HOME LOAN TRUST 2002HI1
Issuer
AND
JPMORGAN CHASE BANK
Indenture Trustee
INDENTURE
Dated as of January 29, 2002
HOME LOANBACKED NOTES
TABLE OF CONTENTS
Section Page
Article I
Definitions
Section 1.01. Definitions............................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act......................2
Section 1.03. Rules of Construction..................................................2
Article II
Original Issuance of Notes
Section 2.01. Form...................................................................4
Section 2.02. Execution, Authentication and Delivery.................................4
Article III
Covenants
Section 3.01. Collection of Payments with respect to the Home Loans..................5
Section 3.02. Maintenance of Office or Agency........................................5
Section 3.03. Money for Payments To Be Held in Trust; Paying Agent...................5
Section 3.04. Existence..............................................................6
Section 3.05. Payment of Principal and Interest; Defaulted Interest..................7
Section 3.06. Protection of Trust Estate.............................................9
Section 3.07. Opinions as to Trust Estate...........................................10
Section 3.08. Performance of Obligations; Servicing Agreement.......................10
Section 3.09. Negative Covenants....................................................11
Section 3.10. Annual Statement as to Compliance.....................................11
Section 3.11. Recording of Assignments..............................................12
Section 3.12. Representations and Warranties Concerning the Home Loans..............12
Section 3.13. Assignee of Record of the Home Loans..................................12
Section 3.14. Master Servicer as Agent and Bailee of the Indenture Trustee..........12
Section 3.15. Investment Company Act................................................12
Section 3.16. Issuer May Consolidate, etc...........................................13
Section 3.17. Successor or Transferee...............................................14
Section 3.18. No Other Business.....................................................14
Section 3.19. No Borrowing..........................................................15
Section 3.20. Guarantees, Loans, Advances and Other Liabilities.....................15
Section 3.21. Capital Expenditures..................................................15
Section 3.22. Owner Trustee Not Liable for Certificates or Related Documents........15
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Section 3.23. Restricted Payments...................................................15
Section 3.24. Notice of Events of Default...........................................15
Section 3.25. Further Instruments and Acts..........................................16
Section 3.26. Statements to Noteholders.............................................16
Section 3.27. Payments under the Credit Enhancement Instrument......................16
Section 3.28. Payments under the Limited Reimbursement Agreement....................16
Section 3.29. Determination of Class A1 Note Rate..................................17
Article IV
The Notes; Satisfaction and Discharge of Indenture
Section 4.01. The Notes.............................................................18
Section 4.02. Registration of and Limitations on Transfer and Exchange of Notes;
Appointment of Certificate Registrar................................................18
Section 4.03. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, Lost or Stolen Notes............................20
Section 4.04. Persons Deemed Owners.................................................20
Section 4.05. Cancellation..........................................................20
Section 4.06. BookEntry Notes......................................................21
Section 4.07. Notices to Depository.................................................22
Section 4.08. Definitive Notes......................................................22
Section 4.09. Tax Treatment.........................................................22
Section 4.10. Satisfaction and Discharge of Indenture...............................22
Section 4.11. Application of Trust Money............................................24
Section 4.12. Subrogation and Cooperation...........................................24
Section 4.13. Repayment of Monies Held by Paying Agent..............................25
Section 4.14. Temporary Notes.......................................................25
Article V
Default and Remedies
Section 5.01. Events of Default.....................................................26
Section 5.02. Acceleration of Maturity; Rescission and Annulment....................26
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee
...................................................................................27
Section 5.04. Remedies; Priorities..................................................29
Section 5.05. Optional Preservation of the Trust Estate.............................30
Section 5.06. Limitation of Suits...................................................31
Section 5.07. Unconditional Rights of Noteholders to Receive Principal and Interest
...................................................................................31
Section 5.08. Restoration of Rights and Remedies....................................32
Section 5.09. Rights and Remedies Cumulative........................................32
Section 5.10. Delay or Omission Not a Waiver........................................32
Section 5.11. Control by Noteholders................................................32
Section 5.12. Waiver of Past Defaults...............................................33
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Section 5.13. Undertaking for Costs.................................................33
Section 5.14. Waiver of Stay or Extension Laws......................................33
Section 5.15. Sale of Trust Estate..................................................34
Section 5.16. Action on Notes.......................................................35
Section 5.17. Performance and Enforcement of Certain Obligations....................35
Article VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee...........................................37
Section 6.02. Rights of Indenture Trustee...........................................38
Section 6.03. Individual Rights of Indenture Trustee................................38
Section 6.04. Indenture Trustee's Disclaimer........................................38
Section 6.05. Notice of Event of Default............................................39
Section 6.06. Reports by Indenture Trustee to Holders...............................39
Section 6.07. Compensation and Indemnity............................................39
Section 6.08. Replacement of Indenture Trustee......................................39
Section 6.09. Successor Indenture Trustee by ▇▇▇▇▇▇.................................40
Section 6.10. Appointment of CoIndenture Trustee or Separate Indenture Trustee.....41
Section 6.11. Eligibility; Disqualification.........................................42
Section 6.12. Preferential Collection of Claims Against Issuer......................42
Section 6.13. Representations and Warranties........................................42
Section 6.14. Directions to Indenture Trustee.......................................43
Section 6.15. Indenture Trustee May Own Securities..................................43
Article VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders
...................................................................................44
Section 7.02. Preservation of Information; Communications to Noteholders............44
Section 7.03. Reports by Issuer.....................................................44
Section 7.04. Reports by Indenture Trustee..........................................45
Article VIII
Accounts, Disbursements and Releases
Section 8.01. Collection of Money...................................................46
Section 8.02. Trust Accounts........................................................46
Section 8.03. Officer's Certificate.................................................46
Section 8.04. Termination Upon Distribution to Noteholders..........................47
Section 8.05. Release of Trust Estate...............................................47
Section 8.06. Surrender of Notes Upon Final Payment.................................47
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Article IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Without Consent of Noteholders................48
Section 9.02. Supplemental Indentures With Consent of Noteholders...................49
Section 9.03. Execution of Supplemental Indentures..................................51
Section 9.04. Effect of Supplemental Indenture......................................51
Section 9.05. Conformity with Trust Indenture Act...................................51
Section 9.06. Reference in Notes to Supplemental Indentures.........................51
Article X
Miscellaneous
Section 10.01.Compliance Certificates and Opinions, etc.............................52
Section 10.02.Form of Documents Delivered to Indenture Trustee......................53
Section 10.03.Acts of Noteholders...................................................54
Section 10.04.Notices, etc., to Indenture Trustee, Issuer, Credit Enhancer and Rating
Agencies............................................................................55
Section 10.05.Notices to Noteholders; Waiver........................................55
Section 10.06.Alternate Payment and Notice Provisions...............................56
Section 10.07.Conflict with Trust Indenture Act.....................................56
Section 10.08.Effect of Headings....................................................56
Section 10.09.Successors and Assigns................................................56
Section 10.10.Separability..........................................................56
Section 10.11.Benefits of Indenture.................................................57
Section ▇▇.▇▇.▇▇▇▇▇ Holidays........................................................57
Section 10.13.GOVERNING LAW.........................................................57
Section 10.14.Counterparts..........................................................57
Section 10.15.Recording of Indenture................................................57
Section 10.16.Issuer Obligation.....................................................57
Section ▇▇.▇▇.▇▇ Petition...........................................................58
Section 10.18.Inspection............................................................58
Signatures and Seals
Acknowledgments
EXHIBITS
Exhibit A1 Form of Notes
Exhibit A2 Form of Class AIO Notes
Appendix A Definitions
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This is the Indenture, dated as of January 29, 2002, between
HOME LOAN TRUST 2002HI1, a Delaware business trust, as Issuer (the "Issuer"),
and JPMorgan Chase Bank, as Indenture Trustee (the "Indenture Trustee"),
WITNESSETH THAT
Each party hereto agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders of the Issuer's
Series 2002HI1 Home LoanBacked Notes (the "Notes").
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, as trustee for the benefit of the Holders of the Notes, all of the
Issuer's right, title and interest in and to whether now existing or hereafter
created (a) the Home Loans, (b) all funds on deposit from time to time in the
Payment Account and in all proceeds thereof; (c) the Credit Enhancement
Instrument and (d) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on or under,
and all proceeds of every kind and nature whatsoever in respect of, any or all
of the foregoing and all payments on or under, and all proceeds of every kind
and nature whatsoever in the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing (collectively, the "Trust Estate" or the
"Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The foregoing Grant shall inure to the benefit of the Credit
Enhancer in respect of draws made on the Credit Enhancement Instrument and
amounts owing from time to time pursuant to the Insurance Agreement (regardless
of whether such amounts relate to the Notes or the Certificates), and such Grant
shall continue in full force and effect for the benefit of the Credit Enhancer
until all such amounts owing to it have been repaid in full.
The Indenture Trustee, as trustee on behalf of the Holders of
the Notes, acknowledges such ▇▇▇▇▇, accepts the trust under this Indenture in
accordance with the provisions hereof and agrees to perform its duties as
Indenture Trustee as required herein.
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Article I
Definitions
Section 1.01. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions attached hereto as Appendix A which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act (the
"TIA"), 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
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by
Commission rule have the meaning assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise
requires
(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 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
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(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 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.
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Article II
Original Issuance of Notes
Section 2.01. Form. The Notes, together with the Indenture Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibit A1 and A2, 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 of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the Authorized Officers executing such Notes, as
evidenced by their execution of such Notes. The terms of the Notes set forth in
Exhibit A1 and A2 are part of the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes
may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and deliver
Notes for original issue in an aggregate initial principal amount of
$102,720,000 with respect to the Class A1 Notes, $53,447,000 with respect to
the Class A2 Notes, $72,751,000 with respect to the Class A3 Notes,
$32,028,000 with respect to the Class A4 Notes, $49,652,000 with respect to the
Class A 5 Notes, $71,210,000 with respect to the Class A6 Notes, and
$68,192,000 with respect to the Class A7 Notes. The Indenture Trustee shall
upon Issuer Request authenticate and deliver Notes for original issue in an
aggregate initial notional amount of $45,000,000 with respect to the Class AIO
Notes.
The Notes shall be dated the date of their authentication. The Notes
shall be issuable as registered Notes and the Notes shall be issuable in the
minimum initial Note Balances or Notional Amounts of $25,000 and in integral
multiples of $1 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
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Article III
Covenants
Section 3.01. Collection of Payments with respect to the Home Loans. The
Indenture Trustee shall establish and maintain with itself the Payment Account
in which the Indenture Trustee shall, subject to the terms of this paragraph,
deposit, on the same day as it is received from the Master Servicer, each
remittance received by the Indenture Trustee with respect to the Home Loans. The
Indenture Trustee shall make all payments of principal of and interest on the
Notes, subject to Section 3.03, as provided in Section 3.05 herein from monies
on deposit in the Payment Account.
Section 3.02. Maintenance of Office or Agency. The Issuer will maintain
in the City of New York, an office or agency where, subject to satisfaction of
conditions set forth herein, Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the 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; Paying Agent. (a)
As provided in Section 3.01, all payments of amounts due and payable with
respect to any Notes that are to be made from amounts withdrawn from the Payment
Account pursuant to Section 3.01 shall be made on behalf of the Issuer by the
Indenture Trustee or by the Paying Agent, and no amounts so withdrawn from the
Payment Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.03. The Issuer will cause each Paying Agent other
than the Indenture Trustee to execute and deliver to the Indenture Trustee an
instrument in which such Paying Agent shall agree with the Indenture Trustee
(and if the Indenture Trustee acts as Paying Agent it hereby so agrees), subject
to the provisions of this Section 3.03, 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 and the Credit Enhancer
written notice of any default by the Issuer of which it has actual
knowledge in the making of any payment required to be made with respect
to the Notes;
(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;
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(iv) immediately resign as Paying Agent and forthwith pay
to the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met
by a Paying Agent at the time of its appointment;
(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; and
(vi) deliver to the Indenture Trustee a copy of the report
to Noteholders prepared with respect to each Payment Date by the Master
Servicer pursuant to Section 4.01 of the Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Request direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or 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
an Authorized Newspaper, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee may 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 monies 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. 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, the Home Loans and each other
instrument or agreement included in the Trust Estate.
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Section 3.05. Payment of Principal and Interest; Defaulted Interest. (a)
On each Payment Date from amounts on deposit in the Payment Account (other than
amounts deposited constituting prepayment charges), the Paying Agent shall pay
to the Noteholders, the Certificate Paying Agent, on behalf of the
Certificateholders, and to other Persons the amounts to which they are entitled,
as set forth in the statements delivered to the Indenture Trustee pursuant to
Section 4.01 of the Servicing Agreement, as set forth below in the following
order of priority
(i) to the Noteholders, interest at the related Note Rate
for the related Interest Accrual Period on the related Note Balance, in
the case of the Notes other than the Class A IO Notes, or Notional
Amount, in the case of the Class AIO Notes, immediately prior to such
Payment Date, on a pro rata basis, based on the amount of interest
accrued during the related Interest Accrual Period;
(ii) to the Noteholders, other than the Class AIO
Noteholders, as principal on the Notes, the Principal Collection
Distribution Amount for such Payment Date, in the order described in
Section 3.05(b) below, until the Note Balances thereof have been reduced
to zero;
(iii) to the Noteholders, other than the Class AIO
Noteholders, as principal on the Notes, the Liquidation Loss
Distribution Amount for such Payment Date and any Excess Loss Amount
included in the Credit Enhancement Draw Amount on such Payment Date, in
the order described in Section 3.05(b) below, until the Note Balances
thereof have been reduced to zero;
(iv) on a pro rata basis, (A) to the Credit Enhancer, the
Premium Amount for the Credit Enhancement Instrument, plus any unpaid
Premium Amount from any prior Payment Date (with interest thereon as
provided in the Insurance Agreement), and (B) to the designee or
designees of the Credit Enhancer pursuant to Section 3.28, the amount of
any payments for the Limited Reimbursement Agreement, plus any such
unpaid payments from any prior Payment Date (with interest thereon as
provided in the Limited Reimbursement Agreement);
(v) to the Credit Enhancer, to reimburse it for prior
draws made on the Credit Enhancement Instrument (with interest thereon
as provided in the Insurance Agreement) (except for draws attributable
to Excess Loss Amounts) provided, that no such reimbursement shall be
made in respect of amounts that were paid to the Indenture Trustee under
the Limited Reimbursement Agreement, or for which the Credit Enhancer is
entitled to reimbursement under the Limited Reimbursement Agreement;
(vi) to the Noteholders, other than the Class AIO
Noteholders, as principal on the Notes, the Reserve Increase Amount for
such Payment Date, in the order described in Section 3.05(b) below,
until the Note Balances thereof have been reduced to zero;
(vii) to the Credit Enhancer, any other amounts owed to the
Credit Enhancer pursuant to the Insurance Agreement;
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(viii) to the Indenture Trustee, any amounts owing to the
Indenture Trustee pursuant to Section 6.07 remaining unpaid; and
(ix) any remaining amount and any amounts constituting
prepayment charges to the Certificate Paying Agent, on behalf of the
holders of the Certificates.
provided, however, in the event that on a Payment Date a Credit Enhancer Default
shall have occurred and be continuing, (a) no payments will be made to the
Credit Enhancer pursuant to clause (iv)(A) above until all Credit Enhancement
Draw Amounts that are due and required to be paid by the Credit Enhancer on the
Notes on such Payment Date or were due and required to be paid by the Credit
Enhancer on any prior Payment Date have been paid in full, (b) any amounts
payable to the Credit Enhancer pursuant to clause (v) shall instead be paid
pursuant to clause (vii) and (c) any Excess Loss Amounts will be allocated on a
pro rata basis to the Notes based on their outstanding Note Balances, in
reduction of the Note Balances thereof, until the Note Balances thereof have
been reduced to zero. In addition, on the Final Insured Payment Date or other
final Payment Date (including the Payment Date following any purchase by the
Master Servicer of the Home Loans pursuant to Section 8.08 of the Servicing
Agreement), the amount to be paid pursuant to clause (ii) above shall be equal
to the aggregate Note Balance of the Notes immediately prior to such Payment
Date and, in addition to the foregoing, the Class AIO Notes shall be paid the
Adjusted Issue Price, if any.
On each Payment Date, the Certificate Paying Agent shall deposit in the
Certificate Distribution Account all amounts it received pursuant to this
Section 3.05 for the purpose of distributing such funds to the
Certificateholders.
The amounts paid to Noteholders shall be paid to the Notes in accordance
with the applicable percentage as set forth in paragraph (b) below. Interest
will accrue on the Notes (other than the Class A1 Notes) on the basis of a
360day year consisting of twelve 30day months. Interest will accrue on the
Class A1 Notes on the basis of a 360day year and the actual number of days in
the related Interest Accrual Period.
Any installment of interest or principal, if any, payable on any Note
that is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall, if such Holder holds Notes of an aggregate initial Note
Balance or Notional Amount, as applicable, of at least $1,000,000, be paid to
each Holder of record on the preceding Record Date, by wire transfer to an
account specified in writing by such Holder reasonably satisfactory to the
Indenture Trustee as of the preceding Record Date or in all other cases or if no
such instructions have been delivered to the Indenture Trustee, by check or
money order to such Noteholder mailed to such Holder's address as it appears in
the Note Register the amount required to be distributed to such Holder on such
Payment Date pursuant to such Holder's Securities; provided, however, that the
Indenture Trustee shall not pay to such Holders any amount required to be
withheld from a payment to such Holder by the Code.
(b) Any payments to the Notes pursuant to clauses 3.05(a)(ii), (iii) and
(vi) above plus amounts drawn on the Credit Enhancement Instrument in respect of
principal and any amounts paid under the Limited Reimbursement Agreement in
respect of principal shall be distributed to the Class
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A1 Notes, Class A2 Notes, Class A3 Notes, Class A4 Notes, Class A5 Notes,
Class A6 Notes and Class A7 Notes, in that order, in each case until the
outstanding Note Balances thereof have been reduced to zero.
(c) The principal of each Note, other than a Class AIO Note, shall be
due and payable in full on the Final Insured Payment Date as provided in the
related form of Note set forth in Exhibit A1 and A2. All principal payments on
the Notes shall be made to the Noteholders entitled thereto in accordance with
the Percentage Interests represented by such Notes. Upon written notice to the
Indenture Trustee by the Issuer (or by the Master Servicer on behalf of the
Issuer, pursuant to Section 8.08(e) of the Servicing Agreement) of the Final
Insured Payment Date for the Notes or other final Payment Date, the Indenture
Trustee shall notify the related Noteholders of record of the Final Insured
Payment Date or other final Payment Date, by mail or facsimile, no later than
five Business Days prior to the Final Insured Payment Date or other final
Payment Date and shall specify
(i) that the Record Date otherwise applicable to such Payment
Date is not applicable;
(ii) that payment of the principal amount and any interest
due with respect to such Note at the Final Insured Payment Date or other
final Payment Date will be payable only upon presentation and surrender
of such Note and shall specify the place where such Note may be
presented and surrendered for such final payment; and
(iii) the amount of any such final payment, if known.
Section 3.06. Protection of Trust Estate. (a) The Issuer will from time
to time execute and deliver all such supplements and amendments hereto and all
such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to
(i) maintain or preserve the lien and security interest
(and the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) cause the Trust to enforce any of the Home Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Trust Estate
against the claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture
Trustee shall not remove any portion of the Trust Estate that consists of money
or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.07 (or from the jurisdiction in which it
was held
9
as described in the Opinion of Counsel delivered at the Closing Date pursuant to
Section 3.07(a), if no Opinion of Counsel has yet been delivered pursuant to
Section 3.07(b)) unless the Trustee shall have first received an Opinion of
Counsel to the effect that the lien and security interest created by this
Indenture with respect to such property will continue to be maintained after
giving effect to such action or actions. The Issuer hereby designates the
Indenture Trustee its agent and attorneyinfact to execute any financing
statement, continuation statement or other instrument required to be executed
pursuant to this Section 3.06.
Section 3.07. Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee and the Owner Trustee an Opinion
of Counsel at the expense of the Issuer either stating that, in the opinion of
such counsel, such action has been taken with respect to the recording and
filing 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 are necessary to perfect
and make effective the lien and security interest in the Home Loans and reciting
the details of such action, or stating that, in the opinion of such counsel, no
such action is necessary to make such lien and security interest effective.
(b) On or before December 31st in each calendar year, beginning in 2002,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel at the
expense of the Issuer either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording, filing, rerecording 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 in the Home Loans 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, rerecording 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 in the Home Loans until December 31 in the
following calendar year.
Section 3.08. Performance of Obligations; Servicing Agreement. (a) The
Issuer will punctually perform and observe all of its obligations and agreements
contained in this Indenture, the Basic Documents and in the instruments and
agreements included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer.
(c) The Issuer will not take any action or permit any action to be taken
by others which would release any Person from any of such Person's covenants or
obligations under any of the documents relating to the Home Loans or under any
instrument included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the documents relating to the Home Loans or
any such instrument, except such actions as the Master Servicer is expressly
permitted to take in the Servicing Agreement.
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(d) The Issuer may retain an administrator and may enter into contracts
with other Persons for the performance of the Issuer's obligations hereunder,
and performance of such obligations by such Persons shall be deemed to be
performance of such obligations by the Issuer.
Section 3.09. Negative Covenants. So long as any Notes are Outstanding, the
Issuer shall not
(i) except as expressly permitted by this Indenture, sell,
transfer, exchange or otherwise dispose of the Trust Estate, unless
directed to do so by the Indenture Trustee;
(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 Trust
Estate;
(iii) (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 be expressly permitted
hereby, permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture) to
be created on or extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds
thereof or (B) permit the lien of this Indenture not to constitute a
valid first priority security interest in the Trust Estate; or
(iv) waive or impair, or fail to assert rights under the
Home Loans, or cause to be impaired the Home Loans or the Issuer's
interest in the Home Loans, the Home Loan Purchase Agreement or in any
Basic Document, if any such action would materially and adversely affect
the interests of the Noteholders.
Section 3.10. 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 with the fiscal year 2002), 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 and the Trust Agreement
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 and the provisions of the Trust Agreement
throughout such year, or, if there has been a default in its compliance
with any such condition or covenant, specifying each such default known
to such Authorized Officer and the nature and status thereof.
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Section 3.11. Recording of Assignments. The Issuer shall enforce the
obligation of the Seller under the Home Loan Purchase Agreement to submit or
cause to be submitted for recording all Assignments of Mortgages within 60 days
of receipt of recording information by the Master Servicer.
Section 3.12. Representations and Warranties Concerning the Home Loans.
The Indenture Trustee, as pledgee of the Home Loans, has the benefit of the
representations and warranties made by the Seller in Section 3.1(a) and Section
3.1(b) of the Home Loan Purchase Agreement concerning the Home Loans and the
right to enforce the remedies against the Seller provided in such Section 3.1(a)
or Section 3.1(b) to the same extent as though such representations and
warranties were made directly to the Indenture Trustee.
Section 3.13. Assignee of Record of the Home Loans. The Issuer hereby
directs and authorizes the Indenture Trustee to hold record title to the Home
Loans by being named as payee in the endorsements of the Mortgage Notes and
assignee in the Assignments of Mortgage to be recorded under Section 2.1 of the
Home Loan Purchase Agreement. Except as expressly provided in the Home Loan
Purchase Agreement or in the Servicing Agreement with respect to any specific
Home Loan, the Indenture Trustee shall not execute any endorsement or assignment
or otherwise release or transfer such record title to any of the Home Loans
until such time as the remaining Trust Estate may be released pursuant to
Section 8.05(b). The Indenture Trustee's holding of such record title shall in
all respects be subject to its fiduciary obligations to the Noteholders
hereunder.
Section 3.14. Master Servicer as Agent and Bailee of the Indenture
Trustee. Solely for purposes of perfection under Section 9305 of the Uniform
Commercial Code or other similar applicable law, rule or regulation of the state
in which such property is held by the Master Servicer, the Issuer and the
Indenture Trustee hereby acknowledge that the Master Servicer is acting as agent
and bailee of the Indenture Trustee in holding amounts on deposit in the
Custodial Account pursuant to Section 3.02 of the Servicing Agreement that are
allocable to the Home Loans, as well as its agent and bailee in holding any
Related Documents released to the Master Servicer pursuant to Section 3.06(c) of
the Servicing Agreement, and any other items constituting a part of the Trust
Estate which from time to time come into the possession of the Master Servicer.
It is intended that, by the Master Servicer's acceptance of such agency pursuant
to Section 3.02 of the Servicing Agreement, the Indenture Trustee, as a pledgee
of the Home Loans, will be deemed to have possession of such Related Documents,
such monies and such other items for purposes of Section 9305 of the Uniform
Commercial Code of the state in which such property is held by the Master
Servicer.
Section 3.15. Investment Company Act. The Issuer shall not become an
"investment company" or "controlled by" an investment company as such terms are
defined in the Investment Company Act of 1940, as amended (or any successor or
amendatory statute), and the rules and regulations thereunder (taking into
account not only the general definition of the term "investment company" but
also any available exceptions to such general definition); provided, however,
that the Issuer shall be in compliance with this Section 3.15 if it shall have
obtained an order exempting it from regulation as an "investment company" so
long as it is in compliance with the conditions imposed in such order.
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Section 3.16. Issuer May Consolidate, etc. (a) The Issuer shall not
consolidate or merge with or into any other Person, unless
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any state or
the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee, in
form reasonably satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all Notes and to
the Certificate Paying Agent, on behalf of the Certificateholders and
the performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction, no
Event of Default shall have occurred and be continuing;
(iii) the Issuer receives consent of the Credit Enhancer
and the Rating Agencies shall have notified the Issuer that such
transaction shall not cause the rating of the Notes or the Certificates
to be reduced, suspended or withdrawn or to be considered by either
Rating Agency to be below investment grade without taking into account
the Credit Enhancement Instrument;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee and
the Credit Enhancer) to the effect that such transaction will not have
any material adverse tax consequence to the Issuer, any Noteholder or
any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation or merger and such supplemental indenture comply
with this Article III and that all conditions precedent herein provided
for relating to such transaction have been complied with (including any
filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America or
any state, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form satisfactory to
the Indenture Trustee, the due and punctual payment of the principal of
and interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agree by
means of such
13
supplemental indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of Holders of
the Notes, (D) unless otherwise provided in such supplemental indenture,
expressly agree to indemnify, defend and hold harmless the Issuer
against and from any loss, liability or expense arising under or related
to this Indenture and the Notes and (E) expressly agree by means of such
supplemental indenture that such Person (or if a group of Persons, then
one specified Person) shall make all filings with the Commission (and
any other appropriate Person) required by the Exchange Act in connection
with the Notes;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Issuer receives consent of the Credit Enhancer
and the Rating Agencies shall have notified the Issuer that such
transaction shall not cause the rating of the Notes, without regard to
the Credit Enhancement Instrument, to be reduced, suspended or
withdrawn;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to
the effect that such transaction will not have any material adverse tax
consequence to the Issuer or any Noteholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such conveyance or transfer and such supplemental indenture comply
with this Article III and that all conditions precedent herein provided
for relating to such transaction have been complied with (including any
filing required by the Exchange Act).
Section 3.17. Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.16(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.16(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee of such conveyance or transfer.
Section 3.18. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning and selling and managing the
Home Loans and the issuance of the Notes and Certificates in the manner
contemplated by this Indenture and the Basic Documents and all activities
incidental thereto.
14
Section 3.19. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly,
for any indebtedness except for the Notes.
Section 3.20. Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by this Indenture or the Basic Documents, the Issuer shall not
make any loan or advance or credit to, or guarantee (directly or indirectly or
by an instrument having the effect of assuring another's payment or performance
on any obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or
agree contingently to do so) any stock, obligations, assets or securities of, or
any other interest in, or make any capital contribution to, any other Person.
Section 3.21. Capital Expenditures. The Issuer shall not make any
expenditure (by longterm or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.22. Owner Trustee Not Liable for Certificates or Related
Documents. The recitals contained herein shall be taken as the statements of the
Depositor, and the Owner Trustee assumes no responsibility for the correctness
thereof. The Owner Trustee makes no representations as to the validity or
sufficiency of this Indenture, of any Basic Document or of the Certificates
(other than the signatures of the Owner Trustee on the Certificates) or the
Notes, or of any Related Documents. The Owner Trustee shall at no time have any
responsibility or liability with respect to the sufficiency of the Owner Trust
Estate or its ability to generate the payments to be distributed to
Certificateholders under the Trust Agreement or the Noteholders under this
Indenture, including, the compliance by the Depositor or the Seller with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation, or any action
of the Certificate Paying Agent, the Certificate Registrar or the Indenture
Trustee taken in the name of the Owner Trustee.
Section 3.23. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (x) distributions to the Owner Trustee
and the Certificateholders as contemplated by, and to the extent funds are
available for such purpose under the Trust Agreement, and (y) payments to the
Master Servicer pursuant to the terms of the Servicing Agreement. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Custodial Account except in accordance with this Indenture and the Basic
Documents.
Section 3.24. Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Credit Enhancer and the Rating Agencies prompt written
notice of each Event of Default hereunder and under the Trust Agreement.
15
Section 3.25. 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.
Section 3.26. Statements to Noteholders. On each Payment Date, the
Indenture Trustee and the Certificate Registrar shall forward by mail or
otherwise make available electronically to each Noteholder and Certificateholder
and the ISDA Counterparty, respectively, the statement delivered to it, on the
Business Day following the related Determination Date pursuant to Section 4.01
of the Servicing Agreement.
Section 3.27. Payments under the Credit Enhancement Instrument. (a) On
any Payment Date, including the Final Insured Payment Date, the Indenture
Trustee shall make a draw on the Credit Enhancement Instrument in an amount, if
any, equal to the Credit Enhancement Draw Amount. On any Dissolution Payment
Date, the Indenture Trustee shall make a draw on the Credit Enhancement
Instrument in an amount, if any, equal to the Dissolution Draw, less any
payments made to the Indenture Trustee with respect to that date under the
Limited Reimbursement Agreement.
(b) To the extent (i) a valid claim is made on the Indenture Trustee by
the ISDA Counterparty for reimbursement or other payment of amounts paid under
the Limited Reimbursement Agreement in error or otherwise not in accordance with
the terms of this Indenture, in each case with the consent of the Credit
Enhancer, which consent shall not be unreasonably withheld, or (ii) a court of
competent jurisdiction orders the repayment by the Indenture Trustee to the ISDA
Counterparty under the Limited Reimbursement Agreement of the amount of any
payment made pursuant to Section 3.28, the Indenture Trustee shall make a draw
on the Credit Enhancement Instrument pursuant to the terms hereof as if the ISDA
Counterparty under the Limited Reimbursement Agreement had not made any payment
to the Indenture Trustee.
(c) The Indenture Trustee shall submit, if a Credit Enhancement Draw
Amount or Dissolution Draw is specified in any Servicing Certificate prepared by
the Master Servicer pursuant to Section 4.01 of the Servicing Agreement, the
Notice of Non Payment and Demand for Payment of Insured Amounts (in the form
attached as Exhibit A to the Credit Enhancement Instrument) in the amount of the
Credit Enhancement Draw Amount or Dissolution Draw to the Credit Enhancer no
later than 200 P.M., New York City time, on the second Business Day prior to
the applicable Payment Date. Upon receipt of such Credit Enhancement Draw Amount
in accordance with the terms of the Credit Enhancement Instrument or Dissolution
Draw, the Indenture Trustee shall deposit such Credit Enhancement Draw Amount in
the Payment Account for distribution to Noteholders pursuant to Section 3.05 and
shall distribute such Dissolution Draw in accordance with Section 5.04.
Section 3.28. Payments under the Limited Reimbursement Agreement. The
Indenture Trustee shall deposit any amounts received from the Limited
Reimbursement Agreement into the Payment Account. Any such amounts shall be
distributed on the immediately following Payment Date pursuant to Section
3.05(a). The Indenture Trustee shall make the payments to the designee or
designees of the Credit Enhancer under Section 3.05(a)(iv)(B) pursuant to the
letter from the Credit Enhancer to the Indenture Trustee dated as of the Closing
Date.
16
Section 3.29. Determination of Class A1 Note Rate. On the second LIBOR
Business Day immediately preceding (i) the Closing Date in the case of the first
Interest Accrual Period and (ii) the first day of each succeeding Interest
Accrual Period, the Indenture Trustee shall determine LIBOR and the Note Rate
for the Class A1 Notes for such Interest Accrual Period and shall inform the
Issuer, the Master Servicer, the Credit Enhancer and the Depositor at their
respective facsimile numbers given to the Indenture Trustee in writing. All
determinations of LIBOR by the Indenture Trustee shall, in the absence of
manifest error, be conclusive for all purposes, and each holder of a Class A1
Note, by accepting this Class A1 Note, agrees to be bound by such
determination.
17
Article IV
The Notes; Satisfaction and Discharge of Indenture
Section 4.01. The Notes. The Notes shall be registered in the name of a
nominee designated by the Depository. Beneficial Owners will hold interests in
the Notes as set forth in Section 4.06 herein in minimum initial Note Balances
or Notional Amounts, as applicable, of $25,000 and integral multiples of $1 in
excess thereof.
The Indenture Trustee may for all purposes (including the making of
payments due on the Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Notes for the
purposes of exercising the rights of Holders of Notes hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08,
Beneficial Owners shall not be entitled to definitive certificates for the Notes
as to which they are the Beneficial Owners. Requests and directions from, and
votes of, the Depository as Holder of the Notes shall not be deemed inconsistent
if they are made with respect to different Beneficial Owners. The Indenture
Trustee may establish a reasonable record date in connection with solicitations
of consents from or voting by Noteholders and give notice to the Depository of
such record date. Without the consent of the Issuer and the Indenture Trustee,
no Note may be transferred by the Depository except to a successor Depository
that agrees to hold such Note for the account of the Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuer
by the Owner Trustee, not in its individual capacity but solely as Owner
Trustee, authenticated by the Note Registrar and delivered by the Indenture
Trustee to or upon the order of the Issuer.
Section 4.02. Registration of and Limitations on Transfer and Exchange
of Notes; Appointment of Certificate Registrar. The Issuer shall cause to be
kept at the Indenture Trustee's Corporate Trust Office a Note Register in which,
subject to such reasonable regulations as it may prescribe, the Note Registrar
shall provide for the registration of Notes and of transfers and exchanges of
Notes as herein provided.
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note at the Corporate Trust
Office, the Issuer shall execute and the Note Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Notes in authorized initial Note Balances or Notional Amounts, as
applicable, evidencing the same aggregate Percentage Interests.
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Subject to the foregoing, at the option of the Noteholders, Notes may be
exchanged for other Notes of like tenor, in authorized initial Note Balances or
Notional Amounts, as applicable, evidencing the same aggregate Percentage
Interests upon surrender of the Notes to be exchanged at the Corporate Trust
Office of the Note Registrar. Whenever any Notes are so surrendered for
exchange, the Issuer shall execute and the Note Registrar shall authenticate and
deliver the Notes which the Noteholder making the exchange is entitled to
receive. Each Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Note Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form reasonably satisfactory
to the Note Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing with such signature guaranteed by a commercial bank or
trust company located or having a correspondent located in the city of New York.
Notes delivered upon any such transfer or exchange will evidence the same
obligations, and will be entitled to the same rights and privileges, as the
Notes surrendered.
No service charge shall be imposed for any registration of transfer or
exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
All Notes surrendered for registration of transfer and exchange shall be
cancelled by the Note Registrar and delivered to the Indenture Trustee for
subsequent destruction without liability on the part of either.
The Issuer hereby appoints the Indenture Trustee as Certificate
Registrar to keep at its Corporate Trust Office a Certificate Register pursuant
to Section 3.09 of the Trust Agreement in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges thereof pursuant to
Section 3.05 of the Trust Agreement. The Indenture Trustee hereby accepts such
appointment.
Each purchaser of a Note, by its acceptance of the Note, shall be deemed
to have represented that either (i) it is not a Plan nor is it acquiring a Note
with Plan Assets or (2) the acquisition of such Note by the purchaser does not
constitute or give rise to a prohibited transaction under Section 406 of ERISA
or Section 4975 of the Code, for which no statutory, regulatory or
administrative exemption is available.
The notes may not be purchased with the assets of an ERISA plan if the
depositor, the master servicer, the owner of the Certificates, the indenture
trustee, the owner trustee or any of their affiliates
(i) has investment or administrative discretion with respect to the ERISA
plan's assets;
(ii)has authority or responsibility to give, or regularly
gives, investment advice regarding the ERISA plan's assets, for a fee and under
an agreement or understanding that the advice will serve as a primary basis for
investment decisions regarding the ERISA plan's assets and will be based on the
particular investment needs for the ERISA plan; or
(iiiis an employer maintaining or contributing to the ERISA plan.
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Section 4.03. 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 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,
and provided that the requirements of Section 8 405 of the UCC are met, 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; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable without surrender thereof. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Note in
lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03, 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 4.03 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder. The
provisions of this Section 4.03 are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Indenture Trustee or any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 4.05. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
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authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section 4.05, except as expressly
permitted by this Indenture. All cancelled Notes may be held or disposed of by
the 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
Request that they be destroyed or returned to it; provided however, that such
Issuer Request is timely and the Notes have not been previously disposed of by
the Indenture Trustee.
Section 4.06. BookEntry Notes. Each Class of Notes shall initially be
issued as one or more Notes held by the BookEntry Custodian or, if appointed to
hold such Notes as provided below, the Depository Trust Company, the initial
Depository, and registered in the name of its nominee Cede & Co. Except as
provided below, registration of such Notes may not be transferred by the
Indenture Trustee except to another Depository that agrees to hold such Notes
for the respective Beneficial Owners. The Indenture Trustee is hereby initially
appointed as the BookEntry Custodian and hereby agrees to act as such in
accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The BookEntry Custodian may, and, if
it is no longer qualified to act as such, the BookEntry Custodian shall,
appoint, by a written instrument delivered to the Depositor, the Master Servicer
and, if the Indenture Trustee is not the BookEntry Custodian, the Indenture
Trustee, any other transfer agent (including the Depository or any successor
Depository) to act as BookEntry Custodian under such conditions as the
predecessor BookEntry Custodian and the Depository or any successor Depository
may prescribe, provided that the predecessor BookEntry Custodian shall not be
relieved of any of its duties or responsibilities by reason of any new
appointment, except if the Depository is the successor to the BookEntry
Custodian. If the Indenture Trustee resigns or is removed in accordance with the
terms hereof, the successor trustee or, if it so elects, the Depository shall
immediately succeed to its predecessor's duties as BookEntry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any Notes
held as BookEntry Notes by the BookEntry Custodian. No Beneficial Owner will
receive a Definitive Note representing such Beneficial Owner's interest in such
Note, except as provided in Section 4.08. Unless and until definitive, fully
registered Notes (the "Definitive Notes") have been issued to Beneficial Owners
pursuant to Section 4.08
(i) the provisions of this Section 4.06 shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled to deal
with the Depository for all purposes of this Indenture (including the payment of
principal of and interest on the Notes and the giving of instructions or
directions hereunder) as the sole holder of the Notes, and shall have no
obligation to the Owners of Notes;
(iii) to the extent that the provisions of this Section 4.06 conflict with
any other provisions of this Indenture, the provisions of this Section 4.06
shall control;
(iv) the rights of Beneficial Owners shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between such Owners of Notes and the Depository and/or the Depository
Participants. Unless and until Definitive Notes are issued pursuant to Section
4.08, the initial Depository will make bookentry transfers among the
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Depository Participants and receive and transmit payments of principal of and
interest on the Notes to such Depository 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 aggregate Note Balance or Notional Amount, as applicable, of
the Notes, the Depository shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from Beneficial
Owners and/or Depository Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has delivered
such instructions to the Indenture Trustee.
Section 4.07. Notices to Depository. Whenever a notice or other
communication to the Note Holders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Beneficial Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. Definitive Notes. If (i) the Indenture Trustee determines
that the Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Notes and the Indenture Trustee is unable
to locate a qualified successor, (ii) the Indenture Trustee elects to terminate
the bookentry system through the Depository or (iii) after the occurrence of an
Event of Default, Owners of Notes representing beneficial interests aggregating
at least a majority of the aggregate Note Balance or Notional Amount, as
applicable, of the Notes advise the Depository in writing that the continuation
of a bookentry system through the Depository is no longer in the best interests
of the Beneficial Owners, then the Depository shall notify all Beneficial Owners
and the Indenture Trustee of the occurrence of any such event and of the
availability of Definitive Notes to Beneficial Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Notes representing the
BookEntry Notes by the BookEntry Custodian or the Depository, as applicable,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Depository. None of the Issuer, the Note Registrar or the
Indenture Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall
recognize the Holders of the Definitive Notes as Noteholders.
Section 4.09. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness of the Issuer. The Issuer, by entering into this Indenture, and
each Noteholder, by its acceptance of its Note (and each Beneficial Owner by its
acceptance of an interest in the applicable BookEntry Note), agree to treat the
Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Section 4.10. 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, 3.06, 3.09,
3.16, 3.18 and
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3.19, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.07 and
the obligations of the Indenture Trustee under Section 4.11) 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
(A) either
(1) the Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 4.03 and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.03) have
been delivered to the Indenture Trustee for cancellation; or
(2) the Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. will become due and payable at the Final Insured Payment
Date within one year, or
c. have been declared immediately due and payable pursuant
to Section 5.02.
and the Issuer, in the case of a. or b. above, has irrevocably deposited
or caused to be irrevocably 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 then outstanding not theretofore
delivered to the Indenture Trustee for cancellation when due on the
Final Insured Payment Date;
(B) the Issuer has paid or caused to be paid all other
sums payable hereunder and under the Insurance Agreement by
the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee and
the Credit Enhancer an Officer's Certificate and an Opinion of
Counsel, each meeting the applicable requirements of Section
10.01 and each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of
this Indenture have been complied with and, if the Opinion of
Counsel relates to a deposit made in connection with Section
4.10(A)(2)b. above, such opinion shall further be to the
effect that such deposit will not have any material adverse
tax consequences to the Issuer, any Noteholders or any
Certificateholders.
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Section 4.11. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent or
Certificate Paying Agent, as the Indenture Trustee may determine, to the Holders
of Securities, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from other funds except to the
extent required herein or required by law.
Section 4.12. Subrogation and Cooperation. (a) The Issuer and the
Indenture Trustee acknowledge that (i) to the extent the Credit Enhancer makes
payments under the Credit Enhancement Instrument on account of principal of or
interest on the Home Loans, the Credit Enhancer will be fully subrogated to the
rights of the Noteholders to receive such principal and interest from the Home
Loans, and (ii) the Credit Enhancer shall be paid such principal and interest
but only from the sources and in the manner provided herein and in the Insurance
Agreement for the payment of such principal and interest.
The Indenture Trustee shall cooperate in all respects with any
reasonable request by the Credit Enhancer for action to preserve or enforce the
Credit Enhancer's rights or interest under this Indenture or the Insurance
Agreement, consistent with this Indenture and without limiting the rights of the
Noteholders as otherwise set forth in the Indenture, including, without
limitation, upon the occurrence and continuance of a default under the Insurance
Agreement, a request to take any one or more of the following actions
(i) institute Proceedings for the collection of all
amounts then payable on the Notes, or under this Indenture in respect to
the Notes and all amounts payable under the Insurance Agreement and to
enforce any judgment obtained and collect from the Issuer monies
adjudged due;
(ii) sell the Trust Estate or any portion thereof or
rights or interest therein, at one or more public or private Sales (as
defined in Section 5.15 hereof) called and conducted in any manner
permitted by law;
(iii) file or record all assignments that have not
previously been recorded;
(iv) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the
Uniform Commercial Code and take any other appropriate action to protect
and enforce the rights and remedies of the Credit Enhancer hereunder.
Following the payment in full of the Notes, the Credit
Enhancer shall continue to have all rights and privileges provided to it under
this Section and in all other provisions of this Indenture, until all amounts
owing to the Credit Enhancer have been paid in full.
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Section 4.13. Repayment of Monies Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Person other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.05 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
Section 4.14. Temporary Notes. Pending the preparation of any Definitive
Notes, the Issuer may execute and upon its written direction, the Indenture
Trustee may authenticate and make available for delivery, temporary Notes that
are printed, lithographed, typewritten, photocopied or otherwise produced, in
any denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of the Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Indenture
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Issuer shall execute and the Indenture Trustee
shall authenticate and make available for delivery, in exchange therefor,
Definitive Notes of authorized denominations and of like tenor and aggregate
principal amount. Until so exchanged, such temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as Definitive Notes.
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Article V
Default and Remedies
Section 5.01. Events of Default. The Issuer shall deliver to the
Indenture Trustee and the Credit Enhancer, within five days after learning of
the occurrence any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (iii) of the definition of "Event
of Default" written notice in the form of an Officer's Certificate of its status
and what action the Issuer is taking or proposes to take with respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee or the Holders of Notes representing not less than a majority
of the aggregate Note Balance of all Notes (for which purpose the Class AIO
Notes will be deemed to have a Note Balance equal to their Notional Amount) with
the written consent of the Credit Enhancer, or the Credit Enhancer may declare
the Notes to be immediately due and payable, by a notice in writing to the
Issuer (and to the Indenture Trustee if given by Noteholders), and upon any such
declaration the unpaid principal amount of such Notes, together with accrued and
unpaid interest thereon through the date of acceleration, shall become
immediately due and payable, together with the Adjusted Issue Price on the Class
AIO Notes.
At any time after such declaration of acceleration of maturity with
respect to an Event of Default has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article V provided, the Holders of Notes representing a
majority of the aggregate Note Balance of all Notes (for which purpose the Class
AIO Notes will be deemed to have a Note Balance equal to their Notional
Amount), by written notice to the Issuer and the Indenture Trustee with the
written consent of the Credit Enhancer, or the Credit Enhancer, may in writing
waive the related Event of Default and rescind and annul such declaration and
its consequences if
(i) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay
(A) all payments of principal of and interest on the Notes
and all other amounts that would then be due hereunder or upon
the Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) 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
(ii) all Events of Default, other than the nonpayment of
the principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
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Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if default in the payment of (i) any
interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) the principal of or any installment
of the principal of any Note when the same becomes due and payable, the Issuer
shall, upon demand of the Indenture Trustee, pay to it, for the benefit of the
Holders of Notes, the whole amount then due and payable on the Notes for
principal and interest, with interest upon the overdue principal, and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements 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, in its own name and as trustee of an express
trust, subject to the provisions of Section 10.17 hereof may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor upon the Notes, wherever
situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee subject to the provisions of Section 10.17 hereof may, as more
particularly provided in Section 5.04, in its discretion, proceed to protect and
enforce its rights and the rights of the Noteholders, 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 Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or 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
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the
27
Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence, willful misconduct 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 monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the 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, willful misconduct
or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder 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 and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(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 Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
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Section 5.04. Remedies; Priorities. (a) If an Event of Default shall
have occurred and be continuing, the Indenture Trustee subject to the provisions
of Section 10.17 hereof may with the written consent of the Credit Enhancer, or
shall at the written direction of the Credit Enhancer, do one or more of the
following (subject to Section 5.05)
(i) institute Proceedings in its own name and as trustee
of an express trust for the collection of all amounts then payable on
the Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, and all amounts payable under the Insurance
Agreement, enforce any judgment obtained, and collect from the Issuer
and any other obligor upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Trust Estate;
(iii) exercise any remedies of a secured party under the
UCC and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee and the Holders of the
Notes; and
(iv) sell the Trust Estate or any portion thereof or
rights or interest therein, at one or more public or private sales
called and conducted in any manner permitted by law; provided, however,
that the Indenture Trustee may not sell or otherwise liquidate the Trust
Estate following an Event of Default, unless (A) the Indenture Trustee
obtains the consent of the Holders of 100% of the aggregate Note Balance
and Notional Amount, as applicable, of the Notes and the Credit
Enhancer, which consent will not be unreasonably withheld, (B) the
proceeds of such Sale distributable to Holders are sufficient to
discharge in full all amounts then due and unpaid upon the Notes for
principal and interest and to reimburse the Credit Enhancer for any
amounts drawn under the Credit Enhancement Instrument and any other
amounts due the Credit Enhancer under the Insurance Agreement or (C) the
Indenture Trustee determines that the Home Loans will not continue to
provide sufficient funds for the payment of principal of and interest on
the Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains the consent
of the Credit Enhancer, which consent will not be unreasonably withheld,
and of the Holders of 66 2/3% of the aggregate Note Balance (for which
purpose the Class AIO Notes will be deemed to have a Note Balance equal
to their Notional Amount) of the Notes. In determining such sufficiency
or insufficiency with respect to clause (B) and (C), 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 Trust Estate for such purpose. Following an Event of Liquidation,
on the related Dissolution Payment Date the Indenture Trustee shall make
a draw on the Credit Enhancement Instrument in an amount equal to the
Dissolution Draw, less any payments made to the Indenture Trustee with
respect to that date under the Limited Reimbursement Agreement, pursuant
to Section 3.27 and shall distribute such amount as set forth in Section
5.04(b) below. Notwithstanding the foregoing, so long as a Servicing
Default has not occurred, any Sale of the Trust Estate shall be made
subject to the continued servicing of the Home Loans by the Master
Servicer as provided in the Servicing Agreement.
29
(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
FIRST to the Indenture Trustee for amounts due under Section
6.07;
SECOND to the Holders of the Notes for amounts due and unpaid on
the Notes for interest, according to the amounts due and payable
on such Notes for interest from amounts available in the Trust
Estate for such Noteholders;
THIRD on a pro rata basis, (A) to Holders of the Notes, other
than the Class A IO Notes, for amounts due and unpaid on the
Notes for principal, from amounts available in the Trust Estate
for such Noteholders, according to the amounts due and payable on
the Notes for principal, until the related Note Balances of the
Notes are reduced to zero, and (B) to the Class AIO Notes, the
Adjusted Issue Price;
FOURTH [reserved;
FIFTH to the payment of all amounts due and owing to the Credit
Enhancer under the Insurance Agreement;
SIXTH to the Certificate Paying Agent for amounts due under
Article VIII of the Trust Agreement; and
SEVENTH to the payment of the remainder, if any, to the Issuer or
any other person legally entitled thereto.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.04. At least 15 days before
such record date, the Indenture Trustee shall mail to each Noteholder a notice
that states the record date, the payment date and the amount to be paid.
Section 5.05. Optional Preservation of the Trust Estate. If the Notes
have been declared to be due and payable under Section 5.02 following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, (but shall at the written
direction of the Credit Enhancer) elect to take and maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes and other obligations of the Issuer including payment to
the Credit Enhancer, and the Indenture Trustee shall take such desire into
account when determining whether or not to take and maintain possession of the
Trust Estate. In determining whether to take and maintain possession of the
Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
30
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 and subject to the provisions of Section 10.17 hereof
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the aggregate
Note Balance (for which purpose the Class AIO Notes will be deemed to
have a Note Balance equal to their Notional Amount) of the 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;
(iii) 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;
(iv) the Indenture Trustee for 60 days after its receipt
of such notice, request and offer of indemnity has failed to institute
such Proceedings; and
(v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60day period by the
Holders of a majority of the aggregate Note Balance of the Notes (for
which purpose the Class AIO Notes will be deemed to have a Note Balance
equal to their Notional Amount) or by the Credit Enhancer.
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 of the aggregate Note Balance of the
Notes (for which purpose the Class AIO Notes will be deemed to have a Note
Balance equal to their Notional Amount), the Indenture Trustee in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provisions of this Indenture.
Section 5.07. Unconditional Rights of Noteholders to Receive Principal
and Interest. 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 respective due dates thereof expressed in such Note or in this
Indenture and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder.
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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 respective
former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Credit Enhancer 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, the Credit Enhancer or any Holder of any Note to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee 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 Holders of a majority of the
aggregate Note Balance of Notes (for which purpose the Class AIO Notes will be
deemed to have a Note Balance equal to their Notional Amount) with the consent
of the Credit Enhancer, or the Credit Enhancer (so long as no Credit Enhancer
Default exists) 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 that
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the express terms of Section 5.04, any
direction to the Indenture Trustee to sell or liquidate the Trust Estate
shall be by Holders of Notes representing not less than 100% of the
aggregate Note Balance of Notes, (for which purpose the Class AIO Notes
will be deemed to have a Note Balance equal to their Notional Amount)
with the consent of the Credit Enhancer, or the Credit Enhancer (so long
as no Credit Enhancer Default exists);
(iii) if the conditions set forth in Section 5.05 have
been satisfied and the Indenture Trustee elects to retain the Trust
Estate pursuant to such Section, then any direction to the Indenture
Trustee by Holders of Notes representing less than 100% of the aggregate
Note Balance of Notes, (for which purpose the Class AIO Notes will be
deemed to have a
32
Note Balance equal to their Notional Amount) to sell or liquidate the
Trust Estate shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not inconsistent with
such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability or might materially adversely affect the rights of
any Noteholders not consenting to such action.
Section 5.12. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Holders of Notes of not less than a majority of the aggregate Note Balance of
the Notes (for which purpose the Class AIO Notes will be deemed to have a Note
Balance equal to their Notional Amount) with the consent of the Credit Enhancer,
or the Credit Enhancer (so long as no Credit Enhancer Default exists) may waive
any past Event of Default and its consequences except an Event of Default (a)
with respect to payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which 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 Event of Default or impair any right
consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such ▇▇▇▇▇▇'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 5.13 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
aggregate Note Balance (for which purpose the Class AIO Notes will be deemed to
have a Note Balance equal to their Notional Amount) of the 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.
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
33
any such law, and covenants that it shall not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
Section 5.15. Sale of Trust Estate. (a) The power to effect any sale,
liquidation or other disposition (a "Sale") of any portion of the Trust Estate
pursuant to Section 5.04 is expressly subject to the provisions of Section 5.05
and this Section 5.15. The power to effect any such Sale shall not be exhausted
by any one or more Sales as to any portion of the Trust Estate remaining unsold,
but shall continue unimpaired until the entire Trust Estate shall have been sold
or all amounts payable on the Notes and under this Indenture and under the
Insurance Agreement shall have been paid. The Indenture Trustee may from time to
time postpone any public Sale by public announcement made at the time and place
of such Sale. The Indenture Trustee hereby expressly waives its right to any
amount fixed by law as compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless
(1) the Holders of all Notes and the Credit Enhancer consent to, or direct
the Indenture Trustee to make, such Sale, or
(2) the proceeds of such Sale would be not less than the
entire amount which would be payable to the Noteholders under the Notes, the
Certificateholders under the Certificates and the Credit Enhancer in respect of
amounts drawn under the Credit Enhancement Instrument and any other amounts due
the Credit Enhancer under the Insurance Agreement, in full payment thereof in
accordance with Section 5.02, on the Payment Date next succeeding the date of
such Sale, or
(3) the Indenture Trustee determines, in its sole discretion,
that the conditions for retention of the Trust Estate set forth in Section 5.05
cannot be satisfied (in making any such determination, the Indenture Trustee may
rely upon an opinion of an Independent investment banking firm obtained and
delivered as provided in Section 5.05), and the Credit Enhancer consents to such
Sale, which consent will not be unreasonably withheld and the Holders
representing at least 662/3% of the aggregate Note Balance (for which purpose
the Class AIO Notes will be deemed to have a Note Balance equal to their
Notional Amount) of the Notes consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(c) Unless the Holders and the Credit Enhancer have otherwise consented
or directed the Indenture Trustee, at any public Sale of all or any portion of
the Trust Estate at which a minimum bid equal to or greater than the amount
described in paragraph (2) of subsection (b) of this Section 5.15 has not been
established by the Indenture Trustee and no Person bids an amount equal to or
greater than such amount, the Indenture Trustee shall bid an amount at least
$1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of the Trust Estate
34
(1) any Holder or Holders of Notes may bid for and with the
consent of the Credit Enhancer purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain and possess and dispose of
such property, without further accountability, and may, in paying the purchase
money therefor, deliver any Notes or claims for interest thereon in lieu of cash
up to the amount which shall, upon distribution of the net proceeds of such
sale, be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Holders
thereof after being appropriately stamped to show such partial payment;
(2) the Indenture Trustee may bid for and acquire the property
offered for Sale in connection with any Sale thereof, and, subject to any
requirements of, and to the extent permitted by, applicable law in connection
therewith, may purchase all or any portion of the Trust Estate in a private
sale, and, in lieu of paying cash therefor, may make settlement for the purchase
price by crediting the gross Sale price against the sum of (A) the amount which
would be distributable to the Holders of the Notes and Holders of Certificates
and amounts owing to the Credit Enhancer as a result of such Sale in accordance
with Section 5.04(b) on the Payment Date next succeeding the date of such Sale
and (B) the expenses of the Sale and of any Proceedings in connection therewith
which are reimbursable to it, without being required to produce the Notes in
order to complete any such Sale or in order for the net Sale price to be
credited against such Notes, and any property so acquired by the Indenture
Trustee shall be held and dealt with by it in accordance with the provisions of
this Indenture;
(3) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any portion of
the Trust Estate in connection with a Sale thereof;
(4) the Indenture Trustee is hereby irrevocably appointed the
agent and attorneyin fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection with a Sale thereof, and to take
all action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any monies.
Section 5.16. Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.04(b).
Section 5.17. Performance and Enforcement of Certain Obligations. (a)
Promptly following a written request from the Credit Enhancer or the Indenture
Trustee with the written consent of the Credit Enhancer to do so, the Issuer, in
its capacity as holder of the Home Loans, shall, with the written consent of the
Credit Enhancer, take all such lawful action as the Indenture
35
Trustee may request to cause the Issuer to compel or secure the performance and
observance by the Seller and the Master Servicer, as applicable, of each of
their obligations to the Issuer under or in connection with the Home Loan
Purchase Agreement and the Servicing Agreement, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Home Loan Purchase Agreement and the Servicing
Agreement to the extent and in the manner directed by the Indenture Trustee, as
pledgee of the Home Loans, including the transmission of notices of default on
the part of the Seller or the Master Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by the Seller or the Master Servicer of each of their obligations under the Home
Loan Purchase Agreement and the Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee, as pledgee of the Home Loans, subject to the rights of the Credit
Enhancer under the Servicing Agreement may, and at the direction (which
direction shall be in writing or by telephone (confirmed in writing promptly
thereafter)) of the Holders of 662/3% of the aggregate Note Balance (for which
purpose the Class AIO Notes will be deemed to have a Note Balance equal to
their Notional Amount) of the Notes shall, exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Seller or the Master
Servicer under or in connection with the Home Loan Purchase Agreement and the
Servicing Agreement, including the right or power to take any action to compel
or secure performance or observance by the Seller or the Master 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
Home Loan Purchase Agreement and the Servicing Agreement, as the case may be,
and any right of the Issuer to take such action shall not be suspended. In
connection therewith, as determined by the Indenture Trustee, the Issuer shall
take all actions necessary to effect the transfer of the Home Loans to the
Indenture Trustee.
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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
(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; however, 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 (A) pursuant to Section 5.11
or (B) from the Credit Enhancer, which it is entitled to give under any
of the Basic Documents.
(d) 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.
(e) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Trust Agreement.
(f) 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
37
believe that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(g) 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.
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, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(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 Note Registrar,
coregistrar or copaying agent may do the same with like rights. However, the
Indenture Trustee must comply with Sections 6.11 and 6.12.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be (i) responsible for and makes no representation as to the validity
or adequacy of this Indenture or the Notes, (ii) accountable for the Issuer's
use of the proceeds from the Notes or (iii) 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.
38
Section 6.05. Notice of Event of Default. If an Event of Default occurs
and is continuing and if it is known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall give notice thereof to the Credit Enhancer.
The Indenture Trustee shall mail to each Noteholder notice of the Event of
Default within 90 days after it occurs. Except in the case of an Event of
Default in payment of principal of or interest on any 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. In
addition, upon the Issuer's written request, the Indenture Trustee shall
promptly furnish information reasonably requested by the Issuer that is
reasonably available to the Indenture Trustee to enable the Issuer to perform
its federal and state income tax reporting obligations.
Section 6.07. Compensation and Indemnity. The Issuer shall pay to the
Indenture Trustee on each Payment Date reasonable compensation for its services.
The Indenture Trustee shall be compensated and indemnified by the Master
Servicer in accordance with Section 6.06 of the Servicing Agreement, and all
amounts owing to the Indenture Trustee hereunder in excess of such amount shall
be paid solely as provided in Section 3.05 hereof (subject to the priorities set
forth therein). The Indenture Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Issuer shall reimburse
the Indenture Trustee for all reasonable outofpocket 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 shall 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 promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee to so notify the Issuer shall not relieve the Issuer of its
obligations hereunder. The Issuer shall defend any such claim, and the Indenture
Trustee may have separate counsel and the Issuer shall pay the fees and expenses
of such counsel. The Issuer is not obligated to reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith. The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section 6.07 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of an Event of Default
specified in clause (iv) or (v) of the definition thereof 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.
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 and the Credit Enhancer. The
Holders of a majority of the aggregate Note Balance of the Notes (for which
purpose the Class AIO Notes will be deemed to have a Note Balance equal to
their Notional Amount) or the Credit
39
Enhancer may remove the Indenture Trustee by so notifying the Indenture Trustee
and the Credit Enhancer and may appoint a successor Indenture Trustee. The
Issuer shall remove the Indenture Trustee if
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the
office of the Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee with the consent of the
Credit Enhancer which consent will not be unreasonably withheld. In addition,
the Indenture Trustee will resign to avoid being directly or indirectly
controlled by the Issuer.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to 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 aggregate Note
Balance of the Notes (for which purpose the Class AIO Notes will be deemed to
have a Note Balance equal to their Notional Amount) may petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.
Section 6.09. Successor Indenture Trustee by ▇▇▇▇▇▇. 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 or transferee corporation
without any further act shall be the successor Indenture Trustee; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture
40
Trustee shall provide the Rating Agencies written notice of any such transaction
after the Closing Date.
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 CoIndenture Trustee or Separate Indenture
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at 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 cotrustee or cotrustees, or separate
trustee or separate trustees, of all or any part of the Owner Trust, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Trust Estate, or any part thereof, and, subject
to the other provisions of this Section, such powers, duties, obligations,
rights and trusts as the Indenture Trustee may consider necessary or desirable.
No cotrustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 6.11 and no notice to
Noteholders of the appointment of any cotrustee or separate trustee shall be
required under Section 6.08 hereof.
(b) Every separate trustee and cotrustee 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 cotrustee jointly (it being understood that such separate
trustee or cotrustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed the Indenture Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust Estate or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or cotrustee, but solely at
the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or cotrustee.
41
(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
cotrustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or cotrustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and cotrustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or cotrustee may at any time constitute the
Indenture Trustee, its agent or attorneyinfact 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
cotrustee 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 ss. 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 and it or its parent
shall have a longterm debt rating of A or better by ▇▇▇▇▇'▇. The Indenture
Trustee shall comply with TIA ss. 310(b), including the optional provision
permitted by the second sentence of TIA ss. 310(b)(9); provided, however, that
there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or
indentures under which other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.13. Representations and Warranties. The Indenture Trustee hereby
represents that
(i) The Indenture Trustee is duly organized, validly
existing and in good standing under the laws of the State of New York
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(ii) The Indenture Trustee has the power and authority to
execute and deliver this Indenture and to carry out its terms; and the
execution, delivery and performance of this Indenture have been duly
authorized by the Indenture Trustee by all necessary corporate action.
(iii) The consummation of the transactions contemplated by
this Indenture and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default
42
under, the articles of organization or bylaws of the Indenture Trustee
or any agreement or other instrument to which the Indenture Trustee is a
party or by which it is bound.
(iv) To the Indenture Trustee's best knowledge, there are
no proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Indenture Trustee or its
properties (A) asserting the invalidity of this Indenture (B) seeking
to prevent the consummation of any of the transactions contemplated by
this Indenture or (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Indenture Trustee
of its obligations under, or the validity or enforceability of, this
Indenture.
(v) The Indenture Trustee does not have notice of any
adverse claim (as such terms are used in Delaware UCC Section 8302)
with respect to the Home Loans.
Section 6.14. Directions to Indenture Trustee. The Indenture Trustee is
hereby directed
(a) to accept the pledge of the Home Loans and hold the assets of the Trust
in trust for the Noteholders and the Credit Enhancer;
(b) to authenticate and deliver the Notes substantially in the form
prescribed by Exhibit A1 and A2 in accordance with the terms of this
Indenture; and
(c) to take all other actions as shall be required to be taken by the terms
of this Indenture.
Section 6.15. Indenture Trustee May Own Securities. The Indenture
Trustee, in its individual or any other capacity may become the owner or pledgee
of Securities with the same rights it would have if it were not Indenture
Trustee.
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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 each 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 and, (b) at such other times as the
Indenture Trustee and the Credit Enhancer may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that 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 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 ss. 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 TIAss.312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall
(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies of
the annual reports and the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) that the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the Indenture Trustee, and the Commission
in accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA ss.
313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this Section 7.03(a) and by rules and regulations prescribed from time
to time by the Commission.
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(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIA ss.
313(a), within 60 days after each January 1 beginning with January 1, 2003, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss. 313(c)
and to the Credit Enhancer a brief report dated as of such date that complies
with TIA ss. 313(a). The Indenture Trustee also shall comply with TIA ss.
313(b). A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock 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 stock exchange.
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Article VIII
Accounts, Disbursements and Releases
Section 8.01. Collection of Money. 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 Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02. Trust Accounts. (a) On or prior to the Closing Date, the
Issuer shall cause the Indenture Trustee to establish and maintain, in the name
of the Indenture Trustee, for the benefit of the Noteholders and the Certificate
Paying Agent, on behalf of the Certificateholders and the Credit Enhancer, the
Payment Account as provided in Section 3.01 of this Indenture.
(b) All monies deposited from time to time in the Payment Account
pursuant to the Servicing Agreement and all deposits therein pursuant to this
Indenture are for the benefit of the Noteholders and the Certificate Paying
Agent, on behalf of the Certificateholders and all investments made with such
monies including all income or other gain from such investments are for the
benefit of the Master Servicer as provided by the Servicing Agreement.
On each Payment Date, the Indenture Trustee shall distribute all amounts
on deposit in the Payment Account to Noteholders in respect of the Notes and in
its capacity as Certificate Paying Agent to Certificateholders in the order of
priority set forth in Section 3.05 (except as otherwise provided in Section
5.04(b).
The Master Servicer shall direct the Indenture Trustee in writing to
invest any funds in the Payment Account in Permitted Investments maturing no
later than the Business Day preceding each Payment Date and shall not be sold or
disposed of prior to the maturity.
Section 8.03. Officer's Certificate. The Indenture Trustee shall receive
at least seven days notice when requested by the Issuer to take any action
pursuant to Section 8.05(a), accompanied by copies of any instruments to be
executed, and the Indenture Trustee shall also require, as a condition to such
action, an Officer's Certificate, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with.
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Section 8.04. Termination Upon Distribution to Noteholders. This
Indenture and the respective obligations and responsibilities of the Issuer and
the Indenture Trustee created hereby shall terminate upon the distribution to
the Noteholders, the Certificate Paying Agent (on behalf of the
Certificateholders) and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III; provided, however, that in no event shall
the trust created hereby continue beyond the expiration of 21 years from the
death of the survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. ▇▇▇▇▇, living on the date
hereof.
Section 8.05. Release of Trust Estate. (a) Subject to the payment of its
fees and expenses, 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 Article VIII hereunder shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent, or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as (i) there are no Notes
Outstanding, (ii) all sums due the Indenture Trustee pursuant to this Indenture
have been paid, and (iii) all sums due the Credit Enhancer have been paid,
release any remaining portion of the Trust Estate that secured the Notes from
the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.05 only upon receipt of a request from the
Issuer accompanied by an Officers' Certificate and a letter from the Credit
Enhancer, stating that the Credit Enhancer has no objection to such request from
the Issuer.
(d) The Indenture Trustee shall, at the request of the Issuer or the
Depositor, surrender the Credit Enhancement Instrument to the Credit Enhancer
for cancellation, upon final payment on the Notes.
Section 8.06. Surrender of Notes Upon Final Payment. By acceptance of
any Note, the Holder thereof agrees to surrender such Note to the Indenture
Trustee promptly, prior to such Noteholder's receipt of the final payment
thereon.
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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 and the Credit Enhancer, the Issuer and the Indenture Trustee,
when authorized by an Issuer Request, at any time and from time to time, may
enter into one or more indentures supplemental hereto (which shall conform to
the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, 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 the Credit Enhancer, or to
surrender any right or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct any error, or to
correct or supplement any provision herein or in any supplemental
indenture that may be inconsistent with any other provision herein, in
any supplemental indenture or in the Prospectus Supplement;
(vi) to make any other provisions with respect to matters
or questions arising under this Indenture or in any supplemental
indenture; provided, that such action shall not materially and adversely
affect the interests of the Holders of the Notes or the Credit Enhancer;
(vii) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as shall
be necessary to facilitate the administration of the trusts hereunder by
more than one trustee, pursuant to the requirements of Article VI; or
(viii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under 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; provided,
however, that no such indenture supplements shall be entered into unless
the Indenture Trustee shall have received
48
an Opinion of Counsel that entering into such indenture supplement will
not have any material adverse tax consequences to the Noteholders. 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
Request, may, also without the consent of any of the Holders of the Notes but
with prior notice to the Rating Agencies and the Credit Enhancer, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel, (i) adversely affect in any material
respect the interests of any Noteholder or the Credit Enhancer or (ii) cause the
Issuer to be subject to an entity level tax.
(c) The Issuer and the Indenture Trustee shall, as directed by the
Holders of Certificates which represent not less than 100% of the Certificate
Percentage Interests thereof, enter into an indenture or indentures supplemental
hereto for the purpose of providing for the issuance of one or more additional
classes of Notes entitled to payments derived solely from all or a portion of
the payments to which the Certificates issued on the Closing Date pursuant to
the Trust Agreement are entitled; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel, (i) adversely affect in any material
respect the interests of any Noteholder or the Credit Enhancer or (ii) cause the
Issuer to be subject to an entity level tax. Each such class of Notes shall be a
nonrecourse obligation of the Issuer and shall be entitled to interest and
principal in such amounts, and to such security for the repayment thereof, as
shall be specified in such amendment or amendments. Promptly after the execution
by the Issuer and the Indenture Trustee of any amendments pursuant to this
Section or the creation of a new indenture and the issuance of the related class
or classes of Notes, the Issuer shall require the Indenture Trustee to give
notice to the Holders of the Notes and the Rating Agencies setting forth in
general terms the substance of the provisions of such amendment. Any failure of
the Indenture Trustee to provide such notice as is required under this
paragraph, or any defect therein, shall not, however, in any way impair or
affect the validity of such amendment or any class of Notes issued pursuant
thereto. Unless the Credit Enhancer agrees in writing, (i) any classes of Notes
issued pursuant to a supplemental indenture shall not be entitled to the
insurance provided by the Credit Enhancement Instrument and (ii) the Holders of
any such classes of Notes shall be entitled only to such distributions or a
portion of such distributions as the Holders would have received as Holders of
Certificates.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, also
may, with prior notice to the Rating Agencies and with the consent of the
Holders of not less than a majority of the aggregate Note Balance of the Notes
(for which purpose the Class AIO Notes will be deemed to have a Note Balance
equal to their Notional Amount) affected thereby and the Credit Enhancer, 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 Note affected
thereby
49
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount
thereof or the interest rate thereon, change the provisions of this
Indenture relating to the application of collections on, or the proceeds
of the Sale of, the Trust Estate to payment of principal of or interest
on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions
of this Indenture requiring the application of funds available therefor,
as provided in Article V, to the payment of any such amount due on the
Notes on or after the respective due dates thereof;
(ii) reduce the percentage of the related Note Balance or
Notional Amount, as applicable, of any Class of 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;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding" or modify or alter the exception in
the definition of the term "Holder";
(iv) reduce the percentage of the aggregate Note Balance
of the Notes required to direct the Indenture Trustee to direct the
Issuer to sell or liquidate the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section 9.02 except to
increase any percentage specified herein or to provide that certain
additional provisions of this Indenture or the Basic Documents cannot be
modified or waived without the consent of the Holder of each Note
affected thereby;
(vi) modify any of the provisions of this Indenture in
such manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including the
calculation of any of the individual components of such calculation); or
(vii) permit the creation of any lien ranking prior to or
on a parity with the lien of this Indenture with respect to any part of
the Trust Estate or, except as otherwise permitted or contemplated
herein, terminate the lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture; and provided, further, that such
action shall not, as evidenced by an Opinion of Counsel, cause the
Issuer to be subject to an entity level tax.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
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It shall not be necessary for any Act of Noteholders (as defined in
Section 10.03) under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such Act shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes and the Custodian to which such amendment
or supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
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, 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 and conforms to the requirements of
the Trust Indenture Act. 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 Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance therewith
with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the 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.
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Article X
Miscellaneous
Section 10.01.Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Credit Enhancer (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that, in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished. Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(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;
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with; and
(5) if the Signer of such Certificate or Opinion is required
to be Independent, the Statement required by the definition of the term
"Independent".
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 10.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i)
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 thencurrent fiscal year of the Issuer, as set forth
in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the aggregate Note Balance (for which
purpose the
52
Class AIO Notes will be deemed to have a Note Balance equal to their
Notional 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 aggregate Note
Balance of the Notes.
(iii) 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.
(iv) 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 clause
(iii) 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 property as
contemplated by clause (v) below or securities released from the lien of
this Indenture since the commencement of the thencurrent calendar year,
as set forth in the certificates required by clause (iii) above and this
clause (iv), equals 10% or more of the aggregate Note Balance (for which
purpose the Class AIO Notes will be deemed to have a Note Balance equal
to their Notional 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 aggregate Note
Balance of the Notes.
(v) Notwithstanding any provision of this Indenture, the
Issuer may, without compliance with the requirements of the other
provisions of this Section 10.01, (A) collect, sell or otherwise dispose
of the Home Loans as and to the extent permitted or required by the
Basic Documents or (B) make cash payments out of the Payment Account as
and to the extent permitted or required by the Basic Documents, so long
as the Issuer shall deliver to the Indenture Trustee every six months,
commencing June 30, 2002, an Officer's Certificate of the Issuer stating
that all the dispositions of Collateral described in clauses (A) or (B)
above that occurred during the preceding six calendar months were in the
ordinary course of the Issuer's business and that the proceeds thereof
were applied in accordance with the Basic Documents.
Section 10.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
53
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 Seller or the
Issuer, stating that the information with respect to such factual matters is in
the possession of the Seller or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, 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.
Section 10.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section 10.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(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.
54
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Credit
Enhancer 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 the
Corporate Trust Office. The Indenture Trustee shall promptly transmit
any notice received by it from the Noteholders to the Issuer, or
(ii) the Issuer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if in writing
and mailed firstclass, postage prepaid to the Issuer addressed to Home
Loan Trust 2002HI1, in care of Wilmington Trust Company, or at any
other address previously furnished in writing to the Indenture Trustee
by the Issuer. The Issuer shall promptly transmit any notice received by
it from the Noteholders to the Indenture Trustee, or
(iii) the Credit Enhancer by the Issuer, the Indenture
Trustee or by any Noteholders shall be sufficient for every purpose
hereunder to in writing and mailed, firstclass postage prepaid, or
personally delivered or telecopied to Ambac Assurance Corporation, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention
Consumer AssetBacked Securities Group, telecopier number (212)
3631459. The Credit Enhancer shall promptly transmit any notice
received by it from the Issuer, the Indenture Trustee or the Noteholders
to the Issuer or Indenture Trustee, as the case may be.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
Moody's, at the following address ▇▇▇▇▇'▇ Investors Service, Inc., ABS
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (ii) in
the case of Standard & Poor's, at the following address Standard & Poor's, A
Division of the McGrawHill Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of Asset Backed Surveillance Department; or as
to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
Section 10.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, firstclass, postage prepaid to each Noteholder affected by such
event, at such Person's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.
55
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of Default.
Section 10.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee to such Holder, that is different
from the methods provided for in this Indenture for such payments or notices.
The Issuer shall furnish to the Indenture Trustee a copy of each such agreement
and the Indenture Trustee shall cause payments to be made and notices to be
given in accordance with such agreements.
Section 10.07. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control. The provisions of TIA
▇▇.▇▇. 310 through 317 that impose duties on any Person (including the
provisions automatically deemed included herein unless expressly excluded by
this Indenture) are a part of and govern this Indenture, whether or not
physically contained herein.
Section 10.08. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the
construction hereof.
Section 10.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, cotrustees and agents.
Section 10.10. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
56
Section 10.11. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, the Credit Enhancer,
and any other party secured hereunder, and any other Person with an ownership
interest in any part of the Trust Estate, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 10.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 10.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.14. Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 10.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which 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 10.16. Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee 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 have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
57
Section 10.17. 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 Depositor or the Issuer, or
join in any institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Basic Documents.
Section 10.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it shall 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 be reasonably 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.
58
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
HOME LOAN TRUST 2002HI1,
as Issuer
By Wilmington Trust Company
not in its individual capacity
but solely as Owner Trustee
By
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title Vice President
JPMORGAN CHASE BANK,
as Indenture Trustee
By
Name ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title Assistant Vice President
JPMORGAN CHASE BANK
hereby accepts the appointment as Paying Agent pursuant to Section 3.03 hereof
and as Note Registrar pursuant to Section 4.02 hereof.
By
Name ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title Assistant Vice President
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
HOME LOAN TRUST 2002HI1,
as Issuer
By Wilmington Trust Company
not in its individual capacity
but solely as Owner Trustee
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title Vice President
JPMORGAN CHASE BANK,
as Indenture Trustee
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title Assistant Vice President
JPMORGAN CHASE BANK
hereby accepts the appointment as Paying Agent pursuant to Section 3.03 hereof
and as Note Registrar pursuant to Section 4.02 hereof.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title Assistant Vice President
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 29th day of January, 2002, before me personally appeared ▇▇▇▇
▇▇▇▇▇▇▇▇▇, to me known, who being by me duly sworn, did depose and say, that he
resides at New York , NY, that he is the Assistant Vice President of the
Indenture Trustee, one of the corporations described in and which executed the
above instrument; and that he signed his name thereto by like order.
Notary Public
STATE OF DELAWARE )
) ss.
COUNTY OF NEW CASTLE )
On this 29th day of January, 2002, before me personally appeared ▇▇▇▇▇
▇. ▇▇▇▇▇▇, to me known, who being by me duly sworn, did depose and say, that he
resides at Wilmington, DE, that he is the Vice President of Wilmington Trust
Company, as Owner Trustee, one of the corporations described in and which
executed the above instrument; and that he signed his name thereto by like
order.
Notary Public
NOTARIAL SEAL
EXHIBIT A1
FORM OF NOTES
CLASS A__ NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
SELLER, THE DEPOSITOR, THE MASTER SERVICER, THE INDENTURE TRUSTEE, THE OWNER
TRUSTEE OR GMAC MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.
THE HOLDER OF THIS NOTE IS DEEMED TO HAVE REPRESENTED THAT EITHER
(1) IT IS NOT A PLAN NOR IS IT ACQUIRING THIS NOTE WITH PLAN ASSETS OR (2) THE
ACQUISITION OF THIS NOTE BY THE HOLDER DOES NOT CONSTITUTE OR GIVE RISE TO A
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE,
FOR WHICH NO STATUTORY, REGULATORY OR ADMINISTRATIVE EXEMPTION IS AVAILABLE.
HOME LOAN TRUST 2002HI1
Home LoanBacked Note
Registered Principal Amount $___________
Class A__
No. __ Percentage Interest _____%
CUSIP No. ___________ Note Rate _____%
1
Home Loan Trust 2002HI1, a business trust duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of $___________, payable on each Payment
Date in an amount equal to the Percentage Interest specified above of the
aggregate amount, if any, payable from the Payment Account in respect of
principal on the Class A__ Notes pursuant to Section 3.05 of the Indenture
dated as of January 29, 2002 (the "Indenture") between the Issuer, as Issuer,
and JPMorgan Chase Bank, as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the Payment Date in September 2031, to the extent not
previously paid on a prior Payment Date. Capitalized terms used but not defined
herein are defined in Appendix A of the Indenture.
[Interest on the Class A__ Notes will be paid monthly on each
Payment Date at the Note Rate. The Note Rate for the Class A__ Notes will be
_____% per annum. Interest will be computed on the basis of a 30day month and a
360day year. Principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof. On the StepUp Date, the Note Rate on the Class
A7 Notes will increase by 0.50% per annum.
[Interest on the Class A1 Notes will be paid monthly on each
Payment Date at the Note Rate for the related Interest Accrual Period. The Note
Rate for each Interest Accrual Period will be equal to the lesser of (i) LIBOR
plus 0.19% per annum and (ii) 9.50% per annum. LIBOR for each applicable
Interest Accrual Period will be determined on the second LIBOR Business Day
immediately preceding (i) the Closing Date in the case of the first Interest
Accrual Period and (ii) the first day of each succeeding Interest Accrual Period
by the Indenture Trustee as set forth in the Indenture. All determinations of
LIBOR by the Indenture Trustee shall, in the absence of manifest error, be
conclusive for all purposes, and each holder of this Class A1 Note, by
accepting this Class A1 Note, agrees to be bound by such determination.
Interest on this Class A1 Note will accrue for each Payment Date from the most
recent Payment Date on which interest has been paid (in the case of the first
Payment Date, from the Closing Date) to but excluding such Payment Date.
Interest will be computed on the basis of the actual number of days in each
Interest Accrual Period and a year assumed to consist of 360 days. Principal of
and interest on this Class A1 Note shall be paid in the manner specified in the
Indenture.
Principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Home LoanBacked Notes (herein called the "Notes"),
all issued under the Indenture, to which
2
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the holders of the Notes. The Notes are subject to all
terms of the Indenture.
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
This Note is entitled to the benefits of an irrevocable and
unconditional financial guaranty insurance policy issued by Ambac Assurance
Corporation.
Principal of and interest on this Note will be payable on each
Payment Date, commencing on February 25, 2002, as described in the Indenture.
"Payment Date" means the twentyfifth day of each month, or, if any such date is
not a Business Day, then the next Business Day.
The entire unpaid principal amount of this Note shall be due and
payable in full on the Payment Date in September 2031 pursuant to the Indenture,
to the extent not previously paid on a prior Payment Date. Notwithstanding the
foregoing, if an Event of Default shall have occurred and be continuing, then
the Indenture Trustee or the holders of Notes representing not less than a
majority of the aggregate Note Balance (for which purpose the Class AIO Notes
will be deemed to have a Note Balance equal to their Notional Amount) of all
Notes with the consent of the Credit Enhancer, or the Credit Enhancer may
declare the Notes to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture. All principal payments on the Notes shall be made
pro rata to the holders of Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the address specified in such notice of final payment.
3
As provided in the Indenture and subject to certain limitations
set forth therein, the transfer of this Note may be registered on the Note
Register upon surrender of this Note for registration of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by, the
holder hereof or such holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes in authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the Note Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of this Note.
Each holder or Beneficial Owner of a Note, by acceptance of a
Note, or, in the case of a Beneficial Owner of a Note, a beneficial interest in
a Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee,
the Seller, the Master Servicer, the Depositor or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee 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 have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each holder or Beneficial Owner of a Note, by acceptance of a
Note or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees by accepting the benefits of the Indenture that such
holder or Beneficial Owner of a Note will not at any time institute against the
Depositor, the Seller, the Master Servicer, GMAC Mortgage Group, Inc. or the
Issuer, or join in any institution against the Depositor, the Seller, the Master
Servicer, GMAC Mortgage Group, Inc. or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the
Issuer. Each holder of a Note, by acceptance of a Note (and each Beneficial
Owner of a Note by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
4
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note is registered (as
of the day of determination or as of such other date as may be specified in the
Indenture) as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the Indenture Trustee and the rights of the
holders of the Notes under the Indenture at any time by the Issuer and the
Indenture Trustee with the consent of the holders of Notes representing a
majority of the aggregate Note Balance (for which purpose the Class AIO Notes
will be deemed to have a Note Balance equal to their Notional Amount) of all
Notes at the time Outstanding and the Credit Enhancer and with prior notice to
the Rating Agencies. The Indenture also contains provisions permitting the
holders of Notes representing specified percentages of the aggregate Note
Balance of all Notes, on behalf of the holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the holder of this Note (or any one of more Predecessor Notes) shall
be conclusive and binding upon such holder and upon all future holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Issuer and the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of holders of the Notes issued thereunder but
with prior notice to the Rating Agencies and the Credit Enhancer.
The term "Issuer" as used in this Note includes any successor or
the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations
as provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair, the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Wilmington Trust Company in
its individual capacity, JPMorgan Chase
5
Bank, in its individual capacity, any owner of a beneficial interest in the
Issuer, or any of their respective partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on this Note or performance of, or omission to perform, any of the
covenants, obligations or indemnifications contained in the Indenture. The
holder of this Note by its acceptance hereof agrees that, except as expressly
provided in the Basic Documents, in the case of an Event of Default under the
Indenture, the holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
6
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer
and not in its individual capacity, has caused this Note to be duly executed.
HOME LOAN TRUST 2002HI1
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as Owner
Trustee
Dated January [__, 2002
By
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A__ Notes referred to in the within mentioned
Indenture.
JPMORGAN CHASE BANK, not in its
individual capacity but solely as Indenture
Trustee
Dated January [__, 2002
By
Authorized Signatory
7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
__________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints , attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated */
Signature Guaranteed
/ *
1 NOTICE The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
8
EXHIBIT A2
FORM OF NOTES
CLASS AIO NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
SELLER, THE DEPOSITOR, THE MASTER SERVICER, THE INDENTURE TRUSTEE, THE OWNER
TRUSTEE OR GMAC MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.
THE HOLDER OF THIS NOTE IS DEEMED TO HAVE REPRESENTED THAT EITHER
(1) IT IS NOT A PLAN NOR IS IT ACQUIRING THIS NOTE WITH PLAN ASSETS OR (2) THE
ACQUISITION OF THIS NOTE BY THE HOLDER DOES NOT CONSTITUTE OR GIVE RISE TO A
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE,
FOR WHICH NO STATUTORY, REGULATORY OR ADMINISTRATIVE EXEMPTION IS AVAILABLE.
9
HOME LOAN TRUST 2002HI1
Home LoanBacked Note
Registered Notional Amount $___________
Class AIO
No. __ Percentage Interest _____%
CUSIP No. ___________ Note Rate _____%
Home Loan Trust 2002HI1, a business trust duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the amount payable on each Payment Date to the Class AIO
Notes in an amount equal to the Percentage Interest specified above of the
aggregate amount, if any, payable from the Payment Account in respect of
interest on the Class AIO Notes pursuant to Section 3.05 of the Indenture dated
as of January 29, 2002 (the "Indenture") between the Issuer, as Issuer, and
JPMorgan Chase Bank, as Indenture Trustee (the "Indenture Trustee"). Capitalized
terms used but not defined herein are defined in Appendix A of the Indenture.
Interest on the Class AIO Notes will be paid monthly on each
Payment Date at the Note Rate. The Note Rate for the Class AIO Notes will be
11.00% per annum for the February 2002 through January 2003 Payment Dates,
10.00% per annum for the February 2003 through January 2004 Payment Dates, 7.00%
per annum for the February 2004 through July 2004 Payment Dates, and 0.00%
thereafter. Interest will be computed on the basis of a 30day month and a
360day year. Interest on this Note shall be paid in the manner specified on the
reverse hereof.
Interest on this Note is payable in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts. All payments made by the Issuer with respect to
this Note shall be applied to interest due and payable on this Note as provided
above.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose. This Note is one of a
duly authorized issue of Notes of the Issuer, designated as its
Home LoanBacked Notes (herein called the "Notes"), all issued
under the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the holders of
the Notes. The Notes are subject to all terms of the Indenture.
10
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
This Note is entitled to the benefits of an irrevocable and
unconditional financial guaranty insurance policy issued by Ambac Assurance
Corporation.
Interest on this Note will be payable on each Payment Date for
the first 30 Payment Dates, commencing on February 25, 2002, as described in the
Indenture. "Payment Date" means the twentyfifth day of each month, or, if any
such date is not a Business Day, then the next Business Day.
If an Event of Default shall have occurred and be continuing,
then the Indenture Trustee or the holders of Notes representing not less than a
majority of the aggregate Note Balance (for which purpose the Class AIO Notes
will be deemed to have a Note Balance equal to their Notional Amount) of all
Notes with the consent of the Credit Enhancer, or the Credit Enhancer may
declare the Notes to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture.
Payments of interest on this Note due and payable on each Payment
Date, shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of the nominee of the
Depository Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. If funds are expected to be available, as provided in the
Indenture, for the last payment on this Class AIO Note occurring on the Payment
Date in July 2004, then the Indenture Trustee, in the name of and on behalf of
the Issuer, will notify the Person who was the Registered Holder hereof as of
the Record Date preceding such Payment Date by notice mailed or transmitted by
facsimile prior to such Payment Date, and the amount then due and payable shall
be payable only upon presentation and surrender of this Note at the address
specified in such notice of final payment.
As provided in the Indenture and subject to certain limitations
set forth therein, the transfer of this Note may be registered on the Note
Register upon surrender of this Note for registration of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by, the
holder hereof or such holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes in authorized denominations and in the same aggregate notional amount will
be issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the Note
Registrar shall require payment of a sum sufficient to cover any tax or
11
governmental charge that may be imposed in connection with any registration of
transfer or exchange of this Note.
Each holder or Beneficial Owner of a Note, by acceptance of a
Note, or, in the case of a Beneficial Owner of a Note, a beneficial interest in
a Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee,
the Seller, the Master Servicer, the Depositor or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee 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 have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each holder or Beneficial Owner of a Note, by acceptance of a
Note or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees by accepting the benefits of the Indenture that such
holder or Beneficial Owner of a Note will not at any time institute against the
Depositor, the Seller, the Master Servicer, GMAC Mortgage Group, Inc. or the
Issuer, or join in any institution against the Depositor, the Seller, the Master
Servicer, GMAC Mortgage Group, Inc. or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the
Issuer. Each holder of a Note, by acceptance of a Note (and each Beneficial
Owner of a Note by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note is registered (as
of the day of determination or as of such other date as may be specified in the
Indenture) as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the Indenture Trustee and the rights of the
holders of the Notes under the Indenture at any time by the Issuer and the
Indenture Trustee with the consent of the holders of Notes representing a
majority of the aggregate Note Balance (for which purpose the Class AIO Notes
will be deemed to have a Note Balance equal to their Notional Amount) of all
Notes at the time Outstanding and the Credit Enhancer and with prior
12
notice to the Rating Agencies. The Indenture also contains provisions permitting
the holders of Notes representing specified percentages of the aggregate Note
Balance of all Notes, on behalf of the holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the holder of this Note (or any one of more Predecessor Notes) shall
be conclusive and binding upon such holder and upon all future holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Issuer and the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of holders of the Notes issued thereunder but
with prior notice to the Rating Agencies and the Credit Enhancer.
The term "Issuer" as used in this Note includes any successor or
the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations
as provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair, the obligation of the Issuer,
which is absolute and unconditional, to pay the interest on this Note at the
times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Wilmington Trust Company in
its individual capacity, JPMorgan Chase Bank, in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of interest on this Note or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in the
Indenture. The holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
13
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer
and not in its individual capacity, has caused this Note to be duly executed.
HOME LOAN TRUST 2002HI1
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as Owner
Trustee
Dated January [__, 2002
By
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class AIO Notes referred to in the within mentioned
Indenture.
JPMORGAN CHASE BANK, not in its
individual capacity but solely as Indenture
Trustee
Dated January [__, 2002
By
Authorized Signatory
14
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
______________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
, attorney, to transfer said Note on the books kept for registration thereof,
with full power of substitution in the premises.
Dated */
Signature Guaranteed
__________________________________ //
_____________________
1 NOTICE The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
15
APPENDIX A
DEFINITIONS
Administrative Fees The Servicing Fees and the fees payable to the Owner
Trustee and the Indenture Trustee.
Adjusted Issue Price Upon the occurrence of an Event of Default,
or upon the occurrence of an Optional Redemption (i) with respect to the first
29 Payment Dates, as defined in Code Section 1272(a)(4) and (ii) with respect to
all Payment Dates thereafter, zero.
Affiliate With respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise and "controlling" and "controlled"
shall have meanings correlative to the foregoing.
Appraised Value For any Home Loan the value of the related
Mortgaged Property determined by the appraisal, sales price for such Mortgaged
Property or alternative valuation method used in the origination of such Home
Loan (which may have been obtained at an earlier time); provided that if such
Home Loan was originated simultaneously with or not more than 12 months after a
senior lien on the related Mortgaged Property which was originated in a purchase
or cashout refinance transaction, the appraised value shall be the lesser of
the appraised value at the origination of the senior lien and the sales price
for such Mortgaged Property.
Assignment of Mortgage With respect to any Mortgage, an
assignment, notice of transfer or equivalent instrument, in recordable form,
sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to reflect the sale of the Mortgage, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering Mortgages secured by Mortgaged Properties located
in the same jurisdiction.
Authorized Officer With respect to the Issuer, any officer of
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).
Bankruptcy Code The Bankruptcy Code of 1978, as amended.
Basic Documents The Trust Agreement, the Indenture, the Home
Loan Purchase Agreement, the Insurance Agreement, the Credit Enhancement
Instrument, the Servicing Agreement, the Custodial Agreement and the other
documents and certificates delivered in connection with any of the above.
Beneficial Owner With respect to any Note, the Person who is the
beneficial owner of such Note as reflected on the books of the Depository or on
the books of a Person maintaining an
1
account with such Depository (directly as a Depository Participant or indirectly
through a Depository Participant, in accordance with the rules of such
Depository).
BookEntry Custodian The custodian appointed pursuant to Section
4.06 of the Indenture.
BookEntry Notes Beneficial interests in the Notes, ownership
and transfers of which shall be made through book entries by the Depository as
described in Section 4.06 of the Indenture.
Business Day Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the States of New York, California,
Texas, Minnesota, Pennsylvania, Illinois or Delaware are required or authorized
by law to be closed.
Business Trust Statute Chapter 38 of Title 12 of the Delaware Code, 12 Del.
Code ss.ss.3801 et seq., as the same may be amended from time to time.
Calendar Quarter A Calendar Quarter shall consist of one of the
following time periods in any given year January 1 through March 31, April 1
through June 30, July 1 though September 30, and October 1 through December 31.
Certificate Distribution Account The account or accounts created
and maintained by the Certificate Paying Agent pursuant to Section 3.10(c) of
the Trust Agreement. The Certificate Paying Agent will make all distributions on
the Certificates from money on deposit in the Certificate Distribution Account.
The Certificate Distribution Account shall be an Eligible Account.
Certificate Distribution Amount The amount payable to the
Certificate Paying Agent under Section 3.05(a)(ix) of the Indenture for payment
to the Certificates under the Trust Agreement.
Certificate Paying Agent The meaning specified in Section 3.10 of the Trust
Agreement.
Certificate Percentage Interest With respect to any Certificate
and any date of determination, the percentage interest as stated on the face of
such Certificate, which percentage may be recalculated in accordance with
Section 3.03 of the Trust Agreement.
Certificate Principal Balance As of any Payment Date, with
respect to any Certificate; an amount equal to the then applicable Certificate
Percentage Interest of such Certificate multiplied by the Outstanding Reserve
Amount immediately prior to such Payment Date.
Certificate Register The register maintained by the Certificate Registrar
in which the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates.
Certificate Registrar Initially, the Indenture Trustee, in its capacity as
Certificate Registrar, or any successor to the Indenture Trustee in such
capacity.
2
Certificate of Trust The Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute, including all
amendments and restatements.
Certificateholder The Person in whose name a Certificate is
registered in the Certificate Register except that, any Certificate registered
in the name of the Issuer, the Owner Trustee or the Indenture Trustee or any
Affiliate of any of them shall be deemed not to be outstanding and the
registered holder will not be considered a Certificateholder or a holder for
purposes of giving any request, demand, authorization, direction, notice,
consent or waiver under the Indenture or the Trust Agreement provided that, in
determining whether the Indenture Trustee or the Owner Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that the Indenture Trustee or the
Owner Trustee knows to be so owned shall be so disregarded. Owners of
Certificates that have been pledged in good faith may be regarded as Holders if
the pledgee establishes to the satisfaction of the Indenture Trustee or the
Owner Trustee, as the case may be, the pledgee's right so to act with respect to
such Certificates and that the pledgee is not the Issuer, any other obligor upon
the Certificates or any Affiliate of any of the foregoing Persons.
Certificates The Certificates in substantially the form set forth in
Exhibit A to the Trust Agreement.
Class Collectively, all of the Notes bearing the same designation.
Closing Date January 29, 2002.
Code The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
Collateral The meaning specified in the Granting Clause of the Indenture.
Collection Period With respect to any Payment Date, the calendar month
immediately preceding the month of such Payment Date.
Combined LoantoValue Ratio With respect to each Home Loan, the
ratio, expressed as a percentage, of (i) the sum of (A) the original principal
balance of such Home Loan, and (B) any outstanding principal balance, at
origination of such Home Loan, of all other mortgage loans, if any, secured by
senior or subordinate liens on the related Mortgaged Property, to (ii) the
Appraised Value, or, if permitted by the Program Guide, a statistical valuation
or the Stated Value.
Corporate Trust Office With respect to the Indenture Trustee,
Certificate Registrar, Certificate Paying Agent and Paying Agent, the principal
corporate trust office of the Indenture Trustee and Note Registrar at which at
any particular time its corporate trust business shall be administered, which
office at the date of the execution of this instrument is located at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention Capital Markets
Fiduciary Services. With th respect to the Owner Trustee, the principal
corporate trust office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office at the
3
date of the execution of this Trust Agreement is located at ▇▇▇▇▇▇ Square North,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention Corporate Trust
Administration.
Credit Enhancement Draw Amount (1) With respect to any Payment
Date, an amount, if any, equal to the sum of (w) the excess, if any, of (A) the
aggregate amount of accrued interest on the Notes at the respective Note Rates
on such Payment Date over (B)(i) the amount on deposit in the Payment Account on
such Payment Date, less (ii) an amount equal to the Principal Collection
Distribution Amount, if any, for such Payment Date, (x) any Liquidation Loss
Amount (other than any Excess Loss Amount) for such Payment Date, not currently
covered by a Liquidation Loss Distribution Amount or a reduction in the
Outstanding Reserve Amount, and (y) any Excess Loss Amount, and (2) with respect
to the Final Insured Payment Date, the amount by which the Note Balance of the
Notes plus any amount determined pursuant to clause (1) hereof exceeds the
payments otherwise available to be made to the Holders thereof on the Final
Insured Payment Date. The Credit Enhancement Draw Amount for any Payment Date
shall be reduced by the amount of any payments made to the Trust Estate with
respect to that date from the Limited Reimbursement Agreement. A Credit
Enhancement Draw Amount shall not include the Adjusted Issue Price, if any,
payable to the Holders of the Class AIO Notes if the Class AIO Notes are
redeemed pursuant to Section 8.08 of the Servicing Agreement prior to the
Payment Date in July 2004.
Credit Enhancement Instrument The Certificate Guaranty Insurance
Policy number AB0531BE, dated as of the Closing Date, issued by the Credit
Enhancer to the Indenture Trustee.
Credit Enhancer Ambac Assurance Corporation, a Wisconsindomiciled stock
insurance corporation or any successor thereto.
Credit Enhancer Default If the Credit Enhancer fails to make a payment
required under the Credit Enhancement Instrument in accordance with its terms.
Credit Scores The figure assigned to a Home Loan that is
designed to assess the Mortgagor's credit history which is obtained from credit
reports provided by various credit reporting organizations and obtained by many
lenders in connection with Home Loan applications to help assess a ▇▇▇▇▇▇▇▇▇'s
creditworthiness.
Custodial Account The account or accounts created and maintained
by the Master Servicer pursuant to Section 3.02(b) of the Servicing Agreement,
in which the Master Servicer shall deposit or cause to be deposited certain
amounts in respect of the Home Loans.
Custodial Agreement Any Custodial Agreement among the Custodian,
the Indenture Trustee, the Issuer and the Master Servicer relating to the
custody of the Home Loans and the Related Documents.
Custodian ▇▇▇▇▇ Fargo Bank Minnesota, N.A., a national association, and its
successors and assigns.
Cutoff Date January 1, 2002.
4
Cutoff Date Loan Balance With respect to any Home Loan, the
unpaid principal balance thereof as of the close of business on the Business Day
immediately prior to the Cutoff Date.
Default Any occurrence which is or with notice or the lapse of time or both
would become an Event of Default.
Deficient Valuation With respect to any Home Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under the Home Loan, or any reduction in
the amount of principal to be paid in connection with any scheduled payment that
constitutes a permanent forgiveness of principal, which valuation or reduction
results from a proceeding under the Bankruptcy Code.
Definitive Notes The meaning specified in Section 4.06 of the Indenture.
Deleted Loan A Home Loan replaced or to be replaced with an Eligible
Substitute Loan.
Delinquent As used herein, a Home Loan is considered to be "30
to 59 days" or "30 or more days" delinquent when a payment due on any due date
remains unpaid as of the close of business on the next following monthly due
date. Since the determination as to whether a Home Loan falls into these
categories is made as of the close of business on the last business day of each
month, a Home Loan with a payment due on July 1 that remained unpaid as of the
close of business on July 31 would still be considered current as of July 31. If
that payment remained unpaid as of the close of business on August 31, the Home
Loan would then be considered 3059 days delinquent. Delinquency information as
of the Cutoff Date is determined and prepared as of the close of business on
the last business day immediately prior to the Cutoff Date.
Depositor Residential Funding Mortgage Securities II, Inc., a Delaware
corporation, or its successor in interest.
Depository or Depository Agency The Depository Trust Company or
a successor appointed by the Indenture Trustee with the approval of the
Depositor. Any successor to the Depository shall be an organization registered
as a "clearing agency" pursuant to Section 17A of the Exchange Act and the
regulations of the Securities and Exchange Commission thereunder.
Depository Participant A Person for whom, from time to time, the Depository
effects bookentry transfers and pledges of securities deposited with the
Depository.
Determination Date With respect to any Payment Date, the 20th
day of the month in which such Payment Date occurs or if such day is not a
Business Day, the next succeeding Business Day.
Dissolution Draw Following an Event of Liquidation, on the
related Dissolution Payment Date, the amount, if any, by which the proceeds of
the sale, liquidation or other disposition of the assets of the Owner Trust in
connection with the liquidation of the Trust Estate which are
5
available for distribution to the Securityholders is less than the sum of (1) an
amount equal to the aggregate of all accrued and unpaid interest on the Notes at
the respective Note Rates through such Payment Date and (2) 100% of the
aggregate Note Balance of the Notes outstanding immediately prior to such
Dissolution Payment Date.
Dissolution Payment Date Following an Event of Liquidation, the
Business Day following the date on which the proceeds of the sale, liquidation
or other disposition of the assets of the Owner Trust in connection with the
liquidation of the Trust Estate are paid to the Securityholders.
Due Date The date on which the Monthly Payment on the related Home Loan is
due in accordance with the terms of the related Mortgage Note.
Eligible Account An account that is any of the following (i)
maintained with a depository institution the shortterm debt obligations of
which have been rated by each Rating Agency in its highest rating category
available, or (ii) an account or accounts in a depository institution in which
such accounts are fully insured to the limits established by the FDIC, provided
that any deposits not so insured shall, to the extent acceptable to each Rating
Agency, as evidenced in writing, be maintained such that (as evidenced by an
Opinion of Counsel delivered to the Indenture Trustee and each Rating Agency)
the Indenture Trustee have a claim with respect to the funds in such account or
a perfected first security interest against any collateral (which shall be
limited to Permitted Investments) securing such funds that is superior to claims
of any other depositors or creditors of the depository institution with which
such account is maintained, or (iii) in the case of the Custodial Account,
either (A) a trust account or accounts maintained at the corporate trust
department of the Indenture Trustee or (B) an account or accounts maintained at
the corporate trust department of the Indenture Trustee, as long as its short
term debt obligations are rated P1 by ▇▇▇▇▇'▇ and A1+ by Standard & Poor's (or
the equivalent) or better by each Rating Agency and its long term debt
obligations are rated A2 by ▇▇▇▇▇'▇ and AA by Standard & Poor's (or the
equivalent) or better, by each Rating Agency, or (iv) in the case of the
Custodial Account and the Payment Account, a trust account or accounts
maintained in the corporate trust division of the Indenture Trustee, or (v) an
account or accounts of a depository institution acceptable to each Rating Agency
(as evidenced in writing by each Rating Agency that use of any such account as
the Custodial Account or the Payment Account will not reduce the rating assigned
to any of the Securities by such Rating Agency (if determined without regard to
the Credit Enhancement Instrument) below the lower of the thencurrent rating or
the rating assigned to such Securities (if determined without regard to the
Credit Enhancement Instrument) as of the Closing Date by such Rating Agency).
Eligible Substitute Loan A Home Loan substituted by the Seller
for a Deleted Loan which must, on the date of such substitution, as confirmed in
an Officers' Certificate delivered to the Indenture Trustee, (i) have an
outstanding principal balance, after deduction of the principal portion of the
monthly payment due in the month of substitution (or in the case of a
substitution of more than one Home Loan for a Deleted Loan, an aggregate
outstanding principal balance, after such deduction), not in excess of the
outstanding principal balance of the Deleted Loan (the amount of any shortfall
to be deposited by the Seller in the Custodial Account in the month of
substitution); (ii) comply with each representation and warranty set forth in
clauses (iii) through (xxxiv) of Section
6
3.1(b) of the Home Loan Purchase Agreement other than clauses (viii), (xiii),
(xiv), (xxiv), (xxv)(B), and (xxvi) as of the date of substitution; (iii) have a
Loan Rate no lower than and not more than 1% in excess of the Loan Rate of such
Deleted Loan; (iv) have a Combined LoantoValue Ratio at the time of
substitution no higher than that of the Deleted Loan at the time of
substitution; (v) have, at the time of substitution, a remaining term to stated
maturity not greater than (and not more than one year less than) that of the
Deleted Loan; (vi) be ineligible for inclusion in a real estate mortgage
investment conduit ("REMIC") (a "REMIC Ineligible Loan") if the Deleted Loan was
a REMIC Ineligible Loan (because (a) the value of the real property securing the
Deleted Loan was not at least equal to eighty percent of the adjusted issue
price of such loan at the time of origination, calculated by subtracting the
amount of any liens that are senior to such Home Loan and a proportionate amount
of any lien of equal priority from the value of such property when the Deleted
Loan was originated and (b) substantially all of the proceeds of the Deleted
Loan were not used to acquire, improve or protect an interest in the real
property securing such loan and such real property was the only security for
such Deleted Loan); and (vii) not be 30 days or more delinquent.
ERISA The Employee Retirement Income Security Act of 1974, as amended.
Event of Default With respect to the Indenture, 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) a default in the payment of any interest on any Note
when the same becomes due and payable, and such default shall continue
for a period of five days; or
(ii) a default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable, and such default shall continue for a period of five days; or
(iii) there occurs a default in the observance or
performance of any covenant or agreement of the Issuer made in the
Indenture, or any representation or warranty of the Issuer made in the
Indenture 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 which
has a material adverse effect on Securityholders, and such default shall
continue or not be cured, or the circumstance or condition in respect of
which such representation 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 outstanding Note Balance (for which
purpose the Class AIO Notes will be deemed to have a Note Balance equal
to their Notional Amount) of the Notes or the Credit Enhancer, 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
(iv) there occurs 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 Trust Estate
7
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 Trust Estate, or ordering the windingup 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
(v) there occurs 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 or
for any substantial part of the assets of the Trust Estate, 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.
Event of Liquidation Following the occurrence of an Event of
Default under the Indenture, the determination by the Indenture Trustee, as
evidenced by a written notice provided to the Owner Trustee, the Depositor, the
Issuer and the Credit Enhancer, that all conditions precedent to the sale or
other liquidation of the Trust Estate pursuant to Section 5.04 of the Indenture
have been satisfied.
Event of Servicer Termination With respect to the Servicing Agreement, a
Servicing Default as defined in Section 7.01 of the Servicing Agreement.
Excess Loss Amount On any Payment Date, the "Excess Loss Amount"
will be equal to the sum of (i) any Liquidation Loss Amounts (other than as
described in clauses (ii)(iv) below) for the related Collection Period which,
when added to the aggregate of such Liquidation Loss Amounts for all preceding
Collection Periods exceed $144,000,000, (ii) any Special Hazard Losses in excess
of the Special Hazard Amount, (iii) any Fraud Losses in excess of the Fraud Loss
Amount, and (iv) any losses incurred on the Home Loans caused by or resulting
from an Extraordinary Event.
Exchange Act The Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
Expenses The meaning specified in Section 7.02 of the Trust Agreement.
Extraordinary Event Any of the following conditions with respect
to a Mortgaged Property or Home Loan causing or resulting in a loss which causes
the liquidation of such Home Loan
(b) losses that are of a type that would be covered by the
fidelity bond and the errors and omissions insurance policy required to
be maintained pursuant to Section 3.13 of the Servicing Agreement but
are in excess of the coverage maintained thereunder;
8
(c) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether such
loss be direct or indirect, proximate or remote or be in whole or in
part caused by, contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(d) hostile or warlike action in time of peace or war, including
action in hindering, combating or defending against an actual, impending
or expected attack
1. by any government or sovereign power, de jure or de
facto, or by any authority maintaining or using military, naval
or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(e) any weapon of war employing atomic fission or
radioactive force whether in time of peace or war; or
(f) insurrection, rebellion, revolution, civil war, usurped power
or action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any
government or public authority; or risks of contraband or illegal
transportation or trade.
FDIC The Federal Deposit Insurance Corporation or any successor
thereto.
FHLMCThe Federal Home Loan Mortgage Corporation, or any successor
thereto.
Final Insured Payment Date The Payment Date in September 2031.
FNMA The Federal National Mortgage Association, or any successor
thereto.
Foreclosure Profit With respect to a Liquidated Home Loan, the
excess, if any, of (x) Net Liquidation Proceeds over (y) the sum of (a) the Loan
Balance of the related Home Loan immediately prior to the date it became a
Liquidated Home Loan, less any Net Liquidation Proceeds previously received with
respect to such Home Loan and applied as a recovery of principal, and (b)
accrued and unpaid interest on the related Home Loan at the Net Loan Rate
through the date of receipt of the proceeds.
Fraud Loss Amount As of any date of determination after the
Cutoff Date, the Fraud Loss Amount shall equal (X) prior to the first
anniversary of the Cutoff Date an amount equal to 5% of the Cutoff Date Loan
Balance minus the aggregate of any Liquidation Loss Amounts on the Home Loans
due to Fraud Losses up to such date of determination; (Y) from the first to the
second anniversary of the Cutoff Date, an amount equal to (1) the lesser of (a)
the Fraud Loss Amount as of the most recent anniversary of the Cutoff Date and
(b) 3% of the Pool Balance of the Home Loans as of the most recent anniversary
of the Cutoff Date minus (2) the aggregate of any Liquidation Loss Amounts on
the Home Loans due to Fraud Losses since the most recent
9
anniversary of the Cutoff Date up to such date of determination; and (Z) from
the second to the fifth anniversary of the Cutoff Date, an amount equal to (1)
the lesser of (a) the Fraud Loss Amount as of the most recent anniversary of the
Cutoff Date and (b) 2% of the Pool Balance as of the most recent anniversary of
the Cutoff Date minus (2) the aggregate of any Liquidation Loss Amounts on the
Home Loans due to Fraud Losses since the most recent anniversary of the Cutoff
Date up to such date of determination. On and after the fifth anniversary of the
Cutoff Date the Fraud Loss Amount shall be zero. The initial Fraud Loss Amount
shall be equal to $22,500,000.
Fraud Losses Losses on Home Loans as to which there was fraud in the
origination of such Home Loan.
Grant Pledge, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, create, and ▇▇▇▇▇ ▇ ▇▇▇▇ upon and a security interest
in and right of setoff against, deposit, set over and confirm pursuant to the
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 such collateral or other agreement or instrument 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.
Holder Any of the Noteholders or Certificateholders.
Home Loans At any time, the Home Loans that have been sold by
the Seller under the Home Loan Purchase Agreement, together with the Related
Documents, and that remain subject to the terms thereof.
Home Loan Purchase Agreement The Home Loan Purchase Agreement,
between the Seller, as seller, and the Depositor, as purchaser, with respect to
the Home Loans, dated as of the Cutoff Date.
Home Loan Schedule The initial schedule of Home Loans as of the
Cutoff Date set forth in Exhibit A of the Servicing Agreement, which schedule
sets forth as to each Home Loan in each Loan Group, among other things
(i) the Home Loan identifying number ("RFC LOAN #");
(ii) the state, city and zip code of the Mortgaged Property;
(iii) the maturity of the Mortgage Note ("MATURITY DATE");
(iv) the Loan Rate ("CUR RATE");
(v) the Principal Balance at origination ("ORG AMT");
10
(vi) the type of property securing the Mortgage Note ("PROPERTY
TYPE");
(vii) the appraised value ("APPRSL");
(viii) the initial scheduled monthly payment of principal, if
any, and interest ("ORIGINAL P & I");
(ix) the Cutoff Date Loan Balance ("CUTOFF BAL");
(x) the Combined LoantoValue Ratio at origination ("CLTV");
(xi) the date of the Mortgage Note ("NOTE DATE");
(xii)the original term to maturity of the Home Loan ("ORIGINAL
TERM");
(xiii) under the column "OCCP CODE," a code indicating whether
the Home Loan is secured by a nonowner occupied
residence;
(xiv)the Principal Balance of any Home Loan senior thereto ("SR
BAL");
(xv) the Credit Score ("CR SCORE");
(xvi) the debt to income ratio ("DTI");
(xvii) product code ("PRODUCT CODE");
(xviii)loan purpose ("PURPOSE");
(xix) the lien position of the related Mortgage ("LIEN");
(xx) the Subservicer loan number (SERVICER LOAN #); and
(xxi)the remaining term of the Home Loan (REMAINING TERM). Such
schedule may consist of multiple reports that collectively
set forth all of the information required.
Indemnified Party The meaning specified in Section 7.02 of the
Trust Agreement.
Indenture The indenture dated as of January 29, 2002 between the Issuer, as
debtor, nd the Indenture Trustee, as indenture trustee.
Indenture Trustee JPMorgan Chase Bank, and its successors and assigns or
any successor indenture trustee appointed pursuant to the terms of the
Indenture.
11
Independent When used with respect to any specified Person, the
Person (i) is in fact independent of the Issuer, any other obligor on the Notes,
the Seller, the Issuer, the Depositor and any Affiliate of any of the foregoing
Persons, (ii) does not have any direct financial or any material indirect
financial interest in the Issuer, any such other obligor, the Seller, the
Issuer, the Depositor or any Affiliate of any of the foregoing Persons and (iii)
is not connected with the Issuer, any such other obligor, the Seller, the
Issuer, the Depositor or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
Independent Certificate A certificate or opinion to be delivered
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.01 of the Indenture,
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.
Initial Certificates The Home LoanBacked Certificates, Series
2002HI1, issued on the Closing Date, each evidencing undivided beneficial
interests in the Issuer and executed by the Owner Trustee.
Initial Note Balance With respect to the Class A1 Notes,
$102,720,000, with respect to the Class A2 Notes, $53,447,000, with respect to
the Class A3 Notes, $72,751,000, with respect to the Class A4 Notes,
$32,028,000, with respect to the Class A5 Notes, $49,652,000, with respect to
the Class A6 Notes, $71,210,000, and with respect to the Class A7 Notes,
$68,192,000.
Insolvency Event With respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the windingup or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person in writing (as to which the Indenture Trustee shall have notice)
of its inability to pay its debts generally, or the adoption by the Board of
Directors or managing member of such Person of a resolution which authorizes
action by such Person in furtherance of any of the foregoing.
Insurance Agreement The Insurance and Indemnity Agreement dated
as of January 29, 2002, among the Master Servicer, the Seller, the Depositor,
the Issuer, the Indenture Trustee and the Credit Enhancer, including any
amendments and supplements thereto.
12
Insurance Proceeds Proceeds paid by any insurer (other than the
Credit Enhancer) pursuant to any insurance policy covering a Home Loan which are
required to be remitted to the Master Servicer, or amounts required to be paid
by the Master Servicer pursuant to the next to last sentence of Section 3.04 of
the Servicing Agreement, net of any component thereof (i) covering any expenses
incurred by or on behalf of the Master Servicer in connection with obtaining
such proceeds, (ii) that is applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the Mortgagor in accordance with the
Master Servicer's normal servicing procedures or (iv) required to be paid to any
holder of a mortgage senior to such Home Loan.
Interest Accrual Period With respect to the Notes (other than
the Class A1 Notes) and as to any Payment Date, will be the calendar month
preceding the month in which the related Payment Date occurs. With respect to
the Class A1 Notes and any Payment Date other than the first Payment Date, the
period beginning on the preceding Payment Date and ending on the day preceding
such Payment Date, and in the case of the first Payment Date, the period
beginning on the Closing Date and ending on the day preceding the first Payment
Date.
Interest Collections With respect to any Payment Date, the sum
of (i) the portion allocable to interest of all scheduled monthly payments on
the Home Loans received during the related Collection Period, minus the
Administrative Fees, (ii) the portion of all Net Liquidation Proceeds allocated
to interest pursuant to the terms of the Mortgage Notes, reduced by the
Administrative Fees for such Collection Period, (iii) the interest portion of
the Repurchase Price for any Deleted Loans and the interest portion of the cash
purchase price paid in connection with any optional purchase of the Home Loans
by the Master Servicer and (iv) proceeds and recoveries received during the
related Collection Period from a Home Loan after it becomes a Liquidated Home
Loan allocated to Interest Collections in accordance with the last paragraph of
Section 3.07 of the Servicing Agreement.
ISDA Counterparty The counterparty named in the Limited
Reimbursement Agreement.
Issuer or Trust The Home Loan Trust 2002HI1, a Delaware business trust, or
its successor in interest.
Issuer Request A written order or request signed in the name of the Issuer
by any one of its Authorized Officers and delivered to the Indenture Trustee.
LIBOR For any Interest Accrual Period other than the first
Interest Accrual Period, the rate for United States dollar deposits for one
month which appears on the Dow ▇▇▇▇▇ Telerate Screen Page 3750 as of 1100 A.M.,
London, England time, on the second LIBOR Business Day prior to the first day of
such Interest Accrual Period. With respect to the first Interest Accrual Period,
the rate for United States dollar deposits for one month which appears on the
Dow ▇▇▇▇▇ Telerate Screen Page 3750 as of 1100 A.M., London, England time, two
LIBOR Business Days prior to the Closing Date. If such rate does not appear on
such page (or such other page as may replace that page on that service, or if
such service is no longer offered, such other service for displaying LIBOR or
comparable rates as may be reasonably selected by the Indenture Trustee after
consultation with the Master Servicer and the Credit Enhancer), the rate will be
the Reference Bank Rate. If no such
13
quotations can be obtained and no Reference Bank Rate is available, LIBOR will
be LIBOR applicable to the preceding Payment Date.
LIBOR Business Day Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the city of London, England are
required or authorized by law to be closed.
Lien Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing;
provided, however, that any assignment pursuant to Section 6.02 of the Servicing
Agreement shall not be deemed to constitute a Lien.
Limited Reimbursement Agreement The ISDA Master Agreement, dated
June 1, 1999, as amended and restated as of January 9, 2001, between the Credit
Enhancer and the ISDA Counterparty, with the related Confirmation.
Liquidated Home Loan With respect to any Payment Date, any Home
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified in the Servicing Agreement, as of the end of
the related Collection Period, that substantially all Liquidation Proceeds which
it reasonably expects to recover, if any, with respect to the disposition of the
related Mortgaged Property have been recovered. In addition, the Master Servicer
will treat any Home Loan that is 180 days or more delinquent as having been
finally liquidated.
Liquidation Expenses Outofpocket expenses (exclusive of
overhead) which are incurred by or on behalf of the Master Servicer in
connection with the liquidation of any Home Loan and not recovered under any
insurance policy, such expenses including, without limitation, legal fees and
expenses, any unreimbursed amount expended (including, without limitation,
amounts advanced to correct defaults on any loan which is senior to such Home
Loan and amounts advanced to keep current or pay off a loan that is senior to
such Home Loan) respecting the related Home Loan and any related and
unreimbursed expenditures for real estate property taxes or for property
acquisition, restoration, preservation or disposition, or insurance against
casualty loss or damage.
Liquidation Loss Amount With respect to any Payment Date and any
Home Loan that became a Liquidated Home Loan during the related Collection
Period, the unrecovered portion of the related Loan Balance thereof at the end
of such Collection Period, after giving effect to the Net Liquidation Proceeds
applied in reduction of the Loan Balance.
Liquidation Loss Distribution Amount With respect to any Payment
Date, the aggregate of (A) 100% of the Liquidation Loss Amounts (other than any
Excess Loss Amounts) on the Home Loans on such Payment Date, plus (B) any such
Liquidation Loss Amounts (other than
14
any Excess Loss Amounts) remaining unpaid from any preceding Payment Date, to
the extent not reflected on such preceding Payment Date by a reduction of the
Outstanding Reserve Amount.
Liquidation Proceeds Proceeds (including Insurance Proceeds but
not including amounts drawn under the Credit Enhancement Instrument) if any
received in connection with the liquidation of any Home Loan or related REO,
whether through trustee's sale, foreclosure sale, the exercise of the power of
eminent domain or condemnation or otherwise.
Loan Balance With respect to any Home Loan, other than a
Liquidated Home Loan, and as of any day, the related Cutoff Date Loan Balance,
minus all collections in respect of principal in accordance with the related
Mortgage Note and applied in reduction of the Loan Balance thereof. For purposes
of this definition, a Liquidated Home Loan shall be deemed to have a Loan
Balance equal to zero.
Loan Rate or Mortgage Rate With respect to any Home Loan and any
day, the per annum rate of interest set forth in the related Mortgage Note.
Lost Note Affidavit With respect to any Home Loan as to which
the original Mortgage Note has been permanently lost or destroyed and has not
been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost, misplaced or destroyed (together with a copy of the
related Mortgage Note).
Master Servicer Residential Funding Corporation, a Delaware corporation,
and its successors and assigns.
Master Servicing Fee With respect to any Home Loan and any
Collection Period, the product of (i) the Master Servicing Fee Rate divided by
12 and (ii) the Loan Balance of such Home Loan as of the first day of such
Collection Period.
Master Servicing Fee Rate With respect to any Home Loan, 0.08% per annum.
Monthly Payment With respect to any Home Loan (including any REO
Property) and any Due Date, the payment of principal and interest due thereon in
accordance with the amortization schedule at the time applicable thereto (after
adjustment, if any, for partial prepayments and for Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule by reason of any bankruptcy, other than a Deficient Valuation, or
similar proceeding or any moratorium or similar waiver or grace period).
Moody's ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
Mortgage The mortgage, deed of trust or other instrument
creating a first or second lien on an estate in fee simple interest in real
property securing a Home Loan.
Mortgage File The file containing the Related Documents
pertaining to a particular Home Loan and any additional documents required to be
added to the Mortgage File pursuant to the Home Loan Purchase Agreement or the
Servicing Agreement.
15
Mortgage Note With respect to a Home Loan, the mortgage note
pursuant to which the related mortgagor agrees to pay the indebtedness evidenced
thereby and secured by the related Mortgage as modified or amended.
Mortgaged Property The underlying property, including real property and
improvements thereon, securing a Home Loan.
Mortgagor The obligor or obligors under a Mortgage Note.
Net Liquidation Proceeds With respect to any Liquidated Home
Loan, Liquidation Proceeds (including Insurance Proceeds but excluding amounts
drawn on the Credit Enhancement Instrument or paid in connection with the
Limited Reimbursement Agreement) net of Liquidation Expenses.
Note Balance With respect to any Payment Date and any Class of
Notes, other than the Class AIO Notes, the Initial Note Balance thereof reduced
by all payments of principal thereon prior to and as of such Payment Date.
Note Owner The Beneficial Owner of a Note.
Note Rate With respect to the Class A1 Notes, will be the
lesser of (a) LIBOR plus 0.19% per annum and (b) 9.50% per annum. With respect
to the Class A2 Notes, 4.33% per annum. With respect to the Class A3 Notes,
5.03% per annum. With respect to the Class A4 Notes, 5.54% per annum. With
respect to the Class A5 Notes, 5.92% per annum. With respect to the Class A6
Notes, 6.46% per annum. With respect to the Class A7 Notes, 6.90% per annum;
provided, that on the StepUp Date, the Note Rate on the Class A7 Notes shall
increase by 0.50% per annum. With respect to the Class AIO Notes, 11.00% per
annum for the February 2002 through January 2003 payment dates, 10.00% per annum
for the February 2003 through January 2004 payment dates and 7.00% per annum for
the February 2004 through July 2004 Payment Dates.
Notional Amount With respect to the first 30 Payment Dates of the Class AIO
Notes, $45,000,000; thereafter, zero.
Note Register The register maintained by the Note Registrar in which the
Note Registrar shall provide for the registration of Notes and of transfers and
exchanges of Notes.
Note Registrar The Indenture Trustee, in its capacity as Note Registrar.
Noteholder The Person in whose name a Note is registered in the
Note Register, except that, any Note registered in the name of the Depositor,
the Issuer or the Indenture Trustee or any Affiliate of any of them shall be
deemed not to be outstanding and the registered holder will not be considered a
Noteholder or holder for purposes of giving any request, demand, authorization,
direction, notice, consent or waiver under the Indenture or the Trust Agreement
provided 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 or the Owner Trustee
knows to be so owned shall be so disregarded. Owners of Notes that have been
16
pledged in good faith may be regarded as Holders if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Owner Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes or any Affiliate of any of the
foregoing Persons. Any Notes on which payments are made under the Credit
Enhancement Instrument shall be deemed Outstanding until the Credit Enhancer has
been reimbursed with respect thereto and the Credit Enhancer shall be deemed the
Noteholder thereof to the extent of such unreimbursed payment.
Notes Any one of the Class A1, Class A2, Class A3, Class A4,
Class A 5, Class A6, Class A7 or Class AIO Notes issued and outstanding at
any time pursuant to the Indenture.
Officer's Certificate With respect to the Master Servicer, a
certificate signed by the President, Managing Director, a Director, a Vice
President or an Assistant Vice President, of the Master Servicer and delivered
to the Indenture Trustee. With respect to the Issuer, a certificate signed by
any Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 10.01 of the
Indenture, and delivered to the Indenture Trustee. Unless otherwise specified,
any reference in the Indenture to an Officer's Certificate shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.
Opinion of Counsel A written opinion of counsel. Any Opinion of
Counsel for the Master Servicer may be provided by inhouse counsel for the
Master Servicer if reasonably acceptable to the Indenture Trustee, the Credit
Enhancer and the Rating Agencies or counsel for the Depositor, as the case may
be.
Optional Redemption The right of the Master Servicer to purchase
the Home Loans on any Payment Date on which the aggregate Principal Balance of
the Home Loans as of the end of the related Collection Period is less than 10%
of the Cutoff Date Balance, pursuant to Section 8.08 of the Servicing
Agreement.
Original Trust Agreement The Trust Agreement, dated as of January 22, 2002,
between the Owner Trustee and the Depositor.
Outstanding With respect to the Notes, as of the date of determination, all
Notes theretofore executed, authenticated and delivered under this Indenture
except
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Indenture Trustee for cancellation; and
(ii) Notes in exchange for or in lieu of which other Notes
have been executed, authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Indenture Trustee is
presented that any such Notes are held by a holder in due course;
provided, however, that for purposes of effectuating the Credit Enhancer's right
of subrogation as set forth in Section 4.12 of the Indenture only, all Notes
that have been paid with funds provided under the Credit Enhancement Instrument
shall be deemed to be Outstanding until the Credit Enhancer has been reimbursed
with respect thereto.
17
Outstanding Reserve Amount With respect to any Payment Date, the
amount, if any, by which (i) the Pool Balance after applying payments received
in the related Collection Period exceeds (ii) the aggregate Note Balance of the
Notes on such Payment Date after application of Principal Collections for such
date. On each Payment Date, the Outstanding Reserve Amount available to cover
Liquidation Loss Amounts on such Payment Date, if any, shall be deemed to be
reduced by an amount equal to any Liquidation Loss Amounts (other than any
Excess Loss Amounts) for such Payment Date, except to the extent that such
Liquidation Loss Amounts were covered on such Payment Date by a Liquidation Loss
Distribution Amount.
Owner Trust Home Loan Trust 2002HI1, created by the Certificate of Trust
pursuant to the Trust Agreement and the Original Trust Agreement.
Owner Trust Estate The corpus of the Issuer created by the Trust Agreement
which consists of the Home Loans and the Credit Enhancement Instrument.
Owner Trustee Wilmington Trust Company not in its individual
capacity but solely as Owner Trustee of the Trust, and its successors and
assigns or any successor owner trustee appointed pursuant to the terms of the
Trust Agreement.
Paying Agent Any paying agent or copaying agent appointed pursuant to
Section 3.03 of the Indenture, which initially shall be the Indenture Trustee.
Payment Account The account established by the Indenture Trustee
pursuant to Section 8.02 of the Indenture and Section 5.01 of the Servicing
Agreement. Amounts deposited in the Payment Account will be distributed by the
Indenture Trustee in accordance with Section 3.05 of the Indenture.
Payment Date The 25th day of each month, or if such day is not a Business
Day, then the next Business Day.
Percentage Interest With respect to any Note and any date of
determination, the percentage obtained by dividing the Note Balance or Notional
Amount, as applicable, of such Note by the aggregate of the Note Balances or
Notional Amounts, as applicable, of all Notes of the same Class.
Permitted Investments One or more of the following
(ii) obligations of or guaranteed as to principal and
interest by the United States or any agency or instrumentality thereof
when such obligations are backed by the full faith and credit of the
United States;
(iii) repurchase agreements on obligations specified in
clause (i) maturing not more than one month from the date of acquisition
thereof, provided that the unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated by each Rating
Agency in its highest shortterm rating category available;
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(iv) federal funds, certificates of deposit, demand
deposits, time deposits and bankers' acceptances (which shall each have
an original maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original maturity of
more than 365 days or a remaining maturity of more than 30 days)
denominated in United States dollars of any U.S. depository institution
or trust company incorporated under the laws of the United States or any
state thereof or of any domestic branch of a foreign depository
institution or trust company; provided that the debt obligations of such
depository institution or trust company (or, if the only Rating Agency
is Standard & Poor's, in the case of the principal depository
institution in a depository institution holding company, debt
obligations of the depository institution holding company) at the date
of acquisition thereof have been rated by each Rating Agency in its
highest shortterm rating category available; and provided further that,
if the only Rating Agency is Standard & Poor's and if the depository or
trust company is a principal subsidiary of a bank holding company and
the debt obligations of such subsidiary are not separately rated, the
applicable rating shall be that of the bank holding company; and,
provided further that, if the original maturity of such shortterm
obligations of a domestic branch of a foreign depository institution or
trust company shall exceed 30 days, the shortterm rating of such
institution shall be A1+ in the case of Standard & Poor's if Standard &
Poor's is the Rating Agency;
(v) commercial paper (having original maturities of not
more than 365 days) of any corporation incorporated under the laws of
the United States or any state thereof which on the date of acquisition
has been rated by each Rating Agency in its highest shortterm rating
category available; provided that such commercial paper shall have a
remaining maturity of not more than 30 days;
(vi) a money market fund or a qualified investment fund
rated by each Rating Agency in its highest longterm rating category
available; and
(vii) other obligations or securities that are acceptable
to each Rating Agency as an Permitted Investment hereunder and will not
reduce the rating assigned to any Securities by such Rating Agency below
the lower of the thencurrent rating or the rating assigned to such
Securities as of the Closing Date by such Rating Agency, and which are
acceptable to the Credit Enhancer, as evidenced in writing, provided
that if the Master Servicer or any other Person controlled by the Master
Servicer is the issuer or the obligor of any obligation or security
described in this clause (vi) such obligation or security must have an
interest rate or yield that is fixed or is variable based on an
objective index that is not affected by the rate or amount of losses on
the Home Loans;
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations References herein to the highest rating available on unsecured
longterm debt shall mean AAA in the case of Standard & Poor's and Aaa in the
case of ▇▇▇▇▇'▇, and references herein to the highest rating available on
19
unsecured commercial paper and shortterm debt obligations shall mean A1+ in
the case of Standard & Poor's and P1 in the case of ▇▇▇▇▇'▇.
Person Any legal individual, corporation, partnership, joint
venture, association, jointstock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Plan Any employee benefit plan subject to Title IV of ERISA and any plan or
other arrangement described in Section 4975(e)(1) of the Code.
Plan Assets The assets of a Plan as determined under Department of Labor
regulation section 2510.3101 or other applicable law.
Pool Balance With respect to any date, the aggregate of the Loan Balances
of all Home Loans as of such date.
Predecessor Note With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 4.03 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
Premium Amount The amount of premium due to the Credit Enhancer in
accordance with the terms of the Insurance Agreement.
Premium Percentage As set forth in the Insurance Agreement.
Prepayment Assumption A 100% Prepayment Assumption used solely
for determining the accrual of original issue discount, market discount and
premium, if any, on the Notes for federal income tax purposes. A 100% Prepayment
Assumption assumes a constant prepayment rate of 2% per annum for the first
month, increasing each month by an additional 0.789474% until the twentieth
month. Beginning in the twentieth month and in each month thereafter during the
life of the Home Loans, a 100% Prepayment Assumption assumes a constant
prepayment rate of 17% per annum each month.
Principal Collection Distribution Amount For any Payment Date,
the Principal Collections for such Payment Date; provided, however, on any
Payment Date with respect to which the Outstanding Reserve Amount that would
result, if determined without regard to this proviso, exceeds the Reserve Amount
Target, the Principal Collection Distribution Amount will be reduced by the
amount of such excess, but not below zero, until the Outstanding Reserve Amount
equals the Reserve Amount Target.
Principal Collections An amount equal to the sum of the following amounts
(i) the principal portion of all scheduled Monthly Payments on the Home
Loans received during the related Collection Period;
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(ii) the principal portion of all proceeds of the repurchase of
any Home Loans (or, in the case of a substitution, any Substitution
Adjustment Amounts) as required by the Servicing Agreement during the
related Collection Period and the principal portion of the cash purchase
price paid in connection with any optional purchase of the Home Loans by
the Master Servicer; and
(iii) the principal portion of all other unscheduled collections
received on the Home Loans during the related Collection Period (or
deemed to be received during the related Collection Period) (including,
without limitation, full and partial Principal Prepayments made by the
respective Mortgagors, Insurance Proceeds and Net Liquidation Proceeds),
to the extent not previously distributed;
provided, however, that Principal Collections shall be reduced by any amounts
withdrawn from the Custodial Account pursuant to Section 3.03(ii), (v), (vi) and
(vii) of the Servicing Agreement.
Principal Prepayment Any payment of principal made by the
Mortgagor on a Home Loan which is received in advance of its scheduled Due Date
and which is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of prepayment.
Proceeding Any suit in equity, action at law or other judicial or
administrative proceeding.
Program Guide Together, the Seller's Seller Guide and Servicing Guide, as
in effect from time to time.
Prospectus Supplement The prospectus supplement, dated January 23, 2002,
relating to the issuance of the Home LoanBacked Notes, Series 2002HI1.
Purchase Price The meaning specified in Section 2.2(a) of the Home Loan
Purchase Agreement.
Purchaser Residential Funding Mortgage Securities II, Inc., a Delaware
corporation, and its successors and assigns.
Qualified Insurer A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed in such
states to transact a mortgage guaranty insurance business in such states and to
write the insurance provided by the insurance policy issued by it, approved as
an insurer by the Master Servicer and as a FNMAapproved mortgage insurer.
Rating Agency Any nationally recognized statistical rating
organization, or its successor, that rated the Securities at the request of the
Depositor at the time of the initial issuance of the Securities, which initially
shall be ▇▇▇▇▇'▇ or Standard & Poor's. If such organization or a successor is no
longer in existence, "Rating Agency" shall be such nationally recognized
statistical
21
rating organization, or other comparable Person, designated by the Depositor,
notice of which designation shall be given to the Indenture Trustee. References
herein to the highest short term unsecured rating category of a Rating Agency
shall mean A1 or better in the case of Standard & Poor's and P1 or better in
the case of ▇▇▇▇▇'▇ and in the case of any other Rating Agency shall mean such
equivalent ratings. References herein to the highest longterm rating category
of a Rating Agency shall mean "AAA" in the case of Standard & Poor's and "Aaa"
in the case of ▇▇▇▇▇'▇ and in the case of any other Rating Agency, such
equivalent rating.
Record Date With respect to the Class A1 Notes and any Payment
Date, the Business Day next preceding such Payment Date and with respect to the
Notes (other than the Class A1 Notes) and the Certificates and any Payment
Date, the last Business Day of the month preceding the month of such Payment
Date.
Reference Bank Rate With respect to any Interest Accrual Period,
as follows the arithmetic mean (rounded upwards, if necessary, to the nearest
one sixteenth of a percent) of the offered rates for United States dollar
deposits for one month which are offered by the Reference Banks as of 1100
A.M., London, England time, on the second LIBOR Business Day prior to the first
day of such Interest Accrual Period to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the sum of
the outstanding Note Balance of the Class A1 Notes; provided that at least two
such Reference Banks provide such rate. If fewer than two offered rates appear,
the Reference Bank Rate will be the arithmetic mean of the rates quoted by one
or more major banks in New York City, selected by the Indenture Trustee after
consultation with the Master Servicer and the Credit Enhancer, as of 1100 a.m.,
New York time, on such date for loans in U.S. Dollars to leading European Banks
for a period of one month in amounts approximately equal to the aggregate Note
Balance of the Class A1 Notes. If no such quotations can be obtained, the
Reference Bank Rate shall be LIBOR applicable to the preceding Payment Date;
provided however, that if, under the priorities indicated above, LIBOR for a
Payment Date would be based on LIBOR for the previous Payment Date for the third
consecutive Payment Date, the Indenture Trustee shall select an alternative
comparable index over which the Indenture Trustee has no control, used for
determining onemonth Eurodollar lending rates that is calculated and published
or otherwise made available by an independent party.
Reference Banks Barclays Bank PLC, Credit Suisse and Abbey National PLC.
Registered Holder The Person in whose name a Note is registered in the Note
Register on the applicable Record Date.
Related Documents With respect to each Home Loan, the documents
specified in Section 2.1(c) of the Home Loan Purchase Agreement and any
documents required to be added to such documents pursuant to the Home Loan
Purchase Agreement, the Trust Agreement or the Servicing Agreement.
Release Agreement A Release Agreement as defined in Section 3.05 of the
Servicing Agreement.
22
REO A Mortgaged Property that is acquired by the Issuer in foreclosure or
by deed in lieu of foreclosure.
Repurchase Event With respect to any Home Loan, one of the
following (i) a discovery that, as of the Closing Date, the related Mortgage
was not a valid lien on the related Mortgaged Property subject only to (A) the
lien of any prior mortgage indicated on the Home Loan Schedule, (B) the lien of
real property taxes and assessments not yet due and payable, (C) covenants,
conditions, and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage and such other
permissible title exceptions as are listed in the Program Guide and (D) other
matters to which like properties are commonly subject which do not materially
adversely affect the value, use, enjoyment or marketability of the related
Mortgaged Property, or (ii) with respect to any Home Loan as to which the Seller
delivers a Lost Note Affidavit, a subsequent default on such Home Loan if the
enforcement thereof or of the related Mortgage is materially and adversely
affected by the absence of the original Mortgage Note.
Repurchase Price With respect to any Home Loan required to be
repurchased on any date pursuant to the Home Loan Purchase Agreement or
purchased by the Master Servicer pursuant to the Servicing Agreement, an amount
equal to the sum of (i) 100% of the Loan Balance thereof (without reduction for
any amounts charged off) and (ii) unpaid accrued interest at the Loan Rate (or
with respect to the last day of the month in the month of repurchase, the Loan
Rate will be the Loan Rate in effect as to the second to last day in such month)
on the outstanding principal balance thereof from the Due Date to which interest
was last paid by the Mortgagor to the first day of the month following the month
of purchase.
Request for Release The form attached as Exhibit 4 to the Custodial
Agreement or an electronic request in a form acceptable to the Custodian.
Reserve Amount Target On any Payment Date prior to the Stepdown
Date, the Reserve Amount Target will be 2.00% of the Pool Balance as of the
Cutoff Date. On or after the Stepdown Date, the Reserve Amount Target will be
equal to the lesser of
(a) the Reserve Amount Target as of the Cutoff Date and
(b) 4.00% of the Pool Balance after applying payments received in the
related Collection Period (but not less than $2,250,000 (0.50% of the Pool
Balance as of the Cutoff Date));
provided, however, that any scheduled reduction to the Reserve Amount Target on
or after the Stepdown Date as described above shall not be made on any Payment
Date unless
(i) either (a) the aggregate cumulative Liquidation Loss Amount on the
Home Loans from the Cutoff Date through the end of the Collection
Period immediately prior to such Payment Date is less than
(A) 7.0% of the Pool Balance as of the Cutoff Date, if such
Payment Date is the Stepdown Date or one of the first through
eleventh Payment Dates after the Stepdown Date,
23
(B) 8.5% of the Pool Balance as of the Cutoff Date, if such
Payment Date is one of the twelfth through twentythird Payment
Dates after the Stepdown Date, or
(C) 10.5% of the Pool Balance as of the Cutoff Date, if such
Payment Date is the twentyfourth Payment Date (or any Payment
Date thereafter) after the Stepdown Date or
(b) the average of the aggregate Liquidation Loss Amount on the
Home Loans that became Liquidated Home Loans during the related
Collection Period, as determined for the current and five previous
Payment Dates, is less than 50% of the average of the amount remaining
in the Payment Account on such Payment Date following distributions
pursuant to clauses (i)(v) of Section 3.05 of the Indenture (other than
distributions made pursuant to clause (iii) thereof), as determined for
the current and five previous Payment Dates and
(ii) there has been no draw on the Credit Enhancement Instrument on such
Payment Date that remains unreimbursed.
In addition, the Reserve Amount Target may be reduced with the prior written
consent of the Credit Enhancer and notice to the Rating Agencies.
Reserve Increase Amount On each Payment Date other than the
Payment Dates in February 2002 and March 2002, an amount equal to the lesser of
(i) the amount remaining in the Payment Account following distributions pursuant
to Section 3.05(a)(v) of the Indenture and (ii) the amount necessary to bring
the Outstanding Reserve Amount up to the Reserve Amount Target. On the Payment
Dates in February 2002 and March 2002, an amount equal to zero.
Responsible Officer With respect to the Indenture Trustee, any
officer of the Indenture Trustee with direct responsibility for the
administration of the Trust Agreement and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Sale The meaning specified in Section 5.15 of the Indenture.
Securities Act The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
Security Any of the Certificates or Notes.
Securityholder or Holder Any Noteholder or a Certificateholder.
Security Instrument A written instrument creating a valid first
lien on a Mortgaged Property securing a Mortgage Note, which may be any
applicable form of mortgage, deed of trust, deed to secure debt or security
deed, including any riders or addenda thereto.
Seller Residential Funding Corporation, a Delaware corporation, and its
successors and assigns.
24
Servicing Agreement The Servicing Agreement dated as of January 29, 2002
among the Indenture Trustee, the Issuer and the Master Servicer, as master
servicer.
Servicing Certificate A certificate prepared by a Servicing Officer on
behalf of the Master Servicer in accordance with Section 4.01 of the Servicing
Agreement.
Servicing Default The meaning specified in Section 7.01 of the Servicing
Agreement.
Servicing Fee With respect to any Home Loan, the sum of the related Master
Servicing Fee and the related Subservicing Fee.
Servicing Fee Rate With respect to any Home Loan, the sum of the related
Master Servicing Fee Rate and the related Subservicing Fee Rate.
Servicing Officer Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Home Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee (with a copy to the Credit Enhancer) by the Master
Servicer, as such list may be amended from time to time.
Special Hazard Amount As of any date of determination following
the Cutoff Date, the Special Hazard Amount shall equal $4,500,000 less the sum
of (A) the aggregate of any Liquidation Loss Amounts on the Home Loans due to
Special Hazard Losses and (B) the Adjustment Amount (as defined below) as most
recently calculated. For each anniversary of the Cutoff Date, the Adjustment
Amount shall be equal to the amount, if any, by which the amount calculated in
accordance with the preceding sentence (without giving effect to the deduction
of the Adjustment Amount for such anniversary) exceeds the greatest of (i) twice
the outstanding principal balance of the Home Loan which has the largest
outstanding principal balance on the Payment Date immediately preceding such
anniversary, (ii) the product of 1.00% multiplied by the outstanding aggregate
credit limits of all Home Loans on the Payment Date immediately preceding such
anniversary and (iii) the aggregate outstanding principal balance (as of the
immediately preceding Payment Date) of the Home Loans in any single fivedigit
California zip code area with the largest amount of Home Loans by aggregate
principal balance as of such anniversary.
Special Hazard Loss Any Liquidation Loss Amount not in excess of
the cost of the lesser of repair or replacement of a Mortgaged Property suffered
by such Mortgaged Property on account of direct physical loss, exclusive of (i)
any loss of a type covered by a hazard policy or a flood insurance policy
required to be maintained in respect of such Mortgaged Property pursuant to
Section 3.04 of the Servicing Agreement, except to the extent of the portion of
such loss not covered as a result of any coinsurance provision and (ii) any
losses resulting from an Extraordinary Event.
Standard & Poor's Standard & Poor's, a Division of The McGrawHill
Companies, Inc. or its successor in interest.
Stated Value The value of the Mortgaged Property as stated by the related
Mortgagor in his or her application.
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StepUp Date The second Payment Date immediately following the
Payment Date on which the Master Servicer can purchase all or some of the Home
Loans from the Trust pursuant to Section 8.08 of the Servicing Agreement.
Stepdown Date The later of (i) the Payment Date in February 2005
and (ii) the Payment Date on which the Pool Balance, after applying payments
received in the related Collection Period, is less than 50% of the Pool Balance
as of the Cutoff Date.
Subservicer Any Person with whom the Master Servicer has entered into a
Subservicing Agreement as a Subservicer by the Master Servicer.
Subservicing Account An Eligible Account established or maintained by a
Subservicer as provided for in Section 3.02(c) of the Servicing Agreement.
Subservicing Agreement The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of certain
Home Loans as provided in Section 3.01 of the Servicing Agreement.
Subservicing Fee With respect to any Collection Period, the fee
retained monthly by the Subservicer (or, in the case of a nonsubserviced Home
Loan, by the Master Servicer) equal to the product of (i) the Subservicing Fee
Rate divided by 12 and (ii) the Pool Balance as of the first day of such
Collection Period.
Subservicing Fee Rate With respect to each Home Loan, the amount payable to
the related Subservicer, equal to 0.50% per annum.
Substitution Adjustment Amounts With respect to any Eligible
Substitute Loan, the amount as defined in Section 3.1(b) of the Home Loan
Purchase Agreement and any Deleted Loan, the amount, if any, as determined by
the Master Servicer, by which the aggregate principal balance of all such
Eligible Substitute Loans as of the date of substitution is less than the
aggregate principal balance of all such Deleted Loans (after application of the
principal portion of the Monthly Payments due in the month of substitution that
are to be distributed to the Payment Account in the month of substitution).
Termination Price In the event that all of the Home Loans are
purchased by the Master Servicer, the Termination Price will be an amount equal
to 100% of the unpaid Loan Balance of each Home Loan so purchased, plus accrued
and unpaid interest thereon at the weighted average of the Loan Rates through
the day preceding the Payment Date on which such purchase occurs, plus the
Adjusted Issue Price of the Class AIO Notes, plus any amounts due and owing to
the Credit Enhancer under the Insurance Agreement and any amounts due and owing
to the ISDA Counterparty under the Limited Reimbursement Agreement (such amount
to be determined without respect to the limitation in the definition of "Fixed
Amount" therein which limits the Fixed Amount to Available Funds).
Treasury Regulations Regulations, including proposed or temporary
Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary
26
regulations shall include analogous provisions of final Treasury Regulations or
other successor Treasury Regulations.
Trust Agreement The Amended and Restated Trust Agreement, dated as of
September 27, 2001, between the Owner Trustee and the Depositor.
Trust Estate The meaning specified in the Granting Clause of the Indenture.
Trust Indenture Act or TIA The Trust Indenture Act of 1939, as amended from
time to time, as in effect on any relevant date.
UCC The Uniform Commercial Code, as amended from time to time, as in effect
in any specified jurisdiction.
Underwriters Bear, ▇▇▇▇▇▇▇ & Co. Inc. and Residential Funding Securities
Corporation.
Uniform Single Attestation Program for Mortgage Bankers The
Uniform Single Attestation Program for Mortgage Bankers, as published by the
Mortgage Bankers Association of America and effective with respect to fiscal
periods ending on or after December 15, 1995.
United States Person A citizen or resident of the United States,
a corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any state thereof or the District of Columbia
(except, in the case of a partnership, to the extent provided in regulations),
or an estate whose income is subject to United States federal income tax
regardless of its source, or a trust other than a "foreign trust" within the
meaning of Section 7701(a)(30) of the Code.
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