EXECUTION COPY
HOME EQUITY LOAN TRUST 2004-HS3
Issuer
AND
JPMORGAN CHASE BANK
Indenture Trustee
INDENTURE
Dated as of September 29, 2004
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HOME EQUITY LOAN-BACKED TERM NOTES
HOME EQUITY LOAN-BACKED VARIABLE FUNDING NOTES
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TABLE OF CONTENTS
PAGE
ARTICLE I Definitions...............................................................2
Section 1.01. Definitions........................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act..................2
Section 1.03. Rules of Construction..............................................2
ARTICLE II Original Issuance of Notes................................................3
Section 2.01. Form...............................................................3
Section 2.02. Execution, Authentication and Delivery.............................3
ARTICLE III Covenants.................................................................4
Section 3.01. Collection of Payments with Respect to the Home Equity Loans.......4
Section 3.02. Maintenance of Office or Agency....................................4
Section 3.03. Money for Payments to Be Held in Trust; Paying Agent...............4
Section 3.04. Existence..........................................................6
Section 3.05. Payment of Principal and Interest; Defaulted Interest..............6
Section 3.06. Protection of Trust Estate........................................11
Section 3.07. Opinions as to Trust Estate.......................................12
Section 3.08. Performance of Obligations; Servicing Agreement...................12
Section 3.09. Negative Covenants................................................13
Section 3.10. Annual Statement as to Compliance.................................13
Section 3.11. Recording of Assignments..........................................14
Section 3.12. Representations and Warranties Concerning the Home Equity
Loans.............................................................14
Section 3.13. Assignee of Record of the Home Equity Loans.......................14
Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee......14
Section 3.15. Investment Company Act............................................14
Section 3.16. Issuer May Consolidate, etc.......................................15
Section 3.17. Successor or Transferee...........................................16
Section 3.18. No Other Business.................................................16
Section 3.19. No Borrowing......................................................16
Section 3.20. Guarantees, Loans, Advances and Other Liabilities.................16
Section 3.21. Capital Expenditures..............................................17
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Section 3.22. Owner Trustee Not Liable for Certificates or Related
Documents.........................................................17
Section 3.23. Restricted Payments...............................................17
Section 3.24. Notice of Events of Default.......................................17
Section 3.25. Further Instruments and Act.......................................17
Section 3.26. Statements to Noteholders.........................................17
Section 3.27. Determination of Note Rates.......................................18
Section 3.28. Payments under the Policy.........................................18
Section 3.29. Additional Representations of the Issuer..........................19
ARTICLE IV The Notes; Satisfaction and Discharge of Indenture.......................20
Section 4.01. The Notes; Increase of Maximum Variable Funding Balance;
Variable Funding Notes............................................20
Section 4.02. Registration of and Limitations on Transfer and Exchange of
Notes; Appointment of Certificate Registrar.......................21
Section 4.03. Xxxxxxxxx, Xxxxxxxxx, Lost or Stolen Notes........................24
Section 4.04. Persons Deemed Owners.............................................25
Section 4.05. Cancellation......................................................25
Section 4.06. Book-Entry Notes..................................................25
Section 4.07. Notices to Depository.............................................26
Section 4.08. Definitive Notes..................................................26
Section 4.09. Tax Treatment.....................................................27
Section 4.10. Satisfaction and Discharge of Indenture...........................27
Section 4.11. Application of Trust Money........................................28
Section 4.12. Subrogation and Cooperation.......................................29
Section 4.13. Repayment of Monies Held by Paying Agent..........................29
Section 4.14. Temporary Notes...................................................30
ARTICLE V Default and Remedies.....................................................30
Section 5.01. Events of Default.................................................30
Section 5.02. Acceleration of Maturity; Rescission and Annulment................30
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.................................................31
Section 5.04. Remedies; Priorities..............................................33
Section 5.05. Optional Preservation of the Trust Estate.........................35
Section 5.06. Limitation of Suits...............................................35
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Section 5.07. Unconditional Rights of Noteholders to Receive Principal and
Interest..........................................................36
Section 5.08. Restoration of Rights and Remedies................................36
Section 5.09. Rights and Remedies Cumulative....................................36
Section 5.10. Delay or Omission Not a Waiver....................................36
Section 5.11. Control by the Credit Enhancer or Noteholders.....................37
Section 5.12. Waiver of Past Default............................................37
Section 5.13. Undertaking for Costs.............................................37
Section 5.14. Waiver of Stay or Extension Laws..................................38
Section 5.15. Sale of Trust Estate..............................................38
Section 5.16. Action on Notes...................................................40
Section 5.17. Performance and Enforcement of Certain Obligations................40
ARTICLE VI The Indenture Trustee....................................................41
Section 6.01. Duties of Indenture Trustee.......................................41
Section 6.02. Rights of Indenture Trustee.......................................42
Section 6.03. Individual Rights of Indenture Trustee............................42
Section 6.04. Indenture Trustee's Disclaimer....................................42
Section 6.05. Notice of Event of Default........................................42
Section 6.06. Reports by Indenture Trustee to Holders...........................43
Section 6.07. Compensation and Indemnity........................................43
Section 6.08. Replacement of Indenture Trustee..................................43
Section 6.09. Successor Indenture Trustee by Xxxxxx.............................44
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee...........................................................45
Section 6.11. Eligibility; Disqualification.....................................46
Section 6.12. Preferential Collection of Claims Against Issuer..................47
Section 6.13. Representations and Warranties....................................47
Section 6.14. Directions to Indenture Trustee...................................47
Section 6.15. Indenture Trustee May Own Securities..............................48
ARTICLE VII Noteholders' Lists and Reports...........................................48
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Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders.......................................................48
Section 7.02. Preservation of Information; Communications to Noteholders........48
Section 7.03. Reports by Issuer.................................................48
Section 7.04. Reports by Indenture Trustee......................................49
ARTICLE VIII Accounts, Disbursements and Releases.....................................49
Section 8.01. Collection of Money...............................................49
Section 8.02. Trust Accounts....................................................49
Section 8.03. Officer's Certificate.............................................50
Section 8.04. Termination Upon Distribution to Noteholders......................50
Section 8.05. Release of Trust Estate...........................................50
Section 8.06. Surrender of Notes Upon Final Payment.............................51
ARTICLE IX SUPPLEMENTAL INDENTURES..................................................51
Section 9.01. Supplemental Indentures Without Consent of Noteholders............51
Section 9.02. Supplemental Indentures With Consent of Noteholders...............52
Section 9.03. Execution of Supplemental Indentures..............................54
Section 9.04. Effect of Supplemental Indenture..................................54
Section 9.05. Conformity with Trust Indenture Act...............................54
Section 9.06. Reference in Notes to Supplemental Indentures.....................54
ARTICLE X MISCELLANEOUS............................................................54
Section 10.01. Compliance Certificates and Opinions, etc.........................54
Section 10.02. Form of Documents Delivered to Indenture Trustee..................56
Section 10.03. Acts of Noteholders...............................................57
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Credit Enhancer
and Rating Agencies...............................................57
Section 10.05. Notices to Noteholders; Waiver....................................58
Section 10.06. Alternate Payment and Notice Provisions...........................59
Section 10.07. Conflict with Trust Indenture Act.................................59
Section 10.08. Effect of Headings................................................59
Section 10.09. Successors and Assigns............................................59
Section 10.10. Separability......................................................59
Section 10.11. Benefits of Indenture.............................................59
Section 10.12. Legal Holidays....................................................59
Section 10.13. GOVERNING LAW.....................................................60
Section 10.14. Counterparts......................................................60
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Section 10.15. Recording of Indenture............................................60
Section 10.16. Issuer Obligation.................................................60
Section 10.17. No Petition.......................................................60
Section 10.18. Inspection........................................................60
ARTICLE XI RESERVED.................................................................61
EXHIBIT
Exhibit A-1 ..Form of Class I Notes, Form of Class A-II Notes A-1
Exhibit A-2 ...Form of Variable Funding Notes A-2
Exhibit B .....Form of Rule 144A Investment Representation B-1
Exhibit C .....Form of Investor Representation Letter C-1
Exhibit D .....Form of Transferor Representation Letter D-1
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
ACT OF 1939 AND INDENTURE PROVISIONS*
Trust Indenture
Act Section Indenture Section
310(a)(1).......................... 6.11
(a)(2)........................... 6.11
(a)(3)........................... 6.10
(a)(4)........................... Not Applicable
(a)(5)........................... 6.11
(b).............................. 6.08, 6.11
(c).............................. Not Applicable
311(a)............................. 6.12
(b).............................. 6.12
(c).............................. Not Applicable
312(a)............................. 7.01, 7.02(a)
(b).............................. 7.02(b)
(c).............................. 7.02(c)
313(a)............................. 7.04
(b).............................. 7.04
(c).............................. 7.03(a)(iii), 7.04
(d).............................. 7.04
314(a)............................. 3.10, 7.03(a)
(b)............................. 3.07
(c)(1)........................... 8.05(c), 10.01(a)
(c)(2)........................... 8.05(c), 10.01(a)
(c)(3)........................... Not Applicable
(d)(1)........................... 8.05(c), 10.01(b)
(d)(2)........................... 8.05(c), 10.01(b)
(d)(3)........................... 8.05(c), 10.01(b)
(e).............................. 10.01(a)
315(a)............................. 6.01(b)
(b).............................. 6.05
(c).............................. 6.01(a)
(d).............................. 6.01(c)
(d)(1)........................... 6.01(c)
(d)(2)........................... 6.01(c)
(d)(3)........................... 6.01(c)
(e).............................. 5.13
316(a)(1)(A)....................... 5.11
316(a)(1)(B)....................... 5.12
316(a)(2).......................... Not Applicable
316(b)............................. 5.07
317(a)(1).......................... 5.04
317(a)(2).......................... 5.03(d)
317(b)............................. 3.03(a)
318(a)............................. 10.07
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*This reconciliation and tie shall not, for any purpose, be deemed to be part of
the within indenture.
This Indenture, dated as of September 29, 2004, between HOME
EQUITY LOAN TRUST 2004-HS3, a Delaware statutory trust, as Issuer (the
"Issuer"), and JPMORGAN CHASE BANK, as Indenture Trustee (the "Indenture
Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's
Series 2004-HS3 Home Equity Loan-Backed Term Notes and Home Equity Loan-Backed
Variable Funding Notes (together, the "Notes").
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as trustee for the benefit of the Holders of the Notes, all of the
Issuer's right, title and interest in and to the Home Equity Loans and to all
accounts, chattel paper, general intangibles, payment intangibles, contract
rights, certificates of deposit, deposit accounts, instruments, documents,
letters of credit, money, advices of credit, investment property, goods and
other property consisting of, arising under or related to whether now existing
or hereafter created in (a) the Home Equity Loans, (b) the Payment Account, all
funds on deposit or credited thereto from time to time and all proceeds thereof;
(c) the Policy and (d) all present and future claims, demands, causes and choses
in action in respect of any or all of the foregoing and all payments on or
under, and all proceeds of every kind and nature whatsoever in respect of, any
or all of the foregoing and all payments on or under, and all proceeds of every
kind and nature whatsoever in the conversion thereof, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing (collectively, the "Trust
Estate" or the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The foregoing Grant shall inure to the benefit of the Credit
Enhancer in respect of draws made on the Policy and amounts owing to the Credit
Enhancer from time to time pursuant to the Insurance Agreement and payable to
the Credit Enhancer pursuant to this Indenture, and such Grant shall continue in
full force and effect for the benefit of the Credit Enhancer until all such
amounts owing to it have been repaid in full.
The Indenture Trustee, as trustee on behalf of the Holders of the
Notes, (i) acknowledges such Grant, (ii) accepts the trust under this Indenture
in accordance with the provisions hereof, (iii) agrees to perform its duties as
Indenture Trustee as required herein and (iv) acknowledges receipt of the Policy
and shall hold such Policy in accordance with the terms of this Indenture for
the benefit of the Holders of the Notes.
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ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions attached hereto as Appendix A which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act. Whenever this
Indenture refers to a provision of the Trust Indenture Act (the "TIA"), the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by
Commission rule have the meaning assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise requires:
---------------------
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles as in effect from time
to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural include the
singular; and
(vi) any agreement, instrument or statute defined or referred to herein or in
any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
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ARTICLE II
Original Issuance of Notes
Section 2.01. Form. The Term Notes and the Variable Funding Notes, in each case
together with the Indenture Trustee's certificate of authentication, shall be in
substantially the forms set forth in Exhibits A-1 and A-2, respectively, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes. Any portion of the text of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the Authorized Officers executing such Notes, as
evidenced by their execution of such Notes.
The terms of the Notes set forth in Exhibits A-1 and A-2 are part of the
terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and deliver
Term Notes for original issue in an aggregate initial principal amount of
$284,000,000 and Variable Funding Notes for original issue in an aggregate
initial principal amount of $0. The Security Balance of the Variable Funding
Notes in the aggregate may not exceed the Maximum Variable Funding Balance.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes an in the minimum initial Security Balances of
$25,000 and in integral multiples of $1 in excess thereof.
Each Variable Funding Note shall be initially issued with a Security
Balance of $0 or, if applicable, with a Security Balance in the amount equal to
the Additional Balance Differential for the Collection Period related to the
Payment Date following the date of issuance of such Variable Funding Note
pursuant to Section 4.01(b).
3
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
ARTICLE III
Covenants
Section 3.01. Collection of Payments with Respect to the Home Equity Loans. The
Indenture Trustee shall establish and maintain with itself the Payment Account
in which the Indenture Trustee shall, subject to the terms of this paragraph,
deposit, on the same day as it is received from the Master Servicer, each
remittance received by the Indenture Trustee with respect to the Home Equity
Loans. The Indenture Trustee shall make all payments of principal of and
interest on the Notes, subject to Section 3.03, as provided in Section 3.05
herein from monies on deposit in the Payment Account.
Section 3.02. Maintenance of Office or Agency. The Issuer will maintain in the
City of New York, an office or agency where, subject to satisfaction of
conditions set forth herein, Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments to Be Held in Trust; Paying Agent. (a) As
provided in Section 3.01, all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Payment Account
pursuant to Section 3.01 shall be made on behalf of the Issuer by the Indenture
Trustee or by the Paying Agent, and no amounts so withdrawn from the Payment
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.03.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with respect to the
Notes in trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
pay such sums to such Persons as herein provided;
4
(ii) give the Indenture Trustee and the Credit Enhancer written notice of any
default by the Issuer of which it has actual knowledge in the making of any
payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the written
request of the Indenture Trustee, forthwith pay to the Indenture Trustee all
sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for the payment of Notes, if at any time it
ceases to meet the standards required to be met by a Paying Agent at the time of
its appointment;
(v) comply with all requirements of the Code with respect to the withholding
from any payments made by it on any Notes of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith; and
(vi) deliver to the Indenture Trustee a copy of the report to Noteholders
prepared with respect to each Payment Date by the Master Servicer pursuant to
Section 4.01 of the Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Request direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
an Authorized Newspaper, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee may also adopt and employ,
at the expense and direction of the Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in monies due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
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Section 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a statutory trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuer will keep in full effect its existence, rights
and franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Home Equity Loans and each
other instrument or agreement included in the Trust Estate.
Section 3.05. Payment of Principal and Interest; Defaulted
Interest. (a) On each Payment Date from amounts on deposit in the Payment
Account with respect to Home Equity Loans (other than amounts deposited in the
nature of prepayment charges), the Paying Agent shall pay to the Noteholders,
the Certificate Paying Agent, on behalf of the Certificateholders, and to other
Persons the amounts to which they are entitled, as set forth in the statements
delivered to the Indenture Trustee pursuant to Section 4.01 of the Servicing
Agreement, and to the Class SB Certificateholders, amounts in the nature of
prepayment charges, as set forth below in the following order of priority:
(i) first, to the Class A Noteholders and the Variable Funding
Noteholders, the Interest Distribution Amount for the Class A Notes and the
Variable Funding Notes for such Payment Date, on a pro rata basis in accordance
with their respective Interest Distribution Amounts;
(ii) second, to the Class A Noteholders and the Variable Funding
Noteholders, as principal on the Class A Notes and Variable Funding Notes, the
Principal Collection Distribution Amount with respect to the Class A Notes and
the Variable Funding Notes for such Payment Date, on a pro rata basis in
accordance with the outstanding Security Balances thereof;
(iii) third, to the Class A Noteholders and the Variable Funding
Noteholders, as principal on the Class A Notes and Variable Funding Notes, on a
pro rata basis in accordance with the outstanding Security Balances thereof, the
Liquidation Loss Distribution Amount (other than any amount attributable to
Excess Loss Amounts) with respect to the Home Equity Loans for such Payment
Date;
(iv) fourth, to the Credit Enhancer, the amount of the premium
for the Policy and any previously unpaid premiums for the Policy, with interest
thereon as provided in the Insurance Agreement;
(v) fifth, to the Credit Enhancer, to reimburse it for prior
draws made on the Policy (other than any Excess Loss Amount) related to payments
of principal and interest on the Class A Notes and the Variable Funding Notes
(other than any draws related to Excess Loss Amounts) with interest thereon as
provided in the Insurance Agreement;
(vi) sixth, to the Class A Noteholders and the Variable Funding
Noteholders, as principal on the Class A Notes and the Variable Funding Notes,
on a pro rata basis in accordance with the outstanding Security Balances
thereof, the Overcollateralization Increase Amount, if any, for such Payment
Date;
6
(vii) seventh, to the Credit Enhancer, any other amounts owed to
the Credit Enhancer pursuant to the Insurance Agreement and related to the
Notes;
(viii) eighth, to the Class A Noteholders and the Variable
Funding Noteholders, any Net WAC Cap Shortfalls for that Payment Date and any
Net WAC Cap Shortfalls for previous Payment Dates and not previously paid
(together with interest thereon at the Note Rate for the related Notes (as
adjusted from time to time)), on a pro rata basis in accordance with the
respective amounts of Net WAC Cap Shortfalls allocated for such Payment Date and
any previous Payment Dates not previously paid (with interest thereon);
(ix) ninth, to pay to the holders of the Class A Notes and the
Variable Funding Notes any Relief Act Shortfalls with respect to the Home Equity
Loans incurred during the related Collection Period, pro rata in accordance with
any such Relief Act Shortfalls allocated to the Class A Notes and Variable
Funding Notes in such Collection Period;
(x) tenth, to the Indenture Trustee, any amounts owing to the
Indenture Trustee pursuant to Section 6.07 remaining unpaid; and
(xi) eleventh, any remaining amount (other than amounts in the
nature of prepayment charges) to the Certificate Paying Agent on behalf of the
holders of the Class SB Certificates and any amounts in the nature of prepayment
charges to the Certificate Paying Agent, on behalf of the holders of the Class
SB Certificates;
provided, however, in the event that on a Payment Date a Credit Enhancer Default
shall have occurred and be continuing, then the priorities of distributions
described above will be adjusted such that payments of any amounts to be paid to
the Credit Enhancer (x) pursuant to clauses 3.05(a) (iv) and (vii) will not be
paid until the full amount of interest and principal in accordance with clauses
3.05(a) (i) through (iii), (vi) and (viii) through (ix) that are due and
required to be paid on such Payment Date and any Interest Distribution Amount
remaining unpaid from any previous Payment Date have been paid and (y) pursuant
to clause 3.05(a) (v) will not be paid until the full amount of interest and
principal in accordance with clauses 3.05(a) (i) through (iii) and (vi) that are
due and required to be paid on such Payment Date and any Interest Distribution
Amount remaining unpaid from any previous Payment Date have been paid. For
purposes of the foregoing, required payments of principal on the Notes on each
Payment Date pursuant to clause 3.05(a)(iii) above will include the pro rata
portion allocable to the Notes of all Liquidation Loss Amounts (other than any
Excess Loss Amounts) for such Payment Date and for all previous Collection
Periods until paid or covered in full, to the extent not otherwise covered by a
Liquidation Loss Distribution Amount, a reduction of the Overcollateralization
Amount or a draw on the Policy (up to the outstanding Security Balance thereof).
On the Final Scheduled Payment Date or other final Payment Date for the
Notes, the amount to be paid pursuant to clause (ii) above shall be equal to the
Security Balances of the Notes immediately prior to such Payment Date.
Notwithstanding anything herein to the contrary, if the final Payment Date is a
date on which the Master Servicer has exercised its right to purchase all of the
Home Equity Loans pursuant to Section 8.08 of the Servicing Agreement, the
priorities set forth in clauses (i) through (iv) above shall be disregarded, and
amounts on deposit in the Payment Account with respect to the Home Equity Loans
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will be applied first, to pay the Interest Distribution Amount for the Class A
Notes and Variable Funding Notes, on a pro rata basis in accordance with their
respective Interest Distribution Amounts; second, to pay principal on the Class
A Notes and Variable Funding Notes on a pro rata basis in accordance with their
respective Security Balances, until the Security Balances thereof have been
reduced to zero and then in accordance with the priorities set forth in clauses
(iv) through (xi) above.
(b) Relief Act Shortfalls on the Home Equity Loans will be
allocated to the Class A Notes and Variable Funding Notes on a pro rata basis in
accordance with the amount of accrued interest payable on that Class for such
Payment Date, absent such reductions.
(c) On each Payment Date, the Certificate Paying Agent shall
deposit in the Certificate Distribution Account all amounts it received pursuant
to this Section 3.05 for the purpose of distributing such funds to the
Certificateholders.
The amounts paid to Noteholders shall be paid in respect of the
related Class or Classes of Term Notes or Variable Funding Notes, as the case
may be, in accordance with the applicable percentage as set forth in paragraph
(d) below. Interest will accrue on the Notes during an Interest Period, on the
basis of the actual number of days in such Interest Period and a year assumed to
consist of 360 days.
Any installment of interest or principal, if any, payable on any
Note that is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall, if such Holder holds Notes of an aggregate
initial Security Balance or notional amount of at least $1,000,000, be paid to
each Holder of record on the preceding Record Date, by wire transfer to an
account specified in writing by such Holder reasonably satisfactory to the
Indenture Trustee as of the preceding Record Date or in all other cases or if no
such instructions have been delivered to the Indenture Trustee, by check to such
Noteholder mailed to such Holder's address as it appears in the Note Register
the amount required to be distributed to such Holder on such Payment Date
pursuant to such Holder's Securities; provided, however, that the Indenture
Trustee shall not pay to such Holders any amount required to be withheld from a
payment to such Holder by the Code.
(d) Principal of each Note shall be due and payable in full on
the Final Scheduled Payment Date for such Note as provided in the related form
of Note set forth in Exhibits A-1 and A-2. All principal payments on each of the
Term Notes and Variable Funding Notes shall be made in accordance with the
priorities set forth in paragraphs (a) and (b) above to the Noteholders entitled
thereto in accordance with the related Percentage Interests represented thereby.
Upon written notice to the Indenture Trustee by the Issuer, the Indenture
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Final Scheduled Payment Date or
other final Payment Date. Such notice shall be mailed no later than five
Business Days prior to such Final Scheduled Payment Date or other final Payment
Date and shall specify that payment of the principal amount and any interest due
with respect to such Note at the Final Scheduled Payment Date or other final
Payment Date will be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered for
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such final payment.
Section 3.06. Protection of Trust Estate. (a) The Issuer will from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the purposes
hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture; (iii) cause the Trust to enforce any
of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture
Trustee shall not remove any portion of the Trust Estate that consists of money
or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.07 (or from the jurisdiction in which it
was held as described in the Opinion of Counsel delivered at the Closing Date
pursuant to Section 3.07(a), if no Opinion of Counsel has yet been delivered
pursuant to Section 3.07(b)) unless the Owner Trustee shall have first received
an Opinion of Counsel to the effect that the lien and security interest created
by this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.06.
Section 3.07. Opinions as to Trust Estate. (a) On the Closing
Date, the Issuer shall furnish to the Indenture Trustee and the Owner Trustee an
Opinion of Counsel at the expense of the Issuer stating that, upon delivery of
the Loan Agreements relating to the Initial Home Equity Loans to the Indenture
Trustee or the Custodian, the Indenture Trustee will have a perfected, first
priority security interest in the Home Equity Loans.
(b) On or before December 31st in each calendar year, beginning
in 2004, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
at the expense of the Issuer either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as is necessary to
maintain the lien and security interest in the Home Equity Loans and reciting
the details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest in the Home Equity Loans until
December 31 in the following calendar year.
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Section 3.08. Performance of Obligations; Servicing Agreement.
(a) The Issuer will punctually perform and observe all of its obligations and
agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer.
(c) The Issuer will not take any action or permit any action to
be taken by others which would release any Person from any of such Person's
covenants or obligations under any of the documents relating to the Home Equity
Loans or under any instrument included in the Trust Estate, or which would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any of the documents relating to
the Home Equity Loans or any such instrument, except such actions as the Master
Servicer is expressly permitted to take in the Servicing Agreement.
(d) The Issuer may retain an administrator and may enter into
contracts with other Persons for the performance of the Issuer's obligations
hereunder, and performance of such obligations by such Persons shall be deemed
to be performance of such obligations by the Issuer.
Section 3.09. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(a) except as expressly permitted by this Indenture, sell, transfer, exchange or
otherwise dispose of the Trust Estate, unless directed to do so by the Indenture
Trustee;
(b) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Trust Estate;
(c) (i) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (ii) permit any lien, charge,
excise, claim, security interest, mortgage or other encumbrance (other than the
lien of this Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or the
proceeds thereof or (iii) permit the lien of this Indenture not to constitute a
valid first priority security interest in the Trust Estate; or
(d) impair or cause to be impaired the Issuer's interest in the
Home Equity Loans, the Purchase Agreement or in any Basic Document, if any such
action would materially and adversely affect the interests of the Noteholders.
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Section 3.10. Annual Statement as to Compliance. The Issuer will deliver to the
Indenture Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 2004), an Officer's Certificate stating,
as to the Authorized Officer signing such Officer's Certificate, that:
(a) a review of the activities of the Issuer during such year and of its
performance under this Indenture and the Trust Agreement has been made under
such Authorized Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based on such review,
the Issuer has complied with all conditions and covenants under this Indenture
and the provisions of the Trust Agreement throughout such year, or, if there has
been a default in its compliance with any such condition or covenant, specifying
each such default known to such Authorized Officer and the nature and status
thereof.
Section 3.11. Recording of Assignments. The Issuer shall enforce the obligation
of the Seller under the Purchase Agreement to submit or cause to be submitted
for recordation all Assignments of Mortgages within 60 days of receipt of
recording information by the Master Servicer.
Section 3.12. Representations and Warranties Concerning the Home Equity Loans.
The Indenture Trustee, as pledgee of the Home Equity Loans, has the benefit of
the representations and warranties made by the Seller in Section 3.1(a), Section
3.1(b) and 3.1(c) of the Purchase Agreement concerning the Home Equity Loans and
the right to enforce the remedies against the Seller provided in such Section
3.1(a), Section 3.1(b) and 3.1(c) to the same extent as though such
representations and warranties were made directly to the Indenture Trustee.
Section 3.13. Assignee of Record of the Home Equity Loans. As pledgee of the
Home Equity Loans, the Indenture Trustee shall hold record title to the Home
Equity Loans by being named as payee in the endorsements or assignments of the
Loan Agreements and assignee in the Assignments of Mortgage to be recorded under
Section 2.1 of the Purchase Agreement. Except as expressly provided in the
Purchase Agreement or in the Servicing Agreement with respect to any specific
Home Equity Loan, the Indenture Trustee shall not execute any endorsement or
assignment or otherwise release or transfer such record title to any of the Home
Equity Loans until such time as the remaining Trust Estate may be released
pursuant to Section 8.05(b).
Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee.
Solely for purposes of perfection under Section 9-313 or 9-314 of the Uniform
Commercial Code or other similar applicable law, rule or regulation of the state
in which such property is held by the Master Servicer, the Issuer and the
Indenture Trustee hereby acknowledge that the Master Servicer is acting as agent
and bailee of the Indenture Trustee in holding amounts on deposit in the
Custodial Account pursuant to Section 3.02 of the Servicing Agreement that are
allocable to the Home Equity Loans, as well as the agent and bailee of the
Indenture Trustee in holding any Related Documents released to the Master
Servicer pursuant to Section 3.06(c) of the Servicing Agreement, and any other
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items constituting a part of the Trust Estate which from time to time come into
the possession of the Master Servicer. It is intended that, by the Master
Servicer's acceptance of such agency pursuant to Section 3.02 of the Servicing
Agreement, the Indenture Trustee, as a pledgee of the Home Equity Loans, will be
deemed to have possession of such Related Documents, such monies and such other
items for purposes of Section 9-305 of the Uniform Commercial Code of the state
in which such property is held by the Master Servicer.
Section 3.15. Investment Company Act. The Issuer shall not become an "investment
company" or under the "control" of an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (or any successor or
amendatory statute), and the rules and regulations thereunder (taking into
account not only the general definition of the term "investment company" but
also any available exceptions to such general definition); provided, however,
that the Issuer shall be in compliance with this Section 3.15 if it shall have
obtained an order exempting it from regulation as an "investment company" so
long as it is in compliance with the conditions imposed in such order.
Section 3.16. Issuer May Consolidate, etc. (a) The Issuer shall not consolidate
or merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the laws
of the United States of America or any state or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form reasonably satisfactory to the
Indenture Trustee, the due and punctual payment of the principal of and interest
on all Notes and to the Certificate Paying Agent, on behalf of the
Certificateholders and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Event of Default
shall have occurred and be continuing;
(iii) the Issuer receives consent of the Credit Enhancer and the Rating Agencies
shall have notified the Issuer that such transaction shall not cause the rating
of the Notes to be reduced, suspended or withdrawn or to be considered by either
Rating Agency to be below investment grade without taking into account the
Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and shall have
delivered copies thereof to the Indenture Trustee and the Credit Enhancer) to
the effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and security interest
created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation or
merger and such supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction have been
complied with (including any filing required by the Exchange Act).
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(b) The Issuer shall not convey or transfer any of its properties or assets,
including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the properties and assets
of the Issuer the conveyance or transfer of which is hereby restricted shall (i)
be a United States citizen or a Person organized and existing under the laws of
the United States of America or any state, (ii) expressly assumes, by an
indenture supplemental hereto, executed and delivered to the Indenture Trustee,
in form satisfactory to the Indenture Trustee, the due and punctual payment of
the principal of and interest on all Notes and the performance or observance of
every agreement and covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein, (iii) expressly agrees by means
of such supplemental indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of Holders of the
Notes, (iv) unless otherwise provided in such supplemental indenture, expressly
agrees to indemnify, defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this Indenture and the
Notes and (v) expressly agrees by means of such supplemental indenture that such
Person (or if a group of Persons, then one specified Person) shall make all
filings with the Commission (and any other appropriate Person) required by the
Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing;
(iii) the Issuer receives consent of the Credit Enhancer and the Rating Agencies
shall have notified the Issuer that such transaction shall not cause the rating
of the Notes to be reduced, suspended or withdrawn, if determined without regard
to the Policies;
(iv) the Issuer shall have received an Opinion of Counsel (and shall have
delivered copies thereof to the Indenture Trustee and the Credit Enhancer) to
the effect that such transaction will not have any material adverse tax
consequence to the Issuer or any Noteholder;
(v) any action that is necessary to maintain the lien and security interest
created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such conveyance or
transfer and such supplemental indenture comply with this Article III and that
all conditions precedent herein provided for relating to such transaction have
been complied with (including any filing required by the Exchange Act).
Section 3.17. Successor or Transferee. (a) Upon any consolidation or merger of
the Issuer in accordance with Section 3.16(a), the Person formed by or surviving
such consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the Issuer
pursuant to Section 3.16(b), the Issuer will be released from every covenant and
agreement of this Indenture to be observed or performed on the part of the
Issuer with respect to the Notes immediately upon the delivery of written notice
to the Indenture Trustee of such conveyance or transfer.
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Section 3.18. No Other Business. The Issuer shall not engage in any business
other than financing, purchasing, owning and selling and managing the Home
Equity Loans and the issuance of the Notes and Certificates in the manner
contemplated by this Indenture and the Basic Documents and all activities
incidental thereto.
Section 3.19. No Borrowing. The Issuer shall not issue, incur, assume, guarantee
or otherwise become liable, directly or indirectly, for any indebtedness except
for the Notes.
Section 3.20. Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the other Basic Documents, the Issuer shall
not make any loan or advance or credit to, or guarantee (directly or indirectly
or by an instrument having the effect of assuring another's payment or
performance on any obligation or capability of so doing or otherwise), endorse
or otherwise become contingently liable, directly or indirectly, in connection
with the obligations, stocks or dividends of, or own, purchase, repurchase or
acquire (or agree contingently to do so) any stock, obligations, assets or
securities of, or any other interest in, or make any capital contribution to,
any other Person.
Section 3.21. Capital Expenditures. The Issuer shall not make any expenditure
(by long- term or operating lease or otherwise) for capital assets (either
realty or personalty).
Section 3.22. Owner Trustee Not Liable for Certificates or Related Documents.
The recitals contained herein shall be taken as the statements of the Depositor,
and the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Indenture, of any Basic Document or of the Certificates (other than the
signatures of the Owner Trustee on the Certificates) or the Notes, or of any
Related Documents. The Owner Trustee shall at no time have any responsibility or
liability with respect to the sufficiency of the Trust Estate or its ability to
generate the payments to be distributed to Certificateholders under the Trust
Agreement or the Noteholders under this Indenture, including, the compliance by
the Depositor or the Seller with any warranty or representation made under any
Basic Document or in any related document or the accuracy of any such warranty
or representation, or any action of the Certificate Paying Agent, the
Certificate Registrar or the Indenture Trustee taken in the name of the Owner
Trustee.
Section 3.23. Restricted Payments. The Issuer shall not, directly or indirectly,
(i) pay any dividend or make any distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, to
the Owner Trustee or any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Issuer, (ii) redeem, purchase, retire or otherwise acquire for value any
such ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the Issuer
may make, or cause to be made, (x) distributions to the Owner Trustee and the
14
Certificateholders as contemplated by, and to the extent funds are available for
such purpose under the Trust Agreement and (y) payments to the Master Servicer
pursuant to the terms of the Servicing Agreement. The Issuer will not, directly
or indirectly, make payments to or distributions from the Custodial Account
except in accordance with this Indenture and the other Basic Documents.
Section 3.24. Notice of Events of Default. The Issuer shall give the Indenture
Trustee, the Credit Enhancer and the Rating Agencies prompt written notice of
each Event of Default hereunder and under the Trust Agreement.
Section 3.25. Further Instruments and Acts. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.26. Statements to Noteholders. On each Payment Date, the Indenture
Trustee and the Certificate Registrar shall forward by mail to each Noteholder
or make available on its website initially located at "xxx.xxxxxxxx.xxx/xxx" and
Certificateholder, respectively, the statement delivered to it, on the Business
Day following the related Determination Date pursuant to Section 4.01 of the
Servicing Agreement.
Section 3.27. Determination of Note Rates. On the second LIBOR Business Day
immediately preceding (i) the Closing Date in the case of the first Interest
Period and (ii) the first day of each succeeding Interest Period, the Indenture
Trustee shall determine LIBOR and the Note Rate for such Interest Period and
shall inform the Issuer, the Master Servicer and the Depositor at their
respective facsimile numbers given to the Indenture Trustee in writing.
Section 3.28. Payments under the Policy. (a) On or prior to 12:00 p.m. on the
second Business Day before any Payment Date, the Indenture Trustee shall make a
draw on the Policy, in an amount, if any, equal to the Deficiency Amount with
respect to the Notes. For purposes of the foregoing, amounts in the Payment
Account available for interest distributions on the Notes on any Payment Date
shall be deemed to include all amounts distributed on the Home Equity Loans,
other than the Principal Collection Distribution Amount distributed thereon. In
addition, on the Final Scheduled Payment Date for the Notes, the Indenture
Trustee shall make a draw on the Policy in the amount by which the Security
Balances on Notes exceeds the payments otherwise available to be made to the
Holders thereof on the Final Scheduled Payment Date.
(b) The Indenture Trustee shall submit, if a Deficiency Amount is specified in
any statement to Holders of the Notes prepared by the Master Servicer pursuant
to Section 4.01 of the Servicing Agreement and timely delivered to the Indenture
Trustee, the notice (in the form attached as Exhibit A to the Policy) in the
amount of the Deficiency Amount to the Credit Enhancer no later than 12:00 noon,
New York City time, on the second Business Day prior to the applicable Payment
Date. Upon receipt of such Deficiency Amount in accordance with the terms of the
Policy, as applicable, the Indenture Trustee shall deposit such Deficiency
Amount in the Payment Account for distribution to the Noteholders, as
15
applicable, pursuant to Section 3.05.
Section 3.29. Additional Representations of the Issuer.
----------------------------------------
(a) This Indenture creates a valid and continuing security interest (as defined
in the New York UCC) in the Mortgage Notes in favor of the Indenture
Trustee, which security interest is prior to all other Liens (except as
expressly permitted otherwise in this Indenture), and is enforceable as such
as against creditors of and purchasers from the Issuer.
(b) The Mortgage Notes constitute "instruments" within the meaning of the New
York UCC and the Delaware UCC.
(c) The Issuer owns and has good and marketable title to the Mortgage Notes free
and clear of any Lien of any Person.
(d) The original executed copy of each mortgage Note (except for any Mortgage
Note with respect to which a Lost Note Affidavit has been delivered to the
Custodian) has been delivered to the Custodian.
(e) The Issuer has received a written acknowledgment from the Custodian that the
Custodian is acting solely as agent of the Indenture Trustee for the benefit
of the Noteholders.
(f) Other than the security interest granted to the Indenture Trustee pursuant
to this Indenture, the Issuer has not pledged, assigned, sold, granted a
security interest in, or otherwise conveyed any of the Mortgage Notes. The
Issuer has not authorized the filing of and is not aware of any financing
statements against the Issuer that include a description of collateral
covering the Mortgage Notes other than any financing statement relating to
the security interest granted to the Indenture Trustee hereunder or any
security interest that has been terminated. The Issuer is not aware of any
judgment or tax lien filings against the Issuer.
(g) None of the Mortgage Notes has any marks or notations indicating that they
have been pledged, assigned or otherwise conveyed to any Person other than
the Indenture Trustee, except for (i) any endorsements that are part of a
complete chain of endorsements from the originator of the Mortgage Note to
the Indenture Trustee, and (ii) any marks or notations pertaining to Liens
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that have been terminated or released.
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture.
Section 4.01. The Notes; Increase of Maximum Variable Funding Balance; Variable
Funding Notes. (a) The Term Notes shall be registered in the name of a nominee
designated by the Depository. Beneficial Owners will hold interests in the Class
A Notes as set forth in Section 4.06 herein in minimum initial Security Balances
of $25,000 and integral multiples of $1 in excess thereof. The Capped Funding
Notes will be issued as definitive notes in fully registered form in minimum
initial Security Balances of $10,000 and integral multiples of $1 in excess
thereof, together with any additional amount necessary to cover (i) the
aggregate initial Security Balance of the Capped Funding Notes surrendered at
the time of the initial denominational exchange thereof (with such initial
Security Balance in each case being deemed to be the Security Balance of the
Capped Funding Notes at the time of such initial denominational exchange
thereof) or (ii) the aggregate initial Security Balance of any Capped Funding
Notes issued in an exchange described in subsection (d) below.
The Indenture Trustee may for all purposes (including the making of
payments due on the Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Term Notes for the
purposes of exercising the rights of Holders of Term Notes hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Term Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08,
Beneficial Owners shall not be entitled to definitive certificates for the Term
Notes as to which they are the Beneficial Owners. Requests and directions from,
and votes of, the Depository as Holder of the Term Notes shall not be deemed
inconsistent if they are made with respect to different Beneficial Owners. The
Indenture Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Noteholders and give notice to the
Depository of such record date. Without the consent of the Issuer and the
Indenture Trustee, no Term Note may be transferred by the Depository except to a
successor Depository that agrees to hold such Note for the account of the
Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuer
by the Owner Trustee, not in its individual capacity but solely as Owner
Trustee, authenticated by the Note Registrar and delivered by the Indenture
Trustee to or upon the order of the Issuer.
(b) On each Payment Date, the aggregate Security Balance of the Variable Funding
Notes shall be increased by an amount equal to the Additional Balance
Differential for such Payment Date, subject to the Maximum Variable Funding
Balance and the terms and conditions set forth below. The Maximum Variable
Funding Balance may be increased as provided in Section 9.01(a)(viii).
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(c) The Variable Funding Notes issued on the Closing Date shall bear the
Designation "VFN-1" and each new Variable Funding Note for such Class of
Variable Funding Note will bear sequential numerical designations in the order
of their issuance.
(d) Subject to the following conditions, the Variable Funding Notes may be
exchanged pursuant to Section 4.02 for one or more Capped Funding Notes. Prior
to any such exchange, the party requesting the exchange must provide an Opinion
of Counsel, addressed to the Credit Enhancer, the Issuer and the Indenture
Trustee, to the effect that the Capped Funding Notes shall qualify for federal
income tax purposes as indebtedness of the Issuer and the Issuer will not be
characterized as an association (or a publicly traded partnership) taxable as a
corporation or a taxable mortgage pool within the meaning of Section 7701(i) of
the Code. If required by the Opinion of Counsel, the Capped Funding Notes may be
issued concurrently with a reduction in the Security Balance of the Variable
Funding Notes and an equivalent increase in the Security Balance of the
Certificates, pursuant to Section 3.12 of the Trust Agreement. Upon receipt of
the Opinion of Counsel, the Indenture Trustee shall issue the Capped Funding
Notes with a Security Balance equal to the Security Balance permitted under such
Opinion of Counsel, in minimum denominations as set forth in subsection (a)
above. The Capped Funding Notes shall bear the designation "Capped" in addition
to any other applicable designation. In connection with such exchange, any
Security Balance not represented by either a Capped Funding Note or an increase
in the Security Balance of the Certificates referred to above shall result in
the issuance of a new Variable Funding Note having an initial Security Balance
equal to the excess of the outstanding Security Balance of the Variable Funding
Note so surrendered over the initial Security Balances of the related Capped
Funding Notes and an increase in the Security Balance of the Certificates
referred to above. The Indenture Trustee and the Issuer agree to cooperate with
each other and the party requesting the exchange of Variable Funding Notes for
Capped Funding Notes, the Credit Enhancer, the Depositor, the Seller and the
Owner Trustee and to cause no unreasonable delay in issuing Capped Funding Notes
in connection with this Section and Section 3.12 of the Trust Agreement.
Section 4.02. Registration of and Limitations on Transfer and Exchange of Notes;
Appointment of Certificate Registrar. (a) The Issuer shall cause to be kept at
the Indenture Trustee's Corporate Trust Office a Note Register in which, subject
to such reasonable regulations as it may prescribe, the Note Registrar shall
provide for the registration of Notes and of transfers and exchanges of Notes as
herein provided.
(b) Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note at the Corporate Trust
Office, the Issuer shall execute and the Note Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Notes in authorized initial Security Balances evidencing the same aggregate
Percentage Interests.
(c) No Variable Funding Note, other than any Capped Funding Notes, may
be transferred. Subject to the provisions set forth below, Capped Funding Notes
may be transferred, provided that with respect to the initial transfer thereof
by the Seller, prior written notification of such transfer shall have been given
to the Rating Agencies and to the Credit Enhancer by the Seller.
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(d) No transfer, sale, pledge or other disposition of a Capped Funding
Note shall be made unless such transfer, sale, pledge or other disposition is
exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws or is made in accordance with
said Act and laws. In the event of any such transfer, the Indenture Trustee or
the Issuer shall require the transferee to execute either (i)(a) an investment
letter in substantially the form attached hereto as Exhibit B (or in such form
and substance reasonably satisfactory to the Indenture Trustee and the Issuer)
which investment letters shall not be an expense of the Trust, the Owner
Trustee, the Indenture Trustee, the Master Servicer, the Depositor or the Issuer
and which investment letter states that, among other things, such transferee (a)
is a "qualified institutional buyer" as defined under Rule 144A, acting for its
own account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A, and (b) is aware that the proposed transferor intends to rely
on the exemption from registration requirements under the Securities Act of
1933, as amended, provided by Rule 144A or (ii)(a) a written Opinion of Counsel
(which may be in-house counsel) acceptable to and in form and substance
reasonably satisfactory to the Indenture Trustee and the Issuer that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an expense
of the Indenture Trustee or the Issuer and (b) the Indenture Trustee shall
require the transferee executes an investment letter in substantially the form
of Exhibit C hereto and the transferor executes a representation letter,
substantially in the form of Exhibit D hereto acceptable to and in form and
substance reasonably satisfactory to the Issuer and the Indenture Trustee
certifying to the Issuer and the Indenture Trustee the facts surrounding such
transfer, which investment letter shall not be an expense of the Indenture
Trustee or the Issuer. The Holder of a Capped Funding Note desiring to effect
such transfer shall, and does hereby agree to, indemnify the Indenture Trustee
the Credit Enhancer and the Issuer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws. In addition, any Noteholder of a Capped Funding Note desiring to
effect any such transfer shall deliver, if any private placement memorandum or
other offering document prepared in connection with the offering of such Capped
Funding Notes specifies that such delivery will be required, to the Indenture
Trustee and the Master Servicer, either (i) a certificate substantially to the
effect of the certification set forth in Exhibit G to the Trust Agreement or
(ii) an Opinion of Counsel that establishes to the satisfaction of the Indenture
Trustee and the Master Servicer that the purchase of Certificates is permissible
under applicable law, will not constitute or result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code and will not subject the
Indenture Trustee or the Master Servicer to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Indenture, which Opinion of Counsel
shall not be an expense of the Indenture Trustee or the Master Servicer.
Notwithstanding the foregoing, the restrictions on transfer specified in this
paragraph are not applicable to any Capped Funding Notes that have been
registered under the Securities Act of 1933 pursuant to Section 2.4 of the
Purchase Agreement.
(e)(i) In the case of any Note (each such Note, a "Book-Entry
Non-Restricted Note") presented for registration in the name of any Person, such
Person shall be deemed to have represented to the Indenture Trustee, the
Depositor and the Master Servicer that (A) the Person is not a Plan Investor, or
(B) the acquisition of the Note by that Person does not constitute or give rise
to a prohibited transaction under Section 406 of ERISA or Section 4975 of the
Code for which no statutory, regulatory or administrative exemption is
available.
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(ii) (A) If any Note (or any interest therein) is acquired or held in
violation of the provisions of clause (e)(i) above, then the last preceding
Transferee that is not in violation of the provisions of clause (e)(i) above
shall be restored, to the extent permitted by law, to all rights and obligations
as Note Owner thereof retroactive to the date of such Transfer of such
Book-Entry Non-Restricted Note. The Indenture Trustee shall be under no
liability to any Person for making any payments due on such Note to such
preceding Transferee.
(iii) Any Person investing assets of an employee benefit or other plan
subject to the prohibited transaction provisions of ERISA or Section 4975 of the
Code (a "Plan") may not acquire any Note or any interest therein if the
Depositor, the Master Servicer, the Indenture Trustee, the Owner Trustee or any
affiliates of any such person (A) has investment or administrative discretion
with respect to those plan assets of such Plan; (B) has authority or
responsibility to give or regularly gives investment advice with respect to
those plan assets for a fee and pursuant to an agreement or understanding that
such advice will serve as a primary basis for investment decisions with respect
to those plan assets and will be based on the particular investment needs for
the Plan; or (C) unless United States Department of Labor Prohibited Transaction
Class Exemption 90-1, 91-38 or 95-60 applies, is an employer maintaining or
contributing to the Plan.
(iv) Any purported Beneficial Owner whose acquisition or holding of any
Book-Entry Non-Restricted Note (or interest therein) was effected in violation
of the restrictions in this Section 4.02(e) shall indemnify and hold harmless
the Depositor, the Indenture Trustee, the Underwriter, the Master Servicer, any
Subservicer, and the Trust from and against any and all liabilities, claims,
costs or expenses incurred by such parties as a result of such acquisition or
holding.
(f) Subject to the foregoing, at the option of the Noteholders, Notes
may be exchanged for other Notes of like tenor, in each case in authorized
initial Security Balances evidencing the same aggregate Percentage Interests
upon surrender of the Notes to be exchanged at the Corporate Trust Office of the
Note Registrar. With respect to any surrender of Capped Funding Notes for
exchange the new Notes delivered in exchange therefor will bear the designation
"Capped" in addition to any other applicable designations. Whenever any Notes
are so surrendered for exchange, the Indenture Trustee shall execute and the
Note Registrar shall authenticate and deliver the Notes which the Noteholder
making the exchange is entitled to receive. Each Note presented or surrendered
for registration of transfer or exchange shall (if so required by the Note
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer in form reasonably satisfactory to the Note Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing with such
signature guaranteed by a commercial bank or trust company located or having a
correspondent located in the city of New York. Notes delivered upon any such
transfer or exchange will evidence the same obligations, and will be entitled to
the same rights and privileges, as the Notes surrendered.
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(g) No service charge shall be imposed for any registration of transfer
or exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
(h) All Notes surrendered for registration of transfer and exchange
shall be cancelled by the Note Registrar and delivered to the Indenture Trustee
for subsequent destruction without liability on the part of either.
(i) The Issuer hereby appoints the Indenture Trustee as Certificate
Registrar to keep at its Corporate Trust Office a Certificate Register pursuant
to Section 3.09 of the Trust Agreement in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges thereof pursuant to
Section 3.05 of the Trust Agreement. The Indenture Trustee hereby accepts such
appointment.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated
Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Indenture Trustee such security or indemnity as
may be required by it to hold the Issuer and the Indenture Trustee harmless,
then, in the absence of notice to the Issuer, the Note Registrar or the
Indenture Trustee that such Note has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the UCC are met, the Issuer
shall execute, and upon its request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note of the same class; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable without surrender thereof. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Note in
lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
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The provisions of this Section 4.03 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due presentment for registration
of transfer of any Note, the Issuer, the Indenture Trustee, the Credit Enhancer
and any agent of the Issuer or the Indenture Trustee may treat the Person in
whose name any Note is registered (as of the day of determination) as the owner
of such Note for the purpose of receiving payments of principal of and interest,
if any, on such Note and for all other purposes whatsoever, whether or not such
Note be overdue, and none of the Issuer, the Indenture Trustee or any agent of
the Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 4.05. Cancellation. All Notes surrendered for payment, registration of
transfer, exchange or redemption shall, if surrendered to any Person other than
the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section 4.05, except as expressly permitted by
this Indenture. All cancelled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Request that they
be destroyed or returned to it; provided however, that such Issuer Request is
timely and the Notes have not been previously disposed of by the Indenture
Trustee.
Section 4.06. Book-Entry Notes. The Term Notes shall initially be issued as one
or more Term Notes held by the Book-Entry Custodian or, if appointed to hold
such Term Notes as provided below, the Depository Trust Company, the initial
Depository, and registered in the name of its nominee Cede & Co. Except as
provided below, registration of such Term Notes may not be transferred by the
Indenture Trustee except to another Depository that agrees to hold such Term
Notes for the respective Beneficial Owners. The Indenture Trustee is hereby
initially appointed as the Book-Entry Custodian and hereby agrees to act as such
in accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian may, and, if
it is no longer qualified to act as such, the Book-Entry Custodian shall,
appoint, by a written instrument delivered to the Depositor, the Master Servicer
and, if the Indenture Trustee is not the Book-Entry Custodian, the Indenture
Trustee, any other transfer agent (including the Depository or any successor
Depository) to act as Book-Entry Custodian under such conditions as the
predecessor Book-Entry Custodian and the Depository or any successor Depository
may prescribe, provided that the predecessor Book-Entry Custodian shall not be
relieved of any of its duties or responsibilities by reason of any new
appointment, except if the Depository is the successor to the Book-Entry
Custodian. If the Indenture Trustee resigns or is removed in accordance with the
terms hereof, the successor trustee or, if it so elects, the Depository shall
22
immediately succeed to its predecessor's duties as Book-Entry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any Term
Notes held as Book-Entry Notes by the Book-Entry Custodian. No Beneficial Owner
will receive a Definitive Note representing such Beneficial Owner's interest in
such Note, except as provided in Section 4.08. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to Beneficial
Owners pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled to deal with
the Depository for all purposes of this Indenture (including the payment of
principal of and interest on the Notes and the giving of instructions or
directions hereunder) as the sole holder of the Term Notes, and shall have no
obligation to the Owners of Term Notes;
(iii) to the extent that the provisions of this Section 4.06 conflict with any
other provisions of this Indenture, the provisions of this Section 4.06 shall
control;
(iv) the rights of Beneficial Owners shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between such Owners of Term Notes and the Depository and/or the Depository
Participants. Unless and until Definitive Term Notes are issued pursuant to
Section 4.08, the initial Depository will make book-entry transfers among the
Depository Participants and receive and transmit payments of principal of and
interest on the Notes to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be taken based upon
instructions or directions of Holders of Term Notes evidencing a specified
percentage of the Security Balances of the Term Notes, the Depository shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Beneficial Owners and/or Depository
Participants owning or representing, respectively, such required percentage of
the beneficial interest in the Term Notes and has delivered such instructions to
the Indenture Trustee.
Section 4.07. Notices to Depository. Whenever a notice or other communication to
the Term Note Holders is required under this Indenture, unless and until
Definitive Term Notes shall have been issued to Beneficial Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Term Notes to the
Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. Definitive Notes. If (i) the Indenture Trustee determines that the
Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Term Notes and the Indenture Trustee is
unable to locate a qualified successor, (ii) the Indenture Trustee elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, Owners of Term Notes representing beneficial
interests aggregating at least a majority of the Security Balances of the Term
Notes advise the Depository in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests of the
Beneficial Owners, then the Depository shall notify all Beneficial Owners and
the Indenture Trustee of the occurrence of any such event and of the
availability of Definitive Term Notes to Beneficial Owners requesting the same.
Upon surrender to the Indenture Trustee of the typewritten Term Notes
representing the Book-Entry Notes by the Book-Entry Custodian or the Depository,
23
as applicable, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Term Notes
in accordance with the instructions of the Depository. None of the Issuer, the
Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes
as Noteholders.
In addition, if an Event of Default has occurred and is continuing, each
Beneficial Owner materially adversely affected thereby may at its option request
a Definitive Note evidencing such Beneficial Owner's Percentage Interest in the
related Class of Notes. In order to make such request, such Beneficial Owner
shall, subject to the rules and procedures of the Depository, provide the
Depository or the related Depository Participant with directions for the Note
Registrar to exchange or cause the exchange of the Beneficial Owner's interest
in such Class of Notes for an equivalent Percentage Interest in fully registered
definitive form. Upon receipt by the Note Registrar of instructions from the
Depository directing the Note Registrar to effect such exchange (such
instructions to contain information regarding the Class of Notes and the
Security Balance being exchanged, the Depository Participant account to be
debited with the decrease, the registered holder of and delivery instructions
for the Definitive Note, and any other information reasonably required by the
Note Registrar), (i) the Note Registrar shall instruct the Depository to reduce
the related Depository Participant's account by the aggregate Security Balance
of the Definitive Note, (ii) the Issuer shall execute and the Note Registrar
shall authenticate and deliver, in accordance with the registration and delivery
instructions provided by the Depository, a Definitive Note evidencing such
Beneficial Owner's Percentage Interest in such Class of Notes and (iii) the
Issuer shall execute and the Note Registrar shall authenticate a new Book-Entry
Note reflecting the reduction in the aggregate Security Balance of such Class of
Notes by the amount of the Definitive Notes.
Section 4.09. Tax Treatment. The Issuer has entered into this Indenture, and the
Notes will be issued, with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Notes will be treated as
indebtedness for purposes of such taxes. The Issuer, by entering into this
Indenture, and each Noteholder, by its acceptance of its Note (and each
Beneficial Owner by its acceptance of an interest in the applicable Book-Entry
Note), agree to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness for purposes of such taxes.
Section 4.10. Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09,
3.16, 3.18 and 3.19, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Section 4.11) and (vi)
the rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with the Indenture Trustee payable to all or any of them, and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to the Notes, when
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(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 4.03 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. will become due and payable at the Final Scheduled
Payment Date within one year, or
c. have been declared immediately due and payable pursuant
to Section 5.02.
and the Issuer, in the case of a. or b. above, has irrevocably deposited or
caused to be irrevocably deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and discharge the entire indebtedness on
such Notes and Certificates then outstanding not theretofore delivered to the
Indenture Trustee for cancellation when due on the Final Scheduled Payment Date;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder and under the Insurance Agreement by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate and an Opinion of Counsel, each
meeting the applicable requirements of Section 10.01 and each stating
that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with
and, if the Opinion of Counsel relates to a deposit made in connection
with Section 4.10(A)(2)b. above, such opinion shall further be to the
effect that such deposit will not have any material adverse tax
consequences to the Issuer, any Noteholders or any Certificateholders.
Section 4.11. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent or
Certificate Paying Agent, as the Indenture Trustee may determine, to the Holders
of Securities, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from other funds except to the
extent required herein or required by law.
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Section 4.12. Subrogation and Cooperation. The Issuer and the Indenture Trustee
acknowledge that to the extent the Credit Enhancer makes payments under the
Policy on account of principal of or interest on the Home Equity Loans, the
Credit Enhancer will be fully subrogated to the rights of the Noteholders to
receive such principal and interest from the Home Equity Loans and (iii) the
Credit Enhancer shall be paid such principal and interest but only from the
sources and in the manner provided herein and in the Insurance Agreement for the
payment of such principal and interest.
The Indenture Trustee shall cooperate in all respects with any
reasonable request by the Credit Enhancer for action to preserve or enforce the
Credit Enhancer's rights or interest under this Indenture or the Insurance
Agreement, consistent with this Indenture and without limiting the rights of the
Noteholders as otherwise set forth in the Indenture, including, without
limitation, upon the occurrence and continuance of a default under the Insurance
Agreement, a request to take any one or more of the following actions:
(i) institute Proceedings for the collection of all amounts then payable on the
Notes or under this Indenture in respect to the Notes and all amounts payable
under the Insurance Agreement and to enforce any judgment obtained and collect
from the Issuer monies adjudged due;
(ii) sell the Trust Estate or any portion thereof or rights or interest therein,
at one or more public or private Sales (as defined in Section 5.15 hereof)
called and conducted in any manner permitted by law;
(iii) file or record all assignments that have not previously been recorded;
(iv) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the Uniform Commercial Code
and take any other appropriate action to protect and enforce the rights and
remedies of the Credit Enhancer hereunder.
Following the payment in full of the Notes, the Credit Enhancer shall
continue to have all rights and privileges provided to it under this Section and
in all other provisions of this Indenture, until all amounts owing to the Credit
Enhancer have been paid in full.
Section 4.13. Repayment of Monies Held by Paying Agent. In connection with the
satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Person other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.05 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
Section 4.14. Temporary Notes. Pending the preparation of any Definitive Notes,
the Issuer may execute and upon its written direction, the Indenture Trustee may
authenticate and make available for delivery, temporary Notes that are printed,
lithographed, typewritten, photocopied or otherwise produced, in any
denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
26
If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of the Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Indenture
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Issuer shall execute and the Indenture Trustee
shall authenticate and make available for delivery, in exchange therefor,
Definitive Notes of authorized denominations and of like tenor and aggregate
principal amount. Until so exchanged, such temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as Definitive Notes.
ARTICLE V
Default and Remedies
Section 5.01. Events of Default. The Issuer shall deliver to the Indenture
Trustee and the Credit Enhancer, within five days after learning of the
occurrence any event which with the giving of notice and the lapse of time would
become an Event of Default under clause (iii) of the definition of "Event of
Default" written notice in the form of an Officer's Certificate of its status
and what action the Issuer is taking or proposes to take with respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an Event of
Default should occur and be continuing or if the Master Servicer shall purchase
all of the Home Equity Loans pursuant to Section 8.08 of the Servicing
Agreement, then and in every such case the Indenture Trustee or the Holders of
Notes representing not less than a majority of the Security Balances of all
Notes with the written consent of the Credit Enhancer, or, the Credit Enhancer
may declare the Notes to be immediately due and payable, by a notice in writing
to the Issuer (and to the Indenture Trustee if given by Noteholders), and upon
any such declaration the unpaid principal amount of such class of Notes,
together with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity with
respect to an Event of Default has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter provided in this Article V, the Holders of Notes representing a
majority of the Security Balances of all Notes, by written notice to the Issuer
and the Indenture Trustee with the written consent of the Credit Enhancer, or
the Credit Enhancer, may in writing waive the related Event of Default and
rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a sum sufficient
to pay:
27
(A) all payments of principal of and interest on the Notes
and all other amounts that would then be due hereunder or upon
the Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its
agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal of the
Notes that has become due solely by such acceleration, have been cured or waived
as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee. (a) The Issuer covenants that if default in the payment of (i) any
interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) the principal of or any installment
of the principal of any Note when the same becomes due and payable, the Issuer
shall, upon demand of the Indenture Trustee, pay to it, for the benefit of the
Holders of Notes, the whole amount then due and payable on the Notes for
principal and interest, with interest upon the overdue principal, and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, subject to the provisions of Section 10.17 hereof may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor upon the Notes, wherever
situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default shall occur and be continuing, the Indenture Trustee
subject to the provisions of Section 10.17 hereof may, as more particularly
provided in Section 5.04, in its discretion, proceed to protect and enforce its
rights and the rights of the Noteholders, by such appropriate Proceedings as the
Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other obligor
upon the Notes or any Person having or claiming an ownership interest in the
Trust Estate, Proceedings under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or other similar law, or in
case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
28
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire amount of principal and
interest owing and unpaid in respect of the Notes and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for reasonable compensation to the
Indenture Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence, willful
misconduct or bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on behalf of
the Holders of Notes in any election of a trustee, a standby trustee or Person
performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute all amounts received with respect to the
claims of the Noteholders and of the Indenture Trustee on their behalf; and (iv)
to file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Indenture Trustee or the Holders
of Notes allowed in any judicial proceedings relative to the Issuer, its
creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence, willful
misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Indenture Trustee to vote in respect of the claim of any Noteholder in any such
proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar Person.
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(f) All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Term Notes or the Variable Funding Notes,
as applicable.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
Section 5.04. Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing, the Indenture Trustee subject to the provisions of
Section 10.17 hereof may with the written consent of the Credit Enhancer, or
shall at the written direction of the Credit Enhancer do one or more of the
following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an express trust for
the collection of all amounts then payable on the Notes or under this Indenture
with respect thereto, whether by declaration or otherwise, and all amounts
payable under the Insurance Agreement, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Notes monies adjudged
due;
(ii) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee and the Holders of the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights or interest therein,
at one or more public or private sales called and conducted in any manner
permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Credit Enhancer, which consent will
not be unreasonably withheld, or, if a Credit Enhancer Default has occurred and
is continuing, the consent of the Holders of 100% of the aggregate Security
Balances of the Notes, (B) the proceeds of such sale or liquidation
distributable to Holders are sufficient to discharge in full all amounts then
due and unpaid upon the Notes for principal and interest and to reimburse the
Credit Enhancer for any amounts drawn under the Policies and any other amounts
due the Credit Enhancer under the Insurance Agreement or (C) the Indenture
Trustee determines that the Home Equity Loans will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
30
they would have become due if the Notes had not been declared due and payable,
and the Indenture Trustee obtains the consent of the Credit Enhancer, which
consent will not be unreasonably withheld; provided further that the Indenture
Trustee shall not sell or otherwise liquidate the Trust Estate if the proceeds
of such sale or liquidation together with amounts drawn under the Policies will
not be sufficient to discharge in full all amounts then due and unpaid upon the
Notes for principal and interest and to reimburse the Credit Enhancer for any
amounts drawn under the Policies and any other amounts due the Credit Enhancer
under the Insurance Agreement unless the Indenture Trustee obtains the consent
of the Holders of 66 2/3% of the aggregate Security Balances of the Notes. In
determining such sufficiency or insufficiency with respect to clause (B) and
(C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose. Notwithstanding the foregoing, so long as a
Servicing Default has not occurred, any Sale of the Trust Estate shall be made
subject to the continued servicing of the Home Equity Loans by the Master
Servicer as provided in the Servicing Agreement.
(b) If the Indenture Trustee collects any money or property pursuant to this
Article V, it shall pay out the money or property in the following order:
FIRST: to the Indenture Trustee for amounts due under Section
6.07;
SECOND:to Holders of the Class A Notes and Variable Funding Notes
for amounts due and unpaid on the related Notes for interest, ratably
from the collections relating to the Home Equity Loans, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for interest from amounts available in the Trust
Estate for such Noteholders;
THIRD: to Holders of the Class A Notes and Variable Funding Notes
for amounts due and unpaid on the related Notes for principal, ratably
from the collections relating to the Home Equity Loans, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal, from amounts available in the Trust
Estate for such Noteholders, until the Security Balances of such Notes
have been reduced to zero;
FOURTH:to the payment of all amounts due and owing
to the Credit Enhancer under the Insurance Agreement;
FIFTH: to the Certificate Paying Agent for amounts
due under Article VIII of the Trust Agreement; and
SIXTH: to the payment of the remainder, if any, to
the Issuer or any other person legally entitled thereto.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.04. At least 15 days before
such record date, the Indenture Trustee shall mail to each Noteholder a notice
that states the record date, the payment date and the amount to be paid.
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Section 5.05. Optional Preservation of the Trust Estate. If the Notes have been
declared to be due and payable under Section 5.02 following an Event of Default
and such declaration and its consequences have not been rescinded and annulled,
the Indenture Trustee may, but need not, (but shall at the written direction of
the Credit Enhancer) elect to take and maintain possession of the Trust Estate.
It is the desire of the parties hereto and the Noteholders that there be at all
times sufficient funds for the payment of principal of and interest on the Notes
and other obligations of the Issuer including payment to the Credit Enhancer,
and the Indenture Trustee shall take such desire into account when determining
whether or not to take and maintain possession of the Trust Estate. In
determining whether to take and maintain possession of the Trust Estate, the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Note shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless and subject to the provisions of Section 10.17 hereof:
(i) such Holder has previously given written notice to the Indenture Trustee of
a continuing Event of Default;
(ii) the Holders of not less than 25% of the Security Balances of the Notes have
made written request to the Indenture Trustee to institute such Proceeding in
respect of such Event of Default in its own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such Proceedings; and
(v) no direction inconsistent with such written request has been given to the
Indenture Trustee during such 60-day period by the Holders of a majority of the
Security Balances of the Notes or by the Credit Enhancer.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb 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.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Security Balances of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
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Section 5.07. Unconditional Rights of Noteholders to Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture Trustee or
any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Credit Enhancer or to
the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Credit Enhancer or any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.
Section 5.11. Control by the Credit Enhancer or Noteholders. The Holders of a
majority of the Security Balances of Notes with the consent of the Credit
Enhancer, or the Credit Enhancer (so long as no Credit Enhancer Default exists)
shall have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to the
Notes or exercising any trust or power conferred on the Indenture Trustee;
provided that:
(i) such direction shall not be in conflict with any rule of law or with this
Indenture;
(ii) subject to the express terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Trust Estate shall be by Holders of
Notes representing not less than 100% of the Security Balances of Notes with the
consent of the Credit Enhancer, or the Credit Enhancer (so long as no Credit
Enhancer Default exists);
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(iii) if the conditions set forth in Section 5.05 have been satisfied and the
Indenture Trustee elects to retain the Trust Estate pursuant to such Section,
then any direction to the Indenture Trustee by Holders of Notes representing
less than 100% of the Security Balances of Notes to sell or liquidate the Trust
Estate shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability or might materially adversely affect the rights of
any Noteholders not consenting to such action unless the Indenture Trustee has
received satisfactory indemnity from the Credit Enhancer or the Noteholders.
Section 5.12. Waiver of Past Default. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Holders of Notes of not less than a majority of the Security Balances of the
Notes with the consent of the Credit Enhancer, or the Credit Enhancer (so long
as no Credit Enhancer Default exists) may waive any past Event of Default and
its consequences except an Event of Default (i) with respect to payment of
principal of or interest on any of the Notes or (ii) in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver, the Issuer, the Indenture
Trustee and the Holders of the Notes shall be restored to their respective
former positions and rights hereunder; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture agree, and
each Holder of any Note by such Xxxxxx's acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Security
Balances of the Notes or (c) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates expressed in such Note and in this Indenture.
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
34
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
Section 5.15. Sale of Trust Estate. (a) The power to effect any sale or other
disposition (a "Sale") of any portion of the Trust Estate pursuant to Section
5.04 is expressly subject to the provisions of Section 5.05 and this Section
5.15. The power to effect any such Sale shall not be exhausted by any one or
more Sales as to any portion of the Trust Estate remaining unsold, but shall
continue unimpaired until the entire Trust Estate shall have been sold or all
amounts payable on the Notes and under this Indenture and under the Insurance
Agreement shall have been paid. The Indenture Trustee may from time to time
postpone any public Sale by public announcement made at the time and place of
such Sale. The Indenture Trustee hereby expressly waives its right to any amount
fixed by law as compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the Trust Estate,
or any portion thereof, unless:
(1) the Holders of all Notes and the Credit Enhancer consent to,
or direct the Indenture Trustee to make, such Sale, or
(2) the proceeds of such Sale would be not less than the entire
amount which would be payable to the Noteholders under the Notes, the
Certificateholders under the Certificates and the Credit Enhancer in
respect of amounts drawn under the Policy and any other amounts due the
Credit Enhancer under the Insurance Agreement, in full payment thereof
in accordance with Section 5.02, on the Payment Date next succeeding the
date of such Sale, or
(3) the Indenture Trustee determines, in its sole discretion,
that the conditions for retention of the Trust Estate set forth in
Section 5.05 cannot be satisfied (in making any such determination, the
Indenture Trustee may rely upon an opinion of an Independent investment
banking firm obtained and delivered as provided in Section 5.05), and
the Credit Enhancer consents to such Sale, which consent will not be
unreasonably withheld and the Holders representing at least 66-2/3% of
the Security Balances of the Notes consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(c) Unless the Holders and the Credit Enhancer have otherwise consented or
directed the Indenture Trustee, at any public Sale of all or any portion of the
Trust Estate at which a minimum bid equal to or greater than the amount
described in paragraph (2) of subsection (b) of this Section 5.15 has not been
established by the Indenture Trustee and no Person bids an amount equal to or
greater than such amount, the Indenture Trustee shall bid an amount at least
$1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of the Trust Estate:
35
(1) any Holder or Holders of Notes may bid for and with the
consent of the Credit Enhancer purchase the property offered for sale,
and upon compliance with the terms of sale may hold, retain and possess
and dispose of such property, without further accountability, and may,
in paying the purchase money therefor, deliver any Notes or claims for
interest thereon in lieu of cash up to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and
such Notes, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the Holders thereof after
being appropriately stamped to show such partial payment;
(2) the Indenture Trustee may bid for and acquire the property
offered for Sale in connection with any Sale thereof, and, subject to
any requirements of, and to the extent permitted by, applicable law in
connection therewith, may purchase all or any portion of the Trust
Estate in a private sale, and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting the gross Sale price
against the sum of (A) the amount which would be distributable to the
Holders of the Notes and Holders of Certificates and amounts owing to
the Credit Enhancer as a result of such Sale in accordance with Section
5.04(b) 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;
(3) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate in connection with a Sale thereof;
(4) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney- in-fact of the Issuer to transfer and convey its
interest in any portion of the Trust Estate in connection with a Sale
thereof, and to take all action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any monies.
Section 5.16. Action on Notes. The Indenture Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.04(b).
Section 5.17. Performance and Enforcement of Certain Obligations. (a) Promptly
following a written request from the Credit Enhancer or the Indenture Trustee
with the written consent of the Credit Enhancer to do so, the Issuer, in its
36
capacity as holder of the Home Equity Loans, shall, with the written consent of
the Credit Enhancer, take all such lawful action as the Indenture Trustee may
request to cause the Issuer to compel or secure the performance and observance
by the Seller and the Master Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Purchase Agreement and
the Servicing Agreement, and to exercise any and all rights, remedies, powers
and privileges lawfully available to the Issuer under or in connection with the
Purchase Agreement and the Servicing Agreement to the extent and in the manner
directed by the Indenture Trustee, as pledgee of the Home Equity Loans,
including the transmission of notices of default on the part of the Seller or
the Master Servicer thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by the Seller or the
Master Servicer of each of their obligations under the Purchase Agreement and
the Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee, as pledgee of the Home Equity Loans, subject to the rights of the
Credit Enhancer under the Servicing Agreement may, and at the direction (which
direction shall be in writing or by telephone (confirmed in writing promptly
thereafter)) of the Holders of 66-2/3% of the Security Balances of the Notes
shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Seller or the Master Servicer under or in connection with the
Purchase Agreement and the Servicing Agreement, including the right or power to
take any action to compel or secure performance or observance by the Seller or
the Master Servicer, as the case may be, of each of their obligations to the
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Purchase Agreement and the Servicing Agreement, as
the case may be, and any right of the Issuer to take such action shall not be
suspended. In connection therewith, as determined by the Indenture Trustee, the
Issuer shall take all actions necessary to effect the transfer of the Home
Equity Loans to the Indenture Trustee.
ARTICLE VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this Indenture;
provided, however, the Indenture Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of this
Indenture.
37
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this Section
6.01;
(ii) the Indenture Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer unless it is proved that the Indenture
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it (A) pursuant to Section 5.11 or (B) from the Credit Enhancer, which it is
entitled to give under any of the Basic Documents.
(d) The Indenture Trustee shall not be liable for interest on any money received
by it except as the Indenture Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Indenture Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g) Every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Indenture Trustee shall be subject
to the provisions of this Section and to the provisions of the TIA.
Section 6.02. Rights of Indenture Trustee. (a) The Indenture Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Indenture Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. The Indenture Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
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(d) The Indenture Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Indenture Trustee's conduct does not
constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Note Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Indenture Trustee
must comply with Sections 6.11 and 6.12.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall not be
(i) responsible for and makes no representation as to the validity or adequacy
of this Indenture or the Notes, (ii) accountable for the Issuer's use of the
proceeds from the Notes or (iii) responsible for any statement of the Issuer in
this Indenture or in any document issued in connection with the sale of the
Notes or in the Notes other than the Indenture Trustee's certificate of
authentication.
Section 6.05. Notice of Event of Default. If an Event of Default occurs and is
continuing and if it is known to a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall give notice thereof to the Credit Enhancer. The
Indenture Trustee shall mail to each Noteholder notice of the Event of Default
within 90 days after it occurs. Except in the case of an Event of Default in
payment of principal of or interest on any Note, the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Noteholders.
Section 6.06. Reports by Indenture Trustee to Holders. The Indenture Trustee
shall deliver to each Noteholder such information as may be required to enable
such holder to prepare its federal and state income tax returns. In addition,
upon the Issuer's written request, the Indenture Trustee shall promptly furnish
information reasonably requested by the Issuer that is reasonably available to
the Indenture Trustee to enable the Issuer to perform its federal and state
income tax reporting obligations.
Section 6.07. Compensation and Indemnity. The Issuer shall pay to the Indenture
Trustee on each Payment Date reasonable compensation for its services. The
Indenture Trustee shall be compensated and indemnified by the Master Servicer in
accordance with Section 6.06 of the Servicing Agreement, and all amounts owing
to the Indenture Trustee hereunder in excess of such amount shall be paid solely
as provided in Section 3.05 hereof (subject to the priorities set forth
therein). The Indenture Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuer shall reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
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services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall indemnify the Indenture Trustee
against any and all loss, liability or expense (including attorneys' fees)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Indenture Trustee shall notify the
Issuer promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee to so notify the Issuer shall not relieve the Issuer of its
obligations hereunder. The Issuer shall defend any such claim, and the Indenture
Trustee may have separate counsel and the Issuer shall pay the fees and expenses
of such counsel. The Issuer is not obligated to reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section 6.07 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of an Event of Default
specified in clause (iv) or (v) of the definition thereof with respect to the
Issuer, the expenses are intended to constitute expenses of administration under
Title 11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee. No resignation or removal of the
Indenture Trustee and no appointment of a successor Indenture Trustee shall
become effective until the acceptance of appointment by the successor Indenture
Trustee pursuant to this Section 6.08. The Indenture Trustee may resign at any
time by so notifying the Issuer and the Credit Enhancer. The Holders of a
majority of Security Balances of the Notes or the Credit Enhancer may remove the
Indenture Trustee by so notifying the Indenture Trustee and the Credit Enhancer
and may appoint a successor Indenture Trustee. The Issuer shall remove the
Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Indenture Trustee
or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee with the consent of
the Credit Enhancer which consent will not be unreasonably withheld. In
addition, the Indenture Trustee will resign to avoid being directly or
indirectly controlled by the Issuer.
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A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority of Security Balances
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.
Section 6.09. Successor Indenture Trustee by Xxxxxx. If the Indenture Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Indenture Trustee; provided, that such
corporation or banking association shall be otherwise qualified and eligible
under Section 6.11. The Indenture Trustee shall provide the Rating Agencies
written notice of any such transaction occurring after the Closing Date.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust Estate may at the time be located, the Indenture Trustee shall have
the power and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust Estate, and to vest in such Person or
Persons, in such capacity and for the benefit of the Noteholders, such title to
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the Trust Estate, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Indenture Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed upon the
Indenture Trustee shall be conferred or imposed upon and exercised or performed
by the Indenture Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized to
act separately without the Indenture Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Estate or
any portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any act or
omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Indenture and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the Indenture
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.
Eligibility; Disqualification. The Indenture Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition and it or its parent shall have
a long-term debt rating of A or better by Xxxxx'x.
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Section 6.11. Preferential Collection of Claims Against Issuer. The Indenture
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). An Indenture Trustee who has resigned or been removed
shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.12. Representations and Warranties. The Indenture Trustee hereby
represents that:
(i) The Indenture Trustee is duly organized, validly existing and in good
standing under the laws of the State of New York with power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted.
(ii) The Indenture Trustee has the power and authority to execute and deliver
this Indenture and to carry out its terms; and the execution, delivery and
performance of this Indenture have been duly authorized by the Indenture Trustee
by all necessary corporate action.
(iii) The consummation of the transactions contemplated by this Indenture and
the fulfillment of the terms hereof do not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the articles of organization or bylaws of the
Indenture Trustee or any agreement or other instrument to which the Indenture
Trustee is a party or by which it is bound.
(iv) To the Indenture Trustee's best knowledge, there are no proceedings or
investigations pending or threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Indenture Trustee or its properties: (A) asserting the invalidity of
this Indenture (B) seeking to prevent the consummation of any of the
transactions contemplated by this Indenture or (C) seeking any determination or
ruling that might materially and adversely affect the performance by the
Indenture Trustee of its obligations under, or the validity or enforceability
of, this Indenture.
(v) The Indenture Trustee does not have notice of any adverse claim (as such
terms are used in Delaware UCC Section 8-302) with respect to the Home Equity
Loans.
Section 6.13. Directions to Indenture Trustee. The Indenture Trustee is hereby
directed:
(a) to accept the pledge of the Home Equity Loans and hold the assets of the
Trust in trust for the Noteholders and the Credit Enhancer;
(b) to authenticate and deliver the Notes substantially in the form prescribed
by Exhibit A in accordance with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken by the terms of
this Indenture.
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Section 6.14. Indenture Trustee May Own Securities. The Indenture Trustee, in
its individual or any other capacity may become the owner or pledgee of
Securities with the same rights it would have if it were not Indenture Trustee.
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after each Record Date, a list, in such form
as the Indenture Trustee may reasonably require, of the names and addresses of
the Holders of Notes as of such Record Date and, (b) at such other times as the
Indenture Trustee and the Credit Enhancer may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the Note
Registrar, no such list shall be required to be furnished.
Section 7.02. Preservation of Information; Communications to Noteholders. (a)
The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.01
and the names and addresses of 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 such Section 7.01 upon receipt of a new list
so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall:
-----------------
(i) file with the Indenture Trustee, within 15 days after the Issuer is required
to file the same with the Commission, copies of the annual reports and the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) that the Issuer may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee, and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission such
additional information, documents and reports with respect to compliance by the
Issuer with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit
by mail to all Noteholders described in TIA ss. 313(c)) such summaries of any
information, documents and reports required to be filed by the Issuer pursuant
to clauses (i) and (ii) of this Section 7.03(a) and by rules and regulations
prescribed from time to time by the Commission.
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(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall
end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIA ss. 313(a),
within 60 days after each January 1, beginning with January 1, 2005, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss. 313(c)
and to the Credit Enhancer a brief report dated as of such date that complies
with TIA ss. 313(a). The Indenture Trustee also shall comply with TIA ss.
313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission, if required, and each stock
exchange, if any, on which the Term Notes are listed. The Issuer shall notify
the Indenture Trustee if and when the Term Notes are listed on any stock
exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
Section 8.01. Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02. Trust Accounts. (a) On or prior to the Closing Date, the Issuer
shall cause the Indenture Trustee to establish and maintain, in the name of the
Indenture Trustee, for the benefit of the Noteholders and the Certificate Paying
Agent, on behalf of the Certificateholders and the Credit Enhancer, the Payment
Account as provided in Section 3.01 of this Indenture.
(b) All monies deposited from time to time in the Payment Account pursuant to
the Servicing Agreement and all deposits therein pursuant to this Indenture are
for the benefit of the Noteholders and the Certificate Paying Agent, on behalf
of the Certificateholders and all investments made with such monies including
all income or other gain from such investments are for the benefit of the Master
Servicer as provided in Section 5.01 of the Servicing Agreement.
On each Payment Date, the Indenture Trustee shall distribute all amounts
on deposit in the Payment Account to Noteholders in respect of the Notes and in
its capacity as Certificate Paying Agent to Certificateholders in the order of
priority set forth in Section 3.05 (except as otherwise provided in Section
5.04(b).
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The Master Servicer shall direct the Indenture Trustee in writing to
invest any funds in the Payment Account in Permitted Investments maturing no
later than the Business Day preceding each Payment Date and shall not be sold or
disposed of prior to the maturity.
Section 8.03. Officer's Certificate. The Indenture Trustee shall receive at
least seven days notice when requested by the Issuer to take any action pursuant
to Section 8.05(a), accompanied by copies of any instruments to be executed, and
the Indenture Trustee shall also require, as a condition to such action, an
Officer's Certificate, in form and substance 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.
Section 8.04. Termination Upon Distribution to Noteholders. This Indenture and
the respective obligations and responsibilities of the Issuer and the Indenture
Trustee created hereby shall terminate upon the distribution to the Noteholders,
the Certificate Paying Agent (on behalf of the Certificateholders) and the
Indenture Trustee of all amounts required to be distributed pursuant to Article
III and the Insurance Agreement; provided, however, that in no event shall the
trust created hereby continue beyond the expiration of 21 years from the death
of the survivor of the descendants of Xxxxxx X. Xxxxxxx, the late ambassador of
the United States to the Court of St. James's, living on the date hereof.
Section 8.05. Release of Trust Estate. (a) Subject to the payment of its fees
and expenses, the Indenture Trustee may, and when required by the provisions of
this Indenture or the Servicing Agreement shall, execute instruments to release
property from the lien of this Indenture, or convey the Indenture Trustee's
interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in Article VIII
hereunder shall be bound to ascertain the Indenture Trustee's authority, inquire
into the satisfaction of any conditions precedent, or see to the application of
any monies.
(b) The Indenture Trustee shall, at such time as (i) there are no Notes
Outstanding, (ii) all sums due the Indenture Trustee pursuant to this Indenture
have been paid, and (iii) all sums due the Credit Enhancer have been paid,
release any remaining portion of the Trust Estate that secured the Notes from
the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.05 only upon receipt of a request from the Issuer
accompanied by an Officers' Certificate and a letter from the Credit Enhancer,
stating that the Credit Enhancer has no objection to such request from the
Issuer.
(d) The Indenture Trustee shall, at the request of the Issuer or the Depositor,
surrender the Policy to the Credit Enhancer for cancellation, upon final payment
of principal of and interest on the Notes.
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Section 8.06. Surrender of Notes Upon Final Payment. By acceptance of any Note,
the Holder thereof agrees to surrender such Note to the Indenture Trustee
promptly, prior to such Noteholder's receipt of the final payment thereon.
ARTICLE IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies and the written consent of the Credit Enhancer (which consent
shall not be unreasonably withheld), unless an Enhancer Default shall have
occurred, the Issuer and the Indenture Trustee, when authorized by an Issuer
Request, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of the execution thereof), in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time subject to
the lien of this Indenture, or better to assure, convey and confirm unto the
Indenture Trustee any property subject or required to be subjected to the lien
of this Indenture, or to subject to the lien of this Indenture additional
property;
(ii) to evidence the succession, in compliance with the applicable provisions
hereof, of another person to the Issuer, and the assumption by any such
successor of the covenants of the Issuer herein and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of the Holders of
the Notes or the Credit Enhancer, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee;
(v) to cure any ambiguity, to correct any error or to correct or supplement any
provision herein or in any supplemental indenture that may be inconsistent with
any other provision herein or in any supplemental indenture;
(vi) to make any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided, that such
action shall not materially and adversely affect the interests of the Holders of
the Notes or the Credit Enhancer;
(vii) to evidence and provide for the acceptance of the appointment hereunder by
a successor trustee with respect to the Notes and to add to or change any of the
provisions of this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one trustee, pursuant to the
requirements of Article VI;
(viii) to increase the Maximum Variable Funding Balance with the written consent
of the Credit Enhancer; or
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(ix) to modify, eliminate or add to the provisions of this Indenture to such
extent as shall be necessary to effect the qualification of this Indenture under
the TIA or under any similar federal statute hereafter enacted and to add to
this Indenture such other provisions as may be expressly required by the TIA;
provided, however, that no such supplemental indenture shall be entered into
unless the Indenture Trustee and the Credit Enhancer shall have received an
Opinion of Counsel to the effect that the execution of such supplemental
indenture will not give rise to any material adverse tax consequence to the
Noteholders.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer Request,
may, also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies and with the consent of the Credit Enhancer, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel, (i) adversely affect in any
material respect the interests of any Noteholder or the Credit Enhancer or (ii)
cause the Issuer to be subject to an entity level tax.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The Issuer
and the Indenture Trustee, when authorized by an Issuer Request, also may, with
prior notice to the Rating Agencies and with the consent of the Holders of not
less than a majority of the Security Balances of the Notes affected thereby and
the Credit Enhancer, by Act (as defined in Section 10.03 hereof) of such Holders
delivered to the Issuer and the Indenture Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Note affected thereby:
(i) change the date of payment of any installment of principal of or interest on
any Note, or reduce the principal amount thereof or the Note Rate thereon,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Notes on or after the
respective due dates thereof;
(ii) reduce the percentage of the Security Balances of the Notes, the consent of
the Holders of which is required for any such supplemental indenture, or the
consent of the Holders of which is required for any waiver of compliance with
certain provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture;
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(iii) modify or alter the provisions of the proviso to the definition of the
term "Outstanding" or modify or alter the exception in the definition of the
term "Noteholder";
(iv) reduce the percentage of the Security Balances of the Notes required to
direct the Indenture Trustee to direct the Issuer to sell or liquidate the Trust
Estate pursuant to Section 5.04;
(v) modify any provision of this Section 9.02 except to increase any percentage
specified herein or to provide that certain additional provisions of this
Indenture or the other Basic Documents cannot be modified or waived without the
consent of the Holder of each Note affected thereby;
(vi) modify any of the provisions of this Indenture in such manner as to affect
the calculation of the amount of any payment of interest or principal due on any
Note on any Payment Date (including the calculation of any of the individual
components of such calculation); or
(vii) permit the creation of any lien ranking prior to or on a parity with the
lien of this Indenture with respect to any part of the Trust Estate or, except
as otherwise permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the Holder of
any Note of the security provided by the lien of this Indenture;
and provided, further, that any action listed in clauses (i) through (vii) above
shall not, as evidenced by an Opinion of Counsel, cause the Issuer to be subject
to an entity level tax.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act (as defined in Section 10.03
hereof) of Noteholders under this Section 9.02 to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
So long as there does not exist a failure by the Credit Enhancer to make
a required payment under the Policies, the Credit Enhancer shall have the right
to exercise all rights of the Holders of the Notes under this Indenture without
any consent of such Holders, and such Holders may exercise such rights only with
the prior written consent of the Credit Enhancer, except as provided herein.
49
Section 9.03. Execution of Supplemental Indentures. In executing, or permitting
the additional trusts created by, any supplemental indenture permitted by this
Article IX or the modification thereby of the trusts created by this Indenture,
the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01
and 6.02, shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 9.05. Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the 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 Issuer or the Indenture Trustee shall so
determine, new Notes so modified as to conform, in the opinion of the Indenture
Trustee and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Indenture Trustee
in exchange for Outstanding Notes.
ARTICLE X
Miscellaneous
Section 10.01. Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Credit Enhancer (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
50
been complied with, except that, in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has read or
has caused to be read such covenant or condition and the definitions herein
relating thereto;
(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 or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such signatory
has made such examination or investigation as is necessary to enable such
signatory to express an informed opinion as to whether or not such covenant or
condition has been complied with;
(iv) a statement as to whether, in the opinion of each such signatory, such
condition or covenant has been complied with; and
(v) if the signer of such certificate or Opinion is required to be Independent,
the statement required by the definition of the term "Independent".
(b) (i) Prior to the deposit of any Collateral or other property or securities
with the Indenture Trustee that is to be made the basis for the release of any
property or securities subject to the lien of this Indenture, the Issuer shall,
in addition to any obligation imposed in Section 10.01(a) or elsewhere in this
Indenture, furnish to the Indenture Trustee an Officer's Certificate certifying
or stating the opinion of each person signing such certificate as to the fair
value (within 90 days of such deposit) to the Issuer of the Collateral or other
property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of any signer thereof as
to the matters described in clause (i) above, the Issuer shall also deliver to
the Indenture Trustee an Independent Certificate as to the same matters, if the
fair value to the Issuer of the securities to be so deposited and of all other
such securities made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set forth in the
certificates delivered pursuant to clause (i) above and this clause (ii), is 10%
or more of the Security Balances of the Notes, but such a certificate need not
be furnished with respect to any securities so deposited, if the fair value
thereof to the Issuer as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the Security Balances of the Notes.
(iii) Whenever any property or securities are to be released from the lien of
this Indenture, the Issuer shall also furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of such release) of the
property or securities proposed to be released and stating that in the opinion
of such person the proposed release will not impair the security under this
Indenture in contravention of the provisions hereof.
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(iv) Whenever the Issuer is required to furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of any signer thereof as
to the matters described in clause (iii) above, the Issuer shall also furnish to
the Indenture Trustee an Independent Certificate as to the same matters if the
fair value of the property or securities and of all other property, other than
property as contemplated by clause (v) below or securities released from the
lien of this Indenture since the commencement of the then-current calendar year,
as set forth in the certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Security Balances of the Notes, but such
certificate need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the then Security
Balances of the Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer may, without
compliance with the requirements of the other provisions of this Section 10.01,
(A) collect upon, sell or otherwise dispose of the Home Equity Loans as and to
the extent permitted or required by the Basic Documents or (B) make cash
payments out of the Payment Account as and to the extent permitted or required
by the Basic Documents, so long as the Issuer shall deliver to the Indenture
Trustee every six months, commencing December 31, 2004, an Officer's Certificate
of the Issuer stating that all the dispositions of Collateral described in
clauses (A) or (B) above that occurred during the preceding six calendar months
were in the ordinary course of the Issuer's business and that the proceeds
thereof were applied in accordance with the Basic Documents.
Section 10.02. Form of Documents Delivered to Indenture Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Seller or the
Issuer, stating that the information with respect to such factual matters is in
the possession of the Seller or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
52
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 10.03. Acts of Noteholders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section 10.03.
(b) The fact and date of the execution by any person of any such instrument or
writing may be proved in any manner that the Indenture Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice, consent, waiver or
other action by the Holder of any Note shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Credit Enhancer and
Rating Agencies. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Indenture Trustee at the Corporate Trust Office. The Indenture Trustee
shall promptly transmit any notice received by it from the Noteholders to the
Issuer, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed first-class,
postage prepaid to the Issuer addressed to: Home Equity Loan Trust 2004-HS3, in
care of Wilmington Trust Company, or at any other address previously furnished
in writing to the Indenture Trustee by the Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the Indenture
Trustee, or
53
(iii) the Credit Enhancer by the Issuer, the Indenture Trustee or by any
Noteholders shall be sufficient for every purpose hereunder to in writing and
mailed, first-class postage pre-paid, or personally delivered or telecopied to:
Financial Guaranty Insurance Company, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Research and Risk Management (Home Equity Loan Trust 2004-HS3),
telecopier number (000) 000-0000. The Credit Enhancer shall promptly transmit
any notice received by it from the Issuer, the Indenture Trustee or the
Noteholders to the Issuer or Indenture Trustee, as the case may be.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
Standard & Poor's, at the following address: Standard & Poor's Ratings Services,
00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed
Surveillance Department and (ii) in the case of Moody's, at the following
address: Xxxxx'x Investors Service, Inc., ABS Monitoring Department, 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
Section 10.05. Notices to Noteholders; Waiver. Where this Indenture provides for
notice to Noteholders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Noteholder affected by such event, at such
Person's address as it appears on the Note Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Noteholders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
54
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of Default.
Section 10.06. Alternate Payment and Notice Provisions. Notwithstanding any
provision of this Indenture or any of the Notes to the contrary, the Issuer may
enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee to such Holder, that is different
from the methods provided for in this Indenture for such payments or notices.
The Issuer shall furnish to the Indenture Trustee a copy of each such agreement
and the Indenture Trustee shall cause payments to be made and notices to be
given in accordance with such agreements.
Section 10.07. 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.
The provisions of TIA xx.xx. 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 10.08. Effect of Headings. The Article and Section headings herein are
for convenience only and shall not affect the construction hereof.
Section 10.09. Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents.
Section 10.10. Separability. In case any provision in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
Section 10.11. Benefits of Indenture. Nothing in this Indenture or in the Notes,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, and the Noteholders, the Credit Enhancer, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 10.12. Legal Holidays. In any case where the date on which any payment
is due shall not be a Business Day, then (notwithstanding any other provision of
the Notes or this Indenture) payment need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date on which nominally due, and no interest shall accrue for the
period from and after any such nominal date.
Section 10.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICTS OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
55
Section 10.14. Counterparts. This Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
Section 10.15. Recording of Indenture. If this Indenture is subject to recording
in any appropriate public recording offices, such recording is to be effected by
the Issuer and at its expense accompanied by an Opinion of Counsel (which may be
counsel to the Indenture Trustee or any other counsel reasonably acceptable to
the Indenture Trustee) to the effect that such recording is necessary either for
the protection of the Noteholders or any other Person secured hereunder or for
the enforcement of any right or remedy granted to the Indenture Trustee under
this Indenture.
Section 10.16. Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their respective individual capacities) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
Section 10.17. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by its acceptance of a Note, hereby covenant and
agree that they will not at any time institute against the Depositor or the
Issuer, or join in any institution against the Depositor or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of other the Basic Documents.
Section 10.18. Inspection. The Issuer agrees that, on reasonable prior notice,
it shall permit any representative of the Indenture Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports and
other papers of the Issuer, to make copies and extracts therefrom, to cause such
books to be audited by Independent certified public accountants, and to discuss
the Issuer's affairs, finances and accounts with the Issuer's officers,
employees, and Independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Indenture Trustee shall
and shall cause its representatives to hold in confidence all such information
except to the extent disclosure may be required by law (and all reasonable
applications for confidential treatment are unavailing) and except to the extent
that the Indenture Trustee may reasonably determine that such disclosure is
consistent with its obligations hereunder.
56
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
HOME EQUITY LOAN TRUST 2004-HS3,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:
---------------------------------
Name:
Title:
JPMORGAN CHASE BANK,
as Indenture Trustee
By:
---------------------------------
Name:
Title:
JPMORGAN CHASE BANK hereby accepts the appointment as Paying Agent pursuant to
Section 3.03 hereof and as Note Registrar pursuant to Section 4.02 hereof.
By:
------------------------------------
Name:
Title:
57
STATE OF DELAWARE )
) ss.:
COUNTY OF NEWCASTLE )
On this 29th day of September, 2004, before me personally appeared
______________________________, to me known, who being by me duly sworn, did
depose and say, that s/he resides at in _____________________ , that s/he is the
_______________ of the Owner Trustee, one of the corporations described in and
which executed the above instrument; that s/he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that s/he signed her/his name thereto by like order.
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 29th day of September, 2004, before me personally appeared
_____________________, to me known, who being by me duly sworn, did depose and
say, that s/he resides at _________________ that s/he is the ___________ of
JPMorgan Chase Bank, as Indenture Trustee, one of the corporations described in
and which executed the above instrument; that s/he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that s/he signed her/his name thereto by like order.
Notary Public
NOTORIAL SEAL
EXHIBIT A-1
FORM OF CLASS A NOTES
UNLESS THIS TERM NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY TERM NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS TERM NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TERM NOTE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS TERM NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
THE SELLER, THE DEPOSITOR, THE MASTER SERVICER, THE INDENTURE TRUSTEE, THE
TRUSTEE OR GMAC MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.
HOME EQUITY LOAN TRUST 2004-HS3
Home Equity Loan-Backed Term Note, Class A
Registered Principal Amount: $[ ]
No. 1 Note Rate: Floating
CUSIP NO.
Home Equity Loan Trust 2004-HS3, a statutory trust duly organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of $[ ], payable on each Payment Date in
an amount equal to the Percentage Interest evidenced by this Term Note of the
aggregate amount, if any, payable from the Payment Account in respect of
principal on the Term Notes pursuant to Section 3.05 of the Indenture dated as
of September 29, 2004 (the "Indenture") between the Issuer, as Issuer, and
JPMorgan Chase Bank, as Indenture Trustee (the "Indenture Trustee"); provided,
however, that the entire unpaid principal amount of this Term Note shall be due
and payable on the Payment Date in September 2029, to the extent not previously
paid on a prior Payment Date. Capitalized terms used but not defined herein are
defined in Appendix A of the Indenture.
Interest on the Class A Notes will be paid monthly on each
Payment Date at the Note Rate for the related Interest Period subject to
limitations which may result in Net WAC Cap Shortfalls (as further described in
the Indenture). The Note Rate for each Interest Period will be a floating rate
equal to the least of (i) LIBOR plus 0.265% per annum, (ii) 17.25% per annum and
(iii) the Net WAC Rate. LIBOR for each applicable Interest Period will be
determined on the second LIBOR Business Day immediately preceding (i) the
Closing Date in the case of the first Interest Period and (ii) the first day of
each succeeding Interest Period by the Indenture Trustee as set forth in the
Indenture. All determinations of LIBOR by the Indenture Trustee shall, in the
absence of manifest error, be conclusive for all purposes, and each holder of
this Term Note, by accepting this Term Note, agrees to be bound by such
determination. Interest on this Term Note will accrue for each Payment Date from
the most recent Payment Date on which interest has been paid (in the case of the
first Payment Date, from the Closing Date) to but excluding such Payment Date.
Interest will be computed on the basis of the actual number of days in each
Interest Period and a year assumed to consist of 360 days. Principal of and
interest on this Term Note shall be paid in the manner specified on the reverse
hereof.
Principal of and interest on this Term 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
Issuer with respect to this Term Note shall be applied first to interest due and
payable on this Term Note as provided above and then to the unpaid principal of
this Term Note.
Reference is made to the further provisions of this Term Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Term Note.
Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this Term
Note shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
This Term Note is one of a duly authorized issue of Term Notes of
the Issuer, designated as its Home Equity Loan-Backed Term Notes, all issued
under the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the holders of
the Term Notes. The Term Notes are subject to all terms of the Indenture.
The Term Notes and the Variable Funding Notes (collectively, the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
This Term Note is entitled to the benefits of an irrevocable and
unconditional financial guaranty insurance policy issued by Financial Guaranty
Insurance Company.
Principal of and interest on this Term Note will be payable on
each Payment Date, commencing October 25, 2004, as described in the Indenture.
"Payment Date" means the twenty-fifth day of each month, or, if any such date is
not a Business Day, then the next Business Day.
The entire unpaid principal amount of this Term Note shall be due
and payable in full on the Payment Date in September 2029 pursuant to the
Indenture, to the extent not previously paid on a prior Payment Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing, then the Indenture Trustee or the holders of Notes representing not
less than a majority of the Security Balances of all Notes with the consent of
the Credit Enhancer, or the Credit Enhancer may declare the Notes to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Term Notes shall be made pro rata to
the holders of Term Notes entitled thereto.
Payments of interest on this Term 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 Term Note, shall be made by check mailed to the
Person whose name appears as the Registered Holder of this Term Note (or one or
more Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Term Notes registered on the Record
Date in the name of the nominee of the Depository Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Term Note be submitted for notation of payment. Any reduction in the
principal amount of this Term 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 Term Note and of any Term 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 Term Note on a Payment Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and
payable shall be payable only upon presentation and surrender of this Term Note
at the address specified in such notice of final payment.
As provided in the Indenture and subject to certain limitations
set forth therein, the transfer of this Term Note may be registered on the Note
Register upon surrender of this Term Note for registration of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by, the
holder hereof or such holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended, and thereupon one or more new
Term Notes in 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 Term
Note, but the Note Registrar shall require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
registration of transfer or exchange of this Term Note.
Each holder or Beneficial Owner of a Term Note, by acceptance of
a Term Note, or, in the case of a Beneficial Owner of a Term Note, a beneficial
interest in a Term Note, covenants and agrees that no recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee, the Seller, the Master Servicer, the Depositor or the Indenture Trustee
on the Term 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 Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director or employee of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in 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 holder or Beneficial Owner of a Term Note, by acceptance of
a Term Note or, in the case of a Beneficial Owner of a Term Note, a beneficial
interest in a Term Note, covenants and agrees by accepting the benefits of the
Indenture that such holder or Beneficial Owner of a Term Note will not at any
time institute against the Depositor or the Issuer, or join in any institution
against the Depositor, the Seller, the Master Servicer, GMAC Mortgage Group,
Inc. or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States federal or state bankruptcy
or similar law in connection with any obligations relating to the Term Notes,
the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Term Note is
issued with the intention that, for federal, state and local income, single
business and franchise tax purposes, the Term Notes will qualify as indebtedness
of the Issuer. Each holder of a Term Note, by acceptance of a Term Note (and
each Beneficial Owner of a Term Note by acceptance of a beneficial interest in a
Term Note), agrees to treat the Term Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Term Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Term Note is
registered (as of the day of determination or as of such other date as may be
specified in the Indenture) as the owner hereof for all purposes, whether or not
this Term Note be overdue, and none of the Issuer, the Indenture Trustee or any
such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the Indenture Trustee and the rights of the
holders of the Term Notes under the Indenture at any time by the Issuer and the
Indenture Trustee with the consent of the holders of Notes representing a
majority of the Security Balances of all Notes at the time Outstanding and the
Credit Enhancer and with prior notice to the Rating Agencies. The Indenture also
contains provisions permitting the holders of Notes representing specified
percentages of the Security Balances of all Notes, on behalf of the holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the holder of this Term Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such holder and upon all
future holders of this Term Note and of any Term 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 Term Note. The
Indenture also permits the Issuer and the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
holders of the Term Notes issued thereunder but with prior notice to the Rating
Agencies and the Credit Enhancer.
The term "Issuer" as used in this Term Note includes any
successor or the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the holders of Term Notes under the Indenture.
The Term Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Term 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
Term Note or of the Indenture shall alter or impair, the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Term Note at the times, place and rate, and in the coin or
currency herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Wilmington Trust Company in
its individual capacity, JPMorgan Chase Bank, in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Term Note or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The holder of this Term Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Term Note.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not
in its individual capacity, has caused this Term Note to be duly executed.
HOME EQUITY LOAN TRUST 2004-HS3,
By WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as
Owner Trustee
Dated: September 29, 2004
By:
------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Term Notes referred to in the within mentioned Indenture.
JPMORGAN CHASE BANK, not in its
individual capacity but solely as
Indenture Trustee
Dated: September 29, 2004
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 transfer unto
--------------------------------------------------------------------------------
(name and address of assignee)
the within Term Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ___________________________, attorney, to transfer said
Term 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 Term 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.
EXHIBIT A-2
FORM OF VARIABLE FUNDING NOTES
THIS VARIABLE FUNDING NOTE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH
ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND
IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE
INDENTURE REFERRED TO HEREIN.
THE PRINCIPAL OF THIS VARIABLE FUNDING NOTE IS PAYABLE IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS VARIABLE FUNDING NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON
THE FACE HEREOF.
THIS VARIABLE FUNDING NOTE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF THE SELLER, THE DEPOSITOR, THE MASTER SERVICER, THE INDENTURE
TRUSTEE, THE TRUSTEE OR GMAC MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE
AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC
DOCUMENTS.
HOME EQUITY LOAN TRUST 2004-HS3
Home Equity Loan-Backed Variable Funding Note
Registered Initial Maximum Variable
Funding Note Balance: $0.00
No.VFN-1 Note Rate: Floating
Home Equity Loan Trust 2004-HS3, a statutory trust duly organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Residential Funding
Corporation or registered assigns, the principal amount set forth on Schedule A
attached hereto (or otherwise owing hereunder as determined pursuant to the
Indenture as defined below), payable on each Payment Date in an amount equal to
the pro rata portion allocable hereto (based on the Security Balances of all
Variable Funding Notes immediately prior to such Payment Date) of the aggregate
amount, if any, payable from the Payment Account in respect of principal on the
Variable Funding Notes pursuant to Section 3.05 of the Indenture dated as of
September 29, 2004 (the "Indenture") between the Issuer, as Issuer, and JPMorgan
Chase Bank, as Indenture Trustee (the "Indenture Trustee"); provided, however,
that the entire unpaid principal amount of this Variable Funding Note shall be
due and payable on the Payment Date in September 2029 to the extent not
previously paid on a prior Payment Date. Capitalized terms used but not defined
herein are defined in Appendix A of the Indenture.
Interest on the Variable Funding Notes will be paid monthly on
each Payment Date at the Note Rate for the related Interest Period subject to
limitations which may result in Net WAC Cap Shortfalls (as further described in
the Indenture). The Note Rate for each Interest Period will be a floating rate
equal to the least of (i) LIBOR plus 0.265% per annum, (ii) 17.25% per annum and
(iii) the Net WAC Rate. LIBOR for each applicable Interest Period will be
determined on the second LIBOR Business Day immediately preceding (i) the
Closing Date in the case of the first Interest Period and (ii) the first day of
each succeeding Interest Period by the Indenture Trustee as set forth in the
Indenture. All determinations of LIBOR by the Indenture Trustee shall, in the
absence of manifest error, be conclusive for all purposes, and each holder of
this Variable Funding Note, by accepting this Variable Funding Note, agrees to
be bound by such determination. Interest on this Variable Funding Note will
accrue for each Payment Date from the most recent Payment Date on which interest
has been paid (in the case of the First Payment Date, from the Closing Date) to
but excluding such Payment Date. Interest will be computed on the basis of the
actual number of days in each Interest Period and a year assumed to consist of
360 days. Principal of and interest on this Variable Funding Note shall be paid
in the manner specified on the reverse hereof.
Principal of and interest on this Variable Funding 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 Issuer with respect to this Variable Funding Note shall be applied
first to interest due and payable on this Variable Funding Note as provided
above and then to the unpaid principal of this Variable Funding Note.
Reference is made to the further provisions of this Variable
Funding Note set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Variable Funding Note.
Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this
Variable Funding Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.
This Variable Funding Note is one of a duly authorized issue of
Variable Funding Notes of the Issuer, designated as its Home Equity Loan-Backed
Variable Funding Notes (herein called the "Variable Funding Notes"), all issued
under the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the holders of
the Variable Funding Notes. The Variable Funding Notes are subject to all terms
of the Indenture.
The Variable Funding Notes and the Term Notes (collectively, the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
This Variable Funding Note is entitled to the benefits of an
irrevocable and unconditional financial guaranty insurance policy issued by
Financial Guaranty Insurance Company.
Principal of and interest on this Variable Funding Note will be
payable on each Payment Date, commencing October 25, 2004, as described in the
Indenture. "Payment Date" means the twenty-fifth day of each month, or, if any
such day is not a Business Day, then the next Business Day.
The entire unpaid principal amount of this Variable Funding Note
shall be due and payable in full on the Payment Date in September 2029 pursuant
to the Indenture, to the extent not previously paid on a prior Payment Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing, then the Indenture Trustee or the holders of Notes representing not
less than a majority of the Security Balances of all Notes with the consent of
the Credit Enhancer, or the Credit Enhancer may declare the Notes to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Variable Funding Notes shall be made
pro rata to the holders of Variable Funding Notes entitle thereto.
Payments of interest on this Variable Funding 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 Variable Funding Note, shall be
made by check mailed to the Person whose name appears as the Registered Holder
of this Variable Funding Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Variable Funding Notes registered on the Record Date in the name of
the nominee of the Depository Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Variable
Funding Note be submitted for notation of payment. Any reduction in the
principal amount of this Variable Funding Note (or any one or more Predecessor
Variable Funding Notes) effected by any payments made on any Payment Date shall
be binding upon all future holders of this Variable Funding Note and of any
Variable Funding 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 Variable Funding Note on a
Payment Date, then the Indenture Trustee, in the name of and on behalf of the
Issuer, will notify the Person who was the Registered Holder hereof as of the
Record Date preceding such Payment Date by notice mailed or transmitted by
facsimile prior to such Payment Date and the amount then due and payable shall
be payable only upon presentation and surrender of this Variable Funding Note at
the address specified in such notice of final payment.
As provided in the Indenture and subject to certain limitations
set forth therein, the transfer of this Variable Funding Note may be registered
on the Note Register upon surrender of this Variable Funding Note for
registration of transfer at the Corporate Trust Office, duly endorsed by, and
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the holder hereof or such holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Variable Funding Notes in 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 Variable Funding Note, but the Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of this Variable Funding Note.
Each holder or Beneficial Owner of a Variable Funding Note, by
acceptance of a Variable Funding Note or, in the case of a Beneficial Owner of a
Variable Funding Note, a beneficial interest in a Variable Funding Note,
covenants and agrees that no recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner Trustee, the Seller, the
Master Servicer, the Depositor or the Indenture Trustee on the Variable Funding
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 Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in 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 holder or Beneficial Owner of a Variable Funding Note, by
acceptance of a Variable Funding Note or, in the case of a Beneficial Owner of a
Variable Funding Note, a beneficial interest in a Variable Funding Note,
covenants and agrees by accepting the benefits of the Indenture that such holder
or Beneficial Owner of a Variable Funding Note will not at any time institute
against the Depositor or the Issuer, or join in any institution against the
Depositor, the Seller, the Master Servicer, GMAC Mortgage Group, Inc. or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Variable Funding
Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Variable
Funding Note is issued with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Variable Funding Notes
will qualify as indebtedness of the Issuer. Each holder of a Variable Funding
Note, by acceptance of a Variable Funding Note (and each Beneficial Owner of a
Variable Funding Note, by acceptance of a beneficial interest in a Variable
Funding Note), agrees to treat the Variable Funding Notes for federal, state and
local income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of this
Variable Funding Note, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name this Variable
Funding 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 Variable Funding Note be overdue, and none of the Issuer,
the Indenture Trustee or any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the Indenture Trustee and the rights of the
holders of the Variable Funding Notes under the Indenture at any time by the
Issuer and the Indenture Trustee with the consent of the holders of Notes
representing a majority of the Security Balances of all Notes at the time
Outstanding and the Credit Enhancer and with prior notice to the Rating
Agencies. The Indenture also contains provisions permitting the holders of Notes
representing specified percentages of the Security Balances of all Notes, on
behalf of the holders of all the Notes, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the holder of
this Variable Funding Note (or any one of more Predecessor Variable Funding
Notes) shall be conclusive and binding upon such holder and upon all future
holders of this Variable Funding Note and of any Variable Funding 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 Variable
Funding Note. The Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
holders of the Variable Funding Notes issued thereunder but with prior notice to
the Rating Agencies and the Credit Enhancer.
The term "Issuer" as used in this Variable Funding Note includes
any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the holders of Variable Funding Notes under the Indenture.
The Variable Funding Notes are issuable only in registered form
in denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Variable Funding 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
Variable Funding Note or of the Indenture shall alter or impair the obligation
of the Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Variable Funding Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Wilmington Trust Company in
its individual capacity, JPMorgan Chase Bank, in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Variable Funding Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The holder of this Variable Funding
Note by its acceptance hereof agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Variable Funding Note.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer
and not in its individual capacity, has caused this Variable Funding Note to be
duly executed.
HOME EQUITY LOAN TRUST 2004-HS3,
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
Dated: September 29, 2004
By:
------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Variable Funding Note referred to in the within mentioned
Indenture.
JPMORGAN CHASE BANK, not in
its individual capacity but solely as Indenture
Trustee
Dated: September 29, 2004
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 transfer unto
--------------------------------------------------------------------------------
(name and address of assignee)
the within Term Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ___________________________, attorney, to transfer said
Term 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 Term 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.
SCHEDULE A
to
HOME EQUITY LOAN TRUST 2004-HS3
Home Equity Loan-Backed Variable Funding Note
============ ====================== ================ =================== ========================
DATE PERCENTAGE INTEREST PRINCIPAL SECURITY BALANCE AUTHORIZED SIGNATURE
PAYMENTS OUTSTANDING OF INDENTURE TRUSTEE
------------ ---------------------- ---------------- ------------------- ------------------------
------------ ---------------------- ---------------- ------------------- ------------------------
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============ ====================== ================ =================== ========================
EXHIBIT B
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
==============================================
==============================================
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the Seller
hereby certifies the following facts: Neither the Seller nor anyone acting on
its behalf has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or
negotiated with respect to the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security with, any person in any manner, or
made any general solicitation by means of general advertising or in any other
manner, or taken any other action, that would constitute a distribution of the
Rule 144A Securities under the Securities Act of 1933, as amended (the "1933
Act"), or that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or another "qualified institutional buyer" as defined in Rule
144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with, the
Indenture Trustee and the Issuer (as defined in the Indenture (the "Indenture"),
dated as of September 29, 2004, between Home Equity Loan Trust 2004-HS3, as
Issuer, and JPMorgan Chase Bank, as Indenture Trustee, pursuant to Section 4.02
of the Indenture, as follows:
a. The Buyer understands that the Rule 144A Securities
have not been registered under the 1933 Act or the securities laws of
any state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and
risks of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the
Seller, the Indenture Trustee, the Owner Trustee or the Master Servicer.
d. Neither the Buyer nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Rule
144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Rule 144A Securities, any interest in
the Rule 144A Securities or any other similar security from, or
otherwise approached or negotiated with respect to the Rule 144A
Securities, any interest in the Rule 144A Securities or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Rule
144A Securities under the 1933 Act or that would render the disposition
of the Rule 144A Securities a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor has it
authorized or will it authorize any person to act, in such manner with
respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that
term is defined in Rule 144A under the 1933 Act and has completed either
of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. The Buyer is aware that the sale to it is being made in
reliance on Rule 144A. The Buyer is acquiring the Rule 144A Securities
for its own account or the accounts of other qualified institutional
buyers, understands that such Rule 144A Securities may be resold,
pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for
the account of a qualified institutional buyer to whom notice is given
that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the
1933 Act.
3. This document may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
Print Name of Seller Print Name of Buyer
By: By:
-------------------------- ---------------------------
Name: Name:
Title: Title:
Tax Payer Identification: Tax Payer Identification:
No. No.
Date: Date:
------------------------- ----------------------------
ANNEX 1 TO EXHIBIT B
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis $ ** in securities (except for the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year (such
amount being calculated in accordance with Rule 144A) and (ii) the Buyer
satisfies the criteria in the category marked below.
_____ Corporation, etc. The Buyer is a corporation (other than a bank, savings
and loan association or similar institution), Massachusetts or similar
business trust, partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code.
____ Bank. The Buyer (a) is a national bank or banking institution organized
under the laws of any State, territory or the District of Columbia, the
business of which is substantially confined to banking and is supervised
by the State or territorial banking commission or similar official or is
a foreign bank or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached hereto.
_____ Savings and Loan. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association
or similar institution, which is supervised and examined by a State or
Federal authority having supervision over any such institutions or is a
foreign savings and loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements.
_____ Broker-Dealer. The Buyer is a dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934.
_____ Insurance Company. The Buyer is an insurance company whose primary and
predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a similar
official or agency of a State or territory or the District of Columbia.
** Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
_____ State or Local Plan. The Buyer is a plan established and maintained by a
State, its political subdivisions, or any agency or instrumentality of
the State or its political subdivisions, for the benefit of its
employees.
_____ ERISA Plan. The Buyer is an employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974.
_____ Investment Adviser. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
_____ SBIC. The Buyer is a Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958.
_____ Business Development Company. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisers Act
of 1940.
_____ Trust Fund. The Buyer is a trust fund whose trustee is a bank or trust
company and whose participants are exclusively (a) plans established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees, or (b) employee benefit plans within the
meaning of Title I of the Employee Retirement Income Security Act of
1974, but is not a trust fund that includes as participants individual
retirement accounts or H.R. 10 plans.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Rule 144A
Securities are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
Will the Buyer be purchasing the Rule 144A Yes No Securities only for
the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
Print Name of Buyer
By:
--------------------------------
Name:
Title:
Date:
------------------------------
ANNEX 2 TO EXHIBIT B
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used.
_____ []The Buyer owned $ in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year
(such amount being calculated in accordance with Rule 144A).
_____ []The Buyer is part of a Family of Investment Companies which owned in
the aggregate $ in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year
(such amount being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that each
of the parties to which this certification is made are relying and will continue
to rely on the statements made herein because one or more sales to the Buyer
will be in reliance on Rule 144A. In addition, the Buyer will only purchase for
the Buyer's own account.
6. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
Print Name of Buyer
By:
--------------------------------
Name:
---------------------------
Title:
IF AN ADVISER:
Print Name of Buyer
Date:
------------------------------
EXHIBIT C
FORM OF INVESTOR REPRESENTATION LETTER
_______________ , 20__
Residential Funding Mortgage Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration
Re: Home Equity Loan-Backed Capped Funding Notes
Series 2004-HS3
Ladies and Gentlemen:
__________________(the "Purchaser") intends to purchase from
_________ (the "Seller") $_______ Capped Funding Notes of Series 2004-HS3 (the
"Notes"), issued pursuant to the Indenture (the "Indenture"), dated as of
September 29, 2004 between Home Equity Loan Trust 2004-HS3, as issuer (the
"Issuer"), and JPMorgan Chase Bank, as indenture trustee (the "Indenture
Trustee"). All terms used herein and not otherwise defined shall have the
meanings set forth in the Indenture. The Purchaser hereby certifies, represents
and warrants to, and covenants with, the Issuer and the Indenture Trustee that:
1. The Purchaser understands that (a) the Notes have not been and
will not be registered or qualified under the Securities Act of 1933, as
amended (the "Act") or any state securities law, (b) the Depositor is
not required to so register or qualify the Notes, (c) the Notes may be
resold only if registered and qualified pursuant to the provisions of
the Act or any state securities law, or if an exemption from such
registration and qualification is available, (d) the Indenture contains
restrictions regarding the transfer of the Notes and (e) the Notes will
bear a legend to the foregoing effect.
2. The Purchaser is acquiring the Notes for its own account for
investment only and not with a view to or for sale in connection with
any distribution thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters, and, in particular, in such matters related to
securities similar to the Notes, such that it is capable of evaluating
the merits and risks of investment in the Notes, (b) able to bear the
economic risks of such an investment and (c) an "accredited investor"
within the meaning of Rule 501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an
opportunity to review (a) [a copy of the Private Placement Memorandum,
dated relating to the Notes (b)] a copy of the Indenture and [b] [c]
such other information concerning the Notes, the Home Equity Loans and
the Depositor as has been requested by the Purchaser from the Depositor
or the Seller and is relevant to the Purchaser's decision to purchase
the Notes. The Purchaser has had any questions arising from such review
answered by the Depositor or the Seller to the satisfaction of the
Purchaser. [If the Purchaser did not purchase the Notes from the Seller
in connection with the initial distribution of the Notes and was
provided with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original Sale") of the
Notes by the Depositor, the Purchaser acknowledges that such Memorandum
was provided to it by the Seller, that the Memorandum was prepared by
the Depositor solely for use in connection with the Original Sale and
the Depositor did not participate in or facilitate in any way the
purchase of the Notes by the Purchaser from the Seller, and the
Purchaser agrees that it will look solely to the Seller and not to the
Depositor with respect to any damage, liability, claim or expense
arising out of, resulting from or in connection with (a) error or
omission, or alleged error or omission, contained in the Memorandum, or
(b) any information, development or event arising after the date of the
Memorandum.]
5. The Purchaser has not and will not nor has it authorized or
will it authorize any person to (a) offer, pledge, sell, dispose of or
otherwise transfer any Note, any interest in any Note or any other
similar security to any person in any manner, (b) solicit any offer to
buy or to accept a pledge, disposition of other transfer of any Note,
any interest in any Note or any other similar security from any person
in any manner, (c) otherwise approach or negotiate with respect to any
Note, any interest in any Note or any other similar security with any
person in any manner, (d) make any general solicitation by means of
general advertising or in any other manner or (e) take any other action,
that (as to any of (a) through (e) above) would constitute a
distribution of any Note under the Act, that would render the
disposition of any Note a violation of Section 5 of the Act or any state
securities law, or that would require registration or qualification
pursuant thereto. The Purchaser will not sell or otherwise transfer any
of the Notes, except in compliance with the provisions of the Indenture.
6. The Purchaser is not a non-United States person.
Very truly yours,
By:
--------------------------------
Name:
Title:
EXHIBIT D
FORM OF TRANSFEROR REPRESENTATION LETTER
__________________, 20___
Residential Funding Mortgage Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration
Re: Home Equity Loan-Backed Capped Funding Notes
Series 2004-HS3
Ladies and Gentlemen:
___________________(the "Purchaser") intends to purchase from
______ (the "Seller") $_______ Capped Funding Notes of Series 2004-HS3 (the
"Notes"), issued pursuant to the (the "Indenture"), dated as of September 29,
2004 between Home Equity Loan Trust 2004-HS3, as issuer (the "Issuer"), and
JPMorgan Chase Bank, as indenture trustee (the "Indenture Trustee"). All terms
used herein and not otherwise defined shall have the meanings set forth in the
Indenture. The Seller hereby certifies, represents and warrants to, and
covenants with, the Issuer and the Indenture Trustee that:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Note, any
interest in any Note or any other similar security to any person in any manner,
(b) has solicited any offer to buy or to accept a pledge, disposition or other
transfer of any Note, any interest in any Note or any other similar security
from any person in any manner, (c) has otherwise approached or negotiated with
respect to any Note, any interest in any Note or any other similar security with
any person in any manner, (d) has made any general solicitation by means of
general advertising or in any other manner, or (e) has taken any other action,
that (as to any of (a) through (e) above) would constitute a distribution of the
Notes under the Securities Act of 1933 (the "Act"), that would render the
disposition of any Note a violation of Section 5 of the Act or any state
securities law, or that would require registration or qualification pursuant
thereto. The Seller will not act, in any manner set forth in the foregoing
sentence with respect to any Note. The Seller has not and will not sell or
otherwise transfer any of the Notes, except in compliance with the provisions of
the Indenture.
Very truly yours,
(Seller)
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
APPENDIX A
DEFINITIONS
Additional Balance: With respect to any Home Equity Loan, any
future Draw made by the related Mortgagor pursuant to the related Loan Agreement
on and after the Cut-off Date; provided, however, that if an Amortization Event
occurs, then any Draw after such Amortization Event shall not be acquired by the
Trust and shall not be an Additional Balance.
Additional Balance Differential: With respect to any Payment
Date, unless and until an Amortization Event occurs, (x) up to and including the
Payment Date occurring in the calendar month during which the Revolving Period
ends, the amount, if any, by which Additional Balances resulting from Draws
under the Home Equity Loans during the related Collection Period exceed
Principal Collections related to the Home Equity Loans during such Collection
Period and (y) after the Payment Date occurring in the calendar month during
which the Revolving Period ends, the aggregate amount of Additional Balances
conveyed to the Trust during the related Collection Period.
Additional Certificate Security Balance: With respect to the
issuance of Capped Funding Notes pursuant to Section 4.01(d) of the Indenture,
the amount, if any, required in accordance with the Opinion of Counsel in
connection therewith to be added to the Security Balances of the Certificates in
accordance with Section 3.12 of the Trust Agreement. In addition, with respect
to any Payment Date described in the second sentence of Section 3.12(a) of the
Trust Agreement, the "Additional Certificate Security Balance" shall include the
amount of the excess described in such sentence.
Adjusted Mortgage Rate: With respect to any Home Equity Loan and
any date of determination, the Loan Rate borne by the related Home Equity Loan,
less the rate at which the related Subservicing Fee accrues.
Affiliate: With respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise and "controlling" and "controlled"
shall have meanings correlative to the foregoing.
Aggregate Additional Balance Differential: With respect to any
Payment Date and the Variable Funding Notes, the sum of Additional Balance
Differentials that have been added to the Security Balance of Variable Funding
Notes prior to such Payment Date.
Aggregate Security Balance: With respect to any Payment Date, the
aggregate of the Security Balances of all Securities or specified Classes of
Securities as of such date.
Amortization Event: Any one of the following events:
1
(a) the failure on the part of the Seller (i) to make any payment
or deposit required to be made under the Purchase Agreement within five
Business Days after the date such payment or deposit is required to be
made; or (ii) to observe or perform in any material respect any other
covenants or agreements of the Seller set forth in the Purchase
Agreement, which failure continues unremedied for a period of 60 days
after written notice and such failure materially and adversely affects
the interests of the Securityholders or the Credit Enhancer;
(b) if any representation or warranty made by the Seller in the
Purchase Agreement proves to have been incorrect in any material respect
when made and which continues to be incorrect in any material respect
for a period of 45 days with respect to any representation or warranty
of the Seller made in Section 3.1(a) of the Purchase Agreement or 90
days with respect to any representation or warranty made in Section
3.1(b) or 3.1(c) of the Purchase Agreement after written notice and as a
result of which the interests of the Securityholders or the Credit
Enhancer are materially and adversely affected; provided, however, that
an Amortization Event shall not be deemed to occur if the Seller has
repurchased or caused to be repurchased or substituted for the related
Home Equity Loan or all Home Equity Loans, if applicable, during such
period (or within an additional 60 days with the consent of the
Indenture Trustee and the Credit Enhancer) in accordance with the
provisions of the Indenture;
(c) the entry against the Seller or the Issuer of a decree or
order by a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a trustee, conservator, receiver
or liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days;
(d) the Seller or the Issuer shall voluntarily go into
liquidation, consent to the appointment of a conservator, receiver,
liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Seller or the Issuer or of or relating to all or
substantially all of its property, or a decree or order of a court,
agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver, liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation
of its affairs, shall have been entered against the Seller or the Issuer
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 60 days; or the Seller or the
Issuer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors or voluntarily suspend payment of its obligations;
(e) the Issuer becomes subject to regulation by the Commission as
an investment company within the meaning of the Investment Company Act
2
of 1940, as amended;
(f) a Servicing Default relating to the Master Servicer occurs
under the Servicing Agreement and the Master Servicer is the Seller;
(g) the occurrence of a draw on any of the Policies and the
failure of the Credit Enhancer to be reimbursed for such draw, which
failure continues unremedied for a period of 90 days after written
notice to the Master Servicer; or
(h) the Issuer is determined to be an association taxable as a
corporation for federal income tax purposes.
In the case of any event described in (a), (b), (f) or (g), an
Amortization Event will be deemed to have occurred only if, after any applicable
grace period described in such clauses, any of the Indenture Trustee, the Credit
Enhancer or, with the consent of the Credit Enhancer, Securityholders evidencing
not less than 51% of the Security Balance of each of the Term Notes and the
Certificates, by written notice to the Seller, the Master Servicer, the
Depositor and the Owner Trustee (and to the Indenture Trustee, if given by the
Credit Enhancer or the Securityholders), declare that an Amortization Event has
occurred as of the date of such notice. In the case of any event described in
clauses (c), (d), (e) or (h), an Amortization Event will be deemed to have
occurred without any notice or other action on the part of the Indenture
Trustee, the Noteholders or the Credit Enhancer immediately upon the occurrence
of such event; provided, that any Amortization Event may be waived and deemed of
no effect with the written consent of the Credit Enhancer and each Rating
Agency, subject to the satisfaction of any conditions to such waiver.
Appraised Value: As to any Mortgaged Property, the value of the
related Mortgaged Property determined by the appraisal, sales price for such
Mortgaged Property or alternative valuation method, including a statistical
valuation or the Stated Value, used in the origination of such Home Equity Loan,
which may have been obtained at an earlier time but in no case more than 24
months prior to origination; provided that if such Home Equity Loan was
originated simultaneously with or not more than 12 months after the origination
of a mortgage loan secured by a senior lien on the related Mortgaged Property
which senior lien was originated in a purchase or cash-out refinance
transaction, the Appraised Value shall be the lesser of (i) the appraised value
of such Mortgaged Property based upon the appraisal made at the time of the
origination of such senior mortgage, and (ii) the sales price of the Mortgaged
Property at such time of origination.
Assignment of Mortgage: With respect to any Mortgage, an
assignment, notice of transfer or equivalent instrument, in recordable form,
sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to reflect the conveyance of the Mortgage, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering Mortgages secured by Mortgaged Properties located
in the same jurisdiction.
Authorized Newspaper: A newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays.
3
Authorized Officer: With respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter).
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Bankruptcy Loss: With respect to any Home Equity Loan, a
Deficient Valuation or a Debt Service Reduction; provided, however, that neither
a Deficient Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy
Loss hereunder so long as the Master Servicer has notified the Indenture Trustee
in writing that the Master Servicer is diligently pursuing any remedies that may
exist in connection with the representations and warranties made regarding the
related Home Equity Loan and either (A) the related Home Equity Loan is not in
default with regard to payments due thereunder or (B) delinquent payments of
principal and interest under the related Home Equity Loan and any premiums on
any applicable primary hazard insurance policy and any related escrow payments
in respect of such Home Equity Loan are being advanced on a current basis by the
Master Servicer or a Subservicer, in either case without giving effect to any
Debt Service Reduction.
Basic Documents: The Trust Agreement, the Indenture, the Purchase
Agreement, the Insurance Agreement, the Policy, the Servicing Agreement, the
Custodial Agreement, the Indemnification Agreement and the other documents and
certificates delivered in connection with any of the above.
Beneficial Owner: With respect to any Term Note, the Person who
is the beneficial owner of such Note as reflected on the books of the Depository
or on the books of a Person maintaining an account with such Depository
(directly as a Depository Participant or indirectly through a Depository
Participant, in accordance with the rules of such Depository).
Billing Cycle: With respect to any Home Equity Loan and Due Date,
the calendar month preceding such Due Date.
Book-Entry Custodian: The custodian appointed pursuant to Section
4.06 of the Indenture.
Book-Entry Notes: Beneficial interests in the Notes, ownership
and transfers of which shall be made through book entries by the Depository as
described in Section 4.06 of the Indenture.
Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the States of New York, California,
Minnesota, Illinois or Delaware are required or authorized by law to be closed.
Capped Funding Note: Any Class A Capped Funding Note issued in
4
connection with an exchange pursuant to Section 4.01(d) of the Indenture.
Cash Liquidation: As to any defaulted Home Equity Loan other than
a Home Equity Loan as to which an REO Acquisition occurred, a determination by
the Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Home Equity Loan.
Certificate Distribution Account: The account or accounts created
and maintained by the Certificate Paying Agent pursuant to Section 3.10(c) of
the Trust Agreement. The Certificate Paying Agent will make all distributions on
the Certificates from money on deposit in the Certificate Distribution Account.
Certificate Distribution Amount: For any Payment Date, the amount
remaining in the Payment Account following distributions pursuant to clauses (i)
through (ix) of Section 3.05(a) of the Indenture.
Certificate of Trust: The Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Statutory Trust Statute.
Certificate Paying Agent: The meaning specified in Section 3.10
of the Trust Agreement.
Certificate Percentage Interest: With respect to any Payment
Date, the Certificate Percentage Interest as stated on the face of such
Certificate, which percentage may be recalculated in accordance with Section
3.12 of the Trust Agreement.
Certificate Principal Balance: As of any Payment Date, with
respect to any Certificate, an amount equal to the then applicable Certificate
Percentage Interest of such Certificate multiplied by the Overcollateralization
Amount.
Certificate Register: The register maintained by the Certificate
Registrar in which the Certificate Registrar shall provide for the registration
of Certificates and of transfers and exchanges of Certificates.
Certificate Registrar: Initially, the Indenture Trustee, in its
capacity as Certificate Registrar.
Certificateholder: The Person in whose name a Certificate is
registered in the Certificate Register except that, any Certificate registered
in the name of the Issuer, the Owner Trustee or the Indenture Trustee or any
Affiliate of any of them shall be deemed not to be outstanding and the
registered holder will not be considered a Certificateholder or a holder for
purposes of giving any request, demand, authorization, direction, notice,
consent or waiver under the Indenture or the Trust Agreement provided that, in
determining whether the Indenture Trustee or the Owner Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that the Indenture Trustee or the
Owner Trustee knows to be so owned shall be so disregarded. Owners of
5
Certificates that have been pledged in good faith may be regarded as Holders if
the pledgee establishes to the satisfaction of the Indenture Trustee or the
Owner Trustee, as the case may be, the pledgee's right so to act with respect to
such Certificates and that the pledgee is not the Issuer, any other obligor upon
the Certificates or any Affiliate of any of the foregoing Persons.
Certificates: The SB Certificates.
Class A Notes: The Class A Home Equity Loan-Backed Term Notes,
Series 2004-HS3, in substantially the form set forth in Exhibit A-1 to the
Indenture.
Class SB Certificates: The Class SB Home Equity Loan-Backed
Certificates, Series 2004-HS3, substantially in the form of Exhibit A to the
Trust Agreement.
Closing Date: September 29, 2004.
Code: The Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
Collateral: The meaning specified in the Granting Clause of the
Indenture.
Collection Period: With respect to any Home Equity Loan and any
Payment Date, the calendar month preceding any such Payment Date.
Combined Loan-to-Value Ratio: With respect to any Home Equity
Loan and any date, the percentage equivalent of a fraction, the numerator of
which is the sum of (i) the Credit Limit and (ii) the outstanding principal
balance as of the date of the origination of such Home Equity Loan (or any
subsequent date as of which such outstanding principal balance may be determined
in connection with an increase or decrease in the Credit Limit, to reduce the
amount of primary insurance for such Home Equity Loan or to approve a
subordinate lien) and of all other mortgage loans, if any, that are secured by
liens on the Mortgaged Property that are senior or subordinate to the Mortgage
and the denominator of which is the Appraised Value of the related Mortgaged
Property.
Commission: The Securities and Exchange Commission.
Corporate Trust Office: With respect to the Indenture Trustee,
Certificate Registrar, Certificate Paying Agent and Paying Agent, the principal
corporate trust office of the Indenture Trustee and Note Registrar at which at
any particular time its corporate trust business shall be administered, which
office at the date of the execution of this instrument is located at 0 Xxx Xxxx
Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 10004, Attention: Institutional Trust
Services/Global Debt. For purposes of Section 4.15 of the Indenture, however,
such term shall mean the Indenture Trustee's agent, Chase Manhattan Trust
Company, National Association, located at 0000 Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, or such other office as the Indenture Trustee
shall designate. With respect to the Owner Trustee, the principal corporate
trust 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 this Trust Agreement is located at Xxxxxx Square North, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Administration.
6
Credit Enhancer: Financial Guaranty Insurance Company, or any
successor thereto.
Credit Enhancer Default: If the Credit Enhancer fails to make a
payment required under the Policy in accordance with its terms.
Credit Enhancer Premium Rate: The Premium Percentage (as defined
in the Insurance Agreement) with respect to the Policy.
Credit Limit: With respect to any Home Equity Loan, the maximum
Loan Balance permitted under the terms of the related Loan Agreement.
Credit Limit Increase: As defined in Section 3.01 of the
Servicing Agreement.
Credit Repository: Equifax, Transunion and Experian, or their
successors in interest.
Credit Score: With respect to any Home Equity Loan, the numerical
designation obtained from credit reports provided by any credit reporting
organization used to assess a borrower's credit-worthiness and the relative
degree of risk a borrower represents to a lender, as determined in accordance
with the applicable underwriting criteria.
Curtailment: Any Principal Prepayment made by a Mortgagor which
is not a Principal Prepayment in full.
Custodial Account: The account or accounts created and maintained
by the Master Servicer pursuant to Section 3.02(b) of the Servicing Agreement,
in which the Master Servicer shall deposit or cause to be deposited certain
amounts in respect of the Home Equity Loans.
Custodial Agreement: Any Custodial Agreement among the Custodian,
the Indenture Trustee, the Issuer and the Master Servicer relating to the
custody of the Home Equity Loans and the Related Documents.
Custodian: Xxxxx Fargo Bank, National Association, and its
successors and assigns.
Cut-off Date: September 1, 2004.
Cut-off Date Loan Balance: With respect to any Home Equity Loan,
the unpaid principal balance thereof as of the close of business on the last day
of the Billing Cycle immediately prior to the Cut-off Date.
Debt Service Reduction: With respect to any Home Equity Loan, a
reduction in the scheduled payment for such Home Equity Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code that becomes
final and non-appealable, except such a reduction constituting a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
7
Default: Any occurrence which is or with notice or the lapse of
time or both would become an Event of Default.
Deficiency Amount: With respect to any Payment Date, the sum of
(i) the excess, if any, of (A) the Interest Distribution Amount for the Notes on
such Payment Date over (B) the amount on deposit in the Payment Account
available for interest distributions on the Notes on such Payment Date, (ii) any
Liquidation Loss Amount for such Payment Date, to the extent not distributed as
part of the Liquidation Loss Distribution Amount (other than any Excess Loss
Amounts) for the Notes or covered by a reduction of the Overcollateralization
Amount, (iii) any Excess Loss Amounts from such Payment Date and (iv) the
Guaranteed Payment Amount, if applicable.
Deficient Valuation: With respect to any Home Equity Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Home Equity Loan
and any senior lien on the Mortgaged Property, or any reduction in the amount of
principal to be paid in connection with any scheduled payment that constitutes a
permanent forgiveness of principal, which valuation or reduction results from a
proceeding under the Bankruptcy Code that becomes final and non-appealable.
Definitive Notes: The meaning specified in Section 4.06 of the
Indenture.
Deleted Loan: A Home Equity Loan replaced or to be replaced with
an Eligible Substitute Loan.
Delinquent: As used herein, a Home Equity Loan is considered to
be: "30 to 59 days" or "30 or more days" delinquent when a payment due on any
due date remains unpaid as of the close of business on the next following
monthly due date. Since the determination as to whether a Home Equity Loan falls
into these categories is made as of the close of business on the last business
day of each month, a Home Equity Loan with a payment due on September 1 that
remained unpaid as of the close of business on September 30 would still be
considered current as of September 30. If that payment remained unpaid as of the
close of business on October 31, the Home Equity Loan would then be considered
30-59 days delinquent. Delinquency information as of the Cut-off Date is
determined and prepared as of the close of business on the last business day
immediately prior to the Cut-off Date.
Depositor: Residential Funding Mortgage Securities II, Inc., a
Delaware corporation, or its successor in interest.
Depository or Depository Agency: The Depository Trust Company or
a successor appointed by the Indenture Trustee with the approval of the
Depositor. Any successor to the Depository shall be an organization registered
as a "clearing agency" pursuant to Section 17A of the Exchange Act and the
regulations of the Securities and Exchange Commission thereunder.
Depository Participant: A Person for whom, from time to time, the
Depository effects book-entry transfers and pledges of securities deposited with
the Depository.
8
Derivative Contract: Any ISDA Master Agreement, together with the
related Schedule and Confirmation, entered into by the Owner Trustee and a
Derivative Counterparty in accordance with Section 5.07 of the Trust Agreement.
Derivative Counterparty: Any counterparty to a Derivative
Contract as provided in Section 5.07 of the Trust Agreement.
Determination Date: With respect to any Payment Date, the 20th
day of the month in which such Payment Date occurs or if such day is not a
Business Day, the next succeeding Business Day.
Draw: With respect to any Home Equity Loan, a borrowing by the
related Mortgagor under the related Loan Agreement.
Draw Period: With respect to each Home Equity Loan, the period
consisting of either the first five, ten or fifteen years after the date of
origination of such Home Equity Loan, during which the related Mortgagor is
permitted to make Draws.
Due Date: With respect to any Home Equity Loan, the day of the
month the Minimum Monthly Payment or fixed monthly payment is due as set forth
in the related Mortgage Note.
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the short-term debt obligations of
which have been rated by each Rating Agency in its highest rating category
available, or (ii) an account or accounts in a depository institution in which
such accounts are fully insured to the limits established by the FDIC, provided
that any deposits not so insured shall, to the extent acceptable to each Rating
Agency, as evidenced in writing, be maintained such that (as evidenced by an
Opinion of Counsel delivered to the Indenture Trustee and each Rating Agency)
the Indenture Trustee have a claim with respect to the funds in such account or
a perfected first security interest against any collateral (which shall be
limited to Permitted Investments) securing such funds that is superior to claims
of any other depositors or creditors of the depository institution with which
such account is maintained, or (iii) in the case of the Custodial Account,
either (A) a trust account or accounts maintained at the corporate trust
department of the Indenture Trustee or (B) an account or accounts maintained at
the corporate trust department of the Indenture Trustee, as long as its short
term debt obligations are rated P-1 by Xxxxx'x and A-1 by Standard & Poor's (or
the equivalent) or better by each Rating Agency and its long term debt
obligations are rated A by Standard & Poor's (or the equivalent) or better by
each Rating Agency, or (iv) in the case of the Custodial Account and the Payment
Account, a trust account or accounts maintained in the corporate trust division
of the Indenture Trustee, or (v) an account or accounts of a depository
institution acceptable to each Rating Agency (as evidenced in writing by each
Rating Agency that use of any such account as the Custodial Account or the
Payment Account will not reduce the rating assigned to any of the Securities by
such Rating Agency (if determined without regard to the Policy) below the lower
of the then-current rating or the rating assigned to such Securities (if
determined without regard to the Policy) as of the Closing Date by such Rating
Agency).
9
Eligible Substitute Loan: A Home Equity Loan substituted by the
Seller for a Deleted Loan which must, on the date of such substitution, as
confirmed in an Officer's Certificate delivered to the Indenture Trustee, (i)
have an outstanding principal balance, 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 Home Equity Loan for a Deleted Home Equity Loan,
an aggregate outstanding principal balance, after such deduction), not in excess
of the outstanding principal balance of the Deleted Loan (the amount of any
shortfall to be deposited by the Seller in the Custodial Account in the month of
substitution); (ii) comply with each representation and warranty set forth in
Section 3.1(c) (other than clauses (xiii), (xxiv)(B), (xxv)(B), (xxvi), (xxvii),
(xxxiv) and (xxxvi) thereof) as of the date of substitution; (iii) have a Loan
Rate, Net Loan Rate and Gross Margin (if applicable) no lower than and not more
than 1% per annum higher than the Loan Rate, Net Loan Rate and Gross Margin (if
applicable), respectively, of the Deleted Loan as of the date of substitution;
(iv) have a Combined Loan-to-Value Ratio at the time of substitution no higher
than that of the Deleted Loan at the time of substitution; (v) have a remaining
term to stated maturity not greater than (and not more than one year less than)
that of the Deleted Loan and (vi) not be 30 days or more delinquent.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Event of Default: With respect to the Indenture, any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) a default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a
period of five days; or
(ii) a default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable, and such default shall continue for a period of five days; or
(iii) there occurs a default in the observance or performance of
any covenant or agreement of the Issuer made in the Indenture, or any
representation or warranty of the Issuer made in the Indenture or in any
certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of
the time when the same shall have been made which has a material adverse
effect on Securityholders or the Credit Enhancer, and such default shall
continue or not be cured, or the circumstance or condition in respect of
which such representation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days after there shall
have been given, by registered or certified mail, to the Issuer by the
Indenture Trustee or to the Issuer and the Indenture Trustee by the
Holders of at least 25% of the outstanding Security Balance of the Notes
or the Credit Enhancer, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a notice of default hereunder; or
(iv) there occurs the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of the Issuer or
any substantial part of the Trust Estate in an involuntary case under
10
any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(v) there occurs the commencement by the Issuer of a voluntary
case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by the
Issuer to the entry of an order for relief in an involuntary case under
any such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the assets of the Trust Estate, or the making by the Issuer of
any general assignment for the benefit of creditors, or the failure by
the Issuer generally to pay its debts as such debts become due, or the
taking of any action by the Issuer in furtherance of any of the
foregoing.
Event of Liquidation: Following the occurrence of an Event of
Default under the Indenture, the determination by the Indenture Trustee, as
evidenced by a written notice provided to the Owner Trustee, the Depositor and
the Credit Enhancer, that all conditions precedent to the sale or liquidation of
the Trust Estate pursuant to Section 5.04 of the Indenture have been satisfied.
Event of Servicer Termination: With respect to the Servicing
Agreement, a Servicing Default as defined in Section 7.01 of the Servicing
Agreement.
Excess Loss Amount: With respect to any Payment Date, any
Liquidation Loss Amount on the Home Equity Loans for such Payment Date that
together with Liquidation Loss Amounts on the Home Equity Loans from prior
Payment Dates exceeds an amount equal to 12.50% of the Cut-off Date Loan Balance
of the Home Equity Loans.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
Excluded Amount: For any Payment Date on or after the occurrence
of an Amortization Event, the portion of the balance with respect to each Home
Equity Loan attributable to all Draws not transferred to the Trust, and the
portion of the Principal Collections (other than Net Liquidation Proceeds to the
extent that the Excluded Amount of Liquidation Proceeds is not included in Net
Liquidation Proceeds) and Interest Collections thereon for each Collection
Period allocated to such Excluded Amount based on a pro rata allocation between
the related Excluded Amount and the Loan Balance in proportion to the respective
amounts outstanding as of the end of the calendar month preceding such
Collection Period.
Expenses: The meaning specified in Section 7.02 of the Trust
Agreement.
Extraordinary Event: Any of the following conditions with respect
to a Mortgaged Property or, in the case of clause (a), a Home Equity Loan,
causing or resulting in a loss which causes the liquidation of the related Home
Equity Loan:
11
(a) losses that are of a type that would be covered by the
fidelity bond and the errors and omissions insurance policy required to
be maintained pursuant to Section 3.13 of the Servicing Agreement but
are in excess of the coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether such
loss be direct or indirect, proximate or remote or be in whole or in
part caused by, contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war, including
action in hindering, combating or defending against an actual, impending
or expected attack:
1. by any government or sovereign power, de jure or de
facto, or by any authority maintaining or using military, naval
or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(d) any weapon of war employing atomic fission or radioactive
force whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war, usurped power
or action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any
government or public authority; or risks of contraband or illegal
transportation or trade.
Xxxxxx Xxx: Xxxxxx Xxx, formerly the Federal National Mortgage
Association, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
FGIC: Financial Guaranty Insurance Company or any successor
thereto.
Final Scheduled Payment Date: The Payment Date in September 2029.
Foreclosure Profit: With respect to a Liquidated Home Equity
Loan, the amount, if any, by which (i) the aggregate of Liquidation Proceeds net
of Liquidation Expenses exceeds (ii) the related Loan Balance (plus accrued and
unpaid interest thereon at the applicable Loan Rate from the date interest was
last paid through the date of receipt of the final Liquidation Proceeds) of such
Liquidated Home Equity Loan immediately prior to the final recovery of its
Liquidation Proceeds.
Fraud Losses: Any Liquidation Loss Amount on any Home Equity Loan
as to which there was fraud in the origination of such Home Equity Loan.
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Freddie Mac: Freddie Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.
Xxxxx: Pledge, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, create, and xxxxx x xxxx upon and a security interest
in and right of set-off against, deposit, set over and confirm pursuant to the
Indenture. A Grant of the Collateral or of any other agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of such collateral or other agreement or instrument and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the granting party or otherwise, and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.
Gross Margin: With respect to any Home Equity Loan, the
percentage set forth as the "Margin" for such Home Equity Loan on the Home
Equity Loan Schedule.
Guaranteed Payment Amount: The aggregate outstanding Security
Balance of the Notes on the Payment Date in September 2029, after giving effect
to all other distributions of principal on the Notes on such Payment Date.
Holder: Any of the Noteholders or Certificateholders.
Home Equity Loans: The adjustable-rate, home equity revolving
line of credit loans, including Additional Balances, if any, together with the
Related Documents, included in the Trust Estate.
Home Equity Loan Schedule: The initial schedule of Home Equity
Loans as of the Cut-off Date set forth in Exhibit A of the Servicing Agreement,
which schedule sets forth as to each Home Equity Loan (as applicable) (i) the
Cut-off Date Loan Balance ("Principal Bal"), (ii) the Credit Limit, (iii) the
Gross Margin ("Margin"), (iv) the Maximum Rate ("Ceiling"), if any, (v) the lien
position of the related Mortgaged Property, (vi) the Depositor's Home Equity
Loan identifying number, (vii) the Subservicer's Home Equity Loan identifying
number (viii) the city, state and zip code of the Mortgaged Property, (ix) a
code indicating whether the Mortgaged Property is owner-occupied, (x) the type
of residential dwelling constituting the Mortgaged Property, (xi) the original
number of months to maturity, (xii) the remaining number of months to maturity
from the Cut-off Date, (xiii) as to any first lien Home Equity Loan, the
Loan-to-Value Ratio at origination and as to any second lien Home Equity Loan,
the Combined Loan-to-Value Ratio at origination of such second lien Home Equity
Loan, (xiv) the Loan Rate in effect as of the Cut-off Date, (xv) the stated
maturity date, (xvi) the prior encumbrance principal balance (denoted as "Senior
Lien" on the Home Equity Loan Schedule), if any, (xvii) the Credit Score,
(xviii) the Mortgagor's debt-to-income ratio, (xix) a code indicating the
product type, (xx) a code indicating the purpose of the Home Equity Loan, (xxi)
the Mortgage Note date, (xxii) the teaser expiration date, and (xxiii) the
Appraised Value.
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Indemnified Party: The meaning specified in Section 7.02 of the
Trust Agreement.
Indenture: The indenture, dated as of the Closing Date, between
the Issuer, as debtor, and the Indenture Trustee, as indenture trustee.
Indenture Trustee: JPMorgan Chase Bank, and its successors and
assigns or any successor indenture trustee appointed pursuant to the terms of
the Indenture.
Independent: When used with respect to any specified Person, the
Person (i) is in fact independent of the Issuer, any other obligor on the Notes,
the Seller, the Depositor and any Affiliate of any of the foregoing Persons,
(ii) does not have any direct financial interest or any material indirect
financial interest in the Issuer, any such other obligor, the Seller, the
Depositor or any Affiliate of any of the foregoing Persons and (iii) is not
connected with the Issuer, any such other obligor, the Seller, the Depositor or
any Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Independent Certificate: A certificate or opinion to be delivered
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.01 of the Indenture,
made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
Index: With respect to any Home Equity Loan, the prime rate from
time to time for the adjustment of the Loan Rate set forth as such on the
related Loan Agreement.
Initial Certificates: The Home Equity Loan-Backed Certificates,
Series 2004-HS3, issued on the Closing Date, each evidencing undivided
beneficial interests in the Issuer and executed by the Owner Trustee.
Initial Class A Security Balance: $284,000,000.
Initial Security Balance: With respect to the Initial
Certificates, $0.00, the Term Notes, as listed above for each Class and the
Variable Funding Notes, $0.00.
Insolvency Event: With respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
14
consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person in writing (as to which the Indenture Trustee shall have notice)
of its inability to pay its debts generally, or the adoption by the Board of
Directors or managing member of such Person of a resolution which authorizes
action by such Person in furtherance of any of the foregoing.
Insurance Agreement: The Insurance Agreement, dated as of
September 29, 2004, among the Master Servicer, the Seller, the Depositor, the
Issuer, the Indenture Trustee and the Credit Enhancer, including any amendments
and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the
Credit Enhancer) pursuant to any insurance policy covering a Home Equity Loan
which are required to be remitted to the Master Servicer, or amounts required to
be paid by the Master Servicer pursuant to the next to last sentence of Section
3.04(a) of the Servicing Agreement, net of any component thereof (i) covering
any expenses incurred by or on behalf of the Master Servicer in connection with
obtaining such proceeds, (ii) that is applied to the restoration or repair of
the related Mortgaged Property, (iii) released to the Mortgagor in accordance
with the Master Servicer's normal servicing procedures or (iv) required to be
paid to any holder of a mortgage senior to such Home Equity Loan.
Insured Payment: The Insured Payment as defined in the Policy.
Interest Collections: With respect to any Payment Date, the sum
of all payments by or on behalf of Mortgagors and any other amounts constituting
interest (including without limitation such portion of principal prepayments,
Insurance Proceeds, Net Liquidation Proceeds and Repurchase Prices as is
allocable to interest on the applicable Home Equity Loans) as is paid by the
Seller or the Master Servicer or is collected by the Master Servicer under the
Home Equity Loans (exclusive of the pro rata portion thereof attributable to any
Excluded Amounts not conveyed to the Trust following an Amortization Event),
reduced by the Servicing Fees for the related Collection Period and by any fees
(including annual fees) or late charges or similar administrative fees paid by
Mortgagors during the related Collection Period with respect to the Home Equity
Loans. The terms of the related Loan Agreement shall determine the portion of
each payment in respect of such Home Equity Loan that constitutes principal or
interest.
Interest Distribution Amount: With respect to any Payment Date,
an amount equal to interest accrued during the related Interest Period on the
Notes on their respective Security Balance immediately prior to that Payment
Date, at the Note Rate, minus the amount of any Relief Act Shortfalls on Home
Equity Loans during the related Collection Period.
Interest Period: The Interest Period for the Class A Notes and
the Variable Funding Notes shall be, with respect to any Payment Date other than
the first Payment Date, the period beginning on the preceding Payment Date and
ending on the day preceding such Payment Date, and in the case of the first
Payment Date, the period beginning on the Closing Date and ending on the day
preceding the first Payment Date.
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Interest Rate Adjustment Date: With respect to each Home Equity
Loan, the date or dates on which the Loan Rate is adjusted in accordance with
the related Loan Agreement.
Interim Certification: The meaning specified in Section 2.1(c) of
the Purchase Agreement.
Issuer or Trust: The Home Equity Loan Trust 2004-HS3, a Delaware
statutory trust, or its successor in interest.
Issuer Request: A written order or request signed in the name of
the Issuer by any one of its Authorized Officers and delivered to the Indenture
Trustee.
LIBOR: For any Interest Period other than the first Interest
Period, the rate for United States dollar deposits for one month which appears
on the Telerate Screen Page 3750 as of 11:00 A.M., London, England time, on the
second LIBOR Business Day prior to the first day of such Interest Period. With
respect to the first Interest Period, the rate for United States dollar deposits
for one month which appears on the Telerate Screen Page 3750 as of 11:00 A.M.,
London, England time, two LIBOR Business Days prior to the Closing Date. If such
rate does not appear on such page (or such other page as may replace that page
on that service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be reasonably selected by the
Indenture Trustee after consultation with the Master Servicer and the Credit
Enhancer), the rate will be the Reference Bank Rate. If no such quotations can
be obtained and no Reference Bank Rate is available, LIBOR will be LIBOR
applicable to the preceding Payment Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the city of London, England are
required or authorized by law to be closed.
Lien: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing;
provided, however, that any assignment pursuant to Section 6.02 of the Servicing
Agreement shall not be deemed to constitute a Lien.
Limited Repurchase Right Holder: RFC Asset Holdings II, Inc. or
it successor.
Liquidated Home Equity Loan: With respect to any Payment Date,
any Home Equity Loan in respect of which the Master Servicer has determined, in
accordance with the servicing procedures specified in the Servicing Agreement,
as of the end of the related Collection Period that substantially all
Liquidation Proceeds which it reasonably expects to recover, if any, with
respect to the disposition of the related Home Equity Loan have been recovered.
The Master Servicer will treat any Home Equity Loan that is 180 days or more
Delinquent as having been finally liquidated.
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Liquidation Expenses: Out-of-pocket expenses (exclusive of
overhead) which are incurred by or on behalf of the Master Servicer in
connection with the liquidation of any Home Equity Loan and not recovered under
any insurance policy, such expenses including, without limitation, legal fees
and expenses, any unreimbursed amount expended (including, without limitation,
amounts advanced to correct defaults on any mortgage loan which is senior to
such Home Equity Loan and amounts advanced to keep current or pay off a mortgage
loan that is senior to such Home Equity Loan) respecting the related Home Equity
Loan and any related and unreimbursed expenditures for real estate property
taxes or for property restoration, preservation or insurance against casualty
loss or damage.
Liquidation Loss Amounts: With respect to any Payment Date and
any Home Equity Loan that became a Liquidated Home Equity Loan during the
related Collection Period, the unrecovered portion of the related Loan Balance
thereof at the end of such Collection Period, after giving effect to the Net
Liquidation Proceeds applied in reduction of the Loan Balance. If a Bankruptcy
Loss has occurred with respect to any Home Equity Loan, the amount of the
Bankruptcy Loss will be treated as a Liquidation Loss Amount.
Liquidation Loss Distribution Amount: With respect to any Payment
Date, the aggregate of (A) 100% of the Liquidation Loss Amounts incurred with
respect to the Home Equity Loans during the related Collection Period, plus (B)
any such Liquidation Loss Amounts remaining undistributed from any preceding
Payment Date, provided that any Liquidation Loss Amount described in this clause
(B) shall not be distributed to the extent that the Liquidation Loss Amount was
paid on the Class A Notes and the Variable Funding Notes by means of a draw on
the Policy, or was reflected in the reduction of the Overcollateralization
Amount.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but
not including amounts drawn under the Policy) if any received in connection with
the liquidation of any Home Equity Loan or related REO, whether through
trustee's sale, foreclosure sale or otherwise or any Subsequent Recoveries with
respect to a Liquidated Home Equity Loan.
Loan Agreement: With to any Home Equity Loan, the credit line
account agreement, executed by the related Mortgagor and any amendment or
modification thereof.
Loan Balance: With respect to any Home Equity Loan, other than a
Home Equity Loan which has become a Liquidated Home Equity Loan, and as of any
day, the related Cut-off Date Loan Balance, plus (i) any Additional Balances in
respect of such Home Equity Loan conveyed to the Trust, minus (ii) all
collections credited as principal in respect of any such Home Equity Loan in
accordance with the related Loan Agreement (except for any such collections that
are allocable to any Excluded Amount) and applied in reduction of the Loan
Balance thereof. For purposes of this definition, a Liquidated Home Equity Loan
shall be deemed to have a Loan Balance equal to the Loan Balance of the related
Home Equity Loan immediately prior to the final recovery of substantially all
related Liquidation Proceeds and a Loan Balance of zero thereafter.
Loan Rate: With respect to any Home Equity Loan and any day, the
per annum rate of interest applicable under the related Loan Agreement.
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Lost Note Affidavit: With respect to any Home Equity Loan as to
which the original Loan Agreement has been permanently lost or destroyed and has
not been replaced, an affidavit from the Seller or the related Program Seller
certifying that the original Loan Agreement has been lost, misplaced or
destroyed (together with a copy of the related Loan Agreement).
Master Servicer: Residential Funding Corporation, a Delaware
corporation, and its successors and assigns.
Master Servicing Fee: With respect to any Home Equity Loan and
any Collection Period, the product of (i) the Master Servicing Fee Rate divided
by 12 and (ii) the related Loan Balance as of the first day of such Collection
Period.
Master Servicing Fee Rate: With respect to any Home Equity Loan,
0.08% per annum.
Maximum Variable Funding Balance: The maximum Security Balance of
the Variable Funding Notes, which shall be an amount equal to $37,148,634 or
such greater amount as may be permitted pursuant to Section 9.01 of the
Indenture.
Maximum Rate: With respect to each Home Equity Loan with respect
to which the related Loan Agreement provides for a lifetime rate cap, the
maximum Loan Rate permitted over the life of such Home Equity Loan under the
terms of such Loan Agreement, as set forth on the Home Equity Loan Schedule and
initially as set forth on Exhibit A to the Servicing Agreement.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Home Equity Loans
registered with MERS on the MERS(R) System.
Minimum Monthly Payment: With respect to any Home Equity Loan and
any month, the minimum amount required to be paid by the related Mortgagor in
such month.
MOM Loan: With respect to any Home Equity Loan, MERS acting as
the mortgagee of such Home Equity Loan, solely as nominee for the originator of
such Home Equity Loan and its successors and assigns, at the origination
thereof.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument
creating a first or second lien on an estate in fee simple interest in real
property securing a Home Equity Loan.
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Mortgage File: The file containing the Related Documents
pertaining to a particular Home Equity Loan and any additional documents
required to be added to the Mortgage File pursuant to the Purchase Agreement or
the Servicing Agreement.
Mortgage Note: With respect to a Home Equity Loan, the mortgage
note pursuant to which the related Xxxxxxxxx agrees to pay the indebtedness
evidenced thereby and secured by a Mortgage on a related Mortgaged Property, as
modified or amended.
Mortgaged Property: The underlying property, including real
property and improvements thereon, securing a Home Equity Loan.
Mortgagor: The obligor or obligors under a Loan Agreement.
---------
Net Liquidation Proceeds: With respect to any Liquidated Home
Equity Loan, Liquidation Proceeds (excluding any draws under the Policy) net of
Liquidation Expenses (but not including the portion, if any, of such net amount
that exceeds the Loan Balance of the Home Equity Loan at the end of the
Collection Period immediately preceding the Collection Period in which such Home
Equity Loan became a Liquidated Home Equity Loan, plus accrued and unpaid
interest on such Loan Balance from the date last paid to the date of receipt of
final Liquidation Proceeds).
Net Loan Rate: With respect to any Home Equity Loan and any day,
the related Loan Rate less: (1) 0.58% per annum and (2) the Credit Enhancer
Premium Rate, as applicable.
Net Principal Collections: With respect to the Home Equity Loans
and any Payment Date, the excess, if any, of Principal Collections for the
related Collection Period over the amount of Additional Balances created during
the related Collection Period and conveyed to the Trust Estate.
Net WAC Cap Shortfall: With respect to either the Class A Notes
or the Variable Funding Notes, on any Payment Date an amount by which interest
that would have accrued on such Notes at the applicable Note Rate during the
related Interest Period (without application of the Net WAC Rate) exceeds
interest accrued thereon at the Net WAC Rate.
Net WAC Rate: With respect to any Payment Date, a per annum rate
equal to the weighted average of the Net Loan Rates as of the beginning of the
related Collection Period, adjusted by multiplying the Net WAC Rate by a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days in the related Interest Period.
Non-United States Person: Any Person other than a United States
Person.
Note Owner: The Beneficial Owner of a Note.
Note Rate: With respect to the Class A Notes and the Variable
Funding Notes and any Interest Period, the least of (x) a per annum rate equal
to LIBOR plus 0.265%, (y) 17.25% per annum and (z) the Net WAC Rate.
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Note Register: The register maintained by the Note Registrar in
which the Note Registrar shall provide for the registration of Notes and of
transfers and exchanges of Notes.
Note Registrar: The Indenture Trustee, in its capacity as Note
Registrar.
Noteholder: The Person in whose name a Note is registered in the
Note Register, except that, any Note registered in the name of the Depositor,
the Issuer or the Indenture Trustee or any Affiliate of any of them shall be
deemed not to be outstanding and the registered holder will not be considered a
Noteholder or holder for purposes of giving any request, demand, authorization,
direction, notice, consent or waiver under the Indenture or the Trust Agreement
provided that, in determining whether the Indenture Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that the Indenture Trustee or the Owner Trustee
knows to be so owned shall be so disregarded. Owners of Notes that have been
pledged in good faith may be regarded as Holders if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Owner Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes or any Affiliate of any of the
foregoing Persons.
Notes: Collectively, the Term Notes and the Variable Funding
Notes issued and outstanding at any time pursuant to the Indenture.
Officer's Certificate: With respect to the Master Servicer, a
certificate signed by the President, Managing Director, a Director, a Vice
President or an Assistant Vice President, of the Master Servicer and delivered
to the Indenture Trustee. With respect to the Issuer, a certificate signed by
any Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 10.01 of the
Indenture, and delivered to the Indenture Trustee. Unless otherwise specified,
any reference in the Indenture to an Officer's Certificate shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.
Opinion of Counsel: A written opinion of counsel. Any Opinion of
Counsel for the Master Servicer may be provided by in-house counsel for the
Master Servicer if reasonably acceptable to the Indenture Trustee, the Credit
Enhancer and the Rating Agencies or counsel for the Depositor, as the case may
be.
Original Trust Agreement: The Trust Agreement, dated as of
September 20, 2004, between the Owner Trustee and the Depositor.
Outstanding: With respect to the Notes, as of the date of
determination, all Notes theretofore executed, authenticated and delivered under
this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Indenture Trustee for cancellation; and
(ii) Notes in exchange for or in lieu of which other Notes
have been executed, authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Indenture Trustee is
presented that any such Notes are held by a holder in due course;
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provided, however, that for purposes of effectuating the Credit Enhancer's right
of subrogation as set forth in Section 4.12 of the Indenture only, all Notes
that have been paid with funds provided under the Policy shall be deemed to be
Outstanding until the Credit Enhancer has been reimbursed with respect thereto.
Overcollateralization Amount: With respect to any Payment Date,
the amount by which the Loan Balance of the Home Equity Loans after applying
payments received in the related Collection Period exceeds the aggregate
Security Balance of the Notes on such Payment Date (in each case, after
application of Net Principal Collections or Principal Collections, as the case
may be, for such date and acquisition by the Trust of Additional Balances on
such Payment Date and any payments in respect of Liquidation Loss Amounts). On
each Payment Date, the Overcollateralization Amount available to cover
Liquidation Loss Amounts on such Payment Date, if any, shall be deemed to be
reduced by an amount equal to any Liquidation Loss Amounts for such Payment Date
on the Home Equity Loans, except to the extent that such Liquidation Loss
Amounts were covered on such Payment Date by P&I Collections on the Home Equity
Loans pursuant to Section 3.05(a) of the Indenture and except for any Excess
Loss Amounts.
Overcollateralization Floor: An amount equal to 0.50% of the
aggregate Cut-off Date Loan Balances of the Home Equity Loans.
Overcollateralization Increase Amount: With respect to the Notes
and any Payment Date, an amount equal to the lesser of (i) P&I Collections on
the Home Equity Loans remaining after application of clauses (i) through (v) of
Section 3.05(a) of the Indenture and (ii) the excess, if any, of (x) the
Required Overcollateralization Amount for that Payment Date over (y) the
Overcollateralization Amount for that Payment Date.
Ownership Interest: As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Certificateholder thereof and any other interest therein,
whether direct or indirect, legal or beneficial, as owner or as pledgee.
Owner Trust Estate: The corpus of the Issuer created by the Trust
Agreement which consists of the Home Equity Loans.
Owner Trustee: Wilmington Trust Company not in its individual
capacity but solely as Owner Trustee of the Trust, and its successors and
assigns or any successor owner trustee appointed pursuant to the terms of the
Trust Agreement.
Paying Agent: Any paying agent or co-paying agent appointed
pursuant to Section 3.03 of the Indenture, which initially shall be the
Indenture Trustee.
Payment Account: The account established by the Indenture Trustee
pursuant to Section 8.02 of the Indenture and Section 5.01 of the Servicing
Agreement. Amounts deposited in the Payment Account will be distributed by the
Indenture Trustee in accordance with Section 3.05 of the Indenture.
Payment Date: The 25th day of each month, or if such day is not a
Business Day, then the next Business Day.
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Percentage Interest: With respect to any Note and any Payment
Date, the percentage obtained by dividing the Security Balance of such Note by
the aggregate of the Security Balances of all Notes (including the Term Notes
and the Variable Funding Notes) or all Notes of the same Class, as applicable,
prior to such Payment Date. With respect to any Certificate and any Payment
Date, the Percentage Interest stated on the face of such Certificate.
Permitted Investments: One or more of 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 (i)
maturing not more than one month from the date of acquisition thereof,
provided that the unsecured obligations of the party agreeing to
repurchase such obligations are at the time rated by each Rating Agency
in its highest short-term rating category available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days or a remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof or of any domestic branch of a foreign depository institution or
trust company; provided that the debt obligations of such depository
institution or trust company (or, if the only Rating Agency is Standard
& Poor's, in the case of the principal depository institution in a
depository institution holding company, debt obligations of the
depository institution holding company) at the date of acquisition
thereof have been rated by each Rating Agency in its highest short-term
rating category available; and provided further that, if the only Rating
Agency is Standard & Poor's and if the depository or trust company is a
principal subsidiary of a bank holding company and the debt obligations
of such subsidiary are not separately rated, the applicable rating shall
be that of the bank holding company; and, provided further that, if the
original maturity of such short-term obligations of a domestic branch of
a foreign depository institution or trust company shall exceed 30 days,
the short-term rating of such institution shall be A-1+ in the case of
Standard & Poor's if Standard & Poor's is the Rating Agency;
(iv) commercial paper (having original maturities of not more
than 365 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 by each Rating Agency in its highest short-term rating
category available; provided that such commercial paper shall have a
remaining maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated by
each Rating Agency in its highest long-term rating category available;
and
22
(vi) other obligations or securities that are acceptable to each
Rating Agency as an Permitted Investment hereunder and will not reduce
the rating assigned to any Securities by such Rating Agency below the
lower of the then-current rating or the rating assigned to such
Securities as of the Closing Date by such Rating Agency, and which are
acceptable to the Credit Enhancer, as evidenced in writing, provided
that if the Master Servicer or any other Person controlled by the Master
Servicer is the issuer or the obligor of any obligation or security
described in this clause (vi) such obligation or security must have an
interest rate or yield that is fixed or is variable based on an
objective index that is not affected by the rate or amount of losses on
the Home Equity Loans;
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations References herein to the highest rating available on unsecured
long-term debt shall mean AAA in the case of Standard & Poor's and Aaa in the
case of Xxxxx'x, and references herein to the highest rating available on
unsecured commercial paper and short-term debt obligations shall mean A-1 in the
case of Standard & Poor's and P-1 in the case of Xxxxx'x.
Person: Any legal individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Plan: An employee benefit or other plan subject to the prohibited
transaction restrictions or the fiduciary responsibility requirements of ERISA
or Section 4975 of the Code.
Plan Investor: A Plan, any Person acting, directly or indirectly,
on behalf of any such Plan or any Person using the "plan assets," within the
meaning of the Department of Labor regulations at 29 C.F.R. ss.2510.3-101.
Policy: The financial guaranty insurance policy provided by the
Credit Enhancer, dated as of September 29, 2004.
Pool Balance: With respect to any date, the aggregate of the Loan
Balances of all Home Equity Loans as of such date.
Predecessor Note: 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 4.03 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
Principal Balance: The initial Security Balance of the Notes as
reduced on each successive Payment Date by principal distributed in respect
thereof on such Payment Date pursuant to Section 3.05 of the Indenture.
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Principal Collection Distribution Amount: With respect to the
Class A Notes, for any Payment Date, (i) at any time during the Revolving
Period, so long as an Amortization Event has not occurred, the related Net
Principal Collections on the Home Equity Loans and (ii) following an
Amortization Event or at any time after the end of the Revolving Period, the
related Principal Collections on the Home Equity Loans; provided, however, on
any Payment Date with respect to which the Overcollateralization Amount that
would result if determined without application of this proviso exceeds the
Required Overcollateralization Amount, the related Principal Collection
Distribution Amount will be reduced by the amount of such excess until the
Overcollateralization Amount equals the Required Overcollateralization Amount.
Principal Collections: With respect to any Payment Date and any
Home Equity Loan in a Loan Group, the aggregate of the following amounts:
(i) the total amount of payments made by or on behalf of the
Mortgagor, received and applied as payments of principal on the Home
Equity Loan during the related Collection Period, as reported by the
related Subservicer;
(ii) any Net Liquidation Proceeds, allocable as a recovery of
principal, received in connection with the Home Equity Loan during the
related Collection Period;
(iii) if the Home Equity Loan was purchased by the Master
Servicer pursuant to Section 3.15 of the Servicing Agreement or was
repurchased by the Seller pursuant to the Purchase Agreement during the
related Collection Period, 100% of the Loan Balance of the Home Equity
Loan as of the date of such purchase or repurchase and if a Home Equity
Loan was substituted for a Deleted Loan, the amount deposited by the
Seller as a Substitution Adjustment Amount; and
(iv) any other amounts received as payments on or proceeds of the
Home Equity Loan during the Collection Period to the extent applied in
reduction of the principal amount thereof;
provided that Principal Collections shall not include any Foreclosure Profits,
and shall be reduced by any amounts withdrawn from the Custodial Account
pursuant to clauses (c), (d) and (j) of Section 3.03 of the Servicing Agreement,
and provided further that Principal Collections with respect to the Home Equity
Loans shall not include any portion of such amounts that are allocable to any
Excluded Amount.
Principal Prepayment: Any payment of principal by a Mortgagor,
which is received in advance of its scheduled Due Date and is not accompanied by
an amount as to interest representing scheduled interest on such payment due on
any date or dates in any month or months subsequent to the month of prepayment.
Proceeding: Any suit in equity, action at law or other judicial
or administrative proceeding.
Program Guide: Together, the Seller's Seller Guide and Servicing
Guide, as in effect from time to time.
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Program Seller: With respect to any Home Equity Loan, the Person
that sold such Home Equity Loan to the Seller.
Prospectus Supplement: The prospectus supplement dated September
22, 2004, relating to the Term Notes.
Purchase Agreement: The Home Equity Loan Purchase Agreement,
dated as of the Closing Date, between the Seller, as seller, and the Depositor,
as purchaser, with respect to the Home Equity Loans.
Purchase Price: The meaning specified in Section 2.2(a) of the
Purchase Agreement.
Purchaser: Residential Funding Mortgage Securities II, Inc., a
Delaware corporation, and its successors and assigns.
P&I Collections: With respect to any Payment Date, the sum of the
related Interest Collections for that Payment Date and so long as an
Amortization Event has not occurred and if during the Revolving Period, the
related Net Principal Collections for that Payment Date, or if an Amortization
Event has occurred or the Revolving Period has ended, the related Principal
Collections for the applicable Payment Date, in each case with respect to the
Home Equity Loans.
Rating Agency: Any nationally recognized statistical rating
organization, or its successor, that rated the Securities at the request of the
Depositor at the time of the initial issuance of the Securities. Initially,
Xxxxx'x and Standard & Poor's. If such organization or a successor is no longer
in existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, designated by the Depositor,
notice of which designation shall be given to the Indenture Trustee. References
herein to the highest short term unsecured rating category of a Rating Agency
shall mean A-1 or better in the case of Standard & Poor's or P-1 or better in
the case of Xxxxx'x and in the case of any other Rating Agency shall mean such
equivalent ratings. References herein to the highest long-term rating category
of a Rating Agency shall mean "AAA" in the case of Standard & Poor's and "Aaa"
in the case of Xxxxx'x and in the case of any other Rating Agency, such
equivalent rating.
Record Date: With respect to the Certificates and any Payment
Date, the last Business Day of the month preceding the month of such Payment
Date. With respect to the Notes and any Payment Date, the Business Day next
preceding such Payment Date.
Reference Bank Rate: With respect to any Interest Period, as
follows: the arithmetic mean (rounded upwards, if necessary, to the nearest one
sixteenth of a percent) of the offered rates for United States dollar deposits
for one month which are offered by the Reference Banks as of 11:00 A.M., London,
England time, on the second LIBOR Business Day prior to the first day of such
Interest Period to prime banks in the London interbank market for a period of
one month in amounts approximately equal to the the outstanding Security Balance
of the Notes; provided that at least two such Reference Banks provide such rate.
If fewer than two offered rates appear, the Reference Bank Rate will be the
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arithmetic mean of the rates quoted by one or more major banks in New York City,
selected by the Indenture Trustee after consultation with the Master Servicer
and the Credit Enhancer, as of 11:00 a.m., New York time, on such date for loans
in U.S. Dollars to leading European Banks for a period of one month in amounts
approximately equal to the aggregate Security Balance of the Notes. If no such
quotations can be obtained, the Reference Bank Rate shall be the Reference Bank
Rate applicable to the preceding Interest Period.
Reference Banks: Three major banks which are engaged in
transactions in the London interbank markets selected by the Indenture Trustee,
after consultation with the Master Servicer and the Credit Enhancer.
Registered Holder: The Person in whose name a Note is registered
in the Note Register on the applicable Record Date.
Related Documents: With respect to each Home Equity Loan, the
documents specified in Section 2.1(c) of the Purchase Agreement and any
documents required to be added to such documents pursuant to the Purchase
Agreement, the Trust Agreement or the Servicing Agreement.
Relief Act Shortfalls: With respect to any Payment Date, for any
Home Equity Loan as to which there has been a reduction in the amount of
interest collectible thereon for the related Collection Period as a result of
the application of the Servicemembers Civil Relief Act or any other similar
federal or state law, the shortfall, if any, equal to (i) one month's interest
on the Loan Balance of such Home Equity Loan at the applicable Loan Rate,
without application of such Act, over (ii) the interest collectible on such Home
Equity Loan during such Collection Period.
REO: A Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
REO Acquisition: The acquisition by the Master Servicer on behalf
of the Trustee for the benefit of the Noteholders of any REO Property pursuant
to Section 3.07 of the Servicing Agreement.
REO Disposition: As to any REO Property, a determination by the
Master Servicer that it has received substantially all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which the Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
REO Proceeds: Proceeds, net of expenses, received in respect of
any REO Property (including, without limitation, proceeds from the rental of the
related Mortgaged Property) which proceeds are required to be deposited into the
Custodial Account only upon the related REO Disposition, including any amounts
received by the Master Servicer as a recovery subsequent to the deeming of a REO
Disposition as set forth in Section 3.13.
REO Property: A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed in lieu of foreclosure in connection with a
defaulted Home Equity Loan.
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Repurchase Event: With respect to any Home Equity Loan, either
(i) a discovery that, as of the Closing Date, the related Mortgage was not a
valid lien on the related Mortgaged Property subject only to (A) the lien of any
prior mortgage indicated on the Home Equity Loan Schedule, (B) the lien of real
property taxes and assessments not yet due and payable, (C) covenants,
conditions, and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage and such other
permissible title exceptions as are listed in the Program Guide and (D) other
matters to which like properties are commonly subject which do not materially
adversely affect the value, use, enjoyment or marketability of the related
Mortgaged Property or (ii) with respect to any Home Equity Loan as to which the
Seller delivers a Lost Note Affidavit, a subsequent default on such Home Equity
Loan if the enforcement thereof or of the related Mortgage is materially and
adversely affected by the absence of such original Loan Agreement.
Repurchase Price: With respect to any Home Equity Loan required
to be repurchased on any date pursuant to the Purchase Agreement or purchased by
the Master Servicer or the Limited Repurchase Right Holder pursuant to the
Servicing Agreement, an amount equal to the sum of (i) 100% of the Loan Balance
thereof (without reduction for any amounts charged off) (or, in the case of a
purchase by the Limited Repurchase Right Holder pursuant to Section 5.07 of the
Trust Agreement, the fair market value thereof, if greater) and (ii) unpaid
accrued interest at the Loan Rate (or with respect to the last day of the month
in the month of repurchase, the Loan Rate will be the Loan Rate in effect as to
the second to last day in such month) on the outstanding principal balance
thereof from the Due Date to which interest was last paid by the Mortgagor to
the first day of the month following the month of purchase. No portion of any
Repurchase Price shall be included in any Excluded Amount for any Payment Date.
Request for Release: The form attached as Exhibit 4 to the
Custodial Agreement or an electronic request in a form acceptable to the
Custodian.
Required Insurance Policy: With respect to any Home Equity Loan,
any insurance policy which is required to be maintained from time to time under
the Servicing Agreement, the Program Guide or the related Subservicing Agreement
in respect of such Home Equity Loan.
Required Overcollateralization Amount: With respect to any
Payment Date prior to the Stepdown Date, 0.75% of the aggregate Cut-off Date
Loan Balances of the Home Equity Loans. With respect to any Payment Date on or
after the Stepdown Date, the lesser of (a) the initial Required
Overcollateralization Amount and (b) 1.50% of the Loan Balance for the Home
Equity Loans after application of Interest Collections and Principal Collections
received during the related Collection Period but not less than the
Overcollateralization Floor; provided, however, that any scheduled reduction to
the Required Overcollateralization Amount on or after the Stepdown Date as
described above shall not be made on any Payment Date unless: (i) either (a) the
aggregate cumulative Liquidation Loss Amount on the Home Equity Loans from the
Cut-off Date through the end of the Collection Period immediately prior to such
Payment Date is less than (A) 3.0% of the Pool Balance as of the Cut-off Date,
if such Payment Date is the 24th through 36th Payment Dates, or (B) 4.0% of the
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Pool Balance as of the Cut-off Date, if such Payment Date is the 37th Payment
Date (or any Payment Date thereafter) or (b) the average of the aggregate
Liquidation Loss Amount on the Home Equity Loans that became Liquidated Home
Equity Loans during the related Collection Period, as determined for the current
and five previous Payment Dates, is less than 50% of the average of the amount
remaining in the Payment Account on such Payment Date following distributions
pursuant to clauses (i)-(vi) of Section 3.05 of the Indenture (other than
distributions made pursuant to clause (iii) and (iv) thereof), as determined for
the current and five previous Payment Dates and (ii) there has been no draw on
the Policy on such Payment Date that remains unreimbursed.
The Required Overcollateralization Amount may be reduced with the
prior written consent of the Credit Enhancer, but without the consent of the
Holders of the Notes so long as written confirmation is obtained from each
Rating Agency that the reduction will not reduce the rating assigned to any
Class of Notes by that Rating Agency below the lower of the then-current rating
or the rating assigned to those Notes as of the Closing Date by that Rating
Agency without taking into account the Policy.
Responsible Officer: With respect to the Indenture Trustee, any
officer of the Indenture Trustee with direct responsibility for the
administration of the Indenture and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
Revolving Period: The period commencing on the Closing Date and
ending on September 30, 2009.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Security: Any of the Certificates or Notes.
Security Balance: With respect to any Payment Date and each Class
of Term Notes, the Initial Security Balance thereof prior to such Payment Date
reduced by all payments of principal thereon prior to such Payment Date. With
respect to any Payment Date and the Variable Funding Notes, the Initial Security
Balance thereof prior to such Payment Date (i) increased by the Aggregate
Additional Balance Differential immediately prior to such Payment Date and (ii)
reduced by all payments of principal thereon and Liquidation Loss Amounts
allocated thereto prior to such Payment Date. With respect to any Payment Date
and the Certificates, the Certificate Principal Balance thereof.
Securityholder or Holder: Any Noteholder or a Certificateholder.
Seller: Residential Funding Corporation, a Delaware corporation,
and its successors and assigns.
Seller's Agreement: The agreement between the Seller, as
purchaser, and the related Program Seller, as seller.
Servicing Agreement: The Servicing Agreement, dated as of the
Closing Date, between the Indenture Trustee, the Issuer and the Master Servicer,
as master servicer.
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Servicing Certificate: A certificate prepared by a Servicing
Officer on behalf of the Master Servicer in accordance with Section 4.01 of the
Servicing Agreement.
Servicing Default: The meaning specified in Section 7.01 of the
Servicing Agreement.
Servicing Fee: With respect to any Home Equity Loan, the sum of
the related Master Servicing Fee and the related Subservicing Fee.
Servicing Fee Rate: With respect to any Home Equity Loan, the sum
of the related Master Servicing Fee Rate and the related Subservicing Fee Rate.
Servicing Officer: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Home Equity
Loans whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Credit Enhancer) by the
Master Servicer, as such list may be amended from time to time.
Single Certificate: A Certificate in the denomination of a
Certificate Percentage Interest of 10.0000%.
Special Hazard Loss: Any Liquidation Loss Amount not in excess of
the cost of the lesser of repair or replacement of a Mortgaged Property suffered
by such Mortgaged Property on account of direct physical loss, exclusive of (i)
any loss of a type covered by a hazard policy or a flood insurance policy
required to be maintained in respect of such Mortgaged Property pursuant to
Section 3.04 of the Servicing Agreement, except to the extent of the portion of
such loss not covered as a result of any coinsurance provision and (ii) any
losses resulting from an Extraordinary Event.
Standard & Poor's: Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc. or its successor in interest.
Stated Value: With respect to any Home Equity Loan, the value of
the Mortgaged Property as stated by the related Mortgagor in his or her
application.
Statutory Trust Statute: Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss.ss.3801 et seq., as the same may be amended from time to
time.
Stepdown Date: The later of (a) the Payment Date in September
2006 and (b) the Payment Date on which the Loan Balances of the Home Equity
Loans after applying payments received in the related Collection Period is less
than 50% of the aggregate Cut-off Date Loan Balances of the Home Equity Loans.
Subsequent Recoveries: As of any Payment Date, amounts received
by the Master Servicer (net of any related expenses permitted to be reimbursed
pursuant to the Servicing Agreement) specifically related to a Home Equity Loan
that was treated as a Liquidated Home Equity Loan prior to the related
Collection Period, and that resulted in a Liquidated Loss Amount.
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Subservicer: Any Person with whom the Master Servicer has entered
into a Subservicing Agreement as a Subservicer by the Master Servicer.
Subservicing Account: An Eligible Account established or
maintained by a Subservicer as provided for in Section 3.02(c) of the Servicing
Agreement.
Subservicing Agreement: The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of certain
Home Equity Loans as provided in Section 3.01 of the Servicing Agreement.
Subservicing Fee: With respect to any Collection Period, the fee
retained monthly by the Subservicer (or, in the case of a nonsubserviced Home
Equity Loan, by the Master Servicer) equal to the product of (i) the
Subservicing Fee Rate divided by 12 and (ii) the Loan Balance as of the first
day of such Collection Period.
Subservicing Fee Rate: With respect to each Home Equity Loan,
0.50% per annum.
Substitution Adjustment Amounts: With respect to any Eligible
Substitute Loan and any Deleted Loan, the amount, if any, as determined by the
Master Servicer, by which the aggregate principal balance of all such Eligible
Substitute Loans as of the date of substitution is less than the aggregate
principal balance of all such Deleted Loans (after application of the principal
portion of the monthly payments due in the month of substitution that are to be
distributed to the Payment Account in the month of substitution).
Teaser Loan: Any Home Equity Loan which, as of the Cut-off Date,
has a Loan Rate that is less than the sum of the Index at the time of
origination plus the applicable Gross Margin.
Telerate Screen Page 3750: The display designated as page 3750 on
the Moneyline Telerate Capital Markets Reports (or (i) such other page as may
replace page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks) or (ii) if such service is no longer offered, such
other service for displaying LIBOR or comparable rates as may be selected by the
Indenture Trustee after consultation with the Master Servicer and the Credit
Enhancer.
Term Notes: The Class A Notes.
Transfer: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
Transfer Date: As defined in Section 3.15(c) of the Servicing
Agreement.
Transfer Notice Date: As defined in Section 3.15(c) of the
Servicing Agreement.
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
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Transferor: Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
Treasury Regulations: Regulations, including proposed or
temporary Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
Trust: The Home Equity Loan Trust 2004-HS3 to be created pursuant
to the Trust Agreement.
Trust Agreement: The Amended and Restated Trust Agreement, dated
as of the Closing Date, between the Owner Trustee and the Depositor.
Trust Estate: The meaning specified in the Granting Clause of the
Indenture.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939, as
amended from time to time, as in effect on any relevant date.
UCC: The Uniform Commercial Code, as amended from time to time,
as in effect in the States of New York, Delaware or Minnesota, as applicable.
Underwriters: Bear, Xxxxxxx & Co. Inc. and GMAC RFC Securities.
Undercollateralization Amount: Initially equal to approximately
$4,000,000. With respect to any Payment Date, the amount, if any, by which the
aggregate Security Balance of the Notes on such Payment Date exceeds the Pool
Balance of the Home Equity Loans as of the last day of the related Collection
Period (after application of Net Principal Collections or Principal Collections,
as the case may be, for such date).
Uniform Single Attestation Program for Mortgage Bankers: The
Uniform Single Attestation Program for Mortgage Bankers, as published by the
Mortgage Bankers Association of America and effective with respect to fiscal
periods ending on or after December 15, 1995.
Uninsured Cause: Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies.
United States Person: A citizen or resident of the United States,
a corporation, partnership or other entity created or organized in, or under the
laws of, the United States, any state thereof, or the District of Columbia
(except in the case of a partnership, to the extent provided in Treasury
regulations) or any political subdivision thereof, or an estate that is
described in Section 7701(a)(30)(D) of the Code, or a trust that is described in
Section 7701(a)(30)(E) of the Code.
Variable Funding Notes: The Notes designated as the "Class A
Variable Funding Notes" in the Indenture, including any Capped Funding Notes.
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