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EXHIBIT 4.1
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INDENTURE
BETWEEN
AAMES CAPITAL OWNER TRUST 1997-1,
AS ISSUER,
AND
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
AS INDENTURE TRUSTEE
Dated as of March 1, 1997
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Relating to
AAMES CAPITAL OWNER TRUST 1997-1
ADJUSTABLE RATE ASSET-BACKED BONDS, SERIES 1997-1
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TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS
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Section 1.01 General Definitions...........................................................2
ARTICLE II.
THE BONDS
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Section 2.01 Forms Generally..............................................................31
Section 2.02 Forms of Certificate of Authentication.......................................31
Section 2.03 General Provisions With Respect to Principal and Interest Payments...........31
Section 2.04 Denominations................................................................32
Section 2.05 Execution, Authentication, Delivery and Dating...............................33
Section 2.06 Registration, Registration of Transfer and Exchange..........................33
Section 2.07 Mutilated, Destroyed, Lost or Stolen Bonds...................................34
Section 2.08 Payments of Principal and Interest...........................................35
Section 2.09 Persons Deemed Owners........................................................37
Section 2.10 Cancellation.................................................................37
Section 2.11 Authentication and Delivery of Bonds.........................................37
Section 2.12 Book-Entry Bonds.............................................................39
Section 2.13 Termination of Book-Entry System.............................................40
ARTICLE III.
COVENANTS
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Section 3.01 Payment of Bonds.............................................................41
Section 3.02 Maintenance of Office or Agency..............................................41
Section 3.03 Money for Bond Payments to Be Held in Trust..................................41
Section 3.04 Existence of Issuer..........................................................43
Section 3.05 Protection of Trust Estate...................................................44
Section 3.06 Opinions as to Trust Estate..................................................45
Section 3.07 Performance of Obligations; Servicing Agreement..............................45
Section 3.08 Investment Company Act.......................................................46
Section 3.09 Negative Covenants...........................................................46
Section 3.10 Annual Statement as to Compliance............................................47
Section 3.11 [Reserved]...................................................................47
Section 3.12 Restricted Payments..........................................................48
Section 3.13 Treatment of Bond as Debt for Tax Purposes...................................48
Section 3.14 Notice of Events of Default..................................................48
Section 3.15 Further Instruments and Acts.................................................48
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ARTICLE IV.
SATISFACTION AND DISCHARGE
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Section 4.01 Satisfaction and Discharge of Indenture......................................48
Section 4.02 Application of Trust Money...................................................50
ARTICLE V.
DEFAULTS AND REMEDIES
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Section 5.01 Event of Default.............................................................50
Section 5.02 Acceleration of Maturity; Rescission and Annulment...........................51
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee....52
Section 5.04 Remedies.....................................................................53
Section 5.05 Indenture Trustee May File Proofs of Claim...................................53
Section 5.06 Indenture Trustee May Enforce Claims Without Possession of Bonds.............54
Section 5.07 Application of Money Collected...............................................54
Section 5.08 Limitation on Suits..........................................................55
Section 5.09 Unconditional Rights of Bondholders to Receive Principal and Interest........56
Section 5.10 Restoration of Rights and Remedies...........................................56
Section 5.11 Rights and Remedies Cumulative...............................................56
Section 5.12 Delay or Omission Not Waiver.................................................57
Section 5.13 Control by Bondholders.......................................................57
Section 5.14 Waiver of Past Defaults......................................................57
Section 5.15 Undertaking for Costs........................................................58
Section 5.16 Waiver of Stay or Extension Laws.............................................58
Section 5.17 Sale of Trust Estate.........................................................58
Section 5.18 Action on Bonds..............................................................60
Section 5.19 No Recourse to Other Trust Estates or Other Assets of the Issuer.............60
Section 5.20 Application of the Trust Indenture Act.......................................61
ARTICLE VI.
THE INDENTURE TRUSTEE
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Section 6.01 Duties of Indenture Trustee..................................................61
Section 6.02 Notice of Default............................................................63
Section 6.03 Rights of Indenture Trustee..................................................63
Section 6.04 Not Responsible for Recitals or Issuance of Bonds............................63
Section 6.05 May Hold Bonds...............................................................64
Section 6.06 Money Held in Trust..........................................................64
Section 6.07 [Reserved]...................................................................64
Section 6.08 Eligibility; Disqualification................................................64
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Section 6.09 Indenture Trustee's Capital and Surplus......................................64
Section 6.10 Resignation and Removal; Appointment of Successor............................64
Section 6.11 Acceptance of Appointment by Successor.......................................66
Section 6.12 Merger, Conversion, Consolidation or Succession to Business
of Indenture Trustee.........................................................67
Section 6.13 Preferential Collection of Claims Against Issuer.............................67
Section 6.14 Co-Indenture Trustees and Separate Indenture Trustees........................67
Section 6.15 Authenticating Agents........................................................68
Section 6.16 Review of Mortgage Files.....................................................70
ARTICLE VII.
BONDHOLDERS' LISTS AND REPORTS
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Section 7.01 Issuer to Furnish Indenture Trustee Names and Addresses of Bondholders.......70
Section 7.02 Preservation of Information; Communications to Bondholders...................71
Section 7.03 Reports by Indenture Trustee.................................................71
Section 7.04 Reports by Issuer............................................................72
ARTICLE VIII.
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
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Section 8.01 Collection of Moneys.........................................................72
Section 8.02 Bond Account.................................................................73
Section 8.03 Prefunding Account...........................................................75
Section 8.04 Capitalized Interest Account.................................................76
Section 8.05 Payments on the Financial Guaranty Insurance Policy..........................77
Section 8.06 General Provisions Regarding the Indenture Accounts and Mortgage Loans.......80
Section 8.07 Releases of Defective Mortgage Loans.........................................81
Section 8.08 Reports by Indenture Trustee to Bondholders; Access to Certain Information...82
Section 8.09 Trust Estate Mortgage Files..................................................82
Section 8.10 Amendment to Servicing Agreement.............................................83
Section 8.11 Delivery of the Mortgage Files Pursuant to Servicing Agreement...............83
Section 8.12 Records......................................................................83
Section 8.13 Servicer as Agent............................................................83
Section 8.14 Termination of Servicer......................................................84
Section 8.15 Opinion of Counsel...........................................................84
Section 8.16 Appointment of Custodians....................................................84
Section 8.17 Rights of the Bond Insurer to Exercise Rights of Bondholders.................85
Section 8.18 Trust Estate and Accounts Held for Benefit of the Bond Insurer...............85
Section 8.19 Bond Insurer Option to Purchase Mortgage Loans...............................85
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ARTICLE IX.
SUPPLEMENTAL INDENTURES
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Section 9.01 Supplemental Indentures Without Consent of Bondholders.......................86
Section 9.02 Supplemental Indentures With Consent of Bondholders..........................87
Section 9.03 Execution of Supplemental Indentures.........................................88
Section 9.04 Effect of Supplemental Indentures............................................88
Section 9.05 Conformity With Trust Indenture Act..........................................89
Section 9.06 Reference in Bonds to Supplemental Indentures................................89
Section 9.07 Amendments to Governing Documents............................................89
ARTICLE X.
REDEMPTION OF BONDS
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Section 10.01 Redemption...................................................................90
Section 10.02 Form of Redemption Notice....................................................90
Section 10.03 Bonds Payable on Optional Redemption.........................................91
ARTICLE XI.
MISCELLANEOUS
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Section 11.01 Compliance Certificates and Opinions.........................................91
Section 11.02 Form of Documents Delivered to Indenture Trustee.............................92
Section 11.03 Acts of Bondholders..........................................................93
Section 11.04 Notices, etc. to Indenture Trustee and Issuer................................93
Section 11.05 Notices and Reports to Bondholders; Waiver of Notices........................94
Section 11.06 Rules by Indenture Trustee...................................................94
Section 11.07 Conflict With Trust Indenture Act............................................94
Section 11.08 Effect of Headings and Table of Contents.....................................95
Section 11.09 Successors and Assigns.......................................................95
Section 11.10 Separability.................................................................95
Section 11.11 Benefits of Indenture........................................................95
Section 11.12 Legal Holidays...............................................................95
Section 11.13 Governing Law................................................................95
Section 11.14 Counterparts.................................................................96
Section 11.15 Recording of Indenture.......................................................96
Section 11.16 Issuer Obligation............................................................96
Section 11.17 Inspection...................................................................96
Section 11.18 Usury........................................................................96
Section 11.19 Third Party Beneficiary; Rating..............................................97
Section 11.20 Notice to Bond Insurer.......................................................97
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SCHEDULES AND EXHIBITS
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Schedule I Mortgage Loan Schedule
Exhibit A Form of Bond
Exhibit B Initial Mortgage Loan Conveyance Agreement
Exhibit C Additional Mortgage Loan Conveyance Agreement
Exhibit D Mortgage Loan Contribution Agreement
Exhibit E Letter of Representations to The Depository Trust Company
Exhibit F Indenture Trustee's Final Certification
Exhibit G Financial Guaranty Insurance Policy
Exhibit H Form of Notice of Claim
Exhibit I Servicing Agreement
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CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of the
provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.*
Trust Indenture Act of 1939 Indenture Section
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Section 310
(a) (1).................................. 6.08
(a) (2).................................. 6.08, 6.09
(a) (3).................................. 6.14
(a) (4).................................. Not Applicable
(a) (5).................................. 6.08
(b)...................................... 6.08, 6.10(d)(1)
(c)...................................... Not Applicable
Section 311
(a)...................................... 6.13
(b)...................................... 6.13
(c)...................................... Not Applicable
Section 312
(a)...................................... 7.01(a), 7.02(a)
(b)...................................... 7.02(b)
(c)...................................... 7.02(c)
Section 313
(a)...................................... 7.03(a)
(b)...................................... 7.03(a)
(c)...................................... 11.05
(d)...................................... 7.03(b)
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*This Cross-Reference Table is not part of the Indenture.
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Trust Indenture Act of 1939 Indenture Section
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Section 314
(a)(1)................................... 7.04
(a)(2)................................... 7.04
(a)(3)................................... 7.04
(a)(4)................................... 7.04
(b)(1)................................... 2.11(c), 11.01
(b)(2)................................... 3.06
(c)(1)................................... 2.11(d), 4.01,
8.02(d), 11.01
(c)(2)................................... 2.11(c), 4.01,
8.02(d), 11.01
(c)(3)................................... 8.02(d)
(d)(1)................................... 11.01(a)
(d)(2)................................... 11.01(a)
(d)(3)................................... 11.01(a)
(e)...................................... 11.01(b)
Section 315
(a)...................................... 6.01(b), 6.01(c)(1)
(b)...................................... 6.02, 11.05
(c)...................................... 6.01(a)
(d)(1)................................... 6.01(b), 6.01(c)
(d)(2)................................... 6.01(c)(2)
(d)(3)................................... 6.01(c)(3)
(e)...................................... 5.15
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Trust Indenture Act of 1939 Indenture Section
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Section 316
(a)...................................... 5.20
(b)...................................... 5.09
(c)...................................... 5.20
Section 317
(a)(1)................................... 5.03
(a)(2)................................... 5.05
(b)...................................... 3.03
Section 318
(a)...................................... 11.07
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THIS INDENTURE, dated as of March 1, 1997 (as amended or supplemented
from time to time as permitted hereby, this "Indenture"), is between AAMES
CAPITAL OWNER TRUST 1997-1, a Delaware business trust (together with its
permitted successors and assigns, the "Issuer") and BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., a national banking association, as trustee (together with its
permitted successors in the trusts hereunder, the "Indenture Trustee").
Preliminary Statement
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for its Adjustable Rate Asset-Backed Bonds, Series 0000-0
(xxx "Xxxxx"), issuable as provided in this Indenture. All covenants and
agreements made by the Issuer herein are for the benefit and security of the
Holders of the Bonds. The Issuer is entering into this Indenture, and the
Indenture Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.
Granting Clause
The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Bonds and the Bond Insurer, all of the Issuer's
right, title and interest in and to (a) the Initial Mortgage Loans listed in
Schedule I to this Indenture, including the related Mortgage Files that the
Issuer causes to be delivered to the Indenture Trustee pursuant to the Initial
Mortgage Loan Conveyance Agreement, all payments of principal received,
collected or otherwise recovered on or after the applicable Cut-off Date for
each Initial Mortgage Loan, all payments of interest accruing on each Initial
Mortgage Loan on or after the applicable Cut-off Date therefor whenever received
and all other proceeds received in respect of such Initial Mortgage Loans, (b)
the Additional Mortgage Loans listed on any Additional Mortgage Loan Schedule,
including the related Mortgage Files that the Issuer causes to be delivered to
the Indenture Trustee pursuant to the Additional Mortgage Loan Conveyance
Agreement, all payments of principal received, collected or otherwise recovered
on or after the applicable Cut-off Date for each Additional Mortgage Loan, all
payments of interest accruing on each Additional Mortgage Loan on or after the
applicable Cut-off Date therefor whenever received and all other proceeds
received in respect of such Additional Mortgage Loans, (c) the Financial
Guaranty Insurance Policy, (d) the Servicing Agreement, (e) the Initial Mortgage
Loan Conveyance Agreement, (f) the Additional Mortgage Loan Conveyance
Agreement, (g) the Mortgage Loan Contribution Agreement, (h) the Insurance
Policies, (i) all cash, instruments or other property held or required to be
deposited in the Collection Account, the Bond Account, the Prefunding Account,
the Capitalized Interest Account and the Policy Payments Account, including all
investments made with funds in such accounts (but not including any income on
funds deposited in, or investments made with funds deposited in, the Collection
Account, which income shall belong to and be for the account of the
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Servicer, and not including any income on funds deposited in, or investments
made with funds deposited in, the Bond Account, the Prefunding Account or the
Capitalized Interest Account, which income shall belong to and be for the
account of the Issuer), and (i) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid assets,
including, without limitation, all insurance proceeds and condemnation awards.
Such Grants are made, however, in trust, to secure the Bonds equally and ratably
without prejudice, priority or distinction between any Bond and any other Bond
by reason of difference in time of issuance or otherwise, and to secure (x) the
payment of all amounts due on the Bonds in accordance with their terms, (y) the
payment of all other sums payable under this Indenture and (z) compliance with
the provisions of this Indenture, all as provided in this Indenture. All terms
used in the foregoing granting clauses that are defined in Section 1.01 are used
with the meanings given in said Section.
The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties herein required to the end that the interests of the Holders
of the Bonds may be adequately and effectively protected.
ARTICLE I.
DEFINITIONS
Section 1.01 General Definitions.
Except as otherwise specified or as the context may otherwise require,
the following terms have the respective meanings set forth below for all
purposes of this Indenture, and the definitions of such terms are applicable to
the singular as well as to the plural forms of such terms and to the masculine
as well as to the feminine genders of such terms. Whenever reference is made
herein to an Event of Default or a Default known to the Indenture Trustee or of
which the Indenture Trustee has notice or knowledge, such reference shall be
construed to refer only to an Event of Default or Default of which the Indenture
Trustee is deemed to have notice or knowledge pursuant to Section 6.01(d). All
other terms used herein that are defined in the Trust Indenture Act (as
hereinafter defined), either directly or by reference therein, have the meanings
assigned to them therein.
"ACAC Certificate": As defined in the Trust Agreement.
"Accountant": A Person engaged in the practice of accounting who
(except when this Indenture provides that an Accountant must be Independent) may
be employed by or affiliated with the Issuer or an Affiliate of the Issuer.
"Act": With respect to any Bondholder, as defined in Section 11.03.
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"Addition Notice": With respect to the transfer of Additional Mortgage
Loans to the Trust Estate pursuant to the Additional Mortgage Loan Conveyance
Agreement, notice of the Issuer's designation of Additional Mortgage Loans to be
pledged to the Trust Estate and the aggregate of the Principal Balances of such
Additional Mortgage Loans as of the applicable Cutoff Dates, which notice shall
be given to the Indenture Trustee and the Bond Insurer not later than one
Business Day prior to the related Subsequent Transfer Date.
"Additional Coverage Requirement": As to any Subsequent Transfer Date
and any Payment Date thereafter, the percentage, if any, specified as such by
the Bond Insurer in writing to the Indenture Trustee on the last day of the
Funding Period in connection with its approval of the Additional Mortgage Loans
pursuant to the Additional Mortgage Loan Conveyance Agreement using criteria
established on or before the Closing Date multiplied by the outstanding
Principal Balance of the Additional Mortgage Loans.
"Additional Mortgage Loan Conveyance Agreement": That certain agreement,
dated as of March 1, 1997, among the Mortgage Loan Seller, the Transferor, the
Issuer and the Indenture Trustee pursuant to which Additional Mortgage Loans
will be acquired from time to time during the Funding Period for inclusion in
the Trust Estate, a copy of which agreement is attached hereto as Exhibit C.
"Additional Mortgage Loan": Each of the mortgage loans that are
transferred to the Trust Estate pursuant to the Additional Mortgage Loan
Conveyance Agreement in consideration of the Subsequent Purchase Price paid from
amounts on deposit in the Prefunding Account as provided in Section 8.03, which
Additional Mortgage Loans shall be listed on the Additional Mortgage Loan
Schedule attached to the Addition Notice.
"Additional Mortgage Loan Schedule": As of any Subsequent Transfer Date,
the schedule of Additional Mortgage Loans as of the applicable Cut-off Dates
being transferred to the Trust Estate on such Subsequent Transfer Date pursuant
to the Additional Mortgage Loan Conveyance Agreement. Each Additional Mortgage
Loan Schedule shall contain information regarding the related Additional
Mortgage Loans of the type included in, and shall be substantially in the form
of, the Mortgage Loan Schedule attached hereto as Schedule I. From and after the
related Subsequent Transfer Date, such Additional Mortgage Loan Schedule shall
be part of the Mortgage Loan Schedule.
"Additional Subsequent Purchase Price": As to the last Subsequent
Transfer Date occurring during the Funding Period, the amount, if any, specified
by the Bond Insurer in writing to the Indenture Trustee on the last day of the
Funding Period in connection with its approval of the Additional Mortgage Loans
and paid in accordance with Section 8.03(a).
"Adjustable Rate Cap": With respect to any Payment Date and the Bonds,
the per annum rate expressed as the percentage obtained by (I) dividing (x) an
amount equal to the aggregate of the interest portions of each of the Monthly
Payments due on such Mortgage Loans during the
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related Collection Period, reduced by the sum of (i) the Servicing Fee with
respect to the Mortgage Loans for the related Collection Period, (ii) the Bond
Insurer Premium for such Payment Date, and (iii) in the case of each Payment
Date occurring after the Payment Date in September 1997, an amount equal to 1/12
of 100 basis points multiplied by the aggregate of the Principal Balances of the
Mortgage Loans as of the end of such Collection Period, by (y) the product of
(i) the Bond Balance as of the first day of the related Interest Period and (ii)
the actual number of days elapsed during such Interest Period divided by 360 and
(II) multiplying the result by 100.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract, relation to individuals or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent": Any Bond Registrar, Paying Agent, Authenticating Agent or
Custodian.
"Assignments": Collectively (i) the original instrument of assignment of
a Mortgage, the Mortgage Note secured thereby and all other documents securing
such Mortgage Note, including any interim assignments from the originator or any
other holder of any Mortgage Loan to the Issuer, (ii) the original instrument of
assignment of each agreement creating any leases, rents, income or profits
derived from the ownership, operation or disposition of all or a portion of the
related Mortgaged Property (if such item is separate from the Mortgage) and
(iii) the original instrument of assignment of such Mortgage, Mortgage Note and
other documents (described in clauses (i) and (ii)) made by the Issuer to the
Indenture Trustee (that in each case may, to the extent permitted by the laws of
the state in which the related Mortgaged Property is located, be a blanket
instrument of assignment covering other Mortgages and Mortgage Notes as well and
that may also be an instrument of assignment running directly from the mortgagee
of record under the related Mortgage to the Indenture Trustee).
"Assumed Prefunding Account Deposit Amount": An amount equal to the
Prefunding Account Deposit multiplied by 100/99.
"Authenticating Agent": The Person, if any, appointed as Authenticating
Agent by the Issuer pursuant to Section 6.15, until any successor Authenticating
Agent for the Bonds is named, and thereafter "Authenticating Agent" shall mean
such successor. The initial Authenticating Agent shall be the Indenture Trustee.
"Authorized Officer": With respect to any Person, the Chairman, Chief
Operating Officer, President or any Vice President of such Person.
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"Available Funds": With respect to the Bonds and any Payment Date, the
aggregate of the following amounts available to be paid on such Payment Date:
(I) the sum of (i) Remittable Funds, (ii) the aggregate of the amounts
deposited in the Bond Account on the related Remittance Date by the
Mortgage Loan Seller or the Servicer, as applicable, in connection with
any purchase, repurchase or substitution pursuant to Section 8.07 or the
Servicing Agreement, as applicable, (iii) the aggregate of the amounts
deposited in the Bond Account by the Issuer in connection with a
redemption pursuant to Section 10.01, (iv) the aggregate of the amounts
deposited in the Bond Account by the Bond Insurer in connection with the
purchase of the Mortgage Loans pursuant to Section 8.19, (v) in the case
of the Payment Date occurring in April 1997, (a) the amount deposited in
the Bond Account by the Indenture Trustee from the Capitalized Interest
Account pursuant to Section 8.04 and the amount, if any, deposited in
the Bond Account by the Indenture Trustee from the Prefunding Account
pursuant to Section 8.03 and (b) the portion of the Closing Date Deposit
attributable to Mortgage Loans that do not have a Monthly Payment due in
the month of March 1997 and (vi) in the case of the Payment Date
occurring in May 1997, (a) the aggregate amount of Subsequent Transfer
Deposits and (b) the remainder of the Closing Date Deposit; reduced by
(II) any amount deposited into the Bond Account that may not be
withdrawn therefrom pursuant to a final and nonappealable order of a
United States bankruptcy court of competent jurisdiction imposing a stay
pursuant to Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code and that
would otherwise have been included in Available Funds on such Payment
Date and (ii) received by the Indenture Trustee that are recoverable and
sought to be recovered from the Indenture Trustee as a voidable
preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable order of a
court of competent jurisdiction.
"Basic Documents": This Agreement, the Trust Agreement, the Servicing
Agreement, the Initial Mortgage Loan Conveyance Agreement, the Mortgage Loan
Contribution Agreement and the Additional Mortgage Loan Conveyance Agreement.
"Best Efforts": Efforts determined to be in good faith and reasonably
diligent by the Person performing such efforts, specifically the Issuer or the
Servicer, as the case may be, in its reasonable discretion. Such efforts do not
require the Issuer or the Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Issuer or the Servicer, as the case may be, to advance or expend
fees or sums of money in addition to those specifically set forth in this
Indenture and the Servicing Agreement.
"Bond Account": The segregated trust account, which shall be an
Eligible Account, established and maintained pursuant to Section 8.02 and
entitled "Bankers Trust Company of
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California, N.A., as Indenture Trustee for Aames Capital Owner Trust 1997-1
Adjustable Rate Asset-Backed Bonds, Series 1997-1, Bond Account".
"Bond Balance": With respect to all of the Bonds, the aggregate of the
Current Bond Balances of all Bonds Outstanding at the time of determination.
"Bondholder" or "Holder": The Person in whose name a Bond is registered
in the Bond Register, except that, solely for the purpose of taking any action
under Section 5.02 or giving of any consent pursuant to this Indenture, any Bond
registered in the name of the Issuer, the Mortgage Loan Seller, the Servicer or
the Transferor or any Persons actually known by a Responsible Officer of the
Indenture Trustee to be an Affiliate of the Issuer, the Mortgage Loan Seller,
the Servicer or the Transferor shall be deemed not to be Outstanding and the
percentage interest evidenced thereby shall not be taken into account in
determining whether Holders of the requisite percentage interests necessary to
take any such action or effect any such consent have acted or consented unless
the Issuer, the Mortgage Loan Seller, the Servicer, the Transferor or any such
Person is an owner of record of all of the Bonds.
"Bond Insurer": Financial Security Assurance Inc., a stock insurance
company organized and created under the laws of the State of New York, and any
successors thereto.
"Bond Insurer Default": The existence and continuance of any of the
following:
(a) the failure by the Bond Insurer to make a payment required
under the Financial Guaranty Insurance Policy in accordance with its
terms;
(b) the entry by a court having jurisdiction in the premises of
(i) a decree or order for relief in respect of the Bond Insurer in an
involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, rehabilitation, reorganization
or other similar law of (ii) a decree or order adjudging the Bond
Insurer bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, rehabilitation, arrangement, adjustment or
composition of or in respect of the Bond Insurer under any applicable
United States federal or state law, or appointing a custodian, receiver,
liquidator, rehabilitator, assignee, trustee, sequestrator or other
similar official of the Bond Insurer or of any substantial part of its
property, or ordering the winding-up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(c) the commencement by the Bond Insurer of a voluntary case or
proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated bankrupt or insolvent, or the
consent of the Bond Insurer to the entry of a decree or order for relief
in respect of the Bond Insurer in an involuntary case or proceeding
under any applicable United States federal or state bankruptcy,
insolvency case or proceeding against the Bond
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Insurer, or the filing by the Bond Insurer of a petition or answer or
consent seeking reorganization or relief under any applicable United
States federal or state law, or the consent by the Bond Insurer to the
filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Bond Insurer or of any
substantial part of its property, or the failure by the Bond Insurer to
pay debts generally as they become due, or the admission by the Bond
Insurer in writing of its inability to pay its debts generally as they
become due, or the taking of corporate action by the Bond Insurer in
furtherance of any such action.
Notwithstanding anything to the contrary contained herein, upon the
existence and continuance of a Bond Insurer Default, the consent by the Bond
Insurer shall not be required to any action or inaction hereunder and the Bond
Insurer shall not have any rights with respect thereto.
"Bond Insurer Premium": The premium due to the Bond Insurer on each
Payment Date, which amount shall be equal to 1/12 of the product of the
applicable Bond Insurer Premium Rate and the Bond Balance immediately prior to
such Payment Date.
"Bond Insurer Premium Rate": For each Payment Date, 0.18%; provided,
however, that if on any Payment Date subsequent to the Clean-Up Call Date the
Coverage Amount is less than the Required Coverage Amount as of the immediately
preceding Payment Date, the Bond Insurer Premium Rate shall be 0.68%.
"Bond Interest": As to any Payment Date, the amount of interest payable
to Holders of the Bonds on such Payment Date, which amount shall be equal to (i)
in the case of the April 1997 Payment Date, interest on the initial Bond Balance
for the number of days from and including the Closing Date to and including the
day prior to such Payment Date, computed at the Bond Interest Rate and (ii) in
the case of each subsequent Payment Date, interest for the number of days in the
related Interest Period on the Bond Balance as of the preceding Payment Date
(after giving effect to any payments made in reduction of the Bond Balance on
such preceding Payment Date) computed at the Bond Interest Rate.
"Bond Interest Rate": With respect to the Interest Period relating to
the April 1997 Payment Date, 5.8875% per annum. With respect to each Interest
Period thereafter, a per annum rate equal to the lesser of (a) with respect to
each Interest Period ending prior to the Clean-Up Call Date, LIBOR plus 0.20%
and with respect to each Interest Period thereafter, LIBOR plus 0.40% and (b)
the Adjustable Rate Cap.
"Bond Owner": With respect to a Book-Entry Bond, the Person who is the
beneficial owner of such Bond as reflected on the books of the Clearing Agency
for the Bonds or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency).
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"Bond Register": As defined in Section 2.06.
"Bond Registrar": As defined in Section 2.06.
"Bonds": Any bonds authorized by, and authenticated and delivered
under, this Indenture.
"Book-Entry Bonds": Any Bonds registered in the name of the Clearing
Agency or its nominee, ownership of which is reflected on the books of the
Clearing Agency or on the books of a person maintaining an account with such
Clearing Agency (directly or as an indirect participant in accordance with the
rules of such Clearing Agency).
"Book-Entry Termination": The time at which the book-entry registration
of the Book- Entry Bonds shall terminate, as specified in Section 2.13.
"Business Day": Any day other than (i) a Saturday or Sunday or (ii) a
day that is either a legal holiday or a day on which banking institutions in the
State of New York, the State of California or the State of Delaware are
authorized or obligated by law, regulation or executive order to be closed.
"Capitalized Interest Account": The segregated trust account, which
shall be an Eligible Account, established and maintained pursuant to Section
8.04 and entitled "Bankers Trust Company of California, N.A., as Indenture
Trustee for Aames Capital Owner Trust 1997-1 Adjustable Rate Asset-Backed Bonds,
Series 1997-1, Capitalized Interest Account".
"Capitalized Interest Account Deposit": $163,947.64.
"Certificateholders": As defined in the Trust Agreement.
"Certificate Distribution Account": As defined in the Trust Agreement
"Clean-Up Call Date": The first Payment Date on which the aggregate of
the Principal Balances of the Mortgage Loans is less than 10% of the sum of the
aggregate of the Principal Balances of the Initial Mortgage Loans as of the
applicable Cut-Off Dates plus the amount of the Prefunding Account Deposit.
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended,
and the regulations of the Commission thereunder and shall initially be The
Depository Trust Company of New York, the nominee for which is Cede & Co.
"Clearing Agency Participants": The entities for whom the Clearing
Agency will maintain book-entry records of ownership and transfer of Book-Entry
Bonds, which may include
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securities brokers and dealers, banks and trust companies and clearing
corporations and certain other organizations.
"Closing Date": March 26, 1997, the date of initial issuance of the
Bonds.
"Closing Date Deposit": The aggregate amount deposited in the Bond
Account on or prior to the Closing Date pursuant to Section 8.02, which amount
is equal to the sum of (a) 30 days of interest on the principal balance of each
Initial Mortgage Loan that is included in the Trust Estate as of the applicable
Cut-off Date and does not have a Monthly Payment due in the Collection Period
relating to the April 1997 Payment Date and (b) 30 days of interest on the
principal balance of each Initial Mortgage Loan that is included in the Trust
Estate as of the applicable Cut-off Date and does not have a Monthly Payment due
in the Collection Period relating to the May 1997 Payment Date, in each case
computed at a per annum rate equal to the Mortgage Loan Rate for each such
Mortgage Loan, net of the applicable Servicing Fee Rate.
"Code": The Internal Revenue Code of 1986, as amended, and as may be
further amended from time to time, as successor statutes thereto, and applicable
U.S. Department of Treasury regulations issued pursuant thereto in temporary or
final form and proposed regulations thereunder to the extent that, by reason of
their proposed effective date, such proposed regulations would apply.
"Collection Account": The segregated trust account established by the
Servicer and maintained pursuant to Section 2.02(b) of the Servicing Agreement.
"Collection Period": As to any Payment Date, the period beginning on the
first day of the calendar month immediately preceding the month in which such
Payment Date occurs (except that, in the case of the first Payment Date, the
related Collection Period will commence on the applicable Cut-off Date for each
Mortgage Loan and except that, in the case of any Additional Mortgage Loan, the
first Collection Period with respect thereto will commence on the applicable
Cut-off Date for such Additional Mortgage Loan) and ending on the last day of
such calendar month.
"Commission": The Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time such Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act, then the body performing such duties at
such time under the Trust Indenture Act or similar legislation replacing the
Trust Indenture Act.
"Corporate Trust Office": The principal office of the Indenture Trustee
at which at any particular time its corporate trust business with respect to
this Indenture shall be principally administered, which office at the date of
the execution of this Indenture is located at 0 Xxxx Xxxxx, 00xx Xxxxx, Xxxxxx,
Xxxxxxxxxx 00000, Attention: Aames Owner Trust 1997-1, Adjustable Rate
Asset-Backed Bonds, Series 1997-1.
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"Coverage Amount": As to any Payment Date, the amount, if any, by which
the aggregate of the Principal Balances of the Mortgage Loans as of the end of
the related Collection Period (plus, in the case of the April 1997 Payment Date,
the aggregate of the Principal Balances of any Additional Mortgage Loans added
to the Mortgage Pool after March 31, 1997 but prior to the end of the Funding
Period) exceeds the Bond Balance for such Payment Date, after taking into
account the Monthly Principal (prior to any reduction thereof in respect of any
Coverage Surplus pursuant to clause (II) of the definition of Monthly Principal)
to be applied in reduction of the Bond Balance on such Payment Date. If the
aggregate of the Principal Balances of the Mortgage Loans is less than the Bond
Balance for such Payment Date, determined as provided above, the Coverage Amount
for such Payment Date shall be zero.
"Coverage Deficit": As to any Payment Date, the amount, if any, by which
the Bond Balance on such Payment Date (after taking into account any Monthly
Principal and Excess Cash Payment to be applied in reduction of the Bond Balance
on such Payment Date) exceeds the aggregate of the Principal Balances of the
Mortgage Loans as of the end of the related Collection Period (plus, in the case
of the April 1997 Payment Date, the aggregate of the Principal Balances of any
Additional Mortgage Loans added to the Mortgage Pool after March 31, 1997 but
prior to the end of the Funding Period). If the aggregate of the Principal
Balances of the Mortgage Loans as determined pursuant to the preceding sentence
is greater than the Bond Balance for such Payment Date determined as provided
above, the Coverage Deficit for such Payment Date shall be zero.
"Coverage Surplus": As to any Payment Date, the amount, if any, by
which the Coverage Amount on such Payment Date exceeds the Required Coverage
Amount for such Payment Date.
"Current Bond Balance": With respect to any Bond as of any date of
determination, the original principal amount of such Bond, reduced by all prior
payments, if any, made with respect to principal of such Bond.
"Custodian": A Person who is at any time appointed by the Indenture
Trustee pursuant to Section 8.16 as a document custodian for the Mortgage Files,
which Person shall not be the Issuer or an Affiliate of the Issuer.
"Cut-off Date": As to any Mortgage Loan, the date specified as such on
the Mortgage Loan Schedule.
"Default": Any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Defaulted Mortgage Loan": The meaning specified in Section 8.07(c).
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"Defective Mortgage Loan": Any Mortgage Loan that is required to be
repurchased or substituted by the Mortgage Loan Seller pursuant to the Initial
Mortgage Loan Conveyance Agreement or the Additional Mortgage Loan Conveyance
Agreement.
"Definitive Bonds": Bonds other than Book-Entry Bonds.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
a Qualified Replacement Mortgage Loan.
"Delinquency Percentage": As to any Payment Date, the percentage
equivalent of the fraction obtained by dividing (i) the aggregate of the
Principal Balances of all Mortgage Loans that were then 90 days contractually
delinquent as of the end of the related Collection Period or were foreclosed
upon or otherwise comparably converted during such Collection Period, by (ii)
the aggregate of the Principal Balances of all Mortgage Loans as of such Payment
Date.
"Delinquency Rate Event": Any Remittance Date on which the Rolling
Delinquency Percentage equals or exceeds 17.00%.
"Determination Date": As to any Remittance Date, the last day of the
calendar month immediately preceding the calendar month in which such Remittance
Date occurs.
"Eligible Account": Either (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
unsecured and uncollateralized debt obligations of which shall be rated "A" or
better by Standard & Poor's and "A2" or better by Moody's and in the highest
short term rating category by Standard & Poor's and Moody's, and that is either
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, and (v) approved in writing by the Bond
Insurer or (B) a trust account maintained with the trust department of a federal
or state chartered depository institution or trust company, having capital and
surplus of not less than $50,000,000, acting in its fiduciary capacity, the
unsecured and uncollateralized debt obligations of which shall be rated "Baa3"
or better by Moody's. Any Eligible Accounts maintained with the Indenture
Trustee shall conform to the preceding clause (B).
"Event of Default": As defined in Section 5.01.
"Excess Cash": With respect to any Payment Date, the amount, if any, by
which Available Funds for such Payment Date exceed the sum of (i) the Bond
Interest for such Payment Date, (ii) the Monthly Principal for such Payment Date
and (iii) the aggregate amount payable to the Bond Insurer on such Payment Date
pursuant to clause first of Section 8.02(c).
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"Excess Cash Payment": With respect to any Payment Date on which a
Coverage Surplus does not exist, an amount equal to the lesser of (a) the
amount, if any, by which the Required Coverage Amount for such Payment Date
exceeds the Coverage Amount for such Payment Date, or, if after taking into
account the Monthly Principal to be applied in reduction of the Bond Balance on
such Payment Date, the Bond Balance exceeds the aggregate of the Principal
Balances of the Mortgage Loans, the sum of the Required Coverage Amount for such
Payment Date plus the amount by which the Bond Balance, determined as provided
above, exceeds the aggregate of the Principal Balances of the Mortgage Loans as
of the end of the related Collection Period (plus, in the case of the April 1997
Payment Date, the aggregate of the Principal Balances of any Additional Mortgage
Loans added to the Mortgage Pool after March 31, 1997 but prior to the end of
the Funding Period) and (b) the Excess Cash for such Payment Date; provided,
however, with respect to any Payment Date on which a Coverage Surplus exists,
the Excess Cash Payments shall be zero.
"Excess Spread Trigger": For any Payment Date, an Excess Spread Trigger
will have occurred if the Excess Cash for such Payment Date is less than 1/12 of
3.50% of the Bond Balance for such Payment Date.
"FDIC": The Federal Deposit Insurance Corporation and its successors in
interest.
"FHLMC": The Federal Home Loan Mortgage Corporation and its successors
in interest.
"FNMA": The Federal National Mortgage Association and its successors in
interest.
"Final Maturity Date": With respect to any Bond, the Payment Date in
June 2029.
"Financial Guaranty Insurance Policy": The Financial Guaranty Insurance
Policy (No. 50574-N), dated March 26, 1997, including any endorsements thereto,
issued by the Bond Insurer for the benefit of the Bondholders, pursuant to which
the Bond Insurer guarantees payment of Insured Amounts. A copy of the Financial
Guaranty Insurance Policy is attached hereto as Exhibit G.
"Full Prepayment": With respect to any Mortgage Loan, when any one of
the following occurs: (i) payment is made by the Mortgagor to the Servicer of
100% of the outstanding principal balance of such Mortgage Loan, together with
all accrued and unpaid interest thereon at the Mortgage Loan Rate on such
Mortgage Loan, (ii) payment is made to the Indenture Trustee of the Purchase
Price of such Mortgage Loan in connection with the purchase of such Mortgage
Loan by the Mortgage Loan Seller, the Servicer or the Bond Insurer or (iii)
payment is made to the Servicer of all Insurance Proceeds and Liquidation
Proceeds, and other payments, if any, that have been determined by the Servicer
in accordance with the provisions of the Servicing Agreement to be finally
recoverable, in the Servicer's reasonable judgment, in respect of such Mortgage
Loan.
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"Funding Period": The period beginning on the Closing Date and ending
on the earlier of (a) the date on which the amount on deposit in the Prefunding
Account is zero and (b) the close of business on April 14, 1997.
"Grant": To grant, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in, deposit, set-over and confirm. A Grant of a Mortgage Loan and related
Mortgage Files, a Permitted Investment, the Servicing Agreement, the Initial
Mortgage Loan Conveyance Agreement, the Mortgage Loan Contribution Agreement,
the Additional Mortgage Loan Conveyance Agreement, an Insurance Policy or any
other instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including without limitation the
immediate and continuing right to claim for, collect, receive and give receipts
for principal and interest payments thereunder, insurance proceeds, Purchase
Prices and all other moneys payable thereunder and all proceeds thereof, to give
and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in the name
of the Granting party or otherwise, and generally to do and receive anything
that the Granting party is or may be entitled to do or receive thereunder or
with respect thereto.
"Gross Margin": As defined in the Initial Mortgage Loan Conveyance
Agreement.
"Highest Lawful Rate": As defined in Section 11.18.
"Indenture": This instrument as originally executed and, if from time to
time supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, as so supplemented or
amended. All references in this instrument to designated "Articles", "Sections",
"Subsections" and other subdivisions are to the designated Articles, Sections,
Subsections and other subdivisions of this instrument as originally executed.
The words "herein", "hereof", "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section,
Subsection or other subdivision.
"Indenture Accounts": The Bond Account, the Prefunding Account, the
Capitalized Interest Account and the Policy Payments Account.
"Indenture Trustee": Bankers Trust Company of California, N.A., a
national banking association, and any Person resulting from or surviving any
consolidation or merger to which it may be a party until a successor Person
shall have become the Indenture Trustee pursuant to the applicable provisions of
this Indenture, and thereafter "Indenture Trustee" shall mean such successor
Person.
"Indenture Trustee's Fee": The annual fee of the Indenture Trustee, and
any annual file access fees, such fees being payable by the Servicer as provided
in the Servicing Agreement.
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"Independent": When used with respect to any specified Person means such
a Person who (i) is in fact independent of the Issuer and any other obligor upon
the Bonds, (ii) does not have any direct financial interest or any material
indirect financial interest in the Issuer or in any such other obligor or in an
Affiliate of the Issuer or such other obligor, and (iii) is not connected with
the Issuer or any such other obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Whenever it is herein provided that any Independent Person's opinion or
certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by an Issuer Order and such opinion or certificate shall state that
the signer has read this definition and that the signer is Independent within
the meaning hereof.
"Index": As defined in the Initial Mortgage Loan Conveyance Agreement.
"Individual Bond": A Bond of an original principal amount of $1,000; a
Bond of an original principal amount in excess of $1,000 shall be deemed to be a
number of Individual Bonds equal to the quotient obtained by dividing such
original principal amount by $1,000.
"Initial Mortgage Loan": Each of the mortgage loans Granted to the
Indenture Trustee under this Indenture as security for the Bonds and that from
time to time comprise part of the Trust Estate. The Initial Mortgage Loans are
listed on the Mortgage Loan Schedule annexed hereto as Schedule I.
"Initial Mortgage Loan Conveyance Agreement": That certain agreement,
dated as of March 1, 1997, between the Mortgage Loan Seller and the Transferor
pursuant to which the Mortgage Loans will be acquired from the Mortgage Loan
Seller by the Transferor for inclusion in the Trust Estate, a copy of which
agreement is attached hereto as Exhibit B.
"Insurance Policies": All insurance policies insuring any Mortgage Loan
or Mortgaged Property, to the extent the Issuer or the Indenture Trustee has any
interest therein.
"Insurance Proceeds": As defined in Article I of the Servicing
Agreement.
"Insured Amount": As to any Payment Date, the amount to be paid by the
Bond Insurer under the Financial Guaranty Insurance Policy pursuant to a Notice
of Claim presented by the Indenture Trustee (in the manner described in Section
8.05). The Insured Amount as of any Payment Date shall be equal to the sum of
(i) the amount by which the Bond Interest for such Payment Date will exceed the
amount of Available Funds remaining after taking into account amounts payable
pursuant to clause first of Section 8.02(c) on such Payment Date, (ii) the
Coverage Deficit, if any, on such Payment Date, (iii) the Preference Amount for
such Payment Date, in each case as determined by the Indenture Trustee on the
date a Notice of Claim is required to be made in respect of such Payment Date
and (iv) with respect to the Payment Date, if any, relating to the Final
Maturity Date, the remaining Bond Balance, if any, on such Final Maturity Date.
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"Interest Period": With respect to the first Interest Period, the period
beginning on the Closing Date and ending on the day preceding the Payment Date
in April 1997 and, as to any subsequent Payment Date, the period beginning on
the immediately preceding Payment Date and ending on the day prior to the
related Payment Date.
"Issuer": Aames Capital Owner Trust 1997-1, a Delaware business trust.
"Issuer Order" and "Issuer Request": A written order or request of the
Issuer signed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee or, in the case of such order or request required by Section 2.11, by an
Authorized Officer of the holder of the ACAC Certificate and delivered to the
Indenture Trustee or the Authenticating Agent, as applicable.
"Letter Agreement": The Letter of Representations to The Depository
Trust Company from the Indenture Trustee and the Issuer dated March 26, 1997,
attached hereto as Exhibit E.
"LIBOR": With respect to the April 1997 Payment Date, 5.6875 % per
annum. With respect to any subsequent Payment Date, the per annum rate
determined by the Indenture Trustee on the related LIBOR Determination Date on
the basis of the offered rates of the Reference Banks for one-month U.S. dollar
deposits as such rates appear on the Reuters Screen LIBO Page as of 11:00 a.m.
(London time) on such LIBOR Determination Date. On each LIBOR Determination
Date, LIBOR will be established by the Indenture Trustee as follows:
(a) if on such LIBOR Determination Date two or more Reference
Banks provide such offered quotations, LIBOR shall be the arithmetic
mean (rounded upwards if necessary to the nearest whole multiple of
0.0625%) of such offered quotations; or
(b) if on such LIBOR Determination Date, fewer than two Reference
Banks provide such offered quotations, LIBOR shall be the greater of (x)
LIBOR as determined on the previous LIBOR Determination Date and (y) the
Reserve Interest Rate.
"LIBOR Determination Date": With respect to any Interest Period after
the first Interest Period, the second London Business Day immediately preceding
the first day of such Interest Period.
"Liquidated Mortgage Loan": As defined in Article I of the Servicing
Agreement.
"Liquidation Date": With respect to any Mortgage Loan, the date of the
final receipt of all Liquidation Proceeds, Insurance Proceeds or other payments
with respect to such Mortgage Loan.
"Liquidation Proceeds": As defined in Article I of the Servicing
Agreement.
"Loan-to-Value Ratio": As defined in the Initial Mortgage Loan
Conveyance Agreement.
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"London Business Day": A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
"Loss Percentage": As defined in Article I of the Servicing Agreement.
"Maturity": With respect to any Bond, the date on which the entire
unpaid principal amount of such Bond becomes due and payable as therein or
herein provided, whether at the Final Maturity Date or by declaration of
acceleration, call for redemption or otherwise.
"Minimum Rate": As defined in the Initial Mortgage Loan Conveyance
Agreement.
"Monthly Advance": As defined in Article I of the Servicing Agreement.
"Monthly Payment": With respect to any Mortgage Note, the amount of each
monthly payment payable under such Mortgage Note in accordance with its terms,
including one month's accrued interest on the related Principal Balance at the
then applicable Mortgage Loan Rate, but net of any portion of such monthly
payment that represents late payment charges, prepayment or extension fees or
collections allocable to payments to be made by Mortgagors for payment of
insurance premiums or similar items.
"Monthly Principal": As to any Payment Date, (I) the aggregate of (i)
all Principal Payments received or deemed to have been received in respect of
the Mortgage Loans during or in respect of the related Collection Period, (ii)
all Trust Insurance Proceeds received during the related Collection Period and
allocable to principal of the related Mortgage Loans, (iii) all Net Liquidation
Proceeds received during the related Collection Period and allocable to
principal of the related Mortgage Loans, (iv) the aggregate of the amounts
deposited in the Bond Account on the related Remittance Date by the Mortgage
Loan Seller, the Servicer or the Bond Insurer, as applicable, in connection with
any purchase, repurchase or substitution of any Mortgage Loan pursuant to the
Initial Mortgage Loan Conveyance Agreement, the Additional Mortgage Loan
Conveyance Agreement, the Servicing Agreement or Section 8.19 hereof, net of any
amounts allocable to interest in respect thereof, (v) the aggregate of the
amounts deposited in the Bond Account by the Issuer in connection with a
redemption of the Bonds pursuant to Section 10.01, net of any amounts allocable
to interest in respect thereof, and (vi) the amount, if any, deposited at the
end of the Funding Period in the Bond Account by the Indenture Trustee in
respect of the Prefunding Account Deposit pursuant to Section 8.03, reduced by
(II) the amount of any Coverage Surplus with respect to such Payment Date. For
the limited purpose of stating the obligations with respect to payments in
reduction of principal on the Bonds, Monthly Principal for any Payment Date
shall be deemed to include the Coverage Deficit for such Payment Date and the
principal portion of any Preference Amount relating to the Bonds and, for the
Payment Date occurring on the Final Maturity Date, the remaining Bond Balance.
"Monthly Servicing Fee": As defined in Article I of the Servicing
Agreement.
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"Moody's": Xxxxx'x Investors Service, Inc. and its successors in
interest.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple in real property securing a Mortgage Loan.
"Mortgage File": As defined in the Initial Mortgage Loan Conveyance
Agreement.
"Mortgage Loan Contribution Agreement": That certain agreement, dated as
of March 1, 1997, between the Transferor and the Issuer pursuant to which the
Mortgage Loans will be acquired from the Transferor by the Issuer for inclusion
in the Trust Estate, a copy of which agreement is attached hereto as Exhibit D.
"Mortgage Loan Rate": With respect to each Mortgage Loan, the adjustable
rate per annum set forth in the related Mortgage Note from time to time at which
interest accrues on such Mortgage Loan as of the most recent interest rate
adjustment pursuant to the related Mortgage Note, in each case after giving
effect to any modification of a Mortgage Loan for any period in connection with
a bankruptcy or similar proceeding involving the related Mortgagor or a
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Servicer in accordance with the Servicing Agreement.
"Mortgage Loans": The Initial Mortgage Loans and the Additional
Mortgage Loans.
"Mortgage Loan Seller": Aames Capital Corporation.
"Mortgage Loan Schedule": As of any date, the schedule of mortgage loans
included in the Trust Estate. Schedule I hereto identifies the Initial Mortgage
Loans being Granted to the Indenture Trustee on the Closing Date. The Mortgage
Loan Schedule will be supplemented from time to time during the Funding Period
by any Additional Mortgage Loan Schedule to reflect the addition of the related
Additional Mortgage Loans to the Trust Estate and may be amended as appropriate
from time to time to reflect the deletion and substitution of Mortgage Loans.
"Mortgage Note": The note or other instrument evidencing the
indebtedness of a Mortgagor under the related Mortgage Loan.
"Mortgaged Property": The underlying property securing a Mortgage Note.
"Mortgagor": The obligor under a Mortgage Note.
"Net Liquidation Proceeds": As defined in Article I of the Servicing
Agreement.
"Nonrecoverable Advance": As defined in Article I of the Servicing
Agreement.
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"Notice of Claim": The notice required to be furnished by the Indenture
Trustee to the Bond Insurer in the event an Insured Amount is required to be
paid under the Financial Guaranty Insurance Policy with respect to any Payment
Date, in the form set forth as Exhibit H hereto.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, Chief Operating Officer or
a Vice President of the Mortgage Loan Seller, the Transferor, the Servicer or,
in the case of the Issuer, an authorized signatory of the Owner Trustee, as the
case may be, and delivered to the Indenture Trustee, Bond Insurer or each Rating
Agency, as the case may be.
"Opinion of Counsel": A written opinion of counsel reasonably acceptable
to the Indenture Trustee and, in the case of opinions delivered to the Bond
Insurer, reasonably acceptable to it, who may be in-house counsel for the
Mortgage Loan Seller, the Transferor, the Issuer, or the Servicer or in-house
counsel of an affiliate of any of the foregoing. Any expense related to
obtaining an Opinion of Counsel for an action requested by a party shall be
borne by the party required to obtain such opinion or seeking to effect the
action that requires the delivery of such Opinion of Counsel, except in such
instances where such opinion is at the request of the Indenture Trustee, in
which case such expense shall be an expense of the holder of the ACAC
Certificate.
"Order": As defined in Section 8.05(b).
"Original Bond Balance": The principal balance of the Bonds at the
issue date thereof, equal to $415,000,000.
"Outstanding": As of the date of determination, all Bonds theretofore
authenticated and delivered under this Indenture except:
(i) Definitive Bonds theretofore canceled by the Bond
Registrar or delivered to the Bond Registrar for cancellation;
(ii) Bonds or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Indenture Trustee or any Paying Agent (other than the Issuer)
in trust for the Holders of such Bonds; provided, however, that if such
Bonds are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor, satisfactory to the
Indenture Trustee, has been made;
(iii) Bonds in exchange for or in lieu of which other Bonds
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Bonds are held by a bona fide purchaser (as defined by the Uniform
Commercial Code of the applicable jurisdiction); and
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(iv) Bonds alleged to have been destroyed, lost or stolen
that have been paid as provided for in Section 2.07;
provided, however, that in determining whether the Holders of the requisite
percentage of the Bond Balance of the Outstanding Bonds have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Bonds
owned by the Issuer, any other obligor upon the Bonds or any Affiliate of the
Issuer, the Mortgage Loan Seller, the Servicer or the Transferor or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Bonds that the Indenture Trustee knows to be so owned shall be so disregarded.
Bonds so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Bonds and that the
pledgee is not the Issuer, any other obligor upon the Bonds or any Affiliate of
the Issuer, the Mortgage Loan Seller, the Servicer or the Transferor or such
other obligor.
"Owner Trustee": Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity, but solely as owner trustee under
the Trust Agreement, and any successor owner trustee thereunder.
"Paying Agent": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Issuer pursuant to
Section 3.03 to pay the principal of, or interest on, any Bonds on behalf of the
Issuer.
"Payment Ahead": As defined in Article I of the Servicing Agreement.
"Payment Date": The 15th day of each month or, if any such day is not a
Business Day, the Business Day immediately following such 15th day, beginning
April 15, 1997.
"Payment Date Statement": The statement prepared pursuant to Section
2.08(d) with respect to collection on or in respect of the Mortgage Loans and
other assets of the Trust Estate and payments on or in respect of the Bonds,
based upon the information contained in the Servicer Remittance Report prepared
pursuant to the Servicing Agreement and setting forth the following information
with respect to each Payment Date:
(i) the amount of such payment to Bondholders allocable to
(x) Monthly Principal and (y) any Excess Cash Payment;
(ii) the amount of such payment to Bondholders allocable to
Bond Interest;
(iii) the Bond Balance, after giving effect to the payment
of Monthly Principal and any Excess Cash Payment on such Payment Date;
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(iv) the aggregate of the Principal Balances of the Mortgage
Loans as of the end of the related Collection Period;
(v) the amount of unreimbursed Monthly Advances and/or Servicing
Advances, if any, separately identifying the amount, if any, of funds withdrawn
from the Collection Account on the preceding Remittance Date with respect to
Monthly Advances and/or Servicing Advances;
(vi) the number and aggregate of the Principal Balances of
Mortgage Loans (including the Principal Balances of all Mortgage Loans in
foreclosure) contractually delinquent (i) one month, (ii) two months and (iii)
three months or more, as of the end of the related Collection Period (including
Mortgage Loans in foreclosure or other similar proceedings);
(vii) the number and aggregate of the Principal Balances of the
Mortgage Loans in foreclosure or other similar proceedings, and the number and
aggregate of the Principal Balance of Mortgage Loans, the Mortgagor of which is
known by the Servicer to be in bankruptcy as of the end of the related
Collection Period;
(viii) the book value of any real estate acquired through
foreclosure, grant of a deed in lieu of foreclosure or otherwise and the number
and the aggregate of the Principal Balances of the Mortgage Loans relating
thereto;
(ix) the Coverage Amount, the Required Coverage Amount, the
Coverage Surplus, if any, and the Coverage Deficit, if any;
(x) any Insured Amount for such Payment Date;
(xi) Available Funds for such Payment Date;
(xii) the number and aggregate of the Principal Balances of all
Mortgage Loans that were the subject of a Principal Prepayment during the
related Collection Period, the aggregate amount of Principal Prepayments
collected or deemed collected during the related Collection Period and the
amount of any partial Principal Prepayment collected or deemed collected during
the related Collection Period;
(xiii) the weighted average maturity of the Mortgage Loans and
weighted average Mortgage Loan Rate of the Mortgage Loans, as of the end of the
related Collection Period;
(xiv) the number of Mortgage Loans as of the beginning and the end
of the related Collection Period;
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(xv) Realized Losses incurred during the Collection Period
and cumulative Realized Losses incurred since the Closing Date,
including the number of Mortgage Loans and the aggregate of the
Principal Balance of the Mortgage Loans pertaining to the Realized
Losses that occurred during the related Collection Period;
(xvi) the Bond Insurer Premium for the related Collection
Period;
(xvii) the aggregate amount of the Monthly Servicing Fee paid
to or retained by the Servicer for the related Collection Period; and
(xviii) such other information as the Bond Insurer may
reasonably request to the extent such information is available to the
Paying Agent from the Servicer and is produced by the Servicer in the
ordinary course of the Servicer's business.
In the case of information furnished pursuant to subclauses (i) and (ii)
above, the amounts shall be expressed as a dollar amount per Bond with a
$1,000 principal denomination.
"Percentage Interest": With respect to a Bond, the undivided percentage
interest (carried to eight places rounded down) obtained by dividing the
original principal balance of such Bond by the Original Bond Balance and
multiplying the result by 100.
"Permitted Investments": One or more of the following obligations,
instruments and securities:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States;
(b) Federal Housing Administration debentures, FHLMC senior debt
obligations and FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption or that are not rated in one of the two
highest rating categories by each Rating Agency;
(c) federal funds, certificates of deposit, time and demand deposits and
banker's acceptances (in each case having original maturities of not more
than 365 days) of any bank or trust company incorporated under the laws of
the United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition thereof
have been rated "A-1" or better by Standard & Poor's and Prime-1 or better
by Moody's;
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(d) deposits of any bank or savings and loan association that has
combined capital, surplus and undivided profits of at least $100,000,000 which
deposits are held up to the applicable limits insured by the Bank Insurance Fund
or the Savings Association Insurance Fund of the FDIC;
(e) commercial paper (having original maturities of not more than 180
days) that has the highest short term rating of each of Standard & Poor's and
Moody's;
(f) investments in money market funds rated "AAAm" or "AAAm-G" by
Standard & Poor's and Aaa by Moody's; and
(g) investments approved in writing by Standard & Poor's, the Bond
Insurer and Moody's;
provided that no investment described hereunder shall evidence either the right
to receive (i) only interest with respect to obligations underlying such
instrument or (ii) both principal and interest payments derived from obligations
underlying such instrument and the principal and interest payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity of the underlying obligations; and provided, further, that no
instrument described hereunder may be purchased at a price greater than par if
such instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity. Permitted Investments shall mature not later than the
Business Day prior to the date on which such monies will be needed to make
payments, or in the case of Permitted Investments held in the Prefunding
Account, shall be available on the Business Day next succeeding the date the
Indenture Trustee receives the Addition Notice that such monies will be needed.
Notwithstanding the foregoing, with respect to investment of amounts in any
account, any of the foregoing obligations, instruments or securities will not be
Permitted Investments to the extent that an investment therein will cause the
then outstanding principal amount thereof in which such funds are then invested
to exceed $25,000,000 (such investments being valued at par).
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Policy Payments Account": The segregated trust account, which shall be
an Eligible Account, established and maintained pursuant to Section 8.05 and
entitled "Bankers Trust Company of California, N.A., as Indenture Trustee for
Aames Capital Owner Trust 1997-1 Adjustable Rate Asset-Backed Bonds, Series
1997-1, Policy Payments Account".
"Predecessor Bonds": With respect to any particular Bond, every
previous Bond evidencing all or a portion of the same debt as that evidenced by
such particular Bond; and, for the purpose of this definition, any Bond
authenticated and delivered under Section 2.07 in lieu of
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a lost, destroyed or stolen Bond shall be deemed to evidence the same debt as
the lost, destroyed or stolen Bond.
"Preference Amount": With respect to any Payment Date, any amounts
included in previous payments to Bondholders as Bond Interest, Monthly Principal
and Excess Cash Payment or in respect of a Coverage Deficit that is recovered
from such Bondholders as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction and that have not
theretofore been repaid to such Bondholders; provided such Bondholders have
complied with the provisions of Section 8.05(b).
"Prefunding Account": The segregated trust account, which shall be an
Eligible Account, established and maintained pursuant to Section 8.03 and
entitled "Bankers Trust Company of California, N.A., as Indenture Trustee for
Aames Capital Owner Trust 1997-1 Adjustable Rate Asset-Backed Bonds, Series
1997-1, Prefunding Account".
"Prefunding Account Deposit": $82,720,605.
"Principal Balance": As to any Mortgage Loan and any Determination Date,
the actual outstanding principal amount thereof as of the close of business on
the Determination Date in the preceding month (or, in the case of the first
Payment Date, as of the applicable Cut-off Date) less (i) any Principal Payments
received in respect of such Mortgage Loan during the related Collection Period,
(ii) Net Liquidation Proceeds and Trust Insurance Proceeds allocable to
principal recovered or collected in respect of such Mortgage Loan during the
related Collection Period, (iii) the portion of the Purchase Price allocable to
principal to be remitted by the Mortgage Loan Seller or the Servicer to the Bond
Account on the next succeeding Remittance Date in connection with a purchase or
repurchase of such Mortgage Loan pursuant to the Servicing Agreement or Section
8.07 hereof, to the extent such amount is actually deposited in the Bond Account
on such Remittance Date, (iv) the amount to be remitted by the Mortgage Loan
Seller to the Trustee on the next succeeding Remittance Date in connection with
a substitution of a Qualified Replacement Mortgage Loan for such Mortgage Loan
pursuant to Section 8.07 hereof, to the extent such amount is actually deposited
in the Bond Account on such Remittance Date, and (v) the amount to be remitted
by the Bond Insurer to the Trustee on the next succeeding Remittance Date in
connection with a purchase of such Mortgage Loan pursuant to Section 8.19;
provided, however that a Mortgage Loan that has become a Liquidated Mortgage
Loan since the end of the immediately preceding Collection Period (or, in the
case of the first Payment Date following the transfer of such Mortgage Loan to
the Issuer, since the applicable Cut-off Date) will be deemed to have a
Principal Balance of zero on the current Determination Date.
"Principal Payment": As to any Mortgage Loan and Collection Period,
all amounts received or, in the case of the principal portion of any Payment
Ahead, deemed to have been received by the Servicer from or on behalf of the
related Mortgagor during such Collection
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Period (including Principal Prepayments) that, at the time of receipt or, in the
case of any Payment Ahead, at the time such Payment Ahead is deemed to have been
received, were applied or were required to be applied by the Servicer in
reduction of the Principal Balance of such Mortgage Loan.
"Principal Prepayment": As to any Mortgage Loan and Collection Period,
any payment by a Mortgagor or other recovery in respect of principal on a
Mortgage Loan (including Net Liquidation Proceeds and Trust Insurance Proceeds)
that, in the case of a payment by a Mortgagor, is received in advance of its
scheduled due date and is not a Payment Ahead.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Purchase Price": With respect to any Defective Mortgage Loan, an amount
equal to (i) the sum of (A) the Principal Balance of such Defective Mortgage
Loan as of the beginning of the Collection Period next preceding the Remittance
Date on which such repurchase or purchase is required to occur, (B) interest
computed at the applicable Mortgage Loan Rate on such Principal Balance from the
date to which interest was last paid by the Mortgagor to the last day of the
Collection Period immediately preceding the Remittance Date on which such
repurchase occurs and (C) any previously unreimbursed Servicing Advances made on
or in respect of such Defective Mortgage Loan, less (ii) any payments of
principal and interest in respect of such Defective Mortgage Loan made by or on
behalf of the related Mortgagor during such Collection Period.
"Qualified Replacement Mortgage Loan": A Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 8.07 that must, at
the end of the Collection Period preceding the date of such substitution, (i)
have an outstanding principal balance (when taken together with any other
Qualified Replacement Mortgage Loan being substituted for such Deleted Mortgage
Loan), not in excess of and not substantially less than the unpaid principal
balance of the Deleted Mortgage Loan at the end of the Collection Period
preceding the date of substitution, (ii) have the Mortgage Loan Rate computed on
substantially the same basis as the Mortgage Loan Rate on the related Mortgage
Loan, utilizing the same Index and having a Gross Margin or Minimum Rate not
less than (and not more than one percentage point in excess of) the Gross Margin
and Minimum Rate applicable to the Deleted Mortgage Loan, (iii) have a remaining
term to maturity not greater than (and not more than one year less than) that of
the Deleted Mortgage Loan, (iv) have a Loan-to-Value Ratio equal to or lower
than the Loan-to- Value Ratio of the Deleted Mortgage Loan, (v) have a first
lien priority, (vi) comply as of the date of substitution with each
representation and warranty set forth in Section 4(b) of the Initial Mortgage
Loan Conveyance Agreement, (vii) have the same or better property type as the
Deleted Mortgage Loan and (viii) have the same or better occupancy status. In
the event that one or more mortgage loans are proposed to be substituted for one
or more Deleted Mortgage Loans, the foregoing tests may be met on a weighted
average basis or other aggregate basis acceptable to
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the Certificate Insurer, except that the requirements of clauses (v), (vi),
(vii) and (viii) hereof must be satisfied as to each Qualified Replacement
Mortgage Loan.
"Rating Agencies": Standard & Poor's and Moody's (each, a "Rating
Agency"). If either such agency or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical credit rating
agency, or other comparable Person, designated by the Servicer, notice of which
designation shall be given to the Indenture Trustee.
"Realized Loss": As defined in Article I of the Servicing Agreement.
"Record Date": With respect to any Payment Date, the date on which the
Persons entitled to receive any payment of principal of or interest on any Bonds
(or notice of a payment in full of principal) due and payable on such Payment
Date are determined; such date shall be the last Business Day of the month
preceding the month of such Payment Date. With respect to a vote of Bondholders
required or allowed hereunder, the Record Date shall be the later of (i) 30 days
prior to the first solicitation of consents or (ii) the date of the most recent
list of Bondholders furnished to the Indenture Trustee pursuant to Section
7.01(a) prior to such solicitation.
"Redemption Date": Each Payment Date on or after the Payment Date on
which the Bond Balance is less than 20% of the Original Bond Balance.
"Redemption Price": With respect to any Bond to be redeemed in whole or
in part, an amount equal to 100% of the Current Bond Balance of the Bond to be
so redeemed, together with accrued and unpaid interest on such amount at the
Bond Interest Rate through the last day of the month preceding the month in
which the applicable Redemption Date occurs.
"Reference Banks": Bankers Trust Company, Barclay's Bank PLC and
National Westminster Bank PLC; provided that, if any of the foregoing banks are
deemed by the Servicer (as indicated in writing to the Indenture Trustee) not
suitable to serve as a Reference Bank, then any leading banks selected by the
Indenture Trustee and engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) whose quotations appear on the Reuters Screen LIBO Page on the
LIBOR Determination Date in question, (iii) that have been designated as such by
the Indenture Trustee and (iv) not controlling, controlled by, or under common
control with the Issuer, the Mortgage Loan Seller, the Transferor, the Servicer
or any originator.
"Remittable Funds": As defined in Article I of the Servicing Agreement.
"Remittance Date": The date each month on which funds on deposit in the
Collection Account are remitted by the Servicer to the Indenture Trustee for
deposit into the Bond Account, which date shall be with respect to any Payment
Date, the Business Day that is three Business Days prior to such Payment Date,
commencing in April 1997.
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"Required Coverage Amount": With respect to the Bonds and any Payment
Date on which an Excess Spread Trigger has not occurred, an amount equal to
5.50% of the aggregate of the Principal Balances of the Mortgage Loans as of the
applicable Cut-off Dates plus the Assumed Prefunding Account Deposit Amount
(plus any Additional Required Coverage Amount with respect to Additional
Mortgage Loans), subject to the following: (i) if the Step Up Trigger has
occurred, the Required Coverage Amount for such Payment Date will be an amount
equal to 13.75% of the aggregate of the Principal Balances of the Mortgage Loans
as of such Payment Date, plus the product of 50% and the aggregate of the
Principal Balances of all Mortgage Loans that are 90 or more days delinquent as
of such Payment Date, such sum not to exceed an amount equal to 25.00% of the
aggregate of the Principal Balances of all Mortgage Loans as of the applicable
Cut-off Dates plus the Assumed Prefunding Account Deposit Amount (plus any
Additional Required Coverage Amount with respect to Additional Mortgage Loans),
or (ii) if the Step Up Trigger has not occurred but the Step Down Trigger has
occurred, the Required Coverage Amount for such Payment Date will be an amount
equal to the greater of (a) 0.50% of the aggregate of the Principal Balances of
the Mortgage Loans as of the applicable Cut-off Dates plus the Assumed
Prefunding Account Deposit Amount (plus any Additional Required Coverage Amount
with respect to Additional Mortgage Loans) and (b) the lesser of (x) 5.50% of
the aggregate of the Principal Balances of the Mortgage Loans as of the
applicable Cut-off Dates plus the Assumed Prefunding Account Deposit Amount
(plus any Additional Required Coverage Amount with respect to Additional
Mortgage Loans) and (y) the Stepped Down Required Coverage Percentage of the
aggregate of the Principal Balances of the Mortgage Loans as of such Payment
Date. With respect to the Bonds and any Payment Date on which an Excess Spread
Trigger has occurred, an amount equal to 9.0% of the aggregate of the Principal
Balances of the Mortgage Loans as of the applicable Cut-off Dates plus the
Assumed Prefunding Account Deposit Amount, subject to the following: (i) if the
Step Up Trigger has occurred, the Required Coverage Amount for such Payment Date
will be an amount equal to the lesser of (x) 22.50% of the aggregate of the
Principal Balances of the Mortgage Loans as of such Payment Date, plus the
product of 50% of the aggregate of the Principal Balances of all Mortgage Loans
that are 90 or more days delinquent as of such Payment Date, and (y) 25.00% of
the aggregate of the Principal Balances of the Mortgage Loans as of the
applicable Cut-off Dates plus the Assumed Prefunding Account Deposit Amount
(plus any Additional Required Coverage Amount with respect to Additional
Mortgage Loans), or (ii) if the Step Up Trigger has not occurred but the Step
Down Trigger has occurred, the Required Coverage Amount for such Payment Date
will be an amount equal to the greater of (a) 0.50% of the aggregate of the
Principal Balances of the Mortgage Loans as of the applicable Cut-off Dates plus
the Assumed Prefunding Account Deposit Amount (plus any Additional Required
Coverage Amount with respect to Additional Mortgage Loans) and (b) the lesser of
(x) 9.0% of the aggregate of the Principal Balances of the Mortgage Loans as of
the applicable Cut-off Dates plus the Assumed Prefunding Account Deposit Amount
(plus any Additional Required Coverage Amount with respect to Additional
Mortgage Loans) and (y) the Stepped Down Required Coverage Percentage (Excess
Spread Trigger) of the aggregate Principal Balances of the Mortgage Loans as of
such Payment Date.
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"Required Payment Amount": With respect to any Payment Date, the Bond
Interest for such Payment Date plus the amount of any Coverage Deficit for such
Payment Date, and with respect to the Payment Date occurring on the Final
Maturity Date, the remaining Bond Balance.
"Reserve Interest Rate": With respect to any LIBOR Determination Date,
the rate per annum that the Indenture Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
0.0625%) of the one-month U.S. dollar lending rates that New York City banks
selected by the Indenture Trustee are quoting on the relevant LIBOR
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Indenture Trustee can
determine no such arithmetic mean, the lowest one-month U.S. dollar lending rate
that New York City banks selected by the Indenture Trustee are quoting on such
LIBOR Determination Dates to leading European banks.
"Responsible Officer": With respect to the Indenture Trustee, the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
trust officer or assistant trust officer, the controller, any assistant
controller or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Reuters Screen LIBO Page": The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that servicer for the purpose of displaying London interbank offered
rates of major banks).
"Rolling Delinquency Percentage": For any Payment Date, the average of
the Delinquency Percentages as of the last day of each of the six (or one, two,
three, four and five in the case of the first five Payment Dates, as applicable)
most recently ended Collection Periods.
"Rolling Loss Percentage": For any Payment Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Realized Losses incurred during the preceding 12 Collection Periods, and the
denominator of which is the aggregate of the Principal Balances of the Mortgage
Loans as of the first day of the 12th preceding Collection Period.
"Sale": The meaning specified in Section 5.17.
"Servicer": With respect to any Mortgage Loan, Aames Capital
Corporation, as Servicer under the Servicing Agreement, and its permitted
successors and assigns thereunder, including any successor servicers appointed
pursuant to Section 6.02 of the Servicing Agreement.
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"Servicer Remittance Report": As defined in Article I of the Servicing
Agreement.
"Servicing Advance": As defined in Article I of the Servicing
Agreement.
"Servicing Agreement": The servicing agreement, dated as of March 1,
1997, among the Issuer, the Servicer and the Indenture Trustee, providing, among
other things, for the servicing of the Mortgage Loans, as such agreement may be
amended or supplemented from time to time as permitted hereby and thereby. Such
term shall also include any servicing agreement entered into with a successor
servicer. A copy of the Servicing Agreement as in effect as of the date hereof
is attached hereto as Exhibit I.
"Servicing Fee Rate": As defined in Article I of the Servicing
Agreement.
"Standard & Poor's": Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc., and its successors in interest.
"Step Down Cumulative Loss Test": With respect to any Payment Date, a
determination as to whether: (i) for the Payment Dates occurring in April 1999
through and including March 2000, the Loss Percentage for such Payment Date is
0.75% or less, (ii) for the Payment Dates occurring in April 2000 through and
including March 2001, the Loss Percentage for such Payment Date is 1.25% or
less, (iii) for the Payment Dates occurring in April 2001 through and including
March 2002, the Loss Percentage for such Payment Date is 1.50% or less and (iv)
for any Payment Date occurring in or after April 2002, the Loss Percentage for
such Payment Date is 1.75% or less.
"Step Down Rolling Delinquency Test": With respect to any Payment Date,
the Step Down Rolling Delinquency Test shall be met if the Rolling Delinquency
Percentage for such Payment Date is less than 12.5%.
"Step Down Rolling Loss Test": With respect to the twelfth Payment Date
after the Closing Date, the Step Down Rolling Loss Test shall be met if the
Rolling Loss Percentage for such Payment Date is less than 0.75%. With respect
to the thirteenth Payment Date and each Payment Date thereafter, the Step Down
Rolling Loss Test shall be met if the Rolling Loss Percentage for such Payment
Date is less than 0.50%.
"Step Down Trigger": With respect to any Payment Date after the Payment
Date in April 1999, the Step Down Trigger will have occurred if each of the Step
Down Cumulative Loss Test, the Step Down Rolling Delinquency Test and the Step
Down Rolling Loss Test is met. In no event will the Step Down Trigger be deemed
to have occurred prior to the April 1999 Payment Date.
"Stepped Down Required Coverage Percentage": With respect to the Bonds
and any Payment Date for which the Step Down Trigger for the Mortgage Loans has
occurred, a
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percentage equal to (i) the percentage equivalent of a fraction, the numerator
of which is 5.50% of the aggregate Principal Balances of the Mortgage Loans as
of the applicable Cut-off Dates plus the amount of the Prefunding Account
Deposit (plus any Additional Required Coverage Amount with respect to Additional
Mortgage Loans), and the denominator of which is the aggregate of the Principal
Balances of the Mortgage Loans as of such Payment Date, minus (if the difference
is a positive figure) (ii) the percentage equivalent of a fraction, the
numerator of which is the product of (A) the percentage calculated under clause
(i) above minus 13.75%, multiplied by (B) the number of consecutive Payment
Dates through and including the Payment Date for which the Stepped Down Required
Coverage Percentage is being calculated, up to a maximum of 12, for which the
Step Down Trigger has occurred, and the denominator of which is 12.
"Stepped Down Required Coverage Percentage (Excess Spread Trigger)":
With respect to the Bonds and any Payment Date for which the Step Down Trigger
for the Mortgage Loans has occurred, a percentage equal to (A) the percentage
equivalent of a fraction, the numerator of which is 9.0% of the aggregate of the
Principal Balances of the Mortgage Loans as of the applicable Cut-off Dates plus
the amount of the Prefunding Account Deposit (plus any Additional Required
Coverage Amount with respect to Additional Mortgage Loans), and the denominator
of which is the aggregate of the Principal Balances of the Mortgage Loans as of
such Payment Date, minus (if the result is a positive figure) (B) the percentage
equivalent of a fraction, the numerator of which is the product of (1) the
percentage calculated under clause (A) above minus 22.50%, multiplied by (2) the
number of consecutive Payment Dates through and including the Payment Date for
which the Stepped Down Required Coverage Percentage is being calculated, up to a
maximum of 12, for which the Step Down Trigger has occurred, and the denominator
of which is 12.
"Step Up Cumulative Loss Test": With respect to any Payment Date, a
determination as to whether: (i) for any Payment Date occurring in or prior to
March 1998, the Loss Percentage for such Payment Date is more than 0.75%, (ii)
for any Payment Date occurring in or prior to March 1999, the Loss Percentage
for such Payment Date is more than 1.0%, (iii) for any Payment Date occurring in
or prior to March 2000, the Loss Percentage for such Payment Date is more than
1.25%, (iv) for any Payment Date occurring in or prior to March 2001, the Loss
Percentage for such Payment Date is more than 1.50% and (v) for any Payment Date
occurring in or after April 2001, the Loss Percentage for such Payment Date is
more than 2.0%.
"Step Up Rolling Delinquency Test": With respect to any Payment Date,
the Step Up Rolling Delinquency Test will be met if the Rolling Delinquency
Percentage for such Payment Date is more than 14.75%.
"Step Up Rolling Loss Test": With respect to any Payment Date, the Step
Up Rolling Loss Test will be met if the Rolling Loss Percentage for such Payment
Date is 1.0% or more.
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"Step Up Trigger": With respect to any Payment Date, the Step Up
Trigger will have occurred if any one of the Step Up Cumulative Loss Test, the
Step Up Rolling Delinquency Test or the Step Up Rolling Loss Test is met.
"Subsequent Purchase Price": As of any Subsequent Transfer Date, with
respect to the Additional Mortgage Loans, an amount equal to the sum of (i) the
product of 95% and the aggregate of the Principal Balances as of the applicable
Cut-off Dates for such Additional Mortgage Loans being transferred on such
Subsequent Transfer Date and (ii) any Additional Subsequent Purchase Price
attributable to such Additional Mortgage Loans; provided, however, that the
Additional Subsequent Purchase Price, if any, shall be paid only on the last day
of the Funding Period.
"Subsequent Transfer Date": The date specified in the Addition Notice,
but no later than April 14, 1997.
"Subsequent Transfer Deposit": The amount deposited by the Issuer in the
Bond Account in connection with each conveyance of Additional Mortgage Loans
pursuant to the Additional Mortgage Loan Conveyance Agreement, which amount is
equal to one month's interest on the principal balance of each Additional
Mortgage Loan that does not have a Monthly Payment due in the Collection Period
relating to any Payment Date following the applicable Cut-off Date at a per
annum rate equal to the Mortgage Loan Rate for each such Mortgage Loan, net of
the applicable Servicing Fee Rate pursuant to Section 8.03.
"Transferor": Aames Capital Acceptance Corp.
"Trust Agreement": That certain trust agreement, dated as of March 1,
1997, among the Transferor, as Depositor (as such term is defined therein), the
Owner Trustee and Bankers Trust Company of California, N.A., as Trust Paying
Agent thereunder.
"Trust Estate": All money, instruments and other property subject or
intended to be subject to the lien of this Indenture for the benefit of the
Bondholders as of any particular time (including, without limitation, all
property and interests Granted to the Indenture Trustee, including all proceeds
thereof).
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939 as it
may be amended from time to time.
"Trust Insurance Proceeds": As defined in Article I of the Servicing
Agreement.
"Trust Paying Agent": The entity appointed to act as paying agent
pursuant to the Trust Agreement with respect to amounts on deposit from time to
time in the Certificate Distribution Account and distributions thereof to
Certificateholders. The initial Trust Paying Agent is Bankers Trust Company of
California, N.A.
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"U.S. Bankruptcy Code" shall mean the United States Bankruptcy Code,
11 U.S.C. Sections 101, et seq., as amended or supplemented from time to time.
"Vice President": Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
ARTICLE II.
THE BONDS
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Section 2.01 Forms Generally.
The Bonds shall be in substantially the form set forth on Exhibit A
attached hereto. Each Bond may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which the Bonds
may be listed, or as may, consistently herewith, be determined by the Authorized
Officers of the Owner Trustee executing such Bonds, as evidenced by their
execution thereof. Any portion of the text of any Bond may be set forth on the
reverse thereof with an appropriate reference on the face of the Bond.
The Definitive Bonds may be produced in any manner determined by the
Authorized Officers of the Owner Trustee executing such Bonds, as evidenced by
their execution thereof.
Section 2.02 Forms of Certificate of Authentication.
The form of the Authenticating Agent's certificate of authentication is
as follows:
This is one of the Bonds referred to in the within-mentioned Indenture.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Authenticating Agent
By:
--------------------------------------
Authorized Signatory
Section 2.03 General Provisions With Respect to Principal and Interest
Payments.
The Bonds shall be designated generally as the "Adjustable Rate
Asset-Backed Bonds, Series 1997-1" of the Issuer.
The aggregate principal amount of Bonds that may be authenticated and
delivered under the Indenture is limited to $415,000,000, except for the Bonds
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Bonds pursuant to Sections 2.06,
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2.07 or 9.06 of this Indenture. The Bonds shall consist of one and only one
class having an Original Bond Balance, Bond Interest Rate for the initial
Interest Period and Final Maturity Date as follows:
Bond Interest
Original Bond Rate for the initial Final
Designation Balance Interest Period Maturity Date
----------- ------- --------------- -------------
Series 1997-1 $415,000,000 5.8875% June 15, 2029
The Bonds shall be issued in the form specified in Section 2.01.
Subject to the provisions of Section 3.01, Section 5.09 and Section
8.02(d), the principal of the Bonds shall be payable in installments ending no
later than the Final Maturity Date unless the unpaid principal of such Bonds
become due and payable at an earlier date by declaration of acceleration or call
for redemption or otherwise.
The aggregate amount of principal of and interest on the Bonds due and
payable on each Payment Date shall be equal to the Required Payment Amount for
such Payment Date. All payments made with respect to any Bond shall be applied
first to the interest then due and payable on such Bond and then to the
principal thereof. All computations of interest accrued on any Bond shall be
made on the basis of the actual number of days elapsed in the related Interest
Period in a year of 360 days.
Interest on the Bonds shall accrue at the Bond Interest Rate during each
Interest Period on the Current Bond Balance of each Outstanding Bond at the end
of such Interest Period. Interest accrued during an Interest Period shall be
payable on the next following Payment Date.
All payments of principal of and interest on any Bond shall be made in
the manner specified in Section 2.08.
Notwithstanding any of the foregoing provisions with respect to payments
of principal of and interest on the Bonds, if the Bonds have become or been
declared due and payable following an Event of Default and such acceleration of
maturity and its consequences have not been rescinded and annulled, then
payments of principal of and interest on the Bonds shall be made in accordance
with Section 5.07.
Section 2.04 Denominations.
The Bonds shall be issuable only as registered Bonds in the minimum
denomination of $1,000 and integral multiples of $1 in excess thereof.
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Section 2.05 Execution, Authentication, Delivery and Dating.
The Bonds shall be executed on behalf of the Issuer by an Authorized
Officer of the Owner Trustee. The signature of such Authorized Officer of the
Owner Trustee on the Bonds may be manual or facsimile.
Bonds bearing the manual or facsimile signature of an individual who was
at any time an Authorized Officer of the Owner Trustee shall bind the Issuer,
notwithstanding that such individual has ceased to be an Authorized Officer of
the Owner Trustee prior to the authentication and delivery of such Bonds or was
not an Authorized Officer of the Owner Trustee at the date of such Bonds.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Bonds executed on behalf of the Issuer to
the Authenticating Agent for authentication; and the Authenticating Agent shall
authenticate and deliver such Bonds as in this Indenture provided and not
otherwise.
Each Bond authenticated on the Closing Date shall be dated the Closing
Date. All other Bonds that are authenticated after the Closing Date for any
other purpose hereunder shall be dated the date of their authentication.
No Bond shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Bond a
certificate of authentication substantially in the form provided for herein
executed by the Authenticating Agent by the manual signature of one of its
authorized officers or employees, and such certificate upon any Bond shall be
conclusive evidence, and the only evidence, that such Bond has been duly
authenticated and delivered hereunder.
Section 2.06 Registration, Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Bond Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Bonds and the registration of transfers of
Bonds. The Indenture Trustee is hereby initially appointed "Bond Registrar" for
the purpose of registering Bonds and transfers of Bonds as herein provided. Upon
any resignation of any Bond Registrar appointed by the Issuer, the Issuer shall
promptly appoint a successor or, in the absence of such appointment, shall
assume the duties of Bond Registrar.
At any time the Indenture Trustee is not also the Bond Registrar, the
Indenture Trustee shall be a co-Bond Registrar. The Issuer shall cause each
co-Bond Registrar to furnish the Bond Registrar promptly after each
authentication of a Bond by it appropriate information with respect thereto for
entry by the Bond Registrar into the Bond Register. If the Indenture Trustee
shall at any time not be authorized to keep and maintain the Bond Register, the
Indenture Trustee shall
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have the right to inspect such Bond Register at all reasonable times and to rely
conclusively upon a certificate of the Person in charge of the Bond Register as
to the names and addresses of the Holders of the Bonds and the principal amounts
and numbers of such Bonds as held.
Upon surrender for registration of transfer of any Bond at the office or
agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Authenticating Agent shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Bonds of
any authorized denominations and of a like aggregate principal amount.
At the option of the Holder, Bonds may be exchanged for other Bonds of
any authorized denominations, and of a like aggregate initial principal amount,
upon surrender of the Bonds to be exchanged at such office or agency. Whenever
any Bonds are so surrendered for exchange, the Owner Trustee shall execute, and
the Authenticating Agent shall authenticate and deliver, the Bonds that the
Bondholder making the exchange is entitled to receive.
All Bonds issued upon any registration of transfer or exchange of Bonds
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Bonds surrendered
upon such registration of transfer or exchange.
Every Bond presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Bond Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Bonds, but the Issuer and the Bond Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge as may be imposed
in connection with any registration of transfer or exchange of Bonds, other than
exchanges pursuant to Section 2.07 not involving any transfer.
Section 2.07 Mutilated, Destroyed, Lost or Stolen Bonds.
If (1) any mutilated Bond is surrendered to the Bond Registrar or the
Bond Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Bond, and (2) there is delivered to the Bond Registrar such
security or indemnity as may be required by the Bond Registrar to save each of
the Issuer and the Bond Registrar harmless, then, in the absence of notice to
the Issuer or the Bond Registrar that such Bond has been acquired by a bona fide
purchaser, the Owner Trustee shall execute and upon its request the Bond
Registrar shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Bond, a new Bond or Bonds of the same tenor
and aggregate initial principal amount bearing a number not contemporaneously
outstanding. If, after the delivery of such new Bond, a bona fide purchaser of
the original Bond in lieu of which such new Bond was issued presents for payment
such original Bond, the Issuer and the Bond Registrar shall be entitled to
recover such new Bond from the person to whom it was delivered or any person
taking therefrom, except a
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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 expenses
incurred by the Issuer or the Bond Registrar in connection therewith. If any
such mutilated, destroyed, lost or stolen Bond shall have become or shall be
about to become due and payable, or shall have become subject to redemption in
full, instead of issuing a new Bond, the Issuer may pay such Bond without
surrender thereof, except that any mutilated Bond shall be surrendered.
Upon the issuance of any new Bond under this Section, the Issuer or the
Bond Registrar may require the payment 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 or
the Bond Registrar) connected therewith.
Every new Bond issued pursuant to this Section in lieu of any destroyed,
lost or stolen Bond shall constitute an original additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen Bond
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
Bonds duly issued hereunder.
The provisions of this Section 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 Bonds.
Section 2.08 Payments of Principal and Interest.
(a) Payments on Bonds issued as Book-Entry Bonds will be made by
or on behalf of the Indenture Trustee to the Clearing Agency or its
nominee. Any installment of interest or principal payable on any
Definitive Bonds that is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in
whose name such Bond (or one or more Predecessor Bonds) is registered at
the close of business on the Record Date for such Payment Date by either
(i) check mailed to such Person's address as it appears in the Bond
Register on such Record Date, or (ii) by wire transfer of immediately
available funds to the account of a Bondholder, if such Bondholder (A)
is the registered holder of Definitive Bonds having an initial principal
amount of at least $1,000,000 and (B) has provided the Indenture Trustee
with wiring instructions in writing by five Business Days prior to the
related Record Date or has provided the Indenture Trustee with such
instructions for any previous Payment Date, except for the final
installment of principal payable with respect to such Bond (or the
Redemption Price for any Bond called for redemption, if such redemption
will result in payment of the then entire unpaid principal amount of
such Bond), which shall be payable as provided in subsection (b) below
of this Section 2.08. A fee may be charged by the Indenture Trustee to a
Bondholder of Definitive Bonds for any payment made by wire transfer.
Any installment of interest or principal not punctually paid or duly
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provided for shall be payable as soon as funds are available to the
Indenture Trustee for payment thereof, or if Section 5.07 applies,
pursuant to Section 5.07.
(b) All reductions in the principal amount of a Bond (or
one or more Predecessor Bonds) effected by payments of installments of
principal made on any Payment Date shall be binding upon all Holders of
such Bond 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 Bond. The final installment of principal of
each Bond (including the Redemption Price of any Bond called for
optional redemption, if such optional redemption will result in payment
of the entire unpaid principal amount of such Bond) shall be payable
only upon presentation and surrender thereof on or after the Payment
Date therefor at the Indenture Trustee's presenting office in the
Borough of Manhattan, the City of New York, State of New York, pursuant
to Section 3.02.
Whenever the Indenture Trustee expects that the entire remaining unpaid
principal amount of any Bond will become due and payable on the next
Payment Date other than pursuant to a redemption pursuant to Section
10.02, it shall, no later than two days prior to such Payment Date,
telecopy or hand deliver to each Person in whose name a Bond to be so
retired is registered at the close of business on such otherwise
applicable Record Date a notice to the effect that:
(i) the Indenture Trustee expects that funds
sufficient to pay such final installment will be available in
the Bond Account on such Payment Date; and
(ii) if such funds are available, (A) such final
installment will be payable on such Payment Date, but only upon
presentation and surrender of such Bond at the office or agency
of the Bond Registrar maintained for such purpose pursuant to
Section 3.02 (the address of which shall be set forth in such
notice) and (B) no interest shall accrue on such Bond after such
Payment Date.
A copy of such form of notice shall be sent to the Bond Insurer
by the Indenture Trustee.
Notices in connection with redemptions of Bonds shall be mailed
to Bondholders in accordance with Section 10.02.
(c) Subject to the foregoing provisions of this Section,
each Bond delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Bond shall carry the
rights to unpaid principal and interest that were carried by such other
Bond. Any checks mailed pursuant to subsection (a) of this Section 2.08
and returned undelivered shall be held in accordance with Section 3.03.
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(d) Each Payment Date Statement, prepared by the Paying
Agent based on the Servicer Remittance Report delivered to the Paying
Agent pursuant to the Servicing Agreement shall be delivered by the
Paying Agent to the Bond Insurer, the Rating Agencies, the Owner Trustee
and each Bondholder as the statement required pursuant to Section 8.08.
The Paying Agent shall have no responsibility to recalculate, verify or
recompute information contained in any such Servicer Remittance Report.
Within 90 days after the end of each calendar year, the Paying
Agent will be required to furnish to each person who at any time during
the calendar year was a Bondholder a statement containing the
information set forth in subclauses (i) and (ii) in such report,
aggregated for such calendar year or the applicable portion thereof
during which such person was a Bondholder. Such obligation will be
deemed to have been satisfied to the extent that substantially
comparable information is provided pursuant to any requirements of the
Code as are from time to time in force.
Section 2.09 Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Bond, the
Issuer, the Indenture Trustee, any Agent and any other agent of the Issuer or
the Indenture Trustee may treat the Person in whose name any Bond is registered
as the owner of such Bond (a) on the applicable Record Date for the purpose of
receiving payments of the principal of and interest on such Bond and (b) on any
other date for all other purposes whatsoever, and neither the Issuer, the
Indenture Trustee, any Agent nor any other agent of the Issuer or the Indenture
Trustee shall be affected by notice to the contrary.
Section 2.10 Cancellation.
All Bonds surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any Person other than the Bond Registrar, be
delivered to the Bond Registrar and shall be promptly canceled by it. The Issuer
may at any time deliver to the Bond Registrar for cancellation any Bond
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Bonds so delivered shall be promptly
canceled by the Bond Registrar. No Bonds shall be authenticated in lieu of or in
exchange for any Bonds canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Bonds held by the Bond Registrar shall
be held by the Bond Registrar in accordance with its standard retention policy,
unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it.
Section 2.11 Authentication and Delivery of Bonds.
The Bonds may be executed by an Authorized Officer of the Owner Trustee
and delivered to the Authenticating Agent for authentication, and thereupon the
same shall be
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authenticated and delivered by the Authenticating Agent, upon Issuer Request and
upon receipt by the Authenticating Agent of the following:
(a) an Issuer Order authorizing the execution, authentication
and delivery of the Bonds and specifying the Final Maturity Date, the
principal amount and the Bond Interest Rate (or the manner in which such
Bond Interest Rate is to be determined) of such Bonds to be
authenticated and delivered;
(b) an Issuer Order authorizing the execution and delivery of
this Indenture; and
(c) one or more Opinions of Counsel addressed to the
Authenticating Agent, complying with the requirements of Section 11.01,
reasonably satisfactory in form and substance to the Authenticating
Agent and the Bond Insurer.
In rendering the opinions set forth above, such counsel may rely
upon officer's certificates of the Issuer, the Owner Trustee, the
Servicer and the Indenture Trustee, without independent confirmation or
verification with respect to factual matters relevant to such opinions.
In rendering the opinions set forth above, such counsel need express no
opinion as to (A) the existence of, or the priority of the security
interest created by the Indenture against, any liens or other interests
that arise by operation of law and that do not require any filing or
similar action in order to take priority over a perfected security
interest or (B) the priority of the security interest created by this
Indenture with respect to any claim or lien in favor of the United
States or any agency or instrumentality thereof (including federal tax
liens and liens arising under Title IV of the Employee Retirement Income
Security Act of 1974).
The acceptability to the Bond Insurer of the Opinion of Counsel
delivered to the Indenture Trustee at the Closing Date shall be
conclusively evidenced by the delivery on the Closing Date of the
Financial Guaranty Insurance Policy.
(d) an Officers' Certificate complying with the requirements
of Section 11.01 and stating that:
(i) the Issuer is not in Default under this Indenture
and the issuance of the Bonds will not result in any breach of
any of the terms, conditions or provisions of, or constitute a
default under, the Issuer's Certificate of Trust or any
indenture, mortgage, deed of trust or other agreement or
instrument to which the Issuer is a party or by which it is
bound, or any order of any court or administrative agency
entered in any proceeding to which the Issuer is a party or by
which it may be bound or to which it may be subject, and that
all conditions precedent provided in this Indenture relating to
the authentication and delivery of the Bonds have been complied
with;
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(ii) the Issuer is the owner of each Initial Mortgage
Loan, free and clear of any lien, security interest or charge,
has not assigned any interest or participation in any such
Initial Mortgage Loan (or, if any such interest or participation
has been assigned, it has been released) and has the right to
Grant each such Initial Mortgage Loan to the Indenture Trustee;
(iii) the information set forth in the Mortgage Loan
Schedule attached as Schedule I to this Indenture is correct;
(iv) the Issuer has Granted to the Indenture Trustee
all of its right, title and interest in each Initial Mortgage
Loan;
(v) as of the Closing Date, no lien in favor of the
United States described in Section 6321 of the Code, or lien in
favor of the Pension Benefit Guaranty Corporation described in
Section 4068(a) of the Employee Retirement Income Security Act
of 1974, as amended, has been filed as described in subsections
6323(f) and 6323(g) of the Code upon any property belonging to
the Issuer; and
(vi) attached thereto is a true and correct copy of
letters signed by each Rating Agency confirming that the Bonds
have been rated in the highest rating category of such Rating
Agency.
(e) An executed counterpart of the Servicing Agreement.
(f) An executed counterpart of the Initial Mortgage Loan
Conveyance Agreement.
(g) An executed counterpart of the Mortgage Loan Contribution
Agreement.
(h) An executed counterpart of the Additional Mortgage Loan
Conveyance Agreement.
Section 2.12 Book-Entry Bonds.
The Bonds will be issued initially as one or more certificates in the
name of the Cede & Co., as nominee for the Clearing Agency maintaining
book-entry records with respect to ownership and transfer of such Bonds, and
registration of the Bonds may not be transferred by the Bond Registrar except
upon Book-Entry Termination. In such case, the Bond Registrar shall deal with
the Clearing Agency as representatives of the Bond Owners of such Bonds for
purposes of exercising the rights of Bondholders hereunder. Each payment of
principal of and interest on a Book-Entry Bond shall be paid to the Clearing
Agency, which shall credit the amount of such payments to the accounts of its
Clearing Agency Participants in accordance with
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its normal procedures. Each Clearing Agency Participant shall be responsible for
disbursing such payments to the Bond Owners of the Book-Entry Bonds that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect participating firm") for which it acts as agent. Each brokerage
firm shall be responsible for disbursing funds to the Bond Owners of the
Book-Entry Bonds that it represents. All such credits and disbursements are to
be made by the Clearing Agency and the Clearing Agency Participants in
accordance with the provisions of the Bonds. None of the Indenture Trustee, the
Bond Registrar, if any, the Issuer, or any Agents shall have any responsibility
therefor except as otherwise provided by applicable law. Requests and directions
from, and votes of, such representatives shall not be deemed to be inconsistent
if they are made with respect to different Bond Owners.
Section 2.13 Termination of Book-Entry System.
(a) The book-entry system through the Clearing Agency with
respect to the Book-Entry Bonds may be terminated upon the happening of
any of the following:
(i) The Clearing Agency or the Issuer advises the
Indenture Trustee that the Clearing Agency is no longer willing
or able to properly discharge its responsibilities under the
Letter Agreement and the Issuer is unable to locate a qualified
successor clearing agency satisfactory to the Issuer;
(ii) The Issuer, in its sole discretion, elects to
terminate the book-entry system by notice to the Clearing Agency
and the Indenture Trustee; or
(iii) After the occurrence of an Event of Default (at
which time the Indenture Trustee shall use all reasonable efforts
to promptly notify each Bond Owner through the Clearing Agency of
such Event of Default) when such notice shall be given pursuant
to Section 6.02, the Bond Owners of a majority in Bond Balance of
the Book-Entry Bonds advise the Indenture Trustee in writing,
through the related Clearing Agency Participants and the Clearing
Agency, that the continuation of a book-entry system through the
Clearing Agency to the exclusion of any Definitive Bonds being
issued to any person other than the Clearing Agency or its
nominee is no longer in the best interests of the Bond Owners.
(b) Upon the occurrence of any event described in subsection
(a) above, the Indenture Trustee shall use all reasonable efforts to
notify all Bond Owners, through the Clearing Agency, of the occurrence
of such event and of the availability of Definitive Bonds to Bond Owners
requesting the same, in an aggregate Current Bond Balance representing
the interest of each, making such adjustments and allowances as it may
find necessary or appropriate as to accrued interest and previous calls
for redemption. Definitive Bonds shall be issued only upon surrender to
the Indenture Trustee of the global Bond by the Clearing Agency,
accompanied by registration instructions for the Definitive Bonds.
Neither the Issuer nor the Indenture Trustee shall be liable for any
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delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon issuance of
the Definitive Bonds, all references herein to obligations imposed upon
or to be performed by the Clearing Agency shall cease to be applicable
and the provisions relating to Definitive Bonds shall be applicable.
ARTICLE III.
COVENANTS
Section 3.01 Payment of Bonds.
The Issuer will pay or cause to be duly and punctually paid the
principal of, and interest on, the Bonds in accordance with the terms of the
Bonds and this Indenture. The Bonds shall be non-recourse obligations of the
Issuer and shall be limited in right of payment to amounts available from the
Trust Estate as provided in this Indenture and the Issuer shall not otherwise be
liable for payments on the Bonds. No person shall be personally liable for any
amounts payable under the Bonds. If any other provision of this Indenture
conflicts or is deemed to conflict with the provisions of this Section 3.01, the
provisions of this Section 3.01 shall control.
Section 3.02 Maintenance of Office or Agency.
The Issuer will cause the Bond Registrar to maintain its corporate trust
office at a location where Bonds may be surrendered for registration of transfer
or exchange, and where notices and demands to or upon the Issuer in respect of
the Bonds and this Indenture may be served.
The Issuer may also from time to time at its own expense designate one
or more other offices or agencies (in or outside the City of New York) where the
Bonds may be presented or surrendered for any or all such purposes and may from
time to time rescind such designations; provided, however, that (i) no such
designation or rescission shall in any manner relieve the Issuer of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York, the State of New York, for the purposes set forth in the preceding
paragraph, (ii) presentations or surrenders of Bonds for payment may be made
only in the City of New York, the State of New York and (iii) any designation of
an office or agency for payment of Bonds shall be subject to Section 3.03. The
Issuer will give prompt written notice to the Indenture Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 3.03 Money for Bond Payments to Be Held in Trust.
All payments of amounts due and payable with respect to any Bonds that
are to be made from amounts withdrawn from the Bond Account pursuant to Section
8.02(c) or Section 5.07 shall be made on behalf of the Issuer by the Paying
Agent, and no amounts so withdrawn from
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the Bond Account for payments of Bonds shall be paid over to the Issuer under
any circumstances except as provided in this Section 3.03 or in Section 5.07 or
Section 8.02.
If the Issuer shall have a Paying Agent that is not also the Bond
Registrar, it shall furnish, or cause the Bond Registrar to furnish, no later
than the fifth calendar day after each Record Date, a list, in such form as such
Paying Agent may reasonably require, of the names and addresses of the Holders
of Bonds and of the number of Individual Bonds held by each such Holder.
Whenever the Issuer shall have a Paying Agent other than the Indenture
Trustee, it will, on or before the Business Day next preceding each Payment Date
direct the Indenture Trustee to deposit with such Paying Agent an aggregate sum
sufficient to pay the amounts then becoming due (to the extent funds are then
available for such purpose in the Bond Account), such sum to be held in trust
for the benefit of the Persons entitled thereto. Any moneys deposited with a
Paying Agent in excess of an amount sufficient to pay the amounts then becoming
due on the Bonds with respect to which such deposit was made shall, upon Issuer
Order, be paid over by such Paying Agent to the Indenture Trustee for
application in accordance with Article VIII.
Any Paying Agent other than the Indenture Trustee shall be appointed by
Issuer Order and at the expense of the Issuer. The Issuer shall not appoint any
Paying Agent (other than the Indenture Trustee) that is not, at the time of such
appointment, a depository institution or trust company whose obligations would
be Permitted Investments pursuant to clause (c) of the definition of the term
Permitted Investments. 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, that such Paying Agent will:
(1) allocate all sums received for payment to the Holders of
Bonds on each Payment Date among such Holders in the proportion
specified in the applicable Payment Date Statement, in each case to the
extent permitted by applicable law;
(2) hold all sums held by it for the payment of amounts due with
respect to the Bonds 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;
(3) if such Paying Agent is not the Indenture Trustee,
immediately resign as a Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for the payment of the Bonds if at
any time it ceases to meet the standards set forth above required to be
met by a Paying Agent at the time of its appointment;
(4) if such Paying Agent is not the Indenture Trustee, give the
Indenture Trustee notice of any Default by the Issuer (or any other
obligor upon the Bonds) in the
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making of any payment required to be made with respect to any Bonds for
which it is acting as Paying Agent;
(5) if such Paying Agent is not the Indenture Trustee, 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; and
(6) comply with all requirements of the Code, and all regulations
thereunder, with respect to the withholding taxes from any payments made
by it on any Bonds of any applicable withholding taxes imposed thereon
and with respect to any applicable reporting requirements in connection
therewith; provided, however, that with respect to withholding and
reporting requirements applicable to original issue discount (if any) on
any of the Bonds, the Issuer has provided the calculations pertaining
thereto to the Indenture Trustee and the Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Issuer
Order direct any Paying Agent, if other than the Indenture Trustee, 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 such
sums were held by such Paying Agent; and upon such payment by any Paying Agent
to the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in trust for
the payment of any amount due with respect to any Bond and remaining unclaimed
for two and one-half years after such amount has become due and payable to the
Holder of such Bond (or if earlier, three months before the date on which such
amount would escheat to a governmental entity under applicable law) shall be
discharged from such trust and paid to the Issuer; and the Holder of such Bond
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. The Indenture Trustee may adopt and
employ, at the expense of the Issuer, any reasonable means of notification of
such repayment (including, but not limited to, mailing notice of such repayment
to Holders whose Bonds have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Indenture Trustee or any Agent,
at the last address of record for each such Holder).
Section 3.04 Existence of Issuer.
(a) Subject to Sections 3.04(b) and (c), the Issuer will keep
in full effect its existence, rights and franchises as a business trust
under the laws of the State of Delaware or under the laws of any other
state or the United States of America, and will obtain and preserve its
qualification to do business in each jurisdiction in which such
qualification is
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or shall be necessary to protect the validity and enforceability of this
Indenture, the Bonds, the Servicing Agreement, the Mortgage Loan
Contribution Agreement and the Additional Mortgage Loan Conveyance
Agreement.
(b) Subject to Section 3.09(vii), any entity into which the
Issuer may be merged or with which it may be consolidated, or any entity
resulting from any merger or consolidation to which the Issuer shall be
a party, shall be the successor Issuer 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, anything in any agreement relating to
such merger or consolidation, by which any such Issuer may seek to
retain certain powers, rights and privileges therefore obtaining for any
period of time following such merger or consolidation to the contrary
notwithstanding (other than Section 3.09(vii)).
(c) Upon any consolidation or merger of or other succession to
the Issuer in accordance with this Section 3.04, the Person formed by or
surviving such consolidation or merger (if other than the Issuer) 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.
Section 3.05 Protection of Trust Estate.
(a) The Issuer will from time to time execute and deliver all
such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action as may be
necessary or advisable to:
(i) Grant more effectively all or any portion of the
Trust Estate;
(ii) maintain or preserve the lien of this Indenture or
carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture;
(iv) enforce any of the Mortgage Loans, the Servicing
Agreement, the Mortgage Loan Contribution Agreement or the
Additional Mortgage Loan Conveyance Agreement; or
(v) preserve and defend title to the Trust Estate and
the rights of the Indenture Trustee, and of the Bondholders, in
the Mortgage Loans and the other property held as part of the
Trust Estate against the claims of all Persons and parties.
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(b) 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 3.06 (or from the jurisdiction in which it was held, or to which
it is intended to be removed, as described in the Opinion of Counsel
delivered at the Closing Date pursuant to Section 2.11(c), if no Opinion
of Counsel has yet been delivered pursuant to Section 3.06) or cause or
permit ownership or the pledge of any portion of the Trust Estate that
consists of book-entry securities to be recorded on the books of a
Person located in a different jurisdiction from the jurisdiction in
which such ownership or pledge was recorded at such time 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.
Section 3.06 Opinions as to Trust Estate.
On or before April 30th in each calendar year, beginning with the first
calendar year commencing after the Closing Date, the Issuer shall furnish to the
Indenture Trustee an Opinion of Counsel reasonably satisfactory in form and
substance to the Indenture Trustee either stating that, in the opinion of such
counsel, such action has been taken as is necessary to maintain the lien and
security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe all such action, if any, that will, in the opinion of such
counsel, be required to be taken to maintain the lien and security interest of
this Indenture with respect to the Trust Estate until May 1st in the following
calendar year.
Section 3.07 Performance of Obligations; Servicing Agreement.
(a) The Issuer shall not take any action and will use its Best
Efforts not to permit any action to be taken by others that would
release any Person from any of such Person's covenants or obligations
under any of the Mortgage Files or under any instrument included in the
Trust Estate, or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any of the documents or instruments contained in the
Mortgage Files, except as expressly provided as permitted in this
Indenture, the Servicing Agreement or such document included in the
Mortgage File or other instrument or unless such action will not
adversely affect the interests of the Holders of the Bonds.
(b) If the Issuer shall have knowledge of the occurrence of a
default under the Servicing Agreement, the Issuer shall promptly notify
the Indenture Trustee, the Bond Insurer and the Rating Agencies thereof,
and shall specify in such notice the action, if any, the Issuer is
taking with respect to such default.
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(c) Upon any termination of the Servicer's rights and powers
pursuant to the Servicing Agreement, the rights and powers of the
Servicer with respect to the Mortgage Loans shall vest in the Indenture
Trustee, and the Indenture Trustee shall be the successor in all
respects to the Servicer in its capacity as Servicer with respect to
such Mortgage Loans under the Servicing Agreement, until the Indenture
Trustee shall have appointed, with the consent of the Issuer, the Bond
Insurer and the Rating Agencies, a new servicer to serve as successor to
the Servicer under the Servicing Agreement. Upon appointment of a
successor Servicer, the Indenture Trustee, the Issuer and such Servicer
shall enter into a Servicing Agreement in a form substantially similar
to the Servicing Agreement. In connection with any such appointment, the
Indenture Trustee may make such arrangements for the compensation of
such successor as it and such successor shall agree, but in no event
shall such compensation of the successor Servicer (including the
Indenture Trustee) be in excess of that payable to the original Servicer
under the Servicing Agreement without the consent of the Rating Agencies
and the Bond Insurer.
(d) Upon any termination of the Servicer's rights and powers
pursuant to the Servicing Agreement, the Indenture Trustee shall
promptly notify the Rating Agencies. As soon as any successor Servicer
is appointed, the Indenture Trustee shall notify the Rating Agencies,
specifying in such notice the name and address of such successor
Servicer.
Section 3.08 Investment Company Act.
The Issuer shall at all times conduct its operations so as not to be
subject to, or shall comply with, the requirements of the Investment Company Act
of 1940, as amended (or any successor statute), and the rules and regulations
thereunder.
Section 3.09 Negative Covenants.
The Issuer shall not:
(i) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by this
Indenture or the Servicing Agreement;
(ii) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Bonds by reason of the payment
of any taxes levied or assessed upon any portion of the Trust Estate;
(iii) engage in any business or activity other than as
permitted by the Trust Agreement or other than in connection with, or
relating to, the issuance of the Bonds pursuant to this Indenture or
amend the Trust Agreement, as in effect on the Closing Date, other than
in accordance with Section 11.01;
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(iv) incur, issue, assume or otherwise become liable for any
indebtedness other than the Bonds;
(v) incur, assume, guaranty or agree to indemnify any
Person with respect to any indebtedness of any Person, except for such
indebtedness as may be incurred by the Issuer in connection with the
issuance of the Bonds pursuant to this Indenture;
(vi) dissolve or liquidate in whole or in part;
(vii) (1) permit the validity or effectiveness of this
Indenture or any Grant to be impaired, or permit the lien of this
Indenture to be impaired, amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations under this Indenture, except as may be
expressly permitted hereby, (2) permit any lien, charge, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture or any Permitted Encumbrance) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or
any interest therein or the proceeds thereof, or (3) permit the lien of
this Indenture not to constitute a valid perfected first priority
security interest in the Trust Estate; or
(viii) take any other action or fail to take any action that
may cause the Issuer to be taxable as (a) an association pursuant to
Section 7701 of the Code or (b) as a taxable mortgage pool pursuant to
Section 7701(i) of the Code.
Section 3.10 Annual Statement as to Compliance.
On or before September 30, 1998, and each September 30th thereafter, the
Issuer shall deliver to the Indenture Trustee a written statement, signed by an
Authorized Officer of the Owner Trustee, stating that:
(1) a review of the fulfillment by the Issuer during such
year of its obligations under this Indenture has been made under such
Authorized Officer's supervision; and
(2) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a Default in the fulfillment of any such covenant or condition,
specifying each such Default known to such Authorized Officer and the
nature and status thereof.
Section 3.11 [Reserved].
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Section 3.12 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Indenture Trustee, the Owner Trustee and the
Certificateholders as contemplated by, and to the extent funds are available for
such purpose under, the Servicing Agreement or the Trust Agreement and the
Issuer will not, directly or indirectly, make or cause to be made payments to or
distributions from the Bond Account except in accordance with this Indenture.
Section 3.13 Treatment of Bond as Debt for Tax Purposes. The Issuer
shall treat the Bonds as indebtedness for all federal and state tax purposes.
Section 3.14 Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Bond Insurer and the Rating Agencies prompt written
notice of each Event of Default hereunder, each default on the part of the
Servicer of its obligations under the Servicing Agreement and each default on
the part of the Mortgage Loan Seller of its obligations under the Initial
Mortgage Loan Conveyance Agreement or the Additional Mortgage Loan Conveyance
Agreement.
Section 3.15 Further Instruments and Acts. Upon request of the Indenture
Trustee or the Bond 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.
ARTICLE IV.
SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture.
Whenever the following conditions shall have been satisfied:
(1) either
(A) all Bonds theretofore authenticated and delivered
(other than (i) Bonds that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.07,
and (ii) Bonds for whose payment money has theretofore been
deposited in trust and thereafter repaid to the Issuer, as
provided in Section 3.03) have been delivered to the Bond
Registrar for cancellation; or
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(B) all Bonds not theretofore delivered to the Bond
Registrar for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the Final
Maturity Date within one year, or
(iii) are to be called for redemption within one
year under irrevocable arrangements satisfactory to the
Indenture Trustee for the giving of notice of redemption
by the Indenture Trustee in the name, and at the expense,
of the Issuer,
and the Issuer, in the case of clauses (B)(i), (B)(ii) or
(B)(iii) above, has irrevocably deposited or caused to be
deposited with the Indenture Trustee, in trust for such purpose,
an amount sufficient to pay and discharge the entire indebtedness
on such Bonds not theretofore delivered to the Indenture Trustee
for cancellation, for principal and interest to the Final
Maturity Date or to the applicable Redemption Date, as the case
may be, and in the case of Bonds that were not paid at the Final
Maturity Date of their entire unpaid principal amount, for all
overdue principal and all interest payable on such Bonds to the
next succeeding Payment Date therefor;
(2) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer (including, without limitation, any
amounts due the Bond Insurer hereunder); and
(3) the Issuer has delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel satisfactory in form and
substance to the Indenture Trustee each stating that all conditions
precedent herein providing for the satisfaction and discharge of this
Indenture have been complied with;
then, upon Issuer Request, this Indenture and the lien, rights and interests
created hereby and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Issuer, execute and deliver all
such instruments as may be necessary to acknowledge the satisfaction and
discharge of this Indenture and shall pay, or assign or transfer and deliver, to
the Issuer or upon Issuer Order all cash, securities and other property held by
it as part of the Trust Estate remaining after satisfaction of the conditions
set forth in clauses (1) and (2) above.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Indenture Trustee to the Issuer and the Holders of Bonds
under Section 3.03, the obligations of the Indenture Trustee to the Holders of
Bonds under Section 4.02 and the provisions of Section
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2.07 with respect to lost, stolen, destroyed or mutilated Bonds, registration of
transfers of Bonds and rights to receive payments of principal of and interest
on the Bonds shall survive.
Section 4.02 Application of Trust Money.
All money deposited with the Indenture Trustee pursuant to Sections 3.03
and 4.01 shall be held in trust and applied by it, in accordance with the
provisions of the Bonds and this Indenture, to the payment, either directly or
through any Paying Agent, as the Indenture Trustee may determine, to the Persons
entitled thereto, of the principal and interest for whose payment such money has
been deposited with the Indenture Trustee.
ARTICLE V.
DEFAULTS AND REMEDIES
Section 5.01 Event of Default.
"Event of Default", wherever used herein, means, with respect to Bonds
issued hereunder, any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) if the Issuer shall
(A) default in the payment on any Payment Date of any
Required Payment Amount on any Bond or a failure to pay the Bonds
in full on or before the Payment Date in June 2029 (and in the
case of any such default in the payment of Bond Interest, such
default or failure shall continue for a period of two days); or
(B) default in the payment of the Redemption Price of
the Bonds pursuant to Article X;
(2) if the Issuer shall breach or default in the due
observance of any one or more of the covenants set forth in clauses (i)
through (viii) of Section 3.09;
(3) if the Issuer shall breach, or default in the due
observance or performance of, any other of its covenants in this
Indenture, and such Default shall continue for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Issuer by the Indenture Trustee, or to the Issuer and the Indenture
Trustee by the Holders of Bonds representing at least 25% of the Bond
Balance of the Outstanding Bonds, a written notice specifying such
Default and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder;
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(4) if any representation or warranty of the Issuer made in
this Indenture or any certificate or other writing delivered by the
Issuer pursuant hereto or in connection herewith shall prove to be
incorrect in any material respect as of the time when the same shall
have been made and, within 30 days after there shall have been given, by
registered or certified mail, written notice thereof to the Issuer by
the Indenture Trustee, or to the Issuer and the Indenture Trustee by the
Holders of Bonds representing at least 25% of the Bond Balance of the
Outstanding Bonds, the circumstance or condition in respect of which
such representation or warranty was incorrect shall not have been
eliminated or otherwise cured; provided, however, that in the event that
there exists a remedy with respect to any such breach that consists of a
purchase obligation, repurchase obligation or right to substitute under
the Basic Documents, then such purchase obligation, repurchase
obligation or right to substitute shall be the sole remedy with respect
to such breach and shall not constitute an Event of Default hereunder.
(5) the entry of a decree or order for relief by a court
having jurisdiction in respect of the Issuer in an involuntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any
other present or future federal or state bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Issuer or of
any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(6) the commencement by the Issuer of a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar
law, or the consent by the Issuer to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or of any
substantial part of its property or the making by the Issuer of an
assignment for the benefit of creditors or the failure by the Issuer
generally to pay its debts as such debts become due or the taking of
corporate action by the Issuer in furtherance of any of the foregoing.
The payment by the Bond Insurer of any Insured Amount in an amount
sufficient to cover the related Required Payment Amount pursuant to the
Financial Guaranty Insurance Policy in respect of any Payment Date shall not
constitute an Event of Default with respect to the Bonds.
Section 5.02 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in every such
case, but with the consent of the Bond Insurer in the absence of a failure by
the Bond Insurer to have paid any Insured Amount, the Indenture Trustee or the
Holders of Bonds representing not less than 25% of the Bond Balance of the
Outstanding Bonds may declare all the Bonds to be immediately due and payable by
a notice in writing to the Issuer (and to the Indenture Trustee if given by
Bondholders), and upon any such declaration such Bonds, in an amount equal to
the Bond
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Balance of such Bonds, together with accrued and unpaid interest thereon to the
date of such acceleration, shall become immediately due and payable.
At any time after such a declaration of acceleration of maturity of the
Bonds 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
provided, the Holders of Bonds representing more than 50% of the Bond Balance of
the Outstanding Bonds, by written notice to the Issuer and the Indenture
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all payments of principal of, and interest on, all
Bonds and all other amounts that would then be due hereunder or
upon such Bonds if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents
and counsel; and
(2) all Events of Default, other than the nonpayment of the
principal of Bonds that have become due solely by such acceleration,
have been cured or waived as provided in Section 5.14.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
Section 5.03 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
Subject to the provisions of Section 3.01 and the following sentence, if
an Event of Default occurs and is continuing, the Indenture Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Bondholders and the Bond Insurer by any Proceedings the Indenture Trustee deems
appropriate 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 enforce any other proper remedy. Any
proceedings brought by the Indenture Trustee on behalf of the Bondholders or any
Bondholder against the Issuer shall be limited to the preservation, enforcement
and foreclosure of the liens, assignments, rights and security interests under
the Indenture and no attachment, execution or other unit or process shall be
sought, issued or levied upon any assets, properties or funds of the Issuer,
other than the Trust Estate relative to the Bonds in respect of which such Event
of Default has occurred. If there is a foreclosure of any such liens,
assignments, rights and security interests under this Indenture, by private
power of sale or otherwise, no judgment for any deficiency upon the indebtedness
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represented by the Bonds may be sought or obtained by the Indenture Trustee or
any Bondholder against the Issuer. The Indenture Trustee shall be entitled to
recover the costs and expenses expended by it pursuant to this Section 5.03
including reasonable compensation, expenses, disburse advances of the Indenture
Trustee, its agents and counsel.
Section 5.04 Remedies.
If an Event of Default shall have occurred and be continuing and the
Bonds have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Indenture Trustee
(subject to Section 5.17, to the extent applicable) may, for the benefit of the
Bondholders and the Bond Insurer, do one or more of the following:
(a) institute Proceedings for the collection of all amounts then
payable on the Bonds, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer
moneys adjudged due, subject in all cases to the provisions of Sections
3.01 and 5.03;
(b) in accordance with Section 5.17, 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;
(c) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Holders
of the Bonds hereunder; and
(e) refrain from selling the Trust Estate and apply all
Remittable Funds pursuant to Section 5.07.
Section 5.05 Indenture Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, composition or other judicial
Proceeding relative to the Issuer or any other obligor upon any of the Bonds or
the property of the Issuer or of such other obligor or their creditors, the
Indenture Trustee (irrespective of whether the Bonds 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 on the Issuer for the
payment of any overdue principal or interest) shall be entitled and empowered,
by intervention in such Proceeding or otherwise to:
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(i) file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Bonds and file such other
papers or documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel) and of the Bondholders
allowed in such Proceeding, and
(ii) collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such Proceeding is hereby authorized by each
Bondholder to make such payments to the Indenture Trustee and, in the
event that the Indenture Trustee shall consent to the making of such
payments directly to the Bondholders, to pay to the Indenture Trustee
any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and
counsel.
Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Bondholder any plan of reorganization, arrangement, adjustment or composition
affecting any of the Bonds or the rights of any Holder thereof, or to authorize
the Indenture Trustee to vote in respect of the claim of any Bondholder in any
such Proceeding.
Section 5.06 Indenture Trustee May Enforce Claims Without Possession of
Bonds.
All rights of action and claims under this Indenture or any of the Bonds
may be prosecuted and enforced by the Indenture Trustee without the possession
of any of the Bonds or the production thereof in any Proceeding relating
thereto, and any such Proceeding instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall be for the ratable benefit of the Holders of the Bonds in respect
of which such judgment has been recovered after payment of amounts required to
be paid pursuant to Section 5.07, Clause First.
Section 5.07 Application of Money Collected.
If the Bonds have been declared due and payable following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, any money collected by the Indenture Trustee with respect to such
Bonds pursuant to this Article or otherwise and any other monies that may then
be held or thereafter received by the Indenture Trustee as security for such
Bonds shall be applied in the following order, at the date or dates fixed by the
Indenture Trustee and, in case of the payment of the entire amount due on
account of principal of, and interest on, such Bonds, upon presentation and
surrender thereof:
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First: To the payment of amounts then due and unpaid to the Bond
Insurer in respect of Bond Insurer Premiums and unreimbursed Insured
Amounts (including any accrued interest thereon);
Second: To the payment of amounts then due and unpaid upon the
Outstanding Bonds for interest on the Bond Balance of such Bonds through
the end of the Interest Period preceding the date on which such payment
is made at the Bond Interest Rate; and
Third: To the payment of the Bond Balance of the Bonds, up to
the amount of their respective Current Bond Balances, ratably, without
preference or priority of any kind; and
Fourth: To the payment of the remainder, if any, to the Issuer
or any other Person legally entitled thereto.
Section 5.08 Limitation on Suits.
No Holder of a Bond shall have any right to institute any Proceedings,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(2) the Holders of Bonds representing not less than 25% of the
Bond Balance of the Outstanding Bonds shall have made written request to
the Indenture Trustee to institute Proceedings in respect of such Event
of Default in its own name as Indenture Trustee hereunder;
(3) such Holder or Holders have offered to the Indenture
Trustee indemnity in full against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute any
such Proceeding;
(5) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of Bonds representing more than 50% of the Bond Balance of the
Outstanding Bonds; and
(6) the consent of the Bond Insurer shall have been obtained;
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it being understood and intended that no one or more Holders of Bonds shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Bonds 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 and for the equal and ratable benefit of all the Holders
of Bonds.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Bonds,
each representing less than 50% of the Bond Balances of the Outstanding Bonds,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken notwithstanding any other provision herein to the contrary.
Section 5.09 Unconditional Rights of Bondholders to Receive Principal
and Interest.
Subject to the provisions in this Indenture (including Sections 3.01 and
5.03) limiting the right to recover amounts due on a Bond to recovery from
amounts in the Trust Estate, the Holder of any Bond shall have the right, to the
extent permitted by applicable law, which right is absolute and unconditional,
to receive payment of each installment of interest on such Bond on the
respective Payment Date for such installments of interest, to receive payment of
each installment of principal of such Bond when due (or, in the case of any Bond
called for redemption, on the date fixed for such redemption) 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 5.10 Restoration of Rights and Remedies.
If the Indenture Trustee or any Bondholder has instituted any Proceeding
to enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Indenture Trustee or to such Bondholder, then and in every such case the
Issuer, the Indenture Trustee and the Bondholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee and the Bondholders shall continue as though no such
Proceeding had been instituted.
Section 5.11 Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Indenture
Trustee or to the Bondholders 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.
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Section 5.12 Delay or Omission Not Waiver.
No delay or omission of the Indenture Trustee, the Bond Insurer or of
any Holder of any Bond 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 or by law to the Indenture Trustee, the Bond Insurer or to the
Bondholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee, the Bond Insurer or by the Bondholders, as
the case may be.
Section 5.13 Control by Bondholders.
The Holders of Bonds representing more than 50% of the Bond Balance of
the Outstanding Bonds on the applicable Record Date shall, with the consent of
the Bond Insurer, have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee or
exercising any trust or power conferred on the Indenture Trustee; provided that:
(1) such direction shall not be in conflict with any rule of
law or with this Indenture;
(2) any direction to the Indenture Trustee to undertake a Sale
of the Trust Estate shall be by the Holders of Bonds representing the
percentage of the Bond Balance of the Outstanding Bonds specified in
Section 5.17(b) (1), unless Section 5.17(b) (2) is applicable; and
(3) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction; provided, however, that, subject to Section 6.01, the
Indenture Trustee need not take any action that it determines might
involve it in liability or be unjustly prejudicial to the Bondholders
not consenting.
Section 5.14 Waiver of Past Defaults.
The Holders of Bonds representing more than 50% of the Bond Balance of
the Outstanding Bonds on the applicable Record Date may on behalf of the Holders
of all the Bonds, and with the consent of the Bond Insurer, waive any past
Default hereunder and its consequences, except a Default:
(1) in the payment of principal or any installment of interest
on, any Bond; or
(2) in respect of a covenant or provision hereof that under
Section 9.02 cannot be modified or amended without the consent of the
Holder of each Outstanding Bond affected.
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Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 5.15 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Bond by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Indenture Trustee for any action
taken, suffered or omitted by it as Indenture Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Bondholder, or group of
Bondholders, holding in the aggregate Bonds representing more than 10% of the
Bond Balance of the Outstanding Bonds, or to any suit instituted by any
Bondholder for the enforcement of the payment of any Required Payment Amount on
any Bond on or after the related Payment Date or for the enforcement of the
payment of principal of any Bond on or after the Final Maturity Date (or, in the
case of any Bond called for redemption, on or after the applicable Redemption
Date).
Section 5.16 Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension of law wherever enacted,
now or at any time hereafter in force, that may affect the covenants in, or the
performance of, this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 5.17 Sale of Trust Estate.
(a) The power to effect any sale (a "Sale") of any portion of the
Trust Estate pursuant to Section 5.04 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 Bonds and under this Indenture
with respect thereto shall have been paid. The Indenture Trustee may
from time to time postpone any public Sale by public announcement made
at the time and place of such Sale.
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(b) To the extent permitted by law, the Indenture Trustee
shall not in any private Sale sell or otherwise dispose of the Trust
Estate, or any portion thereof, unless:
(1) the Holders of Bonds representing not less than
50% of the Bond Balance of the Bonds then Outstanding consent to
or direct the Indenture Trustee to make such Sale; or
(2) the proceeds of such Sale would be not less than
the entire amount that would be payable to the Holders of the
Bonds, in full payment thereof in accordance with Section 5.07,
on the Payment Date next succeeding the date of 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
disposition thereof for purposes of this Section 5.17(b). In the absence
of a Bond Insurer Default, no sale hereunder shall be effective without
the consent of the Bond Insurer.
(c) Unless the Holders of all Outstanding Bonds 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 5.17 has not been established by the Indenture Trustee and
no Person bids an amount equal to or greater than such amount, the
Indenture Trustee, acting in its capacity as Indenture Trustee on behalf
of the Bondholders, shall prevent such sale and bid an amount (which
shall include the Indenture Trustee's right, in its capacity as
Indenture Trustee, to credit bid) at least $1.00 more than the highest
other bid in order to preserve the Trust Estate on behalf of the
Bondholders.
(d) In connection with a Sale of all or any portion of the
Trust Estate:
(1) any Holder or Holders of Bonds may bid for and
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 Outstanding Bonds or
claims for interest thereon in lieu of cash up to the amount that
shall, upon distribution of the net proceeds of such Sale, be
payable thereon, and such Bonds, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after being appropriately stamped
to show such partial payment;
(2) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any public Sale
thereof, 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 that would be payable to
the Holders of
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the Bonds as a result of such Sale in accordance with Section
5.07 on the Payment Date next succeeding the date of such Sale
and (B) the expenses of the Sale and of any Proceedings in
connection therewith which are reimbursable to it, without being
required to produce the Bonds in order to complete any such Sale
or in order for the net Sale price to be credited against such
Bonds, and any property so acquired by the Indenture Trustee
shall be held and dealt with by it in accordance with the
provisions of this Indenture;
(3) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in
any portion of the Trust Estate in connection with a Sale
thereof;
(4) the Indenture Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of the Trust
Estate in connection with a Sale thereof, and to take all action
necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be
bound to ascertain the Indenture Trustee's authority, inquire
into the satisfaction of any conditions precedent or see to the
application of any moneys.
(e) Notwithstanding anything in this Indenture to the
contrary, if an Event of Default specified in Section 5.01(l) is the
Event of Default, or one of the Events of Default, on the basis of which
the Bonds have been declared due and payable with the consent of the
Bond Insurer, then the Indenture Trustee may, in its sole discretion,
sell the Trust Estate without compliance with this Section 5.17.
Section 5.18 Action on Bonds.
The Indenture Trustee's right to seek and recover judgment under this
Indenture shall not be affected by the seeking, obtaining or application of any
other relief under or with respect to this Indenture. Neither the lien of this
Indenture nor any rights or remedies of the Indenture Trustee or the Holders of
Bonds 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.
Section 5.19 No Recourse to Other Trust Estates or Other Assets of the
Issuer.
The Trust Estate Granted to the Indenture Trustee as security for the
Bonds serves as security only for the Bonds. Holders of the Bonds shall have no
recourse against the trust estate granted as security for any other series of
bonds issued by the Issuer, and no judgment against the Issuer for any amount
due with respect to the Bonds may be enforced against either the trust
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estate securing any other series or any other assets of the Issuer, nor may any
prejudgment lien or other attachment be sought against any such other trust
estate or any other assets of the Issuer.
Section 5.20 Application of the Trust Indenture Act.
Pursuant to Section 316(a) of the TIA, all provisions automatically
provided for in Section 316(a) are hereby expressly excluded.
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 such of 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 man would exercise or use under the circumstances
in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Indenture Trustee need perform only those
duties that are specifically set forth in this Indenture and no others
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(2) In the absence of bad faith on its part, the
Indenture Trustee may request and 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. The Indenture Trustee
shall, however, examine such certificates and opinions to determine
whether they conform on their face 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:
(1) This paragraph does not limit the effect of
subsection (b) of this Section 6.01;
(2) 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
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(3) The Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 5.13 or
5.17 or exercising any trust or power conferred upon the Indenture
Trustee under this Indenture.
(d) Except with respect to duties of the Indenture Trustee
prescribed by the TIA, as to which this Section 6.01(d) shall not apply,
for all purposes under this Indenture, the Indenture Trustee shall not
be deemed to have notice or knowledge of any Event of Default described
in Section 5.01(2), 5.01(5) or 5.01(6) or any Default described in
Section 5.01(3) or 5.01(4) or of any event described in Section 3.05
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 that 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 Bonds generally, the
Issuer, the Trust Estate or this Indenture.
(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any 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 for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. In
determining that such repayment or indemnity is not reasonably assured
to it, the Indenture Trustee must consider not only the likelihood of
repayment or indemnity by or on behalf of the Issuer but also the
likelihood of repayment or indemnity from amounts payable to it from the
Trust Estate pursuant to Section 8.02(d).
(f) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to the provisions of this Section.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Issuer in and to the Trust Estate following an Event of
Default and a consequent declaration of acceleration of the Maturity of
the Bonds, whether such extinguishment occurs through a Sale of the
Trust Estate to another Person, the acquisition of the Trust Estate by
the Indenture Trustee or otherwise, the rights, powers and duties of the
Indenture Trustee with respect to the Trust Estate (or the proceeds
thereof) and the Bondholders and the rights of Bondholders shall
continue to be governed by the terms of this Indenture.
(h) The Indenture Trustee or the Custodian appointed pursuant
to Section 8.16 shall at all times retain possession of the Mortgage
Files in the State of California, except for those Mortgage Files or
portions thereof, released to the Servicer pursuant to this Indenture or
the Servicing Agreement.
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Section 6.02 Notice of Default.
Within 90 days after the occurrence of any Default known to the
Indenture Trustee, the Indenture Trustee shall transmit by mail to all Holders
of Bonds notice of each such Default, unless such Default shall have been cured
or waived; provided, however, that except in the case of a Default of the type
described in Section 5.01(l), the Indenture Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Indenture Trustee in good faith determine that the withholding of such notice is
in the interests of the Holders of the Bonds; and provided, further, that in the
case of any Default of the character specified in Section 5.01(3) or 5.01(4) no
such notice to Holders of the Bonds shall be given until at least 30 days after
the occurrence thereof. Concurrently with the mailing of any such notice to the
Holders of the Bonds, the Indenture Trustee shall transmit by mail a copy of
such notice to the Rating Agencies.
Section 6.03 Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it
to be genuine and to have been signed or presented by the proper Person.
The Indenture Trustee need not investigate any fact or matter stated in
any such document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee. The
Indenture Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on any such Officer's Certificate or
Opinion of Counsel.
(c) The Indenture Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized
or within its rights or powers.
Section 6.04 Not Responsible for Recitals or Issuance of Bonds.
The recitals contained herein and in the Bonds, except the certificates
of authentication on the Bonds, shall be taken as the statements of the Issuer,
and the Indenture Trustee and the Authenticating Agent assumes no responsibility
for their correctness. The Indenture Trustee makes no representations with
respect to the Trust Estate or as to the validity or sufficiency of this
Indenture or of the Bonds. The Indenture Trustee shall not be accountable for
the use or application by the Issuer of the Bonds or the proceeds thereof or any
money paid to the Issuer or upon Issuer Order pursuant to the provisions hereof.
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Section 6.05 May Hold Bonds.
The Indenture Trustee, any Agent, or any other agent of the Issuer, in
its individual or any other capacity, may become the owner or pledgee of Bonds
and, subject to Sections 6.08 and 6.13, may otherwise deal with the Issuer or
any Affiliate of the Issuer with the same rights it would have if it were not
Indenture Trustee, Agent or such other agent.
Section 6.06 Money Held in Trust.
Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds except to the extent required by this Indenture or
by law. The Indenture Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Issuer and
except to the extent of income or other gain on investments that are obligations
of the Indenture Trustee, in its commercial capacity, and income or other gain
actually received by the Indenture Trustee on investments, which are obligations
of others.
Section 6.07 [Reserved].
Section 6.08 Eligibility; Disqualification.
Irrespective of whether this Indenture is qualified under the TIA, this
Indenture shall always have a Indenture Trustee who satisfies the requirements
of TIA Sections 310(a)(1) and 310(a)(5). The Indenture Trustee shall always have
a combined capital and surplus as stated in Section 6.09. The Indenture Trustee
shall be subject to TIA Section 310(b).
Section 6.09 Indenture Trustee's Capital and Surplus.
The Indenture Trustee shall at all times have a combined capital and
surplus of at least $100,000,000 or shall be a member of a bank holding company
system, the aggregate combined capital and surplus of which is at least
$100,000,000 and shall at all times be rated "BBB" or better by Standard &
Poor's and "Baa2" by Moody's; provided, however, that the Indenture Trustee's
separate capital and surplus shall at all times be at least the amount required
by TIA Section 310(a)(2). If the Indenture Trustee publishes annual reports of
condition of the type described in TIA Section 310(a)(1), its combined capital
and surplus for purposes of this Section 6.09 shall be as set forth in the
latest such report. If at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.09 and TIA Section
310(a)(2), it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the
successor Indenture Trustee under Section 6.11.
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(b) The Indenture Trustee may resign at any time by giving
written notice thereof to the Issuer, the Bond Insurer and each Rating
Agency. If an instrument of acceptance by a successor Indenture Trustee
shall not have been delivered to the Indenture Trustee within 30 days
after the giving of such notice of resignation, the resigning Indenture
Trustee may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
(c) The Indenture Trustee may be removed at any time with the
consent of the Bond Insurer by Act of the Holders representing more than
50% of the Bond Balance of the Outstanding Bonds, delivered to the
Indenture Trustee and to the Issuer.
(d) If at any time:
(1) the Indenture Trustee shall have a conflicting
interest prohibited by Section 6.08 and shall fail to resign or
eliminate such conflicting interest in accordance with Section
6.08 after written request therefor by the Issuer or by any
Bondholder; or
(2) the Indenture Trustee shall cease to be eligible
under Section 6.09 or shall become incapable of acting or shall
be adjudged a bankrupt or insolvent, or a receiver of the
Indenture Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Indenture
Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Issuer by an Issuer Order or the Bond
Insurer may remove the Indenture Trustee, and the Issuer shall join with
the Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint a successor
Indenture Trustee acceptable to the Bond Insurer and to vest in such
successor Indenture Trustee any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this
Indenture; provided, however, if the Issuer and the Bond Insurer do not
join in such appointment within fifteen (15) days after the receipt by
it of a request to do so, or in case an event of default has occurred
and is continuing, the Indenture Trustee may petition a court of
competent jurisdiction to make such appointment, or (ii) subject to
Section 5.15, and, in the case of a conflicting interest as described in
clause (1) above, unless the Indenture Trustee's duty to resign has been
stayed as provided in TIA Section 310(b), the Bond Insurer or any
Bondholder who has been a bona fide Holder of a Bond for at least six
months may, on behalf of himself and all others similarly situated, with
the consent of the Bond Insurer, petition any court of competent
jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of
the Indenture Trustee for any cause, the
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Issuer, by an Issuer Order shall promptly appoint a successor Indenture
Trustee acceptable to the Bond Insurer. If within one year after such
resignation, removal or incapability or the occurrence of such vacancy a
successor Indenture Trustee shall be appointed by the Bond Insurer or,
with the consent of the Bond Insurer, by Act of the Holders of Bonds
representing more than 50% of the Bond Balance of the Outstanding Bonds
delivered to the Issuer and the retiring Indenture Trustee, the
successor Indenture Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Indenture Trustee
and supersede the successor Indenture Trustee appointed by the Issuer.
If no successor Indenture Trustee shall have been so appointed by the
Issuer, the Bond Insurer or Bondholders and shall have accepted
appointment in the manner hereinafter provided, any Bondholder who has
been a bona fide Holder of a Bond for at least six months may, on behalf
of himself and all others similarly situated, with the consent of the
Bond Insurer, petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor
Indenture Trustee to the Holders of Bonds. Each notice shall include the
name of the successor Indenture Trustee and the address of its Corporate
Trust Office.
Section 6.11 Acceptance of Appointment by Successor.
Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective and such successor
Indenture Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Indenture
Trustee. Notwithstanding the foregoing, on request of the Issuer or the
successor Indenture Trustee, such retiring Indenture Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Indenture Trustee all the rights, powers and trusts of the retiring Indenture
Trustee, and shall duly assign, transfer and deliver to such successor Indenture
Trustee all property and money held by such retiring Indenture Trustee
hereunder. Upon request of any such successor Indenture Trustee, the Issuer
shall execute and deliver any and all instruments for more fully and certainly
vesting in and confirming to such successor Indenture Trustee all such rights,
powers and trusts.
No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be qualified
and eligible under this Article.
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Section 6.12 Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee.
Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Indenture Trustee, shall be the successor of
the Indenture Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Bonds have been authenticated, but not delivered, by the Indenture Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Indenture Trustee may adopt such authentication and deliver the
Bonds so authenticated with the same effect as if such successor Indenture
Trustee had authenticated such Bonds.
Section 6.13 Preferential Collection of Claims Against Issuer.
The Indenture Trustee (and any co-trustee or separate trustee) shall be
subject to TIA Section 311(a), excluding any creditor relationship listed in TIA
Section 311(b), and an Indenture Trustee (and any co-trustee or separate
trustee) who has resigned or been removed shall be subject to TIA Section 311(a)
to the extent indicated.
Section 6.14 Co-Indenture Trustees and Separate Indenture Trustees.
At any time or times, for the purpose of meeting the legal requirements
of the TIA or of any jurisdiction in which any of the Trust Estate may at the
time be located, the Issuer and the Indenture Trustee shall have power to
appoint, and, upon the written request of the Indenture Trustee, of the Bond
Insurer or of the Holders of Bonds representing more than 50% of the Bond
Balance of the Outstanding Bonds with respect to which a co-trustee or separate
trustee is being appointed, the Issuer shall for such purpose jointly with the
Indenture Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Indenture Trustee either to act as co-trustee, jointly with the Indenture
Trustee, of all or any part of the Trust Estate, or to act as separate trustee
of any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section. If the Issuer does not join in
such appointment within 15 days after the receipt by it of a request to do so,
or in case an Event of Default has occurred and is continuing, the Indenture
Trustee alone shall have power to make such appointment. All fees and expenses
of any co-trustee or separate trustee shall be payable by the Issuer.
Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such
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property, title, right or power, any and all such instruments shall, on request,
be executed, acknowledged and delivered by the Issuer.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(1) The Bonds shall be authenticated and delivered and all
rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Indenture Trustee
hereunder, shall be exercised, solely by the Indenture Trustee.
(2) The rights, powers, duties and obligations hereby conferred
or imposed upon the Indenture Trustee in respect of any property covered
by such appointment shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee or by the Indenture Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to the
extent that under any law of any jurisdiction in which any particular
act is to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers,
duties and obligations shall be exercised and performed by such
co-trustee or separate trustee.
(3) The Indenture Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Issuer evidenced by
an Issuer Order, may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section, and, in case an Event
of Default has occurred and is continuing, the Indenture Trustee shall
have power to accept the resignation of, or remove, any such co-trustee
or separate trustee without the concurrence of the Issuer upon the
written request of the Indenture Trustee, the Issuer shall join with the
Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate
trustee so resigned or removed may be appointed in the manner provided
in this Section.
(4) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture
Trustee, or any other such trustee hereunder.
(5) Any Act of Bondholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
Section 6.15 Authenticating Agents.
The Issuer shall appoint an Authenticating Agent with power to act on
its behalf and subject to its direction in the authentication and delivery of
the Bonds designated for such
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authentication by the Issuer and containing provisions therein for such
authentication (or with respect to which the Issuer has made other arrangements,
satisfactory to the Indenture Trustee and such Authenticating Agent, for
notation on the Bonds of the authority of an Authenticating Agent appointed
after the initial authentication and delivery of such Bonds) in connection with
transfers and exchanges under Section 2.06, as fully to all intents and purposes
as though the Authenticating Agent had been expressly authorized by that Section
to authenticate and deliver Bonds. For all purposes of this Indenture (other
than in connection with the authentication and delivery of Bonds pursuant to
Sections 2.05 and 2.11 in connection with their initial issuance and for
purposes of Section 2.07), the authentication and delivery of Bonds by the
Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Bonds "by the Indenture Trustee." Such
Authenticating Agent shall at all times be a Person that both meets the
requirements of Section 6.09 for the Indenture Trustee hereunder and has an
office for presentation of Bonds in the Borough of Manhattan, City and State of
New York. The Indenture Trustee shall initially be the Authenticating Agent and
shall be the Bond Registrar as provided in Section 2.06. The office from which
the Indenture Trustee shall perform its duties as Bond Registrar and
Authenticating Agent shall be the Corporate Trust Office. Any Authenticating
Agent appointed pursuant to the terms of this Section 6.15 or pursuant to the
terms of any supplemental indenture shall deliver to the Indenture Trustee as a
condition precedent to the effectiveness of such appointment an instrument
accepting the trusts, duties and responsibilities of Authenticating Agent and of
Bond Registrar or co-Bond Registrar and indemnifying the Indenture Trustee for
and holding the Indenture Trustee harmless against, any loss, liability or
expense (including reasonable attorneys' fees) incurred without negligence or
bad faith on its part, arising out of or in connection with the acceptance,
administration of the trust or exercise of authority by such Authenticating
Agent, Bond Registrar or co-Bond Registrar.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any further act on the part of the
parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Issuer. The Issuer may at any time terminate the agency of
any Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Issuer. Upon receiving such a notice of resignation
or upon such a termination, or in case at any time any Authenticating Agent
shall cease to be eligible under this Section, the Issuer shall promptly appoint
a successor Authenticating Agent, shall give written notice of such appointment
to the Indenture Trustee and shall mail notice of such appointment to all
Holders of Bonds.
The Indenture Trustee agrees, subject to Section 6.01(e), to pay to any
Authenticating Agent from time to time reasonable compensation for its services
and the Indenture Trustee shall
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be entitled to be reimbursed for such payments pursuant to Section 6.05 of the
Servicing Agreement. The provisions of Sections 2.09, 6.04 and 6.05 shall be
applicable to any Authenticating Agent.
Section 6.16 Review of Mortgage Files.
The Indenture Trustee agrees, for the benefit of the Holders of the
Bonds, to review, within 45 days after the Closing Date, the Mortgage Files
delivered to it in connection with the Grant of the Initial Mortgage Loans as
security for the Bonds and after completion of such review to provide a Final
Certification in the form attached hereto as Exhibit F. The Indenture Trustee
further agrees, for the benefit of the Holders of the Bonds, to review, within
45 days after the end of the Funding Period, the Mortgage Files delivered to it
in connection with the Grant of Additional Mortgage Loans as security for the
Bonds and after completion of such review to provide a Final Certification in
the form attached hereto as Exhibit F. The Indenture Trustee's review shall be
limited to a determination that all documents referred to in the definition of
the term Mortgage Files have been delivered with respect to each such Mortgage
Loan, that all such documents have been executed, and that all such documents
relate to the Mortgage Loans. In performing such review the Indenture Trustee
may rely upon the purported genuineness and due execution of any such document
and on the purported genuineness of any signature thereon. If the Indenture
Trustee discovers any defect or omission in the Mortgage Files or that any
document required to be delivered to it has not been delivered or that any
document so delivered does not relate to any of the Mortgage Loans, it shall
promptly notify the Issuer, the Servicer and the Mortgage Loan Seller and the
Issuer shall give notice to the Mortgage Loan Seller to take such action in
respect of such defect or omission as is specified in Section 3 of the Initial
Mortgage Loan Conveyance Agreement. Notwithstanding the foregoing, the sole
remedy hereunder for a breach by the Issuer of such obligation shall be
enforcement by any party in interest as against the Mortgage Loan Seller as
aforesaid.
ARTICLE VII.
BONDHOLDERS' LISTS AND REPORTS
Section 7.01 Issuer to Furnish Indenture Trustee Names and Addresses of
Bondholders.
(a) The Issuer shall furnish or cause to be furnished to the
Indenture Trustee (i) semi-annually, not less than 45 days nor more than
60 days after the Payment Date occurring closest to six months after the
Closing Date and each Payment Date occurring at six-month intervals
thereafter, all information in the possession or control of the Issuer,
in such form as the Indenture Trustee may reasonably require, as to
names and addresses of the Holders of Bonds, and (ii) at such other
times, as the Indenture Trustee may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form
and content as of a date not more than 10 days prior to the time such
list is furnished; provided, however, that so long as the Indenture
Trustee is the Bond Registrar, no such list shall be required to be
furnished.
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(b) In addition to furnishing to the Indenture Trustee the
Bondholder lists, if any, required under subsection (a), the Issuer
shall also furnish all Bondholder lists, if any, required under Section
3.03 at the times required by said Section 3.03.
Section 7.02 Preservation of Information; Communications to
Bondholders.
(a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders of
Bonds contained in the most recent list, if any, furnished to the
Indenture Trustee as provided in Section 7.01 and the names and
addresses of the Holders of Bonds received by the Indenture Trustee in
its capacity as Bond Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in Section 7.01 upon receipt of a new
list so furnished.
(b) Bondholders may communicate pursuant to TIA Section 312(b)
with other Bondholders with respect to their rights under this Indenture
or under the Bonds.
(c) The Issuer, the Indenture Trustee and the Bond Registrar
shall have the protection of TIA Section 312(c).
Section 7.03 Reports by Indenture Trustee.
(a) Within 60 days after December 31 of each year (the
"reporting date"), commencing with the year after the issuance of the
Bonds, (i) the Indenture Trustee shall mail to all Holders a brief
report dated as of such reporting date that complies with TIA Section
313(a); (ii) the Indenture Trustee shall, to the extent not set forth in
the Payment Date Statement pursuant to Section 2.08(d), also mail to
Holders of Bonds with respect to which it has made advances, any reports
with respect to such advances that are required by TIA Section
313(b)(2); and, the Indenture Trustee shall also mail to Holders of
Bonds any reports required by TIA Section 313(b)(1). For purposes of the
information required to be included in any such reports pursuant to TIA
Sections 313(a)(2), 313(b)(1) (if applicable), or 313(b)(2), the
principal amount of indenture securities outstanding on the date as of
which such information is provided shall be the Bond Balance of the then
Outstanding Bonds covered by the report.
(b) A copy of each report required under this Section 7.03
shall, at the time of such transmission to Holders of Bonds be filed by
the Indenture Trustee with the Commission and with each securities
exchange upon which the Bonds are listed. The Issuer will notify the
Indenture Trustee when the Bonds are listed on any securities exchange.
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Section 7.04 Reports by Issuer.
The Issuer (a) shall deliver to the Indenture Trustee within 15 days
after the Issuer is required to file the same with the Commission copies of the
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) that the Issuer is required to file with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, and (b) shall also comply with the other provisions of TIA Section
314(a).
ARTICLE VIII.
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01 Collection of Moneys.
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 hold all such money and
property received by it as part of the Trust Estate and shall apply it as
provided in this Indenture.
If the Indenture Trustee shall not have received the Remittable Funds by
close of business on any related Remittance Date, the Indenture Trustee shall,
unless the Issuer shall have made provisions satisfactory to the Indenture
Trustee for delivery to the Indenture Trustee of an amount equal to such
Remittable Funds, deliver a notice to the Issuer and the Servicer of their
failure to remit such Remittable Funds and that such failure, if not remedied by
2:00 p.m. Eastern Time on the Business Day immediately preceding the related
Payment Date shall constitute an Event of Default. If the Indenture Trustee
shall subsequently receive any such Remittable Funds by 2:00 p.m. Eastern Time
on the Business Day immediately preceding the related Payment Date, such Event
of Default shall not be deemed to have occurred. Notwithstanding any other
provision hereof, the Indenture Trustee shall deliver to the Issuer or its
designee or assignee any Remittable Funds received with respect to a Mortgage
Loan after the related Remittance Date to the extent that the Issuer previously
made payment or provision for payment with respect to such Remittable Funds in
accordance with this Section 8.01, and any Remittable Funds shall not be deemed
part of the Trust Estate.
Except as otherwise expressly provided in this Indenture and the
Servicing Agreement, if, following delivery by the Indenture Trustee of the
notice described above, the Servicer shall fail to remit the Remittable Funds on
any Remittance Date, the Indenture Trustee shall deliver a second notice to the
Servicer, the Issuer and the Bond Insurer by 2:00 p.m. Eastern Time on the
Business Day prior to the related Payment Date indicating that an event of
default occurred and is continuing under the Servicing Agreement. Thereupon, the
Indenture Trustee shall make a deposit in the Bond Account of such Remittable
Funds for such Payment Date (provided,
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however, that the Indenture Trustee's responsibility to make such deposit shall
be limited to the Indenture Trustee's determination, in its reasonable
discretion, that such deposit if made would be recoverable) and, pursuant to
Section 8.14 hereof and Section 6.02 of the Servicing Agreement, assume, upon
the direction of the Bond Insurer, the duties of the Servicer. In addition, if a
default occurs in any other performance required under the Servicing Agreement
or any Insurance Policy, the Indenture Trustee may, and upon the request of the
Bond Insurer or, with the consent of the Bond Insurer, the Holders of Bonds
representing more than 50% of the Bond Balance of the Outstanding Bonds shall,
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 to proceed thereafter as provided in Article V.
Section 8.02 Bond Account.
(a) On or before the Closing Date, the Issuer shall direct the
Indenture Trustee in writing to open, at the Corporate Trust Office one
or more accounts that shall collectively be the "Bond Account". The
Indenture Trustee shall promptly deposit in the Bond Account (i) all
Remittable Funds received by it from the Servicer pursuant to the
Servicing Agreement, (ii) any other funds from any deposits to be made
by the Servicer pursuant to the Servicing Agreement, (iii) any amount
required to be deposited in the Bond Account pursuant to Section 8.01,
(iv) all amounts received pursuant to Section 8.07, (v) the Closing Date
Deposit and (vi) all other amounts received for deposit in the Bond
Account. All amounts that are deposited from time to time in the Bond
Account, and all investments, if any, made with such moneys shall be
held by the Indenture Trustee in the Bond Account as part of the Trust
Estate as herein provided, subject to withdrawal by the Indenture
Trustee for the purposes set forth in subsections (c) and (d) of this
Section 8.02, except that the Issuer shall be entitled to all income or
other gain from such investments. All funds withdrawn from the Bond
Account pursuant to subsection (c) of this Section 8.02 for the purpose
of making payments to the Holders of Bonds shall be applied in
accordance with Section 3.03.
(b) So long as no Default or Event of Default shall have occurred
and be continuing, amounts held in the Bond Account shall be invested in
Permitted Investments of the type specified in clause (f) of the
definition of Permitted Investments, which Permitted Investments shall
mature no later than the Business Day preceding the immediately
following Payment Date.
All income or other gains, if any, from investment of moneys
deposited in the Bond Account shall be withdrawn and paid by the
Indenture Trustee to the Issuer immediately upon receipt, and any loss
resulting from such investment shall be reimbursed to the Bond Account
by the Issuer. Subject to Section 6.01, the Indenture Trustee shall not
in any way be held liable by reason of any insufficiency in the Bond
Account.
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(c) Unless the Bonds have been declared due and payable pursuant
to Section 5.02 and moneys collected by the Indenture Trustee are being
applied in accordance with Section 5.07, amounts on deposit in the Bond
Account on any Payment Date or Redemption Date shall be withdrawn from
the Bond Account, in the amounts required, for application as follows:
on any Payment Date,
first, to the payment to the Bond Insurer an amount
equal to the Bond Insurer Premium for such Payment Date
and, as subrogee to the rights of the Bondholders, the
aggregate amount necessary to reimburse the Bond Insurer
for any unreimbursed Insured Amounts paid by the Bond
Insurer on prior Payment Dates, together with interest
thereon at the Bond Interest Rate from the date such
Insured Amounts were paid by the Bond Insurer to such
Payment Date and the amount of any unpaid Bond Insurer
Premium for any prior Payment Date together with interest
thereon at the Bond Interest Rate from the date such
amounts were due; provided, however, that the Bond Insurer
shall be paid such amounts only after the Bondholders have
received the Required Payment Amount with respect to such
Payment Date;
second, to the Bondholders, the Bond Interest for
such Payment Date;
third, to the Bondholders, the Monthly Principal
for such Payment Date in reduction of the Bond Balance
until such Bond Balance is reduced to zero;
fourth, to the Bondholders, the Excess Cash Payment
for such Payment Date in reduction of the Bond Balance
until such Bond Balance is reduced to zero; and
fifth, to the repayment to the Indenture Trustee of
any amounts deposited by it pursuant to Section 8.01,
each such amount being the amount thereof set forth in the applicable
Payment Date Statement.
(d) On or after each Payment Date, so long as the Indenture
Trustee shall have prepared a Payment Date Statement in respect of such
Payment Date and (1) shall have made, or, in accordance with Section
3.03, set aside from amounts in the Bond Account an amount sufficient to
make, the payments on the Bonds then required to be made as indicated in
such Payment Date Statement, (2) shall have made any reimbursement
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required to be made to the Servicer in respect of Nonrecoverable
Advances made by the Servicer and (3) shall have set aside any amounts
that have been deposited in the Bond Account prior to such time that
represent amounts that are to be used to make payments on the Bonds on
the next succeeding Payment Date, the cash balance, if any, then
remaining in the Bond Account, less the amount of Remittable Funds due
with respect to the Mortgage Loans but not received during the prior
Collection Period, shall be withdrawn from the Bond Account by the
Indenture Trustee and, so long as no Default or Event of Default shall
have occurred and be continuing, shall be released from the lien of this
Indenture and paid by the Indenture Trustee to the Issuer, subject to
satisfaction of the following conditions:
(i) the Issuer shall have delivered to the Indenture
Trustee an Officers' Certificate stating that all conditions
precedent to such release specified in this subsection (d) have
been satisfied; and
(ii) the Issuer shall have delivered to the Indenture
Trustee an Opinion of Counsel reasonably satisfactory in form and
substance to the Indenture Trustee to the effect that all
Officers' Certificates delivered to the Indenture Trustee in
connection with such release comply as to form with the
requirements of this subsection (d) and all conditions precedent
to such release specified in this subsection (d) have been
satisfied.
Notwithstanding anything to the contrary contained in clauses (i)
and (ii) above, in the event the Issuer delivers to the Indenture
Trustee an Opinion of Counsel, citing an exemptive order or similar
relief of the Commission with respect to compliance with the TIA as to
this Section 8.02(d), from such date forward the Issuer shall no longer
be required to comply with the requirements of clauses (i) or (ii)
above, and the Indenture Trustee shall release funds from the lien of
this Indenture, subject only to compliance with the terms of such
exemptive order or similar relief, if any, and other provisions of this
Section.
(e) Any payments made by the Indenture Trustee to the Issuer
pursuant to this Section 8.02 or pursuant to Section 8.03 or Section
8.04 shall be remitted to the Certificate Distribution Account
established and maintained pursuant to the Trust Agreement.
Section 8.03 Prefunding Account.
(a) On or before the Closing Date, the Issuer shall direct the
Indenture Trustee in writing to open, at the Corporate Trust Office, an
account that shall be the "Prefunding Account". No later than the
Closing Date, the Issuer will deposit in the Prefunding Account the
Prefunding Account Deposit from the proceeds of the sale of the Bonds.
All amounts that are deposited in the Prefunding Account, and all
investments, if any, made
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with such monies, shall be held by the Indenture Trustee in the
Prefunding Account as part of the Trust Estate as herein provided. Upon
the conveyance of Additional Mortgage Loans to the Issuer on any
Subsequent Transfer Date, the Issuer shall instruct the Indenture
Trustee to withdraw from the Prefunding Account an amount equal to the
Subsequent Purchase Price for the Additional Mortgage Loans and make a
corresponding reduction in the amount of the Prefunding Account Deposit,
excluding (other than on the last day in the Funding Period) any related
Additional Subsequent Purchase Price, and to pay such amount to or upon
the order of the Issuer upon satisfaction of the conditions set forth in
the Additional Mortgage Loan Conveyance Agreement with respect to such
transfer. The aggregate Additional Subsequent Purchase Prices shall be
paid to the Issuer as provided in the Additional Mortgage Loan
Conveyance Agreement.
(b) Amounts held in the Prefunding Account shall be invested
in Permitted Investments of the type specified in clause (f) of the
definition of Permitted Investments. The Indenture Trustee shall not be
liable for any losses on amounts invested in accordance with the
provisions hereof. Any losses realized in connection with any such
investment shall be for the account of the Issuer and the Issuer shall
deposit the amount of such loss (to the extent not offset by income from
other investments) in the Prefunding Account immediately upon the
realization of such loss. All interest and any other investment earnings
on amounts held in the Prefunding Account shall be paid by the Indenture
Trustee to the Issuer on the April 1997 Payment Date.
(c) On the Payment Date in April 1997, any amounts remaining
in the Prefunding Account in respect of the Prefunding Account Deposit
at such time (net of reinvestment earnings payable to the Issuer) shall
be deposited at such time into the Bond Account for payment as part of
the Monthly Principal on the April 1997 Payment Date.
Section 8.04 Capitalized Interest Account.
(a) On or before the Closing Date, the Issuer shall direct the
Indenture Trustee in writing to open, at the Corporate Trust Office, an
account that shall be the "Capitalized Interest Account". No later than
the Closing Date, the Issuer will deposit in the Capitalized Interest
Account the Capitalized Interest Account Deposit. All amounts that are
deposited in the Capitalized Interest Account, and all investments, if
any, made with such monies, shall be held by the Indenture Trustee in
the Capitalized Interest Account as part of the Trust Estate as herein
provided. The Indenture Trustee shall hold the Capitalized Interest
Account Deposit for the benefit of the Bondholders. The Bondholders will
be entitled to the full Bond Interest for the initial Interest Period.
On the April 1997 Remittance Date, an amount equal to the sum of (i) 20
days interest computed at the Bond Interest Rate for the related Payment
Date on the amount of the Prefunding Account Deposit and (ii) an amount
equal to the result obtained by multiplying the Bond Insurer Premium
payable with respect to the Bonds for the related Payment Date by a
fraction, the numerator of which is the amount of the Prefunding
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Account Deposit and the denominator of which is the Bond Balance for the
related Payment Date, shall be withdrawn from the Capitalized Interest
Account and deposited into the Bond Account in respect of Available
Funds for such Payment Date. Any amounts so deposited in the Bond
Account shall not be invested in Permitted Investments or otherwise.
(b) Amounts held in the Capitalized Interest Account shall be
invested in Permitted Investments of the type specified in clause (e) of
the definition of Permitted Investments, which Permitted Investments
shall mature no later than the Remittance Date in April 1997. The
Indenture Trustee shall not be liable for any losses on amounts invested
in accordance with the provisions hereof. Any losses realized in
connection with any such investment shall be for the account of the
Issuer and the Issuer shall deposit the amount of such loss (to the
extent not offset by income from other investments) in the Capitalized
Interest Account immediately upon the realization of such loss. All
interest and any other investment earnings on amounts held in the
Capitalized Interest Account shall be paid by the Indenture Trustee to
the Issuer on the April 1997 Payment Date.
(c) On the Payment Date in April 1997, (i) any amounts
remaining in the Capitalized Interest Account in respect of the
Capitalized Interest Account Deposit following withdrawal of the amounts
specified in paragraph (a) above (net of reinvestment earnings payable
to the Issuer) shall be deposited at such time into the Bond Account for
payment as part of Available Funds on the April 1997 Payment Date. Any
amounts so deposited shall not be invested in Permitted Investments or
otherwise.
Section 8.05 Payments on the Financial Guaranty Insurance Policy.
(a) On or before the Closing Date, the Issuer shall direct the
Indenture Trustee in writing to open, at the Corporate Trust Office, an
account that shall be the "Policy Payments Account". All amounts that
are deposited in the Policy Payments Account shall be held by the
Indenture Trustee in the Policy Payments Account as part of the Trust
Estate as herein provided. The Indenture Trustee shall hold the Policy
Payments Account as a separate special purpose trust account for the
benefit of the Bondholders and the Bond Insurer. The Indenture Trustee
shall deposit or cause to be deposited any Insured Amounts paid under
the Financial Guaranty Insurance Policy in the Policy Payments Account
and distribute such amounts only for the purpose of payment to the
Bondholders of such Insured Amounts and such amounts may not be used to
satisfy any costs, expenses or liabilities of the Servicer, the
Indenture Trustee or the Issuer. Insured Amounts deposited in the Policy
Payments Account shall not be invested in Permitted Investments or
otherwise, and shall be transferred to the Bond Account on the related
Payment Date and paid by the Indenture Trustee to the Bondholders in
accordance with Section 8.02(c).
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As soon as possible, and in no event later than 9:00 a.m. (Los Angeles
time) on the third Business Day immediately preceding the related
Payment Date, the Indenture Trustee shall determine whether an Insured
Amount is required to be paid under the Financial Guaranty Insurance
Policy with respect to such Payment Date and, if so, shall immediately
notify the Servicer by telephone, which notice shall be confirmed in
writing by facsimile transmission, of the Indenture Trustee's intention
so to file the applicable Notice of Claim. If by the close of business
in Los Angeles on such date an Insured Amount is still required to be
paid under the Financial Guaranty Insurance Policy with respect to such
Payment Date, the Indenture Trustee shall furnish the Bond Insurer with
a completed Notice of Claim in respect of such Insured Amount by 12:00
noon Eastern time on the next succeeding Business Day and shall provide
a copy thereof to the Servicer at or prior to the time such Notice of
Claim is received by the Bond Insurer. The Notice of Claim shall
constitute a claim therefor pursuant to the Financial Guaranty Insurance
Policy. In the event any funds are received by the Indenture Trustee
from the Servicer by 2:00 p.m. Eastern time on the Business Day
following the transmission of a Notice of Claim to the Bond Insurer, and
such funds reduce the amount of the Insured Amount to which such Notice
of Claim relates, the Insured Amount to which such Notice of Claim
relates shall be reduced by a corresponding amount, and the Notice of
Claim shall be deemed to have been rescinded to the extent of the
reduction of the Insured Amount. Notification of any such reduction in
the Insured Amount shall be given to the Bond Insurer by the Indenture
Trustee by no later than 3:00 p.m. Eastern time on the Business Day
prior to the related Payment Date. The Bond Insurer shall, pursuant to
the Financial Guaranty Insurance Policy, pay to the Indenture Trustee
the Insured Amount by 2:00 p.m., Eastern time, on the later of (i) the
second Business Day following receipt of such Notice of Claim and (ii)
such Payment Date. The Indenture Trustee shall deposit or cause to be
deposited such Insured Amount in the Bond Account for distribution
pursuant to Section 8.02(c).
(b) Each Bondholder shall promptly notify the Indenture
Trustee in writing upon the receipt of a court order as described in the
definition of Preference Amount and shall enclose a copy of such order
with such notice to the Indenture Trustee. The Indenture Trustee shall
promptly notify the Bond Insurer upon its receipt of any such court
order. If the payment of any portion of Bond Interest, Monthly
Principal, Excess Cash Payment or any payment in respect of Coverage
Deficit for any Payment Date is avoided as a preference pursuant to a
final, nonappealable order under the U.S. Bankruptcy Code (the "Order"),
the Bond Insurer shall cause such payment to be made on the later of (a)
the date when due to be paid pursuant to the Order or (b) the first to
occur of (i) the fourth Business Day following receipt by the Bond
Insurer from the Indenture Trustee of (A) a copy of the Order to the
effect that the Bondholder is required to return payments on the Bonds
during the term of the Financial Guaranty Insurance Policy because such
payments were avoidable as preference payments pursuant to such Order,
(B) a certificate of the Bondholder that the Order has been entered and
is not subject to any stay and (C) an assignment duly executed and
delivered by the Bondholder in such
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form as is reasonably required by the Bond Insurer and provided to the
Bondholder by the Bond Insurer, irrevocably assigning to the Bond
Insurer all rights and claims of (i) the Bondholders relating to or
arising under the Bonds against the debtor that made such preference
payment or otherwise with respect to such preference payment or (ii) the
date of receipt by the Bond Insurer from the Indenture Trustee of the
items referred to in clauses (A), (B) and (C) above if, at least four
Business Days prior to such date of receipt, the Bond Insurer shall have
received written notice from the Indenture Trustee that such items were
to be delivered on such date and such date was specified in the notice.
Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not
to the Indenture Trustee or any Bondholder directly (unless a Bondholder
has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in
which case such payment shall be disbursed to the Indenture Trustee for
payment to such Bondholder upon proof of such payment reasonably
satisfactory to the Bond Insurer).
(c) The Indenture Trustee shall receive, as attorney-in-fact for
each Bondholder, any Insured Amount from the Bond Insurer and disburse
the same in accordance with the provisions of Section 8.02. Any portion
of the payments made by the Indenture Trustee in respect of the Required
Payment Amount from proceeds of the Financial Guaranty Insurance Policy
shall not be considered payment from the Trust Estate, nor shall such
payments be discharged or otherwise considered as having been made from
the Trust Estate to the Bondholders, and the Bond Insurer shall become
the owner of such unpaid amounts. The Indenture Trustee hereby agrees on
behalf of each Bondholder for the benefit of the Bond Insurer that it
recognizes that to the extent the Bond Insurer pays any Insured Amounts,
either directly or indirectly (as by paying through the Indenture
Trustee), to the Bondholders, the Bond Insurer will be subrogated to the
rights of the Bondholders with respect to such Insured Amounts, shall be
deemed to the extent of the Insured Amounts so paid, to be a registered
Bondholder and shall be entitled to receive all future payments on the
Bonds until all such Insured Amounts (together with interest thereon at
the Bond Interest Rate from the date paid until the date of
reimbursement thereof) have been fully reimbursed, subject to the
following paragraph. To evidence such subrogation, the Indenture Trustee
shall direct the Bond Registrar to note the Bond Insurer's rights as
subrogee on the registration books maintained by the Bond Registrar.
Except as otherwise described herein, the Bond Insurer shall not acquire
any voting rights hereunder as a result of such subrogation. The effect
of the foregoing provisions is that, to the extent of any Insured Amount
made by it on each Payment Date, the Bond Insurer shall be paid before
any other payments are made to the other Bondholders, subject to the
following paragraph.
Notwithstanding the provisions of the preceding paragraph, it is
understood and agreed that the intention of the parties is that the Bond
Insurer shall not be entitled to reimbursement on any Payment Date for
amounts previously paid by it in respect of the
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Bonds unless on such Payment Date the Bondholders shall also have
received the full amount of the Required Payment Amount for such Payment
Date.
(d) The Indenture Trustee shall be entitled to enforce on behalf
of the Bondholders the obligations of the Bond Insurer under the
Financial Guaranty Insurance Policy. The Bondholders are not entitled to
institute proceedings directly against the Bond Insurer. Each
Bondholder, by its purchase of the Bonds, the Servicer, the Issuer and
the Indenture Trustee hereby agree that the Bond Insurer 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, the direction of any appeal of any order relating to such
preference claim and the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition and without
limitation of the foregoing, the Bond Insurer shall be subrogated to the
rights of the Servicer, the Issuer, the Indenture Trustee and each
Bondholder 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.
(e) The Indenture Trustee shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any
Bond from monies received under the Financial Guaranty Insurance Policy.
The Bond Insurer shall have the right to inspect such records at
reasonable times during normal business hours upon one Business Day's
notice to the Indenture Trustee.
Section 8.06 General Provisions Regarding the Indenture Accounts and
Mortgage Loans.
(a) The Indenture Accounts shall relate solely to the Bonds and
to the Mortgage Loans, Permitted Investments and other property securing
the Bonds. Funds and other property in the Indenture Accounts shall not
be commingled with any other moneys or property of the Issuer or any
Affiliate thereof. Notwithstanding the foregoing, the Indenture Trustee
may hold any funds or other property received or held by it as part of
the Indenture Accounts in collective accounts maintained by it in the
normal course of its business and containing funds or property held by
it for other Persons (which may include the Issuer or an Affiliate),
provided that such accounts are under the sole control of the Indenture
Trustee and the Indenture Trustee maintains adequate records indicating
the ownership of all such funds or property and the portions thereof
held for credit to the Indenture Accounts.
(b) If any amounts are needed for payment from the Indenture
Accounts (except for the Policy Payments Account) and sufficient
uninvested funds are not available therein to make such payment, the
Indenture Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in the related Indenture
Accounts.
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(c) The Indenture Trustee shall, at all times while any Bonds are
Outstanding, maintain in its possession, or in the possession of an
agent whose actions with respect to such items are under the sole
control of the Indenture Trustee, all certificates or other instruments,
if any, evidencing any investment of funds in the Investment Accounts
(except for the Policy Payments Account). The Indenture Trustee shall
relinquish possession of such items, or direct its agent to do so, only
for purposes of collecting the final payment receivable on such
investment or certificate or, in connection with the sale of any
investment held in the Indenture Accounts (except for the Policy
Payments Account), against delivery of the amount receivable in
connection with any sale.
(d) The Indenture Trustee shall not invest any part of the Trust
Estate in Permitted Investments that constitute uncertificated
securities (as defined in Section 8- 102 of the Uniform Commercial Code,
as enacted in the relevant jurisdiction) or in any other book-entry
securities unless it has received an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee setting
forth, with respect to each type of security for which authority to
invest is being sought, the procedures that must be followed to maintain
the lien and security interest created by this Indenture with respect to
the Trust Estate.
Section 8.07 Releases of Defective Mortgage Loans.
If any of the representations or warranties of the Mortgage Loan Seller
set forth in Section 4(b) of the Initial Mortgage Loan Conveyance Agreement was
materially incorrect or otherwise misleading with respect to any Mortgage Loan
as of the time made, the Indenture Trustee shall direct the Mortgage Loan Seller
to either (i) within 60 days after the Mortgage Loan Seller receives actual
knowledge of such incorrectness, eliminate or otherwise cure the circumstance or
condition in respect of which such representation or warranty was incorrect as
of the time made, (ii) withdraw such Defective Mortgage Loan from the lien of
this Indenture following the expiration of such 60-day period by depositing to
the Bond Account an amount equal to the Purchase Price for such Mortgage Loan or
(iii) substitute a Qualified Replacement Mortgage Loan for such Defective
Mortgage Loan, all as provided in Section 5 of the Initial Mortgage Loan
Conveyance Agreement. Upon any purchase of or substitution for a Defective
Mortgage Loan by the Mortgage Loan Seller in accordance with Section 5 of the
Initial Mortgage Conveyance Agreement, the Indenture Trustee shall deliver the
Mortgage File relating to such Defective Mortgage Loan to the Mortgage Loan
Seller, and the Issuer and the Indenture Trustee shall execute such instruments
of transfer as are necessary to convey title to such Defective Mortgage Loan to
the Mortgage Loan Seller from the lien of this Indenture. Notwithstanding the
foregoing, the sole remedy hereunder for a breach by the Issuer of such
obligation shall be enforcement by any party in interest as against the Mortgage
Loan Seller as aforesaid.
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Section 8.08 Reports by Indenture Trustee to Bondholders; Access to
Certain Information.
On each Payment Date, the Indenture Trustee shall deliver the written
report required by Section 2.08(d) to Bondholders of record as of the related
Record Date (including the Clearing Agency, if any).
The Indenture Trustee shall make available at its Corporate Trust
Office, during normal business hours, for review by any Bondholder or any person
identified to the Indenture Trustee as a prospective Bondholder, originals or
copies of the following items: (a) the Indenture and any amendments thereto, (b)
all Payment Date Statements delivered to the Issuer since the Closing Date, (c)
any Officers' Certificates delivered to the Indenture Trustee since the Closing
Date as described in the Indenture, (d) any Accountants' reports delivered to
the Indenture Trustee since the Closing Date as required under the Servicing
Agreement, (e) any and all modifications, waivers and amendments of the terms of
a Mortgage Loan entered into by the Servicer and delivered to the Indenture
Trustee and (f) any and all Officers' Certificates of the Servicer and other
evidence delivered to the Indenture Trustee to support the Servicer's
determination that any Servicing Advance was not or, if made, would not be
recoverable. Copies of any and all of the foregoing items will be available from
the Indenture Trustee upon request; however, the Indenture Trustee will be
permitted to require payment of a sum sufficient to cover the reasonable costs
and expenses of providing such copies.
Section 8.09 Trust Estate Mortgage Files.
(a) The Indenture Trustee may, and when required by the
provisions of this Indenture shall, execute such instruments or powers
of attorney as are prepared and delivered to it by the Servicer to
release property from the lien of this Indenture, or convey the
Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article VIII shall be bound to ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) Upon request of the Servicer accompanied by an Officers'
Certificate to the effect that a Mortgage Loan has been the subject of a
Full Prepayment (other than a prepayment pursuant to clause (ii) of the
definition of "Full Prepayment") and a release in a form acceptable to
the Indenture Trustee, the Indenture Trustee shall promptly release the
related Mortgage Files as the Servicer may request to evidence
satisfaction and discharge of such Mortgage Loan. In exchange for the
release of the Mortgage Files, the Servicer shall deliver to the
Indenture Trustee a trust receipt reasonably satisfactory to the
Indenture Trustee and signed by an officer of the Servicer. If such
Mortgage Loan shall be liquidated and the Indenture Trustee receives a
certificate from the Servicer as
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provided above, then, upon request of the Issuer, the Indenture Trustee
shall release the trust receipt to or upon the order of the Issuer.
(c) The Indenture Trustee shall, at such time as there are no
Bonds outstanding, release all of the Trust Estate to the Issuer (other
than any cash held for the payment of the Bonds pursuant to Section 3.03
or 4.02).
Section 8.10 Amendment to Servicing Agreement.
The Indenture Trustee may, without the consent of any Holder, enter into
or consent to any amendment or supplement to the Servicing Agreement for the
purpose of increasing the obligations or duties of any party other than the
Indenture Trustee or the Holders of the Bonds. The Indenture Trustee may, in its
discretion, decline to enter into or consent to any such supplement or
amendment: (i) unless the Indenture Trustee receives an Opinion of Counsel for
the Issuer that the position of the Holders would not be materially adversely
affected or (ii) if its own rights, duties or immunities would be adversely
affected.
Section 8.11 Delivery of the Mortgage Files Pursuant to Servicing
Agreement.
As is appropriate for the servicing or foreclosure of any Mortgage Loan,
the Indenture Trustee shall deliver to the Servicer of such Mortgage the
Mortgage Files for such Mortgage Loan upon receipt by the Indenture Trustee on
or prior to the date such release is to be made of:
(a) such Officers' Certificates as are required by the
Servicing Agreement; and
(b) a trust receipt in the form prescribed by the Servicing
Agreement, executed by the Servicer, providing that the Servicer will
hold or retain the Mortgage Files in trust for the benefit of the
Indenture Trustee and the Holders of Bonds.
Section 8.12 Records.
In order to facilitate the servicing of the Mortgage Loans by the
Servicer, the Issuer shall cause Servicer to retain certain records in
accordance with the provisions of the Servicing Agreement and this Indenture.
Section 8.13 Servicer as Agent.
In order to facilitate the servicing of the Mortgage Loans by the
Servicer of such Mortgage Loans, the Servicer of the Mortgage Loans has been
appointed by the Issuer to retain, in accordance with the provisions of the
Servicing Agreement and this Indenture, all Remittable Funds on such Mortgage
Loans prior to the time they are deposited into the Bond Account.
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Section 8.14 Termination of Servicer.
In the event of an event of default specified in Section 6.01 of the
Servicing Agreement, the Indenture Trustee may, with the consent of the Bond
Insurer, and shall, upon the direction of the Bond Insurer, terminate the
Servicer as provided in Section 6.01 and Section 6.02 of the Servicing
Agreement. If the Indenture Trustee terminates the Servicer, the Indenture
Trustee shall pursuant to Section 6.02 of the Servicing Agreement assume the
duties of the Servicer or appoint a successor servicer acceptable to the Issuer,
the Bond Insurer and the Rating Agencies and meeting the requirements set forth
in the Servicing Agreement.
Section 8.15 Opinion of Counsel.
The Indenture Trustee shall be entitled to receive at least five
Business Days' notice of any action to be taken pursuant to Section 8.09(a)
(other than in connection with releases of Mortgage Loans that were the subject
of a Full Prepayment of the type described in clause (i) of the definition of
the term "Full Prepayment") and 8.10, accompanied by copies of any instruments
involved, and the Indenture Trustee shall be entitled to receive an Opinion of
Counsel, in form and substance reasonably satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with. Counsel rendering any such opinion may
rely, without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
Section 8.16 Appointment of Custodians.
The Indenture Trustee may, at no additional cost to the Issuer, with the
consent of the Issuer, appoint one or more Custodians to hold all or a portion
of the Mortgage Files as agent for the Indenture Trustee. Each Custodian shall
(i) be a financial institution supervised and regulated by the Comptroller of
the Currency, the Board of Governors of the Federal Reserve System, the Office
of Thrift Supervision, or the Federal Deposit Insurance Corporation; (ii) have
combined capital and surplus of at least $10,000,000; (iii) be equipped with
secure, fireproof storage facilities, and have adequate controls on access to
assure the safety and security of the Mortgage Files; (iv) utilize in its
custodial function employees who are knowledgeable in the handling of mortgage
documents and of the functions of a mortgage document custodian; and (v) satisfy
any other reasonable requirements that the Issuer may from time to time deem
necessary to protect the interests of Bondholders in the Mortgage Files. Each
Custodian shall be subject to the same obligations and standard of care as would
be imposed on the Indenture Trustee hereunder assuming the Indenture Trustee
retained the Mortgage Files directly. The appointment of one or more Custodians
shall not relieve the Indenture Trustee from any of its obligations hereunder,
and the Indenture Trustee shall remain responsible for all acts and omissions of
any Custodian. If the Servicer is appointed as a Custodian in accordance with
this Section 8.16, it shall fulfill its servicing and custodial duties and
obligations through separate departments and, if
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it maintains a trust department, shall fulfill its custodial duties and
obligations through such trust department.
Section 8.17 Rights of the Bond Insurer to Exercise Rights of
Bondholders. By accepting its Bonds, each Bondholder agrees that unless a Bond
Insurer Default exists, the Bond Insurer shall have the right to exercise all
rights of the Bondholders under this Agreement without any further consent of
the Bondholders, including, without limitation:
(i) the right to direct the Indenture Trustee to cause the
Servicer to effect foreclosures upon Mortgage Loans upon failure of the
Servicer to do so;
(ii) the right to require the Mortgage Loan Seller to repurchase
or substitute for Defective Mortgage Loans pursuant to Section 8.07; and
(iii) the right to direct the actions of the Indenture Trustee
during the continuance of an Event of Default.
In addition, each Bondholder agrees that, unless a Bond Insurer Default
exists, the rights specifically set forth above may be exercised by the
Bondholders only with the prior written consent of the Bond Insurer.
Section 8.18 Trust Estate and Accounts Held for Benefit of the Bond
Insurer. Provided there does not exist a Bond Insurer Default, the Indenture
Trustee shall hold the Trust Estate and the Mortgage Files for the benefit of
the Bondholders and the Bond Insurer and all references in this Agreement and in
the Bonds to the benefit of Holders of the Bonds shall be deemed to include the
Bond Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Bondholders shall
also be sent to the Bond Insurer.
Section 8.19 Bond Insurer Option to Purchase Mortgage Loans. On any date
on which Mortgage Loans with aggregate Principal Balances that equal or exceed
25% of the sum of the aggregate of the Principal Balances of the Initial
Mortgage Loans as of the applicable Cut-off Dates and the Prefunding Account
Deposit have become Liquidated Mortgage Loans, the Bond Insurer may purchase
from the Indenture Trustee all of the Mortgage Loans then remaining in the Trust
Estate at the Purchase Price for each such Mortgage Loan plus the amount of any
outstanding and unpaid fees and expenses of the Servicer by remitting such
amount to the Indenture Trustee for deposit in the Bond Account on or before the
related Remittance Date and the Indenture Trustee shall, promptly following
remittance of such amount, release to the Bond Insurer the Mortgage Files
pertaining to the Mortgage Loans being purchased, and the Indenture Trustee and
the Issuer shall execute and deliver all other documents necessary to transfer
their respective interests in such Mortgage Loans to the Bond Insurer.
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ARTICLE IX.
SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures Without Consent of Bondholders.
Without the consent of the Holders of any Bonds, the Issuer and the
Indenture Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Indenture Trustee,
for any of the following purposes:
(1) 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;
(2) to add to the conditions, limitations and restrictions on
the authorized amount, terms and purposes of the issuance,
authentication and delivery of any Bonds, as herein set forth,
additional conditions, limitations and restrictions thereafter to be
observed;
(3) to evidence the succession of another Person to the Issuer
to the extent permitted herein, and the assumption by any such successor
of the covenants of the Issuer herein and in the Bonds contained;
(4) to add to the covenants of the Issuer, for the benefit of
the Holders of all Bonds or to surrender any right or power herein
conferred upon the Issuer;
(5) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any other
provision herein, or to amend any other provisions with respect to
matters or questions arising under this Indenture, which shall not be
inconsistent with the provisions of this Indenture, provided that such
action shall not adversely affect in any material respect the interests
of the Holders of the Bonds; and provided, further, that the amendment
shall not be deemed to adversely affect in any material respect the
interests of the Holders of the Bonds if the Person requesting the
amendment obtains letters from the Rating Agencies that the amendment
would not result in the downgrading or withdrawal of the ratings then
assigned to the Bonds;
(6) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted, and to add to this Indenture such
other provisions as may be expressly required by the TIA.
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Section 9.02 Supplemental Indentures With Consent of Bondholders.
With the consent of the Bond Insurer and with the consent of Holders of
Bonds representing not less than a majority of the Bond Balance of all
Outstanding Bonds by Act of said Holders delivered to the Issuer and the
Indenture Trustee, the Issuer and the Indenture Trustee may 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 Bonds under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Bond
affected thereby:
(1) change the any Payment Date or the Final Maturity Date of the
Bonds or reduce the principal amount thereof, the Bond Interest Rate
thereon or the Redemption Price with respect thereto, change the
earliest date on which any Bond may be redeemed at the option of the
Issuer, change any place of payment where, or the coin or currency in
which, any Bond or any interest thereon is payable, or impair the right
to institute suit for the enforcement of the payment of any installment
of interest due on any Bond on or after the Final Maturity Date thereof
or for the enforcement of the payment of the entire remaining unpaid
principal amount of any Bond on or after the Final Maturity Date (or, in
the case of redemption, on or after the applicable Redemption Date);
(2) reduce the percentage of the Bond Balance of the Outstanding
Bonds, 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 provisions of this Indenture
or Defaults hereunder and their consequences provided for in this
Indenture;
(3) modify any of the provisions of this Section, Section 5.13 or
Section 5.17(b), except to increase any percentage specified therein or
to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding
Bond affected thereby;
(4) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(5) permit the creation of any lien other than the lien of this
Indenture with respect to any part of the Trust Estate (except for
Permitted Encumbrances) or terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Bond of
the security afforded by the lien of this Indenture;
(6) modify any of the provisions of this Indenture in such manner
as to affect the calculation of the Required Payment Amount for any
Payment Date (including the calculation of any of the individual
components of such Required Payment Amount) or to
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affect rights of the Holders of the Bonds to the benefits of any
provisions for the mandatory redemption of Bonds contained herein; or
(7) incur any indebtedness, other than the Bonds, for which the
timing or amount of the payments on such indebtedness are in part
determined by the timing or amount of payments or projected payments on
assets in the Trust Estate or that would cause the Issuer or the Trust
Estate to be treated as a "taxable mortgage pool" within the meaning of
Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether or not any
Bonds would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Bonds, 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 Bondholders under this Section
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, the Indenture Trustee shall
mail to the Holders of the Bonds to which such 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.
Section 9.03 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and (subject to Section 6.01) 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 or immunities under this
Indenture or otherwise.
Section 9.04 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Bonds to which such supplemental indenture relates that have theretofore been
or thereafter are authenticated and delivered hereunder shall be bound thereby.
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Section 9.05 Conformity With Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
Section 9.06 Reference in Bonds to Supplemental Indentures.
Bonds authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Bonds so modified as to conform, in the opinion
of 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 Bonds.
Section 9.07 Amendments to Governing Documents.
The Indenture Trustee shall, upon Issuer Request, consent to any
proposed amendment to the Issuer's governing documents, or an amendment to or
waiver of any provision of any other document relating to the Issuer's governing
documents, such consent to be given without the necessity of obtaining the
consent of the Holders of any Bonds upon receipt by the Indenture Trustee of:
(i) an Opinion of Counsel to the effect that such amendment or
waiver will not adversely affect the interests of the Holders of the
Bonds or the Bond Insurer and that all conditions precedent to such
consent specified in this Section 9.07 have been satisfied;
(ii) an Officers' Certificate, to which such proposed amendment
or waiver shall be attached, stating that such attached copy is a true
copy of the proposed amendment or waiver and that all conditions
precedent to such consent specified in this Section 9.07 have been
satisfied; and
(iii) written confirmation from the Rating Agencies that the
implementation of the proposed amendment or waiver will not adversely
affect their ratings of the Bonds.
Notwithstanding the foregoing, the Indenture Trustee may decline to
consent to a proposed waiver or amendment that adversely affects its own rights,
duties or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require that any
Person obtain the consent of the Indenture Trustee to any amendment or waiver or
any provision of any document where the making of such amendment or the giving
of such waiver without obtaining the consent
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of the Indenture Trustee is not prohibited by this Indenture or by the terms of
the document that is the subject of the proposed amendment or waiver.
ARTICLE X.
REDEMPTION OF BONDS
Section 10.01 Redemption.
(a) All the Bonds may be redeemed in whole, but not in part,
at the option of the Issuer, on each Redemption Date at the Redemption
Price provided, however, that funds in an amount equal to the Redemption
Price must have been deposited with the Indenture Trustee prior to the
Indenture Trustee's giving notice of such redemption pursuant to Section
10.02 or the Issuer shall have complied with the requirements for
satisfaction and discharge of the Bonds specified in Section 4.01. If
the Issuer shall elect to redeem the Bonds pursuant to this Section
10.01, it shall furnish notice of such election to the Indenture Trustee
not later than thirty (30) days prior to the Payment Date selected for
such redemption, whereupon all such Bonds shall be due and payable on
such Payment Date upon the furnishing of a notice pursuant to Section
10.02 to each Holder of such Bonds.
(b) Upon receipt of the notice from Issuer of its election to
redeem the Bonds pursuant to Section 10.01(a), the Indenture Trustee
shall prepare and deliver to the Issuer, no later than the related
Redemption Date, a Payment Date Statement stating therein that it has
determined that the conditions to redemption at the option of the Issuer
have been satisfied and setting forth the amount, if any, to be
withdrawn from the Bond Account and paid to the Servicer as
reimbursement for Nonrecoverable Advances and such other information as
may be required to accomplish such redemption.
Section 10.02 Form of Redemption Notice.
Notice of redemption shall be given by the Indenture Trustee in the name
of and at the expense of the Issuer by first class mail, postage prepaid, mailed
not less than ten days prior to the Redemption Date to each Holder of Bonds to
be redeemed, such Holders being determined as of the Record Date for such
Payment Date
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price at which the Bonds of such Series
will be redeemed,
(3) the fact of payment in full on such Bonds, the place where
such Bonds are to be surrendered for payment of the Redemption Price
(which shall be the office or
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agency of the Issuer to be maintained as provided in Section 3.02), and
that no interest shall accrue on such Bond for any period after the date
fixed for redemption.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Bond selected for redemption shall not impair or affect the validity of the
redemption of any other Bond.
Section 10.03 Bonds Payable on Optional Redemption.
Notice of redemption having been given as provided in Section 10.02, the
Bonds to be redeemed shall, on the applicable Redemption Date, become due and
payable at the Redemption Price and (unless the Issuer shall default in the
payment of the Redemption Price) no interest shall accrue on such Redemption
Price for any period after such Redemption Date.
ARTICLE XI.
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
(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 an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and 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 relating to such particular application or request, no
additional certificate or opinion need be furnished.
(b) Every certificate, opinion or letter with respect to compliance
with a condition or covenant provided for in this Indenture, including one
furnished pursuant to specific requirements of this Indenture relating to a
particular application or request (other than certificates provided pursuant to
TIA Section 314(a)(4)) shall include and shall be deemed to include (regardless
of whether specifically stated therein) the following:
(1) a statement that each individual signing such
certificate, opinion or letter has 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, opinion or letter are based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
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(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, 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 the Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion and shall include a statement to the effect that such counsel
believes that such counsel and the Indenture Trustee may reasonably rely upon
the opinion of such other counsel.
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.
Wherever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 6.01(b)(2).
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request or
direction of the Issuer, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Issuer's right to make such request or
direction, the Indenture Trustee shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.01(d).
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Section 11.03 Acts of Bondholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given
or taken by Bondholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Bondholders in
person or by an agent 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
Bondholders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the Indenture Trustee and the Issuer, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness
of such execution or by the certificate of any notary public or other
officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to
him the execution thereof. Whenever such execution is by an officer of a
corporation or a member of a partnership on behalf of such corporation
or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The ownership of Bonds shall be proved by the Bond
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Bonds shall bind
the Holder of every Bond issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Indenture Trustee
or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Bonds.
Section 11.04 Notices, etc. to Indenture Trustee and Issuer.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Bondholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with:
(1) the Indenture Trustee by any Bondholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with and received by the Indenture
Trustee at its Corporate Trust Office; or
(2) the Issuer by the Indenture Trustee or by any Bondholder
shall be sufficient for every purpose hereunder (except as provided in
Section 5.01(3) and (4)) if
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in writing and mailed, first-class postage prepaid, to the Issuer
addressed to it at 0000 Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
00000, or at any other address previously furnished in writing to the
Indenture Trustee by the Issuer.
Section 11.05 Notices and Reports to Bondholders; Waiver of
Notices.
Where this Indenture provides for notice to Bondholders of any event or
the mailing of any report to Bondholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Bondholder affected by such event or to
whom such report is required to be mailed, at the address of such Bondholder as
it appears on the Bond Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Bondholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Bondholder
shall affect the sufficiency of such notice or report with respect to other
Bondholders, and any notice or report that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
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 Bondholders 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 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 Bondholders 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.
Section 11.06 Rules by Indenture Trustee.
The Indenture Trustee may make reasonable rules for any meeting of
Bondholders.
Section 11.07 Conflict With Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Indenture by any of the
provisions of the TIA, such required provision shall control.
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Section 11.08 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 11.09 Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not.
Section 11.10 Separability.
In case any provision in this Indenture or in the Bonds shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.11 Benefits of Indenture.
Nothing in this Indenture or in the Bonds, expressed or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, any separate trustee or Co-trustee appointed under Section 6.14 and
the Bondholders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 11.12 Legal Holidays.
In any case where the date of any Payment Date, Redemption Date or any
other date on which principal of or interest on any Bond is proposed to be paid
shall not be a Business Day, then (notwithstanding any other provision of the
Bonds or this Indenture) payment need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the nominal date of any such Payment Date, Redemption Date or other date for the
payment of principal of or interest on any Bond and no interest shall accrue for
the period from and after any such nominal date, provided such payment is made
in full on such next succeeding Business Day.
Section 11.13 Governing Law.
IN VIEW OF THE FACT THAT BONDHOLDERS ARE EXPECTED TO RESIDE IN MANY
STATES AND OUTSIDE THE UNITED STATES AND THE DESIRE TO ESTABLISH WITH CERTAINTY
THAT THIS INDENTURE WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAW OF A STATE HAVING A WELL-DEVELOPED BODY OF COMMERCIAL
AND FINANCIAL LAW RELEVANT TO TRANSACTIONS OF THE TYPE CONTEMPLATED HEREIN, THIS
INDENTURE AND EACH BOND SHALL BE
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CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN.
Section 11.14 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.15 Recording of Indenture.
This Indenture is subject to recording in any appropriate public
recording offices, such recording to be effected by the Issuer and at its
expense in compliance with any Opinion of Counsel delivered pursuant to Section
2.11(c) or 3.06.
Section 11.16 Issuer Obligation.
No recourse may be taken, directly or indirectly, against any organizer,
the Issuer, the Servicer, the Mortgage Loan Seller, the Transferor or the
Indenture Trustee or of any predecessor or successor thereof with respect to the
Issuer's obligations with respect to the Bonds or the obligations of the Issuer
or the Indenture Trustee under this Indenture or any certificate or other
writing delivered in connection herewith or therewith.
Section 11.17 Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee, during the Issuer's normal business
hours, to examine all of 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 Accountants selected by the Indenture Trustee, and to
discuss its affairs, finances and accounts with its officers, employees and
Independent Accountants (and by this provision the Issuer hereby authorizes its
Accountants to discuss with such representatives such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any expense incident to the exercise by the Indenture Trustee of any
right under this Section 11.17 shall be borne by the Issuer.
Section 11.18 Usury.
The amount of interest payable or paid on any Bond under the terms of
this Indenture shall be limited to an amount that shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the United States
or the State of California (whichever shall permit the higher rate), that could
lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In
the event any payment of interest on any Bond exceeds the Highest Lawful
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Rate, the Issuer stipulates that such excess amount will be deemed to have been
paid as a result of an error on the part of both the Indenture Trustee, acting
on behalf of the Holder of such Bond, and the Issuer, and the Holder receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Issuer or the Indenture Trustee, refund the amount of such
excess or, at the option of the Indenture Trustee, apply the excess to the
payment of principal of such Bond, if any, remaining unpaid. In addition, all
sums paid or agreed to be paid to the Indenture Trustee for the benefit of
Holders of Bonds for the use, forbearance or detention of money shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Bonds.
Section 11.19 Third Party Beneficiary; Rating. The Bond Insurer
is intended as a third party beneficiary of this Indenture. This Indenture shall
be binding upon and inure to the benefit of the Bond Insurer; provided that,
notwithstanding the foregoing, for so long as a Bond Insurer Default is
continuing under its obligations under the Financial Guaranty Insurance Policy,
the Bondholders shall succeed to the Bond Insurer's rights hereunder. Without
limiting the generality of the foregoing, all covenants and agreements in this
Indenture that expressly confer rights upon the Bond Insurer shall be for the
benefit of and run directly to the Bond Insurer, and the Bond Insurer shall be
entitled to rely on and enforce such covenants to the same extent as if it were
a party to this Indenture.
Section 11.20 Notice to Bond Insurer. Notices to be given
hereunder to the Bond Insurer shall be given in accordance with the Servicing
Agreement.
*****
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee and the have
caused this Indenture to be duly executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
AAMES CAPITAL OWNER TRUST 1997-1
By: Wilmington Trust Company,
as Owner Trustee
By: /s/ Xxxxx Xxxxxx
---------------------------------
Authorized Signatory
(Notarized)
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Assistant Vice President
(Notarized)
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SCHEDULE I
MORTGAGE LOAN SCHEDULE
[on file with the Transferor]
109
EXHIBIT A
FORM OF BOND
110
[SPECIMEN]
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS BOND IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS BOND AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
Date of Indenture: As of March 1, 1997 Original Bond Balance: $415,000,000.00
First Payment Date: April 15, 1997 CUSIP Xx. 00000X XX0
Xxxxxxxxxxxx: $__________________ Bond No.: ___
AAMES CAPITAL OWNER TRUST 1997-1
ADJUSTABLE RATE ASSET-BACKED BONDS, SERIES 1997-1
Aames Capital Owner Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of __________________
____________________________________ ($_____________) payable on each Payment
Date in an amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is $_______________ and the denominator of which is
$415,000,000.00 by (ii) the aggregate amount, if any, payable from the Bond
Account in respect of principal on the Bonds pursuant to the Indenture dated as
of March 1, 1997, between the Issuer and Bankers Trust Company of California
N.A., a national banking association, as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Bond shall be due and payable on the earlier of (i) the Payment Date occurring
in June 2029 (the "Final Maturity Date"), (ii) the Redemption Date, if any,
pursuant to Article X of the Indenture or (iii) the date on which an Event of
Default shall have occurred and be continuing, if the Indenture Trustee or the
Holders of Bonds representing not less than 25% of the Bond Balance of the
Outstanding Bonds (with the prior written consent of the Bond Insurer in the
absence of a failure of the Bond Insurer to have paid any Insured Amount) have
declared the Bonds to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture. Capitalized terms used but not defined herein are
defined in Article I of the Indenture.
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[SPECIMEN]
Pursuant to the terms of the Indenture, payments will be made on the
15th day of each month or, if such day is not a Business Day, on the Business
Day immediately following such 15th day (the "Payment Date"), commencing on the
first Payment Date specified above, to the Person in whose name this Bond is
registered at the close of business on the applicable Record Date, in an amount
equal to the product of (a) the Percentage Interest evidenced by this Bond and
(b) the sum of the Bond Interest, Monthly Principal, any Excess Cash Payment and
any Insured Amount with respect to such Payment Date, all as more specifically
set forth in the Indenture.
The principal of and interest on this Bond are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Bond shall be applied first to interest due and payable on
this Bond as provided above and then to the unpaid principal of this Bond.
Reference is made to the further provisions of this Bond set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Bond.
Unless the certificate of authentication hereon has been executed by the
Authenticating Agent whose name appears below by manual signature, this Bond
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signatures follow]
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[SPECIMEN]
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: ______________________
AAMES CAPITAL OWNER TRUST 1997-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee under the Trust Agreement
By:
------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds designated above and referred to in the
within-mentioned Indenture.
Date: ______________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
Authenticating Agent
By:
-----------------------------------
Authorized Signatory
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[Reverse of Bond]
This Bond is one of a duly authorized issue of Bonds of the Issuer,
designated as its Adjustable Rate Asset-Backed Bonds (herein called the
"Bonds"), issued under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Bonds. To the extent that any provision of this Bond contradicts
or is inconsistent with the provisions of the Indenture, the provisions of the
Indenture shall control and supersede such contradictory or inconsistent
provision herein. The Bonds are subject to all terms of the Indenture.
The Bonds are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
Principal of the Bonds will be payable on each Payment Date in an amount
described on the face hereof.
As described above, the entire unpaid principal amount of this Bond
shall be due and payable on the earlier of the Final Maturity Date and the
Redemption Date, if any, pursuant to Article X of the Indenture. Notwithstanding
the foregoing, the entire unpaid principal amount of the Bonds shall be due and
payable on the date on which an Event of Default shall have occurred and be
continuing and the Indenture Trustee, at the direction or upon the prior written
consent of Financial Security Assurance Inc. (the "Bond Insurer") or the Holders
of the Bonds representing not less than 25% of the Bond Balance of the
Outstanding Bonds (with the prior written consent of the Bond Insurer in the
absence of a failure of the Bond Insurer to have paid any Insured Amount) have
declared the Bonds to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture. All principal payments on the Bonds shall be made
pro rata to the Bondholders entitled thereto.
The Bond Insurer, has issued a Financial Guaranty Policy in the name of
the Indenture Trustee for the benefit of the Bondholders, which policy
guarantees payments on each Payment Date to the Indenture Trustee for the
benefit of the Bondholders of the related Bondholders' Percentage Interest in
the Required Payment Amount for such Payment Date. Unless a Bond Insurer Default
shall be continuing, subject to Section 8.17 of the Indenture, the Bond Insurer
shall be deemed to be the Holder of 100% of the Bond Balance of the Outstanding
Bonds for the purpose of exercising the rights, including voting rights, of the
Bondholders under the Indenture. In addition, on each Payment Date, after the
Bondholders have been paid all amounts to which they are entitled, the Bond
Insurer will be entitled to be reimbursed for any unreimbursed Insured Amounts
and any other amounts owed under the Financial Guaranty Insurance Policy.
Payments of interest on this Bond due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Bond, shall be made by check mailed to the Person whose name
appears as the Holder of this Bond (or one or more Predecessor Bonds) on the
Bond Register as of the close of business on each Record Date, except that with
respect to Bonds registered on the Record Date in the name of the nominee of the
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Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Bond Register as of the
applicable Record Date without requiring that this Bond be submitted for
notation of payment. Any reduction in the principal amount of this Bond (or any
one or more Predecessor Bonds) effected by any payments made on any Payment Date
shall be binding upon all future Holders of this Bond and of any Bond issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Bond on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Holder hereof as of the Record Date preceding such Payment Date by notice mailed
or transmitted by facsimile prior to such Payment Date, and the amount then due
and payable shall be payable only upon presentation and surrender of this Bond
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in The City of
New York.
As provided in the Indenture, the Bonds may be redeemed (a) in whole,
but not in part, at the option of the Issuer, on any Payment Date on and after
the date on which the Bond Balance is less than 20% of the Original Bond
Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Bond may be registered on the Bond Register
upon surrender of this Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Bond Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Bond Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Bonds of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Bond, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Bondholder or Bond Owner, by acceptance of a Bond or, in the case
of a Bond Owner, a beneficial interest in a Bond, covenants and agrees that 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 Bonds or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in
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its individual capacity, except as any such Person may have expressly agreed and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Bondholder or Bond Owner, by acceptance of a Bond or, in the case
of a Bond Owner, a beneficial interest in a Bond, covenants and agrees by
accepting the benefits of the Indenture that such Bondholder or Bond Owner will
not at any time institute against the Mortgage Loan Seller or the Issuer, or
join in any institution against the Mortgage Loan Seller, the Transferor or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Bonds, the
Indenture, the Initial Mortgage Loan Conveyance Agreement, the Mortgage Loan
Contribution Agreement, the Additional Mortgage Loan Conveyance Agreement or the
Servicing Agreement (the "Basic Documents").
The Issuer has entered into the Indenture and this Bond is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Bonds will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Bondholder, by acceptance of a Bond (and each
Bond Owner by acceptance of a beneficial interest in a Bond), agrees to treat
the Bonds for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Bond,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Bond (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Bond be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Bond Insurer and the Holders of Bonds
representing a majority of the Bond Balance of all Outstanding Bonds. The
Indenture also contains provisions permitting the Holders of Bonds representing
specified percentages of the Bond Balance of Outstanding Bonds, on behalf of the
Holders of all the Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Bond (or
any one or more Predecessor Bonds) shall be conclusive and binding upon such
Holder and upon all future Holders of this Bond and of any Bond issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Bond. The Indenture
also permits the amendment thereof, in certain limited circumstances, or the
waiver of certain terms and conditions set forth in the Indenture, without the
consent of Holders of the Bonds issued thereunder.
116
The term "Issuer" as used in this Bond includes any successor to the
Issuer under the Indenture.
The Bonds are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Bond and the Indenture shall be construed in accordance with the
laws of the State of California, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Bond or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Bond at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Bond or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Bond by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Bond.
117
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
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(name and address of assignee)
the within Bond and all rights thereunder, and hereby irrevocably constitutes
and appoints ________________________, attorney, to transfer said Bond on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: ___________*/
Signature Guaranteed:
__________________*/
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Bond in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Bond Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Bond Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
118
EXHIBIT B
INITIAL MORTGAGE LOAN CONVEYANCE AGREEMENT
[filed as Exhibit 10.1 to this Form 8-K]
119
EXHIBIT C
ADDITIONAL MORTGAGE LOAN CONVEYANCE AGREEMENT
[filed as Exhibit 10.3 to this Form 8-K]
120
EXHIBIT D
MORTGAGE LOAN CONTRIBUTION AGREEMENT
[filed as Exhibit 10.2 to this Form 8-K]
121
EXHIBIT E
LETTER OF REPRESENTATIONS TO THE DEPOSITORY TRUST COMPANY
[on file with the Trustee and the Servicer]
122
EXHIBIT F
INDENTURE TRUSTEE'S FINAL CERTIFICATION
123
EXHIBIT G
FINANCIAL GUARANTY INSURANCE POLICY
[filed as Exhibit 4.3 to this Form 8-K]
124
EXHIBIT H
FORM OF NOTICE OF CLAIM
[included as Exhibit A to Exhibit 4.3 to this Form 8-K]
125
EXHIBIT I
SERVICING AGREEMENT
[filed as Exhibit 4.2 to this Form 8-K]
