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EXECUTION COPY
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STRUCTURED MORTGAGE TRUST 1997-1
Issuer
AND
STATE STREET BANK AND TRUST COMPANY,
Trustee
-----------------------------------
INDENTURE
Dated as of March 27, 1997
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COLLATERALIZED NOTES
$199,893,850
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TABLE OF CONTENTS
Page
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PRELIMINARY STATEMENT..........................................................1
GRANTING CLAUSES...............................................................1
ARTICLE ONE DEFINITIONS........................................................2
Section 1.01 Definitions.......................................................2
ARTICLE TWO NOTE FORM.........................................................15
Section 2.01 Designation; Form of Notes.......................................15
ARTICLE THREE THE NOTES.......................................................15
Section 3.01 The Depository; Initial Class Principal Balances and
Interest Rates...............................................................15
Section 3.02 Denominations....................................................17
Section 3.03 Execution, Authentication and Delivery...........................17
Section 3.04 Temporary Notes..................................................18
Section 3.05 Registrations of Transfer and Exchange, Restrictions on
Transfer.....................................................................18
Section 3.06 Mutilated, Destroyed, Lost or Stolen Notes.......................21
Section 3.07 Payment of Principal and Interest; Rights Preserved..............22
Section 3.08 Persons Deemed Owners............................................23
Section 3.09 Cancellation.....................................................23
Section 3.10 Additional Notes.................................................24
ARTICLE FOUR AUTHENTICATION AND DELIVERY OF NOTES.............................24
Section 4.01 Security for Notes...............................................24
Section 4.02 Trustee Receipt..................................................26
Section 4.03 Exercise of Rights as Registered Holder of Pooled
Certificates.................................................................26
Section 4.04 Benefit Plan Investor Representations............................26
ARTICLE FIVE SATISFACTION AND DISCHARGE.......................................26
Section 5.01 Satisfaction and Discharge of Indenture..........................27
Section 5.02 Supplication of Trust Money......................................28
Section 5.03 Release of Collateral............................................28
ARTICLE SIX REMEDIES..........................................................28
Section 6.01 Events of Default................................................28
Section 6.02 Acceleration of Maturity; Rescission and Annulment...............29
Section 6.03 Collection of Indebtedness and Suits for Enforcement by
Trustee......................................................................30
Section 6.04 Remedies .....................................................31
Section 6.05 Optional Preservation of Trust Estate............................31
Section 6.06 Trustee May File Proofs of Claim.................................32
Section 6.07 Trustee May Enforce Claims Without Possession of Notes...........33
Section 6.08 Application of Money Collected...................................33
Section 6.09 Limitation on Suits..............................................34
(i)
Section 6.10 Unconditional Rights of Noteholders to Receive Payments..........35
Section 6.11 Restoration of Rights and Remedies...............................35
Section 6.12 Rights and Remedies Cumulative...................................35
Section 6.13 Delay or Omission Not Waiver.....................................35
Section 6.14 Control by Noteholders...........................................35
Section 6.15 Waiver of Past Defaults..........................................36
Section 6.16 Undertaking for Costs............................................36
Section 6.17 Waiver of Stay or Extension Laws; Non-Petition...................36
Section 6.18 Sale of Trust Estate.............................................37
Section 6.19 Action on Notes..................................................37
Section 6.20 Recourse .....................................................38
ARTICLE SEVEN THE TRUSTEE.....................................................38
Section 7.01 Certain Duties and Responsibilities..............................38
Section 7.02 Notice of Default................................................39
Section 7.03 Certain Rights of Trustee........................................39
Section 7.04 Not Responsible for Recitals or Issuance of Notes................41
Section 7.05 May Hold Notes...................................................41
Section 7.06 Money Held in Trust..............................................41
Section 7.07 Compensation and Reimbursement...................................41
Section 7.08 Resignation and Removal; Appointment of Successor................42
Section 7.09 Acceptance of Appointment by Successor...........................43
Section 7.10 Merger, Conversion, Consolidation or Succession to
Business of Trustee..........................................................43
Section 7.11 Corporate Trustee Required, (Trustee) Eligibility................43
Section 7.12 Preferential Collection of Claims Against Issuer.................44
Section 7.13 Co-Trustees and Separate Trustees................................44
Section 7.14 Paying Agents....................................................44
ARTICLE: EIGHT NOTEHOLDERS' LIST..............................................45
Section 8.01 Issuer to Furnish Trustee Names and Addresses of
Noteholders...................................................................45
Section 8.02 Preservation of Information; Communications to
Noteholders..................................................................45
Section 8.03 Reports by Tax Administrator.....................................45
ARTICLE NINE COVENANTS OF ISSUER..............................................46
Section 9.01 Maintenance of Office or Agency..................................46
Section 9.02 Money for Note Payments to Be Held in Trust......................46
Section 9.03 Existence .....................................................47
Section 9.04 Protection of Trust Estate.......................................48
Section 9.05 Negative Covenants...............................................49
Section 9.06 Issuer May Consolidate, Etc., Only on Certain
Terms; Sale of Collateral Subject to Notes...................................49
Section 9.07 Successor Substituted............................................50
Section 9.08 No Other Business................................................50
Section 9.09 Limitation on Borrowing..........................................50
Section 9.10 AIC/SPE Transfer Agreement.......................................51
ARTICLE TEN REDEMPTION OF NOTES...............................................51
Section 10.01 Redemption at the Option of the Issuer; Election to Redeem......51
Section 10.02 Notice to Trustee...............................................52
Section 10.03 Notice of Redemption by the Issuer..............................52
Section 10.04 Deposit of Redemption Price.....................................52
(ii)
Section 10.05 Notes Payable on Redemption Date................................53
Section 10.06 Retention of Notes by Issuer....................................53
ARTICLE ELEVEN ACCOUNTS, ACCOUNTINGS AND RELEASES.............................53
Section 11.01 Collection of Money.............................................53
Section 11.02 Payment Account.................................................54
Section 11.03 Reports by Trustee..............................................54
Section 11.04 Note Remittance Reports and Related Matters.....................54
Section 11.05 Trust Estate....................................................57
ARTICLE TWELVE APPLICATION OF MONIES..........................................57
Section 12.01 Disbursements of Monies from Payment Account....................57
Section 12.02 Limited Release of Collateral...................................59
Section 12.03 Trust Account...................................................59
ARTICLE THIRTEEN AMENDMENTS; SUPPLEMENTAL INDENTURES..........................59
Section 13.01 Supplemental Indentures Without Consent of Noteholders..........59
Section 13.02 Supplemental lndentures With Consent of Noteholders.............61
Section 13.03 Execution of Supplemental Indentures............................62
Section 13.04 Effect of Supplemental Indenture................................62
Section 13.05 Reference in Notes to Supplemental Indentures...................62
ARTICLE FOURTEEN MISCELLANEOUS................................................63
Section 14.01 Compliance Certificates and Opinions............................63
Section 14.02 Form of Documents Delivered to Trustee..........................63
Section 14.03 Acts of Noteholders.............................................64
Section 14.04 Notices, Etc., to Trustee and Issuer............................64
Section 14.05 Notices to Noteholders; Waiver..................................65
Section 14.06 Effect of Headings and Table of Contents........................65
Section 14.07 Successors and Assigns..........................................65
Section 14.08 Separability....................................................65
Section 14.09 Benefits of Indenture...........................................65
Section 14.10 Legal Holidays..................................................66
Section 14.11 Governing Law...................................................66
Section 14.12 Counterparts....................................................66
Section 14.13 Corporate Obligation............................................66
Section 14.14 Loss Mitigation Advisor.........................................66
Section 14.15 Special Servicing Agreements....................................67
Section 14.16 Equity Interests................................................67
Section 14.17 Limitation of Liability.........................................68
(iii)
EXHIBIT A-1 FORM OF CLASS A NOTE
EXHIBIT A-2 FORM OF CLASS B NOTE
EXHIBIT A-3 FORM OF CLASS C NOTE
EXHIBIT A-4 FORM OF CLASS D NOTE
EXHIBIT B-1 FORM OF INVESTMENT LETTER
EXHIBIT B-2 FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
SCHEDULE 1 THE POOLED CERTIFICATES
SCHEDULE 2 LIST OF OTHER ASSETS
SCHEDULE 3 SPECIAL SERVICING AGREEMENTS
(iv)
This INDENTURE, dated as of March 27, 1997, is hereby executed by and
between Structured Mortgage Trust 1997-1, a Delaware business trust acting
through Wilmington Trust Company, as Owner Trustee and not in its individual
capacity (the "Issuer"), and State Street Bank and Trust Company, a
Massachusetts trust company, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its Collateralized Notes, (the
"Notes"), issuable in four Classes (each a "Class"), as provided in this
Indenture. The Issuer has duly authorized the creation of the Notes with an
aggregate principal amount of $199,893,850. All covenants and agreements made by
the Issuer herein are for the benefit and security of the Noteholders and the
Trustee. The Issuer is entering into this Indenture, and the Trustee is
accepting the trust created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.
GRANTING CLAUSES
(a) To secure the payment of the principal and interest of each Class
of Notes in accordance with their respective terms, all of the sums payable
under this Indenture with respect to the Notes and the performance of the
covenants with respect to the Notes contained in this Indenture, the Issuer
hereby Grants to the Trustee, in trust and as collateral security as provided in
this Indenture, for the benefit of the Holders of the Notes, all of the Issuer's
right, title and interest in and to any and all benefits accruing to the Issuer
from (i) the Pooled Certificates listed in Schedule 1 to this Indenture (the
"Pooled Certificates") that the Issuer is causing to be delivered to the Trustee
herewith, together with all interest and principal payments due and received on
the Pooled Certificates after March 24, 1997 (except March 17, 1997 with respect
to the PHH Pooled Certificates); (ii) the AIC/SPE Transfer Agreement, except
that the Issuer shall both pledge and retain its rights under Section 10 and
Section 11 of the AIC/SPE Transfer Agreement; (iii) the Other Assets; (iv) the
Payment Account, whether in the form of cash, instruments, securities or other
properties, including the deposits made therein pursuant to Section 4.01(c); and
(v) the proceeds of all the foregoing (including, but not by way of limitation,
all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and every kind
and other forms of obligations and receivables that at any time constitute all
or part or are included in the proceeds of any of the foregoing) (items (i)
through (v) collectively being referred to herein as the "Trust Estate") to
secure each Class of Notes.
(b) The Trustee acknowledges such Grant, accepts the trusts hereunder
in accordance with the provisions hereof and agrees to perform the duties herein
or therein required in accordance with Article Seven hereof to the end that the
interests of the Noteholders may be adequately and effectively protected.
ARTICLE ONE
DEFINITIONS
Section 1.01 Definitions.
Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture, and the definitions of such terms are equally
applicable both to the singular and plural forms of such terms and to the
masculine or feminine forms of such terms. Whenever reference is made to a
Default or an Event of Default necessitating or involving action by the Trustee,
such reference shall be construed to refer only to a Default or an Event of
Default of which the Trustee has notice or knowledge pursuant to Section 7.01.
"Affiliate" of any specified Person: Any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"AIC": Asset Investors Corporation, a Maryland corporation.
"AIC/SPE Transfer Agreement": The Pooled Certificate Transfer
Agreement, dated March 26, 1997, between AIC and the SPE, under which AIC
contributed the Pooled Certificates to the SPE.
"Aggregate Collateral Report": The report required to be prepared and
distributed by the Trustee with respect to each Payment Date in accordance with
Section 11.04(c).
"Available Funds": With respect to any Payment Date, (a) in respect of
the Pooled Certificates which have a scheduled Certificate Distribution Date on
or prior to the most recently preceding 25th day of a month (or, with respect to
Pooled Certificate distributions due on the 25th day of each month, if such 25th
day is not a Business Day, the next succeeding Business Day), all amounts
actually received by the Trustee by 5:00 p.m. on the Business Day following such
25th day (or such succeeding Business Day) and (b) in respect of the Pooled
Certificates which have a scheduled Certificate Distribution Date subsequent to
the 25th day of a month, all amounts actually received by the Trustee by noon on
the third Business Day following the 25th calendar day of the month if such 25th
calendar day is a Business Day or if such day is not a Business Day, the next
succeeding Business Day, net of investment earnings thereon payable to the
Trustee pursuant to Section 11.02(b); provided that any such amounts shall be
included in Available Funds for a Payment Date only if the Trustee also receives
the related Certificate Remittance Report for the related Certificate
Distribution Date by such applicable time.
"Bear ▇▇▇▇▇▇▇": Bear, ▇▇▇▇▇▇▇ & Co. Inc., a Delaware corporation.
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"Business Day": Any day that is not a Saturday, Sunday, holiday, or
other day on which commercial banking institutions in New York, New York or
Boston, Massachusetts are authorized or obligated by law or executive order to
be closed.
"Certificate Distribution Date": With respect to any Pooled
Certificate, a date on which a distribution is made pursuant to the related
Underlying Agreement.
"Certificate Principal Balance": With respect to any Pooled
Certificate, the Outstanding principal balance thereof.
"Certificate of Deposit": A certificate of deposit satisfying the
definition of an Eligible Investment.
"Certificate Remittance Reports": The reports received periodically by
the Trustee, as the holder of each Pooled Certificate, containing information on
each Pooled Certificate and related Underlying Series.
"Class": The reference to any Class of Notes or, collectively, to one
or more Classes of Notes.
"Class A Notes": The Class A Notes, in the initial aggregate principal
amount of $8,844,850 being issued hereunder.
"Class B Notes": The Class B Notes, in the initial aggregate principal
amount of $13,267,250 being issued hereunder.
"Class C Notes": The Class C Notes, in the initial aggregate principal
amount of $28,745,750 being issued hereunder.
"Class D Notes": The Class D Notes, in the initial aggregate principal
amount of $149,036,000 being issued hereunder.
"Class Principal Balance": As of any date of determination, and with
respect to any Class of Notes, the aggregate outstanding principal balance of
all Notes of that Class as of such date.
"Code": The Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Collateral": The Trust Estate.
"Collateral Proceeds": With respect to any Pooled Certificates and the
Other Assets, all amounts paid to the holder of such Pooled Certificates and the
Other Assets in accordance with the terms of such Pooled Certificates and the
Other Assets.
"Corporate Trust Office": The principal corporate trust office of the
Trustee presently located at Two International Place, Boston, Massachusetts
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02110, Attention: Corporate Trust Department, or at such other address as the
Trustee may designate from time to time by notice to the Noteholders and the
Issuer or the principal corporate trust office of any successor Trustee.
"Current Percentage": The percent that the Note Principal Balance of
each Class of Notes or the Imputed Principal of the Equity Interest represents
of the sum of the Note Principal Balance of all the Notes and the Imputed
Principal Balance of the Equity Interest.
"Default": Any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default or, when used in association with
obligations created by any agreement other than this Indenture, the meaning
specified in such agreement.
"Definitive Notes": The meaning specified in Subsection 3.01(b) hereof.
"Delivery Date": March 27, 1997.
"Depositor": AIC, as depositor under the Trust Agreement.
"Depository": The Depository Trust Company, the nominee of which is
Cede & Co., or any successor thereto.
"Depository Agreement": The meaning specified in Subsection 3.01(a)
hereof.
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"DTC Custodian": State Street Bank and Trust Company, or its successors
in interest.
"DTC Certificates": The Pooled Certificates identified as Chase
Mortgage Finance Corporation, Multi-Class Mortgage Pass-Through Certificates,
Series 1994-H, Class B-6 (except for $68.00 thereof) which are held in
book-entry form through the facilities of The Depository Trust Corporation.
"Eligible Investments": Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, FHLMC, FNMA or any agency or instrumentality of the
United States of America the obligations of which are backed by the full faith
and credit of the United States of America, provided that such obligations of
FHLMC or FNMA shall be limited to senior debt obligations and mortgage
participation certificates;
(ii) (a) demand and time deposits in, certificates of deposit of, or
bankers" acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America (including the
Trustee) or any state thereof and subject to supervision and examination by
federal and/or state banking authorities so long as the commercial paper and the
long-term debt obligations of such depository institution or trust company at
the time of such investment or contractual commitment providing for such
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investment have a credit rating in the highest applicable category from the
Rating Agency in the case of commercial paper and in one of the two highest
applicable categories from the Rating Agency in the case of long-term debt
obligations and (b) any other demand or time deposit or certificate of deposit
that is fully insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (a) any security described
in clause (i) above or (b) any other security issued or guaranteed by an agency
or instrumentality of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal) described
in clause (ii)(a) above (and having the ratings from the Rating Agency required
in clause (ii)(a) above), the repurchaser of which also has the ratings from the
Rating Agency described in clause (ii)(a) above;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
state thereof which have a credit rating in the highest short-term or one of the
two highest long-term categories from the Rating Agency at the time of such
investment or contractual commitment providing for such investment; provided,
however, that securities issued by any particular corporation will not be
Eligible Investments to the extent that investment therein will cause the then
outstanding principal amount of securities issued by such corporation and held
as part of the Trust Estate to exceed 10% of the aggregate outstanding principal
balances of all the Pooled Certificates and Eligible Investments held as part of
the Trust Estate; provided, further, that in no event shall an instrument be an
Eligible Investment if such instrument evidences either (i) a right to receive
only interest payments with respect to the obligations underlying such
instrument, or (ii) a right to receive both principal and interest payments
derived from obligations underlying such instrument if the interest and
principal payments with respect to such instrument provide a yield to maturity
at the date of investment of greater than 120% of the yield to maturity at par
of such underlying obligations;
(v) commercial paper having a rating in the highest applicable category
from the Rating Agency at the time of such investment;
(vi) a guaranteed investment contract issued by any insurance company
or other corporation or entity with a short-term debt rating in the highest
category by the Rating Agency and a long-term debt rating in one of the two
highest applicable categories by the Rating Agency; and
(vii) any other demand, money market or time deposit or obligation,
interest-bearing or other security or investment that would not affect the then
current rating of the Notes by the Rating Agency;
provided, however, that Eligible Investments shall include only obligations or
securities that mature on or before the Business Day immediately preceding the
next Payment Date (or, in the case of an investment that is an obligation of the
institution in which the account is maintained, no later than such Payment
Date). In addition, no Eligible Investment that incorporates a penalty for early
withdrawal will be used unless the maturity of such Eligible Investment is on or
before the Business Day immediately preceding the next Payment Date.
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"Equity Interest": The interest retained by the Issuer in the
overcollateralization resulting from any excess of the aggregate Certificate
Principal Balance of all of the Pooled Certificates over the aggregate Note
Principal Balance of all of the Notes.
"Event of Default": The meaning provided in Section 6.01.
"Federal Bankruptcy Code": Title 11 of the United States Code, as
amended.
"FHLMC": The Federal Home Loan Mortgage Corporation or any successor
thereof.
"Final Payment Date": The Payment Date following the first to occur of
the Sale of the Pooled Certificates in accordance with Section 6.18 hereof or
the final payment on each Pooled Certificate included in the Trust Estate.
"FNMA": The Federal National Mortgage Association or any successor
thereof.
"Global Note": Any Note registered in the name of the Depository or its
nominee, beneficial interests in which are reflected on the books of the
Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Grant": To pledge, create and grant a security interest in and right
of set-off against. A Grant of any instrument shall include all rights, powers
and options (but none of the obligations) of the granting party thereunder,
including without limitation the immediate continuing right to claim for,
collect, receive and receipt for principal and interest payments in respect
thereof and all other monies payable thereunder, to give and receive notices and
other communications, to make waivers or other agreements, to exercise all
rights and options, to bring Proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party is
or may be entitled to do or receive thereunder or with respect thereto.
"Imputed Principal Balance": With respect to the Equity Interest at any
time, an amount equal to the Original Imputed Principal Balance reduced by all
Imputed Principal Payments (whether paid to the Issuer in respect of the Equity
Interest or used to make interest payments on the Notes pursuant to the
subordination provisions contained herein) and Realized Losses theretofore
allocated to the Equity Interest.
"Imputed Principal Payments": All payments made on the Equity Interest
in accordance with Section 12.01 hereof from distributions of principal received
on the Pooled Certificates.
"Indenture": This instrument as supplemented or amended. All references
in this instrument to designated "Articles," "Sections," "Subsections" and other
subdivisions are to the designated Articles, Sections, Subsections and other
subdivisions of this instrument as originally executed. The words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section, Subsection or other
subdivision.
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"Independent": When used with respect to any specified Person means
another Person who (1) is in fact independent of the Issuer and any other
obligor upon the Notes and of any Affiliate of the Issuer or such other obligor,
(2) does not have any direct financial interest or any material indirect
financial interest in the Issuer or in any such other obligor or in any
Affiliate of the Issuer or such other obligor, and (3) is not connected with the
Issuer or any such other obligor as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
"Individual Note": Any Note registered in the name of a Holder other
than the Depository or its nominee.
"Institutional Accredited Investor": Any Person meeting the
requirements of Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the
Securities Act.
"Investment Letter": The letter to be furnished by each Institutional
Accredited Investor which purchases any Class of Notes, substantially in the
form set forth as Exhibit B-1 hereto.
"Issuer": Structured Mortgage Trust 1997-1, a limited purpose Delaware
business trust established by the Trust Agreement for the purpose of issuing the
Notes.
"Issuer Officer": Any Officer of the Owner Trustee authorized to sign
on behalf of the Issuer.
"Issuer Order" and "Issuer Request": A written order or request signed
in the name of the Issuer by the Owner Trustee and delivered to the Trustee.
"Lost Certificates": The Pooled Certificates identified as Housing
Securities, Inc., Mortgage Pass-Through Certificates, Series 1994-1, Class A-B-3
and PNC Mortgage Securities Corp., Mortgage Pass-Through Certificates Series
1994-1, Class B-6 and a portion of ▇▇▇▇▇ ▇▇▇▇▇▇ Mortgage Acceptance Corporation
IV, Mortgage Pass-Through Certificates Series 1993-6, Class B-3, with an
aggregate unpaid principal balance of $1,209,781 as of March 24, 1997.
"Loss Mitigation Advisor": AIC, and its permitted successors as
provided herein.
"Loss Mitigation Advisor's Fee": The monthly fee due the Loss
Mitigation Advisor to be paid from interest paid on the Pooled Certificates, at
a rate of 0.30% per annum calculated on the same aggregate Certificate Principal
Balance of the Pooled Certificates on which interest is paid; provided that if
AIC no longer acts as the Loss Mitigation Advisor and if Special Servicing
Agreements terminate as a result thereof, the Loss Mitigation Advisor's Fee
shall be reduced in proportion to the reduction of the Aggregate Certificate
Principal Balance of Pooled Certificates that remain subject to Special
Servicing Agreements.
"Maturity": With respect to a Class of Notes, the date on which the
unpaid principal of such Class of Notes becomes due and payable as herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
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"Maturity Date": With respect to the Pooled Certificates, the date on
which the last payment of principal of such Pooled Certificates shall be due and
payable. In determining the Maturity Date of such Pooled Certificates, all
pre-payments received prior to the date of determination shall be taken into
account.
"Net Certificate Rate": With respect to a Pooled Certificate and a
Certificate Distribution Date, the effective per annum rate of interest with
respect to the Certificate Principal Balance of such Pooled Certificate
immediately prior to such Certificate Distribution Date actually paid and
received by the Trustee as reported in the related Certificate Remittance Report
received by the Trustee, (or if not so reported, calculated by dividing the
amount of such interest actually received by the Certificate Principal Balance
of such Pooled Certificate immediately prior to such Certificate Distribution
Date, as reported in the related Certificate Remittance Report), i.e., which
takes account of reductions from such Pooled Certificate's then Pass-Through
Rate for any nonreimbursed interest shortfalls and interest losses allocated to
such Pooled Certificate and any increases in respect of reimbursement of past
interest shortfalls when allocated to such Pooled Certificates in the related
Certificate Remittance Report as interest, in each case with respect to such
Certificate Distribution Date and expressed as a per annum rate.
"Note Interest Rate": The annual rate at which interest accrues on the
Notes of a Class, determined as specified in Section 3.01(c).
"Note Owner": Any person who is the beneficial owner of a Note
registered in the name of the Depository or its nominee.
"Note Principal Balance": As of any date of determination, (i) in the
aggregate the outstanding principal balance of all Classes of Notes, which shall
equal the original principal balance of all of the Notes reduced by all
distributions thereon and losses allocated thereto in reduction of their
principal balance on or prior to such date or (ii) with respect to each Class of
Notes or a Note of a Class the outstanding principal balance of all Notes of
that Class or of such Note, which shall equal the original principal balance of
such Class of Notes or of such Note on or prior to such date reduced by all
distributions thereon and losses allocated thereto in reduction of the principal
balance of such Class or of such Note on or prior to such date.
"Note Register" and "Note Registrar": The respective meanings specified
in Section 3.05.
"Note Remittance Report": The report provided by the Trustee to the
Noteholders and the Issuer pursuant to Section 11.04(a).
"Noteholders" or "Holder": With respect to any Note, the Person in
whose name such Note is registered in the Note Register.
"Notes": Any collateralized notes of any Class authorized by, and
authenticated and delivered under, this Indenture.
"Officer": With respect to any corporation, the Chairman of the Board
of Directors, the President, any Vice President, the Secretary, any Assistant
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Secretary or the Treasurer of such corporation; with respect to any partnership,
any individual general partner thereof or any corporate Officer of a corporate
general partner thereof; with respect to any bank or trust company acting as
trustee of an express trust or as custodian, any trust officer or authorized
officer thereof.
"Officer's Certificate": For any Person, a certificate delivered to the
Trustee that has been signed on behalf of that Person by an individual who is
identified in that certificate as being an Officer of that Person or any other
individual authorized to execute the certificate.
"Opinion of Counsel": A written opinion of an attorney at law admitted
to practice before the highest court of any state of the United States or the
District of Columbia or a law firm that may, except as otherwise expressly
provided in this Indenture, be counsel for the Issuer and who shall be
satisfactory to the Trustee. Whenever an Opinion of Counsel is required
hereunder, such opinion may rely on opinions of other counsel who are so
admitted. Notwithstanding the foregoing, an Opinion of Counsel may be rendered
as to matters of Delaware corporate or partnership law by an attorney or law
firm not admitted to practice in Delaware.
"Original Imputed Principal Balance": $21,227,103.30.
"Original Percentage": The percent that the Note Principal Balance of
each Class of Notes and the Imputed Principal Balance of the Equity Interest
represents of the sum of the initial Note Principal Balance of all the Notes and
the Imputed Principal Balance of the Equity Interest, specifically:
Class A 4.0000053672%
Class B 5.▇▇▇▇▇▇▇▇▇▇%
Class C 13.0000117904%
Class D 67.4002159342%
Equity Interest 9.5997701634%
If as a result of the allocation of Realized Losses to the Equity
Interest, the Imputed Principal Balance of the Equity Interest is reduced to
zero while any Class of Notes is still outstanding (or thereafter the Note
Principal Balance of one or more Classes of Notes has been reduced to zero in
accordance with the terms of Section 12.01(a) while at least one other Class of
Notes remains outstanding), the Original Percentages of each remaining Class of
Notes will be recalculated based on the percentage that the initial Note
Principal Balance of each Class of Notes then Outstanding constitutes of the sum
of such aggregate initial Note Principal Balances.
"Other Assets" The list of contracts and contract rights relating to
the Pooled Certificates being transferred to the Issuer pursuant to the Trust
Agreement and set forth on Schedule 2 attached hereto and made a part hereof.
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"Outstanding":
(1) With respect to the Notes or the Notes of any Class, as of any date
of determination, "Outstanding" refers to all Notes or all Notes of such Class
theretofore authenticated and delivered under this Indenture except:
(i) Notes or Notes of such Class theretofore canceled by
the Note Registrar or delivered to the Note Registrar for cancellation;
(ii) Notes or Notes of such Class for which payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Issuer) in trust
or set aside and segregated in trust by the Issuer for the Holders of
such Notes; provided, however, that, if such Notes or Notes of such
Class are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(iii) Notes or Notes of such Class in exchange for or in lieu
of which other Notes have been authenticated and delivered pursuant to
this Indenture unless proof satisfactory to the Trustee is presented
that any such Notes are held by a holder in due course; and
(iv) Notes or Notes of such Class alleged to have been
destroyed, lost or stolen for which replacement Notes have been issued
as provided in Section 3.06;
provided, however, that, in determining whether the Holders of the requisite
principal amount of the Outstanding Notes or the Outstanding Notes of any Class
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Issuer or any other obligor upon the Notes
or any Affiliate of the Issuer or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that the Trustee knows to be so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer or any other obligor upon the Notes
or any Affiliate of the Issuer or such other obligor.
(2) With respect to the Pooled Certificates as of any date,
"Outstanding" refers to the Pooled Certificates with a remaining principal
balance.
"Owner Trustee": The Person acting as Owner Trustee in the Trust
Agreement , initially Wilmington Trust Company, as owner trustee and not in its
individual capacity.
"Owner Trustee's Fee": The monthly fee owed to the Owner Trustee in the
amount of $333.33 for services rendered as the owner trustee under the Trust
Agreement.
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"Pass-through Rate": With respect to any Pooled Certificate and at any
date of determination, the stated per annum rate of interest accruing on the
Certificate Principal Balance of such Pooled Certificate on such date.
"Paying Agent": Any Person authorized by the Issuer to pay the
principal of any Notes on behalf of the Issuer, which shall initially be the
Trustee unless and until the Issuer appoints another Person as Paying Agent.
"Payment Account": A segregated trust account established and
maintained by the Trustee pursuant to Section 11.02 hereof, which shall be
designated "SMT 1997-1."
"Payment Date": April 1, 1997 and thereafter the fourth Business Day
following the 25th day of each month (or, if such 25th day is not a Business
Day, the next succeeding Business Day (each such fourth Business Day, a "Payment
Date") commencing in April 1997. For accounting and Record Date purposes only,
the Payment Date for a month (other than with respect to the April 1, 1997
Payment Date) will be deemed to occur on the 29th day of the month (the 28th day
in February, except in a leap year) without regard to whether such day is a
Business Day.
"Percentage Cash Flow Payments": The monthly payments derived from
interest on the Pooled Certificates paid to the Equity Interest based upon its
Imputed Principal Balance, and which, subject to certain subordination
obligations, as provided in Sections 3.01 and 12.01, is equal in rate to the
Note Interest Rate paid on the Notes.
"Percentage Cash Flow Rate": Subject to the provisions of Section
12.01(a)(ii), the annual rate at which cash flow is payable on the Imputed
Principal Balance of the Equity Interest which shall be equal to the Note
Interest Rate.
"Percentage Interest": (i) With respect to a Note of a specific Class,
the portion that such Note represents of all Notes of the same Class, expressed
as a percentage, the numerator of which is the denomination represented by such
Note, and the denominator of which is the initial Note Principal Balance of
Notes of that Class; and (ii) with respect to all of the Notes, the portion that
such Note represents of all Notes, expressed as a percentage, the numerator of
which is the denomination represented by such Note, and the denominator of which
is the aggregate initial Note Principal Balance of all of the Notes.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"PHH Pooled Certificates": The five Pooled Certificates issued by PHH
Mortgage Services Corporation.
"Pooled Certificate": Each of the mortgage-backed securities pledged to
the Trustee hereunder (including all entitlements to payment thereon and
renewals, extensions, substitutions and replacements thereof) all of which are
listed on Schedule 1 attached hereto.
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"Pooled Certificate Credit Support": With respect to any Underlying
Series, the credit support, if any, provided to the Pooled Certificates included
in such Underlying Series (which may take the form of overcollateralization of
one or more classes of securities of the same Underlying Series that are
subordinated to such Pooled Certificates, or of a reserve fund, insurance policy
or other form of non-structural credit enhancement), including, with respect to
any Pooled Certificate backed by mortgage-backed securities rather than directly
by Mortgage Loans, any credit support provided to such Pooled Certificates in
connection with any series of mortgage-backed securities underlying the related
Underlying Series.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"PSA": A prepayment assumption made using an assumed rate of prepayment
in each month relative to the then outstanding principal balance of a pool of
mortgage loans. 200% PSA assumes prepayment of the then outstanding principal
balance of such mortgage loans in the first month of the life of the mortgage
loans at an annual rate of 0.4 % and an additional 0.4 % in each month
thereafter until the thirtieth month and in each month thereafter during the
life of the mortgage loans, 200% PSA assumes an annual constant prepayment rate
of 12% in each month.
"Purchase Price": With respect to a Pooled Certificate purchased from
the Trust Estate by AIC pursuant to the AIC/SPE Transfer Agreement, the price at
which AIC is required to repurchase such Pooled Certificate from the Issuer,
which shall be an amount equal to the Certificate Principal Balance of the
Pooled Certificate to be repurchased multiplied by the sum of the Current
Percentages for the Class A Notes, Class B Notes, and Class C Notes and one-half
of the Current Percentage for the Class D Notes, plus accrued and unpaid
interest on the Pooled Certificate through the end of the month of purchase.
"Qualified Institutional Buyer": Any "qualified institutional buyer" as
defined in clause (a)(l) of Rule 144A.
"Rating Agency": ▇▇▇▇▇'▇ Investors Service, Inc., any successors
thereto, or any other nationally recognized statistical rating organization
requested by the Issuer to rate any Class of the Notes.
"Realized Loss": The amount of any loss incurred on any Mortgage Loan
upon the liquidation thereof, as specified in the related Certificate Remittance
Report which shall generally equal the unpaid principal balance of the Mortgage
Loan at the time of the liquidation thereof, plus accrued and unpaid interest
thereon, plus any amounts reimbursable to the servicer thereof for unreimbursed
advances (other than advances of principal and interest), minus liquidation
proceeds (net of expenses of liquidation) received with respect to the Mortgage
Loan and any other loss allocated to a Pooled Certificate.
"Record Date": With respect to the first Payment Date, March 31, 1997,
and, with respect to each succeeding Payment Date, the last Business Day of the
month preceding the month in which such Payment Date is deemed to occur.
- 12 -
"Records": All of the books, ledgers, documents, communications,
writings, schedules, reconciliations, controls, computer data, printouts,
programs, tapes and other electronic data processing storage devices, and all
other data relating to or maintained in connection with the Collateral.
"Redemption Date": The date specified for redemption of all Classes of
the Notes pursuant to Section 10.01.
"Redemption Price": An amount equal to 100% of the aggregate Note
Principal Balances of all Notes then Outstanding.
"Redemption Record Date": With respect to any redemption of the Notes,
a date fixed pursuant to Section 10.01.
"Rule 144A Certificate": The certificate to be furnished by each
purchaser of Notes which is a Qualified Institutional Buyer as defined under
Rule 144A promulgated under the Securities Act, substantially in the form set
forth as Exhibit B-2 hereto as the Rule 144A and Related Matters Certificate.
"Rule 144A": Rule 144A promulgated under the Securities Act.
"Sale": The meaning contemplated in Section 6.18.
"Schedule of Pooled Certificates": The list of the Pooled Certificates
securing the Notes attached as Schedule 1 hereto.
"Securities Act": The Securities Act of 1933, as amended.
"Securities Legend": "THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
ANY STATE SECURITIES OR BLUE SKY LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS
AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A
PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A
QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH
CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM
TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE SECURITIES ACT PURCHASING
NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
- 13 -
INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE
TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE
SKY LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION."
"SPE": Asset Investors Secured Financing Corporation, a Delaware
limited purpose corporation, which will hold all of the trust certificates in
the Issuer and consequently the equity interest therein.
"Special Servicing Agreements": Those Agreements relating to certain
Pooled Certificates among AIC, the related servicers or master servicers and the
related trustee which give AIC certain rights with respect to delinquent
Mortgage Loans, as enumerated on Schedule 3 hereto.
"Stated Maturity": The Payment Date occurring in April 2027, which is
the date specified in the Notes as the fixed date on which the final installment
of the principal of the Notes is due and payable.
"Tax Administrator": As defined in Section 8.03(b).
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any ownership interest, record or
beneficial, in any Note.
"Trust Agreement" The Trust Agreement, dated as of March 26, 1997,
among the Depositor, the SPE and the Owner Trustee pursuant to which the Issuer
was established.
"Trust Estate": The meaning specified in the granting clauses hereof.
"Trustee": State Street Bank and Trust Company, a Massachusetts trust
company, unless a successor Person shall have become the Trustee pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Person.
"Trustee's Fee": A monthly fee equal to the product of 1/12th times
0.175% of the sum of the aggregate Note Principal Balances of the Notes plus the
Imputed Principal Balance of the Equity Interest, due to the Trustee as
compensation for its services during the related period.
"Trustee Officer": With respect to the Trustee, any vice-president, any
assistant vice-president, any assistant secretary, any assistant treasurer, or
other trust officer or assistant trust officer in the corporate trust department
of the Trustee and, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Underlying Agreement": The pooling and servicing agreement, trust
agreement, indenture or similar agreement, including all related supplements,
for an Underlying Series, under which the related Pooled Certificates were
issued.
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"Underlying Certificates": Mortgage pass-through certificates,
collateralized mortgage obligations and other similar securities issued pursuant
to Underlying Agreements but not included in the Pooled Certificates.
"Underlying Series": Any series of securities to which any Pooled
Certificate belongs.
"Vice President": Any vice president, irrespective of whether such
title is modified by any other forms preceding or following.
"Voting Rights": With respect to all provisions of this Indenture
requiring the consent, vote, resolution or similar action of the Noteholders,
the voting rights represented by each Note entitled to vote, which voting rights
shall be the portion of the voting rights of all of the Notes which is allocated
to any such Note or if a Class of Notes is entitled to vote separately as a
Class, the portion of the voting rights of all of the Notes of such Class which
is allocated to any such Note of such Class. Voting Rights shall be allocated to
the Notes in proportion to the respective Percentage Interest of the Holders
thereof.
ARTICLE TWO
NOTE FORM
Section 2.01 Designation; Form of Notes.
The Notes of each Class shall be designated generally as the Issuer's
Collateralized Notes. The Notes of each Class shall be issued in the form
attached hereto as Exhibits A-1 through and including A-4, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted under this Indenture, and may have such letters, numbers, or other
marks of identification and such legends or endorsements placed thereon as may
be deemed necessary or desirable by the Note Registrar.
ARTICLE THREE
THE NOTES
Section 3.01 The Depository; Initial Class Principal Balances and
Interest Rates
(a) The Depository, the Issuer and the Trustee have entered into a
Depository Agreement dated as of March 26, 1997 (the "Depository Agreement").
Except for the Individual Notes and as provided in Subsection 3.01(b), the Notes
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shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of such Notes may not be transferred
by the Trustee except to a successor to the Depository; (ii) ownership and
transfers of registration of such Notes on the books of the Depository shall be
governed by applicable rules established by the Depository; (iii) the Depository
may collect its usual and customary fees, charges and expenses from its
Depository Participants; (iv) the Trustee shall deal with the Depository as
representative of the Note Owners for purposes of exercising the rights of
Noteholders under this Indenture, and requests and directions for and votes of
such representative shall not be deemed to be inconsistent if they are made with
respect to different Note Owners; and (v) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants.
All transfers by Note Owners of Notes which are represented by Global
Notes shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such Note Owners. Each
Depository Participant shall only transfer Notes of Note Owners it represents or
of brokerage firms for which it acts as agent in accordance with the
Depository's normal procedures.
(b) If (i)(A) the Issuer advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Issuer is unable to
locate a qualified successor within 30 days or (ii) the Issuer at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall request that the Depository notify all
Note Owners of the occurrence of any such event and of the availability of
definitive, fully registered Notes (the "Definitive Notes") to Note Owners
requesting the same. Upon surrender to the Trustee of the Notes by the
Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall issue the Definitive Notes. Neither the Issuer
nor the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions.
(c) The aggregate principal amount of the Notes that may be
authenticated and delivered hereunder is limited to $199,893,850.00 plus such
Notes as may be authenticated and delivered pursuant to the provisions of
Section 3.10 and except for Notes authenticated and delivered upon registration
of transfer of or in exchange for, or in lieu of, other Notes pursuant to
Sections 3.04, 3.05 or 3.06 hereof. The Notes issued and delivered on the
Delivery Date shall be as follows:
Class of Notes Aggregate Principal Amount
-------------- --------------------------
Class A Notes $ 8,844,850.00
Class B Notes $ 13,267,250.00
Class C Notes $ 28,745,750.00
Class D Notes $ 149,036,000.00
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Each Class of Notes will accrue interest on the Notes from the 29th day
of each month through the 28th day of the following month. Each class of Notes
will be entitled to receive interest on its Note Principal Balance on each
monthly Payment Date at a variable interest rate equal to the excess of (i) the
weighted average of the Net Certificate Rates of all of the Pooled Certificates
with respect to the immediately preceding Certificate Distribution Dates as to
which such interest payments are included in Available Funds over (ii) the sum
of the Loss Mitigation Advisor's Fee, the Trustee's Fee and the Owner Trustee's
Fee due on such date (in each case, expressed as a percentage); provided that if
such rate of interest on a given Payment Date would be less than 4% per annum,
first the Percentage Cash Flow Payment and then the Imputed Principal Payment in
each case due with respect to the Equity Interest on such Payment Date will be
subordinated to the extent necessary to provide each Class of the Notes with
interest at a rate of 4% per annum on such Payment Date. Interest shall be
calculated based upon a 360-day year consisting of 12 30-day months.
The Notes of each Class that are authenticated and delivered by the
Trustee to or upon the order of the Issuer on the Delivery Date shall be dated
the Delivery Date. All other Notes that are authenticated after the Delivery
Date for any other purpose under this Indenture shall be dated the date of their
authentication or as otherwise provided herein.
Section 3.02 Denominations.
Each Class of Notes will be issued in fully registered form in minimum
denominations of $500,000 in the case of Class A Notes and $1,000,000 in the
case of all other Classes and in each case $1.00 in excess thereof, except that
one Note of each such Class may be issued in a different amount so that the sum
of the denominations of all outstanding Notes of such Class shall equal the
Class Principal Balance of such Class on the Delivery Date. On the Delivery
Date, the Issuer shall execute and the Trustee shall authenticate (i) one Global
Note of each Class and/or (ii) one or more Individual Notes all in an aggregate
Note Principal Balance that shall equal the Class Principal Balance of such
Class on the Delivery Date. The Global Notes shall be delivered by the Issuer to
the Depository or pursuant to the Depository's instructions, shall be delivered
by the Issuer on behalf of the Depository to and deposited with the DTC
Custodian. Individual Notes shall be delivered by the Trustee in accordance with
an Issuer Order; the Issuer shall give that Issuer Order in accordance with the
instructions of Bear ▇▇▇▇▇▇▇.
Section 3.03 Execution, Authentication and Delivery.
The Notes shall be executed on behalf of the Issuer by an authorized
Issuer Officer. The signature of any of these Officers on the Notes may be
manual, photocopied or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper Issuer Officers shall bind the Issuer,
notwithstanding the fact 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 issuance of such Notes.
- 17 -
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Notes of any Class executed by the Issuer
to the Trustee for authentication; and the Trustee shall authenticate and
deliver such Notes as in this Indenture provided and not otherwise.
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 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, the such Note has been duly authenticated and delivered
hereunder.
Section 3.04 Temporary Notes.
Pending the preparation of Definitive Notes of any Class, the Issuer
may execute, and upon Issuer Order the Trustee shall authenticate and deliver,
temporary Notes that are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Notes in lieu of which they are issued and with such
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 definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 9.01, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like original principal amount of definitive Notes of the same Class in the
authorized denominations. Until so exchanged the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Notes.
Section 3.05 Registrations of Transfer and Exchange, Restrictions on
Transfer.
(a) The Issuer shall cause to be kept a "Note Register" in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes of each Class and the registration of
transfers of Notes of each Class. The Trustee is hereby initially appointed
"Note Registrar" for the purpose of registering Notes and transfers of Notes as
herein provided.
(b) If a Person other than the Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Person as Note Registrar and of the location, and any change
in the location, of the Note Register, and the Trustee shall have the right to
inspect the Note Register at all reasonable times and to obtain copies thereof
and shall have the right to rely upon a certificate executed on behalf of the
Note Registrar by an Officer thereof as to the names and addresses of the
Holders of each Class of Notes and the principal amounts and numbers of such
Notes.
- 18 -
(c) Subject to Subsection 3.01(a) and upon the satisfaction of the
conditions set forth below, upon surrender for registration of transfer of any
Note at any office or agency of the Issuer maintained for such purpose pursuant
to Section 9.01, the Issuer shall sign, the Trustee shall authenticate and the
Note Registrar shall deliver, in the name of the designated transferee or
transferees, a new Note of a like Class and aggregate Note Principal Balance,
but bearing a different number.
(d) By acceptance of an Individual Note, whether upon original issuance
or subsequent transfer, each holder of such a Note acknowledges the restrictions
on the transfer of such Note set forth in the Securities Legend and agrees that
it will transfer such a Note only as provided herein. In addition to the
provisions of Subsection 3.05(i), the following restrictions shall apply with
respect to the transfer and registration of transfer of an Individual Note to a
transferee that takes delivery in the form of an Individual Note:
(i) The Note Registrar shall register the transfer of an
Individual Note if the requested transfer is being made to a transferee
who has provided the Note Registrar with a Rule 144A Certificate.
(ii) The Note Registrar shall register the transfer of any
Individual Note if (x) the transferor has advised the Note Registrar in
writing that the Note is being transferred to an Institutional
Accredited Investor; and (y) prior to the transfer the transferee
furnishes to the Note Registrar an Investment Letter, provided that, if
the Note Registrar determines (including, but not limited to, based upon
an Opinion of Counsel) that the delivery of (x) and (y) above are not
sufficient to confirm that the proposed transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and other applicable
laws, the Note Registrar may as a condition of the registration of any
such transfer require the transferor to furnish other certifications,
legal opinions or other information reasonably sufficient to provide
such confirmation prior to registering the transfer of an Individual
Note.
(e) Subject to Subsection 3.05(i), so long as the Global Note of a
Class remains outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in such Global Note, or transfers by holders
of Individual Notes of such Class to transferees that take delivery in the form
of beneficial interests in such Global Note, may be made only in accordance with
this Subsection 3.05(e) and in accordance with the rules of the Depository:
(i) In the case of a beneficial interest in the Global Note of a
Class being transferred to an Institutional Accredited Investor, such
transferee shall be required to take delivery in the form of an
Individual Note or Notes of such Class and the Note Registrar shall
register such transfer only upon compliance with the provisions of
Subsection 3.05(d)(ii).
(ii) In the case of a beneficial interest in a Global Note of a
Class being transferred to a transferee that takes delivery in the form
of an Individual Note or Notes of such Class, except as set forth in
clause (i) above, the Note Registrar shall register such transfer only
upon compliance with the provisions of Subsection 3.05(d)(i).
(iii) In the case of an Individual Note of a Class being
transferred to a transferee that takes delivery in the form of a
- 19 -
beneficial interest in the Global Note of such Class, the Note Registrar
shall register such transfer if the transferee has provided the Note
Registrar with a Rule 144A Certificate.
(iv) No restrictions shall apply with respect to the transfer or
registration of transfer of a beneficial interest in the Global Note of
a Class to a transferee that takes delivery in the form of a beneficial
interest in the Global Note of such Class.
(f) Subject to Subsection 3.05(i), an exchange of a beneficial interest
in the Global Note of a Class for an Individual Note or Notes of such Class, an
exchange of an Individual Note or Notes of a Class for a beneficial interest in
the Global Note of such Class and an exchange of an Individual Note or Notes of
a Class for another Individual Note or Notes of such Class (in each case,
whether or not such exchange is made in anticipation of subsequent transfer,
and, in the case of the Global Note of such Class, so long as such Note remains
outstanding and is held by or on behalf of the Depository) may be made only in
accordance with this Subsection 3.05(f) and in accordance with the rules of the
Depository:
(i) A holder of a beneficial interest in a Global Note of a
Class may at any time exchange such beneficial interest for an
Individual Note or Notes of such Class.
(ii) A holder of an Individual Note of a Class may exchange such
Note for a beneficial interest in the Global Note of such Class if such
holder furnishes to the Registrar a Rule 144A Certificate.
(iii) A holder of an Individual Note of a Class may exchange
such Note for an equal aggregate Note Principal Balance of Individual
Notes of such Class in different authorized denominations without any
certification.
(g) (i) Upon acceptance for exchange or transfer of an Individual Note
of a Class for a beneficial interest in the Global Note of such Class as
provided herein, the Note Registrar shall cancel such Individual Note and shall
(or shall request the Depository to) endorse on the schedule affixed to the
applicable Global Note (or on a continuation of such schedule affixed to the
Global Note and made a part thereof) an appropriate notation or otherwise ▇▇▇▇
its records to evidence the date of such exchange or transfer and an increase in
the note balance of the Global Note equal to the note balance of such Individual
Note exchanged or transferred therefor.
(ii) Upon acceptance for exchange or transfer of a beneficial
interest in the Global Note of a Class for an Individual Note of such Class as
provided herein, the Note Registrar shall (or shall request the Depository to)
endorse on the schedule affixed to such Global Note (or on a continuation of
such schedule affixed to such Global Note and made a part thereof) an
appropriate notation or otherwise ▇▇▇▇ its records to evidence the date of such
- 20 -
exchange or transfer and a decrease in the note balance of such Global Note
equal to the note balance of such Individual Note issued in exchange therefor or
upon transfer thereof.
(h) The Securities Legend shall be placed on any Individual Note issued
in exchange for or upon transfer of another Individual Note or of a beneficial
interest in a Global Note.
(i) Subject to the restrictions on transfer and exchange set forth in
this Section 3.05, the holder of any Individual Note may transfer or exchange
the same in whole or in part (in an initial Note Principal Balance equal to the
minimum authorized denomination or any integral multiple of $1.00 in excess
thereof) by surrendering such Note at the Corporate Trust Office, or at the
office of any transfer agent, together with an executed instrument of assignment
and transfer satisfactory in form and substance to the Note Registrar in the
case of transfer and a written request for exchange in the case of exchange duly
executed by the Holder thereof or his attorney duly authorized in writing with
such signature medallion guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the City of New York or the city
in which the Corporate Trust Office is located, or by another participant in the
Securities Transfer Agents Medallion Program. The holder of a beneficial
interest in a Global Note may, subject to the rules and procedures of the
Depository, cause the Depository (or its nominee) to notify the Note Registrar
in writing of a request for transfer or exchange of such beneficial interest for
an Individual Note or Notes. Following a proper request for transfer or
exchange, the Note Registrar shall, within five Business Days of such request
made at such Corporate Trust Office, seek to cause the Issuer to execute, the
Trustee to authenticate and the Note Registrar to deliver at such Corporate
Trust Office, to the transferee (in the case of transfer) or holder (in the case
of exchange) or send by first class mail at the risk of the transferee (in the
case of transfer) or holder (in the case of exchange) to such address as the
transferee or holder, as applicable, may request, an Individual Note or Notes,
as the case may require, for a like aggregate Note Principal Balance and in such
authorized denomination or denominations as may be requested. The presentation
for transfer or exchange of any Individual Note shall not be valid unless made
at the Corporate Trust Office by the registered holder in person, or by a duly
authorized attorney-in-fact.
(j) All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(k) No service charge shall be made to a Holder for any registration of
transfer or exchange of any Class of Notes, but the Issuer may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of such
Notes, other than exchanges pursuant to Section 3.04 not involving any transfer.
Section 3.06 Mutilated, Destroyed, Lost or Stolen Notes.
If (a) any mutilated Note is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
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Note, and (b) there is delivered to the Trustee such security or indemnity as
may be required by it to save each of the Issuer and the Trustee 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, the Issuer shall execute and upon its
request the Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Note, a new Note of the same
Class and of the same tenor and original principal amount, bearing a number not
contemporaneously outstanding; provided, however, that if any such mutilated,
destroyed, lost or stolen Note shall have become or shall be about to become due
and payable, or shall have been selected or called for redemption, instead of
issuing a new Note, the Issuer may pay such Note without surrender thereof,
except that any mutilated Note shall be surrendered prior to being paid in full.
Upon the issuance of any new Note under this Section, the Issuer may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes of the same Class duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
If, after the delivery of a new Note or payment of a destroyed, lost or
stolen Note pursuant to the first paragraph of this Section, a bona fide
purchaser presents for payment the related original Note, the Issuer and the
Trustee shall be entitled to recover the related new Note (or such payment) from
the Person to whom it was delivered or any Person who may have taken such new
Note from such Person, unless such a transferee is a bona fide purchaser of such
new Note, and the Trustee shall be entitled to recover upon the security or
indemnity provided pursuant to the first paragraph of this Section to the extent
of any loss, damage, cost or expenses incurred by the Issuer or the Trustee in
connection with the situation described in this paragraph.
Section 3.07 Payment of Principal and Interest; Rights Preserved.
(a) Principal and interest on the Notes shall be paid out of
collections of principal and interest on the Pooled Certificates and receipts,
if any, with respect to the Other Assets to the extent and in the manner
provided in Section 12.01 until the entire unpaid Note Principal Balance of each
Class of the Notes is reduced to zero.
(b) Except for the final payment due on each Class of Notes at their
Maturity, which final payment shall be made only upon presentation and surrender
of each such Note at the office or agency of the Issuer maintained for the
purpose of making final Note payments as provided in Section 9.01, payments of
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interest and principal of each Note will be made by the Paying Agent on each
Payment Date out of Available Funds to the Person who was the Holder of such
Class of Notes as of the related Record Date either (1) by check mailed to the
address of such Person, as such name and address appear in the Note Register, or
(2) by wire transfer of immediately available funds to the account of such
Person, in accordance with any wiring instructions provided to the Trustee by
such Person in writing at least five Business Days prior to the applicable
Record Date. The Trustee may charge a reasonable fee to any Holder of Notes with
aggregate denominations evidencing original Note Principal Balances of less than
$5,000,000 for any payment made to such holder by wire transfer.
In the case of any Note upon which the final payment is due on the
Maturity of such Note, the Issuer or, at the Issuer's request, the Trustee, in
the name and at the expense of the Issuer, shall notify the Person entitled
thereto at his address as it appears on the Note Register that such Note is to
be paid in full. Such notice shall be mailed as soon as practicable, and in any
event no later than the Payment Date on which the final payment is to be made on
such Note, and shall specify the place where such Note may be presented and
surrendered for final payment.
(c) Notes shall be payable solely from the proceeds of the Trust
Estate and from any other assets of the Issuer.
(d) Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note of the same Class shall carry the rights to
unpaid interest and principal that was carried by such other Note.
Section 3.08 Persons Deemed Owners2.
Prior to due presentment for registration of transfer of any Note, the
Issuer, the Trustee and any agent of the Issuer or of the Trustee may treat the
Person in whose name any such Note is registered in the Note Register as the
owner of such Note for the purpose of receiving payments of interest and
principal on such Note and for all other purposes whatsoever (whether or not
such Note is overdue), and neither the Issuer, the Trustee nor any agent of the
Issuer or the Trustee shall be affected by notice to the contrary.
Section 3.09 Cancellation.
All Notes surrendered for payment, registration of transfer, exchange
or redemption shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Issuer may at
any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder that the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Notes held by the Trustee shall be destroyed in
accordance with the Trustee's customary practices unless the Issuer shall direct
by an Issuer Order that they be returned to it.
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Section 3.10 Additional Notes.
The Owner Trustee and the Trustee are hereby authorized to enter into a
Supplemental Indenture to provide that the Issuer may pledge additional
mortgage-backed securities to the Trustee and issue additional Classes of Notes
and to provide for any additional provisions necessitated by such pledge and
issuance provided that prior to any such action the Trustee and the Owner
Trustee are provided with (i) an opinion of counsel to the effect that the
Issuer will not be treated as a taxable mortgage pool for federal income tax
purposes and (ii) a written acknowledgment from ▇▇▇▇▇'▇ that such action will
not adversely affect its then rating of each Class of Notes.
ARTICLE FOUR
ARTICLE FOUR AUTHENTICATION AND DELIVERY OF NOTES
Section 4.01 Security for Notes.
The Notes of each Class shall be executed by the Issuer and delivered
to the Trustee for authentication, and thereupon the same shall be authenticated
and delivered to the Issuer by the Trustee upon Issuer Order and upon delivery
by the Issuer to the Trustee, and receipt by the Trustee, of the following:
(a) Registration of Collateral. The Issuer shall, at its
expense, have delivered all Pooled Certificates (other than the Lost
Certificates, the DTC Certificates and the other Pooled Certificates,
if any, noted in the Trustee Receipt delivered pursuant to Section
4.02) to the Trustee, duly endorsed by the registered holder to the
Trustee or in blank, and the Trustee shall promptly deliver all Pooled
Certificates (other than the Lost Certificates, the DTC Certificates
and such other Pooled Certificates) to the related Underlying Trustees
together with all required transfer documents to enable the Pooled
Certificates to be registered in the name of the Trustee or its nominee
or agent. The Trustee shall also have received confirmation that the
DTC Certificates have been "transferred" to the Trustee in accordance
with Article Eight of the Uniform Commercial Code as in effect in the
State of New York. In connection with the registration of the Pooled
Certificates in the name of the Trustee or its nominee or agent, the
Issuer assumes all responsibility for compliance with the requirements
of the Underlying Agreements and applicable securities laws, and for
determining whether such transfer is permitted thereunder, and the
Trustee shall have no responsibility therefor and shall be held
harmless from any liability arising therefrom. The Issuer shall cause
to be delivered a lost security affidavit and indemnity agreement to
the Trustee with respect to the Lost Certificates and any other Pooled
Certificates noted in the aforesaid Trustee Receipt and shall promptly
obtain replacement certificates for the Lost Certificates and the
certificates for the other Pooled Certificates noted in the aforesaid
Trustee Receipt and deliver them to the Trustee. Following its receipt
of such certificates, the Trustee shall provide to the Issuer a receipt
with respect thereto comparable to the receipt referred to in Section
4.02.
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(b) Certificate of the Issuer. An Officer's Certificate from
the Issuer, dated as of the date of the Issuer Order, to the effect
that, in the case of each Pooled Certificate and immediately prior to
the delivery thereof on the Delivery Date:
(1) the Issuer is the beneficial owner of such
Pooled Certificate;
(2) the Issuer has acquired its ownership or
security interest in such Pooled Certificate in good faith
without notice of any adverse claim;
(3) the Issuer has not assigned any interest
or participation in such Pooled Certificate (or, if any such
interest or participation has been assigned, it has been
released);
(4) the Issuer has full right to Grant a
security interest in and assign and pledge the Trust Estate
to the Trustee;
(5) the information set forth with respect to
each Pooled Certificate in Schedule 1 hereto is complete and
correct; and
(6) (A) the Issuer is the beneficial owner of the
Other Assets; (B) the Issuer has acquired its ownership of the
rights represented by the Other Assets in good faith without
notice of any adverse claim; (C) the Issuer has not assigned
any interest or participation in the Other Assets; (D) the
Issuer has full right assign its interests in the Other Assets
to the Trustee, or if consents of third parties are required,
such consents have been obtained; and (E) the information set
forth with respect to each of the Other Assets listed in
Schedule 2 hereto is complete and correct
(c) Deposits to Payment Account. The amount of all distributions
received or expected to be received on the Pooled Certificates by the registered
holders thereof during March 1997, which amount is $1,613,876, shall have been
deposited into the Payment Account and shall be disbursed on the first Payment
Date in accordance with joint instructions from the Depositor and Bear ▇▇▇▇▇▇▇
which are intended to reflect the amounts of principal and interest on the Notes
and Percentage Cash Flow Payments and Imputed Principal Payments in respect of
the Equity Interest which would be due hereunder based on March 1997 payments on
the Pooled Certificates. Such deposit shall be invested in Eligible Investments
at the direction of the Depositor. If such deposit plus any proceeds of the
Eligible Investments exceeds the amounts due to the Holders of the Notes and the
Issuer in respect of the Equity Interest as provided in the instructions, the
instructions shall provide that the excess be paid to the Depositor. If such
deposit plus any proceeds of the Eligible Investments are insufficient to pay
the amounts due to the Holders of the Notes and the Issuer in respect of the
Equity Interest, the Depositor shall provide to the Trustee for deposit into the
Payment Account the amount of any such insufficiency by 12:00 p.m. on the day
prior to the first Payment Date.
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Section 4.02 Trustee Receipt.
On or before the Delivery Date, the Trustee shall execute and deliver
an instrument to the Issuer confirming its receipt of each Pooled Certificate
(other than the Lost Certificates and any other exceptions noted thereon), duly
endorsed in blank or to the order of the Trustee, or, in the case of any DTC
Certificate, confirming its receipt of confirmation of the transfer to it of
such Pooled Certificate in accordance with Section 4.01(a).
Section 4.03 Exercise of Rights as Registered Holder of Pooled
Certificates.
If at any time the Trustee, as the registered holder of the Pooled
Certificates, is asked to exercise a right to vote inherent in any Pooled
Certificate or to take any action or give any consent, approval or waiver with
respect to such Pooled Certificate or the related Underlying Agreement, the
Trustee shall promptly notify all of the Noteholders of such request in writing,
requesting direction from such Noteholders as to the course of action the
Trustee should take. The Trustee shall furnish copies to the Holders of any
request or other notice requiring action by, and received by the Trustee as,
registered holder of any Pooled Certificate, and subject to the provisions of
Section 7.03(e) shall act in accordance with the written directions of Holders
of the Notes of all Classes entitled to 51% or more of the Voting Rights of all
the Noteholders. In the absence of such directions, the Trustee may, but shall
have no obligation to, take such action as it may determine in its absolute
discretion. Voting rights will be allocated among the Notes of all Classes pro
rata based upon their respective Note Principal Balances. Except as so provided,
the Trustee shall have no responsibility to monitor or regulate on behalf of the
Holders the exercise by any Person of its rights under any Underlying Agreement,
including any right to amend or terminate such Underlying Agreement, nor any
responsibility to monitor or regulate the liquidation of mortgage loans or other
collateral pursuant to any such Underlying Agreement.
Section 4.04 Benefit Plan Investor Representations.
(a) The Issuer represents and warrants that it is not a "benefit
plan investor" described in or subject to the Department of Labor regulations
set forth in 29 C.F.R. section 2510.3-101.
(b) The Trustee, based upon the Opinion of Counsel it has received from
Stroock & Stroock & ▇▇▇▇▇ LLP to such effect, represents and warrants that it is
not a "benefit plan investor" described in or subject to the Department of Labor
regulations set forth in 29 C.F.R. section 2510.3-101.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01 Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) the rights of Noteholders to receive
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payments of interest on and principal of the Notes, (iv) the rights, obligations
and immunities of the Trustee hereunder and (v) the rights of Noteholders as
beneficiaries hereof with respect to any property deposited with the Trustee
hereunder and payable to all or any of them, and the Trustee, on demand of and
at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when:
(1) either:
(a) all Notes of all Classes 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 3.06, 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 9.02) have been delivered to the Trustee
for cancellation; or
(b) all Notes of all Classes not theretofore
delivered to the Trustee for cancellation:
(i) have become due and payable; or
(ii) will become due and payable at their
Stated Maturity within one year; or
(iii) are to be called for redemption
within one year under an arrangement satisfactory to
the Trustee for the giving of notice of redemption by
the Issuer;
and the Issuer, in the case of clause (i), (ii) or (iii) of paragraph (b) above,
has deposited or caused to be deposited with the Trustee, in trust for such
purpose, cash or Eligible Investments in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation; provided, however, that clause (i) of paragraph (b)
above shall be inapplicable if an election to act in accordance with the
provisions of Section 6.05 shall have been made and not rescinded;
(2) the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer; and
(3) the Issuer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture with respect to the Notes have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Trustee to the Noteholders under Section 5.02 and the
provisions of Section 7.07 for the benefit of the Trustee shall survive.
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Section 5.02 Supplication of Trust Money.
All monies deposited with the Trustee pursuant to Section 5.01 shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying Agent,
as the Trustee may determine, to the Person entitled thereto of the principal
and interest for the payment of which such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent otherwise expressly required herein or required by law.
Section 5.03 Release of Collateral.
Upon satisfaction and discharge of this Indenture as described in
Section 5.01, the Trustee shall release all Collateral, including all funds on
deposit in the Payment Account to the Issuer or its designee, and shall deliver
any Pooled Certificates to the Issuer or its designee duly endorsed to such
Person, and shall take all appropriate actions to transfer ownership rights in
the Other Assets, if any, to the Issuer, and shall execute and deliver to such
Person any other documents or instruments reasonably requested by such Person to
effect the transfer of the Pooled Certificates and the Other Assets to such
Person all at the expense of the Issuer and shall be indemnified by the Issuer
in so doing.
ARTICLE SIX
REMEDIES
Section 6.01 Events of Default.
(a) An Event of Default with respect to a Note of any Class means any
one of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) a failure to pay interest and principal in the
required amounts from Available Funds;
(2) a failure to pay in full the Outstanding principal
amount of any Note by its Stated Maturity; or
(3) default in the performance, or breach, of any covenant or
warranty of the Issuer in this Indenture (other than a Default in the
performance of or breach of any covenant or warranty addressed in
Section 6.01(a)(1) and (2) hereof), and continuance of such Default or
breach for a period of 60 days after there shall have been given, by
registered or certified mail, to the Issuer by the Trustee, a written
notice specifying such Default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" under
the Indenture; or
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(4) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Issuer bankrupt or
insolvent; or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect
of the Issuer under the Federal Bankruptcy Code or any other applicable
federal or state law, or appointing a receiver, liquidator, assignee,
or sequestrator (or other similar official) of the Issuer or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 90 consecutive days; or
(5) the institution by the Issuer of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under the Federal Bankruptcy Code or any other similar
applicable federal or state law, or the consent by it to the filing of
any such petition or to the appointment of a receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of the
Issuer or of any substantial part of its property, or the making by it
of an assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Issuer in furtherance of
any such action.
(b) Each Noteholder shall be deemed to have agreed, by its acceptance
of its Note, not to file, or join in filing, any petition in bankruptcy or
commence any similar proceeding in respect of the Issuer and to treat its Notes
as debt instruments for purposes of federal and state income tax, franchise tax
and any other tax measured in whole or in part by income.
Section 6.02 Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default occurs and is continuing, the Holders of not
less than 25% of the Note Principal Balances of all of the Outstanding Notes may
declare the Outstanding principal balances of all the Notes to be immediately
due and payable, by a notice in writing to the Issuer and to the Trustee, and
upon any such declaration such principal shall become immediately due and
payable.
(b) At any time after a declaration of acceleration of Maturity has
been made pursuant to paragraph (a) of this Section 6.02 and before a judgment
or decree for payment of the money due has been obtained by the Trustee as
hereinafter provided in this Article, the Holders of a majority of the Note
Principal Balances of all of the Outstanding Notes, by written notice to the
Issuer and the Trustee, may rescind and annul such declaration of acceleration
of the Notes and its consequences if:
(1) (A) the Issuer has paid or deposited with the Trustee
a sum sufficient to pay
(i) all overdue installments of interest
and principal on each Class of the Notes, and
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(ii) all sums paid or advanced by the
Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(B) all Events of Default, other than the non-payment
of interest and principal of Notes that have become due solely by such
acceleration, have been cured or waived as provided in Section 6.15; or
(2) an election is made to act in accordance with the
provisions of Section 6.05 with respect to the Event of Default that
gave rise to such declaration.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
Section 6.03 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Issuer covenants that if Default is made in the payment of any
interest or principal of any Note, the Issuer will, upon demand of the Trustee,
pay to the Trustee, for the benefit of the Noteholders, the whole amount then
due and payable on the Notes and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Issuer fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as Trustee of an express trust, 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 any other obligor on the Notes and collect the monies adjudged or
decreed to be payable in the manner provided by law.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Noteholders by such appropriate Proceedings as the Trustee shall deem most
effectual 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 Trustee by this Indenture or by law.
Section 6.04 Remedies.
If an Event of Default shall have occurred and be continuing, the
Trustee may, to the extent not inconsistent with the provisions of Section 6.05,
if applicable, do one or more of the following:
(a) institute Proceedings for the collection of all amounts
then payable on the Notes under this Indenture, whether by declaration
or otherwise, enforce any judgment obtained, and collect from the Trust
Estate securing the Notes and from the Issuer monies adjudged due;
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(b) sell all or a portion of the Trust Estate securing the
Notes or rights of interest therein, at one or more public or private
sales called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Trust Estate securing the Notes; and
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Trustee or the Holders of the
Notes hereunder;
provided, however, that unless a declaration of acceleration has been made in
accordance with Section 6.02, the Trustee may not sell or otherwise liquidate
the Trust Estate.
Section 6.05 Optional Preservation of Trust Estate.
If (i) an Event of Default shall have occurred and be continuing and
(ii) no Notes have been declared due and payable or such declaration and its
consequences are annulled and rescinded, the Trustee may, and upon request from
the Noteholders of a majority in aggregate Note Principal Balance of the
Outstanding Notes, shall, elect, by giving written notice of such election to
the Issuer, to take possession of and retain the Trust Estate securing the Notes
intact, collect or cause the collection of the proceeds thereof and make and
apply all payments and deposits and maintain all accounts in respect of such
Notes in accordance with the provisions of Article Eleven and Article Twelve. If
the Trustee is unable to give or is stayed from giving such notice to the Issuer
for any reason whatsoever, such election shall be effective as of the time of
such determination or request, as the case may be, notwithstanding any failure
to give such notice, and the Trustee shall give such notice upon the removal or
cure of such inability or stay (but shall have no obligation to effect such
removal or cure). Any such election may be rescinded with respect to any portion
of the Trust Estate securing the Notes remaining at the time of such rescission
by written notice to the Trustee and the Issuer from the Noteholders of a
majority in aggregate Note Principal Balance of the Outstanding Notes.
Section 6.06 Trustee May File Proofs of Claim.
In case there shall be pending Proceedings relative to the Issuer or
any other obligor on the Notes under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or its
property, or in case of any other comparable judicial Proceedings relative to
the Issuer or other obligor on the Notes, or the creditors or property of the
Issuer or such other obligor, the Trustee, regardless whether any interest or
the principal of any Notes shall then be due and payable as therein expressed or
by declaration or otherwise and regardless whether the Trustee shall have made
any demand pursuant to the provisions of Section 6.03, shall be entitled and
empowered, by intervention in such Proceedings or otherwise:
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(a) to file and prove a claim or claims for the whole amount
of interest and principal owing and unpaid in respect of each Class of
Notes, and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Noteholders allowed in
any Proceedings relative to the Issuer or other obligor on the Notes,
or to the creditors or property of the Issuer or such other obligor;
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of each Class of Notes in any election of
a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency Proceedings, or of any
Person performing similar functions in comparable Proceedings; and
(c) 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 Trustee on their behalf; and any trustee, receiver or liquidator,
custodian or other similar official is hereby authorized by each of the
Noteholders to make payments to the Trustee, and, in the event that the
Trustee shall consent to the making of such payments, to make payments
directly to the Noteholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith.
Amounts payable to the Trustee under this Section are intended to
constitute administrative expenses. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or vote for or accept or adopt
on behalf of any Noteholder of any Class any plan of reorganization,
arrangement, adjustment or composition affecting the Notes of such Class or the
rights of any Holder thereof, or to authorize the Trustee to vote in respect of
the claim of any Noteholder in any such Proceeding except, as aforesaid, to vote
for the election of a trustee in bankruptcy or similar person.
In any Proceedings brought by the Trustee (and also any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the Holders
of the Notes, and it shall not be necessary to make any Holders of the Notes
parties to any such Proceedings.
Section 6.07 Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any Proceeding relating thereto, and any such
Proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
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payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the
Noteholders in respect of which such judgment has been recovered.
Section 6.08 Application of Money Collected.
If the Notes have been declared due and payable following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, any money collected by the Trustee pursuant to this Article or
otherwise and any moneys that may then be held or thereafter received by the
Trustee as security shall (unless such money is being applied in a accordance
with Section 6.05) be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of the entire amount due on
account of principal of, and interest on, such Notes, upon presentation and
surrender thereof:
first: To the payment of all amounts due the Trustee,
the Owner Trustee and the Loss Mitigation Advisor, in that
order;
second: To the payment of amounts then due and unpaid
on the Outstanding Notes for interest on the aggregate Note
Principal Balance of each Class of Notes to the date of
payment thereof, at the applicable interest rates, all such
amounts to be paid ratably among the Notes, without preference
or priority of any kind;
third: To the payment of the Note Principal Balance
of each Class of Notes in alphabetical order commencing with
the Class A Notes until the Note Principal Balance of the
respective Class has been reduced to zero; and
fourth: To the payment of the remainder, if any, to
the Issuer in respect of the Equity Interest or, with the
consent of the Issuer, any other Person legally entitled
thereto.
Section 6.09 Limitation on Suits.
No Holder of any Note shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% of the aggregate Note
Principal Balance of the Outstanding Notes shall have made written
request to the Trustee to institute Proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
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(4) the Trustee for 30 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
Proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 30-day period by the Holders of a
majority of the Note Principal Balance of the Outstanding Notes;
it being understood and intended that no one or more Noteholders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Noteholders except to the extent explicitly provided herein or to enforce
any right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all the Noteholders.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Noteholders, each representing
less than a majority of the then aggregate Outstanding Note Principal Balance of
all such Outstanding Notes, the Trustee in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other provisions of
this Indenture.
Section 6.10 Unconditional Rights of Noteholders to Receive Payments.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of interest on and principal of such Note as such interest or principal
becomes due and payable in accordance with the terms of such Note and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
Section 6.11 Restoration of Rights and Remedies.
If the 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 Trustee or to such Noteholder, then and in every such case the Issuer, the
Trustee and the Noteholder 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 Trustee and the
Noteholders shall continue as though no such Proceeding had been instituted.
Section 6.12 Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Trustee or
to the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
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Section 6.13 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of 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 or by law to
the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
Section 6.14 Control by Noteholders.
The Holders of a majority of the Note Principal Balance of all of the
Outstanding Notes shall have the right, subject to Section 7.03(e) hereof, to
direct the time, method and place of conducting any Proceeding for any remedy
available to the Trustee with respect to the Notes or exercising any trust or
power conferred on the Trustee; provided that:
(1) such direction shall not be in conflict with any rule of
law or with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction; provided,
however, that, subject to Section 7.01, the Trustee need not take any
action that it determines might involve it in liability or be unjustly
prejudicial to the Noteholders not consenting.
Section 6.15 Waiver of Past Defaults.
The Holders of a majority of the Note Principal Balance of all of the
Outstanding Notes may waive any past Default and its consequences, except a
Default in the payment of interest on or principal of Notes unless an election
to act in accordance with the provisions of Section 6.05 shall have been made
and not been rescinded.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.16 Undertaking for Costs.
All parties to this Indenture agree, and each Noteholder, by its
acceptance of a Note, shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than 10% in Note Principal Balance of the
Outstanding Notes or to any suit instituted by any Noteholder for the
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enforcement of the payment of interest on or principal of any Notes on or after
the Stated Maturity expressed in such Note (or, in the case of redemption, on or
after the applicable Redemption Date).
Section 6.17 Waiver of Stay or Extension Laws; Non-Petition.
Each Holder of a Note shall be deemed to have agreed, by its acceptance
thereof, to refrain from filing, or from joining in filing, any petition in
bankruptcy or commencing any similar proceeding in respect of the Issuer for a
period of one year and one day following the payment in full of such Note.
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, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 6.18 Sale of Trust Estate.
(a) The power to effect any sale of any portion of the Trust Estate
pursuant to Section 6.04 shall not be exhausted by any one or more sales (each a
"Sale") as to any portion of such Trust Estate remaining unsold but shall
continue unimpaired until the entire Trust Estate shall have been sold or all
amounts payable on the Notes and under this Indenture with respect thereto shall
have been paid. The Trustee may from time to time postpone any Sale by public
announcement made at the time and place of such Sale. The Trustee hereby
expressly waives its right to any amount fixed by law as compensation for any
Sale.
(b) The Trustee may bid for and acquire any portion of the Trust Estate
in connection with a public sale thereof, and may pay all or part of the
purchase price by crediting against amounts owing on the Notes or other amounts
secured by this Indenture all or part of the net proceeds of such Sale after
deducting the costs, charges and expenses incurred by the Trustee in connection
with such Sale, notwithstanding the provisions of Section 7.07 hereof. The Notes
need not be produced in order to complete any such Sale, or in order for the net
proceeds of such Sale to be credited against amounts owing on the Notes. The
Trustee may hold, lease, operate, manage or otherwise deal with any property so
acquired in any manner permitted by law.
(c) The 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. In addition, the 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. No purchaser or
transferee at such a Sale shall be bound to ascertain the Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any monies.
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Section 6.19 Action on Notes.
The Trustee's right to seek and recover judgment on the Notes or under
this Indenture shall not be affected by the seeking or obtaining of or
application for any other relief under or with respect to this Indenture.
Neither the lien of this Indenture nor any rights or remedies of the Trustee or
the Noteholders shall be impaired by the recovery of any judgment by the 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.
Section 6.20 Recourse.
In the event of a Default on the Notes, the Noteholders shall have no
recourse to (i) the Trustee, (ii) the Owner Trustee, (iii) Bear ▇▇▇▇▇▇▇, (iv)
the Loss Mitigation Advisor, (v) AIC, (vi) the SPE or (vii) any owner of the
trust certificates representing a beneficial ownership interest in the Issuer,
or any of their respective shareholders, directors, officers, employees, agents
or representatives.
ARTICLE SEVEN
ARTICLE SEVEN THE TRUSTEE
Section 7.01 Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided
herein. The Trustee shall not be deemed to have notice or knowledge of a Default
or an Event of Default unless a Trustee Officer has actual knowledge thereof or
unless written notice of any event which is a Default or an Event of Default is
received by the Trustee at its Corporate Trust Office and such notice references
the Notes or the Indenture. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not herein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01.
(a) Prior to any Default, the Trustee shall not be liable except for
the performance of such duties as are specifically set forth in this Indenture.
In connection therewith, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed herein, in the
absence of bad faith on the part of the Trustee, upon certificates or opinions
conforming to the requirements of this Indenture; provided, however, that the
Trustee shall examine such certificates and opinions to determine whether or not
such papers conform to the requirement of this Indenture.
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(b) Upon any Default, the Trustee shall exercise the rights and powers
vested in it by this Indenture with the degree of care and skill as a prudent
person would exercise or use under the same circumstances in the conduct of his
own affairs.
(c) The Trustee shall not be relieved from liability hereunder for
negligent action, for negligent failure to act, or willful misconduct; provided,
however, that
(1) the Trustee's standard of care shall be established by
Sections 7.01 (a) and 7.01 (b) herein;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by one or more Trustee Officers, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(3) the Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and in accordance with
direction of Noteholders of not less than a majority of the Note
Principal Balance of all of the Outstanding Notes relating to the time,
method and place for conducting any Proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred on the
Trustee under this Indenture.
Section 7.02 Notice of Default.
Upon the occurrence of a Default hereunder known to the Trustee with
respect to the Notes, the Trustee shall give notice of such Default to the
Noteholders within ninety days after the occurrence thereof; provided, however,
that, except in the case of a default in the payment of interest on or principal
of the Notes, the Trustee shall be protected in withholding such notice if and
so long as Trustee officers in good faith determine that the withholding of such
notice is in the interest of the Noteholders.
Section 7.03 Certain Rights of Trustee.
Except as otherwise provided in Section 7.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall
be sufficiently evidenced by an Issuer Order;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder,
the Trustee (unless other evidence be herein specifically
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prescribed) may, in the absence of bad faith on its part, rely
upon an Officer's Certificate;
(d) as a condition to the taking, suffering or omitting of any
action by it hereunder, the Trustee may consult with counsel,
and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture or to
honor the request or direction of any of the Noteholders
pursuant to this Indenture, unless such Noteholders shall have
offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or
document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as
it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Issuer,
personally or by agent or attorney upon reasonable advance
written notice, with such examination to be conducted during
the Issuer's normal business hours and in a manner that does
not unreasonably interfere with the Issuer's conduct of its
affairs and the Trustee's costs of any such examination shall
be borne by the Trustee or, if requested by one or more
Noteholders, then by the Noteholder(s) requesting that such
examination be made;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or
through agents or attorneys, and the Trustee shall not be
responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(h) prior to the occurrence of an Event of Default hereunder and
after the curing or waiver of such Event of Default (or the
rescission of the exercise of any remedies consequent
thereon), the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture,
the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in
this Indenture and no implied covenants or obligations shall
be read into the Indenture against the Trustee; and
(i) the Trustee shall have no liability or responsibility for any
actions or omissions to act of the Issuer or any other Person.
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Section 7.04 Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except the certificate
of authentication, shall be taken as the statements of the Issuer, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Indenture, of the Trust
Estate or of the Notes. The Trustee shall not be accountable for the use or
application by the Issuer of Notes or the proceeds thereof.
Section 7.05 May Hold Notes.
The Trustee, any Paying Agent, any Note Registrar or any other agent of
the Issuer, in its individual or any other capacity, may become the owner or
pledgee of Notes and, subject to Sections 7.07 and 7.12, may otherwise deal with
the Issuer with the same rights it would have if it were not Trustee, Paying
Agent, Note Registrar or such other agent.
Section 7.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds held by the Trustee in trust hereunder except to the extent
required herein or required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed upon
by the Issuer and except to the extent of income or other gain on investments
that are deposits in or certificates of deposit of the Trustee, in its
commercial capacity, and income or other gain actually received by the Trustee
on Eligible Investments.
Section 7.07 Compensation and Reimbursement.
The Issuer agrees:
(1) On each Payment Date, the Trustee shall be entitled to a
monthly fee equal to the product of 1/12th times 0.175% of the sum of
the aggregate Outstanding Note Principal Balances plus the Imputed
Principal Balance of the Equity Interest, as compensation for its
services during the related period (the "Trustee's Fee").
(2) To indemnify the Trustee and its agents for, and to hold
it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder.
The Trustee hereby agrees not to cause the filing of a petition or
otherwise institute any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other Proceeding under any federal or state bankruptcy
or similar law against the Issuer until at least 91 days after the payment in
full of all Notes issued under this Indenture. The provisions of this Section
7.07 shall survive the resignation or removal of the Trustee and the termination
of this Indenture.
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Section 7.08 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 7.09.
(b) The Trustee may resign at any time by giving written notice of its
resignation to the Issuer. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority of Note Principal Balance of all of the Outstanding Notes delivered to
the Trustee and to the Issuer. The Trustee may be removed for cause by the
Issuer provided that the Issuer receives confirmation that the appointment of
the successor Trustee will not result in the lowering of the rating of any Class
of Notes by the Rating Agency.
(d) If at any time the Trustee shall become incapable of acting with
respect to the Notes or shall be adjudged a bankrupt or insolvent or a receiver
or liquidator of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Issuer may remove the Trustee, or, subject to Section 6.16, any Noteholder who
has been a bona fide Holder of a Note of any Class for at least six months may,
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Issuer shall promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapability or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority of Note
Principal Balance of all Notes then Outstanding delivered to the Issuer and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee and supersede the
successor Trustee appointed by the Issuer. If no successor Trustee shall have
been so appointed by the Issuer or the Noteholders and shall have accepted
appointment in the manner hereinbefore provided, any Noteholder who has been a
bona fide Holder of a Note of any Class for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of the
Notes as their names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office. A copy of any such notice shall be sent to the Rating Agency.
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Section 7.09 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective, and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts,
duties and obligations of the retiring Trustee; but, on request of the Issuer or
the successor Trustee, such retiring Trustee shall, upon payment of its charges
then unpaid, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Issuer shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
Section 7.10 Merger, Conversion, Consolidation or Succession to Business
of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes.
Section 7.11 Corporate Trustee Required, (Trustee) Eligibility
There shall at all times be a Trustee hereunder that shall (a) (i) be a
corporation organized and doing business under the laws of the United States of
America or of any State, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, or (ii)
be a member of a bank holding system, having a combined capital and surplus of
at least $50,000,000. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of a supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the affect hereinafter specified in this Article.
Section 7.12 Preferential Collection of Claims Against Issuer.
If the Trustee shall be or shall become a creditor, directly or
indirectly, secured or unsecured, of the Issuer within three months prior to a
Default, then, unless and until such Default shall be cured, the Trustee shall
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set apart and hold in a special account for the benefit of the Trustee,
individually, and the Holders of the Notes, all proceeds of the Pooled
Certificates.
Section 7.13 Co-Trustees and Separate Trustees.
At any time or times, for the purpose of meeting the legal requirements
of any jurisdiction in which any item of the Trust Estate may at the time be
located, the Issuer and the Trustee shall have power to appoint, and, upon the
written request of the Trustee or of the Holders of a majority of the Note
Principal Balances of all of the Outstanding Notes, the Issuer shall for such
purpose join with the Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint one or more Persons
approved by the Trustee either to act as co-trustee, jointly with the Trustee,
of all or any part of the Trust Estate, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section. If the Issuer does not join in
such appointment within 15 days after the receipt by it of a request to do so,
or in case an Event of Default has occurred and is continuing, the Trustee alone
shall have power to make such appointment. The reasonable fees and expenses of
any such co-trustee or separate trustee shall be paid by the Trust Estate.
Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Issuer.
Section 7.14 Paying Agents.
Whenever the Issuer shall have one or more Paying Agents, the Trustee
will, on or before each Payment Date or Redemption Date, deposit with each such
Paying Agent cash, Certificates of Deposit or a letter of credit in an amount
sufficient to pay the principal so becoming due (to the extent funds are then
available for such purposes), such sum to be held in trust for the benefit of
the Persons entitled to such principal, and the Trustee will promptly notify the
Issuer of its action or failure so to act.
ARTICLE EIGHT
NOTEHOLDERS' LIST
Section 8.01 Issuer to Furnish Trustee Names and Addresses of
Noteholders.
The Issuer will furnish or cause to be furnished to the Trustee
monthly, not more than eight days after each Record Date, a list, in such form
as the Trustee may reasonably require, of the names and addresses of each
Noteholder of each Class of Notes as they appear on the Note Register as of such
Record Date, and at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
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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 Trustee is
the Note Registrar, no such list shall be required to be furnished to the
Trustee, and the Trustee shall furnish such list to the Issuer upon the Issuer's
written request, within 30 days after receipt by the Trustee of any such
request.
Section 8.02 Preservation of Information; Communications to Noteholders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Noteholders of each Class of Notes
contained in the most recent list furnished to the Trustee as provided in
Section 8.01 or maintained by the Trustee as Note Registrar. The Trustee may
destroy any list furnished to it as provided in Section 8.01 upon receipt of a
new list so furnished.
Section 8.03 Reports by Tax Administrator.
Financial Asset Management LLC will act as tax administrator (together
with any permitted successors or assignees, the "Tax Administrator") for the
Notes. The Tax Administrator shall deliver a written report to each record
holder of any Class of Notes and, if applicable, to the Internal Revenue
Service, at least annually and otherwise as required by statute, regulation, or
administrative ruling, reporting (i) original issue discount accrued on each
Class of Notes during the relevant period and (ii) information necessary to
permit each Holder to compute the accrual of any market discount on such Class
of Notes, and (iii) any other information necessary to enable the Noteholders to
report all other information regarding each Class of Notes that such Noteholders
are required to report to the Internal Revenue Service by statute, regulation,
or administrative ruling. In addition, the Tax Administrator shall report to any
Noteholder in writing any other tax accounting information reasonably requested
by such Noteholder to enable it to prepare its federal tax returns. The Trustee
shall cooperate with the Tax Administrator by supplying it with a list of
Noteholders, federal tax identification numbers and their addresses (based on
the Note Register) as requested by the Tax Administrator, and by sending copies
of all Note Remittance Reports and Aggregate Collateral Reports to the Tax
Administrator, in each case to the address most recently furnished by the Tax
Administrator to the Trustee. Financial Asset Management LLC serving as Tax
Administrator will be permitted to delegate its duties as Tax Administrator to a
third party with the prior written consent of the Issuer and the Trustee, which
consent shall not be unreasonably withheld. The Tax Administrator will report
original issue discount on the Notes under Section 1272(a)(6) of the Code by
using a prepayment assumption of 200% PSA, which prepayment assumption assumes
no Realized Losses. The Tax Administrator shall send a copy to the Issuer of any
reports it delivers to a Noteholder pursuant to this Section 8.03(b). The Issuer
agrees to report original issue discount on each Class of Notes on the same
basis as determined by the Tax Administrator. In the event the Tax Administrator
resigns or is removed for any reason, AIC shall procure a successor and shall be
responsible for any compensation paid thereto.
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ARTICLE NINE
COVENANTS OF ISSUER
Section 9.01 Maintenance of Office or Agency.
The Issuer will maintain an office or agency within the United States
of America where any Class of Notes may be presented or surrendered for payment,
where any Class of Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Issuer in respect of any
Class of the Notes and this Indenture may be served. The Issuer hereby initially
designates the Corporate Trust Office of the Trustee as such office or agency.
The Issuer will give prompt written notice to the Trustee of the location, and
of any change in the location, of any such office or agency. If at any time the
Issuer shall fail to maintain any such office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office, and the Issuer
hereby appoints the Trustee at its Corporate Trust Office as its agent to
receive all such presentations, surrenders, notices and demands.
Section 9.02 Money for Note Payments to Be Held in Trust.
Subject to the provisions of Section 6.05, if applicable, if the Issuer
shall at any time act as its own Paying Agent, it will, on or before each
Payment Date or Redemption Date, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal and interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
action or failure so to act.
The Issuer will cause each Paying Agent, other than the Trustee, to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of interest
and/or principal due on each Class of the Notes in trust for the
benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and pay
such sums to such Persons as herein provided;
(2) give the Trustee notice of any Default in the making of
any required payment of principal; and
(3) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Issuer or such Paying Agent, such sums to be held by the Trustee
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upon the same trusts as those upon which such sums were held by the Issuer or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuer, in trust for the payment of interest or principal due on any Note
of any Class and remaining unclaimed for two years after such interest or
principal has become due and payable shall be paid to the Issuer on Issuer
Request, or (if then held by the Issuer) shall be discharged from such trust;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money (but only to the extent of
the amounts so paid to the Issuer), and all liability of the Issuer as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such release of payment, may at
the expense of the Issuer cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in New York, New York and in the city in which the Corporate
Trust Office is located, 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 Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
release of payment (including, but not limited to, mailing notice of such
release to Holders whose Notes have been called but have not been surrendered
for redemption or whose right to or interest in monies due and payable but not
claimed is determinable from the records of any Paying Agent, at the last
address of record of each such Holder).
Section 9.03 Existence.
(a) The Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware.
(b) Subject to Sections 9.03 (c) and (d), the Owner Trustee will keep
in full effect its existence, rights and franchises as a corporation under the
laws of the United States of America or any state thereof.
(c) Any corporation into which the Owner Trustee hereunder may be
merged or with which it may be consolidated or any corporation resulting from
any merger or consolidation to which such Owner Trustee hereunder shall be a
party, shall be the successor Owner Trustee under this Indenture without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto, anything herein, or in any agreement relating to
such merger or consolidation, by which any such Owner Trustee may seek to retain
certain powers, rights and privileges theretofore obtaining for any period of
time following such merger or consolidation, to the contrary notwithstanding.
(d) Any successor to the Owner Trustee appointed pursuant to the Trust
Agreement shall be the successor Owner Trustee under this Indenture without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto.
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(e) Upon any consolidation or merger of or other succession to the
Owner Trustee in accordance with this Section 9.03, the Person formed by or
surviving such consolidation or merger (if other than the Owner Trustee) or the
Person succeeding to the Owner Trustee under the Trust Agreement may exercise
every right and power of the Owner Trustee, on behalf of the Issuer under this
Indenture with the same effect as if such Person had been named as the Owner
Trustee herein.
Section 9.04 Protection of Trust Estate.
The Issuer will, at its expense, from time to time execute and deliver
all such supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action as may be necessary or advisable to:
(i) grant more effectively all or any portion of the
Trust Estate;
(ii) maintain or preserve the lien (and the priority
thereof) of this Indenture or to carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of, or protect the
validity of Grant made by this Indenture; or
(iv) preserve and defend title to the Trust Estate
and the rights therein of the Trustee and the Holders of Notes
of any Class against the claims of all persons and parties.
The Issuer hereby designates the Trustee its agent and attorney-in-fact
to execute any financing statement, continuation statement or other instrument
required pursuant to this Section 9.04, and this power of attorney shall be
irrevocable and coupled with an interest; provided, however, that such
designation shall not be deemed to create a duty in the Trustee to monitor the
compliance of the Issuer with the foregoing covenants and provided further that
the duty of the Trustee to execute any instrument required pursuant to this
Section 9.04 shall arise only if the Trustee has knowledge of any failure of the
Issuer to comply with the provisions of this Section 9.04.
The Issuer shall pay or cause to be paid any taxes levied on the
account of the beneficial ownership by the Issuer or an Affiliate of the Issuer
of any Pooled Certificate.
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Section 9.05 Negative Covenants.
(a) The Issuer will not:
(1) sell, transfer, exchange or otherwise dispose of any part
of the Trust Estate except as expressly permitted by this Indenture;
(2) claim any credit on, or make any deduction from, the
interest or principal payable in respect of any Class of Notes by
reason of the payment of any taxes levied or assessed upon any part of
the Trust Estate;
(3) amend its Trust Agreement without first receiving written
assurance from the Rating Agency that its then rating assigned to any
Class of Notes will not be withdrawn or downgraded as a result of such
amendment;
(4) have any employees or own or lease any real property other
than property described in Section 9.08 hereof.
Section 9.06 Issuer May Consolidate, Etc., Only on Certain Terms; Sale
of Collateral Subject to Notes.
(a) The Issuer shall not consolidate or merge with or into any other
Person or convey or transfer its properties and assets substantially as an
entirety to any Person unless:
(1) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger or that acquires by conveyance
or transfer the properties and assets of the Issuer substantially as
an entirety shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, the due and punctual
payment of all interest and principal due on all Classes of Notes and
the performance of every covenant of this Indenture on the part of the
Issuer to be performed or observed;
(2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(3) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental
indenture comply with this Article and that all conditions precedent
in this Article provided for relating to such transaction have been
complied with;
(4) the Rating Agency has confirmed in writing that such
merger, consolidation or transfer will not result in the withdrawal or
downgrading of the rating it has then assigned to any Class of Notes;
and
(5) the interest that the transferee acquires in any
properties or assets that are pledged to secure the Notes shall
expressly be made subject and subordinate to the rights of the
Noteholders and the Trustee.
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(b) The Issuer may sell the Collateral to another person only on terms
that clearly reflect that the Collateral has been pledged to the Trustee to
secure the Notes; provided that the Rating Agency confirms in writing that such
sale will not result in any downgrading or withdrawal of its then rating of any
Class of Notes.
Section 9.07 Successor Substituted2.
Upon any consolidation or merger, or any conveyance or transfer of the
properties and assets of the Issuer substantially as an entirety in accordance
with Section 9.06, the Person formed by or surviving such consolidation or
merger (if other than the Issuer) or the Person to which such conveyance or
transfer is made 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. In the event of any such
conveyance or transfer, the Person named as the "Issuer" in the first paragraph
of this instrument or any successor that shall theretofore have become such in
the manner prescribed in this Article may be dissolved, wound-up and liquidated
at any time thereafter, and such Person thereafter shall be released from its
liabilities as obligor and maker on all of the Notes and from its obligations
under this Indenture.
Section 9.08 No Other Business.
The Issuer shall not engage in any business other than acquiring,
pledging, holding, and disposing of mortgages and mortgage related securities,
or interests therein, issuing interests therein, issuing debt obligations
secured thereby, and engaging in all acts necessary or incidental to any of the
foregoing. The Issuer shall notify the Rating Agency when it intends to issue
securities other than the Notes pursuant to this Section 9.08, and the Issuer's
right to issue any additional securities shall be subject to Section 9.09.
Section 9.09 Limitation on Borrowing.
The Issuer shall not incur any indebtedness other than obligations
described in Sections 3.10 or 9.08 hereof or elsewhere herein and expenses
incidental thereto. In particular, the Issuer shall not guarantee or become
obligated for the debts of any Person or hold out its credit as being available
to satisfy the obligations of any Person, shall not pledge its assets for the
benefit of any Person or make any loans or advances to any Person, and shall not
acquire direct obligations or securities of its Affiliates. The Issuer shall
notify the Rating Agency when it intends to incur an indebtedness pursuant to
this Section 9.09. The Issuer shall not issue any new indebtedness secured by
the Collateral, and shall not incur any indebtedness other than the Notes
without (i) receiving written confirmation from the Rating Agency that such
issuance will not result in any withdrawal or downgrading of its rating then
assigned to any Class of Notes and (ii) receiving an Opinion of Counsel that
such issuance will not cause the Issuer to be taxable as a corporation or a
taxable mortgage pool.
Section 9.10 AIC/SPE Transfer Agreement.
Upon discovery by the Issuer of any breach by AIC of any of its
representations, warranties and covenants under the AIC/SPE Transfer Agreement,
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the Issuer shall use its best efforts to cause AIC to correct such breach, or
shall pursue such remedies as are provided for such breach, including, in
certain circumstances, requiring AIC to repurchase from the Issuer the Pooled
Certificate affected by such breach for its Purchase Price. If any Pooled
Certificate is repurchased by AIC pursuant to the AIC/SPE Transfer Agreement,
the Issuer shall cause the Purchase Price therefor to be paid to the Trustee for
deposit into the Payment Account, and, upon receipt of any such Purchase Price,
the Trustee shall treat such funds as a final payment on the repurchased Pooled
Certificate and shall release such Pooled Certificate from the lien of this
Indenture and shall execute any and all instruments reasonably requested by AIC
to confirm such release to AIC.
ARTICLE TEN
ARTICLE TEN REDEMPTION OF NOTES
Section 10.01 Redemption at the Option of the Issuer; Election to Redeem.
The Notes of all Classes shall be redeemable at the option of the
Issuer, in whole but not in part, on any Payment Date on or after the Payment
Date on which, after taking into account payments of principal to be made on
such Payment Date, the aggregate Outstanding Note Principal Balance of all Notes
is less than 25 % of the aggregate original Note Principal Balance of all of the
Notes issued. In addition, the Issuer may redeem all Classes of Notes, in whole
but not in part, at any time upon a determination by the Issuer, based upon an
Opinion of Counsel, that a substantial risk exists that any Class of Notes will
not be treated as evidences of indebtedness for federal income tax purposes. Any
Payment Date on which such Notes are to be redeemed is referred to herein as a
"Redemption Date."
Payments of interest and principal due on the Redemption Date shall
continue to be payable to the Holders of each Class of Notes as of the
applicable Redemption Record Date according to their terms and the provisions of
Section 3.07. The election of the Issuer to redeem all Classes of Notes pursuant
to this Section 10.01 shall be evidenced by an Issuer Order directing the
Trustee to make the payment of the Redemption Price of all of the Notes from
funds in the Payment Account and/or other funds and/or monies deposited with the
Trustee by the Issuer pursuant to Section 10.04.
The Issuer shall set the Redemption Date and the Redemption Record Date
and shall give notice thereof to the Trustee pursuant to Section 10.02 and shall
prepare the notice of redemption specified in Section 10.03.
Section 10.02 Notice to Trustee.
In the case of any redemption pursuant to Section 10.01, the Issuer
shall, at least 15 days prior to the Redemption Date (unless a shorter period
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the expected principal amount of each Class of Notes to be redeemed
on such Redemption Date.
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Section 10.03 Notice of Redemption by the Issuer.
Notice of redemption pursuant to Section 10.01 shall be given by
first-class mail, postage prepaid, mailed not less than ten days prior to the
applicable Redemption Date to each Noteholder at his address in the Note
Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price to be paid to each Class of
Notes on the Redemption Date, and the fact that, on the
Redemption Date, payment of the Redemption Price shall redeem
each Class of the Notes in full;
(3) that payment of the Redemption Price shall be
the final payment on each Class of Notes; and
(4) the place where each Class of Notes are to be
surrendered for payment of the Redemption Price, which shall
be the office or agency of the Issuer to be maintained as
provided in Section 9.01.
Notice of redemption of each Class of Notes shall be given by the
Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer. Failure to give notice of redemption, or any defect
therein, to any Noteholder shall not impair or affect the validity of the
redemption of any Notes of any Class.
Section 10.04 Deposit of Redemption Price.
In the case of all redemptions, on or before the Business Day next
preceding the giving of notice of redemption as provided in Section 10.03, the
Issuer shall deposit with the Trustee cash, Certificates of Deposit or a letter
of credit in an amount sufficient to provide for payment of the Redemption Price
of all of the Notes of each Class on such Redemption Date (except to the extent
such payment is to be made from the Payment Account).
Section 10.05 Notes Payable on Redemption Date.
Notice of redemption having been given as provided in Section 10.03,
each Class of Notes shall, on the Redemption Date, become due and payable at the
Redemption Price. On or after the Redemption Date, any Class of Notes shall be
paid by the Issuer at the Redemption Price; provided, however, that payments due
on a Payment Date on or prior to the Redemption Date shall be payable to the
Noteholders of such Notes registered as such on the relevant Record Dates
according to their terms and the provisions of Section 3.07.
Section 10.06 Retention of Notes by Issuer.
In the event that the Issuer effects a redemption of all Classes of the
Notes in accordance with the provisions of this Article Ten, it may elect to
cause any Class of Notes to remain Outstanding and not to terminate all Classes
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of the Notes or release the lien of the Indenture with respect to the Trust
Estate securing such Class of Notes.
Notwithstanding the foregoing, no redemption of any Notes shall be
permitted without retiring them unless the Issuer shall have delivered to the
Trustee an Opinion of Counsel that such redemption without retirement will not
adversely affect the status of all Classes of Notes, for federal income tax
purposes, as debt instruments. If any Class of Notes is redeemed and not
retired, the Trustee shall not release its lien on the Trust Estate.
ARTICLE ELEVEN
ACCOUNTS, ACCOUNTINGS AND RELEASES
Section 11.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee may demand
payment or delivery of, and shall receive and collect, directly and without
intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable to or receivable by the Trustee pursuant to this
Indenture, including all payments due on the Pooled Certificates securing the
Notes in accordance with the terms and conditions of the Pooled Certificates.
The Trustee shall hold all such money and property received by it in trust for
the Noteholders and shall apply 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 Pooled Certificate securing the
Notes, the Trustee may, and upon the request of the Holders of a majority of
Note Principal Balance of the Outstanding Notes (as evidenced by the Note
Register), subject to Section 7.03(e), shall, take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate Proceedings. In the event that the Trustee has
not received timely payment on the Pooled Certificates securing the Notes, the
Trustee shall immediately notify the appropriate Person of its failure to
receive such payment. The Trustee shall request that such appropriate Person
wire such payments in immediately available funds to the Trustee, or take such
other action as the Trustee shall designate in accordance with (a) the
procedures of such appropriate Person then in effect and (b) any agreements made
by the Trustee or such Person with the Issuer regarding such Pooled Certificate.
Any such action shall be without prejudice to any right to claim a Default or
Event of Default under this Indenture and to proceed thereafter as provided in
Article Six.
Section 11.02 Payment Account.
The Trustee shall, prior to the Delivery Date for the Notes, establish
the Payment Account, into which the Trustee shall deposit all Collateral
Proceeds as received by the Trustee; provided, however, that all amounts as
provided by Section 4.01(c) shall be deposited in such Payment Account on the
Delivery Date. All monies deposited from time to time in the Payment Account
pursuant to this Indenture shall be held by the Trustee as part of the Trust
Estate as herein provided.
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(a) All payments to be made from time to time by the Trustee to the
Noteholders out of funds in the Payment Account pursuant to this Indenture shall
be made by the Trustee as the Paying Agent of the Issuer.
(b) Monies in the Payment Account shall be invested and reinvested, but
only in one or more Eligible Investments, by the Trustee at its discretion. All
income or other gain from such investments shall be credited to such Payment
Account, and, except with respect to any losses incurred from investment of
funds deposited on the Delivery Date pursuant to Section 4.01(c), any loss
resulting from such investments shall be charged to the Trustee. Except as
otherwise provided in Section 4.01(c), income and gain from such investments
shall be payable monthly to the Trustee as additional compensation for its
services as trustee. Except with respect to investments of funds deposited on
the Closing date pursuant to Section 4.01(c), if any loss is incurred on any
Eligible Investments in which Payment Account funds are invested, the Trustee
shall deposit the amount of such loss into the Payment Account, out of its own
funds, promptly after the loss was incurred, and in any event prior to the next
Payment Date.
Section 11.03 Reports by Trustee.
The Trustee shall timely supply to the Issuer any information in the
Trustee's possession that the Issuer may from time to time reasonably request in
writing with respect to the Collateral and the Payment Account.
Section 11.04 Note Remittance Reports and Related Matters.
(a) Not later than each Payment Date, the Trustee shall prepare a
report (a "Note Remittance Report") that shall state the following information:
(1) (A) the aggregate amount of Available Funds available for
payment on all Classes of Notes and to the Equity Interest on such
Payment Date, (B) the amount of interest to be paid to each Class of
Notes, and the Note Interest Rate being paid on the Notes (based on the
then Note Principal Balance of such Class of Notes), and (C) the amount
of principal being paid to each Class of Notes, on such Payment Date in
the aggregate and per $1,000 initial aggregate Note Principal Balance
of Notes of each Class;
(2) the amount of any Realized Losses being charged against
either the Equity Interest, if applicable (and the remaining Imputed
Principal Balance thereof, if any), and/or the then current Note
Principal Balance for each affected Class or Classes of Notes;
(3) for each Class of Notes, a factor, expressed as a decimal
carried to seven digits, equal to the percentage of the initial Note
Principal Balance for each Class that remains outstanding on such
Payment Date, after giving effect to the payments and Realized Loss
charge-offs to be made on such Payment Date;
(4) the Note Principal Balance of each Class of Notes after
giving effect to the payments and Realized Loss charge-offs to be made
on such Payment Date; and
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(5) the amount of Percentage Cash Flow Payments and Imputed
Principal Payments otherwise due to the Equity Interest (if any) that
are paid to the holders of the Notes to provide for the payment of
interest on the Notes at a rate of 4% per annum and the amount of the
Percentage Cash Flow Payment and the Imputed Principal Payment being
made to the Issuer in respect of the Equity Interest.
(b) On each Payment Date, the Trustee will transmit by mail to the
Issuer, Bear ▇▇▇▇▇▇▇ and each Noteholder a copy of the related Note Remittance
Report.
(c) As soon as reasonably practicable following each Payment Date, and
in any event no later than seven Business Days after each Payment Date, the
Trustee shall mail to the Issuer, Bear ▇▇▇▇▇▇▇, AIC and to each Noteholder an
"Aggregate Collateral Report" containing the following information, based upon,
and to the extent reported in, the Certificate Remittance Reports received by
the Trustee through the Certificate Remittance Reports related to the Available
Funds for such Payment Date:
(1) For each Outstanding Pooled Certificate: (A) the
Certificate Principal Balance of such Pooled Certificate before and
after the related Certificate Distribution Date; (B) the Pass-Through
Rate and the Net Certificate Rate borne by such Pooled Certificate with
respect to the related Certificate Distribution Date; (C) the amount of
interest distributed on such Pooled Certificate on the related
Certificate Distribution Date, as well as any amount by which the
amount of interest scheduled to be distributed on such Pooled
Certificate on such Certificate Distribution Date exceeded the amount
of interest actually distributed thereon; (D) all Realized Losses
incurred on the Mortgage Loans underlying the Pooled Certificate on the
related Certificate Distribution Date, since the date of issuance of
such Pooled Certificate and since March 24, 1997 (except since March
17, 1997 in the case of the PHH Pooled Certificates); (E) all Realized
Losses allocated to the Pooled Certificate on the related Certificate
Distribution Date, since the date of issuance of such Pooled
Certificate, and since March 24, 1997 (except since March 17, 1997 in
the case of the PHH Pooled Certificates); (F) the amount and aggregate
principal balance of Mortgage Loans underlying such Pooled Certificate
that were (i) more than 30 but fewer than 60 days delinquent, (ii) 60
or more but fewer than 90 days delinquent, (iii) 90 or more days
delinquent, (iv) in foreclosure and (v) real estate owed by the related
Underlying Trust, in each case, as of the end of the reporting period
to which the Certificate Remittance Report delivered with respect to
such Pooled Certificate as of the related Certificate Distribution Date
relates; (G) the amount of principal distributed on such Pooled
Certificate on the related Certificate Distribution Date; (H) the total
amount distributed on such Pooled Certificate on the related
Certificate Distribution Date; (I) the amount of any Pooled Certificate
Credit Support remaining on such Payment Date; and (J) the amount of
any cumulative interest shortfalls on any Pooled Certificates on such
Payment Date.
(2) For all Mortgage Loans underlying all of the Pooled
Certificates, an aggregate statement of delinquency statistics,
reporting all of the information specified in clause (1)(F) above in
the aggregate; and
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(3) The number and aggregate Certificate Principal Balance of
all of the Pooled Certificates as of the respective related Certificate
Distribution Dates.
(d) The Trustee will transmit by mail to the Issuer upon its written
request a copy of the Certificate Remittance Report relating to each of the
Underlying Series containing Outstanding Pooled Certificates, in each case
within three Business Days after the mailing of the related Aggregate Collateral
Report. The Trustee shall also provide copies of Certificate Remittance Reports
that it has received to Bear ▇▇▇▇▇▇▇ or to a Noteholder upon Bear ▇▇▇▇▇▇▇' or
such Noteholder's written request and payment to the Trustee of its costs of
duplicating and mailing the same.
(e) Not less than five Business Days after receiving an Issuer Order
requesting information regarding an optional redemption of Notes as of a
proposed Redemption Date set forth in such Issuer Order, the Trustee shall
provide the following information to the Issuer:
(i) the aggregate Note Principal Balances for each Class
of Notes as of such proposed Redemption Date; and
(ii) the amount in the Payment Account available for
application to the redemption of all Classes of Notes.
(f) The Trustee shall send copies of each Note Remittance Report and
Aggregate Collateral Report to the Rating Agency, to the address provided by the
Rating Agency to the Trustee for such purpose.
▇▇▇▇▇▇▇ ▇▇.▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇.
(a) The Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the lien of this
Indenture, or convey, without recourse, the Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Trustee as
provided in this Article Eleven shall be bound to ascertain the Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any monies.
(b) The Trustee shall, at such time as there are no Notes of any Class
Outstanding, and as otherwise provided for in Section 5.01, release the Trust
Estate from the lien of this Indenture in accordance with Article Five.
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ARTICLE TWELVE
APPLICATION OF MONIES
Section 12.01 Disbursements of Monies from Payment Account.
(a) Unless the Notes have been declared due and payable pursuant to
Section 6.02 and moneys collected by the Trustee are being applied in accordance
with Section 6.08, Available Funds on deposit in the Payment Account on any
Payment Date shall be withdrawn by the Trustee from the Payment Account, in the
amounts required, for application as follows:
(i) first, from amounts representing interest
received on the Pooled Certificates, in the following
priority, (A) to the Trustee, the Trustee's Fee, (B) to the
Loss Mitigation Advisor, the Loss Mitigation Advisor's Fee and
(C) to the Owner Trustee, the Owner Trustee's Fee;
second, from amounts representing interest
received on the Pooled Certificates, subject to clause (ii)
below, to the holders of each Class of Notes interest at the
Note Interest Rate and to the Issuer in respect of the Equity
Interest a Percentage Cash Flow Payment at the Percentage Cash
Flow Rate, pro rata based on the Outstanding Note Principal
Balance of each Class of Notes and the then Imputed Principal
Balance of the Equity Interest, to the extent that Available
Funds are sufficient therefor;
third, to the Trustee and Owner Trustee,
reimbursements of expenses and indemnifications permitted
hereunder to the extent not covered by their fees; and
fourth, subject to clause (ii) and to clause
(iii) from amounts representing principal received on the
Pooled Certificates and any amounts received on the Other
Assets, to the holders of each Class of Notes and the Issuer
as holder of the Equity Interest pro rata based on the
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Original Percentages until the Class Principal Balance of each
Class of Notes and the Imputed Principal Balance of the Equity
Interest have been reduced to zero.
(ii) Notwithstanding the foregoing, if, with respect
to any Payment Date the Notes would receive interest at a rate
lower than 4% per annum, first the Percentage Cash Flow
Payment and then the Imputed Principal Payment will be
subordinated to the extent necessary to provide each Class of
Notes with interest at the rate of 4% per annum on such
Payment Date.
(iii) Notwithstanding the foregoing, (A) Realized
Losses that are allocated to the Pooled Certificates and (B)
any excess of the Certificate Principal Balance over the
Purchase Price of a Pooled Certificate repurchased as a result
of a breach of representation of warranty will be allocated
first to the Equity Interest to reduce the Imputed Principal
Balance thereof until its outstanding Imputed Principal
Balance equals zero and will be allocated thereafter to reduce
the Class Principal Balances of the Classes of Notes in
reverse alphabetical order commencing with the Class D Notes
until the respective Class Principal Balances thereof have
been reduced to zero.
(iv) On the Redemption Date, the Trustee shall
withdraw from the Payment Account an amount equal to the
aggregate Redemption Price of the Notes and, on behalf of the
Issuer, apply that amount to the payment of such Redemption
Price as provided in Article Ten.
(v) All amounts payable to Holders of a Class of
Notes or Realized Losses allocated to a Class of Notes shall
be payable or allocated as the case may be among the Holders
of such Class pro rata based upon their respective Percentage
Interests.
(b) On each Payment Date on which funds are to be paid to the Issuer in
respect of the Equity Interest, such funds, upon payment, shall be released from
the lien of this Indenture. In addition, on the Payment Date on which the
principal of and interest on the Notes and all other payments required hereunder
have been paid in full, any cash balance then remaining in the Payment Account
shall be withdrawn from the Payment Account by the Trustee and shall be released
from the lien of this Indenture and paid by the Trustee to the Issuer for
distribution to the holders of the Trust Certificates in accordance with the
provisions of Section 5.01 of the Trust Agreement.
Section 12.02 Limited Release of Collateral.
To the extent and only to the extent required to make any required
Percentage Cash Flow Payments and Imputed Principal Payments in respect of the
Equity Interest, pursuant to the provisions of Section 12.01 above, the Trustee
shall release its lien on the monies in the Payment Account and make payment to
the Issuer in the amounts to which it is entitled.
Section 12.03 Trust Account.
All monies held by or deposited with the Trustee in any fund or account
pursuant to the provisions of this Indenture, including the Payment Account, and
not invested in Eligible Investments as herein provided, shall be deposited in
one or more trust accounts for the benefit of the Noteholders. To the extent
monies deposited in a trust account exceed the Federal Deposit Insurance
Corporation insured amounts, such account shall be invested in Eligible
Investments pursuant to the written directions of the Issuer.
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ARTICLE THIRTEEN
AMENDMENTS; SUPPLEMENTAL INDENTURES
Section 13.01 Supplemental Indentures Without Consent of Noteholders.
Without the consent of the Holders of the Notes of any Class, the
Issuer and the Trustee, at any time and from time to time, may enter into one or
more indentures supplemental hereto, for any of the following purposes:
(1) 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 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; or
(2) to add to the conditions, limitations and restrictions
on the authorized amount, terms and purposes of issue, authentication
and delivery of the Notes; or
(3) to evidence the succession of another Person to the
Issuer, and the assumption by any such successor of the covenants of
the Issuer contained herein and in the Notes; or
(4) to add to the covenants of the Issuer or the Trustee, for
the benefit of the Holders of all Notes, or to surrender any right or
power herein conferred upon the Issuer; or
(5) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee; or
(6) to cure any ambiguity, to amend, correct or supplement any
provision herein or in any supplemental indenture that may be
defective, ineffective or inconsistent with any other provision herein
or in any supplemental indenture, or to amend or add any other
provisions with respect to matters or questions relating to this
Indenture or in any supplemental indenture, including, but not limited
to, any provisions necessary to achieve the intended federal income tax
treatment of the Noteholders of each Class and the Issuer; provided,
that such action shall not adversely affect the interests of the
Holders of any Outstanding Notes of any Class; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes and to add
to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by
more than one Trustee, pursuant to the requirements of Section 7.09 or
7.13 hereof; or
(8) to provide for the issuance of an additional Class or
Classes of Notes provided that the conditions therefor as set forth in
Section 3.10 hereof are satisfied.
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The 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, but the Trustee shall not be
obligated to enter into any such supplemental indenture that affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise except to the extent required by law.
The Trustee may in its discretion determine whether or not the rights
of the Holders of any Class of Notes would be adversely affected by any
supplemental indenture, and any such determination shall be conclusive upon the
Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. In making such determination, a supplemental indenture
shall be conclusively deemed by the Trustee not to adversely affect the
Noteholders or the Noteholders of a given Class if (i) the Trustee receives a
letter or other writing from the Rating Agency to the effect that execution of
the supplemental indenture will not result in any withdrawal or downgrading of
the then-current rating assigned by it to any Class of Notes or the Notes of a
given Class and (ii) the supplemental indenture effects no change in payments,
Redemption Prices, Payment Dates, Record Dates, or terms of optional redemption.
The Trustee shall not be liable for any such determination made in good faith.
Section 13.02 Supplemental lndentures With Consent of Noteholders.
With the prior written consent of the Holders of not less than a
majority of the Voting Rights of all Classes of Notes or if the amendment
affects less than all Classes of Notes, of the Class or Classes affected
thereby, the Issuer and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture relating to
the Notes or one or more Classes thereof, or of modifying in any manner the
rights of the Holders of the Notes or one or more Classes thereof, under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Note, as evidenced by the Note
Register, affected thereby:
(1) change the Stated Maturity of the principal of, or the
timing of any installment of principal on, any Note, reduce the
principal amount thereof or the Redemption Price or time for redemption
with respect thereto, change the provisions of this Indenture relating
to the application of proceeds of the Trust Estate to the payment of
interest on or principal of the Notes, change any place where, or the
coin or currency in which, any Note is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Maturity thereof (or, in the case of redemption, on or after the
applicable Redemption Date); or
(2) reduce the Percentage Interest of the Class Principal
Balance of the Outstanding Notes of each Class, the consent of the
Holders of which is required for the execution of any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or
certain Defaults hereunder and their consequences provided for in this
Indenture; or
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(3) impair or adversely affect the Trust Estate except as
otherwise permitted herein; or
(4) except as expressly provided herein, 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 a Trust Estate or terminate the
lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security afforded by the lien of
this Indenture; or
(5) change the definition of Event of Default or the
percentage required to direct the Trustee to sell or liquidate the
Trust Estate pursuant to Section 6.04; or
(6) change any of the conditions precedent for the redemption
of Notes under this Indenture or any supplemental indenture; or
(7) modify any of the provisions of this Section or Section
6.15, except to increase the Percentage Interest required to consent to
amendments or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holders of all of the Outstanding Classes or all of the Holders of
Notes of the affected Class, in each case as evidenced by the Note
Register.
The Trustee may in its discretion determine whether or not any Notes of
a given Class would be affected by any supplemental indenture, and any such
determination shall be conclusive upon the Holders of all Notes of such Class,
whether theretofore or thereafter authenticated and delivered hereunder. The
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any consent of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
Section 13.03 Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 7.01) 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 Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 13.04 Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes with respect to
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any affected Series; and every Holder of Notes of each Class theretofore or
thereafter authenticated and delivered hereunder and affected by such
supplemental indenture shall be bound thereby.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Article Thirteen, the Issuer shall mail
to the Holders of the Notes as their names appear on the Note Register to which
such supplemental indenture relates, a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Issuer 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 13.05 Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Issuer shall, bear a notation in form approved by the Issuer as to any matter
provided for in such supplemental indenture. If the Issuer shall so determine,
new Notes so modified as to conform, in the opinion of the Issuer, to any such
supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Trustee in exchange for Outstanding Notes.
ARTICLE FOURTEEN
MISCELLANEOUS
Section 14.01 Compliance Certificates and Opinions.
Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, upon the reasonable request of
the Trustee, the Issuer shall furnish to the Trustee an Officer's Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, except that in the case
of any such application or request as to which the furnishing of such a
certificate is specifically required by any provision of this Indenture relating
to such particular application or request, no additional certificate or opinion
need be furnished.
Section 14.02 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an 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
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with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Issuer, unless such counsel knows 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.
Section 14.03 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 of any Class or Classes may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Noteholders in
person or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the 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 acts of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the 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 Holder of any Notes shall bind the Holder (and any
transferee thereof) 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 Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Note.
Section 14.04 Notices, Etc., to Trustee and Issuer.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other document provided for or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office;
or
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(2) the Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class postage prepaid, to the Issuer addressed to it at
Wilmington Trust Company, as Owner Trustee, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: Corporate
Trust Administration, with a copy to Asset Investors Corporation, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: President, or
at any other address previously furnished in writing to the Trustee by
the Issuer.
Section 14.05 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 his address as it appears on the Note
Register not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Noteholder shall affect the
sufficiency of such notice with respect to other Noteholders, and any notice
that is mailed in the manner herein provided shall conclusively be presumed to
have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In the event that, 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 that is satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
Section 14.06 Effect of Headings and Table of Contents.
The Article and Section headings and the Table of Contents herein are
for convenience only and shall not affect the construction hereof.
Section 14.07 Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not.
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Section 14.08 Separability.
In case any provision in this Indenture or in any Class of Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 14.09 Benefits of Indenture.
Nothing in this Indenture or in any Class of Notes, express or implied,
shall give to any Person, other than the parties hereto, and their successors
hereunder and the Noteholders, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 14.10 Legal Holidays2.
In the event that the date of any Payment Date shall not be a Business
Day, then notwithstanding any other provision of the Notes or this Indenture,
payment need not be made on such date but may be made on the next succeeding
Business Day with the same force and effect as if made on the nominal date of
any such Payment Date, and no additional interest shall be payable with respect
thereto.
Section 14.11 Governing Law.
THIS INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS THEREOF, APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
THEREIN.
Section 14.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 14.13 Corporate Obligation2.
No recourse may be taken, directly or indirectly, against any
incorporator, depositor, subscriber to the capital stock, stockholder, officer,
director or employee of the Issuer or the Trustee or of any predecessor or
successor of the Issuer or the Trustee with respect to the Issuer's obligations
on the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith except as otherwise expressly
provided in any such certificate or other writing.
Section 14.14 Loss Mitigation Advisor.
(a) AIC agrees to serve as Loss Mitigation Advisor to the Trustee. AIC
shall have the right to cause its manager, Financial Asset Management LLC, to
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perform on its behalf but it will not thereby be released from its obligations
hereunder. To the extent certain consents to the continuation of the Special
Servicing Agreements despite the transfer of the related Pooled Certificates are
received, the Loss Mitigation Advisor will perform the activities provided for
in the Special Servicing Agreements on behalf of the Trustee with respect to the
Mortgage Loans underlying the applicable Pooled Certificates. To the extent
there is no applicable Special Servicing Agreement or a consent is not received,
the Loss Mitigation Advisor on a monthly basis will nonetheless monitor
delinquency and foreclosure information otherwise available to the Trustee, both
from monthly reports supplied to it as the holder of the related Pooled
Certificates or as reported on publicly available sources. In addition, it will
attempt to contact applicable Servicers in order to determine the status of, and
to make suggestions with respect to procedures relating to, foreclosures. For
such services, the Loss Mitigation Advisor shall be entitled to receive the Loss
Mitigation Advisor's Fee each month, in accordance with Section 12.01(a).
(b) AIC may be removed as Loss Mitigation Advisor at any time upon the
determination by the Trustee that AIC has not performed in accordance with
accepted industry standards as the Loss Mitigation Advisor; provided that prior
to such removal becoming effective, the Trustee seeks and obtains the
affirmative vote of holders of each Class of Notes, voting separately, holding
60% of the Voting Rights of each such Class and the prior written confirmation
of the Rating Agency that such action will not adversely affect its then rating
of any Class of Notes.
(c) In connection with performing its duties as Loss Mitigation
Advisor, AIC may not resign as the Loss Mitigation Advisor or assign its
interest in all or any part of the Loss Mitigation Advisor's Fee without
obtaining the affirmative vote of Holders of each Class of Notes, voting
separately, holding 60% of the Voting Rights of each such Class and the prior
written confirmation of the Rating Agency that such action will not adversely
affect its then rating of any Class of Notes.
Section 14.15 Special Servicing Agreements.
The Trustee acknowledges for the benefit of each servicer or master
servicer under a Special Servicing Agreement to which AIC is a party and which
relates to any of the Pooled Certificates that it is not entitled to exercise
any contractual rights under those various Special Servicing Agreements either
prior to, or, if applicable, after any foreclosure upon the Collateral due to a
default under the Notes, without the express prior written consent of such
servicer or master servicer. In addition, each Holder and each Note Owner by its
acceptance of an Individual Note or of an interest in a Global Note,
acknowledges such limitations on the powers of the Trustee and that it as
Noteholder or Note Owner also has no entitlement to exercise any such
contractual rights.
Section 14.16 Equity Interests.
AIC agrees not to consent to the transfer by the SPE of the trust
certificates in the Issuer, and, except in connection with certain
reorganizations or restructurings of AIC in which the equity interest in the SPE
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would be held by an entity succeeding to the rights under Special Servicing
Agreements applicable to not less than 75% of the then aggregate Certificate
Principal Balances of the Pooled Certificates to which Special Servicing
Agreements relate, AIC agrees not to transfer its equity interest in the SPE to
an entity unaffiliated with AIC, in each case without the affirmative vote of
Holders of each Class of Notes, voting separately, holding at least 60% of the
Voting Rights of such Class and the prior written confirmation of the Rating
Agency that such action will not adversely affect its then ratings of any Class
of the Notes. Any transfer of the equity interest in the SPE by AIC whether or
not a consent of Noteholders is required in accordance with the foregoing will
require the same written confirmation of the Rating Agency.
"Section 14.17 Limitation of Liability
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as owner trustee of the Issuer under the
Trust Agreement, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose for binding only the Issuer, (c) nothing
herein contained shall be construed as creating any liability on Wilmington
Trust Company, individually or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the Trustee and by any Person claiming by, through or under
the Trustee and (d) under no circumstances shall Wilmington Trust Company be
personally liable for the payment of any indebtedness or expenses of the Issuer
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Issuer under this Indenture or
the Notes.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused
this Indenture, dated as of March 27, 1997, to be duly executed by their
respective officers thereunto duly authorized all as of the 27th day of March,
1997.
STRUCTURED MORTGAGE TRUST 1997-1
By: WILMINGTON TRUST COMPANY, as Owner Trustee
and not in its individual capacity
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
STATE STREET BANK AND TRUST COMPANY
as Trustee
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: A.V.P.
AGREED AND ACCEPTED,
with respect to Sections 14.14 and 14.16 and Section 4.01(c)
and Section 8.03
ASSET INVESTORS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: President and Chief Operating Officer
AGREED AND ACCEPTED
with respect to Section 8.03
Financial Asset Management LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: President