EXECUTION COPY
WACHOVIA ASSET SECURITIZATION, INC. 2003-HE2 TRUST,
Issuer,
and
U.S. BANK NATIONAL ASSOCIATION,
Indenture Trustee
and
WACHOVIA BANK, NATIONAL ASSOCIATION
Paying Agent
------------------------
INDENTURE
------------------------
Dated as of July 2, 2003
WACHOVIA ASSET SECURITIZATION, INC.
ASSET-BACKED NOTES, SERIES 2003-HE2
TABLE OF CONTENTS
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ARTICLE I Definitions......................................................2
Section 1.01 Definitions..............................................2
Section 1.02 Incorporation by Reference of Trust Indenture Act........2
Section 1.03 Rules of Construction....................................2
ARTICLE II Original Issuance of Notes.......................................3
Section 2.01 Form.....................................................3
Section 2.02 Execution, Authentication and Delivery...................3
ARTICLE III Covenants........................................................4
Section 3.01 Collection of Payments with Respect to the
Mortgage Loans...........................................4
Section 3.02 Maintenance of Office or Agency..........................4
Section 3.03 Money for Payments to Be Held in Trust; Paying Agent.....4
Section 3.04 Existence................................................6
Section 3.05 Priority of Distributions; Defaulted Interest............6
Section 3.06 Protection of Trust Estate..............................12
Section 3.07 Opinions as to Trust Estate.............................12
Section 3.08 Performance of Obligations; Servicing Agreement.........13
Section 3.09 Negative Covenants......................................13
Section 3.10 Annual Statement as to Compliance.......................14
Section 3.11 Recordation of Assignments..............................14
Section 3.12 Representations and Warranties Concerning the
Mortgage Loans..........................................14
Section 3.13 Assignee of Record of the Mortgage Loans................14
Section 3.14 Servicer as Agent and Bailee of the Indenture Trustee...14
Section 3.15 Investment Company Act..................................15
Section 3.16 Issuer May Consolidate, etc.............................15
Section 3.17 Successor or Transferee.................................17
Section 3.18 No Other Business.......................................17
Section 3.19 No Borrowing............................................17
Section 3.20 Guarantees, Loans, Advances and Other Liabilities.......17
Section 3.21 Capital Expenditures....................................17
Section 3.22 Owner Trustee Not Liable for Certificates or
Related Documents.......................................17
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Section 3.23 Restricted Payments.....................................18
Section 3.24 Notice of Events of Default.............................18
Section 3.25 Further Instruments and Acts............................18
Section 3.26 Statements to Noteholders...............................18
Section 3.27 Determination of Note Rate..............................18
Section 3.28 Payments under the Policy...............................19
Section 3.29 Replacement Enhancement.................................20
Section 3.30 Additional Representations of Issuer....................21
Section 3.31 Yield Maintenance Agreements............................21
Section 3.32 Preference Claims under Policy..........................22
ARTICLE IV The Notes; Satisfaction And Discharge Of Indenture..............23
Section 4.01 The Notes...............................................23
Section 4.02 Registration of and Limitations on Transfer and Exchange
of Notes; Appointment of Certificate Registrar..........24
Section 4.03 Mutilated, Destroyed, Lost or Stolen Notes..............25
Section 4.04 Persons Deemed Owners...................................26
Section 4.05 Cancellation............................................26
Section 4.06 Book-Entry Notes........................................26
Section 4.07 Notices to Depository...................................27
Section 4.08 Definitive Notes........................................27
Section 4.09 Tax Treatment...........................................28
Section 4.10 Satisfaction and Discharge of Indenture.................28
Section 4.11 Application of Trust Money..............................29
Section 4.12 Subrogation and Cooperation.............................29
Section 4.13 Repayment of Monies Held by Paying Agent................30
Section 4.14 Temporary Notes.........................................30
ARTICLE V Default And Remedies............................................31
Section 5.01 Events of Default.......................................31
Section 5.02 Acceleration of Maturity; Rescission and Annulment......31
Section 5.03 Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee....................................32
Section 5.04 Remedies; Priorities....................................34
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Section 5.05 Optional Preservation of the Trust Estate...............35
Section 5.06 Limitation of Suits.....................................36
Section 5.07 Unconditional Rights of Noteholders to Receive
Principal and Interest..................................37
Section 5.08 Restoration of Rights and Remedies......................37
Section 5.09 Rights and Remedies Cumulative..........................37
Section 5.10 Delay or Omission Not a Waiver..........................37
Section 5.11 Control by Enhancer or Noteholders......................37
Section 5.12 Waiver of Past Defaults.................................38
Section 5.13 Undertaking for Costs...................................38
Section 5.14 Waiver of Stay or Extension Laws........................38
Section 5.15 Sale of Trust Estate....................................39
Section 5.16 Action on Notes.........................................40
Section 5.17 Performance and Enforcement of Certain Obligations......40
ARTICLE VI The Indenture Trustee...........................................41
Section 6.01 Duties of Indenture Trustee.............................41
Section 6.02 Rights of Indenture Trustee and Paying Agent............43
Section 6.03 Individual Rights of Indenture Trustee..................44
Section 6.04 Disclaimer of the Indenture Trustee and Paying Agent....45
Section 6.05 Notice of Event of Default..............................45
Section 6.06 Reports by Paying Agent to Noteholders..................45
Section 6.07 Compensation and Indemnity..............................45
Section 6.08 Replacement of Indenture Trustee or Paying Agent........46
Section 6.09 Successor Indenture Trustee or Paying Agent by Xxxxxx...48
Section 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.......................................49
Section 6.11 Eligibility; Disqualification...........................50
Section 6.12 Preferential Collection of Claims Against Issuer........50
Section 6.13 Representations and Warranties..........................50
Section 6.14 Directions to Indenture Trustee.........................51
Section 6.15 Indenture Trustee May Own Securities....................51
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Section 6.16 Rights of Paying Agent, Certificate Paying Agent,
Note Registrar and Certificate Registrar................51
ARTICLE VII Noteholders' Lists and Reports..................................52
Section 7.01 Issuer to Furnish Paying Agent Names and Addresses
of Noteholders..........................................52
Section 7.02 Preservation of Information; Communications to
Noteholders.............................................52
Section 7.03 Reports by Issuer.......................................52
Section 7.04 Reports by Indenture Trustee............................53
ARTICLE VIII Accounts, Disbursements and Releases............................53
Section 8.01 Collection of Money.....................................53
Section 8.02 Trust Accounts..........................................53
Section 8.03 Officer's Certificate...................................54
Section 8.04 Termination Upon Distribution to Noteholders............54
Section 8.05 Release of Trust Estate.................................54
Section 8.06 Surrender of Notes Upon Final Payment...................55
ARTICLE IX Supplemental Indentures.........................................55
Section 9.01 Supplemental Indentures Without Consent of Noteholders..55
Section 9.02 Supplemental Indentures With Consent of Noteholders.....56
Section 9.03 Execution of Supplemental Indentures....................58
Section 9.04 Effect of Supplemental Indenture........................58
Section 9.05 Conformity with Trust Indenture Act.....................58
Section 9.06 Reference in Notes to Supplemental Indentures...........58
ARTICLE X Miscellaneous...................................................59
Section 10.01 Compliance Certificates and Opinions, etc...............59
Section 10.02 Form of Documents Delivered to Indenture Trustee or
the Paying Agent........................................60
Section 10.03 Acts of Noteholders.....................................61
Section 10.04 Notices, etc., to Indenture Trustee, Paying Agent, Issuer,
Enhancer, Yield Maintenance Provider and
Rating Agencies.........................................62
Section 10.05 Notices to Noteholders; Waiver..........................63
Section 10.06 Alternate Payment and Notice Provisions.................63
Section 10.07 Conflict with Trust Indenture Act.......................64
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Section 10.08 Effect of Headings......................................64
Section 10.09 Successors and Assigns..................................64
Section 10.10 Severability............................................64
Section 10.11 Benefits of Indenture...................................64
Section 10.12 Legal Holidays..........................................64
Section 10.13 GOVERNING LAW...........................................65
Section 10.14 Counterparts............................................65
Section 10.15 Recording of Indenture..................................65
Section 10.16 Issuer Obligation.......................................65
Section 10.17 No Petition.............................................65
Section 10.18 Inspection..............................................66
EXHIBITS
Exhibit A - Form of Notes
Appendix A - Definitions
SCHEDULE I
ANNEX I
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RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
ACT OF 1939 AND INDENTURE PROVISIONS*
Trust Indenture
Act Section Indenture Section
----------- -----------------
310(a)(1)............................... 6.11
(a)(2).............................. 6.11
(a)(3).............................. 6.10
(a)(4).............................. Not Applicable
(a)(5).............................. 6.11
(b)................................. 6.08, 6.11
(c)................................. Not Applicable
311(a).................................. 6.12
(b)................................. 6.12
(c).................................. Not Applicable
312(a).................................. 7.01, 7.02(a)
(b)................................. 7.02(b)
(c)................................. 7.02(c)
313(a).................................. 7.04
(b)................................. 7.04
(c)................................. 7.03(a)(iii), 7.04
(d)................................. 7.04
314(a).................................. 3.10, 7.03(a)
(b)................................ 3.07
(c)(1).............................. 8.05(c), 10.01(a)
(c)(2).............................. 8.05(c), 10.01(a)
(c)(3)............................... Not Applicable
(d)(1).............................. 8.05(c), 10.01(b)
(d)(2).............................. 8.05(c), 10.01(b)
(d)(3).............................. 8.05(c), 10.01(b)
(e)................................. 10.01(a)
315(a).................................. 6.01(b)
(b)................................. 6.05
(c)................................. 6.01(a)
(d)................................. 6.01(c)
(d)(1).............................. 6.01(c)
(d)(2).............................. 6.01(c)
(d)(3).............................. 6.01(c)
(e)................................. 5.13
316(a)(1)(A)............................ 5.11
316(a)(1)(B)............................ 5.12
316(a)(2)............................... Not Applicable
316(b).................................. 5.07
317(a)(1)............................... 5.04
317(a)(2)............................... 5.03(d)
317(b).................................. 3.03(a)
318(a).................................. 10.07
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* This reconciliation and tie shall not, for any purpose, be deemed to be part
of the within indenture.
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This Indenture, dated as of July 2, 2003, is among WACHOVIA ASSET
SECURITIZATION, INC. 2003-HE2 TRUST, a Delaware statutory trust, as issuer (the
"Issuer"), U.S. BANK NATIONAL ASSOCIATION, as indenture trustee (the "Indenture
Trustee"), and WACHOVIA BANK, NATIONAL ASSOCIATION, the paying agent (the
"Paying Agent").
WITNESSETH:
Each party hereto agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Noteholders of the Issuer's Wachovia
Asset Securitization, Inc. Asset-Backed Notes, Series 2003-HE2, Class A-I-1,
Class A-II-1 and Class A-II-2 (collectively, the "Notes") and the Enhancer.
GRANTING CLAUSE:
The Issuer hereby Grants to the Indenture Trustee, all of the Issuer's
right, title and interest in and to all of the following: (a) the Initial
Mortgage Loans and any Subsequent Mortgage Loans (together with the Cut-Off Date
Principal Balances and any Additional Balances arising thereafter to and
including the date immediately preceding the commencement of the Rapid
Amortization Period), and all monies due or to become due thereunder; (b) the
Note Payment Account, and all funds on deposit or credited thereto from time to
time and all proceeds thereof; (c) the Funding Accounts, and all funds on
deposit or credited thereto from time to time; (d) the Yield Maintenance
Agreements; (e) all hazard insurance policies; (f) all accounts, chattel paper,
deposit accounts, documents, general intangibles, goods, instruments, investment
property, letter-of-credit rights, letters of credit, money, and oil, gas and
other minerals, consisting of, arising from, or relating to, any of the
foregoing; and (g) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on or under,
and all proceeds of every kind and nature whatsoever in respect of, any or all
of the foregoing and all payments on or under, and all proceeds of every kind
and nature whatsoever in the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing (collectively, the "Trust Estate" or the
"Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.
The foregoing Grant shall inure to the benefit of the Enhancer in respect
of draws made on the Policy and amounts owing from time to time pursuant to the
Insurance Agreement (regardless of whether such amounts relate to the Notes or
the Certificates), and such Grant shall continue in full force and effect for
the benefit of the Enhancer until all such amounts owing to it have been repaid
in full.
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Each of the Mortgage Loan Schedules is hereby incorporated by reference and
made a part of this Indenture.
The Indenture Trustee, as trustee on behalf of the Noteholders,
acknowledges such Xxxxx, accepts the trust under this Indenture in accordance
with the provisions hereof and agrees to perform its duties as Indenture Trustee
as required herein.
ARTICLE I
Definitions
Section 1.01 Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions attached hereto as Appendix A, which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the Trust Indenture Act (the "TIA"),
such provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by XXX,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03 Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
from time to time;
(c) "or" includes "and/or";
(d) "including" means "including without limitation";
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(e) words in the singular include the plural and words in the plural
include the singular;
(f) the term "proceeds" has the meaning ascribed thereto in the UCC;
and
(g) any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
Original Issuance of Notes
Section 2.01 Form. The Notes together with the Indenture Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibit A, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing the Notes, as evidenced by their execution thereof. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of such Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods, all as determined by the
Authorized Officers executing such Notes, as evidenced by their execution of
such Notes.
The terms of the Notes set forth in Exhibit A are part of the terms of this
Indenture.
Section 2.02 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and deliver
Notes for original issue in an aggregate initial principal amount of
$1,250,000,000. The Class A-I-1 Notes shall have an initial principal amount of
$400,000,000, the Class A-II-1 Notes shall have an initial principal amount of
$750,000,000 and the Class A-II-2 Notes shall have an initial principal amount
of $100,000,000, respectively.
Each Note shall be dated the date of its authentication. The Notes shall be
issuable as registered Notes. The Class A-I-1 Notes and the Class A-II-1 Notes
shall be issuable in minimum denominations of $25,000 and integral multiples of
$1,000 in excess thereof and the
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Class A-II-2 Notes shall be issuable in minimum denominations of $25,000 and
integral multiples of $25,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
ARTICLE III
Covenants
Section 3.01 Collection of Payments with Respect to the Mortgage Loans. The
Paying Agent shall establish and maintain with itself the Note Payment Account
in which the Paying Agent shall, subject to the terms of this paragraph,
deposit, on the same day as it is received from the Servicer, each remittance
received by the Indenture Trustee with respect to the Mortgage Loans. The Paying
Agent shall distribute all payments of principal of and interest on the Notes,
subject to Section 3.03 as provided in Section 3.05 herein from monies on
deposit in the Note Payment Account.
Section 3.02 Maintenance of Office or Agency. The Issuer will maintain in
the City of Minneapolis, Minnesota, an office or agency where, subject to
satisfaction of conditions set forth herein, Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Paying Agent to serve as its agent for the
foregoing purposes. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Paying Agent with the address
thereof, such surrenders, notices and demands may be made or served at its
Corporate Trust Office, and the Issuer hereby appoints the Paying Agent as its
agent to receive all such surrenders, notices and demands.
Section 3.03 Money for Payments to Be Held in Trust; Paying Agent. As
provided in Section 3.01, all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Note Payment
Account pursuant to Section 3.01 shall be made on behalf of the Issuer by the
Paying Agent or by the Indenture Trustee or another paying agent appointed by
the Indenture Trustee pursuant to Section 6.08 to act as Paying Agent hereunder
and under the Servicing Agreement, and no amounts so withdrawn from the Note
Payment Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.03. The Issuer hereby appoints the Paying Agent to
act as initial Paying Agent hereunder and under the Servicing Agreement. The
Issuer will cause each Paying Agent other than the initial Paying Agent or the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee or the initial Paying Agent acts as Paying Agent, it hereby so
agrees), subject to the provisions of this Section 3.03, that such Paying Agent
will:
(a) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such
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Persons or otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(b) give the Indenture Trustee and the Enhancer written notice of any
default by the Issuer of which it has actual knowledge in the making of any
payment required to be made with respect to the Notes;
(c) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, except in the case where the same
party is both the Indenture Trustee and the Paying Agent, in which case no such
written request will be needed, forthwith pay to the Indenture Trustee all sums
so held in trust by such Paying Agent;
(d) immediately resign as Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes, if at
any time it ceases to be the Certificate Paying Agent or to meet the standards
required to be met by a paying agent at the time of its appointment;
(e) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith; and
(f) deliver to the Indenture Trustee and the Paying Agent, except in
the case where such party is both the Indenture Trustee and the Paying Agent, in
which case no such delivery is required, a copy of the statement to Noteholders
prepared with respect to each Payment Date by the Servicer pursuant to Section
4.01 of the Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Request
direct any Paying Agent to pay to the Indenture Trustee all sums held in trust
by such Paying Agent, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held
by the Indenture Trustee or the Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for one year after
such amount has become due and payable shall be discharged from such trust and
be paid to the Issuer on Issuer Request; and the Noteholder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or the Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or the Paying Agent before being required to make any such repayment,
shall at the expense and written direction of the Issuer cause to be published
once, in an Authorized Newspaper, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee or the Paying Agent may also
adopt and employ, at the expense and written direction of the Issuer, any other
reasonable means of notification of such repayment
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(including, but not limited to, mailing notice of such repayment to Noteholders
the Notes which have been called but have not been surrendered for redemption or
whose right to or interest in monies due and payable but not claimed is
determinable from the records of the Indenture Trustee or the Paying Agent, at
the last address of record for each such Noteholder).
Section 3.04 Existence. The Issuer will keep in full effect its existence,
rights and franchises as a statutory trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Mortgage Loans and each other
instrument or agreement included in the Trust Estate.
Section 3.05 Priority of Distributions; Defaulted Interest.
(a) In accordance with Section 3.04(b) of the Servicing Agreement, the
priority of distributions on each Payment Date from Principal Collections and
Interest Collections with respect to the Mortgage Loans, any optional advance of
delinquent principal and/or interest on the Mortgage Loans made by the Servicer
in respect of the related Collection Period, any amounts received by the Paying
Agent under the Yield Maintenance Agreements with respect to such Payment Date,
any Deficiency Amount with respect to Mortgage Loans or the Notes deposited into
the Note Payment Account, and any amounts transferred to the Note Payment
Account from any Funding Account pursuant to Section 3.19 of the Servicing
Agreement, is as follows:
(i) During each of the Revolving Periods, Managed
Amortization Periods and the Rapid Amortization Period:
(1) from available Interest Collections from the
related Loan Group (exclusive of the pro rata portion of
interest attributable to Additional Balances represented by
the Additional Balance Increase Amount for the related Loan
Group, to the Enhancer, the amount of the pro rata portion
of the premium for the Policy attributable to the related
Notes and any unpaid premium for the Policy, with interest
thereon as provided in the Insurance Agreement;
(2) from any remaining Interest Collections from
the related Loan Group (exclusive of the pro rata portion of
interest attributable to Additional Balances represented by
the Additional Balance Increase Amount for the related Loan
Group) and any Deficiency Amount described in clause (a) of
the definition of Deficiency Amount paid with respect to the
related Notes and deposited into the Note Payment Account
pursuant to Section 3.28(a)(ii), to the Note Payment
Account, for payment by the Paying Agent to the Noteholders,
interest for the related Interest Period at the applicable
Note Rate on the Note Balance immediately prior to that
Payment Date, other than any Interest Shortfalls and
excluding any Relief Act Shortfalls allocated thereto
pursuant to Section 3.05(e) during the related Collection
Period;
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(3) from any remaining Interest Collections from
the related Loan Group, to the Distribution Account, for
payment by the Paying Agent to pay the holders of the
Certificates, the pro rata portion of interest attributable
to Additional Balances represented by the Additional Balance
Increase Amount for the related Loan Group, as interest on
such Additional Balance Increase Amount;
(4) in the case of the Class A-I-1 Notes and the
Class A-II-1 Notes, from any payments received under the
related Yield Maintenance Agreement, to the Note Payment
Account, for payment by the Paying Agent to the Noteholders,
Interest Shortfalls, if any, on the related Class of Notes
for such Payment Date and any prior Payment Date to the
extent not previously paid, together with interest thereon
at the related Note Rate on the Note Balance of such Class
of Notes immediately prior to such Payment Date;
(5) in the case of the Class A-I-1 Notes and the
Class A-II-1 Notes, from any remaining payments received
under a Yield Maintenance Agreement, (to the extent not
previously paid pursuant to clause (4) above), to the Note
Payment Account, for payment by the Paying Agent to the
holders of the Notes relating to the other Loan Group,
Interest Shortfalls, if any, on the related Class of Notes
for such Payment Date, together with interest thereon at the
related Note Rate on the Note Balance of such Class of Notes
immediately prior to such Payment Date; and
(6) from any remaining amounts from the related
Loan Group, to reimburse the Enhancer for prior draws made
on the Policy in order to make interest payments on the
related Class of Notes, with interest thereon, as provided
in the Insurance Agreement.
(ii) During each Revolving Period, and after the payments
described in clause (i) above:
(1) from remaining Net Principal Collections from
the related Loan Group, to the Distribution Account, for
distribution to the holders of the Certificates, an amount
equal to the related Additional Balance Increase Amount;
(2) any remaining Net Principal Collections from a
Loan Group to the related Funding Account as set forth in
the Servicing Agreement or, if such Payment Date is the last
Payment Date in the applicable Revolving Period, the related
Principal Distribution Amount for that Payment Date to the
Note Payment Account, for payment by the Paying Agent to the
holders of the related Notes, until the Note Balance of such
Notes have been reduced to zero;
(3) from Group Excess Spread from the related Loan
Group and any Deficiency Amount described in clause (b) of
the definition of Deficiency Amount paid with respect to the
Notes and allocable to the Class A-I-1 Notes or the Class
A-II Notes, as the case may be, pursuant to Section
3.28(a)(iii) hereof, to the related Funding Account, the
aggregate amount of Liquidation Loss
7
Amounts incurred on the Mortgage Loans in that Loan Group in
the related Collection Period, until the
Overcollateralization Amount for such Loan Group is equal to
the related Overcollateralization Target Amount, but only
until the Total Overcollateralization Amount equals the
Total Overcollateralization Target Amount;
(4) from the Group Excess Spread from one Loan
Group to the Funding Account for the other Loan Group, the
aggregate amount of Liquidation Loss Amounts incurred on the
Mortgage Loans in the other Loan Group in the related
Collection Period, to the extent not paid pursuant to clause
(ii)(3) above, until the Overcollateralization Amount for
that other Loan Group is equal to the related
Overcollateralization Target Amount, but only until the
Total Overcollateralization Amount equals the Total
Overcollateralization Target Amount;
(5) from any remaining amounts from the related
Loan Group, to the Enhancer, to reimburse it for prior draws
made on the Policy with respect to a Loan Group, other than
with respect to payments of interest on the related Class of
Notes, with interest thereon, as provided in the Insurance
Agreement;
(6) on and after the Payment Date in January 2004,
from remaining Group Excess Spread for each Loan Group, to
the related Funding Account, until the Overcollateralization
Amount for such Loan Group is equal to the related
Overcollateralization Target Amount, but only until the
Total Overcollateralization Amount equals the Total
Overcollateralization Target Amount;
(7) on and after the payment date in January 2004,
if the Total Overcollateralization Amount is less than the
Total Overcollateralization Target Amount, from the Group
Excess Spread from each Loan Group, to the related Funding
Account, until the Total Overcollateralization Amount is
equal to the Total Overcollateralization Target Amount;
(8) from any remaining Group Excess Spread from
the related Loan Group, to the Distribution Account, for
distribution to the holders of the Certificates, an amount
equal to the related Additional Balance Increase Amount;
(9) from any remaining amounts from the related
Loan Group, to the Enhancer, any other amounts owed to the
Enhancer pursuant to the Insurance Agreement;
(10) from any remaining Group Excess Spread, to
the Note Payment Account, for payment by the Paying Agent to
the Noteholders of the related Notes, any Interest
Shortfalls, together with interest thereon at the related
Note Rate (as adjusted from time to time);
(11) from any remaining Group Excess Spread from
either Loan Group, to the Distribution Account, for
distribution to the holders of the
8
Certificates, an amount equal to the Additional Balance
Increase Amount for either Loan Group;
(12) from any remaining amounts, (i) to the
Indenture Trustee, any amounts owing to the Indenture
Trustee or (ii) to the Paying Agent, any amounts owing to
the Paying Agent, pursuant to Section 6.07 to the extent
remaining unpaid; and
(13) any remaining amounts, to the Distribution
Account, for distribution to the holders of the Certificates
by the Certificate Paying Agent in accordance with the Trust
Agreement.
(iii) During each Managed Amortization Period, and after the
payments described in clause (i) above:
(1) from Net Principal Collections from the
related Loan Group, to the Distribution Account, for
distribution to the holders of the Certificates, an amount
equal to the related Additional Balance Increase Amount;
(2) from any remaining amounts from the related
Loan Group, to the Note Payment Account, the Principal
Distribution Amount, including any Liquidation Loss Amounts,
and from any Deficiency Amount described in clause (b) of
the definition of Deficiency Amount paid with respect to the
Notes and allocable to the Class A-I-1 Notes or the Class
A-II Notes, as the case may be, pursuant to Section
3.28(a)(iii) hereof, and on deposit in the Note Payment
Account on such Payment Date, for payment by the Paying
Agent to the holders of the related Notes, until the Note
Balance of such Notes have been reduced to zero;
(3) from any remaining Group Excess Spread from a
Loan Group, to the Note Payment Account for payment to the
holders of the Notes related to the other Loan Group, the
aggregate amount of Liquidation Loss Amounts included in the
Principal Distribution Amount of that other Loan Group that
were not paid pursuant to clause (iii)(2) above, until the
Note Balance of such Notes has been reduced to zero;
(4) if the Note Balance of all of the Classes of
Notes related to a Loan Group have been reduced to zero,
from any remaining amounts related to the Mortgage Loans in
that Loan Group, to the Note Payment Account, any remaining
Principal Distribution Amount for that Loan Group for
payment to the holders of the Notes related to such other
Loan Group, until the Note Balance of such Notes has been
reduced to zero;
(5) from any remaining amounts from the related
Loan Group, to the Enhancer, to reimburse it for related
prior draws made on the Policy, other than with respect to
interest of the related Class of Notes, with interest
thereon, as provided in the Insurance Agreement;
9
(6) on and after the payment date in January 2004,
from the Group Excess Spread from each Loan Group, to the
Note Payment Account, for payment to the holders of the
related Notes, until the Overcollateralization Amount for
that Loan Group is equal to the related
Overcollateralization Target Amount but only until the Total
Overcollateralization Amount equals the Total
Overcollateralization Target Amount;
(7) on and after the payment date in January 2004,
if the Total Overcollateralization Amount is less than the
Total Overcollateralization Target Amount, from the Group
Excess Spread from each Loan Group, to the Note Payment
Account, for payment to the holders of the related Notes,
until the Total Overcollateralization Amount is equal to the
Total Overcollateralization Target Amount;
(8) from remaining Group Excess Spread from the
related Loan Group, to the Distribution Account, for
distribution to the holders of the Certificates, an amount
equal to the related Additional Balance Increase Amount;
(9) from any remaining amounts from the related
Loan Group, to the Enhancer, any other amounts owed to the
Enhancer pursuant to the Insurance Agreement;
(10) from any remaining Group Excess Spread from
each Loan Group, to the Note Payment Account, for payment by
the Paying Agent to the holders of the related Notes any
Interest Shortfalls on the related Notes, together with
interest thereon at the applicable Note Rate (as adjusted
from time to time);
(11) from any remaining Group Excess Spread from
either Loan Group, to the Distribution Account, for
distribution to the holders of the Certificates, an amount
equal to the Additional Balance Increase Amount for either
Loan Group;
(12) from any remaining amounts, (i) to the
Indenture Trustee, any amounts owing to the Indenture
Trustee or (ii) to the Paying Agent, any amounts owing to
the Paying Agent, pursuant to Section 6.07 to the extent
remaining unpaid; and
(13) any remaining amounts, to the Distribution
Account, for distribution to the holders of the Certificates
by the Certificate Paying Agent in accordance with the Trust
Agreement.
(iv) During the Rapid Amortization Period, and after the
payments described in clause (i) above:
(1) from any remaining amounts from the related
Loan Group, to the Note Payment Account, the Principal
Distribution Amount, which includes Liquidation Loss
Amounts, from any Deficiency Amount described in clause (b)
of the definition of Deficiency Amount paid with respect to
the Notes and
10
allocable to the Class A-I-1 Notes or the Class
A-II Notes, as the case may be, pursuant to Section
3.28(a)(iii) hereof, and on deposit in the Note Payment
Account on such Payment Date, for payment by the Paying
Agent to the holders of the related Notes, until the Note
Balance of such Notes has been reduced to zero;
(2) from any remaining Group Excess Spread from a
Loan Group, to the Note Payment Account for payment to the
holders of the Notes related to the other Loan Group, the
aggregate amount of Liquidation Loss Amounts included in the
Principal Distribution Amount of such other Loan Group that
were not paid pursuant to clause (iv)(1) above, until the
Note Balance of such Notes has been reduced to zero;
(3) if the Note Balance of all the Classes of
Notes related to a Loan Group have been reduced to zero,
from any remaining amounts related to the Mortgage Loans in
such Loan Group, to the Note Payment Account, any remaining
Principal Distribution Amount for such Loan Group for
payment to the holders of the Notes in the other Loan Group,
until the Note Balance of such Notes has been reduced to
zero;
(4) from Principal Collections, to the
Distribution Account, for distribution to the holders of the
Certificates, an amount equal to the related Additional
Balance Increase Amount;
(5) from any remaining amounts from the related
Loan Group, to the Enhancer, to reimburse it for related
prior draws made on the Policy, other than with respect to
interest of the related Class of Notes, with interest
thereon, as provided in the Insurance Agreement;
(6) on and after the Payment Date in January 2004,
from the Group Excess Spread from each Loan Group, to the
Note Payment Account, for payment to the holders of the
related Notes, until the Overcollateralization Amount for
that Loan Group is equal to the related
Overcollateralization Target Amount but only until the Total
Overcollateralization Amount equals the Total
Overcollateralization Target Amount;
(7) on and after the Payment Date in January 2004,
if the Total Overcollateralization Amount is less than the
Total Overcollateralization Target Amount, from the Group
Excess Spread from each Loan Group, to the Note Payment
Account, for payment to the holders of the related Notes,
until the Total Overcollateralization Amount is equal to the
Total Overcollateralization Target Amount;
(8) from remaining Group Excess Spread from the
related Loan Group, to the Distribution Account, for
distribution to the holders of the Certificates, an amount
equal to the related Additional Balance Increase Amount;
11
(9) from any remaining amounts from the related
Loan Group, to the Enhancer, any other amounts owed to the
Enhancer pursuant to the Insurance Agreement;
(10) from any remaining Group Excess Spread from
each Loan Group, to the Note Payment Account, for payment by
the Paying Agent to the holders of the related Notes any
Interest Shortfalls, together with interest thereon at the
applicable Note Rate (as adjusted from time to time);
(11) from any remaining Group Excess Spread from
either Loan Group, to the Distribution Account, for
distribution to the holders of the Certificates, an amount
equal to the Additional Balance Increase Amount for either
Loan Group;
(12) from any remaining amounts, (i) to the
Indenture Trustee, any amounts owing to the Indenture
Trustee or (ii) to the Paying Agent, any amounts owing to
the Paying Agent, pursuant to Section 6.07 to the extent
remaining unpaid; and
(13) any remaining amounts, to the Distribution
Account, for distribution to the holders of the Certificates
by the Certificate Paying Agent in accordance with the Trust
Agreement.
For purposes of the foregoing, the Note Balance on each Payment Date during
the Amortization Periods will be reduced (any such reduction, an "Unpaid
Principal Amount") by the Liquidation Loss Amounts (other than amounts allocated
in respect of the Excluded Amount) for such Payment Date, but only to the extent
that such Liquidation Loss Amounts are not otherwise covered by payments made
pursuant to clauses (iii)(2), (iii)(3), (iii)(6) or (iii)(7) during each Managed
Amortization Period, and (iv)(1), (iv)(2), (iv)(6) or (iv)(7) during the Rapid
Amortization Period, or by a draw on the Policy, and the Total
Overcollateralization Amount for that Payment Date is zero. All reductions on
the Class A-II-1 Notes and the Class A-II-2 Notes will be made on a pro rata
basis.
(b) On each Payment Date, the Paying Agent shall apply, from amounts
on deposit in the Note Payment Account, and in accordance with the Servicing
Certificate, the amounts set forth above in the order of priority set forth in
Section 3.05(a). The Indenture Trustee and the Paying Agent shall be entitled to
rely conclusively on the accuracy and completeness of each Servicing Certificate
delivered to it by the Servicer and neither the Indenture Trustee nor the Paying
Agent shall be obligated, absent manifest error, to verify, recalculate,
reconcile or recomputed any amount contained in such Servicing Certificate.
(c) Amounts paid to Noteholders shall be paid in respect of the Notes
in accordance with the applicable percentage as set forth in paragraph (d)
below. Interest on the Notes will be computed on the basis of the actual number
of days in each Interest Period and a 360-day year. Interest will be paid to the
Class A-II-1 Notes and Class A-II-2 Notes on a pari passu basis. Interest will
accrue on the related Additional Balance Increase Amount at the Net Loan Rate.
Any installment of interest or principal payable on any Note that is punctually
paid
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or duly provided for by the Issuer on the applicable Payment Date shall be paid
to the Noteholder of record thereof on the immediately preceding Record Date by
wire transfer to an account specified in writing by such Noteholder reasonably
satisfactory to the Paying Agent, or by check or money order mailed to such
Noteholder at such Noteholder's address appearing in the Note Register, in the
amount required to be distributed to such Noteholder on such Payment Date
pursuant to such Noteholder's Notes; provided, however, that the Paying Agent
shall not pay to any such Noteholder any amounts required to be withheld from a
payment to such Noteholder by the Code.
(d) Principal of each Note shall be due and payable in full on the
Final Payment Date as provided in the applicable form of Note set forth in
Exhibit A. All payments on the Notes shall be made in accordance with the
priorities set forth in paragraphs (a) and (b) above to the Noteholders entitled
thereto. All principal payments on the Class A-II Notes will be allocated to the
Class A-II-1 Notes and the Class A-II-2 Notes on a pro rata basis. Principal on
the Notes of any Class will be paid in accordance with the related Percentage
Interests represented thereby. Upon written notice to the Paying Agent by the
Issuer, the Paying Agent shall notify the Person in the name of which a Note is
registered at the close of business on the Record Date preceding the Final
Payment Date or other final Payment Date, as applicable. Such notice shall be
mailed no later than five Business Days prior to the Final Payment Date or such
other final Payment Date and, unless such Note is then a Book-Entry Note, shall
specify that payment of the principal amount and any interest due with respect
to such Note at the Final Payment Date or such other final Payment Date will be
payable only upon presentation and surrender of such Note, and shall specify the
place where such Note may be presented and surrendered for such final payment.
On each Payment Date, the Overcollateralization Amount available to cover
any Liquidation Loss Amounts (other than amounts allocated in respect of the
Excluded Amount) on such Payment Date shall be deemed to be reduced by an amount
equal to such Liquidation Loss Amounts (except to the extent that such
Liquidation Loss Amounts were covered on such Payment Date by a payment in
respect of Liquidation Loss Amounts).
(e) With respect to any Payment Date, interest payments on the Notes
will be reduced by any Relief Act Shortfalls for the related Collection Period
on a pro rata basis in accordance with the amount of interest payable on the
Notes on such Payment Date, absent such reduction.
Section 3.06 Protection of Trust Estate.
(a) The Issuer shall from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
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(ii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iii) cause the Trust to enforce any of the Mortgage Loans;
or
(iv) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Trust
Estate against the claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture
Trustee shall not remove any portion of the Trust Estate that consists of money
or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.07 (or from the jurisdiction in which it
was held as described in the Opinion of Counsel delivered at the Closing Date
pursuant to Section 3.07, if no Opinion of Counsel has yet been delivered
pursuant to Section 3.07) unless the Indenture Trustee and the Enhancer shall
have first received an Opinion of Counsel to the effect that the lien and
security interest created by this Indenture with respect to such property will
continue to be maintained after giving effect to such action or actions.
Section 3.07 Opinions as to Trust Estate.
On the Closing Date, the Issuer shall furnish to the Indenture Trustee, the
Paying Agent, the Enhancer and the Owner Trustee an Opinion of Counsel at the
expense of the Issuer stating that, upon delivery of the Loan Agreements
relating to the Initial Mortgage Loans to the Indenture Trustee or the Servicer,
in the State of North Carolina, the Indenture Trustee will have a perfected,
first priority security interest in such Mortgage Loans.
On or before December 31st in each calendar year, beginning in 2004, the
Issuer shall furnish to the Indenture Trustee, the Paying Agent and the Enhancer
an Opinion of Counsel at the expense of the Issuer either stating that, in the
opinion of such counsel, no further action is necessary to maintain a perfected,
first priority security interest in the Mortgage Loans until December 31 in the
following calendar year or, if any such action is required to maintain such
security interest in the Mortgage Loans, such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the security
interest in the Mortgage Loans until December 31 in the following calendar year.
Section 3.08 Performance of Obligations; Servicing Agreement.
(a) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer.
14
(c) The Issuer shall not take any action or permit any action to be
taken by others that would release any Person from any of such Person's
covenants or obligations under any of the documents relating to the Mortgage
Loans or under any instrument included in the Trust Estate, or that would result
in the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any of the documents relating to the
Mortgage Loans or any such instrument, except such actions as the Servicer is
expressly permitted to take in the Servicing Agreement.
(d) The Issuer may retain an administrator and may enter into
contracts with other Persons for the performance of the Issuer's obligations
hereunder, and performance of such obligations by such Persons shall be deemed
to be performance of such obligations by the Issuer.
Section 3.09 Negative Covenants. So long as any Notes are Outstanding, the
Issuer shall not:
(a) except as expressly permitted by this Indenture, sell, transfer,
exchange or otherwise dispose of the Trust Estate, unless directed to do so by
the Indenture Trustee pursuant to Section 5.04 hereof;
(b) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly withheld
from such payments under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or assessed upon
any part of the Trust Estate;
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (ii) permit any lien, charge,
excise, claim, security interest, mortgage or other encumbrance (other than the
lien of this Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or the
proceeds thereof or (iii) permit the lien of this Indenture not to constitute a
valid first priority security interest in the Trust Estate; or
(d) impair or cause to be impaired the Issuer's interest in the
Mortgage Loans, the Purchase Agreement or in any other Basic Document, if any
such action would materially and adversely affect the interests of the
Noteholders and the Enhancer.
Section 3.10 Annual Statement as to Compliance. The Issuer shall deliver to
the Indenture Trustee, the Paying Agent and the Enhancer, within 120 days after
the end of each fiscal year of the Issuer (commencing with the fiscal year
ending on December 31, 2003), an Officer's Certificate stating, as to the
Authorized Officer signing such Officer's Certificate, that:
(a) a review of the activities of the Issuer during such year and of
its performance under this Indenture and the Trust Agreement has been made under
such Authorized Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under this
Indenture and the provisions
15
of the Trust Agreement throughout such year, or, if there has been a default in
its compliance with any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
Section 3.11 Recordation of Assignments. The Issuer shall enforce the
obligation, if any, of the Seller under the Purchase Agreement to execute any
Assignments of Mortgage and of the Servicer to submit or cause to be submitted
for recordation all Assignments of Mortgages in accordance with Section 3.17 of
the Servicing Agreement.
Section 3.12 Representations and Warranties Concerning the Mortgage Loans.
The Indenture Trustee, as pledgee of the Mortgage Loans, shall have the benefit
of the representations and warranties made by the Seller in Sections 3.1 of the
Purchase Agreement, concerning the Mortgage Loans and the right to enforce the
remedies against the Seller provided in such Section 3.1, as applicable, to the
same extent as though such representations and warranties were made directly to
the Indenture Trustee.
Section 3.13 Assignee of Record of the Mortgage Loans. As pledgee of the
Mortgage Loans, the Indenture Trustee shall hold title to the Mortgage Loans by
being named as payee in the endorsements or assignments of the Loan Agreements
and assignee in the Assignments of Mortgage to be delivered under Section 2.1 of
the Purchase Agreement. Except as expressly provided in the Purchase Agreement
or in the Servicing Agreement with respect to any specific Mortgage Loan, the
Indenture Trustee shall not execute any endorsement or assignment or otherwise
release or transfer such title to any of the Mortgage Loans until such time as
the remaining Trust Estate may be released pursuant to Section 8.05(b). The
Indenture Trustee's holding of such title shall in all respects be subject to
its fiduciary obligations to the Noteholders hereunder.
Section 3.14 Servicer as Agent and Bailee of the Indenture Trustee. Solely
for purposes of perfection under Section 9-313 or 9-314 of the UCC or other
similar applicable law, rule or regulation of the state in which such property
is held by the Servicer, the Issuer and the Indenture Trustee hereby acknowledge
that the Servicer is acting as agent and bailee of the Indenture Trustee in
holding amounts on deposit in the Custodial Account pursuant to Section 3.03 of
the Servicing Agreement that are allocable to the Mortgage Loans, as well as the
agent and bailee of the Indenture Trustee in holding any Related Documents
released to the Servicer pursuant to Section 3.07(b) of the Servicing Agreement,
and any other items constituting a part of the Trust Estate which from time to
time come into the possession of the Servicer. It is intended that, by the
Servicer's acceptance of such agency pursuant to Section 3.03 of the Servicing
Agreement, the Indenture Trustee, as a pledgee of the Mortgage Loans, will be
deemed to have possession of such Related Documents, such monies and such other
items for purposes of Section 9-313 or 9-314 of the UCC of the state in which
such property is held by the Servicer.
Section 3.15 Investment Company Act. The Issuer shall not become an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);
provided,
16
however, that the Issuer shall be in compliance with this Section 3.15 if it
shall have obtained an order exempting it from regulation as an "investment
company" so long as it is in compliance with the conditions imposed in such
order.
Section 3.16 Issuer May Consolidate, etc.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any state
or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Indenture
Trustee, in form reasonably satisfactory to the Indenture Trustee, the
due and punctual payment of the principal of and interest on all Notes
and to the Certificate Paying Agent, on behalf of the
Certificateholders and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Event of Default shall have occurred and be continuing;
(iii) the Enhancer shall have consented thereto and each
Rating Agency shall have notified the Issuer that such transaction
will not cause a Rating Event, without taking into account the Policy;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee, the
Paying Agent and the Enhancer) to the effect that such transaction
will not have any material adverse tax consequence to the Issuer, any
Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee, the Paying Agent and the Enhancer an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation or
merger and such supplemental indenture comply with this Article III
and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by
the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of
which is hereby restricted shall (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any state, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee
and the Paying Agent, in a form
17
satisfactory to the Indenture Trustee and the Paying Agent, the due
and punctual payment of the principal of and interest on all Notes and
the performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all
as provided herein, (C) expressly agrees by means of such supplemental
indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of
Noteholders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agrees to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agrees by means of such supplemental indenture that such
Person (or if a group of Persons, then one specified Person) shall
make all filings with the Commission (and any other appropriate
Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Enhancer shall have consented thereto, and each
Rating Agency shall have notified the Issuer that such transaction
will not cause a Rating Event, if determined without regard to the
Policy;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee and
the Paying Agent) to the effect that such transaction will not have
any material adverse tax consequence to the Issuer or any Noteholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee and the Paying Agent an Officer's Certificate and an Opinion
of Counsel each stating that such conveyance or transfer and such
supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction
have been complied with (including any filing required by the Exchange
Act).
Section 3.17 Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.16(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.16(b), the Issuer shall be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee of such conveyance or transfer.
18
Section 3.18 No Other Business. The Issuer shall not engage in any business
other than financing, purchasing, owning and selling and managing the Mortgage
Loans and the issuance of the Notes and Certificates in the manner contemplated
by this Indenture and the Basic Documents and all activities incidental thereto.
Section 3.19 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
Section 3.20 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the other Basic Documents, the Issuer shall
not make any loan or advance or credit to, or guarantee (directly or indirectly
or by an instrument having the effect of assuring another's payment or
performance on any obligation or capability of so doing or otherwise), endorse
or otherwise become contingently liable, directly or indirectly, in connection
with the obligations, stocks or dividends of, or own, purchase, repurchase or
acquire (or agree contingently to do so) any stock, obligations, assets or
securities of, or any other interest in, or make any capital contribution to,
any other Person.
Section 3.21 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.22 Owner Trustee Not Liable for Certificates or Related
Documents. The recitals contained herein shall be taken as the statements of the
Issuer, and the Owner Trustee, the Paying Agent and the Indenture Trustee assume
no responsibility for the correctness of the recitals contained herein. The
Owner Trustee, the Paying Agent and the Indenture Trustee make no
representations as to the validity or sufficiency of this Indenture or any other
Basic Document, of the Certificates (other than the signatures of the Owner
Trustee or the Indenture Trustee on the Certificates) or the Notes, or of any
Related Documents. The Owner Trustee, the Paying Agent and the Indenture Trustee
shall at no time have any responsibility or liability with respect to the
sufficiency of the Trust Estate or its ability to generate the payments to be
distributed to Certificateholders under the Trust Agreement or the Noteholders
under this Indenture, including, the compliance by the Depositor or the Seller
with any warranty or representation made under any Basic Document or in any
related document or the accuracy of any such warranty or representation, or any
action of the Certificate Paying Agent, the Certificate Registrar or any other
person taken in the name of the Owner Trustee, the Paying Agent or the Indenture
Trustee.
Section 3.23 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (x) distributions to the Owner Trustee
and the Certificateholders as contemplated by, and to the extent funds are
available for such purpose under, the Trust Agreement and (y) payments to the
Servicer pursuant to the terms of the Servicing Agreement. The Issuer will not,
directly or indirectly, make
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payments to or distributions from the Custodial Account except in accordance
with this Indenture and the other Basic Documents.
Section 3.24 Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Paying Agent, the Enhancer and the Rating Agencies prompt
written notice of each Event of Default hereunder and under the Trust Agreement.
Section 3.25 Further Instruments and Acts. Upon request of the Paying Agent
or the Indenture Trustee, the Issuer shall execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purposes of this Indenture.
Section 3.26 Statements to Noteholders. On each Payment Date, each of the
Paying Agent and the Certificate Registrar shall make available to the
Depositor, the Owner Trustee, each Rating Agency, each Noteholder, each
Certificateholder and the Enhancer, the Servicing Certificate provided to the
Paying Agent by the Servicer relating to such Payment Date and delivered
pursuant to Section 4.01 of the Servicing Agreement.
The Paying Agent will make the Servicing Certificate (and, at its option,
any additional files containing the same information in an alternative format)
available each month to Securityholders and the Enhancer, and other parties to
this Indenture via the Paying Agent's internet website. The Paying Agent's
internet website shall initially be located at "xxx.xxxxxxxxxxxx.xxx".
Assistance in using the website can be obtained by calling the Paying Agent's
customer service desk at 000-000-0000. Parties that are unable to use the above
distribution options are entitled to have a paper copy mailed to them via first
class mail by calling the customer service desk and indicating such. The Paying
Agent shall have the right to change the way monthly statements to
Securityholders are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Paying Agent
shall provide timely and adequate notification to all above parties regarding
any such changes. The Paying Agent may require registration and acceptance of a
disclaimer in connection with providing access to its website.
Section 3.27 Determination of Note Rate. On the second LIBOR Business Day,
in the case of the Class A-I-1 Notes and Class A-II-1 Notes, and the first LIBOR
Business Day, in the case of the Class A-II-2 Notes, immediately preceding (i)
the Closing Date in the case of the first Interest Period and (ii) the first day
of each succeeding Interest Period, the Servicer shall determine LIBOR and the
Note Rate (unless the Note Rate on the Class A-II-2 Notes is determined in
accordance with the Auction Procedures) for such Interest Period and shall
inform the Issuer, the Auction Agent, the Paying Agent and the Depositor by
means of facsimile transmission, in writing or other electronic means.
Section 3.28 Payments under the Policy.
(a) (i) If the Servicing Certificate specifies a Deficiency Amount for
any Payment Date, the Indenture Trustee shall make a draw on the Policy in an
amount specified in the Servicing Certificate for such Payment Date or, if no
amount is specified, the Indenture Trustee shall act in accordance with Section
3.28(b)(ii).
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(ii) The Indenture Trustee shall deposit or cause to be deposited such
draw on the Policy into the Note Payment Account on such Payment Date to the
extent such amount relates to clause (a) of the definition of "Deficiency
Amount" for payment to Holders (as defined in the Policy) on the related Payment
Date. Any Payment made by the Enhancer under the Policy will be applied solely
to the payment of the related Notes or, in the case of money deposited into the
applicable Funding Account, to the purchase of Additional Balances for the
related Loan Group, and for no other purpose. The Enhancer's payment obligations
under the Policy with respect to particular Deficiency Amounts and Preference
Amounts will be discharged to the extent funds equal to the applicable
Deficiency Amounts and Preference Amounts are paid by the Enhancer to, or at the
direction of, the Indenture Trustee in accordance with the Indenture Trustee's
request, whether or not such funds are properly applied by the Indenture
Trustee. Payment of Deficiency Amounts and Preference Amounts will be made only
at the time set forth in the Policy, and no accelerated Insured Payments (as
defined in the Policy) will be made except to the extent that the Enhancer has
specified an earlier date for payment at its sole option.
(iii) To the extent such amount relates to clause (b) of the
definition of "Deficiency Amount," the Indenture Trustee shall (i) during each
Revolving Period, deposit such amount into the related Funding Account as
Principal Collections and (ii) during the Amortization Periods, deposit such
amount into the Note Payment Account. Any amounts relating to clause (b)(1) of
the definition of Deficiency Amount shall be allocated between the Class A-I-1
Notes and the Class A-II Notes on a pro rata basis in accordance with the
respective amounts by which the related Note Balance of the Notes would exceed
the sum of the aggregate Pool Balance of Loan Group I or Loan Group II, as
applicable, in each case as of the close of business on the last day of the
related Collection Period.
(b) (i) The Indenture Trustee shall submit, if a Deficiency Amount is
specified in any statement to Securityholders prepared pursuant to Section 4.01
of the Servicing Agreement and furnished to the Indenture Trustee, the Notice of
Nonpayment and Demand for Payment of Insured Amounts (in the form attached as
Exhibit A to the Policy) to the Enhancer no later than 12:00 noon, New York City
time, on the second (2nd) Business Day prior to the applicable Payment Date;
provided, that if such Notice is received after 12:00 noon, New York City time,
on such Business Day, it will be deemed to be received before 12:00 noon, New
York City time, on the following Business Day. If any such Notice is not in
proper form or is otherwise insufficient for the purpose of making a claim under
the Policy, it will be deemed not to have been received for purposes of making
such claim, and the Enhancer will promptly so advise the Indenture Trustee in
writing and the Indenture Trustee may submit an amended or corrected Notice. If
such an amended or corrected Notice is in proper form and is otherwise
sufficient for the purpose of making a claim under the Policy, it will be deemed
to have been timely received on the Business Day of such resubmission; provided,
that if such notice is received after 12:00 noon, New York City time, it shall
be deemed to be received before 12:00 noon, New York City time, on the following
Business Day.
(ii) If no Deficiency Amount is specified in the Servicing Certificate,
then on the Business Day preceding the Payment Date, the Paying Agent shall
check the amount on deposit in the Note Payment Account after remittance by the
Servicer, and shall determine whether the amounts on deposit therein, plus
amounts stated in the Servicing Certificate to be payable under
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the related Yield Maintenance Agreement, are sufficient to make all payments
required pursuant to the Servicing Certificate. If the Paying Agent determines
that such amounts are not sufficient to make all such payments, the Paying Agent
shall immediately notify the Servicer and the Servicer shall recalculate the
amounts indicated on the Servicing Certificate and determine whether there is in
fact a Deficiency Amount for such Payment Date. The Servicer shall notify the
Paying Agent in writing of such recalculated amount, even if such amount is
zero, and if a Deficiency Amount exists, the Paying Agent will instruct the
Indenture Trustee to make a draw on the Policy for the amount of such Deficiency
Amount and shall remit such amounts to the holders of the related Notes upon
receipt thereof from the Enhancer.
(c) The Enhancer will have the right to inspect account statements for
the Note Payment Account and the Funding Accounts at reasonable times upon
reasonable written notice to the Paying Agent.
(d) Only the Indenture Trustee on behalf of the Holders pursuant to
the Servicing Certificate or a written servicer order will be entitled to make a
claim for an Insured Amount under the Policy.
(e) The Indenture Trustee will surrender the Policy to the Enhancer
for cancellation upon the expiration of such Policy in accordance with the terms
thereof.
Section 3.29 Replacement Enhancement. The Issuer (or the Servicer on its
behalf) may, at its expense, in accordance with and upon satisfaction of the
conditions set forth herein, but shall not be required to, arrange for any form
of additional credit enhancement; provided, however, that no such additional
credit enhancement shall be obtained if, as a result thereof, a Rating Agency
would inform the Issuer that a Rating Event would occur (without taking the
Policy into account); provided, further, that the issuer of any such additional
credit enhancement and the timing and mechanism for drawing on such additional
enhancement shall be acceptable to the Indenture Trustee and the Enhancer. It
shall be a condition to procurement of any such additional credit enhancement
that there be delivered to the Indenture Trustee, the Paying Agent and the
Enhancer (a) an Opinion of Counsel, acceptable in form to the Indenture Trustee,
the Paying Agent and the Enhancer, from counsel to the provider of such
additional credit enhancement with respect to the enforceability thereof and
such other matters as the Indenture Trustee, the Paying Agent or the Enhancer
may require and (b) an Opinion of Counsel to the effect that the procurement of
such additional enhancement would not (i) adversely affect in any material
respect the tax status of the Notes or the Certificates or (ii) cause the Issuer
to be taxable as an association (or a publicly traded partnership) for federal
income tax purposes or to be classified as a taxable mortgage pool within the
meaning of Section 7701(i) of the Code.
Section 3.30 Additional Representations of Issuer.
The Issuer hereby represents and warrants to the Indenture Trustee and the
Paying Agent that as of the Closing Date:
(a) This Indenture creates a valid and continuing security interest
(as defined in the applicable UCC) in the Mortgage Notes in favor of the
Indenture Trustee, which security
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interest is prior to all other Liens (except as expressly permitted otherwise in
this Indenture), and is enforceable as such as against creditors of and
purchasers from the Issuer.
(b) The Loan Agreements constitute "instruments" within the meaning of
the applicable UCC.
(c) The Issuer owns and has good and marketable title to the Mortgage
Notes free and clear of any Lien of any Person.
(d) The original executed copy of each Loan Agreement (except for any
Loan Agreement with respect to which a Lost Note Affidavit has been delivered to
the Servicer) has been delivered to the Servicer.
(e) The Issuer has received a written acknowledgment from the Servicer
that the Servicer (in the capacity described in Section 3.14 hereof) is acting
solely as agent of the Indenture Trustee for the benefit of the Noteholders.
(f) Other than the security interest granted to the Indenture Trustee
pursuant to this Indenture, the Issuer has not pledged, assigned, sold, granted
a security interest in, or otherwise conveyed any of the Mortgage Notes. The
Issuer has not authorized the filing of and is not aware of any financing
statements against the Issuer that include a description of collateral covering
the Mortgage Notes other than any financing statement relating to the security
interest granted to the Indenture Trustee hereunder or any security interest
that has been terminated. The Issuer is not aware of any judgment or tax lien
filings against the Issuer.
(g) None of the Mortgage Notes has any marks or notations indicating
that they have been pledged, assigned or otherwise conveyed to any Person other
than the Indenture Trustee, except for (i) any endorsements that are part of a
complete chain of endorsements from the originator of the Mortgage Note to the
Indenture Trustee, and (ii) any marks or notations pertaining to Liens that have
been terminated or released.
(h) None of the provisions of this Section 3.30 shall be waived
without the prior written confirmation from Standard & Poor's that such waiver
shall not result in a reduction or withdrawal of the then-current rating of the
Notes.
Section 3.31 Yield Maintenance Agreements.
(a) In the event that the Indenture Trustee or the Paying Agent does
not receive any required payment from the Yield Maintenance Provider under
either the Group I Yield Maintenance Agreement or the Group II Yield Maintenance
Agreement, as applicable, the Indenture Trustee, upon the written direction of
any of the Enhancer, a majority of the Noteholders or the Servicer shall enforce
the obligation of the Yield Maintenance Provider thereunder. The parties hereto
acknowledge that the Yield Maintenance Provider shall make all calculations, and
determine the amounts to be paid, under the Yield Maintenance Agreements. Absent
manifest error, the Indenture Trustee and the Paying Agent, as applicable, may
conclusively rely on such calculations and determinations.
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(b) The Indenture Trustee or the Paying Agent, as applicable, shall
deposit or cause to be deposited any amount received under either Yield
Maintenance Agreement into the Note Payment Account on the Payment Date for
which such amount is received from the Yield Maintenance Provider under such
Yield Maintenance Agreement.
Section 3.32 Preference Claims under Policy.
(a) In the event that the Indenture Trustee has received a certified
copy of a final, nonappealable order of an appropriate court or other body
exercising jurisdiction that any interest on or principal of the Notes which has
become due for payment under the Indenture, the nonpayment of which would have
been covered by the Policy, and which was made to a Holder by or on behalf of
the Issuer has been deemed a preferential transfer and recoverable, or
theretofore recovered, from such Holder pursuant to Title 11 of the United
States Code in accordance with an Order (as defined below) (such amount, a
"Preference Amount"), the Indenture Trustee will so notify the Enhancer, will
comply with the provisions of the Policy to obtain payment by the Enhancer of
such avoided payment, and will, at the time it provides notice to the Enhancer,
notify the Paying Agent and the Holders by mail that, in the event that any
Holder's payment is so recoverable, such Holder will be entitled to payment
pursuant to the terms of the Policy. The Enhancer will pay any Preference Amount
when due to be paid pursuant to an Order (as defined below), but in any event no
earlier than the fifth Business Day following actual receipt by the Enhancer of
(i) a certified copy of a final, nonappealable order of a court or other body
exercising jurisdiction in such insolvency proceeding to the effect that the
Indenture Trustee, or Holder, as applicable, is required to return such
Preference Amount paid during the term of this Policy because such payments were
avoided as a preferential transfer or otherwise rescinded or required to be
restored by the Indenture Trustee or Holder (the "Order"), (ii) a certificate by
or on behalf of the Indenture Trustee or Holder, as applicable, that the Order
has been entered and is not subject to any stay, (iii) an assignment, in form
and substance satisfactory to the Enhancer, duly executed and delivered by the
Indenture Trustee or Holder, irrevocably assigning to the Enhancer all rights
and claims of the Indenture Trustee or Holder relating to or arising under the
Indenture against the estate of the Indenture Trustee or otherwise with respect
to such Preference Amount and (iv) a Notice of Nonpayment (in the form attached
to the Policy as Exhibit A) appropriately completed and executed by the
Indenture Trustee; provided, that (I) if such documents are received by the
Enhancer after 12:00 noon, New York City time, on such Business Day, they will
be deemed to be received before 12:00 noon, New York City time, on the following
Business Day and (II) the Enhancer will not be obligated to pay any Preference
Amount in respect of principal (other than Deficiency Amounts relating to
principal) prior to the Final Scheduled Payment Date for the relevant class of
Notes. Such payment will be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, and not to the
Indenture Trustee or the Holder directly, unless the Indenture Trustee or the
relevant Holder has made a payment of the Preference Amount to the court or such
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order, in which case the Enhancer will pay the Indenture Trustee, or as
directed by the Indenture Trustee, to the extent of the payment of the
Preference Amount, subject to the delivery of (a) the items referred to in
clauses (i), (ii), (iii) and (iv) above to the Enhancer and (b) evidence
satisfactory to the Enhancer that payment has been made to such court or
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order; provided, further, that in no event will the Enhancer be obligated to
make any payment prior to the time the
24
Enhancer would have been required to make an Insured Payment pursuant to Section
3 of the Policy.
(b) The Indenture Trustee will promptly notify the Enhancer of any
proceeding or the institution of any action (of which a Responsible Officer of
the Indenture Trustee has actual knowledge) seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a "Note Preference Claim") of any payment made to
a Holder that has been deemed a preferential transfer and recoverable, or
theretofore recovered, from such Holder pursuant to Title 11 of United States
Code in accordance with an Order. Each Holder, by its purchase of Notes, and the
Indenture Trustee hereby agree that so long as no Enhancer Default has occurred
and is continuing, the Enhancer may at any time during the continuation of any
proceeding relating to a Note Preference Claim direct all matters relating to
such Note Preference Claim, including (i) the direction of any appeal of any
order relating to any Note Preference Claim and (ii) the posting of any surety,
supersedeas or performance bond pending any such appeal at the expense of the
Enhancer, but subject to reimbursement as provided in the Insurance Agreement.
In addition, and without limitation of the foregoing, as set forth in Section
4.12, the Enhancer will be subrogated to, and each Holder and the Indenture
Trustee hereby delegate and assign, to the fullest extent permitted by law, the
rights of the trustee and each Holder in the conduct of any proceeding with
respect to a Note Preference Claim, including all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Note Preference Claim.
ARTICLE IV
The Notes; Satisfaction And Discharge Of Indenture
Section 4.01 The Notes.
The Notes shall be registered in the name of a nominee designated by the
Depository. Beneficial Owners will hold interests in the Notes through the
book-entry facilities of the Depository in the minimum initial Note Balance of
$25,000 and integral multiples of $1,000 in excess thereof, with respect to the
Class A-I-1 Notes and Class A-II-1 Notes, and in the minimum initial Note
Balance of $25,000 and integral multiples of $25,000 in excess thereof, with
respect to the Class A-II-2 Notes.
The Indenture Trustee, Paying Agent and Note Registrar may for all purposes
(including the making of payments due on the Notes) deal with the Depository as
the authorized representative of the Beneficial Owners with respect to the Notes
for the purposes of exercising the rights of Noteholders hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08,
Beneficial Owners shall not be entitled to definitive certificates for the Notes
as to which they are the Beneficial Owners. Requests and directions from, and
votes of, the Depository as Noteholder of the Notes shall not be deemed
inconsistent if they are made with respect to different Beneficial Owners. The
Indenture Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Noteholders and give notice to the
Depository of such record date.
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Without the consent of the Issuer, Indenture Trustee, Note Registrar and Paying
Agent, no Note may be transferred by the Depository except to a successor
Xxxxxxxxxx that agrees to hold such Note for the account of the Beneficial
Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee, at the request of the Servicer and with the
approval of the Issuer may appoint a successor Depository. If no successor
Depository has been appointed within 30 days of the effective date of the
Depository's resignation or removal, each Beneficial Owner shall be entitled to
certificates representing the Notes it beneficially owns in the manner
prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuer by
the Owner Trustee, not in its individual capacity but solely as Owner Trustee
and upon Issuer Order, authenticated by the Indenture Trustee and delivered by
the Indenture Trustee to or upon the order of the Issuer.
Section 4.02 Registration of and Limitations on Transfer and Exchange of
Notes; Appointment of Certificate Registrar. The Issuer shall cause to be kept
at the Note Registrar's Corporate Trust Office a Note Register in which, subject
to such reasonable regulations as it may prescribe, the Note Registrar shall
provide for the registration of Notes and of transfers and exchanges of Notes as
herein provided. The Issuer hereby appoints Wachovia Bank, National Association
as the initial Note Registrar. Wachovia Bank, National Association hereby
accepts such appointment.
Subject to the restrictions and limitations set forth below, upon surrender
for registration of transfer of any Note at the Note Registrar's Corporate Trust
Office, the Issuer shall execute, and the Indenture Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Notes in the authorized initial Note Balance evidencing the same
aggregate Percentage Interests.
Subject to the foregoing, at the option of the Noteholders, Notes may be
exchanged for other Notes of like tenor, in each case in the authorized initial
Note Balance evidencing the same aggregate Percentage Interests, upon surrender
of the Notes to be exchanged at the Corporate Trust Office of the Note
Registrar. Whenever any Notes are so surrendered for exchange, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver the Notes which
the Noteholder making the exchange is entitled to receive. Each Note presented
or surrendered for registration of transfer or exchange shall (if so required by
the Note Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Note Registrar
duly executed by, the Noteholder thereof or his attorney duly authorized in
writing with such signature guaranteed by a commercial bank or trust company
located or having a correspondent located in The City of New York. Notes
delivered upon any such transfer or exchange will evidence the same obligations,
and will be entitled to the same rights and privileges, as the Notes
surrendered.
No service charge shall be imposed for any registration of transfer or
exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
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All Notes surrendered for registration of transfer and exchange shall be
cancelled by the Note Registrar and delivered to the Indenture Trustee for
subsequent destruction without liability on the part of either.
The Issuer hereby appoints Wachovia Bank, National Association as
Certificate Registrar to keep at its Corporate Trust Office a Certificate
Register pursuant to Section 3.13 of the Trust Agreement in which, subject to
such reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of Certificates and of transfers and exchanges
thereof pursuant to Section 3.09 of the Trust Agreement. Wachovia Bank, National
Association hereby accepts such appointment.
Each purchaser of a Note, by its acceptance of the Note, shall be deemed to
have represented that the acquisition of such Note by the purchaser does not
constitute or give rise to a prohibited transaction under Section 406 of ERISA
or Section 4975 of the Code, for which no statutory, regulatory or
administrative exemption is available.
Section 4.03 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Note Registrar, or the Note Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Note Registrar such security or
indemnity as may be required by it to hold the Issuer and the Note Registrar
harmless, then, in the absence of notice to the Issuer or the Note Registrar
that such Note has been acquired by a bona fide purchaser, and provided that the
requirements of Section 8-405 of the UCC are met, the Issuer shall execute, and
upon receipt of an Issuer Request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note of the same class; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable without surrender thereof. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Note in
lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Note Registrar shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Note Registrar in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03, the
Issuer may require the payment by the Noteholder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee and the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at
27
any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section 4.03 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04 Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Paying Agent, the Note
Registrar, the Indenture Trustee and any agent of the Issuer, the Paying Agent,
the Note Registrar or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Paying Agent, the Note Registrar, the
Indenture Trustee or any agent of the Issuer, the Paying Agent, the Note
Registrar or the Indenture Trustee shall be affected by notice to the contrary.
Section 4.05 Cancellation. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Note Registrar, be delivered to the Note Registrar and shall be
promptly cancelled by the Note Registrar. The Issuer may at any time deliver to
the Note Registrar for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Note Registrar. No
Notes shall be authenticated in lieu of or in exchange for any Notes cancelled
as provided in this Section 4.05, except as expressly permitted by this
Indenture. All cancelled Notes may be held or disposed of by the Note Registrar
in accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Request that they be destroyed
or returned to it; provided, however, that such Issuer Request is timely and the
Notes have not been previously disposed of by the Note Registrar.
Section 4.06 Book-Entry Notes. The Notes, upon original issuance, shall be
issued in the form of typewritten Notes representing the Book-Entry Notes, to be
delivered to The Depository Trust Company, the initial Depository, by, or on
behalf of, the Issuer. Such Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Depository, and
no Beneficial Owner shall receive a Definitive Note representing such Beneficial
Owner's interest in such Note, except as provided in Section 4.08. Unless and
until definitive, fully registered Notes (the "Definitive Notes") have been
issued to Beneficial Owners pursuant to Section 4.08:
(a) the provisions of this Section 4.06 shall be in full force and
effect;
(b) the Note Registrar, the Paying Agent and the Indenture Trustee
shall be entitled to deal with the Depository for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Beneficial Owners;
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(c) to the extent that the provisions of this Section 4.06 conflict
with any other provisions of this Indenture, the provisions of this Section 4.06
shall control;
(d) the rights of Beneficial Owners shall be exercised only through
the Depository and shall be limited to those established by law and agreements
between such Owners of Notes and the Depository and/or the Depository
Participants. Unless and until Definitive Notes are issued pursuant to Section
4.08, the initial Depository will make book-entry transfers among the Depository
Participants and receive and transmit payments of principal of and interest on
the Notes to such Depository Participants; and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Noteholders of Notes evidencing a
specified percentage of the Note Balance of the Notes, the Depository shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Beneficial Owners and/or Depository
Participants owning or representing, respectively, such required percentage of
the beneficial interest in the Notes and has delivered such instructions to the
Indenture Trustee.
Section 4.07 Notices to Depository. Whenever a notice or other
communication to the Noteholders of the Notes is required under this Indenture,
unless and until Definitive Notes shall have been issued to Beneficial Owners
pursuant to Section 4.08, the Indenture Trustee or the Paying Agent, as
applicable, shall give all such notices and communications specified herein to
be given to Noteholders of the Notes to the Depository, and shall have no
obligation to the Beneficial Owners.
Section 4.08 Definitive Notes. If (i) in the actual knowledge of
Responsible Officers of the Indenture Trustee or the Paying Agent the Depository
is no longer willing or able to properly discharge its responsibilities with
respect to the Notes and the Indenture Trustee, the Paying Agent or Depositor is
unable to locate a qualified successor, (ii) after the occurrence of an Event of
Default, Beneficial Owners of Notes representing beneficial interests
aggregating at least a majority of the Note Balance of the Notes advise the
Depository in writing that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Beneficial Owners, then the
Depository shall notify all Beneficial Owners, the Paying Agent and the
Indenture Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Beneficial Owners requesting the same. Upon surrender to the
Note Registrar of the typewritten Notes representing the Book-Entry Notes by the
Depository, accompanied by registration instructions, the Issuer shall execute
and the Indenture Trustee shall authenticate the Definitive Notes in accordance
with the instructions of the Depository. None of the Issuer, the Paying Agent,
the Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions, and each may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee, the Note Registrar and the Paying Agent shall
recognize the Noteholders of the Definitive Notes as Noteholders.
Section 4.09 Tax Treatment. The Issuer has entered into this Indenture, and
the Notes will be issued, with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Notes will be treated as
indebtedness for purposes of such taxes. The Issuer, by entering into this
Indenture, and each Noteholder, by its acceptance of its Note (and
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each Beneficial Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness for purposes of such
taxes.
Section 4.10 Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes, and shall be discharged
and satisfied, except as to (i) rights of registration of transfer and exchange,
(ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of
Noteholders to receive payments of principal thereof and interest thereon, (iv)
Sections 3.03, 3.04, 3.06, 3.09, 3.16, 3.18 and 3.19, (v) the rights,
obligations and immunities of the Indenture Trustee, Note Registrar and Paying
Agent hereunder (including the rights of the Indenture Trustee, Note Registrar
and Paying Agent under Section 6.07 and the obligations of the Indenture
Trustee, Note Registrar and Paying Agent under Section 4.11) and (vi) the rights
of Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee or the Paying Agent payable to all or any of them,
and the Indenture Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when:
(a) either:
(i) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been replaced or
paid as provided in Section 4.03 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Note Registrar for
cancellation; or
(ii) all Notes not theretofore delivered to the Note Registrar for
cancellation:
(A) have become due and payable;
(B) will become due and payable at the Final Payment
Date within one year; or
(C) have been declared immediately due and payable
pursuant to Section 5.02;
and the Issuer, in the case of Section 4.10(a)(ii)(A) or (B) above,
has irrevocably deposited or caused to be irrevocably deposited with
the Indenture Trustee or the Paying Agent cash or direct obligations
of or obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in trust for
such purpose, in an amount sufficient to pay and discharge the entire
indebtedness on such Notes and Certificates then outstanding not
theretofore delivered to the Note Registrar for cancellation when due
on the Final Payment Date, as evidenced to the Note Registrar by an
accountant's letter or an Officer's Certificate of the Issuer;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder and under the Insurance Agreement by the Issuer; and
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(c) the Issuer has delivered to the Indenture Trustee, the Paying
Agent and the Enhancer an Officer's Certificate and an Opinion of Counsel, each
meeting the applicable requirements of Section 10.01 and each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with and, if the Opinion of
Counsel relates to a deposit made in connection with Section 4.10(a)(ii)(B)
above, such opinion shall further be to the effect that such deposit will not
have any material adverse tax consequences to the Issuer, any Noteholders or any
Certificateholders.
Section 4.11 Application of Trust Money. All monies deposited with the
Paying Agent pursuant to Section 4.10 hereof shall be held in trust and applied
by it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent or Certificate Paying
Agent, as the Paying Agent may determine, to the Securityholders of Securities,
of all sums due and to become due thereon for principal and interest; but such
monies need not be segregated from other funds except to the extent required
herein or required by law.
Section 4.12 Subrogation and Cooperation.
(a) Any and all Deficiency Amounts and Preference Amounts disbursed by
the Indenture Trustee from claims made under the Policy will not be considered
payment by the Trust with respect to the Notes, and will not discharge the
obligations of the Trust with respect thereto. The Enhancer will, upon any
payment pursuant to the Policy, in furtherance and not in limitation of its
equitable right of subrogation and its rights under the Insurance Agreement, to
the extent it makes any payment with respect to the Notes, become subrogated to
the rights of any Holders to receive any and all amounts due in respect of the
Notes as to which such payment was made. Subject to and conditioned upon any
payment with respect to the Notes by or on behalf of the Enhancer, the Paying
Agent will assign to the Enhancer all rights to the payment of interest or
principal with respect to the Notes which are then due for payment to the extent
of all payments made by the Enhancer, and the Enhancer may exercise any option,
vote, right, power or the like with respect to the Notes to the extent that it
has made payment pursuant to the Policy. To evidence such subrogation, the Note
Registrar will note the Enhancer's rights as subrogee upon the register of
Holders. The foregoing subrogation will in all cases be subject to the rights of
the Holders to receive all Deficiency Amounts in respect of the Notes.
Notwithstanding anything herein to the contrary, the Enhancer shall be paid such
principal and interest only from the sources and in the manner provided herein
and in the Insurance Agreement for the payment of such principal and interest.
The Indenture Trustee and the Paying Agent shall cooperate in all respects
with any reasonable request by the Enhancer for action to preserve or enforce
the Enhancer's rights or interest under this Indenture or the Insurance
Agreement, consistent with this Indenture and without limiting the rights of the
Noteholders as otherwise set forth in the Indenture, including upon the
occurrence and continuance of a default under the Insurance Agreement, a request
(which request shall be in writing) to take any one or more of the following
actions:
(i) institute Proceedings for the collection of all amounts
then payable on the Notes or under this Indenture in respect to the
Notes and all amounts payable
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under the Insurance Agreement and to enforce any judgment obtained and
collect from the Issuer monies adjudged due;
(ii) sell the Trust Estate or any portion thereof or rights
or interest therein, at one or more public or private Sales (as
defined in Section 5.15 hereof) called and conducted in any manner
permitted by law;
(iii) file or record all Assignments of Mortgage that have
not previously been recorded, if filing is required in accordance with
the Servicing Agreement;
(iv) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the
rights and remedies of the Enhancer hereunder.
Following the payment in full of the Notes, the Enhancer shall continue to
have all rights and privileges provided to it under this Section and in all
other provisions of this Indenture, until all amounts owing to the Enhancer have
been paid in full.
Section 4.13 Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Paying Agent (other than the Indenture Trustee) under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee, to be held and applied
according to Section 3.05; and thereupon, such Paying Agent shall be released
from all further liability with respect to such monies.
Section 4.14 Temporary Notes. Pending the preparation of any Definitive
Notes, the Issuer may execute and upon its written direction, the Indenture
Trustee may authenticate and make available for delivery, temporary Notes that
are printed, lithographed, typewritten, photocopied or otherwise produced, in
any denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of the Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Note Registrar,
without charge to the Noteholder. Upon surrender for cancellation of any one or
more temporary Notes, the Issuer shall execute and the Indenture Trustee shall
authenticate and make available for delivery, in exchange therefor, Definitive
Notes of authorized denominations and of like tenor and aggregate principal
amount. Until so exchanged, such temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
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ARTICLE V
Default And Remedies
Section 5.01 Events of Default. The Issuer shall deliver to the Indenture
Trustee, the Paying Agent and the Enhancer, within five days after learning of
the occurrence of any event that with the giving of notice and the lapse of time
would become an Event of Default under clause (b) of the definition of "Event of
Default" written notice in the form of an Officer's Certificate of its status
and what action the Issuer is taking or proposes to take with respect thereto.
Section 5.02 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default shall occur and be continuing, then and in every such case the
Indenture Trustee, acting at the written direction of the Enhancer (so long as
no Enhancer Default exists) or the Noteholders of Notes representing not less
than a majority of the Note Balance of the Notes (if an Enhancer Default
exists), may declare the Notes to be immediately due and payable by a notice in
writing to the Issuer (and to the Indenture Trustee if given by Noteholders);
and upon any such declaration, the unpaid principal amount of the Notes,
together with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity with respect
to an Event of Default has been made and before a judgment or decree for payment
of the money due has been obtained by the Indenture Trustee as hereinafter
provided in this Article V, the Enhancer (so long as no Enhancer Default exists)
or the Noteholders of Notes representing a majority of the Note Balance of the
Notes (if an Enhancer Default exists), by written notice to the Issuer and the
Indenture Trustee, may in writing waive the related Event of Default and rescind
and annul such declaration and its consequences if the Issuer has paid or
deposited with the Indenture Trustee a sum sufficient to pay:
(a) all payments of principal of and interest on the Notes and all
other amounts that would then be due hereunder or upon the Notes if the Event of
Default giving rise to such acceleration had not occurred;
(b) all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements, advances and
indemnification of the Indenture Trustee, Paying Agent, Note Registrar and their
respective agents and counsel; and
(c) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
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Section 5.03 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if there is a default in the payment of
(i) any interest on any Note when the same becomes due and payable, and such
default continues for a period of five days, or (ii) the principal of or any
installment of the principal of any Note when the same becomes due and payable,
the Issuer shall, upon demand of the Indenture Trustee pay to it or the Paying
Agent, for the benefit of the Noteholders and the Enhancer, the entire amount
then due and payable on the Notes for principal and interest, with interest on
the overdue principal, and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements, advances and indemnification
owed to the Indenture Trustee and its agents (including, without limitation, the
Paying Agent) and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, subject to the provisions of Section 10.17 hereof, may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor on the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor on the Notes, wherever
situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default shall occur and be continuing, the
Indenture Trustee, subject to the provisions of Section 10.17 hereof, may, as
more particularly provided in Section 5.04, in its discretion proceed to protect
and enforce its rights and the rights of the Noteholders and the Enhancer by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) If there shall be pending, relative to the Issuer or any other
obligor on the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or if a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or if there shall be any other comparable judicial Proceedings relative to the
Issuer or other any other obligor on the Notes, or relative to the creditors or
property of the Issuer or such other obligor, then the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise, and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire
amount of principal and interest owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the
34
Indenture Trustee (including any claim for reasonable compensation to
the Indenture Trustee and each predecessor Indenture Trustee, and
their respective agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all advances made, by
the Indenture Trustee and each predecessor Indenture Trustee, except
as a result of negligence, willful misconduct or bad faith) and of the
Noteholders and the Enhancer allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Noteholders and the Enhancer in any election of
a trustee, a standby trustee or Person performing similar functions in
any such Proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Noteholders and of
the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Noteholders allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders and the
Enhancer to make payments to the Indenture Trustee, and, in the event the
Indenture Trustee shall consent to the making of payments directly to such
Noteholders and the Enhancer, to pay to the Indenture Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Indenture Trustee,
each predecessor Indenture Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances made,
by the Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence, willful misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder and the Enhancer any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Noteholder thereof or to authorize the Indenture Trustee to vote in respect of
the claim of any Noteholder and the Enhancer in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
Person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements, indemnification and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Noteholders and the Enhancer.
(g) In any Proceedings to which the Indenture Trustee shall be a party
(including any Proceedings involving the interpretation of any provision of this
Indenture), the
35
Indenture Trustee shall be held to represent all Noteholders, and it shall not
be necessary to make any Noteholder a party to any such Proceedings.
Section 5.04 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing, then
the Indenture Trustee, subject to the provisions of Section 10.17 hereof, with
the written consent of the Enhancer may, or, at the written direction of the
Enhancer, shall, do one or more of the following, in each case subject to
Section 5.05:
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, and all amounts payable under the Insurance
Agreement, enforce any judgment obtained, and collect from the Issuer
and any other obligor on the Notes monies adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Trust Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights
or interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the written consent of the Enhancer, so long as no
Enhancer Default exists, or, if an Enhancer Default exists, the Noteholders of
100% of the Note Balance of the Notes, (B) the proceeds of such sale or
liquidation distributable to Noteholders are sufficient to discharge in full all
amounts then due and unpaid upon the Notes for principal and interest and to
reimburse the Enhancer for any amounts drawn under the Policy and any other
amounts due the Enhancer under the Insurance Agreement or (C) the Indenture
Trustee determines that the Mortgage Loans will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
they would have become due if the Notes had not been declared due and payable,
and the Indenture Trustee obtains the written consent of the Enhancer and the
Noteholders of 66 2/3% of the Note Balance of the Notes. In determining such
sufficiency or insufficiency with respect to clause (B) and (C) above, the
Indenture Trustee may, but need not, obtain and rely, and shall be protected in
relying in good faith, upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
Notwithstanding the foregoing, provided that a Servicing Default shall not have
occurred, any Sale (as defined in Section 5.15 hereof) of the Trust Estate shall
be made subject to the continued servicing of the Mortgage Loans by the Servicer
as provided in the Servicing Agreement. Notwithstanding any sale of the Mortgage
Loans pursuant to this Section 5.04(a), the Indenture Trustee shall, for so long
as any principal or accrued interest on
36
the Notes remains unpaid, continue to act as Indenture Trustee hereunder and to
draw amounts payable under the Policy in accordance with its terms.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, it, or the Paying Agent on its behalf, shall pay out such
money or property in the following order:
FIRST: to the Indenture Trustee, the Paying Agent and the Note
Registrar for amounts due under Section 6.07;
SECOND: to the Noteholders for amounts due and unpaid on the related
Notes for interest, including accrued and unpaid interest on the Notes
for any prior Payment Date, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Notes for
interest from amounts available in the Trust Estate for such
Noteholders, but excluding any Interest Shortfalls;
THIRD: to the Noteholders for amounts due and unpaid on the related
Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Notes for
principal, from amounts available in the Trust Estate for such
Noteholders, first, from the related Loan Group and then from the
other Loan Group with all payments made on the Class A-II-1 Notes and
the Class A-II-2 Notes made on a pro rata basis, until the Note
Balance of such Notes have been reduced to zero;
FOURTH: to the payment of all amounts due and owing the Enhancer under
the Insurance Agreement; FIFTH: to the Noteholders for amounts due and
unpaid on the related Notes for Interest Shortfalls, if any, including
any unpaid Interest Shortfalls on the Notes for any prior Payment
Date, ratably, without preference or priority of any kind, according
to such amounts due and payable from amounts available in the Trust
Estate for such Noteholders;
SIXTH: to the Certificate Paying Agent for amounts due under Article
VIII of the Trust Agreement; and
SEVENTH: to the payment of the remainder, if any, to the Issuer or any
other person legally entitled thereto.
The Indenture Trustee, or the Paying Agent on behalf of the Indenture
Trustee, may fix a record date and payment date for any payment to Noteholders
pursuant to this Section 5.04. At least 15 days before such record date, the
Indenture Trustee shall mail to each Noteholder a notice that states the record
date, the payment date and the amount to be paid.
Section 5.05 Optional Preservation of the Trust Estate. If the Notes have
been declared due and payable under Section 5.02 following an Event of Default
and such declaration and its consequences have not been rescinded and annulled,
the Indenture Trustee may (with the prior written consent of the Enhancer so
long as no Enhancer Default exists), but need not (but
37
shall at the written direction of the Enhancer so long as no Enhancer Default
exists), elect to take and maintain possession of the Trust Estate. It is the
desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest on the Notes and
other obligations of the Issuer hereunder including payment to the Enhancer, and
the Indenture Trustee shall take such desire into account when determining
whether or not to take and maintain possession of the Trust Estate. In
determining whether to take and maintain possession of the Trust Estate, the
Indenture Trustee may, but need not, obtain and rely, and shall be protected in
relying in good faith, upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
Section 5.06 Limitation of Suits. No Noteholder shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this Indenture,
including with respect to the Policy, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless and subject to the provisions
of Section 10.17 hereof:
(a) such Noteholder shall have previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Noteholders of not less than 25% of the Note Balance of the
Notes shall have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(c) such Noteholder or Noteholders shall have offered the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred by it in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity shall have failed to institute such
Proceedings;
(e) unless an Enhancer Default has occurred, the Enhancer has given
its written consent to the proposed proceedings; and
(f) no written direction inconsistent with such written request shall
have been given to the Indenture Trustee during such 60-day period by the
Noteholders of a majority of the Note Balance of the Notes or by the Enhancer.
It is understood and intended that no Noteholder shall have any right in
any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Noteholders or
to obtain or to seek to obtain priority or preference over any other Noteholders
or to enforce any right under this Indenture, except in the manner herein
provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders, each
representing less than a majority of the Note Balance of the Notes, the
Indenture Trustee shall act at the direction of the group of Noteholders with
the greater Note Balance. In the event that the Indenture Trustee shall receive
conflicting or inconsistent requests and indemnity from two or more groups of
Noteholders
38
representing the same Note Balance, then the Indenture Trustee in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provisions of this Indenture.
Section 5.07 Unconditional Rights of Noteholders to Receive Principal and
Interest. Subject to the provisions of this Indenture, the Noteholder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Noteholder.
Section 5.08 Restoration of Rights and Remedies. If the Indenture Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
Section 5.09 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Enhancer or the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law, in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.10 Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Enhancer or any Noteholder to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Indenture
Trustee or to the Noteholders may be exercised from time to time, and as often
as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as
the case may be.
Section 5.11 Control by Enhancer or Noteholders. The Enhancer (so long as
no Enhancer Default exists) or if an Enhancer Default exists, the Noteholders of
a majority of the Note Balance of Notes, shall have the right to direct in
writing the time, method and place of conducting any Proceeding for any remedy
available to the Indenture Trustee with respect to the Notes or exercising any
trust or power conferred on the Indenture Trustee, provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Trust Estate shall be by the Enhancer
(so long as no Enhancer
39
Default exists) or if an Enhancer Default exists, by the Noteholders of Notes
representing not less than 100% of the Note Balance of the Notes;
(c) if the conditions set forth in Section 5.05 shall have been
satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant
to such Section, then any direction to the Indenture Trustee by Noteholders of
Notes representing less than 100% of the Note Balance of the Notes to sell or
liquidate the Trust Estate shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
(in its sole discretion) might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action,
unless the Trustee has received satisfactory indemnity from the Enhancer or a
Noteholder.
Section 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Enhancer (so long as no Enhancer Default exists) or if an Enhancer Default
exists, the Noteholders of not less than a majority of the Note Balance of the
Notes, may waive in writing any past Event of Default and its consequences,
except an Event of Default (a) with respect to payment of principal of or
interest on any of the Notes or (b) in respect of a covenant or provision hereof
that cannot be modified or amended without the consent of the Noteholder of each
Note. In the case of any such waiver, the Issuer, the Indenture Trustee, the
Enhancer and the Noteholders shall be restored to their respective former
positions and rights hereunder; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.
Section 5.13 Undertaking for Costs. All parties to this Indenture agree,
and each Noteholder by such Noteholder's acceptance of the related Note shall be
deemed to have agreed, that any court may in its discretion require, in any
Proceeding for the enforcement of any right or remedy under this Indenture, or
in any Proceeding against the Indenture Trustee for any action taken, suffered
or omitted by it as Indenture Trustee, the filing by any party litigant in such
Proceeding of an undertaking to pay the costs of such Proceeding, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such Proceeding,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 5.13 shall not apply to
(a) any Proceeding instituted by the Indenture Trustee, (b) any Proceeding
instituted by any Noteholder, or group of Noteholders, in each case holding in
the aggregate more than 10% of the Note Balance of the Notes or (c) any
Proceeding instituted by any Noteholder for the enforcement of the payment of
principal of or interest on any Note on or after the respective due dates
expressed in such Note and in this Indenture.
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Section 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
Section 5.15 Sale of Trust Estate.
(a) The power to effect any sale or other disposition (a "Sale") of
any portion of the Trust Estate pursuant to Section 5.04 is expressly subject to
the provisions of Section 5.05 and this Section 5.15. The power to effect any
such Sale shall not be exhausted by any one or more Sales as to any portion of
the Trust Estate remaining unsold, but shall continue unimpaired until the
entire Trust Estate shall have been sold or all amounts payable on the Notes and
under this Indenture and under the Insurance Agreement shall have been paid. The
Indenture Trustee may from time to time postpone any public Sale by public
announcement made at the time and place of such Sale. The Indenture Trustee
hereby expressly waives its right to any amount fixed by law as compensation for
any Sale (which, for the avoidance of doubt, does not include any fees or other
expenses payable to the Indenture Trustee pursuant to this Indenture).
(b) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless:
(i) the Enhancer, if no Enhancer Default exists, or, if an
Enhancer Default exists, the Noteholders of 100% of the Note Balance
of the Notes, direct the Indenture Trustee in writing to make such
Sale,
(ii) the proceeds of such Sale would be not less than the
entire amount that would be payable to the Noteholders under the
Notes, the Certificateholders under the Certificates and the Enhancer
in respect of amounts drawn under the Policy and any other amounts due
the Enhancer under the Insurance Agreement (as certified by the
Enhancer in writing to the Indenture Trustee), in full payment thereof
in accordance with Section 5.02, on the Payment Date next succeeding
the date of such Sale, or
(iii) the Indenture Trustee determines, in its sole
discretion, that the conditions for retention of the Trust Estate set
forth in Section 5.05 cannot be satisfied (in making any such
determination, the Indenture Trustee may rely and shall be protected
in relying in good faith upon an opinion of an Independent investment
banking firm obtained and delivered as provided in Section 5.05), and
the Enhancer, so long as no Enhancer Default exists, consents in
writing to such Sale, and, if an Enhancer Default exists, the
Noteholders of Notes representing at least 66 2/3% of the Note Balance
of the Notes consent in writing to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
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(c) Unless the Enhancer, so long as no Enhancer Default exists, or, if
an Enhancer Default exists, the Noteholders of 100% of the Note Balance of the
Notes, shall have otherwise consented or directed the Indenture Trustee, at any
public Sale of all or any portion of the Trust Estate at which a minimum bid
equal to or greater than the amount described in paragraph (ii) of subsection
(b) of this Section 5.15 has not been established by the Indenture Trustee and
no Person bids an amount equal to or greater than such amount, then the
Indenture Trustee shall bid an amount at least $1.00 more than the highest other
bid, which bid shall be subject to the provisions of Section 5.15(d)(ii) herein.
(d) In connection with a Sale of all or any portion of the Trust
Estate:
(i) any Noteholder may bid for and, with the consent of the
Enhancer, purchase the property offered for sale, and upon compliance
with the terms of sale may hold, retain and possess and dispose of
such property, without further accountability, and may, in paying the
purchase money therefor, deliver any Notes or claims for interest
thereon in lieu of cash up to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and
such Notes, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the Noteholders thereof
after being appropriately stamped to show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any Sale thereof and,
subject to any requirements of, and to the extent permitted by,
applicable law in connection therewith, may purchase all or any
portion of the Trust Estate in a private sale;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate in connection with a Sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed
the agent and attorney-in-fact of the Issuer to transfer and convey
its interest in any portion of the Trust Estate in connection with a
Sale thereof, and to take all action necessary to effect such Sale;
and
(v) no purchaser or transferee at such a Sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any monies.
Section 5.16 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.04(b).
Section 5.17 Performance and Enforcement of Certain Obligations.
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(a) Promptly following a written request from the Enhancer or the
Indenture Trustee (with the written consent of the Enhancer), the Issuer, in its
capacity as owner of the Mortgage Loans, shall, with the written consent of the
Enhancer, take all such lawful action as the Indenture Trustee may request to
cause the Issuer to compel or secure the performance and observance by the
Seller and the Servicer, as applicable, of each of their obligations to the
Issuer under or in connection with the Purchase Agreement and the Servicing
Agreement, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Purchase
Agreement and the Servicing Agreement to the extent and in the manner directed
by the Indenture Trustee, as pledgee of the Mortgage Loans, including the
transmission of notices of default on the part of the Seller or the Servicer
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure performance by the Seller or the Servicer of each of their
obligations under the Purchase Agreement and the Servicing Agreement.
(b) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee, as pledgee of the Mortgage Loans, subject to the rights of
the Enhancer hereunder and under the Servicing Agreement, may, and at the
direction (which direction shall be in writing) of the Enhancer or, if an
Enhancer Default exists, the Noteholders of 66 2/3% of the Note Balance of the
Notes, shall, exercise all rights, remedies, powers, privileges and claims of
the Issuer against the Seller or the Servicer under or in connection with the
Purchase Agreement and the Servicing Agreement, including the right or power to
take any action to compel or secure performance or observance by the Seller or
the Servicer, as the case may be, of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Purchase Agreement and the Servicing Agreement, as
the case may be, and any right of the Issuer to take such action shall not be
suspended. In connection therewith, as determined by the Indenture Trustee, the
Issuer shall take all actions necessary to effect the transfer of the Mortgage
Loans to the Indenture Trustee.
ARTICLE VI
The Indenture Trustee and the Paying Agent
Section 6.01 Duties of Indenture Trustee and the Paying Agent.
(a) (i) If an Event of Default shall have occurred and be continuing,
the Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(ii) Except during the continuance of an Event of Default:
(1) the Indenture Trustee undertakes to perform
such duties and only such duties as are specifically set
forth in this Indenture and any other Basic Document to
which it is a party and no implied covenants or obligations
shall be read into this Indenture or any such other Basic
Document against the Indenture Trustee; and
43
(2) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon certificates, reports or opinions furnished to
the Indenture Trustee and conforming to the requirements of
this Indenture and any other Basic Document to which it is a
party; provided, -------- however, that the Indenture
Trustee shall examine the certificates, reports and opinions
to determine whether or not they conform to the requirements
of this Indenture and any other Basic Document to which it
is a party.
(iii) The Indenture Trustee may not be relieved from
liability for its own negligent action, its own negligent failure to
act or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of
paragraph (a)(i) of this Section 6.01;
(2) the Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer unless it is proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant
to Section 5.11 or any direction from the Enhancer or the
Noteholders that the Enhancer or the Noteholders are is
entitled to give under any of the Basic Documents.
(iv) The Indenture Trustee shall not be liable for interest
on any money received by it except as the Indenture Trustee may agree
in writing with the Issuer.
(v) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or
the terms of this Indenture or the Trust Agreement.
(vi) No provision of this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds to believe that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(vii) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the
Indenture Trustee shall be subject to the provisions of this Section
and to the provisions of TIA.
(viii) [reserved].
(ix) [reserved]
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(x) The Indenture Trustee shall not be required to take
notice or be deemed to have notice or knowledge of any Event of
Default (except for an Event of Default specified in clause (a) of the
definition thereof) unless a Responsible Officer of the Indenture
Trustee shall have received written notice or have actual knowledge
thereof. In the absence of receipt of such notice or such knowledge,
the Indenture Trustee may conclusively assume that there is no default
or Event of Default.
(xi) The Indenture Trustee shall have no duty to see to any
recording or filing of any Assignment of Mortgage (except as provided
in Section 4.12) or any financing statement or continuation statement
evidencing a security interest or to see to the maintenance of any
such recording or filing or to any rerecording or refiling of any
thereof.
(b) (i) the Paying Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and any other Basic
Document to which it is a party and no implied covenants or obligations shall be
read into this Indenture or any such other Basic Document against the Paying
Agent; and
(ii) in the absence of bad faith on its part, the Paying
Agent may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates,
reports or opinions furnished to the Paying Agent and conforming to
the requirements of this Indenture and any other Basic Document to
which it is a party; provided, however, that the Paying Agent shall
examine the certificates, reports and opinions to determine whether or
not they conform to the requirements of this Indenture and any other
Basic Document to which it is a party.
(i) The Paying Agent may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own
willful misconduct, except that the Paying Agent shall not be liable
for any error of judgment made in good faith by a Responsible Officer
unless it is proved that the Paying Agent was negligent in
ascertaining the pertinent facts.
(ii) The Paying Agent shall not be liable for interest on
any money received by it except as the Paying Agent may agree in
writing with the Issuer.
(iii) Money held in trust by the Paying Agent need not be
segregated from other funds except to the extent required by law or
the terms of this Indenture or the Trust Agreement.
(iv) No provision of this Indenture shall require the Paying
Agent to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(v) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the
Paying Agent shall be subject to the provisions of this Section 6.01
and to the provisions of TIA.
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(vi) The Paying Agent shall not be required to take notice
or be deemed to have notice or knowledge of any Event of Default
(except for an Event of Default specified in clause (a) of the
definition thereof) unless a Responsible Officer of the Paying Agent
shall have received written notice or have actual knowledge thereof.
In the absence of receipt of such notice or such knowledge, the Paying
Agent may conclusively assume that there is no default or Event of
Default.
(vii) The Paying Agent xxxxxx accepts appointment as
Certificate Paying Agent under the Trust Agreement and agrees to be
bound by the provisions of the Trust Agreement relating to the
Certificate Paying Agent. The Paying Agent xxxxxx agrees to be bound
by the provisions of the Trust Agreement.
Section 6.02 Rights of Indenture Trustee and Paying Agent.
(a) (i) The Indenture Trustee and the Paying Agent may rely and shall
be protected in acting or refraining from acting in good faith upon any
resolution, Officer's Certificate, opinion of counsel, certificate of auditors,
or any other certificate, statement, instrument, report, notice, consent or
other document believed by it to be genuine and to have been signed or presented
by the proper person. Neither the Indenture Trustee nor the Paying Agent need
investigate any fact or matter stated in any such document.
(i) Before the Indenture Trustee or the Paying Agent, as
applicable, acts or refrains from acting, it may require an Officer's
Certificate or an Opinion of Counsel. Neither the Indenture Trustee
nor the Paying Agent, as applicable, shall be liable for any action it
takes or omits to take in good faith in reliance on any such Officer's
Certificate or Opinion of Counsel.
(ii) The Indenture Trustee or the Paying Agent, as
applicable, may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents
or attorneys or a custodian or nominee, and neither the Indenture
Trustee nor the Paying Agent, as applicable, shall be responsible for
any misconduct or negligence on the part of, or for the supervision
of, any such agent, attorney, custodian or nominee appointed with due
care by it hereunder.
(iii) Neither the Indenture Trustee nor the Paying Agent
shall be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers;
provided, however, that the Indenture Trustee's or the Paying Agent's
conduct, as applicable, does not constitute willful misconduct,
negligence or bad faith.
(iv) The Indenture Trustee and the Paying Agent may consult
with counsel, and the advice or opinion of counsel with respect to
legal matters relating to this Indenture and the Notes shall be full
and complete authorization and protection from liability in respect to
any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(v) Neither the Indenture Trustee nor the Paying Agent, as
applicable, shall be personally liable for any action taken, suffered
or omitted by it in good faith and
46
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture, unless it shall be proved that the
Indenture Trustee or the Paying Agent, as applicable, was negligent in
ascertaining the pertinent facts.
(vi) Prior to the occurrence of an Event of Default
hereunder, and after the curing or waiver of all Events of Default
that may have occurred, neither the Indenture Trustee, nor the Paying
Agent, as applicable, shall be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing
to do so by the Enhancer or the Noteholders representing a majority of
the Note Balance; provided, -------- however, that if the payment
within a reasonable time to the Indenture Trustee or the Paying Agent,
as applicable, of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion
of the Indenture Trustee or the Paying Agent, as applicable, not
assured to the Indenture Trustee or the Paying Agent, as applicable,
by the security afforded to it by the terms of this Indenture, the
Indenture Trustee or the Paying Agent, as applicable, may require
indemnity satisfactory to such party against such cost, expense or
liability as a condition to taking any such action.
(vii) Neither the Indenture Trustee nor the Paying Agent
shall be under any obligation to exercise any of the trusts or powers
vested in it by this Indenture or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or
direction of any of the Enhancer or the Noteholders, pursuant to the
provisions of this Indenture, unless the Enhancer or the Noteholders
shall have offered to the Indenture Trustee or the Paying Agent, as
applicable, reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Indenture Trustee
or the Paying Agent, as applicable, of the obligation, upon the
occurrence of an Event of Default (which has not been cured or
waived), to exercise such of the rights and powers vested in it by
this Indenture, and to use the same degree of care and skill in their
exercise as a prudent investor would exercise or use under the
circumstances in the conduct of such investor's own affairs.
(viii) Anything in this Indenture to the contrary
notwithstanding, in no event shall either the Indenture Trustee or the
Paying Agent, as applicable, be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not
limited to lost profits), even if the Indenture Trustee or the Paying
Agent, as applicable, has been advised of the likelihood of such loss
or damage and regardless of the form of action, so long as the action
taken by the such party was in accordance with this Indenture and the
Insurance Agreement.
(b) The Paying Agent undertakes only to perform such duties as are
specifically set forth in the Basic Documents and no implied covenants or
obligations shall be read into the Basic Documents against the Paying Agent.
Section 6.03 Individual Rights of Indenture Trustee and the Paying Agent.
The Indenture Trustee in its individual or any other capacity may become the
owner or pledgee of
47
Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. The Paying Agent, Note
Registrar, any other paying agent, co-registrar or co-paying agent may do the
same with like rights. However, the Indenture Trustee and the Paying Agent must
comply with Sections 6.11 and 6.12.
Section 6.04 Disclaimer of the Indenture Trustee and Paying Agent. Neither the
Indenture Trustee nor the Paying Agent shall be (i) responsible for and makes
any representation as to the validity, sufficiency or adequacy of this Indenture
or the Notes or any other Basic Document to which it is a party or the Auction
Agent Agreement, (ii) accountable for the Issuer's use of the proceeds from the
Notes, (iii) responsible for any statement of the Issuer in this Indenture or in
any document issued in connection with the sale of the Notes or in the Notes,
other than the Indenture Trustee's certificate of authentication thereon or (iv)
responsible or liable for any acts or omissions of any of the Servicer, the
Depositor, the Owner Trustee, any Yield Maintenance Provider, the Auction Agent,
the Broker-Dealer, the Depository or any Depository Participant.
Section 6.05 Notice of Event of Default. If an Event of Default shall occur
and be continuing, and if such Event of Default is known to a Responsible
Officer of the Indenture Trustee or the Paying Agent, then the Indenture Trustee
or the Paying Agent, as applicable, shall give notice thereof to the Enhancer.
The Indenture Trustee or the Paying Agent, as applicable, shall mail to each
Noteholder notice of such Event of Default within 90 days after it occurs.
Except in the case of an Event of Default with respect to the payment of
principal of or interest on any Note, the Indenture Trustee or the Paying Agent,
as applicable, may withhold such notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding such notice is in
the interests of the Noteholders.
Section 6.06 Reports by Paying Agent to Noteholders. The Paying Agent shall
deliver to each Noteholder such information as may be required to enable such
Noteholder to prepare its federal and state income tax returns. In addition,
upon Issuer Request, the Paying Agent shall promptly furnish such information
reasonably in writing requested by the Issuer that is reasonably available to
the Paying Agent to enable the Issuer to perform its federal and state income
tax reporting obligations.
Section 6.07 Compensation and Indemnity.
(a) The Indenture Trustee shall be compensated and indemnified by the
Servicer in accordance with Section 6.06 of the Servicing Agreement. All amounts
owing the Indenture Trustee hereunder in excess of such amount, as well as any
amount owed to the Indenture Trustee in accordance with Section 6.06 of the
Servicing Agreement, to the extent the Servicer has failed to pay such amount,
shall be paid solely as provided in Section 3.05 hereof (subject to the
priorities set forth therein). The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall reimburse the Indenture Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee's
agents, counsel, accountants and experts. The Issuer shall indemnify the
Indenture Trustee against any and all loss, liability or expense (including
attorneys' fees and expenses) incurred by
48
it in connection with the administration of this trust and the performance of
its duties hereunder. The Indenture Trustee shall notify the Issuer promptly of
any claim for which it may seek indemnity. Failure by the Indenture Trustee to
so notify the Issuer shall not relieve the Issuer of its obligations hereunder.
The Issuer shall defend any such claim, and the Indenture Trustee may have
separate counsel and the Issuer shall pay the fees and expenses of such counsel.
The Issuer is not obligated to reimburse any expense or indemnify against any
loss, liability or expense incurred by the Indenture Trustee through the
Indenture Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section 6.07 shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of an Event of Default specified in
clause (c) or (d) of the definition thereof with respect to the Issuer, such
expenses are intended to constitute expenses of administration under Title 11 of
the United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
(b) The Paying Agent shall be compensated and indemnified by the
Servicer in accordance with Section 6.06 of the Servicing Agreement. All amounts
owing the Paying Agent hereunder in excess of such amount, as well as any amount
owed to the Paying Agent in accordance with Section 6.06 of the Servicing
Agreement, to the extent the Servicer has failed to pay such amount, shall be
paid solely as provided in Section 3.05 hereof (subject to the priorities set
forth therein). The Issuer shall reimburse the Paying Agent for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, expenses, disbursements and advances of the Paying
Agent's agents, counsel, accountants and experts. The Issuer shall indemnify the
Paying Agent against any and all loss, liability or expense (including
attorneys' fees and expenses) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder. The
Paying Agent shall notify the Issuer promptly of any claim for which it may seek
indemnity. Failure by the Paying Agent to so notify the Issuer shall not relieve
the Issuer of its obligations hereunder. The Issuer shall defend any such claim,
and the Paying Agent may have separate counsel and the Issuer shall pay the fees
and expenses of such counsel. The Issuer is not obligated to reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Paying Agent through the Paying Agent's own willful misconduct, negligence or
bad faith.
The Issuer's payment obligations and indemnities to the Paying Agent
pursuant to this Section shall survive the discharge of this Indenture or the
earlier resignation or removal of the Paying Agent. When the Indenture Trustee
incurs expenses after the occurrence of an Event of Default specified in clause
(c) or (d) of the definition thereof with respect to the Issuer, such expenses
are intended to constitute expenses of administration under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
Section 6.08 Replacement of Indenture Trustee or Paying Agent.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee shall become effective until the
acceptance of appointment by the successor Indenture Trustee pursuant to this
Section 6.08. The Indenture Trustee may resign at
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any time by so notifying the Issuer and the Enhancer. The Enhancer (so long as
no Enhancer Default exists) or if an Enhancer Default exists, the Noteholders of
a majority of the Note Balance of the Notes, may remove the Indenture Trustee by
so notifying the Indenture Trustee and the Enhancer in writing (if given by such
Noteholders) and may appoint a successor Indenture Trustee. Unless a Servicer
Default has occurred and is continuing, the appointment of any successor
Indenture Trustee shall be subject to the prior written approval of the
Servicer. The Issuer shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or
insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
fulfilling its duties under the Basic Documents.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee with the consent of
the Enhancer, which consent shall not be unreasonably withheld. In addition, the
Indenture Trustee shall resign to avoid being directly or indirectly controlled
by the Issuer.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to the Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, then the retiring
Indenture Trustee, the Issuer or the Noteholders of a majority of Note Balance
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.
(b) No resignation or removal of the Paying Agent and no appointment
of a successor paying agent shall become effective until the acceptance of
appointment by the successor paying agent pursuant to this Section 6.08. The
Paying Agent may resign at any time
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by so notifying the Issuer, the Indenture Trustee and the Enhancer. The Enhancer
(so long as no Enhancer Default exists) or if an Enhancer Default exists, the
Noteholders of a majority of the Note Balance of the Notes, may remove the
Paying Agent by so notifying the Paying Agent and the Enhancer (if given by such
Noteholders) in writing and may appoint a successor paying agent. The Indenture
Trustee shall remove the Paying Agent if:
(i) the Paying Agent is adjudged a bankrupt or insolvent;
(ii) a receiver or other public officer takes charge of the
Paying Agent or its property;
(iii) the Paying Agent otherwise becomes incapable of
acting; or
(iv) the Paying Agent breaches any representation, warranty
or covenant made by it under any Basic Document.
If the Paying Agent resigns or is removed or if a vacancy exists in the
office of Paying Agent for any reason (the Paying Agent in such event being
referred to herein as the retiring Paying Agent), the Indenture Trustee shall
promptly appoint a successor Paying Agent with the consent of the Enhancer,
which consent shall not be unreasonably withheld. Any Paying Agent appointed
hereunder shall also be the Certificate Paying Agent.
A successor Paying Agent shall deliver a written acceptance of its
appointment to the retiring Paying Agent, the Indenture Trustee, the Enhancer
and the Issuer. Thereupon the resignation or removal of the retiring Paying
Agent shall become effective, and the successor paying agent shall have all the
rights, powers and duties of the Paying Agent under this Indenture. The retiring
Paying Agent shall be paid all amounts owed to it upon its resignation or
removal. The retiring Paying Agent shall promptly transfer all property held by
it as Paying Agent to the successor paying agent. The retiring Paying Agent
shall not be liable for the acts or omissions of any successor paying agent.
If a successor paying agent does not take office concurrently with the
effective resignation or removal of the Paying Agent, the Indenture Trustee will
perform the duties of the Paying Agent until a successor paying agent takes
office.
Notwithstanding the replacement of the Paying Agent pursuant to this
Section, the Issuer's and the Trust Administrator's obligations under Section
6.07 shall continue for the benefit of the retiring Paying Agent.
Section 6.09 Successor Indenture Trustee or Paying Agent by Xxxxxx.
(a) If the Indenture Trustee consolidates with, merges or converts
into, or transfers all or substantially all its corporate trust business or
assets to, another corporation or banking association, then the resulting,
surviving or transferee corporation without any further act shall be the
successor Indenture Trustee, provided that such corporation or banking
association shall be otherwise qualified and eligible under Section 6.11. The
Indenture Trustee shall provide the Rating Agencies with written notice of any
such transaction occurring after the Closing Date.
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If at the time of any such succession by merger, conversion or
consolidation, any of the Notes shall have been authenticated but not delivered,
then any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated. If at such time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases, such certificates
shall have the full force that it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
(b) If the Paying Agent consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, then the resulting, surviving or
transferee corporation or banking association without any further act shall be
the successor paying agent; provided that such corporation or banking
association shall be an Eligible Institution.
Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at such time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Issuer, and to vest in
such Person or Persons, in such capacity and for the benefit of the Noteholders,
such title to the Trust Estate, or any part thereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Indenture Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 6.11, and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust Estate or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
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(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11 Eligibility; Disqualification. The Indenture Trustee and the
Paying Agent shall at all times satisfy the requirements of TIA ss. 310(a). Each
of the Indenture Trustee and the Paying Agent, shall individually have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it or its parent either (a)
shall have a long-term debt rating of A or better by Xxxxx'x or (b) such other
rating as would not cause any Rating Agency to lower the rating of the Notes
below its initial rating thereof, without taking into account the Policy. The
Indenture Trustee shall comply with TIA ss. 310(b), including the optional
provision permitted by the second sentence of TIA ss. 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
Section 6.12 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee that has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.13 Representations and Warranties.
(a) The Indenture Trustee hereby represents and warrants that:
(i) The Indenture Trustee is duly organized, validly
existing and in good standing as a national bank under the laws of the
United States with power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is currently conducted.
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(ii) The Indenture Trustee has the power and authority to
execute and deliver this Indenture and to carry out its terms; and the
execution, delivery and performance of this Indenture have been duly
authorized by the Indenture Trustee by all necessary corporate action.
(iii) The consummation of the transactions contemplated by
this Indenture and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of organization or bylaws of the Indenture Trustee or any
agreement or other instrument to which the Indenture Trustee is a
party or by which it is bound.
(iv) To the Indenture Trustee's best knowledge, there are no
Proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Indenture Trustee or its
properties (A) asserting the invalidity of this Indenture, (B) seeking
to prevent the consummation of any of the transactions contemplated by
this Indenture or (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Indenture
Trustee of its obligations under, or the validity or enforceability
of, this Indenture.
(v) The Indenture Trustee does not have notice of any
adverse claim (as such terms are used in Section 8-302 of the UCC in
effect in the State of Delaware) with respect to the Mortgage Loans.
(b) The Paying Agent hereby represents and warrants that:
(i) The Paying Agent is duly organized, validly existing and
in good standing as a national banking association under the laws of
the United States with power and authority to own its properties and
to conduct its business as such properties are currently owned and
such business is currently conducted.
(ii) The Paying Agent has the power and authority to execute
and deliver this Indenture and to carry out its terms; and the
execution, delivery and performance of this Indenture have been duly
authorized by the Paying Agent by all necessary corporate action.
(iii) The consummation of the transactions contemplated by
this Indenture and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of organization or bylaws of the Paying Agent or any
agreement or other instrument to which the Paying Agent is a party or
by which it is bound.
(iv) To the Paying Agent's best knowledge, there are no
Proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Paying Agent or its
properties (A) asserting the invalidity of this Indenture, (B) seeking
to prevent the
54
consummation of any of the transactions contemplated by this Indenture
or (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Paying Agent of its
obligations under, or the validity or enforceability of, this
Indenture.
(v) The Paying Agent does not have notice of any adverse
claim (as such terms are used in Section 8-302 of the UCC in effect in
the State of Delaware) with respect to the Mortgage Loans.
Section 6.14 Directions to Indenture Trustee. The Indenture Trustee is
hereby directed:
(a) to accept the pledge of the Mortgage Loans and hold the
assets of the Trust in trust in accordance with the Granting Clause;
(b) to authenticate and deliver the Notes substantially in
the form prescribed by Exhibit A in accordance with the terms of this
Indenture; and
(c) to take all other actions as shall be required to be
taken by the terms of this Indenture.
Section 6.15 Indenture Trustee May Own Securities. The Indenture Trustee,
in its individual or any other capacity, may become the owner or pledgee of
Securities with the same rights it would have if it were not Indenture Trustee.
Section 6.16 Rights of Paying Agent, Certificate Paying Agent, Note
Registrar and Certificate Registrar. All the rights and protections included in
this Article VI for the Indenture Trustee shall also apply to the Indenture
Trustee in its separate capacities, if applicable, as Paying Agent, Certificate
Paying Agent, Note Registrar and Certificate Registrar. In addition, the Paying
Agent shall be afforded the rights, indemnities and protections afforded to the
Paying Agent pursuant to this Article VI and in the event that the Paying Agent
is also acting as Note Registrar, the rights, indemnities and protections
afforded to the Indenture Trustee pursuant to Article VI shall be afforded to
such Note Registrar.
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01 Issuer to Furnish Paying Agent Names and Addresses of
Noteholders. The Issuer shall furnish or cause to be furnished to the Paying
Agent (a) not more than five days after each Record Date, a list, in such form
as the Paying Agent may reasonably require, of the names and addresses of the
Noteholders as of such Record Date, and (b) at such other times as the Paying
Agent and the Enhancer may request in writing, within 30 days after receipt by
the Issuer of any such request, a list of similar form and content as of a date
not more than 10 days prior to the time such list is furnished; provided,
however, that for so long as the Paying Agent is the Note Registrar, no such
list need be furnished.
Section 7.02 Preservation of Information; Communications to Noteholders.
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(a) The Paying Agent shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Paying Agent as provided in Section 7.01
and the names and addresses of the Noteholders received by the Paying Agent in
its capacity as Note Registrar. The Paying Agent may destroy any list furnished
to it as provided in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIAss.312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee, the Paying Agent and the Note
Registrar shall have the protection of TIA ss. 312(c).
Section 7.03 Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies of
the annual reports and the information, documents and other reports
including any certifications required to be filed with Form 10-K by
the Xxxxxxxx-Xxxxx Act of 2002 (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and
regulations prescribe) that the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such additional information, documents and reports
with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time by
such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA ss.
313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this Section 7.03(a) and by rules and regulations prescribed from time
to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04 Reports by Indenture Trustee. If required by TIA ss. 313(a),
within 60 days after each May 15, beginning with May 15, 2004, the Indenture
Trustee shall make available to each Noteholder as required by TIA ss. 313(c)
and to the Enhancer a brief report dated as of such date that complies with TIA
ss. 313(a). The Indenture Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its distribution to Noteholders shall
be filed by the Indenture Trustee with the Commission, if required, and each
stock exchange, if any, on which
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the Notes are listed. The Issuer shall notify the Indenture Trustee if and when
the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
Section 8.01 Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee or the Paying Agent may demand payment or delivery
of, and shall receive and collect, directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee or the Paying Agent,
as applicable, pursuant to this Indenture. The Indenture Trustee or the Paying
Agent, as applicable, shall apply all such money received by it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Trust Estate, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as provided in
Article V.
Section 8.02 Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Paying
Agent to establish and maintain, in the name of the Paying Agent, for the
benefit of the Noteholders, the Certificate Paying Agent, on behalf of the
Certificateholders, and the Enhancer, the Note Payment Account as provided in
Section 3.01 of this Indenture.
(b) All monies deposited from time to time in the Note Payment Account
pursuant to the Servicing Agreement and all deposits therein pursuant to this
Indenture are for the benefit of the Noteholders and the Certificate Paying
Agent, on behalf of the Certificateholders, and all Permitted Investments made
with such monies, including all income or other gain from such investments, are
for the benefit of the Servicer, the Indenture Trustee and the Paying Agent as
provided in Section 5.01 of the Servicing Agreement.
On each Payment Date, the Paying Agent shall distribute, on behalf of the
Indenture Trustee, all amounts on deposit in the Note Payment Account to the
Noteholders in respect of the Notes and, in its capacity as Certificate Paying
Agent, to the Certificateholders from the Distribution Account in the order of
priority set forth in Section 3.05 (except as otherwise provided in Section
5.04(b)) and in accordance with the Servicing Certificate.
The Paying Agent shall invest any funds in the Note Payment Account in
Permitted Investments selected in writing by the Servicer maturing no later than
the Business Day preceding the next succeeding Payment Date and shall not be
sold or disposed of prior to the maturity (except that any investment in the
institution with which the Note Payment Account is maintained may mature or be
payable on demand on such Payment Date). In addition, such Permitted Investments
shall not be purchased at a price in excess of par. The amount of any losses
incurred in respect of any such investments shall be deposited in the Note
Payment Account by the Servicer and the Paying Agent out of their own funds
immediately as realized and shall be allocated between the Servicer and the
Paying Agent on a pro rata basis, such that the percentage of any such loss
allocated to the Paying Agent shall equal a fraction, the numerator of which
equals one (1) and the denominator of which equals the number of days the funds
in the Note Payment
57
Account were invested in such investment. Subject to this Section 8.02(b) of the
Indenture, and except as provided in this Section 5.01 of the Servicing
Agreement, the Paying Agent shall not be liable for investment losses on funds
on deposit in the Note Payment Account..
Section 8.03 Officer's Certificate. The Indenture Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.05(a), accompanied by copies of any instruments to be
executed, and the Indenture Trustee shall also require, as a condition to such
action, an Officer's Certificate, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with.
Section 8.04 Termination Upon Distribution to Noteholders. This Indenture
and the respective obligations and responsibilities of the Issuer and the
Indenture Trustee created hereby shall terminate upon the distribution to the
Noteholders, the Certificate Paying Agent on behalf of the Certificateholders,
the Enhancer and the Indenture Trustee of all amounts required to be distributed
pursuant to Article III; provided, however, that in no event shall the trust
created hereby continue beyond the expiration of 21 years from the death of the
survivor of the descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the
United States to the Court of St. James's, living on the date hereof.
Section 8.05 Release of Trust Estate.
(a) Subject to the payment of its fees, expenses and indemnification,
the Indenture Trustee may, and when required by the provisions of this Indenture
or the Servicing Agreement, shall, execute instruments to release property from
the lien of this Indenture, or convey the Indenture Trustee's interest in the
same, in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture. No Person relying upon an instrument executed by
the Indenture Trustee as provided in Article VIII hereunder shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent, or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as (i) there are no
Notes Outstanding, (ii) all sums due the Indenture Trustee and the Paying Agent
pursuant to this Indenture have been paid and (iii) all sums due the Enhancer
have been paid, release any remaining portion of the Trust Estate that secured
the Notes from the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.05 only upon receipt of (i) an Issuer
Request accompanied by an Officers' Certificate and a letter from the Enhancer
stating that the Enhancer has no objection to such request from the Issuer, or
(ii) a Request for Release from the Servicer in accordance with the Servicing
Agreement.
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(d) The Indenture Trustee shall surrender the Policy to the Enhancer
for cancellation upon the final payment of principal of and interest on the
Notes.
Section 8.06 Surrender of Notes Upon Final Payment. By acceptance of any
Note, the Noteholder thereof agrees to surrender such Note to the Indenture
Trustee promptly, prior to such Noteholder's receipt of the final payment
thereon.
ARTICLE IX
Supplemental Indentures
Section 9.01 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Noteholders of any Notes, but with
prior notice to the Rating Agencies and the prior written consent of the
Enhancer (which consent shall not be unreasonably withheld) unless an Enhancer
Default shall have occurred, the Issuer, the Paying Agent and the Indenture
Trustee, when authorized by an Issuer Request, at any time and from time to
time, may enter into one or more indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as in force at the date of
the execution thereof), in form satisfactory to the Indenture Trustee and the
Paying Agent, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Noteholders or the Enhancer, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct any error or to
correct or supplement any provision herein or in any supplemental
indenture that may be inconsistent with any other provision herein or
in any supplemental indenture;
(vi) to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture, provided that such action shall not materially and
adversely affect the interests of the Noteholders or the Enhancer (as
evidenced by an Opinion of Counsel);
(vii) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of
59
the provisions of this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one trustee, pursuant to the
requirements of Article VI; or
(viii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under TIA or under any similar federal
statute hereafter enacted and to add to this Indenture such other
provisions as may be expressly required by TIA;
provided, however, that no such supplemental indenture shall be entered into
unless the Indenture Trustee, the Paying Agent and the Enhancer shall have
received an Opinion of Counsel to the effect that the execution of such
supplemental indenture will not give rise to any material adverse tax
consequence to the Noteholders.
Each of the Paying Agent and the Indenture Trustee is hereby authorized to
join in the execution of any such supplemental indenture and to make any further
appropriate agreements and stipulations that may be therein contained.
(b) The Issuer, the Paying Agent and the Indenture Trustee, when
authorized by an Issuer Request, may, without the consent of any Noteholder but
with prior notice to the Rating Agencies and the Enhancer, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Noteholders
under this Indenture; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, (i) adversely affect in any material respect
the interests of any Noteholder or the Enhancer or (ii) cause the Issuer to be
subject to an entity level tax.
Section 9.02 Supplemental Indentures With Consent of Noteholders. The
Issuer, the Paying Agent and the Indenture Trustee, when authorized by an Issuer
Request, may, with prior notice to the Rating Agencies and with the written
consent of the Enhancer and the Noteholders of not less than a majority of the
Note Balance affected thereby, by Act (as defined in Section 10.03 hereof) of
such Noteholders delivered to the Issuer, the Paying Agent and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Noteholders under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Noteholder of each Note
affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof or the Note Rate
thereon, change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Notes on or after the
respective due dates thereof;
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(b) reduce the percentage of the Note Balance, the consent of the
Noteholders of which is required for any such supplemental indenture, or the
consent of the Noteholders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definition of
the term "Outstanding" or modify or alter the exception in the definition of the
term "Noteholder";
(d) reduce the percentage of the Note Balance of the Notes required to
direct the Indenture Trustee to direct the Issuer to sell or liquidate the Trust
Estate pursuant to Section 5.04;
(e) modify any provision of this Section 9.02 except to increase any
percentage specified herein or to provide that certain additional provisions of
this Indenture or the other Basic Documents cannot be modified or waived without
the consent of the Noteholder of each Note affected thereby;
(f) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or principal
due on any Note on any Payment Date (including the calculation of any of the
individual components of such calculation); or
(g) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust Estate or,
except as otherwise permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the Noteholder
of any Note of the security provided by the lien of this Indenture; provided,
further, that such action shall not, as evidenced by an Opinion of Counsel,
cause the Issuer to be subject to an entity level tax.
Either the Paying Agent or the Indenture Trustee may in its discretion or
at the advice of counsel determine whether or not any Notes would be affected by
any supplemental indenture and any such determination shall be conclusive upon
the Noteholders of all Notes, whether theretofore or thereafter authenticated
and delivered hereunder. Neither the Paying Agent nor the Indenture Trustee
shall be liable for any such determination made in good faith.
It shall not be necessary for any Act (as defined in Section 10.03 hereof)
of Noteholders under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such Act shall
approve the substance thereof.
Promptly after the execution by the Issuer, the Paying Agent and the
Indenture Trustee of any supplemental indenture pursuant to this Section 9.02,
the Paying Agent shall mail to the Noteholders of the Notes to which such
amendment or supplemental indenture relates a notice setting forth in general
terms the substance of such supplemental indenture. Any failure of the Paying
Agent to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
Section 9.03 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the
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modification thereby of the trusts created by this Indenture, the Indenture
Trustee and the Paying Agent shall be entitled to receive and, subject to
Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Indenture Trustee and the Paying Agent may,
but shall not be obligated to, enter into any such supplemental indenture that
affects the Paying Agent's or the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
Section 9.04 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Paying Agent, the Note Registrar, the Issuer and the
Noteholders shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 9.05 Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of TIA as in effect at the time of such
amendment or supplement so long as this Indenture shall then be qualified under
TIA.
Section 9.06 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee,
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
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ARTICLE X
Miscellaneous
Section 10.01 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture
Trustee or the Paying Agent to take any action under any provision of this
Indenture, the Issuer shall furnish to the Indenture Trustee, the Paying Agent
and to the Enhancer (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and (ii) an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or investigation
as is necessary to enable such signatory to express an informed
opinion as to whether or not such covenant or condition has been
complied with;
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with; and
(v) if the signer of such certificate or opinion is required
to be Independent, the statement required by the definition of the
term "Independent".
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee or the Paying Agent that is to be made the
basis for the release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in Section
10.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee and
the Paying Agent an Officer's Certificate certifying or stating the opinion of
each person signing such certificate as to the fair value (within 90 days of
such deposit) to the Issuer of the Collateral or other property or securities to
be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee or the Paying Agent an Officer's Certificate
certifying or stating the opinion of any signer
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thereof as to the matters described in clause (i) above, the Issuer shall also
deliver to the Indenture Trustee and the Paying Agent an Independent Certificate
as to the same matters, if the fair value to the Issuer of the securities to be
so deposited and of all other such securities made the basis of any such
withdrawal or release since the commencement of the then-current fiscal year of
the Issuer, as set forth in the certificates delivered pursuant to clause (i)
above and this clause (ii), is 10% or more of the Note Balance of the Notes, but
such a certificate need not be furnished with respect to any securities so
deposited, if the fair value thereof to the Issuer as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of the Note
Balance of the Notes.
(iii) Whenever any property or securities are to be released
from the lien of this Indenture, the Issuer shall furnish to the
Indenture Trustee and the Paying Agent an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of
the property or securities proposed to be released and stating that in
the opinion of such person the proposed release will not impair the
security under this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee or the Paying Agent an Officer's Certificate
certifying or stating the opinion of any signer thereof as to the
matters described in clause (iii) above, the Issuer shall also furnish
to the Indenture Trustee and the Paying Agent an Independent
Certificate as to the same matters if the fair value of the property
or securities and of all other property, other than property as
contemplated by clause (v) below or securities released from the lien
of this Indenture since the commencement of the then-current calendar
year, as set forth in the certificates required by clause (iii) above
and this clause (iv), equals 10% or more of the Note Balance of the
Notes, but such certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set
forth in the related Officer's Certificate is less than $25,000 or
less than one percent of the Note Balance of the Notes.
(v) Notwithstanding any provision of this Indenture, the
Issuer may, without compliance with the requirements of the other
provisions of this Section 10.01, (A) collect upon, sell or otherwise
dispose of the Mortgage Loans as and to the extent permitted or
required by the Basic Documents or (B) make cash payments out of the
Note Payment Account as and to the extent permitted or required by the
Basic Documents, so long as the Issuer shall deliver to the Indenture
Trustee every six months, commencing June 30, 2003, an Officer's
Certificate of the Issuer stating that all the dispositions of
Collateral described in clauses (A) or (B) above that occurred during
the preceding six calendar months (or such longer period, in the case
of the first such Officer's Certificate) were in the ordinary course
of the Issuer's business and that the proceeds thereof were applied in
accordance with the Basic Documents.
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Section 10.02 Form of Documents Delivered to Indenture Trustee or the
Paying Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of either Seller or
the Issuer, stating that the information with respect to such factual matters is
in the possession of either Seller or the Issuer, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee or the Paying Agent, it is
provided that the Issuer shall deliver any document as a condition of the
granting of such application, or as evidence of the Issuer's compliance with any
term hereof, it is intended that the truth and accuracy, at the time of the
granting of such application or at the effective date of such certificate or
report (as the case may be), of the facts and opinions stated in such document
shall in such case be conditions precedent to the right of the Issuer to have
such application granted or to the sufficiency of such certificate or report.
The foregoing shall not, however, be construed to affect the Indenture Trustee's
or the Paying Agent's right to rely upon the truth and accuracy of any statement
or opinion contained in any such document as provided in Article VI.
Section 10.03 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be
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sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section 10.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Noteholder of any Note shall bind the Noteholder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 10.04 Notices, etc., to Indenture Trustee, Paying Agent, Issuer,
Enhancer, Yield Maintenance Provider and Rating Agencies. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders or other
documents provided or permitted by this Indenture shall be in writing and if
such request, demand, authorization, direction, notice, consent, waiver or Act
of Noteholders is to be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder, the Paying Agent or by
the Issuer shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at its Corporate
Trust Office. The Indenture Trustee shall promptly transmit any notice received
by it from the Noteholders to the Issuer,
(b) the Issuer by the Indenture Trustee, the Paying Agent or by any
Noteholder shall be sufficient for every purpose hereunder if in writing and
mailed first-class, postage prepaid to the Issuer addressed to: Wachovia Asset
Securitization, Inc. 2003-HE2 Trust, in care of the Owner Trustee, or at any
other address previously furnished in writing to the Indenture Trustee and the
Paying Agent by the Issuer. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee,
(c) the Enhancer by the Issuer, the Indenture Trustee, the Paying
Agent or by any Noteholder shall be sufficient for every purpose hereunder to in
writing and mailed, first-class postage pre-paid, or personally delivered or
telecopied to: Financial Guaranty Insurance Company, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Research and Risk Management (Wachovia Asset
Securitization, Inc. 2003-HE2 Trust), telecopier number (000) 000-0000. The
Enhancer shall promptly transmit any notice received by it from the Issuer, the
Paying Agent, the Indenture Trustee or the Noteholders to the Issuer, the Paying
Agent or Indenture Trustee, as the case may be,
(d) the Yield Maintenance Provider by the Issuer, the Paying Agent,
the Indenture Trustee or by any Noteholder shall be sufficient for every purpose
hereunder if in writing and mailed, first-class postage pre-paid, or personally
delivered or telecopied to: Wachovia Bank, National Association, 000 Xxxxx
Xxxxxxx Xxxxxx, XX-0, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, Attention: Xxxxx X.
Xxxxx, Xx. Vice President, Risk Management, telecopier number 000-000-0000. The
Yield Maintenance Provider shall promptly transmit any
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notice received by it from the Issuer, the Paying Agent, the Indenture Trustee
or the Noteholders to the Issuer, the Paying Agent or Indenture Trustee, as the
case may be; or, as to each of the foregoing Persons, at such other address as
shall be designated by written notice to the other foregoing Persons, or
(e) the Paying Agent by any Noteholder or by the Issuer, shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Paying Agent at its Corporate Trust Office.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
Moody's, at the following address: Xxxxx'x Investors Service, Inc., ABS
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (ii) in
the case of Standard & Poor's, at the following address: Standard & Poor's, 00
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed
Surveillance Department; or, as to each of the foregoing Persons, at such other
address as shall be designated by written notice to the other foregoing Persons.
Section 10.05 Notices to Noteholders; Waiver. Where this Indenture provides
for notice to Noteholders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Noteholder affected by such event, at such
Person's address as it appears on the Note Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Noteholders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of Default.
Section 10.06 Alternate Payment and Notice Provisions. Notwithstanding any
provision of this Indenture or any of the Notes to the contrary, the Issuer may
enter into any
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agreement with any Noteholder providing for a method of payment, or notice by
the Indenture Trustee to such Noteholder, that is different from the methods
provided for in this Indenture for such payments or notices. The Issuer shall
furnish to the Paying Agent and the Indenture Trustee a copy of each such
agreement and the Indenture Trustee or the Paying Agent, as applicable, shall
cause payments to be made and notices to be given in accordance with such
agreements.
Section 10.07 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of TIA, such required
provision shall control.
The provisions of TIA xx.xx. 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 10.08 Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 10.09 Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee and the
Paying Agent in this Indenture shall bind its successors, co-trustees and
agents.
Section 10.10 Severability. In case any provision in this Indenture or in
the Notes shall be held invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby.
Section 10.11 Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto (including the Paying Agent in its capacities as Certificate Registrar,
Certificate Paying Agent, Note Registrar and Paying Agent) and their successors
hereunder, and the Noteholders, the Enhancer, and any other party secured
hereunder, and any other Person with an ownership interest in any part of the
Trust Estate, any benefit or any legal or equitable right, remedy or claim under
this Indenture. The Enhancer shall be an express third party beneficiary of this
Indenture.
The Enhancer, the Paying Agent and the Indenture Trustee acknowledge that
nothing in this Indenture is intended to create any fiduciary obligation of the
Indenture Trustee or the Paying Agent hereunder or under any other Basic
Document to the Enhancer, except for the Indenture Trustee to the extent of its
rights as a subrogee of the Noteholders in accordance with the provisions of
Section 5.12 of this Indenture, and that Indenture Trustee's and the Paying
Agent's other obligations hereunder and under any Basic Document to the Enhancer
are intended to be contractual in nature.
Section 10.12 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
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Section 10.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.14 Counterparts. This Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
Section 10.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which counsel shall be reasonably acceptable to the Indenture Trustee and the
Paying Agent) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.
Section 10.16 Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee, the Paying Agent, the Note Registrar or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Indenture Trustee, the Paying Agent, the Note Registrar or the
Owner Trustee in its individual capacity, any holder of a beneficial interest in
the Issuer, the Owner Trustee, the Paying Agent, the Note Registrar or the
Indenture Trustee or of any successor or assign of the Indenture Trustee, the
Paying Agent, the Note Registrar or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee, the Paying Agent, the Note Registrar and
the Owner Trustee have no such obligations in their respective individual
capacities), and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.
Section 10.17 No Petition. The Indenture Trustee and the Paying Agent, by
entering into this Indenture, and each Noteholder, by its acceptance of a Note,
hereby covenants and agrees that it will not at any time institute against the
Depositor or the Issuer, or join in any institution against the Depositor or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the other Basic Documents.
Section 10.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it shall permit any representative of the Indenture Trustee and of the
Paying Agent, during the Issuer's
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normal business hours, to examine all the books of account, records, reports and
other papers of the Issuer, to make copies and extracts therefrom, to cause such
books to be audited by Independent certified public accountants, and to discuss
the Issuer's affairs, finances and accounts with the Issuer's officers,
employees, and Independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Indenture Trustee and the
Paying Agent shall each cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee or the Paying Agent may reasonably
determine that such disclosure is consistent with its obligations hereunder.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
WACHOVIA ASSET SECURITIZATION, INC.
2003-HE2 TRUST, as Issuer
By: Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee
By:
------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By:
------------------------------------
Name:
Title:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Paying Agent pursuant to Section
3.03 hereof and as Note Registrar
pursuant to Section 4.02 hereof.
By:
------------------------------------
Name:
Title:
STATE OF )
--------------
) ss.:
COUNTY OF )
-------------
On this ___ day of July, 2003, before me personally appeared
____________, to me known, who being by me duly sworn, did depose and say, that
he/she resides at _____________, that he/she is the ____________ of Wilmington
Trust Company, the Owner Trustee, one of the corporations described in and which
executed the above instrument; that he/she knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he/she
signed his/her name thereto by like order.
-----------------------------------------
Notary Public
Acknowledgements
STATE OF )
--------------
) ss.:
COUNTY OF )
-------------
On this ___ day of July, 2003, before me personally appeared
____________, to me known, who being by me duly sworn, did depose and say, that
he/she resides at _____________, that he/she is the ____________ of Wachovia
Bank, National Association, the Paying Agent, one of the corporations described
in and which executed the above instrument; that he/she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that he/she signed his/her name thereto by like order.
-----------------------------------------
Notary Public
Acknowledgements
STATE OF )
--------------
) ss.:
COUNTY OF )
-------------
On this ___ day of July, 2003, before me personally appeared
____________, to me known, who being by me duly sworn, did depose and say, that
he/she resides at _____________, that he/she is the ____________ of U.S. Bank
National Association, the Indenture Trustee, one of the corporations described
in and which executed the above instrument; that he/she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that he/she signed his/her name thereto by like order.
-----------------------------------------
Notary Public
Acknowledgements
Class A-I-1 Notes
Schedule I-A-1
Payment Scheduled Payment Scheduled
Date Notional Balance Date Notional Balance
---- ---------------- ---- ----------------
July 2003 400,000,000.00 February 2006 400,000,000.00
August 2003 400,000,000.00 March 2006 400,000,000.00
September 2003 400,000,000.00 April 2006 400,000,000.00
October 2003 400,000,000.00 May 2006 400,000,000.00
November 2003 400,000,000.00 June 2006 400,000,000.00
December 2003 400,000,000.00 July 2006 400,000,000.00
January 2004 400,000,000.00 August 2006 385,623,745.06
February 2004 400,000,000.00 September 2006 371,171,786.86
March 2004 400,000,000.00 October 2006 356,643,726.78
April 2004 400,000,000.00 November 2006 342,039,164.07
May 2004 400,000,000.00 December 2006 327,357,695.87
June 2004 400,000,000.00 January 2007 312,598,917.22
July 2004 400,000,000.00 February 2007 297,762,421.01
August 2004 400,000,000.00 March 2007 282,847,797.99
September 2004 400,000,000.00 April 2007 267,854,636.75
October 2004 400,000,000.00 May 2007 252,782,523.72
November 2004 400,000,000.00 June 2007 237,631,043.16
December 2004 400,000,000.00 July 2007 222,399,777.13
January 2005 400,000,000.00 August 2007 207,088,305.49
February 2005 400,000,000.00 September 2007 191,696,205.88
March 2005 400,000,000.00 October 2007 176,223,053.74
April 2005 400,000,000.00 November 2007 160,668,422.26
May 2005 400,000,000.00 December 2007 145,031,882.36
June 2005 400,000,000.00 January 2008 129,313,002.74
July 2005 400,000,000.00 February 2008 113,511,349.82
August 2005 400,000,000.00 March 2008 97,626,487.70
September 2005 400,000,000.00 April 2008 81,657,978.24
October 2005 400,000,000.00 May 2008 65,605,380.95
November 2005 400,000,000.00 June 2008 49,468,253.03
December 2005 400,000,000.00 July 2008 33,246,149.37
January 2006 400,000,000.00
Class A-II-1 Notes
Schedule I-A-II
Payment Scheduled Payment Scheduled
Date Notional Balance Date Notional Balance
---- ---------------- ---- ----------------
July 2003 750,000,000.00 February 2006 750,000,000.00
August 2003 750,000,000.00 March 2006 750,000,000.00
September 2003 750,000,000.00 April 2006 750,000,000.00
October 2003 750,000,000.00 May 2006 750,000,000.00
November 2003 750,000,000.00 June 2006 750,000,000.00
December 2003 750,000,000.00 July 2006 750,000,000.00
January 2004 750,000,000.00 August 2006 723,043,468.34
February 2004 750,000,000.00 September 2006 695,944,987.54
March 2004 750,000,000.00 October 2006 668,703,810.12
April 2004 750,000,000.00 November 2006 641,319,184.67
May 2004 750,000,000.00 December 2006 613,790,355.79
June 2004 750,000,000.00 January 2007 586,116,564.14
July 2004 750,000,000.00 February 2007 558,297,046.37
August 2004 750,000,000.00 March 2007 530,331,035.10
September 2004 750,000,000.00 April 2007 502,217,758.93
October 2004 750,000,000.00 May 2007 473,956,442.36
November 2004 750,000,000.00 June 2007 445,546,305.86
December 2004 750,000,000.00 July 2007 416,986,565.74
January 2005 750,000,000.00 August 2007 388,276,434.23
February 2005 750,000,000.00 September 2007 359,415,119.38
March 2005 750,000,000.00 October 2007 330,401,825.09
April 2005 750,000,000.00 November 2007 301,235,751.05
May 2005 750,000,000.00 December 2007 271,916,092.74
June 2005 750,000,000.00 January 2008 242,442,041.41
July 2005 750,000,000.00 February 2008 212,812,784.06
August 2005 750,000,000.00 March 2008 183,027,503.40
September 2005 750,000,000.00 April 2008 153,085,377.81
October 2005 750,000,000.00 May 2008 122,985,581.39
November 2005 750,000,000.00 June 2008 92,727,283.86
December 2005 750,000,000.00 July 2008 62,309,650.58
January 2006 750,000,000.00
EXHIBIT A
FORM OF NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER, THE
DEPOSITOR, THE SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, THE PAYING
AGENT, THE NOTE REGISTRAR OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS
EXPRESSLY PROVIDED IN THE INDENTURE OR THE OTHER BASIC DOCUMENTS.
WACHOVIA ASSET SECURITIZATION, INC. 2003-HE2 TRUST
Wachovia Asset Securitization, Inc. Asset-Backed Note,
Series 2003-HE2, Class A-I-1
Registered Initial Note Balance:
$[----------]
No. 1 Note Rate: Variable
CUSIP No. [____]
Wachovia Asset Securitization, Inc. 2003-HE2, a statutory trust duly
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
its registered assigns, the principal sum of [__________________] dollars
($[__________]), payable on each Payment Date in an amount equal to the pro rata
portion allocable hereto (based on the Initial Note Balance specified above and
the Initial Note Balance) of the aggregate amount, if any, payable from the Note
Payment Account in respect of principal of the Notes (defined below) pursuant to
Section 3.05 of the indenture dated as of July 2, 2003 (the "Indenture"), among
the Issuer, U.S. Bank National Association, as indenture trustee (the "Indenture
Trustee"), and Wachovia Bank, National Association, as Paying Agent (the "Paying
Agent"); provided, however, that the entire unpaid principal amount of this Note
shall be due and payable on the Payment Date in June 2033, to the
A-1-1
extent not previously paid on a prior Payment Date. Capitalized terms used
herein that are not otherwise defined shall have the meanings ascribed thereto
in Appendix A to the Indenture.
Interest on the Notes will be paid monthly on each Payment Date at the Note
Rate for the related Interest Period subject to limitations that may result in
Interest Shortfalls (as further described in the Indenture). The Note Rate for
each Interest Period will be a floating rate equal to the least of (i) LIBOR
plus 0.26% per annum and (ii) the Class A-I-1 Net WAC Rate. LIBOR for the Class
A-I-1 Notes and each applicable Interest Period will be determined on the second
LIBOR Business Day immediately preceding (i) the Closing Date in the case of the
first Interest Period and (ii) the first day of each succeeding Interest Period
by the Servicer as set forth in the Indenture. All determinations of LIBOR by
the Servicer shall, in the absence of manifest error, be conclusive for all
purposes, and each holder of this Note, by accepting this Note, agrees to be
bound by such determination. Interest on this Note will accrue for each Payment
Date from the most recent Payment Date on which interest has been paid (in the
case of the first Payment Date, from the Closing Date) to but excluding such
Payment Date. Interest will be computed on the basis of the actual number of
days in each Interest Period and a year assumed to consist of 360 days.
Principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
Principal of and interest on this Note are payable in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts. All payments made by the Issuer with
respect to this Note shall be applied first to interest due and payable on this
Note as provided above and then to the unpaid principal of this Note.
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Wachovia Asset Securitization, Inc. Asset-Backed Notes, Series
2003-HE2 (the "Notes"), all issued under the Indenture, to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights and obligations thereunder of the Issuer, the Paying
Agent, the Indenture Trustee and the Noteholders. The Notes are subject to all
terms of the Indenture.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
This Note is entitled to the benefits of an irrevocable and unconditional
financial guaranty insurance policy issued by Financial Guaranty Insurance
Company.
Principal of and interest on this Note will be payable on each Payment
Date, commencing on July 25, 2003, as described in the Indenture. "Payment Date"
means the twenty-fifth day of each month, or, if any such date is not a Business
Day, then the next succeeding Business Day.
The entire unpaid principal amount of this Note shall be due and payable in
full on the Payment Date in June 2033 pursuant to the Indenture, to the extent
not previously paid on a prior Payment Date. Notwithstanding the foregoing, if
an Event of Default shall have occurred and be continuing, then the Indenture
Trustee, the Enhancer or the holders of Notes representing not less than a
majority of the Note Balance of the Notes, with the consent of the Enhancer, may
declare
A-1-2
the Notes to be immediately due and payable in the manner provided in Section
5.02 of the Indenture. All principal payments on the Notes shall be made pro
rata to the Noteholders entitled thereto.
Any installment of interest or principal, if any, payable on any Note that
is punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the related Noteholder on the preceding Record Date, by
wire transfer to an account specified in writing by such Noteholder reasonably
satisfactory to the Paying Agent as of the preceding Record Date or, if no such
instructions have been delivered to the Paying Agent, by check or money order to
such Noteholder mailed to such Noteholder's address as it appears in the Note
Register, the amount required to be distributed to such Noteholder on such
Payment Date pursuant to such Noteholder's Notes; provided, however, that the
Paying Agent shall not pay to such Noteholder any amount required to be withheld
from a payment to such Noteholder by the Code. Any reduction in the principal
amount of this Note (or any one or more predecessor Notes) effected by any
payments made on any Payment Date shall be binding upon all future holders of
this Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Paying Agent, in the name of and on behalf of the Issuer, will notify the
Person who was the registered Noteholder hereof as of the Record Date preceding
such Payment Date by notice mailed or transmitted by facsimile prior to such
Payment Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the address specified in such notice
of final payment.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the Corporate Trust
Office of the Note Registrar, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Note Registrar duly executed
by, the Noteholder hereof or such Noteholder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act, and thereupon one or more new Notes in
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of this Note.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note,
or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee,
the Seller, the Servicer, the Depositor or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee, the Paying Agent, the Note
Registrar or the Owner Trustee in its
A-1-3
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee, the Paying Agent, the Note Registrar or the Owner Trustee
in its individual capacity, any holder of a beneficial interest in the Issuer,
the Owner Trustee, the Paying Agent, the Note Registrar or the Indenture Trustee
or of any successor or assign of the Indenture Trustee, the Paying Agent, the
Note Registrar or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note
or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees by accepting the benefits of the Indenture that such
Noteholder or Beneficial Owner will not at any time institute against the
Depositor, the Seller, the Servicer or the Issuer, or join in any institution
against the Depositor, the Seller, the Servicer or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the other Basic
Documents.
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer.
Each Noteholder by its acceptance of a Note (and each Beneficial Owner of a Note
by its acceptance of a beneficial interest in a Note), agrees to treat the Notes
for federal, state and local income, single business and franchise tax purposes
as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Note Registrar, the Paying Agent and any
agent of the Issuer, the Note Registrar, the Paying Agent or the Indenture
Trustee may treat the Person in the name of which this Note is registered (as of
the day of determination or as of such other date as may be specified in the
Indenture) as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar, the
Paying Agent or any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer, the Paying Agent and the Indenture Trustee and the rights of the
Noteholders under the Indenture at any time by the Issuer, the Paying Agent and
the Indenture Trustee with the consent of the Enhancer and the holders of Notes
representing a majority of the Note Balance of the Notes then Outstanding and
with prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the holders of Notes representing specified percentages of the Note
Balance, on behalf of the Noteholders, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Noteholder
of this Note (or any one of more predecessor Notes) shall be conclusive and
binding upon such Noteholder and upon all future holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent
A-1-4
or waiver is made upon this Note. The Indenture also permits the Issuer, the
Paying Agent and the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Noteholders but
with prior notice to the Rating Agencies and the Enhancer.
The term "Issuer" as used in this Note includes any successor or the Issuer
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflicts of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Wilmington Trust Company in its
individual capacity, U.S. Bank National Association in its individual capacity,
any owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Note or the performance of,
or the failure to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note, by its acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in the
case of an Event of Default under the Indenture, such Noteholder shall have no
claim against any of the foregoing for any deficiency, loss or claim therefrom;
provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
The Servicer shall have the right to purchase from the Issuer all of the
Mortgage Loans and related REO Property if the Note Balance of the Notes as of
any Payment Date is less than 10% of the Note Balance of the Notes as of the
Closing Date, (provided that a draw on the Policy would not occur as a result of
such purchase, and provided further that the purchase price will provide
sufficient funds to pay the outstanding Note Balance and accrued and unpaid
interest on the Notes to the Payment Date on which such amounts are to be
distributed to the Securityholders), at a price equal to 100% of the aggregate
unpaid Principal Balance of all such
A-1-5
remaining Mortgage Loans, plus accrued and unpaid interest thereon at the
weighted average of the Loan Rates thereon up to the date preceding the Payment
Date on which such amounts are to be distributed to the Securityholders (and in
the case of REO Property, the fair market value of the REO Property), plus any
amounts due and owing to the Enhancer under the Insurance Agreement related to
the Mortgage Loans or the Notes (and any unpaid Servicing Fee relating to the
Mortgage Loans shall be deemed to have been paid at such time), plus any
Interest Shortfall and interest owed thereon to the Noteholders. The purchase
price paid by the Servicer shall also include certain amounts owed by the Seller
pursuant to the Purchase Agreement that remain unpaid on the date of such
purchase.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
A-1-6
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in
its individual capacity, has caused this Note to be duly executed.
WACHOVIA ASSET SECURITIZATION, INC.
2003-HE2 TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee
Dated: __________, 20__
By:
------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION, not
in its individual capacity but
solely as Indenture Trustee
Dated: __________, 20__
By:
------------------------------
Authorized Signatory
A-1-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints __________________________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-------------------------------- -----------------------------*/
Signature Guaranteed:
-----------------------------*/
------------------------
* NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Term Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-1-8
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER, THE
DEPOSITOR, THE SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, THE PAYING
AGENT, THE NOTE REGISTRAR OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS
EXPRESSLY PROVIDED IN THE INDENTURE OR THE OTHER BASIC DOCUMENTS.
WACHOVIA ASSET SECURITIZATION, INC. 2003-HE2 TRUST
Wachovia Asset Securitization, Inc. Asset-Backed Note,
Series 2003-HE2, Class A-II-1
Registered Initial Note Balance:
$[----------]
No. 1 Note Rate: Variable
CUSIP No. [____]
Wachovia Asset Securitization, Inc. 2003-HE2, a statutory trust duly
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
its registered assigns, the principal sum of [__________________] dollars
($[__________]), payable on each Payment Date in an amount equal to the pro rata
portion allocable hereto (based on the Initial Note Balance specified above and
the Initial Note Balance) of the aggregate amount, if any, payable from the Note
Payment Account in respect of principal of the Notes (defined below) pursuant to
Section 3.05 of the indenture dated as of July 2, 2003 (the "Indenture"), among
the Issuer, U.S. Bank National Association, as indenture trustee (the "Indenture
Trustee") and Wachovia Bank, National Association, as Paying Agent (the "Paying
Agent"); provided, however, that the entire unpaid principal amount of this Note
shall be due and payable on the Payment Date in June 2033, to the extent not
previously paid on a prior Payment Date. Capitalized terms used herein that are
not otherwise defined shall have the meanings ascribed thereto in Appendix A to
the Indenture.
A-2-1
Interest on the Notes will be paid monthly on each Payment Date at the Note
Rate for the related Interest Period subject to limitations that may result in
Interest Shortfalls (as further described in the Indenture). The Note Rate for
each Interest Period will be a floating rate equal to the least of (i) LIBOR
plus 0.26% per annum and (ii) the Class A-II-1 Net WAC Rate. LIBOR for the Class
A-II-1 Notes and each applicable Interest Period will be determined on the
second LIBOR Business Day immediately preceding (i) the Closing Date in the case
of the first Interest Period and (ii) the first day of each succeeding Interest
Period by the Servicer as set forth in the Indenture. All determinations of
LIBOR by the Servicer shall, in the absence of manifest error, be conclusive for
all purposes, and each holder of this Note, by accepting this Note, agrees to be
bound by such determination. Interest on this Note will accrue for each Payment
Date from the most recent Payment Date on which interest has been paid (in the
case of the first Payment Date, from the Closing Date) to but excluding such
Payment Date. Interest will be computed on the basis of the actual number of
days in each Interest Period and a year assumed to consist of 360 days.
Principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
Principal of and interest on this Note are payable in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts. All payments made by the Issuer with
respect to this Note shall be applied first to interest due and payable on this
Note as provided above and then to the unpaid principal of this Note.
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Wachovia Asset Securitization, Inc. Asset-Backed Notes, Series
2003-HE2 (the "Notes"), all issued under the Indenture, to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights and obligations thereunder of the Issuer, the Paying
Agent, the Indenture Trustee and the Noteholders. The Notes are subject to all
terms of the Indenture.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
This Note is entitled to the benefits of an irrevocable and unconditional
financial guaranty insurance policy issued by Financial Guaranty Insurance
Company.
Principal of and interest on this Note will be payable on each
Payment Date, commencing on July 25, 2003, as described in the Indenture.
"Payment Date" means the twenty-fifth day of each month, or, if any such date is
not a Business Day, then the next succeeding Business Day.
The entire unpaid principal amount of this Note shall be due and payable in
full on the Payment Date in June 2033 pursuant to the Indenture, to the extent
not previously paid on a prior Payment Date. Notwithstanding the foregoing, if
an Event of Default shall have occurred and be continuing, then the Indenture
Trustee, the Enhancer or the holders of Notes representing not less than a
majority of the Note Balance of the Notes, with the consent of the Enhancer, may
declare the Notes to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture. All principal payments on the Notes shall be made
pro rata to the Noteholders entitled thereto.
A-2-2
Any installment of interest or principal, if any, payable on any Note that
is punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the related Noteholder on the preceding Record Date, by
wire transfer to an account specified in writing by such Noteholder reasonably
satisfactory to the Paying Agent as of the preceding Record Date or, if no such
instructions have been delivered to the Paying Agent, by check or money order to
such Noteholder mailed to such Noteholder's address as it appears in the Note
Register, the amount required to be distributed to such Noteholder on such
Payment Date pursuant to such Noteholder's Notes; provided, however, that the
Paying Agent shall not pay to such Noteholder any amount required to be withheld
from a payment to such Noteholder by the Code. Any reduction in the principal
amount of this Note (or any one or more predecessor Notes) effected by any
payments made on any Payment Date shall be binding upon all future holders of
this Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Paying Agent, in the name of and on behalf of the Issuer, will notify the
Person who was the registered Noteholder hereof as of the Record Date preceding
such Payment Date by notice mailed or transmitted by facsimile prior to such
Payment Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the address specified in such notice
of final payment.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the Corporate Trust
Office of the Note Registrar, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Note Registrar duly executed
by, the Noteholder hereof or such Noteholder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act, and thereupon one or more new Notes in
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of this Note.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note,
or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee,
the Seller, the Servicer, the Depositor or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee, the Paying Agent, the Note
Registrar or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee, the Paying Agent,
the Note Registrar or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Owner Trustee, the Paying Agent, the
Note Registrar or the Indenture Trustee
A-2-3
or of any successor or assign of the Indenture Trustee, the Paying Agent, the
Note Registrar or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note
or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees by accepting the benefits of the Indenture that such
Noteholder or Beneficial Owner will not at any time institute against the
Depositor, the Seller, the Servicer or the Issuer, or join in any institution
against the Depositor, the Seller, the Servicer or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the other Basic
Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the
Issuer. Each Noteholder by its acceptance of a Note (and each Beneficial Owner
of a Note by its acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Note Registrar, the Paying Agent and any
agent of the Issuer, the Note Registrar, the Paying Agent or the Indenture
Trustee may treat the Person in the name of which this Note is registered (as of
the day of determination or as of such other date as may be specified in the
Indenture) as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar, the
Paying Agent or any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer, the Paying Agent and the Indenture Trustee and the rights of the
Noteholders under the Indenture at any time by the Issuer, the Paying Agent and
the Indenture Trustee with the consent of the Enhancer and the holders of Notes
representing a majority of the Note Balance of the Notes then Outstanding and
with prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the holders of Notes representing specified percentages of the Note
Balance, on behalf of the Noteholders, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Noteholder
of this Note (or any one of more predecessor Notes) shall be conclusive and
binding upon such Noteholder and upon all future holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Issuer, the Paying Agent and the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Noteholders but with prior notice to the Rating
Agencies and the Enhancer.
A-2-4
The term "Issuer" as used in this Note includes any successor or the Issuer
under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflicts of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Wilmington Trust Company in its
individual capacity, U.S. Bank National Association in its individual capacity,
any owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Note or the performance of,
or the failure to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note, by its acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in the
case of an Event of Default under the Indenture, such Noteholder shall have no
claim against any of the foregoing for any deficiency, loss or claim therefrom;
provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
The Servicer shall have the right to purchase from the Issuer all of the
Mortgage Loans and related REO Property if the Note Balance of the Notes as of
any Payment Date is less than 10% of the Note Balance of the Notes as of the
Closing Date, (provided that a draw on the Policy would not occur as a result of
such purchase, and provided further that the purchase price will provide
sufficient funds to pay the outstanding Note Balance and accrued and unpaid
interest on the Notes to the Payment Date on which such amounts are to be
distributed to the Securityholders), at a price equal to 100% of the aggregate
unpaid Principal Balance of all such remaining Mortgage Loans, plus accrued and
unpaid interest thereon at the weighted average of the Loan Rates thereon up to
the date preceding the Payment Date on which such amounts are to be distributed
to the Securityholders (and in the case of REO Property, the fair market value
of the REO Property), plus any amounts due and owing to the Enhancer under the
Insurance Agreement related to the Mortgage Loans or the Notes (and any unpaid
Servicing Fee relating to
A-2-5
the Mortgage Loans shall be deemed to have been paid at such time), plus any
Interest Shortfall and interest owed thereon to the Noteholders. The purchase
price paid by the Servicer shall also include certain amounts owed by the Seller
pursuant to the Purchase Agreement that remain unpaid on the date of such
purchase.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
A-2-6
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in
its individual capacity, has caused this Note to be duly executed.
WACHOVIA ASSET SECURITIZATION, INC.
2003-HE2 TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee
Dated: __________, 20__
By:
------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION, not
in its individual capacity but
solely as Indenture Trustee
Dated: __________, 20__
By:
------------------------------
Authorized Signatory
A-2-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints __________________________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-------------------------------- -----------------------------*/
Signature Guaranteed:
-----------------------------*/
------------------------
* NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Term Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-2-8
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER, THE
DEPOSITOR, THE SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, THE NOTE
REGISTRAR, THE PAYING AGENT OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS
EXPRESSLY PROVIDED IN THE INDENTURE OR THE OTHER BASIC DOCUMENTS.
WACHOVIA ASSET SECURITIZATION, INC. 2003-HE2 TRUST
Wachovia Asset Securitization, Inc. Asset-Backed Note,
Series 2003-HE2, Class A-II-2
Registered Initial Note Balance:
$[----------]
No. 1 Note Rate: Variable
CUSIP No. [____]
Wachovia Asset Securitization, Inc. 2003-HE2, a statutory trust duly
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
its registered assigns, the principal sum of [__________________] dollars
($[__________]), payable on each Payment Date in an amount equal to the pro rata
portion allocable hereto (based on the Initial Note Balance specified above and
the Initial Note Balance) of the aggregate amount, if any, payable from the Note
Payment Account in respect of principal of the Notes (defined below) pursuant to
Section 3.05 of the indenture dated as of July 2, 2003 (the "Indenture"), among
the Issuer and U.S. Bank National Association, as indenture trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Payment Date in June 2033, to the
extent not previously paid on a prior Payment Date. Capitalized terms used
herein that are not otherwise defined shall have the meanings ascribed thereto
in Appendix A to the Indenture.
A-3-1
Interest on the Notes will be paid monthly on each Payment Date at the Note
Rate for the related Interest Period subject to limitations that may result in
Interest Shortfalls (as further described in the Indenture). So long as the
Class A-II-2 Notes are Book-Entry Notes, the Note Rate for each Interest Period
will be the Note Rate determined pursuant to the Auction Procedures as set forth
in the Indenture. If the Class A-II-2 Notes are not Book-Entry Notes, the Note
Rate on such Notes shall be the lesser of the Maximum Auction Rate and the Class
A-II-2 Net WAC Rate. Interest on this Note will accrue for each Payment Date
from the most recent Payment Date on which interest has been paid (in the case
of the first Payment Date, from the Closing Date) to but excluding such Payment
Date. Interest will be computed on the basis of the actual number of days in
each Interest Period and a year assumed to consist of 360 days. Principal of and
interest on this Note shall be paid in the manner specified on the reverse
hereof.
Principal of and interest on this Note are payable in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts. All payments made by the Issuer with
respect to this Note shall be applied first to interest due and payable on this
Note as provided above and then to the unpaid principal of this Note.
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Wachovia Asset Securitization, Inc. Asset-Backed Notes, Series
2003-HE2 (the "Notes"), all issued under the Indenture, to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights and obligations thereunder of the Issuer, the Paying
Agent, the Indenture Trustee and the Noteholders. The Notes are subject to all
terms of the Indenture.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
This Note is entitled to the benefits of an irrevocable and unconditional
financial guaranty insurance policy issued by Financial Guaranty Insurance
Company.
Principal of and interest on this Note will be payable on each Payment
Date, commencing on July 25, 2003, as described in the Indenture. "Payment Date"
means the twenty-fifth day of each month, or, if any such date is not a Business
Day, then the next succeeding Business Day.
The entire unpaid principal amount of this Note shall be due and payable in
full on the Payment Date in June 2033 pursuant to the Indenture, to the extent
not previously paid on a prior Payment Date. Notwithstanding the foregoing, if
an Event of Default shall have occurred and be continuing, then the Indenture
Trustee, the Enhancer or the holders of Notes representing not less than a
majority of the Note Balance of the Notes, with the consent of the Enhancer, may
declare the Notes to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture. All principal payments on the Notes shall be made
pro rata to the Noteholders entitled thereto.
Any installment of interest or principal, if any, payable on any Note that
is punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the related Noteholder on the preceding Record Date, by
wire transfer to an account specified in
A-3-2
writing by such Noteholder reasonably satisfactory to the Paying Agent as of the
preceding Record Date or, if no such instructions have been delivered to the
Paying Agent, by check or money order to such Noteholder mailed to such
Noteholder's address as it appears in the Note Register, the amount required to
be distributed to such Noteholder on such Payment Date pursuant to such
Noteholder's Notes; provided, however, that the Paying Agent shall not pay to
such Noteholder any amount required to be withheld from a payment to such
Noteholder by the Code. Any reduction in the principal amount of this Note (or
any one or more predecessor Notes) effected by any payments made on any Payment
Date shall be binding upon all future holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Paying Agent, in the
name of and on behalf of the Issuer, will notify the Person who was the
registered Noteholder hereof as of the Record Date preceding such Payment Date
by notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the address specified in such notice of final payment.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the Corporate Trust
Office of the Paying Agent, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Paying Agent duly executed
by, the Noteholder hereof or such Noteholder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act, and thereupon one or more new Notes in
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of this Note.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of
a Note, or, in the case of a Beneficial Owner of a Note, a beneficial interest
in a Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee,
the Seller, the Servicer, the Depositor or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee, the Note Registrar, the Paying
Agent or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee, the Note
Registrar, the Paying Agent or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee, the Note
Registrar, the Paying Agent or the Indenture Trustee or of any successor or
assign of the Indenture Trustee, the Note Registrar, the Paying Agent or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent
A-3-3
provided by applicable law for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note
or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees by accepting the benefits of the Indenture that such
Noteholder or Beneficial Owner will not at any time institute against the
Depositor, the Seller, the Servicer or the Issuer, or join in any institution
against the Depositor, the Seller, the Servicer or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the other Basic
Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the
Issuer. Each Noteholder by its acceptance of a Note (and each Beneficial Owner
of a Note by its acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Note Registrar, the Paying Agent and any
agent of the Issuer, the Indenture Trustee, the Note Registrar or the Paying
Agent may treat the Person in the name of which this Note is registered (as of
the day of determination or as of such other date as may be specified in the
Indenture) as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar, the
Paying Agent or any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer, the Paying Agent and the Indenture Trustee and the rights of the
Noteholders under the Indenture at any time by the Issuer, the Paying Agent and
the Indenture Trustee with the consent of the Enhancer and the holders of Notes
representing a majority of the Note Balance of the Notes then Outstanding and
with prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the holders of Notes representing specified percentages of the Note
Balance, on behalf of the Noteholders, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Noteholder
of this Note (or any one of more predecessor Notes) shall be conclusive and
binding upon such Noteholder and upon all future holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Issuer, the Paying Agent and the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Noteholders but with prior notice to the Rating
Agencies and the Enhancer.
The term "Issuer" as used in this Note includes any successor or the Issuer
under the Indenture.
A-3-4
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflicts of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Wilmington Trust Company in its
individual capacity, U.S. Bank National Association in its individual capacity,
any owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Note or the performance of,
or the failure to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note, by its acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in the
case of an Event of Default under the Indenture, such Noteholder shall have no
claim against any of the foregoing for any deficiency, loss or claim therefrom;
provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
The Servicer shall have the right to purchase from the Issuer all of the
Mortgage Loans and related REO Property if the Note Balance of the Notes as of
any Payment Date is less than 10% of the Note Balance of the Notes as of the
Closing Date, (provided that a draw on the Policy would not occur as a result of
such purchase, and provided further that the purchase price will provide
sufficient funds to pay the outstanding Note Balance and accrued and unpaid
interest on the Notes to the Payment Date on which such amounts are to be
distributed to the Securityholders), at a price equal to 100% of the aggregate
unpaid Principal Balance of all such remaining Mortgage Loans, plus accrued and
unpaid interest thereon at the weighted average of the Loan Rates thereon up to
the date preceding the Payment Date on which such amounts are to be distributed
to the Securityholders (and in the case of REO Property, the fair market value
of the REO Property), plus any amounts due and owing to the Enhancer under the
Insurance Agreement related to the Mortgage Loans or the Notes (and any unpaid
Servicing Fee relating to the Mortgage Loans shall be deemed to have been paid
at such time), plus any Interest Shortfall and interest owed thereon to the
Noteholders. The purchase price paid by the Servicer shall also
A-3-5
include certain amounts owed by the Seller pursuant to the Purchase Agreement
that remain unpaid on the date of such purchase.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
A-3-6
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in
its individual capacity, has caused this Note to be duly executed.
WACHOVIA ASSET SECURITIZATION, INC.
2003-HE2 TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee
Dated: __________, 20__
By:
------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION, not
in its individual capacity but
solely as Indenture Trustee
Dated: __________, 20__
By:
------------------------------
Authorized Signatory
A-3-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints __________________________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-------------------------------- -----------------------------*/
Signature Guaranteed:
-----------------------------*/
------------------------
* NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Term Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-3-8
