EXHIBIT 4.2
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INDENTURE
between
[ ] HOME LOAN OWNER TRUST 199 - ,
as Issuer
and
[INDENTURE TRUSTEE],
as Indenture Trustee
Dated as of [ ], 199
[ ] HOME LOAN OWNER TRUST 199 -
Asset Backed Notes,
Series 199 -
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions....................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act.............10
Section 1.03. Rules of Construction.........................................11
ARTICLE II
THE NOTES
Section 2.01. Form..........................................................11
Section 2.02. Execution, Authentication, Delivery and Dating................12
Section 2.03. Registration; Registration of Transfer and Exchange...........13
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes....................14
Section 2.05. Persons Deemed Note Owners....................................15
Section 2.06. Payment of Principal and/or Interest; Defaulted Interest......15
Section 2.07. Cancellation..................................................16
Section 2.08. Conditions Precedent to the Authentication of the Notes.......16
Section 2.09. Release of Collateral.........................................18
Section 2.10. Book-Entry Notes..............................................19
Section 2.11. Notices to Clearing Agency....................................20
Section 2.12. Definitive Notes..............................................20
Section 2.13. Tax Treatment.................................................22
Section 2.14. Limitations on Transfer of the Class B-2 and Class X-1 Notes..22
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and/or Interest..........................22
Section 3.02. Maintenance of Office or Agency...............................23
Section 3.03. Money for Payments to Be Held in Trust........................23
Section 3.04. Existence.....................................................25
Section 3.05. Protection of Collateral......................................25
Section 3.06. Annual Opinions as to Collateral..............................26
Section 3.07. Performance of Obligations; Servicing of Home Loans...........26
Section 3.08. Negative Covenants............................................28
Section 3.09. Annual Statement as to Compliance.............................29
Section 3.10. Covenants of the Issuer.......................................30
Section 3.11. Servicer's Obligations........................................30
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Section 3.12. Restricted Payments...........................................30
Section 3.13. Treatment of Notes as Debt for Tax Purposes...................30
Section 3.14. Notice of Events of Default...................................30
Section 3.15. Further Instruments and Acts..................................30
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.......................31
Section 4.02. Application of Trust Money....................................32
Section 4.03. Repayment of Moneys Held by Paying Agent......................32
ARTICLE V
REMEDIES
Section 5.01. Events of Default.............................................32
Section 5.02. Acceleration of Maturity; Rescission and Annulment............34
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.............................................35
Section 5.04. Remedies; Priorities..........................................37
Section 5.05. Optional Preservation of the Collateral.......................38
Section 5.06. Limitation of Suits...........................................38
Section 5.07. Unconditional Rights of Noteholders to Receive Principal
and/or Interest...............................................39
Section 5.08. Restoration of Rights and Remedies............................39
Section 5.09. Rights and Remedies Cumulative................................40
Section 5.10. Delay or Omission Not a Waiver................................40
Section 5.11. Control by Noteholders........................................40
Section 5.12. Waiver of Past Defaults.......................................41
Section 5.13. Undertaking for Costs.........................................41
Section 5.14. Waiver of Stay or Extension Laws..............................41
Section 5.15. Action on Notes...............................................41
Section 5.16. Performance and Enforcement of Certain Obligations............42
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee...................................42
Section 6.02. Rights of Indenture Trustee...................................44
Section 6.03. Individual Rights of Indenture Trustee........................44
Section 6.04. Indenture Trustee's Disclaimer................................45
Section 6.05. Notices of Default............................................45
Section 6.06. Reports by Indenture Trustee to Holders.......................45
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Section 6.07. Compensation and Indemnity....................................45
Section 6.08. Replacement of Indenture Trustee..............................46
Section 6.09. Successor Indenture Trustee by Merger.........................46
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.......................................................47
Section 6.11. Eligibility; Disqualification.................................48
Section 6.12. Preferential Collection of Claims Against Issuer..............48
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders...................................................48
Section 7.02. Preservation of Information; Communications to Noteholders....49
Section 7.03. Reports by Issuer.............................................49
Section 7.04. Reports by Indenture Trustee..................................50
Section 7.05. 144A Information..............................................50
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money...........................................50
Section 8.02. Trust Accounts; Distributions.................................50
Section 8.03. General Provisions Regarding Accounts.........................51
Section 8.04. Servicer's Monthly Statements.................................52
Section 8.05. Release of Collateral.........................................52
Section 8.06. Opinion of Counsel............................................53
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders........53
Section 9.02. Supplemental Indentures with Consent of Noteholders...........54
Section 9.03. Execution of Supplemental Indentures..........................56
Section 9.04. Effect of Supplemental Indentures.............................56
Section 9.05. Conformity with Trust Indenture Act...........................56
Section 9.06. Reference in Notes to Supplemental Indentures.................56
Section 9.07. Amendments to Trust Agreement.................................56
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption....................................................57
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Section 10.02. Form of Redemption Notice.....................................57
Section 10.03. Notes Payable on Redemption Date; Provision for Payment of
Indenture Trustee.............................................58
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.....................58
Section 11.02. Form of Documents Delivered to Indenture Trustee..............59
Section 11.03. Acts of Noteholders...........................................60
Section 11.04. Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies......................................................61
Section 11.05. Notices to Noteholders; Waiver................................61
Section 11.06. Conflict with Trust Indenture Act.............................62
Section 11.07. Effect of Headings and Table of Contents......................62
Section 11.08. Successors and Assigns........................................62
Section 11.09. Separability..................................................62
Section 11.10. Benefits of Indenture.........................................62
Section 11.11. Legal Holidays................................................62
Section 11.12. Governing Law.................................................63
Section 11.13. Counterparts..................................................63
Section 11.14. Recording of Indenture........................................63
Section 11.15. Trust Obligation..............................................63
Section 11.16. No Petition...................................................63
Section 11.17. Inspection....................................................64
EXHIBITS
EXHIBIT A - Forms of Notes
EXHIBIT B-1 - Form of Transferor Affidavit (144A)
EXHIBIT B-2 - Form of Transferee Affidavit (Accredited Investor)
EXHIBIT B-3 - Form of Transfer Affidavit
EXHIBIT C - Form of Securities Legend
This Indenture entered into effective , 1997, between
[ ] HOME LOAN OWNER TRUST 199 - , a Delaware business
trust, as Issuer (the "Issuer"), and [INDENTURE TRUSTEE], as Indenture Trustee
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(the "Indenture Trustee"),
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W I T N E S S E T H T H A T:
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In consideration of the mutual covenants herein contained, the Issuer
and the Indenture Trustee hereby agree as follows for the benefit of each of
them and for the equal and ratable benefit of the holders of the Issuer's Class
A-1 Floating Rate Asset Backed Notes (the "Class A-1 Notes"), Class A-2 %
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Asset Backed Notes (the "Class A-2 Notes"), Class A-3 % Asset Backed Notes
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(the "Class A-3 Notes"), Class A-4 % Asset Backed Notes (the "Class A-4
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Notes"), Class A-5 % Asset Backed Notes (the "Class A-5 Notes"), Class X-1A
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% Asset Backed Notes (the "Class X-1A Notes"), Class X-1B % Asset Backed
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Notes (the "Class X-1B Notes"), Class X-1C % Asset Backed Notes (the "Class
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X-1C Notes"), Class M-1 % Asset Backed Notes (the "Class M-1 Notes"), Class
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M-2 % Asset Backed Notes (the "Class M-2 Notes"), Class B-1 % Asset
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Backed Notes (the "Class B-1 Notes") and Class B-2 % Asset Backed Notes (the
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"Class B-2 Notes" and, together with the Class A Notes, Class X-1A Notes, Class
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X-1B Notes, Class X-1C Notes, Class M-1 Notes, Class M-2 Notes and Class B-1
Notes, the "Notes"):
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GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants on
the Closing Date, to the Indenture Trustee, as Indenture Trustee for the benefit
of the Holders of the Notes, all of the Issuer's right, title and interest in
and to: (i) the Trust Estate (as defined in the Sale and Servicing Agreement);
(ii) all right, title and interest of the Issuer in and to the Sale and
Servicing Agreement (including the Issuer's right to cause the Transferor to
repurchase Loans from the Issuer under certain circumstances described therein);
(iii) all present and future claims, demands, causes of action and choses in
action in respect of any or all of the foregoing and all payments on or under
and all proceeds of every kind and nature whatsoever in respect of any or all of
the foregoing, 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; (iv) all funds on deposit from time to time in
the Trust Accounts (including the Certificate Distribution Account); and (v) all
other property of the Trust from time to time (collectively, the "Collateral").
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The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders
of the Notes, acknowledges such Grant, accepts the trusts hereunder 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 Notes may adequately and
effectively be protected. The Indenture Trustee agrees and acknowledges that
the Indenture Trustee's Loan Files will be held by the Custodian for the benefit
of the Indenture Trustee in [ ]. The Indenture Trustee further
agrees and acknowledges that each other item of Collateral that is physically
delivered to the Indenture Trustee will be held by the Indenture Trustee in [
].
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) Except as otherwise specified
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herein or as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.03(a) hereof.
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"Administration Agreement" means the Administration Agreement dated as
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of , 199 , among the Administrator, the Issuer and the Company.
"Administrator" means [Indenture Trustee], a [ ], or any
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successor Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other
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Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any 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.
"Authorized Officer" means, with respect to the Issuer, any officer of
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the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter) and, so
long as the Administration Agreement is in effect, any Vice President or more
senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified on
the list of Authorized Officers delivered by the Administrator to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
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"Basic Documents" means the Certificate of Trust, the Deposit Trust
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Agreement, this Indenture, the Sale and Servicing Agreement, the Administration
Agreement, the Custodial Agreement, the Note Depository Agreement and other
documents and certificates delivered in connection herewith or therewith.
"Book-Entry Notes" means a beneficial interest in the Class A-1, Class
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A-2, Class A-3, Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-1, Class M-2, Class B-1 or Class
B-2 Notes, ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 2.10 hereof.
"Business Day" means any day other than (i) a Saturday or a Sunday, or
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(ii) a day on which banking institutions in The City of New York or the city in
which the corporate trust office of the Indenture Trustee is located are
authorized or obligated by law or executive order to be closed.
"Certificate of Trust" means the certificate of trust of the Issuer
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substantially in the form of Exhibit C to the Deposit Trust Agreement.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes, the
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Class A-3 Notes, the Class A-4 Notes and the Class A-5 Notes.
"Class A-1 Notes", "Class A-2 Notes", "Class A-3 Notes", "Class A-4
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Notes", "Class A-5 Notes", "Class X-1A Notes", "Class X-1B Notes", "Class X-1C
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Notes", "Class B-1 Notes", "Class B-2 Notes", "Class M-1 Notes" and "Class M- 2
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Notes" shall each have the meaning assigned thereto in the "WITNESSETH THAT"
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Clause of this Indenture.
"Class X-1 Notes" means, collectively, the Class X-1A Notes, the Class
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X-1B Notes and the Class X-1C Notes.
"Clearing Agency" means an organization registered as a "clearing
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agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
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financial institution or other Person for which from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means , 199 .
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"Code" means the Internal Revenue Code of 1986, as amended from time
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to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
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Indenture.
"Commission" means the Securities and Exchange Commission.
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"Company" means [Transferor and Servicer], a [ ]
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corporation, or any successor in interest thereto.
"Corporate Trust Office" means the principal office of the Indenture
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Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located at
[Address], [City, State, Zip]; Attention: , or at such other address as
the Indenture Trustee may designate from time to time by notice to the
Noteholders and the Issuer, or the principal corporate trust office of any
successor Indenture Trustee at the address designated by such successor
Indenture Trustee by notice to the Noteholders and the Issuer.
"DCR" means Duff & ▇▇▇▇▇▇ Credit Rating Co. or any successor thereto.
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"Default" means any occurrence that is, or with notice or the lapse of
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time or both would become, an Event of Default.
"Definitive Notes" means each Subclass of the Class X-1 Notes and any
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other Class of Notes as set forth in Section 2.12 hereof.
"Deposit Trust Agreement" means the Deposit Trust Agreement dated as
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of , 199 , among ACE Securities Corp., as Depositor, [Transferor and
Servicer], as the Company and [Owner Trustee], as Owner Trustee.
"Depositor" shall mean ACE Securities Corp., a Delaware corporation,
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in its capacity as depositor under the Sale and Servicing Agreement, or any
successor in interest thereto.
"Depository Institution" means any depository institution or trust
----------------------
company, including the Indenture Trustee, that (a) is incorporated under the
laws of the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated A-1 by Standard & Poor's and DCR (or comparable
ratings if Standard & Poor's and DCR are not the Rating Agencies).
"Distribution Date" means the 25th day of any month or if such 25th
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day is not a Business Day, the first Business Day immediately following such
day, commencing in November 1997.
"Due Period" means, with respect to any Distribution Date and any
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Class of Notes, the calendar month immediately preceding the month of such
Distribution Date.
"Event of Default" has the meaning specified in Section 5.01 hereof.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Executive Officer" means, with respect to any corporation, the Chief
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Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive
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Vice President, any Vice President, the Secretary or the Treasurer of such
corporation; and with respect to any partnership, any general partner thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
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remise, release, convey, assign, transfer, create and ▇▇▇▇▇ ▇ ▇▇▇▇ upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Highest Priority Classes Notes" means, until the Security Balances of
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all Classes of Class A Notes are reduced to zero and all sums payable to the
Holders of the Class A Notes have been paid in full, the Class X-1 Notes and
Class A Notes; when the Security Balances of all Classes of Class A Notes have
been reduced to zero and all amounts payable to the Holders of the Class A Notes
have been paid in full, the Class X-1 Notes and Class M-1 Notes; when the
Security Balances of all Classes of Class A Notes and Class M-1 Notes have been
reduced to zero and all sums payable to the Holders of the Class A Notes and
Class M-1 Notes have been paid in full, the Class X-1 Notes and Class M-2 Notes;
when the Security Balances of all Classes of Class A Notes, Class M-1 Notes and
Class M-2 Notes have been reduced to zero and all sums payable to the Holders of
the Class A Notes, Class M-1 Notes and Class M-2 Notes have been paid in full,
the Class X-1 Notes and Class B-1 Notes; when the Security Balances of all
Classes of Class A Notes, Class M-1 Notes, Class M-2 Notes and Class B-1 Notes
have been reduced to zero and all sums payable to the Holders of the Class A
Notes, Class M-1 Notes, Class M-2 Notes and Class B-1 Notes have been paid in
full, the Class X-1 Notes and Class B-2 Notes.
"Holder" or "Noteholder" means the Person in whose name a Note is
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registered on the Note Register.
"Indenture Trustee" means [ ], a [ ],
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as Indenture Trustee under this Indenture, or any successor Indenture Trustee
hereunder.
"Independent" means, when used with respect to any specified Person,
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that the Person (a) is in fact independent of the Issuer, any other obligor on
the Notes, the Transferor and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Transferor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Transferor or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
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"Independent Certificate" means a certificate or opinion to be
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delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 hereof,
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made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"Issuer" means [ ] Home Loan Owner Trust 199 - until a
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successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" mean a written order or request
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signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Majority Highest Priority Classes Noteholders" means on any date,
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Holders of Highest Priority Classes Notes representing more than 50% of the
Voting Interests of the Highest Priority Classes Notes then Outstanding.
"Maturity Date" means, with respect to each Class of Notes, the
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applicable maturity date set forth below:
Class Maturity Date
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▇-▇
▇-▇
▇-▇
▇-▇
▇-▇
M-1
M-2
B-1
B-2
"Note" means a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class
----
A-4 Note, Class A-5 Note, Class X-1A Note, Class X-1B Note, Class X-1C Note,
Class M-1 Note, Class M-2 Note, Class B-1 Note or Class B-2 Note, as applicable.
"Note Depository Agreement" means the agreement to be entered into
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among the Issuer, the Administrator, the Indenture Trustee and The Depository
Trust Company, as the initial Clearing Agency, relating to the Book-Entry Notes.
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"Note Interest Rate" means, with respect to any Class of Notes, the
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applicable rate per annum specified below (computed on the basis of a 360-day
year assumed to consist of twelve 30-day months except that with respect to the
Class A-1 Notes, calculations of accrued interest shall be made on the basis of
a 360-day year and actual number of days elapsed in each Accrual Period):
Class A-1: (1)
Class A-2: %
Class A-3: %
Class A-4: %
Class A-5: %
Class X-1A: %
Class X-1B: %
Class X-1C: %
Class M-1: %
Class M-2: %
Class B-1: %
Class B-2: %
______________________________
(1) Interest will accrue on the Class A-1 Notes during each Accrual Period at a
per annum interest rate equal to LIBOR for the related LIBOR Determination
Date plus %, subject to a maximum rate equal to the Net Weighted Average
Rate. The Note Interest Rate applicable to the Class A-1 Notes for the
initial Accrual Period will be % per annum.
"Note Owner" means, with respect to a Book-Entry Note, the Person that
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is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
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specified in Section 2.03 hereof.
"Officer's Certificate" means a certificate signed by any Authorized
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Officer of the Issuer or the Administrator, under the circumstances described
in, and otherwise complying with, the applicable requirements of Section 11.01
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hereof, and delivered to the Indenture Trustee. Unless otherwise specified, any
reference in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer or the Administrator.
"Opinion of Counsel" means one or more written opinions of counsel who
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may, except as otherwise expressly provided in this Indenture, be an employee of
or counsel to the Issuer and who shall be satisfactory to the Indenture Trustee,
and which opinion or opinions shall be addressed to the Indenture Trustee, as
Indenture Trustee, and shall comply with any
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applicable requirements of Section 11.01 hereof and shall be in form and
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substance satisfactory to the Indenture Trustee.
"Outstanding" means, with respect to any Note and as of the date of
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determination, any Note theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has theretofore been deposited with the Indenture Trustee
or any Paying Agent 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 for such notice
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; provided, however, that in determining
whether the Holders of the requisite Voting Interests of the Outstanding
Notes have given any request, demand, authorization, direction, notice,
consent or waiver hereunder or under any Basic Document, Notes owned by the
Issuer, any other obligor upon the Notes, the Transferor or any Affiliate
of any of the foregoing Persons 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 owned in such manner shall be disregarded. Notes owned in such
manner that have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Indenture Trustee
that the pledgee has the right so to act with respect to such Notes and
that the pledgee is not the Issuer, any other obligor upon the Notes, the
Transferor or any Affiliate of any of the foregoing Persons; and
(iv) Notes for which the related Maturity Date has occurred.
"Outstanding Amount" means the aggregate principal amount of all
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Notes, or Class of Notes, as applicable, Outstanding at the date of
determination. The Class X-1 Notes shall not have an Outstanding Amount.
"Owner Trustee" means [Owner Trustee], not in its individual capacity
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but solely as Owner Trustee under the Deposit Trust Agreement, or any successor
Owner Trustee under the Deposit Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that
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meets the eligibility standards for the Indenture Trustee specified in Section
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6.11 hereof and is authorized by the Issuer to make payments to and
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distributions from the Note Distribution Account, including payment of principal
of or interest on the Notes on behalf of the Issuer.
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"Payment Date" means any Distribution Date.
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"Person" means any individual, corporation, estate, partnership, joint
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venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, limited liability company, limited
liability partnership or government or any agency or political subdivision
thereof.
"Predecessor Note" means, with respect to any particular Note, every
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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 2.04 hereof in lieu of a mutilated,
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lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
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or administrative proceeding.
"Rating Agency" means either or both of (i) [Rating Agency] or (ii)
-------------
[Rating Agency]. If no such organization or successor thereto is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person rating the Notes.
"Rating Agency Condition" means, with respect to any applicable
-----------------------
action, that each Rating Agency shall have been given 10 days' prior notice
thereof (or such shorter period as is acceptable to each Rating Agency) and that
each of the Rating Agencies shall have notified the Depositor, the Servicer and
the Issuer in writing that such action will not result in a reduction or
withdrawal of the then current rating of the Notes.
"Record Date" means, as to each Distribution Date, the last Business
-----------
Day of the month immediately preceding the month in which such Distribution Date
occurs.
"Redemption Date" means in the case of a redemption of the Notes
---------------
pursuant to Section 10.01 hereof, the Distribution Date specified by the
-------------
Servicer or the Issuer pursuant to such Section 10.01.
-------------
"Registered Holder" means the Person in the name of which a Note is
-----------------
registered on the Note Register on the applicable Record Date.
"Residual Interest Certificate" has the meaning assigned to such term
-----------------------------
in Section 1.1 of the Deposit Trust Agreement.
-----------
"Responsible Officer" means, with respect to the Indenture Trustee,
-------------------
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
-9-
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
----------------------------
dated as of , 199 , among the Issuer, ACE Securities Corp., as
Depositor, and [Transferor and Servicer], as Transferor and Servicer, and
[Indenture Trustee], as Indenture Trustee.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Servicer" shall mean [Servicer], in its capacity as servicer under
--------
the Sale and Servicing Agreement, and any Successor Servicer thereunder.
"Standard & Poor's" means Standard & Poor's or any successor thereto.
-----------------
"State" means any one of the States of the United States of America or
-----
the District of Columbia.
"Subclass" means each subdivision of the Class X-1 Notes, denominated
--------
respectively as Class X-1A, Class X-1B and Class X-1C.
"Successor Servicer" has the meaning specified in Section 3.07(e)
------------------ ---------------
hereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
------------------- ---
as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
---
Commercial Code as in effect in the relevant jurisdiction, as amended from time
to time.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein have
the respective meanings set forth in the Sale and Servicing Agreement for all
purposes of this Indenture.
"Voting Interests" means (A) with respect to any Class of Notes, other
----------------
than the Class X-1 Notes, the percentage equal to the product of (i) 99% and
(ii) a fraction, the numerator of which is equal to the Security Balance of such
Class of Notes and the denominator of which is equal to the aggregate Security
Balances of all Classes of Notes Outstanding and (B) with respect to any
Subclass of Class X-1 Notes, the percentage equal to the product of (i) 1% and
(ii) a fraction, the numerator of which is equal to the applicable Notional
Amount of such Subclass and the denominator of which is equal to the aggregate
of the Notional Amounts of all Subclasses of Class X-1 Notes Outstanding.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
(a) Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
--------------------
-10-
"indenture security holder" means a Noteholder.
-------------------------
"indenture to be qualified" means this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" means the Indenture
----------------- ---------------------
Trustee.
"obligor" on the indenture securities means the Issuer and any other
-------
obligor on the indenture securities.
(b) All other TIA terms used in this Indenture that are defined in the
TIA, defined by TIA reference to another statute or defined by rule of the
Securities and Exchange Commission have the respective meanings assigned to them
by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise
---------------------
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect in the United States from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented (as provided in such agreements) and includes (in
the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person are
also to its permitted successors and assigns.
ARTICLE II
THE NOTES
Section 2.01. Form. The Notes shall be designated as the "[
----
] Home Loan Owner Trust 199 - Asset Backed Notes, Series 199 - ". Each Class
of Notes shall be in substantially the form set forth in Exhibit A hereto, with
---------
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution thereof. Any portion of the text of any
-11-
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes are set forth in Exhibit A hereto. The terms of each Class of Notes
---------
are part of the terms of this Indenture.
Section 2.02. Execution, Authentication, Delivery and Dating. The
----------------------------------------------
Notes shall be executed on behalf of the Issuer by an Authorized Officer of the
Owner Trustee or the Administrator. The signature of any such Authorized Officer
on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Owner Trustee or the Administrator
shall bind the Issuer, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Notes or did not hold such offices at the date of such Notes.
Subject to the satisfaction of the conditions set forth in Section
-------
2.08 hereof, the Indenture Trustee shall upon Issuer Order authenticate and
----
deliver the Classes of Notes for original issue in the following principal
amounts, or Notional Amounts in the case of the Class X-1 Notes: Class A-1, $
; Class A-2, $ ; Class A-3, $ ; Class A-4, $
; Class A-5, $ ; Class X-1A, $ ; Class X-1B, $
; Class X-1C, $ ; Class M-1, $ ; Class M-2, $
; Class B-1, $ ; Class B-2, $ . The aggregate
principal amounts, or Notional Amounts in the case of the Class X-1 Notes, of
such Classes of Notes outstanding at any time may not exceed such respective
amounts.
The Notes that are authenticated and delivered by the Indenture
Trustee to or upon the order of the Issuer on the Closing Date shall be dated
, 199 . All other Notes that are authenticated after the Closing Date for any
other purpose under the Indenture shall be dated the date of their
authentication. Each Subclass of Class X-1 Notes shall be issuable as
registered Notes in the minimum denomination of $ and integral
multiples of $ in excess thereof, and all other Classes of Notes
shall be issuable as registered Notes in the minimum denomination of $
and integral multiples of $ in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be
-12-
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 2.03. Registration; Registration of Transfer and Exchange.
---------------------------------------------------
The Issuer shall cause to be kept a register (the "Note Register") in
-------------
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee initially shall be the "Note Registrar" for the
--------------
purpose of registering Notes and transfers of Notes as herein provided. Upon
any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties of
Note Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts or Notional Amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02 hereof, the
------------
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes of the same Class in
any authorized denominations, of a like aggregate principal amount, or Notional
Amount in the case of the Class X-1 Notes.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount or Notional Amount, as the case may be, upon surrender of the Notes to be
exchanged at such office or agency. Whenever any Notes are so surrendered for
exchange, the Issuer shall execute, and the Indenture Trustee shall authenticate
and the Noteholder shall obtain from the Indenture Trustee, the Notes which 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 Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agents' Medallion Program ("STAMP") or
-----
such other "signature guarantee program" as may be determined by the Note
-13-
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Exchange Act.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 9.06 hereof not involving any transfer.
------------
The preceding provisions of this Section 2.03 notwithstanding, the
------------
Issuer shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to such
Note.
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes. If (i)
------------------------------------------
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Indenture Trustee such security
or indemnity as may reasonably be required by it to hold the Issuer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, an Authorized Officer of the Owner Trustee or the
Administrator on behalf of the Issuer shall execute, and upon its request the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note of the
same Class; provided, however, that if any such destroyed, lost or stolen Note,
but not a mutilated Note, shall have become or within seven days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
which it was delivered or any Person taking such replacement Note from such
Person to which such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section 2.04, the
------------
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 2.04 in
------------
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at
-14-
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 2.04 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 2.05. Persons Deemed Note Owners. Prior to due presentment
--------------------------
for registration of transfer of any Note, the Issuer, the Indenture Trustee and
any agent of the Issuer or the Indenture Trustee may treat the Person in the
name of which any Note is registered (as of the day of determination) as the
Note Owner for the purpose of receiving payments of principal of and interest,
if any, on such Note and for all other purposes whatsoever, whether or not such
Note be overdue, and none of the Issuer, the Indenture Trustee or any agent of
the Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 2.06. Payment of Principal and/or Interest; Defaulted
-----------------------------------------------
Interest. (a) Each Class of Notes shall accrue interest at the related Note
--------
Interest Rate, and such interest shall be payable on each Distribution Date as
specified in Exhibit A hereto, subject to Section 3.01 hereof. With respect to
--------- ------------
the Class A-1 Notes, the Indenture Trustee shall determine LIBOR for each
applicable Accrual Period on the second Libor Business Day prior thereto. Any
installment of interest or principal, if any, payable on any Note that is
punctually paid or duly provided for by the Issuer on the applicable
Distribution Date shall be paid to the Person in the name of which such Note (or
one or more Predecessor Notes) is registered on the Record Date by check mailed
first-class postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.12 hereof, 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.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date or on the applicable Maturity Date for such Class of Notes
(and except for the Termination Price for any Note called for redemption
pursuant to Section 10.01) hereof, which shall be payable as provided in Section
------------- -------
2.06(b) below. The funds represented by any such checks returned undelivered
-------
shall be held in accordance with Section 3.03 hereof.
------------
(b) The principal of each Note other than the Class X-1 Notes shall be
payable in installments on each Distribution Date as provided in the forms of
the Notes set forth in Exhibit A hereto. Notwithstanding the foregoing, the
---------
entire unpaid principal amount of the Notes together with the amount of any Loss
Reimbursement Deficiency in respect thereof of a Class of Notes other than the
Class X-1 Notes shall be due and payable, if not previously paid, on the earlier
of (i) the applicable Maturity Date of such Class, (ii) the Redemption Date or
(iii) the date on which an Event of Default shall have occurred and be
continuing, if the Indenture Trustee or the Majority Highest Priority Classes
Noteholders shall have declared the Notes to be immediately due and payable in
the manner provided in Section
-------
-15-
5.02 hereof. The Class X-1 Notes are "interest only" and shall receive no
----
distributions in respect of principal.
All principal payments on each Class of Notes other than the Class X-1
Notes shall be made pro rata to the Noteholders of such Class entitled thereto.
The Indenture Trustee shall notify the Person in the name of which a Note is
registered at the close of business on the Record Date preceding the
Distribution Date on which the Issuer expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be mailed
or transmitted by facsimile prior to such final Distribution Date and shall
specify that such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
-------
10.02 hereof.
-----
Section 2.07. Cancellation. All Notes surrendered for payment,
------------
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall promptly be cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall promptly be cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange
for any Notes canceled as provided in this Section 2.07, except as expressly
------------
permitted by this Indenture. All canceled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it; provided, however, that such
Issuer Order is timely and the Notes have not been previously disposed of by the
Indenture Trustee.
Section 2.08. Conditions Precedent to the Authentication of the
-------------------------------------------------
Notes. The Notes may be authenticated by the Indenture Trustee, upon Issuer
-----
Request and upon receipt by the Indenture Trustee of the following:
(a) An Issuer Order authorizing the execution and authentication of
such Notes by the Issuer.
(b) All of the items of Collateral which shall be delivered to the
Indenture Trustee or its designee.
(c) An executed counterpart of the Deposit Trust Agreement.
(d) An Opinion of Counsel addressed to the Indenture Trustee to the
effect that:
(i) all conditions precedent provided for in this Indenture
relating to the authentication of the Notes have been complied with;
-16-
(ii) the Owner Trustee has power and authority to execute, deliver
and perform their obligations under the Deposit Trust Agreement;
(iii) the Issuer has been duly formed, is validly existing as a
business trust under the laws of the State of Delaware, 12 Del. C. Section
3801 et seq., and has power, authority and legal right to execute and
deliver this Indenture, the Administration Agreement and the Sale and
Servicing Agreement;
(iv) assuming due authorization, execution and delivery hereof by
the Indenture Trustee, the Indenture is the valid, legal and binding
obligation of the Issuer, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent or preferential conveyance and other similar laws of general
application affecting the rights of creditors generally and to general
principles of equity (regardless of whether such enforcement is considered
in a Proceeding in equity or at law);
(v) the Notes, when executed and authenticated as provided herein
and delivered against payment therefor, will be the valid, legal and
binding obligations of the Issuer pursuant to the terms of this Indenture,
entitled to the benefits of this Indenture, and will be enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent or preferential
conveyance and other similar laws of general application affecting the
rights of creditors generally and to general principles of equity
(regardless of whether such enforcement is considered in a Proceeding in
equity or at law);
(vi) the Deposit Trust Agreement authorizes the Issuer to Grant the
Collateral to the Indenture Trustee as security for the Notes;
(vii) this Indenture has been duly qualified under the Trust
Indenture Act;
(viii) no authorization, approval or consent of any governmental body
having jurisdiction in the premises which has not been obtained by the
Issuer is required to be obtained by the Issuer for the valid issuance and
delivery of the Notes, except that no opinion need be expressed with
respect to any such authorizations, approvals or consents as may be
required under any state securities or "blue sky" laws; and
(ix) any other matters as the Indenture Trustee may reasonably
request.
(e) An Officer's Certificate complying with the requirements of
Section 11.01 hereof and stating that:
(i) the Issuer is not in Default under this Indenture and the
issuance of the Notes applied for will not result in any breach of any of
the terms, conditions or provisions of, or constitute a default under, the
Deposit Trust Agreement, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer is a party or by which it is
bound, or any order of any court or administrative agency
-17-
entered in any Proceeding to which the Issuer 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 applied for have been complied with;
(ii) the Issuer is the owner of all of the Loans, has not assigned
any interest or participation in the Loans (or, if any such interest or
participation has been assigned, it has been released) and has the right to
Grant all of the Loans to the Indenture Trustee;
(iii) the Issuer has Granted to the Indenture Trustee all of its
right, title and interest in and to the Collateral, and has delivered or
caused the same to be delivered to the Indenture Trustee;
(iv) attached thereto are true and correct copies of letters signed
by [Rating Agencies] confirming that the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class X-1A Notes, Class X-1B Notes and Class X-1C
Notes have been rated "AAA" and letters signed by [Rating Agencies]
confirming that the Class M-1 Notes have been rated "AA", the Class M-2
Notes have been rated "A-", the Class B-1 Notes have been rated "BBB" and
the Class B-2 Notes have been rated "BB"; and
(v) all conditions precedent provided for in this Indenture
relating to the authentication of the Notes have been complied with.
Section 2.09. Release of Collateral. (a) Except as otherwise
---------------------
provided in subsections (b) and (c) of this Section 2.09, Section 11.01 hereof
------------ -------------
and the terms of the Basic Documents, the Indenture Trustee shall release
property from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(l) or an Opinion
of Counsel in lieu of such Independent Certificates to the effect that the TIA
does not require any such Independent Certificates.
(b) The Servicer, on behalf of the Issuer, shall be entitled to obtain
a release from the lien of this Indenture for any Loan and the related Mortgaged
Property at any time (i) after a payment by the Transferor or the Issuer of the
Purchase Price of the Loan, (ii) after a Qualified Substitute Loan is
substituted for such Loan and payment of the Substitution Adjustment, if any,
(iii) after liquidation of the Loan in accordance with Section 4.11 of the Sale
and Servicing Agreement and the deposit of all Recoveries thereon in the
Collection Account, or (iv) upon the termination of a Loan (due to, among other
causes, a prepayment in full of the Loan and sale or other disposition of the
related Mortgaged Property), if the Issuer delivers to the Indenture Trustee an
Issuer Request (A) identifying the Loan and the related Mortgaged Property to be
released, (B) requesting the release thereof, (C) setting forth the amount
deposited in the Collection Account with respect thereto, and (D) certifying
that the amount deposited in the Collection Account (x) equals the Purchase
Price of the Loan, in the event a Loan and the related Mortgaged Property are
being released from the lien of this Indenture pursuant to item (i) above, (y)
equals the Substitution Adjustment related to the
-18-
Qualified Substitute Loan and the Deleted Loan released from the lien of the
Indenture pursuant to item (ii) above, or (z) equals the entire amount of
Recoveries received with respect to such Loan and the related Mortgaged property
in the event of a release from the lien of this Indenture pursuant to items
(iii) or (iv) above.
(c) The Indenture Trustee shall, if requested by the Servicer,
temporarily release or cause the Custodian temporarily to release to the
Servicer the Indenture Trustee's Loan File pursuant to the provisions of Section
7.02 of the Sale and Servicing Agreement upon compliance by the Servicer with
the provisions thereof; provided, however, that the Indenture Trustee's Loan
File shall have been stamped to signify the Issuer's pledge to the Indenture
Trustee under the Indenture.
Section 2.10. Book-Entry Notes. The Notes, when authorized by an
----------------
Issuer Order, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by or on behalf of the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no Note Owner will receive a definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.12 hereof. Unless and until definitive, fully registered Notes (the
------------
"Definitive Notes") have been issued to such Note Owners pursuant to Section
----------------- -------
2.12 hereof:
----
(i) the provisions of this Section 2.10 shall be in full force and
------------
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the
giving of instructions or directions hereunder) as the sole Holder of the
Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section 2.10 conflict
------------
with any other provisions of this Indenture, the provisions of this Section
-------
2.10 shall control;
----
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant to Section 2.12
------------
hereof, the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Notes to such Clearing Agency
Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Voting Interests of the Outstanding Notes, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Note Owners
and/or Clearing Agency Participants owning or representing,
-19-
respectively, such required percentage of the beneficial interest in the
Notes and has delivered such instructions to the Indenture Trustee.
Section 2.11. Notices to Clearing Agency. Whenever a notice or
--------------------------
other communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to such Note Owners pursuant
to Section 2.12 hereof, the Indenture Trustee shall give all such notices and
------------
communications specified herein to be given to Holders of the Notes to the
Clearing Agency and shall have no obligation to such Note Owners.
Section 2.12. Definitive Notes. (a) If (i) the Administrator
----------------
advises the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Book-Entry Notes and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Indenture Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency or (iii) after the occurrence of an Event of Default, Owners of the Book-
Entry Notes representing beneficial interests aggregating at least a majority of
the Voting Interests of the Outstanding Notes advise the Clearing Agency in
writing that the continuation of a book-entry system through the Clearing Agency
is no longer in the best interests of such Note Owners, then the Clearing Agency
shall notify all Note Owners and the Indenture Trustee of the occurrence of such
event and of the availability of Definitive Notes to Note Owners requesting the
same. Upon surrender to the Indenture Trustee of the typewritten Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and each
of them may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall
recognize the Holders of the Definitive Notes as Noteholders.
(b) Notwithstanding the foregoing, (i) Holders of the Class B-2 Notes
held as Book-Entry Notes, may transfer such Class B-2 Notes to transferees who
will hold such Class B-2 Notes as Definitive Notes and (ii) Holders of the Class
B-2 Notes held as Definitive Notes, may transfer the Class B-2 Notes to
transferees who will hold such Class B-2 Notes as Book-Entry Notes, if the
conditions set forth in this Section 2.12 are satisfied.
------------
Any and all transfers from a Holder of a Class B-2 Book-Entry Note to
a transferee wishing to take delivery in the form of a Definitive Note will
require the transferee to take delivery subject to the restrictions on the
transfer of such Definitive Note described in the legend set forth on the face
of the Class B-2 Note substantially in the form of Exhibit C as attached hereto
(the "Legend"), and such transferee agrees that it will transfer such a Class B-
2 Note only as provided therein and herein. No such transfer shall be made and
the Indenture Trustee shall not register any such transfer unless such transfer
is made in accordance with Section 2.12(b) and Section 2.14.
--------------- ------------
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Upon acceptance for exchange or transfer of a beneficial interest in a
Class B-2 Book-Entry Note for a Definitive Note as provided herein, the
Indenture Trustee shall endorse on (or cause the endorsement of) the schedule
affixed to the related Book-Entry Note (or on a continuation of such schedule
affixed to the such Book-Entry Note and made a part thereof) an appropriate
notation evidencing the date of such exchange or transfer and a decrease in the
Security Balance, in the case of the Class B-2 Notes, of such Book-Entry Note
equal to the Security Balance of such Definitive Note issued in exchange
therefor or upon transfer thereof. Unless determined otherwise by the Indenture
Trustee in accordance with applicable law, a Definitive Note issued upon
transfer of or exchange for a beneficial interest in a Class B-2 Book-Entry Note
shall bear the Legend.
If a Holder of a Class B-2 Definitive Note wishes at any time to
transfer such Definitive Note to a Person who wishes to take delivery thereof in
the form of a beneficial interest in the Book-Entry Note, such transfer may be
effected only in accordance with the applicable procedures of the Depository
Institution, and Section 2.12(b) and Section 2.14. Upon receipt by the
--------------- ------------
Indenture Trustee at the Corporate Trust Office of (1) the Class B-2 Definitive
Note to be transferred with an assignment and transfer, (2) written instructions
given in accordance with the applicable procedures from a participant directing
the Indenture Trustee to credit or cause to be credited to another specified
participant's account a beneficial interest in the Book-Entry Note, in an amount
equal to the Security Balance of the Class B-2 Notes of such Definitive Note to
be so transferred, (3) a written order given in accordance with the applicable
procedures containing information regarding the account of the participant to be
credited with such beneficial interest, and (4) transfer documentation received
for a "Qualified Institutional Buyer" pursuant to Section 2.14, the Trustee
------------
shall cancel such Definitive Note, execute and deliver a new Definitive Note for
the Security Balance of the Class B-2 Notes of the Definitive Note not so
transferred, registered in the name of the Holder or the Holder's transferee (as
instructed by the Holder), and the Indenture Trustee shall instruct the
Depository Institution to increase the Security Balance of the Book-Entry Note,
by the Security Balance of the Definitive Note to be so transferred, and to
credit or cause to be credited to the account of the Person specified in such
instructions a corresponding Security Balance of the Book-Entry Note.
Under no circumstances may an institutional "accredited investor"
within Regulation D of the Securities Act take delivery in the form of a
beneficial interest in a Class B-2 Book-Entry Note if such purchaser is not a
"qualified institutional buyer" as defined under Rule 144A under the Securities
Act.
An exchange of a beneficial interest in a Class B-2 Book-Entry Note
for a Definitive Note or Notes, an exchange of a Class B-2 Definitive Note or
Notes for a beneficial interest in the Book-Entry Note and exchange of a Class
B-2 Definitive Note or Notes for another Definitive Note or Notes (in each case,
whether or not such exchange is made in anticipation of subsequent transfer, and
in the case of the Book-Entry Note, so long as the Book-Entry Note remains
outstanding and is held by or on behalf of the Depository Institution), may be
made only in accordance with Section 2.12(b) and Section 2.14 and in accordance
--------------- ------------
with the rules of the Depository Institution.
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Section 2.13. Tax Treatment. The Issuer has entered into this
-------------
Indenture, and the Notes will be issued, with the intention that for all
purposes, including federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. The Issuer, by entering into this Indenture, and
each Noteholder, by its acceptance of a Note (and each Note Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat the
Notes for all purposes, including federal, state and local income, single
business and franchise tax purposes, as indebtedness of the Issuer.
SECTION 2.14. Limitations on Transfer of the Class B-2 and Class X-1
------------------------------------------------------
Notes. The Class B-2 and Class X-1 Notes have not been and will not be
-----
registered under the Securities Act and will not be listed on any exchange. No
transfer of a Class B-2 or Class X-1 Definitive Note or exchange of a Class B-2
or Class X-1 Definitive Note for a Class B-2 or Class X-1 Book-Entry Note (or
vice versa) shall be made unless such transfer is made pursuant to an effective
registration statement under the Securities Act and any applicable state
securities laws or is exempt from the registration requirements under the
Securities Act and such state securities laws. In the event that a transfer of
Class B-2 or Class X-1 Note in Definitive Note form is to be made in reliance
upon an exemption from the Securities Act and state securities laws, in order to
assure compliance with the Securities Act and such laws, the prospective
transferee shall (A) in the event that the transfer is made in reliance upon
Rule 144A under the Securities Act, the Indenture Trustee shall require that the
transferor deliver a certification substantially in the form of Exhibit B-1
hereto, or (B) in the event that the transfer is made to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act that is not a "qualified institutional
buyer," the Indenture Trustee shall require that the transferee deliver a
certification substantially in the form of Exhibit B-2 hereto. In the event of a
transfer of a Class B-2 or Class X-1 Note pursuant to clause (A) or (B) in the
immediately preceding sentence, the Indenture Trustee shall require that the
transferee deliver a certification substantially in the form of Exhibit B-3
hereto.
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and/or Interest. The Issuer
------------------------------------
will duly and punctually pay (or will cause to be paid duly and punctually) the
principal of and interest on the Notes in accordance with the terms of the Notes
and this Indenture. Without limiting the foregoing, subject to and in
accordance with Section 8.02(c) hereof, the Issuer will cause to be distributed
---------------
all amounts on deposit in the Note Distribution Account on each Distribution
Date deposited therein pursuant to the Sale and Servicing Agreement (i) for the
benefit of the Class A-1 Notes, to the Class A-1 Noteholders, (ii) for the
benefit of the Class A-2 Notes, to the Class A-2 Noteholders, (iii) for the
benefit of the Class A-3 Notes, to the Class A-3 Noteholders, (iv) for the
benefit of the Class A-4 Notes, to the Class A-4 Noteholders, (v) for the
benefit of the Class A-5 Notes, to the Class A-5 Noteholders, (vi) for the
benefit of the Class X-1A Notes, to the Class X-1A Noteholders, (vii) for the
benefit of the Class X-1B
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Notes, to the Class X-1B Noteholders, (viii) for the benefit of the Class X-1C
Notes, to the Class X-1C Noteholders, (ix) for the benefit of the Class M-1
Notes, to the Class M-1 Noteholders, (x) for the benefit of the Class M-2 Notes,
to the Class M-2 Noteholders, (xi) for the benefit of the Class B-1 Notes, to
the Class B-1 Noteholders and (xii) for the benefit of the Class B-2 Notes, to
the Class B-2 Noteholders. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture. The Notes shall be non-recourse obligations of the Issuer and
shall be limited in right of payment to amounts available from the Collateral,
as provided in this Indenture. The Issuer shall not otherwise be liable for
payments on the Notes. If any other provision of this Indenture shall be 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 Issuer will or
-------------------------------
will cause the Administrator to maintain in the Borough of Manhattan in The City
of New York an office or agency where Notes may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Administrator to serve as its agent for the foregoing
purposes and to serve as Paying Agent with respect to the Notes and the
Certificates. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments to Be Held in Trust. As provided in
--------------------------------------
Section 8.02(a) and (b) hereof, all payments of amounts due and payable with
----------------
respect to any Notes that are to be made from amounts withdrawn from the
Collection Account and the Note Distribution Account pursuant to Section 8.02(c)
---------------
hereof shall be made on behalf of the Issuer by the Indenture Trustee or by the
Paying Agent, and no amounts so withdrawn from the Collection Account and the
Note Distribution Account for payments of Notes shall be paid over to the Issuer
except as provided in this Section 3.03.
------------
On or before the Business Day preceding each Distribution Date and the
Redemption Date, the Paying Agent shall deposit or cause to be deposited in the
Note Distribution Account an aggregate sum sufficient to pay the amounts due on
such Distribution Date or the Redemption Date under the Notes, such sum to be
held in trust for the benefit of the Persons entitled thereto, and (unless the
Paying Agent is the Indenture Trustee) shall promptly notify the Indenture
Trustee of its action or failure so to act.
Any Paying Agent shall be appointed by Issuer Order with written
notice thereof to the Indenture Trustee. Any Paying Agent appointed by the
Issuer shall be a Person which would be eligible to be Indenture Trustee
hereunder as provided in Section 6.11 hereof.
------------
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The Issuer shall not appoint any Paying Agent (other than the Indenture Trustee)
which is not, at the time of such appointment, a Depository Institution.
The Issuer will cause each Paying Agent other than the Administrator
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer
(or any other obligor upon the Notes) of which it has actual knowledge in
the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; provided, however, that
with respect to withholding and reporting requirements applicable to
original issue discount (if any) on the Notes, the Issuer shall have first
provided the calculations pertaining thereto to the Indenture Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds or
abandoned property, 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 years after such amount has become due and payable
shall be discharged from such trust and be paid to the Issuer on Issuer Request;
and the Holder of such Note shall thereafter, as an unsecured
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general creditor, look only to the Issuer for payment thereof (but only to the
extent of the amounts so paid to the Issuer), and all liability of the Indenture
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Indenture Trustee or such Paying Agent,
before being required to make any such repayment, shall at the expense and
direction of the Issuer cause to be published, once in a newspaper of general
circulation in The City of New York customarily published in the English
language on each Business Day, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee shall also adopt and employ,
at the expense and direction of the Issuer, any other 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 of any Paying Agent, at the last address of record for each such
Holder).
Section 3.04. Existence. (a) Subject to subparagraph (b) of this
---------
Section 3.04, the Issuer will keep in full effect its existence, rights and
------------
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other State or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes and the Collateral.
(b) Any successor to the Owner Trustee appointed pursuant to Section
-------
10.2 of the Deposit Trust Agreement shall be the successor Owner Trustee under
----
this Indenture without the execution or filing of any paper, instrument or
further act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the
Owner Trustee, the Person succeeding to the Owner Trustee under the Deposit
Trust Agreement may exercise every right and power of the Owner Trustee under
this Indenture with the same effect as if such Person had been named as the
Owner Trustee herein.
Section 3.05. Protection of Collateral. The Issuer will from
------------------------
time to time execute and deliver all such reasonable supplements and amendments
hereto and all such financing statements, continuation statements, instruments
of further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) provide further assurance with respect to the Grant of all or
any portion of the Collateral;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
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(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any rights with respect to the Collateral; or
(v) preserve and defend title to the Collateral and the rights of
the Indenture Trustee and the Noteholders in such Collateral against the
claims of all persons and parties.
The Issuer hereby designates the Administrator, its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.05.
------------
Section 3.06. Annual Opinions as to Collateral. On or before
--------------------------------
March 15th in each calendar year, beginning in 1998, the Issuer shall furnish to
the Indenture Trustee an Opinion of Counsel either stating that, in the opinion
of such counsel, such action has been taken with respect to the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and with respect to the execution and
filing of any financing statements and continuation statements as 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 the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture until March 15th of
the following calendar year.
Section 3.07. Performance of Obligations; Servicing of Loans.
----------------------------------------------
(a) The Issuer will not take any action and will use its best efforts not to
permit any action to be taken by others that would release any Person from any
of such Person's material covenants or obligations under any instrument or
agreement included in the Collateral or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance of
other Persons (including, without limitation, the Administrator under the
Administration Agreement) to assist it in performing its duties under this
Indenture, and any performance of such duties by a Person identified to the
Indenture Trustee in an Officer's Certificate of the Issuer shall be deemed to
be action taken by the Issuer. Initially, the Issuer has contracted with the
Servicer and the Administrator to assist the Issuer in performing its duties
under this Indenture. The Administrator must at all times be the same Person as
the Indenture Trustee.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, in the Basic Documents
and in the instruments and agreements included in the Collateral, including but
not limited to (i) filing or causing to be
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filed all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement and
(ii) recording or causing to be recorded all Mortgages, Assignments of Mortgage,
all intervening Assignments of Mortgage and all assumption and modification
agreements required to be recorded by the terms of the Sale and Servicing
Agreement, in accordance with and within the time periods provided for in this
Indenture and/or the Sale and Servicing Agreement, as applicable. Except as
otherwise expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without the
consent of the Indenture Trustee and the Holders of at least a majority of the
Voting Interests of the Outstanding Notes.
(d) If the Issuer shall have knowledge of the occurrence of an Event
of Default under the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee and the Rating Agencies thereof, and shall specify
in such notice the action, if any, the Issuer is taking with respect to such
default. If such an Event of Default shall arise from the failure of the
Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement with respect to the Loans, the Issuer shall take all
reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice to the Servicer
of the termination of the Servicer's rights and powers pursuant to Section 10.01
-------------
of the Sale and Servicing Agreement, the Indenture Trustee shall appoint a
successor servicer (the "Successor Servicer"), and such Successor Servicer shall
------------------
accept its appointment by a written assumption in a form acceptable to the
Indenture Trustee. In the event that a Successor Servicer shall not have
been appointed and accepted its appointment at the time when the Servicer ceases
to act as Servicer, the Indenture Trustee without further action shall
automatically be appointed the Successor Servicer. The Indenture Trustee may
resign as the Servicer by giving written notice of such resignation to the
Issuer and in such event will be released from such duties and obligations, such
release not to be effective until the date a new servicer enters into a
servicing agreement with the Issuer as provided below. Upon delivery of any
such notice to the Issuer, the Issuer shall obtain a new servicer as the
Successor Servicer under the Sale and Servicing Agreement. Any Successor
Servicer other than the Indenture Trustee shall (i) satisfy the criteria
specified in Section 4.07 of the Sale and Servicing Agreement and (ii) enter
------------
into a servicing agreement with the Issuer having substantially the same
provisions as the provisions of the Sale and Servicing Agreement applicable to
the Servicer. If within 30 days after the delivery of the notice referred to
above, the Issuer shall not have obtained such new servicer, the Indenture
Trustee may appoint, or may petition a court of competent jurisdiction to
appoint, a Successor Servicer. In connection with any such appointment, the
Indenture Trustee may make such arrangements for the compensation of such
successor as it and such successor shall agree, subject to the limitations set
forth below and in the Sale and Servicing Agreement, and in accordance with
Section 10.02 of the Sale and Servicing Agreement, the Issuer shall enter into
-------------
an agreement with such successor for the servicing of the Loans (such agreement
to be in form and substance satisfactory to the Indenture Trustee). The
servicing fee paid to any Successor Servicer shall not be in excess of the
Servicing Fee being paid to the initial Servicer. If the Indenture Trustee
shall succeed to the Servicer's duties as servicer of the Loans as
-27-
provided herein, it shall do so in its individual capacity and not in its
capacity as Indenture Trustee and, accordingly, the provisions of Article VI
hereof shall be inapplicable to the Indenture Trustee in its duties as Successor
Servicer and the servicing of the Loans. In case the Indenture Trustee shall
become Successor Servicer under the Sale and Servicing Agreement, the Indenture
Trustee shall be entitled to appoint as Servicer any one of its Affiliates,
provided that it shall be fully liable for the actions and omissions of such
Affiliate in such capacity as Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee. As soon as a Successor Servicer is appointed, the Indenture
Trustee shall notify the Issuer of such appointment, specifying in such notice
the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without the
prior written consent of the Indenture Trustee, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
supplement, termination, waiver or surrender of, the terms of any Collateral
(except to the extent otherwise provided in the Sale and Servicing Agreement) or
the Basic Documents, or waive timely performance or observance by the Servicer
or the Depositor under the Sale and Servicing Agreement; and (ii) that any such
amendment shall not (A) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Noteholders or (B) reduce the aforesaid percentage of the
Notes that is required to consent to any such amendment, without the consent of
the Holders the Voting Interests of all Outstanding Notes. If any such
amendment, modification, supplement or waiver shall so be consented to by the
Indenture Trustee, the Issuer agrees, promptly following a request by the
Indenture Trustee to do so, to execute and deliver, in its own name and at its
own expense, such agreements, instruments, consents and other documents as the
Indenture Trustee may deem necessary or appropriate in the circumstances.
Section 3.08. Negative Covenants. So long as any Notes are
------------------
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Sale and
Servicing Agreement, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of the Issuer, including those included in the
Collateral, unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Noteholder by reason of the payment of the taxes levied
or assessed upon any part of the Collateral;
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(iii) engage in any business or activity other than as permitted by
the Deposit Trust Agreement or other than in connection with, or relating
to, the issuance of Notes pursuant to this Indenture, or amend the Deposit
Trust Agreement as in effect on the Closing Date other than in accordance
with Section 11.1 thereof;
------------
(iv) issue debt obligations under any other indenture;
(v) incur or assume any indebtedness or guaranty any indebtedness
of any Person, except for such indebtedness as may be incurred by the
Issuer in connection with the issuance of the Notes pursuant to this
Indenture;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture except as may expressly be permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Collateral or any part
thereof or any interest therein or the proceeds thereof (other than tax
liens, mechanics' liens and other liens that arise by operation of law, in
each case on any of the Mortgaged Properties and arising solely as a result
of an action or omission of the related Obligors) or (C) permit the lien of
this Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien) security interest in the
Collateral;
(viii) remove the Administrator without cause unless the Rating
Agency Condition shall have been satisfied in connection with such removal;
or
(ix) take any other action or fail to take any action which may
cause the Issuer to be taxable as (a) an association pursuant to Section
7701 of the Code and the corresponding regulations or (b) as a taxable
mortgage pool pursuant to Section 7701(i) of the Code and the corresponding
regulations.
Section 3.09. Annual Statement as to Compliance. The Issuer will
---------------------------------
deliver to the Indenture Trustee, within 120 days after the end of each fiscal
year of the Issuer (commencing in the fiscal year 1998), an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
(i) a review of the activities of the Issuer during such year and
of its performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture
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throughout such year, or, if there has been a default in its compliance
with any such condition or covenant, specifying each such default known to
such Authorized Officer and the nature and status thereof.
Section 3.10. Covenants of the Issuer. All covenants of the
-----------------------
Issuer in this Indenture are covenants of the Issuer and are not covenants of
the Owner Trustee. The Owner Trustee is, and any successor Owner Trustee under
the Deposit Trust Agreement will be, entering into this Indenture solely as
Owner Trustee under the Deposit Trust Agreement and not in its respective
individual capacity, and in no case whatsoever shall the Owner Trustee or any
such successor Owner Trustee be personally liable on, or for any loss in respect
of, any of the statements, representations, warranties or obligations of the
Issuer hereunder, as to all of which the parties hereto agree to look solely to
the property of the Issuer.
Section 3.11. Servicer's Obligations. The Issuer shall cause
----------------------
the Servicer to comply with the Sale and Servicing Agreement.
Section 3.12. Restricted Payments. The Issuer shall not, directly
-------------------
or indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, (x)
distributions to the Servicer, the Indenture Trustee, the Owner Trustee, the
Noteholders and the holders of the Residual Interest Certificate as contemplated
by, and to the extent funds are available for such purpose under, the Sale and
Servicing Agreement or the Deposit Trust Agreement and (y) payments to the
Indenture Trustee pursuant to Section 1(a)(ii) of the Administration Agreement.
The Issuer will not, directly or indirectly, make or cause to be made payments
to or distributions from the Collection Account except in accordance with this
Indenture and the Basic Documents.
Section 3.13. Treatment of Notes as Debt for Tax Purposes. The
-------------------------------------------
Issuer shall, and shall cause the Administrator to, treat the Notes as
indebtedness for all purposes.
Section 3.14. Notice of Events of Default. The Issuer shall give
---------------------------
the Indenture Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder, each default on the part of the Servicer or the
Transferor of its obligations under the Sale and Servicing Agreement and each
default on the part of the Transferor of its obligations under the Loan Purchase
Agreement.
Section 3.15. Further Instruments and Acts. Upon request of the
----------------------------
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
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ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This
---------------------------------------
Indenture shall cease to be of further effect with respect to the Notes (except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections 3.03,
--------------
3.04, 3.05, 3.08 and 3.10 hereof, (v) the rights, obligations and immunities of
---------------- ----
the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.07 hereof and the obligations of the Indenture Trustee under
------------
Section 4.02 hereof) and (vi) the rights of Noteholders as beneficiaries hereof
------------
with respect to the property so deposited with the Indenture Trustee payable to
all or any of them), and the Indenture Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when all of the following
have occurred:
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i) Notes
that have been destroyed, lost or stolen and that have been replaced or
paid as provided in Section 2.04 hereof and (ii) Notes for the payment of
------------
which money has theretofore been deposited in trust or segregated and held
in trust by the Issuer and thereafter repaid to the Issuer or discharged
from such trust, as provided in Section 3.03 hereof) shall have been
------------
delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
a. shall have become due and payable, or
b. will become due and payable within one year following the Maturity
Date applicable to the Class B-2 Notes, or
c. are to be called for redemption within one year under arrangements
satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at the expense,
of the Issuer,
d. and the Issuer, in the case of clause a., b. or c. above, has
irrevocably deposited or caused irrevocably to be deposited with the
Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to
the date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such
Notes not theretofore delivered to the Indenture Trustee for
cancellation when due to the applicable Maturity Date of such Class of
Notes or the Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.01 hereof), as the case may be; and
-------------
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(B) the latest of (a) 18 months after payment in full of all
outstanding obligations under the Notes, (b) the payment in full of all unpaid
Trust Fees and Expenses and (c) the date on which the Issuer has paid or caused
to be paid all other sums payable hereunder by the Issuer; and
(C) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01(a) hereof
----------------
and, subject to Section 11.02 hereof, each stating that all conditions precedent
-------------
herein provided for, relating to the satisfaction and discharge of this
Indenture with respect to the Notes, have been complied with.
Section 4.02. Application of Trust Money. All moneys 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 Holders of the particular Notes
for the payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal
and/or interest; but such moneys need not be segregated from other funds except
to the extent required herein or in the Sale and Servicing Agreement or required
by law.
Section 4.03. Repayment of Moneys Held by Paying Agent. In
----------------------------------------
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes shall,
upon demand of the Issuer, be paid to the Indenture Trustee to be held and
applied according to Section 3.03 hereof and thereupon such Paying Agent shall
------------
be released from all further liability with respect to such moneys.
ARTICLE V
REMEDIES
Section 5.01. Events of Default. (a) "Event of Default,"
-----------------
wherever used herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(i) subject to Section 5.01(b) and notwithstanding that there may
be insufficient sums in the Note Distribution Account for payment thereof on the
related Distribution Date, default in the payment of any interest on any Note
when the same becomes due and payable, and continuance of such default for a
period of five (5) days; or
(ii) subject to Section 5.01(b) and notwithstanding that there may
be insufficient sums in the Note Distribution Account for payment thereof on the
related
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Distribution Date, default in the payment of the principal of or any installment
of the principal of any Note (i) when the same becomes due and payable or (ii)
on the Maturity Date; or
(iii) the existence of an unpaid Loss Reimbursement Deficiency in
respect of any Highest Priority Classes Notes; or
(iv) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section specifically dealt with), or any representation or warranty of the
Issuer made in this Indenture, the Sale and Servicing Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
proving to have been incorrect in any material respect as of the time when the
same shall have been made, and such default shall continue or not be cured, or
the circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee, or to the Issuer and the Indenture
Trustee by the Holders of at least 25% of the Voting Interests of the
Outstanding Notes, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating that such
notice is a notice of Default hereunder; or
(v) default in the observance or performance of any covenant or
agreement of the Company made in the Deposit Trust Agreement or any
representation or warranty of the Company made in the Deposit Trust Agreement,
proving to have been incorrect in any material respect as of the time when the
same shall have been made, and such default shall continue or not be cured, or
the circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee, or to the Issuer and the Indenture
Trustee by the Holders of at least 25% of the Voting Interests of the
Outstanding Notes, a written notice specifying such Default or incorrect
representation or warranty and requiring it to be remedied and stating that such
notice is a notice of Default hereunder; or
(vi) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Collateral in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Collateral, or
ordering the winding-up or liquidation of the Issuer's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(vii) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Issuer to the entry of an order for
relief in an involuntary case under any such law, or the consent by the Issuer
to the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer
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or for any substantial part of the Collateral, or the making by the Issuer of
any general assignment for the benefit of creditors, or the failure by the
Issuer generally to pay its debts as such debts become due, or the taking of any
action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five days
after the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clauses (iv) and (v) above, the status of
such event and what action the Issuer is taking or proposes to take with respect
thereto.
(b) Neither (i) the failure to pay the full amount of interest payable
pursuant to Section 5.01(d) of the Sale and Servicing Agreement to Holders of
---------------
any Non-Priority Class, nor (ii) an application of Allocable Loss Amounts
pursuant to Section 5.04 of the Sale and Servicing Agreement to a Non-Priority
------------
Class, shall constitute an Event of Default under Section 5.01(a)(i).
------------------
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default should occur and be continuing, then and in every such
case the Indenture Trustee, at the direction or upon the prior written consent
of the Majority Highest Priority Classes Noteholders, may declare all the Notes
to be immediately due and payable, by a notice in writing to the Issuer (and to
the Indenture Trustee if given by Noteholders), and upon any such declaration
the unpaid principal amount of such Notes, together with accrued and unpaid
interest thereon, and all accrued and unpaid interest on each Subclass of Class
X-1 Notes, through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the moneys due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
---------
Majority Highest Priority Classes Noteholders, by written notice to the Issuer
and the Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
1. all payments of principal of and/or interest on all 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
2. all sums paid or advanced by the Indenture Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been cured or
waived as provided
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in Section 5.12 hereof. No such rescission shall affect any subsequent
------------
default or impair any right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in
-----------------
the payment of any interest on any Note when the same becomes due and payable,
and such default continues for a period of five days, or (ii) default is made in
the payment of the principal of or any installment of the principal of any Note
when the same becomes due and payable, the Issuer will, upon demand of the
Indenture Trustee, pay to the Indenture Trustee, for the benefit of the Holders
of the Notes, the whole amount then due and payable on such Notes for principal
and/or interest, with interest upon the overdue principal and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest at the rate borne by the Notes and in addition thereto
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee may, and shall at the direction of the
majority of the Holders of the Notes, institute a Proceeding for the collection
of the sums so due and unpaid, and may prosecute such Proceeding to judgment or
final decree, and may enforce the same against the Issuer or other obligor upon
such Notes and collect in the manner provided by law out of the property of the
Issuer or other obligor upon such Notes, wherever situated, the moneys adjudged
or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, in its discretion, and shall at the direction of the majority of
the Holders of the Notes, as more particularly provided in Section 5.04 hereof,
------------
proceed to protect and enforce its rights and the rights of the Noteholders by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered by intervention in such Proceedings or otherwise:
-35-
(i) to file and prove a claim or claims for the whole amount of
principal and/or interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee, each predecessor
Indenture Trustee, and its agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee,
except as a result of negligence or bad faith) and of the Noteholders
allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and the Indenture Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property; and any trustee,
receiver, liquidator, custodian or other similar official in any such
Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture
Trustee shall consent to the making of payments directly to such
Noteholders, to pay to the Indenture Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred and all advances
made by the Indenture Trustee and each predecessor Indenture Trustee except
as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents, attorneys and
counsel, shall be for the ratable benefit of the Holders of the Notes.
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(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
Section 5.04. Remedies; Priorities.
--------------------
(a) If an Event of Default shall have occurred and be continuing,
the Indenture Trustee may, and at the direction of a majority of the Holders of
the Notes shall, do one or more of the following (subject to Section 5.05
------------
hereof):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer and
any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee or the Noteholders; and
(iv) sell the Collateral or any portion thereof or rights or
interest therein in a commercially reasonable manner, at one or more public
or private sales called and conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Collateral following an Event of Default, unless (A) the
Holders of 100% of the Voting Interests of the Outstanding Notes consent
thereto, (B) the proceeds of such sale or liquidation distributable to the
Noteholders are sufficient to discharge in full all amounts then due and
unpaid upon such Notes for principal and/or interest or (C) the Indenture
Trustee determines that the Collateral will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes
as they would have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of Holders of 66-
2/3% of the Voting Interests of the Outstanding Notes. In determining such
sufficiency or insufficiency with respect to clause (B) and (C) of this
subsection (a)(iv), the Indenture Trustee may, but need not, obtain and
rely upon an opinion of an Independent investment banking or accounting
firm of national reputation as to the feasibility of such proposed action
and as to the sufficiency of the Collateral for such purpose.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out the money or property in the
---------
following order:
-37-
FIRST: to the Indenture Trustee for the Indenture Trustee Fee then
due and 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 for the Owner Trustee Fee then due;
SECOND: to the Servicer for the Servicing Fee then due and unpaid;
THIRD: to the Custodian for the Custodian Fee then due and unpaid;
FOURTH: to the Servicer for any amounts then due and payable as the
Servicing Advance Reimbursement Amount under the Sale and Servicing
Agreement;
FIFTH: to the Noteholders for amounts due and unpaid on the Notes for
interest, pro rata according to the amounts due and payable on the Notes
for interest;
SIXTH: to the applicable Noteholders for amounts due and unpaid on
the Notes (other than the Class X-1 Notes) for principal, pro rata among
the Holders of each such Class of Notes, according to the amounts due and
payable and in the order and priorities set forth in Sections 5.01(d) and
----------------
(e) of the Sale and Servicing Agreement, until the Security Balance of each
---
such Class is reduced to zero; and
SEVENTH: to the Owner Trustee, for any amounts to be distributed pro
rata to the holders of the Residual Interest Certificate pursuant to the
Deposit Trust Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section. At least 15
days before such record date, the Indenture Trustee shall mail to each
Noteholder and the Issuer a notice that states the record date, the payment date
and the amount to be paid.
Section 5.05. Optional Preservation of the Collateral. If the
---------------------------------------
Notes have been declared to be due and payable under Section 5.02 hereof
------------
following an Event of Default and such declaration and its consequences have not
been rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Collateral. It is the desire of the parties hereto
and the Noteholders that there be at all times sufficient funds for the payment
of principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Collateral. In determining whether to maintain possession of the
Collateral, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Note shall
-------------------
have any right to institute any Proceeding, judicial or otherwise, with respect
to this Indenture or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
-38-
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Voting Interests of the
Outstanding Highest Priority Classes Notes have made written request to the
Indenture Trustee to institute such Proceeding in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(d) the Indenture Trustee for 30 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceeding; and
(e) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 30-day period by the Majority Priority
Highest Classes Noteholders.
It is 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.
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 a Majority Priority Highest Classes Noteholders, the
Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
Section 5.07. Unconditional Rights of Noteholders to Receive
----------------------------------------------
Principal and/or Interest. Notwithstanding any other provisions in this
-------------------------
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the applicable Maturity Date thereof expressed in such
Note or in this Indenture (or, in the case of redemption, on or after the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
Section 5.08. Restoration of Rights and Remedies. If the
----------------------------------
Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been discontinued
or abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder,
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and thereafter all rights and remedies of the Indenture Trustee and the
Noteholders shall continue as though no such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to the Indenture Trustee 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 5.10. Delay or Omission Not a Waiver. No delay or
------------------------------
omission of the Indenture Trustee or any Holder of any Note to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Indenture Trustee or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Noteholders, as the case may be.
Section 5.11. Control by Noteholders. The Majority Priority
----------------------
Highest Classes Notes shall have the right to direct the time, method and place
of conducting any Proceeding for any remedy available to the Indenture Trustee
with respect to the Notes or exercising any trust or power conferred on the
Indenture Trustee; provided, however, that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.04 hereof, any direction
------------
to the Indenture Trustee to sell or liquidate the Collateral shall be by
Holders of Notes representing not less than 100% of the Voting Interests of
all Classes of Notes Outstanding;
(c) if the conditions set forth in Section 5.05 hereof have been
------------
satisfied and the Indenture Trustee elects to retain the Collateral
pursuant to such Section, then any direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the Voting Interests of all
Classes of Notes Outstanding to sell or liquidate the Collateral shall be
of no force and effect; and
(d) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of the Noteholders set forth in this
Section 5.11, subject to Section 6.01 hereof, the Indenture Trustee need not
------------ ------------
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
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Section 5.12. Waiver of Past Defaults. The Majority Priority
-----------------------
Highest Classes Notes may waive any past Default or Event of Default and its
consequences, except a Default (a) in the payment of principal of or interest on
any of the Notes or (b) in respect of a covenant or provision hereof that cannot
be modified or amended without the consent of the Holder of each Note. In the
case of any such waiver, the Issuer, the Indenture Trustee and the Holders of
the Notes shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this
---------------------
Indenture agree, and each Holder of any Note by such Holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or omitted
by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Voting
Interests of the Outstanding Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
Section 5.14. Waiver of Stay or Extension Laws. The Issuer
--------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.15. Action on Notes. The Indenture Trustee's right to
---------------
seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall be impaired
by the recovery of any judgment by the Indenture Trustee against the Issuer
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or by the levy of any execution under such judgment upon any portion of the
Collateral or upon any of the assets of the Issuer. Any money or property
collected by the Indenture Trustee shall be applied in accordance with Section
-------
5.04(b) hereof.
-------
Section 5.16. Performance and Enforcement of Certain Obligations.
--------------------------------------------------
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer shall take all such lawful action
as the Indenture Trustee may request to compel or secure the performance and
observance by the Transferor and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Servicing
Agreement, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Sale and
Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Transferor or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Transferor or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in writing
or by telephone, confirmed in writing promptly thereafter) of the Holders of 66-
2/3% of the Highest Priority Classes Notes Outstanding shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the
Transferor or the Servicer under or in connection with the Sale and Servicing
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Transferor or the Servicer, as the case may be,
of each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension, or waiver under the Sale and
Servicing Agreement, and any right of the Issuer to take such action shall be
suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee. (a) If an Event of
---------------------------
Default has occurred and is continuing, the Indenture Trustee shall exercise the
rights and powers vested in it by this Indenture and 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.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
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(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, that the Indenture
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) 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) this paragraph does not limit the effect of paragraph (b) of
this Section 6.01;
------------
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11 hereof.
------------
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section
-------------------------------- -------
6.01.
----
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee shall be segregated
from other funds except to the extent permitted by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it; provided, however, that the Indenture Trustee
shall not refuse or fail to perform any of its duties hereunder solely as a
result of nonpayment of its normal fees and expenses and provided, further, that
nothing in this Section 6.01(g) shall be construed to limit the exercise by the
---------------
Indenture Trustee of any right or remedy permitted under this Indenture or
otherwise in the event of the Issuer's failure to pay the Indenture Trustee's
fees and expenses pursuant to Section 6.07 hereof. In determining that such
------------
repayment or indemnity is not reasonably assured to it, the Indenture Trustee
must consider not only the likelihood of repayment or indemnity by or on behalf
of the Issuer but also the likelihood of repayment or indemnity from amounts
payable to it from the Collateral pursuant to Section 6.07 hereof.
------------
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(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(i) The Indenture Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any Event of Default (other than an Event
of Default pursuant to Section 5.01(a)(i) or (ii) hereof) unless a Responsible
------------------ ----
Officer of the Indenture Trustee shall have received written notice thereof or
otherwise shall have actual knowledge thereof. In the absence of receipt of
notice or such knowledge, the Indenture Trustee may conclusively assume that
there is no Event of Default.
Section 6.02. Rights of Indenture Trustee.
---------------------------
(a) The Indenture Trustee may rely on 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 the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for (i) any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that such action or omission by
the Indenture Trustee does not constitute willful misconduct, negligence or bad
faith; or (ii) any willful misconduct or gross negligence on the part of the
Custodian.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The
--------------------------------------
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12
------------- ----
hereof.
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Section 6.04. Indenture Trustee's Disclaimer. The Indenture
------------------------------
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, shall not be accountable
for the Issuer's use of the proceeds from the Notes, or responsible for any
statement of the Issuer in the Indenture or in any document issued in connection
with the sale of the Notes or in the Notes other than the Indenture Trustee's
certificate of authentication.
Section 6.05. Notices of Default. If a Default occurs and is
------------------
continuing and if it is known to a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall mail to each Noteholder notice of the Default within
90 days after it occurs. Except in the case of a Default in payment of
principal of or interest on any Note (including payments pursuant to the
mandatory redemption provisions of such Note), the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Noteholders.
Section 6.06. Reports by Indenture Trustee to Holders. The
---------------------------------------
Indenture Trustee shall deliver to each Noteholder such information as may be
required to enable such Holder to prepare its federal and state income tax
returns.
Section 6.07. Compensation and Indemnity. As compensation for
--------------------------
its services hereunder, the Indenture Trustee shall be entitled to receive, on
each Distribution Date, the Indenture Trustee's Fee pursuant to Section 8.02(c)
---------------
hereof (which compensation shall not be limited by any law on compensation of a
trustee of an express trust) and shall be entitled to reimbursement by the
Servicer for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer agrees to cause the Transferor to indemnify
the Indenture Trustee against any and all loss, liability or expense (including
attorneys' fees) incurred by it in connection with the administration of this
trust and the performance of its duties hereunder. The Indenture Trustee shall
notify the Issuer and the Servicer promptly of any claim for which it may seek
indemnity. Failure by the Indenture Trustee so to notify the Issuer and the
Servicer shall not relieve the Issuer of its obligations hereunder. The Issuer
shall or shall cause the Servicer to defend any such claim, and the Indenture
Trustee may have separate counsel reasonably acceptable to the Servicer and the
Issuer shall or shall cause the Servicer to pay the reasonable fees and expenses
of such counsel. Neither the Issuer nor the Servicer need reimburse any expense
or indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section 6.07 shall survive the discharge of this Indenture. When the
------------
Indenture Trustee incurs expenses after the occurrence of a Default specified in
Section 5.01(a)(vi) or (vii) hereof with respect to the Issuer, the expenses are
------------------- -----
intended to constitute expenses of administration under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency or
similar law.
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Section 6.08. Replacement of Indenture Trustee. No resignation
--------------------------------
or removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.08. The Indenture
------------
Trustee may resign at any time by so notifying the Issuer. The Holders of a
majority of the Voting Interests of the Outstanding Notes may remove the
Indenture Trustee by so notifying the Indenture Trustee and may appoint a
successor Indenture Trustee. The Issuer shall remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11 hereof;
------------
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer. Thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights, powers
and duties of the Indenture Trustee under this Indenture. The successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority of the Voting
Interests of Outstanding Notes may petition any court of competent jurisdiction
for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11 hereof, any
------------
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section 6.08, the Issuer's and the Administrator's obligations under
------------
Section 6.07 hereof shall continue for the benefit of the retiring Indenture
------------
Trustee.
Section 6.09. Successor Indenture Trustee by Merger. If the
-------------------------------------
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving
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or transferee corporation without any further act shall be the successor
Indenture Trustee; provided, however, that such corporation or banking
association shall otherwise be qualified and eligible under Section 6.11 hereof.
------------
The Indenture Trustee shall provide the Rating Agencies prior written notice of
any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate
-----------------------------------------------
Indenture Trustee. (a) Notwithstanding any other provisions of this
-----------------
Indenture, at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Collateral may at the time be located, the
Indenture Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or co-
trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Collateral, or any part hereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 hereof
------------
and no notice to Noteholders of the appointment of any co-trustee or separate
trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or co-
trustee jointly (it being understood that such separate trustee or co-
trustee is not authorized to act separately without the Indenture Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Collateral or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
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(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
----------
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, jointly with the Indenture
Trustee, subject to all the provisions of this Indenture, specifically including
every provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture
-----------------------------
Trustee shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Indenture Trustee shall comply with TIA Section 310(b),
including the optional provision permitted by the second sentence of TIA Section
310(b)(9); provided, however, that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other securities
of the Issuer are outstanding if the requirements for such exclusion set forth
in TIA Section 310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against Issuer.
------------------------------------------------
The Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee which
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS'
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses
-------------------------------------------------------
of Noteholders. The Issuer will furnish or cause to be furnished to the
--------------
Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last
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Record Date, a list, in such form as the Indenture Trustee may reasonably
require, of the names and addresses of the Holders of Notes as of such Record
Date, (b) at such other times as the Indenture Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Indenture Trustee
is the Note Registrar, no such list shall be required to be furnished.
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 furnished to the Indenture Trustee as provided
in Section 7.01 hereof and the names and addresses of 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 such Section 7.01
------------
upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall:
-----------------
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) that the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of the
-------------------
Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with the rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA Section 313(c))
such summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section
-------
7.03(a) and by rules and regulations prescribed from time to time by the
-------
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
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Section 7.04. Reports by Indenture Trustee. If required by TIA
----------------------------
Section 313(a), within 60 days after each March 1, beginning with March 1, 1998,
the Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each securities
exchange, if any, on which the Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Notes are listed on any securities exchange.
Section 7.05. 144A Information. The Indenture Trustee shall provide
----------------
to any Holder of a Class B-2 or Class X-1 Note and any prospective transferee
designated by any such Holder information regarding the Class B-2 or Class X-1
Notes and the Loans and such other information as shall be necessary to satisfy
the condition to eligibility set forth in Rule 144A(d)(4) under the Securities
Act for transfer of any such Note without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A
under the Securities Act. Each Holder of a Class B-2 or Class X-1 Note desiring
to effect such a transfer shall, and does hereby agree to, indemnify the Issuer,
the Owner Trustee, the Indenture Trustee and the Depositor against any liability
that may result if the transfer is not so exempt or is not made in accordance
with federal and state securities laws.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money.
-------------------
General. Except as otherwise expressly provided herein, the Indenture
-------
Trustee may demand payment or delivery of, and shall receive and collect,
directly and without intervention or assistance of any fiscal agent or other
intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply
all such money received by it as provided in this Indenture. Except as
otherwise expressly provided in this Indenture, if any default occurs in the
making of any payment or performance under any agreement or instrument that is
part of the Collateral, the Indenture Trustee may take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V hereof.
---------
Section 8.02. Trust Accounts; Distributions. (a) On or prior to
-----------------------------
the Closing Date, the Issuer shall cause the Servicer to establish and maintain,
in the name of the Indenture Trustee for the benefit of the Noteholders, or on
behalf of the Owner Trustee for the benefit of the Securityholders, the Trust
Accounts as provided in Article V of the Sale and Servicing Agreement. The
---------
Indenture Trustee shall deposit amounts into each of the Trust Accounts in
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accordance with the terms hereof, the Sale and Servicing Agreement and the
Servicer's Monthly Remittance Report.
(b) On the second Business Day prior to each Distribution Date, the
Indenture Trustee shall withdraw from the Collection Account, pursuant to
Section 5.01(b)(2) of the Sale and Servicing Agreement, the Available Collection
------------------
Amount and shall deposit such amount into the Note Distribution Account. On
each Distribution Date, to the extent funds are available in the Note
Distribution Account, the Indenture Trustee shall either retain funds in the
Note Distribution Account for distribution on such day or make the withdrawals
from the Note Distribution Account and deposits into the Certificate
Distribution Account for distribution on such Distribution Date as required
pursuant to Section 5.01(c) of the Sale and Servicing Agreement.
---------------
(c) On each Distribution Date and Redemption Date, to the extent funds
are available in the Note Distribution Account, the Indenture Trustee shall make
the following distributions from the amounts on deposit in the Note Distribution
Account in the following order of priority (except as otherwise provided in
Section 5.04(c) hereof):
---------------
(i) (A) to the Servicer, an amount equal (i) to the Servicing
Compensation (net of any amounts retained prior to deposit into the
Collection Account pursuant to Section 5.01(b)(1) of the Sale and Servicing
Agreement) and all unpaid Servicing Compensation from prior Distribution
Dates and (ii) all Nonrecoverable Servicing Advances not previously
reimbursed, (B) to the Indenture Trustee, an amount equal to the Indenture
Trustee Fee and all unpaid Indenture Trustee Fees from prior Distribution
Dates, (C) to the Servicer, in trust for the Owner Trustee, an amount equal
to the Owner Trustee Fee and all unpaid Owner Trustee Fees from prior Due
Periods, and (D) to the Custodian, an amount equal to the Custodian Fee, if
any, and all unpaid Custodian Fees from prior Distribution Dates; and
(ii) to the Noteholders, the amounts set forth in Sections 5.01(d)
and (e) of the Sale and Servicing Agreement.
(d) On each Distribution Date and each Redemption Date, to the extent
of the interest of the Indenture Trustee in the Certificate Distribution Account
(as described in Section 5.03(a) of the Sale and Servicing Agreement), the
Indenture Trustee hereby authorizes the Owner Trustee or the Paying Agent, as
applicable, to make the distributions from the Certificate Distribution Account
as required pursuant to Sections 5.01(d) and (e) of the Sale and Servicing
------------------------
Agreement.
Section 8.03. General Provisions Regarding Accounts. (a) So long
-------------------------------------
as no Default or Event of Default shall have occurred and be continuing, all or
a portion of the funds in the Trust Accounts shall be invested in Permitted
Investments and reinvested by the Indenture Trustee at the direction of the
Servicer in accordance with the provisions of Article V of the Sale and
---------
Servicing Agreement. All income or other gain from investments of moneys
deposited in the Trust Accounts shall be deposited by the Indenture Trustee into
the Note Distribution Account, and any loss resulting from such investments
shall be charged to
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such account. The Issuer will not direct the Indenture Trustee to make any
investment of any funds or to sell any investment held in any of the Trust
Accounts unless the security interest Granted and perfected in such account will
continue to be perfected in such investment or the proceeds of such sale, in
either case without any further action by any Person, and, in connection with
any direction to the Indenture Trustee to make any such investment or sale, if
requested by the Indenture Trustee, the Issuer shall deliver to the Indenture
Trustee an Opinion of Counsel, acceptable to the Indenture Trustee, to such
effect.
(b) Subject to Section 6.01(c) hereof, the Indenture Trustee shall not
---------------
in any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with
their terms.
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Indenture Trustee by 11:00
a.m. Eastern Time (or such other time as may be agreed by the Issuer and
Indenture Trustee) on any Business Day or (ii) a Default or Event of Default
shall have occurred and be continuing with respect to the Notes but the Notes
shall not have been declared due and payable pursuant to Section 5.02 hereof or
------------
(iii) if such Notes shall have been declared due and payable following an Event
of Default, amounts collected or receivable from the Collateral are being
applied in accordance with Section 5.05 hereof as if there had not been such a
------------
declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in one or more
Eligible Investments.
Section 8.04. Servicer's Monthly Statements. On each Distribution
-----------------------------
Date, the Indenture Trustee shall deliver the Servicer's Monthly Remittance
Report (as defined in the Sale and Servicing Agreement) with respect to such
Distribution Date to DTC and the Rating Agencies.
Section 8.05. Release of Collateral. (a) Subject to the payment
---------------------
of its fees and expenses pursuant to Section 6.07 hereof, the Indenture Trustee
------------
may, and when required by the provisions of this Indenture shall, execute
instruments to release property from the lien of this Indenture, or convey the
Indenture Trustee's interest in the same, in a manner and under circumstances
that are not inconsistent with the provisions of this Indenture. No party
relying upon an instrument executed by the Indenture Trustee as provided in this
Article VIII shall be bound to ascertain the Indenture Trustee's authority,
------------
inquire into the satisfaction of any conditions precedent or see to the
application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due to the Certificateholders pursuant to Section
5.02(b) of the Sale and Servicing Agreement, to the Servicer pursuant to Section
-------
8.02(c)(i)(A) hereof, to the Indenture Trustee pursuant to Section 8.02(c)(i)(B)
------------- ---------------------
hereof, to the Owner Trustee pursuant to Section 8.02(c)(i)(C) hereof and to the
---------------------
Custodian pursuant to Section 8.02(c)(i)(D) hereof have
---------------------
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been paid, release any remaining portion of the Collateral that secured the
Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Trust Accounts. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Subsection (b) only upon receipt of an Issuer Request
--------------
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.01 hereof.
-------------
Section 8.06. Opinion of Counsel. The Indenture Trustee shall
------------------
receive at least seven days' prior notice when requested by the Issuer to take
any action pursuant to Section 8.05(a) hereof, accompanied by copies of any
---------------
instruments involved, and the Indenture Trustee may also require, as a condition
to such action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Collateral. 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.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
------------------------------------------------------
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by
an Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
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(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided, however, that such
action shall not adversely affect the interests of the Holders of the
Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI hereof; or
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior consent of the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by (i) an
Opinion of Counsel or (ii) satisfaction of the Rating Agency Condition,
adversely affect in any material respect the interests of any Noteholder.
Section 9.02. Supplemental Indentures with Consent of Noteholders.
---------------------------------------------------
The Issuer and the Indenture Trustee, When authorized by an Issuer Order, also
may, with prior consent of the Rating Agencies, and with the consent of the
Holders of not less than a majority of the Voting Interests of the Outstanding
Notes, by Act of such Holders delivered to the Issuer and the Indenture Trustee,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the Security Balance (or Notional Amount in the
case of the Class X-1
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Notes) thereof, the interest rate thereon or the Termination Price with respect
thereto, change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Collateral to payment of
principal of or interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article V hereof, to the payment of any such amount due on the Notes on or
---------
after the respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(b) reduce the percentage of the Voting Interests 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 certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definition of
the term "Outstanding" or "Voting Rights";
(d) reduce the percentage of the Voting Rights of the Notes required
to direct the Indenture Trustee to direct the Issuer to sell or liquidate the
Collateral pursuant to Section 5.04 hereof;
------------
(e) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional provisions of
this Indenture or the Basic Documents cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby;
(f) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or principal
due on any Note on any Distribution Date (including the calculation of any of
the individual components of such calculation) or to affect the rights of the
Holders of Notes to the benefit of any provisions for the mandatory redemption
of the Notes contained herein; or
(g) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Collateral or,
except as otherwise permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the Holder of
any Note of the security provided by the lien of this Indenture.
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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In connection with requesting the consent of the Noteholders pursuant
to this Section 9.02, the Indenture Trustee shall mail to the Holders of the
------------
Notes to which such amendment or supplemental indenture relates a notice setting
forth in general terms the substance of such supplemental indenture. 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.
Section 9.03. Execution of Supplemental Indentures. In executing,
------------------------------------
or permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts
----------
created by this Indenture, the Indenture Trustee shall be entitled to receive,
and subject to Sections 6.01 and 6.02 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,
liabilities or immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indentures. Upon the
---------------------------------
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and shall be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 9.05. Conformity with Trust Indenture Act. Every
-----------------------------------
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture Act
----------
as then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures.
---------------------------------------------
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
----------
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
Section 9.07. Amendments to Deposit Trust Agreement.
-------------------------------------
Subject to Section 11.1 of the Deposit Trust Agreement, the Indenture
Trustee shall, upon Issuer Order, consent to any proposed amendment to the
Deposit
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Trust Agreement or an amendment to or waiver of any provision of any other
document relating to the Deposit Trust Agreement, such consent to be given
without the necessity of obtaining the consent of the Holders of any Notes upon
satisfaction of the requirements under Section 11.1 of the Deposit Trust
Agreement. Nothing in this Section 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.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
----------
The Majority Residual Interestholders (as defined in the Deposit Trust
Agreement) may, at their option, effect an early redemption of the Notes on any
Distribution Date on or after the Distribution Date on which the Pool Principal
Balance declines to 10% or less of the Original Pool Principal Balance. The
Majority Residual Interestholders shall effect such early termination in the
manner specified in and subject to the provisions of Section 11.02(b) of the
----------------
Sale and Servicing Agreement.
The Servicer or the Issuer shall furnish the Rating Agencies notice of
any such redemption in accordance with Section 10.02 hereof.
-------------
Section 10.02. Form of Redemption Notice. Notice of redemption
-------------------------
under Section 10.01 hereof shall be given by the Indenture Trustee by first-
class mail, postage prepaid, or by facsimile mailed or transmitted not later
than 10 days prior to the applicable Redemption Date to each Holder of Notes, as
of the close of business on the Record Date preceding the applicable Redemption
Date, at such Holder's address or facsimile number appearing in the Note
Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) that on the Redemption Date Noteholders shall receive the Note
Redemption Amount; and
(iii) the place where such Notes are to be surrendered for payment of
the Termination Price (which shall be the office or agency of the Issuer to
be maintained as provided in Section 3.02 hereof).
------------
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name of the Issuer and at the expense of the Servicer. Failure
to give to any Holder of any Note notice of redemption, or any defect therein,
shall not impair or affect the validity of the redemption of any other Note.
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Section 10.03. Notes Payable on Redemption Date; Provision for
-----------------------------------------------
Payment of Indenture Trustee. The Notes to be redeemed shall, following
----------------------------
notice of redemption as required by Section 10.02 hereof (in the case of
-------------
redemption pursuant to Section 10.01) hereof, on the Redemption Date become due
-------------
and payable at the Note Redemption Amount and (unless the Issuer shall default
in the payment of the Note Redemption Amount) no interest shall accrue thereon
for any period after the date to which accrued interest is calculated for
purposes of calculating the Note Redemption Amount. The Issuer may not redeem
the Notes unless (i) all outstanding obligations under the Notes have been paid
in full and (ii) the Indenture Trustee has been paid all amounts to which it is
entitled hereunder.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc. (a)
-----------------------------------------
Upon any application or request by the Issuer to the Indenture Trustee to take
any action under any provision of this Indenture (except with respect to the
Servicer's servicing activity in the ordinary course of its business), the
Issuer shall furnish to the Indenture Trustee (i) an Officer's Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants meeting the
applicable requirements of this Section, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
(4) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
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(b) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.01(a) hereof
----------------
or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(c) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in subsection (b) above, the Issuer shall
--------------
also deliver to the Indenture Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be so deposited
and of all other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of the Issuer, as
set forth in the certificates delivered pursuant to subsection (b) above and
--------------
this subsection (c), is 10% or more of the Outstanding Amount of the Notes, but
--------------
such a certificate need not be furnished with respect to any securities so
deposited, if the fair value thereof to the Issuer as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of the
Outstanding Amount of the Notes.
(d) Whenever any property or securities are to be released from the
lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such release)
of the property or securities proposed to be released and stating that in the
opinion of such person the proposed release will not impair the security under
this Indenture in contravention of the provisions hereof.
(e) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in subsection (d) above, the Issuer shall
--------------
also furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property, other than securities released from the lien of this Indenture since
the commencement of the then-current calendar year, as set forth in the
certificates required by subsection (d) above and this subsection (e), equals
-------------- --------------
10% or more of the Outstanding Amount of the Notes, but such certificate need
not be furnished in the case of any release of property or securities if the
fair value thereof as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the then Outstanding Amount of the
Notes.
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.
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Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Transferor, the Issuer or the
Administrator, stating that the information with respect to such factual matters
is in the possession of the Servicer, the Transferor, the Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI 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 agents duly appointed in writing; and except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee, and,
where it is hereby expressly required, to the Issuer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Noteholders signing such instrument or
---
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Indenture
------------
Trustee and the Issuer, 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 in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
-60-
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.04. Notices, etc., to Indenture Trustee, Issuer and Rating
------------------------------------------------------
Agencies. Any request, demand, authorization, direction, notice, consent,
--------
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Indenture Trustee at its Corporate Trust
Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and made, given,
furnished or filed with the Issuer addressed to: [ ] Home Loan
Owner Trust 199 - , in care of [Owner Trustee], [Address], [City, State,
Zip], Attention: , or at any other address previously
furnished in writing to the Indenture Trustee by the Issuer or the
Administrator. The Issuer shall promptly transmit any notice received by
it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
[Rating Agency], at the following address: [Rating Agency], [Address], [City,
State, Zip] Attention: , and (ii) in the case of [Rating Agency], at
the following address: [Rating Agency], [Address], [City, State, Zip],
Attention: .
Section 11.05. Notices to Noteholders; Waiver. Where this
------------------------------
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have duly been given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
-61-
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
Section 11.06. Conflict with Trust Indenture Act. If any
---------------------------------
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this Indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 11.07. 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 11.08. Successors and Assigns. All covenants and
----------------------
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors, co-trustees and
agents.
Section 11.09. 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 11.10. Benefits of Indenture. Nothing in this Indenture
---------------------
or in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Collateral, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 11.11. Legal Holidays. In any case where the date on
--------------
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
-62-
Section 11.12. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13. Counterparts. This Indenture may be executed in
------------
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.14. Recording of Indenture. If this Indenture is
----------------------
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
Section 11.15. Trust Obligation. No recourse may be taken,
----------------
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or, except as expressly provided
for in Article VI hereof, 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 Issuer 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 Issuer, 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 expressly have 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 Issuer hereunder, the
Owner Trustee shall be subject to, and entitled to the benefits of, the terms
and provisions of Articles VI, VII and VIII of the Deposit Trust Agreement.
Section 11.16. No Petition. The Indenture Trustee, by entering
-----------
into this Indenture, and each Noteholder, by accepting a Note, hereby covenant
and agree that they will not at any time institute against the Transferor, the
Servicer or the Issuer, or join in any institution against the Transferor, the
Servicer or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law, in connection with any
obligations relating to the Notes, this Indenture or any of the Basic Documents.
-63-
Section 11.17. Inspection. The Issuer agrees that, on reasonable
----------
prior notice, it will permit any representative of the Indenture Trustee, during
the Issuer's normal business hours, to examine all the books of account,
records, reports and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by Independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with the
Issuer's officers, employees, and Independent certified public accountants, all
at such reasonable times and as often as may reasonably be requested. The
Indenture Trustee shall and shall cause its representatives to hold in
confidence all such information except to the extent disclosure may be required
by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
-64-
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
[ ] HOME LOAN
OWNER TRUST 199 -
By: [OWNER TRUSTEE]
not in its individual capacity but
solely as Owner Trustee
By:
-------------------------------------------
Name:
Title:
[INDENTURE TRUSTEE], as Indenture Trustee
By:
-------------------------------------------
Name:
Title:
-65-
STATE OF __________
COUNTY OF __________
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared ___________________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said ___________, not in its individual capacity, but solely as Owner Trustee on
behalf of [ ] HOME LOAN OWNER TRUST 199 - , a Delaware business
trust, and that such person executed the same as the act of said business trust
for the purpose and consideration therein expressed, and in the capacities
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of ,
199 .
-----------------------------------------------------
Notary Public in and for the State of [ ]
My commission expires:
--------------------------
STATE OF __________
COUNTY OF __________
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared __________________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of
[INDENTURE TRUSTEE], a __________, and that such person executed the same as the
act of said corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of ,
199 .
-----------------------------------------------
Notary Public in and for the State of New York
(Seal)
My commission expires:
---------------------------
Schedule A
Schedule ▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: [ ] Home Loan Owner Trust 199 -
Asset-Backed Notes Series 199 -
---------------------------------
Reference is hereby made to the Indenture dated as of , 199
(the "INDENTURE") between [ ] Home Loan Owner Trust 199 - (the
"TRUST") and [Indenture Trustee] (the "INDENTURE TRUSTEE"). Capitalized terms
used but not defined herein shall have the meanings given to them in the Sale
and Servicing Agreement dated as of , 199 among the Trust,
[Transferor and Servicer] ("[TRANSFEROR AND SERVICER]"), ACE Securities Corp.
(the "DEPOSITOR"), and [Indenture Trustee] as Indenture Trustee.
The undersigned (the "TRANSFEROR") has requested a transfer of $_________
initial Class [Principal Balance][Notional Amount] of Class [B-2][X-1] Notes to
[insert name of transferee].
In connection with such request, and in respect of such Class [B-2][X-1]
Notes, the Transferor hereby certifies that such Class [B-2][X-1] Notes are
being transferred in accordance with (i) the transfer restrictions set forth in
the Indenture and the Class [B-2][X-1] Notes and (ii) Rule 144A under the
Securities Act of 1933, as amended to a purchaser that the Transferor reasonably
believes is a "qualified institutional buyer" within the meaning of Rule 144A
purchasing for its own account or for the account of a "qualified institutional
buyer," which purchaser is aware that the sale to it is being made in reliance
upon Rule 144A, in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Depositor.
--------------------------------------------
[Name of Transferor]
By:
-----------------------------------------
Name:
Title:
Dated: ,
------- ----------
B-1-1
EXHIBIT B-2
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
_________________________
[Date]
Dear Sirs:
In connection with our proposed purchase of $_________________ initial Class
[Principal Balance][Notional Amount] of Class [B-2][X-1] Home Loan Asset Backed
Notes, Series 199 - (the "OFFERED NOTES") issued by [ ] Home Loan
Owner Trust 199 - (the "TRUST"), we confirm that:
(1) We have received a copy of the Private Placement Memorandum dated ,
199 relating to the Offered Notes (the "PRIVATE PLACEMENT MEMORANDUM"),
and we understand that the Offered Notes have not been, and will not be,
registered under the Securities Act of 1933, as amended (the "1933 ACT") or
any state securities laws, and may not be sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we should
sell any Offered Notes we will do so only (A) pursuant to a registration
statement which has been declared effective under the 1933 Act, (B) for so
long as the Offered Notes are eligible for resale pursuant to Rule 144A
under the 1933 Act, to a Person we reasonably believe is a "qualified
institutional buyer" as defined in Rule 144A that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the transfer is being made in reliance on Rule 144A,
(C) to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the 1933 Act (an
"INSTITUTIONAL ACCREDITED INVESTOR") that is acquiring the Offered Notes
for its own account, or for the account of such an Institutional Accredited
Investor, for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the 1933 Act, in
each case in compliance with the requirements of the Indenture dated as of
, 199 between [ ] Home Loan Owner Trust 199 - and [Indenture
Trustee], as Indenture Trustee, and applicable state securities laws; and
we further agree, in the capacities stated above, to provide to any person
purchasing any of the Offered Notes from us a notice advising such
purchaser that resales of the Offered Notes are restricted as stated
herein.
(2) We understand that, in connection with any proposed resale of any Offered
Notes to an Institutional Accredited Investor, we will be required to
furnish to the Indenture Trustee and the Depositor a certification from
such transferee in the form hereof to confirm that the proposed sale is
being made pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the 1933 Act and applicable state
securities laws. We further understand that the Offered Notes purchased by
us will bear a legend to the foregoing effect.
B-2-1
(3) We are acquiring the Offered Notes for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution in
violation of the 1933 Act. We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of our investment in the Offered Notes, and we and any account
for which we are acting are each able to bear the economic risk of such
investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Offered Notes purchased by us for our own account or for one or more
accounts (each of which is an Institutional Accredited Investor) as to each
of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to make our
investment decision.
Terms used in this letter which are not otherwise defined herein have the
respective meanings assigned thereto in the Private Placement Memorandum or, if
not defined therein, in the Indenture.
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
--------------------------------------------
[Purchaser]
By:
-----------------------------------------
Name:
Title:
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
[FORM OF TRANSFER AFFIDAVIT]
STATE OF _____________ )
) ss.:
COUNTY OF ____________ )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the _____________of ________________________ (the
"INVESTOR"), a [corporation duly organized] and existing under the laws of
_____________ on behalf of which he makes this affidavit.
2. The Investor either (i) is not, and is not acquiring the Offered Notes
on behalf of or with the assets of, an employee benefit plan or other retirement
plan or arrangement subject to Title I of ERISA or Section 4975 of the Code, or
(b) is, or is acquiring the Offered Notes on behalf of or with the assets of, an
employee benefit plan or other retirement plan or arrangement subject to Title I
of ERISA of Section 4975 of the Code and the conditions for exemptive relief
under at least one of the following prohibited transaction class exemptions have
been satisfied: Prohibited Transaction Class Exemption ("PTCE") 96-23 (relating
to transactions effected by an "in-house asset manager"), PTCE 95-60 (relating
to transactions involving insurance company general accounts, PTCE 91-38
(relating to transactions involving bank collective investment funds), ▇▇▇▇ ▇▇-▇
(relating to transactions involving insurance company pooled separate accounts),
and PTCE 84-14 (relating to transactions effected by a "qualified professional
asset manager").
3. The Investor hereby acknowledges that under the terms of the
Indenture (the "AGREEMENT") between [ ] Loan Owner Trust 199 -
and [Indenture Trustee], as indenture trustee, dated as of , 199 ,
no transfer of the Definitive Notes (as defined in the Agreement) shall be
permitted to be made to any person unless the Depositor and Owner Trustee have
received a certificate from such transferee in the form hereof.
[FOR TRANSFERS IN RELIANCE UPON RULE 144A]
4. The Investor is a "qualified institutional buyer" (as such term is
defined under Rule 144A under the Securities Act of 1933, as amended (the "1933
ACT"), and is acquiring the Offered Notes for its own account or as a fiduciary
or agent for others (which others also are "qualified institutional buyers").
The Investor is familiar with Rule 144A under the 1933 Act, and is aware that
the transferor of the Offered Notes and other parties intend to rely on the
statements made herein and the exemption from the registration requirements of
the 1933 Act provided by Rule 144A.
B-3-1
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to proper authority, by its duly authorized officer,
duly attested, this ____ day of _____________, 199__.
--------------------------------------------
[Investor]
By:
----------------------------------------
Name:
Title:
ATTEST:
____________________________
B-3-2
STATE OF _____________ )
) ss.:
COUNTY OF ___________ )
Personally appeared before me the above-named , known or proved to
me to be the same person who executed the foregoing instrument and to be the
___________ of the Investor, and acknowledged that he executed the same as his
free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ______ day of _______________, 199__.
--------------------------------------------
NOTARY PUBLIC
My commission expires the
______ day of __________, 19__
B-3-3
EXHIBIT C
ANY PERSON WHO PURCHASES THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE
DEEMED TO HAVE MADE, UPON SUCH PURCHASE, THE REPRESENTATIONS SET FORTH UNDER THE
HEADING "NOTICES TO INVESTORS" IN THE PRIVATE PLACEMENT MEMORANDUM DATED OCTOBER
[__], 1997 FOR THE [ ] HOME LOAN OWNER TRUST 199 - HOME LOAN
ASSET BACKED NOTES, SERIES 199 - .
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
1933 ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE 1933 ACT, IN EACH CASE IN COMPLIANCE WITH THE REQUIREMENTS OF
THE INDENTURE AND APPLICABLE STATE SECURITIES LAWS.
THIS NOTE MAY NOT BE TRANSFERRED UNLESS THE OWNER TRUSTEE HAS RECEIVED A
CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT EITHER (I) THE TRANSFEREE IS
NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT PLAN OR ARRANGEMENT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (EACH, A "PLAN"),
AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (II) IF THE
TRANSFEREE IS A PLAN, OR IS ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A
PLAN, THE CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT LEAST ONE OF THE FOLLOWING
PROHIBITED TRANSACTION CLASS
C-1
EXEMPTIONS HAVE BEEN SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE")
96-23 (RELATING TO TRANSACTIONS EFFECTED BY AN "IN-HOUSE ASSET MANAGER"), PTCE
95-60 (RELATING TO TRANSACTIONS INVOLVING INSURANCE COMPANY GENERAL ACCOUNTS),
PTCE 91-38 (RELATING TO TRANSACTIONS INVOLVING BANK COLLECTIVE INVESTMENT
FUNDS), PTCE 90-1 (RELATING TO TRANSACTIONS INVOLVING INSURANCE COMPANY POOLED
SEPARATE ACCOUNTS) AND PTCE 84-14 (RELATING TO TRANSACTIONS EFFECTED BY A
"QUALIFIED PROFESSIONAL ASSET MANAGER"). EACH TRANSFEREE OF A BENEFICIAL
INTEREST HEREIN THAT IS A PLAN, OR IS A PERSON ACTING ON BEHALF OF OR INVESTING
THE ASSETS OF A PLAN, SHALL BE DEEMED TO MAKE THE REPRESENTATION SET FORTH UNDER
(II) ABOVE.
C-2