DRAFT OF DECEMBER 5, 2002
INDENTURE
dated as of November 1, 2002
by and between
ACCREDITED MORTGAGE LOAN TRUST 2002-2,
as Issuer
and
DEUTSCHE BANK NATIONAL TRUST COMPANY
as Indenture Trustee
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions .......................................... 3
ARTICLE II
THE NOTES
Section 2.01. Forms Generally .............................................. 4
Section 2.02. Form of Certificate of Authentication ........................ 4
Section 2.03. General Provisions with Respect to Principal and Interest
Payment ...................................................... 4
Section 2.04. Denominations ................................................ 5
Section 2.05. Execution, Authentication, Delivery and Dating ............... 5
Section 2.06. Registration, Registration of Transfer and Exchange .......... 5
Section 2.07. Xxxxxxxxx, Destroyed, Lost or Stolen Notes ................... 7
Section 2.08. Payments of Principal and Interest ........................... 8
Section 2.09. Persons Deemed Owner ......................................... 10
Section 2.10. Cancellation ................................................. 10
Section 2.11. Authentication and Delivery of Notes ......................... 10
Section 2.12. Book-Entry Note .............................................. 12
Section 2.13. Termination of Book Entry System ............................. 12
ARTICLE III
COVENANTS
Section 3.01. Payment of Notes ............................................. 13
Section 3.02. Maintenance of Office or Agency .............................. 13
Section 3.03. Money for Note Payments to Be Held in Trust .................. 14
Section 3.04. Existence of Trust ........................................... 16
Section 3.05. Protection of Trust Estate ................................... 16
Section 3.06. Opinions as to the Trust Estate .............................. 17
Section 3.07. Performance of Obligations ................................... 17
Section 3.08. Investment Company Act ....................................... 18
Section 3.09. Negative Covenants ........................................... 18
Section 3.10. Annual Statement as to Compliance ............................ 19
Section 3.11. Restricted Payments .......................................... 19
Section 3.12. Treatment of Notes as Debt for Tax Purposes .................. 20
Section 3.13. Notice of Events of Default .................................. 20
i
Section 3.14. Further Instruments and Acts ................................. 20
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture ...................... 20
Section 4.02. Application of Trust Money ................................... 21
Section 4.03. Subrogation and Cooperation. ................................. 21
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Event of Default ............................................. 22
Section 5.02. Acceleration of Maturity; Rescission and Annulment ........... 24
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee ............................................ 24
Section 5.04. Remedies ..................................................... 25
Section 5.05. Indenture Trustee May File Proofs of Claim ................... 26
Section 5.06. Indenture Trustee May Enforce Claims Without Possession
of Notes ..................................................... 26
Section 5.07. Application of Money Collected ............................... 26
Section 5.08. Limitation on Suits .......................................... 28
Section 5.09. Unconditional Rights of Noteholders to Receive Principal
and Interest ................................................. 29
Section 5.10. Restoration of Rights and Remedies ........................... 29
Section 5.11. Rights and Remedies Cumulative ............................... 30
Section 5.12. Delay or Omission Not Waiver ................................. 30
Section 5.13. Control by Noteholders ....................................... 30
Section 5.14. Waiver of Past Defaults ...................................... 30
Section 5.15. Undertaking for Costs ........................................ 31
Section 5.16. Waiver of Stay or Extension Laws ............................. 31
Section 5.17. Sale of Trust Estate ......................................... 31
Section 5.18. Action on Notes .............................................. 33
Section 5.19. No Recourse .................................................. 33
Section 5.20. Application of the Trust Indenture Act ....................... 33
Section 5.21. Suspension and Termination of Note Insurer's Rights .......... 33
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee .................................. 34
Section 6.02. Notice of Default ............................................ 36
Section 6.03. Rights of Indenture Trustee .................................. 37
ii
Section 6.04. Not Responsible for Recitals, Issuance of Notes or
Mortgage Loans ............................................... 38
Section 6.05. May Hold Notes ............................................... 38
Section 6.06. Money Held in Trust .......................................... 39
Section 6.07. Eligibility, Disqualification ................................ 39
Section 6.08. Indenture Trustee's Capital and Surplus ...................... 39
Section 6.09. Resignation and Removal; Appointment of Successor ............ 39
Section 6.10. Acceptance of Appointment by Successor Indenture Trustee ..... 41
Section 6.11. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee ................................ 41
Section 6.12. Preferential Collection of Claims Against Trust .............. 41
Section 6.13. Co-Indenture Trustees and Separate Indenture Trustees ........ 41
Section 6.14. Authenticating Agents ........................................ 43
Section 6.15. Review of Mortgage Files ..................................... 44
Section 6.16. Indenture Trustee Fees and Expenses Indemnification .......... 45
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Note Registrar to Furnish Indenture Trustee Names and
Addresses of Noteholders ..................................... 45
Section 7.02. Preservation of Information: Communications to Noteholders ... 46
Section 7.03. Reports by Indenture Trustee ................................. 46
Section 7.04. Reports by Trust ............................................. 46
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. Accounts; Investment; Collection of Moneys ................... 47
Section 8.02. Payments; Statements ......................................... 49
Section 8.03. Claims against the Note Insurance Policy ..................... 51
Section 8.04. General Provisions Regarding the Payment Accounts and
Mortgage Loans ............................................... 53
Section 8.05. Releases of Deleted Mortgage Loans ........................... 55
Section 8.06. Reports by Indenture Trustee to Noteholders; Access to
Certain Information .......................................... 55
Section 8.07. Release of Trust Estate ...................................... 56
Section 8.08. Amendment to Sale and Servicing Agreement .................... 56
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale and
Servicing Agreement .......................................... 56
Section 8.10. Master Servicer as Agent ..................................... 56
Section 8.11. Termination of Master Servicer ............................... 56
iii
Section 8.12. Opinion of Counsel ........................................... 57
Section 8.13. Appointment of Collateral Agents ............................. 57
Section 8.14. Rights of the Note Insurer to Exercise Rights of Noteholders . 57
Section 8.15. Trust Estate and Accounts Held for Benefit of the Note
Insurer ...................................................... 58
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders ....... 58
Section 9.02. Supplemental Indentures with Consent of Noteholders .......... 59
Section 9.03. Execution of Supplemental Indentures ......................... 60
Section 9.04. Effect of Supplemental Indentures ............................ 61
Section 9.05. Conformity With Trust Indenture Act .......................... 61
Section 9.06. Reference in Notes to Supplemental Indentures ................ 61
Section 9.07. Amendments to Governing Documents ............................ 61
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption of Notes .......................................... 62
Section 10.02. Form of Redemption Notice .................................... 63
Section 10.03. Notes Payable on Optional Redemption ......................... 63
Section 10.04. Auction Sale ................................................. 63
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions ......................... 64
Section 11.02. Form of Documents Delivered to Indenture Trustee ............. 65
Section 11.03. Acts of Noteholders .......................................... 66
Section 11.04. Notices, etc., to Indenture Trustee, the Note Insurer
and Trust .................................................... 66
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices ........ 68
Section 11.06. [Rules by Indenture Trustee .................................. 68
Section 11.07. Conflict with Trust Indenture Act ............................ 68
Section 11.08. Effect of Headings and Table of Contents ..................... 69
Section 11.09. Successors and Assigns ....................................... 69
Section 11.10. Separability ................................................. 69
Section 11.11. Benefits of Indenture ........................................ 69
Section 11.12. Legal Holidays ............................................... 69
iv
Section 11.13. Governing Law ................................................ 69
Section 11.14. Counterparts ................................................. 69
Section 11.15. Recording of Indenture ....................................... 69
Section 11.16. Trust Obligation ............................................. 70
Section 11.17. No Petition .................................................. 70
Section 11.18. Inspection ................................................... 71
Section 11.19. Usury ........................................................ 71
Section 11.20. Note Insurer Default ......................................... 71
Section 11.21. Third-Party Beneficiary ...................................... 71
APPENDICES, SCHEDULES AND EXHIBITS
Appendix 1 Defined Terns
Schedule 1 Mortgage Loan Schedule
Exhibit A Form of Note
v
This INDENTURE, dated as of November 1, 2002 (as amended or supplemented
from time to time as permitted hereby, this "Indenture"), is between ACCREDITED
MORTGAGE LOAN TRUST 2002-2, a Delaware statutory trust (together with its
permitted successors and assigns, the "Trust"), and DEUTSCHE BANK NATIONAL TRUST
COMPANY, a national banking association, as indenture Trustee (together with its
permitted successors in the trusts hereunder, the "Indenture Trustee").
Preliminary Statement
The Trust has duly authorized the execution and delivery of this Indenture
to provide for its Asset-Backed Notes, Series 2002-2 (the "Notes"), issuable as
provided in this Indenture. All covenants and agreements made by the Trust
herein are for the benefit and security of the Holders of the Notes and the Note
Insurer. The Trust 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 Trust
in accordance with its terms have been done.
Granting Clause
Subject to the terms of this Indenture, the Trust hereby Grants to the
Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of
the Class A-1 Noteholders and the Note Insurer, all of the Trust's right, title
and interest in and to: (i) the Trust Estate relating to Loan Group 1; (ii) all
right, title and interest of the Trust in the Sale and Servicing Agreement with
respect to the Group 1 Mortgage Loans (including the Trust's right to cause the
Sponsor to repurchase Group 1 Mortgage Loans from the Trust under certain
circumstances described therein); (iii) all present and future claims, demands,
causes of action and chooses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing, each with respect to Loan Group 1; (iv) all funds on deposit from
time to time in (a) the Collection Account relating to Loan Group 1, (b) the
Payment Account relating to Loan Group 1, (c) the related Pre-Funding Account
and (d) the Capitalized Interest Account; (v) all other property of the Trust
relating to Loan Group 1 from time to time; and (vi) any and all proceeds of the
foregoing (collectively with respect to Loan Group 1, the "Group 1 Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Class A-1 Notes,
equally and
ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.
Subject to the terms of this Indenture, the Trust hereby Grants to the
Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of
the Class A-2 Noteholders and the Note Insurer, all of the Trust's right, title
and interests in and to: (i) the Trust Estate relating to Loan Group 2; (ii) all
right, title and interest, of the Trust in the Sale and Servicing Agreement with
respect to the Group 2 Mortgage Loans (including the Trust's right to cause the
Sponsor to repurchase Group 2 Mortgage Loans from the Trust under certain
circumstances described therein); (iii) all present and future claims, demands,
causes of action and chooses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing, each with respect to Loan Group 2; (iv) all funds on deposit from
time to time in (a) the Collection Account relating to Loan Group 2, (b) the
Payment Account relating to Loan Group 2, (c) the related Pre-Funding Account
and (d) the Capitalized Interest (v) all other property of the Trust relating to
Loan Group 2 from time to time; and (vi) any and all proceeds of the foregoing
(collectively with respect to Loan Group 2, the "Group 2 Collateral,".
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any), other amounts owing in respect of, the Class A-2
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
Subject to the terms of this Indenture, the Trust hereby Grants to the
Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of
the Class A-3 Noteholders and the Note Insurer, all of the Trust's right, title
and interest in and to: (i) the Trust Estate relating to Loan Group 3; (ii) all
right, title and interest of the Trust in the Sale and Servicing Agreement with
respect to the Group 3 Mortgage Loans (including the Trust's right to cause the
Sponsor to repurchase Group 3 Mortgage Loans from the Trust under certain
circumstances described therein); (iii) all present and future claims, demands,
causes of action and chooses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing, each with respect to Loan Group 3; (iv) all funds on deposit from
time to time in (a) the Collection Account relating to Loan Group 3, (b) the
Payment Account relating to Loan
2
Group 3, (c) the related Pre-Funding Account and (d) the Capitalized Interest
Account; (v) all other property of the Trust relating to Loan Group 3 from time
to time; and (vi) any and all proceeds of the foregoing (collectively with
respect to Loan Group 3, the "Group 3 Collateral," and together with the Group 1
Collateral and Group 2 Collateral, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any), other amounts owing in respect of, the Class A-3
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
Subject to the terms of this Indenture, the Trust hereby Grants to the
Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of
the Class A-1 Noteholders, the Class A-2 Noteholders the Class A-3 Noteholders
and the Note Insurer, all of the Trust's right, title and interest in and to all
three Reserve Accounts; provided, however, that with respect to the Class A-2
Net WAC Carry-Forward Amount and the Class A-3 Net WAC Carry-Forward Amount,
respectively, only amounts on deposit in the related Reserve Account are
available to pay such Class A-2 Net WAC Cap Carry-Forward Amount and Class A-3
Net WAC Carry-Forward Amount.
The foregoing Grants shall inure to the benefit of the Note Insurer in
respect of draws made on the Note Insurance Policy and amounts owing from time
to time pursuant to the Insurance Agreement, and such Grants shall continue in
full force and effect for the benefit of the Note Insurer until all such amounts
owing to it have been repaid in full.
The Indenture Trustee, as Indenture Trustee on behalf of the holders of
each Group of Notes, acknowledges the foregoing Grants, accepts the trusts
hereunder in good faith and without notice of any adverse claim or liens and
agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the holders of the related Notes and
the Note Insurer may be adequately and effectively protected. The Indenture
Trustee agrees and acknowledges that each item of Collateral that is physically
delivered to the Indenture Trustee will be held by the Indenture Trustee in
California. The Indenture Trustee agrees that it will hold the Note Insurance
Policy in trust and that it will hold any proceeds of any claim upon the Note
Insurance Policy, solely for the use and benefit of the Noteholders in
accordance with the terms hereof and the Note Insurance Policy.
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions. Except as otherwise specified or as the
context may otherwise require, the terms defined in Appendix I have the
respective meanings set forth in such Appendix I 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
3
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.
ARTICLE II
THE NOTES
Section 2.01. Forms Generally. The Notes shall be substantially in the
form set forth as Exhibit A attached hereto. Each Note may have such letters,
numbers or other marks of indemnification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange on which the Notes may be listed, or as may, consistently herewith, be
determined by the Trust, as evidenced by its execution thereof. Any portion of
the text of any Note may be set forth on the reverse thereof with an appropriate
reference on the face of the Note.
The Definitive Notes may be produced in any manner determined by the
Trust, as evidenced by its execution thereof.
Section 2.02. Form of Certificate of Authentication. The form of the
Authenticating Agent's certificate of authentication is as set forth on the
signature page of the form of the Note attached hereto as Exhibit A.
Section 2.03. General Provisions with Respect to Principal and Interest
Payment. The Notes shall be designated generally as the "Accredited Mortgage
Loan Trust 2002-2, Asset-Backed Notes, Series 2002-2".
The Notes shall be issued in the form specified in Section 2.01 hereof.
The Notes shall be issued in three Classes, the Class A-1 Notes, Class A-2
Notes, and the Class A-3 Notes. The aggregate Original Note Principal Balance of
Notes that may be authenticated and delivered under the Indenture is limited to
$178,667,000 of Class A-1 Notes $250,056,000 of Class A-2 Notes and $113,175,000
of Class A-3 Notes, except for the Notes authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Notes
pursuant to Sections 2.06, 2.07, or 9.06 of this Indenture.
Subject to the provisions of Sections 3.01, 5.07, 5.09 and 8.02 of this
Indenture, the principal of each Class of Notes shall be payable in installments
ending no later than the related Final Stated Maturity Date, unless the unpaid
principal of such Notes become due and payable at an earlier date by declaration
of acceleration or call for redemption or otherwise.
All payments made with respect to any Note shall be applied first to the
interest then due and payable on such Note and then to the principal thereof.
All computations of interest accrued on any Class A-1 Note shall be made on the
basis of a year of 360 days
4
and twelve 30-day months. All computations of interest accrued on any Class A-2
Note or Class A-3 Note shall be made on the basis of a year of 360 days and the
actual number of days elapsed in the related Accrual Period.
Notwithstanding any of the foregoing provisions with respect to payments
of principal of and interest on the Notes, if the Notes 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 Notes shall be made in accordance
with Section 5.07 hereof.
Section 2.04. Denominations. The Notes shall be issuable only as
registered Notes in the denominations equal to the Authorized Denominations.
Section 2.05. Execution, Authentication, Delivery and Dating. The Notes
shall be executed on behalf of the Trust by an Authorized Officer of the Owner
Trustee, acting at the direction of the Certificateholders. The signature of
such Authorized Officer of the Owner Trustee on the Notes may be manual or by
facsimile.
Notes bearing the manual or facsimile signature of an individual who was
at any time an Authorized Officer of the Owner Trustee shall bind the Trust,
notwithstanding that such individual has ceased to be an Authorized Officer of
the Owner Trustee prior to the authentication and delivery of such Notes or was
not an Authorized Officer of the Owner Trustee at the date of such Notes.
At any time and from time to time after the execution and delivery of this
Indenture, the Trust may deliver Notes executed on behalf of the Trust to the
Authenticating Agent for authentication, and the Authenticating Agent shall
authenticate and deliver such Notes as provided in this Indenture and not
otherwise.
Each Note authenticated on the Closing Date shall be dated the Closing
Date. All other Notes that are authenticated after the Closing Date for any
other purpose hereunder shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for in Section 2.02 hereof,
executed by the Authenticating Agent by the manual signature of one of its
Authorized Officers or employees, and such certificate of authentication upon
any Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder.
Section 2.06. Registration, Registration of Transfer and Exchange. The
Trust shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Trust shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee is hereby initially appointed "Note Registrar" for the purpose
of registering Notes and transfers of Notes as herein provided. The Indenture
Trustee shall remain the Note Registrar throughout the term
5
hereof. Upon any resignation of the Indenture Trustee, the Master Servicer, on
behalf of the Trust, shall promptly appoint a successor, with the approval of
the Note Insurer, or, in the absence of such appointment, the Master Servicer,
on behalf of the Trust, shall assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Trust as
Note Registrar, the Trust will give the Indenture Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and the Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Authorized Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Trust to be maintained as provided in Section 3.02 hereof, the
Owner Trustee on behalf of the Trust, acting at the direction of the
Certificateholders, shall execute, and the Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees; one or more new Notes of any authorized denominations and of a like
aggregate initial Note Principal Balance.
At the option of the Holder, Notes may be exchanged for other Notes of any
authorized denominations, and of a like aggregate Note Principal Balance, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Owner Trustee shall execute, and the
Authenticating Agent shall authenticate and deliver, the Notes that the
Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Trust, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in the form included in Exhibit A attached hereto, duly executed by the
Holder thereof or its attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Note 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
6
transfer or exchange of Notes, other than exchanges pursuant to Section 2.07 or
Section 9.06 hereof not involving any transfer or any exchange made by the Note
Insurer.
The Note Registrar shall not register the transfer of a Note unless the
Note Registrar has received a representation letter from the transferee to the
effect that either (i) the transferee is not, and is not acquiring the Note on
behalf of or with the assets of, an employee benefit plan or other retirement
plan or arrangement that is subject to Title I of ERISA or Section 4975 of the
Code or (ii) the acquisition and holding of the Note by the transferee qualifies
for exemptive relief under a Department of Labor Prohibited Transaction Class
Exemption. Each Beneficial Owner of a Note which is a Book-Entry Note shall be
deemed to make one of the foregoing representations.
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes. If (1) any
mutilated Note is surrendered to the Note Registrar or the Note Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (2) there is delivered to the Note Registrar such security or
indemnity as may be required by the Note Registrar to save each of the Trust,
the Owner Trustee, the Note Insurer and the Note Registrar harmless, then, in
the absence of notice to the Note Registrar that such Note has been acquired by
a bona fide purchaser, the Owner Trustee on behalf of the Trust, acting at the
direction of the Certificateholders, shall execute and upon its delivery of a
Trust Request the Authenticating Agent shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
new Note or Notes of the same tenor and aggregate initial principal amount
bearing a number not contemporaneously outstanding. If, after the delivery of
such new Note, a bona fide purchaser of the original Note in lieu of which such
new Note was issued presents for payment such original Note, the note Registrar,
shall be entitled to recover such new Note from the person to whom it was
delivered or any person taking therefrom, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expenses incurred by the Trust, the
Owner Trustee, the Note Insurer or the Note Registrar in connection therewith.
If any such mutilated, destroyed, lost, or stolen Note 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 Note, the Trust may pay such Note
without surrender thereof, except that any mutilated Note shall be surrendered.
Upon the issuance of any new Note under this Section 2.07, the Note
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 Trust, the Indenture
Trustee or the Note Registrar) connected therewith.
Every new Note issued pursuant to this Section 2.07 in lieu of any
destroyed, lost or stolen Note shall constitute an original contractual
obligation of the Trust, whether or not the destroyed, lost or stolen Note shall
be at any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
7
The provisions of this Section 2.07 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08. Payments of Principal and Interest. (a) Payments on Notes
issued as Book-Entry Notes 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 Notes that is punctually paid or duly provided for by
the Trust on the applicable Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered at the close of
business on the Record Date for such Class of Notes and such Payment Date by
either (i) wire transfer of immediately available funds to the account of a
Noteholder, if such Noteholder (a) is the registered holder of Definitive Notes
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 (5) Business
Days prior to the related Record Date or has provided the Indenture Trustee with
such instructions for any previous Payment Date or (ii) check mailed to such
Person's address as it appears in the Note Register on such Record Date, except
for the final installment of principal payable with respect to such Note, which
shall be payable as provided in subsection (b) of this Section 2.08. A fee may
be charged by the Indenture Trustee to a Holder of Definitive Notes for any
payment made by wire transfer. Any installment of interest or principal not
punctually paid or duly 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.
Payments on Certificates will be made by or on behalf of the Indenture
Trustee to or at the direction of the Person in whose name such Certificate is
registered by either (i) wire transfer of immediately available funds to the
account directed by a Certificateholder, if such Certificateholder (A) is
Accredited Home Lenders, Inc. and (B) has provided the Indenture Trustee with
wiring instructions in writing by five (5) Business Days prior to the related
payment Date or has provided the Indenture Trustee with such instructions for
any previous Payment Date or (ii) check mailed to such Person's address as it
appears in the Certificate Register on such Record Date. A fee may be charged by
the Indenture Trustee to a Certificateholder for any payment made by wire
transfer. The Indenture Trustee shall be entitled to rely on information
provided by the Owner Trustee as Certificate Registrar as to all matters related
to the Certificate Registrar and the Certificates.
(b) All reductions in the Note Principal Balance of a Note (or one or more
Predecessor Notes) effected by payments of installments of principal made on any
Payment Date shall be binding upon all Holders of such Note and of any Note
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Note. The final
installment of principal of each Note shall be payable only upon presentation
and surrender thereof on or after the Payment Date therefor at the designated
office of the Indenture Trustee located within the United States of America
pursuant to Section 3.02.
8
Whenever the Indenture Trustee expects that the entire unpaid Note
Principal Balance of any Note will become due and payable on the next Payment
Date, other than pursuant to a redemption pursuant to Article X, it shall, no
later than two (2) Business Days prior to such Payment Date, mail to each Person
in whose name a Note 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 related Payment 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 Note at the office or agency of the Note 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 Note after
such Payment Date.
A copy of such form of notice shall be sent to the Note Insurer by the
Indenture Trustee.
Notices in connection with redemptions of Notes shall be mailed to
Noteholders in accordance with Section 10.02 hereof.
(c) Subject to the foregoing provisions of this Section 2.08, each
Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to unpaid
principal and interest that were carried by such other Note. Any checks mailed
pursuant to paragraph (a) of this Section 2.08 and returned undelivered shall be
held in accordance with Section 3.03 hereof.
(d) The Indenture Trustee's Remittance Report, shall be prepared by
the Indenture Trustee based on the loan level data provided in the Servicer
Remittance Report delivered to the Indenture Trustee pursuant to the Sale and
Servicing Agreement. The Indenture Trustee shall not have any responsibility to
recalculate, verify or recompute information contained in any tape, electronic
data file or disk or Servicer Remittance Report delivered to the Indenture
Trustee pursuant to the Sale and Servicing Agreement except to the extent
necessary to satisfy all obligations under this Section 2.08(d).
Within thirty (30) days after the end of each calendar year, the Indenture
Trustee will be required to furnish to each Person who at any time during the
calendar year was a Noteholder, if requested in writing by such person, a
statement containing the information set forth in subclauses (a), (b) and (c) in
the definition of "Indenture Trustee's Remittance Report," aggregated for such
calendar year. 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.
From time to time (but no more than once per calendar month), upon the
written request of the Seller, the Sponsor, the Master Servicer, the Backup
Servicer or the Note
9
Insurer, the Indenture Trustee shall report to the Seller, the Sponsor, the
Master Servicer, the Backup Servicer and the Note Insurer the amount then held
in each Account (including investment earnings accrued) held by the Indenture
Trustee and the identity of the investments included therein. From time to time,
at the request of the Note Insurer, the Indenture Trustee shall report to the
Note Insurer with respect to the actual knowledge of a Responsible Officer,
without independent investigation, of any breach of any of the representations
or warranties relating to individual Mortgage Loans set forth in Section 4.01 of
the Sale and Servicing Agreement. The Indenture Trustee shall also provide the
Note Insurer such other information within its control as may be reasonably
requested by the Note Insurer.
Section 2.09. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, any agent on behalf of the Trust including
but not limited to the Indenture Trustee, or the Note Insurer, may treat the
Person in whose name any Note is registered as the owner of such Note (a) on the
applicable Record Date for the purpose of receiving payments of the principal of
and interest on such Note and (b) on any other date for all other purposes
whatsoever, and none of the Trust, the Indenture Trustee or any other agent of
the Trust, or the Note Insurer shall be affected by notice to the contrary.
Section 2.10. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Note Registrar, be delivered to the Note Registrar and
shall be promptly canceled by it. The Owner Trustee, on behalf of the Trust,
shall deliver to the Note Registrar for cancellation any Note previously
authenticated and delivered hereunder which the Owner Trustee, on behalf of the
Trust may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Note Registrar. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 2.10, except as expressly permitted by this Indenture. All canceled
Notes held by the Note Registrar shall be held by the Note Registrar in
accordance with its standard retention policy, unless the Owner Trustee, on
behalf of the Trust shall direct [within 5 Business Days of receipt of the
cancelled note] by a Trust Order that they be destroyed or returned to it.
Section 2.11. Authentication and Delivery of Notes. The Notes shall be
executed by an Authorized Officer of the Owner Trustee, on behalf of the Trust;
and delivered to the Authenticating Agent for authentication, and thereupon the
same shall be authenticated and delivered by the Authenticating Agent, upon a
Trust Request and upon receipt by the Authenticating Agent of all of the
following:
(a) A Trust Order authorizing the execution, authentication and
delivery of the Notes and specifying the Note Principal Balance and the
Percentage Interest of such Notes to be authenticated and delivered.
(b) A Trust Order authorizing the execution and delivery of this
Indenture and the Sale and Servicing Agreement.
10
(c) One or more Opinions of Counsel (which opinion shall not be at
the expense of the Indenture Trustee or the Trust) addressed to the
Authenticating Agent and the Note Insurer or upon which the Authenticating Agent
and the Note Insurer are expressly permitted to rely, complying with the
requirements of Section 11.01, reasonably satisfactory in form and substance to
the Authenticating Agent and the Note Insurer.
In rendering the opinions set forth above, such counsel may rely upon
Officer's Certificates of the Trust, the Owner Trustee, the Seller, the Sponsor,
the Master Servicer, the Backup 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 tile United States or any agency or
instrumentality thereof (including federal tax liens and liens arising under
Title IV of ERISA).
The acceptability to the Note Insurer of the Opinion of Counsel delivered
to the Authenticating Agent and the Note Insurer at the Closing Date shall be
conclusively evidenced by the delivery on the Closing Date of the Note Insurance
Policy.
(d) An Officer's Certificate of the Trust complying with the
requirements of Section 11.01 and stating that:
(i) the Trust is not in Default under this Indenture and the
issuance of the Notes will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, the Trust's
Certificate of Trust or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Trust 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 Trust 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 Notes
have been complied with;
(ii) the Trust is the owner of each Mortgage Loan, free and clear of
any lien, security interest or charge, has not assigned any interest or
participation in any such Mortgage Loan (or, if any such interest or
participation has been assigned, it has been released), and has the right
to Grant each such Mortgage Loan to the Indenture Trustee;
(iii) the information set forth in the Mortgage Loan Schedule
attached as Schedule 1 to this Indenture is correct;
(iv) the Trust has Granted to the Indenture Trustee all of its
right, title and interest in each Mortgage Loan; and
11
(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 ERISA,
has been filed as described in subsections 6323(f) and 6323(g) of the Code
upon any property belonging to the Trust.
(e) An executed counterpart of the Sale and Servicing Agreement.
(f) [Reserved].
(g) An executed counterpart of the Trust Agreement.
(h) An executed copy of the Insurance Agreement.
(i) An original executed copy of the Note Insurance Policy
(j) A copy of a letter from Moody's that is has assigned a rating of
"Aaa" to each Class of the Notes and a copy of a letter from S&P that it has
assigned a rating of "AAA" to each Class of the Notes.
(k) Evidence of the establishment of the Accounts.
Section 2.12. Book-Entry Note. The Notes will be issued initially as one
or more certificates in the name of Cede & Co., as nominee for the Clearing
Agency maintaining book-entry records with respect to ownership and transfer of
such Notes, and registration of the Notes may not be transferred by the Note
Registrar except upon the termination of the book-entry system as described in
Section 2.13. In such case, the Note Registrar shall deal with the Clearing
Agency as representative of the Beneficial Owners of such Notes for purposes of
exercising the rights of Noteholders hereunder. Each payment of principal of and
interest on a Book-Entry Note 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 its normal procedures. Each Clearing Agency
Participant shall be responsible for disbursing such payments to the Beneficial
Owners of the Book-Entry Notes 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 Beneficial Owners of the Book-Entry Notes 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 Notes. None of the Indenture Trustee, the Note Registrar, if any, the Trust
or the Note Insurer 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 Beneficial Owners.
Section 2.13. Termination of Book Entry System. (a) The book-entry system
through the Clearing Agency with respect to the Book-Entry Notes may be
terminated upon the happening of any of the following:
12
(i) The Clearing Agency advises the Indenture Trustee that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities as nominee and depository with respect to the Notes and a
qualified successor Clearing Agency satisfactory to the Master Servicer is
not located, on behalf of the Trust;
(ii) The Certificateholders, on behalf of the Trust, in their sole
discretion, elect 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
Beneficial Owner through the Clearing Agency of such Event of Default),
the Beneficial Owners of no less than 51% of the Note Principal Balance of
the Book-Entry Notes 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 Notes being issued to any person other than
the Clearing Agency or its nominee is no longer in the best interests of
the Beneficial Owners.
(b) Upon the occurrence of any event described in subsection (a) of
this Section 2.13, the Indenture Trustee shall use all reasonable efforts to
notify all Beneficial Owners, through the Clearing Agency, of the occurrence of
such event and of the availability of Definitive Notes to Beneficial Owners
requesting the same, in an aggregate outstanding Note Principal 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 Notes shall be issued only upon surrender to the
Indenture Trustee of the global Note by the Clearing Agency, accompanied by
registration instructions for the Definitive Notes. Neither the Trust nor the
Indenture Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon issuance of the Definitive Notes, 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 Notes shall be
applicable.
ARTICLE III
COVENANTS
Section 3.01. Payment of Notes. The Trust will pay or cause to be duly and
punctually paid the principal of, and interest on, the Notes in accordance with
the terms of the Notes and this Indenture. The Notes shall be non-recourse
obligations of the Trust and shall be limited in right of payment to amounts
available from the Trust Estate as provided in this Indenture and the Trust
shall not otherwise be liable for payments on the Notes. No person shall be
personally liable for any amounts payable under the Notes. 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.
13
Section 3.02. Maintenance of Office or Agency. The Indenture Trustee will
always maintain an office at a location in the United States of America where
Notes may be surrendered for registration of transfer or exchange, which as of
the Closing Date shall be located c/o DTC Transfer Agent Services, 00 Xxxxx
Xxxxxx, Xxxxxxxx Xxxx Xxxxxxxx, Xxx Xxxx Xxx Xxxx 00000. Notices and demands to
or upon the Trust in respect of the Notes and this Indenture may be delivered at
the Corporate Trust Office of the Indenture Trustee.
The Owner Trustee, at the direction of the Certificateholders, on behalf
of the Trust may also from time to time, at the expense of the
Certificateholders, designate one or more other offices or agencies within the
United States of America where the Notes may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, any designation of an office or agency for payment of Notes
shall be subject to Section 3.03 hereof. The Owner Trustee, at the direction of
the Certificateholders, on behalf of the Trust will give prompt written notice
to the Indenture Trustee and the Note Insurer 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 Note Payments to Be Held in Trust. All payments of
amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the related Payment Account pursuant to Sections 5.07 or
8.02 hereof shall be made on behalf of the Trust by the Indenture Trustee, and
no amounts so withdrawn from the related Payment Account for payments on the
Notes shall be paid over to the Trust under any circumstances except as provided
in this Section 3.03 or in Sections 5.07 or 8.02 hereof.
With respect to Definitive Notes, if the Trust shall have a Note Registrar
that is not also the Indenture Trustee, such Note Registrar shall furnish, no
later than the fifth (5th) calendar day after each Record Date, a list, in such
form as such Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Notes and of the number of Individual Notes held by
each such Holder.
Whenever the Trust shall have a Paying Agent other than the Indenture
Trustee, the Master Servicer, on behalf of the Trust, 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 related Payment 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 Notes with
respect to which such deposit was made shall, upon Trust Order, be paid over by
such Paying Agent to the Indenture Trustee for application in accordance with
Article VIII hereof.
Subject to the prior written consent of the Note Insurer, any Paying Agent
other than the Indenture Trustee, may be appointed by Trust Order and at the
expense of the Trust. The Trust 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
14
whose obligations would be Permitted Investments pursuant to clause (b) of the
definition of the term "Permitted Investments". The Master Servicer, on behalf
of the Trust, will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee and the Owner Trustee, on behalf of
the Trust, an instrument in which such Paying Agent shall agree with the
Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section 3.03, that such Paying
Agent will:
(a) allocate all sums received for payment to the Holders of Notes
on each Payment Date among such Holders in the proportion specified in the
applicable Indenture Trustee's Remittance Report, in each case to the extent
permitted by applicable law;
(b) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;
(c) 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 Notes if at any time the Paying Agent
ceases to meet the standards set forth above required to be met by a Paying
Agent at the time of its appointment;
(d) if such Paying Agent is not the Indenture Trustee, give the
Indenture Trustee notice of any Default by the Trust (or any other obligor upon
the Notes) in the making of any payment required to be made with respect to any
Notes for which it is acting as Paying Agent;
(e) if such Paying Agent is not the Indenture Trustee, at any time
during the continuance of any Default by the Trust (or any other obligor upon
the Notes), 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
(f) comply with all requirements of the Code, and all regulations
thereunder, with respect to withholding from any payments made by it on any
Notes of any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith; provided,
however, that with respect to withholding and reporting requirements applicable
to original issue discount (if any) on any of the Notes, the Master Servicer, on
behalf of the Trust, has provided the calculations pertaining thereto to the
Indenture Trustee and the Paying Agent.
The Trust may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or any other purpose, by Trust 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 in the same trusts as such sums were held by such Paying
Agent; and upon such payment by any Paying
15
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 Note and remaining unclaimed
for two and one-half years after such amount has become due and payable to the
Holder of such Note (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 Trust; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Trust for
payment thereof (but only to the extent of the amounts so paid to the Trust),
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 Trust, any reasonable means of notification of
such repayment (including, but not limited to, mailing notice of such repayment
to Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Indenture Trustee or an), Paying
Agent, at the last address of record for each such Holder).
Section 3.04. Existence of Trust. (a) Subject to paragraphs (b) and (c) of
this Section 3.04, the Trust will keep in full effect its existence, rights and
franchises as a statutory trust under the laws of the State of Delaware or under
the laws of any other state of the United States of America, and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes and the other Basic Documents.
(b) Subject to Section 3.09(g) hereof, and with the prior written
consent of the Note Insurer, any entity into which the Trust may be merged or
with which it may be consolidated, or any entity resulting from any merger or
consolidation to which the Trust 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 Trust 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(g)).
(c) Upon any consolidation or merger of or other succession to the
Trust in accordance with this Section 3.04, the Person formed by or surviving
such consolidation or merger (if other than the Trust) may exercise every right
and power of, and shall have all of the obligations of, the Trust 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 Trust 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:
16
(i) Grant more effectively all or any portion of the Trust Estate as
made by this Indenture;
(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 or the Sale and Servicing
Agreement; or
(v) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee, the Noteholders and the Note Insurer in the
Mortgage Loans and the other property held as part of the Trust Estate
against the claims of all Persons and parties.
(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 Closing Date
(provided that the Indenture Trustee may allow for the release of the Indenture
Trustee's Mortgage File as provided in tile Sale and Servicing Agreement) 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 the Trust Estate. On or before April 30th in
each calendar year, beginning in 2003, the Master Servicer, on behalf of the
Trust, shall furnish to the Backup Servicer, the Indenture Trustee and the Note
Insurer an Opinion of Counsel reasonably satisfactory in form and substance to
the Indenture Trustee and the Note Insurer 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. (a) The Trust shall punctually
perform and observe all of its obligations under this Indenture and the other
Basic Documents.
(b) The Trust 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
17
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 permitted in this Indenture, the other
Basic Documents or such document included in the Mortgage File or other
instrument or unless such action will not adversely affect the interests of the
Noteholders and the Note Insurer.
(c) If the Master Servicer or the Owner Trustee, on behalf of the
Trust, shall have knowledge of the occurrence of a Servicer Event of Default,
the Master Servicer or the Owner Trustee, as applicable, shall promptly notify
the Indenture Trustee, the Note Insurer and the Rating Agencies thereof, and, in
the case of the Master Servicer, shall specify in such notice the action, if
any, the Master Servicer is taking with respect to such default.
(d) Upon any termination of the Master Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Indenture Trustee shall
promptly notify the Note Insurer and the Rating Agencies. As soon as any
successor Master Xxxxxxxx is appointed, the Indenture Trustee shall notify the
Note Insurer and the Rating Agencies, specifying in such notice the name and
address of such successor Master Servicer.
Section 3.08. Investment Company Act. The Trust 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 Trust shall not:
(a) sell, transfer, exchange or otherwise dispose of any portion of
the Trust Estate, except as expressly permitted by this Indenture and the other
Basic Documents;
(b) claim any credit on, or make any deduction from, the principal
of, or interest on, any of the Notes (other than amounts properly withheld from
such payments under the Code) or assert any claim against any present or former
Noteholder by reason of the payment of any taxes levied or assessed upon any
portion of the Trust Estate;
(c) 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 Notes pursuant to this Indenture, or amend the Trust Agreement,
as in effect on the Closing Date, other than in accordance with Section 12.01 of
the Trust Agreement;
(d) incur, issue, assume or otherwise become liable for any
indebtedness other than the Notes;
18
(e) 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 Trust in connection with the issuance of the Notes pursuant
to this Indenture;
(f) subject to Article X of the Trust Agreement, dissolve or
liquidate in whole or in part (until the Notes are paid in full);
(g) (i) 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, (ii) permit any lien, charge,
security interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or burden the
Trust Estate or any pall thereof or any interest therein or the proceeds
thereof; or (iii) permit the lien of this Indenture not to constitute a valid
perfected first priority (other than with respect to any such tax, mechanics' or
other lien) security interest in the Trust Estate; or
(h) take any other action that should reasonably be expected to, or
fail to take any action if such failure should reasonably be expected to, cause
the Trust to be taxable as (x) an association pursuant to Section 7701 of the
Code and the corresponding regulations or (y) a taxable mortgage pool pursuant
to Section 7701(i) of the Code and the corresponding regulations.
Section 3.10. Annual Statement as to Compliance. On or before April 30,
2003, and each April 30 thereafter, the Master Servicer, on behalf of the Trust,
shall deliver to the Backup Servicer, the Indenture Trustee, the Note Insurer
and the Sponsor a written statement, signed by an Authorized Officer of the
Master Servicer, on behalf of the Trust, stating that:
(i) a review of the fulfillment by the Trust during such year of its
obligations under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Trust 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. Restricted Payments. The Trust 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 Trust
or otherwise with respect to any ownership or equity interest or security in or
of the Trust or to the Master Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
19
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Trust may make, or cause to be made, distributions
to the Master Servicer, the Backup Servicer, the Indenture Trustee, the Owner
Trustee, the Note Insurer, the Noteholders and the Certificateholders as
contemplated by, and to the extent funds are available for such purpose under
this Indenture and the other Basic Documents and the Trust will not, directly or
indirectly, make or cause to be made payments to or distributions from any
Payment Account except in accordance with this Indenture.
Section 3.12. Treatment of Notes as Debt for Tax Purposes. For purposes of
federal, state and local income, franchise and any other income taxes, the Trust
will treat the Notes as indebtedness, and hereby instructs the Indenture
Trustee, Payee Agent, the Master Servicer and the Backup Servicer, on behalf of
the Trust to treat the Notes as indebtedness for all applicable tax reporting
purposes.
Section 3.13. Notice of Events of Default. The Master Servicer, on behalf
of the Trust, shall give the Backup Servicer, the Indenture Trustee, the Note
Insurer, the Rating Agencies and the Sponsor prompt written notice of each Event
of Default hereunder of which it has knowledge, each default on the part of the
Master Servicer of its obligations under the Sale and Servicing Agreement and
each default on the part of the Sponsor of its obligation under the Sale and
Servicing Agreement.
Section 3.14. Further Instruments and Acts. Upon written request of the
Indenture Trustee or the Note Insurer, the Owner Trustee, on behalf of the
Trust, 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:
(a) either
(i) all Notes theretofore authenticated and delivered (other than
(x) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.07 hereof, and (y) Notes for
whose payment money has theretofore been deposited in trust and thereafter
repaid to the Trust, as provided in Section 3.03 hereof) have been
delivered to the Note Registrar for cancellation; or
(ii) all Notes not theretofore delivered to the Note Registrar for
cancellation, (a) have become due and payable, or (b) will become due and
payable at the Final Stated Maturity Date within one (1) year, or (c) are
to be called for redemption pursuant to Section 10.01 hereof within one
(1) year under
20
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 Sponsor,
and the Sponsor, in the case of clause ii(c), or Master Servicer, in the case of
clauses (ii)(a) or (ii)(b) 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 unpaid Note Principal Balance of such
Notes not theretofore delivered to the Indenture Trustee for cancellation, for
principal and interest to the Final Stated Maturity Date or to the applicable
Redemption Date, as the case may be, and in the case of Notes that were not paid
at the Final Stated Maturity Date of their entire unpaid Note Principal Balance,
for all overdue principal and all interest payable on such Notes to the next
succeeding Payment Date therefor;
(b) the Master Servicer, on behalf of the Trust, has paid or caused
to be paid all other sums payable hereunder by the Trust (including, without
limitation, amounts due the Note Insurer); and
(c) the Master Servicer, on behalf of the Trust, has delivered to
the Indenture Trustee and the Note Insurer an Officer's Certificate and an
Opinion of Counsel satisfactory in form and substance to the Indenture Trustee
and the Note Insurer each stating that all conditions precedent herein providing
for the satisfaction and discharge of this Indenture have been complied with;
then, upon a Trust 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 Trust, 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 Trust or upon Trust 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 paragraphs (a) and (b) above.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Indenture Trustee and any Paying Agent to the Trust and the
Holders of Notes under Section 3.03 hereof, the obligations of the Indenture
Trustee to the Holders of Notes under Section 4.02 hereof and the provisions of
Section 2.07 hereof with respect to lost, stolen, destroyed or mutilated Notes,
registration of transfers of Notes and rights to receive payments of principal
of and interest on the Notes shall survive.
Section 4.02. Application of Trust Money. All money deposited with the
Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, 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.
21
Section 4.03. Subrogation and Cooperation.
(a) The Trust and the Indenture Trustee acknowledge that (i) to the
extent the Note Insurer makes payments under the Note Insurance Policy on
account of principal of or interest on the Mortgage Loans the Note Insurer will
be fully subrogated to the rights of the Noteholders to receive such principal
of and interest on the Mortgage Loans of the related Trust Estate, and (ii) the
Note Insurer shall be paid such principal and interest only from the sources and
in the manner provided herein and in the Insurance Agreement for the payment of
such principal and interest.
(b) The Indenture Trustee shall cooperate in all respects with any
reasonable written request or direction by the Note Insurer for action to
preserve or enforce the Note Insurer's rights or interest under this Indenture,
the Sale and Servicing Agreement or the Insurance Agreement, consistent with
this Indenture and without limiting the rights of the Noteholders as otherwise
set forth in the Indenture, including without limitation upon the occurrence and
continuance of a Default, a request to take any one or more of the following
actions:
(i) institute proceedings for the collection of all amounts then
payable on the Notes or under this Indenture in respect to the Notes and
all amounts payable under the Insurance Agreement and to enforce any
judgment obtained and collect from the Trust monies adjudged due;
(ii) sell either Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
(iii) cause the Sponsor to record all assignments that have not
previously been recorded;
(iv) institute proceedings from time to time for the complete or
partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Note Insurer hereunder.
(c) Following the payment in full of the Notes, the Note Insurer
shall continue to have all rights and privileges provided to it under this
Section 4.03 and in all other provisions of this Indenture, until all amounts
owing to the Note Insurer have been paid in full.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Event of Default. "Event of Default", wherever used herein,
means, with respect to Notes issued hereunder, any one of the following events
(whatever
22
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) if the Trust shall fail to distribute or cause to be distributed
to the Indenture Trustee, for the benefit of the holders of the Notes, (x) on
any Payment Date, any Interest Payment Amount due and payable on such Payment
Date or (y) on the applicable Final Stated Maturity Date for each of the Class
A-2 Notes and Class A-3 Notes, any remaining Class A-2 Net WAC Cap Carry-Forward
Amount or any remaining Class A-3 Net WAC Cap Carry-Forward Amount, as
applicable;
(b) if the Trust shall fail to distribute or cause to be distributed
to the Indenture Trustee, for the benefit of the holders of the Notes, (x) on
any Payment Date, (other than the Final Stated Maturity Date) an amount equal to
the Base Principal Payment Amount due on the Notes on such Payment Date, to the
extent that sufficient funds are on deposit in the Collection Account or (y) on
the Final Stated Maturity Date for any Class of Notes, the aggregate outstanding
Note Principal Balance of such Class of Notes;
(c) if the Trust shall breach or default in the due observance of
any one or more of the covenants hereof;
(d) if the Trust shall consent to the appointment of a custodian,
receiver, trustee or liquidator (or other similar official) of itself, or of a
substantial part of its property, or shall admit in writing, its inability to
pay its debts generally as they come due, or a court of competent jurisdiction
shall determine that the Trust is generally not paying its debts as they come
due, or the Trust shall make a general assignment for the benefit of creditors;
(e) if the Trust shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization in a proceeding under any
bankruptcy laws (as now or hereafter in effect) or an answer admitting the
material allegation of a petition filed against the Trust in any, such
proceeding, or the Trust shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy or other
similar law providing for the reorganization or winding-up of debtors, or
providing for an agreement, composition, extension or adjustment with its
creditors;
(f) if an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent (express or legally implied) of the Trust, a custodian, receiver,
trustee or liquidator (or other similar official) of the Trust or any
substantial part of its property, or sequestering any substantial part of its
respective property, and any such order, judgment or decree or appointment or
sequestration shall remain in force undismissed, unstayed or unvacated for a
period of ninety (90) days after the date of entry thereof;
23
(g) if a petition against the Trust in a proceeding under applicable
bankruptcy laws or other insolvency laws, as now or hereafter in effect, shall
be filed and shall not be stayed, withdrawn or dismissed within ninety (90) days
thereafter, or if, under the provisions of any law providing for reorganization
or winding-up of debtors which may apply to the Trust, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Trust or any
substantial part of its property, and such jurisdiction, custody or control
shall remain in force unrelinquished, unstayed or unterminated for a period of
ninety (90) days; or
(h) an event of default under the Insurance Agreement.
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 Note Insurer in the absence of a Note Insurer Default, the
Indenture Trustee may, and at the written direction of the Note Insurer, in the
absence of a Note Insurer Default, or, with the prior written consent of the
Note Insurer, at the direction of Holders of Notes representing at least 51% of
the Note Principal Balance of the Outstanding Notes of all of the Classes,
shall, declare all the Notes to be immediately due and payable by a notice in
writing to the Trust (and to the Indenture Trustee if given by Noteholders), and
upon any such declaration such Notes, in an amount equal to the entire unpaid
Note Principal Balance of such Notes, together with accrued and unpaid interest
thereon to the date of such acceleration, shall become immediately due and
payable, all subject to the prior written consent of the Note Insurer in the
absence of a Note Insurer Default.
At any time after such a declaration of acceleration of maturity of the
Notes has been made and before a judgment or decree for payment of the money due
has been obtained by the Indenture Trustee as hereinafter provided in this
Article V, the Note Insurer, in the absence of a Note Insurer Default, or the
Holders of Notes representing at least 51% of the Note Principal Balance of the
Outstanding Notes of all of the Classes, with the prior written consent of the
Note Insurer, by written notice to the Trust and the Indenture Trustee, may
rescind and annul such declaration and its consequences if:
(a) the Trust has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all payments of principal of, and interest on, all Outstanding
Notes and all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had not
occurred; and
(ii) 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
(b) all Events of Default, other than the nonpayment of the
principal of Notes that have become due solely by such acceleration, have been
cured or waived as provided in Section 5.14 hereof.
24
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 hereof and the
following sentence, if an Event of Default occurs and is continuing, the
Indenture Trustee may, with the prior written consent of the Note Insurer, and
shall at the written direction of the Note Insurer or of the Holders of Notes
representing not less than 50% of the Note Principal Balance of the Outstanding
Notes of all of the Classes, with the consent of the Note Insurer, proceed to
protect and enforce its rights and the rights of the Noteholders and the Note
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 Noteholders and the Note Insurer, or any
Noteholder against the Trust 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 Trust,
other than the Trust Estate relative to the Notes 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
represented by the Notes may be sought or obtained by the Indenture Trustee or
any Noteholder against the Trust. The Indenture Trustee shall be entitled to
recover the costs and expenses expended by it pursuant to this Article V
including reasonable compensation, expenses, or disbursements incurred of the
Indenture Trustee, its agents and counsel from the Trust Estate.
Section 5.04. Remedies. If an Event of Default shall have occurred and be
continuing and the Notes been declared due and payable and such declaration and
its consequences have not been rescinded and annulled, the Indenture Trustee, at
the direction of the Note Insurer (subject to Section 5.17 hereof, to the extent
applicable) shall, for the benefit of the Noteholders and the Note Insurer, do
one or more of the following:
(a) institute Proceedings for the collection of all amounts then
payable on the Notes, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Trust moneys
adjudged due, subject in all cases to the provisions of Sections 3.01 and 5.03
hereof;
(b) in accordance with Section 5.17 hereof, 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;
25
(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 Notes and the
Note Insurer hereunder; and
(e) refrain from selling the Trust Estate and apply all funds on
deposit in each of the Accounts pursuant to Section 5.07 hereof.
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 Trust or any other obligor upon any of the Notes or the property of the
Trust or of such other obligor or their creditors, the Indenture Trustee
irrespective of whether the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Trust for the payment of any
overdue principal or interest shall, with the prior written consent of the Note
Insurer be entitled and empowered, by intervention in such Proceeding or
otherwise to:
(a) file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes 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), the Noteholders and the Note Insurer allowed in such Proceeding, and
(b) 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 Noteholder and the Note Insurer
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
Noteholders and the Note Insurer, 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
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder or the Note Insurer in any such
Proceeding.
Section 5.06. Indenture Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under this Indenture or any of the Notes
may be prosecuted and enforced by the Indenture Trustee without the possession
of any of the Notes or the production thereof in any Proceeding relating
thereto, and any such Proceeding instituted by the Indenture Trustee, at the
written direction of the Note Insurer, shall be brought in its own name as
trustee of an express trust, and any recovery
26
of judgment shall be for the ratable benefit of the Holders of the Notes and the
Note Insurer in respect of which such judgment has been recovered after payment
of amounts required to be paid pursuant to paragraph (a) of Section 5.07 hereof.
Section 5.07. Application of Money Collected. If the Notes 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 each Class of Notes pursuant to this
Article V or otherwise and any other monies that may then be held or thereafter
received by the Indenture Trustee as security for such Class of Notes 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 Class of Notes, upon presentation and
surrender thereof:
(a) first, to the Indenture Trustee, any unpaid Indenture Trustee
Fees with respect to such Class then due and any other amounts payable and due
to the Indenture Trustee with respect to such Class under this Indenture
including any amounts in respect of indemnification or reimbursement of costs
and expenses including costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article V (subject to Section
6.16 herein), to the Note Insurer, any unpaid Premium with respect to such Class
then due, and to the Owner Trustee, any unpaid Owner Trustee Fees with respect
to such Class then due;
(b) second, from amounts then on deposit in the related Payment
Account, to the Holders of the related Class of Notes, the Payment Amount for
such Class;
(c) third, from amounts then on deposit in the related Payment
Account, the allocable portion of the Over-collateralization Deficit, if any,
for the related Class of Notes;
(d) fourth, from amounts then on deposit in the related Payment
Account, to the Holders of each other Class of Notes, the Shortfall Amount for
each other Class of Notes, allocated pro rata based on the amount of each
Shortfall Amount;
(e) fifth, from amounts then on deposit in the related Payment
Account, to the Note Insurer, the Reimbursement Amount with respect to the
related Class as of such Payment Date;
(f) sixth, from amounts then on deposit in the related Payment
Account, to the Note Insurer, the Reimbursement Amount with respect to each
other Class of Notes as of such Payment Date to the extent not already paid
pursuant to clause (e) above, allocated pro rata based on the amount of such
outstanding Reimbursement Amount;
(g) seventh, from amounts then on deposit in the related Payment
Account, the Over-collateralization Increase Amount for the related Class of
Notes;
27
(h) eighth, from amounts then on deposit in the related Payment
Account, to the payment of the Note Principal Balance of the Outstanding Notes
of such Class, up to the amount of their unpaid Note Principal Balance, ratably,
without preference or priority of any kind;
(i) ninth, from amounts then on deposit in the related Payment
Account, to the related Reserve Account, such Loan Group's pro rata share of the
Reserve Payment Amount based on the amount of Net Monthly Excess Cashflow;
(j) tenth, with respect to the Class A-2 Notes, from amounts then on
deposit in the related Payment Account and amounts released from the related
Reserve Account, to the Holders of the Class A-2 Notes, the Class A-2 Net WAC
Cap Carry-Forward Amount and, with respect to the Class A-3 Notes, from amounts
then on deposit in the related Payment Account and amounts released from the
related Reserve Account, to the Holders of the Class A-3 Notes, the Class A-3
Net WAC Cap Carry-Forward Amount;
(k) eleventh, from:
(A) amounts then on deposit in the Payment Account related
to the Class A-1 Notes, to the Master Servicer, any
amount due to it with respect to the Group 1 Mortgage
Loans; and
(B) amounts then on deposit in the Payment Account related
to the Class A-2 Notes, to the Master Servicer, any
amount due to it with respect to the Group 2 Mortgage
Loans;
(C) amounts then on deposit in the Payment Account related
to the Class A-3 Notes, to the Master Servicer, any
amount due to it with respect to the Group 3 Mortgage
Loans; and
(l) twelfth, to the Indenture Trustee, any amounts in respect of
indemnity or reimbursement due the Indenture Trustee under any of the Basic
Documents to the extent not previously paid or reimbursed under paragraph (a)
hereof; and
(m) thirteenth, to the Owner Trustee, any amounts due and owing to
the Owner Trustee under Article IX of the Trust Agreement or the other Basic
Documents, to the extent not already paid by the Servicer pursuant to Section
9.02 of the Trust Agreement; and
(n) fourteenth, following the making by the Indenture Trustee of all
allocations, transfers and disbursements described above, from amounts then on
deposit in each Payment Account, the Indenture Trustee shall distribute to or at
the direction of the Certificateholders (as identified in the Certificate
Register maintained by the Owner Trustee), the amount remaining on such Payment
Date in each Payment Account, if any.
28
Section 5.08. Limitation on Suits. No Holder of a Note 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:
(a) such Holder has previously given written notice to the Indenture
Trustee and the Note Insurer of a continuing Event of Default;
(b) the Holders of Notes representing not less than 25% of the Note
Principal Balance of the Outstanding Notes of all of the Classes 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;
(c) such Holder or Holders have offered to the Indenture Trustee
indemnity satisfactory to it in full against the costs, expenses and liabilities
to be incurred in compliance with such request;
(d) the Indenture Trustee, for sixty (60) days after its receipt of
such notice, request and offer of indemnity, has failed to institute any such
Proceeding;
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such sixty (60) day period by the Holders
of Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes of all of the Classes; and
(f) the consent of the Note Insurer shall have been obtained; it
being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the Holders
of Notes.
(g) In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than 50% of the Note Principal Balance of the Outstanding
Notes of all of the Classes, the Indenture Trustee shall take the action
prescribed by the Group representing a greater percentage of the Note Principal
Balance of the Outstanding Notes of all of the Classes.
Section 5.09. Unconditional Rights of Noteholders to Receive Principal and
Interest. Subject to the provisions in this Indenture (including Sections 3.01
and 5.03 hereof) limiting the right to recover amounts due on a Note to recovery
from amounts in the portion of the Trust Estate relating to such Note, the
Holder of any Note 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 Note on the respective Payment Date for such
installments of interest, to receive payment of each installment of principal of
such Note when due (or, in the case of any Note called for
29
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, the Note Insurer or any Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined to be adverse
to the Indenture Trustee, the Note Insurer or to such Noteholder, then and in
every such case the Indenture Trustee, the Note Insurer and the Noteholders
shall, subject to any determination in such Proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Indenture Trustee, the Note Insurer and the Noteholders
shall continue as though no such Proceeding had been instituted.
Section 5.11. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Note Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of an),
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.12. Delay or Omission Not Waiver. No delay or omission of the
Indenture Trustee, the Note Insurer or of any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee, the Note Insurer or to the Noteholders may be exercised from
time to time, and as often as may be deemed expedient, by the Indenture Trustee,
the Note Insurer or by the Noteholders with the prior consent of the Note
Insurer, as the case may be.
Section 5.13. Control by Noteholders. The Holders of Notes representing
more than 50% of the Note Principal Balance of the Outstanding Notes of all of
the Classes on the applicable Record Date shall, with the written consent of the
Note Insurer (a copy of which shall be provided to the Indenture Trustee), 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:
(a) such written direction shall not be in conflict with any rule of
law or with this Indenture;
(b) any direction to the Indenture Trustee to undertake a Sale of
the Trust Estate shall be by the Holders of Notes representing the percentage of
the Note Principal Balance of the Outstanding Notes specified in Section
5.17(b)(i) hereof, unless Section 5.17(b)(ii) hereof is applicable; and
30
(c) 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 hereof, the Indenture Trustee need not
take any action that it determines might involve it in liability or be unjustly
prejudicial to the Noteholders not consenting.
Section 5.14. Waiver of Past Defaults. The Holders of Notes representing
more than 50% of the Note Principal Balance of the Outstanding Notes of all of
the Classes on the applicable Record Date may on behalf of the Holders of all
the Notes, and with the written consent of the Note Insurer, waive any past
Default hereunder and its consequences, except a Default:
(a) in the payment of principal or any installment of interest on
any Note; or
(b) in respect of a covenant or provision hereof that under Section
9.02 hereof cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
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 Note 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 5.15 shall not apply to any suit instituted by the
Indenture Trustee or the Note Insurer, to any suit instituted by any Noteholder,
or Group of Noteholders, holding in the aggregate Notes representing more than
10% of the Note Principal Balance of the Outstanding Notes of all of the
Classes, or to any suit instituted by any Noteholder for the enforcement of the
payment of any Interest Payment Amount or Base Principal Payment Amount on any
Note on or after the related Payment Date or for the enforcement of the payment
of principal of any Note on or after the Final Stated Maturity Date (or, in the
case of any Note called for redemption, on or after the applicable Redemption
Date).
Section 5.16. Waiver of Stay or Extension Laws. The Trust 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 Trust (to the extent that it
31
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 hereof shall
not be exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired until the entire Trust Estate
shall have been sold or all amounts payable on the Notes and under this
Indenture with respect thereto shall have been paid. The Indenture Trustee may,
with the consent of the Note Insurer, from time to time postpone any public Sale
by public announcement made at the time and place of such Sale.
(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:
(i) the Holders of Notes representing not less than 50% of the Note
Principal Balance of the Notes of all of the Classes then Outstanding and
the Note Insurer consents to or directs the Indenture Trustee in writing
to make such Sale; or
(ii) the proceeds of such Sale would be not less than the entire
amount that would be payable to the Holders of the Notes and the Note
Insurer in respect of Reimbursement Amounts, in full payment thereof in
accordance with Section 5.07 hereof, 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 Note Insurer Default, no
Sale hereunder shall be effective without the consent of the Note Insurer.
(c) Unless the Holders of all Outstanding Notes or the Note Insurer
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 (b)(ii) 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 (i) on behalf of the Noteholders and the Note Insurer, 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 Noteholders and the Note Insurer.
(d) In connection with a Sale of all or any portion of the Trust
Estate:
32
(i) any Holder or Holders of Notes 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 Notes 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 Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the
Holders thereof after being appropriately stamped to show such partial
payment;
(ii) 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 the Notes as a result of such Sale in
accordance with Section 5.07 hereof on the Payment Date next succeeding
the date of such Sale and (b) the expenses of the Sale and of any
Proceedings in connection therewith which are reimbursable to it, without
being required to produce the Notes in order to complete any such Sale or
in order for the net Sale price to be credited against such Notes, and any
property so acquired by the Indenture Trustee shall be held and dealt with
by it in accordance with the provisions of this Indenture;
(iii) 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;
(iv) the Indenture Trustee is hereby irrevocably appointed the agent
and attorney in-fact of the Trust 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
(v) 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.
Section 5.18. Action on Notes. 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, the Note Insurer or the Holders of Notes shall be impaired by
the recovery of any judgment by the Indenture Trustee against the Trust or by
the levy of any execution under such judgment upon any portion of the Trust
Estate. Any money or property collected by the Indenture Trustee shall be
applied in accordance with Section 5.07 hereof.
Section 5.19. No Recourse. The Trust Estate Granted to the Indenture
Trustee as security for the Notes serves as security only for the Notes. The
Noteholders shall have no recourse against the Owner Trustee, the Indenture
Trustee, the Note Registrar, the
33
Authenticating Agent, the Seller, the Sponsor, the Master Servicer, the Backup
Servicer or any of their respective Affiliates, or to the assets of any of the
foregoing entities.
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.
Section 5.21. Suspension and Termination of Note Insurer's Rights. During
the continuation of a Note Insurer Default, rights granted or reserved to the
Note Insurer hereunder shall vest instead in the Noteholders, and may be
exercised at the direction of Holders of Notes representing at least 51% of the
Note Principal Balance of the Outstanding Notes of all of the Classes; provided,
that the Note Insurer shall be entitled to any distributions of reimbursements
as set forth in the Indenture and the Insurance Agreement and the Note Insurer
shall retain those rights under Section 12.01 to consent to any amendment of
this Agreement.
At such time as either (i) the outstanding Note Principal Balance of the
Notes has been reduced to zero or (ii) the Note Insurance Policy has been
terminated and in either case of (i) or (ii) the Note Insurer has been
reimbursed for all amounts owed under the Note Insurance Policy and the
Insurance Agreement (and the Note Insurer no longer has any obligation under the
Note Insurance Policy, except for breach thereof by the Note Insurer), then the
rights and benefits granted or reserved to the Note Insurer hereunder (including
the rights to direct certain actions and receive certain notices) shall
terminate and the Certificateholders shall be entitled to the exercise of such
rights and to receive such benefits of the Note Insurer following such
termination to the extent that such rights and benefits are applicable to the
Certificateholders.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing of which a Responsible Officer of the Indenture
Trustee has actual knowledge, 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 person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee need perform only those duties that are
expressly 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
(ii) 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,
opinions, resolutions,
34
statements, reports, instruments or other documents furnished to the
Indenture Trustee and conforming, on their faces, 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:
(i) The duties and obligations of the Indenture Trustee shall be
determined solely by the express provisions of this Indenture, the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture, no
implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee and, in the absence of bad faith on the part of the
Indenture Trustee, the Indenture Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates, opinions or other documents (including,
but not limited to, any reports or statements furnished by the Master
Servicer or Backup Servicer) reasonably believed by the Indenture Trustee
to be genuine and to have been furnished by the proper party to the
Indenture Trustee and which on their face, do not contradict the
requirements of this Indenture;
(ii) this paragraph does not limit the effect of paragraph (b) of
this Section 6.01;
(iii) 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;
(iv) 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 of the Noteholders or the Note Insurer (including directions
pursuant to Sections 5.13 or 5.17 hereof or in accordance with the
direction of the Note Insurer) or exercising any trust or power or remedy
conferred upon the Indenture Trustee under this Indenture; and
(v) The Indenture Trustee shall not be charged with knowledge of any
failure by the Master Servicer to comply with any of its obligations under
the Sale and Servicing Agreement or any breach of representations or
warranties under the Sale and Servicing Agreement unless a Responsible
Officer of the Indenture Trustee obtains actual knowledge of such failure
or breach or the Indenture Trustee receives written notice of such failure
or breach from the Master Servicer, the Backup Servicer or the Note
Insurer.
(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
35
Indenture, the Indenture Trustee shall not be deemed to have notice or knowledge
of any Event of Default described in Sections 5.01(c), 5.01(d), 5.01(e),
5.01(f), 5.01(g) or 5.01(h) hereof or any Default described in Sections 5.01(c)
hereof or of any event described in Section 3.05 hereof unless a Responsible
Officer assigned to and working in the Indenture Trustee's corporate trust
department and having direct responsibility for this Indenture 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 Notes generally, the
Trust, 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 under this Indenture or the other
Basic Documents.
(f) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to the provisions of this Section 6.01 and to the
provisions of the TIA.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Trust in and to the Trust Estate following an Event of Default
and a consequent declaration of acceleration of the maturity of the Notes,
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), the Noteholders and the Note
Insurer and the rights of Noteholders and the Note Insurer shall continue to be
governed by the terms of this Indenture.
(h) The Indenture Trustee shall at all times retain possession of
the Indenture Trustee's Mortgage Files in the State of California, except for
those Indenture Trustee's Mortgage Files or portions thereof released to the
Master Servicer or the Note Insurer pursuant to this Indenture or the Sale and
Servicing Agreement.
(i) Subject to the other provisions of this Indenture and without
limiting the generality of this Section 6.01, the Indenture Trustee shall have
no duty (a) to see to any recording, filing, or depositing of this Indenture or
any agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording, filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (b) to see to any insurance, (c) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Estate from funds available in the Payment
Accounts or (D) to confirm or verify the contents of any reports or certificates
of the Master Servicer or the Backup Servicer delivered to the Indenture Trustee
pursuant to this Indenture believed by the
36
Indenture trustee to be genuine and to have been signed or presented by the
proper party or parties.
Section 6.02. Notice of Default. Immediately after the occurrence of any
Default known to a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall transmit by mail to the Note Insurer and the Sponsor notice of
each such Default and, within ninety (90) days after the occurrence of any
Default known to a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall transmit by mail to all Holders of Notes notice of each such
Default, unless such Default shall have been cured or waived; provided, however,
that in no event shall the Indenture Trustee provide notice, or fail to provide
notice of a Default of which a Responsible Officer of the Indenture Trustee has
actual knowledge in a manner contrary to the requirements of the Trust Indenture
Act. Concurrently with the mailing of any such notice to the Holders of the
Notes, the Indenture Trustee shall transmit by mail a copy of such notice to the
Rating Agencies.
Section 6.03. Rights of Indenture Trustee. (a) Except as otherwise
provided in Section 6.01 hereof, the Indenture Trustee may rely on, and be
protected in acting or refraining to act upon 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 Officer's 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) With the consent of the Note Insurer, which consent shall not be
unreasonably withheld, 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.
(e) The Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Indenture or to institute,
conduct or defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Noteholders or the Note Insurer, pursuant to
the provisions of this Indenture, unless such Noteholders or the Note Insurer
shall have offered to the Indenture Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby; nothing contained herein shall, however, relieve the Indenture Trustee
of the obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Indenture Trustee shall have actual knowledge (which
has not been cured), to exercise such of the rights and powers vested in it by
this Indenture, and to use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
37
(f) The Indenture Trustee shall not be bound to make any
investigation into the facts of the matters stated in any resolution,
certificate, statement, instrument, opinion, report notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing to
do so by the Noteholders or the Note Insurer and provided further that payment
within a reasonable time to the Indenture Trustee of the costs, expenses or
liabilities likely to be incurred by it in tile making of such investigation is,
in the opinion of the Indenture Trustee, reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture or such
other security or indemnity as the Indenture Trustee may reasonably require as a
condition to taking any such action.
(g) The right of the Indenture Trustee to perform any discretionary
act enumerated in this Indenture shall not be construed as a duty, and the
Indenture Trustee shall not be answerable for anything other than its negligence
or willful misconduct in the performance of such act.
Section 6.04. Not Responsible for Recitals, Issuance of Notes or Mortgage
Loans. The recitals contained herein and in the Notes, except, with respect to
the Indenture Trustee, the certificates of authentication on the Notes, shall be
taken as the statements of the Trust, and the Owner Trustee, the Indenture
Trustee and the Authenticating Agent assume no responsibility for their
correctness. The Owner Trustee and the Indenture Trustee make no representations
with respect to the Trust Estate or as to the validity or sufficiency of this
Indenture or of the Notes. Neither the Indenture Trustee nor the Owner Trustee
shall be accountable for the use or application by the Trust of the Notes or the
proceeds thereof or any money paid to the Trust or upon a Trust Order pursuant
to the provisions hereof.
The Indenture Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Mortgage or any Mortgage Loan, or the recordability, sufficiency, perfection
and priority of any mortgage or the maintenance of any such perfection and
priority or for or with respect to the sufficiency of the Trust Estate or its
ability to generate the payments to be distributed to Noteholders under this
Indenture, including, without limitation: the existence, condition and ownership
of any Mortgaged Property; the existence and enforceability of any hazard
insurance or primary mortgage insurance thereon; the validity of the assignment
of any Mortgage Loan to the Indenture Trustee or of any intervening assignment;
the completeness of any Mortgage Loan; the performance or enforcement of any
Mortgage Loan; the compliance by the Seller, the Sponsor, Issuer, Master
Servicer, Backup Servicer, Note Insurer with any warranty or representation made
under this Indenture, the Sale and Servicing Agreement, the Insurance Agreement
or in any related document or the accuracy of any such warranty or
representation; any investment of monies by or at the direction of the Sponsor
or the Master Servicer or any loss resulting therefrom; the acts or omissions of
any of the Sponsor, the Master Servicer or any Mortgagor; any action of the
Master Servicer taken in the name of the Indenture Trustee; the failure of the
Master Servicer to act or perform any duties acquired of it as agent of the
Indenture Trustee hereunder; or any action by the Indenture Trustee taken at the
instruction of the Master Servicer or the Note Insurer. The Indenture Trustee
shall have no responsibility
38
for filing any financing or continuation statement in any public office at any
time or otherwise to perfect or maintain the perfection of any security interest
or xxxx granted to it hereunder.
Section 6.05. May Hold Notes. The Indenture Trustee, any Agent, or any
other agent of the Trust, in its individual or any other capacity, may become
the owner or pledgee of Notes and, subject to Sections 6.07, 6.09 and 6.12
hereof, may otherwise deal with the Trust or any Affiliate of the Trust 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 Trust 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. Eligibility, Disqualification. Irrespective of whether this
Indenture is qualified under the TIA, this Indenture shall always have an
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 6.08 hereof. The Indenture Trustee shall be subject
to TIA Section 310(b).
Section 6.08. Indenture Trustee's Capital and Surplus. The Indenture
Trustee shall at all times (a)(i) have a combined capital and surplus of at
least $550,000,000, or (ii) be a member of a bank holding company system, the
aggregate combined capital and surplus of which is at least $100,000,000 and (b)
be rated (or have long- term debt rated) "BBB" or better by S&P and "Baa2" by
Xxxxx'x; 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 6.08 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 6.08 and TIA Section 310(a)(2), it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article VI.
Section 6.09. 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 VI shall become effective
until the acceptance of appointment by the successor Indenture Trustee under
Section 6.10 hereof.
(b) The Indenture Trustee may resign at any time by giving written
notice thereof to the Trust, the Note 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 thirty (30) days after the giving of
such notice of resignation,
39
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 by the Note
Insurer or, with the consent of the Note Insurer, by Act of the Holders
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of all of the Classes, by written notice delivered to the Indenture
Trustee and to the Trust.
(d) If at any time:
(i) the Indenture Trustee shall have a conflicting interest
prohibited by Section 6.07 hereof and shall fail to resign or eliminate
such conflicting interest in accordance with Section 6.07 hereof after
written request therefor by the Trust, the Note Insurer or by any
Noteholder; or
(ii) the Indenture Trustee shall cease to be eligible under Section
6.08 hereof or shall become incapable of acting or shall be adjudged
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, (x) the Owner Trustee, on behalf of the Trust, by a
Trust Order, with the written consent of, or at the written direction of the
Note Insurer, may remove the Indenture Trustee, and the Owner Trustee, on behalf
of the Trust, by a Trust Order, 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 Note
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 Owner Trustee, on behalf of the Trust,
and the Note Insurer do not join in such appointment within thirty (30) days
after the receipt by it of a request to do so, (either by reason of resignation
or removal) 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 (y) subject to Section 5.15 hereof, and, in the case of a
conflicting interest as described in clause (i) above, unless the Indenture
Trustee's duty to resign has been stayed as provided in TIA Section 310(b), the
Note Insurer or any Noteholder who has been a bona fide Holder of a Note for at
least six (6) months may, on behalf of himself and all others similarly
situated, with the consent of the Note 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 Note Insurer may, and if the Note Insurer fails to do
so, the Owner Trustee, on behalf of the Trust, by a Trust Order, shall promptly,
appoint a successor
40
Indenture Trustee acceptable to the Note Insurer and reasonably acceptable to
the Sponsor.
(f) The Master Servicer, on behalf of the Trust, shall give notice
of each resignation and each removal of the Indenture Trustee and each
appointment of a successor Indenture Trustee to the Backup Servicer, the Holders
of Notes and the Note Insurer. Each notice shall include the name of the
successor Indenture Trustee and the address of its Corporate Trust Office.
Section 6.10. Acceptance of Appointment by Successor Indenture Trustee.
Every successor Indenture Trustee appointed hereunder shall execute, acknowledge
and deliver to the Trust, the Note Insurer 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, upon a Trust Request of the Owner
Trustee or the Note Insurer, on behalf of the Trust, or the successor Indenture
Trustee, such retiring Indenture Trustee shall, upon payment of its charges and
any fees, expenses or other amounts owing the Indenture trustee, 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 a written
request of any such successor Indenture Trustee, the Owner Trustee, on behalf of
the Trust, shall, with the written consent of the Note Insurer, 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 VI.
Section 6.11. Merger, Conversion, Consolidation or Succession to Business
of Indenture Trustee. Any corporation or banking association into which the
Indenture Trustee may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from any
merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any corporation or banking association 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, that such
corporation or banking association shall be otherwise qualified and eligible
under this Article VI, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes 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 Notes so
authenticated with the same effect as if such successor Indenture Trustee had
authenticated such Notes.
41
Section 6.12. Preferential Collection of Claims Against Trust. 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 6.13. 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 Indenture Trustee shall have power and shall execute and deliver
all instruments necessary 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 6.13. All fees and expenses of
any co-trustee or separate trustee shall be payable by the Trust.
Should any written instrument from the Trust be required by any co-trustee
or separate trustee so appointed for more fully confirming to such co-trustee or
separate trustee such property, title, right or power, any and all such
instruments shall, on written request, be executed, acknowledged and delivered
by the Owner Trustee, on behalf of the Trust, with the written consent of the
Note Insurer.
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:
(a) The Notes 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.
(b) 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.
(c) The Indenture Trustee at any time may accept the resignation of
or remove any co-trustee or separate trustee appointed under this Section 6.13.
A successor to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section 6.13.
42
(d) The Indenture Trustee shall not be liable by reason of any act
or omission of a co-trustee or separate trustee appointed by the Indenture
Trustee with due care. 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.
(e) Any Act of Noteholders delivered to the Indenture Trustee shall
be deemed to have been delivered to each such co-trustee and separate trustee.
(f) Any co-trustee or separate trustee appointed hereunder shall be
afforded the same rights, protections and immunities as the Indenture Trustee.
Section 6.14. Authenticating Agents. The Owner Trustee, acting at the
direction of the Certificateholders, shall appoint an Authenticating Agent with
power to act on the Trust's behalf, subject to the direction of the
Certificateholders, in the authentication and delivery of the Notes designated
for such authentication and, containing provisions therein for such
authentication (unless the Owner Trustee, acting at the direction of the
Certificateholders, has made other arrangements, satisfactory to the Indenture
Trustee and such Authenticating Agent, for notation on the Notes of the
authority of an Authenticating Agent appointed after the initial authentication
and delivery of such Notes) in connection with transfers and exchanges under
Section 2.06 hereof, as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by Section 2.06 hereof to
authenticate and deliver Notes. For all purposes of this Indenture (other than
in connection with the authentication and delivery of Notes pursuant to Sections
2.05 and 2.11 hereof in connection with their initial issuance), the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section 6.14 shall be deemed to be the authentication and delivery of Notes
"by the Indenture Trustee." Such Authenticating Agent shall at all times be a
Person that both meets the requirements of Section 6.07 hereof for the Indenture
Trustee hereunder and has an office for presentation of Notes in the United
States of America. The Indenture Trustee, shall initially be the Authenticating
Agent and shall be the Note Registrar as provided in Section 2.06 hereof. The
office from which the Indenture Trustee shall perform its duties as Note
Registrar and Authenticating Agent shall be its Corporate Trust Office. Any
Authenticating Agent appointed pursuant to the terns of this Section 6.14 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 Note Registrar or co-Note 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, Note Registrar or co-Note Registrar.
Any corporation or banking association into which any Authenticating Agent
may be merged or converted or with which it may be consolidated, or any
corporation or banking association resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation or banking association succeeding to the corporate trust business of
any Authenticating Agent, shall be the
43
successor of the Authenticating Agent hereunder, if such successor corporation
is otherwise eligible under this Section 6.14, without the execution or filing
of any further act on the part of the parties hereto or the Authenticating Agent
or such successor corporation or banking association.
Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Trust. The Owner Trustee, acting at the direction of the
Certificateholders, may at any time with the consent of the Note Insurer
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Indenture Trustee. 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
6.14, the Owner Trustee, acting at the direction of the Certificateholders,
shall promptly appoint a successor Authenticating Agent acceptable to the Note
Insurer, shall give written notice of such appointment to the Indenture Trustee,
and shall mail notice of such appointment to all Holders of Notes.
The Indenture Trustee agrees, subject to Section 6.01(e) hereof to pay to
any Authenticating Agent from time to time reasonable compensation for its
services and the Indenture Trustee shall be entitled to be reimbursed for such
payments pursuant to Section 6.16 hereof. The provisions of Sections 2.09, 6.04
and 6.05 hereof shall be applicable to any Authenticating Agent.
Section 6.15. Review of Mortgage Files. (a) The Indenture Trustee shall,
on or prior to the Closing Date, execute and deliver the acknowledgement of
receipt of the Note Insurance Policy required by Section 2.06(a) of the Sale and
Servicing Agreement.
(b) The Indenture Trustee shall (i) on or prior to the Closing Date
(or, with respect to any Subsequent Mortgage Loan, the related Subsequent
Transfer Date), execute and deliver the acknowledgement of receipt of the
Mortgage Loans required by Section 2.06(b)(1) of the Sale and Servicing
Agreement, (ii) on or prior to sixty (60) days following the Closing Date (or,
with respect to any Subsequent Mortgage Loan, the related Subsequent Transfer
Date), execute and deliver the Initial Certification required by Section
2.06(b)(ii) of the Sale and Servicing Agreement, and (iii) on or prior to one
hundred eighty (180) days following the Closing Date (or, with respect to any
Subsequent Mortgage Loan, the related Subsequent Transfer Date), execute and
deliver the Final Certification required by Section 2.06(b)(iii) of the Sale and
Servicing Agreement.
(c) In giving each of the acknowledgements, the Initial
Certification and the Final Certification referred to in paragraphs (a) and (b)
of this Section 6.15, the Indenture Trustee shall not be under any duty or
obligation (i) to inspect, review or examine any such documents, instruments,
securities or other papers to determine that they or the signatures thereto are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face, (ii) to determine whether any Mortgage File should include a
flood insurance policy, any rider, addenda, surety or guaranty agreement, power
of attorney, buy down agreement, assumption agreement, modification agreement,
written
44
assurance or substitution agreement, or (iii) to determine the validity,
sufficiency, recordability, perfection, or priority of any document in the
Mortgage File.
(d) In the event that the Mortgage Loans are required to be recorded
in accordance with the provisions of Section 2.05 of the Sale and Servicing
Agreement, no later than the fifth Business Day of each fourth month, commencing
in September 2003, the Indenture Trustee shall deliver to the Master Servicer
and the Note Insurer a report dated as of the first day of such month,
identifying those Mortgage Loans for which it has not yet received (i) an
original recorded Mortgage or a copy thereof certified to be true and correct by
the public recording office in possession of such Mortgage or (ii) an original
recorded Assignment of Mortgage to the Indenture Trustee and any required
intervening Assignments of Mortgage or a copy thereof certified to be a true and
correct copy by the public recording office in possession of such Assignment of
Mortgage.
Section 6.16. Indenture Trustee Fees and Expenses Indemnification. The
Indenture Trustee shall be entitled to receive the Indenture Trustee Fee on each
Payment Date as provided herein. The Indenture Trustee also shall be entitled to
(i) payment of or reimbursement for expenses and disbursements incurred or made
by the Indenture Trustee in accordance with any of the provisions of this
Indenture or the Sale and Servicing Agreement (including, but not limited to,
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ), and (ii) indemnification
against losses, liability costs and expenses, including reasonable attorney's
fees, incurred, arising out of or in connection with this Indenture, the Notes,
the Sale and Servicing Agreement or any other documents or agreements relating
to the Trust or the Notes, other than any loss, liability, cost or expense
incurred solely by reason of willful malfeasance, bad faith or negligence of the
Indenture Trustee in the performance of its duties under the Basic Documents or
by reason of its failure to perform its obligations hereunder. The Indenture
Trustee and any director, officer, employee or agent of the Indenture Trustee
shall be indemnified by, first, the Trust Estate as a first-priority expense, in
an amount not to exceed $125,000 in any calendar year, second, the Trust Estate
on any Payment Date after required payments to the Notes and Note Insurer and,
third, the Master Servicer, to the extent that the Indenture Trustee's claims
for indemnification exceed $125,000 in any calendar year, and held harmless
against any loss, liability costs or reasonable expense incurred in connection
with this Indenture or the Notes, other than any loss, liability, cost or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance by the Indenture Trustee of its duties hereunder or by reason of
its failure to perform its obligations hereunder. The obligations of the Master
Servicer and the Trust under this Section 6.16 shall survive termination of the
Trust and payment of the Notes, and shall extend to any co-Indenture Trustee or
separate-Indenture Trustee appointed pursuant to this Article VI.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Note Registrar to Furnish Indenture Trustee Names and
Addresses of Noteholders. (a) The Note Registrar shall furnish or cause to be
furnished to the
45
Indenture Trustee (i) semiannually, not less than forty-five (45) days nor more
than sixty (60) days after the Payment Date occurring closest to six (6) months
after the Closing Date and each Payment Date occurring at six (6) month
intervals thereafter, all information in the possession or control of the Note
Registrar, in such form as the Indenture Trustee may reasonably require, as to
names and addresses of the Holders of Notes, and (ii) at such other times, as
the Indenture Trustee may request in writing, within thirty (30) days after
receipt by the Note Registrar of any such request, a list of similar form and
content as of a date not more than ten (10) days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the Note
Registrar, no such list shall be required to be furnished.
(b) In addition to furnishing to the Indenture Trustee the
Noteholder lists, if any, required under paragraph (a) of this Section 7.01, the
Note Registrar shall also furnish all Noteholder lists, if any, required under
Section 3.03 hereof at the times required by such Section 3.03.
Section 7.02. Preservation of Information: Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list, if any, furnished to the Indenture Trustee as provided in
Section 7.01 hereof and the names and addresses of the Holders of Notes received
by the Indenture Trustee in its capacity as Note Registrar. The Indenture
Trustee may destroy any list furnished to it as provided in Section 7.01 hereof
upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Trust, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
Section 7.03. Reports by Indenture Trustee. Within sixty (60) days after
December 31 of each year (the "reporting date"), commencing December 31, 2002,
(i) the Indenture Trustee shall, if required by TIA Section 313(a), mail to all
Noteholders 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 Indenture Trustee's Remittance Report pursuant to Section 2.08(d)
hereof, also mail to Holders of Notes and the Note Insurer 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 Notes and the Note Insurer 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 Note Principal Balance of
the then Outstanding Notes covered by the report.
46
Section 7.04. Reports by Trust. The Trust shall cause the Master Servicer,
on behalf of the Trust, (a) to deliver to the Indenture Trustee and the Backup
Servicer within fifteen (15) days after the Trust 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 Trust is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act, and (b) to also comply with the other provisions of TIA Section
314(a).
A copy of each report required under this Section 7.03 shall, at the time
of such transmission to Holders of Notes and the Note Insurer be filed by the
Sponsor with the Commission and with each securities exchange upon which the
Notes are listed. The Master Servicer, on behalf of the Trust, will notify the
Backup Servicer and the Indenture Trustee when the Notes are listed on any
securities exchange.
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. Accounts; Investment; Collection of Moneys. (a) The Trust
hereby directs the Indenture Trustee to establish, on or before the Closing
Date, three Eligible Accounts that shall be the "Payment Accounts" for the
Notes. Each Payment Account shall relate to one of each of the three Classes of
Notes. The Indenture Trustee shall promptly deposit in the related Payment
Account (i) the Servicer Remittance Amount for the related Group received by it
from the Master Servicer on the Servicer Payment Date pursuant to the Sale and
Servicing Agreement, (ii) any other funds from any deposits for such Group to be
made by the Master Servicer pursuant to the Sale and Servicing Agreement, (iii)
any amount for such Group required to be deposited in such Payment Account
pursuant to this Section 8.01(c), (iv) all amounts for such Group received
pursuant to Section 8.03 hereof, (v) the Termination Price received by it from
the Sponsor on the related Clean-up Call Date pursuant to Section 10.01, (vi) on
each Payment Date, in accordance with the Indenture Trustee's Remittance Report,
(A) until the Shortfall Amount for the related Class, is paid in full, and (B)
until the amount specified in clause (v) of Section 8.02 for such group is paid
in full, in each case, first, pro rata from the Payment Account relating to each
of the other Classes of Notes based on the amount of Net Monthly Excess Cashflow
for such other Classes of Notes, to the extent of the Net Monthly Excess
Cashflow from the related Groups of Mortgage Loans and second, from each Reserve
Account, an amount equal to the product of (A) a fraction, the numerator of
which is the amount on deposit in such Reserve Account and the denominator of
which is the aggregate amounts on deposit in all three Reserve Accounts and (B)
the Shortfall Amount after giving effect to this Section 8.01(a)(vi)(B) first,
(vii) any amounts received from the related Pre-Funding Account, (viii) any
amounts received from the Capitalized Interest Account allocable to such Payment
Account, (ix) on each Payment Date, from each Reserve Account an amount equal to
the product of (A) a fraction, the numerator of which is the amount on deposit
in the such Reserve Account and the denominator of which is the aggregate
amounts on deposit in all three Reserve Accounts and (B) the Reserve Account
Release Amount, and (x) all other
47
amounts for such Group received for deposit in such Payment Account, including
the payment of any Loan Repurchase Price or Substitution Adjustment for a
Mortgage Loan in such Group received by the Indenture Trustee. All amounts that
are deposited from time to time in a Payment Account are subject to withdrawal
by the Indenture Trustee for the purposes set forth in Section 8.02 hereof. All
funds withdrawn from a Payment Account pursuant to Section 8.02 hereof for the
purpose of making payments to the Holders of Notes shall be applied in
accordance with Sections 3.03 and 8.02 hereof.
(b) The Trust hereby directs the Indenture Trustee to establish, on
or before the Closing Date, three Eligible Accounts that shall be the "Reserve
Accounts" for the Notes. Each Reserve Account shall relate to each of the three
Loan Groups. The Indenture Trustee shall deposit and withdraw funds in the
Reserve Account in accordance with the provisions of Sections 8.01 (a) and
8.02(a) hereof. Amounts in the Reserve Accounts can be used to (i) pay Shortfall
Amounts in accordance with Section 8.01 and (ii) to pay Class A-2 Net WAC Cap
Carry-forward Amounts and Class A-3 Net WAC Cap Carry-forward Amounts. Amounts
on deposit in any of the Reserve Accounts may be used to pay Shortfall Amounts
for any Class of Notes, provided, that to the extent that funds are on deposit
in two or more Reserve Accounts, funds will be withdrawn pursuant to Section
8.01(vi). Class A-2 Net WAC Cap Carry-forward Amounts and Class A-3 Net-WAC Cap
Carry-forward Amounts can only be paid from funds released from each related
Reserve Account pursuant to Section 8.01(a)(ix).
(c) So long as no Default or Event of Default shall have occurred
and be continuing, amounts held in the Accounts, other than the Payment Account
or the Note Insurance Payment Account, shall at the written direction of the
Master Servicer be invested in Permitted Investments, which Permitted
Investments shall mature no later than the Business Day preceding the
immediately following Payment Date. Absent written direction, all such amounts
shall be held uninvested. Amounts in the Payment Account may be invested in
Permitted Investments at the direction of the Indenture Trustee or remain
uninvested.
All income or other gains, if any, from investment of moneys deposited in
the Collection Account and Payment Account shall be for the benefit of the
Master Servicer and the Indenture Trustee, respectively and on or after each
Payment Date, any such amounts may be released from such Accounts and paid to
the Master Servicer or Indenture Trustee, as applicable, as part of its
compensation hereunder. Any loss resulting from such investment of moneys
deposited in the Collection Account or the Payment Account shall be reimbursed
immediately as incurred to the related Account by the Master Servicer or
Indenture Trustee, respectively. Subject to Section 6.01 hereof and the
preceding sentence, neither the Indenture Trustee nor the Master Servicer shall
in any way be held liable by reason of any insufficiency in the Accounts.
The Indenture Trustee shall not in any way be held liable by reason of any
insufficiency in any Account (other than the Payment Account) held by the
Indenture Trustee resulting from any investment loss on any Permitted Investment
included therein (except to the extent that the Indenture Trustee is the obligor
and has defaulted thereon).
48
(d) 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 Servicer Remittance
Amount by close of business on any related Servicer Payment Date, the Indenture
Trustee shall, unless the Master Servicer shall have made provisions
satisfactory to the Indenture Trustee for delivery to the Indenture Trustee of
an amount equal to such Servicer Remittance Amount, deliver a notice, with a
copy to the Backup Servicer and the Note Insurer, to the Master Servicer of the
Master Servicer's failure to remit such Servicer Remittance Amount and that such
failure, if not remedied by the close of business on the Business Day after the
date upon which such notice is delivered to the Master Servicer, shall
constitute a Servicer Event of Default under the Sale and Servicing Agreement.
If the Indenture Trustee shall subsequently receive any such Servicer Remittance
Amount by the close of business on such Business Day, such Servicer Event of
Default shall not be deemed to have occurred. Notwithstanding any other
provision hereof, the Indenture Trustee shall deliver to the Master Servicer, or
its designee or assignee, any Servicer Remittance Amount received with respect
to a Mortgage Loan after the related Servicer Payment Date to the extent that
the Master Servicer previously made payment or provision for payment with
respect to such Servicer Remittance Amount in accordance with this Section 8.01,
and any such Servicer Remittance Amount shall not be deemed part of the Trust
Estate.
Except as otherwise expressly provided in this Indenture and the Sale and
Servicing Agreement, if, following delivery by the Indenture Trustee of the
notice described above, the Master Servicer shall fail to remit the Servicer
Remittance Amount on any Servicer Payment Date, the Indenture Trustee shall
deliver a second notice to the Master Servicer, the Backup Servicer, the Trust
and the Note Insurer by the close of business on the Business Day immediately
prior to the related Payment Date indicating that a Servicer Event of Default
occurred and is continuing under the Sale and Servicing Agreement. Thereupon,
the Indenture Trustee shall take such actions as are required of the Indenture
Trustee under Article VII of the Sale and Servicing Agreement. In addition, if a
default occurs in any other performance required under the Sale and Servicing
Agreement, the Indenture Trustee may, and upon the request of the Note Insurer
or, with the consent of the Note Insurer, the Holders of Notes representing more
than 50% of the Note Principal Balance of the Outstanding Notes of all of the
Classes 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 hereof.
Section 8.02. Payments; Statements. On each Payment Date, the Indenture
Trustee shall withdraw from each Payment Account, such amounts on deposit
therein relating to the Indenture Trustee Fees, expenses and other amounts then
due to it
49
including any payments with respect to reimbursement or indemnification due to
the Indenture Trustee (subject to Section 6.16), the Owner Trustee Fee due to
the Owner Trustee for such Payment Date and the Premium due the Note Insurer for
such Payment Date and shall pay itself the Indenture Trustee Fee and any other
amounts due the Indenture Trustee and shall distribute such Owner Trustee Fee
and Premium as instructed in writing by the Master Servicer. On each Payment
Date, unless the Notes have been declared due and payable pursuant to Section
5.02 hereof and moneys collected by the Indenture Trustee are being applied in
accordance with Section 5.07 hereof, Available Funds on deposit in each Payment
Account on any Payment Date or Redemption Date shall be withdrawn from such
Payment Account, in the amounts required (based on the Indenture Trustee's
Remittance Report prepared by the Indenture Trustee on or before such Payment
Date in reliance on the related Servicer Remittance Report), for application on
such Payment Date in respect of payments for the related Class of Notes as
follows:
(i) from amounts then on deposit in the related Payment Account, to
the Holders of the related Class of Notes, the Payment Amount for such
Class;
(ii) from amounts then on deposit in the related Payment Account,
the Over-collateralization Deficit, if any, for the related Class of
Notes;
(iii) pari passu, with respect to each other Class of Notes, from
amounts then on deposit in the related Payment Account, to the Holders of
each other Class of Notes, the Shortfall Amount for each other Class,
allocated pro rata based on the amount of each Shortfall Amount;
(iv) from amounts then on deposit in the related Payment Account, to
the Note Insurer, the Reimbursement Amount with respect to the related
Class as of such Payment Date;
(v) from amounts then on deposit in the related Payment Account, to
the Note Insurer, the Reimbursement Amount with respect to each other
Class of Notes as of such Payment Date to the extent not already
reimbursed pursuant to clause (iv) above, allocated pro rata based on the
amount of each Reimbursement Amount;
(vi) from amounts then on deposit in the related Payment Account,
the Overcollateralization Increase Amount for the related Class of Notes;
(vii) from amounts then on deposit in the related Payment Account,
to the related Reserve Account, the Reserve Payment Amount;
(viii) with respect to the Class A-2 Notes, from amounts then on
deposit in the related Payment Account and amounts released from the
related Reserve Account, to the Holders of the Class A-2 Notes, the Class
A-2 Net WAC Cap Carry-Forward Amount;
(ix) with respect to the Class A-3 Notes, from amounts then on
deposit in the related Payment Account and amounts released from the
related Reserve
50
Account, to the Holders of the Class A-3 Notes, the Class A-3 Net WAC Cap
Carry-Forward Amounts;
(x) from:
(A) amounts then on deposit in the Payment Account related
to the Class A-1 Notes, to the Master Servicer, any
amount due to it with respect to the Group 1 Mortgage
Loans; and
(B) amounts then on deposit in the Payment Account related
to the Class A-2 Notes, to the Master Servicer, any
amount due to it with respect to the Group 2 Mortgage
Loans;
(C) amounts then on deposit in the Payment Account related
to the Class A-3 Notes, to the Master Servicer, any
amount due to it with respect to the Group 3 Mortgage
Loans; and
(xi) pro rata, from aggregate amounts then on deposit in all three
Payment Accounts, any amounts in respect of indemnity or reimbursement due
the Indenture Trustee under any of the Basic Documents to the extent not
previously paid or reimbursed hereunder;
(xii) pro rata, from aggregate amounts then on deposit in all three
Payment Accounts, to the Owner Trustee, its Expenses as defined in section
9.02 of the Trust Agreement, to the extent the Sponsor has not already
paid to the Owner Trustee such Expenses; and
(xiii) following the making by the Indenture Trustee of all
allocations, transfers and disbursements described above, from amounts
then on deposit in each Payment Account, the Indenture Trustee shall
distribute to the Certificateholders (as identified in the Certificate
Register maintained by the Owner Trustee), the amount remaining on such
Payment Date in each Payment Account, if any.
Section 8.03. Claims against the Note Insurance Policy. (a) No later than
two (2) Business Days prior to each Payment Date, the Indenture Trustee shall
determine with respect to the immediately following Payment Date, the amount
required to be on deposit in each Payment Account on such Payment Date as a
result of the Master Servicer's remittance of the Servicer Remittance Amount on
the related Servicer Payment Date.
(b) If the Servicer Remittance Report with respect to any Payment
Date indicates that an Insured Amount shall be payable for any Group, after
giving effect to the distributions specified in Section 8.02 (calculating such
distributions without giving effect to any Insured Amount to be paid by the Note
Insurer on such Payment Date) the Indenture Trustee shall complete a Notice in
the form of Exhibit A to the Note Insurance Policy and submit such notice to the
Note Insurer no later than 12:00 noon New York City time (9:00 Los Angeles time)
on the second Business Day preceding such Payment Date as a claim for an Insured
Amount.
51
(c) The Indenture Trustee shall establish an Eligible Account (which
may be a subaccount of the Payment Account) for the benefit of Holders of the
Notes and the Note Insurer referred to herein as the "Note Insurance Payment
Account" over which the Indenture Trustee shall have exclusive control and sole
right of withdrawal. The Indenture Trustee shall deposit upon receipt any amount
paid under the Note Insurance Policy in the Note Insurance Payment Account and
distribute such amount only for purposes of payment to the Noteholders of the
related Group of the Insured Amount for such Group for which a claim was made
and such amount may not be applied to satisfy any costs, expenses or liabilities
of the Master Servicer, the Indenture Trustee or the Trust. Amounts paid under
the Note Insurance Policy, to the extent needed to pay the Insured Amount shall
be disbursed by the Indenture Trustee to the Noteholders in accordance with
Section 8.02. It shall not be necessary for such payments to be made by checks
or wire transfers separate from the checks or wire transfers used to pay the
Insured Amount with other funds available to make such payment. However, the
amount of any payment of principal of or interest on the Notes to be paid from
funds transferred from the Note Insurance Payment Account shall be noted as
provided in subsection (d) of this Section 8.03 in the Note Register and in the
Indenture Trustee's Remittance Report. Funds held in the Note Insurance Payment
Account shall not be invested. Any funds remaining in the Note Insurance Payment
Account on the first Business Day following a Payment Date shall be returned to
the Note Insurer pursuant to the written Instructions of the Note Insurer by the
end of such Business Day.
(d) The Indenture Trustee shall keep a complete and accurate record
of the amount of interest and principal paid in respect of any Note from moneys
received under the Note Insurance Policy. The Note Insurer shall have the right
to inspect such records at reasonable times during normal business hours upon
one (1) Business Day's prior written notice to the Indenture Trustee.
(e) In the event that the Indenture Trustee has received a certified
copy of an order of the appropriate court that any Insured Amount has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Indenture Trustee shall so notify the Note Insurer, shall comply with
the provisions of the Note Insurance Policy to obtain payment by the Note
Insurer of such voided Insured Amount, and shall, at the time it provides notice
to the Note Insurer, notify, by mail to the Noteholders of the affected Notes
that, in the event any Noteholder's Insured Amount is so recovered, such
Noteholder will be entitled to payment pursuant to the Note Insurance Policy, a
copy of which shall be made available through the Indenture Trustee, the Note
Insurer or the Note Insurer's fiscal agent, if any, and the Indenture Trustee
shall furnish to the Note Insurer or its fiscal agent, if any, its records
evidencing the payments which have been made by the Indenture Trustee and
subsequently recovered from the Noteholders, and dates on which such payments
were made.
(f) The Indenture Trustee shall promptly notify the Note Insurer of
any proceeding or the institution of any action, of which a Responsible Officer
of the Indenture Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any payment made with respect to the
Notes. Each Noteholder, by its
52
purchase of Notes, the Master Servicer, the Backup Servicer, and the Indenture
Trustee agree that, the Note Insurer (so long as no Note Insurer Default exists)
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim,
including, without limitation, (i) the direction of any appeal of any order
relating to such Preference Claim and (ii) the posting of any surety, supersede
as or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the Note Insurer shall be subrogated to, and each
Noteholder, the Master Servicer, the Backup Servicer and the Indenture Trustee
hereby delegate and assign to the Note Insurer, to the fullest extent permitted
by law, the rights of the Master Servicer, the Backup Servicer, the Indenture
Trustee and each Noteholder in the conduct of any such Preference Claim,
including, without limitation, all rights of any party to any adversary
proceeding or action with respect to any court order issued in connection with
any such Preference Claim.
(g) The Indenture Trustee shall, upon retirement of the Notes,
furnish to the Note Insurer a notice of such retirement, and, upon retirement of
the Notes and the expiration of the term of the Note Insurance Policy, surrender
the Note Insurance Policy to the Note Insurer for cancellation.
(h) Unless a Note Insurer Default exists and is continuing, the
Indenture Trustee and the Trust shall cooperate in all respects with any
reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interests hereunder without limiting the rights or
affecting the interests of the Noteholders as otherwise set forth herein.
(i) Each Noteholder, by its purchase of Notes, and the Indenture
Trustee hereby agrees that, unless a Note Insurer Default exists and is
continuing, the Note Insurer shall have the right to direct all matters relating
to the Notes in any proceeding in a bankruptcy of the Trust, including without
limitation any proceeding relating to a Preference Amount and the posting of any
surety or Note pending any such appeal.
(j) Anything herein to the contrary notwithstanding, any payment
with respect to principal of or interest on the Notes which is made with moneys
received pursuant to the terms of the Note Insurance Policy shall not be
considered payment of the Notes from the Trust. The Trust and the Indenture
Trustee acknowledge, and each Holder by its acceptance of a Note agrees, that
without the need for any further action on the part of the Note Insurer, the
Trust, the Indenture Trustee or the Note Registrar (x) to the extent the Note
Insurer makes payments, directly or indirectly, on account of principal of or
interest on the Notes to the Holders of such Notes, the Note Insurer will be
fully subrogated to, and each Noteholder, the Trust and the Indenture Trustee
hereby delegate and assign to the Note Insurer, to the fullest extent permitted
by law, the rights of such Holders to receive such principal and interest from
the Trust, including, without limitation, any amounts due to the Noteholders in
respect of securities law violations arising from the offer and sale of the
Notes, and (y) the Note Insurer shall be paid such amounts from the sources and
in the manner provided herein for the payment of such amounts.
53
Section 8.04. General Provisions Regarding the Payment Accounts and
Mortgage Loans. (a) Each Payment Account shall relate solely to the Notes of the
related Class and to the Mortgage Loans in the related Group, Permitted
Investments and other property securing the related Notes. Funds and other
property in each Payment Account shall not be commingled with the other Payment
Account or any other moneys or property of the Trust 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 a Payment Account 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 Trust 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 related Payment Account.
(b) If any amounts are needed for payment from a Payment 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, to the
extent available, a sufficient amount of the investments in such Payment
Account.
(c) The Indenture Trustee shall, at all times while any Notes 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 Payment Accounts. 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
Payment Accounts, against delivery of the amount receivable in connection with
any sale.
(d) The Master Servicer shall not direct the Indenture Trustee to
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) unless it has delivered an
Opinion of Counsel addressed to the Indenture Trustee and 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.
(e) With respect to any portion of the Trust Estate invested in
Permitted Investments, the Indenture Trustee acknowledges and agrees that:
(i) any Permitted Investment that is held in a deposit account shall
be held solely in an Eligible Account; and each such Eligible Account
shall be subject to the sole and exclusive dominion, custody and control
of the Indenture Trustee; and, without limitation on the foregoing, the
Indenture Trustee shall have sole signature authority with respect
thereto;
54
(ii) any Permitted Investment that constitutes Physical Property
shall be delivered to the Indenture Trustee in accordance with paragraph
(a) and/or (b) of the definition of "Delivery," as applicable, and shall
be held, pending maturity or disposition, solely by the Indenture Trustee
or a securities intermediary (as such term is defined in Section
8-102(a)(14) of the Uniform Commercial Code) acting solely for the
Indenture Trustee; and
(iii) any Permitted Investment that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry registration
of such Permitted Investment as described in such paragraph.
Section 8.05. Releases of Deleted Mortgage Loans. Upon notice or discovery
by a Responsible Officer of the Indenture Trustee that any of the
representations or warranties of the Sponsor set forth in Section 4.01 of the
Sale and Servicing Agreement was materially incorrect or otherwise misleading
with respect to any Mortgage Loan as of the time made, the Indenture Trustee
shall direct the Sponsor to either cure, repurchase or substitute for such
Mortgage Loan as provided in Section 4.02 of the Sale and Servicing Agreement.
Upon any purchase of or substitution for a Deleted Mortgage Loan by the Sponsor
in accordance with Section 2.06 or Section 4.02 of the Sale and Servicing
Agreement, the Indenture Trustee shall deliver the Indenture Trustee's Mortgage
File relating to such Deleted Mortgage Loan to the Sponsor, and the Trust and
the Indenture Trustee shall execute such instruments of transfer as are
necessary to convey title to such Deleted Mortgage Loan to the Sponsor from the
lien of this Indenture. Nothing in this Section 8.05 should be construed to
obligate the Indenture Trustee to actively monitor the correctness or accuracy
of the representations and warranties of the Sponsor.
Section 8.06. Reports by Indenture Trustee to Noteholders; Access to
Certain Information. On each Payment Date, the Indenture Trustee, shall provide
the written reports required by the first paragraph of Section 2.08(d) to
Noteholders of record as of the related Record Date (including the Clearing
Agency, if any) and the Note Insurer. The Indenture Trustee will make available
the Indenture Trustee's Remittance Report (and, at its option, any additional
files containing the same information in an alternative format) to any
interested person via the Indenture Trustee's internet website. The Indenture
Trustee's internet website shall initially be located at
xxxx://xxx.xxxxxxxxxxxxxx.xx.xxx and assistance in using the website can be
obtained by calling the Indenture Trustee's investor relations desk at
800.735.7777. The Indenture Trustee shall have the right to alter the manner in
which it provides its Indenture Trustee's Remittance Reports to Noteholders upon
notice to Noteholders in the manner in which such Indenture Trustee's Remittance
Reports are then being provided.
The Indenture Trustee shall make available at its Corporate Trust Office,
during normal business hours, for review by any Noteholder, designees of the
Issuer, or the Note Insurer, originals or copies of the following items: (a) the
Indenture and any amendments thereto, (b) all Indenture Trustee's Remittance
Reports and other reports delivered since
55
the Closing Date pursuant to Section 2.08(d) hereof, (c) any Officers'
Certificates delivered to the Indenture Trustee since the Closing Date as
described in the Indenture and (d) any Accountants' reports delivered to the
Indenture Trustee since the Closing Date as required under the Sale and
Servicing Agreement. 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 and shall not be required
to provide such copies without reasonable assurances that such sum will be paid.
Section 8.07. Release of Trust Estate. The Indenture Trustee shall, at
such time as there are no Notes Outstanding, release all of the Trust Estate to
the Trust (other than any cash held for the payment of the Notes pursuant to
Section 3.03 or 4.02 hereof and amounts due the Indenture Trustee hereunder).
Section 8.08. Amendment to Sale and Servicing Agreement. The Indenture
Trustee may, without the consent of any Holder, enter into or consent to any
amendment or supplement to the Sale and Servicing Agreement for the purpose of
increasing the obligations or duties of any party other than the Indenture
Trustee or the Holders of the Notes. The Indenture Trustee shall not enter into
or consent to any such supplement or amendment unless the Indenture Trustee
receives an Opinion of Counsel that the position of the Holders would not be
materially adversely affected or written confirmation of satisfaction of the
Rating Agency Condition has been delivered to it. The Indenture Trustee may in
its discretion decline to enter into any such supplement or amendment if its own
rights, duties or immunities would be adversely affected. Prior to entering into
any supplement or amendment an Opinion of Counsel shall be delivered to the
Indenture Trustee (upon which it may conclusively rely) to the effect that such
amendment or supplement is permitted and authorized by this Indenture and the
Sale and Servicing Agreement.
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale and
Servicing Agreement. As is appropriate for the servicing or foreclosure of any
Mortgage Loan, the Indenture Trustee shall deliver to the Master Servicer (if
directed in writing by the Master Servicer) the Indenture Trustee's 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 Officer's Certificates, if any, as are required by the Sale
and Servicing Agreement; and
(b) a Request for Release, executed by the Master Servicer,
providing that the Master Servicer (if directed in writing by the Master
Servicer) will hold or retain the Indenture Trustee's Mortgage Files in trust
for the benefit of the Indenture Trustee, the Note Insurer and the Holders of
Notes.
Section 8.10. Master Servicer as Agent. In order to facilitate the
servicing of the Mortgage Loans by the Master Servicer of such Mortgage Loans,
the Master Servicer of the Mortgage Loans has been appointed by the Trust to
retain, in accordance with the provisions of the Sale and Servicing Agreement
and this Indenture, all Servicer
56
Remittance Amounts on such Mortgage Loans prior to their deposit into the
related Payment Account on or prior to the related Servicer Payment Date.
Section 8.11. Termination of Master Servicer. In the event of the
occurrence of a Servicer Event of Default specified in Section 7.01 of the Sale
and Servicing Agreement, the Indenture Trustee may, with the consent of the Note
Insurer or, with the prior written consent of the Note Insurer, the Holder of
Notes representing not less than 50% of the Note Principal Balance of the
Outstanding Notes of all of the Classes, and shall, upon the written direction
of the Note Insurer (or as otherwise provided in the Sale and Servicing
Agreement), terminate the Master Servicer as provided in Section 7.01 of the
Sale and Servicing Agreement. If the Indenture Trustee terminates the Master
Servicer, the Backup Servicer shall, pursuant to Section 7.02 of the Sale and
Servicing Agreement, assume the duties of the Master Servicer or appoint a
successor master servicer acceptable to the Rating Agencies in accordance with
the directions of the Note Insurer and meeting the requirements set forth in the
Sale and Servicing Agreement.
Section 8.12. Opinion of Counsel. The Indenture Trustee shall be entitled
to receive at least five (5) Business Days' notice of any action to be taken
pursuant to Sections 8.08 and 8.09 hereof (other than in connection with
releases of Mortgage Loans that were subject to a prepayment in full),
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 8.13. Appointment of Collateral Agents. The Indenture Trustee may,
at no additional cost to the Trust or to the Indenture Trustee, with the consent
of the Note Insurer, appoint one or more Collateral Agents to hold all or a
portion of the Indenture Trustee Mortgage Files, as Agent for the Indenture
Trustee. Such Collateral Agent shall meet the requirements of Article IX of the
Sale and Servicing Agreement. Matters concerning the Collateral Agents shall be
governed by said Article IX.
Section 8.14. Rights of the Note Insurer to Exercise Rights of
Noteholders. By accepting its Notes, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall have the right to exercise all
rights of the Noteholders under this Indenture, without any further consent of
the Noteholders, including, without limitation:
(a) the right to require the Master Servicer to effect foreclosures
upon Mortgage Loan upon failure of the Master Servicer to do so;
(b) the right to require the Sponsor to repurchase or substitute for
Deleted Mortgage Loans pursuant to Section 8.05;
57
(c) the right to direct the actions of the Indenture Trustee during
the continuance of an Event of Default; and
(d) the right to vote on proposed amendments to this Indenture.
In addition, each Noteholder agrees that, unless a Note Insurer Default
exists, the rights specifically set forth above may be exercised by the
Noteholders only with the prior written consent of the Note Insurer.
Except as otherwise provided in Section 8.03 hereof and notwithstanding
any provision in this Indenture to the contrary, so long as a Note Insurer
Default has occurred and is continuing, the Note Insurer shall have no rights to
exercise any voting rights of the Noteholders hereunder, nor shall the Indenture
Trustee be required to obtain the consent of, or act at the direction of, the
Note Insurer.
All notices, statements, reports, certificates or opinions required by
this Indenture to be sent to any other party hereto or to the Noteholders shall
also be sent to the Note Insurer.
Section 8.15. Trust Estate and Accounts Held for Benefit of the Note
Insurer. The Indenture Trustee shall hold the Trust Estate and the Indenture
Trustee's Mortgage Files, for the benefit of the Noteholders and the Note
Insurer, and all references in this Indenture and in the Notes to the benefit of
Holders of the Notes shall be deemed to include the Note Insurer (provided there
does not exist a Note Insurer Default).
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders. With
the consent of the Note Insurer and without the consent of the Holders of any
Notes, the Trust and the Indenture Trustee, at any time and from time to time,
may enter into one or more indenture supplemental hereto, in form satisfactory
to the Indenture Trustee, for any of the following purposes:
(a) 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;
(b) to add to the conditions, limitations and restrictions on the
authorized amount, terms and purposes of the issuance, authentication and
delivery of any Notes, as herein set forth, additional conditions, limitations
and restrictions thereafter to be observed;
(c) to evidence the succession of another Person to the Trust to the
extent permitted herein, and the assumption by any such successor of the
covenants of the Trust herein and in the Notes contained;
58
(d) to add to the covenants of the Trust, for the benefit of the
Holders of all Notes and the Note Insurer, or to surrender any right or power
herein conferred upon the Trust;
(e) 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 Notes or the Certificateholders;
provided, that the amendment shall be deemed not to adversely affect in any
material respect the interests of the Holders of the Notes and the Note Insurer
if the Person requesting the amendment obtains written confirmation of the
satisfaction of the Rating Agency Condition; or
(f) 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.
Section 9.02. Supplemental Indentures with Consent of Noteholders. With
the consent of the Note Insurer and with the consent of Holders of Notes
representing not less than a majority of the Note Principal Balance of all
Outstanding Notes of the Classes affected thereby by Act of said Holders
delivered to the Trust and the Indenture Trustee, the Trust 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 Notes under this Indenture; provided, however, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(a) change any Payment Date or the Final Stated Maturity Date of the
Notes or, with respect to the Notes, reduce the Note Principal Balance thereof
or the Note Rate thereon, change the earliest date on which any Note may be
redeemed at the option of the Sponsor, change payment where, or the coin or
currency in which, any Note 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 Note on or after the Final Stated Maturity Date thereof or
for the enforcement of the payment of the entire remaining unpaid principal
amount of any Note on or after the Final Stated Maturity Date (or, in the case
of redemption, on or after the applicable Redemption Date);
(b) reduce the percentage of the Note Principal Balance of the
Outstanding Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required for
any waiver of compliance with provisions of this Indenture or Defaults hereunder
and their consequences provided for in this Indenture;
59
(c) modify any of the provisions of this Section 9.02 or Sections
5.13 or 5.17(b) hereof, 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 Note affected
thereby;
(d) modify or alter the provisions of the proviso to the definition
of the term "Outstanding;"
(e) permit the creation of any lien other than the lien of this
Indenture with respect to any part of the Trust Estate or terminate the lien of
this Indenture on any property at any time subject hereto or deprive the Holder
of any Note of the security afforded by the lien of this Indenture;
(f) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the Interest Payment Amount or Base Principal
Payment Amount for any Payment Date and any Class (including the calculation of
any of the individual components of such amounts) or to affect rights of the
Holders of the Notes to the benefits of any provisions for the redemption of
Notes contained herein; or
(g) incur any indebtedness, other than the Notes, that would cause
the Trust 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
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
9.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Trust and the Indenture Trustee of any
supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes to which such supplemental indenture
relates a notice setting forth in general terns 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 IX or the modifications thereby of the trusts created by this
Indenture, the Indenture Trustee shall be entitled to receive, and shall be
fully protected in relying upon, (i) an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture and such supplemental indenture does not adversely affect the
interests of the Noteholders or the Note Insurer in any material respect or (ii)
written
60
confirmation of satisfaction of the Rating Agency Condition. 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. The Master Servicer, on behalf of the Trust,
shall cause executed copies of any supplemental indentures to be delivered to
the Backup Servicer, the Note Insurer and the Rating Agencies.
Section 9.04. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article IX, 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 Notes to which such
supplemental indenture relates that have theretofore been or thereafter are
authenticated and delivered hereunder shall be bound thereby.
Section 9.05. Conformity With Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article IX shall conform to the requirements
of the TIA as then in effect so long as this Indenture shall then be qualified
under the TIA.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Owner Trustee, acting at the
direction of the Certificateholders, shall so determine, new Notes so modified
as to conform, in the opinion of the Indenture Trustee and the Owner Trustee,
acting at the direction of the Certificateholders, to any such supplemental
indenture may be prepared by the Master Servicer and executed by the Owner
Trustee, acting at the direction of the Certificateholders, on behalf of the
Trust, and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
Section 9.07. Amendments to Governing Documents. The Indenture Trustee
shall, upon a Trust Request, consent to any proposed amendment to the Trust's
governing documents, or an amendment to or waiver of any provision of any other
document relating to the Trust's governing documents, such consent to be given
without the necessity of obtaining the consent of the Holders of any Notes upon
receipt by the Indenture Trustee of:
(a) an Officer's 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;
(b) written confirmation of the satisfaction of the Rating Agency
Condition with respect to such proposed amendment; and,
(c) written consent of the Note Insurer.
61
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 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 NOTES
Section 10.01. Redemption of Notes. (a) The Sponsor may, at its sole cost
and expense, (i) terminate this Indenture and all the Notes may be redeemed in
whole, but not in part, on any Redemption Date on and after the related Clean-Up
Call Date at the Termination Price, (ii) redeem the Class A-1 Notes, Class A-2
Notes, or the Class A-3 Notes, on any Redemption Date on and after the related
Clean-up Call Date at the applicable Termination Price or (iii) to the extent
that the Sponsor has not redeemed any, or only one Class of Notes, redeem the
outstanding Classes of Notes on any Redemption Date on and after the related
Clean-up Call Date; provided that, in each case, the Group or Groups related to
the Class or Classes of Notes that are not being redeemed has reached its
Specified Over-Collateralization Amount and will remain at its Specified
Over-Collateralization Amount after giving effect to the redemption of the Class
of Notes being redeemed. Upon the redemption of any Class of Notes, the related
Sub-Trust shall be terminated and Excess Interest from such Sub-Trust will no
longer be available to fund the Reserve Account. Any amounts on deposit in the
Reserve Account related to the Class of Notes redeemed shall remain on deposit
in such Reserve Account until all of the Notes are redeemed and may continue to
be used to fund Shortfall Amounts for the other Classes of Notes.
(b) Any such purchase or redemption shall be accomplished by deposit
by the Sponsor, into the related Payment Account of the Termination Price on the
Servicer Payment Date preceding the Redemption Date. The amounts on deposit
therein shall be distributed by the Indenture Trustee on such Redemption Date in
accordance with the priority set forth in Section 8.02 hereof. No termination or
redemption is permitted without the prior written consent of the Note Insurer if
it would result in a draw on the Note Insurance Policy.
(c) [Reserved].
(d) Upon the redemption of any Class of Notes, the related Mortgage
Loans in the Trust Estate shall be released and delivered to the Sponsor.
(e) Upon receipt of the written notice from the Sponsor of its
election to redeem the Notes pursuant to Section 10.01 (a) hereof (which shall
state that the
62
Sponsor has determined that the conditions to redemption at the option of the
Sponsor have been satisfied and setting forth information as may be required to
accomplish such redemption), the Indenture Trustee shall prepare and deliver to
the Trust, the Seller, the Master Servicer, the Backup Servicer and the Note
Insurer, no later than the related Redemption Date, an Indenture Trustee's
Remittance Report.
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 Trust by
first class mail, postage prepaid, mailed not less than ten days prior to the
Redemption Date to each Holder of Notes to be redeemed, such Holders being
determined as of the Record Date for such Payment Date, and to the Note Insurer.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the price at which the Notes of such Class will be redeemed; and
(c) the fact of payment in full on such Notes, the place where such
Notes are to be surrendered for final payment (which shall be the office or
agency of the Trust to be maintained as provided in Section 3.02 hereof), and
that no interest shall accrue on such Note for any period after the date fixed
for redemption.
Failure to give notice of redemption, or any defect therein, to any Holder
of any Note selected for redemption shall not impair or affect the validity of
the redemption of any other Note.
Section 10.03. Notes Payable on Optional Redemption. Notice of redemption
having been given as provided in Section 10.02 hereof, the Notes to be redeemed
shall, on the applicable Redemption Date, become due and payable and (unless the
Trust shall default in such payment) no interest shall accrue on such Notes for
any period after such Redemption Date; provided, however, that if such payment
is not made on the Redemption Date, the Note Principal Balance shall, until
paid, bear interest from the Redemption Date at the applicable Note Rate.
Section 10.04. Auction Sale. If the Sponsor does not elect to exercise its
clean-up call option pursuant to Section 10.01 hereof with respect to any Class
or all Classes of Notes within three months after the related Clean-up Call
Date, on the following Payment Date, the remaining Mortgage Loans in the related
Sub-Trust or Sub-Trusts will be sold pursuant to the auction process outlined in
Exhibit B. The amounts received from the auction sale must be sufficient to
redeem the Notes for an amount equal to the aggregate outstanding Note Principal
Balance of the related Class or Classes of Notes, plus all accrued and unpaid
interest thereon including shortfalls of Interest Carry-forward Amounts
(including, with respect to the Class A-2 Notes, any Class A-2 Net WAC Cap
Carry-Forward Amount and the Class A-3 Notes, any Class A-3 Net WAC Cap
Carry-Forward Amount), the Indenture Trustee's fees and expenses associated with
such auction sale (including any fees and expenses associated with engaging a
third-
63
party as agent to assist in the auction sale process), unreimbursed advances due
and owing to the Master Servicer and all amounts due and owing to the Note
Insurer (such aggregate amount, the "Minimum Sale Price").
However, if Noteholders representing 66-2/3% of the outstanding principal
balance of the related Class or Classes of Notes consent and the Note Insurer
consents, the Indenture Trustee may sell the Mortgage Loans remaining in the
related Sub-Trust or Sub-Trusts after the Clean-up Call Date for less than the
Minimum Sale Price. The Indenture Trustee will submit a claim to the Note
Insurer for any resulting shortfalls in Insured Amounts pursuant to Section 8.03
hereof. Additionally, to the extent that the auction sale would not produce
sufficient proceeds and the Noteholders do not consent to sell the Mortgage
Loans for less than the Minimum Sale Price, the Note Insurer may exercise the
clean-up call option with respect to the related Class or Classes of Notes for
the Minimum Sale Price (such funds to be distributed according to the priority
established, as applicable, in Section 5.07). In any event, the Indenture
Trustee shall be entitled to reimbursement of its costs and expenses of any such
sale (including any fees and expenses associated with engaging a third-party to
assist in any attempted auction sale).
In addition, so long as the auction process continues with respect to one
or more Groups, all payments from such Group or Groups that would normally be
distributed to the Certificateholders pursuant to Section 8.02(x) or 5.07(l)
hereof will be distributed as principal to the Noteholders of the related Class
or Classes and all payments from the other Group or Groups that would normally
be distributed to the Certificateholders will be deposited in the Reserve
Account.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions. (a) Upon any
application or request by any Person to the Indenture Trustee to take any action
under any provision of this Indenture, such Person shall furnish to the
Indenture Trustee an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel, if requested by the
Indenture Trustee, 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:
64
(i) a statement that each individual signing such certificate,
opinion or letter has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate, opinion or letter are based;
(iii) 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
(iv) 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 Trust 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 Trust
shall deliver any document as a condition of the reporting of such application,
or as evidence of the Trust'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 Trust to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the
65
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)(ii)
hereof.
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 Trust, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Trust'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)
hereof.
Section 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders 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 Trust. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Indenture
Trustee and the Trust, if made in the manner provided in this Section 11.03.
(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 Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration 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 Trust in reliance thereon; whether or not notation
of such action is made upon such Notes.
Section 11.04. Notices, etc., to Indenture Trustee, the Note Insurer and
Trust. Any request, demands authorization, direction, notice, consent, waiver or
Act of
66
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with:
(a) the Indenture Trustee by any Noteholder or by the Trust shall be
sufficient for every purpose hereunder if in writing and made, given, furnished
or filed and received by the Indenture Trustee at its Corporate Trust Office; or
(b) the Trust by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder (except as provided in Section 5.01 (c)
and (d)) hereof if in writing and mailed, first-class postage prepaid, to the
Trust addressed to it at Accredited Mortgage Loan Trust 2002-2, in care of U.S.
Bank Trust National Association, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, Attention: Corporate Trust Administration, or at any other address
previously furnished in writing to the Indenture Trustee by the Trust.
(c) the Note Insurer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to Ambac Assurance Corporation addressed to it at
Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Surveillance
Department (in each case in which notice or other communication to the Note
Insurer refers to an Event of Default, a claim on the Note Insurance Policy or
with respect to which failure on the part of the Note Insurer to respond shall
be deemed to constitute consent or acceptance, then a copy of such notice or
other communication should also be sent to the attention of each of the General
Counsel and the Head-Financial Guaranty Group and shall be marked to indicate
"URGENT MATERIAL ENCLOSED"), or at any other address previously furnished in
writing to the Indenture Trustee by the Note Insurer; or
(d) the Sponsor by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and mailed, first-class,
postage paid, to Accredited Home Lenders, Inc., 00000 Xxxxxx xx Xxxxxxx, Xxxxx
000, Xxx Xxxxx, Xxxxxxxxxx, 00000, Attention: Corporate Trust Administration, or
at any other address previously furnished in writing to the Indenture Trustee by
the Sponsor; or
(e) the Master Servicer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage paid, to Accredited Home Lenders, Inc., 00000
Xxxxxx xx Xxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: Corporate
Trust Administration or at any other address previously furnished in writing to
the Indenture Trustee by the Master Servicer; or
(f) the Seller by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and mailed, first-class,
postage paid, to Accredited Home Lenders, Inc., 00000 Xxxxxx xx Xxxxxxx, Xxxxx
000, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: Corporate Trust Administration or
at any other address previously furnished in writing to the Indenture Trustee by
the Seller; or
67
(g) the Underwriter by any party or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed, first-class,
postage prepaid, to Xxxxxx Brothers Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxx X. Xxxxx, or at any other address previously furnished
in writing to the Indenture Trustee by the Underwriter; or
(h) the Backup Servicer by the Master Servicer or the Indenture
Trustee shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage prepaid, to Countrywide Home Loans, Inc., 0000
Xxxxxxxxx Xxxxx, Xxxxx, Xxxxx 00000, Attention: Accredited Mortgage Loan Trust
2002-2; or at any other address previously furnished in writing to the Indenture
Trustee by the Backup Servicer.
Notices required to be given to the Rating Agencies by the Trust or the
Indenture Trustee shall be in writing, personally delivered or mailed
first-class postage pre-paid, to (i) in the case of Moody's, at the following
address: Xxxxx'x Investors Service, Inc., Residential Mortgage Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (ii) in the case of
S&P, at the following address: Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
Attention: Asset-Backed Surveillance Department; or as to each of the foregoing,
at such other address as shall be designed by written notice to the other
parties; or
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices.
Where this Indenture provides for notice to Noteholders of any event or the
mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whole such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Noteholders 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 Noteholder
shall affect the sufficiency of such notice or report with respect to other
Noteholders, 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 Noteholders shall be filed with the Indenture Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
68
Section 11.06. Rules by Indenture Trustee. The Indenture Trustee may (but
is not obligated to) make reasonable rules for any meeting of Noteholders.
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.
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 Trust 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 Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 11.11. Benefits of Indenture. Nothing in this Indenture or in the
Notes, expressed or implied, shall give to any Person, other than the Note
Insurer, the parties hereto and their successors hereunder, any separate trustee
or co-trustee appointed under Section 6.14 hereof and the Noteholders, 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
Note is proposed to be paid shall not be a Business Day, then (notwithstanding
any other provision of the Notes or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day, with the same
force and effect as if made on the nominal date of any such Payment Date,
Redemption Date or other date for the payment of principal of or interest on any
Note 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 NOTEHOLDERS 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 NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED
69
THEREIN, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 11.14. Counterparts. This 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 Master Servicer, on behalf of the Trust, and at its expense in
compliance with any Opinion of Counsel delivered pursuant to Sections 2.11 (c)
or 3.06 hereof.
Section 11.16. Trust Obligation. (a) No recourse, may be taken, directly
or indirectly, with respect to the obligations of the Trust, the Owner Trustee
or the Indenture Trustee on the Notes or under this Indenture or any certificate
or other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee (except as expressly stated herein regarding performance of
its own obligations) Owner Trustee in its individual capacity, (ii) any manner
of a beneficial interest in the Trust or (iii) any partner, owner, beneficiary,
agent, officer, director, employee or agent of the Indenture Trustee or the
Owner Trustee in its individual capacity, any holder of a beneficial interest in
the Trust, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
the Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Trust hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of the Trust Agreement.
(b) It is expressly understood and agreed by the parties hereto that
(i) this Agreement is executed and delivered by U.S. Bank Trust, National
Association, not individually or personally but solely as Owner Trustee of the
Issuer, in the exercise of the powers and authority conferred and vested in it
under the Trust Agreement, (ii) each of the representations, undertakings and
agreements herein made on the part of the Issuer is made and intended not as
personal representations, undertakings and agreements by U.S. Bank Trust,
National Association but is made and intended for the purpose for binding only
the Issuer, (iii) nothing herein contained shall be construed as creating any
liability on U.S. Bank Trust, National Association, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (iv) under no
circumstances shall U.S. Bank Trust, National Association be personally liable
for the payment of any indebtedness or expenses of the Issuer or be liable for
the breach or failure of any obligation, representation, warranty or
70
covenant made or undertaken by the Issuer under this Agreement or any other
related documents.
Section 11.17. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder and Beneficial Owner, by accepting a Note, hereby
covenant and agree that they will not at any time institute against the Sponsor
or the Trust, or join in any institution against the Sponsor or the Trust of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the Basic Documents. In addition, the Indenture
Trustee will, if directed in writing by the Majority Noteholders and indemnity
is provided as set forth herein, on behalf of the Holders of the Notes, (a) file
a written objection to any motion or other proceeding seeking the substantive
consolidation of the Sponsor or the Trust, (b) file an appropriate memorandum of
points and authorities or other brief in support of such objection, or (c)
endeavor to establish at the hearing on such objection that the substantive
consolidation of such entity would be materially prejudicial to the Noteholders.
This Section 11.17 will survive for one year and one day following the
termination of this indenture.
Section 11.18. Inspection. The Trust agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee and the Note
Insurer, during the Trust's normal business hours, to examine all of books of
account, records, reports and other papers of the Trust, to make copies and
extracts therefrom, to cause such books to be audited by Independent Accountants
selected by the Indenture Trustee or the Note Insurer, as the case may be, and
to discuss its affairs, finances and accounts with its officers, employees and
Independent Accountants (and by this provision the Trust 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 11.18 shall be borne by the Trust.
Section 11.19. Usury. The amount of interest payable or paid on any Note
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 New York (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 Note exceeds the
Highest Lawful Rate, the Trust 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 Note, and the Trust, and the
Holder receiving such excess payment shall promptly, upon discovery of such
error or upon notice thereof from the Trust 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 Note, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Indenture Trustee for the
benefit of Holders of Notes for the use,
71
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 Notes.
Section 11.20. Note Insurer Default. Any right conferred to the Note
Insurer shall be suspended during any period in which a Note Insurer Default
exists. At such time as the Notes are no longer Outstanding under this
Indenture, and no amounts owed to the Note Insurer under the Basic Documents
remain unpaid, the Note Insurer's rights under this Indenture shall terminate.
Section 11.21. Third-Party Beneficiary. The Note Insurer is intended as a
third-party beneficiary of this Indenture which shall be binding upon and inure
to the benefit of the Note Insurer; provided, that, notwithstanding the
foregoing, for so long as a Note Insurer Default is continuing with respect to
its obligations under the Note Insurance Policy, the Noteholders shall succeed
to the Note Insurer's rights hereunder. Without limiting the generality of the
foregoing, all covenants and agreements in this Indenture that expressly confer
rights upon the Note Insurer shall be for the benefit of and run directly to the
Note Insurer, and the Note Insurer shall be entitled to rely on and enforce such
covenants to the same extent as if it were a party to this Indenture.
[Remainder of Page Intentionally Left Blank]
72
IN WITNESS WHEREOF, the Trust and the Indenture Trustee 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.
ACCREDITED MORTGAGE LOAN TRUST 2002-2
By: U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Owner Trustee under the
Trust Agreement
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Indenture Trustee
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Associate
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Assistant Secretary
73
APPENDIX I
DEFINED TERMS
"Accepted Servicing Practices": The Master Servicer's normal
servicing practices, which in general will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service, for their own
account, mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located.
"Account": Any of the Collection Account, the Payment Accounts, the
Pre-Funding Accounts, the Capitalized Interest Account, the Reserve Account or
the Note Insurance Payment Account.
"Accountant": A Person engaged in the practice of accounting who
(except when the Indenture provides that an Accountant must be Independent) may
be employed by or affiliated with the Trust or an Affiliate of the Trust.
"Accrual Period": With respect to the Class A-1 Notes and any
Payment Date, the prior calendar month; with respect to the Class A-2 Notes and
Class A-3 Notes and any Payment Date, the period from and including the prior
Payment Date (or, in the case of the first Payment Date, from and including the
Closing Date) to and including the day immediately preceding such Payment Date.
"Act": With respect to any Noteholder, as defined in Section 11.03
of the Indenture.
"Affiliate": With respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect 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 or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent": Any Note Registrar or Authenticating Agent.
"Aggregate Principal Balance": With respect to any Mortgage Loans
and any date of determination, the aggregate of the Principal Balances of such
Mortgage Loans as of such date of determination.
"Appraised Value": As to any Mortgaged Property, the appraised value
of the Mortgaged Property based upon the appraisal made in connection with the
origination of the Mortgage Loan and, in the case of a Mortgaged Property that
was purchased with the proceeds of the Mortgage Loan or within twelve months
preceding the origination of the Mortgage Loan, the sales price of the Mortgaged
Property, if such sales price is less than such appraised value.
"Assignment of Mortgage": With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the
1
conveyance of the Mortgage to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer.
"Authenticating Agent": The Person, if any, appointed as
Authenticating Agent by the Owner Trustee on behalf of the Trust, acting at the
direction of the Certificateholders, pursuant to Section 6.14 of the Indenture,
until any successor Authenticating Agent for the Notes is named, and thereafter
"Authenticating Agent" shall mean such successor. The initial Authenticating
Agent shall be the Indenture Trustee. Any Authenticating Agent other than the
Indenture Trustee shall sign an instrument under which it agrees to be bound by
all of the terms of this Indenture applicable to the Authenticating Agent.
"Authorized Denominations": Each Class of Notes is issuable only in
the minimum Percentage Interest corresponding to a minimum denomination of
$25,000 or integral multiples of $1,000 in excess thereof; provided, however,
that one Note of each Class is issuable in a denomination equal to any such
multiple plus an additional amount such that the aggregate denomination of all
Notes of such Class shall be equal to the Original Note Principal Balance of
such Class.
"Authorized Officer": With respect to (i) the Indenture Trustee, any
Responsible Officer, (ii) the Owner Trustee, the president, any vice president,
any assistant vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer, any financial services
officer or any other officer of the Owner Trustee customarily performing
functions similar to those performed by the above officers and (iii) any other
Person, the chairman, chief operating officer, president or any vice president
of such Person.
"Available Funds": With respect to any Payment Date and Group, the
amount to be on deposit in the related Payment Account on such Payment Date less
the Indenture Trustee Fee and any payments in respect of the indemnification and
other expenses (subject to Section 6.16 of the Indenture) due to the Indenture
Trustee pursuant to the Indenture or the Sale and Servicing Agreement, the Owner
Trustee Fee, and the Note Insurer Fee, in each case with respect to the related
Group (excluding the amount of any Insured Amounts and prior to the application
of such amounts as described in Section 8.02 of the Indenture for such Payment
Date) as a result of (i) the Servicer Remittance Amount for the related Group
received by the Indenture Trustee from the Master Servicer on the Servicer
Payment Date pursuant to the Sale and Servicing Agreement, (ii) any other funds
from any deposits for such Group to be made by the Master Servicer pursuant to
the Sale and Servicing Agreement, (iii) the Termination Price received by from
the Sponsor on the related Clean-up Call Date pursuant to Section 10.01 of the
Indenture, (iv) on each Payment Date, in accordance with the Indenture Trustee's
Remittance Report, (A) until the Shortfall Amount for the related Class, is paid
in full, and (B) until the amount specified in clause (v) of Section 8.02 of the
Indenture for such group is paid in full, in each case, first, pro rata from the
Payment Account relating to each of the other Classes of Notes based on the
amount of Net Monthly Excess Cashflow for such other Classes of Notes, to the
extent of the Net Monthly Excess Cashflow from the related Groups of Mortgage
Loans and second, from each Reserve Account, an amount equal to the product of
(A) a fraction, the numerator of which is the amount on deposit in such Reserve
Account and the denominator of which is the aggregate amounts on deposit in all
three Reserve Accounts and (B) the Shortfall Amount after giving effect to this
Section 8.01(a)(vi)(B) first, (v) any amounts received from the related
Pre-Funding
2
Account, (vi) any amounts received from the Capitalized Interest Account
allocable to such Payment Account, (vii) on each Payment Date, from each Reserve
Account an amount equal to the product of (A) a fraction, the numerator of which
is the amount on deposit in the such Reserve Account and the denominator of
which is the aggregate amounts on deposit in all three Reserve Accounts and (B)
the Reserve Account Release Amount, and (viii) all other amounts for such Group
received for deposit in such Payment Account, including the payment of any Loan
Repurchase Price or Substitution Adjustment for a Mortgage Loan in such Group
received by the Indenture Trustee. For purposes of calculating the Available
Funds, any Loan Repurchase Price or Substitution Adjustment that is paid shall
be deemed deposited in the Payment Account in the Due Period preceding such
Servicer Payment Date.
"Backup Servicer": Countrywide Home Loans Servicing LP a Texas
limited partnership, or any successor appointed as provided in the Sale and
Servicing Agreement.
"Backup Servicing Fee": As defined in Section 5.08 of the Sale and
Servicing Agreement.
"Backup Servicing Fee Rate": The product of (i) 0.015% per annum
(or, in the event that servicing is transferred to the Backup Servicer, 0.50%
per annum, plus the per annum rates (as applicable) referred to as supplemental
fees in clause (i) of the Servicing Fee Rate definition), and (ii) the stated
principal balance of the Mortgage Loans at the beginning of the related Due
Period.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the
payment of the unamortized principal balance of such Mortgage Loan in a single
payment at the maturity of such Mortgage Loan that is greater than the preceding
Monthly Payment.
"Balloon Payment": A payment of the unamortized principal balance of
a Mortgage Loan in a single payment at the maturity of such Mortgage Loan that
is greater than the preceding Monthly Payment.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the United States Code), as amended.
"Base Principal Payment Amount": For any Payment Date and any Class
of Notes will be the lesser of:
(a) the excess of (x) the sum, as of such Payment Date, of (A) the
Available Funds for the related Group of Mortgage Loans and (B) any
Insured Amount with respect to the related Class of Notes over (y) the sum
of the Interest Payment Amount for such Group; and
(b) the sum, without duplication, of:
(i) all scheduled principal payments due and collected or
advanced for the related Due Period, plus the principal
portion of all prepayments in full received during the
related Prepayment Period, plus all partial prepayments
3
and other unscheduled recoveries of principal (other
than Net Liquidation Proceeds) received during the
related calendar month less any related reimbursements
of Delinquency Advances or of Servicing Advances to the
Master Servicer, in each case, for the related Group of
Mortgage Loans;
(ii) the Principal Balance of each Mortgage Loan in such
Group that was repurchased by the Sponsor on the related
Servicer Payment Date from such Group to the extent such
Principal Balance is actually received by the Indenture
Trustee and less any related reimbursements of
Delinquency Advances or of Servicing Advances to the
Master Servicer;
(iii) any Substitution Adjustments delivered by the Sponsor on
the related Servicer Payment Date in connection with a
substitution of a Mortgage Loan in that Group, to the
extent such Substitution Adjustments are actually
received by the Indenture Trustee;
(iv) the Net Liquidation Proceeds actually collected by the
Master Servicer on all Mortgage Loans in such Group
during the preceding calendar month to the extent such
Net Liquidation Proceeds relate to principal;
(v) the proceeds received by the Indenture Trustee upon the
exercise by the Sponsor of its option to call the
related Class of Notes to the extent such proceeds
relate to principal;
(vi) the proceeds received by the Indenture Trustee on any
termination of the trust to the extent such proceeds
relate to principal allocable to such Group;
(vii) any amount that the Note Insurer has elected to pay as
principal including Liquidated Loan Losses prior to the
occurrence of any Remaining Over-collateralization
Deficit;
(viii) on the Payment Date following the end of the
Pre-Funding Period, any amounts remaining in the related
Pre-Funding Account;
minus
(ix) the amount of any Over-collateralization Reduction
Amount for such Group for such Payment Date.
In no event will the Base Principal Payment Amount for a Group with
respect to any Payment Date be (x) less than zero or (y) greater than the then
aggregate outstanding Note Principal Balance of the related Class of Notes.
"Basic Documents": The Indenture, the Trust Agreement, the Sale and
Servicing Agreement, the Insurance Agreement and the Indemnification Agreement.
4
"Beneficial Owner": With respect to a Book-Entry Note, the Person
who is the beneficial owner of such Note as reflected on the books of the
Clearing Agency for the Notes or on the books of a Person maintaining an account
with such Clearing Agency (as either a Direct Participant or an Indirect
Participant, in accordance with the rules of such Clearing Agency).
"Best Efforts": Efforts determined to be in good faith and
reasonably diligent by the Person performing such efforts, specifically the
Trust or the Master Servicer or any other agent of the Trust, as the case may
be, in its reasonable discretion. Such efforts do not require the Trust or the
Master Servicer or any other agent of the Trust, as the case may be, to enter
into any litigation, arbitration or other legal or quasi-legal proceeding, nor
do they require the Trust or the Master Servicer or any other agent of the
Trust, 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 Sale and
Servicing Agreement.
"Book-Entry Notes": Any Notes 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 (as either a Direct Participant or an Indirect Participant in
accordance with the rules of such Clearing Agency).
"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 the Note Insurer or
banking institutions in the State of New York, the State of Delaware, the State
of California, or the state in which the Indenture Trustee's office from which
payments will be made to Noteholders, are authorized or obligated by law,
regulation or executive order to be closed.
"Capitalized Interest Account": The Eligible Account established
pursuant to Section 5.25 of the Sale and Servicing Agreement.
"CERCLA": The Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
"Certificates" shall mean the Trust Certificates.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Civil Relief Act Interest Shortfall": With respect to any Payment
Date, for any Mortgage Loan as to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Civil Relief Act or similar state law, the
amount, if any, by which (a) interest collectible on such Mortgage Loan during
the most recently ended calendar month is less than (b) one month's interest on
the Principal Balance of such Mortgage Loan, calculated at a rate equal to the
related Mortgage Interest Rate.
"Class": Each class of Notes designated as the Class A-1 Notes and
the Class A-2 Notes.
5
"Class A-1 Base Principal Payment Amount": The Base Principal
Payment Amount for the Class A-1 Notes.
"Class A-1 Carry-Forward Amount": As of any Payment Date, the sum of
(a) the amount, if any, by which (i) the Class A-1 Interest Payment Amount as of
the immediately preceding Payment Date exceeded (ii) the amount of interest
actually paid to the Holders of the Class A-1 Notes on such immediately
preceding Payment Date and (b) thirty (30) days' interest on the amount
described in clause (a), calculated at an interest rate equal to the Class A-1
Note Rate.
"Class A-1 Current Interest": With respect to the Class A-1 Notes
for any Payment Date, the interest accrued during the related Accrual Period at
the Class A-1 Note Rate applicable to such Payment Date on the Class A-1 Note
Principal Balance as of such Payment Date (and prior to making any payments on
such Payment Date) reduced by the sum of Civil Relief Act Interest Shortfalls
and Net Prepayment Interest Shortfalls, in each case, related to the Group 1
Mortgage Loans.
"Class A-1 Formula Payment Amount": With respect to the Class A-1
Notes for any Payment Date, the sum of the Class A-1 Interest Payment Amount and
the Class A-1 Base Principal Payment Amount.
"Class A-1 Interest Payment Amount": With respect to the Class A-1
Notes for any Payment Date, an amount equal to (a) the related Class A-1 Current
Interest, plus (b) the Class A-1 Carry-Forward Amount remaining unpaid as of
such Payment Date.
"Class A-1 Note": Any Note designated as a "Class A-1 Note" on the
face thereof, in the form of Exhibit A to the Indenture. The Class A-1 Notes
shall be issued with an initial aggregate Note Principal Balance equal to the
Original Note Principal Balance therefor.
"Class A-1 Note Principal Balance": As of any date of determination,
the Original Note Principal Balance of the Class A-1 Notes less any amounts
actually paid with respect to principal thereon on all prior Payment Dates.
"Class A-1 Note Rate": With respect to any Payment Date, the per
annum rate equal to 4.48%; provided, that, on any Payment Date after the
Clean-Up Call Date related to the Class A-1 Notes, the Class A-1 Note Rate will
be 5.23%.
"Class A-1 Payment Amount": With respect to the Class A-1 Notes for
any Payment Date, the amount to be paid to the Holders of the Class A-1 Notes on
such Payment Date, applied first to interest and then to principal, which amount
shall be equal to the lesser of (i) the Class A-1 Formula Payment Amount for
such Payment Date and (ii) the amount (including any applicable portion of any
Insured Amount) available for payment on account of the Class A-1 Notes for such
Payment Date pursuant to the provisions of Section 8.02 of the Indenture.
"Class A-2 Base Principal Payment Amount": The Base Principal
Payment Amount for the Class A-2 Notes.
6
"Class A-2 Carry-Forward Amount": As of any Payment Date, the sum of
(a) the amount, if any, by which (i) the Class A-2 Interest Payment Amount as of
the immediately preceding Payment Date exceeded (ii) the amount of interest
actually paid to the Holders of the Class A-2 Notes on such immediately
preceding Payment Date and (b) thirty (30) days' interest on the amount
described in clause (i), calculated at an interest rate equal to the Class A-2
Note Rate.
"Class A-2 Current Interest": With respect to the Class A-2 Notes
for any Payment Date, the interest accrued during the related Accrual Period at
the Class A-2 Note Rate applicable to such Payment Date on the Class A-2 Note
Principal Balance as of such Payment Date (and prior to making any distributions
on such Payment Date) reduced by the sum of Civil Relief Act Interest Shortfalls
and Net Pre-payment Interest Shortfalls, in each case, related to the Group 2
Mortgage Loans.
"Class A-2 Formula Note Rate": A per annum rate equal to the lesser
of (i) LIBOR plus 0.49%; provided, that, on any Payment Date after the Clean-Up
Call Date related to the Class A-2 Notes, the Class A-2 Formula Note Rate will
be equal to LIBOR plus 0.98% per annum, and (ii) 13.0%.
"Class A-2 Formula Payment Amount": With respect to the Class A-2
Notes for any Payment Date, the sum of the Class A-2 Interest Payment Amount and
the Class A-2 Base Principal Payment Amount.
"Class A-2 Interest Payment Amount": With respect to the Class A-2
Notes for any Payment Date, an amount equal to (a) the related Class A-2 Current
Interest, plus (b) the Class A-2 Carry-Forward Amount remaining unpaid as of
such Payment Date.
"Class A-2 Net WAC Cap Carry-Forward Amount": With respect to the
Class A-2 Notes and any Payment Date, the sum of (a) the excess of (x) the Class
A-2 Current Interest calculated at the Class A-2 Formula Note Rate over (y) the
Class A-2 Current Interest calculated at the Class A-2 Net WAC Cap Rate, in each
case as of such Payment Date and (b) the amount of any Class A-2 Net WAC Cap
Carry-Forward Amount remaining unpaid from any previous Payment Date, with 30
days' interest thereon on the Class A-2 Note Rate.
"Class A-2 Net WAC Cap Rate": A per annum rate equal to the product
of (1) the Weighted Average Mortgage Interest Rate with respect to the Mortgage
Loans in Loan Group 2, less the rate at which the Indenture Trustee Fee is then
calculated, less the rate at which the Owner Trustee Fee is then calculated,
less the Servicing Fee Rate, less the Backup Servicing Fee Rate, less the
Premium Percentage, each with respect to the Class A-2 Notes only, less 0.50%
and (2) 30 divided by the number of days in the related accrual period.
"Class A-2 Note": Any Note designated as a "Class A-2 Note" on the
face thereof, in the form of Exhibit A to the Indenture. The Class A-2 Notes
shall be issued with an initial aggregate Note Principal Balance equal to the
Original Note Principal Balance therefor.
"Class A-2 Note Principal Balance": As of any date of determination,
the Original Note Principal Balance of the Class A-2 Notes less any amounts
actually paid with respect to principal thereon on all prior Payment Dates.
7
"Class A-2 Note Rate": With respect to any Payment Date, the per
annum rate equal to the lesser of (i) the Class A-2 Formula Note Rate and (ii)
the Class A-2 Net WAC Cap Rate for such Payment Date.
"Class A-2 Payment Amount": With respect to the Class A-2 Notes for
any Payment Date, the amount to be paid to the Holders of the Class A-2 Notes on
such Payment Date, applied first to interest and then to principal, which amount
shall be equal to the lesser of (i) the Class A-2 Formula Payment Amount for
such Payment Date and (ii) the amount (including any applicable portion of any
Insured Amount) available for payment on account of the Class A-2 Notes for such
Payment Date.
"Class A-3 Base Principal Payment Amount": The Base Principal
Payment Amount for the Class A-3 Notes.
"Class A-3 Carry-Forward Amount": As of any Payment Date, the sum of
(a) the amount, if any, by which (i) the Class A-3 Interest Payment Amount as of
the immediately preceding Payment Date exceeded (ii) the amount of interest
actually paid to the Holders of the Class A-3 Notes on such immediately
preceding Payment Date and (b) thirty (30) days' interest on the amount
described in clause (i), calculated at an interest rate equal to the Class A-3
Note Rate.
"Class A-3 Current Interest": With respect to the Class A-3 Notes
for any Payment Date, the interest accrued during the related Accrual Period at
the Class A-3 Note Rate applicable to such Payment Date on the Class A-3 Note
Principal Balance as of such Payment Date (and prior to making any distributions
on such Payment Date) reduced by the sum of Civil Relief Act Interest Shortfalls
and Net Pre-payment Interest Shortfalls, in each case, related to the Group 2
Mortgage Loans.
"Class A-3 Formula Note Rate": A per annum rate equal to the lesser
of (i) LIBOR plus 0.50%; provided, that, on any Payment Date after the Clean-Up
Call Date related to the Class A-3 Notes, the Class A-3 Formula Note Rate will
be equal to LIBOR plus 1.00% per annum, and (ii) 13.0%.
"Class A-3 Formula Payment Amount": With respect to the Class A-3
Notes for any Payment Date, the sum of the Class A-3 Interest Payment Amount and
the Class A-3 Base Principal Payment Amount.
"Class A-3 Interest Payment Amount": With respect to the Class A-3
Notes for any Payment Date, an amount equal to (a) the related Class A-3 Current
Interest, plus (b) the Class A-3 Carry-Forward Amount remaining unpaid as of
such Payment Date.
"Class A-3 Net WAC Cap Carry-Forward Amount": With respect to the
Class A-3 Notes and any Payment Date, the sum of (a) the excess of (x) the Class
A-3 Current Interest calculated at the Class A-3 Formula Note Rate over (y) the
Class A-3 Current Interest calculated at the Class A-3 Net WAC Cap Rate, in each
case as of such Payment Date and (b) the amount of any Class A-3 Net WAC Cap
Carry-Forward Amount remaining unpaid from any previous Payment Date, with 30
days' interest thereon on the Class A-3 Note Rate.
8
"Class A-3 Net WAC Cap Rate": A per annum rate equal to the product
of (1) the Weighted Average Mortgage Interest Rate with respect to the Mortgage
Loans in Loan Group 3, less the rate at which the Indenture Trustee Fee is then
calculated, less the rate at which the Owner Trustee Fee is then calculated,
less the Servicing Fee Rate, less the Backup Servicing Fee Rate, less the
Premium Percentage, each with respect to the Class A-3 Notes only, less 0.50%
and (2) 30 divided by the number of days in the related accrual period.
"Class A-3 Note": Any Note designated as a "Class A-3 Note" on the
face thereof, in the form of Exhibit A to the Indenture. The Class A-3 Notes
shall be issued with an initial aggregate Note Principal Balance equal to the
Original Note Principal Balance therefor.
"Class A-3 Note Principal Balance": As of any date of determination,
the Original Note Principal Balance of the Class A-3 Notes less any amounts
actually paid with respect to principal thereon on all prior Payment Dates.
"Class A-3 Note Rate": With respect to any Payment Date, the per
annum rate equal to the lesser of (i) the Class A-3 Formula Note Rate and (ii)
the Class A-3 Net WAC Cap Rate for such Payment Date.
"Class A-3 Payment Amount": With respect to the Class A-3 Notes for
any Payment Date, the amount to be paid to the Holders of the Class A-3 Notes on
such Payment Date, applied first to interest and then to principal, which amount
shall be equal to the lesser of (i) the Class A-3 Formula Payment Amount for
such Payment Date and (ii) the amount (including any applicable portion of any
Insured Amount) available for payment on account of the Class A-3 Notes for such
Payment Date.
"Clean-Up Call Date": The first Payment Date on which: (1) the Class
A-1 Note Principal Balance is equal to or less than 10% of the Original Note
Principal Balance of Class A-1 Notes provided that Loan Group 2 and Loan Group 3
are each currently at its Specified Over-collateralization Amount and will
remain at its Specified Over-collateralization Amount after giving effect to the
redemption of the Class A-1 Notes; (2) the Class A-2 Note Principal Balance is
equal to or less than 10% of the Original Note Principal Balance of the Class
A-2 Notes provided that Loan Group 1 and Loan Group 3 are each currently funded
at its Specified Over-collateralization Amount and will remain at its Specified
Over-collateralization Amount after giving effect to redemption of the Class A-2
Notes; (3) the Class A-3 Note Principal Balance is equal to or less than 20% of
the Original Note Principal Balance of the Class A-3 Notes provided that Loan
Group 1 and Loan Group 2 are each currently funded at its Specified
Over-collateralization Amount and will remain at its Specified
Over-collateralization Amount after giving effect to redemption of the Class A-3
Notes or (4) to the extent the sponsor has not exercised the optional clean-up
call with respect to any, one or two of the Class A-1 Notes, Class A-2 Notes, or
Class A-3 Notes, the Sponsor may redeem such outstanding Class or Classes of
Notes when their aggregate outstanding Principal Balance is equal to or less
than the sum of (a) 10% of the original Aggregate Principal Balance of the Class
A-1 Notes, if such class is still outstanding, (b) 10% of the original Aggregate
Principal Balance of the Class A-2 Notes, if such Class is still outstanding,
and (c) 20% of the original Aggregate Principal Balance of the Class A-3 Notes,
if such Class is still outstanding.
9
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities 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
Notes, which may include securities brokers and dealers, banks and trust
companies and clearing corporations and certain other organizations.
"Closing Date": November 25, 2002.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The Eligible Account established and
maintained by the Master Servicer pursuant to Section 5.02(b) of the Sale and
Servicing Agreement.
"Collection Period": With respect to each Payment Date, the calendar
month preceding the related Payment Date.
"Commission": The United States Securities and Exchange Commission.
"Compensating Interest": As defined in Section 6.05 of the Sale and
Servicing Agreement.
"Corporate Trust Office": With respect to (y) the Indenture Trustee,
the principal office of the Indenture Trustee at which at any particular time
its corporate trust business shall be principally administered, which office at
the date of the execution of the Basic Documents is located at: Deutsche Bank
National Trust Company, 0000 Xxxx Xx. Xxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxxxx
00000-0000, Attention: AC0202 where it conducts its trust administration
services; and (z) the Owner Trustee, the office of the Owner Trustee at which at
any particular time its corporate trust business shall be administered, which
office at the date of the execution of the Basic Documents is located at 000
Xxxxx Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
Corporate Trust Administration.
"Credit Enhancement Amount": With respect to any Payment Date, the
sum of (a) the aggregate Over-collateralization Amount of Group 1, Group 2 and
Group 3 for such Payment Date (after taking into account any
Over-collateralization Increase Amount) and (b) the amount on deposit in all
three Reserve Accounts after giving effect to any deposit to or withdrawal (not
related to the Reserve Account Release Amount) of funds from all three Reserve
Accounts on such Payment Date.
"Cumulative Loan Loss": With respect to any period, the sum of all
Liquidated Loan Losses which occurred during such period.
"Curtailment": With respect to a Mortgage Loan, any payment of
principal received in advance of its Monthly Payment and which is not
accompanied by an amount as to
10
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.
"Cut-Off Date": With respect to the Initial Mortgage Loans, October
30, 2002 after giving effect to scheduled principal payments due on or prior to
November 1, 2002 and with respect to the Subsequent Mortgage Loans, November 30,
2002 after giving effect to scheduled principal payments due on or prior to
December 1, 2002.
"Cut-Off Date Aggregate Principal Balance": With respect to each
Loan Group or all Loan Groups, the aggregate of the Cut-Off Date Principal
Balance of the Mortgage Loans in such Loan Group or both Loan Groups, as
required by the context. The Cut-Off Date Aggregate Principal Balance of the
Mortgage Loans for the Trust is $406,425,083.86. The Cut-Off Date Aggregate
Principal Balance for the Mortgage Loans in Loan Group 1, Loan Group 2 and Loan
Group 3 is $134,000,983.34, $187,542,191.98 and $84,881,908.52, respectively.
"Cut-Off Date Principal Balance": Means as to any Mortgage Loan, the
principal balance of such Mortgage Loan as of the related Cut-Off Date as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such amortization schedule by reason of any moratorium or similar
waiver or grace period) (or, with respect to Mortgage Loans which were
originated after the Cut-Off Date, as of the date of origination) and after
giving effect to any previous Curtailments and Liquidation Proceeds allocable to
principal (other than with respect to any Liquidated Mortgage Loan),
irrespective of any delinquency in payment by the related Mortgagor.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the Bankruptcy Code, except such a
reduction that constitutes a Deficient Valuation or a permanent forgiveness of
principal.
"Default": Any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding Principal Balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"Definitive Notes": Notes other than Book-Entry Notes.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
by a Qualified Substitute Mortgage Loan.
"Delinquency Ratio": With respect to any Payment Date, the
percentage equivalent of a fraction (a) the numerator of which equals the
Aggregate Principal Balances of all Mortgage Loans that are sixty (60) or more
days Delinquent, in foreclosure or converted to REO Property as of the last day
of the related Collection Period and (b) the denominator of which is the
Aggregate Principal Balance of the Mortgage Loans as of the last day of such
Collection Period.
11
"Delinquent": A Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery": When used with respect to Permitted Investments means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-102(a)(47) of the Uniform
Commercial Code and are susceptible of physical delivery (except with
respect to Permitted Investments consisting of certificated securities (as
defined in Section 8-102(a)(4) of the Uniform Commercial Code)), physical
delivery to the Indenture Trustee or its custodian endorsed to the
Indenture Trustee or its custodian or endorsed in blank;
(b) with respect to a certificated security (as defined in Section
8-102(a)(4) of the Uniform Commercial Code) (i) delivery of such
certificated security, not containing any evidence of a right or interest
inconsistent with the Indenture Trustee's interest therein, endorsed to,
or registered in the name of, the Indenture Trustee or endorsed in blank
to a securities intermediary (as defined in Section 8-102(a)(14) of the
Uniform Commercial Code) and the making by such securities intermediary of
appropriate entries in its records identifying such certificated
securities as credited to the securities account (as defined in Section
8-501(a) of the Uniform Commercial Code) of the Indenture Trustee, or (ii)
by delivery thereof to a "clearing corporation" (as defined in Section
8-102(5) of the Uniform Commercial Code) and the making by such clearing
corporation of appropriate entries in its records crediting the securities
account of a securities intermediary by the amount of such certificated
security and the making by such securities intermediary of appropriate
entries in its records identifying such certificated securities as
credited to the securities account of the Indenture Trustee (all Permitted
Investments described in subsections (a) and (b), and "Physical
Property"); and, in any event, any such Physical Property in registered
form shall be registered in the name of the Indenture Trustee or its
nominee or custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership
of any such Permitted Investments to the Indenture Trustee or its nominee
or custodian, consistent with then applicable law or regulations or the
interpretation thereof; and
(c) with respect to any security issued by the U.S. Treasury, Xxxxxx
Xxx or Freddie Mac that is a book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the Uniform Commercial Code:
the making by a Federal Reserve Bank of an appropriate entry crediting
such Permitted Investment to an account of a securities intermediary that
is also a "participant" pursuant to applicable federal regulations; the
making by such
12
securities intermediary of appropriate entries in its records crediting
such book-entry security held through the Federal Reserve System pursuant
to federal book-entry regulations and Articles 8 and 9 of the Uniform
Commercial Code to the securities account of the Indenture Trustee; and
such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Permitted
Investments to the Indenture Trustee or its nominee or custodian,
consistent with then applicable law or regulations or the interpretation
thereof.
"Direct Participant": Any broker-dealer, bank or other financial
institution for which the Clearing Agency holds Notes from time to time as a
securities depositary.
"Due Date": With respect to any Mortgage Loan and any Monthly
Payment, the date on which such Monthly Payment is due from the related
Mortgagor.
"Due for Payment": (i) with respect to an Insured Amount, the
Payment Date on which Insured Amounts are due and payable pursuant to the terms
of the Indenture and (ii) with respect to a Preference Amount, the Business Day
on which the documentation required by the Note Insurer has been received by the
Note Insurer.
"Due Period": With respect to any Payment Date, the period
commencing on the second day of the month preceding the month in which such
Payment Date occurs and ending on the first day of the month in which such
Payment Date occurs.
"Eligible Account": Either (A) an account or accounts (including any
sub-account or sub-accounts) maintained with an institution (which may include
the Indenture Trustee; provided, that the Indenture Trustee otherwise meets
these requirements) whose deposits are insured by the FDIC, the unsecured and
uncollateralized debt obligations of which institution shall be rated "AA" or
better by S&P and "Aa2" or better by Moody's and in the highest short term
rating by S&P and Moody's, and which is (i) a federal savings and loan
association duly organized, validly existing and in good standing under the
federal banking laws, (ii) an institution (including the Indenture Trustee) 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, or (v) approved in writing by the Note
Insurer and the Rating Agencies or (B) a trust account or accounts maintained
with the trust department of a federal or state chartered depository institution
or trust company (which may include the Indenture Trustee; provided, that the
Indenture Trustee otherwise meets these requirements), having capital and
surplus of not less than $50,000,000, acting in its fiduciary capacity.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": As defined in Section 5.01 of the Indenture.
"Excess Over-collateralized Amount": With respect to each Group of
Mortgage Loans and any Payment Date, the excess, if any, of (a) the
Over-collateralization Amount that would apply to that Group on such Payment
Date after giving effect to the payment of the Base Principal Payment Amount for
such Group calculated without reduction for any Over-
13
collateralization Reduction Amounts, over (b) the Specified
Over-collateralization Amount for such Group.
"Excess Spread": With respect to any Payment Date and each Loan
Group, an amount equal to the excess of (A) the product of (i) the aggregate
Principal Balances of Mortgage Loans as of the first day of the immediately
preceding Collection Period and (ii) one-twelfth of the weighted average
Mortgage Interest Rate for the Mortgage Loans, as the case may be, as of the
first day of the related Collection Period to the extent that interest payments
that are due during the related Collection Period are either received or
advanced over (B) the sum of (i) the aggregate Interest Payment Amount for the
related Class of Notes for such Payment Date and (ii) the sum of the Servicing
Fee, the Indenture Trustee Fee, the Owner Trustee Fee and the Premium in each
case for the Mortgage Loans in such Loan Group with respect to such Payment
Date.
"Exchange Act": Means the Securities Exchange Act of 1934, as
amended.
"Xxxxxx Xxx": Xxxxxx Xxx, formerly known as, The Federal National
Mortgage Association, and any successor thereto.
"FDIC": The Federal Deposit Insurance Corporation, and any successor
thereto.
"Final Certification": A certification as to the completeness of
each Indenture Trustee's Mortgage File prepared by the Indenture Trustee, and
provided by the Indenture Trustee within one hundred eighty (180) of the Closing
Date pursuant to Section 2.06(b)(iii) of the Sale and Servicing Agreement.
"Final Stated Maturity Date": With respect to the Class A-1 Notes,
the Payment Date occurring in January 2033, with respect to the Class A-2 Notes,
the Payment Date occurring in February 2033, and with respect to the Class A-3
Notes, the Payment Date occurring in January 2033.
"Foreclosure Profits": As to any Payment Date, the excess, if any,
of (i) Net Liquidation Proceeds in respect of each Mortgage Loan that became a
Liquidated Mortgage Loan during the Collection Period immediately preceding such
Payment Date over (ii) the sum of the unpaid Principal Balance of each such
Liquidated Mortgage Loan plus accrued and unpaid interest at the applicable
Mortgage Interest Rate on the unpaid Principal Balance thereof from the Due Date
on which interest was last paid by the Mortgagor (or, in the case of a
Liquidated Mortgage Loan that had been an REO Mortgage Loan, from the Due Date
on which interest was last deemed to have been paid pursuant to Section 5.06 of
the Sale and Servicing Agreement) to the next succeeding Due Date following the
date such Loan became a Liquidated Mortgage Loan, plus any amounts required by
applicable law to be paid to the related Mortgagors.
"Freddie Mac": Freddie Mac, formerly known as The Federal Home Loan
Mortgage Corporation, and any successor thereto.
"GAAP": Generally accepted accounting principles, consistently
applied.
14
"Grant": To assign, transfer, mortgage, pledge, create and grant a
security interest in, deposit, set-over and confirm. A Grant of a Mortgage Loan
and the related Mortgage Files, a Permitted Investment, the Sale and Servicing
Agreement, 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, Loan Repurchase 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.
"Group": With respect to the Notes, any of Group 1, Group 2 or Group
3, as the context requires. With respect to the Mortgage Loans, any of Loan
Group 1, Loan Group 2 or Loan Group 3, as the context requires.
"Group 1": The Class A-1 Notes. The related Loan Group for Group 1
is Loan Group 1.
"Group 2": The Class A-2 Notes. The related Loan Group for Group 2
is Loan Group 2.
"Group 3": The Class A-3 Notes. The related Loan Group for Group 3
is Loan Group 3.
"Highest Lawful Rate": As defined in Section 11.19 of the Indenture.
"Indemnification Agreement": The Indemnification Agreement dated as
of November 25, 2002 among the Note Insurer, and the Underwriter as such
agreement may be amended or supplemented in accordance with the provisions
thereof.
"Indenture": The Indenture, dated as of November 1, 2002, between
the Trust and the Indenture Trustee, relating to the issuance of the Notes.
"Indenture Trustee": Deutsche Bank, National Trust Company, a
national banking association, or its successor-in-interest, or any successor
Indenture Trustee appointed as provided for in Section 6.09 of the Indenture.
"Indenture Trustee Fee": As to any Payment Date, the fee payable to
the Indenture Trustee in respect of its services as Indenture Trustee pursuant
to Section 6.16 of the Indenture as set forth in a separate fee agreement
provided; however that in no case will the Indenture Trustee Fee exceed a
monthly rate equal to the sum of (i) one-twelfth of [0.010]% on the Stated
Principal Balance of each Mortgage Loan and (ii) the Pre-Funding Amount.
"Indenture Trustee's Mortgage File": The documents delivered to the
Indenture Trustee, pursuant to Section 2.05 of the Sale and Servicing Agreement.
15
"Indenture Trustee's Remittance Report": The statement prepared
pursuant to Section 2.08(d) of the Indenture, containing the following
information with respect to each Class:
(a) the amount of the payment with respect to each Class of Notes
and Certificates;
(b) the amount of such payments allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments or other
unscheduled recoveries of principal included therein and separately identifying
any Over-collateralization Increase Amounts for each Group;
(c) the amount of such payments allocable to interest and the
calculation thereof;
(d) the Note Principal Balance of each Class of Notes as of such
Payment Date, together with the Note Principal Balance of each Class of Notes
(based on a Note in an original Note Principal Balance of $1,000) then
outstanding, in each case after giving effect to any payment of principal on
such Payment Date;
(e) the amount of any Insured Payment included in the amounts paid
to the Noteholders on such Payment Date;
(f) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such payment;
(g) the amounts, if any, of any Liquidated Loan Losses for the
related Collection Period and cumulative Liquidated Loan Losses since the
Closing Date; and
(h) LIBOR for such Payment Date.
Items (a), (b) and (c) above shall, with respect to each Class of
Notes, be presented on the basis of a Note having a $1,000 denomination.
"Independent": When used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Trust and any other obligor
upon the Notes, (ii) does not have any direct financial interest or any material
indirect financial interest in the Trust or in any such other obligor or in an
Affiliate of the Trust or such other obligor, and (iii) is not connected with
the Trust 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 a Trust 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.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Note.
16
"Individual Note": A Note of an Original Note Principal Balance of
$1,000; a Note of an Original Note Principal Balance in excess of $1,000 shall
be deemed to be a number of Individual Notes equal to the quotient obtained by
dividing such Original Note Principal Balance amount by $1,000.
"Initial Certification": A certification as to the completeness of
each Indenture Trustee's Mortgage File prepared by the Indenture Trustee, and
provided by the Indenture Trustee within sixty (60) days of the Closing Date
pursuant to Section 2.06(b)(ii) of the Sale and Servicing Agreement.
"Initial Mortgage Loans": The Mortgage Loans that are conveyed by
the Seller to the Trust on the Closing Date as described in the Mortgage Loan
Schedule.
"Insurance Agreement": The Insurance and Indemnity Agreement dated
as of November 25, 2002 among the Seller, the Indenture Trustee, the Note
Insurer, the Sponsor, the Master Servicer and the Trust as such agreement may be
amended or supplemented in accordance with the provisions thereof.
"Insured Amounts": Means, with respect to any Payment Date and the
Notes, the sum of (i) any Insured Interest Payment for such Payment Date and
(ii) any Insured Principal Payment for such Payment Date.
"Insured Interest Payment": Means, with respect to any Payment Date
and the Notes, the excess, if any, of Required Interest Distributions over the
Available Funds for the related Group for such Payment Date.
"Insured Payments": Means, the aggregate amount actually paid by the
Note Insurer to the Indenture Trustee in respect of (i) Insured Amounts for a
Payment Date and (ii) Preference Amounts for any given Business Day.
"Insured Principal Payment": (i) for any Payment Date other than the
Payment Date occurring in (a) January, 2033 with respect to the Class A-1 Notes
and Class A-3 Notes and (b) February, 2033 with respect to the Class A-2 Notes,
the Remaining Over-collateralization Deficit allocable to the Notes, if any, for
such Payment Date and (ii) with respect to the Payment Date occurring in (a)
January, 2033 with respect to the Class A-1 Notes and Class A-3 Notes and (b)
February, 2033 with respect to the Class A-2 Notes, the outstanding Note
Principal Balance of such Class of Notes (after giving effect to all
distributions to be made thereon on such Payment Date other than any portion
thereof consisting of an Insured Principal Payment).
"Interest Determination Date": With respect to any Accrual Period
for the Class A-2 Notes or Class A-3 Notes, the second London Business Day prior
to the immediately preceding Payment Date; provided, however, that with respect
to the December 2002 Payment Date, the Interest Determination Date shall be
December 23, 2002.
"Interest Payment Amount": The Class A-1 Interest Payment Amount,
Class A-2 Interest Payment Amount or the Class A-3 Interest Payment Amount, as
applicable.
17
"Late Payment Rate": Has the meaning ascribed thereto in the
Insurance Agreement.
"Letter Agreement": The Letter of Representations to the Clearing
Agency from the Indenture Trustee and the Trust dated November 25, 2002.
"LIBOR": With respect to any Accrual Period for the Class A-2 Notes
or Class A-3 Notes, the rate determined by the Indenture Trustee on the related
Interest Determination Date on the basis of the posted rate U.S. dollar deposits
for one month which appears on Telerate Page 3750, as of 11:00 a.m. (London
time) on such Interest Determination Date. If no such posted rate appears, LIBOR
will be determined on the basis of the offered quotation of the Reference Banks
for U.S. dollar deposits for one month to prime banks in the London interbank
market as of 11:00 a.m. London time, on such date. If fewer than two Reference
Banks provide such offered quotations on that date, LIBOR will be calculated as
the offered rate which one or more leading banks in The City of New York
selected by the Indenture Trustee (after consultation with the Master Servicer)
are quoting as of 11:00 a.m., New York City time, on such date to leading
European banks for U.S. dollar deposits for one month; provided, however, that
if such banks are not quoting as described above, LIBOR will be equal to the
value calculated for the immediately preceding Accrual Period.
In any event, LIBOR is calculated as the arithmetic mean (rounded,
if necessary, to the nearest 1/100th of a percent (0.0001), with upwards
rounding of amounts equal to or in excess of 5/1,000th of a percent (0.0005) of
all such quotations.
"Liquidated Loan Loss": With respect to any Payment Date, the
aggregate of the amount of losses with respect to each Mortgage Loan which
became a Liquidated Mortgage Loan on or prior to the last day of the calendar
month preceding such Payment Date, equal to the excess of (i) the unpaid
Principal Balance of each such Liquidated Mortgage Loan, plus accrued interest
thereon in accordance with the amortization schedule at the time applicable
thereto at the applicable Mortgage Interest Rate from the Due Date as to which
interest was last paid with respect thereto through the next succeeding Due Date
following the date such Loan became a Liquidated Mortgage Loan, over (ii) Net
Liquidation Proceeds with respect to such Liquidated Mortgage Loan.
"Liquidated Mortgage Loan": A Mortgage Loan with respect to which
the related Mortgaged Property has been acquired, liquidated or foreclosed and
with respect to which the Master Servicer determines that all Liquidation
Proceeds which it expects to recover have been recovered and for which the
Master Servicer has so designated on its Servicer Remittance Report.
"Liquidation Expenses": Expenses incurred by the Master Servicer in
connection with the liquidation of any defaulted Mortgage Loan or property
acquired in respect thereof (including, without limitation, legal fees and
expenses, committee or referee fees, and, if applicable, brokerage commissions
and conveyance taxes), any unreimbursed amount expended by the Master Servicer
pursuant to Sections 5.04 and 5.06 of the Sale and Servicing Agreement
respecting the related Mortgage Loan and any unreimbursed expenditures for real
property taxes or for property restoration or preservation of the related
Mortgaged Property. Liquidation
18
Expenses shall not include any previously incurred expenses in respect of an REO
Mortgage Loan which have been netted against related REO Proceeds.
"Liquidation Proceeds": The amount received by the Master Servicer
in connection with (i) the taking of all or a part of a Mortgaged Property by
exercise of the power of eminent domain or condemnation, (ii) the liquidation of
a defaulted Mortgage Loan through an Indenture Trustee's sale, foreclosure sale,
REO Disposition or otherwise or (iii) the liquidation of any other security for
such Mortgage Loan, including, without limitation, pledged equipment, inventory
and working capital and assignments of rights and interests made by the related
Mortgagor.
"Loan Group": Any of Loan Group 1, Loan Group 2 or Loan Group 3.
"Loan Group 1": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule for Sub-Trust 1.
"Loan Group 2": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule for Sub-Trust 2.
"Loan Group 3": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule for Sub-Trust 3.
"Loan Repurchase Price": With respect to any Mortgage Loan, the
Principal Balance of such Mortgage Loan as of the date of repurchase, plus the
greater of (x) all accrued and unpaid interest thereon and (y) thirty (30) days'
interest thereon, computed, as of the next succeeding Due Date for such
repurchased Mortgage Loan, at the Mortgage Interest Rate, plus the amount of any
unreimbursed Periodic Advances and Servicing Advances made by the Master
Servicer with respect to such Mortgage Loan, which purchase price shall be
deposited in the Collection Account on the next succeeding Servicer Payment
Date, after deducting therefrom any amounts received in respect of such
repurchased Mortgage Loan or Loans and being held in the Collection Account for
future payment to the extent such amounts have not yet been applied to principal
or interest on such Mortgage Loan.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan as
of its date of origination, the ratio on such date borne by the original
Principal Balance of the Mortgage Loan to the Appraised Value of the related
Mortgaged Property.
"London Business Day": A day on which banking institutions in the
City of London, England, are not required or authorized to be closed.
"Majority Noteholders": With respect to the Notes, the Holder or
Holders of Notes evidencing Percentage Interests in excess of 51% in the
aggregate. With respect to the Class A-1 Notes, Class A-2 Notes or Class A-3
Notes, the Holder or Holders of Class A-1 Notes, Class A-2 Notes or Class A-3
Notes, as applicable, evidencing Percentage Interests in excess of 51% in the
aggregate.
"Master Servicer": Accredited Home Lenders, Inc., a California
corporation, or any successor appointed as provided in the Sale and Servicing
Agreement.
19
"Master Servicer Prepayment Charge Amount": The amounts payable by
the Master Servicer in respect of any waived Prepayment Charges pursuant to
Section 3.05 of the Sale and Servicing Agreement.
"Maximum Collateral Amount": With respect to each Loan Group or all
Loan Groups, the Cut-Off Date Aggregate Principal Balance plus the aggregate
amounts on deposit in the Pre-Funding Accounts for the related Loan Group or all
Loan Groups, as required by the context.
"Monthly Payment": As to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the payment of principal and interest due
thereon as specified for such Due Date in the related amortization schedule at
the time applicable thereto (after adjustment for any Curtailments and Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than Deficient
Valuations, or similar proceeding or any moratorium or similar waiver or grace
period).
"Moody's": Xxxxx'x Investors Service, Inc., a corporation organized
and existing under Delaware law, or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized rating agency designated by the Note Insurer.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first or second lien on the Mortgaged Property.
"Mortgage File": As described in Exhibit A to the Sale and Servicing
Agreement.
"Mortgage Interest Rate": As to any Mortgage Loan, the per annum
rate at which interest accrues on the unpaid Principal Balance thereof.
"Mortgage Loan Schedule": The schedule of Initial Mortgage Loans as
of the Cut-Off Date attached as Schedule I to the Indenture (and with respect to
the Subsequent Mortgage Loans, the schedule as of the Cut-Off Date attached to
the Subsequent Transfer Instrument), which will be deemed to be modified
automatically to reflect any replacement, sale, substitution, liquidation,
transfer or addition of any Mortgage Loan. The Mortgage Loan Schedule sets forth
as to each Mortgage Loan: (i) its identifying number and the name of the related
Mortgagor; (ii) the billing address, mailing address and property address for
the related Mortgaged Property including the state and zip code; (iii) its date
of origination; (iv) the original number of months to stated maturity; (v) a
designation indicating whether or not such Mortgage Loan is a Balloon Loan; (vi)
the original Principal Balance; (vii) its Principal Balance as of the applicable
Cut-Off Date and its Cut-Off Date Principal Balance; (viii) the Mortgage
Interest Rate and margin; (ix) the scheduled monthly payment of principal and
interest; (x) a Group designation; and (xi) the LTV.
"Mortgage Loans": The Initial Mortgage Loans and the Subsequent
Mortgage Loans, together with any Qualified Substitute Mortgage Loans
substituted therefor in accordance with the Basic Documents, as from time to
time are held as a part of the Trust, the Initial Mortgage Loans originally so
held being identified in the Mortgage Loan Schedule on the Closing Date and all
Subsequent Mortgage Loans acquired by the Trust identified on the related
20
Subsequent Transfer Instrument. When used in respect of any Payment Date, the
term Mortgage Loans shall mean all Mortgage Loans (including those in respect of
which the Indenture Trustee has acquired the related Mortgaged Property) which
have not been repaid in full prior to the related Due Period, did not become
Liquidated Mortgage Loans prior to such related Due Period or were not
repurchased or replaced by the Sponsor prior to such related Due Period.
"Mortgage Note": The original, executed note or other evidence of
any indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgaged Property": The underlying property or properties securing
a Mortgage Loan, consisting of a fee simple or leasehold interest in one or more
parcels of land.
"Mortgagor": The obligor on a Mortgage Note.
"Net Foreclosure Profits": As to any Payment Date, the excess, if
any, of (i) the aggregate Foreclosure Profits with respect to such Payment Date
over (ii) Liquidated Loan Losses with respect to such Payment Date.
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances and Servicing Advances made by the Master Servicer with
respect to such Liquidated Mortgage Loan. For all purposes of the Basic
Documents, Net Liquidation Proceeds shall be allocated first to accrued and
unpaid interest on the related Mortgage Loan and then to the unpaid Principal
Balance thereof.
"Net Monthly Excess Cashflow": With respect to any Payment Date and
any Group, the excess of (x) the Available Funds for such Group then on deposit
in the related Payment Account over (y) the sum (without duplication) of (i) the
Interest Payment Amount for such Group and such Payment Date and, (ii) the Base
Principal Payment Amount and the Over-collateralization Deficit, in each case,
for such Group and such Payment Date.
"Net Prepayment Interest Shortfalls": For any Payment Date and any
Group of Mortgage Loans, the amount by which the aggregate Prepayment Interest
Shortfalls for such Group during the related Prepayment Period exceeds available
Compensating Interest for such Group.
"Net REO Proceeds": As to any REO Mortgage Loan, REO Proceeds net of
any related expenses of the Master Servicer.
"Nonpayment": Means, with respect to any Payment Date, an Insured
Amount is Due for Payment but has not been paid pursuant to the Indenture.
"Nonrecoverable Advances": Means, with respect to any Mortgage Loan,
(a) any Periodic Advance or Servicing Advance previously made and not reimbursed
pursuant to Section 5.03 of the Sale and Servicing Agreement, or (b) a Periodic
Advance proposed to be made in respect of a Mortgage Loan or REO Property either
of which, in the good faith business judgment of the Master Servicer, as
evidenced by an Officer's Certificate delivered to the Note Insurer and the
Indenture Trustee no later than the Business Day following such determination,
21
would not ultimately be recoverable pursuant to Section 5.03 of the Sale and
Servicing Agreement.
"Note": Any Class A-1 Note, Class A-2 Note or Class A-3 Note
executed by the Owner Trustee on behalf of the Trust and authenticated by the
Indenture Trustee.
"Noteholder" or "Holder": Each Person in whose name a Note is
registered in the Note Register, except that, solely for the purposes of giving
any consent, waiver, request or demand pursuant to the Indenture, any Note
registered in the name of the Master Servicer, the Backup Servicer or the
Sponsor, or any Affiliate of any of them, shall be deemed not to be outstanding
and the undivided Percentage Interest evidenced thereby shall not be taken into
account in determining whether the requisite percentage of Notes necessary to
effect any such consent, waiver, request or demand has been obtained. For
purposes of any consent, waiver, request or demand of Noteholders pursuant to
the Indenture, upon the Indenture Trustee's request, the Master Servicer, the
Backup Servicer and the Sponsor shall provide to the Indenture Trustee a notice
identifying any of their respective Affiliates that is a Noteholder as of the
date(s) specified by the Indenture Trustee in such request. Any Notes on which
payments are made under the Note Insurance Policy shall be deemed to be
Outstanding and held by the Note Insurer to the extent of such payment.
"Note Insurance Payment Account": The Note Insurance Payment Account
established in accordance with Section 8.03(c) of the Indenture and maintained
by the Indenture Trustee.
"Note Insurance Policy": The financial guarantee insurance policy,
number AB0617BE, and all endorsements thereto dated the Closing Date, issued by
the Note Insurer for the benefit of the Noteholders.
"Note Insurer": Ambac Assurance Corporation a Wisconsin-domiciled
stock insurance corporation, and any successors thereto.
"Note Insurer Default": The existence and continuance of any of the
following:
(i) the Note Insurer shall have failed to make a required
payment when due under the Note Insurance Policy;
(ii) the Note Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of
the Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment for the benefit of its creditors or (iii) had an order
for relief entered against it under the Bankruptcy Code, the New
York State Insurance Law or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization that is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or any other competent regulatory authority
shall have entered a final and nonappealable order, judgment or
decree (i) appointing a custodian, indenture
22
trustee, agent, or receiver for the Note Insurer or for all or any
material portion of its property or (ii) authorizing the taking of
possession by a custodian, indenture trustee, agent, or receiver of
the Note Insurer or of all or any material portion of its property.
"Note Principal Balance": As to any particular Note and date of
determination, the product of the Percentage Interest evidenced thereby and the
aggregate principal balance of all Notes of the same Class as of such date of
determination. The Certificates do not have a "Note Principal Balance."
"Note Rate": The Class A-1 Note Rate, Class A-2 Note Rate or the
Class A-3 Note Rate, as applicable.
"Note Register": As defined in Section 2.06 of the Indenture.
"Note Registrar": As defined in Section 2.06 of the Indenture.
"Notice": The telephonic or telegraphic notice, promptly confirmed
in writing by telecopy substantially in the form of Exhibit A to the Note
Insurance Policy, the original of which is subsequently delivered by registered
or certified mail, from the Indenture Trustee specifying the Insured Amount
which shall be due and owing on the applicable Payment Date.
"Officer's Certificate": A certificate signed by the chairman of the
board, the president or a vice president and the treasurer, the secretary or one
of the assistant treasurers or assistant secretaries of the Sponsor, the Master
Servicer, or the Backup Servicer, or, with respect to the Trust, a certificate
signed by a Responsible Officer of the Owner Trustee, at the direction of the
Certificateholders as required by any Basic Document.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be counsel for the Sponsor, the Master Servicer, the Indenture
Trustee, the Owner Trustee, a Noteholder or a Noteholder's prospective
transferee or the Note Insurer (including except as otherwise provided herein,
in-house counsel) reasonably acceptable to each addressee of such opinion and
experienced in matters relating to the subject of such opinion.
"Original Note Principal Balance": As of the Closing Date and as to
the Class A-1 Notes, $178,667,000, as to the Class A-2 Notes, $250,056,000 and
as to the Class A-3 Notes, $113,175,000. The Certificates do not have an
"Original Note Principal Balance."
"Original Pre-Funded Amount": With respect to Loan Group I,
$44,666,994.45, with respect to Loan Group II, $62,514,064.00 and with respect
to Loan Group III, $29,293,969.51.
"Outstanding": As of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
(i) Definitive Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for cancellation;
23
(ii) Notes or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with
the Indenture Trustee in trust for the Holders of such Notes;
provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision therefor, satisfactory to the Indenture Trustee, has been
made;
(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture
unless proof satisfactory to the Indenture Trustee is presented that
any such Notes are held by a bona fide purchaser (as defined by the
Uniform Commercial Code of the applicable jurisdiction); and
(iv) Notes alleged to have been destroyed, lost or stolen that
have been paid as provided for in Section 2.07 of the Indenture;
provided, however, that Notes which have been paid with proceeds of the Policy
shall continue to remain Outstanding for purposes of this Indenture until the
Note Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Note Insurer
delivered to the Trustee, and the Note Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the Note Insurer;
provided, further, however, that in determining whether the Holders of the
requisite percentage of the Note Principal Balance of the Outstanding Notes have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Trust, any other obligor upon the Notes or any
Affiliate of the Trust, the Master Servicer or the Sponsor 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
Notes that a Responsible Officer of the Indenture Trustee has actual knowledge
to be so owned shall be so disregarded. Notes so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with respect
to such Notes and that the pledgee is not the Trust, any other obligor upon the
Notes or any Affiliate of the Trust, the Master Servicer or the Sponsor or such
other obligor; provided, further, however, that Notes that have been paid with
the proceeds of the Note Insurance Policy shall be deemed to be Outstanding for
the purposes of this Indenture, such payment to be evidenced by written notice
from the Note Insurer to the Indenture Trustee, and the Note Insurer shall be
deemed to be the Holder thereof to the extent of any payments thereon made by
the Note Insurer which have not been reimbursed.
"Over-collateralization Amount": As of any Payment Date and any
Group, the excess, if any, of (a) the aggregate Stated Principal Balance of the
Mortgage Loans in such Group plus any amounts in the related Pre-Funding Account
as of the close of business on the last day of the related Due Period over (b)
the Note Principal Balance of the related Class as of such Payment Date (after
taking into account the payment of all principal payments for such Group on such
Payment Date, except for any portion thereof related to any
Overcollateralization Increase Amount for such Payment Date); provided, however,
that such amount shall not be less than zero.
24
"Over-collateralization Deficiency Amount": With respect to any
Payment Date and any Group, the difference, if greater than zero, between (a)
the Specified Overcollateralization Amount for such Group applicable to such
Payment Date and (b) the Overcollateralization Amount for such Group applicable
to such Payment Date prior to taking into account the payment of any related
Over-collateralization Increase Amount for such Group on such Payment Date.
"Over-collateralization Deficit": As of any Payment Date, the
amount, if any, by which (a) the aggregate Note Principal Balance of the Notes,
after taking into account the payment of the Base Principal Payment Amount for
each Group on such date, but before taking into account any principal payment
funded from Net Monthly Excess Cashflow, the Reserve Accounts or any Insured
Principal Payment exceeds (b) the aggregate Stated Principal Balance of the
Mortgage Loans plus any amounts in the Pre-Funding Accounts determined as of the
end of the immediately preceding Prepayment Period. For purposes of determining
the amount to be paid on account of the Over-collateralization Deficit to the
Noteholders of each Class of Notes on the Payment Date, the
Over-collateralization Deficit will be allocated to each Class pro rata based on
the amount by which the Note Principal Balance of each class on such payment
date, after payment of the Base Principal Payment Amount but before taking into
account any principal payment funded from Net Monthly Excess Cashflow, any
amounts released from the Reserve Accounts or any Insured Principal Payment,
exceeds the aggregate Stated Principal Balance of the Mortgage Loans in the
related group plus any amount in the related Pre-Funding Account as of the end
of the immediately preceding Payment Date.
"Over-collateralization Increase Amount": With respect to any
Payment Date and any Group, the lesser of:
(i) the Over-collateralization Deficiency Amount for such
Group as of such Payment Date (after taking into account the payment of
the Base Principal Payment Amount for such Group on such Payment Date);
and
(ii) 100% of the amount of Net Monthly Excess Cashflow on such
Payment Date.
"Over-collateralization Reduction Amount": With respect to any
Payment Date and Group, the lesser of (a) the Excess Over-collateralization
Amount for such Group and Payment Date and (b) the Base Principal Payment Amount
for such group and Payment Date.
"Over-collateralized Percentage": As to any Payment Date, and with
respect to any Loan Group, the percentage equivalent of a fraction, the
numerator of which is the Over-collateralization Amount for such Loan Group as
of such Payment Date and the denominator of which is the Aggregate Principal
Balance of the Mortgage Loans in such Loan Group plus any amounts in the related
Pre-Funding Account as of the end of the related Collection Period; as to all
Loan Groups, the percentage equivalent of a fraction, numerator of which is the
Over-collateralization Amounts for all Loan Groups and the denominator of which
is the Aggregate Principal Balance of the Mortgage Loans in all Loan Groups as
of the end of the related Collection Period.
25
"Owner-Occupied Mortgaged Property": A Residential Dwelling as to
which (a) the related Xxxxxxxxx represented an intent to occupy as such
Xxxxxxxxx's primary residence at the origination of the Mortgage Loan, and (b)
the Sponsor has no actual knowledge that such Residential Dwelling is not so
occupied.
"Ownership Interest": As to any Note, any ownership or security
interest in such Note, including any interest in such Note as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
"Owner Trustee": U.S. Bank Trust National Association, a national
banking association, not in its individual capacity, but solely as owner trustee
under the Trust Agreement, and any successor owner trustee thereunder.
"Owner Trustee Fee": As defined in Section 9.01 of the Trust
Agreement.
"Paying Agent": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Trust pursuant to Section
3.03 of the Indenture to pay the principal of, or interest on, any Notes on
behalf of the Trust, which agent, if not the Indenture Trustee, shall have
signed an instrument agreeing to be bound by the terms of the Indenture
applicable to such Paying Agent.
"Payment Account": With respect to each Class of Notes, the
segregated trust account, which shall be an Eligible Account, established and
maintained pursuant to Section 8.01(a) of the Indenture and entitled "Deutsche
Bank, National Trust Company", as Indenture Trustee for Accredited Mortgage Loan
Trust 2002-2 Asset-Backed Notes, Series 2002-2, Class A-[1][2][3], Payment
Account," as the case may be, on behalf of the related Noteholders and the Note
Insurer.
"Payment Amount": The Class A-1 Payment Amount, the Class A-2
Payment Amount or Class A-3 Payment Amount, as applicable.
"Payment Date": The 25th day of any month or if such 25th day is not
a Business Day, the first Business Day immediately following, commencing on
December 26, 2002.
"Percentage Interest": With respect to a Note of any Class, the
portion evidenced by such Note, expressed as a percentage rounded to four
decimal places, equal to a fraction the numerator of which is the denomination
represented by original principal balance of such Note and the denominator of
which is the Original Note Principal Balance of such Class. With respect to the
Certificates, the portion evidenced thereby as stated on the face of such
Certificate.
"Periodic Advance": The aggregate of the advances required to be
made by the Master Servicer on any Servicer Payment Date pursuant to Section
5.18 of the Sale and Servicing Agreement, the amount of any such advances being
equal to the sum of
(i) with respect to each Mortgage Loan, other than an
REO Mortgage Loan, that was Delinquent as of the close of
business on the last day of the Due Period preceding the
related Servicer Payment Date, the
26
aggregate amount of Monthly Payments (net of the related
Servicing Fee and Backup Servicing Fee) due during the related
Due Period, and
(ii) with respect to each REO Property which was
acquired during or prior to the related Collection Period and
as to which an REO Disposition did not occur during the
related Collection Period, an amount equal to the excess, if
any, of (i) interest on the Principal Balance of the related
REO Mortgage Loan at the Mortgage Interest Rate for such REO
Mortgage Loan net of the related Servicing Fee and Backup
Servicing Fee, for the most recently ended Due Period over
(ii) the Net REO Proceeds transferred to the Payment Account
for such Payment Date;
provided, however, that in each such case such advance has not been determined
by the Master Servicer to be a Nonrecoverable Advance. For purposes of the
preceding sentence, the Monthly Payment on each Balloon Mortgage Loan with a
delinquent Balloon Payment is equal to the assumed monthly payment that would
have been due on the related Due Date based on the original principal
amortization schedule for the such Balloon Mortgage Loan.
"Permitted Investments": As used herein, Permitted Investments shall
include the following:
(i) obligations of, or guaranteed as to principal and
interest by, the United States or any agency or
instrumentality thereof when such obligations are backed by
the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in
clause (a) maturing not more than three months from the date
of acquisition thereof, provided that the unsecured
obligations of the party agreeing to repurchase such
obligations are at the time rated at least A-l+ by S&P and in
one of the two highest ratings by Xxxxx'x;
(iii) certificates of deposit, time deposits and
bankers' acceptances (which, in the case of bankers'
acceptances, shall in no event have an original maturity of
more than 365 days) of any U.S. depository institution or
trust company, incorporated under the laws of the United
States or any state; provided, that the debt obligations of
such depository institution or trust company at the date of
acquisition thereof have been rated in one of the two highest
ratings by Xxxxx'x and S&P.
(iv) commercial paper (having original maturities of not
more than 270 days) of any corporation incorporated under the
laws of the United States or any state thereof which on the
date of acquisition has been rated in the highest short-term
rating by the Rating Agencies; and
(v) units of money market funds registered under the
Investment Company Act of 1940, investing in any of the
foregoing, including any funds managed or advised by the
Indenture Trustee or any affiliate of the Indenture Trustee;
provided, such money market funds are
27
at the time rated in the highest short-term rating category by
the Rating Agencies;
provided, that no instrument described hereunder shall evidence either the right
to receive (x) only interest with respect to the obligations underlying such
instrument or (y) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par 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.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
national banking association, unincorporated organization or government or any
agency or political subdivision thereof.
"Physical Property": As defined in clause (b) of the definition of
"Delivery."
"Plan": A pension or benefit plan or individual retirement
arrangement that is subject to ERISA or Section 4975 of the Code.
"Predecessor Notes": With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.07 of the Indenture in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note.
"Preference Amount": Any payment of principal or interest on a Note,
which has become Due for Payment and which is made to an owner of a Note by or
on behalf of the Indenture Trustee which has been deemed a preferential transfer
and was previously recovered from its owner pursuant to the United States
Bankruptcy Code in accordance with a final, non appealable order from a court of
competent jurisdiction.
"Preference Claim": As defined in Section 8.03(f) of the Indenture.
"Pre-Funded Amount": With respect to any date of determination, the
amount on deposit in the Pre-Funding Account.
"Pre-Funding Account": The account established and maintained
pursuant to Section 5.24 if the Sale and Servicing Agreement, as defined herein,
and which must be an Eligible Account.
"Pre-Funding Period": The period beginning on the Closing Date and
ending on the earlier to occur of the date upon which (a) the amount on deposit
in the Pre-Funding Account (exclusive of investment income) has been reduced to
less than $10,000 or (b) December 23, 2002.
28
"Premium": The product of the Premium Percentage and the aggregate
outstanding Note Principal Balance for the related Class on the related Payment
Date, but prior to any payments on such Payment Date.
"Premium Percentage": The rate at which the "Premium" is determined
(including any "premium supplement"), as defined in the Insurance Agreement.
"Prepayment Charge": As to a Mortgage Loan, any charge paid by a
Mortgagor in connection with Principal Prepayment made within the related
Prepayment Charge Period, the Prepayment Charges with respect to each applicable
Mortgage Loan so held by the Trust being identified in a Prepayment Charge
Schedule (other than any Master Servicer Prepayment Charge Payment Amount).
"Prepayment Charge Period": As of any Mortgage Loan, the period of
time, if any, during which a Prepayment Charge may be imposed.
"Prepayment Charge Schedule": As of any date, the list of Prepayment
Charges on the Mortgage Loans included in the Trust on such date, attached as
Exhibit H to the Sale and Servicing Agreement. The Prepayment Charge Schedule
shall set forth the following information with respect to each Prepayment
Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the term of the Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first Monthly Payment was due on
the related Mortgage Loan;
(v) the term of the related Mortgage Loan; and
(vi) the Cut-Off Date Principal Balance of the related
Mortgage Loan.
"Prepayment Interest Shortfall": With respect to any Payment Date,
for each Mortgage Loan that was the subject during the related Prepayment Period
of a Principal Prepayment in full, an amount equal to the excess, if any, of (a)
30 days' interest on the Principal Balance of such Mortgage Loan at a per annum
rate equal to (i) the Mortgage Interest Rate (or at such lower rate as may be in
effect for such Mortgage Loan pursuant to application of the Civil Relief Act,
any Deficient Valuation and/or any Debt Service Reduction) minus (ii) the
Servicing Fee Rate and the Backup Servicing Fee Rate, over (b) the amount of
interest actually remitted by the related Mortgagor in connection with such
Principal Prepayment in full, less the Servicing Fee and the Backup Servicing
Fee for such Mortgage Loan in such month.
"Prepayment Period": With respect to any Payment Date, the period
commencing on the 16th day of the month preceding the month in which such
Payment Date occurs (or, in the case of the first Payment Date, the day
following the Cut-Off Date) and ending on the 15th day of the month in which
such Payment Date occurs.
29
"Principal Balance": As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Prospectus Supplement": The Prospectus Supplement dated November
20, 2002 relating to the Notes filed with the Commission in connection with the
Registration Statement heretofore filed or to be filed with the Commission
pursuant to Rule 424(b)(5).
"Qualified Appraiser": An appraiser, duly appointed by the Sponsor,
who had no interest, direct or indirect, in the Mortgaged Property or in any
loan made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
"Qualified Substitute Mortgage Loan": A mortgage loan or mortgage
loans substituted for a Deleted Mortgage Loan pursuant to Section 2.06 or
4.02(b) of the Sale and Servicing Agreement, which (a) has or have an interest
rate greater than or equal to those applicable to the Deleted Mortgage Loan, (b)
relates or relate to a detached one- to four-family residence and has or have
the same or a better lien priority as the Deleted Mortgage Loan and has or have
the same occupancy status as the Deleted Mortgage Loan or is or are
Owner-Occupied Mortgaged Property(ies), (c) matures or mature no later than (and
not more than one year earlier than) the Deleted Mortgage Loan, (d) has or have
a Loan-to-Value Ratio or Loan-to-Value Ratios at the time of such substitution
no higher than the Loan-to-Value Ratio of the Deleted Mortgage Loan, (e) has or
have a Stated Principal Balance or Stated Principal Balances, after deduction of
the principal portion of the Monthly Payment due in the month of substitution
(or, in the case of a substitution of more than one mortgage loan for a Deleted
Mortgage Loan, an aggregate principal balance) not more than the Stated
Principal Balance of the Deleted Mortgage Loan as of such date, (f) complies or
comply as of the date of substitution with each representation and warranty set
forth in Section 4.01 of the Sale and Servicing Agreement, and (g) is otherwise
acceptable to the Note Insurer.
"Rating Agency": S&P or Xxxxx'x.
"Rating Agency Condition": Means, with respect to any action to
which a Rating Agency Condition applies, that each Rating Agency shall have been
given ten (10) days (or such shorter period as is acceptable to each Rating
Agency) prior notice thereof and that each of the Rating Agencies shall have
notified the Indenture Trustee, the Master Servicer, the Backup Servicer, the
Sponsor, the Seller, the Note Insurer and the Trust in writing that such action
will not result in a reduction, qualification or withdrawal of the then current
"implied" rating of the Notes that it maintains without taking into account the
Note Insurance Policy.
30
"Record Date": With respect to the Class A-1 Notes, the last
Business Day of the month immediately preceding a month in which a Payment Date
occurs; with respect to the Class A-2 Notes and Class A-3 Notes, the Business
Day immediately preceding the related Payment Date.
"Redemption Date": The Payment Date, if any, on which the Class A-1
Notes, the Class A-2 Notes, Class A-3 Notes or all of the Notes are redeemed, in
each case, pursuant to Article X of the Indenture, which date may occur on or
after the related Clean-Up Call Date.
"Reference Banks": Citibank, Xxxxxxx'x Bank PLC, The Bank of
Tokyo-Mitsubishi and National Westminster Bank PLC; provided, that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Indenture Trustee (after consultation with the Master
Servicer) which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
the Master Servicer or the Indenture Trustee or any affiliate thereof and (iii)
whose quotations appear on the Telerate Page 3750 on the relevant Interest
Determination Date.
"Reimbursement Amount": Means, as to any Payment Date, the sum of
(x) (i) all Insured Payments paid by the Note Insurer, but for which the Note
Insurer has not been reimbursed prior to such Payment Date pursuant to Section
8.02(iv) and (v) of the Indenture or 5.07(e) and (f) of the Indenture, plus (ii)
interest accrued on such Insured Payments not previously repaid calculated at
the Late Payment Rate from the date the Indenture Trustee received the related
Insured Payments or the date such Insured Payments were made, and (y) without
duplication (i) any amounts then due and owing to the Note Insurer under the
Insurance Agreement, as certified to the Indenture Trustee by the Note Insurer
plus (ii) interest on such amounts at the Late Payment Rate. In the event any
amounts due under the Insurance Agreement are not clearly allocable to a
particular Group, those amounts shall be allocated between the Groups pro rata
based on the aggregate unpaid Principal Balance of the related Notes.
"Remaining Over-collateralization Deficit": With respect to any
Payment Date, the excess, if any, of (a) the aggregate Note Principal Balances
of all three Classes of Notes, after payment of the Base Principal Payment
Amount for all three Groups and after taking into account any principal payment
funded from Net Monthly Excess Cashflow or from amounts released from the
Reserve Account, but before taking into account the principal portion of any
Insured Payment, over (b) the aggregate Stated Principal Balance of the Mortgage
Loans as of the close of business on the last day of the prior Prepayment
Period. For purposes of determining the amount to be paid on account of the
Remaining Over-collateralization Deficit to the Noteholders of each Class of
Notes on the Payment Date, the Remaining Over-collateralization Deficit will be
allocated to each class pro rata based on the amount by which the Note Principal
Balance of each Class on such Payment Date, after payment of the Base Principal
Payment Amount but after taking into account any principal payment funded from
Net Monthly Excess Cashflow or from the amounts released from the Reserve
Account, but before taking into account the principal portion of any Insured
Payment, exceeds the aggregate Stated Principal Balances of the Mortgage Loans
in the related Group as of the end of the immediately preceding Payment Date.
31
"REO Disposition": The final sale by the Master Servicer of a REO
Property acquired by the Master Servicer in foreclosure or by deed in lieu of
foreclosure.
"REO Mortgage Loan": Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related Mortgage
Note is discharged and the related Mortgaged Property is held as part of the
Trust.
"REO Proceeds": Proceeds received in respect of any REO Mortgage
Loan (including, without limitation, proceeds from the rental of the related
Mortgaged Property).
"REO Property": A Mortgaged Property acquired by the Master Servicer
in the name of the Indenture Trustee on behalf of the Noteholders through
foreclosure or deed-in-lieu of foreclosure.
"Required Interest Distributions": (i) with respect to the Class A-1
Notes and any Payment Date, the Class A-1 Interest Payment Amount for such
Payment Date, (ii) with respect to the Class A-2 Notes and any Payment Date, the
Class A-2 Interest Payment Amount for such Payment Date and (iii) with respect
to the Class A-3 Notes and any Payment Date, the Class A-3 Interest Payment
Amount for such Payment Date.
"Request for Release": A request for release in substantially the
form attached as Exhibit F of the Sale and Servicing Agreement.
"Reserve Account": Each of the three segregated trust accounts
relating to each of the three Loan Groups, each of which shall be an Eligible
Account (or subaccount of the Payment Account), established and maintained
pursuant to Section 8.01(b) of the Indenture and entitled Deutsche Bank,
National Trust Company as Indenture Trustee for Accredited Mortgage Loan Trust
2002-2, Asset-Backed Notes, Series 2002-2, Cross-collateralization Reserve
Account, Class A-[1][2][3]" on behalf of the Noteholders and the Note Insurer.
"Reserve Account Release Amount": With respect to any Payment Date,
the lesser of (a) the aggregate amounts on deposit in all three Reserve Accounts
and (b) and the amount by which the Credit Enhancement Amount exceeds the
Specified Credit Enhancement Amount.
"Reserve Payment Amount": With respect to any Payment Date and any
Loan Group, the amount necessary for the aggregate funds on deposit in all three
Reserve Accounts to equal the Specified Reserve Amount.
"Residential Dwelling": A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development or a townhouse.
"Responsible Officer": When used with respect to the Indenture
Trustee or the Owner Trustee, any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Second or Assistant
Vice President, Senior Trust Officer, Trust Officer, Assistant Trust Officer,
any Assistant Secretary, associate, any trust officer or any other officer of
the Indenture Trustee or the Owner Trustee customarily performing functions
similar to those performed by any of the above designated officers and to whom,
with respect to a
32
particular matter, such matter is referred because of such officer's knowledge
of and familiarity with the particular subject. When used with respect to the
Sponsor or the Master Servicer, the chief executive officer, the president or
any vice president, assistant vice president, or any secretary or assistant
secretary.
"Rolling Six Month Delinquency Rate": For any Payment Date, the
fraction, expressed as a percentage, equal to the average of the Delinquency
Ratio for each of the six immediately preceding Collection Periods (or for each
Payment Date starting in December 2002, through May 2003, the corresponding
number of preceding Collection Periods).
"Rolling Three Month Delinquency Rate": For any Payment Date, the
fraction, expressed as a percentage, equal to the average of the Delinquency
Ratio for each of the three immediately preceding Collection Periods (or for the
Payment Date in December 2002, the Delinquency Ratio for the immediately
preceding Collection Period, and for the Payment Date in January 2003, the
Delinquency Ratio for the two immediately preceding Collection Periods).
"Sale": The meaning specified in Section 5.17 of the Indenture.
"Sale and Servicing Agreement": The Sale and Servicing Agreement,
dated as of November 1, 2002, among the Trust, the Master Servicer, the Backup
Servicer, the Sponsor , the Seller, and the Indenture Trustee, providing for,
among other things, the sale of the Mortgage Loans from the Seller to the Trust
and the servicing of the Mortgage Loans.
"Securities Act": Means the Securities Act of 1933, as amended.
"Seller": Accredited Home Capital, Inc., a Delaware corporation.
"Servicer Event of Default": As defined in Section 7.01 of the Sale
and Servicing Agreement.
"Servicer Payment Date": With respect to any Payment Date, the
second Business Day preceding the Payment Date.
"Servicer Remittance Amount": With respect to any Servicer Payment
Date, an amount equal to the sum of (i) all Monthly Payments on the Mortgage
Loans collected by the Master Servicer during the related Due Period, (ii) all
Curtailments and other amounts collected on account of principal (including Net
REO Proceeds, Net Liquidation Proceeds and Insurance Proceeds, if any) by the
Master Servicer during the related Collection Period, (iii) all Principal
Prepayments in full (including Prepayment Charges) collected by the Master
Servicer during the related Prepayment Period, (iv) all Periodic Advances made
by the Master Servicer with respect to Monthly Payments due to be received on
the Mortgage Loans during the related Due Period and (v) any other amounts
required to be placed in the Collection Account by the Master Servicer pursuant
to the Sale and Servicing Agreement but excluding the following:
(a) amounts received on a Mortgage Loan, other than timely Monthly
Payments, and including late payments, Liquidation Proceeds and Insurance
Proceeds, to the extent the Master Servicer has previously made an
unreimbursed Periodic Advance or
33
an unreimbursed Servicing Advance with regard to such Mortgage Loan, to
the extent of such unreimbursed Periodic Advance;
(b) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee and the Backup Servicing
Fee;
(c) that portion of Liquidation Proceeds and REO Proceeds to the
extent of any unpaid Servicing Fee and Backup Servicing Fee;
(d) all income from Permitted Investments that is held in the
Collection Account for the account of the Master Servicer;
(e) all amounts actually recovered by the Master Servicer in respect
of late fees, assumption fees and similar fees;
(f) certain other amounts which are reimbursable to the Master
Servicer, as provided in this Sale and Servicing Agreement;
(g) all amounts previously advanced by the Master Servicer as
Periodic Advances or Servicing Advances that are determined in good faith
by the Master Servicer to be unrecoverable from the proceeds of the
particular Mortgage Loan to which they relate; and
(h) Net Foreclosure Profits.
"Servicer Remittance Report": The monthly report prepared by the
Master Servicer and delivered to the parties specified in Section 5.16(a) of the
Sale and Servicing Agreement.
"Servicer Reporting Date": As defined in Section 5.16(a) of the Sale
and Servicing Agreement.
"Servicing Advances": All reasonable and customary "out-of-pocket"
costs and expenses incurred in the performance by the Master Servicer of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, including,
without limitation, real estate taxes and insurance premiums, (b) any
enforcement, collection and judicial proceedings, including foreclosures and
liquidations, (c) the management and liquidation of the REO Property, including
reasonable fees paid to any independent contractor in connection therewith, and
(d) compliance with the obligations under Sections 5.04 and 5.06 of the Sale and
Servicing Agreement, all of which reasonable and customary out-of-pocket costs
and expenses are reimbursable to the Master Servicer to the extent provided in
Sections 5.03 and 5.06 of the Sale and Servicing Agreement.
"Servicing Compensation": The Servicing Fee and other amounts to
which the Master Servicer is entitled pursuant to Section 5.08 of the Sale and
Servicing Agreement.
"Servicing Fee": As defined in Section 5.08 of the Sale and
Servicing Agreement.
34
"Servicing Fee Rate": The product of (i) 0.485% per annum (to the
extent that servicing is transferred and in the event that 30+ day Delinquencies
on the Mortgage Loans are greater than 25% and less than or equal to 35% of the
Aggregate Principal Balance of the Mortgage Loans, a supplemental fee of 0.15%
per annum will apply and in the event that 30+ day Delinquencies on the Mortgage
Loans are greater than 35% of the Aggregate Principal Balance of the Mortgage
Loans then a supplemental fee of 0.20% per annum will apply) and (ii) the stated
principal balance of the Mortgage Loans at the beginning of the related Due
Period.
"Servicing Officer": Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee and the Note Insurer by the Master Servicer, as such list
may from time to time be amended.
"Shortfall Amount": With respect to any Payment Date and any Class
of Notes, an amount, not less than zero, equal to the excess, if any, of (A) the
sum of (i) the Interest Payment Amount and the Base Principal Payment Amount, in
each case, for such Group and such Payment Date and (ii) the amount of any
Over-collateralization Deficit allocable to such Class and such Payment Date
over (B) the Available Funds (without taking into account the portion thereof
referred to in clause (iv) of the definition "Available Funds") for such Class
and such Payment Date.
"Specified Credit Enhancement Amount": With respect to any Payment
Date, the sum of the Specified Over-collateralization Amounts for all three
Groups.
"Specified Over-collateralization Amount": The greatest of (i) (a)
with respect to each of Loan Group 1, Loan Group 2 and Loan Group 3 and any
Payment Date on which the Step Down Requirement has not been satisfied, an
amount equal to 1.75%, 3.10% and 3.10% of the Maximum Collateral Amount for each
such Group, respectively, (b) with respect to any Payment Date on which the Step
Down Requirement has been satisfied, the related Stepped Down Required
Over-collaterized Percentage, or (c) with respect to any Payment Date on which a
Step-up Test Event has occurred, the related Stepped Up Required
Over-collateralization Percentage, (ii) the sum of the three largest outstanding
Aggregate Principal Balance of the Mortgage Loans in the related Loan Group,
(iii) the product of two and the excess of (x) 50% of the Aggregate Principal
Balance of the Mortgage Loans (including Mortgage Loans in foreclosure) and any
REO Mortgage Loans in the related Loan Group that are 90 days or more delinquent
over (y) three times the related Excess Spread, and (iv) 0.50% of the aggregate
Maximum Collateral Amount for both Loan Groups; provided, however, that during
the period that the auction process is continuing pursuant to Section 10.04 of
the Indenture the Specified Over-collateralization Amount shall be 100% of the
Aggregate Principal Balance of Mortgage Loans in the related Loan Group.
"Specified Reserve Amount": Means, with respect to any Payment Date,
the excess, if any, of (x) the sum of Specified Over-collateralization Amounts
for all three Groups on such Payment Date, over (y) the sum of
Over-collateralization Amounts for all three Groups and such Payment Date.
"Sponsor": Accredited Home Lenders, Inc., a California corporation.
35
"Standard & Poor's" or "S&P": Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc. or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "S&P" shall be deemed to refer to any other nationally recognized
statistical rating organization designated by the Note Insurer.
"Stated Principal Balance": As to any Mortgage Loan and Payment
Date, the unpaid principal balance of such Mortgage Loan as of the Due Date in
the related Collection Period as specified in the amortization schedule at the
time relating thereto (before any adjustment to such amortization schedule by
reason of any moratorium or similar waiver or grace period) after giving effect
to (i) any previous Principal Prepayments in full received during the related
Prepayment Period, (ii) any previous Curtailments and Liquidation Proceeds
allocable to principal received during the prior calendar month (other than with
respect to any Liquidated Mortgage Loan) and (iii) the payment of principal due
on the Due Date in the related Collection Period and irrespective of any
delinquency in payment by the related Mortgagor.
"Statutory Trust Statute": Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Codess. 3801 et seq., as the same may be amended from time to
time.
"Step Down Requirement": The Step Down Requirement is satisfied on
or after the later of (a) the 37th Payment Date or (b) the Payment Date upon
which the Aggregate Principal Balance of the Mortgage Loans plus the Pre-Funded
Amount, if any, is equal to or less than 50% of the initial aggregate Maximum
Collateral Amount plus 50% of the Original Pre-Funded Amount.
"Stepped Down Required Over-collateralized Percentage": For any
Payment Date for which the Step Down Requirement is satisfied, (A) with respect
to Loan Group 1, 3.50% of the Aggregate Principal Balance of the related
Mortgage Loans, (B) with respect to Loan Group 2, 6.20% of the Aggregate
Principal Balance of the related Mortgage Loans and (C) with respect to Loan
Group 3, 6.20% of the Aggregate Principal Balance of the related Mortgage Loans.
"Step-Up Test Event": On any Payment Date, if either of the
following events occur: (i) the Rolling Six Month Delinquency Rate exceeds
[12.50]% of the Aggregate Principal Balance of the Mortgage Loans or (ii) the
Twelve Month Loss Amount exceeds [1.75]% of the Aggregate Principal Balance of
the Mortgage Loans as of the first day of such twelve month period.
"Stepped Up Required Over-collateralized Percentage": On any Payment
Date on which a Step-Up Test Event exists, the Over-collateralization target
will increase (x) with respect to Loan Group 1, from 1.75% to 3.00% of the
initial Maximum Collateral Amount of Loan Group 1 (or from 3.50% to 6.00% of the
Aggregate Principal Balance of the Mortgage Loans on the related Payment Date if
the Step Down Requirement has been met) (y) with respect to Loan Group 2, from
3.10% to 5.00% of the Maximum Collateral Amount of Loan Group 2 of the related
Mortgage Loans (or from 6.20% to 10.00% of the Aggregate Principal Balance of
the Mortgage Loans on the related Payment Date of the Step Down Requirement has
been met) and (z) with respect to Loan Group 3, from 3.10% to 5.00% of the
Maximum Collateral Amount of
36
Loan Group 3 of the related Mortgage Loans (or from 6.20% to 10.00% of the
Aggregate Principal Balance of the Mortgage Loans on the related Payment Date of
the Step Down Requirement has been met).
"Subsequent Mortgage Loan": A Mortgage Loan sold by the Seller to
the Trust pursuant to Section 2.10 of the Sale and Servicing Agreement, such
Mortgage Loan being identified on the Mortgage Loan Schedule attached to a
Subsequent Transfer Instrument.
"Subsequent Transfer Date": With respect to each Subsequent Transfer
Instrument, the date on which the related Subsequent Mortgage Loans are sold to
the Trust.
"Subsequent Transfer Instrument": Each Subsequent Transfer
Instrument, dated as of a Subsequent Transfer Date, executed by the Trust and
the Seller substantially in the form attached hereto as Exhibit H to the Sale
and Servicing Agreement, by which Subsequent Mortgage Loans are transferred to
the Trust Fund.
"Substitution Adjustment": As to any date on which a substitution
occurs pursuant to Sections 2.06 or 4.02(b) of the Sale and Servicing Agreement,
the amount (if any) by which the aggregate principal balances (after application
of principal payments received on or before the date of substitution) of any
Qualified Substitute Mortgage Loans as of the date of substitution, are less
than the aggregate Stated Principal Balance of the related Deleted Mortgage
Loans (after application of the scheduled principal portion of the Monthly
Payments due in the month of substitution) together with 30-days' interest
thereon at the Mortgage Interest Rate.
"Sub-Trust": Shall have the meaning specified in Section 3.01 of the
Trust Agreement and include either Sub-Trust 1, Sub-Trust 2 or Sub-Trust 3, each
of which constitute a separate interest in the Trust Estate pursuant to Section
3806(b)(2) of the Statutory Trust Statute.
"Sub-Trust 1": The portion of the Trust Estate assigned to Loan
Group 1.
"Sub-Trust 2": The portion of the Trust Estate assigned to Loan
Group 2.
"Sub-Trust 3": The portion of the Trust Estate assigned to Loan
Group 3.
"Telerate Page 3750": The display designated as Telerate Page 3750
on the Telerate Service (or such other page as may replace the Telerate page on
that service for the purpose of displaying London interbank offered rates of
major banks).
"Termination Price": The greater of (A) the sum of (i) 100% of the
Note Principal Balance of the related Class of Notes, (ii) the aggregate amount
of accrued and unpaid interest on the related Class of Notes through the related
Due Period (including with respect to the Class A-2 Notes, any Class A-2 Net WAC
Cap Carry-Forward Amount and with respect to the Class A-3 Notes, any Class A-3
Net WAC Cap Carry-Forward Amount), (iii) any Indenture Trustee's fees and
expenses (including any fees and expenses associated with engaging a third-party
as agent to assist in the auction sale pursuant to Section 10.04 of the
Indenture), (iv) any Owner Trustee Fees or Expenses, (v) any unreimbursed
advances due and owing to the Master
37
Servicer, and (vi) any unpaid amount due the Note Insurer, as applicable and (B)
the fair market value of the Mortgage Loans in the related Group.
"Trust": Accredited Mortgage Loan Trust 2002-2, a Delaware statutory
trust.
"Trust Agreement": The Trust Agreement, dated as of November 12,
2002, as amended and restated as of November 25, 2002, between the Sponsor, the
Seller and the Owner Trustee, relating to the establishment of the Trust.
"Trust Certificate": A certificate evidencing the beneficial
interest of a Trust Certificateholder in the Trust consisting of the Mortgage
Loans in Loan Group 1, the Mortgage Loans in Loan Group 2 and the Mortgage Loans
in Loan Group 3, substantially in the form of Exhibit A to the Trust Agreement.
"Trust Certificateholder," "Certificateholder" or "Holder": A Person
in whose name a Trust Certificate is registered.
"Trust Estate": All money, instruments and other property subject or
intended to be subject to the lien of the Indenture, for the benefit of the
Noteholders and the Note Insurer, as of any particular time, including, without
limitation, all property and interests, including all proceeds thereof, granted
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, pursuant to the Granting Clauses of the Indenture. The Trust Estate
shall consist of three separate Sub-Trusts comprised of Sub-Trust 1, Sub-Trust 2
and Sub-Trust 3.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939, as
it may be amended from time to time.
"Trust Order" and "Trust Request": A written order or request of the
Trust signed on behalf of the Trust by an Authorized Officer of the Owner
Trustee, at the direction of the Certificateholders and delivered to the
Indenture Trustee or the Authenticating Agent, as applicable.
"Twelve Month Loss Amount": With respect to any Payment Date, an
amount equal to the aggregate of all Liquidated Loan Losses on the Mortgage
Loans which became Liquidated Mortgage Loans during the twelve (12) preceding
Collection Periods.
"Underwriter": Xxxxxx Brothers Inc.
"Underwriting Guidelines": The underwriting guidelines of the
Sponsor as approved by the Note Insurer.
"United States Person": A citizen or resident of the United States,
a corporation, partnership or treated as a corporation or partnership organized
in or under the laws of, the United States or any state thereof including the
District of Columbia, or an estate or trust whose income from sources without
the United States is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of a trade or
business within the United States or a trust if a court within the United States
can exercise primary jurisdiction over its administration and at least one
United States Person has the authority to
38
control all substantial decisions of the trust. Notwithstanding the last clause
of the preceding sentence, to the extent provided in Treasury Regulations,
certain trusts in existence on August 20, 1996 and treated as United States
Persons prior to such date, may elect to continue to be United States Persons.
"Weighted Average Mortgage Interest Rate": With respect to any Due
Period, the weighted average Mortgage Interest Rates (weighted by Principal
Balances) of the Mortgage Loans in Loan Group 2, and Loan Group 3, as
applicable, calculated at the opening of business on the first day of such Due
Period.
39
SCHEDULE I
MORTGAGE LOAN SCHEDULE
See Schedule I to Sale and Servicing Agreement.
EXHIBIT A
FORM OF NOTE
ACCREDITED MORTGAGE LOAN TRUST 2002-2
CLASS A-[1][2][3] NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE NOTE IS A NON-RECOURSE OBLIGATION OF THE TRUST, AND IS LIMITED IN
RIGHT OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AND THE NOTE
INSURANCE POLICY AS PROVIDED IN THE INDENTURE REFERRED TO BELOW. THE TRUST IS
NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
--------------------------------------------------------
Note No.:
A-[1][2][3] CUSIP No.:
Class A-[1][2][3] Original Note Principal Balance: Percentage Interest:
$____________ 100%
Date of Indenture: First Payment Date:
As of November 1, 2002 December 26, 2002
--------------------------------------------------------
ACCREDITED MORTGAGE LOAN TRUST 2002-2
ASSET-BACKED NOTES, SERIES 2002-2, CLASS A-[1][2][3]
Accredited Mortgage Loan Trust 2002-2, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Trust"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of $______________
(________________________ Thousand Dollars) payable on each Payment Date in an
amount equal to the result obtained by multiplying (x) the Percentage Interest
of this Note set forth on the cover page hereof, by (y) the aggregate amount, if
any, payable from the related Payment Account in respect of principal on the
Class A-[1][2][3] Notes, pursuant to the Indenture, dated as of November 1,
2002, between the Trust and Deutsche Bank National Trust Company, a national
trust company, as Indenture Trustee (the "Indenture Trustee"); provided,
however, that the entire unpaid Note Principal Balance of this Note shall be due
and payable on the earlier of (i) the Payment Date occurring in January 2033
with respect to the Class A-1 Notes and Class A-3 Notes and February 2033 with
respect to the Class A-2 Notes (this Note's "Final Stated Maturity Date"), (ii)
the Redemption Date, if any, applicable to this Notes 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 Notes have been declared 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 Appendix I to the Indenture.
Pursuant to the terms of the Indenture, payments will be made on the 25th
day of each month or, if such day is not a Business Day, on the Business Day
immediately following such 25th day (each a "Payment Date"), commencing on the
first Payment Date specified on the cover page hereof, to the Person in whose
name this Note 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 Note and (b) the sum of the amounts to be paid on the Class A-[1][2][3]
Notes with respect to such Payment Date, all as more specifically set forth in
the Indenture.
Notwithstanding the foregoing, in the case of Definitive Notes, upon
written request at least five (5) days prior to the related Record Date with
appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Principal Balance of at least $1,000,000), any payment of principal
or interest, other than the final installment of principal or interest, shall be
made by wire transfer to an account in the United States of America designated
by such Holder reasonably satisfactory to the Indenture Trustee.
On each Payment Date, Noteholders will be entitled to receive interest
payments in an aggregate amount equal to the Interest Payment Amount for such
Class for such Payment Date, together with principal payments in an aggregate
amount equal to the Base Principal Payment Amount for such Class for such
Payment Date, plus, until the Over-collateralization Amount for the related
Group and such Payment Date is equal to the Specified Over-collateralization
Amount for such Group and such Payment Date, the Net Monthly Excess Cashflow, if
any, for such Group and such Payment Date. The "Note Principal Balance" of a
Note as of any date of determination is equal to the initial Note Principal
Balance thereof as of the Closing Date, reduced by the aggregate of all amounts
previously paid with respect to such Note on account of principal.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Trust
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
This Note is one of a duly authorized issue of Notes of the Trust,
designated as the "Accredited Mortgage Loan Trust 2002-2, Asset-Backed Notes,
Series 2002-2, Class A-[1][2][3]," issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Trust, the
Indenture Trustee and the Holders of the Notes. Also issued under the Indenture
are the "Accredited Mortgage Loan Trust 2002-2, Asset-Backed Notes, Series
2002-2, Class A[l][2][3]." To the extent that any provision of this Note
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 Notes are subject to all terms of the
Indenture.
The Class A-[1][2][3] Notes are and will be equally and ratably secured by
the Mortgage Loans in Loan Group [1][2][3], the other collateral related thereto
pledged as security therefor as provided in the Indenture, and, to the extent
provided in the Indenture, by the Mortgage Loans in Loan Group [1][2][3].
As described above, the entire unpaid Note Principal Balance of this Note
shall be due and payable on the earlier of the Final Stated Maturity Date and
any Redemption Date applicable to such Class, pursuant to Article X of the
Indenture. Notwithstanding the foregoing, the entire unpaid Note Principal
Balance of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing if the Indenture Trustee, at the
direction or upon the prior written consent of Ambac Assurance Corporation (the
"Note Insurer") in the absence of a Note Insurer Default, or the Holders of the
Notes representing not less than 50% of the Note Principal Balance of the
Outstanding Notes (with the prior written consent of the Note Insurer in the
absence of a Note Insurer Default) of all of the Classes, shall have declared
the Notes to be immediately due and payable in the manner provided in Section
5.02 of the Indenture. All principal payments on the Notes shall be made pro
rata to the Noteholders entitled thereto.
The Note Insurer, in consideration of the payment of the premium and
subject to the terms of the Note Guaranty Insurance Policy (the "Note Insurance
Policy") thereby has unconditionally and irrevocably guaranteed the payment of
the Insured Payments.
Pursuant to the Indenture, unless a Note Insurer Default exists (i) the
Note Insurer shall be deemed to be the holder of the Notes for certain purposes
specified in the Indenture and will be entitled to exercise all rights of the
Noteholders thereunder, including the rights of Noteholders relating to the
occurrence of, and the remedies with respect to, an Event of Default, without
the consent of such Noteholders, and (ii) the Indenture Trustee may take actions
which would otherwise be at its option or within its discretion, including
actions relating to the occurrence of, and the remedies with respect to, an
Event of Default, only at the direction of the Note Insurer. In addition, on
each Payment Date, after the Noteholders have been paid all
amounts to which they are entitled, the Note Insurer will be entitled to be
reimbursed for any unreimbursed Insured Payments (with interest thereon at the
"Late Payment Rate" specified in the Insurance Agreement), Reimbursement Amounts
and any other amounts owed under the Note Insurance Policy.
The Trust shall not be liable upon the indebtedness evidenced by the Notes
except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate and payments under the Note Insurance Policy will be sole source of
payments on the Notes, and each Holder hereof, by its acceptance of this Note,
agrees that (i) such Note will be limited in right of payment to amounts
available from the Trust Estate and the Note Insurance Policy as provided in the
Indenture and (ii) such Holder shall have no recourse to the Trust, the Owner
Trustee, the Indenture Trustee, the Sponsor, the Master Servicer, the Backup
Servicer or any of their respective affiliates, or to the assets of any of the
foregoing entities, except the assets of the Trust pledged to secure the Notes
pursuant to the Indenture.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by wire transfer in immediately available
funds to the account designated by such nominee, or if no instructions for wire
transfers have been provided to the Indenture Trustee as provided in the
Indenture, then by check mailed to the Person whose name appears as the Holder
of this Note (or one or more Predecessor Notes) on the Note Register as of the
close of business on each Record Date. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Trust, will notify the Person who was the
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 Note
at the Indenture Trustee's office or at the office of the Indenture Trustee's
agent designated for such purposes.
As provided in the Indenture, all of the Classes of Notes may be redeemed
in whole, but not in part, at the option of the Sponsor on any Payment Date on
and after the date on which the sum of the Class A-1 Note Principal Balance, the
Class A-2 Note Principal Balance and the Class A-3 Note Principal Balance is
less than or equal to 10% of the sum of the Class A-1 Note Principal Balance,
Class A-2 Note Principal Balance and the Class A-3 Note Principal Balance.
As provided in the Indenture, any Class of Notes may be redeemed in whole,
but not in part at the option of the Sponsor on any Payment Date on and after
the date on which the aggregate unpaid Note Principal Balances on the related
class of Notes is less than or equal to 10% of the aggregate Original Note
Principal balance of the related class of Notes; provided that the Loan Group
relating to the other class of Notes has reached its specified
Over-
collateralization Amount or Stepped Down Required Over-collateralized
Percentage, as applicable.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Trust pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Xxxxxx's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the 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.
In the case of a transfer of a Class A-[1][2][3] Note, the Note Registrar
shall not register the transfer of this Note unless the Note Registrar has
received a representation letter from the transferee to the effect that either
(i) the transferee is not, and is not acquiring the Note on behalf of or with
the assets of, an employee benefit plan or other retirement plan or arrangement
that is subject to Title I of the Employee Retirement Income Security Act or
1974, as amended, or Section 4975 of the Code or (ii) the acquisition and
holding of this Note by the transferee qualifies for exemptive relief under a
Department of Labor Prohibited Transaction Class Exemption. Each Beneficial
Owner, by acceptance of a beneficial interest herein, shall be deemed to make
one of the foregoing representations.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Trust, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Trust or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Trust, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees by accepting the benefits of the Indenture that such Noteholder or
Beneficial Owner will not at any time institute against Accredited Home Lenders,
Inc., in its capacity as Sponsor under the Sale and Servicing
Agreement (the "Sponsor"), or the Trust, or join in any institution against the
Sponsor or the Trust 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 Notes; the
Indenture, the Trust Agreement and the Sale and Servicing Agreement and the
Insurance Agreement (the "Basic Documents").
The Trust has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Trust
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Beneficial Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Trust.
Prior to the due presentment for registration of transfer of this Note,
the Trust, the Indenture Trustee and any agent of the Trust or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Trust, the Indenture Trustee or any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust and the rights of the Holders of the Notes under the Indenture at any time
by the Trust with the consent of the Note Insurer and the Holders of Notes
representing a majority of the Note Principal Balance of the Outstanding Notes
affected thereby. The Indenture also contains provisions permitting the (i) Note
Insurer or (ii) if a Note Insurer Default exists, the Holders of Notes
representing specified percentages of the Note Principal Balance of Outstanding
Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Trust with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Note
Insurer or by the Holder of this Note (or any one or more Predecessor Notes)
shall be conclusive and binding upon such Holder and upon all future Holders of
this Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the 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 Notes issued
thereunder.
The term "Trust" as used in this Note includes any successor to the Trust
under the Indenture.
Initially, each Class of Notes will be represented by one Note registered
in the name of Cede & Co. as nominees of the Clearing Agency. The Notes will be
delivered in denominations as provided in the Indenture and subject to certain
limitations therein set forth. The Notes are exchangeable for a like aggregate
initial Note Principal Balance of Notes of different authorized denominations,
as requested by the Holder surrendering the same.
THIS NOTE AND THE INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Trust, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Unless the certificate of authentication hereon has been executed by the
Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to herein, or
be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Trust has caused this Instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Dated:
ACCREDITED MORTGAGE LOAN TRUST 2002-2
By: U.S. BANK NATIONAL ASSOCIATION,
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 Class A-[1][2][3] Notes designated above and referred
to in the within-mentioned Indenture.
Dated:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Authenticating Agent
By:
--------------------------------------
Authorized Signatory
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
--------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________________, attorney, to transfer
said Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: _________________________*/
Signature Guaranteed:
_______________________________*/
*/ NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
