EXHIBIT 4.2
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HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
Class A Home Equity Loan Asset Backed Notes, Series 1999-1
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INDENTURE
Dated as of May 1, 1999
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FIRST UNION NATIONAL BANK
Indenture Trustee
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions and Incorporation by Reference..............................................................2
SECTION 1.1. Definitions....................................................................................2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act..........................................2
SECTION 1.3. Rules of Construction..........................................................................3
SECTION 1.4. Conflict with TIA..............................................................................3
ARTICLE II The Notes..............................................................................................3
SECTION 2.1. Form...........................................................................................3
SECTION 2.2. Execution, Authentication and Delivery.........................................................4
SECTION 2.3. Registration; Registration of Transfer and Exchange............................................4
SECTION 2.4. Xxxxxxxxx, Xxxxxxxxx, Lost or Stolen Notes.....................................................5
SECTION 2.5. Persons Deemed Owners..........................................................................6
SECTION 2.6. Payment of Principal and Interest..............................................................7
SECTION 2.7. Cancellation...................................................................................7
SECTION 2.8. Release of Collateral..........................................................................7
SECTION 2.9. Book-Entry Notes...............................................................................8
SECTION 2.10. Notices to Depository.........................................................................8
SECTION 2.11. Definitive Notes..............................................................................8
ARTICLE III Covenants.............................................................................................9
SECTION 3.1. Payment of Principal and Interest..............................................................9
SECTION 3.2. Maintenance of Office or Agency................................................................9
SECTION 3.3. Money for Payments to Be Held in Trust.........................................................9
SECTION 3.4. Existence.....................................................................................10
SECTION 3.5. Protection of Trust Property..................................................................11
SECTION 3.6. Opinions as to Trust Property.................................................................11
SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans.......................................12
SECTION 3.8. Negative Covenants............................................................................13
SECTION 3.9. Annual Statement as to Compliance.............................................................13
SECTION 3.10. Issuer May Not Consolidate...................................................................14
SECTION 3.11. No Other Business............................................................................14
SECTION 3.12. No Borrowing; Use of Proceeds................................................................14
SECTION 3.13. Servicer's Obligations.......................................................................14
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities............................................14
SECTION 3.15. Capital Expenditures.........................................................................14
SECTION 3.16. Compliance with Laws.........................................................................14
SECTION 3.17. Restricted Payments..........................................................................14
SECTION 3.18. Notice of Events of Default and Servicer Events of Default...................................15
SECTION 3.19. Further Instruments and Acts.................................................................15
SECTION 3.20. Amendments of Sale and Servicing Agreement and Trust Agreement...............................15
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SECTION 3.21. Income Tax Characterization..................................................................15
SECTION 3.22. [Reserved]...................................................................................15
ARTICLE IV Satisfaction and Discharge............................................................................15
SECTION 4.1. Satisfaction and Discharge of Indenture.......................................................15
SECTION 4.2. Application of Trust Money....................................................................16
SECTION 4.3. Repayment of Monies Held by Note Paying Agent.................................................16
ARTICLE V Remedies...............................................................................................17
SECTION 5.1. Events of Default.............................................................................17
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment............................................17
SECTION 5.3. Remedies......................................................................................18
SECTION 5.4. Indenture Trustee Shall File Proofs of Claim..................................................19
SECTION 5.5. Indenture Trustee May Enforce Claims Without Possession of Notes..............................20
SECTION 5.6. Application of Money Collected................................................................20
SECTION 5.7. Limitation on Rights of Noteholders...........................................................20
SECTION 5.8. Unconditional Rights of Noteholders to Receive Principal and Interest.........................21
SECTION 5.9. Restoration of Rights and Remedies............................................................21
SECTION 5.10. Rights and Remedies Cumulative...............................................................21
SECTION 5.11. Delay or Omission Not a Waiver...............................................................22
SECTION 5.12. Control by Insurer or Noteholders............................................................22
SECTION 5.13. Undertaking for Costs........................................................................22
SECTION 5.14. Waiver of Stay or Extension Laws.............................................................23
SECTION 5.15. Action on Notes..............................................................................23
SECTION 5.16. Performance and Enforcement of Certain Obligations...........................................23
SECTION 5.17. Subrogation..................................................................................23
SECTION 5.18. Preference Claims............................................................................24
SECTION 5.19. Sale of Trust Estate.........................................................................24
SECTION 5.20. Waiver of Past Defaults......................................................................25
ARTICLE VI The Indenture Trustee.................................................................................26
SECTION 6.1. Duties of Indenture Trustee...................................................................26
SECTION 6.2. Rights of Indenture Trustee...................................................................28
SECTION 6.3. Individual Rights of Indenture Trustee........................................................29
SECTION 6.4. Indenture Trustee's Disclaimer................................................................29
SECTION 6.5. Notice of Defaults............................................................................29
SECTION 6.6. Reports by Indenture Trustee to Holders.......................................................29
SECTION 6.7. Compensation and Indemnity....................................................................29
SECTION 6.8. Replacement of Indenture Trustee..............................................................30
SECTION 6.9. Successor Indenture Trustee by Merger.........................................................32
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee............................32
SECTION 6.11. Eligibility..................................................................................33
SECTION 6.12. Preferential Collection of Claims Against Issuer.............................................33
SECTION 6.13. Appointment and Powers.......................................................................33
SECTION 6.14. Performance of Duties........................................................................34
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SECTION 6.15. Limitation on Liability......................................................................34
SECTION 6.16. Reliance Upon Documents......................................................................34
SECTION 6.17. Representations and Warranties of the Indenture Trustee......................................34
SECTION 6.18. Waiver of Setoffs............................................................................35
SECTION 6.19. Suits for Enforcement........................................................................35
SECTION 6.20. Mortgagor Claims.............................................................................36
SECTION 6.21. Certain Available Information................................................................36
ARTICLE VII Noteholders' Lists and Reports.......................................................................37
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and Addresses of Noteholders.....................37
SECTION 7.2. Preservation of Information; Communications to Noteholders....................................37
SECTION 7.3. Reports by Issuer.............................................................................37
SECTION 7.4. Reports by Indenture Trustee..................................................................38
ARTICLE VIII Accounts; Investment of Moneys; Collection and Application of Moneys; Reports.......................38
SECTION 8.1. Collection of Money...........................................................................38
SECTION 8.2. Release of Trust Property.....................................................................38
SECTION 8.3. Payments......................................................................................39
SECTION 8.4. Compliance with Withholding Requirements......................................................43
SECTION 8.5. Statements to Noteholders.....................................................................43
SECTION 8.6. Rights of Noteholders.........................................................................43
SECTION 8.7. Distribution Account..........................................................................44
SECTION 8.8. [Reserved]....................................................................................44
SECTION 8.9. [Reserved]....................................................................................44
SECTION 8.10. Expense Account..............................................................................44
SECTION 8.11. Reserve Account..............................................................................45
SECTION 8.12. Investment of Funds..........................................................................46
ARTICLE IX Supplemental Indentures...............................................................................47
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders........................................47
SECTION 9.2. Supplemental Indentures with Consent of Insurer or Noteholders................................48
SECTION 9.3. Execution of Supplemental Indentures..........................................................49
SECTION 9.4. Effect of Supplemental Indenture..............................................................50
SECTION 9.5. Conformity With Trust Indenture Act...........................................................50
SECTION 9.6. Reference in Notes to Supplemental Indentures.................................................50
ARTICLE X Redemption of Notes....................................................................................50
SECTION 10.1. Redemption...................................................................................50
SECTION 10.2. Notice.......................................................................................51
SECTION 10.3. Presentation and Surrender of Notes and Payment..............................................51
ARTICLE XI Certain Matters Regarding the Insurer.................................................................51
SECTION 11.1. Rights of the Insurer to Exercise Rights of Class A Noteholders..............................51
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SECTION 11.2. Indenture Trustee to Act Solely with Consent of the Insurer..................................51
SECTION 11.3. Trust Property and Accounts Held for Benefit of the Insurer..................................52
SECTION 11.4. Claims Upon the Policy; Policy Payments Account..............................................52
SECTION 11.5. Notices to the Insurer.......................................................................53
SECTION 11.6. Third-Party Beneficiary......................................................................53
SECTION 11.7. Indenture Trustee to Hold the Policy.........................................................53
ARTICLE XII Miscellaneous........................................................................................53
SECTION 12.1. Compliance Certificates and Opinions, etc....................................................53
SECTION 12.2. Form of Documents Delivered to Indenture Trustee.............................................54
SECTION 12.3. Acts of Noteholders..........................................................................55
SECTION 12.4. Notices, etc. to Indenture Trustee, Issuer, Insurer and Rating Agencies......................55
SECTION 12.5. Notices to Noteholders; Waiver...............................................................56
SECTION 12.6. Alternate Payment and Notice Provisions......................................................56
SECTION 12.7. Conflict with Trust Indenture Act............................................................57
SECTION 12.8. Effect of Headings and Table of Contents.....................................................57
SECTION 12.9. Successors and Assigns.......................................................................57
SECTION 12.10. Separability................................................................................57
SECTION 12.11. Benefits of Indenture.......................................................................57
SECTION 12.12. Legal Holidays..............................................................................57
SECTION 12.13. GOVERNING LAW...............................................................................57
SECTION 12.14. Counterparts................................................................................58
SECTION 12.15. Recording of Indenture......................................................................58
SECTION 12.16. Trust Obligation............................................................................58
SECTION 12.17. No Petition.................................................................................58
SECTION 12.18. Inspection..................................................................................58
SECTION 12.19. Limitation of Liability.....................................................................59
EXHIBIT A -- Glossary of Defined Terms
EXHIBIT B -- Form of Class A Note
EXHIBIT C -- Form of Financial Guaranty Insurance Policy
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HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
Reconciliation and Tie between the Indenture
dated as of March 1, 1999 and the
Trust Indenture Act of 1939, as amended
Trust Indenture Act Section Indenture Section
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Section 310 (a) (1) Section 6.11
(a) (2) Section 6.11
(a) (3) Section 6.10
(a) (4) Not Applicable
(b) Section 6.11
(c) Not Applicable
311 (a) Section 6.12
(b) Section 6.12
312 (a) Section 7.1
(b) Section 7.2(b)
(c) Section 7.2(c)
313 (a) Section 7.4
(b) (1) Section 7.4
(b) (2) Section 7.4
(c) Section 7.3, ss. 7.4
(d) Section 7.4
314 (a) Section 3.9, ss. 7.3
(b) Section 3.6
(c) (1) Section 2.8, Section 8.2(c), Section 12.1
(c) (2) Section 12.1
(c) (3) Section 12.1
(d) Section 2.8, Section 8.2(c), Section 12.1
(e) Section 12.1
(f) Not Applicable
315 (a) Section 6.1, Section 6.14, Section 6.16
(b) Section 6.5
(c) Section 6.1
(d) Section 6.1
(e) Section 5.13
316 (a) (last sentence) Section 1.1
(a) (1) (A) Section 5.12
(a) (1) (B) Section 5.20
(a) (2) Not Applicable
317 (a) (1) Section 5.3
(a) (2) Section 5.4, Section 5.5
(b) Section 3.3
318 (a) Section 1.4, Section 12.7
(c) Section 12.7
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INDENTURE dated as of May 1, 1999, between HOMEGOLD HOME
EQUITY LOAN TRUST 1999-1, a Delaware business trust (the "Issuer"), and FIRST
UNION NATIONAL BANK, a national banking association, as trustee (the
"Indenture Trustee").
Each party agrees as follows for the benefit of the other
party, the Insurer and for the equal and ratable benefit of the Holders of the
Issuer's Class A Home Equity Loan Asset Backed Notes, Series 1999-1
(collectively, the "Notes"):
As security for the payment and performance by the Issuer of
its obligations under this Indenture and the Notes, the Issuer has agreed to
assign the Collateral (as defined below) to the Indenture Trustee on behalf of
the Noteholders and the Insurer.
Financial Security Assurance, Inc. (the "Insurer") has
issued and delivered a financial guaranty insurance policy, dated the Closing
Date (the "Policy"), pursuant to which the Insurer guarantees the Scheduled
Payments (as defined below).
As an inducement to the Insurer to issue and deliver the
Policy, the Issuer and the Insurer have executed and delivered the Insurance
and Indemnity Agreement, dated as of May1, 1999 (as amended from time to time,
the "Insurance Agreement"), among the Insurer, the Issuer, HomeGold, Inc.,
HomeGold Financial, Inc., Emergent Mortgage Holdings Corporation, and
Prudential Securities Secured Financing Corporation.
As an additional inducement to the Insurer to issue the
Policy, and as security for the performance by the Issuer of its respective
obligations hereunder and the other Basic Documents to the Insurer and the
Indenture Trustee, the Issuer has agreed to grant and assign the Collateral
(as defined below) to the Indenture Trustee for the benefit of the Issuer
Secured Parties, as their respective interests may appear.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, for the benefit of the Issuer Secured Parties all of the
Issuer's right, title and interest in and to (i) the Mortgage Loans, (ii) any
Qualified Substitute Mortgage Loans acquired by the Issuer subsequent to the
Closing Date pursuant to the Sale and Servicing Agreement, (iii) the Mortgage
Files delivered or to be delivered to the Indenture Trustee pursuant to the
Sale and Servicing Agreement, (iv) all interest and principal received by the
Issuer on or in respect of the Mortgage Loans and the Qualified Substitute
Mortgage Loans pursuant to the Sale and Servicing Agreement due after the
applicable Cut-off Date and all other proceeds received in respect of such
Mortgage Loans, (v) the Depositor's rights under the Unaffiliated Seller's
Agreement, and the Purchase Agreement and Assignment (including any security
interest created thereby) assigned to the Issuer pursuant to the Sale and
Servicing Agreement, (vi) the Sale and Servicing Agreement, (vii) any and all
other property, assets, rights and interests included or to be included in the
Trust Property, (viii) all cash, instruments or other property held or
required to be deposited in the Collection Account, the Distribution Account,
the Reserve Account and the Expense Account, including all investments made
with funds in such accounts (but not including any income on funds deposited
in, or investments made with funds deposited in, such accounts, which income
shall belong to and be for the account of the Servicer), and (ix) all proceeds
of the conversion, voluntary or involuntary, of any of the foregoing into cash
or other liquid assets, including, without limitation, all insurance proceeds
and condemnation awards. Such Grants are made, however, in trust, to secure
the Notes equally and ratably without prejudice, priority or distinction
between any Note and any other Note by reason of difference in time of
issuance or otherwise, and for the benefit of the Insurer to secure (x) the
payment of all amounts due on the Notes in accordance with their terms, (y)
the payment of all other sums payable under this Indenture and (z) compliance
with the provisions of this Indenture, all as provided in this Indenture (the
foregoing "Collateral").
The foregoing Grant is made in trust to the Indenture
Trustee, for the benefit first, of the Holders of the Notes, and second, for
the benefit of the Insurer. The Indenture Trustee hereby acknowledges such
Xxxxx, accepts the trusts under this Indenture in accordance with the
provisions of this Indenture and agrees to perform its duties required in this
Indenture to the best of its ability to the end that the interests of such
parties, recognizing the priorities of their respective interests, may be
adequately and effectively protected.
In connection with the Grant set forth above, the Issuer
does hereby deliver to, and deposit with the Indenture Trustee, the Mortgage
Files.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed thereto in Exhibit A
hereto.
SECTION 1.2. Incorporation by Reference of the Trust
Indenture Act. Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by
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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.
All other TIA terms used in this Indenture that are defined
by the TIA, or defined by Commission rule have the meaning assigned to them by
such definitions.
SECTION 1.3. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in
the plural include the singular.
SECTION 1.4. Conflict with TIA. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA that is required
under the TIA to be part of and govern this Indenture, the latter provision
shall control and all provisions required by the TIA are hereby incorporated
by reference. If any provision of this Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, such provisions of
the TIA shall be deemed to apply to this Indenture as so modified or excluded,
as the case may be.
ARTICLE II
The Notes
SECTION 2.1. Form. The Class A Notes, in each case together
with the Indenture Trustee's certificate of authentication, shall be in
substantially the form set forth in Exhibits B-1 and B-2, 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
3
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.
Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibits B-1 and B-2 are part of the terms of
this Indenture.
SECTION 2.2. 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
original or facsimile.
Notes bearing the original 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 authenticate and deliver Class A
Notes for original issue in an aggregate principal amount of $53,964,000. The
Class A Notes outstanding at any time may not exceed such amount except as
provided in Section 2.4.
Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$1,000 and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears
attached to 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 attached
to any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder. Subject to Section
2.9 and Section 2.11, the Notes shall be Book-Entry Notes.
SECTION 2.3. Registration; Registration of Transfer and
Exchange. The Issuer shall cause to be kept a register (the "Note Register")
in which, subject to such reasonable regulations as it may prescribe, the
Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Indenture Trustee shall be "Note Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided. Upon
any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties
of Note Registrar.
If a Person other than the Indenture Trustee is appointed by
the Issuer as Note Registrar, the Issuer will give the Indenture Trustee
prompt written notice of the appointment of such Note Registrar and of the
location, and any change in the location, of the Note Register, and the
Indenture Trustee shall have the right to inspect the Note Register at all
reasonable times and to obtain copies thereof. The Indenture Trustee shall
have the right to rely upon a certificate executed on behalf of the Note
Registrar by an Authorized Officer thereof as to the names and addresses of
the Holders of the Notes and the principal amounts and number of such Notes.
4
Upon surrender for registration or transfer of any Note at
the office or agency of the Issuer to be maintained as provided in Section
3.2, and if the requirements of Section 8-401(a) of the UCC are met, the
Issuer shall execute and cause the Indenture Trustee to authenticate one or
more new Notes, in any authorized denominations, of the same class and a like
aggregate principal amount. A Noteholder may also obtain from the Indenture
Trustee, in the name of the designated transferee or transferees one or more
new Notes, in any authorized denominations, of the same Class and a like
aggregate principal amount. Such requirements shall not be deemed to create a
duty on the part of the Indenture Trustee to monitor the compliance by the
Issuer with Section 8-401 of the UCC.
At the option of the Holder, Notes may be exchanged for
other Notes in any authorized denominations, of the same Class and a like
aggregate principal amount, upon surrender of the Notes to be exchanged at
such office or agency. Whenever any Notes are so surrendered for exchange, and
if the requirements of Section 8-401(a) of the UCC are met, the Issuer shall
execute and upon its request the Indenture Trustee shall authenticate the
Notes which the Noteholder making the exchange is entitled to receive. Such
requirements shall not be deemed to create a duty on the part the Indenture
Trustee to monitor the compliance by the Issuer with Section 8-401 of the UCC.
All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Notes surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in the form attached to Exhibits B-1 and B-2,
duly executed by, the Holder thereof or such Holder's attorney duly authorized
in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar all in accordance
with the Exchange Act, and (ii) accompanied by such other documents as the
Note Registrar may require.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Note Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.4 not involving
any transfer.
Any Noteholder using the assets of (i) an employee benefit
plan (as defined in Section 3(3) of ERISA that is subject to the provisions of
Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended, or (iii) any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity to purchase
the Notes, or to whom the Notes are transferred, will be deemed to have
represented that the acquisition and continued holding of the Notes will be
covered by a U.S. Department of Labor Class Exemption.
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes.
If (i) any mutilated Note is surrendered to the Note Registrar, or the Note
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the
5
Indenture Trustee and the Insurer such security or indemnity as may be required
by it to hold the Issuer, the Indenture Trustee and the Insurer 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 or protected
purchaser (within the meaning of Section 8-302 of the UCC), 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 (such requirement shall not be deemed to create a duty in the
Indenture Trustee to monitor the compliance by the Issuer with Section 8-405);
provided, however, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become or within seven days shall be due and payable,
or shall have been called for redemption, the Issuer may, instead of issuing a
replacement Note, direct the Indenture Trustee, in writing, to pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a protected purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Issuer, the Indenture Trustee and the Insurer 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
protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer, the Insurer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this
Section, 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 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute
an original additional contractual obligation of the Issuer, whether or not
the mutilated, destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.5. Persons Deemed Owners. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Indenture Trustee
and the Insurer and any agent of the Issuer, the Indenture Trustee and the
Insurer may treat the Person in whose name any Note is registered (as of the
Record Date) 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
Insurer, the Indenture Trustee nor any agent of the Issuer, the Insurer or the
Indenture Trustee shall be affected by notice to the contrary.
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SECTION 2.6. Payment of Principal and Interest. (a) The
unpaid principal of the Notes of each Class shall accrue interest as provided
herein, which (except for Shortfall Interest Deferred Amounts or Accrued
Shortfall Interest Carry Forward Amounts, which shall be due and payable only
to the extent funds are available therefor as provided herein) shall be due
and payable on each Payment Date prior to the Final Payment Date thereof and
(without regard to the availability of funds for the payment of Shortfall
Interest Deferred Amounts or Accrued Shortfall Interest Carry Forward Amounts)
on such Final Payment Date. The unpaid principal of the Notes of each Class
shall be due and payable (to the extent of funds available therefor as
provided herein) on each Payment Date as provided in Section 8.3 and
(regardless of the availability of sufficient funds therefor) on the Final
Payment Date for such Class. Payment of interest and principal on any Note
shall be made as provided in Section 8.3(d).
(b) [Intentionally Omitted.]
(c) [Intentionally Omitted.]
(d) Promptly following the date on which all principal of
and interest on the Notes has been paid in full and the Notes have been
surrendered to the Indenture Trustee, the Indenture Trustee shall, upon
written notice from the Servicer of the amounts, if any, that the Insurer has
paid in respect of the Notes under the Policy or otherwise which has not been
reimbursed to it, deliver such surrendered Notes to the Insurer to the extent
not previously cancelled or destroyed.
SECTION 2.7. Cancellation. Subject to Section 2.6(d), all
Notes surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any Person other than the Indenture
Trustee, be delivered to the Indenture Trustee and shall be promptly canceled
by the Indenture Trustee. Subject to Section 2.6(d), the Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in
any manner whatsoever, and all Notes so delivered shall be promptly canceled
by the Indenture Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as
expressly permitted by this Indenture. Subject to Section 2.6(d), all canceled
Notes may be held or disposed of by the Indenture Trustee in accordance with
its standard retention or disposal policy as in effect at the time unless the
Issuer shall direct by an Issuer Order that they be destroyed or returned to
it; provided that such Issuer Order is timely and the Notes have not been
previously disposed of by the Indenture Trustee.
SECTION 2.8. Release of Collateral. The Indenture Trustee
shall (i) release any portion of the Trust Property relating to a Class from
the lien created by this Indenture in accordance with the provisions of
Section 10.02(b) of the Sale and Servicing Agreement and (ii) on or after the
Termination Date with respect to such Class, release any remaining portion of
the Trust Property relating to such Class from the lien created by this
Indenture, in each case upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1)
meeting the applicable requirements of Section 10.02.
7
SECTION 2.9. Book-Entry Notes. The Notes, upon original
issuance, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to the Depository or its nominee by, or on
behalf of, the Issuer. Such Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the Depository, and no Note
Owner will receive a Definitive Note representing such Note Owner's interest
in such Note, except as provided in Section 2.11. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to Note
Owners pursuant to Section 2.11:
(i) the provisions of this Section shall be in full
force and effect;
(ii) the Note Registrar and the Indenture Trustee shall
be entitled to deal with the Depository for all purposes of
this Indenture (including the payment of principal of and
interest on the Notes and the giving of instructions or
directions hereunder) as the sole Holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the
provisions of this Section shall control;
(iv) the rights of Note Owners shall be exercised only
through the Depository and shall be limited to those
established by law and agreements between such Note Owners and
the Depository and/or the Depository Participants. Unless and
until Definitive Notes are issued pursuant to Section 2.11, 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;
(v) whenever this Indenture requires or permits actions
to be taken based upon instructions or directions of Holders of
Notes evidencing a specified percentage of the Outstanding
Amount of the Notes, the Depository shall be deemed to
represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or
Depository Participants owning or representing, respectively,
such required percentage of the beneficial interest in the
Notes and has delivered such instructions to the Indenture
Trustee; and
(vi) Note Owners may receive copies of any reports sent
to Noteholders pursuant to this Indenture, upon written
request, together with a certification that they are Note
Owners and payment of reproduction and postage expenses
associated with the distribution of such reports, from the
Indenture Trustee at the Corporate Trust Office.
SECTION 2.10. Notices to Depository. Whenever a notice or
other communication to the Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued to Note Owners
pursuant to Section 2.11, the Indenture Trustee shall give all such notices
and communications specified herein to be given to Holders of the Notes to the
Depository, and shall have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Depositor or the
Depository advises the Indenture Trustee in writing that the Depository is no
longer willing or able to properly discharge its responsibilities with respect
to the Notes, and the Servicer is unable to locate a qualified successor, (ii)
the Depositor at its option advises the Indenture Trustee in writing that it
8
elects to terminate the book-entry system through the Depository or (iii)
after the occurrence of a Servicer Event of Default or Event of Default,
Holders of Notes evidencing not less than 51% of the Outstanding Amount of the
Notes advise the Indenture Trustee through the Depository in writing that the
continuation of a book entry system through the Depository is no longer in the
best interests of the Note Owners, then the Indenture Trustee shall notify all
Depository Participants and Note Owners of the occurrence of any such event
and of the availability of Definitive Notes to Note Owners requesting the
same. Upon surrender to the Indenture Trustee of the typewritten Note or Notes
representing the Book-Entry Notes by the Depository, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate Definitive Notes in accordance with the instructions of the
Depository. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize
the Holders of the Definitive Notes as Noteholders.
ARTICLE III
Covenants
SECTION 3.1. Payment of Principal and Interest. The Issuer
will duly and punctually pay the principal of and interest on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting
the foregoing, the Issuer will cause to be delivered to the Indenture Trustee
all amounts on deposit in the Collection Account when and as required by the
Sale and Servicing Agreement. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer
will maintain in Charlotte, North Carolina, an office or agency where Notes
may be surrendered for registration, transfer or exchange of the Notes, and
where notices and demands to or upon the Issuer in respect of the Notes and
this Indenture may be served. The Issuer hereby initially appoints the
Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer
will give prompt written notice to the Indenture Trustee of the location, and
of any change in the location, of any such office or agency. If at any time
the Issuer shall fail to maintain any such office or agency or shall fail to
furnish the Indenture Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and
the Issuer hereby appoints the Indenture Trustee as its agent to receive all
such surrenders, notices and demands.
SECTION 3.3. Money for Payments to Be Held in Trust. The
Issuer will cause each Note Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee and the Insurer an instrument in
which such Note Paying Agent shall agree with the Indenture Trustee (and if
the Indenture Trustee acts as Note Paying Agent, it hereby so agrees), subject
to the provisions of this Section, that such Note 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
9
to such Persons or otherwise disposed of as herein provided and pay such sums to
such Persons as herein provided;
(ii) give the Indenture Trustee and the Insurer written
notice of any default by the Issuer (or any other obligor upon the Notes) of
which it has actual knowledge in the making of any payment required to be made
with respect to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note 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 Note Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Note Paying Agent to pay to the Indenture Trustee all
sums held in trust by such Note 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 Note Paying Agent; and upon such a payment by any Note Paying Agent to
the Indenture Trustee, such Note Paying Agent shall be released from all
further liability with respect to such money.
Subject to applicable laws with respect to the escheat of
funds, any money held by the Indenture Trustee or any Note Paying Agent in
trust for the payment of any amount due with respect to any Note and remaining
unclaimed for two years 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 Note Paying Agent with respect to such trust money shall thereupon cease.
SECTION 3.4. Existence. The Issuer will keep in full effect
its existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States
of America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Trust Property, the Notes, and each
other instrument or agreement included in the Trust Property.
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SECTION 3.5. Protection of Trust Property. The Issuer
intends the security interest granted pursuant to this Indenture in favor of
the Issuer Secured Parties to be prior to all other liens in respect of the
Trust Property, and the Issuer shall take all actions necessary to discharge
and release the Warehouse Liens upon the acquisition by the Trust of the
related Mortgage Loans and thereafter to obtain and maintain, in favor of the
Indenture Trustee, for the benefit of the Issuer Secured Parties, a first lien
on and a first priority, perfected security interest in the Trust Property.
The Issuer will from time to time prepare (or shall cause to be prepared),
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) Grant more effectively all or any portion of the
Trust Property;
(ii) maintain or preserve the lien and security interest
(and the priority thereof) in favor of the Indenture Trustee for the benefit
of the Issuer Secured Parties created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Property and
the rights of the Indenture Trustee in such Trust Property against the claims
of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon
the Trust Property when due.
The Issuer hereby designates the Indenture Trustee its agent
and attorney-in-fact to execute any financing statement, continuation
statement or other instrument required by the Indenture Trustee pursuant to
this Section; provided that, such designation shall not be deemed to create a
duty in the Indenture Trustee or the Indenture Trustee to monitor the
compliance of the Issuer with respect to its duties under this Section 3.5 or
the adequacy of any financing statement, continuation statement or other
instrument prepared by the Issuer.
SECTION 3.6. Opinions as to Trust Property. (a) On the
Closing Date, the Issuer shall furnish to the Indenture Trustee and the
Insurer an Opinion of Counsel stating that, in the opinion of such counsel,
such actions have been taken with respect to the recording and filing of this
Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the first priority lien and security interest in favor of the
Indenture Trustee, for the benefit of the Issuer Secured Parties, created by
this Indenture.
(b) Within 90 days after the beginning of each calendar
year, beginning with the first calendar year beginning more than six months
after the Closing Date, the Issuer shall furnish to the Indenture Trustee and
the Insurer, an Opinion of Counsel either stating that, in the opinion of such
counsel, such actions have been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite
11
documents and with respect to the execution and filing of any financing
statements and continuation statements as are necessary to maintain the lien and
security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel, no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the lien and security interest of this Indenture.
SECTION 3.7. Performance of Obligations; Servicing of
Mortgage Loans. (a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Property or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as ordered by any bankruptcy or other court or as expressly provided or
permitted in this Indenture, the Basic Documents or such other instrument or
agreement.
(b) The Issuer may contract with other Persons acceptable to
the Insurer to assist it in performing its duties under this Indenture, and
any performance of such duties by a Person identified to the Indenture Trustee
and the Insurer in an Officer's Certificate of the Issuer shall be deemed to
be action taken by the Issuer. Initially, the Issuer has contracted with the
Servicer to assist the Issuer in performing its duties under this Indenture.
(c) 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
Property, including, but not limited, to preparing (or causing to be prepared)
and filing (or causing to be filed) all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture
and the Sale and Servicing Agreement in accordance with and within the time
periods provided for herein and therein. Except as otherwise expressly
provided therein, the Issuer shall not waive, amend, modify, supplement or
terminate any Basic Document or any provision thereof without the consent of
the Indenture Trustee and the Insurer (or, if an Insurer Default has occurred
and is continuing, and such waiver, amendment, modification, supplement or
termination would adversely affect the interests of the Noteholders, then of
the Holders of a majority of the Outstanding Amount of the Notes). The
Indenture Trustee may determine whether or not any Notes would be adversely
affected by any such waiver, amendment, modification, supplement or
termination upon receipt of written confirmation from the Rating Agencies that
such action would not adversely affect the then current ratings on the Notes.
(d) If a Responsible Officer of the Owner Trustee shall
have actual knowledge of the occurrence of a Servicer Event of Default under
the Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee, the Insurer and the Rating Agencies thereof in accordance
with Section 12.4, and shall specify in such notice the action, if any, being
taken or to be taken by the Issuer or other Persons.
12
(e) The Issuer agrees that it will not waive timely
performance or observance by the Servicer or the Unaffiliated Seller of their
respective duties under the Basic Documents (x) without the prior consent of
the Insurer or (y) if the effect thereof would adversely affect the Holders of
the Notes.
SECTION 3.8. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as permitted by this Indenture or the Basic
Documents, sell, transfer, exchange or otherwise dispose of any of
the properties or assets of the Issuer, including those included in
the Trust Property, without the consent of the Insurer;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or
assert any claim against any present or former Noteholder by reason
of the payment of the taxes levied or assessed upon any part of the
Trust Property; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the
Indenture Trustee created by this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance (other than the
lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Trust Property or any part thereof or any
interest therein or the proceeds thereof (other than (i) tax liens,
mechanics' liens and other liens that arise by operation of law, in
each case on a Mortgaged Property and arising solely as a result of
an action or omission of the related Mortgagor and (ii) the
Warehouse Liens provided that such Warehouse Liens are discharged
and released as provided in Section 3.12), (C) permit the lien of
this Indenture not to constitute a valid first priority (other than
with respect to any such tax, mechanics' or other lien or such
Warehouse Liens) security interest in the Trust Property or (D)
amend, modify or fail to comply with the provisions of the Basic
Documents without the prior written consent of the Insurer.
SECTION 3.9. Annual Statement as to Compliance. The Issuer
will deliver to the Indenture Trustee and the Insurer, within 90 days after
the end of each fiscal year of the Issuer (commencing with the fiscal year
ended December 31, 1999), and otherwise in compliance with the requirements of
TIA Section 314(a)(4) an Officer's Certificate stating, as to the Authorized
Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during
such year and of performance under this Indenture has been made
under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions
and covenants under this Indenture throughout
13
such year, or, if there has been a default in the compliance of any
such condition or covenant, specifying each such default known to such
Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Not Consolidate. The Issuer may not
consolidate or merge with or into any other Person.
SECTION 3.11. No Other Business. The Issuer shall not engage
in any business other than as contemplated by this Indenture and the Basic
Documents and activities incidental thereto.
SECTION 3.12. No Borrowing; Use of Proceeds. The Issuer
shall not issue, incur, assume, guarantee or otherwise become liable, directly
or indirectly, for any Indebtedness except for (i) the Notes, (ii) obligations
owing from time to time to the Insurer under the Insurance Agreement and (iii)
any other Indebtedness permitted by or arising under the Basic Documents. The
proceeds of the Notes shall be used exclusively to repay the Warehouse Loans
and obtain the release and discharge of the Warehouse Liens, to make any other
payments required by the terms of any of the Basic Documents and to pay the
Issuer's organizational, transactional and start-up expenses.
SECTION 3.13. Servicer's Obligations. The Issuer shall cause
the Servicer to comply with its obligations under the Sale and Servicing
Agreement.
SECTION 3.14. Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Sale and Servicing Agreement, this
Indenture or the Basic Documents, the Issuer shall not make any loan or
advance or credit to, or guarantee (directly or indirectly or by an instrument
having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise
become continently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire
(or agree continently 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 3.15. Capital Expenditures. Except as and to the
extent authorized by the Basic Documents, the Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personally).
SECTION 3.16. Compliance with Laws. The Issuer shall comply
with the requirements of all applicable laws, the noncompliance with which
would, individually or in the aggregate, materially and adversely affect the
ability of the Issuer to perform its obligations under the Notes, this
Indenture or any Basic Document.
SECTION 3.17. Restricted Payments. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial
interest in the Issuer or otherwise with respect to any ownership or equity
interest or security in or of the Issuer or to the Servicer, (ii) redeem,
purchase, retire or otherwise acquire for value any such ownership or equity
interest or security or (iii) set aside or otherwise segregate any amounts for
any such purpose; provided, however, that the Issuer may make, or
14
cause to be made, distributions to the Servicer, the Owner Trustee, the
Indenture Trustee, the Insurer and the Noteholders as permitted or contemplated
by, and to the extent funds are available for such purpose under, the Sale and
Servicing Agreement, this Indenture or the Trust Agreement.
SECTION 3.18. Notice of Events of Default and Servicer
Events of Default. Upon a Responsible Officer of the Owner Trustee having
actual knowledge thereof, the Issuer agrees to give the Indenture Trustee, the
Insurer and the Rating Agencies prompt written notice of each Event of Default
hereunder or Servicer Event of Default under the Sale and Servicing Agreement.
SECTION 3.19. Further Instruments and Acts. Upon request of
the Indenture Trustee or the Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
SECTION 3.20. Amendments of Sale and Servicing Agreement and
Trust Agreement. The Issuer shall not agree to any amendment to Section 12.01
of the Sale and Servicing Agreement or Section 16.1 of the Trust Agreement to
eliminate the requirements thereunder that the Indenture Trustee, the Insurer
or the Holders of the Notes, as the case may be, consent to amendments thereto
as provided therein.
SECTION 3.21. Income Tax Characterization. For purposes of
federal income, state and local income and franchise and any other income
taxes, the Issuer will treat the Notes as indebtedness of the Issuer and
hereby instructs the Indenture Trustee to treat the Notes as indebtedness of
the Issuer for federal and state tax reporting purposes.
SECTION 3.22. [Reserved].
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture. Upon
payment in full of the Notes and all amounts due to the Insurer under the
Insurance Agreement, this Indenture shall cease to be of further effect with
respect to the Notes except as to (i) the rights, obligations and immunities
of the Indenture Trustee hereunder (including the rights of the Indenture
Trustee under Section 6.7 and the obligations of the Indenture Trustee under
Section 4.2) and (ii) 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
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.4 and (ii)
Notes for which money in payment of which has theretofore been
15
deposited in trust or segregated and held in trust and thereafter
repaid to the Issuer or discharged from such trust, as provided in
Section 3.3) have been delivered to the Indenture Trustee for
cancellation and the Policy has terminated and been returned to the
Insurer for cancellation and all amounts owing to the Insurer have
been paid in full; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at the Final Maturity
Date within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Indenture
Trustee for the giving of notice of redemption by
the Indenture Trustee in the name, and at the
expense, of the Issuer,
and in the case of (i), (ii) or (iii) above
(B) the Issuer, has irrevocably deposited or caused to be
irrevocably deposited with the Indenture Trustee cash or direct obligations of
or obligations guaranteed by the United States of America (which will mature
prior to the date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such Notes
not theretofore delivered to the Indenture Trustee for cancellation when due
on the Final Maturity Date or the Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.1), as the case may be;
(C) the Issuer has paid or caused to be paid all Insurer
Issuer Secured Obligations and all Indenture Trustee Issuer Secured
Obligations; and
(D) the Issuer has delivered to the Indenture Trustee and the
Insurer an Officer's Certificate, an Opinion of Counsel and if required by the
TIA, the Indenture Trustee or the Insurer an Independent Certificate from a
firm of certified public accountants, each meeting the applicable requirements
of Section 12.1 and each stating that all conditions precedent herein provided
relating to the satisfaction and discharge of this Indenture have been
complied with.
SECTION 4.2. Application of Trust Money. All monies
deposited with the Indenture Trustee pursuant to Section 4.1 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 Note
Paying Agent, as the Indenture Trustee may determine, to the Holders of the
particular Notes for the payment or redemption of which such monies have been
deposited with the Indenture Trustee, of all sums due and to become due
thereon for principal and interest.
SECTION 4.3. Repayment of Monies Held by Note Paying Agent.
In connection with the satisfaction and discharge of this Indenture with
respect to the Notes, all monies then held by any Note Paying Agent other than
the Indenture Trustee under the provisions of this Indenture with respect to
such Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee
to be held and applied according to Section 3.3 and thereupon such Note Paying
Agent shall be released from all further liability with respect to such
monies.
16
ARTICLE V
Remedies
SECTION 5.1. Events of Default. "Event of Default" with
respect to each Class of Notes issued hereunder, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be affected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) (i) default in the payment of any interest on or in
respect of any Note of such Class when due and payable (as provided in Section
2.6(a)), which default shall continue for a period of five days, or (ii) the
failure to apply funds which are available for payment in accordance with the
priority of distribution set forth in Article VIII hereof, which failure shall
continue for a period of five days, or (iii) default in the payment of
principal due on any such Class of Notes, on the Final Distribution Date
thereof; or
(b) with respect to the related Class of Notes the occurrence
and continuance of an Insurer Default; or
(c) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Issuer in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or (ii) a decree or order
adjudging the Issuer a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment, or composition of or
in respect of the Issuer under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator,
or other similar official of the Issuer or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or
(d) the commencement by the Issuer of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Issuer in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or to the commencement of any bankruptcy
or insolvency case or proceeding against it, or the filing by it of a petition
or answer or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by it to the filing of such petition or
to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator, or similar official of the Issuer
or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the Issuer's failure to pay its
debts generally as they become due, or the taking of corporate action by the
Issuer in furtherance of any such action.
SECTION 5.2. Acceleration of Maturity; Rescission and
Annulment. (a) If an Event of Default occurs and is continuing, then and in
every such case, the Insurer may (or, if an
17
Insurer Default has occurred and is continuing, the Indenture Trustee may, and
if so directed by the Holders of Notes evidencing to at least 66-2/3% of the
Outstanding Amount of the related Class of Notes shall) declare the unpaid
principal amount of all such Notes to be due and payable immediately, by a
notice in writing to the Issuer, the Servicer and the Insurer, and upon any such
declaration such principal amount shall become immediately due and payable
together with all accrued and unpaid interest thereon, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Issuer.
(b) At any time after such a declaration of acceleration of
the related Class of Notes has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article provided, the Insurer may (or, if an Insurer
Default has occurred and is continuing, the Indenture Trustee may, and, if so
directed by the Holders of Notes evidencing at least 66-2/3% of the
Outstanding Amount of the related Class of Notes, shall), by written notice to
the Issuer, Servicer, Insurer and the Indenture Trustee, rescind and annul
such declaration and its consequences, if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all overdue amounts payable on or in respect of
the related Notes (other than amounts due solely as a result of the
acceleration),
(B) to the extent that payment of interest on such
amount is lawful, interest on such overdue amounts at the applicable
Note Interest Rate;
(C) all unpaid amounts referred to in Section 6.7 and
clauses (iii) and (v) of Section 8.3(a);
(D) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements,
and advances of the Indenture Trustee, its agents and counsel;
and
(ii) all Events of Default, other than the nonpayment of
amounts payable on or in respect of the related Notes which have
become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 5.20.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 5.3. Remedies. (a) If an Event of Default occurs
and is continuing of which a Responsible Officer has actual knowledge, the
Indenture Trustee shall give notice to each Noteholder of the related Class of
Notes as set forth in Section 6.5.
(b) Following any acceleration of the related Class of Notes,
the Indenture Trustee shall, subject to Section 5.3(d), have all of the
rights, powers and remedies with respect to the Trust Property as are
available to secured parties under the Uniform Commercial Code or
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other applicable law. Such rights, powers and remedies may be exercised by the
Indenture Trustee in its own name as trustee of an express trust.
(c) If an Event of Default specified in Section 5.1(a) occurs
and is continuing, the Indenture Trustee is authorized to recover judgment in
its own name and as trustee of an express trust against the Issuer for the
whole amount of principal and interest remaining of the related Class Notes of
not paid when due and payable.
(d) In exercising its rights and obligations under this
Section 5.3, the Indenture Trustee may sell the Trust Property subject to the
provisions of Section 5.19. Neither the Indenture Trustee nor any Noteholder
of the related Class of Notes shall have any rights against the Issuer other
than to enforce the Grant hereunder and to sell the Trust Property.
SECTION 5.4. Indenture Trustee Shall File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition, or other
judicial proceeding relative to the Issuer, the Servicer, the Unaffiliated
Seller, the Insurer or any other obligor upon or in respect of the Notes or
the other obligations secured hereby or relating to the property of the
Issuer, the Servicer, the Unaffiliated Seller, the Insurer or of such other
obligor or their creditors, the Indenture Trustee (irrespective of whether the
principal of the such Class of Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Issuer, the Servicer, the
Unaffiliated Seller, or the Insurer for the payment of overdue principal or
interest or any such other obligation) shall by intervention in such
proceeding or otherwise:
(i) file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of such Notes and
any other obligation secured hereby 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 the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel) and of the Noteholders of
the Related Class allowed in such judicial proceeding; and
(ii) collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder of the related Class to make such payments to the Indenture
Trustee and, in the event that the Indenture Trustee shall consent to the
making of such payments directly to the Noteholders of the related Class to
pay to the Indenture Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee,
its agents and counsel, and any other amounts due the Indenture Trustee under
Section 6.7.
(b) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of
any Noteholder of the related Class any plan of reorganization, arrangement,
adjustment or composition affecting such Notes or the
19
rights of any holder thereof or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder of the related Class in any such
proceeding.
SECTION 5.5. Indenture Trustee May Enforce Claims Without
Possession of Notes. All rights of action and claims under this Indenture or
any of the Notes may be prosecuted and enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel, be for the ratable benefit of the
Holders of the related Class of Notes in respect of which such judgment has
been recovered.
SECTION 5.6. Application of Money Collected. Any money
collected by the Indenture Trustee pursuant to this Article (including all
collections from, and proceeds of the sale or liquidation of, the Trust
Property), and any moneys that may then be held or thereafter received by the
Indenture Trustee shall be applied in the following order, at the date or
dates fixed by the Indenture Trustee and, in case of the distribution of the
entire amount due on account of principal or interest, upon presentation of
the related Class of Notes and surrender thereof:
first, to the payment of all costs and expenses of
collection incurred by the Indenture Trustee and the Noteholders of
the related Class (including the reasonable fees and expenses of any
counsel to the Indenture Trustee and the Noteholders of the related
Class) and all amounts due and unpaid to the Indenture Trustee
pursuant to Section 6.7; and
second, in the same order as specified in Section 8.3.
SECTION 5.7. Limitation on Rights of Noteholders. (a) No
Holder of any Note shall have any right to institute any Proceeding with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless:
(i) such Holder has previously given written
notice to the Indenture Trustee of a continuing Event of Default;
(ii) the Holders of Notes evidencing not less than 25%
of the Outstanding Amount of the related Class of 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 indemnity reasonably satisfactory to it 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;
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(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 Outstanding Amount of the related
Class of Notes; and
(vi) an Insurer Default shall have occurred and be
continuing;
it being understood and intended that no Holders of a Class of Notes shall
have any right in any manner whatsoever 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 a
Class of Notes, each representing less than a majority of the Outstanding
Amount of the related Class of Notes, the Indenture Trustee in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provisions of this Indenture.
(b) The death or incapacity of any Noteholder shall not
operate to terminate this Indenture, nor entitle such Noteholder's legal
representatives or heirs to claim an accounting or to take any action or
Proceeding in any court for a partition or winding up of the Issuer, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Noteholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the
operation and management of the Issuer, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of any
of the Notes, be construed so as to constitute the Noteholders from time to
time as partners or members of an association; nor shall any Noteholder be
under any liability to any third person by reason of any action taken by the
parties to this Indenture pursuant to any provision hereof.
SECTION 5.8. 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 on such
Note on or after the respective due dates thereof expressed in such Note or in
this Indenture (or, in the case of redemption, on or after the Redemption
Date) 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 5.9. Restoration of Rights and Remedies. If 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, 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 5.10. Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Noteholders is intended to be
exclusive of any other right or
21
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 5.11. Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee, any Holder of any Note or the Insurer to
exercise any right or remedy accruing upon any Default or Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Default or Event of Default or an acquiescence therein. Every right and remedy
given by this Article V or by law to the Indenture Trustee, to the Noteholders
or the Insurer may be exercised from time to time, and as often as may be
deemed expedient, by the Indenture Trustee , the Noteholders or the Insurer,
as the case may be.
SECTION 5.12. Control by Insurer or Noteholders. The Insurer
(or, if an Insurer Default has occurred and is continuing, the Holders of
Notes evidencing a majority of the Outstanding Amount of a Class of Notes)
shall have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to
such 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) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not inconsistent with
such direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need
not take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to
such action.
SECTION 5.13. 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 shall not apply to (a) any
suit instituted by the Indenture Trustee or the Insurer, (b) any suit
instituted by any Noteholder, or group of Noteholders, in each case holding in
the aggregate more than 10% of the Outstanding Amount of the related Class of
Notes or (c) any suit instituted by any Noteholder of such Class for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates thereof expressed in such Note and in this Indenture
(or, in the case of redemption, on or after the Redemption Date).
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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 force, that may affect the covenants or the performance
of this Indenture; and the Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 5.15. Action on Notes. The Indenture Trustee's right
to seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee 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 Property or upon any of the assets of the Issuer.
SECTION 5.16. Performance and Enforcement of Certain
Obligations. (a) Promptly following a request from the Indenture Trustee or
the Insurer to do so, and at the Servicer's expense, the Issuer agrees to take
all such lawful action as the Indenture Trustee or the Insurer may request to
compel or secure the performance and observance by the Unaffiliated Seller and
the Servicer, as applicable, of each of their obligations to the Issuer under
or in connection with the Sale and Servicing Agreement in accordance with the
terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Sale and Servicing Agreement to the extent and in the manner directed by the
Indenture Trustee or the Insurer, including the transmission of notices of
default on the part of the Unaffiliated Seller or the Servicer thereunder and
the institution of legal or administrative actions or proceedings to compel or
secure performance by the Unaffiliated Seller or the Servicer of each of their
obligations under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing,
the Indenture Trustee may, and, at the written direction of the Insurer (or,
if an Insurer Default has occurred and is continuing, the Holders of a Class
of Notes evidencing at least 66-2/3% of the Outstanding Amount of the related
Class of Notes), shall, exercise all rights, remedies, powers, privileges and
claims of the Issuer against the Unaffiliated Seller or the Servicer under or
in connection with the Sale and Servicing Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Unaffiliated Seller or the Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of
the Issuer to take such action shall be suspended.
SECTION 5.17. Subrogation. The Indenture Trustee shall
receive as attorney-in-fact of each Noteholder any amount received from the
Insurer under the Policy. Any and all amounts disbursed by the Indenture
Trustee from claims made under the Policy shall not be considered payment by
the Issuer with respect to such Notes, and shall not discharge the obligations
of the Issuer with respect thereto. The Insurer shall, to the extent it makes
any payment with respect to the Notes, become subrogated to the rights of the
recipient of such
23
payments to the extent of such payments. Subject to and conditioned upon any
payment with respect to the Notes by or on behalf of the Insurer, the Indenture
Trustee shall assign to the Insurer all rights to the payment of interest or
principal with respect to the Notes which are then due for payment to the extent
of all such payments made by the Insurer, and the Insurer may exercise any
option, vote right, power or the like with respect to the Notes to the extent
that it has made payment pursuant to the Policy.
SECTION 5.18. Preference Claims. The Indenture Trustee shall
promptly notify the Insurer of any proceeding or the institution of any
action, of which a Responsible Officer has actual knowledge, seeking the
avoidance as a preferential transfer under applicable bankruptcy, insolvency,
receivership or similar law (a "Preference Claim") of any distribution made
with respect to a Class of Notes. Each Class A Noteholder, by its purchase of
Class A Notes, the Servicer and the Indenture Trustee hereby agree that the
Insurer (so long as no Insurer Default has occurred and is continuing) may at
any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to such
Preference Claim and (ii) the posting of any surety, supersedes or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, the Insurer shall be subrogated to the rights of the Servicer, the
Indenture Trustee and each Class A Noteholder in the conduct of any such
Preference Claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
SECTION 5.19. Sale of Trust Estate. (a) The power to effect
any sale of any portion of the Trust Property pursuant to this Section 5.19
shall not be exhausted by any one or more sales as to any portion of the Trust
Property remaining unsold, but shall continue unimpaired until the entire
Trust Property shall have been sold or all amounts payable on the Notes shall
have been paid. The Indenture Trustee may from time to time, upon directions
in accordance with Section 5.12, postpone any public sale by public
announcement made at the time and place of such sale.
(b) To the extent permitted by applicable law, the Indenture
Trustee shall not in any private sale sell to a third party the Trust
Property, or any portion thereof unless,
(i) until such time as the conditions specified in
Sections 10.01(a)(i) or 10.01(a)(ii) of the Sale and Servicing
Agreement have been satisfied in full, the Insurer (or, if an
Insurer Default has occurred and is continuing, the Holders of Notes
evidencing at least 66-2/3% of the Outstanding Amount of the related
Class of Notes), consent to or direct the Indenture Trustee in
writing to make such sale; or
(ii) the proceeds of such sale would be not less than
the sum of all amounts due to the Indenture Trustee hereunder and
the Insurer under the Insurance Agreement and the entire unpaid
principal amount of the Notes and all interest due or to become due
thereon in accordance with Section 8.3(a) on the Payment Date next
succeeding the date of such sale.
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The foregoing provisions shall not preclude or limit the ability of the
Indenture Trustee to purchase all or any portion of the Trust Property at a
private sale.
(c) In connection with a sale of all or any portion of the
Trust Property:
(i) any one or more Noteholders may bid for and purchase
the property offered for sale, and upon compliance with the terms of
sale may hold, retain, and possess and dispose of such property,
without further accountability, and any Noteholder may, in paying
the purchase money therefor, deliver in lieu of cash any Outstanding
Notes or claims for interest thereon for credit in the amount that
shall, upon distribution of the net proceeds of such sale, be
payable thereon, and such Notes, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned
to the Noteholders thereof after being appropriately stamped to show
such partial payment;
(ii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in
any portion of the Trust Property related to the Class of Notes in
connection with a sale thereof;
(iii) 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 Property related
to the Class of Notes in connection with a sale thereof, and to take
all action necessary to effect such sale; and
(iv) no purchaser or transferee at such a sale shall be
bound to ascertain the Indenture Trustee's authority, inquire into
the satisfaction of any conditions precedent or see to the
application of any moneys.
(d) The method, manner, time, place and terms of any sale of
all or any portion of the Trust Property shall be commercially
reasonable.
(e) The provisions of this Section 5.19 shall not be
construed to restrict the ability of the Indenture Trustee to
exercise any rights and powers against the Issuer or the Trust
Property that are vested in the Indenture Trustee by this Indenture,
including, without limitation, the power of the Indenture Trustee to
proceed against the Collateral and to institute judicial proceedings
for the collection of any deficiency remaining thereafter or the
ability of the Servicer to exercise any rights or powers or to
perform its obligations under the Sale and Servicing Agreement.
SECTION 5.20. Waiver of Past Defaults. Prior to the time a
judgment or decree for payment of the money due has been obtained by the
Indenture Trustee, the Insurer (or, if an Insurer Default has occurred and is
continuing, the Holders of Notes evidencing at least a majority of the
Outstanding Amount of the related Class of Notes) may on behalf of the Holders
of all the Notes waive any past Default or Event of Default and its
consequences, except a Default or Event of Default:
(a) In the payment of the principal of or interest on any
Note when due and payable, or
25
(b) In respect of a covenant or provision hereof that under
Section 9.2 cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected. In the case of any such waiver, the Issuer,
the Indenture Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto. Upon such waiver, such Default or Event of Default
shall cease to exist, and any Event of Default arising from any such Default
shall be deemed to have been cured, for every purpose of this Indenture; but
no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon.
ARTICLE VI
The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee. (a) If an Event
of Default has occurred and is continuing, the Indenture Trustee shall
exercise the rights and powers vested in it by this Indenture and the Basic
Documents and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs; provided, however, that if the Indenture Trustee is
acting as Servicer, it shall use the same degree of care and skill as is
required of the Servicer under the Sale and Servicing Agreement.
(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 the Basic Documents and no implied covenants or
obligations shall be read into this Indenture or the Basic Documents
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 and the Basic
Documents; however, the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they conform
on their face to the requirements of this Indenture and the Basic
Documents.
(c) The Indenture Trustee may not be relieved from liability
for its own gross negligent action, its own gross negligent failure to act or
its own misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(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;
26
(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 from Holders of Notes
evidencing a majority of the Outstanding Amount of the Notes (or
such greater percentage as may be required by the terms hereof),
with the consent of the Insurer if no Insurer Default shall have
occurred and be continuing, relating to the time, method and place
of conducting any Proceeding for any remedy available to the
Indenture Trustee, or exercising any trust or power conferred upon
the Indenture Trustee, under this Indenture; and
(iv) the Indenture Trustee shall not be charged with
knowledge of any failure by the Servicer to comply with the
obligations of the Servicer under the Sale and Servicing Agreement
unless a Responsible Officer obtains actual knowledge of such
failure or occurrence or the Indenture Trustee receives written
notice of such failure or occurrence from the Servicer, the Insurer
or the Holders of Notes entitled to a majority of the Voting Rights.
(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) 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 indemnity reasonably satisfactory to it
against such risk or liability is not reasonably assured to it.
(f) 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.
(g) The Indenture Trustee shall, upon three Business Day's
prior written notice to the Indenture Trustee, permit any representative of
the Insurer, during the Indenture Trustee's normal business hours, to examine
all books of account, records, reports and other papers of the Indenture
Trustee relating to the Notes, to make copies and extracts therefrom and to
discuss the Indenture Trustee's affairs and actions, as such affairs and
actions relate to the Indenture Trustee's duties with respect to the Notes,
with the Indenture Trustee's officers and employees responsible for carrying
out the Indenture Trustee's duties with respect to the Notes.
(h) The Indenture Trustee is hereby authorized to execute and
shall execute the Sale and Servicing Agreement and shall perform its duties
and satisfy its obligations thereunder. Every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Indenture Trustee shall apply to the Indenture Trustee's execution of
the Sale and Servicing Agreement and the performance of its duties and
satisfaction of its obligations thereunder.
(i) The Indenture Trustee shall, and hereby agrees that it
will, hold the Policy in trust, and will hold any proceeds of any claim on the
Policy in trust solely for the use and benefit of the Noteholders.
27
(j) In no event shall the Indenture Trustee, in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner
Trustee under the Delaware Business Trust Statute, common law, or the Trust
Agreement.
SECTION 6.2. Rights of Indenture Trustee. (a) The
Indenture Trustee may rely on any document reasonably believed by it to be
genuine and to have been signed or presented by the proper person. The
Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from
acting, it may 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 the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that 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.
(f) The Indenture Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Indenture or in
relation to this Indenture, at the request, order or direction of any of the
Holders of Notes, pursuant to the provisions of this Indenture, unless such
Holders of Notes shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby; provided, however, that the Indenture Trustee
shall, upon the occurrence of an Event of Default (that has not been cured or
waived), exercise the rights and powers vested in it by this Indenture or the
Sale and Servicing Agreement with reasonable care and skill.
(g) Prior to the occurrence of an Event of Default, the
Indenture Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing to do so by the Insurer (or, if
an Insurer Default has occurred and is continuing, by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the related Class of
Notes); provided, however, that if the payment within a reasonable time to the
Indenture Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Indenture
Trustee, not reasonably assured to the Indenture Trustee by the security
afforded to it by the terms of this
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Indenture, the Indenture Trustee may require indemnity reasonably satisfactory
to it against such cost, expense or liability as a condition to so proceeding;
the reasonable expense of every such examination shall be paid by the Person
making such request, or, if paid by the Indenture Trustee shall be reimbursed by
the Person making such request upon demand.
(h) The Indenture Trustee shall not be accountable, shall
have no liability and makes no representation as to any acts or omissions
hereunder or under the Sale and Servicing Agreement of the Servicer until such
time as the Indenture Trustee may be required to act as Servicer.
(i) The Indenture Trustee shall not be personally liable for
any loss resulting from the investment of funds held in any Investment Account
at the direction of the Servicer pursuant to Section 8.11.
SECTION 6.3. Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any Note
Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Indenture Trustee must comply with Sections
6.11 and 6.12.
SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or any of the Basic Documents, the
Trust Property or the Notes, it shall not be accountable for the Issuer's use
of the proceeds from the Notes, and it shall not be responsible for any
statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
SECTION 6.5. Notice of Defaults. If a Servicer Event of
Default or an Event of Default occurs and is continuing and if it is either
known by, or written notice of the existence thereof has been delivered to, a
Responsible Officer, the Indenture Trustee shall mail to each Noteholder of
such event within 90 days after such knowledge or notice occurs. Except in the
case of a Default in payment of principal of or interest on any Note when due
and payable, 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 6.6. Reports by Indenture Trustee to Holders. Upon
written request, the Note Paying Agent or the Servicer shall on behalf of the
Issuer deliver to each Noteholder such information as may be reasonably
required to enable such Holder to prepare its Federal and state income tax
returns required by law.
SECTION 6.7. Compensation and Indemnity. (a) The Indenture
Trustee shall withdraw from the Distribution Account on each Payment Date and
pay to itself the Indenture Trustee's Fee and, to the extent that the funds
therein are at any time insufficient for such purpose, the Servicer shall pay
such fees. Any such amount so withdrawn from the Distribution Account shall
reduce the Available Distribution Amount for each Group pro rata based upon
the relative proportions of the aggregate Stated Principal Balances of the
Mortgage Loans and any
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REO Properties in each Group as of the preceding Payment Date (or, in the case
of the initial Payment Date as of the Cut-Off Date to the total aggregate Stated
Principal Balance of Mortgage Loans and the REO Properties in both Groups as of
such date. The Indenture Trustee and any director, officer, employee or agent of
the Indenture Trustee shall be indemnified by the Issuer from the Trust Property
and held harmless against any loss, liability or expense (not including
expenses, disbursements and advances incurred or made by the Indenture Trustee,
including the compensation and the expenses and disbursements of its agents and
counsel, in the ordinary course of the Indenture Trustee's performance in
accordance with the provisions of this Agreement) incurred by the Indenture
Trustee arising out of or in connection with the acceptance or administration of
its obligations and duties under this Agreement, other than any loss, liability
or expense (i) resulting from the Servicer's actions or omissions in connection
with the Sale and Servicing Agreement and the Mortgage Loans (but only to the
extent the Indenture Trustee is actually indemnified by the Servicer pursuant to
the Sale and Servicing Agreement), or (ii) any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Indenture Trustee's duties hereunder or by reason of reckless
disregard of the Indenture Trustee's obligations and duties hereunder.
(b) The Issuer's payment obligations to the Indenture
Trustee pursuant to this Section shall survive the discharge of this
Indenture. Notwithstanding anything else set forth in this Indenture or the
Basic Documents, the Indenture Trustee agrees that the obligations of the
Issuer (but not the Servicer) to the Indenture Trustee hereunder and under the
Basic Documents shall be recourse to the Trust Property only and specifically
shall not be recourse to the assets of the Issuer or any Securityholder. In
addition, the Indenture Trustee agrees that its recourse to the Issuer, the
Trust Property and amounts held in any of the Trust Accounts shall be limited
to the right to receive the distributions referred to in Section 8.3 hereof.
SECTION 6.8. Replacement of Indenture Trustee. The Indenture
Trustee may resign at any time by so notifying the Issuer, the Servicer, the
Unaffiliated Seller and the Insurer by written notice. Upon receiving such
notice of resignation, the Issuer shall promptly appoint a successor Indenture
Trustee (approved in writing by the Insurer, so long as such approval is not
unreasonably withheld) by written instrument, in duplicate, one copy of such
instrument shall be delivered to the resigning Indenture Trustee (who shall
deliver a copy to the Servicer) and one copy to the successor Trustee. The
Insurer (or, if an Insurer Default has occurred and is continuing, the Issuer)
may remove the Indenture Trustee, if:
(i) the Indenture Trustee fails to comply with
Section 6.11;
(ii) a court having jurisdiction in the premises in
respect of the Indenture Trustee in an involuntary case or
proceeding under federal or state banking or bankruptcy laws, as now
or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, shall have entered a
decree or order granting relief or appointing a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator
(or similar official) for the Indenture Trustee or for any
substantial part of the Indenture Trustee's property, or ordering
the winding-up or liquidation of the Indenture Trustee's affairs;
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(iii) an involuntary case under the federal bankruptcy
laws, as now or hereafter in effect, or another present or future
federal or state bankruptcy, insolvency or similar law is commenced
with respect to the Indenture Trustee and such case is not dismissed
within 60 days;
(iv) the Indenture Trustee commences a voluntary case
under any federal or state banking or bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or consents to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, conservator, sequestrator (or other
similar official) for the Indenture Trustee or for any substantial
part of the Indenture Trustee's property, or makes any assignment
for the benefit of creditors or fails generally to pay its debts as
such debts become due or takes any corporate action in furtherance
of any of the foregoing; or
(v) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a
vacancy exists in the office of Indenture Trustee for any reason (the
Indenture Trustee in such event being referred to herein as the retiring
Indenture Trustee), the Issuer shall promptly appoint a successor Indenture
Trustee (approved in writing by the Insurer, so long as such approval is not
unreasonably withheld). If the Issuer fails to appoint such a successor
Indenture Trustee, the Insurer may appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee, to the
Insurer and to the Issuer. Thereupon the resignation or removal of the
retiring Indenture Trustee shall become effective, and the successor Indenture
Trustee shall have all the rights, powers and duties of the retiring Indenture
Trustee under this Indenture. The successor Indenture Trustee shall mail a
notice of its succession to Noteholders. The retiring Indenture Trustee shall
promptly transfer all property held by it as Indenture Trustee to the
successor Indenture Trustee.
If a successor Indenture Trustee does not take office within
30 days after the retiring Indenture Trustee resigns or is removed, the
retiring Indenture Trustee, the Insurer (or, if an Insurer Default has
occurred and is continuing, the Issuer or the Holders of Notes evidencing a
majority of the Outstanding Amount of the Notes) may petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee
acceptable to the Insurer.
If the Indenture Trustee fails to comply with Section 6.11,
the Insurer (or, if an Insurer Default has occurred and is continuing, the
Issuer or the Holders of Notes evidencing a majority of the Outstanding Amount
of the Notes), may petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee acceptable to the Insurer.
Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee pursuant to any of the provisions
of this Section shall not become effective until acceptance of appointment by
the successor Indenture Trustee pursuant to Section 6.8 and payment of all
fees and expenses owed to the outgoing Indenture Trustee.
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Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section, the Issuer's and the Servicer's indemnity
obligations under Section 6.7 shall continue for the benefit of the retiring
Indenture Trustee and the Servicer shall pay any amounts owing to the
Indenture Trustee.
SECTION 6.9. 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 (subject to replacement as provided
in Section 6.8) be the successor Indenture Trustee.
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 may at the time be located,
the Indenture Trustee with the consent of the Insurer 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, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Trust, or
any part hereof, 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 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred
or imposed upon and exercised or performed by the Indenture Trustee
and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act
separately without the Indenture Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including
the holding of title to the Trust 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;
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(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder,
including acts or omissions of predecessor or successor trustees;
and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each of them.
Every instrument appointing any separate trustee or co-trustee shall refer to
this Agreement and the conditions of this Article VI. Each separate trustee
and co-trustee, upon its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument of appointment,
either jointly with the Indenture Trustee or separately, as may be provided
therein, subject to all the provisions of this Indenture, specifically
including every provision of this Indenture relating to the conduct of,
affecting the liability of, or affording protection to, the Indenture Trustee.
Every such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee, its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, dissolve, become insolvent, 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.
(e) The Servicer shall be responsible for the fees of any
co-trustee or separate trustee appointed hereunder.
SECTION 6.11. Eligibility. The Indenture Trustee shall at
all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition. The
Indenture Trustee shall provide copies of such reports to the Insurer upon
request. The Indenture Trustee shall comply with TIA Section 310(b), including
the optional provision permitted by the second sentence of TIA Section
310(b)(9); provided, however, that there shall be excluded from the operation
of TIA Section 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against
Issuer. The Indenture Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). An Indenture Trustee
who has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
SECTION 6.13. Appointment and Powers. Subject to the terms
and conditions hereof, each of the Issuer Secured Parties hereby appoints
First Union National Bank as the Indenture Trustee with respect to the
Collateral, and First Union National Bank hereby accepts such appointment and
agrees to act as Indenture Trustee with respect to the Trust Property for the
33
Issuer Secured Parties, to maintain custody and possession of such Trust
Property (except as otherwise provided hereunder or under the Sale and
Servicing Agreement) and to perform the other duties of the Indenture Trustee
in accordance with the provisions of this Indenture and the other Basic
Documents. Each Issuer Secured Party hereby authorizes the Indenture Trustee
to take such action on its behalf, and to exercise such rights, remedies,
powers and privileges hereunder, as the Insurer (or, if an Insurer Default has
occurred and is continuing, Holders of Notes evidencing a majority (or such
greater percentage as may be required by the terms hereof) of the Outstanding
Amount of the Notes) may direct and as are specifically authorized to be
exercised by the Indenture Trustee by the terms hereof, together with such
actions, rights, remedies, powers and privileges as are reasonably incidental
thereto. The Indenture Trustee shall act upon and in compliance with the
written instructions of the Insurer (or, if an Insurer Default has occurred
and is continuing, Holders of Notes evidencing a majority (or such greater
percentage as may be required by the terms hereof) of the Outstanding Amount
of the related Class of Notes) delivered pursuant to this Indenture promptly
following receipt of such written instructions; provided that the Indenture
Trustee shall not act in accordance with any instructions (i) which are not
authorized by, or in violation of the provisions of, this Indenture or (ii)
for which the Indenture Trustee has not received reasonable indemnity. Receipt
of such instructions shall not be a condition to the exercise by the Indenture
Trustee of its express duties hereunder, except where this Indenture provides
that the Indenture Trustee is permitted to act only following and in
accordance with such instructions.
SECTION 6.14. Performance of Duties. The Indenture Trustee
shall have no duties or responsibilities except those expressly set forth in
this Indenture and the other Basic Documents to which the Indenture Trustee is
a party or as directed by the Controlling Party in accordance with this
Indenture. The Indenture Trustee shall not be required to take any
discretionary actions hereunder except at the written direction of the Insurer
(or, if an Insurer Default has occurred and is continuing, Holders of Notes
evidencing a majority (or such greater percentage as may be required by the
terms hereof) of the Outstanding Amount of the related Class of Notes) and
with indemnification as provided herein.
SECTION 6.15. Limitation on Liability. Neither the Indenture
Trustee nor any of its directors, officers, employees and agents shall be
liable for any action taken or omitted to be taken by it or them hereunder, or
in connection herewith, except that the Indenture Trustee shall be liable for
its gross negligence, bad faith or willful misconduct; nor shall the Indenture
Trustee be responsible for the validity, effectiveness, value, sufficiency or
enforceability against the Issuer of this Indenture or any of the Trust
Property (or any part thereof).
SECTION 6.16. Reliance Upon Documents. In the absence of
negligence, bad faith or willful misconduct on its part, the Indenture Trustee
shall be entitled to rely on any communication, instrument, paper or other
document reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons and shall have no liability in
acting, or omitting to act, where such action or omission to act is in
reasonable reliance upon any statement or opinion contained in any such
document or instrument.
SECTION 6.17. Representations and Warranties of the
Indenture Trustee. The Indenture Trustee represents and warrants to the Issuer
and to each Issuer Secured Party as follows:
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(a) The Indenture Trustee is a national banking association
duly organized, validly existing and in good standing under the laws of the
United States.
(b) The execution and delivery of this Indenture by the
Indenture Trustee, and the performance and compliance with the terms of this
Indenture by the Indenture Trustee, will not violate the Indenture Trustee's
charter or bylaws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in the
breach of, any material agreement or other instrument to which it is a party
or which is applicable to it or any of its assets.
(c) The Indenture Trustee has the full power and authority to
enter into and consummate all transactions contemplated by this Indenture, has
duly authorized the execution, delivery and performance of this Indenture, and
has duly executed and delivered this Indenture.
(d) This Indenture, assuming due authorization, execution and
delivery by the Issuer, constitutes a valid, legal and binding obligation of
the Indenture Trustee, enforceable against the Indenture Trustee in accordance
with the terms hereof, subject to (A) applicable bankruptcy, insolvency,
receivership, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally, and (B) general principles of
equity, regardless of whether such enforcement is considered in a proceeding
in equity or at law.
(e) The Indenture Trustee is not in violation of, and its
execution and delivery of this Indenture and its performance and compliance
with the terms of this Indenture will not constitute a violation of, any law,
any order or decree of any court or arbiter, or any order, regulation or
demand of any federal, state or local governmental or regulatory authority,
which violation, in the Indenture Trustee's good faith and reasonable
judgment, is likely to affect materially and adversely either the ability of
the Indenture Trustee to perform its obligations under this Indenture or the
financial condition of the Indenture Trustee.
(f) No litigation is pending or, to the best of the
Indenture Trustee's knowledge, threatened against the Indenture Trustee which
would prohibit the Indenture Trustee from entering into this Indenture or, in
the Indenture Trustee's good faith reasonable judgment, is likely to
materially and adversely affect either the ability of the Indenture Trustee to
perform its obligations under this Indenture or the financial condition of the
Indenture Trustee.
SECTION 6.18. Waiver of Setoffs. The Indenture Trustee hereby
expressly waives any and all rights of setoff that the Indenture Trustee may
otherwise at any time have under applicable law with respect to any Trust
Account and agrees that amounts in the Trust Accounts shall at all times be
held and applied solely in accordance with the provisions hereof.
SECTION 6.19. Suits for Enforcement. In case a Servicer
Event of Default or other default by the Servicer under the Sale and Servicing
Agreement shall occur and be continuing, the Indenture Trustee (with the
consent of the Insurer if no Insurer Default has occurred and is continuing)
may proceed to protect and enforce its rights and the rights of the
Noteholders under this Indenture by a suit, action or proceeding in equity or
at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the execution of any power
granted in this Agreement or for the enforcement of any
35
other legal, equitable or other remedy, as the Indenture Trustee, being advised
by counsel, shall deem most effectual to protect and enforce any of the rights
of the Indenture Trustee and the Noteholders.
SECTION 6.20. Mortgagor Claims. In connection with any
offset defenses, or affirmative claim for recovery, asserted in legal actions
brought by Mortgagors under one or more Mortgage Loans based upon provisions
therein or upon other rights or remedies arising from any requirements of law
applicable to the Mortgage Loans:
(a) The Indenture Trustee is the holder of Mortgage Loans
only as trustee on behalf of the holders of the Notes, and not as a principal
or in any individual or personal capacity.
(b) The Indenture Trustee shall not be personally liable
for, or obligated to pay Mortgagors, any affirmative claims asserted thereby,
or responsible to holders of the Notes for any offset defense amounts applied
against Mortgage Loan payments for the related Group, pursuant to such legal
actions.
(c) The Indenture Trustee will pay, solely from available
Trust money, affirmative claims for recovery by Xxxxxxxxxx only pursuant to
final judicial orders or judgments, or judicially approved settlement
agreements, resulting from such legal actions.
(d) The Indenture Trustee will comply with judicial orders
and judgments which require its actions or cooperation in connection with
Xxxxxxxxxx' legal actions to recover affirmative claims against holders of the
Notes.
(e) The Indenture Trustee will cooperate with and assist the
Servicer, the Unaffiliated Seller, or holders of the Notes in their defense of
legal actions by Xxxxxxxxxx to recover affirmative claims if such cooperation
and assistance is not contrary to the interests of the Indenture Trustee as a
party to such legal actions and if the Indenture Trustee is satisfactorily
indemnified for all liability, costs and expenses arising therefrom.
(f) The Issuer hereby agrees to indemnify, hold harmless and
defend the Indenture Trustee from and against any and all liability, loss,
costs and expenses of the Indenture Trustee resulting from any affirmative
claims for recovery asserted or collected by mortgagors under the Mortgage
Loans.
SECTION 6.21. Certain Available Information. The Indenture
Trustee shall maintain its Corporate Trust Office and make available free of
charge during normal business hours for review by any Holder of a Note or any
Person identified to the Indenture Trustee as a prospective transferee of a
Note, originals or copies of the following items: (A) this Indenture and any
supplements hereto entered into pursuant to Article IX, (B) the Sale and
Servicing Agreement and any amendments thereto entered into pursuant to
Section 12.01 of the Sale and Servicing Agreement, (C) all monthly statements
required to be delivered to Noteholders of the relevant Class pursuant to
Section 4.02 of the Sale and Servicing Agreement since the Closing Date, and
all other notices, reports, statements and written communications delivered to
the Noteholders of the relevant Class pursuant to this Indenture or the Sale
and Servicing Agreement since the Closing Date (to the extent the Indenture
Trustee is in receipt thereof), (D) any and all
36
Officer's Certificates delivered to the Indenture Trustee by the Servicer since
the Closing Date to evidence the Servicer's determination that any Monthly
Advance or Servicing Advance, was, or if made, would be a Nonrecoverable Monthly
Advance, and (E) any and all Officer's Certificates delivered to the Indenture
Trustee by the Servicer since the Closing Date pursuant to Section 4.04 of the
Sale and Servicing Agreement. Copies and mailing of any and all of the foregoing
items will be available from the Indenture Trustee upon request at the expense
of the Person requesting the same.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1. Issuer to Furnish to Indenture Trustee Names and
Addresses of Noteholders. The Issuer will furnish or cause to be furnished to
the Indenture Trustee or the Insurer (a) not more than five days after the
earlier of (i) each Record Date and (ii) three months after the last Record
Date, a list, in such form as the Indenture Trustee or the Insurer may
reasonably require, of the names and addresses of the Holders as of such
Record Date, (b) at such other times as the Indenture Trustee or the Insurer
may request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as
the Indenture Trustee is the Note Registrar, no such list shall be required to
be furnished. The Indenture Trustee or, if the Indenture Trustee is not the
Note Registrar, the Issuer shall furnish to the Insurer or the Issuer in
writing upon their written request and at such other times as the Insurer or
the Issuer may request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.1 and the names and addresses of Holders received by the Indenture Trustee
in its capacity as Note Registrar. The Indenture Trustee may destroy any list
furnished to it as provided in such Section 7.1 upon receipt of a new list so
furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
SECTION 7.3. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after
the Issuer or Depositor is required to file the same with the
Commission, copies of the annual reports and copies of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Issuer or Depositor may be required to
file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act;
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(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 or Depositor 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
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer or Depositor pursuant to
clauses (i) and (ii) of this Section 7.3(a) as may be required by rules
and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal
year of the Issuer shall end on December 31 of each year.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA
Section 313(a), within 60 days after each [August 31], beginning with [August
31, 2000], the Indenture Trustee shall mail to each Noteholder as required by
TIA Section 313(c) and the Insurer a brief report dated as of such date that
complies with TIA Section 313(a). The Indenture Trustee also shall comply with
TIA Section 313(b).
A copy of each report at the time of its mailing to
Noteholders shall be filed by the Indenture Trustee with the Commission and
each stock exchange, if any, on which the Notes are listed. The Issuer shall
notify the Indenture Trustee and the Insurer if and when the Notes are listed
on any stock exchange.
ARTICLE VIII
Accounts; Investment of Moneys;
Collection and Application of Moneys; Reports
SECTION 8.1. Collection of Money. Except as otherwise
expressly provided herein, the Indenture Trustee may demand payment or delivery
of, and shall receive and collect, directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee pursuant to this
Indenture. The Indenture Trustee shall apply all such money received by it as
provided in this Indenture. Except as otherwise expressly provided in this
Indenture or in the Sale and Servicing Agreement, if any default occurs in the
making of any payment or performance under any agreement or instrument that is
part of the Trust Property, 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.
SECTION 8.2. Release of Trust Property. (a) Subject to Section
8.9 and the payment of its fees and expenses pursuant to Section 6.7, the
Indenture Trustee may, and when required by the Issuer and the provisions of
this Indenture shall, execute instruments to release property from the lien of
this Indenture, in a manner and under circumstances that are not inconsistent
with the provisions of this Indenture or the Sale and Servicing Agreement. No
party
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relying upon an instrument executed by the Indenture Trustee as provided in this
Article VIII shall be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any monies. The Indenture Trustee may require as a condition to
any such release, an Opinion of Counsel, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding that
all conditions precedent to the taking of such action have been complied with
and such action will not materially and adversely impair the security for the
Notes or the rights of the Noteholders or the Insurer in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Property. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
release.
(b) The Indenture Trustee shall, at such time as there are no
Notes outstanding and all sums due the Indenture Trustee pursuant to Section 6.7
and to the Insurer pursuant to the Insurance Agreement have been paid, release
any remaining portion of the Trust Property that secured the Notes from the lien
of this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts.
(c) The Indenture Trustee shall release property from the lien
of this Indenture pursuant to this Section 8.2 only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 12.1.
SECTION 8.3. Payments. (a) On each Payment Date, after
withdrawing amounts owed pursuant to Section 6.7 and Section 8.7(c) and amounts
owed to the Owner Trustee under Section 12.1 of the Trust Agreement, the
Indenture Trustee or the Note Paying Agent, as the case may be, shall, based
solely on information contained in the Remittance Report for such Payment Date,
withdraw from the Distribution Account an amount equal to the Available
Distribution Amount for each Class and pay to the following Persons the
following amounts, in the following order of priority:
(i) first, to the payment of the Accrued Note Interest
and the Accrued Shortfall Interest Carry Forward Amount for that Class
of Notes;
(ii) second, to the payment of the Base Principal
Distribution Amount for that Class of Notes;
(iii) third, the remaining amount of the Available
Distribution Amount for that Class, as the "Net Monthly Excess
Cashflow" for that Class and Payment Date, for application in the
following order of the priority:
(aa) first, to the Holders of the other
Class of Notes, to the extent of any shortfall in the
payment of the full amount of other Class' Interest
Distribution Amount;
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(bb) second, to the Holders of the related
Class of Notes, as a payment of such Class' allocable
portion of the Overcollateralization Deficit, if any;
(cc) third, to the Holders of the other
Class of Notes, as a payment of such Class' allocable
portion of the Overcollateralization Deficit, if any;
(dd) fourth, to the Insurer, in an amount
equal to any Cumulative Insurance Payments (as defined
below) previously made with respect to the related Class of
Notes;
(ee) fifth, to the Insurer, to the extent
of any shortfall in the full amount of the payment of any
Cumulative Insurance Payments previously made with respect
to the other Class of Notes;
(ff) sixth, to the Insurer, any remaining
amounts due to the Insurer with respect to the related Class
of Notes under the terms of the Insurance Agreement;
(gg) seventh, to the Insurer, to the
extent of any shortfall in the full amount of the payment of
any remaining amounts due to the Insurer with respect to the
other Class under the terms of the Insurance Agreement;
(hh) eighth, to the holders of the
related Class of Notes, an amount equal to the
Overcollateralization Increase Amount;
(ii) ninth, to the Reserve Account, to the
extent that, after taking into account all applications
described in the preceding clauses, the other class would
have any remaining Overcollaterialization Increase Amount;
(jj) tenth, to the Holders of the other
Class of Notes, to the extent of any shortfall in the
payment of the full amount of the other Class' Accrued
Shortfall Interest Carry-Forward Amount; and
(kk) eleventh, to the Trust for
distribution to the Certificateholder or as otherwise provided
in this Indenture.
Funds distributed to the Certificateholder pursuant to clause (iii)(jj) above
shall be free and clear of the lien of this Indenture.
Distributions in respect of the Certificate shall be made
(i) by wire transfer of immediately available funds to the account of the
Certificateholder at a bank or other entity having appropriate facilities
therefor, provided that the Certificateholder shall have notified the
Indenture Trustee in writing at least five Business Days prior to the relevant
Record Date, and (ii) if the Certificateholder shall have failed to give the
notification referred to in clause (i), by check mailed by first class mail to
the address of such Holder appearing in the Certificate Register. The
Indenture Trustee may deduct a reasonable wire transfer fee from any payment
40
made by wire transfer. The final distribution on the Certificate will be made
in like manner, but only upon presentment and surrender of the Certificate to
the Certificate Registrar.
Prior to the final distribution hereunder with respect to
the Certificate, the Indenture Trustee shall mail to the Certificateholder a
notice to the effect that the Indenture Trustee expects that the final
distribution with respect to the Certificate will be made on a specific date
but only upon presentation and surrender of the Certificate at the office of
the Certificate Registrar therein specified.
(b) In addition to making the payments required pursuant to
Section 8.3(a), on each Payment Date for which there exists a Deficiency Amount
for a Class of Notes, the Indenture Trustee shall withdraw from the Distribution
Account any amount therein that was transferred from the Policy Payments Account
to the Distribution Account pursuant to Section 11.4 and pay to the Holders of
that Class (i) an amount equal to any amount required to be paid pursuant to
Section 8.3(a)(i) for such Payment Date remaining unpaid after giving effect to
all payments made pursuant to Section 8.3(a) for such Payment Date, (ii) an
amount equal to any Remaining Overcollateralization Deficit for such Class on
such Payment Date after giving effect to all distributions made pursuant to
Section 8.3(a) for such Payment Date and (iii) without duplication, any other
amount constituting a Deficiency Amount for such Class.
(c) All payments made with respect to the Notes on each
Payment Date shall be allocated, pro rata among the outstanding Notes, and on
their respective Note Principal Balances.
(d) Payments in respect of the Notes on each Payment Date will
be made to the Holders of record on the related Record Date (except as otherwise
provided in Section 8.3(f) and Article X respecting the final distribution on
the Notes), based on the aggregate Note Principal Balance evidenced by their
respective Notes. So long as the Book-Entry Notes are registered in the name of
the Depository or its nominee, the Indenture Trustee shall make all payments on
such Notes by wire transfers of immediately available funds to the Depository or
its nominee. In the case of Notes issued in fully registered, certificated form,
payments shall be made by wire transfer of immediately available funds to the
account of any such Holder at a bank or other entity having appropriate
facilities therefor, if such Holder shall have so notified the Indenture Trustee
in writing at least five Business Days prior to the Record Date immediately
prior to such Payment Date and is the registered owner of Notes having an
initial aggregate Note Principal Balance in excess of $5,000,000, or otherwise
by check mailed by first class mail to the address of such Holder appearing in
the Note Register. The Indenture Trustee may deduct a reasonable wire transfer
fee from any payment made by wire transfer. The final payment on each Note will
be made in like manner, but only upon presentment and surrender of such Note at
the Corporate Trust Office or such other location specified in the notice to
Noteholders of such final distribution. Payments to the Insurer on any Payment
Date will be made by wire transfer of immediately available funds to the account
designated by the Insurer. Funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.3.
Each payment with respect to a Book-Entry Note shall be paid
to the Depository, as Holder thereof, and the Depository shall be responsible
for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such payment to the
41
Note Owners that it represents and to each indirect participating brokerage
firm (a "brokerage firm" or "indirect participating firm") for which it acts
as agent. Each brokerage firm shall be responsible for disbursing funds to the
Note Owners that it represents. None of the Indenture Trustee, the Note
Registrar, the Depositor or the Servicer shall have any responsibility
therefor except as otherwise provided by this Agreement or applicable law.
(e) The rights of the Noteholders to receive payments in
respect of the Notes, and all interests of the Noteholders in such
distributions, shall be as set forth in this Indenture. Neither the Holders of
the Notes nor the Issuer, Insurer, Indenture Trustee, Unaffiliated Seller or
Servicer shall in any way be responsible or liable to the Holders of any other
Notes in respect of amounts properly previously paid on the Notes.
(f) Whenever the Indenture Trustee expects that the Final
Payment Date with respect to the Notes will occur on the next Payment Date, the
Indenture Trustee shall mail to each Holder on the such Class of Notes and to
the Insurer a notice to the effect that:
(i) the Indenture Trustee expects that the final payment
with respect to the Notes will be made on such Payment Date but only
upon presentation and surrender of such Notes at the office of the
Indenture Trustee therein specified;
(ii) no interest shall accrue on such Notes from and after
the end of the related Interest Accrual Period.
Such notice shall be given by the Indenture Trustee (a) in
the event such notice is given in connection with a redemption of the Notes
pursuant to Article X, not earlier than the 10th day and not later than the
15th day of the month next preceding the Redemption Date or (b) otherwise,
during the month of such Final Payment Date on or before the Determination
Date in respect of such Final Payment Date.
Any funds not paid to any Holder or Holders of Notes on the
related Final Payment Date because of the failure of such Holder or Holders to
tender their Notes shall, on such date, be set aside and held in trust and
credited to the account of the appropriate non-tendering Holder or Holders. If
any Note as to which notice has been given pursuant to this Section 8.3(f)
shall not have been surrendered for cancellation within six months after the
time specified in such notice, the Indenture Trustee shall mail a second
notice to the remaining non-tendering Noteholders to surrender their Notes for
cancellation in order to receive the final distribution with respect thereto.
If within one year after the second notice all such Notes shall not have been
surrendered for cancellation, the Indenture Trustee shall, directly or through
an agent, contact the remaining non-tendering Noteholders concerning surrender
of their Notes in the manner reasonably specified to the Indenture Trustee by
the Servicer in writing. The costs and expenses of maintaining the funds in
trust and of contacting such Noteholders shall be paid out of the assets so
held in trust for such Noteholders. If in one year after the second notice any
such Notes shall not have been surrendered for cancellation, the Servicer
shall pay to the Insurer any amount of such funds that were paid by the
Insurer under the Policy but shall continue to hold any remaining funds for
the benefit of the non-tendering Noteholders, and such Noteholders shall
thereafter look solely to the Servicer for payment thereof, and all liability
of the Insurer with respect to such Trust Properties shall thereupon cease. No
interest shall accrue or be
42
payable to any Noteholder on any amount held in trust by the Servicer as a
result of such Noteholder's failure to surrender its Note(s) for final payment
thereof in accordance with this Section 8.3(f).
(g) [Reserved]
SECTION 8.4. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Indenture Trustee
shall comply with all federal withholding requirements respecting payments to
Noteholders of interest or original issue discount that the Indenture Trustee
reasonably believes are applicable under the Code. The consent of Noteholders
shall not be required for such withholding. In the event the Indenture Trustee
does withhold any amount from interest or original issue discount payments or
advances thereof to any Noteholder pursuant to federal withholding requirements,
the Indenture Trustee shall indicate the amount withheld to such Noteholders.
SECTION 8.5. Statements to Noteholders. Concurrently with each
payment to Noteholders on any Payment Date, the Indenture Trustee shall forward
to each Noteholder, the Servicer, the Insurer and each Rating Agency the
statement prepared by the Servicer pursuant to Section 4.02 of the Sale and
Servicing Agreement with respect to such payment.
To the extent that there are inconsistencies between the
telecopy of the Remittance Report and the hard copy thereof and information
set forth in the computer tape or other media provided by the Servicer under
the Sale and Servicing Agreement, the Indenture Trustee shall be entitled to
rely upon the telecopy.
Within a reasonable period of time after the end of each
calendar year, the Indenture Trustee shall forward to each Person who at any
time during the calendar year was a Holder of Notes (a) the statement
furnished to the Indenture Trustee by the Servicer pursuant to Section 4.02 of
the Sale and Servicing Agreement containing the information set forth in
clauses (1) through (3) of Section 4.02 of the Sale and Servicing Agreement,
aggregated for such calendar year or applicable portion thereof during which
such person was a Noteholder and (b) such information contained in the
Remittance Reports as required to enable the Holders of the Notes to prepare
their tax returns.
Upon request, the Indenture Trustee shall forward to each
Noteholder, during the term of this Indenture, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonably requested with respect to the Noteholder, or otherwise with respect
to the purposes of this Indenture, all such reports or information to be
prepared by the Servicer and provided at the expense of the Noteholder in
accordance with such reasonable and explicit instructions and directions as
the Noteholder may provide. For purposes of this Section 8.5, the Indenture
Trustee's duties are limited to the extent that the Indenture Trustee receives
timely reports as required from the Servicer.
SECTION 8.6. Rights of Noteholders. The Notes shall represent
obligations of the Issuer, secured by the Trust Property, including the Trust
Accounts and the right to receive interest, principal and other amounts at the
times and in the amounts specified in this Indenture.
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SECTION 8.7. Distribution Account. (a) The Indenture Trustee
shall establish and maintain with itself a separate trust account (the
"Distribution Account") entitled "First Union National Bank as Indenture
Trustee, in trust for (A) the registered holders of HomeGold Home Equity Loan
Trust 1999-1 Asset Backed Notes, Series 1999-1, and (B) Financial Security
Assurance Inc., Distribution Account". The Distribution Account shall be an
Eligible Account. Deposits to and withdrawals from the Distribution Account
shall be made as provided herein and in the Sale and Servicing Agreement. Funds
in the Distribution Account shall be invested in Permitted Investments, at the
direction of the Servicer, in accordance with Section 8.12 hereof. The Indenture
Trustee shall give notice to the Issuer, the Servicer and the Insurer of the
location of the Distribution Account when established and prior to any change
thereof.
(b) Promptly upon receipt of any Stayed Funds, whether from
the Servicer, a trustee in bankruptcy, or federal bankruptcy court or other
source, the Indenture Trustee shall deposit such funds in the Distribution
Account, subject to withdrawal thereof pursuant to Section 7.02(b) of the Sale
and Servicing Agreement or as otherwise permitted thereunder.
(c) The Indenture Trustee shall be entitled to withdraw
amounts from the Distribution Account and to transfer funds to the Expense
Account on the Business Day immediately preceding each Payment Date pursuant to
Section 8.10(b) prior to any payments as required pursuant to Section 8.3.
(d) If, at the close of business on the third Business Day
prior to any Payment Date, the funds on deposit in the Distribution Account are
less than the Scheduled Payment for such Payment Date, the Indenture Trustee
shall give notice by telephone or telecopy of the amount of such deficiency,
confirmed in writing in the form set forth as Exhibit A to the Policy, to the
Insurer and the Fiscal Agent (as defined in the Policy), if any, at or before
10:00 a.m., New York time, on the second Business Day prior to such Payment
Date.
SECTION 8.8. [Reserved]
SECTION 8.9. [Reserved]
SECTION 8.10. Expense Account. (a) The Indenture Trustee shall
establish and maintain with itself a separate trust account (the "Expense
Account") entitled "First Union National Bank as Indenture Trustee, in trust for
(A) the registered holders of HomeGold Home Equity Loan Trust 1999-1 Asset
Backed Notes, Series 1999-1, and (B) Financial Security Assurance Inc., Expense
Account." The Expense Account shall be an Eligible Account, and funds on deposit
therein shall be held separate and apart from, and shall not be commingled with,
any other moneys, including, without limitation, other moneys of the Trustee
held pursuant to this Agreement.
(b) On the Business Day immediately preceding each Payment
Date, the Indenture Trustee shall withdraw from the Distribution Account and
deposit into the Expense Account an amount equal to the product of (i) l/12 of
the Insurer Premium Rate and (ii) the Class A Note Principal Balance after
giving effect to distributions of principal on such Payment Date. Such amount so
withdrawn from the Distribution Account shall reduce the Available Distribution
Amount for each Group pro rata, based upon the relative proportions of the Class
A-
44
1 Note Principal Balance and the Class A-2 Note Principal Balance to the total
Class A Note Principal Balance (in such case after giving effect to
distributions of principal on such Payment Date).
(c) The Indenture Trustee shall make withdrawals from the
Expense Account to pay the Insurer Premium on each Payment Date.
(d) Funds in the Expense Account shall be invested in
Permitted Investments, at the direction of the Servicer, in accordance with
Section 8.12 hereof. The Indenture Trustee shall give notice to the Issuer, the
Servicer and the Insurer of the location of the Expense Account on the Closing
Date and prior to any change thereof.
(e) Upon payment in full of the principal of and interest on
the Notes and any amounts due the Insurer under the Insurance Agreement, any
amounts remaining in the Expense Account following the payment of all unpaid
Insurer Premiums shall be released to the Servicer as additional servicing
compensation.
SECTION 8.11. Reserve Account. (a) The Indenture Trustee shall
establish and maintain with itself a separate trust account (the "Reserve
Account") entitled "First Union National Bank as Indenture Trustee, in trust for
(A) the registered holders of HomeGold Home Equity Loan Trust 1999-1 Asset
Backed Notes, Series 1999-1, and (B) Financial Security Assurance Inc., Reserve
Account." The Reserve Account shall be an Eligible Account, and funds on deposit
therein shall be held separate and apart from, and shall not be commingled with,
any other moneys, including, without limitation, other moneys of the Trustee
held pursuant to this Agreement.
(b) On each Payment Date, the Indenture Trustee shall withdraw
from the Distribution Account and deposit into the Reserve Account the amounts
if any, described in Section 8.3(a)(iii)(hh) hereof. In addition, in the event
that the Servicer exercises its option to call one Class of Notes, the Servicer
shall deliver to the Trustee, and the Trustee shall deposit to the Reserve
Account, the full amount of the Overcollateralization Deficiency, if any, with
respect to the still-outstanding Class of Notes, calculated as of the date on
which the Servicer exercises such option.
(c) If, on any Payment Date, and after applying the Available
Distribution Amount for each Class as described on Section 8.3 hereof, either
Class has not received the full amount of its Interest Distribution Amount or
its allocable portion of any Overcollateralization Deficit, the Trustee shall
withdraw the amount of any such insufficiency from the Reserve Account and apply
it to the payment of such shortfall; if the aggregate amount of such
insufficiency on a Payment Date exceeds the amount available in the Reserve
Account, the Trustee shall apply such amount as is available in the Reserve
Account as directed by the Insurer.
(d) Funds in the Reserve Account shall be invested in
Permitted Investments, at the direction of the Servicer, in accordance with
Section 8.12 hereof. The Indenture Trustee shall give notice to the Issuer, the
Servicer and the Insurer of the location of the Reserve Account on the Closing
Date and prior to any change thereof.
45
(i) If, on any Payment Date, and after applying the
Available Distribution Amount for each class, as described in Section
8.3 hereof, and after making any withdrawal from the Reserve Account
pursuant to Clause (c) above, (A) the sum of (x) the
Overcollateralization Amount for both classes of Notes plus (y) the
amount remaining in the Reserve Account exceeds (B) the Specified
Overcollateralization Amount for both classes of Notes for such Payment
Date, the Trustee shall release to the Certificateholders the lesser of
such excess, or the amount then on deposit on the Reserve Account.
(ii) Upon payment in full of the principal of and interest
on the Notes and any amounts due the Insurer under the Insurance
Agreement, any amounts remaining in the Reserve Account following the
payment of all unpaid Insurer Premiums shall be released to the
Certificateholder.
SECTION 8.12. Investment of Funds. (a) The Servicer may direct
the Indenture Trustee to invest funds in the Distribution Account, the Reserve
Account and the Expense Account (each, for purposes of this Section 8.12, an
"Investment Account"), to invest the funds in such Investment Account in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the next Payment Date, if a Person other than the Indenture Trustee is
the obligor thereon, and (ii) no later than the next Payment Date, if the
Indenture Trustee is the obligor thereon. All such Permitted Investments shall
be held to maturity, unless payable on demand. Any investment of funds in an
Investment Account shall be made in the name of the Indenture Trustee (in its
capacity as such) or in the name of a nominee of the Indenture Trustee. The
Indenture Trustee shall be entitled to sole possession over each such investment
and the income thereon, and any certificate or other instrument evidencing any
such investment shall be delivered directly to the Indenture Trustee or its
agent, together with any document of transfer necessary to transfer title to
such investment to the Indenture Trustee or its nominee. In the event amounts on
deposit in an Investment Account are at any time invested in a Permitted
Investment payable on demand, the Indenture Trustee shall at the direction of
the Servicer:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on
such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer that such Permitted
Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Investment
Account.
(b) All income and gain realized from the investment of funds
deposited in the Collection Account, the Expense Account, the Distribution
Account and the Servicing Accounts held by or on behalf of the Servicer or the
Indenture Trustee, shall be for the benefit of the Servicer and shall be subject
to its withdrawal in accordance with Section 3.11 of the Sale and Servicing
Agreement or remitted to the Servicer pursuant to this Section. Pursuant to
Section 3.14(b) of the Sale and Servicing Agreement, the Servicer shall be
obligated to deposit in the Collection Account, the Expense Account or the
Distribution Account, as applicable, the amount
46
of any loss incurred in respect of any such Permitted Investment made with funds
in such accounts immediately upon realization of such loss.
(c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Indenture Trustee may and, subject to Article VI, upon
the request of the Insurer, shall, take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate Proceedings.
ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Holders of any Notes but with the
consent of the Insurer, as evidenced to the Indenture Trustee, the Issuer and
the Indenture Trustee, when authorized by an Issuer Order, 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 Trust Indenture Act as in force at the
date of the execution thereof), in form satisfactory to the Indenture Trustee,
for any of the following purposes:
(i) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of the Notes, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not adversely affect the
interests of the Holders of the Notes or the Insurer;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
47
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further
appropriate agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by
an Issuer Order, may, also without the consent of any of the Holders of the
Notes but with the prior written consent of the Insurer and with prior notice to
the Rating Agencies by the Issuer, as evidenced to 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 such action
shall not, as evidenced by a written confirmation from the Rating Agencies that
such action will not adversely affect the then current ratings on the Notes
without taking into account the Policy, adversely affect in any material respect
the interests of any Noteholder or the Insurer.
SECTION 9.2. Supplemental Indentures with Consent of Insurer
or Noteholders. The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, also may, with prior notice to the Rating Agencies, with the
consent of the Insurer (or, if an Insurer Default has occurred and is
continuing, the Holders of the Notes evidencing a majority of the Outstanding
Amount of both Classes of Notes, by Act 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, subject to the express rights of the Insurer under the Basic
Documents, no such supplemental indenture shall, without the consent of the
Holder of each Outstanding 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, the interest rate thereon or the amounts payable upon any
redemption of the Notes, change the provision of this Indenture
relating to the application of collections on, or the proceeds of the
sale of, the Trust Property 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;
(ii) 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 (or, in the case of redemption, on or
after the Redemption Date);
(iii) reduce the percentage of the Holders of Notes
entitled to Voting Rights required for any such supplemental indenture,
or for any waiver of compliance with
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certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Holders of Notes
entitled to Voting Rights required to authorize a private sale of Trust
Property as contemplated in Section 5.19(b);
(vi) modify any provision of this Section except to
increase any percentage specified herein or to provide that certain
additional provisions of this Indenture or the Basic Documents cannot
be modified or waived without the consent of the Insurer and Holder of
each Outstanding Note affected thereby;
(vii) 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
(viii) permit the creation of any lien (other than the
Warehouse Liens to be discharged and released as provided in Section
3.5 and 3.12) ranking prior to or on a parity with the lien of this
Indenture with respect to any part of the Trust Property or, except as
otherwise permitted or contemplated herein or in any of the Basic
Documents, terminate the lien of this Indenture on any property at any
time subject hereto or deprive the Holder of any Note or the Insurer of
the security provided by the lien of this Indenture.
The Indenture Trustee may determine whether or not any Notes
would be adversely affected by any supplemental indenture upon receipt of
written confirmation from the Rating Agencies that such action will not
adversely effect the then current ratings on the Notes without taking into
account the Policy and any such determination shall be conclusive upon the
Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Insurer and 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.
SECTION 9.3. Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Indenture Trustee shall
49
be entitled to receive, and subject to Sections 6.1 and 6.2, shall be fully
protected in relying upon, an Opinion of Counsel (and, if requested, an
Officer's Certificate) 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 9.4. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and 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 9.5. Conformity With Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture Act
as then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
SECTION 9.6. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1. Redemption. (a) The Servicer shall have the
option to redeem either Class of Notes, in whole but not in part, at the
Redemption Price, on any Payment Date after which the Note Principal Balance of
the related Class is less than 10% of the Note Principal Balance of such Class
as of the Closing Date. Notice of the exercise of the redemption option pursuant
to this Section 10.01(a) shall be given by the Issuer to the Indenture Trustee
and the Insurer not later than the 5th day of the month immediately preceding
the Redemption Date.
(b) [Reserved].
(c) The Issuer may fund any redemption pursuant to this
Article X through sales of Mortgage Loans in the related Group and other
properties in accordance with Article X of the Sale and Servicing Agreement. The
Issuer is also authorized and shall be permitted to sell
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Mortgage Loans and other properties as provided in Section 10.02 of the Sale and
Servicing Agreement, whether or not in connection with a redemption of the Notes
pursuant to this Article X.
SECTION 10.2. Notice. Notice of any redemption of a Class of
Notes pursuant to this Article X shall be given to Noteholders by the Indenture
Trustee in accordance with Section 8.3(f).
SECTION 10.3. Presentation and Surrender of Notes and Payment.
The provisions of Section 8.3(f) shall apply with respect to the presentation
and surrender of Notes for payment and the consequences of any failure to
present or surrender any Note for payment in connection with a redemption
pursuant to this Article X. Upon presentation and surrender of any Note in
connection with a redemption pursuant to this Article X as contemplated in this
Article X and Section 8.3(f), the Indenture Trustee shall pay to the Noteholder
in respect of such Note the Redemption Price.
ARTICLE XI
Certain Matters Regarding the Insurer
SECTION 11.1. Rights of the Insurer to Exercise Rights of
Class A Noteholders. The Indenture Trustee and, by accepting any Note, each
Class A Noteholder, agrees that unless an Insurer Default has occurred and is
continuing, the Insurer shall have the right to exercise all rights of the Class
A Noteholders under this Indenture and the Sale and Servicing Agreement
(including all Voting Rights) (except as provided in Section 9.2 and except as
otherwise expressly required by the TIA) without any further consent of the
Class A Noteholders, including, without limitation the rights enumerated in
Sections 5.2, 5.12, 5.19, 5.20 and 6.13 of this Indenture and, so long as no
Insurer Default shall have occurred and be continuing, the consent of the
Insurer to any action or matter (except as provided in Section 9.2) shall be
deemed to also constitute the consent of the requisite percentage of Noteholders
required by this Indenture or the Sale and Servicing Agreement in respect of
such action or matter. In addition, each Class A Noteholder agrees that, unless
an Insurer Default has occurred and is continuing, the rights referred to above
may be exercised by the Class A Noteholders only with the prior written consent
of the Insurer.
SECTION 11.2. Indenture Trustee to Act Solely with Consent of
the Insurer. Unless an Insurer Default has occurred and is continuing, the
Indenture Trustee shall not:
(a) agree to any amendment of this Indenture pursuant to
Section 9.1 or 9.2 hereof or of the Sale and Servicing Agreement pursuant to
Section 12.01 thereof;
(b) undertake any litigation pursuant to Section 6.19 of
this Indenture; or
(c) terminate the Servicer pursuant to Section 7.01 of
the Sale and Servicing Agreement,
without the prior written consent of the Insurer which consent shall not be
unreasonably withheld.
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SECTION 11.3. Trust Property and Accounts Held for Benefit of
the Insurer. The Indenture Trustee shall hold the Trust Property and the
Mortgage Files for the benefit of the Noteholders and the Insurer and all
references in this Indenture and in the Notes to the benefit of Holders of the
Notes shall be deemed to include the Insurer unless an Insurer default has
occurred and is continuing. The Indenture Trustee shall cooperate in all
reasonable respects with any reasonable request by the Insurer for action to
preserve or enforce the Insurer's rights or interests under this Indenture and
the Notes.
SECTION 11.4. Claims Upon the Policy; Policy Payments Account.
(a) If, by the close of business on the third Business Day prior to a Payment
Date, the Indenture Trustee determines, based on the Remittance Report, that a
Deficiency Amount for any Payment Date is greater than zero, then the Indenture
Trustee shall give notice to the Insurer by telephone or telecopy of the amount
of such Deficiency Amount. Such notice of such Deficiency Amount shall be
confirmed in writing in the form set forth as Exhibit A to the Policy to the
Insurer and the Fiscal Agent (as defined in the Policy), if any, at or before
10:00 a.m., New York time, on the second Business Day prior to such Payment
Date. Following receipt by the Insurer of such notice in such form, the Insurer
will pay any amount payable under the Policy on the later to occur of (i) 12:00
noon, New York time, on the second Business Day following such receipt and (ii)
12:00 noon, New York time, on the Payment Date to which such deficiency relates,
as provided in Exhibit A to the Policy.
(b) The Indenture Trustee shall establish separate special
purpose trust accounts for the benefit of Holders of each Class of Notes and the
Insurer referred to herein as the "Policy Payments Accounts" over which the
Indenture Trustee shall have exclusive control and sole right of withdrawal. The
Indenture Trustee shall deposit any amount paid under the Policy in the Policy
Payments Accounts and distribute such amount only for purposes of payment to
Holders of Class A Notes of the Scheduled Payment for which a claim was made and
such amount may not be applied to satisfy any costs, expenses or liabilities of
the Servicer, the Indenture Trustee or the Issuer. Amounts paid under the Policy
shall be transferred to the Distribution Account in accordance with the next
succeeding paragraph and disbursed by the Indenture Trustee to Holders of the
applicable Class of Class A Notes in accordance with Section 8.3(b) or Article
X, as applicable. It shall not be necessary for such payments to be made by
checks or wire transfers separate from the checks or wire transfers used to pay
the Scheduled Payment with other funds available to make such payment. However,
the amount of any payment of principal of or interest on the applicable Class of
Class A Notes to be paid from funds transferred from the Policy Payments Account
shall be noted as provided in paragraph (c) below in the Note Register and in
the statement to be furnished to Holders of the applicable Class of Class A
Notes pursuant to Section 8.5. Funds held in the Policy Payments Account shall
not be invested.
On any Payment Date with respect to which a claim has been
made under the Policy, the amount of any funds received by the Indenture
Trustee as a result of any claim under the Policy, to the extent required to
make the Scheduled Payment on such Payment Date, shall be withdrawn from the
Policy Payments Account and deposited in the Distribution Account and applied
by the Indenture Trustee, together with the other funds to be withdrawn from
the Distribution Account pursuant to Section 8.3(b) or Article X, as
applicable, directly to the payment in full of the Scheduled Payment due on
the applicable Class of Class A Notes. Funds received by the Indenture Trustee
as a result of any claim under the Policy shall be deposited by
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the Indenture Trustee in the Policy Payments Account and used solely for payment
to the Holders of the applicable Class of Class A Notes and may not be applied
to satisfy any costs, expenses or liabilities of the Servicer, the Indenture
Trustee or the Issuer. Any funds remaining in the Policy Payments Account on the
first Business Day following a Payment Date shall be remitted to the Insurer,
pursuant to the instructions of the Insurer, by the end of such Business Day.
(c) The Indenture Trustee shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any Class A
Note from moneys received under the Policy. The Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon one
Business Day's prior notice to the Indenture Trustee.
SECTION 11.5. Notices to the Insurer. All notices, statements,
reports, certificates or opinions required by this Indenture to be sent to any
other party hereto or to any of the Noteholders shall also be sent to the
Insurer.
SECTION 11.6. Third-Party Beneficiary. The Insurer shall be a
third-party beneficiary of this Agreement, entitled to enforce the provisions
hereof as if a party hereto.
SECTION 11.7. Indenture Trustee to Hold the Policy. The
Indenture Trustee will hold the Policy in trust as agent for the Holders of the
Class A Notes for the purpose of making claims thereon and distributing the
proceeds thereof. The Policy, prior to any distributions thereon deposited into
the Policy Payments Account, will not constitute part of the Trust Property.
Each Holder of Class A Notes, by accepting its Class A Notes, appoints the
Indenture Trustee as attorney-in-fact for the purpose of making claims on the
Policy.
ARTICLE XII
Miscellaneous
SECTION 12.1. Compliance Certificates and Opinions, etc. 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 Insurer (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, 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;
53
(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;
and
(iv) a statement as to whether, in the opinion of each
such signatory such condition or covenant has been complied with.
SECTION 12.2. Form of Documents Delivered to Indenture
Trustee. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his or
her 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 Servicer, the Unaffiliated Seller or the Issuer,
stating that the information with respect to such factual matters is in the
possession of the Servicer, the Unaffiliated 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 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 conclusively rely upon the truth and accuracy of any
statement or opinion contained in any such document as provided in Article VI.
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SECTION 12.3. Acts of Noteholders. (a) Subject to Section
11.1, Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by Noteholders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by agents duly appointed in
writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee, and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any customary manner of the
Indenture Trustee.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 12.4. Notices, etc. to Indenture Trustee, Issuer,
Insurer and Rating Agencies. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to or filed
with:
(a) The Indenture Trustee by any Noteholder or by the
Issuer shall be sufficient for every purpose hereunder if personally delivered,
delivered by overnight courier or mailed first-class and shall be deemed to have
been duly given upon receipt to the Indenture Trustee at its Corporate Trust
Office and any notice delivered by facsimile shall be addressed to the Corporate
Trust Office, telecopy number (000) 000-0000, or
(b) The Issuer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if personally
delivered, delivered by facsimile or overnight courier or mailed first class,
and shall deemed to have been duly given upon receipt to the Issuer addressed
to: HomeGold Home Equity Loan Trust 1999-1, in care of Wilmington Trust Company,
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration, or at any other address previously
furnished in writing to the Indenture Trustee by Issuer. The Issuer shall
promptly transmit any notice received by it from the Noteholders to the
Indenture Trustee.
(c) The Insurer by the Issuer or the Indenture Trustee
shall be sufficient for any purpose hereunder if in writing and mailed by
first-class mail personally delivered or telecopied to the recipient as follows:
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To the Insurer: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department
Re: HomeGold Home Equity Loan Trust 1999-1
Telecopy: (000) 000-0000
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, delivered by overnight courier or first class or via
facsimile to (i) in the case of Moody's, at the following address: Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax No.:
(000) 000-0000 and (ii) in the case of S&P, at the following address: Standard
& Poor's Ratings Group, 00 Xxxxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx 00000,
Attention: Asset Backed Surveillance Department, Fax No.: (000) 000-0000; or
as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 12.5. Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the
Indenture Trustee but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder.
SECTION 12.6. 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 or any
Note Paying Agent to such Holder, that is different from the methods provided
for in this Indenture for such payments or notices, provided that such methods
are reasonable and consented to by the Indenture Trustee (which consent shall
not be unreasonably
56
withheld). The Issuer will furnish to the Indenture Trustee a copy of each such
agreement and the Indenture Trustee will cause payments to be made and notices
to be given in accordance with such agreements.
SECTION 12.7. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose
duties on any person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 12.8. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 12.9. Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors.
SECTION 12.10. Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 12.11. Benefits of Indenture. The Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this 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, the Insurer and the Noteholders, and any other party
secured hereunder, and any other person with an ownership interest in any part
of the Trust Property, any benefit or any legal or equitable right, remedy or
claim under this Indenture. The Insurer may disclaim any of its rights and
powers under this Indenture (in which case the Indenture Trustee may exercise
such right or power hereunder), but not its duties and obligations under the
Policy, upon delivery of a written notice to the Indenture Trustee.
SECTION 12.12. 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 12.13. GOVERNING LAW. THIS INDENTURE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
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SECTION 12.14. 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 12.15. 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 Trust or any other counsel reasonably
acceptable to the Indenture Trustee and the Insurer) 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 12.16. Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Unaffiliated Seller, the Depositor, the Servicer, 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
Unaffiliated Seller, the Depositor, the Servicer, 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 Unaffiliated Seller, the Depositor, the
Servicer, the Indenture Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Unaffiliated Seller, the
Depositor, the Servicer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Unaffiliated Seller, the Depositor, the Servicer, the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such 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 VII and VIII of the Trust Agreement.
SECTION 12.17. No Petition. The Indenture Trustee, by entering
into this Indenture, and each Noteholder, by accepting a Note, hereby covenant
and agree that they will not at any time institute against the Unaffiliated
Seller, the Depositor, or the Issuer, or join in any institution against the
Unaffiliated Seller, 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 the Basic Documents.
SECTION 12.18. Inspection. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee or of the Insurer, during the Issuer's normal business hours, to examine
all the books of account, records, reports, and other papers of the Issuer, to
make copies and extracts therefrom, to cause such books to be audited by
independent certified public accountants, and to discuss the Issuer's affairs,
finances and accounts with the Issuer's officers, employees, and independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Indenture Trustee
58
shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its Obligations hereunder.
SECTION 12.19. Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely as Owner Trustee of the Issuer under the Trust Agreement, in the exercise
of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties to this Agreement and
by any person claiming by, through or under them and (d) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
59
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee
have caused this Indenture to be duly executed by their respective officers,
hereunto duly authorized, all as of the day and year first above written.
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee,
By:
-----------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK, not in its
individual capacity but solely as
Indenture Trustee,
By:
-----------------------------------------
Name:
Title:
60
EXHIBIT A
GLOSSARY OF DEFINED TERMS
[See Separate Document]
A-1
EXHIBIT B-1
[Form of Class A-1 Note]
REGISTERED $18,418,000
No. A-1
CUSIP NO. 43740C AA 6
Unless this Note is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Issuer or its agent for registration of transfer, exchange or
payment, and any Note issued is registered in the name of Cede & Co. or in
such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
Series 1999-1, Class A-1 Class A-1 Note Principal
Balance as of the Issue Date:
$18,418,000
Interest Rate: 6.87%
Date of Sale and Servicing Agreement: Denomination: $18,418,000
May 1, 1999
First Payment Date: Servicer:
June 15, 1999 HomeGold, Inc.
Final Maturity Date: July 15, 2029 or, Indenture Trustee:
if earlier, the Redemption Date (as defined)
First Union National Bank
Issue Date: May 27, 1999
CUSIP: 43740C AA 6
PAYMENTS IN REDUCTION OF THE NOTE PRINCIPAL BALANCE OF THIS NOTE MAY BE
MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE
PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE.
THIS NOTE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN THE
SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, THE UNAFFILIATED
SELLER, THE CONTRIBUTOR, THE DEPOSITOR OR ANY OF THEIR AFFILIATES.
NEITHER THIS NOTE NOR THE UNDERLYING
B-1-1
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES.
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
CLASS A-1 ASSET BACKED NOTES
HomeGold Home Equity Loan Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
CEDE & CO., or registered assigns, the principal sum of ($18,418,000), such
amount payable on each Payment Date in an amount equal to the result obtained
by multiplying (i) a fraction the numerator of which is the initial Note
Principal Balance hereof and the denominator of which is the initial aggregate
Note Principal Balance of the Class A-1 Notes by (ii) the aggregate amount, if
any, payable on such Payment Date in respect of principal on the Class A-1
Notes pursuant to Section 8.3 of the Indenture; provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
Final Maturity Date. The unpaid principal of this Note shall accrue interest
at the rate of [6.87]% per annum, which (except for Shortfall Interest
Deferred Amounts and Accrued Shortfall Interest Deferred Amounts (as defined
in the Indenture), which shall be due and payable only to the extent funds are
available therefor as provided in the Indenture) shall be due and payable on
each Payment Date prior to the Final Payment Date and (without regard to the
availability of funds for the payment of Shortfall Interest Deferred Amounts
and Accrued Shortfall Interest Carry Forward Amounts) on the Final Payment
Date. The Interest Accrual Period for any Payment Date is the calendar month
immediately preceding the month in which such Payment Date occurs. All
calculations of interest on the Class A-1 Notes will be based on a 360-day
year consisting of twelve 30-day months. Payments in respect of principal and
interest will be made of each Payment Date to the Person in whose name this
Note is registered on the last Business Day of the month immediately preceding
the month of such payment as provided in the Indenture.
The principal of and interest on this Note are payable in
such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
The Notes are entitled to the benefits of a financial
guaranty insurance policy (the "Policy") issued by Financial Security
Assurance Inc. (the "Insurer"), pursuant to which the Insurer has
unconditionally guaranteed payments of principal and interest (excluding
Shortfall Interest Deferred Amounts and Accrued Shortfall Interest Carry
Forward Amounts), all as more fully set forth in the Indenture and the Policy.
For purposes of federal income, state and local income and
franchise and any other income taxes, the Issuer will treat the Notes as
indebtedness of the Issuer and has instructed the Indenture Trustee to treat
the Notes as indebtedness of the Issuer for federal state tax reporting
purposes.
B-1-2
Reference is made to the further provisions of this Note
following the Indenture Trustee's Certificate of Authentication, which shall
have the same effect as though fully set forth herein.
Unless the Certificate of Authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual
signature, this Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.
B-1-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer.
Date: May 27, 1999
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee under the Trust
Agreement
By:
---------------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date: May 27, 1999
FIRST UNION NATIONAL BANK, not in its
individual capacity but solely as
Indenture Trustee,
By:
---------------------------------------
Authorized Signatory
B-1-4
FURTHER PROVISIONS
This Class A-1 Note is one of a duly authorized issue of
Notes of the Issuer, designated as its Class A Asset Backed Notes (herein
called the "Class A Notes"), all issued under an Indenture dated as of May 1,
1999 (such Indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and First Union National Bank, as trustee
(the "Indenture Trustee," which term includes any successor Indenture Trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as
so supplemented or amended.
The Class A Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class A Notes will be payable on each
Payment Date in an amount described above. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing June 15, 1999. The term "Payment Date"
shall be deemed to include the Final Payment Date and, unless the context
otherwise requires, the Final Maturity Date. The Final Maturity Date of the
Class A-1 Notes is July 15, 2029 or, if earlier, the Redemption Date (as
defined below).
As described above, the entire unpaid principal amount of
this Note shall be due and payable on the earlier of the Final Payment Date
and the Redemption Date, if any. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes may be declared, and upon such
declaration shall become, due and payable if an Event of Default shall have
occurred and be continuing, in the manner, with the effect and subject to the
conditions provided in the Indenture.
As provided in the Indenture, the Issuer shall have the
option (with the consent of the Insurer, if the exercise of such option would
result in a draw on the Policy or would result in outstanding amounts due to
the Insurer under the Insurance Agreement) to redeem the Notes, in whole but
not in part, at the Redemption Price (as defined in the Indenture), on any
Payment Date after which the aggregate Class A-1 Note Principal Balance is
$1,841,800 or less.
As described in the Sale and Servicing Agreement, each of
the Insurer and the Servicer shall, subject to certain conditions, have the
right to purchase all of the Mortgage Loans and properties acquired in respect
thereof if the aggregate principal balance of the Mortgage Loans and such
properties is equal to or less than 5% (in the case of the Insurer) or 10% (in
the case of the Servicer) of the aggregate principal balance thereof as of
their respective Cut-off Dates. The Trust may, subject to certain conditions,
also fund any redemption of the Notes as described above through the sale of
Mortgage Loans and related properties. The Sale and Servicing Agreement
provides that the Servicer shall have a right of first refusal in respect of
certain proposed sales of Mortgage Loans and related properties.
B-1-5
So long as this Note is registered in the name of a
Depository or its nominee, the Trustee will make payments of principal and
interest on this Note by wire transfers of immediately available funds to the
Depository or its nominee. Otherwise all payments to the Holder of this Note
under the Indenture will be made or caused to be made by or on behalf of the
Indenture Trustee by wire transfer in immediately available funds to the
account of the Person entitled thereto if such Person shall have so notified
the Indenture Trustee in writing at least five Business Days prior to the
Record Date immediately prior to such Payment Date and is the registered owner
of Class A-1 Notes the aggregate initial Note Principal Balance of which is in
excess of $5,000,000, or by check mailed by first class mail to the address of
the Person entitled thereto, as such name and address shall appear on the Note
Register, provided that the Indenture Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final payment on this Note will be made after due notice by the
Indenture Trustee of the pendency of such payment and only upon presentation
and surrender of this Note at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.
Payments in respect of the Class A-1 Notes are limited
recourse obligations of the Issuer payable solely from certain collections and
recoveries respecting the Mortgage Loans and payments under the Policy, all as
more specifically set forth herein, in the Indenture and the Policy. As
provided in the Sale and Servicing Agreement and the Indenture, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than payments to Noteholders, such purposes
including reimbursement of advances made, or certain expenses incurred, with
respect to the Mortgage Loans.
The Indenture and the Sale and Serving Agreement each
permits, with certain exceptions therein provided, the amendment thereof and
the modification of the rights and obligations of the Depositor, the Servicer,
the Indenture Trustee and the rights of the Noteholders under the Indenture
and the Sale and Servicing Agreement, as the case may be, at any time by the
parties thereto with the consent of the Holders of Notes entitled to at least
66% of the Voting Rights and the Insurer. Any such consent by the Holder of
this Note shall be conclusive and binding on such Holder and upon all future
Holders of this Note and of any Note issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Note. The Indenture and the Sale and Servicing Agreement each
also permit the amendment thereof, in certain limited circumstances, without
the consent of the Holders of any of the Notes. In addition, pursuant to the
Indenture and the Sale and Servicing Agreement, the Insurer, so long as no
Insurer Default shall have occurred and be continuing, shall, except in
limited circumstances, be entitled to exercise all rights of the Noteholders
(including voting rights) under the Indenture and the Sale and Servicing
Agreement without any further consent of the Noteholders and, so long as no
Insurer Default shall have occurred and be continuing, the consent to any
action or other matter of the Insurer shall be deemed to also constitute the
consent thereto of the requisite percentage of Noteholders required by the
Indenture in respect of such action or matter.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Note Register upon surrender of this Note for registration of transfer at the
offices or agencies appointed by the Indenture Trustee as provided in the
Indenture, (i) duly endorsed by, or accompanied by an assignment in the form
below or
B-1-6
other written instrument of transfer in form satisfactory to the Indenture
Trustee and the Note Registrar 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 Securities
Transfer Agents Medallion Program ("Stamp") or such other "signature guarantee
program" as may be determined by the Note Registrar in addition to, or in
substitution for, Stamp, all in accordance with the Exchange Act, and (ii)
accompanied by such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of the same Class in authorized denominations
evidencing the same aggregate principal amount will be issued to the designated
transferee or transferees.
The Notes are issuable in fully registered form only without
coupons in Classes and denominations and in the original principal amounts
specified in the Indenture. As provided in the Indenture and subject to
certain limitations therein set forth, Notes are exchangeable for new Notes of
the same Class in authorized denominations in the same aggregate principal
amount, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Notes, but the Indenture Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Notes.
Any Noteholder using the assets of (i) an employee benefit
plan (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), that is subject to the provisions of Title
I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended, or (iii) any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity to purchase
the Notes, or to whom the Notes are transferred, will be deemed to have
represented that the acquisition and continued holding of the Notes will be
covered by a U.S. Department of Labor Class Exemption.
The Depositor, the Servicer, the Indenture Trustee, the
Owner Trustee, the Insurer and the Note Registrar and any agent of the
Depositor, the Servicer, the Indenture Trustee, the Owner Trustee, the Insurer
or the Note Registrar may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Indenture Trustee, the Owner Trustee, the Insurer, the Note
Registrar nor any such agent shall be affected by notice to the contrary.
The recitals contained herein shall be taken as statements
of the Issuer and the Indenture Trustee assumes no responsibility for their
correctness.
Each Noteholder or Note Owner, by acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Unaffiliated Seller, the Depositor,
the Servicer, the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
owner, beneficiary, agent, officer, director or
B-1-7
employee of the Unaffiliated Seller, the Depositor, the Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Unaffiliated Seller, the Depositor, the
Servicer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Unaffiliated Seller, the Depositor, the Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
except that any such owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Note Owner, by acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note covenants and
agrees that by accepting the benefits of the Indenture that such Noteholder
will not at any time institute against the Unaffiliated Seller, the Depositor,
or the Issuer or join in any institution against the Unaffiliated Seller, 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, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and the Insurer and any agent of
the Issuer, the Indenture Trustee or the Insurer may treat the Person in whose
name this Note (as of the day of determination or as of such other date as may
be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Issuer, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
The term "Issuer" as used in this Note includes any
successor to the Issuer under the Indenture.
This Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of
law provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Note at the times, place, and rate, and in the coin or
currency herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Indenture or the Basic Documents, neither Wilmington
Trust Company in its individual capacity, any owner of a beneficial interest
in the Issuer, nor any of their respective 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, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and
indemnifications have been made by the Issuer for the sole purposes of binding
B-1-8
the interests of the Issuer in the assets of the Issuer. The Holder of this
Note by the acceptance hereof agrees that except as expressly provided in the
Indenture or the Basic Documents, in the case of a Default or 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 Note.
B-1-9
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
---------
(Cuss) (Minor)
TEN ENT - as tenants by the entireties under
Uniform Gifts to Minors Act
JT TEN - as joint tenants with
rights of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the
above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto ________________________________________________
______________________________________ (Please print or typewrite name, address
including postal zip code, and Taxpayer Identification Number of
assignee)______________________________________________________________________
______________ the within Note on the books kept for registration thereof, with
full power of substitution in the premises.
I (we) further direct the Note Registrar to issue a new Note
of like tenor to the above named assignee and deliver such Note to the
following address: _____________________________________________________________
__________________________________________________________________________
Dated:
------------------------------------------
Signature by or on behalf of assignor
------------------------------------------
Signature Guaranteed
B-1-10
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Payments shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
______________________________________________________ for the account of _____,
account number __________________________or, if mailed by check, to ____________
_______________________________Applicable statements should be mailed to _______
________________________________________________________________________________
This information is provided by _______________, as its agent.
B-1-11
EXHIBIT B-2
[Form of Class A-2 Note]
REGISTERED $35,546,000
No. A-2
CUSIP NO. 43740C AB 4
Unless this Note is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Issuer or its agent for registration of transfer, exchange or
payment, and any Note issued is registered in the name of Cede & Co. or in
such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
Series 1999-1, Class A-2 Class A-2 Note Principal Balance
as of the Issue Date: $35,546,000
Interest Rate: 6.82%
Date of Sale and Servicing Agreement: Denomination: $35,546,000
May 1, 1999
First Payment Date: Servicer:
June 15, 1999 HomeGold, Inc.
Final Maturity Date: August 15, 2029 or, Indenture Trustee:
if earlier, the Redemption Date (as defined)
First Union National Bank
Issue Date: May 27, 1999
CUSIP: 43740C AB 4
PAYMENTS IN REDUCTION OF THE NOTE PRINCIPAL BALANCE OF THIS NOTE MAY BE
MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE
PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE.
THIS NOTE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN THE
SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, THE UNAFFILIATED
SELLER, THE CONTRIBUTOR, THE DEPOSITOR OR ANY OF THEIR AFFILIATES.
NEITHER THIS NOTE NOR THE UNDERLYING
B-1-1
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES.
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
CLASS A-2 ASSET BACKED NOTES
HomeGold Home Equity Loan Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
CEDE & CO., or registered assigns, the principal sum of ($53,964,000), such
amount payable on each Payment Date in an amount equal to the result obtained
by multiplying (i) a fraction the numerator of which is the initial Note
Principal Balance hereof and the denominator of which is the initial aggregate
Note Principal Balance of the Class A-2 Notes by (ii) the aggregate amount, if
any, payable on such Payment Date in respect of principal on the Class A-2
Notes pursuant to Section 8.3 of the Indenture; provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
Final Maturity Date. The unpaid principal of this Note shall accrue interest
at the rate of 6.82% per annum, which (except for Shortfall Interest Deferred
Amounts and Accrued Shortfall Interest Deferred Amounts (as defined in the
Indenture), which shall be due and payable only to the extent funds are
available therefor as provided in the Indenture) shall be due and payable on
each Payment Date prior to the Final Payment Date and (without regard to the
availability of funds for the payment of Shortfall Interest Deferred Amounts
and Accrued Shortfall Interest Carry Forward Amounts) on the Final Payment
Date. The Interest Accrual Period for any Payment Date is the calendar month
immediately preceding the month in which such Payment Date occurs. All
calculations of interest on the Class A-2 Notes will be based on a 360-day
year consisting of twelve 30-day months. Payments in respect of principal and
interest will be made of each Payment Date to the Person in whose name this
Note is registered on the last Business Day of the month immediately preceding
the month of such payment as provided in the Indenture.
The principal of and interest on this Note are payable in
such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
The Notes are entitled to the benefits of a financial
guaranty insurance policy (the "Policy") issued by Financial Security
Assurance Inc. (the "Insurer"), pursuant to which the Insurer has
unconditionally guaranteed payments of principal and interest (excluding
Shortfall Interest Deferred Amounts and Accrued Shortfall Interest Carry
Forward Amounts), all as more fully set forth in the Indenture and the Policy.
For purposes of federal income, state and local income and
franchise and any other income taxes, the Issuer will treat the Notes as
indebtedness of the Issuer and has instructed the Indenture Trustee to treat
the Notes as indebtedness of the Issuer for federal state tax reporting
purposes.
B-1-2
Reference is made to the further provisions of this Note
following the Indenture Trustee's Certificate of Authentication, which shall
have the same effect as though fully set forth herein.
Unless the Certificate of Authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual
signature, this Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer.
Date: May 27, 1999
HOMEGOLD HOME EQUITY LOAN TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee under the Trust
Agreement
By:
---------------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date: May 27, 1999
FIRST UNION NATIONAL BANK, not in its
individual capacity but solely as
Indenture Trustee,
By:
---------------------------------------
Authorized Signatory
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FURTHER PROVISIONS
This Class A-2 Note is one of a duly authorized issue of
Notes of the Issuer, designated as its Class A Asset Backed Notes (herein
called the "Class A Notes"), all issued under an Indenture dated as of May 1,
1999 (such Indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and First Union National Bank, as trustee
(the "Indenture Trustee," which term includes any successor Indenture Trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as
so supplemented or amended.
The Class A Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class A Notes will be payable on each
Payment Date in an amount described above. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing June 15, 1999. The term "Payment Date"
shall be deemed to include the Final Payment Date and, unless the context
otherwise requires, the Final Maturity Date. The Final Maturity Date of the
Class A-2 Notes is August 15, 2029 or, if earlier, the Redemption Date (as
defined below).
As described above, the entire unpaid principal amount of
this Note shall be due and payable on the earlier of the Final Payment Date
and the Redemption Date, if any. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes may be declared, and upon such
declaration shall become, due and payable if an Event of Default shall have
occurred and be continuing, in the manner, with the effect and subject to the
conditions provided in the Indenture.
As provided in the Indenture, the Issuer shall have the
option (with the consent of the Insurer, if the exercise of such option would
result in a draw on the Policy or would result in outstanding amounts due to
the Insurer under the Insurance Agreement) to redeem the Notes, in whole but
not in part, at the Redemption Price (as defined in the Indenture), on any
Payment Date after which the aggregate Class A-2 Note Principal Balance is
$1,841,800 or less.
As described in the Sale and Servicing Agreement, each of
the Insurer and the Servicer shall, subject to certain conditions, have the
right to purchase all of the Mortgage Loans and properties acquired in respect
thereof if the aggregate principal balance of the Mortgage Loans and such
properties is equal to or less than 5% (in the case of the Insurer) or 10% (in
the case of the Servicer) of the aggregate principal balance thereof as of
their respective Cut-off Dates. The Trust may, subject to certain conditions,
also fund any redemption of the Notes as described above through the sale of
Mortgage Loans and related properties. The Sale and Servicing Agreement
provides that the Servicer shall have a right of first refusal in respect of
certain proposed sales of Mortgage Loans and related properties.
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So long as this Note is registered in the name of a
Depository or its nominee, the Trustee will make payments of principal and
interest on this Note by wire transfers of immediately available funds to the
Depository or its nominee. Otherwise all payments to the Holder of this Note
under the Indenture will be made or caused to be made by or on behalf of the
Indenture Trustee by wire transfer in immediately available funds to the
account of the Person entitled thereto if such Person shall have so notified
the Indenture Trustee in writing at least five Business Days prior to the
Record Date immediately prior to such Payment Date and is the registered owner
of Class A-2 Notes the aggregate initial Note Principal Balance of which is in
excess of $5,000,000, or by check mailed by first class mail to the address of
the Person entitled thereto, as such name and address shall appear on the Note
Register, provided that the Indenture Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final payment on this Note will be made after due notice by the
Indenture Trustee of the pendency of such payment and only upon presentation
and surrender of this Note at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.
Payments in respect of the Class A-2 Notes are limited
recourse obligations of the Issuer payable solely from certain collections and
recoveries respecting the Mortgage Loans and payments under the Policy, all as
more specifically set forth herein, in the Indenture and the Policy. As
provided in the Sale and Servicing Agreement and the Indenture, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than payments to Noteholders, such purposes
including reimbursement of advances made, or certain expenses incurred, with
respect to the Mortgage Loans.
The Indenture and the Sale and Serving Agreement each
permits, with certain exceptions therein provided, the amendment thereof and
the modification of the rights and obligations of the Depositor, the Servicer,
the Indenture Trustee and the rights of the Noteholders under the Indenture
and the Sale and Servicing Agreement, as the case may be, at any time by the
parties thereto with the consent of the Holders of Notes entitled to at least
66% of the Voting Rights and the Insurer. Any such consent by the Holder of
this Note shall be conclusive and binding on such Holder and upon all future
Holders of this Note and of any Note issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Note. The Indenture and the Sale and Servicing Agreement each
also permit the amendment thereof, in certain limited circumstances, without
the consent of the Holders of any of the Notes. In addition, pursuant to the
Indenture and the Sale and Servicing Agreement, the Insurer, so long as no
Insurer Default shall have occurred and be continuing, shall, except in
limited circumstances, be entitled to exercise all rights of the Noteholders
(including voting rights) under the Indenture and the Sale and Servicing
Agreement without any further consent of the Noteholders and, so long as no
Insurer Default shall have occurred and be continuing, the consent to any
action or other matter of the Insurer shall be deemed to also constitute the
consent thereto of the requisite percentage of Noteholders required by the
Indenture in respect of such action or matter.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Note Register upon surrender of this Note for registration of transfer at the
offices or agencies appointed by the Indenture Trustee as provided in the
Indenture, (i) duly endorsed by, or accompanied by an assignment in the form
below or
B-1-6
other written instrument of transfer in form satisfactory to the Indenture
Trustee and the Note Registrar 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 Securities
Transfer Agents Medallion Program ("Stamp") or such other "signature guarantee
program" as may be determined by the Note Registrar in addition to, or in
substitution for, Stamp, all in accordance with the Exchange Act, and (ii)
accompanied by such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of the same Class in authorized denominations
evidencing the same aggregate principal amount will be issued to the designated
transferee or transferees.
The Notes are issuable in fully registered form only without
coupons in Classes and denominations and in the original principal amounts
specified in the Indenture. As provided in the Indenture and subject to
certain limitations therein set forth, Notes are exchangeable for new Notes of
the same Class in authorized denominations in the same aggregate principal
amount, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Notes, but the Indenture Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Notes.
Any Noteholder using the assets of (i) an employee benefit
plan (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), that is subject to the provisions of Title
I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended, or (iii) any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity to purchase
the Notes, or to whom the Notes are transferred, will be deemed to have
represented that the acquisition and continued holding of the Notes will be
covered by a U.S. Department of Labor Class Exemption.
The Depositor, the Servicer, the Indenture Trustee, the
Owner Trustee, the Insurer and the Note Registrar and any agent of the
Depositor, the Servicer, the Indenture Trustee, the Owner Trustee, the Insurer
or the Note Registrar may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Indenture Trustee, the Owner Trustee, the Insurer, the Note
Registrar nor any such agent shall be affected by notice to the contrary.
The recitals contained herein shall be taken as statements
of the Issuer and the Indenture Trustee assumes no responsibility for their
correctness.
Each Noteholder or Note Owner, by acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Unaffiliated Seller, the Depositor,
the Servicer, the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
owner, beneficiary, agent, officer, director or
B-1-7
employee of the Unaffiliated Seller, the Depositor, the Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Unaffiliated Seller, the Depositor, the
Servicer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Unaffiliated Seller, the Depositor, the Servicer, the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
except that any such owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Note Owner, by acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note covenants and
agrees that by accepting the benefits of the Indenture that such Noteholder
will not at any time institute against the Unaffiliated Seller, the Depositor,
or the Issuer or join in any institution against the Unaffiliated Seller, 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, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and the Insurer and any agent of
the Issuer, the Indenture Trustee or the Insurer may treat the Person in whose
name this Note (as of the day of determination or as of such other date as may
be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Issuer, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
The term "Issuer" as used in this Note includes any
successor to the Issuer under the Indenture.
This Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of
law provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Note at the times, place, and rate, and in the coin or
currency herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Indenture or the Basic Documents, neither Wilmington
Trust Company in its individual capacity, any owner of a beneficial interest
in the Issuer, nor any of their respective 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, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and
indemnifications have been made by the Issuer for the sole purposes of binding
B-1-8
the interests of the Issuer in the assets of the Issuer. The Holder of this
Note by the acceptance hereof agrees that except as expressly provided in the
Indenture or the Basic Documents, in the case of a Default or 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 Note.
B-1-9
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
(Cuss) (Minor)
TEN ENT - as tenants by the entireties under
Uniform Gifts to Minors Act
JT TEN - as joint tenants with rights
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the
above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto _________________________________________________
__________________________(Please print or typewrite name, address including
postal zip code, and Taxpayer Identification Number of assignee) _______________
__________________________________________________________________________ the
within Note on the books kept for registration thereof, with full power of
substitution in the premises.
I (we) further direct the Note Registrar to issue a new Note
of like tenor to the above named assignee and deliver such Note to the following
address: _______________________________________________________________________
_______________________________________________________________________
Dated:
------------------------------------------
Signature by or on behalf of assignor
------------------------------------------
Signature Guaranteed
B-1-10
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Payments shall be made, by wire transfer or otherwise, in
immediately available funds ____________________________________________________
___________________________________________________to for the account of _____,
account number __________________ or, if mailed by check, to ___________________
________________________ Applicable statements should be mailed to ____________
________________________________________________________________________________
This information is provided by ______, as its agent.
B-1-11
EXHIBIT C
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
C-1
