereof;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
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If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of the Indenture Trustee for any reason (the Indenture
Trustee in such event being referred to herein as the retiring Indenture
Trustee), the Issuer shall, with the consent of the Note Insurer, so long as no
Note Insurer Default exists, promptly appoint a successor Indenture Trustee
acceptable to the Note Insurer.
A successor Indenture Trustee shall deliver a written acceptance
of its appointment to the retiring Indenture Trustee, the Note 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 the
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60
days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer, the Note Insurer or the Holders of a majority of
Note Principal Balances of the Notes may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant
to this Section, the Issuer's obligations under Section 6.07 shall continue for
the benefit of the retiring Indenture Trustee with respect to services performed
and expenses incurred prior to such replacement.
Section 6.09. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation, without any further act, shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11 hereof. The Indenture Trustee shall
provide the Issuer, the Rating Agencies and the Note Insurer with prior written
notice of any such transaction.
If 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 and 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 if 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 provided in the Notes or in this Indenture that the
certificate of the Indenture Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments
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to appoint one or more Persons to act as a co-trustee or co-trustees, or
separate trustee or separate trustees, of all or any part of the Trust Estate,
and to vest in such Person or Persons, in such capacity and for the benefit of
the Noteholders and the Note Insurer, such title to the Trust Estate, or any
part hereof, and, subject to the other provisions of this Section, such powers,
duties, obli gations, rights and trusts as the Indenture Trustee or the Note
Insurer 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 hereof and notice to, and the consent of, the Note
Insurer (but not the Noteholders) of the appointment of any co-trustee or
separate trustee shall be required.
(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 Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement 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
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of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture Trustee shall at
all times be acceptable to the Note Insurer and authorized to exercise corporate
trust powers. The Indenture Trustee shall also satisfy the requirements of TIA
ss.310(a) and have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition and it or its
parent shall have a long-term debt rating of Baa3 or better by Moody's and BBB
or better by Standard & Poor's. The Indenture Trustee shall comply with TIA ss.
310(b), including the optional provision permitted by the second sentence of TIA
ss. 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA ss. 310(b)(1) are met. If at any time the Indenture Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect specified in Section
6.08 hereof.
Section 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.13. Representations and Warranties. The Indenture Trustee hereby
represents that:
(i) The Indenture Trustee is duly organized and validly existing
as a national banking association in good standing under the laws of the
United States with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted;
(ii) The Indenture Trustee has the power and authority to execute
and deliver this Indenture and to carry out its terms; and the execution,
delivery and performance of this Indenture have been duly authorized by the
Indenture Trustee by all necessary corporate action;
(iii) The consummation of the transactions contemplated by this
Indenture and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the articles of
organization or bylaws of the Indenture Trustee or any agreement or other
instrument to which the Indenture Trustee is a party or by which it is
bound;
(iv) To the Indenture Trustee's best knowledge, there are no
proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Indenture Trustee or its
properties: (A) asserting the invalidity of this Indenture, (B) seeking to
prevent the consummation of any of the transactions contemplated by this
Indenture or (C)
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seeking any determination or ruling that might materially and adversely
affect the performance by the Indenture Trustee of its obligations under,
or the validity or enforceability of, this Indenture; and
(v) This Indenture, when executed by Indenture Trustee, will
constitute the legal, valid and binding obligation of the Indenture
Trustee, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles.
Section 6.14. Directions to Indenture Trustee. The Indenture Trustee is
hereby directed:
(a) to accept the pledge of the Mortgage Loans and hold the assets
of the Owner Trust Estate in trust for the Noteholders and the Note Insurer;
(b) to authenticate and deliver the Notes substantially in the
form prescribed by Exhibit A in accordance with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken by
the terms of this Indenture.
Section 6.15. The Agents. The provisions of this Indenture relating to the
limitations of the Indenture Trustee's liability and to its indemnity shall
inure also to the Paying Agent, the Note Registrar, the Certificate Paying Agent
and the Certificate Registrar.
ARTICLE VII
Noteholders' Lists and Reports
------------------------------
Section 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after each Record Date, a list, in such form
as the Indenture Trustee may reasonably require, of the names and addresses of
the Holders of Notes as of such Record Date, (b) at such other times as the
Indenture Trustee and the Note Insurer may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the Note
Registrar, no such list shall be required to be furnished.
Section 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.01
hereof and the names and addresses of Holders of Notes received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may
45
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss.312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA ss. 312(c).
Section 7.03. Reports by the Indenture Trustee. (a) The Indenture Trustee
shall:
(i) file with the Company and the Note Insurer, 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. Such filings shall be as follows: promptly after each
Payment Date, the Indenture Trustee shall file with the Commission via the
Electronic Data Gathering and Retrieval System, a Form 8-K with a copy of
the statement to Noteholders for such Payment Date as an exhibit thereto.
Prior to January 30, 1998, the Indenture Trustee shall file a Form 15
Suspension Notification with respect to the Trust Fund, if applicable.
Prior to March 30, 1998, the Indenture Trustee shall file a Form 10-K, in
substance conforming to industry standards, with respect to the Trust Fund.
The Company hereby grants to the Indenture Trustee a limited power of
attorney to execute and file each such document on behalf of the Company.
Such power of attorney shall continue until the earlier of (i) receipt by
the Trustee from the Company of written termination of such power of
attorney and (ii) the termination of the Trust Fund. At least three
Business Days prior to filing any Form 8-K or Form 10-K pursuant to this
Section 7.03, the Indenture Trustee shall deliver a copy of such Form 8-K
or Form 10-K, as the case may be, to the Company;
(ii) file with the Company, the Note Insurer and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Company and the Note Insurer (and the
Indenture Trustee shall transmit by mail to all Noteholders described in
TIA ss. 313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of this
Section 7.03(a) and by rules and regulations prescribed from time to time
by the Commission. For purposes of notice under TIA the parties hereto
agree that the Statement to Noteholders provided in Section 7.05 hereof
shall be deemed notice, as applicable.
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(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
(c) The Company and the Issuer hereby agrees to furnish such
information and otherwise cooperate with the Indenture Trustee as necessary for
the Indenture Trustee to perform its duties as provided in this Section 7.03.
Section 7.04. Reports by Indenture Trustee. If required by TIA ss. 313(a),
within 60 days after each January 1 beginning with January 1, 1998, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss. 313(c)
and to the Note Insurer a brief report dated as of such date that complies with
TIA ss. 313(a). The Indenture Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Noteholders
shall be filed by the Indenture Trustee with the Commission and each stock
exchange, if any, on which the Notes are listed. The Issuer shall notify the
Indenture Trustee and the Note Insurer if and when the Notes are listed on any
stock exchange.
Section 7.05. Statements to Noteholders. (a) Subject to Section 3.26 of
this Indenture, with respect to each Payment Date, the Indenture Trustee shall
deliver to each Certificateholder and Noteholder, the Note Insurer, the Company,
the Owner Trustee, the Certificate Paying Agent and each Rating Agency, a
statement setting forth the following information as to the Notes, to the extent
applicable:
(i) the aggregate amount of collections with respect to the
Mortgage Loans with respect to such Payment Date;
(ii) the Interest Payment Amount, Principal Payment Amount
and Subordination Increase Amount payable to the Noteholders for such Payment
Date, the Guaranteed Interest Payment Amount and the Carry-Forward Amount for
such Payment Date and the aggregate unpaid Carry-Forward Amount for all prior
Payment Dates;
(iii) the amount of the aggregate distribution to the
Noteholders for such Payment Date;
(iv) the Scheduled Payments, if any, paid by the Note Insurer
under the Note Insurance Policy for such Payment Date and the aggregate
Scheduled Payments for all prior Payment Dates paid by the Note Insurer under
the Note Insurance Policy and not yet reimbursed;
(v) the aggregate Principal Balance of the Mortgage Loans as
of the end of the preceding Due Period;
(vi) the number and aggregate Principal Balances of Mortgage
Loans (a) as to which the Monthly Payment is delinquent for 30-59 days, 60-89
days and 90 or more days (excluding any Mortgage Loans in foreclosure or that
have become REO Property), respectively, (b) in foreclosure and (c) that have
become REO Property, in each case as of the end of the
47
preceding Due Period; provided, however, that such information will not be
provided on the statements relating to the first Payment Date;
(vii) the Weighted Average Net Mortgage Rate for the related
Payment Date;
(viii) the Required Subordination Amount, Subordination
Amount, Net Monthly Excess Cashflow and Subordination Reduction Amount for such
Payment Date;
(ix) the amount of any Advances and Compensating Interest for
such Payment Date;
(x) the aggregate Realized Losses with respect to the related
Payment Date and cumulative Realized Losses since the Closing Date;
(xi) the amount of any unpaid accrued interest on the Notes
after such Payment Date;
(xii) the aggregate Note Principal Balance of the Notes after
giving effect to the distribution of principal on such Payment Date;
(xiii) the Maximum Note Interest Rate, Guaranteed Interest
Payment Amount and Note Interest Rate for such Payment Date;
(xiv) the number and aggregate Principal Balance of Mortgage
Loans repurchased pursuant to the Home Equity Loan Purchase Agreement for the
related Payment Date and cumulatively since the Closing Date;
(xv) the Cumulative Loss Percentage, Delinquency Percentage,
Delinquency Amount and Rolling Delinquency Percentage for such Payment Date;
(xvi) the amount of any Prepayment Interest Shortfalls or
Relief Act Shortfalls for such Payment Date; and
(xvii) the aggregate Principal Balance of Mortgage Loans
purchased pursuant to Section 3.18 of the Servicing Agreement for the related
Payment Date and cumulatively since the Closing Date.
Items (iii) and (xii) above shall be presented on the basis of a
Note having a $1,000 denomination. In addition, by January 31 of each calendar
year following any year during which the Notes are outstanding, the Indenture
Trustee shall furnish a report to each Noteholder of record if so requested in
writing at any time during each calendar year as to the aggregate of amounts
reported pursuant to (iii) and (xii) with respect to the Notes for such calendar
year.
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The Indenture Trustee in the absence of manifest error may
conclusively rely upon the Determination Date Report provided by the Master
Servicer pursuant to Section 4.01 of the Servicing Agreement in its preparation
of its Statement to the Noteholders pursuant to this Section 7.04.
Section 7.06. Books and Records.
The Issuer hereby covenants with the Indenture Trustee that, so
long as any of the Notes remain Outstanding, it shall:
(a) at all times cause to be kept proper books of account and
allow the Indenture Trustee and any person appointed by it, to whom the
Issuer shall have no reasonable objection, access to the books of account
of the Issuer at all reasonable times, on reasonable prior notice and
during normal business hours;
(b) at all times conduct and continue to conduct business in its
own corporate name;
(c) at all times act and continue to act through its duly
authorized officers and agents; and
(d) so far as permitted by law, at all times cause to be given to
the Indenture Trustee such information as it shall reasonably require for
the purpose of the discharge of the duties, powers, trusts, authorities and
discretions vested in it by this Indenture or by operation of law.
ARTICLE VIII
Accounts, Disbursements and Releases
------------------------------------
Section 8.01. Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02. Trust Accounts. (a) On or prior to the Closing Date, the
Issuer shall cause the Indenture Trustee to establish and maintain, in the name
of the Indenture Trustee, for the
49
benefit of the Noteholders and the Note Insurer, the Payment Account as provided
in Section 3.01 hereof.
(b) All monies deposited from time to time in the Payment Account
(other than investments made with such monies including all income or other gain
from such investments pursuant to this Indenture), including assumption fees and
prepayment penalties, and all deposits therein pursuant to this Indenture are
for the benefit of the Noteholders and the Note Insurer.
On each Payment Date, the Indenture Trustee shall distribute all
amounts on deposit in the Payment Account to Noteholders in respect of the Notes
and to such other persons in the order of priority set forth in Section 3.05
hereof (except as otherwise provided in Section 5.04(b) hereof).
The Indenture Trustee may invest any funds in the Payment Account
(other than the proceeds of the Note Insurance Policy) in Eligible Investments,
in its discretion, maturing no later than the Business Day preceding each
Payment Date (provided, however, that with respect to Eligible Investments that
consist of obligations of the Indenture Trustee or its affiliates, such Eligible
Investments may mature on the related Payment Date) and such Eligible
Investments shall not be sold or disposed of prior to their maturity. All income
or other gain from such investments may be released from the Payment Account and
paid to the Indenture Trustee from time to time as part of its compensation for
acting as Indenture Trustee and any losses on such investments shall be
deposited by the Indenture Trustee into the Payment Account no later than the
Business Day preceding each Payment Date.
Section 8.03. Officer's Certificate. The Indenture Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.05(a) hereof, accompanied by copies of any instruments to
be executed, and the Indenture Trustee shall also require, as a condition to
such action, an Officer's Certificate, in form and substance reasonably
satisfactory to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to complete such action, and concluding
that all conditions precedent to the taking of such action have been complied
with.
Section 8.04. Termination Upon Distribution to Noteholders. This Indenture
and the respective obligations and responsibilities of the Issuer and the
Indenture Trustee created hereby shall terminate upon the distribution to
Noteholders, the Note Insurer, the Certificate Paying Agent on behalf of the
Certificateholders and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III; provided, however, that in no event shall
the trust created here by continue beyond the expiration of 21 years from the
death of the survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
ambassador of the United States to the Court of St. Xxxxx, living on the date
hereof.
Section 8.05. Release of Trust Estate. (a) Subject to the payment of its
reasonable fees and expenses, the Indenture Trustee may, and when required by
the provisions of this Indenture shall, execute instruments to release property
from the lien of this Indenture, or convey the
50
Indenture Trustee's interest in the same, in a manner and under circumstances
that are not inconsistent with the provisions of this Indenture.
(b) The Indenture Trustee shall, at such time as (i) there are no
Notes Outstanding, (ii) all sums due to the Indenture Trustee pursuant to this
Indenture have been paid, and (iii) all sums due to the Note Insurer have been
paid, release any remaining portion of the Trust Estate that secured the Notes
from the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of
this Indenture pursuant to this Section 8.05 only upon receipt of a request from
the Issuer accompanied by an Officers' Certificate and an Opinion of Counsel
stating that all applicable requirements have been satisfied, and a letter from
the Note Insurer stating that the Note Insurer has no objection to such request
from the Issuer.
Section 8.06. Surrender of Notes Upon Final Payment. By acceptance of any
Note, the Holder thereof agrees to surrender such Note to the Indenture Trustee
promptly, prior to such Noteholder's receipt of the final payment thereon.
Section 8.07. Optional Redemption of the Notes. (a) The Seller shall have
the option to redeem the Notes in whole, but not in part, on any Payment Date on
or after the Payment Date on which the aggregate Principal Balance of the
Initial Mortgage Loans is less than or equal to 10% of the sum of the aggregate
Principal Balance of the Initial Mortgage Loans as of the Cut-Off Date and the
Original Pre-Funded Amount. The aggregate redemption price for the Notes will be
calculated as pursuant to Section 7.2 of the Home Equity Loan Purchase
Agreement.
(b) In order to exercise the foregoing option, the Seller shall,
not less than 15 days prior to the proposed Payment Date on which such
redemption is to be made, deposit the aggregate redemption price specified in
(a) above with the Indenture Trustee (and the Indenture Trustee shall deposit
such funds in the Payment Account), and shall provide written notice of its
exercise of such option to the Indenture Trustee, the Note Insurer, the Issuer
and the Owner Trustee. Following receipt of the notice and the aggregate
redemption, pursuant to the foregoing, the Indenture Trustee shall release to
the Seller the Mortgage Files pertaining to the Mortgage Loans being purchased
and provide notice to the Noteholders of the final payment on the Notes and
shall apply such funds to make final payments of principal and interest on the
Notes in accordance with Section 3.05(a) hereof, and this Indenture shall be
discharged, subject to the provisions of Section 4.10 hereof. If for any reason
the amount deposited by the Seller is not sufficient to make such redemption or
such redemption cannot be completed for any reason, the amount so deposited by
the Seller with the Indenture Trustee shall be immediately returned to the
Seller in full and shall not be used for any other purpose or be deemed to be
part of the Trust Estate.
ARTICLE IX
Supplemental Indentures
-----------------------
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Section 9.01. Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Holders of any Notes but with the prior written
consent of the Note Insurer and the Seller and prior notice to the Rating
Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer
Request, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of the execution thereof), in form reasonably
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or 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 or to correct or supplement any
provision herein or in any supplemental indenture that may be inconsistent
with any other provision herein or in any supplemental indenture;
(vi) to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental indenture;
provided, that such action shall not materially and adversely affect the
interests of the Holders of the Notes;
(vii) to evidence and provide for the acceptance of the
appointment hereunder by a successor Indenture 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
hereof; or
(viii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such other provisions as may
be expressly required by the TIA;
provided, however, that no such supplemental indenture shall be entered into
unless the Indenture Trustee shall have received an Opinion of Counsel that
entering into such supplemental indenture will not (A) result in a "substantial
modification" of the Notes under Treasury Regulation Section
52
1.1001.3 or adversely affect the status of the Notes as indebtedness for federal
income tax purposes or (B) cause the Trust to be subject to an entity level tax.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Request, may, also without the consent of any of the Holders of the Notes
but with the prior written consent of the Note Insurer and prior notice to the
Rating Agencies, enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel (or,
in the alternative, with respect to clause (i), as evidenced by a rating letter
confirming the existing ratings on the Notes (without taking into account the
Note Insurer Policy)) (i) adversely affect in any material respect the interests
of any Noteholder or (ii) if 100% of the Certificates are not owned by
PacificAmerica Money Center, Inc. or if the Note Insurance Policy is
outstanding, cause the Issuer to be subject to an entity level tax for federal
income tax purposes.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, also
may, with prior notice to the Rating Agencies and with the prior written consent
of the Note Insurer and the Seller and the consent of the Holders of not less
than a majority of the Note Principal Balances of the Notes affected thereby, by
Act (as defined in Section 10.03 hereof) of such Holders delivered to the Issuer
and the Indenture Trustee, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Note affected thereby:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof or the
interest rate thereon, change the provisions of this Indenture relating to
the application of collections on, or the proceeds of the sale of, the
Trust Estate to payment of principal of or interest on the Notes, or change
any place of payment where, or the coin or currency in which, any Note or
the interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to the
payment of any such amount due on the Notes on or after the respective due
dates thereof;
(ii) reduce the percentage of the Note Principal Balances 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
53
provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding" or modify or alter the exception in
the definition of the term "Noteholder";
(iv) reduce the percentage of the Note Principal Balances of the
Notes required to direct the Indenture Trustee to direct the Issuer to sell
or liquidate the Trust Estate pursuant to Section 5.04 hereof;
(v) modify any provision of this Section 9.02 except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Note affected thereby;
(vi) 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
(vii) 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; and 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, with the consent of the Note Insurer,
so long as no Note Insurer Default exists, in its discretion determine whether
or not any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section 9.02, the
Indenture Trustee shall mail to the Holders of the Notes to which such amendment
or supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
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Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02 hereof, shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Indenture Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
that affects the Indenture Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 9.05. Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the require ments of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Inden ture
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
Miscellaneous
-------------
Section 10.01. Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Note 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 and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that, in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(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;
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with; and
(5) if the signatory of such certificate or opinion is required to
be Independent, the statement required by the definition of the term
"Independent".
(b) (i) Except with respect to the substitution of Mortgage Loans
pursuant to Section 2.2 of the Home Equity Loan Purchase Agreement or the
addition of Subsequent Mortgage Loans pursuant to Section 2.3 thereof, prior to
the deposit of any Collateral or other property or securities with the Indenture
Trustee that is to be made the basis for the release of any property or
securities subject to the lien of this Indenture, the Issuer shall, in addition
to any obligation imposed in Section 10.01(a) or elsewhere in this Indenture,
furnish to the Indenture Trustee and the Note 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 deposit) to the Issuer
56
of the Collateral or other property or securities to be so deposited and a
report from a nationally recognized accounting firm verifying such value.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Note Insurer 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 Note Insurer an
Independent Certificate from a nationally recognized accounting firm as to the
same matters, if the fair value to the Issuer of the securities to be so
deposited and of all other such securities made the basis of any such withdrawal
or release since the commencement of the then-current fiscal year of the Issuer,
as set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the Note Principal Balances of the Notes, but
such a certificate need not be furnished with respect to any securities so
deposited, if the fair value thereof to the Issuer as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of the Note
Principal Balances of the Notes.
(iii) Except with respect to the substitution of Mortgage Loans
pursuant to Section 2.2 of the Home Equity Loan Purchase Agreement or the
addition of Subsequent Mortgage Loans pursuant to Section 2.3 thereof, 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 Note 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 Note 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 Note Insurer an
Independent Certificate as to the same matters if the fair value of the property
or securities and of all other property, other than 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 Balances of the Notes, but such
certificate need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the then Note
Principal Balances of the Notes.
Section 10.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by,
57
counsel, unless such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to the
matters upon which his certificate or opinion is based are erroneous. Any such
certificate of an Authorized Officer or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Seller or the Issuer, stating
that the information with respect to such factual matters is in the possession
of the Seller or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condi tion of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 10.03. Acts of Noteholders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by agents duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.01
hereof) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section 10.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any 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
58
to be done by the Indenture Trustee or the Issuer in reliance thereon, whether
or not notation of such action is made upon such Note.
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Note Insurer
and Rating Agencies. Any request, demand, authorization, direction, notice,
consent, waiver or Act of Note holders or other documents provided or permitted
by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders is to be
made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer or
the Note Insurer shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with the Indenture Trustee at
the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee
shall promptly transmit any notice received by it from the Noteholders to
the Issuer and the Note Insurer; or
(ii) the Issuer by the Indenture Trustee or by any Noteholder or
the Note Insurer shall be sufficient for every purpose hereunder if in
writing and mailed first-class, postage prepaid, to the Issuer addressed
to: PacificAmerica Home Equity Loan Trust Series 1997-1, in care of
Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration
(telecopy number (000) 000-0000), 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 and the Note Insurer; or
(iii) the Company by the Indenture Trustee or by any Noteholder or
the Note Insurer shall be sufficient for every purpose hereunder if in
writing and mailed first-class, postage prepaid, to the Company addressed
to: Xxxxxxx Xxxxx Mortgage Investors, Inc., 000 Xxxxx Xxxxxx, Xxxxx
Financial Xxxxxx/Xxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Legal Department, Xxxxxxx XxXxxxxx (telecopy number (212)
449-5559), or at any other address previously furnished in writing to the
Indenture Trustee by the Company. The Company shall promptly transmit any
notice received by it from the Noteholders to the Indenture Trustee and the
Note Insurer; or
(iv) the Seller by the Indenture Trustee or by any Noteholder or
the Note Insurer shall be sufficient for every purpose hereunder if in
writing and mailed first-class, postage prepaid, to the Issuer addressed
to: PacificAmerica Money Center, Inc., 00000 Xxxxxxx Xxxxxxxxx, Xxxxxxxx
Xxxxx, Xxxxxxxxxx 00000-0000, Attention: Chief Financial Officer (telecopy
number (000) 000-0000), or at any other address previously furnished in
writing to the Indenture Trustee by the Seller. The Seller shall promptly
transmit any notice received by it from the Noteholders to the Indenture
Trustee and the Note Insurer; or
(v) the Note Insurer by the Issuer, the Indenture Trustee or by
any Noteholders shall be sufficient for every purpose hereunder if in
writing and mailed, first-
59
class, postage pre-paid, or personally delivered or telecopied to:
Financial Security Assurance Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Surveillance Department, Re: Pacific America Home Equity Loan
Asset-Backed Notes Series 1997-1 (telecopy number (000) 000-0000). In each
case in which a notice or other communication to the Note Insurer refers to
a Servicing Default or a claim under the Policy or with respect to which
failure on the part of the Note Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication shall also be sent to the attention of the General Counsel
and the Head-Financial Guaranty Group and shall be marked to indicate
"URGENT MATERIAL ENCLOSED."
Notices required to be given to the Rating Agencies by the Issuer,
the Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered or mailed first-class postage pre-paid, to (i) in the case of Moody's,
at the following address: Xxxxx'x Investors Service, Inc., Residential Mortgage
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (ii) in
the case of Standard & Poor's, at the following address: Standard & Poor's
Ratings Group, 00 Xxxxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx 00000, Attention of
Asset Backed Surveillance Department; or as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
Section 10.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed first-class, postage prepaid, to each Noteholder affected by such
event, at such Person's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute an Event of
Default.
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Section 10.06. 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 xx.xx. 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 10.07. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 10.08. Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents.
Section 10.09. 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 10.10. Benefits of Indenture. The Note Insurer and its successors
and assigns shall be a third-party beneficiary to the provisions of this
Indenture. To the extent that this Indenture confers upon or gives or grants to
the Note Insurer any right, remedy or claim under or by reason of this
Indenture, the Note Insurer may enforce any such right, remedy or claim
conferred, given or granted hereunder. 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 and the Note Insurer,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 10.11. 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 Inden ture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 10.12. 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 10.13. 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.
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Section 10.14. 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 at its expense accompanied by an Opinion of Counsel at
its expense (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
Section 10.15. Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their 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 Article VI, VII and VIII of the Trust Agreement.
Section 10.16. 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 Company or the Issuer, or
join in any institution against the Company 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 Basic Documents. This Section 10.16 will survive for one year and one day
following the termination of this Indenture.
Section 10.17. Inspection. The Issuer agrees that, on reasonable prior
notice, it shall permit any representative of the Indenture Trustee and the Note
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 Note Insurer shall cause their
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 necessary to
perform its obligations hereunder.
62
ARTICLE XI
Certain Matters Regarding the Note Insurer
------------------------------------------
Section 11.01. Certain Rights of the Note Insurer. By accepting its Note,
each Noteholder agrees that unless a Note Insurer Default exists, the Note
Insurer shall have the following rights, without any consent of the Noteholders:
(a) the right to direct foreclosure upon Mortgage Loans upon
failure of the Master Servicer to do so for any reason;
(b) the right to require Pacific or the Seller to repurchase or
substitute for, or to require the Master Servicer to purchase, Mortgage Loans;
(c) the right to give notice of breach or to terminate the rights
and obligations of the Master Servicer;
(d) the right to direct the actions of the Indenture Trustee
during the continuance of a Servicing Default.
In addition, each Noteholder agrees that, unless a Note Insurer
Default exists, the right to remove the Indenture Trustee may be exercised by
the Majority Noteholders only with the prior written consent of the Note
Insurer.
Section 11.02. Indenture Trustee To Act Solely with Consent of the Note
Insurer.
(a) Unless a Note Insurer Default exists, the Indenture Trustee
shall not;
(i) terminate the rights and obligations of the Master
Servicer or consent to the resignation of the Master Servicer;
(ii) terminate any Sub-Servicing Agreements; or
(iii) assume any Sub-Servicing Agreements;
without the prior written consent of the Note Insurer.
(b) Notwithstanding anything herein to the contrary, after the
occurrence of a Servicing Default and until such time as all Servicing Defaults
have been cured, no provision of this Agreement shall require the Indenture
Trustee to take any action or omit to take any action at the request of the Note
Insurer or any Noteholder to the extent the Indenture Trustee believes in good
faith such action or omission would cause the Indenture Trustee to violate any
law or
63
regulation applicable to it or to breach their respective obligations owed by it
to the Noteholders and to the Note Insurer, pursuant to their Agreement or
otherwise.
Section 11.03. Trust Estate and Accounts Held for Benefit of the Note
Insurer and the Noteholders. The Indenture Trustee shall hold the Trust Estate
and the Mortgage Files, and shall maintain the Accounts, for the benefit of the
Noteholders and the Note Insurer and all references in this Agreement and in the
Notes to the benefit of Noteholders shall be deemed to include the Note Insurer.
The Indenture Trustee shall cooperate in all reasonable respects with any
reasonable requests by the Note Insurer or the Noteholders (when other than the
Seller, the Master Servicer or any affiliate thereof), for action to preserve or
enforce the respective rights and interests of the Note Insurer or the
Noteholders (when other than the Seller, the Master Servicer or any affiliate
thereof) under this Agreement and the Notes.
The Master Servicer hereby acknowledges and agrees that it shall
service and administer, or cause a Sub-Servicer to service and administer, the
Mortgage Loans and any REO Properties for the benefit of the Noteholders and for
the benefit of the Note Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Noteholders shall be deemed to include
the Note Insurer. Unless a Note Insurer Default exists, the Master Servicer
shall not terminate any Sub-Servicing Agreements or undertake any litigation
with respect to the transactions contemplated by the Basic Documents pursuant to
Section 3.02(b) of the Servicing Agreement without the prior written consent of
the Note Insurer. Unless a Note Insurer Default exists, the Indenture Trustee
shall not undertake any litigation pursuant to Section 5.03 (other than
litigation to enforce their respective rights hereunder) without the prior
written consent of the Note Insurer.
Section 11.04. Effect of Payments by the Note Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Notes which is made with moneys received
pursuant to the terms of the Policy shall not be considered payment of the Notes
from the Trust Estate. The Indenture Trustee agrees, that without the need for
any further action on the part of the Note Insurer, the Seller, the Master
Servicer or the Indenture Trustee, to the extent the Note Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Notes to the Noteholders, the Note Insurer will be fully subrogated to the
rights of such Noteholders to receive such principal and/or interest from the
Trust Estate. The Issuer shall not be discharged from its obligations hereunder
upon payment of principal of any interest on the Notes by the Note Insurer under
the Policy.
The Indenture Trustee shall reasonably cooperate in all respects
with any reasonable request by the Note Insurer or the Noteholders (when other
than the Seller, the Master Servicer or any affiliate thereof) for action to
preserve or enforce the respective rights or interests of the Note Insurer or
the Noteholders under this Agreement without limiting the rights or affecting
the interest of the Noteholders as otherwise set forth herein.
Section 11.05. Insolvency Proceedings. The Indenture Trustee shall promptly
notify the Note Insurer of either of the following as to which it has actual
knowledge: (i) the commencement of any proceeding by or against the Issuer
commenced under the United States Bankruptcy Code
64
or any other applicable bankruptcy, insolvency, receivership, rehabilitation or
similar law (an "Insolvency Proceeding") and (ii) the making of any claim in
connection with any Insolvency Proceeding seeking the avoidance as a
preferential transfer (a "Preference Claim") of any payment of principal of, or
interest on, the Notes. Each Noteholder, by its purchase of Notes, and the
Indenture Trustee hereby agree that the Note Insurer may at any time during the
continuation of an Insolvency Proceeding direct all matters relating to such
Insolvency Proceeding, including, without limitation, (i) all matters relating
to any Preference Claim, (ii) the direction of any appeal of any order relating
to any Preference Claim at the expense of the Note Insurer but subject to
reimbursement as provided in the Insurance Agreement and (iii) the posting of
any surety, supersedeas or performance bond pending any such appeal. In
addition, and without limitation of the foregoing, as set forth in Section
11.04, the Note Insurer shall be subrogated to, and each Noteholder and the
Indenture Trustee hereby delegate and assign, to the fullest extent permitted by
law the rights of the Indenture Trustee and each Noteholder in the conduct of
any Insolvency Proceeding, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Insolvency Proceeding.
Section 11.06. Notices to the Note Insurer. All notices, statements,
reports, certificates or opinions required by this Agreement to be sent to any
other party hereto or to the Noteholders and, if not otherwise required to be
sent to the Note Insurer, shall also be sent to the Note Insurer.
65
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
PACIFICAMERICA HOME EQUITY LOAN TRUST SERIES
1997-1,
as Issuer
By: WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Owner Trustee
By:
-----------------------------------------------
Name:
Title:
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., not
in its individual capacity but solely as
Indenture Trustee and as Note Registrar
By:
-----------------------------------------------
Name:
Title:
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
hereby accepts the appointment as Certificate
Paying Agent pursuant to Section 3.10 of the
Trust Agreement and as Certificate Registrar
pursuant to Section 4.02 hereof.
By:
-----------------------------------------
Name:
Title:
66
STATE OF DELAWARE)
) ss.:
COUNTY OF NEW CASTLE)
On this __ day of December, before me personally appeared Xxxxxx X. Xxxxxx,
to me known, who being by me duly sworn, did depose and say, that he resides at
_____________, he is the Administrative Account Manager of the Owner Trustee,
one of the corporations described in and which executed the above instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation; and that he signed his name thereto by like
order.
Notary Public
[NOTARIAL SEAL]
67
STATE OF _________________)
) ss.:
COUNTY OF ________________)
On this ___ day of December, before me personally appeared _______________,
to me known, who being by me duly sworn, did depose and say, that [s]he is the
_____________________________ of Bankers Trust Company of California, N.A., as
Indenture Trustee, a national banking association, which executed the above
instrument; that [s]he knows the seal of said national banking association; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said national banking association;
and that she signed her name thereto by like order.
Notary Public
[NOTARIAL SEAL]
68
EXHIBIT A
FORM OF NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE 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.
THIS NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AND THE NOTE INSURANCE POLICY
AS PROVIDED IN THE INDENTURE REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE
PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE.
PRINCIPAL OF THIS NOTE IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.
PACIFICAMERICA HOME EQUITY LOAN TRUST SERIES 1997-1 PACIFICAMERICA HOME
EQUITY LOAN ASSET-BACKED NOTES, SERIES 0000-0
XXXXXXXXX NOTE PRINCIPAL
BALANCE: $100,000,000
INITIAL NOTE PRINCIPAL
BALANCE OF THIS NOTE: $ CUSIP NO.
NOTE NUMBER:
-69-
PacificAmerica Home Equity Loan Trust Series 1997-1 (the "Issuer"), a
Delaware business trust, for value received, hereby promises to pay to
__________ or registered assigns, the principal sum of
______________________________________ ($___________) in monthly installments on
the twenty-fifth day of each month or, if such day is not a Business Day, the
next succeeding Business Day (each a "Payment Date"), commencing in January 1998
and ending on or before the Payment Date occurring in December 2027 (the "Stated
Maturity") and to pay interest on the Note Principal Balance of this Note
outstanding from time to time as provided below.
This Note is one of a duly authorized issue of PacificAmerica Home Equity
Loan Asset- Backed Notes, Series 1997-1, (the "Notes"), issued under an
Indenture, dated as of December 1, 1997 (the "Indenture"), between the Issuer
and Bankers Trust Company of California, N.A., as indenture trustee (the
"Indenture Trustee", which term includes any successor Indenture Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights thereunder of
the Issuer, the Indenture Trustee, and the Holders of the Notes and the terms
upon which the Notes are to be authenticated and delivered. All terms used in
this Note which are defined in the Indenture shall have the meanings assigned to
them in the Indenture.
Payments of principal and interest on the Notes will be made on each
Payment Date to Noteholders of record as of the related Record Date. On each
Payment Date, Noteholders will be entitled to receive interest payments in an
aggregate amount equal to the Interest Payment Amount for such Payment Date,
together with principal payments in an aggregate amount equal to the Principal
Payment Amount plus the Subordination Increase Amount, if any, for such Payment
Date. In addition, on each Payment Date, Noteholders in the aggregate will be
entitled to receive additional interest payments equal to the Carry-Forward
Amount for such Payment Date, to the extent of available funds. The "Note
Principal Balance" of a Note as of any date of determination is equal to the
initial principal balance thereof as of the Closing Date, reduced by the
aggregate of all amounts previously paid with respect to such Note on account of
principal.
The principal of, and interest on, this Note are due and payable as
described in the Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. All payments made by the Issuer with respect to this Note shall
be equal to this Note's pro rata share of the aggregate payments on all Notes as
described above, and shall be applied as between interest and principal as
provided in the Indenture.
Financial Security Assurance Inc. (the "Note Insurer"), in consideration of
the payment of the premium and subject to the terms of the financial guaranty
insurance policy (the "Note Insurance Policy") issued thereby, has
unconditionally and irrevocably guaranteed the payment of the Scheduled Payment.
The Note Insurance Policy will not cover any Prepayment Interest Shortfalls,
Relief Act Shortfalls or Carry-Forward Amount.
All principal and interest accrued on the Notes, if not previously paid,
will become finally due and payable at the Final Scheduled Payment Date.
-70-
The Notes are subject to redemption in whole, but not in part, by the
Seller on any Payment Date on or after the Payment Date on which the aggregate
Principal Balance of the Mortgage Loans is less than or equal to 10% of the
aggregate Principal Balance of the Initial Mortgage Loans as of the Cut-Off Date
and the Original Pre-Funded Amount.
The Issuer shall not be liable upon the indebtedness evidenced by the Notes
except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate and payments under the Note Insurance Policy will be the sole
source of payments on the Notes, and each Holder hereof, by its acceptance of
this Note, agrees that (i) such Note will be limited in right of payment to
amounts available from the Trust Estate and the Note Insurance Policy as
provided in the Indenture and (ii) such Holder shall have no recourse to the
Issuer, the Owner Trustee, the Indenture Trustee, the Company, the Master
Servicer or any of their respective affiliates, or to the assets of any of the
foregoing entities, except the assets of the Issuer pledged to secure the Notes
pursuant to the Indenture.
Any payment of principal or interest payable on this Note which is
punctually paid on the applicable Payment Date shall be paid to the Person in
whose name such Note (or one or more predecessor Notes) is registered at the
close of business on the Record Date for such Payment Date by check mailed to
such person's address as it appears in the Note Register on such Record Date,
except for the final installment of principal and interest payable with respect
to such Note, which shall be payable as provided below. Notwithstanding the
foregoing, upon written request with appropriate instructions by the Holder of
this Note (holding an aggregate initial Note Principal Balance of at least
$5,000,000), any payment of principal or interest, other than the final
installment of principal or interest, shall be made by wire transfer to an
account in the United States designated by such Holder reasonably satisfactory
to the Indenture Trustee. All reductions in the principal amount of a Note (or
one or more predecessor Notes) effected by payments of principal made on any
Payment Date shall be binding upon all Holders of this Note and of any bond
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Note. The final
payment of this Note shall be payable upon presentation and surrender thereof on
or after the Payment Date thereof at the Corporate Trust Office or the office or
agency of the Issuer maintained by it for such purpose pursuant to Section 3.02
of the Indenture.
Subject to the foregoing provisions, each Note delivered under the
Indenture, upon registration of transfer of or in exchange for or in lieu of any
other Note, shall carry the rights to unpaid principal and interest that were
carried by such other Note.
If an Event of Default as defined in the Indenture shall occur and be
continuing with respect to the Notes, the Notes may become or be declared to be
due and payable in the manner and with the effect provided in the Indenture. If
any such acceleration of maturity occurs prior to the payment of the entire
unpaid Note Principal Balance of the Notes, the amount payable to the Holder of
this Note will be equal to the sum of the unpaid Note Principal Balance of the
Notes, together with accrued and unpaid interest thereon as described in the
Indenture. The Indenture provides that, notwithstanding the acceleration of the
maturity of the Notes, under certain circumstances specified therein, all
amounts collected as proceeds of the Trust Estate securing the
-71-
Notes or otherwise shall continue to be applied to payments of principal of and
interest on the Notes as if they had not been declared due and payable.
The failure to pay any Subordination Increase Amount or Carry-Forward
Amount at any time when funds are not available to make such payment as provided
in the Indenture shall not constitute an Event of Default under the Indenture.
Pursuant to the Indenture, unless a Note Insurer Default exists (i) the
Note Insurer shall be deemed to be the holder of the Notes for certain purposes
specified in the Indenture (other than with respect to payment on the Notes),
and will be entitled to exercise all rights of the Noteholders thereunder,
including the rights of Noteholders relating to the occurrence of, and the
remedies with respect to, an Event of Default, without the consent of such
Noteholders, and (ii) the Indenture Trustee may take actions which would
otherwise be at its option or within its discretion, including actions relating
to the occurrence of, and the remedies with respect to, an Event of Default,
only at the direction of the Note Insurer.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note may be registered on the Note Register of the
Issuer. Upon surrender for registration of transfer of, or presentation of a
written instrument of transfer for, this Note at the Corporate Trust Office,
accompanied by proper instruments of assignment in form satisfactory to the
Indenture Trustee, one or more new Notes of any authorized denominations and of
a like aggregate initial Note Principal Balance will be issued to the designated
transferee or transferees.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note is registered as the owner
of such Note (i) on the applicable Record Date for the purpose of making
payments and interest of such Note, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Note Insurer and the Holders of a
majority of all Notes at the time outstanding. The Indenture also contains
provisions permitting (i) the Note Insurer or (ii) if a Note Insurer Default
exists, the Holders of Notes representing specified percentages of the aggregate
Note Principal Balance of the Notes on behalf of the Holders of all the Notes,
to waive any past Event of Default under the Indenture and its consequences. Any
such waiver by the Holder, at the time of the giving thereof, of this Note (or
any one or more predecessor Notes) shall bind the Holder of every 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 such
Note. The Indenture also permits the Issuer and the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Holders of the Notes issued thereunder.
-72-
Initially, the Notes will be represented by one bond registered in the name
of CEDE & Co. as nominee of DTC, acting in its capacity as the Depository for
the Notes. The Notes will be delivered in denominations as provided in the
Indenture and subject to certain limitations therein set forth. The Notes are
exchangeable for a like aggregate initial Note Principal Balance of Notes of
different authorized denominations, as requested by the Holder surrendering the
same.
Unless the Certificate of Authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.
Each Noteholder, by accepting a Note, hereby covenants and agrees that such
Noteholder will not at any time institute against the Company or the Issuer, or
join in any institution against the Company 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, the Indenture or any
of the Basic Documents.
So long as no Note Insurer Default exists, the Note Insurer shall at all
times be treated as if it were the exclusive Noteholder for the purposes of all
approvals, consents, waivers and the institution of any action and the direction
of all remedies, and the Indenture Trustee shall act in accordance with the
directions of the Note Insurer so long as it is indemnified therefor to its
reasonable satisfaction.
AS PROVIDED IN THE INDENTURE, THIS NOTE AND THE INDENTURE CREATING THIS
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
-73-
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by Wilmington Trust Company, not in its individual capacity but solely
as Owner Trustee.
Dated:
PACIFICAMERICA HOME EQUITY LOAN TRUST SERIES
1997-1
BY: WILMINGTON TRUST COMPANY, not in its individual
capacity but solely in its capacity as Owner Trustee
By:
-----------------------------------------------------
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., not in its individual
capacity but solely as Indenture Trustee
By:
--------------------------------------
Authorized Signatory
-74-
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
the Note, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT -- Custodian
-------------- -----------------
(Cust) (Minor)
under Uniform Gifts to Minor Act
-------------
(State)
Additional abbreviations may also be used though not in the above
list.
--------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE:
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
(Please print or typewrite name and address, including zip code, of assignee)
--------------------------------------------------------------------------------
the within bond and all rights thereunder, hereby irrevocably constitution and
appointing _______________________ attorney to transfer said Note on the books
of the Issuer, with full power of substitution in the premises.
Dated:
-------------------------- ---------------------------------
Signature Guaranteed by
---------------------------------------------
NOTICE: The signature(s) to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatsoever. Signature(s) must be guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.
EXHIBIT B
FORM OF TRUSTEE INITIAL CERTIFICATION
[Closing Date]
[Seller]
[Servicer]
[Note Insurer]
[Company]
----------------------------
----------------------------
Re: Indenture, dated as of December 1, 1997 (the "Indenture"), between
PacificAmerica Home Equity Loan Trust Series 1997-1 and Bankers
Trust Company of California, N.A. -- PacificAmerica Home Equity
Loan Asset-Backed Notes, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.03 of the above-captioned Indenture,
and Section 2.2 of the Home Equity Loan Purchase Agreement, dated December 11,
1997 among PacificAmerica Money Center, Inc., Xxxxxxx Xxxxx Mortgage Investors,
Inc., PacificAmerica Home Equity Loan Trust Series 1997-1 and Bankers Trust
Company of California, N.A. (the "Home Equity Loan Purchase Agreement"; and
together with the Indenture, the "Agreements"), the undersigned, as Indenture
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or listed on the
attachment hereto) it has reviewed the Mortgage File and the Mortgage Loan
Schedule and has determined that: (i) all documents required to be included in
the Mortgage File are in its possession; (ii) such documents have been reviewed
by it and appear regular on their face and relate to such Mortgage Loan; and
(iii) based on examination by it, and only as to such documents, the information
set forth in items (i), (ii), (iii) and (vi) of the definition or description of
"Mortgage Loan Schedule" is correct.
The Indenture Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Agreements. The Indenture Trustee makes no
representation that any documents specified in clause (vi) of Section 2.2 of the
Home Equity Loan Purchase Agreement should be included in any Mortgage File. The
Indenture Trustee makes no representations as to and shall not be responsible to
verify: (i) the validity, legality, sufficiency, enforceability, due
authorization, recordability or genuineness of any of the documents contained in
each Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule, (ii) the collectability, insurability, effectiveness
-2-
or suitability of any such Mortgage Loan, or (iii) the existence of any
assumption, modification, written assurance or substitution agreement with
respect to any Mortgage File if no such documents appear in the Mortgage File
delivered to the Indenture Trustee.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Indenture.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., not in its individual capacity but solely as
Indenture Trustee
By:
-------------------------------------------
Name:
Title:
-3-
EXHIBIT C
FORM OF TRUSTEE FINAL CERTIFICATION
[date]
[Seller]
[Servicer]
[Note Insurer]
[Company]
--------------------------
--------------------------
Re: Indenture, dated as of December 1, 1997 (the "Indenture"), between
PacificAmerica Home Equity Loan Trust Series 1997-1 and Bankers Trust
Company of California, N.A. -- PacificAmerica Home Equity Loan
Asset-Backed Notes, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.03 of the above-captioned Indenture,
and Section 2.2 of the Home Equity Loan Purchase Agreement, dated December 11,
1997 among PacificAmerica Money Center, Inc., Xxxxxxx Xxxxx Mortgage Investors,
Inc., PacificAmerica Home Equity Loan Trust Series 1997-1 and Bankers Trust
Company of California, N.A. (the "Home Equity Loan Purchase Agreement"; and
together with the Indenture, the "Agreements"), the undersigned, as Indenture
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or listed on the
attachment hereto) it has received the documents set forth in Section 2.2 of the
Home Equity Loan Purchase Agreement.
The Indenture Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Agreements. The Indenture Trustee makes no representation that
any documents specified in clause (vi) of Section 2.2 should be included in any
Mortgage File. The Indenture Trustee makes no representations as to and shall
not be responsible to verify: (i) the validity, legality, sufficiency,
enforceability, due authorization, recordability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan or (iii) the existence of
any assumption, modification, written assurance or substitution agreement with
respect to any Mortgage File if no such documents appear in the Mortgage File
delivered to the Indenture Trustee.
-4-
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Indenture.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., not in its individual capacity but solely as
Indenture Trustee
By:
----------------------------------------------
Name:
Title:
-5-
EXHIBIT D
MORTGAGE LOAN SCHEDULE
[See Tab 4]
-6-
