EXHIBIT 4.1
EXECUTION COPY
INDENTURE
dated as of February 1, 2000
by and between
ACCREDITED MORTGAGE LOAN TRUST 2000-1,
as Issuer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
Table of Contents
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions....................................................................4
ARTICLE II
THE NOTES; PLEDGE OF SUBSEQUENT MORTGAGE LOANS
Section 2.01. Forms Generally........................................................................5
Section 2.02. Form of Certificate of Authentication..................................................5
Section 2.03. General Provisions with Respect to Principal and Interest Payment......................5
Section 2.04. Denominations..........................................................................6
Section 2.05. Execution, Authentication, Delivery and Dating.........................................6
Section 2.06. Registration, Registration of Transfer and Exchange....................................6
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes.............................................7
Section 2.08. Payments of Principal and Interest.....................................................8
Section 2.09. Persons Deemed Owner..................................................................10
Section 2.10. Cancellation..........................................................................10
Section 2.11. Authentication and Delivery of Notes..................................................11
Section 2.12. Book-Entry Note.......................................................................12
Section 2.13. Termination of Book Entry System......................................................13
Section 2.14. Pledge of Subsequent Mortgage Loans...................................................13
ARTICLE III
COVENANTS
Section 3.01. Payment of Notes......................................................................16
Section 3.02. Maintenance of Office or Agency.......................................................16
Section 3.03. Money for Note Payments to Be Held in Trust...........................................16
Section 3.04. Existence of Trust....................................................................18
Section 3.05. Protection of Trust Estate............................................................18
Section 3.06. Opinions as to the Trust Estate.......................................................19
Section 3.07. Performance of Obligations............................................................19
Section 3.08. Investment Company Act................................................................20
Section 3.09. Negative Covenants....................................................................20
Section 3.10. Annual Statement as to Compliance.....................................................21
Section 3.11. Restricted Payments...................................................................21
Section 3.12. Treatment of Notes as Debt for Tax Purposes...........................................21
Section 3.13. Notice of Events of Default...........................................................22
Section 3.14. Further Instruments and Acts..........................................................22
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture...............................................23
Section 4.02. Application of Trust Money............................................................24
Section 4.03. Subrogation and Cooperation...........................................................24
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Event of Default......................................................................26
Section 5.02. Acceleration of Maturity; Rescission and Annulment....................................27
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.............27
Section 5.04. Remedies..............................................................................28
Section 5.05. Indenture Trustee May File Proofs of Claim............................................28
Section 5.06. Indenture Trustee May Enforce Claims Without Possession of Notes......................29
Section 5.07. Application of Money Collected........................................................29
Section 5.08. Limitation on Suits...................................................................31
Section 5.09. Unconditional Rights of Noteholders to Receive Principal and Interest.................31
Section 5.10. Restoration of Rights and Remedies....................................................32
Section 5.11. Rights and Remedies Cumulative........................................................32
Section 5.12. Delay or Omission Not Waiver..........................................................32
Section 5.13. Control by Noteholders................................................................32
Section 5.14. Waiver of Past Defaults...............................................................33
Section 5.15. Undertaking for Costs.................................................................33
Section 5.16. Waiver of Stay or Extension Laws......................................................33
Section 5.17. Sale of Trust Estate..................................................................33
Section 5.18. Action on Notes.......................................................................35
Section 5.19. No Recourse...........................................................................35
Section 5.20. Application of the Trust Indenture Act................................................35
Section 5.21. Suspension and Termination of Note Insurer's Rights...................................35
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee...........................................................37
Section 6.02. Notice of Default.....................................................................39
Section 6.03. Rights of Indenture Trustee...........................................................39
Section 6.04. Not Responsible for Recitals, Issuance of Notes or Mortgage Loans.....................40
Section 6.05. May Hold Notes........................................................................41
Section 6.06. Money Held in Trust...................................................................41
Section 6.07. Eligibility, Disqualification.........................................................41
Section 6.08. Indenture Trustee's Capital and Surplus...............................................41
Section 6.09. Resignation and Removal; Appointment of Successor.....................................41
Section 6.10. Acceptance of Appointment by Successor Indenture Trustee..............................43
Section 6.11. Merger, Conversion, Consolidation or Succession to Business of Indenture
Trustee...........................................................................43
Section 6.12. Preferential Collection of Claims Against Trust.......................................43
Section 6.13. Co-Indenture Trustees and Separate Indenture Trustees.................................43
Section 6.14. Authenticating Agents.................................................................44
Section 6.15. Review of Mortgage Files..............................................................46
Section 6.16. Indenture Trustee Fees and Expenses; Indemnification..................................46
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
ii
Section 7.01. Note Registrar to Furnish Indenture Trustee Names and Addresses
of Noteholders....................................................................48
Section 7.02. Preservation of Information; Communications to Noteholders............................48
Section 7.03. Reports by Indenture Trustee..........................................................48
Section 7.04. Reports by Trust......................................................................49
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. Accounts; Investment; Collection of Moneys............................................50
Section 8.02. Payments; Statements..................................................................53
Section 8.03. Claims against the Note Insurance Policy..............................................54
Section 8.04. General Provisions Regarding the Payment Accounts and Mortgage Loans..................56
Section 8.05. Releases of Deleted Mortgage Loans....................................................57
Section 8.06. Reports by Indenture Trustee to Noteholders; Access to Certain Information............58
Section 8.07. Release of Trust Estate...............................................................58
Section 8.08. Amendment to Sale and Servicing Agreement.............................................58
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale and Servicing Agreement...............58
Section 8.10. Master Servicer as Agent..............................................................59
Section 8.11. Termination of Master Servicer........................................................59
Section 8.12. Opinion of Counsel....................................................................59
Section 8.13. Appointment of Collateral Agents......................................................59
Section 8.14. Rights of the Note Insurer to Exercise Rights of Noteholders..........................60
Section 8.15. Trust Estate and Accounts Held for Benefit of the Note Insurer........................60
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders................................61
Section 9.02. Supplemental Indentures with Consent of Noteholders...................................61
Section 9.03. Execution of Supplemental Indentures..................................................63
Section 9.04. Effect of Supplemental Indentures.....................................................63
Section 9.05. Conformity with Trust Indenture Act...................................................63
Section 9.06. Reference in Notes to Supplemental Indentures.........................................63
Section 9.07. Amendments to Governing Documents.....................................................63
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption............................................................................65
Section 10.02. Form of Redemption Notice.............................................................66
Section 10.03. Notes Payable on Optional Redemption..................................................66
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions..................................................67
Section 11.02. Form of Documents Delivered to Indenture Trustee......................................67
Section 11.03. Acts of Noteholders...................................................................68
Section 11.04. Notices, etc., to Indenture Trustee, the Note Insurer and Trust.......................69
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Section 11.05. Notices and Reports to Noteholders; Waiver of Notices.................................70
Section 11.06. Rules by Indenture Trustee............................................................71
Section 11.07. Conflict with Trust Indenture Act.....................................................71
Section 11.08. Effect of Headings and Table of Contents..............................................71
Section 11.09. Successors and Assigns................................................................71
Section 11.10. Separability..........................................................................71
Section 11.11. Benefits of Indenture.................................................................71
Section 11.12. Legal Holidays........................................................................71
Section 11.13. Governing Law.........................................................................71
Section 11.14. Counterparts..........................................................................72
Section 11.15. Recording of Indenture................................................................72
Section 11.16. Trust Obligation......................................................................72
Section 11.17. No Petition...........................................................................72
Section 11.18. Inspection............................................................................73
Section 11.19. Usury.................................................................................73
Section 11.20. Note Insurer Default..................................................................73
Section 11.21. Third-Party Beneficiary...............................................................73
APPENDICES, SCHEDULES AND EXHIBITS
Appendix I Defined Terms
Schedule l Mortgage Loan Schedule
Exhibit A Form of Note
Exhibit B Form of Subsequent Pledge Agreement
Exhibit C Form of Note Insurer Consent for Subsequent Mortgage Loans
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CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of the provisions
inserted pursuant to Sections 310 through 318(a) inclusive of the Trust
Indenture Act of 1939.
Trust Indenture Act of 1939 Indenture Section
--------------------------- -----------------
Section 310
(a) (1)....................................................................... 6.07
(a) (2)....................................................................... 6.07, 6.08
(a) (3)....................................................................... 6.13
(a) (4)....................................................................... Not Applicable
(a) (5)....................................................................... 6.07
(b)........................................................................... 6.07, 6.09
(c)........................................................................... Not Applicable
Section 311
(a)........................................................................... 6.12
(b)........................................................................... 6.12
(c)........................................................................... Not Applicable
Section 312
(a)........................................................................... 7.01(a), 7.02(a)
(b)........................................................................... 7.02(b)
(c)........................................................................... 7.02(c)
(d)........................................................................... 7.03(a)
Section 313
(a)........................................................................... 7.03(a)
(b)........................................................................... 7.03(a)
(c)........................................................................... 11.05
(d)........................................................................... 7.03(b)
Section 314
(a)(1)........................................................................ 7.04
(a)(2)........................................................................ 7.04
(a)(3)........................................................................ 7.04
(a)(4)........................................................................ 7.04
(b)(1)........................................................................ 2.11(c), 11.01
(b)(2)........................................................................ 3.06
(c)(1)........................................................................ 2.11(d), 4.01,
8.02(d), 11.01
(c)(2)........................................................................ 2.11(c), 4.01,
8.02(d), 11.01
(c)(3)........................................................................ 8.02(d)
(d)(1)........................................................................ 11.01(a)
(d)(2)........................................................................ 11.01(a)
(d)(3)........................................................................ 11.01(a)
(e)........................................................................... 11.0 1(b)
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Section 315
(a)........................................................................... 6.01(b), 6.01(c)(1)
(b)........................................................................... 6.02, 11.05
(c)........................................................................... 6.01(a)
(d)(1)........................................................................ 6.01(b), 6.01(c)
(d)(2)........................................................................ 6.01(c)(2)
(d)(3)........................................................................ 6.01(c)(3)
(e)........................................................................... 5.15
Section 316
(a)........................................................................... 5.20
(b)........................................................................... 5.09
(c)........................................................................... 5.20
Section 317
(a)(1)........................................................................ 5.03
(a)(2)........................................................................ 5.05
(b)........................................................................... 3.01
Section 318
(a)........................................................................... 11.07
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This INDENTURE, dated as of February 1, 2000 (as amended or
supplemented from time to time as permitted hereby, this "Indenture"), is
between ACCREDITED MORTGAGE LOAN TRUST 2000-1, a Delaware statutory business
trust (together with its permitted successors and assigns, the "Trust"), and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association,
as indenture trustee (together with its permitted successors in the trusts
hereunder, the "Indenture Trustee").
PRELIMINARY STATEMENT
The Trust has duly authorized the execution and delivery of this
Indenture to provide for its Asset-Backed Notes, Series 2000-1 (the "Notes"),
issuable as provided in this Indenture. All covenants and agreements made by
the Trust herein are for the benefit and security of the Holders of the Notes
and the Note Insurer. The Trust is entering into this Indenture, and the
Indenture Trustee is accepting the trusts created hereby, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
All things necessary to make this Indenture a valid agreement of the
Trust in accordance with its terms have been done.
GRANTING CLAUSE
Subject to the terms of this Indenture, the Trust hereby Grants to
the Indenture Trustee at the Closing Date, as Indenture Trustee for the
benefit of the Class A-1 Noteholders and the Note Insurer, all of the Trust's
right, title and interest in and to: (i) the Trust Estate relating to Group
1; (ii) all right, title and interest of the Trust in the Sale and Servicing
Agreement with respect to the Group 1 Mortgage Loans (including the Trust's
right to cause the Sponsor to repurchase Group 1 Mortgage Loans from the
Trust under certain circumstances described therein); (iii) all present and
future claims, demands, causes of action and chooses in action in respect of
any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion thereof, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any
and every kind and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or are
included in the proceeds of any of the foregoing, each with respect to Group
1; (iv) all funds on deposit from time to time in (a) the Collection Account
relating to Group 1, (b) the Capitalized Interest Account relating to Group
1, (c) the Payment Account relating to Group 1, and (d) the Pre-Funding
Account relating to Group 1; (v) all other property of the Trust relating to
Group 1 from time to time; and (vi) any and all proceeds of the foregoing
(collectively with respect to Group 1, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Class A-1 Notes, equally and ratably without prejudice, priority or
distinction, and to secure compliance with the provisions of this Indenture,
all as provided in this Indenture.
Subject to the terms of this Indenture, the Trust hereby Grants to
the Indenture Trustee at the Closing Date, as Indenture Trustee for the
benefit of the Class A-2 Noteholders and the Note Insurer, all of the Trust's
right, title and interest in and to: (i) the Trust Estate relating to Group
2; (ii) all right, title and interest of the Trust in the Sale and Servicing
Agreement with respect to the Group 2 Mortgage Loans (including the Trust's
right to cause the Sponsor to repurchase Group 2 Mortgage Loans from the
Trust under certain circumstances described therein); (iii) all present and
future claims, demands, causes of action and chooses in action in respect of
any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion thereof, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any
and every kind and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or are
included in the proceeds of any of the foregoing, each with respect to Group
2; (iv) all funds on deposit from time to time in (a) the Collection Account
relating to Group 2, (b) the Capitalized Interest Account relating to Group
2, (c) the Payment Account relating to Group 2, and (d) the Pre-Funding
Account relating to Group 2; (v) all other property of the Trust relating to
Group 2 from time to time; and (vi) any and all proceeds of the foregoing
(collectively with respect to Group 2, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Class A-2 Notes, equally and ratably without prejudice, priority or
distinction, and to secure compliance with the provisions of this Indenture,
all as provided in this Indenture.
Subject to the terms of this Indenture, the Trust hereby Grants to
the Indenture Trustee at the Closing Date, as Indenture Trustee for the
benefit of the Class A-1 Noteholders, the Class A-2 Noteholders and the Note
Insurer, all of the Trust's right, title and interest in and to the Reserve
Account.
The foregoing Grants shall inure to the benefit of the Note Insurer
in respect of draws made on the Note Insurance Policy and amounts owing from
time to time pursuant to the Insurance Agreement, and such Grants shall
continue in full force and effect for the benefit of the Note Insurer until
all such amounts owing to it have been repaid in full.
The Indenture Trustee, as Indenture Trustee on behalf of the holders
of each Group of Notes, acknowledges the foregoing Grants, accepts the trusts
hereunder in good faith and without notice of any adverse claim or liens and
agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the holders of the related Notes and
the Note Insurer may be adequately and effectively protected. The Indenture
Trustee agrees and acknowledges that each item of Collateral that is
physically delivered to the Indenture Trustee will be held by the Indenture
Trustee in Minnesota or California. The Indenture Trustee agrees that it will
hold the Note Insurance Policy in trust and that it will hold any proceeds of
any claim upon the Note Insurance Policy, solely for the use and benefit of
the Noteholders in accordance with the terms hereof and the Note Insurance
Policy. In addition, the Indenture Trustee agrees that it will acknowledge
the Grant on each Subsequent Transfer Date of the related Subsequent Mortgage
Loans pursuant to the terms of the related Subsequent Pledge Agreement,
provided
2
that the conditions precedent to the pledge of such Subsequent Mortgage Loans
contained in this Indenture and in the Sale and Servicing Agreement are
satisfied on or prior to such Subsequent Transfer Date.
3
ARTICLE I
DEFINITIONS
Section 1.01. GENERAL DEFINITIONS. Except as otherwise specified or
as the context may otherwise require, the terms defined in Appendix I have
the respective meanings set forth in such Appendix I for all purposes of this
Indenture, and the definitions of such terms are applicable to the singular
as well as to the plural forms of such terms and to the masculine as well as
to the feminine genders of such terms. Whenever reference is made herein to
an Event of Default or a Default known to the Indenture Trustee or of which
the Indenture Trustee has notice or knowledge, such reference shall be
construed to refer only to an Event of Default or Default of which the
Indenture Trustee is deemed to have notice or knowledge pursuant to Section
6.01(d). All other terms used herein that are defined in the Trust Indenture
Act (as hereinafter defined), either directly or by reference therein, have
the meanings assigned to them therein.
4
ARTICLE II
THE NOTES; PLEDGE OF SUBSEQUENT MORTGAGE LOANS
Section 2.01. FORMS GENERALLY. The Notes shall be substantially in
the form set forth as EXHIBIT A attached hereto. Each Note may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of
any securities exchange on which the Notes may be listed, or as may,
consistently herewith, be determined by the Trust, as evidenced by its
execution thereof. Any portion of the text of any Note may be set forth on
the reverse thereof with an appropriate reference on the face of the Note.
The Definitive Notes may be produced in any manner determined by the
Trust, as evidenced by its execution thereof.
Section 2.02. FORM OF CERTIFICATE OF AUTHENTICATION. The form of the
Authenticating Agent's certificate of authentication is as set forth on the
signature page of the form of the Note attached hereto as EXHIBIT A.
Section 2.03. GENERAL PROVISIONS WITH RESPECT TO PRINCIPAL AND
INTEREST PAYMENT. The Notes shall be designated generally as the "Accredited
Mortgage Loan Trust 2000-1, Asset-Backed Notes, Series 2000-1".
The Notes shall be issued in the form specified in Section 2.01
hereof. The Notes shall be issued in two Classes, the Class A-1 Notes and the
Class A-2 Notes. The aggregate Original Note Principal Balance of Notes that
may be authenticated and delivered under the Indenture is limited to
$53,047,000 of Class A-1 Notes and $120,429,000 of Class A-2 Notes, except
for the Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 2.06,
2.07, or 9.06 of this Indenture.
Subject to the provisions of Sections 3.01, 5.07, 5.09 and 8.02 of
this Indenture, the principal of each Class of Notes shall be payable in
installments ending no later than the related Final Stated Maturity Date,
unless the unpaid principal of such Notes become due and payable at an
earlier date by declaration of acceleration or call for redemption or
otherwise.
All payments made with respect to any Note shall be applied first to
the interest then due and payable on such Note and then to the principal
thereof. All computations of interest accrued on any Class A-1 Note shall be
made on the basis of a year of 360 days and twelve 30-day months. All
computations of interest accrued on any Class A-2 Note shall be made on the
basis of a year of 360 days and the actual number of days elapsed in the
related Accrual Period.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes, if the Notes have become
or been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on the Notes shall be
made in accordance with Section 5.07 hereof.
5
Section 2.04. DENOMINATIONS. The Notes shall be issuable only as
registered Notes in the denominations equal to the Authorized Denominations.
Section 2.05. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Notes shall be executed on behalf of the Trust by an Authorized Officer of
the Owner Trustee, acting at the direction of the Certificateholders. The
signature of such Authorized Officer of the Owner Trustee on the Notes may be
manual or by facsimile.
Notes bearing the manual or facsimile signature of an individual who
was at any time an Authorized Officer of the Owner Trustee shall bind the
Trust, notwithstanding that such individual has ceased to be an Authorized
Officer of the Owner Trustee prior to the authentication and delivery of such
Notes or was not an Authorized Officer of the Owner Trustee at the date of
such Notes.
At any time and from time to time after the execution and delivery
of this Indenture, the Trust may deliver Notes executed on behalf of the
Trust to the Authenticating Agent for authentication, and the Authenticating
Agent shall authenticate and deliver such Notes as provided in this Indenture
and not otherwise.
Each Note authenticated on the Closing Date shall be dated the
Closing Date. All other Notes that are authenticated after the Closing Date
for any other purpose hereunder shall be dated the date of their
authentication.
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 in
Section 2.02 hereof, executed by the Authenticating Agent by the manual
signature of one of its Authorized Officers or employees, and such
certificate of authentication upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
hereunder.
Section 2.06. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Trust shall cause to be kept a register (the "NOTE REGISTER") in which,
subject to such reasonable regulations as it may prescribe, the Trust shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee is hereby initially appointed "NOTE REGISTRAR"
for the purpose of registering Notes and transfers of Notes as herein
provided. The Indenture Trustee shall remain the Note Registrar throughout
the term hereof. Upon any resignation of the Indenture Trustee, the Master
Servicer, on behalf of the Trust, shall promptly appoint a successor, with
the approval of the Note Insurer, or, in the absence of such appointment, the
Master Servicer, on behalf of the Trust, shall assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the
Trust as Note Registrar, the Trust will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture
Trustee shall have the right to inspect the Note Register at all reasonable
times and to obtain copies thereof, and the Indenture Trustee shall have the
right to rely upon a certificate executed on behalf of the Note Registrar by
an Authorized Officer thereof as to the names and addresses of the Holders of
the Notes and the principal amounts and number of such Notes.
6
Upon surrender for registration of transfer of any Note at the
office or agency of the Trust to be maintained as provided in Section 3.02
hereof, the Owner Trustee on behalf of the Trust, acting at the direction of
the Certificateholders, shall execute, and the Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a
like aggregate initial Note Principal Balance.
At the option of the Holder, Notes may be exchanged for other Notes
of any authorized denominations, and of a like aggregate Note Principal
Balance, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, the Owner Trustee
shall execute, and the Authenticating Agent shall authenticate and deliver,
the Notes that the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Trust, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in the form included in EXHIBIT A attached hereto, duly executed by
the Holder thereof or its attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Note Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge as may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.07 or Section 9.06 hereof not involving any
transfer or any exchange made by the Note Insurer.
The Note Registrar shall not register the transfer of a Note unless
the Note Registrar has received a representation letter from the transferee
to the effect that either (i) the transferee is not, and is not acquiring the
Note on behalf of or with the assets of, an employee benefit plan or other
retirement plan or arrangement that is subject to Title I of ERISA or Section
4975 of the Code or (ii) the acquisition and holding of the Note by the
transferee qualifies for exemptive relief under a Department of Labor
Prohibited Transaction Class Exemption. Each Beneficial Owner of a Note which
is a Book-Entry Note shall be deemed to make one of the foregoing
representations.
Section 2.07. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (1) any
mutilated Note is surrendered to the Note Registrar or the Note Registrar
receives evidence to its satisfaction of the destruction, loss or theft of
any Note, and (2) there is delivered to the Note Registrar such security or
indemnity as may be required by the Note Registrar to save each of the Trust,
the Owner Trustee, the Note Insurer and the Note Registrar harmless, then, in
the absence of notice to the Note Registrar that such Note has been acquired
by a bona fide purchaser, the Owner Trustee on behalf of the Trust, acting at
the direction of the Certificateholders, shall execute and
7
upon its delivery of a Trust Request the Authenticating Agent shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Note or Notes of the same tenor and
aggregate initial principal amount bearing a number not contemporaneously
outstanding. If, after the delivery of such new Note, a bona fide purchaser
of the original Note in lieu of which such new Note was issued presents for
payment such original Note, the Note Registrar, shall be entitled to recover
such new Note from the person to whom it was delivered or any person taking
therefrom, except a bona fide purchaser, and shall be entitled to recover
upon the security or indemnity provided therefor to the extent of any loss,
damage, cost or expenses incurred by the Trust, the Owner Trustee, the Note
Insurer or the Note Registrar in connection therewith. If any such mutilated,
destroyed, lost or stolen Note shall have become or shall be about to become
due and payable, or shall have become subject to redemption in full, instead
of issuing a new Note, the Trust may pay such Note without surrender thereof,
except that any mutilated Note shall be surrendered.
Upon the issuance of any new Note under this Section 2.07, the Note
Registrar, 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 Trust, the
Indenture Trustee or the Note Registrar) connected therewith.
Every new Note issued pursuant to this Section 2.07 in lieu of any
destroyed, lost or stolen Note shall constitute an original contractual
obligation of the Trust, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08. PAYMENTS OF PRINCIPAL AND INTEREST. (a) Payments on
Notes issued as Book-Entry Notes will be made by or on behalf of the
Indenture Trustee to the Clearing Agency or its nominee. Any installment of
interest or principal payable on any Definitive Notes that is punctually paid
or duly provided for by the Trust on the applicable Payment Date shall be
paid to the Person in whose name such Note (or one or more Predecessor Notes)
is registered at the close of business on the Record Date for such Class of
Notes and such Payment Date by either (i) check mailed to such Person's
address as it appears in the Note Register on such Record Date, or (ii) by
wire transfer of immediately available funds to the account of a Noteholder,
if such Noteholder (A) is the registered holder of Definitive Notes having an
initial principal amount of at least $1,000,000 and (B) has provided the
Indenture Trustee with wiring instructions in writing by five (5) Business
Days prior to the related Record Date or has provided the Indenture Trustee
with such instructions for any previous Payment Date, except for the final
installment of principal payable with respect to such Note, which shall be
payable as provided in subsection (b) of this Section 2.08. A fee may be
charged by the Indenture Trustee to a Holder of Definitive Notes for any
payment made by wire transfer. Any installment of interest or principal not
punctually paid or duly provided for shall be payable as soon as funds are
available to the Indenture Trustee for payment thereof, or if Section 5.07
applies, pursuant to Section 5.07.
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Payments on Certificates will be made by or on behalf of the
Indenture Trustee to or at the direction of the Person in whose name such
Certificate is registered by either (i) check mailed to such Person's address
as it appears in the Certificate Register on such Record Date, or (ii) by
wire transfer of immediately available funds to the account directed by a
Certificateholder, if such Certificateholder (A) is Accredited Home Lenders,
Inc. and (B) has provided the Indenture Trustee with wiring instructions in
writing by five (5) Business Days prior to the related Payment Date or has
provided the Indenture Trustee with such instructions for any previous
Payment Date. A fee may be charged by the Indenture Trustee to a
Certificateholder for any payment made by wire transfer. The Indenture
Trustee shall be entitled to rely on information provided by the Owner
Trustee as Certificate Registrar as to all matters related to the Certificate
Registrar and the Certificates.
(b) All reductions in the Note Principal Balance of a Note
(or one or more Predecessor Notes) effected by payments of installments of
principal made on any Payment Date shall be binding upon all Holders of such
Note and of any Note issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, whether or not such payment is noted on
such Note. The final installment of principal of each Note shall be payable
only upon presentation and surrender thereof on or after the Payment Date
therefor at the Corporate Trust Office of the Indenture Trustee located
within the United States of America pursuant to Section 3.02.
Whenever the Indenture Trustee expects that the entire unpaid Note
Principal Balance of any Note will become due and payable on the next Payment
Date, other than pursuant to a redemption pursuant to Article X, it shall, no
later than two (2) Business Days prior to such Payment Date, mail to each
Person in whose name a Note to be so retired is registered at the close of
business on such otherwise applicable Record Date a notice to the effect that:
(i) the Indenture Trustee expects that funds sufficient to pay
such final installment will be available in the related Payment Account
on such Payment Date; and
(ii)if such funds are available, (A) such final installment
will be payable on such Payment Date, but only upon presentation and
surrender of such Note at the office or agency of the Note Registrar
maintained for such purpose pursuant to Section 3.02 (the address of
which shall be set forth in such notice) and (B) no interest shall
accrue on such Note after such Payment Date.
A copy of such form of notice shall be sent to the Note Insurer by the
Indenture Trustee.
Notices in connection with redemptions of Notes shall be mailed to
Noteholders in accordance with Section 10.02 hereof.
(c) Subject to the foregoing provisions of this Section
2.08, each Note delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Note shall carry the rights to
unpaid principal and interest that were carried by such other Note. Any
checks mailed pursuant to paragraph (a) of this Section 2.08 and returned
undelivered shall be held in accordance with Section 3.03 hereof.
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(d) The Indenture Trustee's Remittance Report, shall be
prepared by the Indenture Trustee based on the loan level data provided in
the Servicer Remittance Report delivered to the Indenture Trustee pursuant to
the Sale and Servicing Agreement. The Indenture Trustee shall not have any
responsibility to recalculate, verify or recompute information contained in
any tape, electronic data file or disk or Servicer Remittance Report
delivered to the Indenture Trustee pursuant to the Sale and Servicing
Agreement except to the extent necessary to satisfy all obligations under
this Section 2.08(d).
Within thirty (30) days after the end of each calendar year, the
Indenture Trustee will be required to furnish to each Person who at any time
during the calendar year was a Noteholder, if requested in writing by such
person, a statement containing the information set forth in subclauses (a),
(b) and (c) in the definition of "Indenture Trustee's Remittance Report,"
aggregated for such calendar year or the applicable portion thereof during
which such person was a Noteholder. Such obligation will be deemed to have
been satisfied to the extent that substantially comparable information is
provided pursuant to any requirements of the Code as are from time to time in
force.
From time to time (but no more than once per calendar month), upon
the written request of the Sponsor, the Master Servicer, the Backup Servicer
or the Note Insurer, the Indenture Trustee shall report to the Sponsor, the
Master Service, the Backup Servicer and the Note Insurer the amount then held
in each Account (including investment earnings accrued) held by the Indenture
Trustee and the identity of the investments included therein. From time to
time, at the request of the Note Insurer, the Indenture Trustee shall report
to the Note Insurer with respect to the actual knowledge of a Responsible
Officer, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth
in Section 4.01 of the Sale and Servicing Agreement. The Indenture Trustee
shall also provide the Note Insurer such other information within its control
as may be reasonably requested by the Note Insurer.
Section 2.09. PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, any agent on behalf of the Trust
including but not limited to the Indenture Trustee, or the Note Insurer, may
treat the Person in whose name any Note is registered as the owner of such
Note (a) on the applicable Record Date for the purpose of receiving payments
of the principal of and interest on such Note and (b) on any other date for
all other purposes whatsoever, and none of the Trust, the Indenture Trustee
or any other agent of the Trust, or the Note Insurer shall be affected by
notice to the contrary.
Section 2.10. CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Note Registrar, be delivered to the Note Registrar and
shall be promptly canceled by it. The Owner Trustee, on behalf of the Trust,
shall deliver to the Note Registrar for cancellation any Note previously
authenticated and delivered hereunder which the Owner Trustee, on behalf of the
Trust may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Note Registrar. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 2.10, except as expressly permitted by this Indenture. All canceled
Notes held by the Note Registrar shall be held by the Note Registrar in
accordance with its
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standard retention policy, unless the Owner Trustee, on behalf of the Trust
shall direct by a Trust Order that they be destroyed or returned to it.
Section 2.11. AUTHENTICATION AND DELIVERY OF NOTES. The Notes shall
be executed by an Authorized Officer of the Owner Trustee, on behalf of the
Trust, and delivered to the Authenticating Agent for authentication, and
thereupon the same shall be authenticated and delivered by the Authenticating
Agent, upon a Trust Request and upon receipt by the Authenticating Agent of
all of the following:
(a) A Trust Order authorizing the execution, authentication
and delivery of the Notes and specifying the Note Principal Balance and the
Percentage Interest of such Notes to be authenticated and delivered.
(b) A Trust Order authorizing the execution and delivery of
this Indenture and the Sale and Servicing Agreement.
(c) One or more Opinions of Counsel (which opinion shall not
be at the expense of the Indenture Trustee or the Trust) addressed to the
Authenticating Agent and the Note Insurer or upon which the Authenticating Agent
and the Note Insurer are expressly permitted to rely, complying with the
requirements of Section 11.01, reasonably satisfactory in form and substance to
the Authenticating Agent and the Note Insurer.
In rendering the opinions set forth above, such counsel may rely upon
Officer's Certificates of the Trust, the Owner Trustee, the Sponsor, the Master
Servicer, the Backup Servicer and the Indenture Trustee, without independent
confirmation or verification with respect to factual matters relevant to such
opinions. In rendering the opinions set forth above, such counsel need express
no opinion as to (A) the existence of, or the priority of the security interest
created by the Indenture against, any liens or other interests that arise by
operation of law and that do not require any filing or similar action in order
to take priority over a perfected security interest or (B) the priority of the
security interest created by this Indenture with respect to any claim or lien in
favor of the United States or any agency or instrumentality thereof (including
federal tax liens and liens arising under Title IV of ERISA).
The acceptability to the Note Insurer of the Opinion of Counsel
delivered to the Authenticating Agent and the Note Insurer at the Closing Date
shall be conclusively evidenced by the delivery on the Closing Date of the Note
Insurance Policy.
(d) An Officer's Certificate of the Trust complying with the
requirements of Section 11.01 and stating that:
(i) the Trust is not in Default under this Indenture and the
issuance of the Notes will not result in any breach of any of the
terms, conditions or provisions of, or constitute a default under, the
Trust's Certificate of Trust or any indenture, mortgage, deed of trust
or other agreement or instrument to which the Trust is a party or by
which it is bound, or any order of any court or administrative agency
entered in any proceeding to which the Trust is a party or by which it
may be bound or to which it may be subject, and that all conditions
precedent provided in this Indenture relating to the authentication and
delivery of the Notes have been complied with;
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(ii) the Trust is the owner of each Mortgage Loan, free and
clear of any lien, security interest or charge, has not assigned any
interest or participation in any such Mortgage Loan (or, if any such
interest or participation has been assigned, it has been released) and
has the right to Grant each such Mortgage Loan to the Indenture
Trustee;
(iii) the information set forth in the Mortgage Loan Schedule
attached as Schedule I to this Indenture is correct;
(iv) the Trust has Granted to the Indenture Trustee all of
its right, title and interest in each Mortgage Loan; and
(v) as of the Closing Date, no lien in favor of the United
States described in Section 6321 of the Code, or lien in favor of the
Pension Benefit Guaranty Corporation described in Section 4068(a) of
the ERISA, has been filed as described in subsections 6323(f) and
6323(g) of the Code upon any property belonging to the Trust.
(e) An executed counterpart of the Sale and Servicing
Agreement.
(f) [Reserved].
(g) An executed counterpart of the Trust Agreement.
(h) An executed copy of the Insurance Agreement.
(i) An original executed copy of the Note Insurance Policy and
an original executed copy of the Primary Mortgage Insurance Policy.
(j) A copy of a letter from ▇▇▇▇▇'▇ that it has assigned a
rating of "Aaa" to the Notes and a copy of a letter from S&P that it has
assigned a rating of "AAA" to the Notes.
Section 2.12. BOOK-ENTRY NOTE. The Notes will be issued initially as
one or more certificates in the name of Cede & Co., as nominee for the
Clearing Agency maintaining book-entry records with respect to ownership and
transfer of such Notes, and registration of the Notes may not be transferred
by the Note Registrar except upon the termination of the book-entry system as
described in Section 2.13. In such case, the Note Registrar shall deal with
the Clearing Agency as representative of the Beneficial Owners of such Notes
for purposes of exercising the rights of Noteholders hereunder. Each payment
of principal of and interest on a Book-Entry Note shall be paid to the
Clearing Agency, which shall credit the amount of such payments to the
accounts of its Clearing Agency Participants in accordance with its normal
procedures. Each Clearing Agency Participant shall be responsible for
disbursing such payments to the Beneficial Owners of the Book-Entry Notes
that it represents and to each indirect participating brokerage firm (a
"BROKERAGE FIRM" or "INDIRECT PARTICIPATING FIRM") for which it acts as
agent. Each brokerage firm shall be responsible for disbursing funds to the
Beneficial Owners of the Book-Entry Notes that it represents. All such
credits and disbursements are to be made by the Clearing Agency and the
Clearing Agency Participants in accordance with the provisions of the Notes.
None of the Indenture Trustee, the Note Registrar, if any, the Trust or the
Note Insurer shall have any responsibility therefor except as otherwise
provided by applicable law. Requests and
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directions from, and votes of, such representatives shall not be deemed to be
inconsistent if they are made with respect to different Beneficial Owners.
Section 2.13. TERMINATION OF BOOK ENTRY SYSTEM. (a) The book-entry
system through the Clearing Agency with respect to the Book-Entry Notes may be
terminated upon the happening of any of the following:
(i) The Clearing Agency advises the Indenture Trustee that
the Clearing Agency is no longer willing or able to discharge properly
its responsibilities as nominee and depositary with respect to the
Notes and the Indenture Trustee is unable to locate a qualified
successor Clearing Agency satisfactory to the Master Servicer, on
behalf of the Trust;
(ii) The Certificateholders, on behalf of the Trust, in their
sole discretion, elect to terminate the book-entry system by notice to
the Clearing Agency and the Indenture Trustee; or
(iii) After the occurrence of an Event of Default (at which
time the Indenture Trustee shall use all reasonable efforts to promptly
notify each Beneficial Owner through the Clearing Agency of such Event
of Default), the Beneficial Owners of no less than 51% of the Note
Principal Balance of the Book-Entry Notes advise the Indenture Trustee
in writing, through the related Clearing Agency Participants and the
Clearing Agency, that the continuation of a book-entry system through
the Clearing Agency to the exclusion of any Definitive Notes being
issued to any person other than the Clearing Agency or its nominee is
no longer in the best interests of the Beneficial Owners.
(b) Upon the occurrence of any event described in
subsection (a) of this Section 2.13, the Indenture Trustee shall use all
reasonable efforts to notify all Beneficial Owners, through the Clearing
Agency, of the occurrence of such event and of the availability of Definitive
Notes to Beneficial Owners requesting the same, in an aggregate outstanding
Note Principal Balance representing the interest of each, making such
adjustments and allowances as it may find necessary or appropriate as to
accrued interest and previous calls for redemption. Definitive Notes shall be
issued only upon surrender to the Indenture Trustee of the global Note by the
Clearing Agency, accompanied by registration instructions for the Definitive
Notes. Neither the Trust nor the Indenture Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon issuance of the
Definitive Notes, all references herein to obligations imposed upon or to be
performed by the Clearing Agency shall cease to be applicable and the
provisions relating to Definitive Notes shall be applicable.
Section 2.14. PLEDGE OF SUBSEQUENT MORTGAGE LOANS. (a) Subject to
the satisfaction of the conditions set forth in paragraph (b) of this Section
2.14, in consideration of the Indenture Trustee's delivery on the related
Subsequent Transfer Dates to or upon the order of the Master Servicer, on
behalf of the Trust, of all or a portion of the balance of funds in any
Pre-Funding Account, the Trust shall on any Subsequent Transfer Date pledge,
without recourse, to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer, all right, title and interest of the Trust
in and to the related Subsequent Mortgage Loans, including the aggregate
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Cut-Off Date Principal Balance of such Subsequent Mortgage Loans, and all
other assets in the Trust Estate relating to the Subsequent Mortgage Loans.
In connection with such pledge, and pursuant to Section 2.09 of the Sale and
Servicing Agreement, the Trust does hereby also irrevocably pledge to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer,
all of its rights under the Sale and Servicing Agreement, the related
Subsequent Transfer Agreement, including, without limitation, its right to
exercise the remedies created by Article II of the Sale and Servicing
Agreement for defective documentation and for breaches of representations and
warranties, agreement and covenants of the Sponsor contained in Articles II,
III and IV of the Sale and Servicing Agreement.
The amount released from any Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans shall be one-hundred percent (100%) of
the aggregate Cut-Off Date Principal Balance of the Subsequent Mortgage Loans
so pledged, as of the related Subsequent Cut-Off Date.
(a) The Subsequent Mortgage Loans and the other property
and rights related thereto described in paragraph (a) of this Section 2.14
shall be pledged by the Trust to the Indenture Trustee, for the benefit of
the Noteholders and the Note Insurer, only upon the satisfaction of each of
the following conditions on or prior to the related Subsequent Transfer Date:
(i) the Sponsor shall have provided the Trust, the Indenture
Trustee, the Master Servicer, the Backup Servicer, the Rating Agencies
and the Note Insurer with an Addition Notice at least two (2) Business
Days prior to the Subsequent Transfer Date, which shall include a
Mortgage Loan Schedule listing the Subsequent Mortgage Loans, and shall
have provided any other information reasonably requested by any of the
foregoing parties with respect to the Subsequent Mortgage Loans;
(ii) the Sponsor shall have caused the Master Servicer to
deposit in the Collection Account all collections of (x) principal in
respect of the Subsequent Mortgage Loans received after the related
Subsequent Cut-Off Date (excluding all collections of principal in
respect of the Subsequent Mortgage Loans received after the related
Subsequent Cut-Off Date which were due on or before the first day of
the calendar month during the month in which the Subsequent Transfer
Date occurred) and (y) interest due on the Subsequent Mortgage Loans
after the first day of the calendar month in which the Subsequent
Transfer Date occurred;
(iii) as of each Subsequent Transfer Date, the Sponsor shall
not be insolvent, shall not be made insolvent by such transfer and
shall not be aware of any pending insolvency;
(iv) such Subsequent Transfer shall not result in a material
adverse tax consequence to the Trust or the Holders of the Notes;
(v) the related Pre-Funding Period shall not have
terminated;
(vi) the Sponsor shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and each Subsequent
Mortgage Loan complies with the terms of the Sale
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and Servicing Agreement, including each of the representations and
warranties made with respect thereto in Section 4.01 of the Sale and
Servicing Agreement;
(vii) there shall have been delivered to the Note Insurer,
the Trust, the Rating Agencies and the Indenture Trustee, Independent
Opinions of Counsel with respect to the transfer of the Subsequent
Mortgage Loans substantially in the form of the Opinions of Counsel
delivered to the Sponsor, the Note Insurer, the Trust, the Rating
Agencies and the Indenture Trustee on the Closing Date (i.e.
bankruptcy, corporate and tax opinions);
(viii) the Indenture Trustee shall have received a written
consent from the Note Insurer in the form of EXHIBIT C hereto;
(ix) [reserved];
(x) the Sponsor and the Trust shall have delivered to the
Indenture Trustee an executed copy of a Subsequent Transfer Agreement,
substantially in the form of EXHIBIT G to the Sale and Servicing
Agreement; and
(xi) the Trust and the Indenture Trustee shall have executed
a Subsequent Pledge Agreement, substantially in the form of EXHIBIT B
hereto.
(c) In connection with the transfer, assignment and pledge of
the Subsequent Mortgage Loans, the Sponsor shall satisfy the document delivery
requirements set forth in Section 2.05 of the Sale and Servicing Agreement.
(d) On each Subsequent Transfer Date upon written instruction
from the Sponsor, the Indenture Trustee shall withdraw from the related
Capitalized Interest Account and pay to the Sponsor on such Subsequent Transfer
Date the Overfunded Interest Amount for such Subsequent Transfer Date, as
calculated by the Master Servicer.
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ARTICLE III
COVENANTS
Section 3.01. PAYMENT OF NOTES. The Trust will pay or cause to be
duly and punctually paid the principal of, and interest on, the Notes in
accordance with the terms of the Notes and this Indenture. The Notes shall be
non-recourse obligations of the Trust and shall be limited in right of
payment to amounts available from the Trust Estate as provided in this
Indenture and the Trust shall not otherwise be liable for payments on the
Notes. No person shall be personally liable for any amounts payable under the
Notes. If any other provision of this Indenture conflicts or is deemed to
conflict with the provisions of this Section 3.01, the provisions of this
Section 3.01 shall control.
Section 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Indenture Trustee
will always maintain its corporate trust office at a location in the United
States of America where Notes may be surrendered for registration of transfer
or exchange, and where notices and demands to or upon the Trust in respect of
the Notes and this Indenture may be served. Such location shall be the
Corporate Trust Office of the Indenture Trustee.
The Owner Trustee, at the direction of the Certificateholders, on
behalf of the Trust may also from time to time, at the expense of the
Certificateholders, designate one or more other offices or agencies within
the United States of America where the Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; PROVIDED, HOWEVER, any designation of an office or agency for
payment of Notes shall be subject to Section 3.03 hereof. The Owner Trustee,
at the direction of the Certificateholders, on behalf of the Trust will give
prompt written notice to the Indenture Trustee and the Note Insurer of any
such designation or rescission and of any change in the location of any such
other office or agency.
Section 3.03. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST. All
payments of amounts due and payable with respect to any Notes that are to be
made from amounts withdrawn from the related Payment Account pursuant to
Sections 5.07 or 8.02 hereof shall be made on behalf of the Trust by the
Indenture Trustee, and no amounts so withdrawn from the related Payment
Account for payments on the Notes shall be paid over to the Trust under any
circumstances except as provided in this Section 3.03 or in Sections 5.07 or
8.02 hereof.
With respect to Definitive Notes, if the Trust shall have a Note
Registrar that is not also the Indenture Trustee, such Note Registrar shall
furnish, no later than the fifth (5th) calendar day after each Record Date, a
list, in such form as such Indenture Trustee may reasonably require, of the
names and addresses of the Holders of Notes and of the number of Individual
Notes held by each such Holder.
Whenever the Trust shall have a Paying Agent other than the
Indenture Trustee, the Master Servicer, on behalf of the Trust, will, on or
before the Business Day next preceding each Payment Date, direct the
Indenture Trustee to deposit with such Paying Agent an aggregate sum
sufficient to pay the amounts then becoming due (to the extent funds are then
available for such purpose in the related Payment Account), such sum to be
held in trust for the benefit of the
16
Persons entitled thereto. Any moneys deposited with a Paying Agent in excess
of an amount sufficient to pay the amounts then becoming due on the Notes
with respect to which such deposit was made shall, upon Trust Order, be paid
over by such Paying Agent to the Indenture Trustee for application in
accordance with Article VIII hereof.
Subject to the prior written consent of the Note Insurer, any Paying
Agent other than the Indenture Trustee may be appointed by Trust Order and at
the expense of the Trust. The Trust shall not appoint any Paying Agent (other
than the Indenture Trustee) that is not, at the time of such appointment, a
depository institution or trust company whose obligations would be Permitted
Investments pursuant to clause (b) of the definition of the term "Permitted
Investments". The Master Servicer, on behalf of the Trust, will cause each
Paying Agent other than the Indenture Trustee to execute and deliver to the
Indenture Trustee and the Owner Trustee, on behalf of the Trust, an
instrument in which such Paying Agent shall agree with the Indenture Trustee
(and if the Indenture Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section 3.03, that such Paying Agent will:
(a) allocate all sums received for payment to the Holders of
Notes on each Payment Date among such Holders in the proportion specified in the
applicable Indenture Trustee's Remittance Report, in each case to the extent
permitted by applicable law;
(b) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided and pay such sums to such Persons as herein provided;
(c) if such Paying Agent is not the Indenture Trustee,
immediately resign as a Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for the payment of the Notes if at any
time the Paying Agent ceases to meet the standards set forth above required
to be met by a Paying Agent at the time of its appointment;
(d) if such Paying Agent is not the Indenture Trustee, give
the Indenture Trustee notice of any Default by the Trust (or any other
obligor upon the Notes) in the making of any payment required to be made with
respect to any Notes for which it is acting as Paying Agent;
(e) if such Paying Agent is not the Indenture Trustee, at any
time during the continuance of any Default by the Trust (or any other obligor
upon the Notes), upon the written request of the Indenture Trustee, forthwith
pay to the Indenture Trustee all sums so held in trust by such Paying Agent; and
(f) comply with all requirements of the Code, and all
regulations thereunder, with respect to withholding from any payments made by it
on any Notes of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith;
PROVIDED, HOWEVER, that with respect to withholding and reporting requirements
applicable to original issue discount (if any) on any of the Notes, the Master
Servicer, on behalf of the Trust, has provided the calculations pertaining
thereto to the Indenture Trustee and the Paying Agent.
17
The Trust may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Trust
Order direct any Paying Agent, if other than the Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums
to be held by the Indenture Trustee upon the same trusts as those upon which
such sums were held by such Paying Agent; and upon such payment by any Paying
Agent to the Indenture Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Note and remaining
unclaimed for two and one-half years after such amount has become due and
payable to the Holder of such Note (or if earlier, three months before the
date on which such amount would escheat to a governmental entity under
applicable law) shall be discharged from such trust and paid to the Trust;
and the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to the Trust for payment thereof (but only to the extent
of the amounts so paid to the Trust), and all liability of the Indenture
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease. The Indenture Trustee may adopt and employ, at the expense of the
Trust, any reasonable means of notification of such repayment (including, but
not limited to, mailing notice of such repayment to Holders whose Notes have
been called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Indenture Trustee or any Paying Agent, at the last address of
record for each such Holder).
Section 3.04. EXISTENCE OF TRUST. (a) Subject to paragraphs (b) and
(c) of this Section 3.04, the Trust will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware or under the laws of any other state of the United States of
America, and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Indenture, the Notes and the
other Basic Documents.
(b) Subject to Section 3.09(g) hereof, and with the prior
written consent of the Note Insurer, any entity into which the Trust may be
merged or with which it may be consolidated, or any entity resulting from any
merger or consolidation to which the Trust shall be a party, shall be the
successor issuer 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 in any agreement relating to such merger or consolidation, by which any
such Trust may seek to retain certain powers, rights and privileges therefore
obtaining for any period of time following such merger or consolidation to the
contrary notwithstanding (other than Section 3.09(g)).
(c) Upon any consolidation or merger of or other succession to
the Trust in accordance with this Section 3.04, the Person formed by or
surviving such consolidation or merger (if other than the Trust) may exercise
every right and power of, and shall have all of the obligations of, the Trust
under this Indenture with the same effect as if such Person had been named as
the issuer herein.
Section 3.05. PROTECTION OF TRUST ESTATE. (a) The Trust will, from
time to time, execute and deliver all such supplements and amendments hereto
and all such financing statements,
18
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 as made by this Indenture;
(ii) maintain or preserve the lien of this Indenture or carry
out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Mortgage Loans or the Sale and
Servicing Agreement; or
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee, the Noteholders and the Note Insurer
in the Mortgage Loans and the other property held as part of the Trust
Estate against the claims of all Persons and parties.
(b) The Indenture Trustee shall not remove any portion of
the Trust Estate that consists of money or is evidenced by an instrument,
certificate or other writing from the jurisdiction in which it was held at
the Closing Date (provided that the Indenture Trustee may allow for the
release of the Indenture Trustee's Mortgage File as provided in the Sale and
Servicing Agreement) or cause or permit ownership or the pledge of any
portion of the Trust Estate that consists of book-entry securities to be
recorded on the books of a Person located in a different jurisdiction from
the jurisdiction in which such ownership or pledge was recorded at such time
unless the Indenture Trustee shall have first received an Opinion of Counsel
to the effect that the lien and security interest created by this Indenture
with respect to such property will continue to be maintained after giving
effect to such action or actions.
Section 3.06. OPINIONS AS TO THE TRUST ESTATE. On or before April
30th in each calendar year, beginning in 2001, the Master Servicer, on behalf
of the Trust, shall furnish to the Backup Servicer, the Indenture Trustee and
the Note Insurer an Opinion of Counsel reasonably satisfactory in form and
substance to the Indenture Trustee and the Note Insurer either stating that,
in the opinion of such counsel, such action has been taken as is necessary to
maintain the lien and security interest created by this Indenture and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe all such action, if
any, that will, in the opinion of such counsel, be required to be taken to
maintain the lien and security interest of this Indenture with respect to the
Trust Estate until May 1st in the following calendar year.
Section 3.07. PERFORMANCE OF OBLIGATIONS. (a) The Trust shall
punctually perform and observe all of its obligations under this Indenture
and the other Basic Documents.
(b) The Trust shall not take any action and will use its
Best Efforts not to permit any action to be taken by others that would
release any Person from any of such Person's covenants or obligations under
any of the Mortgage Files or under any instrument included in the Trust
Estate, or that would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of, any
of the documents or instruments
19
contained in the Mortgage Files, except as expressly permitted in this
Indenture, the other Basic Documents or such document included in the
Mortgage File or other instrument or unless such action will not adversely
affect the interests of the Noteholders and the Note Insurer.
(c) If the Master Servicer or the Owner Trustee, on behalf
of the Trust, shall have knowledge of the occurrence of a Servicer Event of
Default, the Master Servicer or the Owner Trustee, as applicable, shall
promptly notify the Indenture Trustee, the Note Insurer and the Rating
Agencies thereof, and, in the case of the Master Servicer, shall specify in
such notice the action, if any, the Master Servicer is taking with respect to
such default.
(d) Upon any termination of the Master Servicer's rights
and powers pursuant to the Sale and Servicing Agreement, the Indenture
Trustee shall promptly notify the Note Insurer and the Rating Agencies. As
soon as any successor Master Servicer is appointed, the Indenture Trustee
shall notify the Note Insurer and the Rating Agencies, specifying in such
notice the name and address of such successor Master Servicer.
Section 3.08. INVESTMENT COMPANY ACT. The Trust shall at all times
conduct its operations so as not to be subject to, or shall comply with, the
requirements of the Investment Company Act of 1940, as amended (or any
successor statute), and the rules and regulations thereunder.
Section 3.09. NEGATIVE COVENANTS. The Trust shall not:
(a) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate, except as expressly permitted by this Indenture
and the other Basic Documents;
(b) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Noteholder by reason of the payment of any taxes levied or
assessed upon any portion of the Trust Estate;
(c) engage in any business or activity other than as permitted
by the Trust Agreement or other than in connection with, or relating to, the
issuance of the Notes pursuant to this Indenture, or amend the Trust Agreement,
as in effect on the Closing Date, other than in accordance with Section 12.01 of
the Trust Agreement;
(d) incur, issue, assume or otherwise become liable for any
indebtedness other than the Notes;
(e) incur, assume, guaranty or agree to indemnify any Person
with respect to any indebtedness of any Person, except for such indebtedness as
may be incurred by the Trust in connection with the issuance of the Notes
pursuant to this Indenture;
(f) subject to Article X of the Trust Agreement, dissolve or
liquidate in whole or in part (until the Notes are paid in full);
(g) (i) permit the validity or effectiveness of this
Indenture or any Grant to be impaired, or permit the lien of this Indenture
to be impaired, amended, hypothecated,
20
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations under this Indenture, except as may be
expressly permitted hereby, (ii) permit any lien, charge, security interest,
mortgage or other encumbrance (other than the lien of this Indenture) to be
created on or extend to or otherwise arise upon or burden the Trust Estate or
any part thereof or any interest therein or the proceeds thereof, or (iii)
permit the lien of this Indenture not to constitute a valid perfected first
priority (other than with respect to any such tax, mechanics' or other lien)
security interest in the Trust Estate; or
(h) take any other action that should reasonably be expected
to, or fail to take any action if such failure should reasonably be expected to,
cause the Trust to be taxable as (x) an association pursuant to Section 7701 of
the Code and the corresponding regulations or (y) a taxable mortgage pool
pursuant to Section 7701(i) of the Code and the corresponding regulations.
Section 3.10. ANNUAL STATEMENT AS TO COMPLIANCE. On or before April 30,
2001, and each April 30 thereafter, the Master Servicer, on behalf of the Trust,
shall deliver to the Backup Servicer, the Indenture Trustee, the Note Insurer
and the Sponsor a written statement, signed by an Authorized Officer of the
Master Servicer, on behalf of the Trust, stating that:
(i) a review of the fulfillment by the Trust during such year
of its obligations under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Trust has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a Default in the fulfillment of any such covenant or condition,
specifying each such Default known to such Authorized Officer and the
nature and status thereof.
Section 3.11. RESTRICTED PAYMENTS. The Trust shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Trust or otherwise with respect to any ownership or equity interest or
security in or of the Trust or to the Master Servicer, (ii) redeem, purchase,
retire or otherwise acquire for value any such ownership or equity interest
or security or (iii) set aside or otherwise segregate any amounts for any
such purpose; provided, however, that the Trust may make, or cause to be
made, distributions to the Master Servicer, the Backup Servicer, the
Indenture Trustee, the Owner Trustee, the Note Insurer, the Primary Mortgage
Insurance Provider, the Noteholders and the Certificateholders as
contemplated by, and to the extent funds are available for such purpose under
this Indenture and the other Basic Documents and the Trust will not, directly
or indirectly, make or cause to be made payments to or distributions from any
Payment Account except in accordance with this Indenture.
Section 3.12. TREATMENT OF NOTES AS DEBT FOR TAX PURPOSES. For
purposes of federal, state and local income, franchise and any other income
taxes, the Trust will treat the Notes as indebtedness, and hereby instructs
the Indenture Trustee, Payee Agent, the Master Servicer and the Backup
Servicer, on behalf of the Trust to treat the Notes as indebtedness for all
applicable tax reporting purposes.
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Section 3.13. NOTICE OF EVENTS OF DEFAULT. The Master Servicer, on
behalf of the Trust, shall give the Backup Servicer, the Indenture Trustee,
the Note Insurer, the Rating Agencies and the Sponsor prompt written notice
of each Event of Default hereunder of which it has knowledge, each default on
the part of the Master Servicer of its obligations under the Sale and
Servicing Agreement and each default on the part of the Sponsor of its
obligations under the Sale and Servicing Agreement.
Section 3.14. FURTHER INSTRUMENTS AND ACTS. Upon written request of
the Indenture Trustee or the Note Insurer, the Owner Trustee, on behalf of
the Trust, will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
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ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. Whenever the
following conditions shall have been satisfied:
(a) either
(i) all Notes theretofore authenticated and delivered (other
than (x) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.07 hereof, and (y) Notes
for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Trust, as provided in Section 3.03 hereof)
have been delivered to the Note Registrar for cancellation; or
(ii) all Notes not theretofore delivered to the Note Registrar
for cancellation, (A) have become due and payable, or (B) will become
due and payable at the Final Stated Maturity Date within one (1) year,
or (C) are to be called for redemption pursuant to Section 10.01 hereof
within one (1) year under irrevocable arrangements satisfactory to the
Indenture Trustee for the giving of notice of redemption by the
Indenture Trustee in the name, and at the expense, of the Sponsor,
and the Sponsor, in the case of clause ii(C), or Master Servicer, in the case of
clauses (ii)(A) or (ii)(B) above, has irrevocably deposited or caused to be
deposited with the Indenture Trustee, in trust for such purpose, an amount
sufficient to pay and discharge the entire unpaid Note Principal Balance of such
Notes not theretofore delivered to the Indenture Trustee for cancellation, for
principal and interest to the Final Stated Maturity Date or to the applicable
Redemption Date, as the case may be, and in the case of Notes that were not paid
at the Final Stated Maturity Date of their entire unpaid Note Principal Balance,
for all overdue principal and all interest payable on such Notes to the next
succeeding Payment Date therefor;
(b) the Master Servicer, on behalf of the Trust, has paid or
caused to be paid all other sums payable hereunder by the Trust (including,
without limitation, amounts due the Note Insurer); and
(c) the Master Servicer, on behalf of the Trust, has delivered
to the Indenture Trustee and the Note Insurer an Officer's Certificate and an
Opinion of Counsel satisfactory in form and substance to the Indenture Trustee
and the Note Insurer each stating that all conditions precedent herein providing
for the satisfaction and discharge of this Indenture have been complied with;
then, upon a Trust Request, this Indenture and the lien, rights and interests
created hereby and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Trust, execute and deliver all
such instruments as may be necessary to acknowledge the satisfaction and
discharge of this Indenture and shall pay, or assign or transfer and deliver, to
the Trust or upon Trust Order all cash, securities and other property held by it
as part of the Trust Estate remaining after satisfaction of the conditions set
forth in paragraphs (a) and (b) above.
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Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Indenture Trustee and any Paying Agent to the Trust
and the Holders of Notes under Section 3.03 hereof, the obligations of the
Indenture Trustee to the Holders of Notes under Section 4.02 hereof and the
provisions of Section 2.07 hereof with respect to lost, stolen, destroyed or
mutilated Notes, registration of transfers of Notes and rights to receive
payments of principal of and interest on the Notes shall survive.
Section 4.02. APPLICATION OF TRUST MONEY. All money deposited with
the Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be held
in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying
Agent, as the Indenture Trustee may determine, to the Persons entitled
thereto, of the principal and interest for whose payment such money has been
deposited with the Indenture Trustee.
Section 4.03. SUBROGATION AND COOPERATION.
(a) The Trust and the Indenture Trustee acknowledge that
(i) to the extent the Note Insurer makes payments under the Note Insurance
Policy on account of principal of or interest on the Mortgage Loans, the Note
Insurer will be fully subrogated to the rights of the Noteholders to receive
such principal of and interest on the Mortgage Loans of the related Trust
Estate, and (ii) the Note Insurer shall be paid such principal and interest
only from the sources and in the manner provided herein and in the Insurance
Agreement for the payment of such principal and interest.
(b) The Indenture Trustee shall cooperate in all respects
with any reasonable request or direction by the Note Insurer for action to
preserve or enforce the Note Insurer's rights or interest under this
Indenture or the Insurance Agreement, consistent with this Indenture and
without limiting the rights of the Noteholders as otherwise set forth in the
Indenture, including without limitation upon the occurrence and continuance
of a Default, a request to take any one or more of the following actions:
(i) institute proceedings for the collection of all amounts
then payable on the Notes or under this Indenture in respect to the
Notes and all amounts payable under the Insurance Agreement and to
enforce any judgment obtained and collect from the Trust monies
adjudged due;
(ii) sell either Trust Estate or any portion thereof or rights
or interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
(iii) cause the Sponsor to record all assignments that have
not previously been recorded;
(iv) institute proceedings from time to time for the complete
or partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Note Insurer hereunder.
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(c) Following the payment in full of the Notes, the Note
Insurer shall continue to have all rights and privileges provided to it under
this Section 4.03 and in all other provisions of this Indenture, until all
amounts owing to the Note Insurer have been paid in full.
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ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. EVENT OF DEFAULT. "EVENT OF DEFAULT", wherever used
herein, means, with respect to Notes issued hereunder, 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):
(a) if the Trust shall fail to distribute or cause to be
distributed to the Indenture Trustee, for the benefit of the holders of the
Notes, on any Payment Date, or any Interest Payment Amount;
(b) if the Trust shall fail to distribute or cause to be
distributed to the Indenture Trustee, for the benefit of the holders of the
Notes, (x) on any Payment Date, an amount equal to the Base Principal Payment
Amount due on the Notes on such Payment Date, to the extent that sufficient
funds are on deposit in the Collection Account or (y) on the Final Stated
Maturity Date for any Class of Notes, the aggregate outstanding Note
Principal Balance of such Class of Notes;
(c) if the Trust shall breach or default in the due
observance of any one or more of the covenants hereof;
(d) if the Trust shall consent to the appointment of a
custodian, receiver, trustee or liquidator (or other similar official) of
itself, or of a substantial part of its property, or shall admit in writing
its inability to pay its debts generally as they come due, or a court of
competent jurisdiction shall determine that the Trust is generally not paying
its debts as they come due, or the Trust shall make a general assignment for
the benefit of creditors;
(e) if the Trust shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization in a
proceeding under any bankruptcy laws (as now or hereafter in effect) or an
answer admitting the material allegation of a petition filed against the
Trust in any such proceeding, or the Trust shall, by voluntary petition,
answer or consent, seek relief under the provisions of any now existing or
future bankruptcy or other similar law providing for the reorganization or
winding-up of debtors, or providing for an agreement, composition, extension
or adjustment with its creditors;
(f) if an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent (express or legally implied) of the Trust, a custodian, receiver,
trustee or liquidator (or other similar official) of the Trust or any
substantial part of its property, or sequestering any substantial part of its
respective property, and any such order, judgment or decree or appointment or
sequestration shall remain in force undismissed, unstayed or unvacated for a
period of ninety (90) days after the date of entry thereof;
(g) if a petition against the Trust in a proceeding under
applicable bankruptcy laws or other insolvency laws, as now or hereafter in
effect, shall be filed and shall not be stayed, withdrawn or dismissed within
ninety (90) days thereafter, or if, under the provisions of any law
26
providing for reorganization or winding-up of debtors which may apply to the
Trust, any court of competent jurisdiction shall assume jurisdiction, custody
or control of the Trust or any substantial part of its property, and such
jurisdiction, custody or control shall remain in force unrelinquished,
unstayed or unterminated for a period of ninety (90) days; or
(h) an event of default under the Insurance Agreement.
Section 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If
an Event of Default occurs and is continuing, then and in every such case,
but with the consent of the Note Insurer in the absence of a Note Insurer
Default, the Indenture Trustee may, and on request of the Note Insurer, in
the absence of a Note Insurer Default, or, with the prior written consent of
the Note Insurer, the Holders of Notes representing at least 51% of the Note
Principal Balance of the Outstanding Notes of all of the Classes, shall,
declare all the Notes to be immediately due and payable by a notice in
writing to the Trust (and to the Indenture Trustee if given by Noteholders),
and upon any such declaration such Notes, in an amount equal to the entire
unpaid Note Principal Balance of such Notes, together with accrued and unpaid
interest thereon to the date of such acceleration, shall become immediately
due and payable, all subject to the prior written consent of the Note Insurer
in the absence of a Note Insurer Default.
At any time after such a declaration of acceleration of maturity of the
Notes has been made and before a judgment or decree for payment of the money due
has been obtained by the Indenture Trustee as hereinafter provided in this
Article V, the Note Insurer, in the absence of a Note Insurer Default, or the
Holders of Notes representing at least 51% of the Note Principal Balance of the
Outstanding Notes of all of the Classes, with the prior written consent of the
Note Insurer, by written notice to the Trust and the Indenture Trustee, may
rescind and annul such declaration and its consequences if:
(a) the Trust has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(i) all payments of principal of, and interest on, all
Outstanding Notes and all other amounts that would then be due
hereunder or upon such Notes if the Event of Default giving rise to
such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the
principal of Notes that have become due solely by such acceleration, have been
cured or waived as provided in Section 5.14 hereof.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
Section 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY INDENTURE TRUSTEE. Subject to the provisions of Section 3.01 hereof and
the following sentence, if an Event of Default occurs and is continuing, the
Indenture Trustee may, with the prior written consent of
27
the Note Insurer, and shall at the written direction of the Note Insurer or
of the Holders of Notes representing not less than 50% of the Note Principal
Balance of the Outstanding Notes of all of the Classes, with the consent of
the Note Insurer, proceed to protect and enforce its rights and the rights of
the Noteholders and the Note Insurer by any Proceedings the Indenture Trustee
deems appropriate 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 enforce any other proper
remedy. Any Proceedings brought by the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer, or any Noteholder against the Trust shall
be limited to the preservation, enforcement and foreclosure of the liens,
assignments, rights and security interests under the Indenture and no
attachment, execution or other unit or process shall be sought, issued or
levied upon any assets, properties or funds of the Trust, other than the
Trust Estate relative to the Notes in respect of which such Event of Default
has occurred. If there is a foreclosure of any such liens, assignments,
rights and security interests under this Indenture, by private power of sale
or otherwise, no judgment for any deficiency upon the indebtedness
represented by the Notes may be sought or obtained by the Indenture Trustee
or any Noteholder against the Trust. The Indenture Trustee shall be entitled
to recover the costs and expenses expended by it pursuant to this Article V
including reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee, its agents and counsel from the Trust Estate.
Section 5.04. REMEDIES. If an Event of Default shall have occurred and
be continuing and the Notes been declared due and payable and such declaration
and its consequences have not been rescinded and annulled, the Indenture
Trustee, at the direction of the Note Insurer (subject to Section 5.17 hereof,
to the extent applicable) may, for the benefit of the Noteholders and the Note
Insurer, do one or more of the following:
(a) institute Proceedings for the collection of all amounts
then payable on the Notes, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Trust moneys
adjudged due, subject in all cases to the provisions of Sections 3.01 and 5.03
hereof;
(b) in accordance with Section 5.17 hereof, sell the Trust
Estate or any portion thereof or rights or interest therein, at one or more
public or private Sales called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust Estate;
(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 Indenture Trustee or the Holders of the Notes and the
Note Insurer hereunder; and
(e) refrain from selling the Trust Estate and apply all funds
on deposit in each of the Accounts pursuant to Section 5.07 hereof.
Section 5.05. INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition
28
or other judicial Proceeding relative to the Trust or any other obligor upon
any of the Notes or the property of the Trust or of such other obligor or
their creditors, the Indenture Trustee (irrespective of whether the Notes
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall have made
any demand on the Trust for the payment of any overdue principal or interest)
shall, with the prior written consent of the Note Insurer, be entitled and
empowered, by intervention in such Proceeding or otherwise to:
(a) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Notes and file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel), the Noteholders and the Note Insurer allowed in such Proceeding, and
(b) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any receiver,
assignee, trustee, liquidator, or sequestrator (or other similar official) in
any such Proceeding is hereby authorized by each Noteholder and the Note Insurer
to make such payments to the Indenture Trustee and, in the event that the
Indenture Trustee shall consent to the making of such payments directly to the
Noteholders and the Note Insurer, to pay to the Indenture Trustee any amount due
to it for the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the Notes or the rights of any
Holder thereof, or the Note Insurer, or to authorize the Indenture Trustee to
vote in respect of the claim of any Noteholder or the Note Insurer in any
such Proceeding.
Section 5.06. INDENTURE TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF NOTES. All rights of action and claims under this Indenture or
any of the Notes may be prosecuted and enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
Proceeding relating thereto, and any such Proceeding instituted by the
Indenture Trustee, at the direction of the Note Insurer, shall be brought in
its own name as trustee of an express trust, and any recovery of judgment
shall be for the ratable benefit of the Holders of the Notes and the Note
Insurer in respect of which such judgment has been recovered after payment of
amounts required to be paid pursuant to paragraph (a) of Section 5.07 hereof.
Section 5.07. 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 Indenture Trustee with respect to each Class of Notes
pursuant to this Article V or otherwise and any other monies that may then be
held or thereafter received by the Indenture Trustee as security for such
Class of Notes shall be applied in the following order, at the date or dates
fixed by the Indenture Trustee and, in case of the payment of the entire
amount due on account of principal of, and interest on, such Class of Notes,
upon presentation and surrender thereof:
29
(a) FIRST, to the Indenture Trustee, any unpaid Indenture
Trustee Fees with respect to such Class then due and any other amounts payable
and due to the Indenture Trustee with respect to such Class under this
Indenture, including any costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article V and to the Owner
Trustee, any unpaid Owner Trustee Fees with respect to such Class then due;
(b) SECOND, from amounts then on deposit in the related
Payment Account, to the Holders of the related Class of Notes, the Payment
Amount for such Class;
(c) THIRD, from amounts then on deposit in the related Payment
Account, the allocable portion of the Over-collateralization Deficit, if any,
for the related Class of Notes;
(d) FOURTH, from amounts then on deposit in the related
Payment Account, to the Holders of the other Class of Notes, the Shortfall
Amount for such other Class;
(e) FIFTH, from amounts then on deposit in the related Payment
Account, to the Note Insurer, the Reimbursement Amount with respect to the
related Class as of such Payment Date;
(f) SIXTH, from amounts then on deposit in the related Payment
Account, to the Note Insurer, the Reimbursement Amount with respect to the other
Class of Notes as of such Payment Date;
(g) SEVENTH, from amounts then on deposit in the related
Payment Account, the Over-collateralization Increase Amount for the related
Class of Notes;
(h) EIGHTH, to the payment of the Note Principal Balance of
the Outstanding Notes of such Class, up to the amount of their unpaid Note
Principal Balance, ratably, without preference or priority of any kind;
(i) NINTH, from amounts then on deposit in the related Payment
Account, to the Reserve Account, Reserve Payment Amount;
(j) TENTH, with respect to the Class A-2 Notes, from amounts
then on deposit in the related Payment Account, to the Holders of the Class A-2
Notes, the Class A-2 Available Funds Cap Carry-Forward Amount;
(k) ELEVENTH, from:
(A) amounts then on deposit in the Payment Account
related to the Class A-1 Notes, to the Master
Servicer, any amount due to it with respect to the
Group 1 Mortgage Loans, and
(B) amounts then on deposit in the Payment Account
related to the Class A-2 Notes, to the Master
Servicer, any amount due to it with respect to the
Group 2 Mortgage Loans; and
30
(l) TWELFTH, following the making by the Indenture Trustee of
all allocations, transfers and disbursements described above, from amounts then
on deposit in each Payment Account, the Indenture Trustee shall distribute to or
at the direction of the Certificateholders (as identified in the Certificate
Register maintained by the Owner Trustee), the amount remaining on such Payment
Date in each Payment Account, if any.
Section 5.08. LIMITATION ON SUITS. No Holder of a 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:
(a) such Holder has previously given written notice to the
Indenture Trustee and the Note Insurer of a continuing Event of Default;
(b) the Holders of Notes representing not less than 25% of the
Note Principal Balance of the Outstanding Notes of all of the Classes shall have
made written request to the Indenture Trustee to institute Proceedings in
respect of such Event of Default in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture
Trustee indemnity in full against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Indenture Trustee, for sixty (60) days after its
receipt of such notice, request and offer of indemnity, has failed to institute
any such Proceeding;
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such sixty (60) day period by the
Holders of Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes of all of the Classes; and
(f) the consent of the Note Insurer shall have been obtained;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the Holders
of Notes.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than 50% of the Note Principal Balance of the Outstanding
Notes of all of the Classes, the Indenture Trustee shall take the action
prescribed by the group representing a greater percentage of the Note Principal
Balance of the Outstanding Notes of all of the Classes.
Section 5.09. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST. Subject to the provisions in this Indenture (including Sections
3.01 and 5.03 hereof) limiting the right to recover amounts due on a Note to
recovery from amounts in the portion of the Trust Estate relating to such Note,
the Holder of any Note shall have the right, to the extent permitted by
applicable law, which right is absolute and unconditional, to receive payment of
each installment of interest on such Note on the respective Payment Date for
such installments of interest, to receive payment of each installment of
principal of such Note when due (or, in the
31
case of any Note called for redemption, on the date fixed for such
redemption) and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
Section 5.10. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
Trustee, the Note Insurer 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 to be adverse
to the Indenture Trustee, the Note Insurer or to such Noteholder, then and in
every such case the Indenture Trustee, the Note Insurer and the Noteholders
shall, subject to any determination in such Proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Indenture Trustee, the Note Insurer and the Noteholders
shall continue as though no such Proceeding had been instituted.
Section 5.11. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Note Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.12. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Indenture Trustee, the Note Insurer or of any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee, the Note Insurer or to the Noteholders may be exercised from
time to time, and as often as may be deemed expedient, by the Indenture Trustee,
the Note Insurer or by the Noteholders with the prior consent of the Note
Insurer, as the case may be.
Section 5.13. CONTROL BY NOTEHOLDERS. The Holders of Notes representing
more than 50% of the Note Principal Balance of the Outstanding Notes of all of
the Classes on the applicable Record Date shall, with the consent of the Note
Insurer, have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee or exercising any
trust or power conferred on the Indenture Trustee; PROVIDED that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) any direction to the Indenture Trustee to undertake a Sale
of the Trust Estate shall be by the Holders of Notes representing the percentage
of the Note Principal Balance of the Outstanding Notes specified in Section
5.17(b)(i) hereof, unless Section 5.17(b)(ii) hereof is applicable; and
(c) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to
32
Section 6.01 hereof, the Indenture Trustee need not take any action that it
determines might involve it in liability or be unjustly prejudicial to the
Noteholders not consenting.
Section 5.14. WAIVER OF PAST DEFAULTS. The Holders of Notes
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of all of the Classes on the applicable Record Date may on behalf of the
Holders of all the Notes, and with the consent of the Note Insurer, waive any
past Default hereunder and its consequences, except a Default:
(a) in the payment of principal or any installment of interest
on any Note; or
(b) in respect of a covenant or provision hereof that under
Section 9.02 hereof cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
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 5.15. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.15 shall not apply to any suit instituted by the
Indenture Trustee or the Note Insurer, to any suit instituted by any Noteholder,
or group of Noteholders, holding in the aggregate Notes representing more than
10% of the Note Principal Balance of the Outstanding Notes of all of the
Classes, or to any suit instituted by any Noteholder for the enforcement of the
payment of any Interest Payment Amount or Base Principal Payment Amount on any
Note on or after the related Payment Date or for the enforcement of the payment
of principal of any Note on or after the Final Stated Maturity Date (or, in the
case of any Note called for redemption, on or after the applicable Redemption
Date).
Section 5.16. WAIVER OF STAY OR EXTENSION LAWS. The Trust 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 of law wherever enacted, now or at any time hereafter in
force, that may affect the covenants in, or the performance of, this Indenture;
and the Trust (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 5.17. SALE OF TRUST ESTATE. (a) The power to effect any sale (a
"SALE") of any portion of the Trust Estate pursuant to Section 5.04 hereof shall
not be exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired
33
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 Indenture Trustee may, with the consent of the Note Insurer, from time to
time postpone any public Sale by public announcement made at the time and
place of such Sale.
(a) To the extent permitted by law, the Indenture Trustee
shall not in any private Sale sell or otherwise dispose of the Trust Estate, or
any portion thereof, unless:
(i) the Holders of Notes representing not less than 50% of the
Note Principal Balance of the Notes of all of the Classes then
Outstanding consent to or direct the Indenture Trustee to make such
Sale; or
(ii) the proceeds of such Sale would be not less than the
entire amount that would be payable to the Holders of the Notes, in
full payment thereof in accordance with Section 5.07 hereof, on the
Payment Date next succeeding the date of such Sale.
The purchase by the Indenture Trustee of all or any portion of the
Trust Estate at a private Sale shall not be deemed a Sale or disposition thereof
for purposes of this Section 5.17(b). In the absence of a Note Insurer Default,
no Sale hereunder shall be effective without the consent of the Note Insurer.
(b) Unless the Holders of all Outstanding Notes or the Note
Insurer have otherwise consented or directed the Indenture Trustee, at any
public Sale of all or any portion of the Trust Estate at which a minimum bid
equal to or greater than the amount described in paragraph (b)(ii) of this
Section 5.17 has not been established by the Indenture Trustee and no Person
bids an amount equal to or greater than such amount, the Indenture Trustee,
acting in its capacity as Indenture Trustee (i) on behalf of the Noteholders and
the Note Insurer, shall prevent such Sale and bid an amount (which shall include
the Indenture Trustee's right, in its capacity as Indenture Trustee, to credit
bid) at least $1.00 more than the highest other bid in order to preserve the
Trust Estate on behalf of the Noteholders and the Note Insurer.
(c) In connection with a Sale of all or any portion of the
Trust Estate:
(i) any Holder or Holders of Notes may bid for and purchase
the property offered for Sale, and upon compliance with the terms of
sale may hold, retain and possess and dispose of such property, without
further accountability, and may, in paying the purchase money therefor,
deliver any Outstanding Notes or claims for interest thereon in lieu of
cash up to the amount that shall, upon distribution of the net proceeds
of such Sale, be payable thereon, and such Notes, in case the amounts
so payable thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after being appropriately stamped to
show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any public Sale thereof,
and, in lieu of paying cash therefor, may make settlement for the
purchase price by crediting the gross Sale price against the sum of
(A) the amount that would be payable to the Holders of the Notes as a
result of such Sale in accordance with Section 5.07 hereof on the
Payment Date next succeeding the date of such Sale and (B) the
expenses of the Sale and of any Proceedings in connection
34
therewith which are reimbursable to it, without being required to
produce the Notes in order to complete any such Sale or in order for
the net Sale price to be credited against such Notes, and any
property so acquired by the Indenture Trustee shall be held and dealt
with by it in accordance with the provisions of this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate in connection with a Sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Trust to transfer and convey its
interest in any portion of the Trust Estate in connection with a Sale
thereof, and to take all action necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys.
Section 5.18. ACTION ON NOTES. The Indenture Trustee's right to seek
and recover judgment under this Indenture shall not be affected by the seeking,
obtaining or application of any other relief under or with respect to this
Indenture. Neither the lien of this Indenture nor any rights or remedies of the
Indenture Trustee, the Note Insurer or the Holders of Notes shall be impaired by
the recovery of any judgment by the Indenture Trustee against the Trust or by
the levy of any execution under such judgment upon any portion of the Trust
Estate. Any money or property collected by the Indenture Trustee shall be
applied in accordance with Section 5.07 hereof.
Section 5.19. NO RECOURSE. The Trust Estate Granted to the Indenture
Trustee as security for the Notes serves as security only for the Notes. The
Noteholders shall have no recourse against the Owner Trustee, the Indenture
Trustee, the Note Registrar, the Authenticating Agent, the Sponsor, the Master
Servicer, the Backup Servicer or any of their respective Affiliates, or to the
assets of any of the foregoing entities.
Section 5.20. APPLICATION OF THE TRUST INDENTURE ACT. Pursuant to
Section 316(a) of the TIA, all provisions automatically provided for in Section
316(a) are hereby expressly excluded.
Section 5.21. SUSPENSION AND TERMINATION OF NOTE INSURER'S RIGHTS.
During the continuation of a Note Insurer Default, rights granted or reserved to
the Note Insurer hereunder shall vest instead in the Certificateholders;
PROVIDED, that the Note Insurer shall be entitled to any distributions of
reimbursements as set forth in the Indenture and the Insurance Agreement and the
Note Insurer shall retain those rights under Section 12.01 to consent to any
amendment of this Agreement.
At such time as either (i) the outstanding Note Principal Balance of
the Notes has been reduced to zero or (ii) the Note Insurance Policy has been
terminated and in either case of (i) or (ii) the Note Insurer has been
reimbursed for all amounts owed under the Note Insurance Policy and the
Insurance Agreement (and the Note Insurer no longer has any obligation under the
Note Insurance Policy, except for breach thereof by the Note Insurer), then the
rights and benefits granted or reserved to the Note Insurer hereunder (including
the rights to direct certain actions
35
and receive certain notices) shall terminate and the Certificateholders shall
be entitled to the exercise of such rights and to receive such benefits of
the Note Insurer following such termination to the extent that such rights
and benefits are applicable to the Certificateholders.
36
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. DUTIES OF INDENTURE TRUSTEE. (a) If an Event of Default
has occurred and is continuing of which a Responsible Officer of the Indenture
Trustee has actual knowledge, the Indenture Trustee shall exercise such of the
rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(a) Except during the continuance of an Event of Default:
(i) the Indenture Trustee need perform only those duties that
are specifically set forth in this Indenture and no others and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may request and conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates, opinions, resolutions, statements, reports, instruments
or other documents furnished to the Indenture Trustee and conforming,
on their faces, to the requirements of this Indenture. The Indenture
Trustee shall, however, examine such certificates and opinions to
determine whether they conform on their face to the requirements of
this Indenture.
(b) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) The duties and obligations of the Indenture Trustee shall
be determined solely by the express provisions of this Indenture, the
Indenture Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Indenture, no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee and, in the absence of bad
faith on the part of the Indenture Trustee, the Indenture Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates,
opinions or other documents (including, but not limited to, any reports
or statements furnished by the Master Servicer, Backup Servicer or
Subservicer) reasonably believed by the Indenture Trustee to be genuine
and to have been furnished by the proper party to the Indenture Trustee
and which on their face, do not contradict the requirements of this
Indenture;
(ii) this paragraph does not limit the effect of paragraph (b)
of this Section 6.01;
(iii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
(iv) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction of the Noteholders or the Note Insurer (including directions
pursuant to Sections 5.13 or 5.17 hereof or in accordance
37
with the direction of the Note Insurer) or exercising any trust or
power or remedy conferred upon the Indenture Trustee under this
Indenture; and
(v) The Indenture Trustee shall not be charged with knowledge
of any failure by the Master Servicer to comply with any of its
obligations under the Sale and Servicing Agreement or any breach of
representations or warranties under the Sale and Servicing Agreement
unless a Responsible Officer of the Indenture Trustee obtains actual
knowledge of such failure or breach or the Indenture Trustee receives
written notice of such failure or breach from the Master Servicer.
(c) Except with respect to duties of the Indenture Trustee
prescribed by the TIA, as to which this Section 6.01(d) shall not apply, for all
purposes under this Indenture, the Indenture Trustee shall not be deemed to have
notice or knowledge of any Event of Default described in Sections 5.01(d),
5.01(e) or 5.01(f) hereof or any Default described in Sections 5.01(c) hereof or
of any event described in Section 3.05 hereof unless a Responsible Officer
assigned to and working in the Indenture Trustee's corporate trust department
and having direct responsibility for this Indenture has actual knowledge thereof
or unless written notice of any event that is in fact such an Event of Default
or Default is received by the Indenture Trustee at the Corporate Trust Office,
and such notice references the Notes generally, the Trust, the Trust Estate or
this Indenture.
(d) No provision of this Indenture shall require the Indenture
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 under this Indenture or the other
Basic Documents.
(e) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to the provisions of this Section 6.01 and
to the provisions of the TIA.
(f) Notwithstanding any extinguishment of all right, title and
interest of the Trust in and to the Trust Estate following an Event of Default
and a consequent declaration of acceleration of the maturity of the Notes,
whether such extinguishment occurs through a Sale of the Trust Estate to another
Person, the acquisition of the Trust Estate by the Indenture Trustee or
otherwise, the rights, powers and duties of the Indenture Trustee with respect
to the Trust Estate (or the proceeds thereof), the Noteholders and the Note
Insurer and the rights of Noteholders and the Note Insurer shall continue to be
governed by the terms of this Indenture.
(g) The Indenture Trustee shall at all times retain possession
of the Indenture Trustee's Mortgage Files in the State of Minnesota or the State
of California, except for those Indenture Trustee's Mortgage Files or portions
thereof released to the Master Servicer or the Note Insurer pursuant to this
Indenture or the Sale and Servicing Agreement.
(h) Subject to the other provisions of this Indenture and
without limiting the generality of this Section 6.01, the Indenture Trustee
shall have no duty (A) to see to any recording, filing, or depositing of this
Indenture or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
38
maintenance of any such recording, filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (B) to see to any insurance, (C) to see
to the payment or discharge of any tax, assessment, or other governmental charge
or any lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Estate from funds available in the Payment
Accounts or (D) to confirm or verify the contents of any reports or certificates
of the Master Servicer or the Backup Servicer delivered to the Indenture Trustee
pursuant to this Indenture believed by the Indenture Trustee to be genuine and
to have been signed or presented by the proper party or parties.
Section 6.02. NOTICE OF DEFAULT. Immediately after the occurrence of
any Default known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall transmit by mail to the Note Insurer and the Sponsor
notice of each such Default and, within ninety (90) days after the occurrence of
any Default known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall transmit by mail to all Holders of Notes notice of each
such Default, unless such Default shall have been cured or waived; PROVIDED,
HOWEVER, that in no event shall the Indenture Trustee provide notice, or fail to
provide notice of a Default known to a Responsible Officer of the Indenture
Trustee in a manner contrary to the requirements of the Trust Indenture Act.
Concurrently with the mailing of any such notice to the Holders of the Notes,
the Indenture Trustee shall transmit by mail a copy of such notice to the Rating
Agencies.
Section 6.03. RIGHTS OF INDENTURE TRUSTEE. (a) Except as otherwise
provided in Section 6.01 hereof, the Indenture Trustee may rely on, and be
protected in acting or refraining to act upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Indenture
Trustee need not investigate any fact or matter stated in any such document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officer's Certificate or an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on any such Officer's Certificate or Opinion of Counsel.
(c) With the consent of the Note Insurer, which consent shall
not be unreasonably withheld, the Indenture Trustee may act through agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes to be authorized or
within its rights or powers.
(e) The Indenture Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Indenture or to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the Noteholders or the Note Insurer,
pursuant to the provisions of this Indenture, unless such Noteholders or the
Note Insurer shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve the
Indenture Trustee of the obligation, upon the occurrence of an Event of Default
of which a Responsible Officer of the Indenture Trustee shall have actual
knowledge (which has not been cured), to exercise such of the rights and powers
vested in it by
39
this Indenture, and to use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(f) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Noteholders or the Note Insurer and provided further that payment within
a reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, reasonably assured to the Indenture Trustee by
the security afforded to it by the terms of this Indenture or such other
security or indemnity as the Indenture Trustee may reasonably require as a
condition to taking any such action.
(g) The right of the Indenture Trustee to perform any
discretionary act enumerated in this Indenture shall not be construed as a duty,
and the Indenture Trustee shall not be answerable for anything other than its
negligence or willful misconduct in the performance of such act.
Section 6.04. NOT RESPONSIBLE FOR RECITALS, ISSUANCE OF NOTES OR
MORTGAGE LOANS. The recitals contained herein and in the Notes, except, with
respect to the Indenture Trustee, the certificates of authentication on the
Notes, shall be taken as the statements of the Trust, and the Owner Trustee, the
Indenture Trustee and the Authenticating Agent assume no responsibility for
their correctness. The Owner Trustee and the Indenture Trustee make no
representations with respect to the Trust Estate or as to the validity or
sufficiency of this Indenture or of the Notes. Neither the Indenture Trustee nor
the Owner Trustee shall be accountable for the use or application by the Trust
of the Notes or the proceeds thereof or any money paid to the Trust or upon a
Trust Order pursuant to the provisions hereof.
The Indenture Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Mortgage or any Mortgage Loan, or the perfection and priority of any
mortgage or the maintenance of any such perfection and priority or for or with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to Noteholders under this Indenture, including,
without limitation: the existence, condition and ownership of any Mortgaged
Property; the existence and enforceability of any hazard insurance or primary
mortgage insurance thereon; the validity of the assignment of any Mortgage Loan
to the Indenture Trustee or of any intervening assignment; the completeness of
any Mortgage Loan; the performance or enforcement of any Mortgage Loan; the
compliance by the Sponsor, Issuer, Master Servicer, Backup Servicer, Note
Insurer with any warranty or representation made under this Indenture, the Sale
and Servicing Agreement, the Insurance Agreement or in any related document or
the accuracy of any such warranty or representation; any investment of monies by
or at the direction of the Sponsor or the Master Servicer or any loss resulting
therefrom; the acts or omissions of any of the Sponsor, the Master Servicer, any
subservicer or any Mortgagor; any action of the Master Servicer or any
subservicer taken in the name of the Indenture Trustee; the failure of the
Master Servicer or any subservicer to act or perform any duties acquired of it
as agent of the Indenture Trustee hereunder; or any action by the Indenture
Trustee taken at the instruction of the Master Servicer or the Note Insurer. The
Indenture Trustee shall have no responsibility for filing any financing or
continuation statement
40
in any public office at any time or otherwise to perfect or maintain the
perfection of any security interest or lien granted to it hereunder.
Section 6.05. MAY HOLD NOTES. The Indenture Trustee, any Agent, or any
other agent of the Trust, in its individual or any other capacity, may become
the owner or pledgee of Notes and, subject to Sections 6.07 and 6.13 hereof, may
otherwise deal with the Trust or any Affiliate of the Trust with the same rights
it would have if it were not Indenture Trustee, Agent or such other agent.
Section 6.06. MONEY HELD IN TRUST. Money held by the Indenture Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by this Indenture or by law. The Indenture Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Trust and except to the extent of income or other gain on
investments that are obligations of the Indenture Trustee, in its commercial
capacity, and income or other gain actually received by the Indenture Trustee on
investments, which are obligations of others.
Section 6.07. ELIGIBILITY, DISQUALIFICATION. Irrespective of whether
this Indenture is qualified under the TIA, this Indenture shall always have an
indenture trustee who satisfies the requirements of TIA Sections 310(a)(1) and
310(a)(5). The Indenture Trustee shall always have a combined capital and
surplus as stated in Section 6.08 hereof. The Indenture Trustee shall be subject
to TIA Section 310(b).
Section 6.08. INDENTURE TRUSTEE'S CAPITAL AND SURPLUS. The Indenture
Trustee shall at all times (a)(i) have a combined capital and surplus of at
least $50,000,000, or (ii) be a member of a bank holding company system, the
aggregate combined capital and surplus of which is at least $100,000,000 and (b)
be rated (or have long-term debt rated) "BBB" or better by S&P and "Baa2" by
▇▇▇▇▇'▇; PROVIDED, HOWEVER, that the Indenture Trustee's separate capital and
surplus shall at all times be at least the amount required by TIA Section
310(a)(2). If the Indenture Trustee publishes annual reports of condition of the
type described in TIA Section 310(a)(1), its combined capital and surplus for
purposes of this Section 6.08 shall be as set forth in the latest such report.
If at any time the Indenture Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.08 and TIA Section 310(a)(2), it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article VI.
Section 6.09. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No
resignation or removal of the Indenture Trustee and no appointment of a
successor Indenture Trustee pursuant to this Article VI shall become effective
until the acceptance of appointment by the successor Indenture Trustee under
Section 6.10 hereof.
(b) The Indenture Trustee may resign at any time by giving
written notice thereof to the Trust, the Note Insurer and each Rating Agency. If
an instrument of acceptance by a successor Indenture Trustee shall not have been
delivered to the Indenture Trustee within thirty (30) days after the giving of
such notice of resignation, the resigning Indenture Trustee may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee.
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(c) The Indenture Trustee may be removed at any time by the
Note Insurer or, with the consent of the Note Insurer, by Act of the Holders
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of all of the Classes, by written notice delivered to the Indenture
Trustee and to the Trust.
(d) If at any time:
(i) the Indenture Trustee shall have a conflicting interest
prohibited by Section 6.07 hereof and shall fail to resign or eliminate
such conflicting interest in accordance with Section 6.07 hereof after
written request therefor by the Trust or by any Noteholder; or
(ii) the Indenture Trustee shall cease to be eligible under
Section 6.08 hereof or shall become incapable of acting or shall be
adjudged bankrupt or insolvent, or a receiver of the Indenture Trustee
or of its property shall be appointed, or any public officer shall take
charge or control of the Indenture Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation;
then, in any such case, (x) the Owner Trustee, on behalf of the Trust, by a
Trust Order, with the consent of the Note Insurer, may remove the Indenture
Trustee, and the Owner Trustee, on behalf of the Trust, by a Trust Order, shall
join with the Indenture Trustee in the execution, delivery and performance of
all instruments and agreements necessary or proper to appoint a successor
Indenture Trustee acceptable to the Note Insurer and to vest in such successor
Indenture Trustee any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Indenture; provided, however,
if the Owner Trustee, on behalf of the Trust, and the Note Insurer do not join
in such appointment within fifteen (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 Indenture Trustee may petition a court of competent jurisdiction to make
such appointment, or (y) subject to Section 5.15 hereof, and, in the case of a
conflicting interest as described in clause (i) above, unless the Indenture
Trustee's duty to resign has been stayed as provided in TIA Section 310(b), the
Note Insurer or any Noteholder who has been a bona fide Holder of a Note for at
least six (6) months may, on behalf of himself and all others similarly
situated, with the consent of the Note Insurer, petition any court of competent
jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of the
Indenture Trustee for any cause, the Note Insurer may, and if the Note Insurer
fails to do so, the Owner Trustee, on behalf of the Trust, by a Trust Order,
shall promptly, appoint a successor Indenture Trustee acceptable to the Note
Insurer and reasonably acceptable to the Sponsor.
(f) The Master Servicer, on behalf of the Trust, shall give
notice of each resignation and each removal of the Indenture Trustee and each
appointment of a successor Indenture Trustee to the Backup Servicer, the Holders
of Notes and the Note Insurer. Each notice shall include the name of the
successor Indenture Trustee and the address of its Corporate Trust Office.
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Section 6.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR INDENTURE TRUSTEE.
Every successor Indenture Trustee appointed hereunder shall execute, acknowledge
and deliver to the Trust, the Note Insurer and the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective and such successor
Indenture Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Indenture
Trustee. Notwithstanding the foregoing, upon a Trust Request of the Owner
Trustee or the Note Insurer, on behalf of the Trust, or the successor Indenture
Trustee, such retiring Indenture Trustee shall, upon payment of its charges and
any fees, expenses or other amounts owing the Indenture Trustee, execute and
deliver an instrument transferring to such successor Indenture Trustee all the
rights, powers and trusts of the retiring Indenture Trustee, and shall duly
assign, transfer and deliver to such successor Indenture Trustee all property
and money held by such retiring Indenture Trustee hereunder. Upon a written
request of any such successor Indenture Trustee, the Owner Trustee, on behalf of
the Trust, shall, with the written consent of the Note Insurer, execute and
deliver any and all instruments for more fully and certainly vesting in and
confirming to such successor Indenture Trustee all such rights, powers and
trusts.
No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be qualified
and eligible under this Article VI.
Section 6.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF INDENTURE TRUSTEE. Any corporation or banking association into which
the Indenture Trustee may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from any
merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any corporation or banking association succeeding to all or
substantially all of the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee hereunder, provided, that such
corporation or banking association shall be otherwise qualified and eligible
under this Article VI, 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 Indenture Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Indenture Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Indenture Trustee had
authenticated such Notes.
Section 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST TRUST. The
Indenture Trustee (and any co-trustee or separate trustee) shall be subject to
TIA Section 311(a), excluding any creditor relationship listed in TIA Section
31l(b), and an Indenture Trustee (and any co-trustee or separate trustee) who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.13. CO-INDENTURE TRUSTEES AND SEPARATE INDENTURE TRUSTEES. At
any time or times, for the purpose of meeting the legal requirements of the TIA
or of any jurisdiction in which any of the Trust Estate may at the time be
located, the Indenture Trustee shall have power and shall execute and deliver
all instruments necessary to appoint one or more Persons approved by the
Indenture Trustee either to act as co-trustee, jointly with the Indenture
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
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Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section 6.13.
All fees and expenses of any co-trustee or separate trustee shall be payable
by the Trust.
Should any written instrument from the Trust 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 written request, be executed, acknowledged and
delivered by the Owner Trustee, on behalf of the Trust, with the written consent
of the Note Insurer.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(a) The Notes shall be authenticated and delivered and all
rights, powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Indenture Trustee hereunder, shall be exercised,
solely by the Indenture Trustee.
(b) The rights, powers, duties and obligations hereby
conferred or imposed upon the Indenture Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee or by the Indenture Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that under
any law of any jurisdiction in which any particular act is to be performed, the
Indenture Trustee shall be incompetent or unqualified to perform such act, in
which event such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee.
(c) The Indenture Trustee at any time may accept the
resignation of or remove any co-trustee or separate trustee appointed under this
Section 6.13. A successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section 6.13.
(d) The Indenture Trustee shall not be liable by reason of any
act or omission of a co-trustee or separate trustee appointed by the Indenture
Trustee with due care. No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture Trustee, or
any other such trustee hereunder.
(e) Any Act of Noteholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and separate
trustee.
Section 6.14. AUTHENTICATING AGENTS. The Owner Trustee, acting at the
direction of the Certificateholders, shall appoint an Authenticating Agent with
power to act on the Trust's behalf, subject to the direction of the
Certificateholders, in the authentication and delivery of the Notes designated
for such authentication and, containing provisions therein for such
authentication (unless the Owner Trustee, acting at the direction of the
Certificateholders, has made other arrangements, satisfactory to the Indenture
Trustee and such Authenticating Agent, for notation on the Notes of the
authority of an Authenticating Agent appointed after the initial authentication
and delivery of such Notes) in connection with transfers and exchanges under
Section 2.06
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hereof, as fully to all intents and purposes as though the Authenticating
Agent had been expressly authorized by Section 2.06 hereof to authenticate
and deliver Notes. For all purposes of this Indenture (other than in
connection with the authentication and delivery of Notes pursuant to Sections
2.05 and 2.11 hereof in connection with their initial issuance), the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section 6.14 shall be deemed to be the authentication and delivery of
Notes "by the Indenture Trustee." Such Authenticating Agent shall at all
times be a Person that both meets the requirements of Section 6.07 hereof for
the Indenture Trustee hereunder and has an office for presentation of Notes
in the United States of America. The Indenture Trustee shall initially be the
Authenticating Agent and shall be the Note Registrar as provided in Section
2.06 hereof. The office from which the Indenture Trustee shall perform its
duties as Note Registrar and Authenticating Agent shall be its Corporate
Trust Office. Any Authenticating Agent appointed pursuant to the terms of
this Section 6.14 or pursuant to the terms of any supplemental indenture
shall deliver to the Indenture Trustee as a condition precedent to the
effectiveness of such appointment an instrument accepting the trusts, duties
and responsibilities of Authenticating Agent and of Note Registrar or co-Note
Registrar and indemnifying the Indenture Trustee for and holding the
Indenture Trustee harmless against, any loss, liability or expense (including
reasonable attorneys' fees) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance, administration of
the trust or exercise of authority by such Authenticating Agent, Note
Registrar or co-Note Registrar.
Any corporation or banking association into which any Authenticating
Agent may be merged or converted or with which it may be consolidated, or any
corporation or banking association resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation or banking association succeeding to the corporate trust business of
any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 6.14, without the execution or filing of any further act on the part of
the parties hereto or the Authenticating Agent or such successor corporation or
banking association.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trust. The Owner Trustee, acting at the direction
of the Certificateholders, may at any time with the consent of the Note Insurer
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Indenture Trustee. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time any Authenticating Agent shall cease to be eligible under this Section
6.14, the Owner Trustee, acting at the direction of the Certificateholders,
shall promptly appoint a successor Authenticating Agent acceptable to the Note
Insurer, shall give written notice of such appointment to the Indenture Trustee,
and shall mail notice of such appointment to all Holders of Notes.
The Indenture Trustee agrees, subject to Section 6.01(e) hereof to pay
to any Authenticating Agent from time to time reasonable compensation for its
services and the Indenture Trustee shall be entitled to be reimbursed for such
payments pursuant to Section 6.16 hereof. The provisions of Sections 2.09, 6.04
and 6.05 hereof shall be applicable to any Authenticating Agent.
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Section 6.15. REVIEW OF MORTGAGE FILES. (a) The Indenture Trustee
shall, on or prior to the Closing Date, execute and deliver the acknowledgement
of receipt of the Note Insurance Policy and the Primary Mortgage Insurance
Policy required by Section 2.06(a) of the Sale and Servicing Agreement.
(b) The Indenture Trustee shall (i) on or prior to the Closing
Date, execute and deliver the acknowledgement of receipt of the Mortgage Loans
required by Section 2.06(b)(i) of the Sale and Servicing Agreement, (ii) on or
prior to sixty (60) days following the Closing Date, execute and deliver the
Initial Certification required by Section 2.06(b)(ii) of the Sale and Servicing
Agreement, and (iii) on or prior to one hundred eighty (180) days following the
Closing Date, execute and deliver the Final Certification required by Section
2.06(b)(iii) of the Sale and Servicing Agreement.
(c) In giving each of the acknowledgements, the Initial
Certification and the Final Certification referred to in paragraphs (a) and (b)
of this Section 6.15, the Indenture Trustee shall not be under any duty or
obligation (i) to inspect, review or examine any such documents, instruments,
securities or other papers to determine that they or the signatures thereto are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face or (ii) to determine whether any Mortgage File should include a
flood insurance policy, any rider, addenda, surety or guaranty agreement, power
of attorney, buy down agreement, assumption agreement, modification agreement,
written assurance or substitution agreement.
(d) In the event that the Mortgage Loans are required to be
recorded in accordance with the provisions of Section 2.05 of the Sale and
Servicing Agreement, no later than the fifth Business Day of each third month,
commencing in March 2000, the Indenture Trustee shall deliver to the Master
Servicer and the Note Insurer a recordation report dated as of the first day of
such month, identifying those Mortgage Loans for which it has not yet received
(i) an original recorded Mortgage or a copy thereof certified to be true and
correct by the public recording office in possession of such Mortgage or (ii) an
original recorded Assignment of Mortgage to the Indenture Trustee and any
required intervening Assignments of Mortgage or a copy thereof certified to be a
true and correct copy by the public recording office in possession of such
Assignment of Mortgage.
Section 6.16. INDENTURE TRUSTEE FEES AND EXPENSES; INDEMNIFICATION. The
Indenture Trustee shall be entitled to receive the Indenture Trustee Fee on each
Payment Date as provided herein. The Indenture Trustee also shall be entitled to
(i) payment of or reimbursement for expenses, disbursements and advances
incurred or made by the Indenture Trustee in accordance with any of the
provisions of this Indenture or the Sale and Servicing Agreement (including, but
not limited to, the reasonable compensation and the expenses and disbursements
of its counsel and of all persons not regularly in its employ), and (ii)
indemnification against losses, liability costs and expenses, including
reasonable attorney's fees, incurred, arising out of or in connection with this
Indenture, the Notes, the Sale and Servicing Agreement or any other documents or
agreements relating to the Trust or the Notes. The Indenture Trustee and any
director, officer, employee or agent of the Indenture Trustee shall be
indemnified by, first, the Trust Estate and, second, the Master Servicer and
held harmless against any loss, liability costs or reasonable expense incurred
in connection with this Indenture or the Notes, other than any loss, liability,
46
cost or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance by the Indenture Trustee of its duties hereunder
or by reason of its failure to perform its obligations hereunder. The
obligations of the Master Servicer and the Trust under this Section 6.16 shall
survive termination of the Trust and payment of the Notes, and shall extend to
any co-Indenture Trustee or separate-Indenture Trustee appointed pursuant to
this Article VI.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. NOTE REGISTRAR TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF NOTEHOLDERS. (a) The Note Registrar shall furnish or cause to be
furnished to the Indenture Trustee (i) semiannually, not less than forty-five
(45) days nor more than sixty (60) days after the Payment Date occurring closest
to six (6) months after the Closing Date and each Payment Date occurring at six
(6) month intervals thereafter, all information in the possession or control of
the Note Registrar, in such form as the Indenture Trustee may reasonably
require, as to names and addresses of the Holders of Notes, and (ii) at such
other times, as the Indenture Trustee may request in writing, within thirty (30)
days after receipt by the Note Registrar of any such request, a list of similar
form and content as of a date not more than ten (10) days prior to the time such
list is furnished; provided, however, that so long as the Indenture Trustee is
the Note Registrar, no such list shall be required to be furnished.
(b) In addition to furnishing to the Indenture Trustee the
Noteholder lists, if any, required under paragraph (a) of this Section 7.01, the
Note Registrar shall also furnish all Noteholder lists, if any, required under
Section 3.03 hereof at the times required by such Section 3.03.
Section 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list, if any, furnished to the Indenture Trustee as
provided in Section 7.01 hereof and the names and addresses of the Holders of
Notes received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.01 hereof upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Trust, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
Section 7.03. REPORTS BY INDENTURE TRUSTEE. Within sixty (60) days
after December 31 of each year (the "REPORTING DATE"), commencing December 31,
2000, (i) the Indenture Trustee shall, if required by TIA Section 313(a), mail
to all Noteholders a brief report dated as of such reporting date that complies
with TIA Section 313(a); (ii) the Indenture Trustee shall, to the extent not set
forth in the Indenture Trustee's Remittance Report pursuant to Section 2.08(d)
hereof, also mail to Holders of Notes and the Note Insurer with respect to which
it has made advances, any reports with respect to such advances that are
required by TIA Section 313(b)(2); and, the Indenture Trustee shall also mail to
Holders of Notes and the Note Insurer any reports required by TIA Section
313(b)(1). For purposes of the information required to be included in any such
reports pursuant to TIA Sections 313(a)(2), 313(b)(1) (if applicable), or
313(b)(2), the principal amount of indenture securities outstanding on the date
as of which such information is
48
provided shall be the Note Principal Balance of the then Outstanding Notes
covered by the report.
Section 7.04. REPORTS BY TRUST. The Trust shall cause the Master
Servicer, on behalf of the Trust, (a) to deliver to the Indenture Trustee and
the Backup Servicer within fifteen (15) days after the Trust is required to file
the same with the Commission copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) that the
Trust is required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act, and (b) to also comply with the other provisions of TIA
Section 314(a).
A copy of each report required under this Section 7.03 shall, at the
time of such transmission to Holders of Notes and the Note Insurer be filed by
the Sponsor with the Commission and with each securities exchange upon which the
Notes are listed. The Master Servicer, on behalf of the Trust, will notify the
Backup Servicer and the Indenture Trustee when the Notes are listed on any
securities exchange.
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ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. ACCOUNTS; INVESTMENT; COLLECTION OF MONEYS. (a) The Trust
hereby directs the Indenture Trustee to establish, on or before the Closing
Date, for each Class of Notes, at its Corporate Trust Office, one or more
Eligible Accounts that shall collectively be the "Payment Account" for such
Class. The Indenture Trustee shall promptly deposit in the related Payment
Account (i) the Servicer Remittance Amount for the related Group received by it
from the Master Servicer on the Servicer Payment Date pursuant to the Sale and
Servicing Agreement, (ii) any other funds from any deposits for such Group to be
made by the Master Servicer pursuant to the Sale and Servicing Agreement, (iii)
any amount for such Group required to be deposited in such Payment Account
pursuant to this Section 8.01, (iv) all amounts for such Group received pursuant
to Section 8.03 hereof, (v) the Termination Price received by it from the
Sponsor on the Clean-up Call Date pursuant to Section 10.01, (vi) on each
Payment Date, in accordance with the Indenture Trustee's Remittance Report, the
(a) Shortfall Amount for the related Class, until paid in full, and (b) the
amount specified in clause (v) of Section 8.02, in each case first, from the
Payment Account relating to the other Classes of Notes, to the extent of the Net
Monthly Excess Cashflow from the other Group of Mortgage Loans and second, from
the Reserve Account, and (i) all other amounts for such Group received for
deposit in such Payment Account, including the payment of any Loan Repurchase
Price or Substitution Adjustment for a Mortgage Loan in such Group received by
the Indenture Trustee. All amounts that are deposited from time to time in a
Payment Account are subject to withdrawal by the Indenture Trustee for the
purposes set forth in Section 8.02 hereof. All funds withdrawn from a Payment
Account pursuant to Section 8.02 hereof for the purpose of making payments to
the Holders of Notes shall be applied in accordance with Sections 3.03 and 8.02
hereof.
(b) The Trust hereby directs the Indenture Trustee to
establish for each Class of Notes, at its Corporate Trust Office, an Eligible
Account which shall be the "Pre-Funding Account" for such Class of Notes. On the
Closing Date, the Indenture Trustee shall deposit the Original Pre-Funded Amount
for each Class of Notes in the related Pre-Funding Account from the proceeds of
the sale of the related Class of Notes that the Trust deposits with the
Indenture Trustee for such purpose. The Indenture Trustee shall withdraw and
distribute or cause to be distributed funds on deposit therein only at the times
specified below, based on written instructions provided by the Master Servicer
or other party as indicated:
(i) on any Subsequent Transfer Date, the Sponsor shall
instruct in writing the Indenture Trustee to withdraw from the related
Pre-Funding Account an amount equal to 100% of the aggregate Cut-Off
Date Principal Balance as of the related Subsequent Cut-Off Date of the
Subsequent Mortgage Loans sold to the Trust in respect of the related
Group and pledged to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer, on such Subsequent Transfer Date and
pay such amount to or upon the order of the Sponsor upon satisfaction
of the conditions set forth in Section 2.14 hereof with respect to such
transfer; the Indenture Trustee may conclusively rely on such written
instructions from the Sponsor;
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(ii) if the Pre-Funding Amount for a Class of Notes (exclusive
of Pre-Funding Earnings for such Class) has been reduced to $100,000 or
less by the March 2000, Payment Date, then, on such Payment Date, after
giving effect to any reductions in the related Pre-Funding Account on
such date, the Indenture Trustee shall withdraw, from the related
Pre-Funding Account on such date and deposit in the Payment Account
relating to such Class, the amount on deposit in such Pre-Funding
Account, other than any Pre-Funding Earnings, for payment to the
related Noteholders as a prepayment of principal on such Payment Date;
(iii) if any amounts remain on deposit in any Pre-Funding
Account at the close of business on March 31, 2000, the Indenture
Trustee shall withdraw, from such Pre-Funding Account on the following
Payment Date and deposit in the Payment Account relating to the related
Class, the amount on deposit in such Pre-Funding Account, other than
any Pre-Funding Earnings, for payment to the related Noteholders as a
prepayment of principal on such Payment Date; and
(iv) on the March 2000 Payment Date, the Indenture Trustee
shall transfer from each Pre-Funding Account to the related Payment
Account, the Pre-Funding Earnings, if any, applicable to such Payment
Date.
(c) The Trust hereby directs the Indenture Trustee to
establish for each Class of Notes, at its Corporate Trust Office, an Eligible
Account which shall be the "Capitalized Interest Account" for such Class of
Notes. On the Closing Date, the Sponsor shall deposit the Original Capitalized
Interest Amount for each Class of Notes in the related Capitalized Interest
Account. The Indenture Trustee shall withdraw and distribute or cause to be
distributed funds on deposit therein only at the times specified below, based on
written instructions provided by the Master Servicer or other party as
indicated:
(i) on the March 2000 Payment Date, the Indenture Trustee
shall transfer from each Capitalized Interest Account to the related
Payment Account, the applicable Capitalized Interest Requirement, if
any, for such Class and such Payment Date; and
(ii) on the Payment Date immediately following, or on which,
the amount on deposit in the related Pre-Funding Account is reduced to
zero, any amounts remaining in any Capitalized Interest Account, after
taking into account the transfers in respect of the Payment Date
described in clause (i) or (ii) above, shall be paid to the Sponsor.
(d) The Trust hereby directs the Indenture Trustee to
establish, on or before the Closing Date, at its Corporate Trust Office, an
Eligible Account that shall be the "Reserve Account" for the Notes. The
Indenture Trustee shall deposit and withdraw funds in the Reserve Account in
accordance with the provisions of Sections 8.01(a) and 8.02(a) hereof.
(e) So long as no Default or Event of Default shall have
occurred and be continuing, amounts held in the Accounts, other than the Note
Insurance Payment Account, shall at the written direction of the Master
Servicer be invested in Permitted Investments, which Permitted Investments
shall mature no later than the Business Day preceding the immediately
following Payment Date.
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All income or other gains, if any, from investment of moneys
deposited in the Payment and Collection Accounts shall be for the benefit of
the Master Servicer and on or after each Payment Date, any such amounts may
be released from the Accounts and paid to the Master Servicer as part of its
compensation for acting as Master Servicer PROVIDED, that the earnings from
the amounts deposited in the Accounts from one Business Day immediately
preceding the Payment Date to the Payment Date shall be for the account of
the Indenture Trustee (i.e., the Indenture Trustee shall receive float on the
Accounts for such period). Any loss resulting from such investment of moneys
deposited in an Account shall be reimbursed immediately as incurred to the
related Account by the Master Servicer. Subject to Section 6.01 hereof and
the preceding sentence, neither the Indenture Trustee nor the Master Servicer
shall in any way be held liable by reason of any insufficiency in the
Accounts.
The Indenture Trustee shall not in any way be held liable by reason
of any insufficiency in any Account held by the Indenture Trustee resulting
from any investment loss on any Permitted Investment included therein (except
to the extent that the Indenture Trustee is the obligor and has defaulted
thereon).
(f) Except as otherwise expressly provided herein, the
Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent
or other intermediary, all money and other property payable to or receivable
by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee
shall hold all such money and property received by it as part of the Trust
Estate and shall apply it as provided in this Indenture.
If the Indenture Trustee shall not have received the Servicer
Remittance Amount by close of business on any related Servicer Payment Date,
the Indenture Trustee shall, unless the Master Servicer shall have made
provisions satisfactory to the Indenture Trustee for delivery to the
Indenture Trustee of an amount equal to such Servicer Remittance Amount,
deliver a notice, with a copy to the Backup Servicer and the Note Insurer, to
the Master Servicer of the Master Servicer's failure to remit such Servicer
Remittance Amount and that such failure, if not remedied by the close of
business on the Business Day after the date upon which such notice is
delivered to the Master Servicer, shall constitute a Servicer Event of
Default under the Sale and Servicing Agreement. If the Indenture Trustee
shall subsequently receive any such Servicer Remittance Amount by the close
of business on such Business Day, such Servicer Event of Default shall not be
deemed to have occurred. Notwithstanding any other provision hereof, the
Indenture Trustee shall deliver to the Master Servicer, or its designee or
assignee, any Servicer Remittance Amount received with respect to a Mortgage
Loan after the related Servicer Payment Date to the extent that the Master
Servicer previously made payment or provision for payment with respect to
such Servicer Remittance Amount in accordance with this Section 8.01, and any
such Servicer Remittance Amount shall not be deemed part of the Trust Estate.
Except as otherwise expressly provided in this Indenture and the
Sale and Servicing Agreement, if, following delivery by the Indenture Trustee
of the notice described above, the Master Servicer shall fail to remit the
Servicer Remittance Amount on any Servicer Payment Date, the Indenture
Trustee shall deliver a second notice to the Master Servicer, the Backup
Servicer, the Trust and the Note Insurer by the close of business on the
second Business Day prior to the related Payment Date indicating that a
Servicer Event of Default occurred and is
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continuing under the Sale and Servicing Agreement. Thereupon, the Indenture
Trustee shall take such actions as are required of the Indenture Trustee
under Article VII of the Sale and Servicing Agreement. In addition, if a
default occurs in any other performance required under the Sale and Servicing
Agreement, the Indenture Trustee may, and upon the request of the Note
Insurer or, with the consent of the Note Insurer, the Holders of Notes
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of all of the Classes shall, take such action as may be appropriate to
enforce such payment or performance including the institution and prosecution
of appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and to
proceed thereafter as provided in Article V hereof.
Section 8.02. PAYMENTS; STATEMENTS. On each Payment Date, the
Indenture Trustee shall withdraw from each Payment Account, such amounts on
deposit therein relating to the Indenture Trustee Fees, expenses and other
amounts then due to it including any payments with respect to indemnification
due to the Indenture Trustee, the Owner Trustee Fee, the Note Insurer Fee and
the Primary Mortgage Insurance Provider Fee for such Payment Date and shall
distribute such Owner Trustee Fee, Note Insurer Fee and Primary Mortgage
Insurance Provider Fee as instructed in writing by the Master Servicer. On
each Payment Date, unless the Notes have been declared due and payable
pursuant to Section 5.02 hereof and moneys collected by the Indenture Trustee
are being applied in accordance with Section 5.07 hereof, Available Funds on
deposit in each Payment Account on any Payment Date or Redemption Date shall
be withdrawn from such Payment Account, in the amounts required (based on the
Indenture Trustee's Remittance Report prepared by the Indenture Trustee on or
before such Payment Date in reliance on the related Servicer Remittance
Report), for application on such Payment Date in respect of payments for the
related Class of Notes as follows:
(i) from amounts then on deposit in the related Payment
Account, to the Holders of the related Class of Notes, the Payment
Amount for such Class;
(ii) from amounts then on deposit in the related Payment
Account, the allocable portion of the Over-collateralization Deficit,
if any, for the related Class of Notes;
(iii) from amounts then on deposit in the related Payment
Account, to the Holders of the other Class of Notes, the Shortfall
Amount for such other Class;
(iv) from amounts then on deposit in the related Payment
Account, to the Note Insurer, the Reimbursement Amount with respect to
the related Class as of such Payment Date;
(v) from amounts then on deposit in the related Payment
Account, to the Note Insurer, the Reimbursement Amount with respect to
the other Class of Notes as of such Payment Date;
(vi) from amounts then on deposit in the related Payment
Account, the Over-collateralization Increase Amount for the related
Class of Notes;
(vii) from amounts then on deposit in the related Payment
Account, to the Reserve Account, the Reserve Payment Amount;
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(viii) with respect to the Class A-2 Notes, from amounts then
on deposit in the related Payment Account, to the Holders of the Class
A-2 Notes, the Class A-2 Available Funds Cap Carry-Forward Amount;
(ix) from:
(A) amounts then on deposit in the Payment Account
related to the Class A-1 Notes, to the Master
Servicer, any amount due to it with respect to the
Group 1 Mortgage Loans, and
(B) amounts then on deposit in the Payment Account
related to the Class A-2 Notes, to the Master
Servicer, any amount due to it with respect to the
Group 2 Mortgage Loans; and
(x) following the making by the Indenture Trustee of all
allocations, transfers and disbursements described above, from amounts
then on deposit in each Payment Account, the Indenture Trustee shall
distribute to the Certificateholders (as identified in the Certificate
Register maintained by the Owner Trustee), the amount remaining on such
Payment Date in each Payment Account, if any.
Section 8.03. CLAIMS AGAINST THE NOTE INSURANCE POLICY. (a) No later
than two (2) Business Days prior to each Payment Date, the Indenture Trustee
shall determine with respect to the immediately following Payment Date, the
amount required to be on deposit in each Payment Account on such Payment Date
as a result of the (i) Master Servicer's remittance of the Servicer
Remittance Amount on the related Servicer Payment Date, and (ii) any
transfers to each Payment Account made from the related Capitalized Interest
Account and/or the related Pre-Funding Account relating to such Payment Date
pursuant to Section 8.01 hereof, excluding the amount of any Insured Payment
hereof for the related Payment Date.
(b) If on any Payment Date there is an Available Funds
Shortfall for any Group, the Indenture Trustee shall complete a Notice in the
form of Exhibit A to the Note Insurance Policy and submit such notice to the
Note Insurer no later than 12:00 noon New York City time on the second
Business Day preceding such Payment Date as a claim for an Insured Payment in
an amount equal to such Available Funds Shortfall for such Group.
(c) The Indenture Trustee shall establish a separate
Eligible Account for the benefit of Holders of the Notes and the Note Insurer
referred to herein as the "Note Insurance Payment Account" over which the
Indenture Trustee shall have exclusive control and sole right of withdrawal.
The Indenture Trustee shall deposit upon receipt any amount paid under the
Note Insurance Policy in the Note Insurance Payment Account and distribute
such amount only for purposes of payment to the Noteholders of the related
Group of the Insured Payment Amount for such Group for which a claim was made
and such amount may not be applied to satisfy any costs, expenses or
liabilities of the Master Servicer, the Indenture Trustee or the Trust.
Amounts paid under the Note Insurance Policy, to the extent needed to pay the
Insured Payment Amount shall be disbursed by the Indenture Trustee to the
Noteholders in accordance with Section 8.02. It shall not be necessary for
such payments to be made by checks or wire transfers separate from the checks
or wire transfers used to pay the Insured Payment Amount with other funds
available
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to make such payment. However, the amount of any payment of principal of or
interest on the Notes to be paid from funds transferred from the Note
Insurance Payment Account shall be noted as provided in subsection (d) of
this Section 8.03 in the Note Register and in the Indenture Trustee's
Remittance Report. Funds held in the Note Insurance Payment Account shall not
be invested. Any funds remaining in the Note Insurance Payment Account on the
first Business Day following a Payment Date shall be returned to the Note
Insurer pursuant to the written instructions of the Note Insurer by the end
of such Business Day.
(d) The Indenture Trustee shall keep a complete and
accurate record of the amount of interest and principal paid in respect of
any Note from moneys received under the Note Insurance Policy. The Note
Insurer shall have the right to inspect such records at reasonable times
during normal business hours upon one (1) Business Day's prior notice to the
Indenture Trustee.
(e) In the event that the Indenture Trustee has received a
certified copy of an order of the appropriate court that any Insured Payment
Amount has been voided in whole or in part as a preference payment under
applicable bankruptcy law, the Indenture Trustee shall so notify the Note
Insurer, shall comply with the provisions of the Note Insurance Policy to
obtain payment by the Note Insurer of such voided Insured Payment Amount, and
shall, at the time it provides notice to the Note Insurer, notify, by mail to
the Noteholders of the affected Notes that, in the event any Noteholder's
Insured Payment Amount is so recovered, such Noteholder will be entitled to
payment pursuant to the Note Insurance Policy, a copy of which shall be made
available through the Indenture Trustee, the Note Insurer or the Note
Insurer's fiscal agent, if any, and the Indenture Trustee shall furnish to
the Note Insurer or its fiscal agent, if any, its records evidencing the
payments which have been made by the Indenture Trustee and subsequently
recovered from the Noteholders, and dates on which such payments were made.
(f) The Indenture Trustee shall promptly notify the Note
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Indenture Trustee has actual knowledge, seeking
the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership or similar law (a "PREFERENCE CLAIM") of any payment
made with respect to the Notes. Each Noteholder, by its purchase of Notes,
the Master Servicer, the Backup Servicer, and the Indenture Trustee agree
that, the Note Insurer (so long as no Note Insurer Default exists) may at any
time during the continuation of any proceeding relating to a Preference Claim
direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to such
Preference Claim and (ii) the posting of any surety, supersede as or
performance bond pending any such appeal. In addition and without limitation
of the foregoing, the Note Insurer shall be subrogated to, and each
Noteholder, the Master Servicer, the Backup Servicer and the Indenture
Trustee hereby delegate and assign to the Note Insurer, to the fullest extent
permitted by law, the rights of the Master Servicer, the Backup Servicer, the
Indenture Trustee and each Noteholder in the conduct of any such Preference
Claim, including, without limitation, all rights of any party to any
adversary proceeding or action with respect to any court order issued in
connection with any such Preference Claim.
(g) The Indenture Trustee shall, upon retirement of the Notes,
furnish to the Note Insurer a notice of such retirement, and, upon retirement of
the Notes and the expiration of the
55
term of the Note Insurance Policy, surrender the Note Insurance Policy to the
Note Insurer for cancellation.
(h) Unless a Note Insurer Default exists and is continuing,
the Indenture Trustee and the Trust shall cooperate in all respects with any
reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interests hereunder without limiting the rights or
affecting the interests of the Noteholders as otherwise set forth herein.
(i) Each Noteholder, by its purchase of Notes, and the
Indenture Trustee hereby agree that, unless a Note Insurer Default exists and
is continuing, the Note Insurer shall have the right to direct all matters
relating to the Notes in any proceeding in a bankruptcy of the Trust,
including without limitation any proceeding relating to a Preference Amount
and the posting of any surety or Note pending any such appeal.
(j) Anything herein to the contrary notwithstanding, any
payment with respect to principal of or interest on the Notes which is made
with moneys received pursuant to the terms of the Note Insurance Policy shall
not be considered payment of the Notes from the Trust. The Trust and the
Indenture Trustee acknowledge, and each Holder by its acceptance of a Note
agrees, that without the need for any further action on the part of the Note
Insurer, the Trust, the Indenture Trustee or the Note Registrar (x) to the
extent the Note Insurer makes payments, directly or indirectly, on account of
principal of or interest on the Notes to the Holders of such Notes, the Note
Insurer will be fully subrogated to, and each Noteholder, the Trust and the
Indenture Trustee hereby delegate and assign to the Note Insurer, to the
fullest extent permitted by law, the rights of such Holders to receive such
principal and interest from the Trust, including, without limitation, any
amounts due to the Noteholders in respect of securities law violations
arising from the offer and sale of the Notes, and (y) the Note Insurer shall
be paid such amounts from the sources and in the manner provided herein for
the payment of such amounts.
Section 8.04. GENERAL PROVISIONS REGARDING THE PAYMENT ACCOUNTS AND
MORTGAGE LOANS. (a) Each Payment Account shall relate solely to the Notes of
the related Class and to the Mortgage Loans in the related Group, Permitted
Investments and other property securing the related Notes. Funds and other
property in each Payment Account shall not be commingled with the other
Payment Account or any other moneys or property of the Trust or any Affiliate
thereof. Notwithstanding the foregoing, the Indenture Trustee may hold any
funds or other property received or held by it as part of a Payment Account
in collective accounts maintained by it in the normal course of its business
and containing funds or property held by it for other Persons (which may
include the Trust or an Affiliate); provided, that such accounts are under
the sole control of the Indenture Trustee and the Indenture Trustee maintains
adequate records indicating the ownership of all such funds or property and
the portions thereof held for credit to the related Payment Account.
(b) If any amounts are needed for payment from a Payment
Account and sufficient uninvested funds are not available therein to make
such payment, the Indenture Trustee shall cause to be sold or otherwise
converted to cash, to the extent available, a sufficient amount of the
investments in such Payment Account.
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(c) The Indenture Trustee shall, at all times while any Notes
are Outstanding, maintain in its possession, or in the possession of an agent
whose actions with respect to such items are under the sole control of the
Indenture Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Payment Accounts. The Indenture Trustee shall
relinquish possession of such items, or direct its agent to do so, only for
purposes of collecting the final payment receivable on such investment or
certificate or, in connection with the sale of any investment held in the
Payment Accounts, against delivery of the amount receivable in connection with
any sale.
(d) The Indenture Trustee shall not invest any part of the
Trust Estate in Permitted Investments that constitute uncertificated securities
(as defined in Section 8-102 of the Uniform Commercial Code, as enacted in the
relevant jurisdiction) unless it has received an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee setting forth, with
respect to each type of security for which authority to invest is being sought,
the procedures that must be followed to maintain the lien and security interest
created by this Indenture with respect to the Trust Estate.
(e) With respect to any portion of the Trust Estate invested
in Permitted Investments, the Indenture Trustee acknowledges and agrees that:
(i) any Permitted Investment that is held in a deposit account
shall be held solely in an Eligible Account; and each such Eligible
Account shall be subject to the sole and exclusive dominion, custody
and control of the Indenture Trustee; and, without limitation on the
foregoing, the Indenture Trustee shall have sole signature authority
with respect thereto;
(ii) any Permitted Investment that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance with
paragraph (a) and/or (b) of the definition of "Delivery," as
applicable, and shall be held, pending maturity or disposition, solely
by the Indenture Trustee or a securities intermediary (as such term is
defined in Section 8-102(a)(14) of the Uniform Commercial Code) acting
solely for the Indenture Trustee; and
(iii) any Permitted Investment that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained by the Indenture
Trustee, pending maturity or disposition, through continued book-entry
registration of such Permitted Investment as described in such
paragraph.
Section 8.05. RELEASES OF DELETED MORTGAGE LOANS. Upon notice or
discovery by a Responsible Officer of the Indenture Trustee that any of the
representations or warranties of the Sponsor set forth in Section 4.01 of the
Sale and Servicing Agreement was materially incorrect or otherwise misleading
with respect to any Mortgage Loan as of the time made, the Indenture Trustee
shall direct the Sponsor to either cure, repurchase or substitute for such
Mortgage Loan as provided in Section 4.02 of the Sale and Servicing
Agreement. Upon any purchase of or substitution for a Deleted Mortgage Loan
by the Sponsor in accordance with Section 2.06 or Section 4.02 of the Sale
and Servicing Agreement, the Indenture Trustee shall deliver the Indenture
Trustee's Mortgage File relating to such Deleted Mortgage Loan to the
Sponsor, and
57
the Trust and the Indenture Trustee shall execute such instruments of
transfer as are necessary to convey title to such Deleted Mortgage Loan to
the Sponsor from the lien of this Indenture. Nothing in this Section 8.05
should be construed to obligate the Indenture Trustee to actively monitor the
correctness or accuracy of the representations and warranties of the Sponsor.
Section 8.06. REPORTS BY INDENTURE TRUSTEE TO NOTEHOLDERS; ACCESS TO
CERTAIN INFORMATION. On each Payment Date, the Indenture Trustee shall
provide the written reports required by Section 2.08(d) to Noteholders of
record as of the related Record Date (including the Clearing Agency, if any).
The Indenture Trustee will provide the Indenture Trustee's Remittance Report
(and, at its option, any additional files containing the same information in
an alternative format) to Noteholders of record via the Indenture Trustee's
internet website and its fax-on-demand service. The Indenture Trustee's
fax-on-demand service may be accessed by calling (▇▇▇) ▇▇▇-▇▇▇▇. The
Indenture Trustee's internet website shall initially be located at
▇▇▇.▇▇▇▇▇▇▇.▇▇▇. The Indenture Trustee shall have the right to alter the
manner in which it provides its Indenture Trustee's Remittance Reports to
Noteholders upon notice to Noteholders in the manner in which such Indenture
Trustee's Remittance Reports are then being provided.
The Indenture Trustee shall make available at its Corporate Trust
Office, during normal business hours, for review by any Noteholder or any
person identified to the Indenture Trustee as a prospective Noteholder,
originals or copies of the following items: (a) the Indenture and any
amendments thereto, (b) all Indenture Trustee's Remittance Reports and other
reports delivered since the Closing Date pursuant to Section 2.08(d) hereof,
(c) any Officers' Certificates delivered to the Indenture Trustee since the
Closing Date as described in the Indenture and (d) any Accountants' reports
delivered to the Indenture Trustee since the Closing Date as required under
the Sale and Servicing Agreement. Copies of any and all of the foregoing
items will be available from the Indenture Trustee upon request; however, the
Indenture Trustee will be permitted to require payment of a sum sufficient to
cover the reasonable costs and expenses of providing such copies and shall
not be required to provide such copies without reasonable assurances that
such sum will be paid.
Section 8.07. RELEASE OF TRUST ESTATE. The Indenture Trustee shall,
at such time as there are no Notes Outstanding, release all of the Trust
Estate to the Trust (other than any cash held for the payment of the Notes
pursuant to Section 3.03 or 4.02 hereof and amounts due the Indenture Trustee
hereunder).
Section 8.08. AMENDMENT TO SALE AND SERVICING AGREEMENT. The
Indenture Trustee may, without the consent of any Holder, enter into or
consent to any amendment or supplement to the Sale and Servicing Agreement
for the purpose of increasing the obligations or duties of any party other
than the Indenture Trustee or the Holders of the Notes. The Indenture Trustee
may, in its discretion, decline to enter into or consent to any such
supplement or amendment: (i) unless the Indenture Trustee receives an Opinion
of Counsel that the position of the Holders would not be materially adversely
affected or written confirmation of satisfaction of the Rating Agency
Condition or (ii) if its own rights, duties or immunities would be adversely
affected.
Section 8.09. DELIVERY OF THE MORTGAGE FILES PURSUANT TO SALE AND
SERVICING AGREEMENT. As is appropriate for the servicing or foreclosure of
any Mortgage Loan, the Indenture Trustee shall deliver to the Master Servicer
58
or a Subservicer (if directed in writing by the Master Servicer or
Subservicer) the Indenture Trustee's Mortgage Files for such Mortgage Loan
upon receipt by the Indenture Trustee on or prior to the date such release is
to be made of:
(a) such Officer's Certificates, if any, as are required by
the Sale and Servicing Agreement; and
(b) a Request for Release, executed by the Master Servicer or
Subservicer, providing that the Master Servicer or a Subservicer (if directed in
writing by the Master Servicer or Subservicer) will hold or retain the Indenture
Trustee's Mortgage Files in trust for the benefit of the Indenture Trustee, the
Note Insurer and the Holders of Notes.
Section 8.10. MASTER SERVICER AS AGENT. In order to facilitate the
servicing of the Mortgage Loans by the Master Servicer of such Mortgage
Loans, the Master Servicer of the Mortgage Loans has been appointed by the
Trust to retain, in accordance with the provisions of the Sale and Servicing
Agreement and this Indenture, all Servicer Remittance Amounts on such
Mortgage Loans prior to their deposit into the related Payment Account on or
prior to the related Servicer Payment Date.
Section 8.11. TERMINATION OF MASTER SERVICER. In the event of the
occurrence of a Servicer Event of Default specified in Section 7.01 of the
Sale and Servicing Agreement, the Indenture Trustee may, with the consent of
the Note Insurer or, with the prior written consent of the Note Insurer, the
Holder of Notes representing not less than 50% of the Note Principal Balance
of the Outstanding Notes of all of the Classes, and shall, upon the direction
of the Note Insurer (or as otherwise provided in the Sale and Servicing
Agreement), terminate the Master Servicer as provided in Section 7.01 of the
Sale and Servicing Agreement. If the Indenture Trustee terminates the Master
Servicer, the Backup Servicer shall, pursuant to Section 7.02 of the Sale and
Servicing Agreement, assume the duties of the Master Servicer or appoint a
successor master servicer acceptable to the Rating Agencies in accordance
with the directions of the Note Insurer and meeting the requirements set
forth in the Sale and Servicing Agreement.
Section 8.12. OPINION OF COUNSEL. The Indenture Trustee shall be
entitled to receive at least five (5) Business Days' notice of any action to
be taken pursuant to Sections 8.08 and 8.09 hereof (other than in connection
with releases of Mortgage Loans that were subject to a prepayment in full),
accompanied by copies of any instruments involved, and the Indenture Trustee
shall be entitled to receive an Opinion of Counsel, in form and substance
reasonably satisfactory to the Indenture Trustee, stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have
been complied with. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any
such action.
Section 8.13. APPOINTMENT OF COLLATERAL AGENTS. The Indenture
Trustee may, at no additional cost to the Trust or to the Indenture Trustee,
with the consent of the Note Insurer, appoint one or more Collateral Agents
to hold all or a portion of the Indenture Trustee Mortgage Files, as Agent
for the Indenture Trustee. Such Collateral Agent shall meet the requirements
of Article IX of the Sale and Servicing Agreement. Matters concerning the
Collateral Agents shall be governed by said Article IX.
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Section 8.14. RIGHTS OF THE NOTE INSURER TO EXERCISE RIGHTS OF
NOTEHOLDERS. By accepting its Notes, each Noteholder agrees that unless a
Note Insurer Default exists, the Note Insurer shall have the right to
exercise all rights of the Noteholders under this Indenture, without any
further consent of the Noteholders, including, without limitation:
(a) the right to require the Master Servicer to effect
foreclosures upon Mortgage Loans upon failure of the Master Servicer to do so;
(b) the right to require the Sponsor to repurchase or
substitute for Deleted Mortgage Loans pursuant to Section 8.05;
(c) the right to direct the actions of the Indenture
Trustee during the continuance of an Event of Default; and
(d) the right to vote on proposed amendments to this
Indenture.
In addition, each Noteholder agrees that, unless a Note Insurer
Default exists, the rights specifically set forth above may be exercised by
the Noteholders only with the prior written consent of the Note Insurer.
Except as otherwise provided in Section 8.03 hereof and
notwithstanding any provision in this Indenture to the contrary, so long as a
Note Insurer Default has occurred and is continuing, the Note Insurer shall
have no rights to exercise any voting rights of the Noteholders hereunder,
nor shall the Indenture Trustee be required to obtain the consent of, or act
at the direction of, the Note Insurer.
All notices, statements, reports, certificates or opinions required
by this Indenture to be sent to any other party hereto or to the Noteholders
shall also be sent to the Note Insurer.
Section 8.15. TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT OF THE NOTE
INSURER. The Indenture Trustee shall hold the Trust Estate and the Indenture
Trustee's Mortgage Files, for the benefit of the Noteholders and the Note
Insurer, and all references in this Indenture and in the Notes to the benefit
of Holders of the Notes shall be deemed to include the Note Insurer (provided
there does not exist a Note Insurer Default).
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
With the consent of the Note Insurer and without the consent of the Holders of
any Notes, the Trust and the Indenture Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(a) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(b) to add to the conditions, limitations and restrictions on
the authorized amount, terms and purposes of the issuance, authentication and
delivery of any Notes, as herein set forth, additional conditions, limitations
and restrictions thereafter to be observed;
(c) to evidence the succession of another Person to the Trust
to the extent permitted herein, and the assumption by any such successor of the
covenants of the Trust herein and in the Notes contained;
(d) to add to the covenants of the Trust, for the benefit of
the Holders of all Notes and the Note Insurer, or to surrender any right or
power herein conferred upon the Trust;
(e) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any other provision
herein, or to amend any other provisions with respect to matters or questions
arising under this Indenture, which shall not be inconsistent with the
provisions of this Indenture, provided that such action shall not adversely
affect in any material respect the interests of the Holders of the Notes or the
Certificateholders; PROVIDED, that the amendment shall be deemed not to
adversely affect in any material respect the interests of the Holders of the
Notes and the Note Insurer if the Person requesting the amendment obtains
written confirmation of the satisfaction of the Rating Agency Condition; or
(f) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the TIA or under any similar federal statute hereafter
enacted, and to add to this Indenture such other provisions as may be expressly
required by the TIA.
Section 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.
With the consent of the Note Insurer and with the consent of Holders of Notes
representing not less than a majority of the Note Principal Balance of all
Outstanding Notes of the Classes affected thereby by Act of said Holders
delivered to the Trust and the Indenture Trustee, the Trust and the Indenture
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 or of modifying in any manner the
rights of the Holders of the Notes under this
61
Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(a) change any Payment Date or the Final Stated Maturity Date
of the Notes or, with respect to the Notes, reduce the Note Principal Balance
thereof or the Note Rate thereon, change the earliest date on which any Note may
be redeemed at the option of the Sponsor, change any place of payment where, or
the coin or currency in which, any Note or any interest thereon is payable, or
impair the right to institute suit for the enforcement of the payment of any
installment of interest due on any Note on or after the Final Stated Maturity
Date thereof or for the enforcement of the payment of the entire remaining
unpaid principal amount of any Note on or after the Final Stated Maturity Date
(or, in the case of redemption, on or after the applicable Redemption Date);
(b) reduce the percentage of the Note Principal Balance of the
Outstanding Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required for
any waiver of compliance with provisions of this Indenture or Defaults hereunder
and their consequences provided for in this Indenture;
(c) modify any of the provisions of this Section 9.02 or
Sections 5.13 or 5.17(b) hereof, except to increase any percentage specified
therein or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(d) modify or alter the provisions of the proviso to the
definition of the term "Outstanding;"
(e) permit the creation of any lien other than the lien of
this Indenture with respect to any part of the 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;
(f) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the Interest Payment Amount or Base
Principal Payment Amount for any Payment Date and any Class (including the
calculation of any of the individual components of such amounts) or to affect
rights of the Holders of the Notes to the benefits of any provisions for the
redemption of Notes contained herein; or
(g) incur any indebtedness, other than the Notes, that would
cause the Trust or the Trust Estate to be treated as a "taxable mortgage pool"
within the meaning of Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
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It shall not be necessary for any Act of Noteholders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Trust and the Indenture Trustee
of any supplemental indenture pursuant to this Section 9.02, the Indenture
Trustee shall mail to the Holders of the Notes to which such supplemental
indenture relates a notice setting forth in general terms the substance of
such supplemental indenture. Any failure of the Indenture Trustee to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
Section 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts
created by this Indenture, the Indenture Trustee shall be entitled to
receive, and (subject to Section 6.01 hereof) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights,
duties or immunities under this Indenture or otherwise. The Master Servicer,
on behalf of the Trust, shall cause executed copies of any supplemental
indentures to be delivered to the Backup Servicer, the Note Insurer and the
Rating Agencies.
Section 9.04. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution
of any supplemental indenture under this Article IX, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Notes to which
such supplemental indenture relates that have theretofore been or thereafter
are authenticated and delivered hereunder shall be bound thereby.
Section 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article IX shall conform to
the requirements of the TIA as then in effect so long as this Indenture shall
then be qualified under the TIA.
Section 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Owner Trustee,
acting at the direction of the Certificateholders, shall so determine, new
Notes so modified as to conform, in the opinion of the Indenture Trustee and
the Owner Trustee, acting at the direction of the Certificateholders, to any
such supplemental indenture may be prepared by the Master Servicer and
executed by the Owner Trustee, acting at the direction of the
Certificateholders, on behalf of the Trust, and authenticated and delivered
by the Indenture Trustee in exchange for Outstanding Notes.
Section 9.07. AMENDMENTS TO GOVERNING DOCUMENTS. The Indenture Trustee
shall, upon a Trust Request, consent to any proposed amendment to the Trust's
governing documents, or an amendment to or waiver of any provision of any other
document relating to the Trust's
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governing documents, such consent to be given without the necessity of
obtaining the consent of the Holders of any Notes upon receipt by the
Indenture Trustee of:
(a) an Officer's Certificate, to which such proposed
amendment or waiver shall be attached, stating that such attached copy is a
true copy of the proposed amendment or waiver and that all conditions
precedent to such consent specified in this Section 9.07 have been satisfied;
and
(b) written confirmation of the satisfaction of the Rating
Agency Condition with respect to such proposed amendment.
Notwithstanding the foregoing, the Indenture Trustee may decline to
consent to a proposed waiver or amendment that adversely affects its own
rights, duties or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require that any
Person obtain the consent of the Indenture Trustee to any amendment or waiver
or any provision of any document where the making of such amendment or the
giving of such waiver without obtaining the consent of the Indenture Trustee
is not prohibited by this Indenture or by the terms of the document that is
the subject of the proposed amendment or waiver.
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ARTICLE X
REDEMPTION OF NOTES
Section 10.01. REDEMPTION. (a) The Sponsor may, at its sole cost and
expense, (i) terminate this Indenture and all the Notes may be redeemed in
whole, but not in part, on any Redemption Date on and after the related
Clean-Up Call Date at the Termination Price, and (ii) redeem the Class A-1
Notes or the Class A-2 Notes, on any Redemption Date on and after the related
Clean-up Call Date at the applicable Termination Price.
(b) Any such purchase or redemption shall be accomplished by
deposit by the Sponsor, into the related Payment Account of the Termination
Price on the Servicer Payment Date preceding the Redemption Date. The amounts on
deposit therein shall be distributed by the Indenture Trustee on such Redemption
Date in accordance with the priority set forth in Section 8.02 hereof. No
termination or redemption is permitted without the prior written consent of the
Note Insurer if it would result in a draw on the Note Insurance Policy.
(c) [Reserved].
(d) Upon the redemption of all of the Notes, the Mortgage
Loans in the Trust Estate shall be released and delivered to the Sponsor. In
the case of a redemption of the Class A-1 Notes only, the Mortgage Loans in
Group 1 will not be released from the lien of the Indenture until such time
as the Class A-2 Notes are redeemed and any amounts due to the Note Insurer
have been paid. In such case, the Group 1 Mortgage Loans will continue to be
pledged to the Indenture Trustee, on behalf of the Noteholders and the Note
Insurer, to secure the obligations of the Trust with respect to the Class A-2
Notes. In the case of a redemption of the Class A-2 Notes only, the Mortgage
Loans in Group 2 will not be released from the lien of the Indenture until
such time as the Class A-1 Notes are redeemed and any amounts due to the Note
Insurer have been paid. In such case, the Group 2 Mortgage Loans will
continue to be pledged to the Indenture Trustee, on behalf of the Noteholders
and the Note Insurer, to secure the obligations of the Trust with respect to
the Class A-1 Notes. In the case of a redemption of the Class A-1 Notes only
or the Class A-2 Notes only, all tests performed to determine (i) if the
Mortgage Portfolio Performance Test is met, (ii) if the Step Down Requirement
is satisfied or (iii) if a Servicer Event of Default under clauses (viii),
(ix) or (x) of Section 7.01 of the Sale and Servicing Agreement then exists,
shall be performed in respect of the related Redemption Date and each Payment
Date thereafter without regard to the Mortgage Loans in the Loan Group
related to the Class of Notes that is being (or has been) redeemed (including
without regard to any prior performance of such Mortgage Loans).
(e) Upon receipt of the notice from the Sponsor of its
election to redeem the Notes pursuant to Section 10.01(a) hereof (which shall
state that the Sponsor has determined that the conditions to redemption at the
option of the Sponsor have been satisfied and setting forth information as may
be required to accomplish such redemption), the Indenture Trustee shall prepare
and deliver to the Trust, the Master Servicer, the Backup Servicer and the Note
Insurer, no later than the related Redemption Date, an Indenture Trustee's
Remittance Report.
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Section 10.02. FORM OF REDEMPTION NOTICE. Notice of redemption shall be
given by the Indenture Trustee in the name of and at the expense of the Trust by
first class mail, postage prepaid, mailed not less than ten days prior to the
Redemption Date to each Holder of Notes to be redeemed, such Holders being
determined as of the Record Date for such Payment Date, and to the Note Insurer.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the price at which the Notes of such Class will be
redeemed; and
(c) the fact of payment in full on such Notes, the place where
such Notes are to be surrendered for final payment (which shall be the office or
agency of the Trust to be maintained as provided in Section 3.02 hereof), and
that no interest shall accrue on such Note for any period after the date fixed
for redemption.
Failure to give notice of redemption, or any defect therein, to any
Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.
Section 10.03. NOTES PAYABLE ON OPTIONAL REDEMPTION. Notice of
redemption having been given as provided in Section 10.02 hereof, the Notes to
be redeemed shall, on the applicable Redemption Date, become due and payable and
(unless the Trust shall default in such payment) no interest shall accrue on
such Notes for any period after such Redemption Date; provided, however, that if
such payment is not made on the Redemption Date, the Note Principal Balance
shall, until paid, bear interest from the Redemption Date at the applicable Note
Rate.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS. (a) Upon any
application or request by any Person to the Indenture Trustee to take any
action under any provision of this Indenture, such Person shall furnish to
the Indenture 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 and an Opinion of Counsel, if requested by the
Indenture Trustee, stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the
case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate
or opinion need be furnished.
(b) Every certificate, opinion or letter with respect to
compliance with a condition or covenant provided for in this Indenture,
including one furnished pursuant to specific requirements of this Indenture
relating to a particular application or request (other than certificates
provided pursuant to TIA Section 314(a)(4)) shall include and shall be deemed to
include (regardless of whether specifically stated therein) the following:
(i) a statement that each individual signing such certificate,
opinion or letter has read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate, opinion or letter are based;
(iii) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of the Trust may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion and shall
67
include a statement to the effect that such counsel believes that such
counsel and the Indenture Trustee may reasonably rely upon the opinion of
such other counsel.
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.
Wherever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Trust
shall deliver any document as a condition of the granting of such
application, or as evidence of the Trust's compliance with any term hereof,
it is intended that the truth and accuracy, at the time of the granting of
such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Trust to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Indenture Trustee's
right to rely upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Section 6.01(b)(ii) hereof.
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request
or direction of the Trust, then, notwithstanding that the satisfaction of
such condition is a condition precedent to the Trust's right to make such
request or direction, the Indenture Trustee shall be protected in acting in
accordance with such request or direction if it does not have knowledge of
the occurrence and continuation of such Default or Event of Default as
provided in Section 6.01(d) hereof.
Section 11.03. ACTS OF NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an 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 Indenture
Trustee, and, where it is hereby expressly required, to the Trust. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 6.01 hereof) conclusive
in favor of the Indenture Trustee and the Trust, if made in the manner
provided in this Section 11.03.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
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(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Indenture Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Notes.
Section 11.04. NOTICES, ETC., TO INDENTURE TRUSTEE, THE NOTE INSURER
AND TRUST. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Indenture Trustee by any Noteholder or by the Trust
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with and received by the Indenture Trustee at its
Corporate Trust Office solely for Note transfer purposes, and for all other
purposes, to Norwest Bank Minnesota, N.A., 11000 ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Services (Accredited Series 2000-1);
or
(b) the Trust by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder (except as provided in Section
5.01(c) and (d)) hereof if in writing and mailed, first-class postage prepaid,
to the Trust addressed to it at Accredited Mortgage Loan Trust 2000-1, in care
of Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration, or
at any other address previously furnished in writing to the Indenture Trustee by
the Trust.
(c) the Note Insurer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage prepaid, to Financial Security Assurance Inc.
addressed to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention:
Surveillance Department (in each case in which notice or other communication to
the Note Insurer refers to an Event of Default, a claim on the Note Insurance
Policy or with respect to which failure on the part of the Note Insurer to
respond shall be deemed to constitute consent or acceptance, then a copy of such
notice or other communication should also be sent to the attention of each of
the General Counsel and the Head--Financial Guaranty Group and shall be marked
to indicate "URGENT MATERIAL ENCLOSED"), or at any other address previously
furnished in writing to the Indenture Trustee by the Note Insurer; or
(d) the Sponsor by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and mailed,
first-class, postage paid, to Accredited Home Lenders, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Attention: Corporate Trust
Administration, or at any other address previously furnished in writing to the
Indenture Trustee by the Sponsor; or
(e) the Master Servicer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage paid, to Accredited Home Lenders, Inc., ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
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92128, Attention: Corporate Trust Administration or at any other address
previously furnished in writing to the Indenture Trustee by the Master
Servicer; or
(f) the Underwriter by any party or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed, first-class,
postage prepaid, to ▇▇▇▇▇▇ Brothers Inc., Three World Financial Center, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or at any
other address previously furnished in writing to the Indenture Trustee by the
Underwriter; or
(g) the Backup Servicer by the Master Servicers or the
Indenture Trustee shall be sufficient for every purpose hereunder if in writing
and mailed, first-class, postage prepaid, to Advanta Mortgage Corp. USA, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Attention: Senior Vice
President Loan Servicing; or at any other address previously furnished in
writing to the Indenture Trustee by the Backup Servicer.
Notices required to be given to the Rating Agencies by the Trust or the
Indenture Trustee shall be in writing, personally delivered or mailed
first-class postage pre-paid, to (i) in the case of Moody's, at the following
address: ▇▇▇▇▇'▇ Investors Service, Inc., Residential Mortgage Monitoring
Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (ii) in the case of
S&P, at the following address: Standard & Poor's Ratings Services, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Asset-Backed Surveillance
Department; or as to each of the foregoing, at such other address as shall be
designed by written notice to the other parties; or
Section 11.05. NOTICES AND REPORTS TO NOTEHOLDERS; WAIVER OF NOTICES.
Where this Indenture provides for notice to Noteholders of any event or the
mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder 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 or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Noteholder
shall affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
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Section 11.06. RULES BY INDENTURE TRUSTEE. The Indenture Trustee may
make reasonable rules for any meeting of Noteholders.
Section 11.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
TIA, such required provision shall control.
Section 11.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience
only and shall not affect the construction hereof.
Section 11.09. SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Indenture by the Trust shall bind its successors and assigns, whether
so expressed or not.
Section 11.10. SEPARABILITY. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
Section 11.11. BENEFITS OF INDENTURE. Nothing in this Indenture or
in the Notes, expressed or implied, shall give to any Person, other than the
Note Insurer, the parties hereto and their successors hereunder, any separate
trustee or co-trustee appointed under Section 6.14 hereof and the
Noteholders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 11.12. LEGAL HOLIDAYS. In any case where the date of any
Payment Date, Redemption Date or any other date on which principal of or
interest on any Note is proposed to be paid 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, Redemption Date or other date for the payment of
principal of or interest on any Note and no interest shall accrue for the
period from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.
Section 11.13. GOVERNING LAW. IN VIEW OF THE FACT THAT NOTEHOLDERS
ARE EXPECTED TO RESIDE IN MANY STATES AND OUTSIDE THE UNITED STATES AND THE
DESIRE TO ESTABLISH WITH CERTAINTY THAT THIS INDENTURE WILL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF A STATE HAVING A
WELL-DEVELOPED BODY OF COMMERCIAL AND FINANCIAL LAW RELEVANT TO TRANSACTIONS
OF THE TYPE CONTEMPLATED HEREIN, THIS INDENTURE AND EACH NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
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Section 11.14. 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 11.15. RECORDING OF INDENTURE. This Indenture is subject to
recording in any appropriate public recording offices, such recording to be
effected by the Master Servicer, on behalf of the Trust, and at its expense
in compliance with any Opinion of Counsel delivered pursuant to Sections
2.11(c) or 3.06 hereof.
Section 11.16. TRUST OBLIGATION. (a) No recourse may be taken,
directly or indirectly, with respect to the obligations of the Trust, the
Owner Trustee or the Indenture Trustee on the Notes or under this Indenture
or any certificate or other writing delivered in connection herewith or
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Trust or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Trust, the Owner Trustee
or the Indenture Trustee or of any successor or assign of the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture,
in the performance of any duties or obligations of the Trust hereunder, the
Owner Trustee shall be subject to, and entitled to the benefits of, the terms
and provisions of the Trust Agreement.
(b) 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, in the exercise of the powers and authority conferred and vested in it
under the Trust Agreement, (b) each of the representations, undertakings and
agreements herein made on the part of the Issuer is made and intended not as
personal representations, undertakings and agreements by Wilmington Trust
Company but is made and intended for the purpose for binding only the Issuer,
(c) nothing herein contained shall be construed as creating any liability on
Wilmington Trust Company, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any Person claiming by, through or
under the parties hereto 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
Agreement or any other related documents.
Section 11.17. NO PETITION. The Indenture Trustee, by entering into
this Indenture, and each Noteholder and Beneficial Owner, by accepting a Note,
hereby covenant and agree that they will not at any time institute against the
Sponsor or the Trust, or join in any institution against the Sponsor or the
Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the Basic
72
Documents. In addition, the Indenture Trustee will on behalf of the Holders
of the Notes, (a) file a written objection to any motion or other proceeding
seeking the substantive consolidation of the Sponsor or the Trust, (b) file
an appropriate memorandum of points and authorities or other brief in support
of such objection, or (c) endeavor to establish at the hearing on such
objection that the substantive consolidation of such entity would be
materially prejudicial to the Noteholders.
This Section 11.17 will survive for one year and one day following the
termination of this Indenture.
Section 11.18. INSPECTION. The Trust agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee and
the Note Insurer, during the Trust's normal business hours, to examine all of
books of account, records, reports and other papers of the Trust, to make
copies and extracts therefrom, to cause such books to be audited by
Independent Accountants selected by the Indenture Trustee or the Note
Insurer, as the case may be, and to discuss its affairs, finances and
accounts with its officers, employees and Independent Accountants (and by
this provision the Trust hereby authorizes its Accountants to discuss with
such representatives such affairs, finances and accounts), all at such
reasonable times and as often as may be reasonably requested. Any expense
incident to the exercise by the Indenture Trustee of any right under this
Section 11.18 shall be borne by the Trust.
Section 11.19. USURY. The amount of interest payable or paid on any
Note under the terms of this Indenture shall be limited to an amount that
shall not exceed the maximum nonusurious rate of interest allowed by the
applicable laws of the United States or the State of New York (whichever
shall permit the higher rate), that could lawfully be contracted for, charged
or received (the "HIGHEST LAWFUL RATE"). In the event any payment of interest
on any Note exceeds the Highest Lawful Rate, the Trust stipulates that such
excess amount will be deemed to have been paid as a result of an error on the
part of both the Indenture Trustee, acting on behalf of the Holder of such
Note, and the Trust, and the Holder receiving such excess payment shall
promptly, upon discovery of such error or upon notice thereof from the Trust
or the Indenture Trustee, refund the amount of such excess or, at the option
of the Indenture Trustee, apply the excess to the payment of principal of
such Note, if any, remaining unpaid. In addition, all sums paid or agreed to
be paid to the Indenture Trustee for the benefit of Holders of Notes for the
use, forbearance or detention of money shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the
full term of such Notes.
Section 11.20. NOTE INSURER DEFAULT. Any right conferred to the Note
Insurer shall be suspended during any period in which a Note Insurer Default
exists. At such time as the Notes are no longer Outstanding under this
Indenture, and no amounts owed to the Note Insurer under the Basic Documents
remain unpaid, the Note Insurer's rights under this Indenture shall terminate.
Section 11.21. THIRD-PARTY BENEFICIARY. The Note Insurer is intended
as a third-party beneficiary of this Indenture which shall be binding upon
and inure to the benefit of the Note Insurer; PROVIDED, that, notwithstanding
the foregoing, for so long as a Note Insurer Default is continuing with
respect to its obligations under the Note Insurance Policy, the Noteholders
shall succeed to the Note Insurer's rights hereunder. Without limiting the
generality of the foregoing,
73
all covenants and agreements in this Indenture that expressly confer rights
upon the Note Insurer shall be for the benefit of and run directly to the
Note Insurer, and the Note Insurer shall be entitled to rely on and enforce
such covenants to the same extent as if it were a party to this Indenture.
[Remainder of Page Intentionally Left Blank]
74
IN WITNESS WHEREOF, the Trust and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
ACCREDITED MORTGAGE LOAN TRUST 2000-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely
as Owner Trustee under the Trust Agreement
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee
By: /s/ ▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
[Signature page to Indenture]
SCHEDULE I
MORTGAGE LOAN SCHEDULE
See Schedule I to Sale and Servicing Agreement.
EXHIBIT A
FORM OF NOTE
ACCREDITED MORTGAGE LOAN TRUST 2000-1
CLASS A-[1][2] NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
THE NOTE IS A NON-RECOURSE OBLIGATION OF THE TRUST, AND IS LIMITED
IN RIGHT OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AND THE NOTE
INSURANCE POLICY AS PROVIDED IN THE INDENTURE REFERRED TO BELOW. THE TRUST IS
NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
-------------------------------------------
Note No.: CUSIP No.:
A-[1][2]
Class A-[1][2] Original Note Principal Balance: Percentage Interest:
$__________ 100%
Date of Indenture: First Payment Date:
As of February 1, 2000 March 27, 2000
------------------------------------------
A-1
ACCREDITED MORTGAGE LOAN TRUST 2000-1
ASSET-BACKED NOTES, SERIES 2000-1, CLASS A-[1][2]
Accredited Mortgage Loan Trust 2000-1, a statutory business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "Trust"), for value received, hereby promises to pay to
CEDE & CO., or registered assigns, the principal sum of $__________
(_________________________ Thousand Dollars) payable on each Payment Date in
an amount equal to the result obtained by multiplying (x) the Percentage
Interest of this Note set forth on the cover page hereof, by (y) the
aggregate amount, if any, payable from the related Payment Account in respect
of principal on the Class A-[1][2] Notes, pursuant to the Indenture, dated as
of February 1, 2000, between the Trust and Norwest Bank Minnesota, National
Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); PROVIDED, HOWEVER, that the entire unpaid Note
Principal Balance of this Note shall be due and payable on the earlier of (i)
the Payment Date occurring in February 2030 (this Note's "Final Stated
Maturity Date"), (ii) the Redemption Date, if any, applicable to this Notes
pursuant to Article X of the Indenture or (iii) the date on which an Event of
Default shall have occurred and be continuing, if the Notes have been
declared to be immediately due and payable in the manner provided in Section
5.02 of the Indenture. Capitalized terms used but not defined herein are
defined in Appendix I to the Indenture.
Pursuant to the terms of the Indenture, payments will be made on the
25th day of each month or, if such day is not a Business Day, on the Business
Day immediately following such 25th day (each a "Payment Date"), commencing
on the first Payment Date specified on the cover page hereof, to the Person
in whose name this Note is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the
Percentage Interest evidenced by this Note and (b) the sum of the amounts to
be paid on the Class A-[1][2] Notes with respect to such Payment Date, all as
more specifically set forth in the Indenture.
Notwithstanding the foregoing, in the case of Definitive Notes, upon
written request at least five (5) days prior to the related Record Date with
appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Principal Balance of at least $1,000,000), any payment of
principal or interest, other than the final installment of principal or
interest, shall be made by wire transfer to an account in the United States
of America designated by such Holder reasonably satisfactory to the Indenture
Trustee.
On each Payment Date, Noteholders will be entitled to receive
interest payments in an aggregate amount equal to the Interest Payment Amount
for such Class for such Payment Date, together with principal payments in an
aggregate amount equal to the Base Principal Payment Amount for such Class
for such Payment Date, plus, until the Over-collateralization Amount for the
related Group and such Payment Date is equal to the Specified
Over-collateralization Amount for such Group and such Payment Date, the Net
Monthly Excess Cashflow, if any, for such Group and such Payment Date. The
"Note Principal Balance" of a Note as of any date of determination is equal
to the initial Note Principal Balance thereof as of the Closing Date, reduced
by the aggregate of all amounts previously paid with respect to such Note on
account of principal.
A-2
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by
the Trust with respect to this Note shall be applied first to interest due
and payable on this Note as provided above and then to the unpaid principal
of this Note.
This Note is one of a duly authorized issue of Notes of the Trust,
designated as the "Accredited Mortgage Loan Trust 2000-1, Asset-Backed Notes,
Series 2000-1, Class A-[1][2]," issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights and obligations thereunder of the
Trust, the Indenture Trustee and the Holders of the Notes. Also issued under
the Indenture are the "Accredited Mortgage Loan Trust 2000-1, Asset-Backed
Notes, Series 2000-1, Class A[1][2]." To the extent that any provision of
this Note contradicts or is inconsistent with the provisions of the
Indenture, the provisions of the Indenture shall control and supersede such
contradictory or inconsistent provision herein. The Notes are subject to all
terms of the Indenture.
The Class A-[1][2] Notes are and will be equally and ratably secured
by the Mortgage Loans in Loan Group [1][2], the other collateral related
thereto pledged as security therefor as provided in the Indenture, and, to
the extent provided in the Indenture, by the Mortgage Loans in Loan Group [1]
[2].
As described above, the entire unpaid Note Principal Balance of this
Note shall be due and payable on the earlier of the Final Stated Maturity
Date and any Redemption Date applicable to such Class, pursuant to Article X
of the Indenture. Notwithstanding the foregoing, the entire unpaid Note
Principal Balance of the Notes shall be due and payable on the date on which
an Event of Default shall have occurred and be continuing if the Indenture
Trustee, at the direction or upon the prior written consent of Financial
Security Assurance Inc. (the "Note Insurer") in the absence of a Note Insurer
Default, or the Holders of the Notes representing not less than 50% of the
Note Principal Balance of the Outstanding Notes (with the prior written
consent of the Note Insurer in the absence of a Note Insurer Default) of all
of the Classes, shall have declared the Notes to be immediately due and
payable in the manner provided in Section 5.02 of the Indenture. All
principal payments on the Notes shall be made pro rata to the Noteholders
entitled thereto.
The Note Insurer, in consideration of the payment of the premium and
subject to the terms of the Note Guaranty Insurance Policy (the "Note
Insurance Policy") thereby has unconditionally and irrevocably guaranteed the
payment of the Insured Payments.
Pursuant to the Indenture, unless a Note Insurer Default exists (i) the
Note Insurer shall be deemed to be the holder of the Notes for certain purposes
specified in the Indenture and will be entitled to exercise all rights of the
Noteholders thereunder, including the rights of Noteholders relating to the
occurrence of, and the remedies with respect to, an Event of Default, without
the consent of such Noteholders, and (ii) the Indenture Trustee may take actions
which would otherwise be at its option or within its discretion, including
actions relating to the occurrence of, and the remedies with respect to, an
Event of Default, only at the direction of the Note Insurer. In addition, on
each Payment Date, after the Noteholders have been paid all amounts to which
they are entitled, the Note Insurer will be entitled to be reimbursed for any
A-3
unreimbursed Insured Payments (with interest thereon at the "Late Payment
Rate" specified in the Insurance Agreement), Reimbursement Amounts and any
other amounts owed under the Note Insurance Policy.
The Trust shall not be liable upon the indebtedness evidenced by the
Notes except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate and payments under the Note Insurance Policy will be sole source of
payments on the Notes, and each Holder hereof, by its acceptance of this Note,
agrees that (i) such Note will be limited in right of payment to amounts
available from the Trust Estate and the Note Insurance Policy as provided in the
Indenture and (ii) such Holder shall have no recourse to the Trust, the Owner
Trustee, the Indenture Trustee, the Sponsor, the Master Servicer, the Backup
Servicer or any of their respective affiliates, or to the assets of any of the
foregoing entities, except the assets of the Trust pledged to secure the Notes
pursuant to the Indenture.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not
in full payment of this Note, shall be made by check mailed to the Person
whose name appears as the Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds
to the account designated by such nominee. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this
Note be submitted for notation of payment. Notwithstanding the foregoing, in
the case of Definitive Notes, upon written request at least five days prior
to the related Record Date with appropriate instructions by the Holder of
this Note (holding an aggregate initial Note Principal Balance of at least
$1,000,000), any payment of principal or interest, other than the final
installment of principal or interest, shall be made by wire transfer to an
account in the United States of America designated by such Holder reasonably
satisfactory to the Indenture Trustee. Any reduction in the principal amount
of this Note (or any one or more Predecessor Notes) effected by any payments
made on any Payment Date shall be binding upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full
of the then remaining unpaid principal amount of this Note on a Payment Date,
then the Indenture Trustee, in the name of and on behalf of the Trust, will
notify the Person who was the Holder hereof as of the Record Date preceding
such Payment Date by notice mailed or transmitted by facsimile prior to such
Payment Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes.
As provided in the Indenture, all of the Classes of Notes may be
redeemed in whole, but not in part, at the option of the Sponsor on any
Payment Date on and after the date on which the sum of the Class A-1 Note
Principal Balance and the Class A-2 Note Principal Balance is less than or
equal to 10% of the sum of the Class A-1 Note Principal Balance and the Class
A-2 Note Principal Balance.
A-4
As provided in the indenture, any Class of Notes may be redeemed in
whole, but not in part at the option of the Sponsor on any Payment Date on
and after the date on which the aggregate unpaid Note Principal Balances on
the related class of Notes is less than or equal to 10% of the aggregate
Original Note Principal balance of the related class of Notes.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note
Register upon surrender of this Note for registration of transfer at the
office or agency designated by the Trust pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note,
but the transferor may be required to pay a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
In the case of a transfer of a Class A-[1][2] Note, the Note
Registrar shall not register the transfer of this Note unless the Note
Registrar has received a representation letter from the transferee to the
effect that either (i) the transferee is not, and is not acquiring the Note
on behalf of or with the assets of, an employee benefit plan or other
retirement plan or arrangement that is subject to Title I of the Employee
Retirement Income Security Act or 1974, as amended, or Section 4975 of the
Code or (ii) the acquisition and holding of this Note by the transferee
qualifies for exemptive relief under a Department of Labor Prohibited
Transaction Class Exemption. Each Beneficial Owner, by acceptance of a
beneficial interest herein, shall be deemed to make one of the foregoing
representations.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in
the case of a Beneficial Owner, a beneficial interest in a Note, covenants
and agrees that no recourse may be taken, directly or indirectly, with
respect to the obligations of the Trust, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other
writing delivered in connection therewith, against (i) the Indenture Trustee
or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Trust or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in
the Trust, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in
the case of a Beneficial Owner, a beneficial interest in a Note, covenants
and agrees by accepting the benefits
A-5
of the Indenture that such Noteholder or Beneficial Owner will not at any
time institute against Accredited Home Lenders, Inc., in its capacity as
Sponsor under the Sale and Servicing Agreement (the "Sponsor"), or the Trust,
or join in any institution against the Sponsor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or state bankruptcy or similar
law in connection with any obligations relating to the Notes, the Indenture,
the Trust Agreement and the Sale and Servicing Agreement and the Insurance
Agreement (the "Basic Documents").
The Trust has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the
Trust secured by the Trust Estate. Each Noteholder, by acceptance of a Note
(and each Beneficial Owner by acceptance of a beneficial interest in a Note),
agrees to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness of the Trust.
Prior to the due presentment for registration of transfer of this
Note, the Trust, the Indenture Trustee and any agent of the Trust or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and none of the Trust, the Indenture Trustee or any
such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Trust and the rights of the Holders of the Notes under the Indenture at
any time by the Trust with the consent of the Note Insurer and the Holders of
Notes representing a majority of the Note Principal Balance of the
Outstanding Notes affected thereby. The Indenture also contains provisions
permitting the (i) Note Insurer or (ii) if a Note Insurer Default exists, the
Holders of Notes representing specified percentages of the Note Principal
Balance of Outstanding Notes, on behalf of the Holders of all the Notes, to
waive compliance by the Trust with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Note Insurer or by the Holder of this Note (or any
one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the amendment thereof, in certain limited
circumstances, or the waiver of certain terms and conditions set forth in the
Indenture, without the consent of Holders of the Notes issued thereunder.
The term "Trust" as used in this Note includes any successor to the
Trust under the Indenture.
Initially, each Class of Notes will be represented by one Note
registered in the name of Cede & Co. as nominees of the Clearing Agency. The
Notes will be delivered in denominations as provided in the Indenture and
subject to certain limitations therein set forth. The Notes are exchangeable
for a like aggregate initial Note Principal Balance of Notes of different
authorized denominations, as requested by the Holder surrendering the same.
A-6
THIS NOTE AND THE INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Trust, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place and rate, and in the coin or currency herein
prescribed.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent whose name appears below by manual signature, this
Note shall not be entitled to any benefit under the Indenture referred to
herein, or be valid or obligatory for any purpose.
A-7
IN WITNESS WHEREOF, the Trust has caused this Instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Dated:
ACCREDITED MORTGAGE LOAN TRUST
2000-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee under the Trust Agreement
By: ______________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[1][2] Notes designated above and referred
to in the within-mentioned Indenture.
Dated:
NORWEST BANK MINNESOTA,
NATIONAL BANK,
as Authenticating Agent
By:__________________________________
Authorized Signatory
A-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
-----------------------------------------------------------------------
-----------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints
__________________________________, attorney, to transfer said Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated: */
----------------------------------------------
Signature Guaranteed:
*/
----------------------------------------------------
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatever.
Such signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended.
A-9
EXHIBIT B
FORM OF SUBSEQUENT PLEDGE AGREEMENT
This SUBSEQUENT PLEDGE AGREEMENT, dated as of _____________, 2000
(the "Subsequent Transfer Date"), is entered into by and between ACCREDITED
MORTGAGE LOAN TRUST 2000-1, as issuer (the "Trust"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, as indenture trustee (the "Indenture
Trustee").
WITNESSETH:
Reference is hereby made to that certain Indenture, dated as of
February 1, 2000 (the "Indenture"), by and between the Trust and the Indenture
Trustee. Pursuant to the Indenture, the Trust agreed to pledge, and the
Indenture Trustee agreed to accept, from time to time, a security interest in
Subsequent Mortgage Loans (as defined below). The Indenture provides that each
such pledge of Subsequent Mortgage Loans be evidenced by the execution and
delivery of a Subsequent Pledge Agreement such as this Subsequent Pledge
Agreement.
The assets pledged to the Indenture Trustee pursuant to this Subsequent
Pledge Agreement consist of (a) the Subsequent Mortgage Loans in Loan Group 1
and Loan Group 2 listed in the Mortgage Loan Schedule attached hereto (including
property that secures a Subsequent Mortgage Loan that becomes an REO Property),
including the related Indenture Trustee's Mortgage Files delivered or to be
delivered to the Indenture Trustee, including the Cut-Off Date Principal Balance
for each Subsequent Mortgage Loan, all payments of interest accruing on each
Subsequent Mortgage Loan after the Subsequent Cut-Off Date therefor whenever
received and all other proceeds received in respect of such Subsequent Mortgage
Loans, (b) the Insurance Policies relating to the Subsequent Mortgage Loans, and
(c) all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid assets, including, without limitation, all
insurance proceeds and condemnation awards.
The "Subsequent Mortgage Loans" are those listed on the Schedule of
Mortgage Loans attached hereto. The Cut-Off Date Principal Balance of such
subsequent Mortgage Loans as of the Subsequent Cut-Off Date is $__________ in
Loan Group 1 and $_________ in Loan Group 2.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Subsequent Pledge
Agreement, capitalized terms used herein but not otherwise defined shall have
the respective meanings assigned to such terms in Appendix I to the Indenture.
Section 2. Pledge. In consideration of the receipt of $__________ (such
amount being approximately 100% of the Cut-Off Date Principal Balance of the
Subsequent Mortgage Loans) from the Indenture Trustee, the Trust hereby pledges
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, without recourse, all of the Trust's right, title
B-1
and interest in, to, and under the Subsequent Mortgage Loans and related
assets described above, whether now existing or hereafter arising.
In connection with such pledge, the Sponsor shall satisfy the document
delivery requirements set forth in Section 2.05 of the Sale and Servicing
Agreement with respect to each Subsequent Mortgage Loan.
Section 3. REPRESENTATIONS AND WARRANTIES CONCERNING THE SUBSEQUENT
MORTGAGE LOANS. With respect to each Subsequent Mortgage Loan, the Trust hereby
assigns each of the representations and warranties made by the Sponsor in
Section 3 of the Subsequent Transfer Agreement, for the benefit of the Indenture
Trustee, the Note Insurer and the Noteholders, on which the Indenture Trustee
relies in accepting the pledge of the Subsequent Mortgage Loans and the Note
Insurer relies in connection with the Note Insurance Policy. Such
representations and warranties speak as of the Subsequent Transfer Date unless
otherwise indicated, and shall survive each pledge, assignment, transfer and
conveyance of the respective Subsequent Mortgage Loans to the Indenture Trustee,
for the benefit of the Noteholders and the Note Insurer.
Section 4. REPURCHASE OF SUBSEQUENT MORTGAGE LOANS. Upon discovery
by any of the Sponsor, the Indenture Trustee, the Master Servicer (on behalf
of the Trust), the Note Insurer or any Noteholder of a breach of any of the
representations and warranties made by the Sponsor pursuant to Section 4.01
of the Sale and Servicing Agreement or any Subsequent Transfer Agreement, the
party discovering such breach shall give prompt written notice to such other
Person; provided, that the Indenture Trustee shall have no duty to inquire or
to investigate the breach of any such representations and warranties. The
Sponsor will be obligated to repurchase a Subsequent Mortgage Loan which
breaches a representation or warranty in accordance with the provisions of
Section 4.01 of the Sale and Servicing Agreement or to indemnify as described
in Section 4.02 of the Sale and Servicing Agreement. Such repurchase and
indemnification obligation of the Sponsor shall constitute the sole remedy
against the Sponsor, and the Trust for such breach available to the Master
Servicer, the Backup Servicer, the Trust, the Owner Trustee, the Indenture
Trustee, the Sponsor, the Note Insurer and the Noteholders.
Section 5. AMENDMENT. This Subsequent Pledge Agreement may be
amended from time to time by the Trust and the Indenture Trustee only with
the prior written consent of the Note Insurer (or, in the event of a Note
Insurer Default, the Majority Holders).
Section 6. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS SUBSEQUENT PLEDGE
AGREEMENT AND ANY AMENDMENT HEREOF PURSUANT TO SECTION 5 SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSEQUENT PLEDGE
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM
THEREIN.
B-2
Section 7. COUNTERPARTS. This Subsequent Pledge Agreement may be
executed in counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 8. BINDING EFFECT; THIRD-PARTY BENEFICIARIES. This
Subsequent Pledge Agreement will inure to the benefit of and be binding upon
the parties hereto, the Note Insurer, the Noteholders, and their respective
successors and permitted assigns.
Section 9. HEADINGS. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section 10. EXHIBITS. The exhibits attached hereto and referred to
herein shall constitute a part of this Subsequent Pledge Agreement and are
incorporated into this Subsequent Pledge Agreement for all purposes.
Section 11. 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, in the exercise of the powers and
authority conferred and vested in it under the Trust Agreement, (b) each of
the representations, undertakings and agreements herein made on the part of
the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company, individually
or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties
hereto and by any Person claiming by, through or under the parties hereto 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 Agreement or any
other related documents.
[Remainder of Page Intentionally Left Blank]
B-3
IN WITNESS WHEREOF, the Trust and the Indenture Trustee have caused
this Subsequent Pledge Agreement to be duly executed by their respective
officers as of the day and year first above written.
ACCREDITED MORTGAGE LOAN TRUST
2000-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By: __________________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee
By: __________________________________
Name:
Title:
[Signature Page to Subsequent Pledge Agreement]
B-4
EXHIBIT C
FORM OF NOTE INSURER CONSENT TO
SUBSEQUENT MORTGAGE LOANS
__________, 2000
Norwest Bank Minnesota,
National Association,
as Indenture Trustee
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: [______________________]
Re: Accredited Mortgage Loan Trust 2000-1
ASSET-BACKED NOTES, SERIES 2000-1
Ladies and Gentlemen:
Reference is made to the Indenture, dated as of February 1, 2000 (the
"Indenture"), by and between Accredited Mortgage Loan Trust 2000-1, as issuer
(the "Trust"), and you, as indenture trustee (the "Indenture Trustee"). Pursuant
to Section 2.14(b)(viii) of the Indenture, the undersigned hereby approves and
consents to the acquisition of the Subsequent Mortgage Loans listed on Schedule
I attached hereto aggregating $____________ in aggregate Cut-Off Date Principal
Balance by the Trust and the subsequent pledge of such Subsequent Mortgage Loans
by the Trust to the Indenture Trustee, for the benefit of the Noteholders and
the Note Insurer.
FINANCIAL SECURITY ASSURANCE INC.
By: __________________________
Name:
Title:
C-1
APPENDIX I
DEFINED TERMS
[See Appendix I to Indenture]
I-1
EXECUTION COPY
APPENDIX I
DEFINED TERMS
"ACCEPTED SERVICING PRACTICES": The Master Servicer's
normal servicing practices, which in general will conform to the mortgage
servicing practices of prudent mortgage lending institutions which service,
for their own account, mortgage loans of the same type as the Mortgage Loans
in the jurisdictions in which the related Mortgaged Properties are located.
"ACCOUNT": Any of the Collection Account, the Payment
Accounts, the Reserve Account, the Note Insurance Payment Account, the
Pre-Funding Accounts or the Capitalized Interest Accounts.
"ACCOUNTANT": A Person engaged in the practice of
accounting who (except when the Indenture provides that an Accountant must be
Independent) may be employed by or affiliated with the Trust or an Affiliate
of the Trust.
"ACCRUAL PERIOD": With respect to the Class A-1 Notes and
any Payment Date, the prior calendar month; with respect to the Class A-2
Notes and any Payment Date, the period from and including the prior Payment
Date (or, in the case of the first Payment Date, from and including the
Closing Date) to and including the day immediately preceding such Payment
Date.
"ACT": With respect to any Noteholder, as defined in Section
11.03 of the Indenture.
"ADDITION NOTICE": A written notice from the Sponsor to the
Trust, the Indenture Trustee, the Backup Servicer, the Master Servicer, the
Rating Agencies and the Note Insurer that the Sponsor desires to make a
Subsequent Transfer.
"ADJUSTED NOTE RATE": With respect to any Payment Date for the
Class A-1 Notes, the percentage equal to (i) the Class A-1 Note Rate plus (ii)
the Premium Percentage for such Class; and with respect to any Payment Date for
the Class A-2 Notes, the percentage equal to (i) the Class A-2 Note Rate plus
(ii) the Premium Percentage for such Class.
"AFFILIATE": With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
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.
"AGENT": Any Note Registrar or Authenticating Agent.
"AGGREGATE PRINCIPAL BALANCE": With respect to any Mortgage
Loans and any date of determination, the aggregate of the Principal Balances of
such Mortgage Loans as of such date of determination.
"APPRAISED VALUE": As to any Mortgaged Property, the appraised
value of the Mortgaged Property based upon the appraisal made in connection with
the origination of the Mortgage Loan and, in the case of a Mortgaged Property
that was purchased with the proceeds of the Mortgage Loan or within twelve
months preceding the origination of the Mortgage Loan, the sales price of the
Mortgaged Property, if such sales price is less than such appraised value.
"ASSIGNMENT OF MORTGAGE": With respect to each Mortgage Loan,
an assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the conveyance of the Mortgage to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
"AUTHENTICATING AGENT": The Person, if any, appointed as
Authenticating Agent by the Owner Trustee on behalf of the Trust, acting at the
direction of the Certificateholders, pursuant to Section 6.14 of the Indenture,
until any successor Authenticating Agent for the Notes is named, and thereafter
"Authenticating Agent" shall mean such successor. The initial Authenticating
Agent shall be the Indenture Trustee. Any Authenticating Agent other than the
Indenture Trustee shall sign an instrument under which it agrees to be bound by
all of the terms of this Indenture applicable to the Authenticating Agent.
"AUTHORIZED DENOMINATIONS": Each Class of Notes is issuable
only in the minimum Percentage Interest corresponding to a minimum denomination
of $25,000 or integral multiples of $1,000 in excess thereof; PROVIDED, HOWEVER,
that one Note of each Class is issuable in a denomination equal to any such
multiple plus an additional amount such that the aggregate denomination of all
Notes of such Class shall be equal to the Original Note Principal Balance of
such Class.
"AUTHORIZED OFFICER": With respect to (i) the Indenture
Trustee, any Responsible Officer, (ii) the Owner Trustee, the president, any
vice president, any assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer, any
financial services officer or any other officer of the Owner Trustee customarily
performing functions similar to those performed by the above officers and (iii)
any other Person, the chairman, chief operating officer, president or any vice
president of such Person.
"AVAILABLE FUNDS": With respect to any Payment Date and Group,
the amount to be on deposit in the related Payment Account on such Payment Date
less the Indenture Trustee Fee and any payments in respect of the
indemnification due to the Indenture Trustee pursuant to Section 6.16 of the
Indenture, the Owner Trustee Fee, the Note Insurer Fee and the Primary Mortgage
Insurance Provider Fee, in each case with respect to the related Group
(excluding the amount of any Insured Payment and prior to the application of
such amounts as described in Section 8.02 of the Indenture for such Payment
Date) as a result of (a) the Master Servicer's remittance of the Servicer
Remittance Amount for the related Group on the related Servicer Payment Date,
(b) any transfers to such Payment Account made from the related Capitalized
Interest Account and/or the related Pre-Funding Account pursuant to Section 8.01
of the Indenture, and (c) any transfers to such Payment Account in respect of
the Shortfall Amount for such Class and such Payment Date pursuant to Section
8.01 of the Indenture, until such Shortfall Amount is paid in full, made FIRST,
to the extent of the Net Monthly Excess Cashflow for the
2
other Group of Mortgage Loans, from the Payment Account relating to such
other Group, and SECOND, from the Reserve Account. For purposes of
calculating the Available Funds, any Loan Repurchase Price or Substitution
Adjustment that is paid shall be deemed deposited in the Payment Account in
the Due Period preceding such Servicer Payment Date.
"AVAILABLE FUNDS SHORTFALL": With respect to any Payment Date
and any Class, an amount equal to the excess of the Insured Payment Amount for
such Payment Date and for such Class over the Available Funds for such Payment
Date and such Class available for distribution in respect of such Insured
Payment Amount.
"BACKUP SERVICER": Advanta Mortgage Corp. USA, a Delaware
corporation, or any successor appointed as provided in the Sale and Servicing
Agreement.
"BACKUP SERVICING FEE": As defined in Section 5.08 of the Sale
and Servicing Agreement.
"BACKUP SERVICING FEE RATE": 0.03% per annum.
"BALLOON MORTGAGE LOAN": A Mortgage Loan that provides for the
payment of the unamortized principal balance of such Mortgage Loan in a single
payment at the maturity of such Mortgage Loan that is greater than the preceding
Monthly Payment.
"BALLOON PAYMENT": A payment of the unamortized principal
balance of a Mortgage Loan in a single payment at the maturity of such Mortgage
Loan that is greater than the preceding Monthly Payment.
"BANKRUPTCY CODE": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"BASE PRINCIPAL PAYMENT AMOUNT": For any Payment Date and any
Class of Notes will be the lesser of:
(a) the excess of (i) the sum, as of such Payment Date, of (A)
the Available Funds for such Group and (B) any optional payment made by
the note insurer with respect to the related Class of Notes over (ii)
the Interest Payment Amount for such Group, and
(b) the sum, without duplication, of:
(i) the principal portion of all Monthly
Payments due and collected (or advanced pursuant to
Section 5.18 of the Sale and Servicing Agreement)
during the related Due Period, plus the principal
portion of all Principal Prepayments in full received
during the related Prepayment Period, plus the
principal portion of all Curtailments and Insurance
Proceeds received during the related Collection
Period, in each case, for the related Group of
Mortgage Loans and less any related reimbursements of
Periodic Advances or Servicing Advances to the Master
Servicer;
3
(ii) the principal balance of each Mortgage
Loan that was repurchased by the Sponsor on the
related Servicer Payment Date from such Group, to the
extent such principal balance is actually received by
the Indenture Trustee and less any related
reimbursements of Periodic Advances or Servicing
Advances to the Master Servicer;
(iii) any Substitution Adjustments delivered
by the Sponsor on the related Servicer Payment Date
in connection with a substitution of a Mortgage Loan
in such Group, to the extent such Substitution
Adjustments are actually received by the Indenture
Trustee;
(iv) the Net Liquidation Proceeds actually
collected by the Master Servicer with respect to
Mortgage Loans in such Group during the related
Collection Period (to the extent such Net Liquidation
Proceeds relate to principal);
(v) with respect to the April 2000 Payment
Date, moneys released from the related Pre-Funding
Account, if any;
(vi) the proceeds received by the Indenture
Trustee upon the exercise by Sponsor of the optional
redemption of the Notes pursuant to Section 10.01 of
the Indenture (to the extent such proceeds relate to
principal);
(vii) the proceeds received by the Indenture
Trustee upon the exercise by the Sponsor of its
option to terminate the Trust pursuant to Section
10.01 of the Indenture (to the extent such proceeds
relate to principal) allocable to such Group;
(viii) if the Note Insurer shall so elect in
its sole discretion, an amount of principal
(including Liquidated Loan Losses) prior to the
occurrence of Remaining Over-collateralization
Deficit in accordance with the terms of the Note
Insurance Policy;
MINUS
(ix) the amount of any
Over-collateralization Reduction Amount for such
Group for such Payment Date.
In no event will the Base Principal Payment Amount for a Group
with respect to any Payment Date be (x) less than zero or (y) greater than the
then aggregate outstanding Note Principal Balance of the related Class of Notes.
"BASIC DOCUMENTS": The Indenture, the Trust Agreement, the
Sale and Servicing Agreement, the Insurance Agreement, the Indemnification
Agreement and the Premium Letter.
"BENEFICIAL OWNER": With respect to a Book-Entry Note, the
Person who is the beneficial owner of such Note as reflected on the books of the
Clearing Agency for the Notes or
4
on the books of a Person maintaining an account with such Clearing Agency (as
either a Direct Participant or an Indirect Participant, in accordance with
the rules of such Clearing Agency).
"BEST EFFORTS": Efforts determined to be in good faith and
reasonably diligent by the Person performing such efforts, specifically the
Trust or the Master Servicer or any other agent of the Trust, as the case may
be, in its reasonable discretion. Such efforts do not require the Trust or the
Master Servicer or any other agent of the Trust, as the case may be, to enter
into any litigation, arbitration or other legal or quasi-legal proceeding, nor
do they require the Trust or the Master Servicer or any other agent of the
Trust, as the case may be, to advance or expend fees or sums of money in
addition to those specifically set forth in this Indenture and the Sale and
Servicing Agreement.
"BOOK-ENTRY NOTES": Any Notes registered in the name of the
Clearing Agency or its nominee, ownership of which is reflected on the books of
the Clearing Agency or on the books of a person maintaining an account with such
Clearing Agency (as either a Direct Participant or an Indirect Participant in
accordance with the rules of such Clearing Agency).
"BUSINESS DAY": Any day other than (i) a Saturday or Sunday or
(ii) a day that is either a legal holiday or a day on which the Note Insurer or
banking institutions in the State of New York, the State of Delaware, the State
of California, the State of Utah, the State of Minnesota, the State of Maryland,
or the state in which the Indenture Trustee's office from which payments will be
made to Noteholders, are authorized or obligated by law, regulation or executive
order to be closed.
"BUSINESS TRUST STATUTE" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"CAPITALIZED INTEREST ACCOUNT": Each of the Capitalized
Interest Accounts established in accordance with Section 8.01(c) of the
Indenture and maintained by the Indenture Trustee.
"CAPITALIZED INTEREST REQUIREMENT": With respect to each Class
of Notes and the Payment Date occurring in March 2000, (A) the product of (i)
one-twelfth of the related Adjusted Note Rate as calculated as of such Payment
Date and (ii) the related Pre-Funded Amount as of the Closing Date, minus (B)
thirty (30) days' interest, at the related Mortgage Interest Rate, on the
Subsequent Mortgage Loans for the related Group transferred to the Trust which
had a Due Date after the related Subsequent Cut-Off Date and during the related
Due Period, minus (C) the amount of any Pre-Funding Earnings for the related
Group earned from the Closing Date with respect to the March 2000 Payment Date.
In no event will the Capitalized Interest Requirement for any Group be less than
zero.
"CERCLA": The Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
"CERTIFICATES" shall mean the Trust Certificates.
"CIVIL RELIEF ACT": The Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
▇
"▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ INTEREST SHORTFALL": With respect to any
Payment Date, for any Mortgage Loan as to which there has been a reduction in
the amount of interest collectible thereon for the most recently ended Due
Period as a result of the application of the Civil Relief Act, the amount, if
any, by which (a) interest collectible on such Mortgage Loan during the most
recently ended calendar month is less than (b) one month's interest on the
Principal Balance of such Mortgage Loan, calculated at a rate equal to the
related Mortgage Interest Rate.
"CLASS": Each class of Notes designated as the Class A-1 Notes
and the Class A-2 Notes.
"CLASS A-1 BASE PRINCIPAL PAYMENT AMOUNT": The Base Principal
Payment Amount for the Class A-1 Notes.
"CLASS A-1 CARRY-FORWARD AMOUNT": As of any Payment Date, the
sum of (a) the amount, if any, by which (i) the Class A-1 Interest Payment
Amount as of the immediately preceding Payment Date exceeded (ii) the amount of
interest actually paid to the Holders of the Class A-1 Notes on such immediately
preceding Payment Date and (b) thirty (30) days' interest on the amount
described in clause (a), calculated at an interest rate equal to the Class A-1
Note Rate.
"CLASS A-1 CURRENT INTEREST": With respect to the Class A-1
Notes for any Payment Date, the interest accrued during the related Accrual
Period at the Class A-1 Note Rate applicable to such Payment Date on the Class
A-1 Note Principal Balance as of such Payment Date (and prior to making any
payments on such Payment Date) reduced by the sum of Civil Relief Act Interest
Shortfalls and Net Prepayment Interest Shortfalls, in each case, related to the
Group 1 Mortgage Loans.
"CLASS A-1 FORMULA PAYMENT AMOUNT": With respect to the Class
A-1 Notes for any Payment Date, the sum of the Class A-1 Interest Payment Amount
and the Class A-1 Base Principal Payment Amount.
"CLASS A-1 INTEREST PAYMENT AMOUNT": With respect to the Class
A-1 Notes for any Payment Date, an amount equal to (a) the related Class A-1
Current Interest, PLUS (b) the Class A-1 Carry-Forward Amount remaining unpaid
as of such Payment Date.
"CLASS A-1 NOTE": Any Note designated as a "Class A-1 Note" on
the face thereof, in the form of EXHIBIT A to the Indenture. The Class A-1 Notes
shall be issued with an initial aggregate Note Principal Balance equal to the
Original Note Principal Balance therefor.
"CLASS A-1 NOTE PRINCIPAL BALANCE": As of any date of
determination, the Original Note Principal Balance of the Class A-1 Notes less
any amounts actually paid with respect to principal thereon on all prior Payment
Dates.
"CLASS A-1 NOTE RATE": With respect to any Payment Date, the
per annum rate equal to 7.94%; PROVIDED, that, on any Payment Date after the
Clean-Up Call Date related to the Class A-1 Notes, the Class A-1 Note Rate will
be 8.69%.
6
"CLASS A-1 PAYMENT AMOUNT": With respect to the Class A-1
Notes for any Payment Date, the amount to be paid to the Holders of the Class
A-1 Notes on such Payment Date, applied first to interest and then to principal,
which amount shall be equal to the lesser of (i) the Class A-1 Formula Payment
Amount for such Payment Date and (ii) the amount (including any applicable
portion of any Insured Payment) available for payment on account of the Class
A-1 Notes for such Payment Date pursuant to the provisions of Section 8.02 of
the Indenture.
"CLASS ▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇▇": With
respect to the Class A-2 Notes and any Payment Date, the sum of (a) the excess
of (x) the Class A-2 Current Interest calculated at the Class A-2 Formula Note
Rate over (y) the Class A-2 Current Interest calculated at the Class A-2
Available Funds Cap Rate, in each case as of such Payment Date and (b) the
amount of any Class A-2 Available Funds Cap Carry-Forward remaining unpaid from
any previous Payment Date, with 30 days' interest thereon on the Class A-2 Note
Rate.
"CLASS A-2 AVAILABLE FUNDS CAP RATE": A per annum rate equal
to the Weighted Average Mortgage Interest Rate with respect to the Mortgage
Loans in Loan Group 2, less the rate at which the Indenture Trustee Fee is then
calculated, less the rate at which the Owner Trustee Fee is the calculated, less
the Servicing Fee Rate, less the Backup Servicing Fee Rate, less the Primary
Mortgage Insurance Premium Percentage, less the Premium Percentage, each with
respect to the Class A-2 Notes only, less 0.75%.
"CLASS A-2 BASE PRINCIPAL PAYMENT AMOUNT": The Base Principal
Payment Amount for the Class A-2 Notes.
"CLASS A-2 CARRY-FORWARD AMOUNT": As of any Payment Date, the
sum of (a) the amount, if any, by which (i) the Class A-2 Interest Payment
Amount as of the immediately preceding Payment Date exceeded (ii) the amount of
interest actually paid to the Holders of the Class A-2 Notes on such immediately
preceding Payment Date and (b) thirty (30) days' interest on the amount
described in clause (i), calculated at an interest rate equal to the Class A-2
Note Rate.
"CLASS A-2 CURRENT INTEREST": With respect to the Class A-2
Notes for any Payment Date, the interest accrued during the related Accrual
Period at the Class A-2 Note Rate applicable to such Payment Date on the Class
A-2 Note Principal Balance as of such Payment Date (and prior to making any
distributions on such Payment Date) reduced by the sum of Civil Relief Act
Interest Shortfalls and Net Pre-payment Interest Shortfalls, in each case,
related to the Group 2 Mortgage Loans.
"CLASS A-2 FORMULA NOTE RATE": A per annum rate equal to the
lesser of (i) LIBOR plus 0.32%; PROVIDED, that, on any Payment Date after the
Clean-Up Call Date related to the Class A-2 Notes, the Class A-2 Formula Note
Rate will be equal to LIBOR plus 0.64% per annum, and (ii) 14%.
"CLASS A-2 FORMULA PAYMENT AMOUNT": With respect to the Class
A-2 Notes for any Payment Date, the sum of the Class A-2 Interest Payment Amount
and the Class A-2 Base Principal Payment Amount.
7
"CLASS A-2 INTEREST PAYMENT AMOUNT": With respect to the Class
A-2 Notes for any Payment Date, an amount equal to (a) the related Class A-2
Current Interest, PLUS (b) the Class A-2 Carry-Forward Amount remaining unpaid
as of such Payment Date.
"CLASS A-2 NOTE": Any Note designated as a "Class A-2 Note" on
the face thereof, in the form of Exhibit A to the Indenture. The Class A-2 Notes
shall be issued with an initial aggregate Note Principal Balance equal to the
Original Note Principal Balance therefor.
"CLASS A-2 NOTE PRINCIPAL BALANCE": As of any date of
determination, the Original Note Principal Balance of the Class A-2 Notes LESS
any amounts actually paid with respect to principal thereon on all prior Payment
Dates.
"CLASS A-2 NOTE RATE": With respect to any Payment Date, the
per annum rate equal to the lesser of (i) the Class A-2 Formula Note Rate and
(ii) the Class A-2 Available Funds Cap Rate for such Payment Date.
"CLASS A-2 PAYMENT AMOUNT": With respect to the Class A-2
Notes for any Payment Date, the amount to be paid to the Holders of the Class
A-2 Notes on such Payment Date, applied first to interest and then to principal,
which amount shall be equal to the lesser of (i) the Class A-2 Formula Payment
Amount for such Payment Date and (ii) the amount (including any applicable
portion of any Insured Payment) available for payment on account of the Class
A-2 Notes for such Payment Date.
"CLEAN-UP CALL DATE": With respect to the Class A-1 Notes, the
first Payment Date on which either (i) the Class A-1 Note Principal Balance is
equal to or less than 10% of the Original Note Principal Balance of the Class
A-1 Notes or (ii) the aggregate of the Class A-1 Note Principal Balance and the
Class A-2 Note Principal Balance is equal to or less than 10% of the aggregate
Original Note Principal Balance of the Class A-1 Notes and the Class A-2 Notes.
With respect to the Class A-2 Notes, the first Payment Date on which either (i)
the Class A-2 Note Principal Balance is equal to or less than 10% of the
Original Note Principal Balance of the Class A-2 Notes or (ii) the aggregate of
the Class A-1 Note Principal Balance and the Class A-2 Note Principal Balance is
equal to or less than 10% of the aggregate Original Note Principal Balance of
the Class A-1 Notes and the Class A-2 Notes.
"CLEARING AGENCY": An organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended, and the regulations of the Commission thereunder and shall initially be
The Depository Trust Company of New York, the nominee for which is Cede & Co.
"CLEARING AGENCY PARTICIPANTS": The entities for whom the
Clearing Agency will maintain book-entry records of ownership and transfer of
Book-Entry Notes, which may include securities brokers and dealers, banks and
trust companies and clearing corporations and certain other organizations.
"CLOSING DATE": February 29, 2000.
"CODE": The Internal Revenue Code of 1986, as amended.
8
"COLLECTION ACCOUNT": The Eligible Account established and
maintained by the Master Servicer pursuant to Section 5.02(b) of the Sale and
Servicing Agreement.
"COLLECTION PERIOD": With respect to each Payment Date, the
calendar month preceding the related Payment Date.
"COMBINED LOAN-TO-VALUE RATIO" or "CLTV": As to any Mortgage
Loan at any time, the fraction, expressed as a percentage, the numerator of
which is the sum of (i) the Principal Balance thereof at such time and (ii) if
such Mortgage Loan is secured by a second priority Mortgage, the unpaid
principal balance of the related first mortgage loan at the time the Mortgage
Loan was originated, and the denominator of which is the Appraised Value of the
related Mortgaged Property.
"COMMISSION": The United States Securities and Exchange
Commission.
"COMPENSATING INTEREST": As defined in Section 6.05 of the
Sale and Servicing Agreement.
"CORPORATE TRUST OFFICE": With respect to (y) the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of the Basic Documents is located at
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Corporate Trust Services -- Accredited Mortgage Loan Trust 2000-1 provided that
copies of all notices or other correspondence required to be delivered to the
Corporate Trust Office of the Indenture Trustee shall also be copied to the
following address: Norwest Bank Minnesota, National Association, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Services,
Accredited 2000-1; and (z) the Owner Trustee, the principal office of the Owner
Trustee at which at any particular time its corporate trust business shall be
principally administered, which office at the date of the execution of the Basic
Documents is located at ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Administration.
"CREDIT ENHANCEMENT AMOUNT": With respect to any Payment Date,
the sum of (a) the Over-collateralization Amount for both Groups for such
Payment Date and (b) the amount on deposit in the Reserve Account immediately
prior to such Payment Date.
"CUMULATIVE LOAN LOSS": With respect to any period, the sum of
all Liquidated Loan Losses which occurred during such period.
"CUMULATIVE LOSS PERCENTAGE": As of any date of determination
thereof, the aggregate of all Liquidated Loan Losses since the Closing Date as a
percentage of the sum of (i) the aggregate Cut-Off Date Principal Balance of the
Initial Mortgage Loans and (ii) the aggregate Cut-Off Date Principal Balance of
any Subsequent Mortgage Loans transferred to the Trust as of the related
Subsequent Cut-Off Date.
"CUMULATIVE LOSS TEST": The Cumulative Loss Test for each
Payment Date indicated below is satisfied if the Cumulative Loss Percentage for
such Payment Date does not exceed the percentage set out for such Payment Date
below:
9
PAYMENT DATE CUMULATIVE LOSS PERCENTAGE
-------------------------------------- ------------------------------
31st - 42nd Payment Date 1.75%
43rd - 54th Payment Date 2.50%
55th - 66th Payment Date 3.15%
67th Payment Date and thereafter 3.50%
"CURTAILMENT": With respect to a Mortgage Loan, any payment of
principal received in advance of its Monthly Payment and which is not
accompanied by an amount as to interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of prepayment.
"CUT-OFF DATE": With respect to the Initial Mortgage Loans,
the Initial Cut-Off Date, and with respect to the Subsequent Mortgage Loans, the
Subsequent Cut-Off Date.
"CUT-OFF DATE AGGREGATE PRINCIPAL BALANCE": With respect to
each Loan Group or both Loan Groups, the aggregate of the Cut-Off Date Principal
Balance of the Mortgage Loans in such Loan Group or both Loan Groups, as
required by the context. The Cut-Off Date Aggregate Principal Balance of the
Initial Mortgage Loans for the Trust is $131,471,558.20. The Cut-Off Date
Aggregate Principal Balance for the Initial Mortgage Loans in Loan Group 1 and
Loan Group 2 is $40,348,535.31 and $91,123,022.89, respectively.
"CUT-OFF DATE PRINCIPAL BALANCE": Means as to any Mortgage
Loan, the principal balance of such Mortgage Loan as of the related Cut-Off Date
as specified in the amortization schedule at the time relating thereto (before
any adjustment to such amortization schedule by reason of any moratorium or
similar waiver or grace period) after application of all payments due on or
before February 1, 2000 (or, with respect to Initial Mortgage Loans which were
originated after the Initial Cut-Off Date, as of the date of origination) and
after giving effect to any previous Curtailments and Liquidation Proceeds
allocable to principal (other than with respect to any Liquidated Mortgage
Loan), irrespective of any delinquency in payment by the related Mortgagor.
"DEBT SERVICE REDUCTION": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the Bankruptcy Code, except such a
reduction that constitutes a Deficient Valuation or a permanent forgiveness of
principal.
"DEFAULT": Any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"DEFICIENT VALUATION": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding Principal Balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"DEFINITIVE NOTES": Notes other than Book-Entry Notes.
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"DELETED MORTGAGE LOAN": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"DELINQUENCY RATIO": With respect to any Payment Date, the
percentage equivalent of a fraction (a) the numerator of which equals the
Aggregate Principal Balances of all Mortgage Loans that are sixty (60) or more
days Delinquent, in foreclosure or converted to REO Property as of the last day
of the related Collection Period and (b) the denominator of which is the
Aggregate Principal Balance of the Mortgage Loans as of the last day of such
Collection Period.
"DELINQUENT": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"DELIVERY": When used with respect to Permitted Investments
means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the Uniform
Commercial Code and are susceptible of physical delivery (except with respect to
Permitted Investments consisting of certificated securities (as defined in
Section 8-102(a)(4) of the Uniform Commercial Code)), physical delivery to the
Indenture Trustee or its custodian endorsed to the Indenture Trustee or its
custodian or endorsed in blank;
(b) with respect to a certificated security (as defined in
Section 8-102(a)(4) of the Uniform Commercial Code) (i) delivery of such
certificated security, not containing any evidence of a right or interest
inconsistent with the Indenture Trustee's interest therein, endorsed to, or
registered in the name of, the Indenture Trustee or endorsed in blank to a
securities intermediary (as defined in Section 8-102(a)(14) of the Uniform
Commercial Code) and the making by such securities intermediary of appropriate
entries in its records identifying such certificated securities as credited to
the securities account (as defined in Section 8-501(a) of the Uniform Commercial
Code) of the Indenture Trustee, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(5) of the Uniform Commercial Code) and
the making by such clearing corporation of appropriate entries in its records
crediting the securities account of a securities intermediary by the amount of
such certificated security and the making by such securities intermediary of
appropriate entries in its records identifying such certificated securities as
credited to the securities account of the Indenture Trustee (all Permitted
Investments described in subsections (a) and (b), "Physical Property"); and, in
any event, any such Physical Property in registered form shall be registered in
the name of the Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such Permitted Investments to
the Indenture Trustee or its nominee or custodian, consistent with then
applicable law or regulations or the interpretation thereof; and
11
(c) with respect to any security issued by the U.S. Treasury,
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac that is a book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable federal
regulations and Articles 8 and 9 of the Uniform Commercial Code: the making by a
Federal Reserve Bank of an appropriate entry crediting such Permitted Investment
to an account of a securities intermediary that is also a "participant" pursuant
to applicable federal regulations; the making by such securities intermediary of
appropriate entries in its records crediting such book-entry security held
through the Federal Reserve System pursuant to federal book-entry regulations
and Articles 8 and 9 of the Uniform Commercial Code to the securities account of
the Indenture Trustee; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership of any
such Permitted Investments to the Indenture Trustee or its nominee or custodian,
consistent with then applicable law or regulations or the interpretation
thereof.
"DIRECT PARTICIPANT": Any broker-dealer, bank or other
financial institution for which the Clearing Agency holds Notes from time to
time as a securities depositary.
"DUE DATE": With respect to any Mortgage Loan and any Monthly
Payment, the date on which such Monthly Payment is due from the related
Mortgagor.
"DUE PERIOD": With respect to any Payment Date, the period
commencing on the second day of the month preceding the month in which such
Payment Date occurs and ending on the first day of the month in which such
Payment Date occurs.
"ELIGIBLE ACCOUNT": Either (A) an account or accounts
maintained with an institution (which may include the Indenture Trustee;
PROVIDED, that the Indenture Trustee otherwise meets these requirements) whose
deposits are insured by the FDIC, the unsecured and uncollateralized debt
obligations of which institution shall be rated "AA" or better by S&P and "Aa2"
or better by Moody's and in the highest short term rating by S&P and Moody's,
and which is (i) a federal savings and loan association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution (including the Indenture Trustee) duly organized, validly existing
and in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, (iv) a principal subsidiary of a bank
holding company, or (v) approved in writing by the Note Insurer and the Rating
Agencies or (B) a trust account or accounts maintained with the trust department
of a federal or state chartered depository institution or trust company (which
may include the Indenture Trustee; PROVIDED, that the Indenture Trustee
otherwise meets these requirements), having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"EXCESS OVER-COLLATERALIZED AMOUNT": With respect to each
Group of Mortgage Loans and any Payment Date, the excess, if any, of (a) the
Over-collateralization Amount that would apply to that Group on such Payment
Date after giving effect to the payment of the Base Principal Payment Amount for
such Group calculated without reduction for any Over-
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collateralization Reduction Amounts, and (b) the Specified
Over-collateralization Amount for such Group.
"EXCHANGE ACT": Means the Securities Exchange Act of 1934, as
amended.
"EVENT OF DEFAULT": As defined in Section 5.01 of the
Indenture.
"▇▇▇▇▇▇ MAE": ▇▇▇▇▇▇ ▇▇▇, formerly known as, The Federal
National Mortgage Association, and any successor thereto.
"FDIC": The Federal Deposit Insurance Corporation, and any
successor thereto.
"FINAL CERTIFICATION": A certification as to the completeness
of each Indenture Trustee's Mortgage File prepared by the Indenture Trustee, and
provided by the Indenture Trustee within one hundred eighty (180) of the Closing
Date pursuant to Section 2.06(b)(iii) of the Sale and Servicing Agreement.
"FINAL STATED MATURITY DATE": With respect to both the Class
A-1 Notes and the Class A-2 Notes, the Payment Date occurring in February 2030.
"FORECLOSURE PROFITS": As to any Payment Date, the excess, if
any, of (i) Net Liquidation Proceeds in respect of each Mortgage Loan that
became a Liquidated Mortgage Loan during the Collection Period immediately
preceding such Payment Date over (ii) the sum of the unpaid Principal Balance of
each such Liquidated Mortgage Loan plus accrued and unpaid interest at the
applicable Mortgage Interest Rate on the unpaid Principal Balance thereof from
the Due Date on which interest was last paid by the Mortgagor (or, in the case
of a Liquidated Mortgage Loan that had been an REO Mortgage Loan, from the Due
Date on which interest was last deemed to have been paid pursuant to Section
5.06 of the Sale and Servicing Agreement) to the next succeeding Due Date
following the date such Loan became a Liquidated Mortgage Loan, plus any amounts
required by applicable law to be paid to the related Mortgagors.
"▇▇▇▇▇▇▇ MAC": ▇▇▇▇▇▇▇ Mac, formerly known as The Federal Home
Loan Mortgage Corporation, and any successor thereto.
"GAAP": Generally accepted accounting principles, consistently
applied.
"GRANT": To assign, transfer, mortgage, pledge, create and
grant a security interest in, deposit, set-over and confirm. A Grant of a
Mortgage Loan and the related Mortgage Files, a Permitted Investment, the Sale
and Servicing Agreement, or any other instrument shall include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder, including without limitation the immediate and continuing right to
claim for, collect, receive and give receipts for principal and interest
payments thereunder, Insurance Proceeds, Loan Repurchase Prices and all other
moneys payable thereunder and all proceeds thereof, 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.
13
"GROUP": With respect to the Notes, either Group 1 or Group 2,
as the context requires. With respect to the Mortgage Loans, either Loan Group 1
or Loan Group 2, as the context requires.
"GROUP 1": The Class A-1 Notes. The related Loan Group for
Group 1 is Loan Group 1.
"GROUP 2": The Class A-2 Notes. The related Loan Group for
Group 2 is Loan Group 2.
"HIGHEST LAWFUL RATE": As defined in Section 11.19 of the
Indenture.
"INDEMNIFICATION AGREEMENT": The Indemnification Agreement
dated as of February 29, 2000 among the Note Insurer, the Sponsor, the Trust and
the Underwriter as such agreement may be amended or supplemented in accordance
with the provisions thereof.
"INDENTURE": The Indenture, dated as of February 1, 2000,
between the Trust and the Indenture Trustee, relating to the issuance of the
Notes.
"INDENTURE TRUSTEE": Norwest Bank Minnesota, National
Association, a national banking association, or its successor-in-interest, or
any successor Indenture Trustee appointed as provided for in Section 6.09 of the
Indenture.
"INDENTURE TRUSTEE FEE": As to any Payment Date, the fee
payable to the Indenture Trustee in respect of its services as Indenture Trustee
pursuant to Section 6.16 of the Indenture that accrues at a monthly rate equal
to one-twelfth of .01625% on the Stated Principal Balance of each Mortgage Loan
and the balance of the Prefunding Accounts, as of the immediately preceding Due
Date.
"INDENTURE TRUSTEE'S MORTGAGE FILE": The documents delivered
to the Indenture Trustee, pursuant to Section 2.05 of the Sale and Servicing
Agreement.
"INDENTURE TRUSTEE'S REMITTANCE REPORT": The statement
prepared pursuant to Section 2.08(d) of the Indenture, containing the following
information with respect to each Class:
(a) the amount of the payment with respect to each Class of
Notes and Certificates;
(b) the amount of such payments allocable to principal,
separately identifying the aggregate amount of any Principal
Prepayments or other unscheduled recoveries of principal included
therein and separately identifying any Over-collateralization Increase
Amounts for each Group;
(c) the amount of such payments allocable to interest and the
calculation thereof;
14
(d) the Note Principal Balance of each Class of Notes as of
such Payment Date, together with the Note Principal Balance of each
Class of Notes (based on a Note in an original Note Principal Balance
of $1,000) then outstanding, in each case after giving effect to any
payment of principal on such Payment Date;
(e) the amount of any Insured Payment included in the amounts
paid to the Noteholders on such Payment Date;
(f) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such payment;
(g) the amounts, if any, of any Liquidated Loan Losses for the
related Collection Period and cumulative Liquidated Loan Losses since
the Closing Date;
(h) the Pre-Funded Amount for each Class on such Payment Date;
and
(i) LIBOR for such Payment Date.
Items (a), (b) and (c) above shall, with respect to each Class
of Notes, be presented on the basis of a Note having a $1,000 denomination.
"INDEPENDENT": When used with respect to any specified Person,
means such a Person who (i) is in fact independent of the Trust and any other
obligor upon the Notes, (ii) does not have any direct financial interest or any
material indirect financial interest in the Trust or in any such other obligor
or in an Affiliate of the Trust or such other obligor, and (iii) is not
connected with the Trust or any such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by a Trust Order and such opinion or certificate shall state that the
signer has read this definition and that the signer is Independent within the
meaning hereof.
"INDIRECT PARTICIPANT": Any financial institution for whom any
Direct Participant holds an interest in a Note.
"INDIVIDUAL NOTE": A Note of an Original Note Principal
Balance of $1,000; a Note of an Original Note Principal Balance in excess of
$1,000 shall be deemed to be a number of Individual Notes equal to the quotient
obtained by dividing such Original Note Principal Balance amount by $1,000.
"INITIAL CERTIFICATION": A certification as to the
completeness of each Indenture Trustee's Mortgage File prepared by the Indenture
Trustee, and provided by the Indenture Trustee within sixty (60) days of the
Closing Date pursuant to Section 2.06(b)(ii) of the Sale and Servicing
Agreement.
"INITIAL CUT-OFF DATE": The close of business on January 31,
2000 (or with respect to any Initial Mortgage Loan originated or otherwise
acquired by the Sponsor after January 31, 2000, the date of origination or
acquisition of such Initial Mortgage Loan).
15
"INITIAL MORTGAGE LOANS": The mortgage loans delivered by the
Trust on the Closing Date.
"INITIAL TERM": As defined in Section 8.04 of the Sale and
Servicing Agreement.
"INSURANCE AGREEMENT": The Insurance and Indemnity Agreement
dated as of February 1, 2000 among the Note Insurer, the Sponsor, and the Trust
as such agreement may be amended or supplemented in accordance with the
provisions thereof.
"INSURANCE POLICIES": All insurance policies insuring any
Mortgage Loan or Mortgaged Property, to the extent the Trust or the Indenture
Trustee has any interest therein.
"INSURANCE PROCEEDS": Proceeds paid by any insurer pursuant to
any insurance policy covering a Mortgage Loan to the extent such proceeds are
not applied to the restoration of the related Mortgaged Property or released to
the related Mortgagor in accordance with the express requirements of applicable
law or Accepted Servicing Practices. "Insurance Proceeds" do not include
"Insured Payments."
"INSURED PAYMENT": With respect to any Payment Date and any
Class of Notes, the amount actually paid by the Note Insurer in respect of the
Available Funds Shortfall for such Class for such Payment Date.
"INSURED PAYMENT AMOUNT": With respect to any Payment Date and
for any Group, is the sum (without duplication) of (i) the Interest Payment
Amount for such Group, (ii) the Remaining Over-collateralization Deficit
allocable to such Group, if any, with respect to such Payment Date, and (iii)
with respect to the Payment Date which is a Final Stated Maturity Date, the
outstanding Note Principal Balance for the related Class of Notes. For purposes
of allocating any Insured Payment Amount attributable to a Remaining
Over-collateralization Deficit, allocation will be pro rata based upon how much
each Group is undercollateralized.
"INTEREST DETERMINATION DATE": With respect to any Accrual
Period for the Class A-2 Notes, the second London Business Day prior to the
immediately preceding Payment Date; PROVIDED, HOWEVER, that with respect to the
March 2000 Payment Date, the Interest Determination Date shall be February 25,
2000.
"INTEREST PAYMENT AMOUNT": The Class A-1 Interest Payment
Amount or the Class A-2 Interest Payment Amount, as applicable.
"LATE PAYMENT RATE": Has the meaning ascribed thereto in the
Insurance Agreement.
"LETTER AGREEMENT": The Letter of Representations to the
Clearing Agency from the Indenture Trustee and the Trust dated February 29,
2000.
"LIBOR": With respect to any Accrual Period for the Class A-2
Notes, the rate determined by the Indenture Trustee on the related Interest
Determination Date on the basis of the posted rate U.S. dollar deposits for one
month which appears on Telerate Page 3750, as of 11:00 a.m. (London time) on
such Interest Determination Date. If no such posted rate appears,
16
LIBOR will be determined on the basis of the offered quotation of the
Reference Banks for U.S. dollar deposits for one month to prime banks in the
London interbank market as of 11:00 a.m. London time, on such date. If fewer
than two Reference Banks provide such offered quotations on that date, LIBOR
will be calculated as the offered rate which one or more leading banks in The
City of New York selected by the Indenture Trustee (after consultation with
the Master Servicer) are quoting as of 11:00 a.m., New York City time, on
such date to leading European banks for U.S. dollar deposits for one month;
provided, however, that if such banks are not quoting as described above,
LIBOR will be equal to the value calculated for the immediately preceding
Accrual Period.
In any event, LIBOR is calculated as the arithmetic mean
(rounded, if necessary, to the nearest 1/100th of a percent (0.0001), with
5/1,000th of a percent (0.00005) rounded upwards) of all such quotations.
"LIQUIDATED LOAN LOSS": With respect to any Payment Date, the
aggregate of the amount of losses with respect to each Mortgage Loan which
became a Liquidated Mortgage Loan on or prior to the last day of the calendar
month preceding such Payment Date, equal to the excess of (i) the unpaid
Principal Balance of each such Liquidated Mortgage Loan, plus accrued interest
thereon in accordance with the amortization schedule at the time applicable
thereto at the applicable Mortgage Interest Rate from the Due Date as to which
interest was last paid with respect thereto through the next succeeding Due Date
following the date such Loan became a Liquidated Mortgage Loan, over (ii) Net
Liquidation Proceeds with respect to such Liquidated Mortgage Loan.
"LIQUIDATED MORTGAGE LOAN": A Mortgage Loan with respect to
which the related Mortgaged Property has been acquired, liquidated or foreclosed
and with respect to which the Master Servicer determines that all Liquidation
Proceeds which it expects to recover have been recovered and for which the
Master Servicer has so designated on its Servicer Remittance Report.
"LIQUIDATION EXPENSES": Expenses incurred by the Master
Servicer in connection with the liquidation of any defaulted Mortgage Loan or
property acquired in respect thereof (including, without limitation, legal fees
and expenses, committee or referee fees, and, if applicable, brokerage
commissions and conveyance taxes), any unreimbursed amount expended by the
Master Servicer pursuant to Sections 5.04 and 5.06 of the Sale and Servicing
Agreement respecting the related Mortgage Loan and any unreimbursed expenditures
for real property taxes or for property restoration or preservation of the
related Mortgaged Property. Liquidation Expenses shall not include any
previously incurred expenses in respect of an REO Mortgage Loan which have been
netted against related REO Proceeds.
"LIQUIDATION PROCEEDS": The amount received by the Master
Servicer in connection with (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation, (ii) the
liquidation of a defaulted Mortgage Loan through an Indenture Trustee's sale,
foreclosure sale, REO Disposition or otherwise or (iii) the liquidation of any
other security for such Mortgage Loan, including, without limitation, pledged
equipment, inventory and working capital and assignments of rights and interests
made by the related Mortgagor.
17
"LOAN GROUP": Either of Loan Group 1 or Loan Group 2.
"LOAN GROUP 1": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule for Sub-Trust 1.
"LOAN GROUP 2": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule for Sub-Trust 2.
"LOAN REPURCHASE PRICE": With respect to any Mortgage Loan,
the Principal Balance of such Mortgage Loan as of the date of repurchase, plus
the greater of (x) all accrued and unpaid interest thereon and (y) thirty (30)
days' interest thereon, computed, as of the next succeeding Due Date for such
repurchased Mortgage Loan, at the Mortgage Interest Rate, plus the amount of any
unreimbursed Periodic Advances and Servicing Advances made by the Master
Servicer with respect to such Mortgage Loan, which purchase price shall be
deposited in the Collection Account on the next succeeding Servicer Payment
Date, after deducting therefrom any amounts received in respect of such
repurchased Mortgage Loan or Loans and being held in the Collection Account for
future payment to the extent such amounts have not yet been applied to principal
or interest on such Mortgage Loan.
"LOAN-TO-VALUE RATIO" or "LTV": With respect to any Mortgage
Loan as of its date of origination, the ratio on such date borne by the original
Principal Balance of the Mortgage Loan to the Appraised Value of the related
Mortgaged Property.
"LONDON BUSINESS DAY": A day on which banking institutions in
the City of London, England, are not required or authorized to be closed.
"MAJORITY NOTEHOLDERS": The Holder or Holders of Notes
evidencing Percentage Interests in excess of 51% in the aggregate.
"MASTER SERVICER": Accredited Home Lenders, Inc., a California
corporation, or any successor appointed as provided in the Sale and Servicing
Agreement.
"MASTER SERVICER PREPAYMENT CHARGE AMOUNT": The amounts
payable by the Master Servicer in respect of any waived Prepayment Charges
pursuant to Section 3.05 of the Sale and Servicing Agreement.
"MAXIMUM COLLATERAL AMOUNT": With respect to each Loan Group
or both Loan Groups, the sum of the Cut-Off Date Aggregate Principal Balance and
the original Pre-Funded Amount, for the related Loan Group or both Loan Groups,
as required by the context.
"MONTHLY PAYMENT": As to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the payment of principal and interest due
thereon as specified for such Due Date in the related amortization schedule at
the time applicable thereto (after adjustment for any Curtailments and Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than Deficient
Valuations, or similar proceeding or any moratorium or similar waiver or grace
period).
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"MOODY'S": ▇▇▇▇▇'▇ Investors Service, Inc., a corporation
organized and existing under Delaware law, or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized rating agency designated by the Note Insurer.
"MORTGAGE": The mortgage, deed of trust or other instrument
creating a first or second lien on the Mortgaged Property.
"MORTGAGE FILE": As described in EXHIBIT A to the Sale and
Servicing Agreement.
"MORTGAGE INTEREST RATE": As to any Mortgage Loan, the per
annum rate at which interest accrues on the unpaid Principal Balance thereof.
"MORTGAGE LOAN SCHEDULE": The schedule of Initial Mortgage
Loans as of the Initial Cut-Off Date attached as Schedule I to the Indenture,
which will be deemed to be modified automatically to reflect any replacement,
sale, substitution, liquidation, transfer or addition of any Mortgage Loan,
including the addition of a Subsequent Mortgage Loan, pursuant to the terms
thereof. The initial Mortgage Loan Schedule sets forth as to each Initial
Mortgage Loan, and any subsequent Mortgage Loan Schedule provided in connection
with the Subsequent Mortgage Loans will set forth as to each Subsequent Mortgage
Loan: (i) its identifying number and the name of the related Mortgagor; (ii) the
billing address, mailing address and property address for the related Mortgaged
Property including the state and zip code; (iii) its date of origination; (iv)
the original number of months to stated maturity; (v) a designation indicating
whether or not such Mortgage Loan is a Balloon Loan; (vi) the original Principal
Balance; (vii) its Principal Balance as of the applicable Cut-Off Date and its
Cut-Off Date Principal Balance; (viii) the Mortgage Interest Rate and margin;
(ix) the scheduled monthly payment of principal and interest; (x) a Group
designation; (xi) a designation indicating whether or not such Mortgage Loan is
covered by the Primary Mortgage Insurance Policy and the Primary Mortgage
Insurance Premium Percentage for any Mortgage Loan covered by such policy; (xii)
the lien position; (xiii) the CLTV, if applicable and (xiv) the LTV.
"MORTGAGE LOANS": The Initial Mortgage Loans and the
Subsequent Mortgage Loans, together with any Qualified Substitute Mortgage Loans
substituted therefor in accordance with the Basic Documents, as from time to
time are held as a part of the Trust, the Initial Mortgage Loans originally so
held being identified in the initial Mortgage Loan Schedule. When used in
respect of any Payment Date, the term Mortgage Loans shall mean all Mortgage
Loans (including those in respect of which the Indenture Trustee has acquired
the related Mortgaged Property) which have not been repaid in full prior to the
related Due Period, did not become Liquidated Mortgage Loans prior to such
related Due Period or were not repurchased or replaced by the Sponsor prior to
such related Due Period.
"MORTGAGE NOTE": The original, executed note or other evidence
of any indebtedness of a Mortgagor under a Mortgage Loan.
"MORTGAGE PORTFOLIO PERFORMANCE TEST": The Mortgage Portfolio
Performance Test is satisfied for any Payment Date if either (a) each of the
following four statements are true for such Payment Date (i) the Rolling Three
Month Delinquency Rate is less than or equal to
19
13.0%, (ii) the Over-collateralization Loss Test is satisfied, (iii) if the
Twelve Month Loss Amount is not greater than or equal to 1.40% of the
Principal Balance of the Mortgage Loans in both Loan Groups as of the first
day of the twelfth preceding Collection Period and (iv) the PMI Downgrade or
Claims Denial Test is not met on such Payment Date or (b) the Note Insurer,
by notice to the Trust, the Master Servicer and the Indenture Trustee,
expressly waives in writing compliance with the foregoing tests for such
Payment Date.
"MORTGAGED PROPERTY": The underlying property or properties
securing a Mortgage Loan, consisting of a fee simple or leasehold interest in
one or more parcels of land.
"MORTGAGOR": The obligor on a Mortgage Note.
"NET FORECLOSURE PROFITS": As to any Payment Date, the excess,
if any, of (i) the aggregate Foreclosure Profits with respect to such Payment
Date over (ii) Liquidated Loan Losses with respect to such Payment Date.
"NET LIQUIDATION PROCEEDS": As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses and net of any
unreimbursed Periodic Advances and Servicing Advances made by the Master
Servicer with respect to such Liquidated Mortgage Loan. For all purposes of the
Basic Documents, Net Liquidation Proceeds shall be allocated first to accrued
and unpaid interest on the related Mortgage Loan and then to the unpaid
Principal Balance thereof.
"NET MONTHLY EXCESS CASHFLOW": With respect to any Payment
Date and any Group, the excess of (x) the Available Funds for such Group then on
deposit in the related Payment Account over (y) the sum (without duplication) of
(i) the Interest Payment Amount for such Group and such Payment Date and, (ii)
the Base Principal Payment Amount and the allocable portion of the
Over-collateralization Deficit, in each case, for such Group and such Payment
Date.
"NET PREPAYMENT INTEREST SHORTFALLS": For any Payment Date and
any Group of Mortgage Loans, the amount by which the aggregate Prepayment
Interest Shortfalls for such Group during the related Prepayment Period exceeds
available Compensating Interest for such Group.
"NET REO PROCEEDS": As to any REO Mortgage Loan, REO Proceeds
net of any related expenses of the Master Servicer.
"NONRECOVERABLE ADVANCES": With respect to any Mortgage Loan,
(a) any Periodic Advance or Servicing Advance previously made and not reimbursed
pursuant to Section 5.03 of the Sale and Servicing Agreement, or (b) a Periodic
Advance proposed to be made in respect of a Mortgage Loan or REO Property either
of which, in the good faith business judgment of the Master Servicer, as
evidenced by an Officer's Certificate delivered to the Note Insurer and the
Indenture Trustee no later than the Business Day following such determination,
would not ultimately be recoverable pursuant to Section 5.03 of the Sale and
Servicing Agreement.
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"NOTE": Any Class A-1 Note or Class A-2 Note executed by the
Owner Trustee on behalf of the Trust and authenticated by the Indenture Trustee.
"NOTEHOLDER" or "HOLDER": Each Person in whose name a Note is
registered in the Note Register, except that, solely for the purposes of giving
any consent, waiver, request or demand pursuant to the Indenture, any Note
registered in the name of the Master Servicer or the Subservicer or the Sponsor,
or any Affiliate of any of them, shall be deemed not to be outstanding and the
undivided Percentage Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Notes necessary to effect any
such consent, waiver, request or demand has been obtained. For purposes of any
consent, waiver, request or demand of Noteholders pursuant to the Indenture,
upon the Indenture Trustee's request, the Master Servicer and the Sponsor shall
provide to the Indenture Trustee a notice identifying any of their respective
Affiliates or the Affiliates of the Subservicer that is a Noteholder as of the
date(s) specified by the Indenture Trustee in such request. Any Notes on which
payments are made under the Note Insurance Policy shall be deemed to be
Outstanding and held by the Note Insurer to the extent of such payment.
"NOTE INSURANCE PAYMENT ACCOUNT": The Note Insurance Payment
Account established in accordance with Section 8.03(c) of the Indenture and
maintained by the Indenture Trustee.
"NOTE INSURANCE POLICY": The Financial Guaranty Insurance
Policy No. 50913-N, all endorsements thereto dated the Closing Date, issued by
the Note Insurer for the benefit of the Noteholders.
"NOTE INSURER": Financial Security Assurance Inc., a monoline
stock insurance company organized and created under the laws of the State of New
York, and any successors thereto.
"NOTE INSURER DEFAULT": The existence and continuance of any
of the following:
(i) the Note Insurer shall have failed to make a required
payment when due under the Note Insurance Policy;
(ii) the Note Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment for the benefit of its creditors or (iii) had an order for
relief entered against it under the Bankruptcy Code, the New York State
Insurance Law or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization
that is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or any other competent regulatory authority
shall have entered a final and nonappealable order, judgment or decree
(i) appointing a custodian, indenture trustee, agent, or receiver for
the Note Insurer or for all or any material portion of its property or
(ii) authorizing the
21
taking of possession by a custodian, indenture trustee, agent, or
receiver of the Note Insurer or of all or any material portion of its
property.
"NOTE INSURER FEE": As to any Payment Date, the fee payable to
the Note Insurer in respect of the Note Insurance Policy pursuant to the Premium
Letter.
"NOTE PRINCIPAL BALANCE": As to any particular Note and date
of determination, the product of the Percentage Interest evidenced thereby and
the aggregate principal balance of all Notes of the same Class as of such date
of determination. The Certificates do not have a "Note Principal Balance."
"NOTE RATE": The Class A-1 Note Rate or the Class A-2 Note
Rate, as applicable.
"NOTE REGISTER": As defined in Section 2.06 of the Indenture.
"NOTE REGISTRAR": As defined in Section 2.06 of the Indenture.
"NOTES": The Class A-1 Notes and the Class A-2 Notes.
"OFFICER'S CERTIFICATE": A certificate signed by the chairman
of the board, the president or a vice president and the treasurer, the secretary
or one of the assistant treasurers or assistant secretaries of the Sponsor, the
Master Servicer, or the Backup Servicer, or, with respect to the Trust, a
certificate signed by a Responsible Officer of the Owner Trustee, at the
direction of the Certificateholders as required by any Basic Document.
"OPINION OF COUNSEL": A written opinion of counsel, who may,
without limitation, be counsel for the Sponsor, the Master Servicer, the
Indenture Trustee, the Owner Trustee, a Noteholder or a Noteholder's prospective
transferee or the Note Insurer (including except as otherwise provided herein,
in-house counsel) reasonably acceptable to each addressee of such opinion and
experienced in matters relating to the subject of such opinion.
"ORIGINAL CAPITALIZED INTEREST AMOUNT": With respect to the
Class A-1 Notes, $62,531.13, and with respect to the Class A-2 Notes,
$98,528.87.
"ORIGINAL NOTE PRINCIPAL BALANCE": As of the Closing Date and
as to the Class A-1 Notes, $53,047,000, and as to the Class A-2 Notes,
$120,429,000. The Certificates do not have an "Original Note Principal Balance."
"ORIGINAL PRE-FUNDED AMOUNT": With respect to the Class A-1
Notes, $13,234,101.19, and with respect to the Class A-2 Notes, $30,094,340.61.
"OUTSTANDING": As of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
(i) Definitive Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for cancellation;
22
(ii) Notes or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Indenture Trustee in trust for the Holders
of such Notes; PROVIDED, HOWEVER, that if such Notes are to be
redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor, satisfactory
to the Indenture Trustee, has been made;
(iii) Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to this
Indenture unless proof satisfactory to the Indenture Trustee
is presented that any such Notes are held by a bona fide
purchaser (as defined by the Uniform Commercial Code of the
applicable jurisdiction); and
(iv) Notes alleged to have been destroyed, lost or
stolen that have been paid as provided for in Section 2.07 of
the Indenture;
PROVIDED, HOWEVER, that Notes which have been paid with proceeds of the Policy
shall continue to remain Outstanding for purposes of this Indenture until the
Note Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Note Insurer
delivered to the Trustee, and the Note Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the Note Insurer;
PROVIDED, FURTHER, HOWEVER, that in determining whether the Holders of the
requisite percentage of the Note Principal Balance of the Outstanding Notes have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Trust, any other obligor upon the Notes or any
Affiliate of the Trust, the Master Servicer or the Sponsor or such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes that the Indenture Trustee knows to be so owned shall be so disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Trust, any other obligor upon the Notes or any Affiliate of
the Trust, the Master Servicer or the Sponsor or such other obligor; PROVIDED,
FURTHER, HOWEVER, that Notes that have been paid with the proceeds of the Note
Insurance Policy shall be deemed to be Outstanding for the purposes of this
Indenture, such payment to be evidenced by written notice from the Note Insurer
to the Indenture Trustee, and the Note Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the Note Insurer which
have not been reimbursed.
"OVER-COLLATERALIZATION AMOUNT": As of any Payment Date and
any Group, the excess, if any, of (a) the sum (i) the aggregate Stated Principal
Balance of the Mortgage Loans in such Group as of the close of business on the
last day of the related Due Period and (ii) the amount on deposit in the related
Pre-Funding Account as of the close of business on the last day of the
immediately preceding Due Period over (b) the Note Principal Balance of the
related Class as of such Payment Date (after taking into account the payment of
all principal payments for such Group on such Payment Date, except for any
portion thereof related to any Over-collateralization Increase Amount for such
Payment Date); PROVIDED, HOWEVER, that such amount shall not be less than zero.
23
"OVER-COLLATERALIZATION DEFICIENCY AMOUNT": With respect to
any Payment Date and any Group, the difference, if greater than zero, between
(a) the Specified Over-collateralization Amount for such Group applicable to
such Payment Date and (b) the Over-collateralization Amount for such Group
applicable to such Payment Date prior to taking into account the payment of any
related Over-collateralization Increase Amount for such Group on such Payment
Date.
"OVER-COLLATERALIZATION DEFICIT": As of any Payment Date, the
amount, if any, by which (a) the aggregate Note Principal Balance of the Notes,
after taking into account the payment of the Base Principal Payment Amount for
each Group on such date, but before taking into account any principal payment
funded from Net Monthly Excess Cashflow, the Reserve Account or any Insured
Payment exceeds (b) the sum of (i) the aggregate Stated Principal Balance of the
Mortgage Loans determined as of the end of the immediately preceding Prepayment
Period and (ii) the amount, if any, on deposit in the Pre-Funding Accounts as of
the close of business on the last day of the immediately preceding Due Period.
For purposes of determining the amount to be paid on account of the
Over-collateralization Deficit to the Noteholders of each Class of Notes on the
Payment Date, the Over-collateralization Deficit will be allocated to each Class
PRO RATA based on the amount by which the Note Principal Balance of each class
on such payment date, after payment of the Base Principal Payment Amount but
before taking into account any principal payment funded from Net Monthly Excess
Cashflow, the Reserve Account or any Insured Payment, exceeds the aggregate
Stated Principal Balance of the Mortgage Loans in the related group as of the
end of the immediately preceding Payment Date and, together with any amount
remaining on deposit in the related Pre-Funding Account on that date.
"OVER-COLLATERALIZATION INCREASE AMOUNT": With respect to any
Payment Date and any Group, the lesser of:
(i) the Over-collateralization Deficiency Amount for such Group as of
such Payment Date (after taking into account the payment of the Base
Principal Payment Amount for such Group on such Payment Date; and
(ii) 100% of the amount of Net Monthly Excess Cashflow on such Payment
Date.
"OVER-COLLATERALIZATION LOSS TEST": The Over-collateralization
Loss Test for any Payment Date set out below is satisfied if the Cumulative Loss
Percentage for such Payment Date does not exceed the percentage set out for such
Payment Date below:
Payment Date Cumulative Loss Percentage
------------------------ ---------------------------
1st - 12th Payment Date 1.25%
13th - 24th Payment Date 1.50%
25th - 36th Payment Date 2.75%
37th - 48th Payment Date 3.75%
49th - Payment Date and thereafter 4.50%
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"OVER-COLLATERALIZATION REDUCTION AMOUNT": With respect to any
Payment Date and Group, the lesser of (a) the Excess Over-collateralization
Amount for such Group and Payment Date and (b) the Base Principal Payment Amount
for such group and Payment Date.
"OVERFUNDED INTEREST AMOUNT": With respect to each Group and
each Subsequent Transfer Date occurring in March 2000, the excess of (i) the
amount on deposit in the related Capitalized Interest Account, over (ii)
two-months' interest calculated at the related Adjusted Note Rate on the amount
on deposit in the related Pre-Funding Account (net of any Pre-Funding Earnings
for such Pre-Funding Account) immediately following such Subsequent Transfer
Date (disregarding any amount applied from such Pre-Funding Account to a
Subsequent Mortgage Loan that does not have a Due Date on or prior to April 1,
2000.
"OWNER-OCCUPIED MORTGAGED PROPERTY": A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary residence at the origination of the Mortgage Loan, and (b)
the Sponsor has no actual knowledge that such Residential Dwelling is not so
occupied.
"OWNERSHIP INTEREST": As to any Note, any ownership or
security interest in such Note, including any interest in such Note as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"OWNER TRUSTEE": Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity, but solely as owner trustee under
the Trust Agreement, and any successor owner trustee thereunder.
"OWNER TRUSTEE FEE": As defined in Section 9.01 of the Trust
Agreement.
"PAYING AGENT": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Trust pursuant to Section
3.03 of the Indenture to pay the principal of, or interest on, any Notes on
behalf of the Trust, which agent, if not the Indenture Trustee, shall have
signed an instrument agreeing to be bound by the terms of the Indenture
applicable to such Paying Agent.
"PAYMENT ACCOUNT": With respect to each Class of Notes, the
segregated trust account, which shall be an Eligible Account, established and
maintained pursuant to Section 8.01(a) of the Indenture and entitled "Norwest
Bank Minnesota, National Association, as Indenture Trustee for Accredited
Mortgage Loan Trust 2000-1 Asset-Backed Notes, Series 2000-1, Class A-[1][2],
Payment Account," as the case may be, on behalf of the related Noteholders and
the Note Insurer.
"PAYMENT AMOUNT": The Class A-1 Payment Amount or the Class
A-2 Payment Amount, as applicable.
"PAYMENT DATE": The 25th day of any month or if such 25th day
is not a Business Day, the first Business Day immediately following, commencing
on March 27, 2000.
"PERCENTAGE INTEREST": With respect to a Note of any Class,
the portion evidenced by such Note, expressed as a percentage rounded to four
decimal places, equal to a fraction the
25
numerator of which is the denomination represented by original principal
balance of such Note and the denominator of which is the Original Note
Principal Balance of such Class. With respect to the Certificates, the
portion evidenced thereby as stated on the face of such Certificate.
"PERIODIC ADVANCE": The aggregate of the advances required to
be made by the Master Servicer on any Servicer Payment Date pursuant to Section
5.18(a) of the Sale and Servicing Agreement, the amount of any such advances
being equal to the sum of:
(i) with respect to each Mortgage Loan, other than an REO
Mortgage Loan, that was Delinquent as of the close of business on the last day
of the Due Period preceding the related Servicer Payment Date, the aggregate
amount of Monthly Payments (net of the related Servicing Fee and Backup
Servicing Fee) due during the related Due Period, and
(ii) with respect to each REO Property which was acquired
during or prior to the related Collection Period and as to which an REO
Disposition did not occur during the related Collection Period, an amount equal
to the excess, if any, of (i) interest on the Principal Balance of the related
REO Mortgage Loan at the Mortgage Interest Rate for such REO Mortgage Loan net
of the related Servicing Fee and Backup Servicing Fee, for the most recently
ended Due Period over (ii) the Net REO Proceeds transferred to the Payment
Account for such Payment Date;
PROVIDED, HOWEVER, that in each such case such advance has not been determined
by the Master Servicer to be a Nonrecoverable Advance. For purposes of the
preceding sentence, the Monthly Payment on each Balloon Mortgage Loan with a
delinquent Balloon Payment is equal to the assumed monthly payment that would
have been due on the related Due Date based on the original principal
amortization schedule for the such Balloon Mortgage Loan.
"PERMITTED INVESTMENTS": As used herein, Permitted Investments
shall include the following:
(i) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(a) maturing not more than three months from the date of acquisition thereof,
provided that the unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated at least A-1+ by S&P and in one of the two
highest ratings by ▇▇▇▇▇'▇;
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, in the case of bankers' acceptances, shall in no event have
an original maturity of more than 365 days) of any U.S. depository institution
or trust company, incorporated under the laws of the United States or any state;
PROVIDED, that the debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated in one of the two
highest ratings by ▇▇▇▇▇'▇ and S&P.
(iv) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the United
States or any state thereof which on
26
the date of acquisition has been rated in the highest short-term rating by
the Rating Agencies; and
(v) units of money market funds registered under the
Investment Company Act of 1940, investing in any of the foregoing, including any
funds managed or advised by the Indenture Trustee or any affiliate of the
Indenture Trustee; provided, such money market funds are at the time rated in
the highest short-term rating category by the Rating Agencies.
PROVIDED, that no instrument described hereunder shall evidence either the right
to receive (x) only interest with respect to the obligations underlying such
instrument or (y) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
"PERSON": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
national banking association, unincorporated organization or government or any
agency or political subdivision thereof.
"PHYSICAL PROPERTY": As defined in clause (b) of the
definition of "Delivery."
"PLAN": A pension or benefit plan or individual retirement
arrangement that is subject to ERISA or Section 4975 of the Code.
"PMI DOWNGRADE OR CLAIMS DENIAL TEST": The PMI Downgrade or
Claims Denial Test will be met with respect to a Payment Date if any of the
following events occurs:
(i) The Primary Mortgage Insurance Provider is downgraded
below "A" or "A2" by Standard & Poor's or ▇▇▇▇▇'▇, respectively;
(ii) The cumulative amounts of claims denied by the Primary
Mortgage Insurance Provider for any 12-month period preceding such Payment Date
exceeds 0.30% of the Principal Balance of all of the Mortgage Loans at the
beginning of such 12-month period; or
(iii) The cumulative amounts of claims denied by the Primary
Mortgage Insurance Provider exceeds $225,000 in the aggregate.
"PREDECESSOR NOTES": With respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.07 of the Indenture in lieu of
a lost, destroyed or stolen Note shall be deemed to evidence the same debt as
the lost, destroyed or stolen Note.
"PREFERENCE AMOUNT": Any amounts paid in respect of the Notes
which are recovered from any Holder of a Note as a voidable preference by a
trustee in bankruptcy pursuant to the Bankruptcy Code or other similar law in
accordance with a final, nonappealable
27
order of a court having competent jurisdiction and which have not theretofore
been repaid to such Holder.
"PREFERENCE CLAIM": As defined in Section 8.03(f) of the
Indenture.
"PRE-FUNDING ACCOUNT": Each of the Pre-Funding Accounts
established in accordance with Section 8.01(b) of the Indenture and maintained
by the Indenture Trustee.
"PRE-FUNDED AMOUNT": With respect to each Group and any date
of determination, the amount on deposit in the related Pre-Funding Account.
"PRE-FUNDING EARNINGS": With respect to each Group and any
date of determination, the actual investment earnings realized on amounts
deposited in the related Pre-Funding Account.
"PRE-FUNDING PERIOD": With respect to each Pre-Funding
Account, the period commencing on the Closing Date and ending on the earliest to
occur of (i) the date on which the amount on deposit in such Pre-Funding Account
(exclusive of any investment earnings) is less than $100,000, (ii) the date on
which any Event of Default or Servicer Event Default occurs and (iii) the close
of business on March 31, 2000.
"PREMIUM AMOUNT": The product of the Premium Percentage and
the aggregate outstanding Note Principal Balance for the related Class on the
related Payment Date, but prior to any payments on such Payment Date.
"PREMIUM LETTER": The premium letter dated as of February 29,
2000, between the Note Insurer and the Sponsor.
"PREMIUM PERCENTAGE": The rate at which the "Premium" is
determined (including any "premium supplement"), as described in the Premium
Letter.
"PREPAYMENT CHARGE": As to a Mortgage Loan, any charge paid by
a Mortgagor in connection with Principal Prepayment made within the related
Prepayment Charge Period, the Prepayment Charges with respect to each applicable
Mortgage Loan so held by the Trust being identified in a Prepayment Charge
Schedule (other than any Master Servicer Prepayment Charge Payment Amount).
"PREPAYMENT CHARGE PERIOD": As of any Mortgage Loan, the
period of time, if any, during which a Prepayment Charge may be imposed.
"PREPAYMENT CHARGE SCHEDULE": As of any date, the list of
Prepayment Charges on the Mortgage Loans included in the Trust on such date,
attached as Exhibit H to the Sale and Servicing Agreement. The Prepayment Charge
Schedule shall set forth the following information with respect to each
Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the term of the Prepayment Charge;
28
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first Monthly Payment was due on
the related Mortgage Loan;
(v) the term of the related Mortgage Loan; and
(vi) the Cut-Off Date Principal Balance of the related
Mortgage Loan.
"PREPAYMENT INTEREST SHORTFALL": With respect to any Payment
Date, for each Mortgage Loan that was the subject during the related Prepayment
Period of a Principal Prepayment in full, an amount equal to the excess, if any,
of (a) 30 days' interest on the Principal Balance of such Mortgage Loan at a per
annum rate equal to (i) the Mortgage Interest Rate (or at such lower rate as may
be in effect for such Mortgage Loan pursuant to application of the Civil Relief
Act, any Deficient Valuation and/or any Debt Service Reduction) MINUS (ii) the
Servicing Fee Rate and the Backup Servicing Fee Rate, over (b) the amount of
interest actually remitted by the related Mortgagor in connection with such
Principal Prepayment in full, less the Servicing Fee and the Backup Servicing
Fee for such Mortgage Loan in such month.
"PREPAYMENT PERIOD": With respect to any Payment Date, the
period commencing on the 16th day of the month preceding the month in which such
Payment Date occurs (or, in the case of the first Payment Date, the day
following the Cut-Off Date) and ending on the 15th day of the month in which
such Payment Date occurs.
"PRIMARY MORTGAGE INSURANCE POLICY": The Primary Mortgage
Insurance Policy Master Policy Number 04-635-4-2698, all endorsements thereto
dated the Closing Date, issued by the Primary Mortgage Insurance Provider.
"PRIMARY MORTGAGE INSURANCE PREMIUM PERCENTAGE": The rate at
which the "Primary Mortgage Insurance Premium" is determined, as described in
the letter dated February 21, 2000 between the Sponsor and the Primary Mortgage
Insurance Provider.
"PRIMARY MORTGAGE INSURANCE PROVIDER": Mortgage Guarantee
Insurance Corporation, a Wisconsin stock insurance corporation, and any
successors thereto.
"PRIMARY MORTGAGE INSURANCE PROVIDER FEE": As to any Payment
Date, the fee payable to the Primary Mortgage Insurance Provider pursuant to the
terms of the Primary Mortgage Insurance Policy.
"PRINCIPAL BALANCE": As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination.
"PRINCIPAL PREPAYMENT": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date.
"PROCEEDING": Any suit in equity, action at law or other
judicial or administrative proceeding.
29
"PROSPECTUS SUPPLEMENT": The Prospectus Supplement dated
February 24, 2000 relating to the Notes filed with the Commission in connection
with the Registration Statement heretofore filed or to be filed with the
Commission pursuant to Rule 424(b)(5).
"QUALIFIED APPRAISER": An appraiser, duly appointed by the
Sponsor, who had no interest, direct or indirect, in the Mortgaged Property or
in any loan made on the security thereof, and whose compensation is not affected
by the approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
"QUALIFIED SUBSTITUTE MORTGAGE LOAN": A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section 2.06
or 4.02(b) of the Sale and Servicing Agreement, which (a) has or have an
interest rate greater than or equal to those applicable to the Deleted Mortgage
Loan, (b) relates or relate to a detached one- to four-family residence and has
or have the same or a better lien priority as the Deleted Mortgage Loan and has
or have the same occupancy status as the Deleted Mortgage Loan or is or are
Owner-Occupied Mortgaged Property(ies), (c) matures or mature no later than (and
not more than one year earlier than) the Deleted Mortgage Loan, (d) has or have
a Loan-to-Value Ratio or Loan-to-Value Ratios at the time of such substitution
no higher than the Loan-to-Value Ratio of the Deleted Mortgage Loan, (e) has or
have a Combined Loan-to-Value Ratio or Combined Loan-to-Value Ratios at the time
of such substitution no higher than the Combined Loan-to-Value Ratio of the
Deleted Mortgage Loan, (f) has or have a Stated Principal Balance or Stated
Principal Balances, after deduction of the principal portion of the Monthly
Payment due in the month of substitution (or, in the case of a substitution of
more than one mortgage loan for a Deleted Mortgage Loan, an aggregate principal
balance) not more than the Stated Principal Balance of the Deleted Mortgage Loan
as of such date, (g) complies or comply as of the date of substitution with each
representation and warranty set forth in Section 4.01 of the Sale and Servicing
Agreement, and (h) is otherwise acceptable to the Note Insurer.
"RATING AGENCY": S&P or ▇▇▇▇▇'▇.
"RATING AGENCY CONDITION": Means, with respect to any action
to which a Rating Agency Condition applies, that each Rating Agency shall have
been given ten (10) days (or such shorter period as is acceptable to each Rating
Agency) prior notice thereof and that each of the Rating Agencies shall have
notified the Indenture Trustee, the Master Servicer, the Backup Servicer, the
Sponsor, the Note Insurer and the Trust in writing that such action will not
result in a reduction, qualification or withdrawal of the then current "implied"
rating of the Notes that it maintains without taking into account the Note
Insurance Policy.
"RECORD DATE": With respect to the Class A-1 Notes, the last
Business Day of the month immediately preceding a month in which a Payment Date
occurs; with respect to the Class A-2 Notes, the Business Day immediately
preceding the related Payment Date.
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"REDEMPTION DATE": The Payment Date, if any, on which the
Class A-1 Notes, the Class A-2 Notes or all of the Notes are redeemed, in each
case, pursuant to Article X of the Indenture, which date may occur on or after
the related Clean-Up Call Date.
"REFERENCE BANKS": Citibank, ▇▇▇▇▇▇▇'▇ Bank PLC, The Bank of
Tokyo-Mitsubishi and National Westminster Bank PLC; PROVIDED, that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Indenture Trustee (after consultation with the Master
Servicer) which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
the Master Servicer or the Indenture Trustee or any affiliate thereof and (iii)
whose quotations appear on the Telerate Page 3750 on the relevant Interest
Determination Date.
"REIMBURSEMENT AMOUNT": With respect to any Payment Date and
any Group the amount of all Insured Payments made by the Note Insurer on all
prior Payment Dates, together with all other amounts due to the Note Insurer for
such Group pursuant to the Insurance Agreement, including the Premium Amount,
which have not been previously paid. The Note Insurer shall notify the Indenture
Trustee and the Master Servicer of the amount of any Reimbursement Amount. For
purposes of allocating the Reimbursement Amount among the respective Classes of
Notes, any Reimbursement Amount that is not clearly attributable to one or more
particular Class(es) of Notes shall be allocated between each Class of Notes,
pro rata, in accordance with the aggregate Note Principal Balances of each such
Class of Notes.
"REMAINING OVER-COLLATERALIZATION DEFICIT": With respect to
any Payment Date, the excess, if any, of (a) the aggregate Note Principal
Balances of both Classes of Notes, after payment of the Base Principal Payment
Amount for both Groups and after taking into account any principal payment
funded from Net Monthly Excess Cashflow or from the Reserve Account, but before
taking into account the principal portion of any Insured Payment, over (b) the
aggregate Stated Principal Balance of the Mortgage Loans as of the close of
business on the last day of the prior Prepayment Period, together with any
amount remaining on deposit in the Pre-Funding Accounts on that date. For
purposes of determining the amount to be paid on account of the Remaining
Over-collateralization Deficit to the Noteholders of each Class of Notes on the
Payment Date, the Remaining Over-collateralization Deficit will be allocated to
each class PRO RATA based on the amount by which the Note Principal Balance of
each Class on such Payment Date, after payment of the Base Principal Payment
Amount but after taking into account any principal payment funded from Net
Monthly Excess Cashflow or the Reserve Account, but before taking into account
the principal portion of any Insured Payment, exceeds the aggregate Stated
Principal Balances of the Mortgage Loans in the related Group as of the end of
the immediately preceding Payment Date, together with any amount remaining on
deposit in the related Pre-Funding account on that date.
"REO DISPOSITION": The final sale by the Master Servicer of a
REO Property acquired by the Master Servicer in foreclosure or by deed in lieu
of foreclosure.
"REO MORTGAGE LOAN": Any Mortgage Loan which is not a
Liquidated Mortgage Loan and as to which the indebtedness evidenced by the
related Mortgage Note is discharged and the related Mortgaged Property is held
as part of the Trust.
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"REO PROCEEDS": Proceeds received in respect of any REO
Mortgage Loan (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
"REO PROPERTY": A Mortgaged Property acquired by the Master
Servicer in the name of the Indenture Trustee on behalf of the Noteholders
through foreclosure or deed-in-lieu of foreclosure.
"REQUEST FOR RELEASE": A request for release in substantially
the form attached as EXHIBIT F of the Sale and Servicing Agreement.
"RESERVE ACCOUNT": The segregated trust account, which shall
be an Eligible Account, established and maintained pursuant to Section 8.01(d)
of the Indenture and entitled "Norwest Bank Minnesota, National Association, as
Indenture Trustee for Accredited Mortgage Loan Trust 2000-1, Asset-Backed Notes,
Series ▇▇▇▇-▇, ▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ Reserve Account," on behalf of the
Noteholders and the Note Insurer.
"RESERVE ACCOUNT RELEASE AMOUNT": With respect to any Payment
Date, the lesser of (a) the amount on deposit in the Reserve Account and (b) and
the amount by which the Credit Enhancement Amount exceeds the Specified Credit
Enhancement Amount.
"RESERVE PAYMENT AMOUNT": With respect to any Payment Date and
any Class of Notes, the amount necessary for the funds on deposit in the Reserve
Account to equal the Specified Reserve Amount.
"RESIDENTIAL DWELLING": A one- to four-family dwelling, a unit
in a planned unit development, a unit in a condominium development or a
townhouse.
"RESPONSIBLE OFFICER": When used with respect to the Indenture
Trustee or the Owner Trustee, any officer assigned to the Corporate Trust
division (or any successor thereto), including any Vice President, Second or
Assistant Vice President, Senior Trust Officer, Trust Officer, Assistant Trust
Officer, any Assistant Secretary, any trust officer or any other officer of the
Indenture Trustee or the Owner Trustee customarily performing functions similar
to those performed by any of the above designated officers and to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. When used
with respect to the Sponsor or the Master Servicer, the chief executive officer,
the president or any vice president, assistant vice president, or any secretary
or assistant secretary.
"ROLLING THREE MONTH DELINQUENCY RATE": For any Payment Date,
the fraction, expressed as a percentage, equal to the average of the Delinquency
Ratio for each of the three (1 or 2 in the case of the first two (2) Payment
Dates, as the case may be) immediately preceding Collection Periods.
"SALE": The meaning specified in Section 5.17 of the
Indenture.
"SALE AND SERVICING AGREEMENT": The Sale and Servicing
Agreement, dated as of February 1, 2000, among the Trust, the Master Servicer,
the Backup Servicer, the Sponsor and
32
the Indenture Trustee, providing for, among other things, the sale of the
Mortgage Loans from the Sponsor to the Trust and the servicing of the
Mortgage Loans.
"SECURITIES ACT": Means the Securities Act of 1933, as
amended.
"SERVICER EVENT OF DEFAULT": As defined in Section 7.01 of the
Sale and Servicing Agreement.
"SERVICER PAYMENT DATE": With respect to any Payment Date, the
third Business Day preceding the Payment Date.
"SERVICER REMITTANCE AMOUNT": With respect to any Servicer
Payment Date, an amount equal to the sum of (i) all Monthly Payments on the
Mortgage Loans collected by the Master Servicer during the related Due Period,
(ii) all Curtailments and other amounts collected on account of principal
(including Net REO Proceeds, Net Liquidation Proceeds and Insurance Proceeds, if
any) by the Master Servicer during the related Collection Period, (iii) all
Principal Prepayments in full (including Prepayment Charges) collected by the
Master Servicer during the related Prepayment Period, (iv) all Periodic Advances
made by the Master Servicer with respect to Monthly Payments due to be received
on the Mortgage Loans during the related Due Period and (v) any other amounts
required to be placed in the Collection Account by the Master Servicer pursuant
to the Sale and Servicing Agreement but excluding the following:
(a) amounts received on a Mortgage Loan, other than timely
Monthly Payments, and including late payments, Liquidation Proceeds and
Insurance Proceeds, to the extent the Master Servicer has previously
made an unreimbursed Periodic Advance or an unreimbursed Servicing
Advance with regard to such Mortgage Loan, to the extent of such
unreimbursed Periodic Advance;
(b) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee and the Backup
Servicing Fee;
(c) that portion of Liquidation Proceeds and REO Proceeds to
the extent of any unpaid Servicing Fee and Backup Servicing Fee;
(d) all income from Permitted Investments that is held in the
Collection Account for the account of the Master Servicer;
(e) all amounts actually recovered by the Master Servicer in
respect of late fees, assumption fees and similar fees;
(f) certain other amounts which are reimbursable to the Master
Servicer, as provided in this Sale and Servicing Agreement;
(g) all amounts previously advanced by the Master Servicer as
Periodic Advances or Servicing Advances that are determined in good
faith by the Master Servicer to be unrecoverable from the proceeds of
the particular Mortgage Loan to which they relate; and
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(h) Net Foreclosure Profits.
"SERVICER REMITTANCE REPORT": The monthly report prepared by
the Master Servicer and delivered to the parties specified in Section 5.16(a) of
the Sale and Servicing Agreement.
"SERVICER REPORTING DATE": As defined in Section 5.16(a) of
the Sale and Servicing Agreement.
"SERVICING ADVANCES": All reasonable and customary
"out-of-pocket" costs and expenses incurred in the performance by the Master
Servicer of its servicing obligations, including, but not limited to, the cost
of (a) the preservation, restoration and protection of the Mortgaged Property,
including without limitation real estate taxes and insurance premiums, (b) any
enforcement, collection and judicial proceedings, including foreclosures and
liquidations, (c) the management and liquidation of the REO Property, including
reasonable fees paid to any independent contractor in connection therewith, and
(d) compliance with the obligations under Sections 5.04 and 5.06 of the Sale and
Servicing Agreement, all of which reasonable and customary out-of-pocket costs
and expenses are reimbursable to the Master Servicer to the extent provided in
Sections 5.03 and 5.06 of the Sale and Servicing Agreement.
"SERVICING COMPENSATION": The Servicing Fee and other amounts
to which the Master Servicer is entitled pursuant to Section 5.08 of the Sale
and Servicing Agreement.
"SERVICING FEE": As defined in Section 5.08 of the Sale and
Servicing Agreement.
"SERVICING FEE RATE": 0.47% per annum.
"SERVICING OFFICER": Any officer of the Master Servicer or a
Subservicer involved in, or responsible for, the administration and servicing of
the Mortgage Loans whose name and specimen signature appear on a list of
servicing officers furnished to the Indenture Trustee and the Note Insurer by
the Master Servicer or a Subservicer, as applicable, as such list may from time
to time be amended.
"SHORTFALL AMOUNT": With respect to any Payment Date and any
Class of Notes, an amount, not less than zero, equal to the excess, if any, of
(A) the sum of (i) the Interest Payment Amount and the Base Principal Payment
Amount, in each case, for such Group and such Payment Date and (ii) the amount
of any Over-collateralization Deficit allocable to such Class and such Payment
Date over (B) the Available Funds (without taking into account the portion
thereof referred to in clause (C) of the definition "Available Funds") for such
Class and such Payment Date.
"SPECIFIED CREDIT ENHANCEMENT AMOUNT": With respect to any
Payment Date, the sum of the Specified Over-collateralization Amounts for both
Groups.
"SPECIFIED OVER-COLLATERALIZATION AMOUNT": With respect to
each Group and any Payment Date, an amount equal to 4.00% of the Maximum
Collateral Amount for such Group, subject, however, to the following: (i) if the
Mortgage Portfolio Performance Test is not
34
satisfied on such Payment Date, the Specified Over-collateralization Amount
with respect to each Group for such Payment Date will be the sum of (A) the
lesser of (x) 10.00% of the Maximum Collateral Amount for such Group or (y)
20.00% of the Aggregate Principal Balance of the Mortgage Loans in the
related Loan Group as of the end of the related Prepayment Period plus any
amount on deposit in the related Pre-Funding Account as of the end of the
related Collection Period and (B) 50% of the Aggregate Principal Balance of
the Mortgage Loans in the related Loan Group that are (1) 90 days or more
Delinquent as of the close of business of the last day of the related
Collection Period and (2) REO Properties and Mortgage Loans subject to
foreclosure proceeding in respect of the related Loan Group; (ii) if the
Spread Squeeze Condition is met or has occurred on any of the prior six
Payment Dates, the Specified Over-collateralization Amount with respect to
Group 2 for such Payment Date will be an amount equal to the sum of (A) the
related Specified Over-collateralization Amount for such Payment Date
determined as though the related Spread Squeeze Condition were not met plus
(B) the Spread Squeeze Over-collateralization Increase Amount; or (iii) if
the Step Down Requirement is satisfied on such Payment Date, the Specified
Overcollateral Amount with respect to each Group for such Payment Date will
be an amount equal to the greater of (A) the greater of (1) 0.50% of the
Maximum Collateral Amount for such Group, and (2) the Aggregate Principal
Balance, as of the end of the related Prepayment Period, of the three largest
outstanding Mortgage Loans in the related Loan Group and (B) the lesser of
(x) 4.00 of the Maximum Collateral Amount for such Group and (y) the Stepped
Down Required Overcollateralized Percentage of the Aggregate Principal
Balance of the Mortgage Loans in respect of the related Loan Group as of the
end of the related Prepayment Period.
"SPECIFIED RESERVE AMOUNT": Means, with respect to any Payment
Date, the excess, if any, of (x) the sum of Specified Over-collateralization
Amounts for both Groups on such Payment Date, over (y) the sum of
Over-collateralization Amounts for both Groups and such Payment Date.
"SPONSOR": Accredited Home Lenders, Inc., a California
corporation.
"SPREAD SQUEEZE CONDITION": The Spread Squeeze Condition will
be applied with respect to Payment Dates on or after March 2001, and will be met
with respect to a Payment Date if the Spread Squeeze Percentage for such Payment
Date is less than 2.00% (in the case of any Payment Date on or after March 2001
and on or before February 2002), 2.50% (in the case of any Payment Date on or
after March 2002 and on or before February 2003) or 3.00% (in the case of any
Payment Date on or after March 2003).
"SPREAD SQUEEZE OVER-COLLATERALIZATION INCREASE AMOUNT": For
any Payment Date, an amount determined as follows:
(a) if the Spread Squeeze Condition is met for such Payment
Date, the Spread Squeeze Over-collateralization Increase Amount for
such Payment Date shall be equal to the product obtained by multiplying
(i) three, (ii) the excess, if any, of the percentage applicable to
such Payment Date set forth in the definition of "Spread Squeeze
Condition" over the Spread Squeeze Percentage for such Payment Date and
(iii) the Maximum Collateral Amount for Group 2; or
35
(b) if the Spread Squeeze Condition is not met on a Payment
Date but has occurred on any of the prior five Payment Dates, the
Spread Squeeze Over-collateralization Increase Amount for the most
recent Payment Date shall be equal to (A) the Spread Squeeze
Over-collateralization Increase Amount for the most recent Payment Date
for which the Spread Squeeze Condition was met minus (B) the product
obtained by multiplying (i) one-sixth of the amount determined under
clause (A) above and (ii) the number of consecutive Payment Dates
through and including the current Payment Date for which Spread Squeeze
Condition was not met.
"SPREAD SQUEEZE PERCENTAGE": With respect to any Payment Date,
the percentage equivalent of a fraction, the numerator of which is the product
of 12 and the Net Monthly Excess Cashflow for Loan Group 2 for such Payment
Date, and the denominator of which is the Aggregate Principal Balance of the
Mortgage Loans in Loan Group 2 as of the end of the related Prepayment Period.
"STANDARD & POOR'S" or "S&P": Standard & Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or any successor thereto
and if such corporation no longer for any reason performs the services of a
securities rating agency, "S&P" shall be deemed to refer to any other nationally
recognized statistical rating organization designated by the Note Insurer.
"STARTUP DAY": The day designated as such pursuant to Section
2.07(a) of the Trust Agreement.
STATED PRINCIPAL BALANCE: As to any Mortgage Loan and Payment
Date, the unpaid principal balance of such Mortgage Loan as of such Due Date as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such amortization schedule by reason of any moratorium or similar
waiver or grace period) after giving effect to (i) any previous Principal
Prepayments in full received during the related Prepayment Period, (ii) any
pervious Curtailments and Liquidation Proceeds allocable to principal received
during the prior Collection Period (other than with respect to any Liquidated
Mortgage Loan) and (iii) the payment of principal due on the related Due Date
and irrespective of any delinquency in payment by the related Mortgagor.
"STEP DOWN DATE": The Payment Date occurring in September
2002.
"STEP DOWN REQUIREMENT": The Stepdown Requirement is satisfied
for any Payment Date on or after the Step Down Date if as of such date of
determination either (i) (x) the Rolling Three Month Delinquency Rate is less
than 11.5%, (y) the Cumulative Loss Test is satisfied and (z) the Twelve Month
Loss Amount is not greater than or equal to 1.00% of the Aggregate Principal
Balance of the Mortgage Loans as of the first day of the twelfth preceding
Collection Period or (ii) the Note Insurer, by notice to each of the parties
specified in Section 10.06 of the Sale and Servicing Agreement, expressly waives
in writing compliance with the foregoing tests for such Payment Date. In no
event may the Step Down Requirement be satisfied prior to the Step Down Date.
36
"STEPPED DOWN REQUIRED OVER-COLLATERALIZED PERCENTAGE": For
any Payment Date for which the Step Down Requirement is satisfied, a percentage
equal to (i) the percentage equivalent of a fraction, the numerator of which is
4.00% of the Maximum Collateral Amount for the applicable Loan Group and the
denominator of which is the Aggregate Principal Balance of the related Mortgage
Loans as of the end of the related Prepayment Period, minus (ii) the percentage
equivalent of a fraction, the numerator of which is the product of (A) the
respective percentage calculated under clause (i) above minus 8.00%, multiplied
by (B) the number of consecutive Payment Dates through and including the Payment
Date for which the Stepped Down Required Overcollateralized Percentage is being
calculated, up to a maximum of six, for which the Step Down Requirement has been
satisfied, and the denominator of which is six.
"SUBSEQUENT CUT-OFF DATE": With respect to any Subsequent
Mortgage Loans, the close of business on the last day of the calendar month
preceding the month in which the Subsequent Transfer Date for such Subsequent
Mortgage Loans occurred or, with respect to any Subsequent Mortgage Loans that
were originated or acquired after such date, the Subsequent Cut-Off Date shall
be the date of origination or acquisition of such Subsequent Mortgage Loans.
"SUBSEQUENT CUT-OFF DATE PRINCIPAL BALANCE": Means as to any
Subsequent Mortgage Loan, the unpaid principal balance of such Subsequent
Mortgage Loan as of the related Subsequent Cut-Off Date as specified in the
amortization schedule at the time relating thereto (before any adjustment to
such amortization schedule by reason of any moratorium or similar waiver or
grace period) after application of all payments due on or before the Subsequent
Cut-Off Date and after giving effect to any previous Curtailments and
Liquidation Proceeds allocable to principal (other than with respect to any
Liquidated Mortgage Loan), irrespective of any delinquency in payment by the
related Mortgagor.
"SUBSEQUENT MORTGAGE LOANS": The Mortgage Loans hereafter
purchased by the Trust and pledged to the Indenture Trustee with funds on
deposit in any Pre-Funding Account pursuant to Section 2.14 of the Indenture.
"SUBSEQUENT PLEDGE AGREEMENT": Any Subsequent Pledge
Agreement, between the Trust and the Indenture Trustee, in the form of EXHIBIT B
to the Indenture, relating to the pledge to the Indenture Trustee, on behalf of
the Noteholders and the Note Insurer, of Subsequent Mortgage Loans.
"SUBSEQUENT TRANSFER": The purchase by the Trust and pledge to
the Indenture Trustee of the Subsequent Mortgage Loans.
"SUBSEQUENT TRANSFER AGREEMENT": Any Subsequent Transfer
Agreement, between the Sponsor and the Trust, in the form of EXHIBIT G to the
Sale and Servicing Agreement, relating to the transfer to the Trust of
Subsequent Mortgage Loans.
"SUBSEQUENT TRANSFER DATE": The date on which Subsequent
Mortgage Loans are purchased by the Trust with funds in any Pre-Funding Account,
such date occurring before the end of the related Pre-Funding Period.
37
"SUBSERVICER": Any Subservicer which is subservicing any of
the Mortgage Loans pursuant to a Subservicing Agreement as provided in Section
5.13 of the Sale and Servicing Agreement.
"SUBSERVICING AGREEMENT": An agreement between the Master
Servicer and a Subservicer relating to subservicing and/or administration of
some or all Mortgage Loans as provided in Section 5.13 of the Sale and Servicing
Agreement, a copy of which shall be delivered, along with any modifications
thereto, to the Indenture Trustee and the Note Insurer.
"SUBSTITUTION ADJUSTMENT": As to any date on which a
substitution occurs pursuant to Sections 2.06 or 4.02(b) of the Sale and
Servicing Agreement, the amount (if any) by which the aggregate principal
balances (after application of principal payments received on or before the date
of substitution) of any Qualified Substitute Mortgage Loans as of the date of
substitution, are less than the aggregate Stated Principal Balance of the
related Deleted Mortgage Loans (after application of the scheduled principal
portion of the Monthly Payments due in the month of substitution) together with
30-days' interest thereon at the Mortgage Interest Rate.
"SUB-TRUST": Shall have the meaning specified in Section 3.1
of the Trust Agreement and include either Sub-Trust 1 or Sub-Trust 2, each of
which constitute a separate interest in the Trust Estate pursuant to Section
3806(b)(2) of the Business Trust Statute.
"SUB-TRUST 1": The portion of the Trust Estate assigned to
Loan Group 1.
"SUB-TRUST 2": The portion of the Trust Estate assigned to
Loan Group 2.
"TELERATE PAGE 3750": The display designated as Telerate Page
3750 on the Telerate Service (or such other page as may replace the Telerate
page on that service for the purpose of displaying London interbank offered
rates of major banks).
"TERMINATION PRICE": The sum of (i) 100% of the Note Principal
Balance of the related Class of Notes, (ii) the aggregate amount of accrued and
unpaid interest on the related Class of Notes through the related Due Period,
and (iii) any unpaid amount due the Note Insurer, as applicable.
"TRUST": Accredited Mortgage Loan Trust 2000-1, a Delaware
statutory business trust.
"TRUST AGREEMENT": The Trust Agreement, dated as of February
1, 2000, between the Sponsor and the Owner Trustee, relating to the
establishment of the Trust.
"TRUST CERTIFICATE": A certificate evidencing the beneficial
interest of a Trust Certificateholder in the Trust consisting of the Mortgage
Loans in Loan Group 1 and the Mortgage Loans in Loan Group 2, substantially in
the form of EXHIBIT A to the Trust Agreement.
"TRUST CERTIFICATEHOLDER," "CERTIFICATEHOLDER" or "HOLDER": A
Person in whose name a Trust Certificate is registered.
38
"TRUST ESTATE": All money, instruments and other property
subject or intended to be subject to the lien of the Indenture (including
without limitation, the Primary Mortgage Insurance Policy), for the benefit of
the Noteholders and the Note Insurer, as of any particular time, including,
without limitation, all property and interests, including all proceeds thereof,
Granted to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, pursuant to the Granting Clauses of the Indenture. The Trust
Estate shall consist of two separate Sub-Trusts comprised of Sub-Trust 1 and
Sub-Trust 2.
"TRUST INDENTURE ACT" or "TIA": The Trust Indenture Act of
1939, as it may be amended from time to time.
"TRUST ORDER" and "TRUST REQUEST": A written order or request
of the Trust signed on behalf of the Trust by an Authorized Officer of the Owner
Trustee, at the direction of the Certificateholders and delivered to the
Indenture Trustee or the Authenticating Agent, as applicable.
"TWELVE MONTH LOSS AMOUNT": With respect to any Payment Date,
an amount equal to the aggregate of all Liquidated Loan Losses on the Mortgage
Loans which became Liquidated Mortgage Loans during the twelve (12) preceding
Collection Periods.
"UNDERWRITER": ▇▇▇▇▇▇ Brothers Inc.
"UNDERWRITING GUIDELINES": The underwriting guidelines of the
Sponsor as approved by the Note Insurer.
"UNITED STATES PERSON": A citizen or resident of the United
States, a corporation, partnership or treated as a corporation or partnership
organized in or under the laws of, the United States or any state thereof
including the District of Columbia, or an estate or trust whose income from
sources without the United States is includible in gross income for United
States federal income tax purposes regardless of its connection with the conduct
of a trade or business within the United States or a trust if a court within the
United States can exercise primary jurisdiction over its administration and at
least one United States Person has the authority to control all substantial
decisions of the trust. Notwithstanding the last clause of the preceding
sentence, to the extent provided in Treasury Regulations, certain trusts in
existence on August 20, 1996 and treated as United States Persons prior to such
date, may elect to continue to be United States Persons.
"WEIGHTED AVERAGE MORTGAGE INTEREST RATE": With respect to any
Due Period, the weighted average Mortgage Interest Rates (weighted by Principal
Balances) of the Mortgage Loans in Loan Group 2, calculated at the opening of
business on the first day of such Due Period.
39