INSURANCE AGREEMENT
among
MBIA INSURANCE CORPORATION
and
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
and
CHARTER MAC ORIGINATION TRUST I
and
CHARTER MAC OWNER TRUST I
and
CHARTER MAC FLOATER CERTIFICATE TRUST I
and
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
as Administrative Agent
and
RELATED CHARTER LP,
as Servicer
and
BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
as Liquidity Agent for the Liquidity Banks
and as an Insured Party
Dated as of May 21, 1998
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Page
SECTION 1.01 Definitions...................................................................3
ARTICLE II THE SURETY BONDS AND PREMIUM
SECTION 2.01 Commitment to Issue Surety Bonds; Increase of Commitment......................4
SECTION 2.02 Conditions Precedent to Issuance of the Surety Bonds..........................4
SECTION 2.03 Premium.......................................................................6
SECTION 2.04 Reimbursement.................................................................7
SECTION 2.05 Fees and Expenses.............................................................8
SECTION 2.06 Payments......................................................................8
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01 Representations, Warranties and Covenants.....................................9
SECTION 3.02 Further Representations and Warranties of Charter............................10
SECTION 3.03 Representations and Warranties of the Surety Provider........................12
SECTION 3.04 Affirmative Covenants of the Charter Entities................................13
SECTION 3.05 Negative Covenants...........................................................15
SECTION 3.06 Affirmative Covenants of the Surety Provider.................................16
ARTICLE IV CONCENTRATION LIMITS; APPRAISALS AND VALUATIONS;NONAPPROVED BONDS
SECTION 4.01 Concentration Limits.........................................................17
SECTION 4.02 Appraisals and Valuations....................................................17
SECTION 4.03 Nonapproved Bonds............................................................18
ARTICLE V EVENTS OF DEFAULT; REMEDIES; RIGHT OF THE CONTROLLINGPERSON TO DIRECT THE OWNER
TRUST AND THE COLLATERAL AGENT
SECTION 5.01 Defaults.....................................................................18
SECTION 5.02 Remedies; No Remedies Exclusive..............................................21
SECTION 5.03 Right of Controlling Person to Direct Actions of the Origination Trust,
the Owner Trust and the Administrative Agent.................................22
ARTICLE VI FURTHER AGREEMENTS
SECTION 6.01 Obligations Absolute.........................................................23
SECTION 6.02 Liability of the Surety Provider.............................................24
SECTION 6.03 Rights of Subrogation; Further Assurances....................................24
SECTION 6.04 Reimbursement of Expenses....................................................25
SECTION 6.05 Indemnification..............................................................25
SECTION 6.06 Reinsurance and Participations...............................................26
SECTION 6.07 No Proceedings...............................................................26
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SECTION 6.08 Successor Servicer...........................................................26
SECTION 6.09 Litigation...................................................................27
SECTION 6.10 Increased Costs; Increased Capital...........................................27
SECTION 6.12 Liquidity Surety Bond Assignment Obligation..................................29
ARTICLE VII MISCELLANEOUS
SECTION 7.01 Amendments, Third-Party Rights...............................................30
SECTION 7.02 Notices......................................................................31
SECTION 7.03 No Waiver: Remedies and Severability.........................................32
SECTION 7.04 Binding Effect; Assignment...................................................33
SECTION 7.05 Termination of this Insurance Agreement and the Surety Bonds;
Continuing Obligations.......................................................34
SECTION 7.06 GOVERNING LAW................................................................34
SECTION 7.07 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL................................34
SECTION 7.08 No Recourse..................................................................35
SECTION 7.09 No Bankruptcy................................................................35
SECTION 7.10 Non-Petition.................................................................36
SECTION 7.11 Counterparts.................................................................36
SECTION 7.12 Captions.....................................................................36
SECTION 7.13 Notice of Limitation of Liability............................................37
EXHIBIT A CERTIFICATE SURETY BOND
EXHIBIT B LIQUIDITY SURETY BOND
EXHIBIT C SCHEDULE OF BONDS
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INSURANCE AGREEMENT
INSURANCE AGREEMENT (the "Agreement"), dated as of May 21, 1998,
by and among MBIA INSURANCE CORPORATION, a New York stock insurance company (the
"Surety Provider"), CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY, a Delaware
business trust ("Charter"), CHARTER MAC ORIGINATION TRUST I, a Delaware business
trust (the "Origination Trust"), CHARTER MAC OWNER TRUST I, a Delaware business
trust (the "Owner Trust," and an Insured Party as hereinafter defined), CHARTER
MAC FLOATER CERTIFICATE TRUST I, a Delaware business trust (the "Certificate
Issuer"), FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as Administrative Agent and
Custodian (the "Administrative Agent") pursuant to the Administration and
Custody Agreement (as hereinafter defined), RELATED CHARTER LP (the "Servicer")
and BAYERISCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as agent (the
"Liquidity Agent") for the Liquidity Banks (as hereinafter defined) pursuant to
the Liquidity Agreement (as hereinafter defined) and as an Insured Party.
PRELIMINARY STATEMENTS
WHEREAS, pursuant to the contribution agreement (the "Charter
Contribution Agreement"), dated as of May 21, 1998, by and between Charter and
the Origination Trust, Charter will from time to time sell, assign, transfer and
contribute Assigned Assets, including Bonds and Bond Collateral (each as
hereinafter defined), to the Origination Trust;
WHEREAS, pursuant to the contribution agreement (the "Origination
Contribution Agreement"), dated as of May 21, 1998, by and between the
Origination Trust and the Owner Trust, the Origination Trust will from time to
time sell, assign, transfer and contribute such Assigned Assets, together with
all of the Origination Trust's rights in, to and under the Charter Contribution
Agreement, to the Owner Trust;
WHEREAS, pursuant to the trust agreement (the "Owner Trust
Agreement"), dated as of May 21, 1998, by and among the Managing Trustees, the
Origination Trust and Wilmington Trust Company, as Registered Trustee, the Owner
Trust will issue its Senior Certificate and its Residual Certificate (each as
hereinafter defined) evidencing beneficial interests in the Owner Trust;
WHEREAS, pursuant to the trust agreement (the "Certificate Issuer
Trust Agreement"), dated as of May 21, 1998, by and between the Owner Trust and
Wilmington Trust Company, as Registered Trustee, the Owner Trust will contribute
the Senior Certificate to the Certificate Issuer and the Certificate Issuer will
issue Low Floater Certificates (as hereinafter defined);
WHEREAS, pursuant to the terms of the Certificate Issuer Trust
Agreement, the
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Low Floater Holders (as hereinafter defined) may tender the Low Floater
Certificates to the Certificate Issuer for purchase upon seven days' notice;
WHEREAS, pursuant to the Liquidity Agreement (the "Liquidity
Agreement"), dated as of May 21, 1998, by and among the Owner Trust, the
Certificate Issuer, the Tender Agent, the Liquidity Banks, the Liquidity Agent
and the Surety Provider, the Liquidity Banks will advance funds to the Tender
Agent, on behalf of the Certificate Issuer, solely for the purpose of purchasing
Low Floater Certificates (i) that have been tendered for purchase and have not
been remarketed by the Remarketing Agent (as hereinafter defined) or (ii) are
subject to mandatory purchase pursuant to Section 6.13 of the Certificate Issuer
Trust Agreement, for which Section 6.13 directs the Tender Agent to draw funds
under the Liquidity Facility;
WHEREAS, the Surety Provider is authorized to transact a surety
and insurance business in the State of New York and, upon entering into this
Insurance Agreement, subject to the terms and conditions set forth below, shall
(i) issue to the Owner Trust for the benefit of the owner of the Senior
Certificate a surety bond in the form of Exhibit A hereto (as amended from time
to time, the "Certificate Surety Bond") guaranteeing the payment of Senior
Certificate Distribution Payments due on the Senior Certificate issued by the
Owner Trust and the Senior Certificate Redemption Price for redemptions of the
Senior Certificate (or portion thereof) pursuant to Section 6.5(b) of the Owner
Trust Agreement, and (ii) issue to the Liquidity Agent a surety bond in the form
of Exhibit B hereto (as amended from time to time, the "Liquidity Surety Bond"
and, together with the Certificate Surety Bond, the "Surety Bonds") guaranteeing
the repayment of the advances (together with the interest thereon) made by the
Liquidity Banks under the Liquidity Facility (as hereinafter defined); and
WHEREAS, Charter, the Surety Provider, the Origination Trust, the
Owner Trust, the Certificate Issuer, the Administrative Agent and the Liquidity
Agent desire to specify conditions precedent to the issuance by the Surety
Provider of the Surety Bonds and to provide for certain other matters related
thereto;
NOW, THEREFORE, in consideration of the premises and of the
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
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ARTICLE I
DEFINITIONS
Section I.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
given to such terms in Appendix A hereto which is incorporated by reference
herein. All other capitalized terms used herein shall have the meanings
specified herein.
(a) All defined terms in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(d) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified, consolidated, continued, extended or supplemented and includes (in the
case of agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
ARTICLE II
THE SURETY BONDS AND PREMIUM
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SECTION II.1 Commitment to Issue Surety Bonds; Increase of
Commitment.
(a) The Surety Provider agrees, on the terms and subject to the
conditions hereinafter set forth, including, without limitation, the conditions
set forth in Section 2.02 hereof, to issue the Certificate Surety Bond and the
Liquidity Surety Bond on the Date of Issuance.
(b) The aggregate Outstanding Face Amount of Low Floater
Certificates shall not at any time exceed the Facility Limit. The Facility Limit
may be increased or decreased by agreement of the parties to this Agreement.
SECTION II.2 Conditions Preecedent to Issuance of the Surety
Bonds. The obligation of the Surety Provider under this Agreement to issue the
Surety Bonds is subject to the satisfaction of the following conditions
precedent:
(a) On or prior to the Date of Issuance, the Surety Provider
shall have received the following documents, each in form and substance
satisfactory to the Surety Provider:
(i) Complete copies of each Transaction Document
(other than the Surety Bonds), with each document to which
Charter is a party being certified by Charter to be accurate and
complete and in full force and effect;
(ii) A copy of the Private Placement Memorandum,
certified by Charter to be final and complete, other than the
information about the Surety Provider and Liquidity Banks that
the Surety Provider and Liquidity Banks have provided for
inclusion in the Private Placement Memorandum;
(iii) Copies, certified by an Authorized
Representative of each of the respective Transaction Parties,
dated the Closing Date, of (A) the respective organizational
documents and (B) the resolutions of each of the governing body
of each entity, or a duly authorized committee thereof (and of
the equity owners of such entity, as may be necessary),
authorizing the execution, delivery and performance by such
Transaction Party of the Transaction Documents to which it is a
party, and certified copies of all documents evidencing other
necessary corporate action and Governmental Approvals, if any,
with respect to this Agreement and the other Transaction
Documents and the Transactions contemplated thereby;
(iv) A certificate, dated the Date of Issuance, of
the appropriate Authorized Representative of each of the
respective Transaction Parties certifying the names, offices and
true signatures of all Authorized Representatives of such entity;
(v) Copies of officially certified documents,
dated not more than 30 days prior to the Date of Issuance,
evidencing the due organization and good standing of each
Transaction Party in the jurisdiction in which it is organized;
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(vi) A certificate, dated the Date of Issuance, of
an Authorized Representative of each of the respective
Transaction Parties certifying with respect to the respective
entity that the representations and warranties of such entity set
forth or incorporated by reference in this Agreement are true and
correct as of the Date of Issuance as if made on the Date of
Issuance;
(vii) A favorable legal opinion or opinions
addressed to the Surety Provider, dated the Date of Issuance,
from counsel to each of the respective Transaction Parties, as
appropriate, in form and substance reasonably satisfactory to the
Surety Provider and covering such matters as the Surety Provider
shall reasonably request, together with a certificate from such
counsel's client directing such counsel to deliver such opinion
and certifying to such factual matters as may be appropriate in
connection with the delivery of such opinions;
(viii) Evidence that each Bond Trustee has been
notified to remit all payments in respect of the Bonds and the
Bond Collateral to the Administrative Agent;
(ix) Evidence that the Administrative Agent is in
possession of the Bonds in accordance with the Administrative and
Custody Agreement; and
(x) Such other documents, certificates, receipts,
instruments, approvals, licenses or consents (and, if requested
by the Surety Provider, certified duplicates or executed copies
thereof) or opinions as may be reasonably necessary to effect the
Transactions, as the Surety Provider shall have reasonably
requested prior to the Date of Issuance.
(b) The Surety Provider shall have received an executed copy of
all legal opinions, certificates and other documents required to be furnished to
or by the respective Transaction Parties or their respective counsel in
connection with the issuance of the Senior Certificate and the Low Floater
Certificates (including, without limitation, all such opinions, certificates and
other documents described in the Transaction Documents or required by any Rating
Agency). Such documents shall be in form and substance satisfactory to the
Surety Provider and each such legal opinion or certificate shall be addressed to
the Surety Provider or accompanied by appropriate reliance letters to the Surety
Provider except as otherwise agreed by the Surety Provider.
(c) Ratings. The Surety Provider shall have received confirmation
from each of the Rating Agencies that (i) the Senior Certificate is rated
investment grade (within the meaning of each such Rating Agency's standard for
investment grade), without consideration of the Surety Bonds, on the Date of
Issuance, and (ii) the Low Floater Certificates, when issued, will be rated
"AAA/A-1+" by Standard & Poor's and "Aaa/P-1" by Moody's.
(d) Conditions and Representations. All conditions in the
respective Transaction Documents relating to the Transactions shall have been
satisfied or waived. Each of the representations and warranties of the
respective Transaction Parties contained in the Transaction Documents shall be
true on and as of the Date of Issuance as if made on the Date of
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Issuance.
(e) Senior Certificate; Low Floater Certificates. The Surety
Provider shall have received specimens of the Senior Certificate and the Low
Floater Certificates. Simultaneously with the issuance of the Surety Bonds, the
Senior Certificate shall have been duly executed and authenticated and delivered
to the Certificate Trust Agent on behalf of the Certificate Issuer and the Low
Floater Certificates shall have been duly authenticated and delivered to The
Depository Trust Company on behalf of the purchasers thereof.
(f) No Legal Impediment. No Applicable Laws shall have been
enacted, entered or deemed applicable by any court or Governmental Authority
which would make the Transactions illegal or otherwise prevent the consummation
thereof.
(g) No Suit, Action or Proceeding. No suit, action or other
proceeding, investigation or injunction, or final judgment relating thereto,
shall be pending or threatened before any court or Governmental Authority in
which it is sought to restrain or prohibit or to obtain damages or other relief
in connection with the Transaction Documents or the consummation of the
Transactions, which, if adversely decided, would have a Material Adverse Change
with respect to any Transaction Party.
(h) Information received. The Surety Provider shall have received
any information which the Surety Provider shall have reasonably requested
regarding the Bonds, the Assigned Assets, the Transaction Documents, the
Transaction Parties and all other financing arrangements with respect thereto,
and the Surety Provider shall have approved and accepted all such matters.
(i) Fees Paid. The Surety Provider shall have received payment of
all amounts due and payable to it on or prior to the Date of Issuance pursuant
to any Transaction Document.
SECTION II.3 Premium. On each Senior Certificate Distribution
Payment Date, in consideration of the issuance by the Surety Provider of the
Surety Bonds, the Owner Trust shall pay or cause to be paid to the Surety
Provider the Surety Bond Premium. The Owner Trust shall receive a credit against
its obligation to pay the Surety Provider the Surety Bond Premium to the extent
the Surety Provider receives payment pursuant to Section 8.3(a) SIXTH(3) of the
Owner Trust Agreement. The Surety Bond Premium shall be calculated on the basis
of a 365-day year, and shall be nonrefundable without regard to whether the
Surety Provider makes any payment under the Surety Bonds or any other
circumstances relating to the Senior Certificate or the Low Floater
Certificates, or provision being made for the payment of the Senior Certificate
or the Low Floater Certificates prior to maturity. All payments of the Surety
Bond Premium shall be made by wire transfer to an account designated from time
to time by the Surety Provider by written notice to Charter, the Owner Trust and
the Administrative Agent. Any failure to pay any Surety Bond Premium will not
affect the Surety Provider's obligations under the Surety Bonds.
9
SECTION II.4 Reimbursement
(a) The Surety Provider shall be entitled to reimbursement for
any payment made under the Certificate Surety Bond or the Liquidity Surety Bond.
Such reimbursement shall be due and payable to the Surety Provider on the date
that any amount (the "Reimbursement Amount") is to be paid pursuant to a Notice
for Payment (as defined in the Surety Bonds), in an amount equal to the amount
to be so paid and all amounts previously paid that remain unreimbursed, together
with interest on any and all amounts remaining unpaid (to the extent permitted
by law, if in respect of any unpaid amounts representing interest), from the
date such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Reimbursement Rate. Amounts on
deposit in the Collection Account, the Redemption Account under the Owner Trust
Agreement, the Cash Trust Account and the Gainshare Account shall be available
to pay the Reimbursement Amount in accordance with the priorities set forth in
Section 8.3(a) of the Owner Trust Agreement.
(b) Reimbursement Related to Deposits. The Surety Provider shall
be entitled to reimbursement from the Administrative Agent for payments made
under the Surety Bonds as a result of Administrative Agent's failure to properly
deposit or properly direct the deposit of any amount required to be deposited in
the Collection Account or the Cash Trust Account pursuant to any Transaction
Document after having received the moneys to make such deposits, together with
interest from the date such amounts became due until paid in full (after as well
as before judgment), at a rate of interest equal to the Default Rate.
(c) No Demand Required; Several Obligations. All amounts payable
under this Section 2.04 are and shall be immediately due and payable on the date
of payment thereof. Each of Charter and the Servicer agrees to pay to the Surety
Provider the respective amounts to which the Surety Provider is entitled as set
forth in clause (a) and (b) of this Section 2.04 with respect to the amounts
owed by it and to pay interest at the Reimbursement Rate on any amounts
described in clauses (a) and (b) of this Section 2.04 from the date payable or
paid by such party until the payment thereof in full. In addition, Charter
agrees to pay the Surety Provider interest at the Reimbursement Rate on any and
all amounts described in Section 2.03 from the date due until payment thereof in
full. Except as provided in this Section 2.04, the obligation to pay to the
Surety Provider the Reimbursement Amount shall not be recourse to Charter, the
Servicer (or any person or organization acting on any its behalf), the
Administrative Agent, any Senior Holder or any Low Floater Holder or any
Affiliate, officer or director of any of them. The Surety Provider shall have
full recourse against the Administrative Agent with respect to amounts payable
to the Surety Provider pursuant to paragraph (b) of this Section 2.04.
SECTION II.5 Fees and Expenses.
(a) Legal Fees. Charter agrees to pay or cause to be paid to the
Surety Provider's attorneys, on the Date of Issuance, the Surety Provider's
reasonable legal fees and disbursements incurred, in connection with the
negotiation, execution and delivery of the Transaction Documents and the
issuance of the Surety Bonds.
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(b) Other Transaction Expenses. Charter further agrees to pay all
out-of-pocket costs and expenses reasonably incurred by the Surety Provider as
of the Date of Issuance in connection with the Surety Provider's due diligence
review of the Assigned Assets and the operations of Charter, the Manager, the
Servicer, the Origination Trust, the Owner Trust and the Certificate Issuer and
otherwise in connection with the Transactions (including, without limitation,
rating agency, engineering, and appraisal fees and expenses). All such costs and
expenses shall be payable on the Date of Issuance.
(c) Costs of Any Modification or Enforcement. Charter agrees to
pay all out-of-pocket costs and expenses (including reasonable fees and expenses
of auditors, legal counsel and any Rating Agency) incurred by the Surety
Provider in connection with (i) maintaining any rating on the Senior Certificate
or Low Floater Certificates, (ii) any amendment, modification, waiver or similar
action regarding any Transaction Document and/or (iii) any enforcement or
exercise of the Surety Provider's rights or remedies under any Transaction
Document.
SECTION II.6 Payments.
(a) All payments to the Surety Provider under this Article II
shall be made in lawful currency of the United States and in immediately
available funds and shall be made prior to 2:00 p.m. (New York City time) on the
date such payment is due by wire transfer in accordance with the instructions
attached hereto as Schedule 2.06 or to such other office or account as the
Surety Provider may direct by notice to Charter, the Servicer, and the
Administrative Agent. Payments received by the Surety Provider after 2:00 p.m.
(New York City time) shall be deemed to have been received on the next
succeeding Business Day, and such extension of time shall be included in
computing interest, premiums, commissions or fees, if any, in connection with
such payment.
(b) Whenever any payment under this Agreement shall be stated to
be due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such cases be
included in computing interest, premiums, commissions or fees, if any, in
connection with such payment.
(c) Unless otherwise specified herein, the Surety Provider shall
be entitled to interest on all overdue amounts owed to the Surety Provider
hereunder at a rate of interest equal to the Default Rate.
(d) Unless otherwise specified herein, interest payable to the
Surety Provider shall be calculated on the basis of a 365 day year and shall be
payable on demand.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION III.1 Representations, Warranties and Covenants.
(a) Each of the parties hereto (other than the Surety Provider
and the Liquidity Agent) represents and warrants to the Surety Provider and each
other, as of the Date of Issuance, (i) it is duly organized, validly existing
and in good standing in the jurisdiction of its organization, (ii) it has all
requisite power and authority to (A) own its properties, (B) carry on its
business as now conducted and proposed to be conducted, and (C) execute and
deliver this Agreement and each of the other Transaction Documents to which it
is a party and to perform its obligations hereunder and thereunder in accordance
with their respective terms, (iii) neither the execution and delivery of this
Agreement and each of the other Transaction Documents to which it is a party,
nor the performance of its obligations hereunder or thereunder, will (A)
conflict with or result in a breach or default under any of its organizational
documents, any Applicable Laws or any material contract, agreement, mortgage,
instrument or other undertaking to which it is a party or by which any of its
properties is subject or (B) result in the creation or imposition of any Lien
other than those created pursuant to the Transaction Documents, (iv) it has
obtained any Governmental Approval required for the execution, delivery and
performance by it of this Agreement and each of the other Transaction Documents
to which it is a party, and such Governmental Approvals remain in full force and
effect and are subject to no further administrative or judicial review, and no
other Governmental Approval is necessary for the due execution, delivery and
performance by any Charter Entity of this Agreement or such Transaction
Documents, (v) there is no action, suit or proceeding pending against it in any
court or by or before any Governmental Authority which would materially affect
the ability of it to carry out the transactions contemplated by this Agreement
or any of the other Transaction Documents to which it is a party, (vi) the
execution, delivery and performance by it of this Agreement and each of the
other Transaction Documents to which it is a party, have been duly authorized by
all necessary corporate or other action on its part, (vii) this Agreement and
each of the other Transaction Documents to which it is a party have been duly
executed and delivered by it and constitute its legal, valid and binding
obligations enforceable against it in accordance with their respective terms,
(viii) all of the representations and warranties made by it in any other
Transaction Document were true and correct when made and are true and correct as
of the Date of Issuance and are hereby made by it as if the same were set forth
in full in this Agreement, (ix) the execution and delivery of this Agreement and
each of the other Transaction Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby were not made
(A) in contemplation of the insolvency of any Person, (B) with the intent to
hinder, delay or defraud any Person, any creditor of any Person or any federal
banking agency, (C) after the commission of any act of insolvency by any Person
or (D) without fair consideration, (x) its assets or capital are not
unreasonably small in value in relation to its business, and its remaining
assets or capital will not be unreasonably small in value in relation to and
after giving effect to the consummation of the transactions contemplated hereby
or by the other Transaction Documents to which it is a party, (xi) it is not
insolvent at the time of, and will not be rendered insolvent by virtue of, the
consummation of the transactions contemplated hereby or by the other Transaction
Documents to which it is a party; and (xii) by consummating the transactions
contemplated hereby or by the other Transaction Documents to which it is a
party, it
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does not intend to, or believe that it will, incur debts beyond its
ability to pay such debts as they become due.
SECTION III.2 Further Representations and Warranties of Charter.
Charter, on behalf of itself and the other Charter Entities, hereby further
represents and warrants to the Surety Provider that:
(a) Transaction Documents. The representations and warranties
made by each Charter Entity in any of the other Transaction Documents to which
it is a party were true and correct when made and are true and correct as of the
Date of Issuance and are hereby incorporated by reference for the benefit of the
Surety Provider as if fully set forth herein.
(b) Senior Certificate and Low Floater Certificates. The Senior
Certificate and Low Floater Certificates, when executed, authenticated and
issued in accordance with the Owner Trust Agreement and Certificate Issuer Trust
Agreement, respectively, will constitute the legal, valid and binding
obligations of the Owner Trust and the Certificate Issuer, as applicable,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, general reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws.
(c) Securities and Registration and Legal Requirements. The offer
and sale of the Senior Certificate and the Low Floater Certificates comply in
all material respects with all requirements of law, including all registration
requirements of applicable securities laws. Neither the offer nor the sale of
the Senior Certificate and the Low Floater Certificates has been or will be in
violation of the 1933 Act, the 1939 Act or any other federal or state securities
laws. Neither Charter, the Origination Trust, the Owner Trust or the Certificate
Issuer is required to be registered as an "investment company" under the 0000
Xxx. The Senior Certificate and Low Floater Certificates are not required to be
registered under the 1934 Act. Charter is not required to be registered as a
broker, dealer or investment adviser. The Transactions do not violate any margin
rules or regulations, including Regulations U, T and X of the Federal Reserve
Board, or any usury or other laws limiting the rate of interest that may be
contracted for, charged, or received.
(d) Disclosure. On the Date of Issuance, the Private Placement
Memorandum does not contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that no representation is made with respect
to information contained in the Private Placement Memorandum which was provided
by the Surety Provider, Liquidity Agent or Liquidity Banks.
(e) Financial Information. Since the formation of Charter, there
has been no Material Adverse Change with respect to Charter and its Affiliates.
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(f) Taxes. Each of the Charter Entities and their respective
parent company or companies, if any, have filed prior to the date hereof all
federal and state tax returns that are required to be filed and paid all taxes,
including any assessments received by them that are not being contested in good
faith, to the extent that such taxes have not become delinquent, except for any
failures to file or pay that, individually or in the aggregate, would not result
in a Material Adverse Change with respect to such Charter Entity.
(g) Compliance with Applicable Law. Each Charter Entity is in
compliance with all Applicable Laws, including all Governmental Approvals,
except for non-compliances that, singly or in the aggregate, have not had and
will not result in a Material Adverse Change with respect to such Charter
Entity.
(h) No Default. No Charter Entity is in default in the
performance, observance or fulfillment of (i) any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which such Charter Entity or any of its property is bound, or (ii) any
judgment, decree or order, except for defaults that, singly or in the aggregate,
will not result in a Material Adverse Change with respect to such Charter
Entity.
(i) No Taxable Interest. No Charter Entity has taken any action
or omitted to take any action and, without undertaking any independent
investigation, knows of no action taken or omitted to be taken by any other
Person or entity, which action, if taken or omitted, would cause the amounts
distributed to the Low Floater Holders (excluding payments of the face amount on
redemption or maturity) to be included in the gross income of such owners for
Federal income tax purposes.
SECTION III.3 Representation and warranties of the Surety
Provider. Surety Provider represents and warrants to each of the Transaction
Parties that:
(a) Due Organization. It is a duly incorporated and subsisting
New York stock insurance company authorized under an effective certificate of
authority to do business in the State of New York, and in each jurisdiction
where the failure to be so authorized under an effective certificate of
authority would result in a Material Adverse Change with respect to the Surety
Provider, individually or taken as a whole.
(b) Power and Authority. The Surety Provider has all necessary
power and authority to execute and deliver this Insurance Agreement and each
Transaction Document to which it is a party, to issue the Surety Bonds and to
perform all of its obligations hereunder and thereunder.
(c) Due Authorization. The execution, delivery, and performance
of this Insurance Agreement by the Surety Provider, the Surety Bonds and the
other Transaction Documents to which it is a party:
(i) have been duly authorized by all necessary
corporate action;
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and
(ii) do not require any approvals or consents of,
or any notice to or filing with, any person or governmental
agency or department (except for filings with the Insurance
Department of the State of New York, all of which have been
made), the failure to obtain or make which would result in a
Material Adverse Change with respect to the Surety Provider,
individually or taken as a whole.
(d) Valid and Binding Agreement. This Insurance Agreement, the
Surety Bonds and the other Transaction Documents to which the Surety Provider is
a party, when executed and delivered by all the parties thereto, will constitute
the legal, valid and binding obligations of the Surety Provider, enforceable
against the Surety Provider in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
conservation, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or law).
(e) No Conflict. The execution, delivery and performance of this
Insurance Agreement, the Surety Bonds and the other Transaction Documents to
which the Surety Provider is a party do not contravene (i) the Surety Provider's
charter or by-laws, (ii) any law, rule or regulation applicable to the Surety
Provider, (iii) any material indenture, loan or credit agreement or other
instrument binding on the Surety Provider or its property or (iv) any order,
writ, judgment, award or injunction binding on or affecting the Surety Provider.
(f) No Litigation. There are no actions, suits or proceedings at
law or in equity by or before any governmental authority now pending, or, to the
Surety Provider's knowledge, threatened, against the Surety Provider or its
property which purport to challenge the legality, validity or enforceability of
this Insurance Agreement, the Surety Bonds or the other Transaction Documents to
which the Surety Provider is a party or which may reasonably be expected to have
a material adverse effect on the Surety Provider's ability to perform its
obligation under any such Transaction Documents.
(g) No Default. The Surety Provider is not in default in the
performance, observance or fulfillment of (i) any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which the Surety Provider or any of its property is bound, or (ii) any
judgment, decree or order, except for defaults that, singly or in the aggregate,
will not result in a Material Adverse Change with respect to the Surety
Provider.
(h) Disclosure. On the Date of Issuance, the information provided
by the Surety Provider for inclusion in the Private Placement Memorandum is
true, complete and correct.
SECTION III.4 Affirmative Covenants of the Charter Entities. Each
Charter Entity hereby covenants and agrees that during the term of this
Agreement and until payment in
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full of all amounts payable to the Surety Provider under any Transaction
Document, it will:
(a) Performance of Obligations. Observe and perform fully and
faithfully all of its respective obligations under this Agreement and each of
the Transaction Documents to which it is a party.
(b) Compliance with Law. Comply in all material respects with all
Applicable Laws, such compliance to include, without limitation, paying and
discharging, as the same may become due and payable, all taxes, assessments and
other governmental charges or levies against or on any of its property, as well
as claims of any kind that, if unpaid, might become a Lien upon any of its
properties.
(c) Reports and Financial Statements. Furnish or cause to be
furnished to the Surety Provider:
(i) within 45 days after the end of each month, a
Servicer's Report, a copy of which shall also be furnished to
each Liquidity Bank;
(ii) within 60 days after the end of the first
three fiscal periods in each fiscal year of Charter, a statement
of financial condition of Charter and of The Related Companies,
L.P. as at the end of such quarter, prepared in accordance with
generally accepted accounting principles and certified, subject
to changes resulting from subsequent audit adjustments, by the
respective Authorized Representative with responsibility for
financial reporting matters;
(iii) within 120 days after the end of each fiscal
year of Charter, the Manager and the Servicer, a statement of
financial condition of Charter and of The Related Companies, L.P.
as at the end of such year, and a statement of revenues and
expenses of Charter for such year, such financial statements to
be audited by, and accompanied by an opinion of, independent
certified public accountants of nationally recognized standing
selected by Charter, the Manager and the Servicer, which opinion
shall state that such financial statements have been prepared in
accordance with generally accepted accounting principles
consistently applied (except as otherwise stated in such opinion)
and that the audit by such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards;
(iv) promptly after receipt thereof (unless
already received by the Surety Provider), a copy of each
certificate, report, statement, notice, demand, or other
communication received by it from any Person in connection with
the Senior Certificate or the Low Floater Certificates, this
Agreement or any other Transaction Document that is material and
had not otherwise been reported to the Surety Provider;
(v) within one Business Day after receipt thereof,
a copy of each Certificate Trust Agent Report furnished by the
Certificate Trust Agent;
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(vi) within one Business Day after receipt
thereof, such information received by it pursuant to any
Transaction Document respecting the business, properties or the
condition or operations, financial or otherwise, of any Charter
Entity; and
(vii) such other information available to it and
relating to the Assigned Assets, the Transaction Parties and the
Transaction, as the Surety Provider may from time to time
reasonably request in writing.
(d) Notice of Defaults. Furnish to the Surety Provider, the
Administrative Agent and the Liquidity Agent one Business Day after obtaining
actual knowledge of the occurrence of an Event of Default, an Unmatured Event of
Default, a Servicer Default, an Unmatured Servicer Default, an Event of
Termination or an Unmatured Termination Event, notice of such event, and
immediately after receiving any certificate, report, statement, notice, or other
communication from Charter, the Servicer or the Owner Trust relating to any such
event, a copy of any such communication.
(e) Maintenance of Existence; Net Worth. Preserve and maintain
its existence as a validly existing business trust (or limited partnership in
the case of the Manager and the Servicer) in good standing under the laws of the
State of Delaware. Each of the Origination Trust and the Owner Trust shall at
all times maintain a positive net worth of at least $10,000 each.
(f) Audits. Upon written request by the Surety Provider,
(i) permit the Surety Provider to participate in
any audit conducted by the Administrative Agent pursuant to the
provisions of the Owner Trust Agreement and
(ii) permit, at any time and from time to time
during regular business hours, upon prior written notice, the
Surety Provider to visit the offices of any Charter Entity to
review the books, records and accounts of the Charter Entities
relating to the Assigned Assets, the Transaction Documents and
the Transactions.
(g) Assignment. In consideration of this Agreement and the Surety
Provider's execution and delivery of the Surety Bonds, the Origination Trust
assigns all of its right, title and interest in the Charter Contribution
Agreement to the Surety Provider and the Owner Trust assigns all of its right,
title and interest in the Origination Trust Contribution Agreement and the
Charter Contribution Agreement to the Surety Provider, including, without
limitation the right to declare the occurrence of a Contribution Termination
Date under each of the aforementioned Contribution Agreements, such assignment
to be subject to the provisions of the Liquidity Pledge and Security Agreement.
SECTION III.5 Negative Covenants. Each of the Charter Entities
(other than Charter), and with respect to paragraphs (a), (e), (f), (g), (h),
(i) and (j), Charter agrees and
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covenants that, without the Surety Provider's prior written consent, it will not
during the term of this Insurance Agreement or until payment in full of all
amounts payable to the Surety Provider under any Transaction Document:
(a) Liens. Create, incur or assume any Lien, upon or with respect
to any Assigned Assets other than pursuant to any of the Transaction Documents.
(b) Mergers, Sales of Assets. Merge into or consolidate with any
Person or assign, transfer, sell, or otherwise dispose of all or substantially
all of its assets to any Person.
(c) Limited Business. Engage in any business or other activity,
directly or indirectly (including through a subsidiary), except those
contemplated by the Transaction Documents.
(d) Creation of Indebtedness. Create, incur, assume, or suffer to
exist any Debt other than (i) with respect to any Transaction Documents, and
(ii) indebtedness in respect of taxes, assessments or governmental charges, and
indebtedness in respect of claims for labor, materials or supplies to the extent
that the nonpayment thereof shall result in the creation of a Lien.
(e) Impairment of Rights. Take any action not required by law, or
fail to take any lawful action, if such action or failure to take such action
will interfere with the enforcement of any rights of the Surety Provider
hereunder or under any Transaction Document.
(f) Amendments or Waivers. Amend, waive or otherwise modify,
after the date hereof, any provision of the Transaction Documents, including,
without limitation, any waiver of any Event of Default, Unmatured Event of
Default, Servicer Default, Unmatured Servicer Default, Event of Termination or
Unmatured Termination Event or any of the Concentration Limits required by
Section 4.01 hereof.
(g) Surety Provider Information. Include in any information
memorandum for the Low Floater Certificates or any loan syndication memorandum,
correspondence or other communication relating to the Low Floater Certificates,
or any information concerning the Surety Provider that is not supplied or
consented to in writing by the Surety Provider expressly for inclusion therein.
(h) Termination of Trusts; Tax Exemption. Take any action or omit
to take any action that, if taken or omitted, would result in the termination of
the Origination Trust, the Owner Trust or the Certificate Issuer otherwise than
as contemplated by the Transaction Documents, or would adversely affect the
exclusion of Certificate Distribution Payments received by the owners of the Low
Floater Certificates from gross income of such owners for Federal income tax
purposes.
(i) Delegation of Obligations. Delegate in whole or in part,
except to the
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Surety Provider, any of its obligations under this Insurance Agreement, consent
to which will be not unreasonably withheld by the Surety Provider.
(j) No Transfer of Residual Certificate. Permit, without the
prior consent of the Surety Provider, the Residual Holder to sell, encumber,
assign, pledge, convey or otherwise transfer the Residual Certificate other than
as pledged pursuant to the Liquidity Pledge and Security Agreement.
SECTION III.6 Affirmative Covenants of the Surety Provider. The
Surety Provider agrees and covenants with the Owner Trust and the Liquidity
Agent that during the term of this Insurance Agreement it will:
(a) Compliance with Laws. Comply with all Applicable Laws, to the
extent that noncompliance would result in a Material Adverse Change with respect
to the Surety Provider.
(b) Corporate Existence. Maintain its corporate existence and at
all times continue to be a corporation organized under the laws of the State of
New York, duly qualified to do business in each jurisdiction in which the
failure to be so qualified would result in a Material Adverse Change with
respect to the Surety Provider.
(c) Financial Statements. Provide to the Administrative Agent,
Charter and the Liquidity Agent (i) as soon as available and in any event within
120 days after the end of each fiscal year of the Surety Provider, a copy of the
Surety Provider's financial statements, as delivered to the Superintendent of
Insurance for the State of New York, for such fiscal year then ended and (ii) as
soon as available and in any event within 90 days after the end of each fiscal
quarter of the Surety Provider, a copy of the Surety Provider's unaudited
financial statements for such fiscal quarter.
(d) Other Information to the Administrative Agent. Provide to the
Administrative Agent, Charter and the Liquidity Agent such other information as
each may reasonably request in writing.
ARTICLE IV
CONCENTRATION LIMITS; APPRAISALS AND VALUATIONS;
NONAPPROVED BONDS
SECTION IV.1 Concentration Limits. In addition to the covenants
contained in Article III hereof, the Owner Trust shall comply with each and
every one of the Concentrations Limits during the term of this Agreement and
until payment in full of all amounts payable to the Surety Provider under any
Transaction Document; provided, however, that the Owner Trust is not obligated
to comply with the Concentration Limits during the first six months following
the
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Date of Issuance; provided further that after the occurrence of a Contribution
Termination Date, the Owner Trust will no longer be obligated to comply with the
Concentration Limits unless (i) the aggregate principal amount of Bonds held by
the Owner Trust is equal to or less than 110% of the Outstanding Face Amount of
Low Floater Certificates and (ii) six months have passed since the Date of
Issuance.
SECTION IV.2 Appraisals and Valuations. In the event any
Property shall experience Deteriorating Property Performance as determined by
the Surety Provider, a new Appraised Value for such Property and Carrying Value
for the Bond secured by such Property shall be determined. Determination of new
Appraised Values and Carrying Values for each Property and Bond respectively
also shall be required upon the occurrence of an Event of Default. In addition,
new Appraised Values and/or Carrying Values of Properties and Bonds,
respectively, may be required, from time to time, as a condition of extension of
the Facility Termination Date. The cost of all appraisals shall be borne by
Charter; provided that if more than one appraisal on a particular Property is
conducted in a particular year at the request of the Surety Provider, the Surety
Provider shall pay for the additional appraisals. The Surety Provider shall have
the right to select the entity that will conduct appraisals and determine
Appraised Values. If an appraisal is unacceptable to Charter, Charter will be
entitled, at its expense, to have an additional appraisal conducted. If such
appraisal indicates a higher Appraised Value for the related Property, Charter
and the Surety Provider shall select and retain a third independent appraiser to
determine which of the two appraisals shall be the Appraised Value. The cost of
such determination shall be borne equally by Charter and the Surety Provider.
SECTION IV.3 Nonapproved Bonds. Any Bonds contributed to the
Owner Trust must be approved by the Surety Provider in writing prior to such
contribution. The Bonds listed on Schedule C hereto have been approved by the
Surety Provider. Any Bonds contributed to the Owner Trust that have not been
approved in writing by the Surety Provider ("Nonapproved Bonds") will constitute
part of the Trust Property (as defined in the Owner Trust Agreement); provided,
however, that until such time as (i) the Bonds are approved in writing by the
Surety Provider and (ii) Xxxxx'x and S&P have stated in writing that the
increase in the Outstanding Face Amount of the Senior Certificate to reflect any
portion of the principal amount of the such Bonds will not result in a reduction
or withdrawal of the then current rating assigned to the Low Floater
Certificates, the Senior Certificate shall not be increased to reflect any
portion of the principal amount of such Nonapproved Bonds. Each party to this
Agreement (other than the Administrative Agent) who has knowledge of a
Nonapproved Bond being held by the Owner Trust hereby agrees to give notice of
such Nonapproved Bond to the Administrative Agent.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES; RIGHT OF THE CONTROLLING
PERSON TO DIRECT THE OWNER TRUST AND THE COLLATERAL AGENT
SECTION V.1 Defaults. The occurrence of any of the following
events shall
20
constitute an Event of Default hereunder:
(a) Any representation or warranty made by any Charter Entity
hereunder or under any other Transaction Document (other than those
representations and warranties contained in Section 4(b) of the Charter
Contribution Agreement and such representations and warranties as incorporated
by reference into any other Transaction Document), or in any certificate
furnished hereunder or under any Transaction Document, shall prove to be untrue
or incomplete in any material respect on any date when made;
(b) Charter or any Charter Entity shall fail to pay any amount
payable by such Person, as applicable, under any Transaction Document, (i) with
respect to any Reimbursement Amount or Surety Bond Premium, when due, and (ii)
with respect to any other amount payable other than the Reimbursement Amount or
Surety Bond Premium, within 5 Business Days, without giving effect to any grace
period provided in any of the Transaction Documents;
(c) Any failure on the part of any Charter Entity duly to observe
or perform in any material respect any of the covenants or agreements on the
part of such Charter Entity, as applicable, contained in this Agreement (other
than those specified in paragraphs (a) and (b) above and paragraphs (g) through
(i) below) or any other Transaction Document which continues unremedied for a
period of 30 days after notice of such failure, which period may be extended for
another 30 days if, in the judgment of the Surety Provider, the Charter Entity
is diligently attempting to cure said breach;
(d) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case under any
present or future Bankruptcy Law or the appointment of a conservator or receiver
or liquidator or other similar official in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against any
Charter Entity and such decree or order shall have remained undischarged or
unstayed for a period of 90 consecutive days;
(e) Any Charter Entity shall consent to the appointment of a
conservator or receiver or liquidator or other similar official in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the Charter Entity or of or relating to
all or substantially all of its property;
(f) Any Charter Entity shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take advantage of
or otherwise voluntarily commence a case or proceeding under any applicable
Bankruptcy Law, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations;
(g) A Level I Trigger Event shall have occurred and has not been
cured within 180 days from the Level I Trigger Date;
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(h) A Level II Trigger Event shall have occurred and has not been
cured within the earlier of (i) 90 days after the Level II Trigger Date, or (ii)
180 days from the Level I Trigger Date that occurred because of the related
event;
(i) A Level III Trigger Event or Level IV Trigger Event has
occurred;
(j) Any Charter Entity is an investment company under the
Investment Company Act of 1940;
(k) The Owner Trust shall for any reason fail to possess good and
marketable title to the Assigned Assets and to all other property in the Owner
Trust, free and clear of all Liens, except as provided in the Transaction
Documents;
(l) Any judgment or order for the payment of money or the
issuance of warrants in excess of $50,000 shall be rendered against any Charter
Entity and such judgment shall remain unsatisfied and either (i) the time for
filing any appeal has expired and enforcement proceedings have been commenced by
any creditor upon such judgment or order and shall remain unstayed or (ii) there
shall be any period of thirty (30) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect unless such judgment or order shall have been
vacated, dismissed or bonded pending appeal or, in the case of a judgment or
order the entire amount (other than an amount not in excess of $50,000) of which
is covered by insurance, is the subject of a binding agreement with the
plaintiff and the insurer covering payment therefor;
(m) Any final, nonappealable judgment or order for the payment of
money or the issuance of warrants in excess of (i) $5,000,000 has been rendered
against Charter and has not been paid, or (ii) $100,000 shall be rendered
against any of the Charter Entities other than Charter;
(n) Failure to replace the Servicer upon the occurrence of a
Servicer Default in accordance with the Servicing Agreement;
(o) Failure of Charter to substitute an Alternate Credit Facility
in lieu of the Surety Provider within two years after the Facility Termination
Date;
(p) Any Advance by any Liquidity Bank under the Liquidity
Agreement is outstanding for two years;
(q) Failure of Charter to substitute an Alternate Liquidity
Facility in the event the Liquidity Facility is not renewed within two years
after the Liquidity Commitment Termination Date, except where such Liquidity
Commitment Termination Date was caused due to a Liquidity Event of Default
described in Section 6.01(a), (b), (c) or (d) of the Liquidity Agreement; or
22
(r) Any provision of this Agreement or any other Transaction
Document shall for any reason other than by the express terms thereof cease to
be valid and binding on any party thereto, or any Transaction Party (other than
the Surety Provider) shall so assert in writing.
SECTION V.2 Remedies; No Remedies Exclusive.
(a) Pursuant to the terms of the Owner Trust Agreement and this
Agreement, upon the occurrence of an Event of Default, the Surety Provider may:
(i) inform the Administrative Agent and the Owner
Trust of the occurrence of any Event of Default and any other
information the Surety Provider may have with respect to the
performance of any Charter Entity under this Agreement;
(ii) take whatever action at law or in equity as
may appear necessary or desirable in its judgment to collect the
amounts then due under this Agreement or any Transaction Document
or to enforce performance and observance of any obligation,
agreement or covenant of any Charter Entity under this Agreement
or any Transaction Document;
(iii) direct the Liquidity Collateral Agent to
exercise any remedy available under the Liquidity Pledge and
Security Agreement; or
(iv) if the Surety Provider, and not the Liquidity
Agent, is the Controlling Person, take all actions necessary to
maintain the Assigned Assets and other Bond Collateral of the
Origination Trust and the Owner Trust, by exercising all rights
to direct the actions of the Origination Trust and the Owner
Trust to maintain, negotiate, sell, exchange, liquidate, or
otherwise dispose of the Trust Property (as defined in the Owner
Trust Agreement). After the occurrence of an Event of Default,
the Surety Provider shall have the sole right to direct the
actions of the Origination Trust, the Owner Trust and the
Certificate Issuer (other than the power to appoint Trustees of
the Trust pursuant to Section 3.1 of the Origination Trust
Agreement, the Owner Trust Agreement and the Certificate Issuer
Trust Agreement); provided that if a Liquidity Trigger Date has
occurred and the Liquidity Agent is the Controlling Person, then
the Liquidity Agent shall have those rights until such time as
all Liquidity Obligations have been paid in full and the
Liquidity Facility has terminated.
(b) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved to the Surety Provider is intended to be exclusive of
any other available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under this Insurance Agreement, any Transaction
Document or existing at law or in equity. No delay or omission to exercise any
right or power accruing under this Insurance Agreement or upon the happening of
any event set forth in Section 5.01 hereof shall impair any such right or power
or shall be construed to be a waiver thereof, but any such right and power may
be exercised from time to time and as often as may be deemed by the Surety
Provider to be expedient. In order to entitle the Surety Provider to exercise
any remedy reserved to the Surety Provider in this Article, it shall not be
necessary to give any notice, other than such notice as may be required in this
23
Article.
(c) Upon learning that an Event of Default exists under this
Agreement, the Surety Provider will promptly give notice of the existence of
such Event of Default to the Administrative Agent.
SECTION V.3 Right of Controlling Person to Direct Actions of the
Origination Trust, the Owner Trust and the Administrative Agent. Each of the
Owner Trust and the Administrative Agent agrees that following the Controlling
Person's written request it will take or refrain from taking any action, and
exercise or refrain from exercising any rights of the Owner Trust or the
Administrative Agent under the Transaction Documents in the manner described in
the Controlling Person's written request, provided, however, that the obligation
of the Owner Trust and the Administrative Agent to take or refrain from taking,
or to exercise or refrain from exercising any such action or rights shall be
limited to those actions and rights that can be exercised or taken (or not
exercised or taken, as the case may be) in full compliance with the provisions
of the Transaction Documents and applicable law. Without limiting the generality
of the preceding sentence, each of the Owner Trust and the Administrative Agent
agrees that, subject to the proviso clause in the next preceding sentence, it
will, upon the Controlling Person's prior written request following the
occurrence of the respective events or conditions described below, take, or
cause to be taken, the following actions:
(a) upon the occurrence and continuance of a Servicer Default,
(i) deliver a Servicer Termination Notice, thereby causing a Servicer Transfer
to take place, (ii) designate a Person selected by the Controlling Person as the
Successor Servicer thereunder and (iii) give notice of such Servicer Termination
Notice and designation of Successor Servicer to the Administrative Agent;
(b) upon the occurrence and continuance of an Event of Default
(i) declare the Facility Termination Date to have occurred, (ii) cause the Owner
Trust to cease purchasing or otherwise acquiring any additional Assigned Assets,
(iii) pursuant to the Owner Trust Agreement, direct the Servicer to commence or
settle any legal action to enforce collection of any amounts then due and
payable under any Bonds and to enforce any rights with respect to any Bond
Collateral or other Assigned Assets relating thereto, (iv) notify Bond Trustees
to make payments thereon as designated by the Controlling Person and exercise
all other remedies of the Owner Trust and/or the Administrative Agent on its
behalf as set forth in the Owner Trust Agreement, and (v) give notice of any
action taken pursuant to this subsection (b) to the Administrative Agent.
(c) with respect to the Administrative Agent, request from the
Owner Trust, Charter or the Servicer, under the Servicing Agreement, any
information, documents, records, or reports respecting the assets comprising the
Trust Property (as defined in the Owner Trust Agreement) or the conditions or
operations, financial or otherwise, of Charter or the Servicer as the
Controlling Person may specify from time to time.
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ARTICLE VI
FURTHER AGREEMENTS
SECTION VI.1 Obligations Absolute. The obligations of the parties
to this Agreement are absolute and unconditional and will be paid or performed
strictly in accordance with the respective terms thereof, irrespective of:
(a) any lack of validity or enforceability of, or any amendment
or other modifications of, or waiver with respect to, the Transaction Documents;
(b) any amendment or waiver of, or consent to departure from the
Surety Bonds or the Transaction Documents to the extent such do not result in a
default with respect to payment under the Surety Bonds and does not materially
and adversely affect the obligations of the Charter Entities under this
Agreement or the Transaction Documents;
(c) the existence of any claim, set-off, defense or other rights
any party may have at any time against any Charter Entity, any beneficiary or
any transferee of the Surety Bonds (or any persons or entities for whom the
Administrative Agent, any such beneficiary or any such transferee may be
acting), or against any other person or entity whether in connection with the
Transaction Documents, the Transactions or any unrelated transactions;
(d) any statement or any other document presented under or in
connection with any Transaction Document (including any Notice for Payment)
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever;
(e) the inaccuracy or alleged inaccuracy of any Servicer's
Certificate or Notice of Payment upon which any drawing under the Surety Bond is
based;
(f) payment by the Surety Provider under the Surety Bonds against
presentation of a draft or certificate which does not comply with the terms of
the respective Surety Bond; provided that such payment shall not have
constituted gross negligence or willful misconduct of the Surety Provider;
(g) the bankruptcy or insolvency of the Surety Provider, the
Certificate Issuer or of either Insured Party, or any other Transaction Party,
provided that it is understood that in the event the Surety Provider's debt
ratings are downgraded by a Rating Agency and the Surety Bonds are returned to
the Surety Provider, then the Surety Provider shall be entitled to no further
premiums hereunder or under the Owner Trust Agreement or under the Certificate
Issuer Trust Agreement, and provided further that obligations hereunder of the
Servicer, the Origination Trust, the Owner Trust, the Certificate Issuer, the
Administrative Agent and Charter incurred before the return of the Surety Bonds
shall remain in effect;
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(h) any default or alleged default of the Surety Provider under
the Surety Bonds other than a default with respect to payment thereunder;
(i) any defense based upon the failure of Charter to receive all
or part of the proceeds of the sale of the Senior Certificate or of the Servicer
to receive any or all of the servicing fee or other compensation required under
the Servicing Agreement or otherwise, or any nonapplication or misapplication of
the proceeds of any drawing upon the Surety Bonds; or
(j) any other circumstance or happening whatsoever, provided that
the same shall not have constituted gross negligence or wilful misconduct of the
Surety Provider, and to the extent that such circumstance or happening does not
result in a default with respect to payment under the Surety Bonds.
SECTION VI.2 Liability of the Surety Provider. Each of the
Charter Entities agrees that neither the Surety Provider, any of its Affiliates,
nor any of their respective officers, directors, or employees, is or will be
liable or responsible for (except to the extent of its own or their gross
negligence or willful misconduct):
(a) the use which may be made of the Surety Bonds by another
Person, or for any acts or omissions of such other Person in connection
therewith; or
(b) the validity, sufficiency, accuracy, or genuineness of
documents, or of any endorsement(s) thereon, even if such documents should in
fact prove to be in any or all respects invalid, insufficient, fraudulent, or
forged.
In furtherance and not in limitation of the foregoing, the Surety Provider may
accept documents that appear on their face to be in order, without
responsibility for further investigation. The provisions of this Section 6.02
shall survive the termination of this Agreement.
SECTION VI.3 Rights of Subrogation; Further Assurances. The
interests, rights, and remedies of the Surety Provider described in Sections
5.02 and 5.03 of this Insurance Agreement are in addition to, and not in lieu
of, the Surety Provider's equitable rights of subrogation, and the Surety
Provider reserves all of such rights; provided that the Surety Provider shall
not exercise such rights of subrogation until all Liquidity Obligations have
been paid in full. Each of the Charter Entities, the Insured Parties, the
Certificate Issuer and the Administrative Agent agrees to take, or cause to be
taken, all reasonable actions deemed desirable by the Surety Provider to
preserve, enforce, perfect, or maintain the perfection in the Surety Provider's
favor of such interests, rights, and remedies and such equitable rights of
subrogation.
For the avoidance of doubt, the parties hereto acknowledge and
agree that receipt of any payment under a Surety Bond shall not constitute (x) a
reduction of any unpaid amounts of principal or interest of advances outstanding
under the Liquidity Agreement or of the Senior Certificate outstanding under the
Owner Trust Agreement, or (y) a discharge of any other obligations whatsoever of
the Certificate Issuer under the Liquidity Agreement or of the Owner
26
Trust under the Owner Trust Agreement.
SECTION VI.4 Reimbursement of Expenses. Charter agrees to remit
to the Surety Provider, promptly upon receipt by Charter of written demand
therefor by the Surety Provider, all reasonable out-of-pocket costs, expenses,
and disbursements, including reasonable attorneys' fees and expenses and other
costs and expenses incurred by the Surety Provider in connection with the
preparation, execution, delivery, administration, modification, amendment,
termination, waiver or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, either of the Surety Bonds, each of the
other Transaction Documents to which it is a party, and any other agreement
related to the foregoing (including, without limitation, any reasonable
out-of-pocket costs in respect of initial and ongoing audit and due diligence of
the Surety Provider reasonably incurred in connection with this transaction),
and Charter agrees to direct the Administrative Agent to pay over to the Surety
Provider any amounts received by it under the Owner Trust Agreement in respect
of any such demand for payment by the Surety Provider. Without prejudice to the
foregoing, Charter agrees that in the event that the Surety Provider seeks to
enforce any of its rights hereunder against the Owner Trust, Charter shall remit
to the Surety Provider, after written demand therefor, all reasonable
out-of-pocket costs, expenses, and disbursements, including attorneys' fees and
expenses and other such costs and expenses incurred by the Surety Provider in
connection with the enforcement of such rights. The reimbursement provisions of
this Section 6.04 will survive the termination of this Agreement.
SECTION VI.5 Indemnification. In addition to any and all rights
of reimbursement, subrogation or any other rights pursuant hereto or under law
or equity, and without limiting any reimbursement or indemnification right of
the Surety Provider under any Transaction Document, Charter hereby agrees to
pay, indemnify, and hold the Surety Provider and its Affiliates and the
officers, directors, employees of the Surety Provider or any such Affiliates
(each an "Indemnitee") harmless from and against any and all out-of-pocket
liabilities (including penalties), obligations, losses, damages, actions, suits,
demands, claims, judgments, taxes, costs, expenses or disbursements of any kind
or nature whatsoever that arise out of or in any way relate to or result from or
out of (a) any material breach of any representation or warranty made by any
Charter Entity in Section 3.01 and 3.02 hereof (other than representations and
warranties contained in Section 4(b) of the Charter Contribution Agreement
incorporated by reference herein), (b) failure of any Charter Entity to pay the
Surety Provider any fees or expenses pursuant to any Transaction Document, (c)
any taxes imposed upon the Surety Provider arising out of the transactions
contemplated by the Transaction Documents (other than the income taxes imposed
on the Surety Bond Premium and other income earned by the Surety Provider
pursuant to the Fee Letter), (d) any violation of any Environmental Law at any
Property, or (e) any investigation or defense of, or participation in, any legal
proceeding relating to the execution, delivery, enforcement, performance or
administration of the Transaction Documents (whether or not such Indemnitee is a
party thereto) (collectively, the "Indemnified Liabilities"); provided that
Charter shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of any Indemnitee. Any payments required to be made by Charter under this
section shall be due upon
27
demand. The indemnity provisions of this section shall survive the termination
of this Agreement.
SECTION VI.6 Reinsurance and Participations. Each of the
Transaction Parties acknowledges that the Surety Provider shall have the right
to grant participations in its rights under this Agreement and to enter into
contracts of reinsurance with respect to the Surety Bond, provided that (i) the
Surety Provider gives Charter prior written notice of any such participation or
reinsurance contract, (ii) the Surety Provider agrees that any such disposition
will not alter or affect in any way whatsoever the Surety Provider's direct
obligations hereunder and under the Surety Bonds, (iii) that any reinsurer or
participant will not have any rights against any Transaction Party and that none
of the Transaction Parties shall have any obligation to have any communication
or relationship whatsoever with any reinsurer or participant in order to enforce
the obligations of the Surety Provider hereunder and under the Surety Bonds, and
(iv) no such participation or reinsurance agreement or arrangement shall be
executed if such transaction would adversely affect any then current rating of
any Senior Certificate or the Low Floater Certificates.
SECTION VI.7 No Proceedings. Each of the Surety Provider, the
Liquidity Agent and the Administrative Agent hereby agrees (which agreement
shall, pursuant to the terms of this Agreement, be binding upon its successors
and assigns) that it shall not institute against, or join any other Person in
instituting against, any Charter Entity any bankruptcy, reorganization,
arrangement, insolvency, or liquidation proceeding, or other proceeding under
any federal or state bankruptcy or similar law, for one year and a day after the
latest maturing Low Floater Certificate or Senior Certificate or other rated
indebtedness issued by the Owner Trust or the Certificate Issuer is paid.
SECTION VI.8 Successor Servicer. Any successor Servicer, by
accepting its appointment pursuant to the Servicing Agreement (a) shall agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Servicer and subject to the duties and obligations of the Servicer
hereunder, and (b) shall agree to indemnify and hold harmless the Surety
Provider from and against any and all claims, damages, losses, liabilities,
costs or expenses whatsoever which the Surety Provider may incur (or which may
be claimed against the Surety Provider) by reason of the negligence or willful
misconduct of the successor Servicer in exercising its powers and carrying out
its obligations as Servicer under the Servicing Agreement. No such appointment
shall make the successor Servicer responsible with respect to any liabilities of
the outgoing Servicer incurred prior to such appointment or for any acts,
omissions or misrepresentations of such outgoing Servicer. No such appointment
shall make the initial Servicer responsible with respect to any liabilities of
the successor Servicer incurred after such appointment or for any acts,
omissions or misrepresentations of such successor Servicer.
SECTION VI.9 Litigation. Each of Charter, Servicer, Owner Trust,
Certificate Issuer and the Administrative Agent shall (i) provide written notice
to the Controlling Person immediately upon obtaining actual knowledge of the
commencement of any judicial proceeding (including, without limitation,
bankruptcy, insolvency, receivership, and other such proceedings)
28
which relates to, or arises in connection with, the Owner Trust Agreement or the
Trust Property (as defined in the Owner Trust Agreement) (each, a "Relevant
Proceeding"); (ii) consult with the Controlling Person with respect to, and the
Controlling Person may participate in any discussions and decisions relating to
any such Relevant Proceeding with a view towards minimizing the potentially
adverse effect that such Relevant Proceeding may have on the Controlling
Person's interest in the Trust Property (as defined in the Owner Trust
Agreement) or the Owner Trust Agreement and (iii) shall not agree to any
settlement of any such Relevant Proceeding without the Controlling Person's
prior written consent. The Controlling Person may elect at any time after
receipt of the notice described in the first sentence of this Section 6.09, to
assume responsibility for and control over the Relevant Proceeding. Such
election shall be made by delivery to the Administrative Agent of a written
notice thereof, signed by the Controlling Person, which notice shall contain the
Controlling Person's agreement to pay for, and indemnify each Charter Entity and
the Administrative Agent against any claims, demands, liabilities, damages,
losses, costs, and expenses (including attorneys' fees and expenses accrued only
from the date the Controlling Person assumed control over such Relevant
Proceeding) that may be incurred by each such Person in connection with such
Relevant Proceeding.
SECTION VI.10 Increased Costs; Increased Capital.
(a) If, after the date hereof due to either (i) the introduction
of or any change in or to the interpretation of any law or regulation by the
governmental authority that promulgated or administers compliance with such law
or regulation (other than laws or regulations with respect to income taxes) or
(ii) the compliance with any guideline or request from any state insurance
regulator or other governmental authority, rating agency or similar agency
(whether or not having the force of law), and taking into account the Surety
Provider's obligations under the other Transaction Documents, any reserve or
similar requirement shall be imposed, modified or deemed applicable or, any
basis of taxation shall be changed or any other condition shall be imposed, and
there shall be any increase in the cost to the Surety Provider of issuing or
maintaining the Surety Bonds or of entering into or performing its obligations
under this Agreement (including the reduction of any premium, fee or other sum
received or receivable hereunder), then Charter shall from time to time, upon
demand by the Surety Provider by the submission of the certificate described
below, pay to the Surety Provider additional amounts sufficient to compensate it
for such increased cost. A certificate setting forth in reasonable detail the
amount of such increased cost submitted to Charter by the Surety Provider shall
be conclusive and binding for all purposes, absent manifest error.
(b) If the Surety Provider determines that compliance with any
law or regulation or any guideline or request or any written interpretation from
any state insurance regulator or other governmental authority, rating agency or
similar agency (whether or not having the force of law) which is introduced,
implemented or received by the Surety Provider after the date hereof, affects or
would affect capital adequacy or the amount of capital required or expected to
be maintained by the Surety Provider or any corporation controlling the Surety
Provider and that the amount of such capital is increased by or based upon the
obligations of the Surety Provider under either of the Surety Bonds, this
Agreement or any of the other Transaction
29
Documents, and other obligations of this type, or has or would have the effect
of reducing the rate of return on capital, then, upon demand by the Surety
Provider by the submission of the certificate described below, Charter shall pay
to the Surety Provider additional amounts sufficient to compensate the Surety
Provider in the light of such circumstances, to the extent that the Surety
Provider reasonably determines such increase in capital to be allocable to the
obligations of the Surety Provider under either of the Surety Bonds or this
Agreement. A certificate setting forth in reasonable detail such amounts
submitted to Charter by the Surety Provider shall be conclusive and binding for
all purposes, absent manifest error.
SECTION VI.11 Surety Provider's Option to Purchase Low Floater
Certificates.
(a) The Liquidity Agent, on behalf of the Liquidity Banks, hereby
grants to the Surety Provider or its designee the option (the "Liquidity
Purchase Option"), in lieu of making a payment under the Liquidity Surety Bond,
to purchase, at any time after the later of the occurrence of (x) the Liquidity
Commitment Termination Date and (y) the presentation of a Notice for Payment
under the Liquidity Surety Bond, all of the Liquidity Banks' respective right,
title and interest in the Low Floater Certificates at a price equal to the
Liquidity Obligations outstanding under the Liquidity Agreement (the "Option
Price"). Payments made by the Surety Provider of the Option Price shall be made
in immediately available funds to the Liquidity Agent by 2:00 P.M. New York City
time on the second Business Day next succeeding the date of receipt of the
relevant Notice for Payment, and all calculations of amounts of the principal
and interest then accrued and unpaid or otherwise outstanding and all other
obligations of the Certificate Issuer under the Liquidity Agreement shall be
made as of such day. The Liquidity Purchase Option is irrevocable by the
Liquidity Agent for so long as the Surety Provider has any liability under the
Liquidity Surety Bond. The Surety Provider may exercise the Liquidity Purchase
Option by telephonic notice confirmed in writing by the Surety Provider to the
Liquidity Agent immediately upon receipt of such Notice for Payment.
(b) Any purchase pursuant to the exercise of the Liquidity
Purchase Option hereunder will be without recourse to or representation or
warranty by the Liquidity Agent other than for a breach by the Liquidity Agent
of a representation that all its right, title, and interest in and to the Low
Floater Certificates have passed to the Surety Provider free and clear of any
Lien created by or arising as a result of actions by the Liquidity Agent.
(c) Simultaneously with the payment of the Option Price, the
Liquidity Agent will deliver the Low Floater Certificates that were Liquidity
Provider Certificates held by the Liquidity Agent to the Surety Provider.
SECTION VI.12 Liquidity Surety Bond Assignment Obligation. In
consideration for the issuance of the Liquidity Surety Bond, the Liquidity
Agent, on behalf of the Liquidity Banks, as an Insured Party hereby agrees that
if the Surety Provider honors all of its payment obligations under the Liquidity
Surety Bond, the Liquidity Agent shall, on the Payout Date, transfer, assign,
and convey to the Surety Provider, without recourse, representation or warranty,
all of its respective right, title and interest in, to and under the following:
30
(i) the Low Floater Certificates;
(ii) all UCC-1 Financing Statements filed against
the Certificate Issuer in connection with the Transaction
Documents and all related UCC-3 Financing Statements pursuant to
which the Certificate Issuer assigned its right, title and
interest in and to the Senior Certificate;
(iii) all other Transaction Documents; and
(iv) all other documents, instruments, agreements
and property relating to the foregoing;
and, in addition, the Liquidity Agent, on behalf of the Liquidity Banks, on the
Payout Date, shall assign to the Surety Provider, without recourse,
representation or warranty, all right, title and interest in, to and under (x)
the Advances made under and as defined in the Liquidity Agreement, and (y) the
Liquidity Agreement, the Liquidity Security Agreement and all UCC-1 Financing
Statements filed against the Certificate Issuer in connection with the
Transaction Documents (collectively, all of the foregoing property and interests
in property being, the "Acquired Assets") (the obligations of the Insured
Parties to transfer, assign, and convey the Acquired Assets is herein
collectively referred to as the "Assignment Obligation"). The Liquidity Agent
agrees that the transfer, assignment and conveyance of its interest in the
Acquired Assets shall become effective automatically on the applicable Payout
Date, without any further act by the Surety Provider or the Liquidity Agent;
provided, however, that the Surety Provider may request the Liquidity Agent to
execute and deliver to the Surety Provider, on or after the applicable Payout
Date, the Low Floater Certificates. The Liquidity Agent further agrees that any
payments made by the Surety Provider under the Liquidity Surety Bond will not
reduce the principal, interest or any other amount payable under the Low Floater
Certificates.
ARTICLE VII
MISCELLANEOUS
SECTION VII.1 Amendments, Third-Party Rights.
(a) No amendment, waiver or modification of any provision of this
Agreement, nor any consent hereunder, shall in any event be effective unless in
writing and signed by each of the parties hereto; provided that any amendment,
waiver or modification of Section 2.04, 3.04, 3.05, 6.06 or 6.11 or any consent
thereunder or to any departure therefrom, insofar as such amendment, waiver,
modification or consent would not have a material adverse effect on the
Liquidity Agent or the Liquidity Banks, may be effective without the consent of
the Liquidity Agent (except that Liquidity Banks must continue to receive the
Servicer's Report pursuant to Section 3.04(c)(i)). Any waiver or consent
hereunder shall be effective only in
31
the specific instance and for the specific purpose for which given. No amendment
to the Surety Bonds shall in any event be effective until each Rating Agency
confirms that such amendment would not cause the then current rating assigned to
the Low Floater Certificates to be reduced or withdrawn. The parties to this
Agreement will give notice of any amendment to this Insurance Agreement, the
Owner Trust Agreement, the Certificate Issuer Trust Agreement, the Liquidity
Agreement, the Charter Contribution Agreement, the Origination Trust
Contribution Agreement and the Certificate Surety Bond to the Administrative
Agent at least twenty (20) calendar days prior to the effectiveness of any such
amendment.
(b) This Agreement, together with the other Transaction
Documents, contains a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement (together with the exhibits hereto) among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
(c) Except as provided herein with respect to participants,
reinsurers and parties entitled to indemnification hereunder, nothing in this
Agreement shall confer any right, remedy or claim, express or implied, upon any
Person, including, particularly, any Low Floater Holder, other than the Surety
Provider against the Charter Entities, and all the terms, covenants, conditions,
promises and agreement contained herein shall be for the sole and exclusive
benefit of the parties hereto and their successors and permitted assigns.
Neither the Administrative Agent nor any Senior Holder or Low Floater Holder
shall have any right to payment from any Surety Bond Premiums paid or payable
hereunder or under the Owner Trust Agreement or Certificate Issuer Trust
Agreement or from any other amounts paid by the Servicer or Charter pursuant to
Article II hereof.
SECTION VII.2 Notices. Except to the extent otherwise expressly
provided herein, all notices, requests, and demands to or upon the respective
parties hereto to be effective shall be in writing (and if sent by mail,
certified or registered, return receipt requested) or facsimile transmission
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given or made when delivered by hand, or three business days after being
deposited in the mail, postage prepaid, or, in the case of facsimile
transmission, when sent, addressed as follows:
If to Charter, the Origination Trust, the Owner Trust, the
Certificate Issuer Trust, or the Servicer:
c/o Related Charter LP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
32
also to:
Attention: Xxxxx Xxxxx, Senior Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Surety Provider:
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(a) with respect to any notice of draws under the Surety Bonds,
Termination Date, Event of Default, Unmatured Event of Default, Servicer
Default, Unmatured Servicer Default, Event of Termination, Unmatured Termination
Event or breach of any covenant or agreement hereunder:
Attention: Vice President and Manager, IPM Structured Finance
(b) with respect to the financial statements of Charter and the
Servicer and other regular correspondence:
Attention: Structured Finance Surveillance
If to the Administrative Agent:
First Tennessee Bank National Association
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Liquidity Agent:
Bayerische Landesbank Girozentrale, New York Branch
000 Xxxxxxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, First Vice President
Manager of Public Finance
33
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SECTION VII.3 No Waiver: Remedies and Severability. No failure on
the part of the Surety Provider or the Controlling Person to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
will any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided or by law.
The parties hereto further agree that the holding by any court of competent
jurisdiction that any remedy pursued by the parties hereto and hereunder is
unavailable or unenforceable will not affect in any way the ability of such
parties to pursue any other remedy available to them. In the event any provision
of this Insurance Agreement shall be held to be invalid or unenforceable by any
court of competent jurisdiction, such provision shall be ineffective only to the
extent of such invalidity or unenforceability, without invalidating the
remainder of such provision or any other provisions of this Insurance Agreement.
SECTION VII.4 Binding Effect; Assignment. This Insurance
Agreement shall be binding upon each of Charter, the Origination Trust, the
Owner Trust, the Certificate Issuer, the Administrative Agent, the Surety
Provider and the Liquidity Agent on behalf of the Liquidity Banks and their
respective successors and permitted assigns (which successors and assigns shall
include a trustee in bankruptcy), and shall inure to the benefit of each such
Person and each of their respective successors and permitted assigns. None of
the Charter Entities or the Administrative Agent shall sell, assign or transfer
to any Person, or otherwise dispose of, at any time, any of its rights or
obligations hereunder or under any of the Transaction Documents, or any of its
interests herein or therein, unless:
(a) such sale, assignment, transfer, or other disposition
constitutes a full assignment of all of the Charter Entities' and/or the
Administrative Agent's rights and obligations under, and interests in, this
Insurance Agreement and the other Transaction Documents, and in all interests in
Assigned Assets under the Owner Trust Agreement;
(b) the Charter Entity and/or the Administrative Agent obtains
the prior written consent of the Surety Provider to such sale, assignment,
transfer or other disposition (which, in the case of Charter, if such transfer
is to an Affiliate, the consent of the Surety Provider shall not be unreasonably
withheld); and
(c) such sale, assignment, transfer or other disposition
otherwise complies with the requirements set forth therefor in each of this
Insurance Agreement, the other Transaction Documents, any restrictions set forth
in the Owner Trust Agreement and the Certificate Issuer Trust Agreement and
applicable law.
Subject to any restrictions set forth in the Liquidity Agreement,
the Surety Provider may, with the prior consent of all the Liquidity Banks,
assign any of its rights or
34
obligations under this Insurance Agreement, the Liquidity Pledge and Security
Agreement or the Surety Bonds or sell, assign or transfer any interest it may
acquire in respect of any Assigned Assets, the Owner Trust Agreement or the
other Transaction Documents to any Person; provided, however, that
(i) any such sale, assignment or transfer shall be
subject to all applicable restrictions on sales, assignments and
transfers of interests that may be applicable under the Owner
Trust Agreement and
(ii) the Surety Provider shall acquire the prior
written consent of Charter, the Owner Trust and the Liquidity
Agent prior to assigning, delegating or otherwise transferring
any obligation of the Surety Provider to make a payment under any
Surety Bond.
Notwithstanding anything to the contrary contained herein, prior
to any assignment by the Surety Provider of any of its obligations hereunder or
under the Surety Bonds, the Surety Provider shall obtain written confirmation
from each Rating Agency that such assignment will not result in a downgrading of
the ratings applicable to the Low Floater Certificates.
SECTION VII.5 Termination of this Insurance Agreement and the
Surety Bonds; Continuing Obligations. This Agreement shall create and constitute
continuing obligations of the Surety Provider, Charter, Origination Trust, Owner
Trust, Certificate Issuer, the Administrative Agent and the Liquidity Agent in
accordance with its terms, and such obligations will terminate on the date which
occurs after the termination of the Surety Bonds on which the Surety Provider
has recovered all of the payments it has made, if any, under the Surety Bonds.
The obligation of the Surety Provider to make a payment under the Surety Bonds
may be terminated only upon receipt by the Surety Provider of written consent
and notice (a "Termination Notice") signed by the Owner Trust, the Certificate
Issuer and Liquidity Agent, as Liquidity Agent for the Liquidity Banks,
terminating this Insurance Agreement and the Surety Bonds and signed by the
Liquidity Agent. Any termination of this Insurance Agreement will be effective
only upon the delivery to the Surety Provider of the Surety Bonds, whereupon the
Surety Bonds will be canceled and the Surety Provider's liability thereunder
will cease except as specified therein with respect to Avoided Payments. The
expense provision of Section 6.04 and the indemnity provision of Section 6.05 as
well as the reimbursement provisions set forth in Section 2.04 shall survive the
termination of this Insurance Agreement until all claims, including without
limitation all suits filed as a result thereof, have been finally concluded.
SECTION VII.6 GOVERNING LAW. THIS INSURANCE AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION VII.7 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
35
(a) THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY
AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR IN CONNECTION WITH ANY OF THE
TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREUNDER OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE
THAT A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SURETY BOND OR ANY TRANSACTION
CONTEMPLATED HEREBY, THEREBY OR BY THE OWNER TRUST AGREEMENT AND THE CERTIFICATE
ISSUER TRUST AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(b) Nothing contained in this Agreement shall limit or affect the
Surety Provider's right to serve process in any other manner permitted by law or
to start legal proceedings relating to any of the Transaction Documents against
any party hereto or such party's property in the courts of any jurisdiction.
SECTION VII.8 No Recourse.
(a) No recourse shall be had for the payment of any amount owing
hereunder or any other obligation or claim arising out of or based upon this
Agreement against any shareholder, employee, officer, director, or incorporator
of the Origination Trust, Owner Trust or the Certificate Issuer except for any
claim arising out of the gross negligence or misconduct of such shareholder,
employee, officer, director, or incorporator of the Owner Trust or the
Certificate Issuer.
(b) Anything contained in this Agreement or any other Transaction
Document to the contrary notwithstanding, all payments to be made by the Owner
Trust or the Certificate Issuer under this Agreement shall be made by the Owner
36
Trust or the Certificate Issuer solely from available cash, which shall be
limited to (a) with respect to payments owed by the Owner Trust, the proceeds of
collections and other amounts payable on the Bonds, or with respect to payments
owed by the Certificate Issuer, the proceeds of amounts paid on the Senior
Certificate, and (b) with respect to both the Owner Trust and the Certificate
Issuer, amounts received otherwise in connection with any of the Transaction
Documents, and (c) amounts paid to the Liquidity Collateral Agent pursuant to
the terms of the Liquidity Pledge and Security Agreement (collectively
"Available Amounts"). The provisions of this Section shall survive the
termination of this Agreement.
SECTION VII.9 No Bankruptcy. The parties to this Agreement hereby
acknowledge that, pursuant to the terms and conditions of this Agreement and the
other Transaction Documents, the Origination Trust, Owner Trust and the
Certificate Issuer are or may be required, from time to time, to make certain
payments to such parties, either as compensation for services rendered,
reimbursement for out of pocket expenses, indemnification, or otherwise, as set
forth herein and therein. Such parties hereby agree that, notwithstanding any
provision of any Transaction Document, (i) the Origination Trust, Owner Trust
and the Certificate Issuer shall not make any such payment to any such party,
(ii) the Origination Trust, Owner Trust and the Certificate Issuer shall have no
duty, liability or obligation to make any such payment to any such party, (iii)
no such payment shall be due from the Origination Trust, Owner Trust or the
Certificate Issuer and (iv) no such party shall have any right to enforce any
claim against the Origination Trust, Owner Trust or the Certificate Issuer in
respect of any such payment, in each case at any time that the Senior
Certificate or any Low Floater Certificate is outstanding and no Bankruptcy
Event (as defined below) has occurred and is continuing, provided, however, that
such payment shall be made if and to the extent that (x) the making of such
payment by the Origination Trust, Owner Trust or the Certificate Issuer would
not render the Origination Trust, Owner Trust or the Certificate Issuer
insolvent and (y) the Origination Trust, Owner Trust or the Certificate Issuer
has received funds with respect to such obligations which may be used to make
such payment and which funds are not required to make payments when due on the
Senior Certificate or Low Floater Certificates; provided, however, that the
foregoing shall not be construed to prohibit a drawing on the Liquidity Surety
Bond by the Liquidity Agent. As used in this Section the term "Bankruptcy Event"
shall mean the entry against the Origination Trust, Owner Trust or the
Certificate Issuer of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the winding
up or liquidation of its affairs, or the institution of any proceeding against
the Origination Trust, Owner Trust or the Certificate Issuer seeking any of the
foregoing, and the continuance of any such decree or order, or any such
proceeding, in each case unstayed and in effect for a period of 60 consecutive
days.
SECTION VII.10 Non-Petition. The parties to this agreement shall
not, prior to the date that is one year and one day after the payment in full of
all the Low Floater Certificates, petition or otherwise invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Owner Trust under any Bankruptcy Law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Owner Trust, or ordering the winding up or liquidation of the affairs of
the Owner
37
Trust.
SECTION VII.11 Counterparts. This Agreement may be executed in
any number of separate counterparts by the parties hereto, and each counterpart
when so executed shall be deemed to be an original and all such counterparts
taken together shall constitute one and the same agreement.
SECTION VII.12 Captions. The various captions (including, without
limitation, the table of contents) in this Agreement are provided solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.
SECTION VII.13 Notice of Limitation of Liability. Pursuant to
Section 10.6 of the Origination Trust Agreement and Section 12.7 of the Owner
Trust Agreement, all suppliers and Persons with whom the Origination Trust and
the Owner Trust do business are on notice that the Shareholders, the Trustees,
and the Manager (each as defined in the Origination Trust Agreement) and the
Senior Holder, Residual Holder, Trustees and Manager (each as defined in the
Owner Trust Agreement) are not liable for the obligations of the Origination
Trust or the Owner Trust, and all suppliers and persons shall look solely to the
assets of the Origination Trust or the Owner Trust, as the case may be, for
payment. The Origination Trust and the Owner Trust are both business trusts
created under the Trust Act; but the Board of Trustees or Manager of neither the
Origination Trust nor the Owner Trust shall be liable for failure to give notice
to such Persons, and any failure to give such notice shall not imply that the
Shareholders, the Managing Trustees, the Manager, and the Registered Trustee are
liable for the Origination Trust's obligations, nor shall such failure imply
that the Senior Holder, Residual Holder, Managing Trustees, the Manager and the
Registered Trustee are liable for the Owner Trust's obligations.
38
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
CHARTER MUNICIPAL MORTGAGE
ACCEPTANCE COMPANY
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC, its General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: President & COO
CHARTER MAC ORIGINATION TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC, its General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: President & COO
CHARTER MAC OWNER TRUST I
By: RELATED CHARTER LP, its Manager
By: RELATED CHARTER LLC, its General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: President & COO
CHARTER MAC FLOATER CERTIFICATE TRUST I
By: FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
as Certificate Trust Agent, pursuant to the
Certificate Issuer Trust Agreement, of CHARTER
MAC FLOATER CERTIFICATE TRUST I
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: President & COO
MBIA INSURANCE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------
Name: Xxxxxx X. Xxxxx
Title: Director
FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as
Administrative Agent
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxxx
Title:
RELATED CHARTER LP, as Servicer
By: RELATED CHARTER LLC, its General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: President & COO
BAYERISCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH, as Liquidity Agent
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
EXHIBIT A
CERTIFICATE SURETY BOND
EXHIBIT B
LIQUIDITY SURETY BOND
EXHIBIT C
SCHEDULE OF BONDS
APPENDIX A
The following definitions are incorporated into and made a part
of each Transaction Document (as defined below).
"Acquired Assets" has the meaning given to such term in Section
6.12 of the Insurance Agreement.
"Actual Debt Service" means, for any applicable period, scheduled
distributions on the Low Floater Certificates plus Surety Bond Premium, all
amounts due and owing under the Liquidity Agreement including interest on
Advances, Tender Agent fees, Certificate Trust Agent fees, Registered Trustee
fees, Certificate Trustee fees, Administrative Agent fees, Servicer fees,
Managers fees, and all other financing costs payable during such period by
Charter, the Origination Trust, the Owner Trust or the Certificate Issuer
pursuant to any Transaction Document.
"Administration and Custody Agreement" means the Administration
and Custody Agreement, dated as of May 21, 1998, by and among the Administrative
Agent, the Owner Trust, the Liquidity Collateral Agent and the Servicer.
"Administrative Agent" means the Administrative Agent and
Custodian pursuant to the Administration and Custody Agreement, initially First
Tennessee Bank National Association.
"Affiliate" means with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"Alternate Credit Facility" shall mean any instrument delivered
pursuant to Section 9.2 of the Owner Trust Agreement in lieu of the Initial
Credit Facility.
"Alternate Liquidity Commitment" means a Liquidity Commitment
provided by a Liquidity Bank to replace all or part of the Liquidity Commitment
initially provided by a Liquidity Bank upon the termination, expiration or
dishonor of such initial Liquidity Commitment.
"Alternate Liquidity Facility" means any instrument delivered
pursuant to Section 9.2 of the Certificate Issuer Trust Agreement in lieu of the
Liquidity Agreement.
"Applicable Laws" means with respect to any Person, all laws,
rules and regulations applicable to such Person or its conduct, including,
without limitation, all applicable state and federal constitutions, all
statutes, rules, regulations and orders of governmental bodies, all orders,
judgments and decrees of all courts and arbitrators and all applicable common
law and equitable principles relating to the foregoing.
"Appraised Value" means with respect to a Property, the value of
such Property as set forth in the most recent appraisal of the Property.
"Assign" has the meaning given to such term in Section 2 of the
Charter Contribution Agreement.
"Assigned Assets" has the meaning given to such term in Section 2
of the Charter Contribution Agreement.
"Assignment" has the meaning given to such term in Section 2 of
the Charter Contribution Agreement.
"Assignment Obligation" has the meaning given to such term in
Section 6.12 of the Insurance Agreement.
"Authorized Representative" means in the case of Charter, the
Manager; in the case of the Origination Trust, the Owner Trust or the
Certificate Issuer, the Certificate Trust Agent and any Managing Trustee; and in
the case of the Surety Provider, the Administrative Agent or the Liquidity
Agent, any Vice President or more senior officer.
"Avoided Payments" with respect to either Surety Bond has the
meaning given to such term in Section 10 of such Surety Bond.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended (Title 11 of the United States Code, as amended).
"Bankruptcy Law" means any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution, or
liquidation or similar law, whether now or hereafter in effect.
"Bond" means each issue of mortgage revenue bonds identified by
Charter from time to time on the Bond Schedule.
"Bond Collateral" means with respect to each Bond, all property
and interests in property now or hereafter securing such Bond, and the
obligations of the Bond Issuer and/or any Bond Obligor in respect of such Bond,
including, without limitation, all contract rights, accounts receivable,
accounts, documents, instruments, general intangibles, escrows and Bond
Documents.
"Bond Documents" means with respect to each Bond, those
instruments, mortgages, indentures, agreements, guaranties, certificates or
other writings, now or hereafter evidencing or securing the obligations of the
Bond Issuer and/or any Bond Obligor in respect of such Bond.
"Bond Issuer" means with respect to each Bond, the state or local
government unit, authority or instrumentality that is the issuer of such Bond.
"Bond Obligor" means with respect to each Bond, each Person
directly or indirectly obligated to repay the indebtedness evidenced by such
Bond (including any guarantor of any such Person).
"Bond Schedule" means the schedule attached to the Charter
Contribution Agreement, the Origination Trust Contribution Agreement and the
Administration and Custody Agreement as Exhibit A, as the same may be
supplemented from time to time.
"Bond Trustee" means with respect to each Bond, the entity acting
as trustee for the benefit of the holders of such Bond.
"Business Day" means any day (a) other than a Saturday, Sunday,
or other day in which banking institutions in the City of New York, New York, or
in the city in which the principal offices of the Administrative Agent, the
Certificate Trust Agent, the Tender Agent, the Liquidity Banks, Remarketing
Agent or the Surety Provider are located, are required to be closed, and (b) on
which the New York Stock Exchange is open for trading.
"Capped Bond Value" means, on any date of determination with
respect to each Bond, an amount equal to the principal amount of such Bond, or
allocable principal portion thereof to the extent such Bond is not in violation
of any Concentration Limits.
"Carrying Value" means with respect to a Bond on any date of
determination, the carrying value of such Bond as calculated by the Owner Trust
in accordance with FSAS 115 and accepted by the Owner Trust's independent
auditors.
"Cash Consideration" means with respect to each Bond and related
Bond Collateral and Assigned Assets, the amount specified with respect to such
Bond on the Bond Schedule.
"Cash Trust Account" means the bank account maintained at the
Administrative Agent established by the Owner Trust pursuant to Section 8.1 of
the Owner Trust Agreement.
"Certificate Issuer" means Charter MAC Floater Certificate Trust
I, a Delaware business trust, its successors and assigns.
"Certificate Issuer Trust Agreement" means the amended and
restated trust agreement, dated as of May 21, 1998, between the Owner Trust, the
Tender Agent and Certificate Trust Agent, and Wilmington Trust Company, as
Certificate Trustee.
"Certificate Surety Bond" has the meaning given to such term in
the Insurance Agreement.
"Certificate Trust Agent" means First Tennessee Bank National
Association, as Certificate Trust Agent, pursuant to the Certificate Issuer
Trust Agreement, for the Certificate Issuer.
"Certificate Trust Agent Report" means an accounting report
prepared monthly by the Certificate Trust Agent in form reasonably satisfactory
to the Surety Provider.
"Certificate Trustee" means, with respect to the Certificate
Issuer, Wilmington Trust Company, not in its individual capacity, but solely as
trustee of the Certificate Issuer.
"Charter" means Charter Municipal Mortgage Acceptance Company, a
Delaware business trust.
"Charter Contribution Agreement" means the contribution
agreement, dated as of May 21, 1998, by and between Charter and the Origination
Trust.
"Charter Entity" means each of Charter, the Origination Trust,
the Owner Trust and the Certificate Issuer.
"Closing Date" means with respect to each Bond, the date on which
occurs the Assignment of such Bond from Charter to the Origination Trust
pursuant to the terms of the Charter Contribution Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
or corresponding provisions of subsequent revenue laws.
"Collateral Value" means with respect to any Eligible Bond on any
date of determination, the lowest of:
(a) the aggregate Appraised Value of all
Properties securing such Eligible Bond;
(b) the Carrying Value of such Eligible Bond; and
(c) the Capped Bond Value of such Eligible Bond.
The Collateral Value with respect to any Ineligible Bond on any
date of determination shall be zero.
"Collateral Value Ratio" means, on any date of determination, the
percentage obtained by dividing the Net Face Amount by the sum of (i) the Net
Collateral Value, (ii) the amount then on deposit in the Cash Trust Account, and
(iii) all accrued and unpaid interest on the Eligible Bonds.
"Collection Account" means the account maintained at the
Administrative Agent established pursuant to Section 8.1 of the Owner Trust
Agreement.
"Concentration Limit" means each of the following calculations,
with respect to the Bonds held by the Owner Trust:
(i) Ten Bond Minimum. The Owner Trust shall own at least ten (10)
Bonds at all times. For purposes of this definition, each amount
held in the Cash Trust Account in an amount equal to one-half of
the average outstanding principal amount of the Bonds held by the
Administrative Agent shall count as one Bond.
(ii) One Bond May Not Exceed 20%. At no time shall the
outstanding principal amount of any one Bond exceed the sum of
20% of the aggregate principal amount outstanding of all Bonds
plus 100% of all amounts held in the Cash Trust Account.
(iii) Bonds Secured by Properties in California Limited to 30%.
At no time shall the aggregate outstanding principal amount of
Bonds secured by Properties located in California exceed 30% of
the aggregate outstanding principal amount of all Bonds.
(iv) Bonds Secured by Properties in any State other than
California. At no time shall the aggregate outstanding principal
amount of Bonds secured by Properties located in any one state
(other than California) exceed 20% of the aggregate outstanding
principal amount of all Bonds.
"Contribution Termination Date" means the earlier to occur of (i)
the date on which an Event of Termination occurs, and (ii) the Facility
Termination Date.
"Control" (and its correlative forms) has the meaning given to
such term in the 1940 Act.
"Controlling Person" means (i) prior to the occurrence of an
Event of Default, the Residual Holder and (ii) on and after the occurrence of an
Event of Default, the Surety Provider, unless the Liquidity Pledge and Security
Agreement is then in effect and the Liquidity Trigger Date (as defined in the
Liquidity Pledge and Security Agreement) has occurred, in which case the
Liquidity Agent shall be the Controlling Person.
"Credit Facility" means initially, the Certificate Surety Bond,
or any Alternate Credit Facility delivered in lieu of the Certificate Surety
Bond.
"Credit Facility Account" means the account established pursuant
to Section 8.1 of the Owner Trust Agreement.
"Credit Provider" means the Surety Provider or the provider of an
Alternate Credit Facility.
"Credit Provider Certificate" means the portion of the Senior
Certificate paid with the proceeds of a drawing on the Certificate Surety Bond
or an Alternate Credit Facility.
"Custody Account" has the meaning given to such term in Section 3
of the Administration and Custody Agreement.
"Date of Issuance" means the date on which the conditions
specified in Section 2.02 of the Insurance Agreement are satisfied in full and
the Surety Provider executes and delivers the Surety Bonds to the Insured
Parties or their agents.
"Debt" means with respect to any Person on any date, without
duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, (iv) all obligations of such Person as
lessee which are capitalized in accordance with generally accepted accounting
principles, (v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, (vi) all
non-contingent obligations of such Person to reimburse any bank or other
Person in respect of amounts paid under letters of credit or similar
instruments, and (vii) all Debt of others guaranteed by such Person.
"Debt Service Coverage" means, for any applicable period, all
Earnings during such period divided by Actual Debt Service for such period.
"Default Rate" shall be equal to the greater of (i) the average
Prime rate of money center banking institutions plus 200 basis points (2.0%) and
(ii) the rate then payable on the Low Floater Certificates.
"Deteriorating Property Performance" means with respect to a
Property securing a Bond the occurrence of either of the following conditions:
(i) At any time of determination, the Net Cash
Flow from the Property over the preceding twelve months is 10%
below the Net Cash Flow from the Property in the twelve months
preceding the assignment of the related Bond to the Owner Trust,
or
(ii) At any time of determination average
occupancy at such Property during the preceding twelve months is
less than 85%.
"Distribution Account" has the meaning given to such term in
Section 8.1 of the Certificate Issuer Trust Agreement.
"Distributions" means Senior Certificate Distribution Payments
and/or Residual Distributions, as the context requires.
"Earnings" means, for any applicable period, (i) Interest Revenue
during such period less (ii) the average aggregate outstanding principal amount
of Bonds during such period times the Pro Forma Servicing Fee.
"Eligible Assignee" means a commercial bank with a short-term
unsecured indebtedness rating of at least A-1 by S&P and P-1 by Moody's, and
which is acceptable to the Liquidity Agent, the Liquidity Borrower and the
Surety Provider, which acceptance neither the Liquidity Agent, Liquidity
Borrower nor the Surety Provider shall unreasonably withhold.
"Eligible Bonds" means, at any time of determination, all Bonds
that are not the Ineligible Bonds.
"Environmental Law" means collectively all federal, state and
local laws, rules, regulations, ordinances, programs, permits, guidances, orders
and consent decrees relating to health, safety or environmental matters,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980.
"Event of Bankruptcy" means the commencement of a case by or
against any Bond Obligor under the Bankruptcy Code or under any other Bankruptcy
Law.
"Event of Default" means any event of default specified in
Section 5.01 of the Insurance Agreement.
"Event of Termination" has the meaning given to such term in
Section 6 of the Charter Contribution Agreement.
"Facility Limit" means initially $150,000,000, subject to
increase or decrease as provided in Sections 2.01(b) of the Insurance Agreement.
"Facility Termination Date" means May 20, 2003, unless extended
by the parties to the Insurance Agreement or determined to have occurred at an
earlier date pursuant to Section 5.03(b) of the Insurance Agreement.
"Fee Letter" means the Fee Letter Agreement, dated as of May 21,
1998, by and between Charter, the Origination Trust, the Owner Trust, the
Certificate Issuer and the Surety Provider.
"Final Distribution Date" means one year after the last scheduled
principal payment on the Bonds.
"Gainshare Account" has the meaning given to such term in Section
8.1 of the Owner Trust Agreement.
"Gainshare Amount" has the meaning given to such term in Section
8.1 of the Owner Trust Agreement.
"Gainshare Percentage" means a percentage equal to ten percent
(10%) times a fraction the numerator of which is equal to Outstanding Face
Amount of Low Floater Certificates and the denominator of which is equal to the
sum of the principal amount of the Bonds plus the amount, if any, on deposit in
the Cash Trust Account.
"Gainshare Purchase Subaccount" has the meaning given to such
term in Section 6.16 of the Certificate Issuer Trust Agreement.
"Governmental Approval" means any authorization, permit, consent,
approval, license or exemption from, registration or filing with, or report to,
any court or Governmental Authority.
"Governmental Authority" means any nation or government, any
federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions.
"Indemnified Liabilities" has the meaning given to such term in
Section 6.06 of the Insurance Agreement.
"Indemnitee" has the meaning given to such term in Section 6.05
of the Insurance Agreement.
"Ineligible Bond" shall have the meaning given to such term in
Section 5 of the Charter Contribution Agreement.
"Initial Closing Date" shall mean the date on which the first
Bond is contributed to the Owner Trust.
"Initial Credit Facility" means the Certificate Surety Bond.
"Insurance Agreement" means the Insurance Agreement, dated as of
May 21, 1998, by and among Charter, the Surety Provider, the Origination Trust,
the Owner Trust, the Certificate Issuer, the Administrative Agent, the Servicer
and the Liquidity Agent.
"Insured Amount," with respect to each Surety Bond shall have the
meaning given to such term in such Surety Bond.
"Insured Party" means (i) with respect to the Certificate Surety
Bond, the Owner Trust and (ii) with respect to the Liquidity Surety Bond, the
Liquidity Agent as agent for the Liquidity Banks.
"Interest Account" has the meaning given to such term in Section
8.1 of the Owner Trust Agreement.
"Interest Revenue" means, for any applicable period, the lower
of:
(b) the sum of total interest payments on all
Eligible Bonds actually received by the Owner Trust during such
period plus interest earned on amounts held in the Cash Trust
Account during such period, and
(c) 95% of Net Cash Flow generated by all
Properties, plus interest earned on amounts held in the Cash
Trust Account during such period.
Funds generated by any sale or refinancing of a Property or a
Bond (other than monies constituting payment of contingent interest) or other
non-operating source (other than interest earning on amounts held in the Cash
Trust Account) shall not constitute Interest Revenue.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended from time to time.
"Level I Trigger Event" means at any time of determination, the
occurrence of any of the following: (i) the Collateral Value Ratio is greater
than 50% but not greater than 60% or, (ii) if the Three-Month Average Debt
Service Coverage is less than 2, but not less than 1.7; or (iii) if the Pro
Forma Debt Service Coverage is less than 1.7 but not less than 1.5. The first
date upon which a Level I Trigger Event occurs is a "Level I Trigger Date."
"Level II Trigger Event" means at any time of determination, the
occurrence of any of the following: (i) the Collateral Value Ratio is greater
than 60% but not greater than 70% or, (ii) the Three-Month Average Debt Service
Coverage is less than 1.7, but not less than 1.35; or (iii) if the Pro Forma
Debt Service Coverage is less than 1.5 but not less than 1.25. The first date
upon which a Level II Trigger Event occurs is a "Level II Trigger Date."
"Level III Trigger Event" means at any time of determination, the
occurrence of any of the following: (i) the Collateral Value Ratio is greater
than 70%; or (ii) if the Three-Month Average Debt Service Coverage is less than
1.35; or (iii) the Pro Forma Debt Service Coverage is less than 1.25.
"Level IV Trigger Event" means at any time of determination, the
occurrence of any of the following: (i) if the Three-Month Average Debt Service
Coverage is less than 1.20; or (ii) the Pro Forma Debt Service Coverage is less
than 1.10.
"Lien" means any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on common law, statute or contract. The term "Lien" shall also
include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting the property.
"Liquidity Agent" means the agent for the Liquidity Banks
pursuant to the Liquidity Agreement, initially Bayerische Landesbank
Girozentrale, New York Branch, its successor and assigns.
"Liquidity Agreement" means the Liquidity Agreement, dated as of
May 21, 1998, by and among the Owner Trust, Certificate Issuer, the Tender
Agent, the Certificate Trust Agent, the Liquidity Agent, the Liquidity Banks
named therein and the Surety Provider, as the same may be amended, restated, or
supplemented.
"Liquidity Bank" and "Liquidity Banks" have the meanings given to
such terms in the first paragraph of the Liquidity Agreement.
"Liquidity Bank Default" means the failure of a Liquidity Bank to
make payment in full under the Liquidity Agreement when required.
"Liquidity Collateral" has the meaning given to such term in
Section 2.1 of the Liquidity Pledge and Security Agreement.
"Liquidity Collateral Agent" means the Liquidity Collateral Agent
pursuant to the Liquidity Pledge and Security Agreement, initially the Liquidity
Agent.
"Liquidity Commitment" has the meaning given to such term in the
Liquidity Agreement.
"Liquidity Commitment Fee" has the meaning given to such term in
the Liquidity Agreement.
"Liquidity Commitment Termination Date" has the meaning given to
such term in Section 1.01 of the Liquidity Agreement.
"Liquidity Event of Default" has the meaning given to such term
in Section 6.01 of the Liquidity Agreement.
"Liquidity Facility" means the revolving line of credit described
in the Liquidity Agreement, and any Alternate Liquidity Facility, as the same
shall be modified, supplemented, amended or extended in accordance with the
terms thereof and of the Certificate Issuer Trust Agreement.
"Liquidity Facility Purchase Subaccount" has the meaning given to
such term in Section 6.16 of the Certificate Issuer Trust Agreement.
"Liquidity Facility Rate" means the rate (or rates) payable (i)
as the Senior Certificate Distribution Rate to the Senior Holder on that portion
of the Outstanding Face Amount of the Senior Certificate that is equal to the
Outstanding Face Amount of the Low Floater Certificates that have become
Liquidity Provider Certificates, and (ii) as the Low Floater Certificate
Distribution Rate on any Low Floater Certificates that are Liquidity Provider
Certificates, which rate shall be equal to the interest rate that is payable, as
of such Low Floater Certificate Distribution Payment Date, on the Advance (or
Advances) made by the Liquidity Provider to the Certificate Issuer pursuant to
the Liquidity Facility with which such Low Floater Certificates were purchased,
as determined in accordance with Section 2.06(a) of the Liquidity Agreement.
"Liquidity Obligations" has the meaning given to such term in
Section 1.01 of the Liquidity Agreement.
"Liquidity Pledge and Security Agreement" means the Liquidity
Pledge and Security Agreement, dated May 21, 1998, by and among the Origination
Trust, the Owner Trust, the Certificate Issuer, the Surety Provider, the
Administrative Agent, the Liquidity Agent and the Liquidity Collateral Agent.
"Liquidity Provider" means the Liquidity Banks named in the
Liquidity Agreement and the issuer of any Alternate Liquidity Facility, together
with their respective successors and assigns.
"Liquidity Provider Certificates" means all Low Floater
Certificates purchased with the proceeds of a drawing under the Liquidity
Facility, unless and until the conditions under clauses (1) and (2) of Section
6.17(a) of the Certificate Issuer Trust Agreement have been satisfied.
"Liquidity Purchase Option" has the meaning given to such term in
Section 6.11 of the Insurance Agreement.
"Liquidity Surety Bond" has the meaning given to such term in the
Insurance Agreement.
"Liquidity Trigger Date" has the meaning given to such term in
Section 5.1(a) of the Liquidity Pledge and Security Agreement.
"Low Floater Certificate Distribution Payment" means the amount
payable on each Low Floater Distribution Payment Date to the Low Floater Holders
as provided in Section 10.1 of the Certificate Issuer Trust Agreement.
"Low Floater Certificate Distribution Payment Date" means the
first Business Day of each month, commencing July 1, 1998.
"Low Floater Certificate Distribution Rate" means the
distribution rate for the Low Floater Certificates as it appears in the Low
Floater Certificates.
"Low Floater Certificate Distribution Rate Determination Date"
means Wednesday in each calendar week or, if such Wednesday is not a Business
Day, the last Business Day preceding such Wednesday; provided, however, that the
first Low Floater Certificate Distribution Rate Determination Date shall be May
27, 1998.
"Low Floater Certificate Distribution Rate Period" means the
seven-day period commencing on the first Thursday, whether or not a Business
Day, following the corresponding Low Floater Certificate Distribution Rate
Determination Date and running through and including the Wednesday, whether or
not a Business Day, of the following calendar week, except (i) the first Low
Floater Certificate Distribution Rate Period shall commence on May 21, 1998 and
(ii) the last Low Floater Certificate Distribution Rate Period shall end on the
date upon which the events specified in Section 6.7(b) or (c) of the Owner Trust
Agreement occur.
"Low Floater Certificates" means the Low Floater Certificates
issued from time to time by the Certificate Issuer pursuant to Section 6.1 of
the Certificate Issuer Trust Agreement.
"Low Floater Holder" means any registered holder of a Low Floater
Certificate.
"Low Floater Redemption Price" has the meaning given to such term
in Section 6.4 of the Certificate Issuer Trust Agreement.
"Management Agreement" means the Management Agreement, dated as
of May 21, 1998, by and between Charter and the Manager.
"Manager" means Related Charter LP, a Delaware limited
partnership and its successors and assigns.
"Material Adverse Change" means, in respect of any Person, a
material adverse change in the business, financial condition, results of
operations or properties of such Person, which change adversely affects the
ability of such Person to perform its obligations under any of the Transaction
Documents.
"Maximum Rate" means for each Senior Certificate Distribution
Rate Determination Date, the lesser of (i) twelve percent (12%) per annum and
(ii) the maximum interest rate permitted under applicable law; provided,
however, that the Maximum Rate shall never exceed the rate payable from (A) all
Bond Interest payable by the Owner Trust for any distribution accrual period
less (B) Bond Interest payable on any bonds for which the Administrative Agent
receives an opinion of nationally recognized bond counsel to the effect that, as
a result of an ongoing default in respect of such Bonds, it is no longer
appropriate under federal income tax principles to accrue interest on such
Bonds.
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor
in interest.
"Net Cash Flow" means, with respect to a Property for any
applicable period, the net operating income of such Property during the
applicable period less any leasing commissions, capital expenditures, deferred
maintenance, reserves or other capital expenses incurred during such period.
"Net Collateral Value" means, on any date of determination, the
then aggregate Collateral Value of all Eligible Bonds (less any portion of the
Collateral Value attributable to any Bond which exceeds any Concentration Limit
to the extent such Bond exceeds the applicable Concentration Limit).
"Net Face Amount" means, on any date of determination, an amount
equal to (i) the Outstanding Face Amount of Low Floater Certificates less (ii)
the amount then on deposit in the Cash Trust Account.
"1933 Act" means the Securities Act of 1933, including, unless
the context requires otherwise, the rules and regulations thereunder, as amended
from time to time.
"1934 Act" means the Securities Exchange Act of 1934, including,
unless the context requires otherwise, the rules and regulations thereunder, as
amended from time to time.
"1939 Act" means the Trust Indenture Act of 1939, including,
unless the context requires otherwise, the rules and regulations thereunder, as
amended from time to time.
"1940 Act" means the Investment Company Act of 1940, including,
unless the context requires otherwise, the rules and regulations thereunder, as
amended from time to time.
"Nonapproved Bond" has the meaning given to such term in Section
4.03 of the Insurance Agreement.
"Notice for Payment" has the meaning given to such term in each
of the Surety Bonds.
"Notice of Tender" has the meaning given to such term in Section
6.12 of the Certificate Issuer Trust Agreement.
"Option Price" has the meaning given to such term in Section 6.11
of the Insurance Agreement.
"Origination Trust" means Charter MAC Origination Trust I, a
Delaware business trust, its successors and assigns.
"Origination Trust Agreement" means the amended and restated
trust agreement, dated as of May 21, 1998, by and among Charter Municipal
Mortgage Acceptance Company, the Managing Trustees, and Wilmington Trust
Company, as Registered Trustee, as such may be amended, modified, supplemented,
or assigned from time to time.
"Origination Trust Certificate" means a certificate issued by the
Origination Trust evidencing a 100% beneficial ownership interest in and to the
Origination Trust.
"Origination Trust Contribution Agreement" means the contribution
agreement, dated as of May 21, 1998, by and between the Origination Trust and
the Owner Trust.
"Origination Trust Management Agreement" means the Management
Agreement dated as of May 21, 1998 between the Origination Trust and the
Manager, as amended from time to time, pursuant to which the Manager will be
engaged by the Origination Trust to conduct the business and affairs of the
Origination Trust upon the terms and conditions therein.
"Outstanding Face Amount" means (i) with respect to the Senior
Certificate, the face amount of the Senior Certificate, as such may have been
increased, or decreased as a result of redemption and (ii) with respect to any
Low Floater Certificate, the face amount thereof, in each case, not including
any accrued Senior Certificate Distribution Payments or Low Floater Certificate
Distribution Payments.
"Owner Trust" means Charter MAC Owner Trust I, a Delaware
business trust, its successors and assigns.
"Owner Trust Agreement" means the amended and restated trust
agreement, dated as of May 21, 1998, by and among Charter MAC Origination Trust
I, the Managing Trustees, and Wilmington Trust Company, as Registered Trustee,
as such may be amended, modified, supplemented, or assigned from time to time.
"Owner Trust Management Agreement" means the Management Agreement
dated as of May 21, 1998 between the Owner Trust and the Manager, as amended
from time to time, pursuant to which the Manager will be engaged by the Owner
Trust to conduct the business and affairs of the Owner Trust upon the terms and
conditions therein.
"Payout Date" means the date on which all of the following have
occurred; (i) the Liquidity Commitment Termination Date, (ii) all Liquidity
Obligations have been paid in full, and (iii) the Surety Provider has satisfied
all payment obligations under the Surety Bonds, exclusive of the obligations
with respect to Avoided Payments.
"Periodic Fee" means, collectively, all fees and premiums payable
to the Surety Provider pursuant to the Fee Letter on a periodic basis.
"Person" means any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Prime Rate" means the prime rate as published in the Wall Street
Journal.
"Private Placement Memorandum" means the offering circular dated
May 21, 1998 prepared in connection with the sale of the Low Floater
Certificates.
"Pro Forma Debt Service" means, for any applicable period, Actual
Debt Service
plus assumed redemption payments in respect of the Face Amount of Floater
Certificates based on a level pay 25-year amortization schedule (assuming the
actual rate payable on the Low Floater Certificate in effect on the immediately
preceding Payment Date).
"Pro Forma Debt Service Coverage" means, for any applicable
period, all Earnings during such period divided by Pro Forma Debt Service for
such period.
"Pro Forma Servicing Fee" means .125%.
"Property" means with respect to each Bond, all real property
which is subject to any lien securing the obligations of the Bond Issuer and/or
any Bond Obligor in respect of such Bond.
"Purchase Account" has the meaning given to such term in Section
6.16 of the Certificate Issuer Trust Agreement.
"Purchase Date" has the meaning given to such term in Section
6.12 and Section 6.13 of the Certificate Issuer Trust Agreement.
"Purchase Price" has the meaning given to such term in Section
6.15 of the Certificate Issuer Trust Agreement.
"Rating Agency" means "Moody's" and/or "S&P," if each and/or
either is currently maintaining a rating on the Low Floater Certificates.
"Redemption Account" has the meaning given to such term in
Section 8.1 of the Owner Trust Agreement.
"Registered Trustee" means, with respect to the Origination Trust
and the Owner Trust, Wilmington Trust Company, not in its individual capacity,
but solely as trustee of the Origination Trust or the Owner Trust, as the case
may be.
"Reimbursement Agreement" means initially the Insurance
Agreement, and any Reimbursement Agreement executed in connection with any
Alternate Credit Facility.
"Reimbursement Amount" has the meaning given to such term in
Section 2.04 of the Insurance Agreement.
"Reimbursement Rate" means a per annum interest rate equal to the
greater of (i) Prime Rate plus 2.0% and (ii) the then current rate on the Low
Floater Certificates.
"Remarketing Agent" means Xxxxxxx, Xxxxx & Co., in its capacity
as remarketing agent pursuant to the Remarketing Agreement, or any successor
remarketing agent appointed by the Owner Trust.
"Remarketing Agreement" means the Remarketing Agreement, dated as
of May 21, 1998, by and between the Remarketing Agent and the Certificate
Issuer, together with all amendments or supplements thereto and any remarketing
agreement entered into between the
Certificate Issuer and any successor Remarketing Agent.
"Remarketing Proceeds Subaccount" has the meaning given to such
term in Section 6.16 of the Certificate Issuer Trust Agreement.
"Residual Certificate" means the Residual Certificate issued by
the Owner Trust pursuant to the Owner Trust Agreement evidencing a residual
beneficial interest in the Owner Trust.
"Residual Distribution" means the amount payable to the Residual
Holder pursuant to Section 8.3 of the Owner Trust Agreement.
"Residual Holder" means the Person in whose name the Residual
Certificate is registered or any Person which is the successor to such Person as
a result of a foreclosure or other similar action with respect to the Residual
Certificate.
"Securities Law Opinion" means the legal opinion of Xxxxxxxxx
Traurig Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx delivered on the Initial Closing Date to
the effect that (i) the offer and sale of the Senior Certificate, the Residual
Certificate and the Low Floater Certificates are not subject to registration
under the 1933 Act; (ii) none of the Origination Trust, the Owner Trust and the
Certificate Issuer is an investment company or a company controlled by an
investment company within the meaning of the 1940 Act; and (iii) none of the
Origination Trust Agreement, the Owner Trust Agreement or the Certificate Issuer
Trust Agreement is required to be qualified under the 0000 Xxx.
"Senior Certificate" means the Senior Certificate issued from
time to time by the Owner Trust pursuant to the Owner Trust Agreement evidencing
beneficial interests in the Owner Trust.
"Senior Certificate Distribution Payment" means the amount
payable on each Senior Certificate Distribution Payment Date to the Senior
Holder as provided in Section 8.3(a) of the Owner Trust Agreement representing a
portion of the Bond Interest payable at the Senior Certificate Distribution Rate
in respect of the Outstanding Face Amount of the Senior Certificate.
"Senior Certificate Distribution Payment Date" means the first
Business Day of each month, commencing July 1, 1998.
"Senior Certificate Distribution Rate" means the distribution
rate applicable to the Senior Certificate determined as provided in Section 6.7
of the Owner Trust Agreement, or with respect to Liquidity Provider
Certificates, the Liquidity Facility Rate.
"Senior Certificate Distribution Rate Determination Date" means
Wednesday in each calendar week or, if such Wednesday is not a Business Day, the
next Business Day preceding such Wednesday; provided, however, that the first
Senior Certificate Distribution Rate Determination Date shall be May 27, 1998.
"Senior Certificate Distribution Rate Period" means the seven-day
period commencing on the first Thursday, whether or not a Business Day,
following the corresponding Senior Certificate Distribution Rate Determination
Date and running through and including the
Wednesday of the following calendar week, whether or not a Business Day, except
(i) the first Senior Certificate Distribution Rate Period shall commence on May
21, 1998 and (ii) the last Senior Certificate Distribution Rate Period shall end
on the date upon which the events specified in Section 6.7(b) or (c) of the
Owner Trust Agreement occur.
"Senior Certificate Gainshare Payment" shall mean the amount
payable on each Distribution Payment Date to the Senior Holder as provided in
Section 8.5 of the Owner Trust Agreement.
"Senior Certificate Redemption Price" has the meaning given to
such term in Section 6.5(a) of the Owner Trust Agreement.
"Senior Holder" means the registered owner of the Senior
Certificate issued by the Owner Trust.
"Servicer" means the party acting as "Servicer" pursuant to the
Servicing Agreement, initially Related Charter LP, a Delaware limited
partnership.
"Servicer Default" has the meaning given to such term in the
Servicing Agreement.
"Servicer Termination Notice" has the meaning given to such term
in the Servicing Agreement.
"Servicer Transfer" has the meaning given to such term in the
Servicing Agreement.
"Servicer's Certificate" has the meaning given to such term in
the Servicing Agreement.
"Servicer's Report" has the meaning given to such term in the
Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement, dated as of
May 21, 1998, by and among the Servicer, the Owner Trust and the Administrative
Agent.
"Servicing Fees" has the meaning given to such term in the Owner
Trust Agreement.
"Settlement Report" has the meaning given to such term in the
Owner Trust Agreement.
"Special Tax Opinion" means the legal opinion of Xxxxxxxxx
Xxxxxxx Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx delivered on the Initial Closing Date
confirming the opinions set forth in the Private Placement Memorandum under the
heading "Certain Federal Income Tax Considerations."
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw Hill
Companies, Inc., and any successor thereto.
"Successor Servicer" has the meaning given to such term in the
Servicing Agreement.
"Surety Bond" means each of the Certificate Surety Bond and the
Liquidity Surety Bond.
"Surety Bond Premium" has the meaning given to such term in the
Fee Letter.
"Surety Provider" means MBIA Insurance Corporation, a New York
stock insurance company, its successors and assigns.
"Tax-Exempt Securities" means (i) securities, other than Bonds,
the income on which is excludable from gross income for purposes of federal
income taxation and which does not constitute an item of tax preference for
purposes of computing the federal alternative minimum tax, which are rated not
lower than "Aaa/P-1" by Xxxxx'x, or "AAA/A-1" by S&P, or (ii) participation or
other interests in tax-exempt mutual funds that, in each case, are rated not
lower than "Aaa/P-1" by Xxxxx'x, or "AAA/A-1" by S&P.
"Tender Agent" means First Tennessee Bank National Association,
its permitted successors and assigns.
"Tender Option Termination Event" means the discontinuance of the
tender option of the Low Floater Holders upon the occurrence of and during the
continuation of a Liquidity Event of Default.
"Termination Fee" has the meaning given to such term in the Fee
Letter.
"Termination Notice" has the meaning given to such term in
Section 7.05 of the Insurance Agreement.
"Three-Month Average Debt Service Coverage" means, on any date of
determination, the Debt Service Coverage averaged over the three full months
most recently ended.
"Transaction Document" means each of the Insurance Agreement, the
Administration and Custody Agreement, the Servicing Agreement, the Charter
Contribution Agreement, the Origination Trust Contribution Agreement, the
Origination Trust Agreement, the Owner Trust Agreement, the Certificate Issuer
Trust Agreement, the Fee Letter, the Liquidity Agreement, the Certificate Surety
Bond, the Liquidity Surety Bond, and the Liquidity Pledge and Security
Agreement.
"Transaction Party" means each of the Surety Provider, Charter,
the Origination Trust, Owner Trust, the Certificate Issuer, the Administrative
Agent, the Certificate Trust Agent, the Servicer, the Manager, the Liquidity
Agent (in its capacity as agent for the Liquidity Banks) and the Liquidity
Collateral Agent.
"Transactions" means the transactions contemplated in the
Transaction Documents.
"Transfer" means sale, assignment, conveyance, transfer, gift,
pledge, hypothecation, mortgage, exchange or other disposition whether
voluntary, involuntary, by operation of law or otherwise.
"Trigger Event" means a Level I Trigger Event, a Level II Trigger
Event, a Level III Trigger Event, or a Level IV Trigger Event.
"Trust Act" means the Delaware Business Trust Act, 12 Del. C.
ss.ss.3801 et. seq., as amended from time to time, or the corresponding
provisions of any succeeding law.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial
Code as from time to time in effect in the State of New York.
"Unmatured Event of Default" means the event which, with the
giving of notice or the passage of time or both, would constitute an Event of
Default.
"Unmatured Servicer Default" has the meaning given to such term
in the Servicing Agreement.
"Unmatured Termination Event" means any event which, with the
giving of notice or the passage of time or both, would constitute a Event of
Termination.
"Voting Securities" has the meaning given to such term under the
1940 Act.
